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Prestige Consumer (PBH) Q4 Earnings Meet Estimates, Revenues Top

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Prestige Consumer Healthcare Inc. (PBH - Free Report) posted fourth-quarter fiscal 2021 results, wherein earnings matched the Zacks Consensus Estimate and revenues beat the same. Notably, this marks the company’s ninth straight quarter of revenue beat. However, both top and bottom lines declined year over year. Nonetheless, management’s fiscal 2022 guidance is encouraging, suggesting revenue and earnings growth. Incidentally, shares of the company grew 6.2% following the earnings release on May 6.

Quarter in Detail

The company posted adjusted earnings of 79 cents per share, which came in line with the Zacks Consensus Estimate. However, the bottom line declined 3.7% year over year.

Total revenues edged down 5.4% to $237.8 million but surpassed the Zacks Consensus Estimate of $230 million. Excluding currency effects, revenues dropped 6.6%. The year-over-year downside resulted from lower consumption for some brands amid the pandemic, which also included tough year-over-year comparisons related to the stock hoarding trends in the same period last year. This was largely compensated by solid performance delivered by most key brands.

Adjusted gross profit came in at $137.1 million, down 8.1% from the prior-year quarter’s figure. Adjusted gross margin contracted 180 basis points to 57.6%. Adjusted EBITDA was $79.2 million, down 7.8% year over year. Adjusted EBITDA margin contracted 90 bps to 33.3%.

Segment Performance

Revenues in the North American OTC Healthcare segment came in at $211.5 million, down from the year-ago quarter’s $219.8 million. Results were affected by reduced consumption for certain brands, wherein category consumption has been hurt by the pandemic, along with tough year-over-year comparisons against last year’s stockpiling. This was somewhat compensated by gains in most of the segment’s key brands.

Revenues in the International OTC Healthcare segment were $26.3 million, down from the year-ago quarter’s $31.4 million. The downside can be accountable to adverse comparisons with the year-ago period, which witnessed increased demand for products like Hydralyte owing to the pandemic-led stock hoarding. This was partly countered by currency gains of roughly $3 million.

Financial Updates

The company exited the quarter with cash and cash equivalents of $32.3 million, long-term debt (net) of $1,479.7 million and total shareholders’ equity of $1,358.3 million.

Net cash provided by operating activities in fiscal 2021 was $235.6 million. Adjusted free cash flow for the same time frame was $213.4 million. Free cash flow is anticipated to be $225 million or more in fiscal 2022.

As of Mar 31, 2021, the company’s net debt position was $1.5 billion. In the quarter under review, Prestige Consumer repurchased shares worth $2 million. In fiscal 2021, the company made share buybacks worth nearly $12 million.

Guidance

Management remains encouraged about its solid market share brand positions, efficient marketing efforts, diverse brands and strong e-commerce initiatives. These factors aided the company in fiscal 2021 and are expected to be drivers in fiscal 2022 and beyond. For fiscal 2022, Prestige Consumer anticipates organic growth to be in tandem with its long-term expectations for its leading brand portfolio, barring some categories that are hurt by the pandemic. However, even in these disrupted categories, management expects a relatively stable performance compared with fiscal 2021. Further, the company expects its robust financial status to facilitate an increase in cash flow in fiscal 2022, as well as a robust low-double-digit increase in earnings.

In fiscal 2022, the company anticipates revenues of nearly $957-$962 million. Organic growth is projected to be 1.5-2%. Finally, the company envisions adjusted earnings per share to be $3.58 or more. The Zacks Consensus Estimate for earnings is pegged at $3.42, currently. In fiscal 2021, Prestige Consumer’s top and bottom lines came in at $943.4 million and $3.24 per share, respectively.

This Zacks Rank #3 (Hold) stock has gained 10.1% in the past three months against the industry’s decline of 20%.

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