Q3 2024 Prestige Consumer Healthcare Inc Earnings Call

Okay.

Operator: Good day, and thank you for standing by. Welcome to Prestige Consumer Health Care's third quarter fiscal 2024 earnings call. At this time, all participants are in a listen-only mode.

Speaker Change: Good day, and thank you for standing by welcome to the prestige consumer health Care's third quarter fiscal 2024 earnings call.

Speaker Change: At this time all participants are in a listen only mode.

Operator: 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 that your hand is raised.

Speaker Change: After the Speakers' presentation, there'll be a question and answer session.

Speaker Change: To ask a question during the session you will need to press star one on your telephone you will then hear an automated message advising your hat is raised.

Operator: To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to turn the call over to your speaker today, Phil Terpolilli, Vice President of Investor Relations and Treasury. Please go ahead.

Speaker Change: To withdraw your question. Please press star one again please.

Speaker Change: Please be advised that today's conference is being recorded.

Speaker Change: I would now like to turn the call over to your speaker today field trip Holly Weiss.

Holly Weiss: <unk> President of Investor Relations and Treasurer. Please go ahead Sir.

Holly Weiss: Okay.

Phil Terpolilli: Thanks, Operator. And thank you to everyone who has joined us today. On the call with me are Ron Lombardi, our chairman, president, and CEO, and Christine Sacco, our CFO. On today's call, we'll review our third quarter fiscal 2024 results, discuss our full year outlook, and then take questions from analysts. A slide presentation accompanies today's call and can be accessed by visiting PrestigeConsumerHealthcare.com, clicking on the investors link, and then on today's webcast and presentation. Please note, some of the information contained in the presentation today includes non-GAAP financial measures. Reconciliations to the Nearest Gap financial measure are included in our earnings release and slides presentation. On today's call, management will make forward-looking statements around risks and uncertainties, which are detailed in a complete safe harbor disclosure on page two of the slide presentation accompanying the call. These are important to review and contemplate.

Holly Weiss: Thanks, operator, and thank you to everyone who has joined today on a call with me are Ron Lombardi, Our chairman, President and CEO and Christine Sacco our CFO.

Holly Weiss: On today's call I'll review, our third quarter fiscal 2024 results discuss our full year outlook and then take questions from analysts.

Holly Weiss: A slide presentation accompanies today's call can be accessed by visiting prestige consumer healthcare dot com clicking on the investors link and then on today's webcast and presentation.

Holly Weiss: Remember some of the information contained in the presentation today includes non-GAAP financial measures.

Holly Weiss: Reconciliations to the nearest GAAP financial measure are included in our earnings release and slide presentation.

Holly Weiss: On today's call management will make forward looking statements around risks and uncertainties, which are detailed in a complete safe harbor disclosure on page two of the slide presentation accompanying the call.

Holly Weiss: These are important to review and contemplate this environment uncertainty remains heightened due to a variety of factors, including high inflation geopolitical events and supply chain constraints, which have numerous potential impacts.

Phil Terpolilli: Business environment uncertainty remains heightened due to a variety of factors, including high inflation, geopolitical events, and supply chain constraints, which have numerous potential impacts. This means results could change at any time, and the forecasted impact of risk considerations is the best estimate based on the information available as of today's date. Further information concerning risk factors and cautionary statements is available in our most recent SEC filings and our most recent company 10K. I'll now hand this over to our CEO, Ron Lombardi. Ron?

Holly Weiss: This means results could change at any time in the forecasted impact of risk considerations is the best estimate based on the information available as of today's date.

Holly Weiss: Further information concerning risk factors and cautionary statements are available on our most recent SEC filings and most recent company 10-K.

Holly Weiss: I'll now hand, it over to our CEO Ron Lombardi, Brian.

Ronald M. Lombardi: Thanks, Phil. Let's begin on slide five. We are very pleased with our Q3 performance that exceeded our sales and earnings expectations and added to our strong results earlier in the fiscal year. Net sales were $283 million in the third quarter, up nearly 3% and ahead of our outlook. This performance was thanks to strength in our ear and eye brands in the US and continued strength in our international segment, which more than offset the impact of the strategic exit of the private label business we've previously discussed. As expected, gross margin improved versus the prior year, enabling increased marketing reinvestment. For EPS, we generated $1.06, up 2% versus the prior year. These results translated into a robust free cash flow of approximately $70 million, enabling further debt reduction that had us finish the quarter at 2.9 times leverage.

Ronald M. Lombardi: Thanks, Bill let's.

Ronald M. Lombardi: Let's begin on slide five.

Ronald M. Lombardi: We are very pleased with our Q3 performance that exceeded our sales and earnings expectations and added to our strong results earlier in the fiscal year.

Ronald M. Lombardi: Net sales were $283 million in the third quarter up nearly 3% and ahead of our outlook.

Ronald M. Lombardi: This performance was thanks to strengthen our ear and eye brands in the U S and continued strength in our international segment, which more than offset the impact from the strategic exit of the private label business. We've previously discussed.

Ronald M. Lombardi: As expected gross margin improved versus the prior year, enabling increased marketing reinvestment.

Ronald M. Lombardi: For EPS, we generated $1 six up 2% versus the prior year.

Ronald M. Lombardi: These results translated into robust free cash flow of approximately $70 million, enabling further debt reduction that had us finish the quarter at two nine times leverage.

Ronald M. Lombardi: We are now within the long-term leverage target of operating with less than three times leverage that we outlined back in May. We will discuss the benefits and capital deployment optionality this gives us later on in our remarks. So, in summary, our strong Q3 performance built on a solid first half, and these results continue to enable robust free cash flow that can drive incremental shareholder value from our proven business strategy. Now, let's turn to page six to discuss our strength in ear and eye care in more detail.

Ronald M. Lombardi: We are now within the long term leverage target of operating with less than three times leverage that we outlined back in may.

We will discuss the benefits and capital deployment Optionality. This gives us later on in our remarks.

Ronald M. Lombardi: So in summary, our strong Q3 performance built on a solid first half and these results continue to enable robust free cash flow that can drive incremental shareholder value from our proven business strategy.

Ronald M. Lombardi: Now, let's turn to page six to discuss the strength and ear and eye care in more detail.

Ronald M. Lombardi: Ear and Eye Care is our third largest category on a percentage of revenue basis, representing over 15% of sales. As shown on the left side of the page, this category contains a wide assortment of leading brands, each designed to solve a specific consumer need. Clear Eyes is a time-tested and proven leader in redness relief and has a long heritage with consumers.

Ronald M. Lombardi: Ear and eye care is our third largest category on a percentage of revenue basis, representing over 15% of sales.

Ronald M. Lombardi: As shown on the left side of the page. This category contains a wide assortment of leading brands each designed to solve for a specific consumer needs.

Ronald M. Lombardi: Clear eyes is a time tested and proven leader and regulatory relief and has a long heritage with consumers.

Ronald M. Lombardi: Third tiers.

Ronald M. Lombardi: Veriteers is well established as a leader in dry ice solutions. For a consumer, it stands for soothing eye relief. Dye drops, ointments, and compresses define the category and help alleviate the discomfort associated with dyes.

Ronald M. Lombardi: As well established as a leader in dry ice solutions for a consumer it stands for soothing relief.

Ronald M. Lombardi: Hi, drops ointments and compresses define the category and help alleviate the discomfort associated with dive.

Ronald M. Lombardi: And lastly, shown here is D-BROX, the leading solution for ear care at home and without a doctor's advice. By strategy, we've created a portfolio that gives us market-leading scale and eye care with the number one position in units across OTC eye drops. We leverage our broad learnings to provide unique insights. These help establish category leadership with both retailers and consumers that enables brand building and long-term growth. There are two examples of this on the right side of the page.

Ronald M. Lombardi: And lastly, showing here is the Bronx, the leading solution for air care at home and without a doctor's visit.

Ronald M. Lombardi: By strategy, we've created a portfolio that gives us market leading scale in eyecare with the number one position in units across OTC eyedrops, we leverage our broad learnings to provide unique insights.

Ronald M. Lombardi: These help establish category leadership with both retailers and consumers that enables brand building and long term growth.

Ronald M. Lombardi: There are two examples of this on the right side of the page.

Ronald M. Lombardi: For marketing, we continue to drive consumer awareness across TV and digital channels around the benefits of safe and effective eye drops, like clear eyes and therapy. We also continue to invest in digital content, which helps consumers find the eyedrop solutions accessible. Innovation is also another element to long-term success and generally fits into two categories. First, we establish claims, which help differentiate products for consumers. For example, our 12 hours of hydrating comfort claim delivers the all day release consumers desire. Second, we establish innovation across need states that offer specific solutions consumers seek. Clear Eyes Sensitive Eyes is an excellent example specifically formulated for sensitive eyes.

Ronald M. Lombardi: For marketing, we continue to drive consumer awareness across TV and digital channels around the benefits of safe and effective eyedrops like clear eyes and thorough tiers.

Ronald M. Lombardi: We also continued to invest in digital content, which helps consumer finds the eyedrop solutions access to them.

