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Prestige Consumer (PBH) Q2 Earnings Top Estimates, Rise Y/Y

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·4 min read
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Prestige Consumer Healthcare Inc. PBH posted solid second-quarter fiscal 2021 results, wherein earnings and sales cruised ahead of the Zacks Consensus Estimate. This marked the company’s seventh straight beat (on a combined basis).

Results were backed by strength of the company’s brand portfolio, efficient marketing plans and considerable growth in the e-commerce channel. These upsides aided Prestige Consumer’s revenues, leading to robust earnings growth. This, in turn, enabled the company to curtail debt and undertake disciplined capital allocation even amid the pandemic.

Quarter in Detail

The company posted adjusted earnings of 78 cents per share, which surpassed the Zacks Consensus Estimate of 72 cents. This marked its 11th consecutive quarter of earnings beat. Quarterly earnings also improved 15% year over year.

Prestige Consumer Healthcare Inc. Price, Consensus and EPS Surprise

Prestige Consumer Healthcare Inc. Price, Consensus and EPS Surprise
Prestige Consumer Healthcare Inc. Price, Consensus and EPS Surprise

Prestige Consumer Healthcare Inc. price-consensus-eps-surprise-chart | Prestige Consumer Healthcare Inc. Quote

Total revenues edged down 0.3% to $237.4 million but surpassed the Zacks Consensus Estimate of $227.4 million. Excluding currency effects, revenues dropped 0.5%. The year-over-year downside can be attributable to lower consumption for some brands amid the pandemic. This was largely compensated by stable consumption trends in most parts of the portfolio.

Adjusted gross profit came in at $137.7 million, down 0.4% from the prior-year quarter’s figure. Adjusted gross margin remained flat at 58%. Adjusted EBITDA was $80.7 million, up 4.7% year over year. Further, adjusted EBITDA margin expanded 160 bps to 34%.

Segment Performance

Revenues in the North American OTC Healthcare segment were $216.6 million, up 1.3% year over year. Results were backed by gains in most of the segment’s key brands, partly countered by reduced consumption for certain brands wherein category consumption has been hurt by the pandemic.

Revenues in the International OTC Healthcare segment were $20.8 million, down 14% from the year-ago quarter’s figure. The downside can be accountable to sluggish consumption in certain brands (like Hydralyte) due to COVID-19, partly compensated by currency gains of roughly $0.7 million.

Financial Updates

The company exited the quarter with cash and cash equivalents of $26.6 million, long-term debt (net) of $1,548.1 million and total shareholders’ equity of $1,278.2 million.

Net cash provided by operating activities in the quarter was $52.1 million. Adjusted free cash flow for the quarter amounted to $43.1 million. As of Sep 30, the company’s net debt position declined to roughly $1.5 billion. In the quarter under review, Prestige Consumer lowered debt by $74 million.

Guidance

The company witnessed more stable consumption and retailer order patterns in the quarter, which along with the current trends form the basis for management’s fiscal 2021 guidance. In fiscal 2021, the company anticipates revenues of $925 million, based on anticipations of growth in most key brands. This is expected to be partly countered by pandemic-led impacts on consumer behavior and demand in certain categories. Adjusted earnings per share are envisioned to be nearly $3.18 for the fiscal. The Zacks Consensus Estimate for earnings is pegged at $3.15, currently. In fiscal 2020, Prestige Consumer’s top and bottom lines came in at $963 million and $2.96 per share, respectively.

Free cash flow is anticipated to be $207 million or more in fiscal 2021.

Management remains focused on strengthening its brand portfolio to drive sales. These efforts, together with a strong financial status and efficient capital allocation, are expected to drive top and bottom-line growth in the long term.

This Zacks Rank #3 (Hold) stock has lost 16.1% in the past three months compared with the industry’s decline of 4.9%.

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Funko FNKO has a trailing four-quarter earnings surprise of 36% and a Zacks Rank #2.

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