Prestige Consumer Healthcare Inc.

Good day, ladies and gentlemen, and welcome to the Prestige Consumer Healthcare Q1 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. If anyone should require operator assistance, please press star and then zero on your touchtone telephone. And as a reminder, today's conference call is being recorded. I'd now like to turn the conference over to Bill Terpolilli, Director of Investor Relations. Please go ahead.

Thank you, operator, and good morning to everyone joining us today. On the call with me are Ron Lombardi, our chairman, president, and CEO, and Christine Sacco, our CFO. On today's call, we will cover the highlights and review the results of our fiscal 21st quarter, review our fiscal 2020 outlook, and then take questions from analysts. We have a slide presentation which accompanies today's call. It can be accessed by visiting PrestigeConsumerHealthcare.com, clicking on the Investors link, and then on today's webcast and presentation. Please remember, some of the information contained in the presentation today includes non-GAAP financial measures. Reconciliations between adjusted and reported financial measures are included in today's earnings release and slide presentation. During today's call, management will make forward-looking statements around risks and uncertainties, which we detail in a complete safe harbor disclosure on page two of the slide presentation accompanying the call. Additional information concerning risk factors and cautionary statements are available in our most recent FCC filings and most recent company 10-K. I'll now hand it over to our CEO, Ron Lombardi, to walk through the highlights of our first quarter performance. Ron?

Thanks, Phil, and good morning, everyone. Let's begin on slide five. We are pleased with our solid start to the year and are on pace to achieve our fiscal year guidance. Q1 highlights include revenue of just over $232 million, which was approximately flat to the prior year on an organic basis in the quarter, slightly ahead of our expectations offered back in May. Importantly, the consumption trends for our leading portfolio remain positive, and we continue to expect approximately 2% consumption growth for the full year. EPS of 65 cents in Q1 was as anticipated, given the divestiture of the household cleaning segment last July, which we have now fully lapped. Finally, we generated approximately $51 million of free cash flow in the quarter, which allowed us to repurchase shares opportunistically, as well as reduce debt. Our capital allocation strategy continues to be enabled by our strong financial profile and consistent cash generation. Turning to slide six, we have further details around Q1 results. As I just mentioned, our net sales were 232.2 million, essentially flat versus the prior year on an organic basis. Sales were positively impacted by strong pipeline results in our international segment with growth of over 15% after adjusting for FX. The performance was driven by both strong consumption trends in Australia and the timing of distributor orders in other countries. Domestic sales were positively impacted by a number of categories including strength and cough cold and ear-eye care, but offset by retailer inventory reductions and changes at shelf in the oral care category. Women's health performance continues to experience positive consumption trends, but sales also declined in Q1, affected by the timing of orders as compared to the prior year. Total company gross margin in Q1 came in at 57.7%, slightly improved sequentially versus fourth quarter's 57.4% gross margin. Free cash flow was $50.8 million in Q1 and continues to benefit from our industry-leading EBITDA margins, minimal capital spending needs, and low cash tax rate. We used this cash flow towards our disciplined capital allocation strategy in Q1 opportunistically buying back approximately $30 million of stock and reducing debt by $20 million. Now, let's turn to slide seven for some details on our Canadian business. In addition to our fast-growing international business, we also have an important and growing portfolio in Canada, which represents about 5% of our annual sales. The Canadian portfolio is comprised of similar brands to the U.S., and is made up of many leading number one brands in niche categories. We have a few examples of these shown in the upper right of the slide. In addition, our Canadian portfolio is anchored by Gaviscon, which has grown steadily since we acquired the brand back in 2012. In many ways, our playbook in Canada is similar to the U.S. We successfully execute a wide-ranging brand building playbook by leveraging leading positions and iconic brands. As an example, we continue to expand our communications around Gaviscon by sharing with consumers the benefits of having one product to both treat and protect against heartburn. This message is communicated with our iconic Gaviscon Blue Man campaigns that are memorable to consumers. Consumer insights are also an important focus as we look for innovation opportunities. This has led to new products like Sleepy's Minis, and Gaviscon Extra Strength Liquid launched in the past year, in addition to bringing innovation from our U.S. business to Canada. As shown on the left-hand side of the slide, we've experienced healthy sales growth in excess of 3% in our Canadian business. The performance is driven by our brand-building strategy and portfolio positioning, each of which has set the stage for continued success. Now let's turn to slide eight. The key to our success comes from being a brand-building organization with our principal objective of positioning our core brands for long-term growth. An example of this is Dentek, which is one of our five core brands that makes up half of our company sales. Fiscal 19 was a challenging year for Dentek due to certain retailer changes at shelf, but we feel good about the strategic positioning for the brand and our ability to execute a long-term brand-building strategy. Acquired in 2016, the Dentek brand has many opportunities to win with consumers and retailers. Dentek is a leader in the fragmented peg section of the store, competing across dental guards, floss picks, interdental brushes, oral care accessories, and pain relief subsections of the oral care aisle. We collaborate with retail partners by educating them around the growing oral healthcare category and how to best organize a hard to shop section of the store. We then work with our partners to help develop an optimal mix of products across the category as well as merchandising initiatives with the end goal of driving incremental peg section sales and increased household penetration. One example of this is Dentek Dental Guards. Dental Guards, which represents about a quarter of Dentek's product mix, is a highly differentiated category where our brand enables retailers to add a high dollar and margin item to a growing category in their oral care aisle. In this space, we are executing our time-tested brand-building efforts to help increase household penetration and drive market share gains for Dentec. We've differentiated our brand by launching a lightweight Dentec Ultimate Guard and supported this effort through various brand-building efforts, including memorable TV campaigns that emphasize the damage that can be caused by nighttime teeth grinding. The strategy is working. We've outperformed the overall dental guard category by a factor of four year to date, and we continue to expand our number one positioning in this space. By executing these types of efforts across the Dentec portfolio, we feel good about the strategic position for the brand and our ability to drive growth over time. Before I turn the call over to Chris, I'd like to comment on our upcoming transition around logistics mentioned in today's press release. Following the divestiture of our household cleaning business, we performed an extensive analysis to determine the most optimal location and partner for our nationwide third-party distribution center to best service our retail partners. The result of this review was a decision to transition to a new third-party logistics provider and warehouse near Indianapolis with an expected completion in the spring of next year. We will provide additional information and updates during the year as we make progress on the transition. Chris will provide additional details on the financial aspects of this change as well. With that, I'll turn it over to Chris to walk through Q1 financials in greater detail.