Prestige Consumer Healthcare Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Q4 2020 Prestige Consumer Healthcare Incorporated 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 assistance, please press star 0. I would now like to hand the conference over to your speaker today, Director of Investor Relations, Phil Terpolilli. Sir, please go ahead.

Thanks, Operator, and thank you to everyone that has joined us today. I speak for all of us when I say we hope you and those close to you are safe and healthy. On the call today are Ron Lombardi, our Chairman, President, and CEO, and Chris Sacco, our CFO. On today's call, we'll begin with some topical remarks given the current crisis, review the results of the fourth quarter and fiscal year 20, discuss our approach and initial thoughts on fiscal 21, and then take questions from analysts. There is 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 presentations. Some of the information contained in the presentation today include non-GAAP financial measures. Reconciliations between adjusted and reported financial measures are included in today's earnings release and slide presentation. On today's call, management will make forward-looking statements around risks and uncertainties, which are detailed in a complete safe harbor disclosure on page two of the slide presentation accompanying the call. These are important to review and contemplate. As everyone on the call today is well aware, The business environment has changed dramatically over the last quarter. Unfortunately, there's a lot we don't know in the short term about the duration and impact of the COVID-19 pandemic. These items include an uncertain shutdown timeframe for many areas of our economy, ongoing changes to consumer purchasing habits, the potential for a disrupted supply chain, rising unemployment, and many other economic factors. This means results could change at any time, and the forecasted impact of COVID-19 on the company's business results and outlook is the best estimate based on the info available as of today's date. Additional 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 our CEO, Ron Lombardi. Ron?

Thanks, Phil. Let's start on slide four. Without question, the COVID-19 pandemic is at the top of mind for everyone, and as Phil outlined, there are numerous uncertainties. We have a proven model that we believe is capable of managing through this extraordinary period and along with our proven three pillar strategy that continues to position us well for whatever challenges we find in fiscal 21. We are an agile and capable organization which has allowed us to quickly adjust to the change experienced so far. On slide four, we have some highlights which are underpinned by our strategy and business attributes. We are putting the health of our employees, partner employees, and communities first. We've adapted effective work from home plans and have enhanced robust safety protocols across our Lynchburg facility, which continues to operate at near normal output levels. The comprehensive strategy we've put in place on the first point, as well as the benefit of our business model, has enabled us to establish strong business continuity plans, which I'll discuss in detail later. Next, investing for growth. We are protecting our brands, and our marketing plans continue to advance our brand building playbook. The environment is unique, but we have the benefit of a leading, diversified, and widely distributed brand portfolio that gives us the ability to adapt quickly. We'll talk about this in more detail later. Last on the page is a reminder of our disciplined capital strategy. We continue to benefit from operating model and disciplined capital strategy with an industry-leading financial profile that will enable us to focus on debt reduction and liquidity while continuing to invest in our brands for the long term. The sum of this is that the proactive approach we are taking positions us well to adapt to marketplace changes in the face of uncertainty. So with that, I'll turn it over to Chris to review Q4 and Fiscal 20.