Ronald M. Lombardi: Innovation is also another element to long term success and generally fits in two categories.

Ronald M. Lombardi: First we established claims which helped differentiate products for consumers for example, our 12 hours of hydrating comfort claim delivers the all day relief consumers desire.

Ronald M. Lombardi: We established innovation across need states that offer specific solutions consumers seek.

Ronald M. Lombardi: <unk> sensitive eyes is an excellent example, specifically formulated for sensitive eyes.

Ronald M. Lombardi: The result of our strategy is a winning franchise that continues to experience solid growth. After certain supply disruptions in fiscal 23, we've returned to growth of over 10% year-to-date and will continue to grow in the mid-single-digit range over time, thanks to these characteristics. With that, I'll turn it over to Chris to discuss the finances. Thanks, Ron. Good morning, everyone.

Ronald M. Lombardi: The result of our strategy is a winning franchise that continues to experience solid growth.

Ronald M. Lombardi: After a certain supply disruptions in fiscal 'twenty three we have returned to growth of over 10% year to date and continue to grow in the mid single digit range over time, thanks to these characteristics.

Ronald M. Lombardi: With that I'll turn it over to Chris to discuss the financials.

Chris: Thanks, Ron Good morning, everyone, let's turn to slide eight and review our third quarter fiscal 'twenty four financial results.

Christine Sacco: Let's turn to slide eight and review our third quarter fiscal 24 financial results. As a reminder, the information in today's presentation includes certain non-GAAP information that is reconciled to the closest GAAP measure in our earnings. U3 revenue of $282.7 million exceeded our expectations, increasing 2.6% from the prior year on both a reported and an organic basis. North American OTC segment revenues were flat versus the prior year, with strength in the eye and ear care category offset by headwinds related to the strategic exit of the private label business and weakness in certain non-core brands.

Chris: As a reminder, the information in today's presentation includes certain non-GAAP information that is reconciled to the closest GAAP measure in our earnings release.

Chris: Q3 revenue of $282 $7 million exceeded our expectations, increasing two 6% from the prior year on both a reported and organic basis.

Chris: North American OTC segment revenues were flat versus prior year with strength in the eye and ear care category offset by headwinds related to the strategic exit of the private label business and weakness in certain noncore brands.

Christine Sacco: International OTC segment revenues increased approximately 20% versus the prior year, with broad-based strengths that included solid double-digit growth for the hydrolite. As expected, EBITDA was approximately flat versus the prior year, attributable to higher A&M spend, while EBITDA margin was consistent with first half performance. EPS increased 2.2% in Q3 from the prior year, reflecting the benefit of our free cash flow and reducing debt in a more stable interest rate. Turn to slide 9 for more detail and to discuss year-to-date consolidated. For the first nine months of fiscal 24, revenues were up 80 basis points to $848.4 million and grew 1.2% versus the prior year when excluding FDIC. By segment, excluding FX, North American segment revenues were approximately flat, while the international segment increased approximately 12% versus the prior year.

Chris: International OTC segment revenues increased approximately 20% versus the prior year with broad based strength that included solid double digit growth for the hydro light brand.

Chris: As expected EBITDA was approximately flat to prior year attributable to higher A&M spend while EBIT margin was consistent with first half performance.

Chris: EPS increased two 2% in Q3 from the prior year, reflecting the benefit of our free cash flow and reducing debt in a more stable interest rate environment.

Chris: Let's turn to slide nine for more detail and discuss the year to date consolidated results.

Chris: For the first nine months of fiscal 'twenty four revenues were up 80 basis points to $848 4 million and grew one 2% versus prior year when excluding FX.

Chris: By segment, excluding FX North American segment revenues were approximately flat, while the international segment increased approximately 12% versus the prior year.

Chris: In North America, the largest category growth drivers for the first nine months were strong ear and eye care and dermatological category sales, which helped partially offset declines in women's health and the strategic exit of the private label business.

Chris: Year to date, we also experienced solid high single digit year over year growth in the E Commerce channel.

Christine Sacco: In North America, the largest category growth drivers for the first nine months were strong ear and eye care and dermatological category sales, which helped partially offset declines in women's health and the strategic exit of the private label business. Year-to-date, we also experienced solid high single-digit year-over-year growth in e-commerce. The international segment performed above our long-term expectations thanks to strong performance across numerous brands and geographies. However, total company growth margin of 55.7% in the first nine months was down slightly versus prior year, owing to challenging comparisons in Q1.

Chris: The international segment performed above our long term expectations, thanks to strong performance across numerous brands and geographies.

Chris: Total company gross margin of 55, 7% in the first nine months was down slightly versus prior year, owing to challenging comparisons in Q1.

Chris: This gross margin was as we expected and attributable to cost increases, partially offset by pricing actions and cost savings across our portfolio, which entirely offset the dollar amount of inflationary cost headwinds.

Chris: For the full fiscal year, we continue to anticipate gross margin flat to up slightly versus fiscal 'twenty three with Q4 estimated to increase nearly 200 basis points versus prior year to 55, 5%.

Chris: Advertising and marketing for the first nine months was up in dollars versus the prior year and flat on a percentage of sales basis at 13, 6%.

Christine Sacco: This gross margin was as we expected and attributable to cost increases, partially offset by pricing actions and cost savings across our portfolio, which entirely offset the dollar amount of inflationary cost headway. For the full fiscal year, we continue to anticipate growth margins flat to up slightly versus fiscal 23, with Q4 estimated to increase nearly 200 basis points versus prior year to 55.5%. Advertising and marketing for the first nine months was up in dollars versus the prior year and flat on a percentage of sales basis at 13.6%. For Q4, we anticipate an A&M rate of approximately 12.5%, attributable to the timing of marketing opportunities. G&A expenses were 9.4% of sales in the first nine months, consistent with the prior year.

Chris: For Q4, we anticipate an A&M rate of approximately $12, 5% attributable to the timing of marketing opportunities.

Chris: G&A expenses were nine 4% of sales in the first nine months consistent with prior year.

Chris: Diluted EPS of $3 19 was up versus $3 14 in the prior year, despite a headwind related to the timing impact of marketing spend and higher interest rates.

Speaker Change: We anticipate interest expense in Q4 of just over $15 million. Thanks.

Speaker Change: Thanks to our debt reduction efforts.

Speaker Change: Finally, our Q3 tax rate was 23, 8% and we anticipate a similar rate in Q4.

Speaker Change: Now, let's turn to slide 10, and discuss cash flow.

Speaker Change: For the first nine months, we generated $175 6 million and free cash flow up mid single digits versus the prior year.

Speaker Change: At December 31, our net debt was approximately $1 1 billion nearly 90% of which is fixed and we achieved a covenant defined leverage ratio of two nine times consistent with our long term objective.

Christine Sacco: Diluted EPS of $3.19 was up versus $3.14 in the prior year, despite a headwind related to the timing impact of marketing spend and higher. We anticipate interest expense in Q4 of just over $15 million thanks to our debt reduction efforts. Finally, our Q3 tax rate was 23.8%, and we anticipate a similar rate in Q4. Now let's turn to slide 10 and discuss cash. For the first nine months, we generated $175.6 million in free cash flow, up mid-single digits versus the prior year. At December 31st, our net debt was approximately $1.1 billion, nearly 90% of which is fixed, and we achieved a covenant-defined leverage ratio of 2.9 times, consistent with our long-term objectives. Although we anticipate reducing debt through the balance of the fiscal year, our reduced leverage and remaining debt being largely fixed at attractive rates unlocks further flexibility around capital deployment moving forward. With that, I'll turn it back to Ron.

Chris: Although we anticipate reducing debt through the balance of the fiscal year, our reduced leverage and remaining debt being largely fixed at attractive rates unlock further flexibility around capital deployment moving forward.

Chris: With that I'll turn it back to Ron.

Ronald M. Lombardi: Thanks, Chris, Let's turn to slide 12 to wrap up.

Ronald M. Lombardi: We are on pace to deliver excellent full year results and exceed the earnings outlook that we began the year with.

Ronald M. Lombardi: We are pleased with this improved EPS forecast that is driven by our proven business strategy and are well positioned and diversified portfolio.

Ronald M. Lombardi: For fiscal 'twenty four we continue to anticipate revenues of $1 billion $1 35 to a $1 billion $1 40, and organic revenue growth of approximately 1% to 2% versus fiscal 'twenty, three or organic revenue growth of 2% to 3%, excluding the strategic exit of the private label.

Ronald M. Lombardi: No.

Ronald M. Lombardi: For Q4, we are forecasting revenue of approximately $287 million a slight year over year increase.

Ronald M. Lombardi: This implies revenue for the full year at the lower end of our original guidance driven largely by unfavorable FX.

Ronald M. Lombardi: Thanks, Chris. Let's turn to slide 12 to wrap things up. We are on pace to deliver excellent full-year results and exceed the earnings outlook that we began the year with. We are pleased with this improved EPS forecast, which is driven by our proven business strategy and a well-positioned and diversified portfolio. For Fiscal 24, we continue to anticipate revenues of $1,135,000,000 to $1,140,000 and organic revenue growth of approximately 1 to 2 percent versus Fiscal 23, or organic revenue growth of 2 to 3 percent, excluding the strategic exit of the private label. For Q4, we are forecasting revenue of approximately $287 million, a slight year-over-year increase. This implies revenue for the full year at the lower end of our original guidance, driven largely by unfavorable efforts. For EPS, we now anticipate diluted EPS of approximately $4.33 for fiscal 24, thanks to our strong year-to-date results and the power of our cash flow.

