Prestige Consumer (PBH) Q2 Revenues Top, Margins Expand
Prestige Consumer Healthcare Inc. PBH delivered second-quarter fiscal 2024 diluted earnings per share (EPS) of $1.07, an increase of 4.9% from the year-ago period’s figure. However, the metric came in line with the Zacks Consensus Estimate.
Revenues
Total revenues in the second quarter fell 1% year over year to $286.3 million but topped the Zacks Consensus Estimate by 0.4%. The revenue performance for the quarter was led by Cough & Cold and Ear & Eye Care category performances in North America and strong year-over-year growth in the International OTC segment, offset by declines in certain other categories and the planned strategic exit of private-label revenues.
Excluding currency impacts, revenues decreased 0.7% compared to the prior- year quarter.
Prestige Consumer Healthcare Inc. Price, Consensus and EPS Surprise
Prestige Consumer Healthcare Inc. price-consensus-eps-surprise-chart | Prestige Consumer Healthcare Inc. Quote
Segments in Detail
The company conducts its operations through two reportable segments — North American OTC Healthcare and International OTC Healthcare.
Revenues in the North American OTC Healthcare segment were $244.4 million, down 3% from the year-earlier quarter. Our model projected the segment’s revenues to be $246.6 million in the third quarter.
The revenue performance for the quarter was driven by lower sales in Women’s Health and certain other categories and the strategic exit of private labels, partially offset by strong performance in the Cough & Cold and Ear & Eye Care categories.
Revenues in the International OTC Healthcare segment were $41.9 million, up 12.6% from the year-ago quarter’s figure. The increase in revenues was driven by strong Eye & Ear Care and Women’s Health sales, partially offset by a $0.7 million currency headwind. Our model’s projected revenues from this segment were $38.7 million.
Margins
The gross profit in the fiscal second quarter decreased 0.6% year over year to $162 million. Meanwhile, the gross margin expanded 27-basis points (bps) year over year to 56.6% due to a 1.6% decrease in the cost of sales (excluding depreciation).
During the quarter, Advertising and marketing expenses fell 8.5% to $40 million, while General and administrative expenses decreased 1.7% to 26 million. The adjusted operating income (excluding depreciation and amortization) in the quarter under review was $95.9 million, highlighting an increase of 3.5%. The adjusted operating margin expanded 147 bps to 33.5%.
Financial Update
Prestige Consumer exited the fiscal second quarter of 2024 with cash and cash equivalents of $60.1 million compared with the $54.6 million recorded at the end of the first quarter. The long-term debt totaled $1.26 billion, sequentially down from $1.32 million at the first-quarter end.
The cumulative net cash provided by operating activities in the second quarter was $110.5 million compared to $115.8 million in the prior-year comparable period. The adjusted free cash flow in the quarter was $59.5 million compared with $55.2 million at the end of the prior period’s quarter.
In the fiscal first quarter, PBH repurchased nearly 0.4 million shares for $25 million, concluding its previously authorized share repurchase program.
Guidance
The company reaffirmed its fiscal 2024 outlook, which was originally announced during the fiscal 2023 fourth-quarter earnings call.
Revenues for the full year are anticipated in the range of $1.135 billion-$1.140 billion (unchanged) compared with the $1.128 billion reported in fiscal 2023. Organic revenue growth for the full year is anticipated to be 1%-2%. The Zacks Consensus Estimate for fiscal 2024 revenues is pegged at $1.14 billion.
Prestige Consumer Healthcare expects fiscal 2024 diluted EPS in the range of $4.27-$4.32 (same as earlier). In fiscal 2023, the company posted a loss of $1.65 per share and an adjusted EPS of $4.21. The Zacks Consensus Estimate for fiscal 2024 EPS stands at $4.31.
Free cash flow for the full year is likely to be $240 million or more (unchanged).
Our Take
PBH exited the fiscal second quarter of 2024 with revenues beating and earnings matching estimates. The top-line performance was driven by the company’s ongoing brand-building efforts and growth in multiple categories, including Cough & Cold and Ear & Eye Care, and the international segment.
Both the gross and adjusted operating margins expanded during the quarter, which is highly promising. In a continued dynamic macro environment, the company’s diverse portfolio of brands comes as an advantage to generate long-term shareholder value.
Meanwhile, the North American OTC Healthcare segment saw a decline in revenues due to lesser sales of Women’s Health products and the strategic exit of private labels.
Zacks Rank and Key Picks
Prestige Consumer Health currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are DexCom DXCM, Medpace MEDP and The Ensign Group ENSG.
DexCom, carrying a Zacks Rank of 2 (Buy), reported a third-quarter 2023 adjusted EPS of 50 cents, beating the Zacks Consensus Estimate by 47.1%. Revenues of $975 million outpaced the consensus mark by 4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DexCom has a long-term estimated growth rate of 33.6%. DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%.
Medpace reported a third-quarter 2023 adjusted EPS of $2.22, beating the Zacks Consensus Estimate by 8.8%. Revenues of $492.5 million surpassed the Zacks Consensus Estimate by 3.4%. It currently carries a Zacks Rank #2.
Medpace has an estimated earnings growth rate of 16.2% for the next year. MEDP’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 14.6%.
The Ensign Group reported a third-quarter 2023 adjusted EPS of $1.20, beating the Zacks Consensus Estimate by 1.7%. Revenues of $940.8 million surpassed the Zacks Consensus Estimate by 0.2%. It currently carries a Zacks Rank #2.
The Ensign Group has a long-term estimated growth rate of 15%. ENSG’s earnings surpassed estimates in all of the trailing four quarters, the average surprise being 1.5%.
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