Prestige Brands Holdings Inc. (PBH)
F3Q09 Earnings Call
February 5, 2009; 8:30 am ET
Mark Pettie - Chairman, Chief Executive Officer
Peter Anderson - Chief Financial Officer
Chuck Jolly - General Counsel
Dean Siegal - Director of Investor Relations
Bill Chappell - Suntrust Robinson Humphrey
Olivia Tong - Merrill Lynch
Joe Altobello - Oppenheimer
Reza Vahabzadeh - Barclays Capital
Jon Andersen - William Blair
Previous Statements by PBH
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I’d now like to turn the presentation over to your host for today’s call, Mr. Dean Siegal, Director of Investor Relations. Please proceed.
Good morning. Welcome to Prestige Brands fiscal 2009 third quarter conference call. During this call statements may be made by management of their beliefs and expectations as to the Company’s future operating results. Statements of management’s expectations of what might occur with respect to future operating results are what is known as forward-looking statements.
All forward-looking statements involve risks and uncertainties, which in many cases are beyond the control of the company and may cause actual results to differ materially from management’s expectations. Additional information concerning the factors that might cause actual results to differ from management’s expectations is contained in the Company’s annual and quarterly reports that it files with the U.S Securities and Exchange Commission.
Now I’d like to introduce Mark Pettie, Chairman and CEO.
Thank you, Dean and welcome to all of you joining us on the call. In addition to Dean, with me is Peter Anderson, Prestige’s Chief Financial Officer and also joining us today is Chuck Jolly, our General Counsel.
I’ll begin today’s call with a brief overview of our third quarter results. Pete will then review the full financials for the quarter in more detail. I’ll follow that with highlights of our segment performance and a look ahead. We’ll then open the call for questions.
So getting underway, our reported total revenues for the third quarter were $80.3 million, $100,000 above last year. As indicated in our press release, this slight increase in revenues for the quarter is in part attributable to the launch of our breakthrough innovation products in the allergy category, Chloraseptic Allergen Block and Little Remedies, Little Allergies.
In addition, we saw sales increases on several other brands, most notably our base Chloraseptic and Little Remedies lines and our Dermoplast, New-Skin and Cutex franchises. Partially offsetting the strong OTC performers was our Murine and Ear business. We have now fully lap last year’s Murine and Earigate introduction and brand building period and consumption has declined on this unique ear wax prevention product.
While we strongly believe that prevailing economic conditions are also having some effect on consumption of Earigate. We are aggressively working to understand what other factors maybe suppressing takeaway and we will be developing remediation plan with people urgency.
Wart care revenues declined 17% in Q3 reflective of the continuing impact of the price decline taking in the cryogenic segment entering this fiscal year. The performance is inline with our expectation for this business, since we clear the pricing transition period that occurred in Q1 and early Q2.
Lastly, Clear Eyes revenues were half versus a year ago also principally due to changes in promotion program timing. Importantly underlying consumption for this largest of our OTC brands remained quite strong in Q3 of plus 8% reflecting the impact of both our March pricing action and underlying unit growth.
In addition, we have a new and powerfully differentiating claim that we are currently introducing on our packaging and through our radio advertising. Specifically, Clear Eyes is the first brand of eye care products to offer up to eight hours of soothing relief across every item in our line.
This tangible indication of the duration of relief provided by every Clear Eyes product is a strong purchase motivator with category consumers that affectively distinguishes us from the competitor set and we look forward to its role and continuing Clear Eyes growth momentum.
Turning to our household products business, revenues were of 6% in Q3. After two quarters of strong growth Comet our largest business leveled-off to essentially flat year-on-year revenues. This is primarily the result of fully lapping last years successful introduction of Comet Mildew Spray Gel combined with increased competitive activity in the bathroom spray category.
As we previously mentioned, household products is the segment where we are seeing the most pronounced channel shifting by consumers and then those mass and dollar accounts we can measure Comet is doing well with consumption up over 5%.
Our Spic and Span and Chore Boy businesses declined during the quarter, leading to the overall decline in household performance. Spic and Span softness reflects the challenging competitive environment partially offset by modest category growth as consumers look to consolidate their household cleaner purchases into fewer more multi purpose products.
The Chore Boy decline is principally centered in the wholesaler class in trade. This represents the large piece of Chore Boy Copper Scrubber business and flows to consumers via unique unmeasured distribution channel such as [inaudible] and small fee stores. We are actively evaluating option to stabilize this important piece of the Chore Boy business in these difficult times.
Finally on the domestic front, personal care revenues were down 10%, with modest growth in the Cutex business offset by anticipated declines in our shampoo brands, primarily Denorex.