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Prestige Consumer (PBH) Up on Q3 Earnings Beat & Raised View

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Prestige Consumer Healthcare Inc. (PBH - Free Report) reported third-quarter fiscal 2020 results, with both top and bottom lines surpassing the Zacks Consensus Estimate for the fourth straight time on a combined basis. Earnings also improved year on year. Based on its strong year-to-date results and efficient use of cash flows, management raised its earnings outlook for fiscal 2020.

Shares of the company gained 8.4% in yesterday’s trading session. Further, this Zacks Rank #3 (Hold) stock has gained 18.2% in the past three months compared with the industry’s growth of 1%.

Q3 Details

The company posted adjusted earnings of 81 cents per share, which surpassed the Zacks Consensus Estimate of 75 cents. This marked its eighth consecutive quarter of earnings beat. Quarterly earnings also improved almost 11% year over year.

Total revenues came in at $241.6 million compared with the Zacks Consensus Estimate of $241 million and the year-ago period’s figure of $241.4 million. Organic revenues inched up 0.5% (excluding currency effects). Top-line results were backed by robust consumption trends at core brands in the domestic regions and solid international unit performance. This was partly offset by persistent retailer inventory reductions.

Adjusted gross profit came in at $140.1 million, which inched up 0.6% from the prior-year quarter’s figure. Adjusted gross margin expanded slightly to 58%.

Adjusted EBITDA was $86.9 million, up 2% year over year. Adjusted EBITDA margin expanded 70 bps to 36%.

Segment Performance

Revenues in the North American OTC Healthcare segment were $214.9 million, down 0.9% year over year. The decline is accountable to retailer inventory reductions, compensated by increased consumption at core categories.

Revenues in the International OTC Healthcare segment totaled $26.7 million, up about 8% from the year-ago quarter’s figure. The upside can be attributed to increased consumption and shipments in the Asia Pacific and Australia, which were partly negated by currency headwinds to the tune of $1 million.

Financial Updates

The company exited the quarter under review with cash and cash equivalents of $28.6 million, long-term debt (net) of $1,701.3 million and total shareholders’ equity of $1,156.5 million.

Net cash provided by operating activities in the reported quarter was $58 million. Adjusted free cash flow for the quarter amounted to $56.3 million.

As of Dec 31, 2019, the company’s net debt position was about $1.7 billion.

Outlook

For fiscal 2020, the company still anticipates revenues of $947-$957 million. Organic revenues are expected to stay flat.

Adjusted earnings are now envisioned in the range of $2.85-$2.87 per share, up from the prior view of $2.76-$2.83.

Adjusted free cash flow is forecasted to be $200 million or more in fiscal 2020.

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