Thanks, Ron. I'll go over Q4 results, give a brief recap on our full year Fiscal 20, and review our cash flow and liquidity profile. As a reminder, the information in today's presentation includes adjusted results that are reconciled to the closest gap measure in our earnings release. Flipping to slide six, you can see the highlights of our fourth quarter. Q4 was a strong finish to the year, including revenue up 4.6% on an organic basis. This performance was led by continued growth in our international segment and our growing e-commerce business, as well as a significant lift from consumer spending in March as we believe consumers stocked up as a result of COVID-19. During the fourth quarter, we continued to benefit from our ongoing investments and focus on e-commerce. Our e-com business grew over 60% in the quarter, as we benefited from consumers shifting to online purchasing. Notably, our consumption growth was about percent, driven by these factors for the quarter, after previously trending at about 2% prior to March, which was consistent with our expectations for the year. Adjusted gross margin of 59.4% was up 200 basis points versus the prior year, primarily as a result of higher volume and geographic mix. For Q1, we expect margins similar to prior quarters of about 58% as we expect a more normalized mix. Adjustment of 82 cents per share was also up meaningfully, increasing approximately 14% versus the prior year as we benefited from higher sales growth, gross margin favorability, and a reduction in interest expense and share count. Free cash flow was $52.5 million in the quarter, and continue to benefit from our industry-leading EBITDA margins, efficient capital spending, and low cash tax rates. We continue to adhere to a disciplined capital allocation this past generation, which I'll discuss a bit later. Now let's turn to slide seven and discuss full-year results. For the full-year fiscal 20, our organic net revenues increased 1.3% versus the prior year, which excludes the impact of foreign currency, and the divestiture of our household cleaning segment in the prior year. Similar to Q4, our full year benefited from strong international segment growth, which was up over 15% versus the prior year when excluding change. E-commerce also grew rapidly, increasing approximately 50% for the full fiscal year and now accounts for approximately 5% of our net sales. Adjusted EBITDA declined slightly versus the prior year, Impacted by the Divestiture of Household Cleaning. As a reminder, we fully lapped the comparison impacts of household cleaning beginning in Q2 of fiscal 20. Adjusted EPS of $2.96 per share increased 0.5%, benefiting from our continued efforts to delever and opportunistically execute share buybacks. Now let's turn to slide 8 to discuss consolidated results in more detail. Full-year fiscal 20 net revenues decreased slightly to $963 million, but as mentioned on the prior slide, increased 1.3% on an organic basis after excluding foreign currency and the divestiture of household cleaning. For the full year, organic growth was affected by the effect of retailer inventory reductions, primarily in the drug channel. Adjusted gross margin, which excludes transition costs associated with our new logistics provider, with 58.3% for the full year, up 130 basis points versus the prior year, primarily driven by mix associated with strong international growth and the divestiture of household cleaning. In terms of AMP, we came in at 16% of revenue in Q4 and 15.3% for the fiscal year. Consistent with our strategy, we reinvested gross margin gains by opportunistically investing AMP behind our core brand portfolio in Q4. For Q1, we would expect A&P to be below the fiscal 20% of sales as marketing plans are being adjusted in response to the current situation, resulting in A&P spending moving to future quarters. Our G&A spending was just over 9% for the year, in dollars year over year. In Q1, we would expect G&A to be about $22 million. We reported adjusting earnings per share in fiscal 20 of $2.96, representing an increase of 6.5% versus the prior year, primarily driven by the effects of debt paydown and share repurchases. We expect to continue to reduce debt outstanding, and as a result, we anticipate approximately $22 million of interest expense in Q1. Now let's turn to slide 9 to discuss our cash flow and financial positions. In Q4, we generated $52.5 million in adjusted free cash flow, which resulted in a full year adjusted free cash flow of $206.8 million. This represents 2% growth versus the prior year, despite the sale of the household cleaning business. We continue to maintain industry-leading free cash flow, with fiscal 20 free cash flow conversion coming in at 36%. At March 31st, We finished the year with approximately $1.6 billion in net debt and a leverage ratio of 4.7 times. During the year, we continued our focus on debt reduction and reduced net debt by $135 million. We also repurchased approximately $57 million in shares opportunistically during the year, enabled by our strong cash generation. Although we continue to have repurization capacity, We have suspended these efforts in favor of focusing on liquidity in the current environment. In addition, we proactively built our liquidity position to strengthen our balance sheet, ending the year with approximately $95 million in cash. Moving forward, given the current operating environment, we intend to maintain a heightened level of cash on hand as a precautionary measure. As we look forward, we feel good about our capital positioning reasons. We have leading and consistent cash flows and will continue to be disciplined around capital deployment with continued priority around debt pay down. Second, we issued new senior notes in December 2019, and our earliest debt maturity is now January 2024. And third, we have material cushioned to our debt covenants, which are detailed in our 10-K. With that, I'll turn it back to Ron.