Ronald M. Lombardi: For EPS, we now anticipate diluted EPS of approximately $4 33 for.

Ronald M. Lombardi: For fiscal 'twenty four.

Ronald M. Lombardi: Thanks to our strong year to date results and the power of our cash flow.

Ronald M. Lombardi: For Q4, we expect EPS of $1 14 up high single digits versus the prior year.

Ronald M. Lombardi: Lastly, we continue to anticipate free cash flow of $240 million or more using cash flows for deleveraging through the balance of the year.

Ronald M. Lombardi: With that let's turn to slide 13 for a reminder, around our business strategy and the long term targets for financial growth.

Ronald M. Lombardi: Sure.

Ronald M. Lombardi: Even in today's evolving marketplace, our diverse portfolio of leading healthcare brands provide a great starting point that supports predictable long term top line organic growth of 2% to 3% annually.

Ronald M. Lombardi: This level of growth is amplified by our industry, leading cash flows that accelerate the topline growth into 6% to 8% organic EPS flow over the long term.

Ronald M. Lombardi: Equally important our strong free cash flow and resulting deleveraging creates additional optionality for capital deployment, including M&A that can drive significant upside to this algorithm.

Ronald M. Lombardi: We continue to assess go forward opportunities and we have a long history of using our leading financial profile to help drive further upside whether it would be buying back stock paying down debt or doing M&A.

Ronald M. Lombardi: For Q4, we expect EPS of $1.14, up high single digits versus the prior year. Lastly, we continue to anticipate free cash flow of $240 million or more, using cash flows for deleveraging through the balance of the year. With that, let's turn to slide 13 for a reminder about our business strategy and the long-term targets for financial growth. Even in today's evolving marketplace, our diverse portfolio of leading healthcare brands provides a great starting point that supports predictable, long-term top line organic growth of two to 3% annually. This level of growth is amplified by our industry-leading cash flows that accelerate this top-line growth into 6-8% organic EPS growth over the long term. Additionally, our strong free cash flow and resulting deleveraging creates additional optionality for capital deployment, including M&A, that can drive significant upside to this algorithm.

Ronald M. Lombardi: We remain confident that our business attributes support this proven formula.

Ronald M. Lombardi: We look forward to providing additional details on our expectations for next year on our May call.

Speaker Change: With that I'll open it up for questions operator.

Speaker Change: Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone.

Speaker Change: As well we ask that you. Please wait for your name to be announced before you proceed with your question one moment, while we compile the Q&A roster.

Speaker Change: The first question today will be coming from Rakesh Park Parker.

Speaker Change: Oppenheimer Your line is open.

Speaker Change: Good morning, and thanks for taking my question.

Speaker Change: Alright, I guess youre given theres been a lot of concerns just about cough and cold just love to hear your expectations for Q4 for that category.

Speaker Change: Sure.

Speaker Change: So for starters the.

Speaker Change: Cough cold.

Speaker Change: Part of our business is about 7% of revenue and sales continued to be largely in line with what we anticipated.

Speaker Change: At the start of the year.

Speaker Change: In Q4, we would anticipate to be fairly close to the levels that we had last year.

Ronald M. Lombardi: We continue to assess go forward opportunities, and we have a long history of using our leading financial profile to help drive further upside, whether it be buying back stock, paying down debt, or doing M&A. We remain confident that our business attributes support this proven formula. We look forward to providing additional details on our expectations for next year on our May call. With that, I'll open it up for, Operator.

Speaker Change: Okay, Great and then just on just on women's health business improved sequentially just from a client perspective, just your latest thinking on that business and the expectations of getting back to growth there.

Speaker Change: Yes.

Speaker Change: We said at the start of the year, we anticipated that this year was going to be kind of a recovery and stabilization for the two brands Monistat is definitely there.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone. As well, we ask that you please wait for your name to be announced before proceeding with your question.

Speaker Change: Got recovered earlier in the year and Summer's Eve continues to see improving trends.

Speaker Change: And should both of those brands should be in a good position to begin growth for next year.

Speaker Change: And then just just for FY 'twenty five I know you guys aren't ready to provide a guidance range, but is there any initial high level puts and takes that we can think of as we look towards your next fiscal year.

Operator: One moment while we compile the Q&A route. The first question today will be from Rupesh Parker of Oppenheimer. Your line is open.

Ronald M. Lombardi: Good morning, and thanks for taking my question. So I guess, given there's been a lot of concerns just about cough and cold, I would just love to hear your expectations for Q4 for that category. Good morning, Lupeche.

Speaker Change: Yes, we finished up the prepared remarks today with that slide that we've talked about.

Speaker Change: For a long time with our 2% to 3% top line growth and mid single digit bottom line growth. So directionally I think that's where where you might want to consider starting and certainly we will get into lots of detail on the may call.

Ronald M. Lombardi: So for starters, the cough cold part of our business is about 7% of revenue, and sales continue to be largely in line with what we anticipated at the start of the year and Q4 we would expect to be fairly close to the levels that we had last year. Okay, great.

Speaker Change: Great and my final question just given you guys are in a really good position from a debt Paydown perspective, Theres only a limited amount of variable rate debt to pay down. So it seems like you have a lot more flexibility to actually deliver on the algorithm. So how does your team think about.

Ronald M. Lombardi: And then just on women's health, the business improved sequentially just from a decline perspective, just your latest thinking on that business and the expectations of getting back to growth there. Yeah, you know, as we said at the start of the year, we anticipated that this year was going to be kind of a recovery and stabilization for the two brands. You know, Monistat is definitely there. He got recovered earlier in the year.

Speaker Change: With the excess cash maybe even investing more in the business just given you could even see more accretion going forward for share buybacks.

Speaker Change: So just trying to get a sense of just the flexibility to invest more in the business.

Speaker Change: It does feel like you guys have more levers to deliver that 6% to 8% EPS growth.

Speaker Change: Excuse me good morning, it's Chris So yes, we did talk about continued deleveraging in Q4, but as Brian highlighted you hit it right on the head as we head into fiscal 'twenty, five and beyond leverage now at $2 nine right. The remaining debt that we have is largely fixed.

Ronald M. Lombardi: And Summer's Eve continues to see improving trends, and both of those brands should be in a good position to begin growth. And then, just for FY 25, I know you guys aren't ready to provide a guidance range, but are there any initial high-level puts and takes that we can think of as we look towards your next fiscal year? Yeah, you know, we finished up our prepared remarks today with that slide that we've talked about for a long time with our two to 3% top line growth and mid single digit bottom line growth. So directionally, I think though, that's where you might want to consider starting, and certainly we'll get into lots of detail on that.

Speaker Change: Very attractive rates, so I think youre going to see increased optionality from us in terms of weather.

Speaker Change: Whether it be M&A buying back stock and our continued delevering, we have the optionality to do more than one.

Speaker Change: And we look forward to that as we head into fiscal 'twenty five.

Speaker Change: Great. Thank you I'll pass it along.

Speaker Change: Thank you one moment, while we prepare for the next question.

Speaker Change: The next question will be coming from Susan Anderson of Canaccord. Your line is open.

Susan Kay Anderson: Hi, good morning, nice job on the quarter.

Susan Kay Anderson: I was wondering if maybe you could talk about kind of the puts and takes in the P&L.

Susan Kay Anderson: That's changed a little bit to raise the bottom line, while keeping the top line. The same and then also just on the North America sales ended up flattish it looks like really nice growth and ear and eye care, maybe if you could talk about the other.

Chris: My final question, you know, given that you guys are in a really good position from a debt pay-down perspective; there's only a limited amount of valuable rate debt to pay down. So it seems like you have a lot more flexibility to actually deliver on the algorithm. So how does your team think about, you know, even investing more in the business, maybe even giving you could even see more accretion going forward for share buybacks? So just trying to get a sense of how flexibly you guys can invest more in the business because it does feel like you guys have more levers to deliver that 68% EPS. Yeah, excuse me. Rupesh, good morning. It's Chris.

Susan Kay Anderson: <unk> and then also I think you mentioned that noncore brands you maybe saw some weakness there if you could talk about.

Susan Kay Anderson: What brands thanks.

Speaker Change: Yes, Susan maybe I'll start and then Ron could take the second part of your question. So the.

Ronald M. Lombardi: The Q3 beat was really timing behind our strong international performance, we talk about the nature of that business being a distributor model in sometimes.

Ronald M. Lombardi: Quarter to quarter results can be a bit lumpy and we did see that so hence no real change to our full year outlook on the bottom line EPS really helped by a more stable interest rate environment. So.

