Prestige Consumer Healthcare Inc. (PBH)·Q3 2025 Earnings Summary

Executive Summary

• PBH delivered record quarterly sales and EPS: revenue $290.3M (+2.7% y/y) and diluted EPS $1.22 (+15% y/y), with sequential growth across most categories and continued strength internationally; EBITDA margin expanded to 33.9% .
• Management raised FY25 adjusted EPS outlook to approximately $4.50 (from $4.40–$4.46) on lower interest expense/shares, and narrowed revenue to $1.128–$1.132B (organic ~1% unchanged); free cash flow “$240M or more” maintained .
• Balance sheet improved: leverage fell to 2.5x and net debt to ~$0.9B; variable-rate term loan fully repaid; Q3 free cash flow $63.5M and cash from operations $65.1M .
• Near-term catalysts: Q4 gross margin expected ~57% on timing of cost-savings; Clear Eyes supply to improve gradually with larger uptick in 2H FY26; robust M&A optionality given cash generation and fixed-rate debt structure .

What Went Well and What Went Wrong

• What Went Well

  • Record Q3 revenue/EPS, above internal forecast; strength in International (Hydralyte) and broad-based North America growth; Summer’s Eve returned to slight y/y growth; Clear Eyes improved sequentially. “Record quarterly sales and EPS” and “EPS up 15%” .
  • Margin/FCF discipline: Q3 EBITDA margin 33.9% (vs 33.2% y/y); Q3 FCF $63.5M; variable-term debt reduced to $0; leverage 2.5x, enhancing future capital deployment .
  • GI portfolio momentum (Dramamine, Fleet, Gaviscon) with consistent innovation (e.g., Dramamine Advanced herbals); management emphasized time-tested brand-building driving mid-single-digit GI growth over 3 years .

• What Went Wrong

  • Cough/cold was weak and below initial expectations; retailers working down preseason inventory; category ~7% of sales, but near-term reorder uptick unlikely despite higher incidents late in season .
  • Clear Eyes supply remains constrained; while sequentially better, production will ramp slowly with more meaningful supply gains in 2H FY26 as additional suppliers come online .
  • Q3 cash from operations and FCF down y/y (Opex/A&M cadence and working capital) despite strong nine-month trends; Q3 CFO $65.1M vs $71.5M; FCF $63.5M vs $69.5M .

Financial Results

Quarterly trend – sequential (oldest → newest)

Year-over-year comparison – Q3

Segment breakdown – Q3

KPIs and cash/returns – Q3 and YTD

Notes:

• Management expects Q4 revenue “~$290M” and Q4 GM ~57% on cost-saving initiatives timing .

Guidance Changes

Additional color: FY25 adjusted EPS of ~$4.50 implies Q4 EPS of ~$1.30; Q4 GM ~57% driven by multiple cost-saving projects beginning to flow through the P&L .

Earnings Call Themes & Trends

Management Commentary

• CEO: “Our solid third quarter results exceeded the expectations we communicated back in November and resulted in both record quarterly sales and EPS.”
• CEO: “In Q3, we reduced our variable term loan debt balance to 0 and continue to opportunistically repurchase shares while improving our leverage ratio to 2.5x.”
• CFO/COO: “Q4 gross margin [is] approximately 57%, with the increase largely attributable to the timing of certain cost-saving efforts.”
• CEO: “For fiscal ’25, we now anticipate revenues of $1.128 billion to $1.132 billion… We now anticipate adjusted EPS of approximately $4.50 for the full year… This implies fourth quarter EPS of $1.30.”

Q&A Highlights

• Clear Eyes recovery: Production in-line; Q4 sales similar to Q3 due to shipment timing; expect gradual sales ramp each quarter with larger supply increases in 2H FY26 as current suppliers expand and new suppliers added .
• Gross margin cadence: Q4 step-up to ~57% driven by multiple cost-saving initiatives commencing; not reliant on a single project .
• Cough/cold: Small mix (~7% of sales) and down in Q3; retailers working down preseason inventories; limited expectation for reorders despite higher incidents .
• Tariffs exposure: Majority of manufacturing in U.S.; diversified remaining footprint; running scenarios and prepared to act; see strategic advantage vs peers .
• Hydralyte expansion: Rights acquired across additional markets (ex-U.S.); long-term, slow build via distribution, retailer education, and consumer connection; Australia remains strong core .

Estimates Context

• S&P Global (Capital IQ) consensus for Q3 FY25 EPS and revenue was unavailable at time of request due to provider rate limits; therefore, vs-consensus comparisons are not included. Management noted the quarter was above internal forecast and delivered record sales/EPS .
• We will update consensus comparisons upon availability from S&P Global.

Key Takeaways for Investors

• Quality print with record sales/EPS and EBITDA margin expansion; FY25 adjusted EPS raised to ~$4.50 while revenue range tightened, signaling confidence amid supply normalization efforts .
• Near-term margin catalyst: Q4 GM ~57% on cost-savings timing; watch for sustained margin progression as initiatives annualize and air freight recedes .
• Clear Eyes recovery remains a FY26 story; gradual quarterly improvements, with more pronounced supply step-up in 2H FY26 as supplier base expands .
• International remains a durable growth engine (Hydralyte plus broader portfolio strength across Europe/LatAm); e-commerce mix ~15% and growing, supporting structural channel tailwinds .
• Balance sheet firepower restored: leverage 2.5x, variable debt eliminated; ample optionality to pursue disciplined M&A and opportunistic buybacks; expect some cash build given attractive fixed-rate debt .
• Cough/cold weakness manageable given small exposure; broad-based portfolio helps offset category volatility; Women’s Health (Summer’s Eve) showing early improvement with innovation/digital .
• Trading lens: Momentum into Q4 on margin tailwinds and capital deployment; medium-term thesis hinges on Clear Eyes normalization, sustained international growth, and accretive M&A optionality .