Thanks, Chris. Into slide 11. to recap the year. Fiscal 20 was a successful year in many ways, owing in large part to the continued execution of our strategy. First, we continued to invest behind our core portfolio, which led to growing categories and market share for many of our leading brands. I'd also like to highlight the success in our international segment, which had a great year as we grew many key brands meaningfully, including... Second, our cash generation and free cash flow conversion remained best in class. As Chris highlighted, we generated $207 million in free cash flow driven by strong EBITDA margins and low cash taxes. Finally, our disciplined capital allocation allowed for multiple areas of investment in fiscal 20. Importantly, we continued to focus on debt reduction, reducing our leverage to within our long targeted range of three and a half to five times. We also used roughly one quarter of our free cash flow to opportunistically repurchase our stock. Even in a challenging environment, we delivered excellent results in fiscal 20 and our strategy leaves us well positioned for future success. This three pillar strategy is highly adaptable and will be our guide as we approach fiscal 21. Turning to slide 12, you can see the ways we expect to do this. We believe our proven three-pillar strategy and the building blocks shown here position us for success as we navigate this pandemic. First, our business continuity plan is robust and critical to executing these strategies that tie back to each of our pillars. We have a diversified leading portfolio that's a key strength in many economic including this one. Our company is nimble and we are able to adapt quickly and refocus efforts around targeted brands and opportunities. We'll share some real-time marketing examples of this shortly. We are also adapting quickly to the changing retail shopping trends and continue our proactive investments in channel opportunities such as e-commerce. And finally, Capital allocation and liquidity is critical in this highly volatile environment. We will remain disciplined capital allocators and true to our company discipline. Let's dive in on each of these in more detail beginning on slide 13. As mentioned earlier, we continue to prioritize putting our employees first through various proactive measures. We have numerous manufacturing partners which are all operating in a similar capacity. We've yet to experience any meaningful supply shortages that would result in out of stock at retail, thanks to the efforts of our operations team and our partners, despite experiencing some reduced capacity from absenteeism and delays in raw material deliveries. We continue to work with our third party suppliers around continuity of supply including prioritizing activity to maintain ample inventory on our leading brands. Efforts include concentrating SKU manufacturing around critical brands and items, finding alternative suppliers as a precaution, and other measures. Fortunately, even with increased demand experienced in March, our inventory remains well positioned as we were able to benefit from the elevated inventory levels We had maintained during our warehouse transition to a new third-party logistics provider, which was completed end of March. Now, let's turn to slide 14. Our number one brands represent over two-thirds of our sales, as you can see on the right-hand side of the slide, and there's a strength in the current environment. These brands often hold a long history with consumers, which we believe positions us for continued demand as consumers focus on their health and hygiene more than ever. With a leading position, they also get to focus on the end-driving category growth rather than fighting for share. This heritage, combined with our long-term brand building and meaningful innovation and new products, continues to differentiate us from other brands and private labels. For example, in fiscal 20, our leading brands continued to drive category growth and a majority of them outperformed private label meaningfully. On the left, UCSF portfolio participates across various categories addressing a broad range of needs. This reach is a strength. This diversity ensures our ability to opportunistically allocate resources where consumer insights dictate drive brand building in both the short term and long term. This is especially true now as consumer purchase patterns and trends affected by the pandemic are shifting rapidly. Turn to slide 15 to expand on this. With the market changing, we are seeing consumers change not only what they buy but where they shop due to shelter in place orders. This is a unique attribute of the current pandemic which makes our current environment different from past recessions. Our wide-ranging portfolio is impacted in many different ways by this. On the right end of the opportunity spectrum, consumers are showing interest for pain, cough and cold treatments, along with feminine care products. Other products shown in the middle are fairly consistent with recent trends, and we expect them to be unaffected by current changes in daily living. On the left, we have brands that are now expected to see lower usage rates as a result of the pandemic as consumers reduced time outdoors and then vacationing. So how will we capitalize opportunities? The focus is to allocate greater investments to high opportunity brands. Investments will be both by brand and channel as we'll discuss on the next two slides. While NYX and Dramamine are being affected by the current environment, our investments will strike a balance between the current headwinds being faced by these brands, and