Prestige Consumer Healthcare Inc.

Thank you for standing by, and welcome to the Q2 2022 Prestige Consumer Healthcare, Inc. Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question at that time, please press star then 1 on your touchstone telephone. As a reminder, today's conference call is being recorded. I would now turn the conference over to your host, Mr. Phil Terpolilli, Vice President of Investor Relations and Treasury. Please go ahead, sir.

Thanks, operator, and thank you to everyone who's joined today. On the call with me are Ron Lombardi, our chairman, president, and CEO, and Christine Sacco, our CFO. On today's call, we'll review the second quarter fiscal 22 results, provide an updated full year outlook, and then take questions from analysts. There's a slide presentation which accompanies today's call can be accessed by visiting PrestigeConsumerHealthcare.com, clicking on the investors link, and then on today's webcast and presentations. Please remember some of the information contained in the presentation today includes non-GAAP financial measures. Reconciliations to the nearest GAAP 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 are detailed in the complete safe harbor 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, business environment uncertainty remains heightened due to COVID-19, and continues to have numerous potential impacts. This means the results could change at any time, and the forecast impact of risk is the best estimate based on the information available as of today's date. Additional information concerning risk factors, 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 begin on slide five. We are very pleased with our Q2 results, which were a continuation of the impressive first quarter performance we discussed in August. We delivered record revenues of $276 million in the quarter, up 16% versus the prior year, driven by several factors. First, our base business performed well across the majority of our portfolio, aided by strong consumer behaviors and our time-tested brand building. Our organic top-line performance and consumption trends of about 11 percent reflects this strength. The rapid growth occurred across nearly all channels and was also driven by continued market share wins in many of our categories year to date. I'll discuss both of these factors in a bit more detail shortly. Lastly, the July 1st acquisition of Acorn's consumer brands generated $12.4 million in revenue and is off to a solid start. We have fully integrated the business into our processes and remain confident in Theratier's long-term growth outlook and fit alongside ClearEyes. This top-line performance translated into superior earnings and free cash flow. We generated $1.02 of adjusted EPS and adjusted free cash flow of $62 million, both up double digits versus the prior year. Our strong free cash flow and our solid Q2 and year-to-date performance continues to enable our disciplined capital allocation strategy. Even with the acquisition of Acorn back on July 1st, we finished the quarter at 4.1 times net leverage and anticipate being below four times at fiscal year end, further enabling future capital allocation optionality. Let's turn to page six for an update around the evolving consumer habits and other macro changes resulting from the pandemic. Since last year, we have witnessed a rapidly evolving consumer environment as consumer habits and other various effects of the COVID-19 pandemic continue to impact all businesses. Fortunately, for our business, many of our attributes, having numerous leading brands, a diverse supply chain, and being an agile organization enables us to succeed in this dynamic environment. In Q2, we experienced some continued trends from Q1 and began to experience a few new trends. These fall under three major themes, and we are well positioned to manage each of them successfully. First, consumer habits around certain categories previously impacted by COVID-19 continue to normalize. we experienced a continuation of the sharp rebound in travel trends that began in Q1 and benefited our Dramamine business. In Q2, the rebound extended into additional categories as well, including higher cough cold illnesses, as well as a modest uptick in head lice. Our leading brands in each of these categories, which include Dramamine, Chloriseptic, Lutens, Hydrolyte, and NYX, are benefiting from this rebound with consumption up double digits. Second, higher consumer demand trends further fueled our Q2 performance. Both consumers and retailers have shifted their purchasing and order rates broadly in anticipation of supply concerns being noted in the media. With our leading market positions, we are top of mind for our consumers as they shop and therefore poised to benefit from this near-term boost. For example, Increased vaccine foot traffic drove strong consumption trends in the drug channel where we have a broad distribution in market share. This also generated higher ordering in this channel to support the increased takeaway at shelf and broad concerns of potential supply risks as retailers do not want to be without leading brands such as ours. Third, similar to others, we are watching and evaluating certain supply chain constraints and elevated costs occurring in the global marketplace. Chris will review the gross margin impact later, but it's important to note we are well positioned to navigate any impacts. Our asset-light manufacturing strategy and leading brand portfolio give us the ability to react quickly to challenges in the marketplace through both ongoing cost savings efforts and price actions as necessary. Now, let's turn to slide seven for a mid-year update on our brand building strategy. For our fiscal year to date, market share for our brand portfolio has outpaced category growth. On the left side of the page are three categories where we've had particularly strong performance in the first six months of fiscal 22. In GI, our strong performance is supported by the travel rebound I just discussed. but we also continue to experience solid long-term growth for both Gaviscon in Canada and fleet. In skin, we continue to experience long-term market share growth in compound W as consumers seek our leading brand for work treatment. This success is driven by utilizing the full spectrum of brand building efforts shown on the right side of the page that continue to deliver a superior consumer experience. And in eye care, ClearEyes continues to expand its market-leading position in redness relief. ClearEyes remains a leader in the category, with year-to-date success helped by brand marketing, innovation, and a recovery in the convenience channel for our ClearEyes Pocket Pal product. We look forward to executing many of these same strategies with the Theratiers brand in coming quarters. We are proud of our share performance year-to-date with the vast majority of our largest brands and categories growing market share. This result is a testament to our portfolio positioning and long-term strategy. Now, let's turn to slide eight for an update on e-commerce. When we began our prior fiscal year, we saw a rapid acceleration in our e-commerce business, which effectively doubled overnight to over 10% of sales. Impressively, our sales continue to grow double digits in this channel despite the year-ago comparison. This is driven by our early and continued investments in e-commerce that today enables our success as a leader in consumer healthcare e-commerce across all of our online retail partners. We continue to win with consumers across e-commerce through our investments in online content and digital advertising. we used engaging, targeted, and timely messaging with the end goal of expanding our share with consumers. Shown on the right of the page are a few examples. For CompoundW, its treatment finder and engaging web content help consumers find the right skin product solution for them. Meanwhile, online campaigns behind other brands, such as Dentek, help deepen connections with consumers. For the Dentec oral care enthusiasts, our online campaigns are a reminder around the broad assortment of offerings used as a part of their daily oral care routine. These are two examples of the many efforts we continue to engage in and that position us for further e-commerce growth. Now I'll turn it over to Chris to walk through the financials.