Prestige Consumer Healthcare Inc.

08/07/2025 | Press release | Distributed by Public on 08/07/2025 04:15

Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read together with the Condensed Consolidated Financial Statements and the related notes included in this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the fiscal year ended March 31, 2025. This discussion and analysis may contain forward-looking statements that involve certain risks, assumptions and uncertainties. Future results could differ materially from the discussion that follows for many reasons, including the factors described in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 and in future reports filed with the U.S. Securities and Exchange Commission ("SEC").
See also "Cautionary Statement Regarding Forward-Looking Statements" on page 26 of this Quarterly Report on Form 10-Q.
Unless otherwise indicated by the context, all references in this Quarterly Report on Form 10-Q to "we," "us," "our," the "Company" or "Prestige" refer to Prestige Consumer Healthcare Inc. and our subsidiaries. Similarly, references to a year (e.g., 2026) refers to our fiscal year ended March 31 of that year.
General
We are engaged in the development, manufacturing, marketing, sales and distribution of well-recognized, brand name, over-the-counter ("OTC") health and personal care products to mass merchandisers, drug, food, dollar, convenience, and club stores and e-commerce channels in North America (the United States and Canada) and in Australia and certain other international markets. We use the strength of our brands, our established retail distribution network, a low-cost operating model and our experienced management team to our competitive advantage.
We have grown our brand portfolio both organically and through acquisitions. We develop our existing brands by investing in new product lines, brand extensions and strong advertising support. Acquisitions of consumer health and personal care brands have also been an important part of our growth strategy. We have acquired well-recognized brands from consumer products and pharmaceutical companies and private equity firms. While many of these brands have long histories of brand development and investment, we believe that, at the time we acquired them, most were considered "non-core" by their previous owners. As a result, these acquired brands did not benefit from adequate management focus and marketing support during the period prior to their acquisition, which created opportunities for us to reinvigorate these brands and improve their performance post-acquisition. After adding a core brand to our portfolio, we seek to increase its sales, market share and distribution in both existing and new channels through our established retail distribution network. We pursue this growth through increased spending on advertising and marketing support, new sales and marketing strategies, improved packaging and formulations, and innovative development of brand extensions.
Economic Environment
There has been economic uncertainty in the United States and globally due to several factors, including evolving fiscal policy, global supply chain constraints, changes in interest rates, a high inflationary environment, geopolitical events and evolving U.S. and international tariffs. We expect economic conditions will continue to be highly volatile and uncertain, put pressure on prices and supply, and could affect demand for our products. We have continued to see changes in the purchasing patterns of our end customers, including a shift in many markets to purchasing our products online, and could see changes in retailer purchasing patterns due to the uncertain economic environment.
The volatile environment has impacted the supply of labor and raw materials and exacerbated rising input costs. We have and may continue to experience shortages, delays and backorders for certain ingredients and products, difficulty scheduling shipping for our products, as well as price increases from many of our suppliers for both shipping and product costs. Certain of our third-party manufacturers are currently having, and have had in the past, difficulty meeting demand, which is and has caused shortages of our products, particularly eye care products. These shortages negatively impacted our results of operations, and we expect further shortages may have a negative impact on our sales. If conditions cause further disruption in the global supply chain, the availability of labor and materials or otherwise further increase costs, it may materially affect our operations and those of third parties on which we rely, including causing material disruptions in the supply and distribution of our products. The extent to which these conditions impact our results of operations and liquidity will depend on future developments, which are highly uncertain and cannot be predicted, including global supply chain constraints, inflation, tariffs, global conflicts and trade actions/disputes. These effects could have a material adverse impact on our business, liquidity, capital resources and results of operations and those of the third parties on which we rely.
Global Minimum Tax
Numerous countries have agreed to a statement in support of the Organization for Economic Cooperation and Development ("OECD") model rules that propose a global minimum tax rate of 15%. Certain countries have enacted, or are in the process of enacting, legislation to address the global minimum tax. This legislation has not and is not expected to have a material impact on our Consolidated Financial Statements. As legislation becomes effective in more countries in which we do business, our taxes could increase and negatively impact our provision for income taxes. We continue to monitor pending legislation and implementation by countries and to evaluate the potential impact on our business in future periods.