with long-term brand-building efforts and potential. So let's turn to slide 16 for three examples of this marketing approach. Here, you can see marketing efforts on the left include reaching consumers at home through digital and addressable TV efforts, touting the ability to have monostats shipped to your door rapidly. A key brand building strategy is to move share from prescription treatments over time, and these marketing efforts are timely to support this objective. Next, in the middle of the slide, is Summer's Eve. With consumers staying at home, refocus marketing efforts around home workouts and highlight on our recently launched Summer's Eve active product. Last, on the right of the slide is Clear Eyes. We've had several new messages from the brand since the pandemic began. The most important to us is a digital effort that launched in late April saluting all the hospital workers on the frontline fighting COVID-19. We launched this tribute by donating 100,000 bottles of clear to hard-hit hospitals in New York City. Each of these are real-time examples of our nimble marketing approach and ability. Let's turn to slide 17 to discuss changes in retail. In addition to consumers shifting brand focus as a result of the pandemic, consumers are also changing their preferences in where they are shopping. Beginning in March, consumer interest in e-commerce ordering and omni-channel click-and-shopping accelerated sharply as consumers looked to minimize their person-to-person contact during the pandemic. As an example, in the month of March alone, we saw an increase of 186% and new visitors browsing prestige products in certain e-commerce retailers. This resulted in our impressive fourth quarter e-commerce sales growth that Chris highlighted earlier. Moving ahead, we could see this channel representing as 8% or more of our total sales in fiscal 21. So just like with our brands, we are being nimble with our channel investments. Our examples shown here are a reminder about quick and easy shipping to a home for Monistat, keyword advertising for BC, and combo pack kits to reduce frequency of purchases. Over the last several years, we've been proactively investing in the emerging e-channel, investing behind digital content and expanding distribution to ensure that our trusted brands are easily available for purchase as customers research and shop for the healthcare needs in new ways. In summary, we're rapidly adapting retail and brand plans to an evolving environment and a diversified and leading portfolio of brands gives us a great starting point. Now, let's turn to slide 18. In fiscal 20, our brand building efforts continued to deliver strong financial results. We finished the year with over 205 million in cash flow and the mid-30s EBITDA margin. As you can see on the chart at the left, we reinvested gross margin gains into A&P consistent with our long-term strategy. With this strong strategic positioning, we are then left with options of how to best allocate this capital to enhance value. Going into fiscal 21, this strategy remains consistent and disciplined. First and foremost, We will continue to invest behind our brands, which are aimed at reinforcing long-term connections with consumers regardless of the economic environment. Second, we continue to focus on deleveraging. We continually evaluate the operating environment and how to best manage our leverage profile at any given time. We have proactively built cash as Chris discussed and also have significant liquidity available due to our capital structure. Number three and four on the page are other capital considerations which are always contemplated if the first two priorities are satisfied. Although admittedly challenging given the limited economic environment visibility, we will continue to evaluate each of these priorities if they make sense and earn value for our shareholders. Let's wrap up on slide 20 and recap what we've just discussed. We have a time-tested playbook that is set up to navigate this changing and challenging environment. Regardless of the landscape, we always focus on ensuring business continuity and will continue brand building for the long term. This is applicable as we think about fiscal 21, but in a very different way compared to prior. We've talked a lot about uncertainty today, and we're contemplating a number of factors, how long shelter-in-place lasts, various economic impacts of the pandemic, and many others. Accordingly, we are not offering our typical full-year financial outlook, but we do want to offer some insight to our thinking for Q1. In Q1, we are anticipating a reversal of the accelerated consumption trends ex de March. So far this quarter, we are seeing consumption declines as shoppers stay home. Partially offsetting these factors were higher retailer orders in April as retailers replenished their stores following the March spike in consumption. The net effect of all of this is difficult to predict, but as of today, we anticipate Q1 revenues of $220 million or more. We also anticipate EPS of $0.70 or more for Q1 as our proactive expense management and cost timing are expected to more than offset the anticipated revenue decline as compared to the prior year. Meanwhile, we expect to maintain a strong financial profile and continued capital allocation optionality. We anticipate continuing to leverage our financial profile to drive strong free cash flow conversion, and we'll use this cash to fund debt reduction while being mindful of managing liquidity through each quarter. By executing this strategy, we believe we are set up for continued success. With that, I'll open it up for questions.

