Prestige Brands Holdings, Inc. (NYSE:PBH) Q4 2017 Earnings Conference Call - Final Transcript

May 11, 2017 • 08:30 am ET

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Prestige Brands Holdings, Inc. (NYSE:PBH) Q4 2017 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Good day, ladies and gentlemen, and welcome to the Prestige Brands Holdings Q4 2017 Earnings Conference Call.

At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, today's conference call is being recorded.

I would now like to turn the conference over to Phil Terpolilli, Director of Investor Relations. Please go ahead.

Executive
Phil Terpolilli

Thank you, operator, and good morning to everyone on the phone. Joining me on the call today are Ron Lombardi, our CEO; and Chris Sacco, our CFO.

As a reminder, we have a slide presentation which accompanies this call. It can be accessed by visiting prestigebrands.com, clicking on the Investor link and then on today's webcast and presentation.

Remember today that some of the information contained in this presentation includes adjusted non-GAAP financial measures. Reconciliation between adjusted and reported financial measures are included in today's earnings release.

(Forward Looking Cautionary Statements)

I'd now like to turn the call over to Ron Lombardi, President and CEO.

Executive
Ron Lombardi

Thanks, Phil, and good morning, everyone. On today's call, we'll cover the highlights of our fourth quarter and full-year performance, review the financial results and finish with our fiscal 2018 outlook. At the end, as the operator mentioned, we'll open up the call to questions.

With that, let's begin on Page 5 of our earnings presentation. In total, we are pleased with our solid Q4 and full-year results, which included the successful closure of the Fleet acquisition in late January and rapid integration of the business, along with our solid financial results.

Highlights for the quarter include a net sales increase of nearly 16% to approximately $241 million in the fourth quarter, driven by growth across our portfolio.

The results included organic revenue growth of 1.1% versus a difficult comparison a year earlier while our Invest for Growth portion of the portfolio grew nearly 2% versus last year. We also experienced strong consumption gains in our Care portfolio, resulting in sales growth of 11.5% versus the prior year. In addition to organic growth, Fleet contributed $38.7 million to total revenues and impacted adjusted EPS with a $0.01 loss during the quarter, which was largely in line with expectation for the transitional period.

Gross margins for the legacy business were largely in line with recent trends with total company adjusted gross margins of approximately 55.5%, reflecting the impact of Fleet on results during the quarter. We reported adjusted EPS of $0.54 during the quarter and $0.55 excluding the impact of Fleet.

We reported adjusted free cash flow of nearly $47 million in Q4. Our adjusted free cash flow continues to benefit from our industry-leading EBITDA margin, minimal capital spending and low cash tax rate. Lastly, the Fleet integration is well underway and on track to deliver the expected cost savings. We will touch on this later in our presentation.

Turning to Slide 6, overview of our full-year results. Full-year fiscal 2017 performance begins to show the impact of the transformation of our portfolio