Results of Operations
Three Months Ended June 30, 2025 compared to the Three Months Ended June 30, 2024
Total Segment Revenues
The following table represents total revenue by segment, including product groups, for the three months ended June 30, 2025 and 2024.
Three Months Ended June 30,
Increase (Decrease)
(In thousands) 2025 % 2024 % Amount %
North American OTC Healthcare
Analgesics $ 27,258 10.9 $ 27,011 10.1 $ 247 0.9
Cough & Cold 13,353 5.4 14,961 5.6 (1,608) (10.7)
Women's Health 51,646 20.7 50,495 19.0 1,151 2.3
Gastrointestinal 43,696 17.5 44,287 16.6 (591) (1.3)
Eye & Ear Care 27,781 11.1 43,319 16.2 (15,538) (35.9)
Dermatologicals 27,852 11.2 31,603 11.8 (3,751) (11.9)
Oral Care 18,154 7.3 17,674 6.6 480 2.7
Other OTC 2,838 1.1 2,966 1.1 (128) (4.3)
Total North American OTC Healthcare 212,578 85.2 232,316 87.0 (19,738) (8.5)
International OTC Healthcare
Analgesics $ 1,674 0.7 $ 1,282 0.5 $ 392 30.6
Cough & Cold 5,654 2.3 5,736 2.1 (82) (1.4)
Women's Health 5,112 2.0 4,083 1.5 1,029 25.2
Gastrointestinal 14,088 5.7 13,728 5.1 360 2.6
Eye & Ear Care 4,527 1.8 4,811 1.8 (284) (5.9)
Dermatologicals 2,257 0.9 1,752 0.7 505 28.8
Oral Care 3,548 1.4 3,100 1.2 448 14.5
Other OTC 92 - 334 0.1 (242) (72.5)
Total International OTC Healthcare 36,952 14.8 34,826 13.0 2,126 6.1
Total Consolidated $ 249,530 100.0 $ 267,142 100.0 $ (17,612) (6.6)
Total revenues for the three months ended June 30, 2025 were $249.5 million, a decrease of $17.6 million, or 6.6%, versus the three months ended June 30, 2024.
North American OTC Healthcare Segment
Revenues for the North American OTC Healthcare segment decreased $19.7 million, or 8.5%, during the three months ended June 30, 2025 versus the three months ended June 30, 2024. The $19.7 million decrease was primarily attributable to a decrease in sales in the Eye & Ear Care and Dermatologicals categories. The decrease in the Eye & Ear Care category was primarily due to limited ability to supply demand for Clear Eyes.
International OTC Healthcare Segment
Revenues for the International OTC Healthcare segment increased $2.1 million, or 6.1%, during the three months ended June 30, 2025 versus the three months ended June 30, 2024. The $2.1 million increase was mainly attributable to increases in sales in the Women's Health and Dermatologicals categories.
Gross Profit
The following table presents our gross profit and gross profit as a percentage of total segment revenues, by segment for each of the periods presented.
Three Months Ended June 30,
(In thousands) Increase (Decrease)
Gross Profit 2025 % 2024 % Amount %
North American OTC Healthcare $ 120,400 56.6 $ 126,757 54.6 $ (6,357) (5.0)
International OTC Healthcare 19,931 53.9 19,265 55.3 666 3.5
$ 140,331 56.2 $ 146,022 54.7 $ (5,691) (3.9)
Gross profit for the three months ended June 30, 2025 decreased $5.7 million, or 3.9%, when compared with the three months ended June 30, 2024. As a percentage of total revenues, gross profit increased to 56.2% during the three months ended June 30, 2025 from 54.7% during the three months ended June 30, 2024, primarily due to favorable product mix and lower air freight.