As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question is from Rupesh Parikh of Oppenheimer.

Your line is open. Thanks for taking my question. I guess just going back to some of the consumer stocking up activities that you saw in Q4, it sounds like it's clearly going to be a headwind in Q1. Do you expect any lingering impacts post Q1?

Good morning, Pesh. It's really hard to predict what's going to happen. Past Q1, we're in the same boat as pretty much everybody else as we try to figure out what will happen in the future. But I think if you go back to what we saw in Q4 and then into the early weeks of Q1, Rupesh, is that we saw a pretty significant spike in consumption. We then saw it tail off as people began to stay home and observe the shelter in space. And then during that time frame, we saw the retailer order pattern in early April as the retailers began to catch up to the spike in consumption.

Okay. Okay, that's helpful. And then just – and this is probably another one that's maybe difficult to answer. So, you know, obviously you guys have had some destocking headwinds in recent years, and now you're also hearing about retailers wanting to keep safety stock. Just any thoughts in terms of, you know, I guess what the impact could be from retailers wanting to carry more safety stock and, you know, if you expect to see inventory destocking headwinds this year?

Hard to predict. In a lot of ways, the retailers are still trying to catch up with all that's happened over the last number of weeks. But if you go back to fiscal 20, over the course of the year, we did see about a two-point disconnect between consumption for us, which was about 2% for the year, and then sell-in, which was about 1%. So actually, I think consumption was in the high twos during the year. Fiscal 20. You know, so far in Q1, we've seen a pretty steady level of dollars of inventory for the retailers, so it's hard to predict what they'll do going forward, Ritesh.

Okay, great. Thank you.

Thank you. Thank you. Our next question comes from Stephanie Wismick-Defries. Your line is open.

Hi, good morning, everyone. Thanks for taking our questions. The first one we wanted to unpack was just the A&P investment. It's certainly been fueled by your gross margin expanding over time. Help us think through how much more opportunity is there in gross margin and, therefore, how much opportunity to continue to advance A&P. And can you talk a little bit about what you're seeing in the channel in terms of private label versus branded? How much are you willing to pee on the table to really defend A&P? Your branded position.

So, Chris, why don't you take the gross margin part of the question and then I'll follow up with the private label question.

Sure. Good morning, Steph. So Q4's gross margin obviously coming in pretty high at 59.4%, right? We talk about it being roughly split between volume and mix. So we are expecting as we move forward to Q1's outlook for that to return to a normalized level. That said, we've always said that to the extent we can realize gross margin savings that we intend to reinvest those back into higher levels of AMP with an objective of maintaining a mid-30s EBITDA margin. So that's exactly what we did in Q4. We spent back against opportunities that we saw under the current environment, and we'll continue to look to do that as we move forward.

So, Steph, in terms of private label, the first I'd want to start is, Fiscal 20 was another very successful year for us in terms of continuing to grow our share and winning against the majority of our competitors, whether they're branded competitors in the categories we compete in or private labels. So that trend continued in Fiscal 20, and it's continued into the early stages of Q1 of Fiscal 21 for us. So even in this highly unusual environment we've seen In March and into April, we continue to do well and are successful in the categories that we compete in. Now, there's been some discussion around private label gaining share during this unique environment. But again, it's really, I think, concentrated in the spaces that strategically we avoid. So the more commoditized spaces like tabulated analgesics or cold medicines or things like where private label has a different position and a different connection with consumers. We come into work every day thinking about differentiating ourselves against any and all competitors, whether it's branded or private label, and do that through our marketing initiatives, through new products and innovation, and that trend we expect to continue going forward.