Chris: So yeah, we did talk about continued deleveraging in Q4. But as Ron highlighted, you hit the nail on the head as we head into fiscal 25 and beyond. Leverage is now at 2.9, right? The remaining debt that we have is largely fixed at very attractive rates. So I think you're going to see increased optionality from us in terms of whether it be, you know, M&A, buying back stock, or continuing de-levering. We have the option to do more than one.

Ronald M. Lombardi: As we've said the power of our cash flow and our ability to delever and fiscal 'twenty four it was really offset by the rising interest rate environment and as we head into a more stable environment. We would expect it to continue to see that leverage you've seen in the past from us on the bottom line as Ron was highlighting earlier as a result of our capital deployment.

Speaker Change: You want to take the great part of that.

Speaker Change: So in terms of performance across the portfolio.

Speaker Change: We called out the ear and eye in international and the release and on the prepared remarks today.

Speaker Change: Those two areas continue to have a lot of momentum and do well.

Speaker Change: Over time, we would expect that the non core and tail brands with decline.

Speaker Change: May get a little bit of peaks and valleys from quarter to quarter. So there wasn't anything out of line across the tail part of the portfolio in terms of in terms of performance during the quarter.

Chris: And we'll look forward to that as we go. Great. Thank you, Apostle Long.

Operator: Thank you. One moment while we prepare for the next question. The next question will be coming from Susan Anderson of Common Core. Your line is open. Hi, good morning.

Speaker Change: Great.

Speaker Change: And then maybe if you could talk about or give some color on just what you saw in the quarter on units versus pricing and just kind of your expectations for the rest of the year in terms of volumes versus pricing.

Susan Kay Anderson: Nice job on the quarter. I was wondering if maybe you could talk about kind of the puts and takes and the P&L. That's changed a little bit to raise the bottom line while keeping the top line the same. And then also just on North America sales ending up flattish. It looks like really nice growth in ear and eye care.

Speaker Change: Price increases kind of taper off.

Speaker Change: Yes, Susan Hi, Chris So we're still benefiting from certain pricing actions that we took in fiscal 'twenty. Three we still expect the full year to be split about half from price growth from price about half volume year to date were pretty consistent with that for Q3 pricing was a little bit less than half right as we start to lap continue.

Chris: Maybe if you could talk about the other categories. And then also, I think you mentioned that non-core brands. You maybe saw some weakness there. If you could talk about what brands those were.

Speaker Change: Through the year, we'd expect that to continue in the fourth quarter.

Chris: Thanks. Yeah Susan, maybe I'll start and then Ron can take the second part of your question. So the Q3 beat was really timing behind a strong international performance. You know, we talk about the nature of that business being a distributor model, and sometimes, quarter-to-quarter results could be a bit lumpy, and we did see that, so hence no real change to our full-year outlook. On the bottom line, EPS really helps buy a more stable interest rate environment. So as we've said, you know, the power of our cash flow and our ability to de-lever in fiscal 24 was really offset by the rising interest rate environment, and as we head into a more stable environment, we would expect to continue to see that leverage you've seen in the past from us.

Speaker Change: But I think what's important is unlike some others are volumes have really remained pretty stable last year, we talked about two thirds of our growth coming from price, but we still had volume growth. This year, we talk about half and half in the year is proving out.

Speaker Change: To fall in line with that so really speaks to the stability of our part of the store and the needs based nature of our of our products.

Speaker Change: Okay, great. Thanks, and then maybe one last question. If you could just talk about the cost savings that you have put in place to help our gross margin back given the inflationary pressures I guess have you started to see those flow through the P&L and how should we think about that as we look out the next few quarters. Thanks.

Speaker Change: Yes, sure. So we have begun to see the benefit of that.

Speaker Change: We're up 130 basis points in the third quarter year over year.

Chris: On the bottom line, as Ron was highlighting earlier, as a result of our capital, so in terms of performance across the portfolio, we called out the ear and eye in international in the release and in the prepared remarks today. Those two areas continue to have a lot of momentum and do well. Over time, we would expect that the non-core and tail brands would decline.

Speaker Change: Of that is price, but less than half the other half.

Speaker Change: Or a bit more is coming from those cost savings you mentioned, we have seen a little bit of deflation on freight and that started to flow through the P&L in the third quarter and we're calling the fourth quarter essentially in line with the third quarter in terms of <unk>.

Speaker Change: Gross margin is still on track for the year to be flat to up slightly so in line with what we expected as we started this year.

Speaker Change: Great. Thanks, so much good luck the rest of the year.

Speaker Change: Thank you one moment for the next question.

Chris: You may get a little bit of peaks and valleys from quarter to quarter, so there wasn't anything out of line across the tail part of the portfolio in terms of performance during the year. Great. And then maybe you could talk about or give some color on just what you saw in the quarter on units versus pricing and just kind of your expectations for the rest of the year in terms of volumes versus pricing as those price increases kind of taper off. Yes, Susan. Hi Chris.

Speaker Change: And our next question will be coming from Jon Andersen of William Blair. Your line is open.

Jon Andersen: Thanks, operator, good morning, everybody.

Jon Andersen: Good morning, John.

Jon Andersen: Let's see any any.

Jon Andersen: And going on from a channel perspective of note.

Jon Andersen: <unk>.

Jon Andersen: Right.

Jon Andersen: Certain areas softness in others and then.

Jon Andersen: You could talk about.

Jon Andersen: Retail inventory levels.

Jon Andersen: Any thoughts around shipments relative to consumption going forward.

Jon Andersen: So.

Jon Andersen: Because your first question was around channel shift.

Chris: So we're still benefiting from certain pricing actions that we took in fiscal 23. We still expect the full year to be split about half from price growth and about half volume. Year to date, we're pretty consistent with that. For Q3, pricing was a little bit less than half, right, as we start to continue through the year. We do expect that to continue in the fourth quarter.

Jon Andersen: The third quarter was fairly consistent with what we've seen since the beginning of our fiscal year, which is <unk>.

Jon Andersen: People are moving around within within channels and shopping a little differently as they look for a better price value propositions to deal with inflation, that's really been.

Jon Andersen: The most notable impact on the high level of inflation at least for our business. So those trends have been fairly consistent over the last year or so and nothing different than again, we have.

Chris: But I think what's important is, unlike some others, you know, our volumes have really remained pretty stable. Last year, we talked about two-thirds of our growth coming from price, but we still had volume growth. This year, we talk about half and half, and the year is proving out to be pretty stable, all in line with that. So, it really speaks to the stability of our part of the store and the needs-based nature of our product. Okay, great. Thanks.

Jon Andersen: Broad distribution of our brands. So we really don't mind, where the consumer chooses to shop by products are widely available.

Jon Andersen: And then in terms of retailer inventory Destocking, it's been fairly.

Jon Andersen: Steady for us.

Jon Andersen: For the fiscal year, we haven't seen any meaningful net impact on our business so far.

Jon Andersen: Unlike other parts of the store and maybe other CPG companies.

Jon Andersen: That you are hearing from.

Speaker Change: I Didnt hear you mentioned E Commerce I may have missed it.

Speaker Change: How did the online business perform from a growth standpoint, and where does that sit now as a percent of your total business.

Chris: And then maybe one last question, if you could just talk about the cost savings that you have put in place to help work gross margin back given the inflationary pressures. I guess, have you started to see those flow through the P&L? And how should we think about that as we look out the next few quarters? Thanks.

Speaker Change: Sure John Hey, Good morning, So E Commerce was up high single digits for us in the third quarter.

John: Now it's sitting at about 15% of our sales are still nice nice growth, even as we comp some significant growth from prior periods.

Speaker Change: Great.

Speaker Change: And.

Speaker Change: I think Ron given your comments around just consumers looking for better value propositions, and that's kind of a common theme now.

Chris: Yeah, sure. So we have begun to see the benefit of that. You know, we're up 130 basis points in the third quarter year over year. Some of that is price, but less than half. The other half or a bit more is coming from those cost savings you mentioned. We have seen a little bit of deflation on freight, and that started to flow through the P&L in the third quarter, and we're calling the fourth quarter essentially in line with the third quarter in terms of gross margin, still on track for the year to be flat to up slightly. So, in line with what we expected as we started. Great. Thanks so much.

Speaker Change: Are there any changes on the.

Ronald M. Lombardi: Market share front for your brands talked we've talked about kind of organic growth.

Ronald M. Lombardi: Not so much share and you've seen any change from.

Jon Andersen: Competitive standpoint relative to private label in any of your categories.

Ronald M. Lombardi: Yes in general we haven't seen any share loss or share shift as a result of consumers moving away from our products to lower priced or private label in particular so.

Ronald M. Lombardi: It goes back to the incident.

Ronald M. Lombardi: <unk> for our products here in the category. Once every year. Once every two years and Youre looking for that trusted brand is not the time you take a chance to try something different to save a few pennies.

Susan Kay Anderson: Good luck for the rest of the year. Thank you. One moment for the next question. And our next question will be coming from Jon Anderson of William Blair. Your line is open. Thanks, operator. Good morning, everybody.

Ronald M. Lombardi: No.

Ronald M. Lombardi: Attribute we've talked about for a long time as being important.

Ronald M. Lombardi: An important consideration when you think about our brands and our position.