North American OTC Healthcare Segment
Gross profit for the North American OTC Healthcare segment decreased $6.4 million, or 5.0%, during the three months ended June 30, 2025 versus the three months ended June 30, 2024. As a percentage of North American OTC Healthcare revenues, gross profit increased to 56.6% during the three months ended June 30, 2025 from 54.6% during the three months ended June 30, 2024, primarily due to lower air freight expenses.
International OTC Healthcare Segment
Gross profit for the International OTC Healthcare segment increased $0.7 million, or 3.5%, during the three months ended June 30, 2025 versus the three months ended June 30, 2024. As a percentage of International OTC Healthcare revenues, gross profit decreased to 53.9% during the three months ended June 30, 2025 from 55.3% during the three months ended June 30, 2024, primarily due to increased inflation costs.
Contribution Margin
Contribution margin is our segment measure of profitability. It is defined as gross profit less advertising and marketing expenses.
The following table presents our contribution margin and contribution margin as a percentage of total segment revenues, by segment for each of the periods presented.
Three Months Ended June 30,
(In thousands) Increase (Decrease)
Contribution Margin 2025 % 2024 % Amount %
North American OTC Healthcare $ 91,446 43.0 $ 93,004 40.0 $ (1,558) (1.7)
International OTC Healthcare 13,948 37.7 13,653 39.2 295 2.2
$ 105,394 42.2 $ 106,657 39.9 $ (1,263) (1.2)
North American OTC Healthcare Segment
Contribution margin for the North American OTC Healthcare segment for the three months ended June 30, 2025 decreased $1.6 million, or 1.7%, when compared with the three months ended June 30, 2024. As a percentage of North American OTC Healthcare revenues, contribution margin increased to 43.0% during the three months ended June 30, 2025 from 40.0% during the three months ended June 30, 2024, primarily due to the increase in gross profit margin above and a decrease in advertising and marketing spend during the quarter attributable to timing.
International OTC Healthcare Segment
Contribution margin for the International OTC Healthcare segment increased $0.3 million, or 2.2%, during the three months ended June 30, 2025 versus the three months ended June 30, 2024. As a percentage of International OTC Healthcare revenues, contribution margin decreased to 37.7% during the three months ended June 30, 2025 from 39.2% during the three months ended June 30, 2024. The contribution margin decrease as a percentage of revenues during the three months ended June 30, 2025 was primarily due to the decrease in gross profit margin above.
General and Administrative
General and administrative expenses were $28.5 million for the three months ended June 30, 2025 and $28.9 million for the three months ended June 30, 2024. General and administrative expenses decreased $0.4 million due to a decrease in legal expense, partially offset by an increase in compensation costs.
Depreciation and Amortization
Depreciation and amortization expenses were $5.2 million for the three months ended June 30, 2025 and $5.7 million for the three months ended June 30, 2024. The decrease in depreciation and amortization expenses was primarily due to a decrease in amortization expense due to impairment charges taken on finite-lived brands in fiscal 2025 as well as certain intangible assets being fully amortized during fiscal 2025.
Interest Expense, Net
Interest expense, net was $10.2 million during the three months ended June 30, 2025 versus $13.1 million during the three months ended June 30, 2024. The average indebtedness during the three months ended June 30, 2025 decreased to $1.0 billion from $1.1 billion during the three months ended June 30, 2024. The average cost of borrowing decreased to 4.5% for the three months ended June 30, 2025 compared to 4.8% for the three months ended June 30, 2024.
Income Taxes
The provision for income taxes during the three months ended June 30, 2025 was $14.3 million versus $9.3 million during the three months ended June 30, 2024. The effective tax rate during the three months ended June 30, 2025 was 23.2% versus 16.0% during the three months ended June 30, 2024. The increase in the effective tax rate for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 was primarily due to discrete items in the prior year pertaining to the release of a reserve for uncertain tax positions due to the statute of limitations expiring.
