Prestige Consumer Healthcare, Inc . PBH came out with second-quarter fiscal 2019 results, wherein earnings and revenues beat the Zacks Consensus Estimate. Organic revenues increased year over year, backed by robust consumption trends. Further, management retained its view for fiscal 2019.
Notably, this marks the company's third consecutive earnings beat. The strong bottom-line history, combined with continued growth in consumption trends, seems to have bolstered investors optimism, which is evident from the stocks rise of roughly 4% yesterday. Such upsides have also aided shares of this Zacks Rank #2 (Buy) company to surge 28.2% in the past six months compared with the industry 's 15.3% growth.
That said, lets delve into the quarterly performance.
Q1 in Details
The company posted adjusted earnings of 65 cents per share, up 7% from the year-ago quarter's figure. Bottom line gained from strong financial profile that aided to leverage capabilities. Also, the figure surpassed the Zacks Consensus Estimate of 63 cents.
Total revenues of $239.4 million beat the Zacks Consensus Estimate of $238.6 million. The top line dropped 7.2% year over year. Nevertheless, organic revenues increased 1.6%, driven by strong consumption trends in several brands that were partially offset by change in accounting policies and packaging expenses of Goody's and BC brands.
Gross profit came in at $137.5 million, reflecting a decline of 4.6% from the prior-year quarter's figure. Also, adjusted gross margin expanded 160 basis points (bps) to 57.4% in the fiscal second quarter, primarily driven by the divestiture of Household Cleaning segment, and progress in minimizing freight and warehousing costs.
Moreover, adjusted EBITDA was $80.2 million, down 7.3% year over year, owing to the household divestiture. Adjusted EBITDA margin remained flat at 33.5%.
Prestige Brand Holdings, Inc. Price, Consensus and EPS Surprise
Prestige Brand Holdings, Inc. Price, Consensus and EPS Surprise | Prestige Brand Holdings, Inc. Quote Segment Performance
Following the divestiture of Household Cleaning segment in Jul 2, 2018, Prestige Consumer is currently operating two segments:
Revenues in the North American OTC Healthcare segment amounted $216 million, up 0.3% year over year. The segment gained from consumption growth across core OTC brands, partially offset by change in revenue recognition accounting policies, and the launch of new packaging for BC and Goody's brands.
Revenues in the International OTC Healthcare segment totaled $23.4 million, up 11.7% from the year-ago quarter. The rise was attributable to consumption growth along with normalization of differences in shipments and distributor orders.
The company exited the quarter under review with cash and cash equivalents of $36.9 million, net long-term debt of $1,895.8 million and shareholders' equity of $1,193.2 million. Net cash provided by operating activities in the quarter was $39.3 million.
The company retained its fiscal 2019 outlook. Management continues to expect revenues of $985-$995 million. Further, adjusted earnings per share are still projected to be $2.84-$2.92.
Additionally, Prestige Consumer is on track with its three core strategies. It is striving to maintain a strong balance sheet, cost-effective capital allocation and returning high value to shareholders.
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