Prestige Consumer Healthcare Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Prestige Consumer Healthcare Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference to your speaker today, Phil Terpolilli, Director of Investor Relations. Please go ahead, sir.

Thank you, operator, and good morning to everyone who has joined 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 results of fiscal 2020 third quarter, discuss the full year outlook, and then take questions from analysts. There is a slide presentation which accompanies today's call and 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 our call today, 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 which accompanies the call. Further information concerning risk factors and cautionary statements are available in our most recent SEC filings and most recent company 10-K. I'll now hand it over to CEO Ron Lombardi to walk through the highlights of the fiscal third quarter. Ron?

Thanks, Phil, and good morning, everyone. We were pleased with Q3 results which are outlined on slide five. Starting with the top line, Revenue of approximately $242 million in Q3 was up versus the prior year on an organic basis and was slightly ahead of our expectations offered back in October. Importantly, consumption for our portfolio is up approximately 2% in Q3 compared to the prior year. We continue to expect consumption trends for the full year to be around this level, attributable to the ongoing success of our long-term brand-building investments. Net sales benefited from strong results in our international segment, which experienced growth of approximately 12% after adjusting for FX. This strong Q3 performance was led by consumption gains in Australia as the country headed into summer. We'll discuss our strong year-to-date international performance and positioning in more detail later on. In North America, Net sales were led by continued strength in our GI and skin care categories. This strength was offset by ongoing retailer inventory reductions, changes at shelf in oral care and women's health previously discussed, and weakness in sore throat incident levels impacting our cough cold portfolio. Total company adjusted gross margin in the quarter came in at 58%, 30 basis points ahead of the prior year, and is consistent with year-to-date performance. Adjusted gross margin excludes costs related to our transition to a new third-party logistics provider that Chris will provide an update on later. Adjusted EPS of 81 cents was up approximately 11 percent versus the prior year. This strong performance was driven by our leading and consistent financial profile, which drove free cash flow in Q3 of $56 million. Our cash flow continues to benefit from our industry-leading EBITDA margins, efficient business model, and low cash tax rate. We use the cash flow in Q3 to reduce debt, which enables future capital allocation optionality that will continue to drive value for our shareholders. Now, let's turn to slide six to review our year-to-date highlights. Our revenue of $712 million through nine months was essentially flat organically versus the prior year, as strong consumption growth of approximately 2% was largely offset by anticipated inventory reductions occurring largely in the drug channel. We continue to feel good with the positioning of our leading brands and our ability to create value in this environment. Year-to-date adjusted EPS of $2.14 was up 4% versus a year ago, with the prior year including approximately 4 cents of contribution from the divested household cleaning business. EPS benefited from a stable financial profile that also resulted in $155 million of free cash flow generated year-to-date. This cash flow enabled about $100 million in debt reduction and $50 million in opportunistic share repurchases year-to-date. In summary, we feel good about the year-to-date performance of our business and the execution of our proven three-pillar strategy, which has enabled us to raise our EPS outlook for the full year. Let's now turn to slide seven and discuss one of the drivers of the solid year-to-date results, our international segment. As you can see on the left side of the slide, our international business makes up about 10% of our sales. It's highly concentrated with over 50% of international sales in Australia, primarily from three well-positioned brands that we have there. Hydrolyte, Seth Nasal Sprays, and Murine Eye Care. This all falls under the Care Farmer banner, which has experienced impressive growth since we acquired it in 2013. Our international business also includes products sold throughout Southeast Asia and certain other geographies, including our largest brand, Summer's Eve, as well as Fleet and others. We also have a small business in Europe, which is concentrated in the U.K. under the Dentek, Mirene, and Ultra chloroseptic brands. Each of these markets has a scalable infrastructure that can support added brands over time, as we saw with the Hydrolyte acquisition by CARE. Over the long term, we would expect our total international business to grow at 5% or more, and in fiscal 20, we're having a great year that is well above this target. Similar to North America, we are winning by focusing on leading and well-positioned brands that can grow both the category and our share over time. Let's review our fastest growing international brand on slide eight, Hydrolyte. Hydrolyte is our largest brand in Australia and a big driver to recent segment growth. It's an excellent example of our brand-building strategy that drives long-term success. The Hydrolyte brand is synonymous with oral hydration for Australians, representing over 90% of the category. Even with this number one market share, Hydrolyte continues to drive total category growth with solid execution of our long-term strategy Growing at sales in fiscal 20 year-to-date in excess of 20%. We've redefined oral hydration over the last five years by extending usage occasions through targeted messaging, expanding from vomiting and diarrhea into heat exhaustion, sports and exercise, and many other occasions. We've backed up this effort with various marketing tactics, including expanding from traditional TV media to digital ad spends ongoing new product development, and expanded distribution. Going forward, we see continued runway for growth of Hydrolyte by continuing to increase household penetration and driving awareness for the brand. Finally, we are constantly looking for ways to give back to our consumers and the communities we serve, and we encourage our employees to do the same. With that, we'd like to express our concerns for those affected by the bushfires that have have impacted large parts of Australia. It's a tragedy for the communities across the country, and we've been engaged with local relief services to help with donations and other efforts. I'd like to now turn it over to Chris to walk through detailed Q3 financials.