Liquidity and Capital Resources
Liquidity
Our primary source of cash comes from our cash flow from operations. In the past, we have supplemented this source of cash with various debt facilities, primarily in connection with acquisitions. We have financed our operations, and expect to continue to finance our operations for the next twelve months and the foreseeable future, with a combination of funds generated from operations and borrowings. Our principal uses of cash are for operating expenses, debt service, share repurchases, capital expenditures, and acquisitions. Based on our current levels of operations and anticipated growth, excluding acquisitions, we believe that our cash generated from operations and our existing credit facilities will be adequate to finance our working capital and capital expenditures through the next twelve months. See "Economic Environment" above.
As of June 30, 2025, we had cash and cash equivalents of $139.5 million, an increase of $41.6 million from March 31, 2025. The following table summarizes the change:
Three Months Ended June 30,
(In thousands) 2025 2024 $ Change
Cash provided by (used in):
Operating Activities $ 79,013 $ 54,776 $ 24,237
Investing Activities (1,938) (2,130) 192
Financing Activities (36,282) (65,522) 29,240
Effects of exchange rate changes on cash and cash equivalents 825 663 162
Net change in cash and cash equivalents $ 41,618 $ (12,213) $ 53,831
Operating Activities
Net cash provided by operating activities was $79.0 million for the three months ended June 30, 2025, compared to $54.8 million for the three months ended June 30, 2024. The $24.2 million increase was due to the timing of working capital and increased net income before non-cash items.
Investing Activities
Net cash used in investing activities was $1.9 million for the three months ended June 30, 2025, compared to $2.1 million for the three months ended June 30, 2024.
Financing Activities
Net cash used in financing activities was $36.3 million for the three months ended June 30, 2025, compared to $65.5 million for the three months ended June 30, 2024. The $29.2 million decrease in cash used in financing activities was primarily due to a decrease in debt repayments of $35.0 million, partly offset by an increase in the repurchase of shares of our common stock in conjunction with our share repurchase program of $8.8 million.
Capital Resources
As of June 30, 2025, we had an aggregate of $1.0 billion of outstanding indebtedness, which consisted of the following:
•$400.0 million of 5.125% 2019 senior unsecured notes, which mature on January 15, 2028 (the "2019 Senior Notes"); and
•$600.0 million of 3.750% 2021 senior unsecured notes, which mature on April 1, 2031 (the "2021 Senior Notes").
As of June 30, 2025, we had no outstanding balance on our asset-based revolving credit facility originally entered into on January 31, 2012 (the "2012 ABL Revolver") and a borrowing capacity of $173.2 million.
Maturities:
(In thousands)
Year Ending March 31, Amount
2026 (remaining nine months ending March 31, 2026) $ -
2027 -
2028 400,000
2029 -
2030 -
Thereafter 600,000
$ 1,000,000
Covenants:
Our debt facilities contain various financial covenants, including provisions that require us to maintain certain fixed charge ratios. The credit agreement governing the 2012 ABL Revolver and the indentures governing the 2021 Senior Notes and 2019 Senior Notes contain provisions that accelerate our indebtedness on certain changes in control and restrict us from undertaking specified corporate actions, including asset dispositions, acquisitions, payments of dividends and other specified payments, repurchasing our equity securities in the public markets, incurrence of indebtedness, creation of liens, making loans and investments and transactions with affiliates. Specifically, we must:
•Have a fixed charge ratio of greater than 1.0 to 1.0 for the quarter ended June 30, 2025 (defined as, with certain adjustments, the ratio of our consolidated EBITDA minus capital expenditures to our trailing twelve month consolidated interest paid, taxes paid and other specified payments). Our fixed charge requirement remains level throughout the term of the debt facilities.
At June 30, 2025, we were in compliance with the applicable financial and restrictive covenants under the 2012 ABL Revolver and the indentures governing the 2021 Senior Notes and the 2019 Senior Notes. Management anticipates that in the normal course of operations, we will be in compliance with the financial and restrictive covenants during the next twelve months.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on our knowledge of current events and actions that we may undertake in the future, actual results could differ from those estimates. A summary of our critical accounting policies is presented in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025. There were no material changes to our critical accounting policies during the three months ended June 30, 2025.
