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Prestige Consumer (PBH) Q3 Earnings & Revenues Top Estimates

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Prestige Consumer Healthcare Inc. PBH posted third-quarter fiscal 2021 results, wherein earnings and sales surpassed the Zacks Consensus Estimate. This marks the company’s eighth straight beat (on a combined basis).

Management remains impressed with its first nine-month performance of fiscal 2021. The company said that its long-term brand as well as channel investments, together with its diversified portfolio helped it win market share in several key categories, alongside driving triple-digit e-commerce growth. Such investments also helped the company largely counter pandemic-induced unfavorable demand in certain categories such as head lice, cough & cold and motion sickness. Management further stated that its robust financial status and strong capital allocation strategy aided the bottom line, EBITDA and free cash flow growth, year to date, even amid the crisis.

Quarter in Detail

The company posted earnings of 81 cents per share, which surpassed the Zacks Consensus Estimate of 77 cents. This marks its 12th consecutive quarter of earnings beat. The company’s adjusted earnings per share in the year-ago period were 81 cents, while its reported earnings were 75 cents.

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 1.1% to $238.8 million but surpassed the Zacks Consensus Estimate of $232 million. Excluding currency effects, revenues dropped 1.6%. The year-over-year downside resulted from 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 $138.9 million, down 0.8% from the prior-year quarter’s figure. Adjusted gross margin advanced 20 basis points to 58.2%. Adjusted EBITDA was $81.4 million, down almost 1% year over year. Adjusted EBITDA margin expanded 10 bps to 34.1%.

Segment Performance

Revenues in the North American OTC Healthcare segment came in at $210.6 million, down from the year-ago quarter’s $214.9 million. Results were affected by reduced consumption for certain brands wherein category consumption has been hurt by the pandemic, somewhat compensated by gains in most of the segment’s key brands.

Revenues in the International OTC Healthcare segment were $28.2 million, up 5.6% from the year-ago quarter’s figure. The upside can be accountable to higher demand for Hydralyte in Australia, thanks to the relaxation of stay at-home limitations. Also, currency gains of roughly $1 million contributed to this uptick.

Financial Updates

The company exited the quarter with cash and cash equivalents of $62.1 million, long-term debt (net) of $1,548.7 million and total shareholders’ equity of $1,323.2 million.

Net cash provided by operating activities in the nine–month period ended Dec 31, 2020 was $176.5 million. Adjusted free cash flow for the same time frame was $159.2 million. As of Dec 31, the company’s net debt position was $1.5 billion. In the quarter under review, Prestige Consumer repurchased shares worth $9 million.

Guidance

Robust operating results and performance to date have encouraged management to raise its top- and bottom-line guidance for fiscal 2021. Management expects to continue witnessing domestic trends, which it has seen year to date. Also, it expects continued enhancements in the International unit. Management projects its solid operating structure to aid high-single-digit earnings growth in fiscal 2021.

In fiscal 2021, the company now anticipates revenues of nearly $935 million, up from the roughly $925 million expected before. Adjusted earnings per share are envisioned to be $3.22 compared with the previous view of $3.18. The Zacks Consensus Estimate for earnings is pegged at $3.18, 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 still anticipated to be $207 million or more in fiscal 2021.

The company remains well placed for an even stronger performance in fiscal 2022. Notably, 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 shareholder value in the long term.

This Zacks Rank #3 (Hold) stock has gained 21.6% in the past three months compared with the industry’s growth of 43.9%.

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