Okay, that's great. And one final question just on the e-commerce industry. Margin and ANP. Help us think through your go-to-market strategy. Any differences in bricks-and-mortar sales versus e-com sales and how you measure either through dashboards and KPIs or how you think about the return on marketing investment in the dot-com environment?

So in a lot of ways, we approach e-commerce The same way we do with traditional brick and mortars, which is we listen to the consumer, find out how they're thinking about shopping and the kinds of products that they're looking for and the best way to connect with them. And we adapt our marketing and vehicles based on that input. So that's the first part of it. The second is that the financial profile of our online business is pretty consistent with brick and mortar. So although we have different tactics, the overall cost of connecting with consumers is fairly similar for us.

Thank you. Very helpful.

Sure. Thank you, Steph. Thank you. Our next question comes from Joe Altebello of Raymond James. Your question, please.

Hey, guys. Good morning. This is actually Adam on for Joe. I hope you're all staying safe. I was kind of curious if you could maybe quantify the impact. I know it might be difficult just in one queue of that pantry load you alluded to, just looking at the outlook, if we can break it down at all. And then also maybe how has COVID-19 impacted the way you do business in terms of sanitization, social distancing? What kind of things are you doing on that front?

So, Chris, do you want to take the sales question, and then I'll come back and talk about our business continuity plans?

Yes. Hi, Adam. So the way to think about the Q1 outlook, to bridge it for you, is talked about retailer reordering patterns as they catch up after the March consumption increase. That's going to be around 2% to 3% in our estimation. I got about a 1% decline from an FX headwind anticipated. And then, you know, the consumption continuing to trend negative at approximately high single digits. So I think if you walk that math from the 232 in the prior year, You'll get to the down five for the outlook for Q1.

So, Adam, in terms of the impact of COVID-19 in terms of how we do business, so back on March 13th, we actually moved to a work-from-home environment for the vast majority of our office-based employees, and that's working well. In terms of our Lynchburg facility, we've rolled out expanded cleaning procedures. We have social distancing in place where people are keeping six feet or more between each person in the facility. And we've also put up partitions and other physical separators to help keep the workforce safe there. Many of these same procedures have been rolled out by our suppliers. to ensure that we have good continuity of the supply chain.

Thanks, Ron and Chris. I appreciate the commentary. If I could ask one more. I know you guys touched on capital allocation quite a bit. I just wanted to reiterate, given the obvious focus on maintaining cash on the balance sheet and staying conservative, would you say the likelihood of M&A has gone down over the past few months, both in terms of your appetite and the quality of potential targets, or is it something that you would still consider if the opportunity was right?

So, you know, in the near term, without great visibility and to expect, you know, clearly M&A is going to be on the back burner for the near term as we understand what the business environment is going to be like going forward.

Great. Thanks, Ron. Good luck, guys, and stay safe.

Thanks, Evan.

Thank you. Our next question comes from Mitch Pinero of Sturdivant. Your line is open. Mitch? Let's try that again. Okay. Let's try that again, Mitch. Your line is open. Hello? There you go.

Hello, Mitch?

Hi, Mitch. Good morning. Can you hear me?

We can.

Okay, good. I got on a little late. If I am asking a question that you've already talked about, I apologize. But in terms of A&P spending, is there any change to the dollar level in Q1 given the circumstances?

So, Chris, why don't you take this question?

We talked about expecting an A&P spend for Q1 of the prior year as we look to shift dollars into the future, obviously related to COVID-19.

How substantial would that be? Are we talking a couple percentage points, a couple million dollars, or could it be larger? Sure.

I think a couple percentage points, a couple million dollars is more accurate. Remember, we're actually increasing AMP spend in certain areas like in certain products or brands that we think would respond to where it would be an efficient use of our spend. The example we like to use is Dremamine. As folks aren't traveling, we've obviously readjusted our plans from an AMP perspective in the near term and either reallocated those dollars or push them out marketing plans for that brand into the future. So it's all playing into the numbers for Q1, and obviously that's pretty much what we have visibility to or we're offering to today.