Ronald M. Lombardi: Okay.

Ronald M. Lombardi: I guess one more.

Ronald M. Lombardi: It sounds like just.

Operator: Let's see, anything going on from a channel perspective of note, strength in certain areas, softness in others, and then if you could talk about retail inventory levels and any thoughts around shipments relative to consumption going forward. So, the first question was around channel shifts. During the third quarter, it was fairly consistent with what we've seen since the beginning of our fiscal year, which is people moving around within within channels and shopping a little differently as they look for better price/value propositions to deal with inflation. You know, that's really been the most noticeable impact on the high level of inflation, at least for our business. So those trends have been fairly consistent over the last year or so, and nothing different. And again, we have a broad distribution of our brands, so we really don't mind where the consumer chooses to shop.

Jon Andersen: Given where you are right now from a balance sheet perspective.

Jon Andersen: And continued strong cash generation looking forward.

Jon Andersen: You probably.

Jon Andersen: Going to look more aggressively to M&A.

Jon Andersen: As the use of excess free cash I mean is that accurate.

Speaker Change: So like.

Jon Andersen: What are you.

Jon Andersen: Whats on your shopping list what are you really looking for what what criteria.

Jon Andersen: From a category products operational perspective.

Jon Andersen: It is important to you as you evaluate M&A opportunities.

Jon Andersen: Yes.

Speaker Change: Stingley enough John there really hasnt been a change in how we think about M&A.

Speaker Change: From two years ago or today, even though our leverage is down meaningfully.

Speaker Change: We've got a very well defined criteria of what we look for leading brands that defined categories that are set up for long term growth and thats been the success behind our M&A over the last 10, plus years and that Hasnt changed so I wouldn't say, we're going to be more aggressive we're going to continue to look.

Ronald M. Lombardi: Our products are widely available. And then, in terms of retailer inventory destocking, it's been fairly steady for us for the fiscal year. We haven't seen any meaningful net impact on our business. Unlike other parts of the store and maybe others, I didn't hear you mention e-commerce. I may have missed it.

Jon Andersen: For opportunities that fit that criteria, there's a lot of activity out there it seems like.

Jon Andersen: I'll go a week without something showing up but we stick to what we know will create value for the shareholders over the long term and I think both in Chris's comments in mind today.

Chris: How did the online business perform from a growth standpoint, and where does it sit now as a percent of your total business? Sure, Jon. Hey, good morning. So e-commerce was up high single digits for us in the third quarter. Right now, it's sitting at about 15% of our sales, so still nice, nice growth, even as we compare some significant growth from prior periods. Great, and I think, Ron, giving your comments around just consumers looking for better value propositions, that's kind of a common theme now. Are there any changes on the, you know, market share front for your brands? Talked to, we've talked about kind of organic growth, but not so much share, and have you seen any change from a competitive standpoint relative to private label in any of your categories?

Jon Andersen: As a reminder, that we continue to be very well positioned to create value for our shareholders with our cash flow in a lower level of leverage whether it's continuing to invest in the business M&A delevering, even lower over time stock buybacks. So we have a lot of optionality to create.

Jon Andersen: And I think that's the important focus of which M&A is certainly an important factor.

Jon Andersen: Factor of it.

Speaker Change: Yes, that's a good approach and I guess with your free cash flow yield in the high single digits.

Jon Andersen: Looking at stock buybacks, we've done a bad thing either so thanks for the time appreciate it.

Speaker Change: Thank you John.

Speaker Change: Thank you one moment to the next question.

Speaker Change: And our next question will be coming from Linda Bolton Weiser.

Chris: Yeah, in general, we haven't seen any share loss or share shift as a result of consumers moving away from our products to lower priced or private label, in particular. So, you know, it goes back to the incidents and occasions for our products. You know, if you're in the category once every year, once every two years, and you're looking for that trusted brand, it's not the time you take a chance to try something different. So that attribute, you know, we've talked about for a long time as being important, an important consideration when you think about our brand. Okay. I guess one more. It sounds like just, you know, given where you are right now, from a balance sheet perspective, and Continued Strong Cash Generation looking forward, you are probably going to look more aggressively at M&A, you know, as a use of excess free cash. I mean, is that accurate?

Speaker Change: D. A Davidson your line is open.

Speaker Change: Yes, hi, good morning, So I was wondering just a little more.

Speaker Change: Discussion of channels distribution channels I was curious.

Speaker Change: Talk very much about the club channels and.

Speaker Change: Like are you in which.

Speaker Change: Which brands would blend themselves to the club channels and is that something you'd like to do more of in that channel and then also same kind of question about the dollar stores. What's your approach there, which brands are most penetrated into dollar stores and how are you thinking about those channels. Thanks.

Speaker Change: Sure. Good morning, Linda So club isn't a big channel for US it's very small.

Speaker Change: And it's largely due to the nature of our products. If you think of Monistat youre not going to buy a three pack like you'd find in the club offering it.

Ronald M. Lombardi: What are you, like, what's on your shopping list? What are you really, you know, looking for? What criteria, you know, from a category product? Operational perspective, you know, as important to you as you evaluate, you know, M&A opportunities? You know, interestingly enough, Jon, there really hasn't been a change in how we think about M&A from two years ago or today, even though our leverage is down meaningfully. You know, we've got a very well-defined criteria of what we look for in leading brands that define categories that are set up for long-term growth. And that's been the success behind our M&A over the last years, and that hasn't changed. So I wouldn't say we're going to be more aggressive.

Speaker Change: It doesn't mean that we don't focus for opportunity there clear eyes.

Speaker Change: And BC and goody's.

Speaker Change: Some examples where we do sell through clubs thats largely be to be where the small convenience channel may go in and byproduct for resale.

Speaker Change: It's more of that end of it in consumer tax doesn't mean, we don't look at it for opportunities to grow but just by the sheer nature of our products its not an important channel for us.

Speaker Change: There is and it has been.

Speaker Change: Nice.

Speaker Change: Growing channel for us over time, if you go into some of the leading dollar.

Speaker Change: Retailers Youll see expanding consumer healthcare idles, where they're looking to expand a branded offering.

Speaker Change: Products that are out there so.

Speaker Change: We have great.

Speaker Change: Product distribution in dollar.

Ronald M. Lombardi: We're going to continue to look for opportunities that fit that criteria. There is a lot of activity out there. Seems like we don't go a week without something showing up.

Speaker Change: Is there with unique pack sizes account sizes. So that the margin in that channel is consistent for us as it would be in any other channel. So we look at it to partner with all of our retail channel retail partners to help them be successful.

Ronald M. Lombardi: But we stick to what we know will create value for shareholders, and I think both Chris's comments and mine today are a reminder that we continue to be very well positioned to create value for our shareholders with our cash flow and our lower level of leverage, continuing to invest in the business, M&A, de-levering even lower over time, and stock buyback. So we have a lot of optionality to create value, and I think that's the important focus of which M&A is certainly an important part. Yeah, that's a good approach. And I guess, you know, with your free cash flow yield in the high single digits, looking at the stock is five X is not a bad thing either. So thanks for the time. I appreciate it.

Speaker Change: So that's a little bit about club and dollar for us.

Speaker Change: Okay. Thank you and.

Speaker Change: Just on private label I know, you said youre, not really seeing any big shifts or anything regarding market share but.

Speaker Change: Just wanted to clarify is it I would think it's the case that private label might have.

Speaker Change: Higher share in tracked channels versus non tracked channels.

Speaker Change: But I don't know can you confirm that what would that be the case.

Speaker Change: I believe it is.

Speaker Change: <unk>.

Speaker Change: Probably skews more heavily to the track.

Speaker Change: <unk> side of the business.

Speaker Change: The other thing.

Speaker Change: We remind the folks on the call today right.

Speaker Change: Our number one job is to have differentiated applications products, so that when the consumer gets to the shelf.

Operator: Thank you. One moment for the next question, and our next question will be from Linda Bolton Weiser of D.A. Davidson.

Speaker Change: There is something different about our products versus private label or any competitor. So that we're not losing just on price. So.

Speaker Change: That's what we think about when we come to work every day is making sure that we've got the best product out there that meets what consumers are looking for and that's been consistent over time and why we continue to hold our share grow our share in the categories that we lead over the long term.

Linda Bolton Weiser: Your line is open. Yes, hi. Good morning. So I was wondering just a little more about channels, distribution channels. I was curious about the club channels. And like, are you in them? And which brands would lend themselves to the club channels?

Speaker Change: Okay sounds good and then.

Speaker Change: Just finally I wanted to ask.

Ronald M. Lombardi: And is that something you'd like to do more of in that channel? And then also, same kind of question about the dollar stores. What's your approach there? Which brands are most penetrated into the dollar stores? And how are you thinking about those channels? Thanks. Good morning, Linda. So Club isn't a big channel for us. It's very small.

Speaker Change: Seeing a lot about recalls the various eyedrop products does any of that effect.

Speaker Change: Okay is it eye drop all that.

Speaker Change: <unk> costs were up I don't know theres been some recalls.

Speaker Change: Is any of that benefiting you in any way.