Recent Accounting Pronouncements
A description of recently issued accounting pronouncements is included in the notes to the unaudited Condensed Consolidated Financial Statements in Part I, Item I, Note 1 of this Quarterly Report on Form 10-Q.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "PSLRA"), including, without limitation, information within Management's Discussion and Analysis of Financial Condition and Results of Operations. The following cautionary statements are being made pursuant to the provisions of the PSLRA and with the intention of obtaining the benefits of the "safe harbor" provisions of the PSLRA.
Forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required under federal securities laws and the rules and regulations of the SEC, we do not intend to update any forward-looking statements to reflect events or circumstances arising after the date of this Quarterly Report on Form 10-Q, whether as a result of new information, future events or otherwise. As a result of the risks and uncertainties described below, readers are cautioned not to place undue reliance on forward-looking statements included in this Quarterly Report on Form 10-Q or that may be made elsewhere from time to time by, or on behalf of, us. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.
These forward-looking statements generally can be identified by the use of words or phrases such as "believe," "anticipate," "expect," "estimate," "plan," "project," "intend," "strategy," "goal," "objective," "future," "seek," "may," "might," "should," "would," "will," or other similar words and phrases. Forward-looking statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated, including, without limitation:
•Disruptions of supply of sourced goods or components;
•Our dependence on third-party manufacturers to produce many of the products we sell and, if necessary due to a disruption, our ability to transfer production to our own facilities or other third-party suppliers;
•Price increases for raw materials, labor, energy and transportation costs and for other input costs;
•Regulatory or enforcement actions of government agencies in connection with our and our suppliers' manufacturing plants, products and advertising;
•The impact of geopolitical events and severe illness outbreaks on global economic conditions, consumer demand, retailer product availability and business operations including manufacturing, supply chain and distribution;
•The high level of competition in our industry and markets, including additional store brand or branded competition;
•Limited success of new product introductions, line extensions, advertising and marketing support and other sales and marketing strategies;
•Our dependence on a limited number of customers for a large portion of our sales;
•Our inability to successfully identify, negotiate, complete and integrate suitable acquisition candidates and to obtain necessary financing;
•Changes by retailers in inventory management practices, delivery requirements and demands for marketing and promotional spending in order to retain or increase shelf space or online share;
•Limited growth of our international sales, including as a result of export or import restrictions or tariffs;
•General economic conditions, changing consumer trends, and incidence levels affecting sales of our products and their respective markets;
•Financial factors, such as increases in interest rates and currency exchange rate fluctuations;
•Our dependence on third-party logistics providers to distribute our products to customers;
•Disruptions in our distribution center or manufacturing facilities;
•Potential changes in export/import and trade laws, regulations and policies, including any increased trade restrictions or tariffs and changes in priorities of the current U.S. administration;
•Acquisitions, dispositions or other strategic transactions diverting managerial resources and creating additional liabilities;
•Product liability claims, product recalls and related negative publicity;
•Our inability to protect our intellectual property rights;
•Our dependence on third parties for intellectual property relating to some of the products we sell;
•Our inability to protect our information technology systems from threats or disruptions or disruptions to the information technology systems of our customers or suppliers;
•Our dependence on third-party information technology service providers and their ability to protect against security threats and disruptions;
•Our assets being comprised virtually entirely of goodwill and intangibles and possible changes in their value based on adverse operating results and/or changes in the discount rate used to value our brands;
•Our dependence on key personnel;
•The costs associated with any claims in litigation or arbitration and any adverse judgments rendered in such litigation or arbitration;
•Our level of indebtedness and any inability to service our debt or to obtain additional financing;
•The restrictions imposed by our financing agreements on our operations; and
•Changes in federal, state and other geographic tax laws.
For more information, see Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025.
Prestige Consumer Healthcare Inc. published this content on August 07, 2025, and is solely responsible for the information contained herein. Distributed via SEC EDGAR on August 07, 2025 at 10:15 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]