You know, I think the important point on A&P spending that's anticipated for Q1 is that, you know, we're in the middle of a pivot period, right? We're looking at our marketing plans. We're figuring out what's best. Thank you. Thank you.

When I look at the gross margin, I know you talked about the gross margin being a combination of mix and volume benefiting your fourth quarter. Given that you're mostly, I guess it's mostly mix given sort of, you know, cost type of, you know, outsourced model. Is that correct? Cliff?

Yeah, Mitch. It's roughly split, actually, between volume and mix. You're right. We do have a variable cost model that we talk about. However, we do have some fixed costs that we can leverage, right? We have our Lynchburg facility. There are some warehousing costs that are largely fixed, so... That contributed on the volume side and geographic mix, you know, international being a large of our sales, but also just the brands in international that are really performing in Hydrolyte and Fess, two of our largest or two largest brands in Australia. Those two brands in particular have gross margins well above the company average, even the international segment margins. So, number of factors that contributed to Q4, but again, we're calling for it to normalize in Q1 as we sit here today.

When do you anticipate filing your CAG?

Likely tomorrow, maybe Monday the latest, but just a couple days from now as they wrap up documentation. Okay.

Thank you very much. Appreciate it.

Thank you, Mitch.

Thank you. Again, to ask a question, please press star 1 on your touchtone telephone. Again, that's star 1 on your touchtone telephone to ask a question. Our next question comes from the line of Anthony Levzinski of Sudoti. Your line is open.

Yes, good morning, and thank you for taking the question. So I may have missed this, but what was e-commerce penetration for the fourth quarter and for fiscal 20?

Chris, do you want to comment?

Yeah, so e-com was up 60% in Q4. It was up 50%, 5-0 for the full year. At the end of the year, it approximated about 5% of our net sales, which is a little bit above what we had been anticipating. I'll be at an interview for.

Got it. Thank you for that. As far as the international segment, you mentioned that some of the revenue increase came from the timing of orders and shipments. Is it possible for you to quantify the impact of the timing shift?

Chris? The reason we say that, Anthony, really is just it's a distributor business. The orders can be a bit lumpy, which is why when you look historically on a comparative basis, you'll see a lot of movement. It's difficult to piece out. Remember that our international business also benefited somewhat in Q4 from the pandemic. There's a lot of moving parts. But generally speaking, we feel very good about our international segment's ability to grow. You know, we talk long-term about wanting to grow that segment 5-plus percent. Obviously, this year, they just had an outstanding year for a number of reasons at over 15% growth on a flat FX basis. And so international has been consistent for us, and we feel good about the long-term growth opportunities for it.

Thank you for that. And then last question for me is you said that you successfully transitioned to your third-party logistics provider. Can you just remind us as to what your expected benefits will be from this new logistics provider and also how should we think about the benefit from a gross margin perspective as well? Thank you.

Hey, Anthony. I'll take that one, Anthony. So The expected benefit, we've talked about a two- to three-year payback period, about $10 million in one-time costs, and you see those stripped out in our fiscal 20. As Ron mentioned earlier, we largely completed this year-end, but the expected timing of the cost savings really doesn't begin to the second half of fiscal 21 as you really get ramped in terms of efficiencies.

Got it. Thank you for that. Best of luck.

Thank you. At this time, I'd like to turn the call over to Ron Lombardi for closing remarks. Sir?

Thank you, Operator. To recap, we are in an unprecedented environment, but believe we are set up for continued success. This is enabled by multiple factors, including our portfolio of leading brands, financial profile, and continued capital allocation optionality. However, the largest enabler of our success is all ease, which I'd like to recognize for their tireless and continued commitment since the pandemic began. So thank you for your continued interest and prestige and we look forward to updating you in the future. Have a good day.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.