Speaker Change: Yes, its right the presses reported on eye care Eyedrop.

Speaker Change: Recalls.

Ronald M. Lombardi: And, largely due to the nature of our products, sick, think of Monistat. You're not going to buy a three pack that you'd find in the club office. But it doesn't mean that we don't focus on opportunity there. Clear eyes, and BC and Goody, are some examples where we do sell through a club that's largely B2B, where the small convenience channel may go in and buy product. So it's more the end of it then.

Speaker Change: Foreign suppliers for brands, you probably never heard over we'll hear from again I guess.

Speaker Change: Over the long term I think it's helpful to the branded players and clear eyes and third tiers in particular, where it just reinforces the importance of staying with trusted brands that you know from companies that you can count on that have disciplined supply chain.

Speaker Change: Our eyecare suppliers.

Speaker Change: Our long term suppliers, we focus on quality product on time, not saving the last Penny no matter, where you chase it so over the long term, it's both good for our brands in the industry.

Ronald M. Lombardi: Consumer. Doesn't mean we don't look at it for opportunities to grow, but just by the sheer nature of our products. The dollar is, and it's been a nice growing channel for us over time. If you go into some of the leading dollar channels, retailers, you'll see expanding consumer health care aisles where they're looking to expand the branded offering of products that are out there. So we have a great product distribution in dollar that's there with unique pack sizes and count sizes so that the margin in that channel is consistent for us as it would be in any other channel. So, you know, we look at it to partner with all of our retail channels and retail partners to help them be successful. So that's a little bit about the club and dollars.

Speaker Change: As consumers.

Speaker Change: Minded of the importance of those trusted brands and quality products.

Speaker Change: Okay. Thank you very much I appreciate it.

Speaker Change: Thank you Linda.

Speaker Change: Thank you one moment for the next question.

Speaker Change: And our next question will be coming from Mitchell.

Mitchell: Panera Sturtevant.

Mitchell: Jeremy Your line is open.

Mitchell: Hey, good morning.

Mitchell: <unk>.

Mitchell: A couple of questions for you.

Speaker Change: And this is just sort.

Speaker Change: Sort of anecdotal, but I kind of look at the irony of care ever since you purchased car tears and I noticed that category continues to.

Linda Bolton Weiser: Okay, thank you. This on private label, I know you said you're not really seeing any big shifts or anything regarding market share, but I just wanted to clarify. I would think it's the case that private label might have a higher share in track channels versus non-track channels. But I don't know. Can you confirm that?

Mitchell: Especially in the drug channel.

Mitchell: Have real spotty inventory coverage is it is there something in there.

Mitchell: Must say, it's all very curious as to the entire category.

Mitchell: Brands.

Mitchell: Private label is there.

Mitchell: Is there anything specific to either the drug channel that where inventory levels are low or is it just execution at various drug retailers that make that.

Ronald M. Lombardi: Would that be the case? I believe it is, Linda, and probably skews more heavily to the track side of the business. The other thing, you know, I'll remind the folks on the call today, right, is that our number one job is to have differentiated, efficacious products so that when the consumer gets to the shelf... There's something different about our products versus private label or any other, so that we're not losing just on price. So, you know, that's what we think about when we come to work every day, making sure that we've got the best product out there that meets what consumers are looking for. And that's been consistent over time and why we continue to hold our share, and grow our share in the categories that we lead. Okay, sounds good. And then, just finally, I wanted to ask, we've been seeing a lot about recalls of various eyedrop products. Does any of that affect whether is it an eyedrop or is it cough syrup?

Mitchell: Shelf coverage look.

Mitchell: Spotty.

Speaker Change: Yes so.

Mitchell: First of all the eye care category in general has been fast growing.

Mitchell: For quite a while now so right, we've got increasing demand it over indexes a bit to the drug channel right.

Mitchell: A bit more of a serious.

Mitchell: Condition and people think about it with seriousness so we.

Mitchell: We see that across our brands that are more serious affliction related that the drug channel.

Mitchell: Overindexes a bit.

Mitchell: And then in addition to that right. There's some nuances in the eye care supply chain, where periodic shutdowns as they do maintenance and other things can put a little bit of a pause and delivery for all the players in there we talked about that last year and the quarter ended December where we had a little bit.

Mitchell: Of of a pause.

Mitchell: In supply so it can happen to any of the brands. So you put all of those elements together maybe why.

Mitchell: You go into the drug channel and maybe look a little bit of a little bit short on inventory.

Ronald M. Lombardi: I don't know. There have been some recalls. Is any of that benefiting you in any way? Yeah, it's great.

Mitchell: Inventory.

Mitchell: Okay.

Speaker Change: Okay. Thank you and then.

Mitchell: When it comes to.

Ronald M. Lombardi: The press is reporting on iCare, iDrop, recalls from foreign suppliers for brands you probably never heard of or will hear from again, I guess. You know, over the long term, I think it's helpful to the branded players and clear eyes and fair tiers, in particular where, you know, it just reinforces the importance of staying with trusted brands that you know from companies that you can count on that have disciplined supply chains. You know, our eye care suppliers are long-term suppliers. We focus on quality products on time, not saving the last penny, you know, no matter where you chase them. So, over the long term, it's both good for our brands and the industry as consumers are reminded of the importance of those trusted brands and Quality Products. Okay, thank you very much.

Mitchell: You look at the gross margin.

Mitchell: Longer term.

Mitchell: Its youre slowly recovering.

Mitchell: Some levels five years ago or more is are those levels, you know 37 50, 758%.

Mitchell: Are they achievable.

Mitchell: Longer term.

Mitchell: Or is there something structural and maybe is it just the math that causes the gross margin that it won't we won't get back to that level.

Speaker Change: Yes, Hi, Mitch good morning, Chris So there is nothing structural going on within our gross margin can we see a path back to more normalized margins absolutely.

Speaker Change: When you say is it just math the math is going to dictate the timing. So as we've said in each of these past three years, we have offset inflationary pressures dollar for dollar with cost savings and pricing, but as you mentioned the math takes the margin part of it a little while to catch up. So we have line of sight several years out to cost saving measures.

Linda Bolton Weiser: I appreciate it. Thank you, Linda. Thank you. One moment for the next question, and our next question will be coming from Mitchell. Mr. Pinheiro, Mr. Irvin, your line is open.

Speaker Change: Good about them and our ability to start to recover margin will talk about in may but there is certainly nothing structural that would prevent us from doing that.

Speaker Change: And I guess the same the same question for <unk> spend I mean, it's been very consistent.

Operator: Hey, good morning. I have a couple questions for you. And this is just sort of anecdotal, but, you know, I've been looking at eye and ear care ever since you purchased Theratears, and I noticed that category continues to, especially in the drug channel, have real spotty inventory coverage. Is there something, and I'm not saying it's all Theratears, it's the entire category of brands, and even the private label? Is there anything specific to either the drug channel where inventory levels are low, or is it just execution at various drug retailers that make that shelf coverage look spotty?

Speaker Change: On a percentage of sales basis is there.

Speaker Change: Is there are there any plans for either.

Speaker Change: Any changes there directionally.

Speaker Change: On A&M over the longer term.

Speaker Change: Yes mix will continue to look to spend more dollars in A&M over over time right.

Speaker Change: <unk> is one thing, but you put dollars to work right Youre right check so.

Speaker Change: As we said as our gross margin picks up that will give us an opportunity to continue to look for opportunities to spend and spend more dollars to support the long term.

Speaker Change: Long term brand building initiatives.

Speaker Change: Marketing company should always start with the desire to spend more money.

Speaker Change: So that's how we think about it.

Speaker Change: Alright.

Speaker Change: I guess last question is.

Mitchell Brad Pinheiro: Yeah, so first of all, the eye care category in general has been growing fast for quite a while now, so with that increasing demand, it over indexes a bit to the drug channel. It's a bit more of a serious condition, and people think about it, you know, with seriousness, so we see that across our brands that are more serious affliction-related, the drug channel over indexes a bit. And then, in addition to that, right, there are some nuances in the eye care supply chain where, you know, periodic shutdowns as they do maintenance and other things can put a little bit of a pause in delivery for all the players involved. We talked about that last year in the quarter ended December, when we had a little bit of a pause in supply.

Speaker Change: Yes.

Speaker Change: On leverage.

Speaker Change: You've come down here below three seems.

Speaker Change: Seems to be a comfortable level for for many investors in the consumer space and.

Speaker Change: I'm curious whether.

Speaker Change: When do you decide on an acquisition.

Speaker Change: Or maybe.

Speaker Change: Maybe its share repurchase but I'm curious.

Speaker Change: Whether there is a level of leverage where you don't want to exceed and or.

Speaker Change: No.

Speaker Change: Like.

Speaker Change: You would like to be in a spot where you can get.

Speaker Change: Back to the below three level quicker than <unk> had in the past.

Speaker Change: Yes.

Speaker Change: As we've said.

Speaker Change: We look to operate the business at lower levels of leverage than we had historically for a long time, we operated the business essentially around five plus on average as we were smaller than someone you did a $500 million of $700 million acquisition. It really move the needle and took a while to get back down.

