Prestige Consumer Healthcare Inc.

Good day and thank you for standing by. Welcome to Prestige Consumer Healthcare Inc. Fourth Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one once again. Please be advised that today's conference is being recorded. And I'd like to hand the conference over to Phil Tebolili, Vice President of Investor Relations, Treasury, and Business Development. Please go ahead.

Thanks, operator, and thank you to everyone who has joined today. On the call with me are Ron Lombardi, our Chairman, President, and CEO, and Christine Sacco, our CFO and COO. On today's call, we're going to review our fiscal 2026 results, discuss our fiscal 2027 and longer-term outlook, and then take questions from analysts. The slide presentation 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. 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 our earnings release and slide presentation. On 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 which accompanies the call. These are important to review and contemplate. Business environment uncertainty remains heightened due to supply chain constraints, high inflation, and geopolitical events. which have numerous potential impacts. This means results could change at any time, and the forecasted impact of risk considerations is a best estimate based on the information available as of today's date. Further information concerning risk factors and cautionary statements are available in our most recent SEC filings and the most recent Company 10-K. Now I'll hand it over to our CEO, Ron Lombardi. Ron?

Thanks, Phil. Let's begin on slide five. we experienced a challenging fourth quarter that fell short of expectations, resulting in full-year revenue declining approximately 4%. A difficult consumer environment persisted into Q4 and was further impacted by global conflict. While these dynamics led to certain shipment disruptions late in the quarter, we expect to return to organic growth in fiscal 27 and are well positioned to manage ongoing macro pressures including inflation, as we have successfully done in the past. In ICARE, we continue to experience near-term volatility driven by our deliberate focus on high-quality production. In Q4, clear-eyed sales were below expectations due to delayed shipments and production shutdowns ahead of line updates. We are actively implementing initiatives to improve production volume and supply consistency, which we believe are essential to supporting our long-term demand outlook. Many aspects of our diverse portfolio of leading brands continue to perform well despite the environment. For example, our GI franchises of Dramamine, Fleet, and Hydrolyte had solid success with all brands growing in fiscal 26. For our women's health category, Summer's Eve had a year of stabilization and continues to be positioned for growth, while Monistat held share in VAF despite the category declining significantly over the past three years. Moving down to P&L, adjusted gross margin was in line with the prior year, while adjusted EPS of $4.38 was down versus the prior year, largely tracking the sales change. Free cash flow was approximately $246 million for fiscal 26, up slightly versus the prior year, and in line with the outlook we gave at the beginning of the year. This durable and resilient free cash flow profile allowed us to repurchase shares in fiscal 26, acquire our manufacturer, Pillar 5, to enhance our long-term iCare output capabilities, and bill cash in advance of the pending Breathe Right and Lacorium acquisitions. As we'll touch on later, this disciplined capital allocation strategy continues to enhance shareholder value and positions us for a robust multi-year outlook. Let's turn to page six and review our strategy and our tactics that have delivered value over a longer horizon. Despite the challenging fiscal 26, our business model's three-pillar strategy has a history of delivering value. First, we use our proven marketing strategy to leverage our leading portfolio of brands. Using consumer insights, we drive effective marketing, channel development, and innovation that underpin our success. The business model we operate leverages our leading financial profile to enable robust free cash flow. And third, the model uses the first two points to enable strategic capital allocation optionality that further amplify shareholder returns. Our ability to use cash flows efficiently through disciplined capital deployment creates incremental value. This includes M&A, like the Breathe Right and Lacorium Health transactions. Executing these pillars has created value over the last five years with a compounded annual growth rate of about 3% for revenues and free cash flow and adjusted EPS of approximately 6%. These results include the volatile fiscal 26 just discussed. Let's turn to slide 7 for a detailed update on ClearEyes and our iCare supply chain. In fiscal 26, we executed actions that supported our long-term strategic objective of best positioning our supply chain to support our iCare franchise's long-term sales This included the acquisition of Pillar 5 in December, which gave us the opportunity to take direct control over this important element of our supply chain. Just over a quarter in, we've made meaningful progress to the benefits of having a dedicated aseptic eye care facility. For example, Pillar 5 recently began producing product on a new high-speed line, which we have plans for further volume output from during fiscal 27. Importantly, production is supported by our rigorous focus on QPOT, or quality product on time, that underpins our operating model. To that point, nearly all of our eye care supply chain has had recent regulatory visits, which helps reinforce this approach. For fiscal 27, we expect ClearEyes to grow in the year as we continue to ramp production This includes a meaningful increase in production, but entirely in the back half of the year. So in summary, our leading eye care brands are positioned for long-term growth in the attractive and growing eye care market. The investments we are making behind capabilities in eye care is a long-term, multi-year process, but puts us on a path to returning to historic sales levels over the next few years. And we expect that growth to begin in fiscal 27. So with that, let's turn to the next section and review a few key areas of how we drive base growth in more detail. As we've discussed in the past, our proven brand building playbook starts with consumer insights. We seek ways to solve unique consumer needs and leverage our wide-ranging brand building capabilities to drive long-term growth. Three of the major ways this manifests itself are, first, using marketing to establish consumer connection. Second, launching relevant innovation that solves unmet consumer needs and being widely distributed and available where consumers are shopping. An example of this is our GI franchise, where we've continued to experience long-term success in our fleet and Dramamine brands. As shown on the left side of the page, we leverage wide-ranging tactics to expand our category reach and relevance. We continue to lead in the motion sickness category with engaging motion sickness content like our iconic Ditch the Drama campaign and various travel sweepstakes. We've continued to accelerate our penetration into the nausea category, entering pediatric nausea last year and adding new form factors to help consumers solve their nausea needs on the go. And we further broadened our relevance by using digital tactics and healthcare practitioner outreach to remind GLP-1 users the benefits of fleet and Dramamine and treating side effects. These tactics continue to prove out in the numbers. In Fleet, shown on the right side of the page, we are driving category growth and have expanded our 50 plus percent market share. This is due to proven marketing tactics as well as innovation, like the recent launch of Fleet Mini Animas.