Mitchell Brad Pinheiro: So it can happen to any of the brands. So, you put all those elements together, and it may be why you go into the drug channel, and they may look a little bit of a little bit short on inventory. Okay, thank you. And then when it comes to, you know, looking at the gross margin over the longer term, you know, it's slowly recovering from levels, you know, five years ago or more are those levels, you know, 37, 57, 58%? Are they achievable?

Speaker Change: The market has spoken they appreciate companies with lower levels of leverage.

Speaker Change: Because it de risks you and gives you more optionality over time and that was one of the themes that we've talked about not only today, but over the last last year or so so although we don't set a ceiling right we want to be able to step back and evaluate every opportunity that may create value for our shareholders. It's our job.

Ronald M. Lombardi: longer term? Or is there something structural? And maybe it is just the math that causes the gross margin to be that we won't get back to that level? Yeah, hi, Mitch. Morning, Chris.

Speaker Change: To figure out how to do it the right way in a way that's appreciated.

Speaker Change: Never say never I don't see us operating anywhere near the peak levels, we did historically, but it.

Chris: So there's nothing structural going on within a gross margin. Can we see a pass back to more normalized margins? Absolutely. When you say that it's just math, the math is going to dictate the timing.

Speaker Change: It doesn't mean that there might be an opportunity where we pop above three <unk>.

Speaker Change: A very short period of time, and then get back into this targeted range of less than three over time. So directionally, that's how we think about things but.

Chris: So, as we've said, in each of these past three years, we have offset inflationary pressures dollar for dollar with cost savings and pricing. But, as you mentioned, the math takes the margin part of it a little while to catch up. So we have a line of sight several years out to cost-saving measures. We feel good about them and our ability to start to recover margin. We'll talk about it in May, but there is certainly nothing structural that would prevent us.

Speaker Change: Clearly operating at lower levels of leverage and.

Speaker Change: And talking about all of that Optionality is where we want to be going forward.

Speaker Change: Okay.

Speaker Change: Just one more just.

Speaker Change: Relative to you mentioned earlier.

Speaker Change: Sure.

Speaker Change: About.

Speaker Change: Youre getting a lot of that you've seen a lot of deal books come your way.

Speaker Change: Steady slow, but I'm curious.

Speaker Change: Are you.

Speaker Change: Is there any difference in sort of M&A pricing are you seeing.

Chris: Yeah, and I guess the same question for for A&M spend. I mean, it's been very consistent is, you know, on a percentage of sales basis. Is there?

Speaker Change: Any change in Reno small deals versus large deals anything anything you could share color wise with the flow that youre seeing.

Ronald M. Lombardi: Are there any plans for either, you know, any changes there directionally at A&M over the longer term? Yeah, Mitch, we'll continue to look to spend more dollars in A&M over time, right? The percent is one thing, but you put dollars to work, right? You write checks.

Speaker Change: Yeah, Hey, Mike, It's Craig so really for the kinds of things that we look at there hasnt been any change.

Craig: We do read some of the headlines that you see out there with very large multiples for large deals and very big category. That's.

Ronald M. Lombardi: So as we said, as our gross margin ticks up, it'll give us an opportunity to continue to look for opportunities to spend spend more dollars to support the long-term brain building. Any marketing company should always start with the desire to spend more money. Well, that's how we think about it. That's right.

Craig: That's not the nature of the kinds of things that we look at so we got this question about two years ago, when we announced their tiered people kept asking us.

Craig: Two handle in front of some of the press on some of our larger deals.

Craig: We kept saying the pricing has remained pretty consistent they're tiers was done at about 10 times. So so.

Ronald M. Lombardi: And I guess the last question is... just on leverage. So you've come down here below three seems to be a comfortable level for many investors in the consumer space. And I'm curious whether, when you decide on an acquisition or maybe it's a share repurchase, but I'm curious whether there's a level of leverage where you don't want to exceed and or, you know, like, you just would like to be in a spot where you can get back to the below-three level quicker than you've had in the past. Yeah, you know, as we've said, you know, For a long time, we operated the business essentially around five plus, on average, as you know, we were smaller than that, so when you did a $500 million or $700 million acquisition, it really moved the needle and took a while to get back down. The market has spoken, and they appreciate companies with lower levels of leverage because it de-risks you and gives you more optionality over time.

Craig: So really no change in the environment and the kinds of things that we look forward.

Speaker Change: Okay. Thank you so much.

Speaker Change: Thank you mentioned.

Speaker Change: Thank you one moment for the next question.

Speaker Change: The next question will be coming from Anthony <unk> landscape.

Anthony: Of Sidoti Your line is open.

Anthony: Good morning, and thank you for taking the questions. So just wanted to follow up on the international segment, certainly impressive growth there I know that the hydro.

Anthony: Driving that but just overall that that business has been doing well for the last couple of years.

Sidoti: Are you guys doing more business with existing retailers or are you signing on new accounts. I mean, just just wondering whats driving that and how sustainable do you think that segment is.

Sidoti: Yeah.

Anthony: Hey, good morning, Anthony it's Chris so.

Chris: We don't talk about it much because we focus on hydro a lot in Hydrolyte did have a really strong third quarter. It has been continuing to grow for us and we expect continued growth in the long term, but when we step back our international portfolio is diverse similar to our North American portfolio.

Ronald M. Lombardi: And that was one of the themes that we've talked about, not only today but over the last year or so. So, although we don't set a ceiling, we want to be able to step back and evaluate every opportunity that may create value for our shareholders. It's our job to figure out how to do it the right way in a way that's... Never say never.

Chris: This year in particular, we're experiencing good growth really across the portfolio. So.

Speaker Change: Number of factors, we talk about in terms of sustainability hydrolyte still at about a 10% household penetration.

Ronald M. Lombardi: I don't see us operating anywhere near the peak levels we did historically, but that doesn't mean that there might be an opportunity where we pop above three for a very short period of time and then get back into this targeted range. To be overt, Directionally, that's how we think about things, but clearly, operating at lower levels of leverage and talking about all that optionality is where we want to be. And then just one more, just relative to what you mentioned earlier about, you know, there's, you're getting a lot of, you're seeing a lot of deal books come your way, and there's a steady flow. But I'm, I'm curious, Are there any differences in sort of M&A pricing? Are you seeing, you know, any change in, you know, small deals versus large deals, anything, anything you could share color-wise with the flow that, Hey, Mitch, it's Chris. So really, for the kinds of things that we look at, there hasn't been any change. You know, we do read some of the headlines that you see out there with very large multiples for large deals in very big categories. But that's not the nature of the kinds of things that we look at.

Speaker Change: Continuing to innovate their rate similar playbook internationally in terms of product innovation to meet unmet consumer needs and we see that across the portfolio opportunities there. So.

Speaker Change: We feel good about the long term algorithm for the international business, which is growth at 5%. This year, we think it will be slightly above that but certainly see a path for that to continue into the future.

Speaker Change: Got you Okay. That's good to hear and then.

Speaker Change: So your long term playbook continues to be 2% to 3% organic growth.

Speaker Change: Obviously here, we've had strong international segment.

Speaker Change: Do you think you can get back to.

Speaker Change: North American segment to be within that growth range.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: So it will be a reasonable timeframe.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Big impact.

Speaker Change: This year, Anthony really has been the women's health business, which.

Speaker Change: In total in total is about 2020 as percent of sales.

Speaker Change: So we get back to growth for that segment next year that will obviously have a big impact on an organic levels of growth for North America.

Speaker Change: Clearly the international businesses has grown way above what we would expect it to be over the long term.

Speaker Change: If you get back to that to the drivers of that 2% to 3% that we had on the last page of the deck today, we would expect the international business to grow mid single digits, 567% over time, the north American business to grow 1% to 2%.

Chris: So we got this question about two years ago when we announced Theratiers. People kept asking us, you know, there's a two-handle in front of some of the press on some larger deals. And we kept saying the pricing remains pretty consistent. Theratiers was done at about 10 times.

Speaker Change: Over the long term, so directionally thats, where we would expect things to flush out over time.

Speaker Change: Got you, Okay, and then lastly, so if you look at your brand portfolio.

Chris: So really no change in the environment, the kinds of things that we... Okay, thank you so much. Thank you. One moment for the next question. The next question will be coming from Anthony Lebowanski. Of course, your line is open.

Speaker Change: Overall I mean.

Speaker Change: You have a very diversified.

Speaker Change: Brand portfolio for sure, but I know you guys talked about M&A, but I guess, Conversely would you guys be open to.

Operator: Good morning, and thank you for taking the questions. So just wanted to follow up on the international segment, certainly impressive growth there. I know that the Hydra is driving that.

Speaker Change: Perhaps divesting any noncore brands.

Speaker Change: Or you think they're worth keeping firstly just for cash flow purposes.

Anthony Lebowanski: But just overall, that business has been doing well for the last couple of years. Are you guys doing more business with existing retailers? Or are you signing on new accounts? I mean, just wondering what's driving that. And then how sustainable do you think that the segment is? Hey, good morning, Anthony. It's Chris.

Speaker Change: Yeah Anthony.

Speaker Change: Certainly evaluate any offer that comes in on the noncore brands, but as you mentioned right. These are OTC brands that have.

Speaker Change: Good gross margins and don't require a lot of investment because they're noncore. So youre right from a cash flow perspective as long as we can get there on the math, we would be willing to divest them, but when the math doesn't work there is still driving value by.

Chris: So, um, you know, we don't talk about it much because we focus on HydroLite a lot. And HydroLite did have a really strong third quarter and has been continuing to grow for us. We expect continued growth in the long term, but when we step back, our international portfolio is diverse, similar to our North American portfolio. And this year in particular, we're experiencing good growth really across the portfolio. So, you know, number of factors we talk about in terms of sustainability, right, HydroLite still at about 10% household penetration, continuing to innovate there, right, similar playbook internationally, in terms of product innovation to meet unmet consumer needs.

Speaker Change: <unk> cash flow, that's reinvested into our other brands. So that's how we think about it.

Speaker Change: Understood. Thank you very much and best of luck.

Speaker Change: Thanks Anthony.

Speaker Change: Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone.

Speaker Change: Okay.

Speaker Change: At this time there are no more questions in the queue I would like to turn the call back over to Ron Lombardi for closing remarks.

Ronald M. Lombardi: Thank you operator, and I'd like to thank everybody for joining us This morning, and I look forward to updating you further in may Thank you.

Speaker Change: Thank you for joining the conference call. This ends our call for today you all may disconnect.

Speaker Change: [music].

Chris: And we see that across the portfolio opportunities there. So, you know, we feel good about the long-term algorithm for the international business, which is growth at five plus percent this year. We think it will be slightly above that, but certainly see a path for that to continue. Gotcha.

Speaker Change: Yes.

Speaker Change: [music].

Ronald M. Lombardi: Okay, that's good to hear. And then your long-term playbook continues to be, you know, two to 3% organic growth. So obviously, here, we've had a strong international segment. Do you think you can get back to, you know, the North American segment to be within that growth range? You know, if you know, if so, what will be a reasonable timeframe?

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Ronald M. Lombardi: Yeah, you know, the big impact. This year, Anthony really has been the women's health business, which is about 20-ish percent of sales. So when we get back, growth for that segment next year, that'll obviously have a big impact on Organic Levels of Growth for North America.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].

Ronald M. Lombardi: Clearly, the international business has grown way above what we would have expected it to be. If you get back to the drivers of that 2-3% that we had on the last..., to grow mid-single digits, 5%, 6%, 7% over time. The North American business to grow 1% to 2% over the long term. So directionally, that's where we were expecting it to go.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Sure.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Anthony Lebowanski: Gotcha. Okay. And then lastly, you know, so if you look at your brand portfolio, overall, I mean, you have a very diversified brand portfolio, for sure. But, you know, I know you guys talked about M&A, but I guess, conversely, would you guys be open to perhaps divesting any non-core brands? Or do you think they're worth keeping for just for cash flow purposes?

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: [music].

Anthony Lebowanski: Anthony, we certainly evaluate any offer that comes in on the non-core brands. But as you mentioned, right, these are OTC brands that have good gross margins and don't require a lot of investment because they're non-core. So you're right, from a cash flow perspective. As long as we can get there on the math, we would be willing to divest them. But when the math doesn't work, they're still driving value by driving cash flow that's reinvested into our other businesses. That's how we do it. Thank you very much and best of luck.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone. At this time, there are no more questions in the queue.

Ronald M. Lombardi: I would like to turn the call back over to Ronald Lombardi for closing remarks. Thank you, operator, and I'd like to thank everybody for joining us this morning, and I look forward to updating you further in May. Thank you. Thank you for joining the conference call. This ends the call for today. You all may disconnect. Phone Ringing, Phone Ringing, Phone Ringing,?? Welcome to Prestige Consumer Healthcare's third quarter fiscal 2024 earnings call. At this time, all participants are in a listen-only mode.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Thank you.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: [music].

Phil Terpolilli: 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 one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to turn the call over to your speaker today, Phil Terpolilli. Vice President of Investor Relations and Treasury. Please go ahead.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: [music].

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Thanks.

Speaker Change: [music].

Speaker Change: Great.

Speaker Change: Yes.

Speaker Change: [music].

Phil Terpolilli: Thanks, Operator. And thank you to everyone who has joined us today. On the call with me are Ron Lombardi, our Chairman, President, and CEO, and Christine Sacco, our CFO. On today's call, we'll review our third quarter fiscal 2024 results, discuss our full year outlook, and then take questions from analysts. A slide presentation accompanies today's call and can be accessed by visiting PrestigeConsumerHealthcare.com, clicking on the investors link, and then on today's webcast and presentation. Please note, some of the information contained in the presentation today includes non-GAAP financial measures. Reconciliations to the Nearest Gap financial measure are included in our earnings release and slide presentation. On today's call, management will make forward-looking statements around risks and uncertainties, which are detailed in a complete safe harbor disclosure on page two of the slide presentation accompanying the call.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].

Phil Terpolilli: These are important to review and contemplate. Business environment uncertainty remains heightened due to a variety of factors, including high inflation, geopolitical events, and supply chain constraints, which have numerous potential impacts. This means results could change at any time, and the forecasted impact of risk considerations is the best estimate based on the information available as of today's date. Further information concerning risk factors and cautionary statements is available in our most recent SEC filings and our most recent company 10-K. I'll now hand it over to our CEO, Ron Lombardi. Ron?

Speaker Change: Sure.

Speaker Change: [music].

Speaker Change: No.

Speaker Change: [music].

Ronald M. Lombardi: Thanks, Phil. Let's begin on slide five. We are very pleased with our Q3 performance that exceeded our sales and earnings expectations and added to our strong results earlier in the fiscal year. Net sales were $283 million in the third quarter, up nearly 3%, and ahead of our outlook. This performance was thanks to strength in our ear and eye brands in the US and continued strength in our international segment, which more than offset the impact of the strategic exit of the private label business we've previously discussed. As expected, gross margin improved versus the prior year, enabling increased marketing reinvestment. For EPS, we generated $1.06, up 2% versus the prior year. These results translated into a robust free cash flow of approximately $70 million, enabling further debt reduction that had us finish the quarter at 2.9 times leverage.

Speaker Change: Thanks.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Thanks.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Good day, and thank you for standing by.

Speaker Change: I'll come to the prestige consumer healthcare's third quarter fiscal 2024 earnings call.

Speaker Change: At this time all participants in a listen only mode. After the speaker's presentation there'll be a question and answer session.

Speaker Change: To ask a question. During this session you will need to press star one on your telephone you will then hear an automated message advising your hands right.

Speaker Change: Throwing a question please press star one again.

Speaker Change: Please be advised that today's conference is being recorded.

Speaker Change: I would now like to turn the call over to your speaker today sales for Pony.

Speaker Change: Vice President Investor Relations and Treasury. Please go ahead Sir.

Speaker Change: Okay.

Pony: 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.

Ronald M. Lombardi: We are now within the long-term leverage target of operating with less than three times leverage that we outlined back in May. We will discuss the benefits and capital deployment optionality this gives us later on in our remarks. So in summary, our strong Q3 performance built on a solid first half, and these results continue to enable robust free cash flow that can drive incremental shareholder value from our proven business strategy. Now, let's turn to page six to discuss the strength in ear and eye care in more detail. Here in iCare, it is our third largest category on a percentage of revenue basis, representing over 15% of sales. As shown on the left side of the page, this category contains a wide assortment of leading brands, each designed to solve a specific consumer need. Clear Eyes is a time-tested and proven leader in redness relief and has a long heritage with consumers.

Speaker Change: On today's call will review, our third quarter fiscal 2024 results discuss our full year outlook and then take questions from analysts.

Speaker Change: A slide presentation accompanies today's call can be accessed by visiting prestige consumer healthcare dot com clicking on the investors link and then on today's webcast and presentation.

Speaker Change: Remember some of the information contained in the presentation today includes non-GAAP financial measures.

Speaker Change: Reconciliations to the nearest GAAP financial measure are included in our earnings release and slide presentation.

Speaker Change: On today's call management will make forward looking statements around risks and uncertainties, which are detailed in a complete safe harbor disclosure on page two of the slide presentation accompanying the call.

Speaker Change: These are important to review and contemplate this environment uncertainty remains heightened due to a variety of factors, including high inflation geopolitical events and supply chain constraints, which have numerous potential impact.

Ronald M. Lombardi: Veriteers is well-established as a leader in dry ice solutions. For a consumer, it stands for soothing eye relief. Dye drops, ointments, and compresses define the category and help alleviate the discomfort associated with dyes.

Speaker Change: This means results could change at any time and the forecasted impact of risk considerations is the best estimate based on the information available as of today's date.

Ronald M. Lombardi: And lastly, shown here is D-BROX, the leading solution for ear care at home and without a doctor's visit. By strategy, we've created a portfolio that gives us market-leading scale and eye care with the number one position in units across OTC eye drops. We leverage our broad learnings to provide unique insight, which helps establish category leadership with both retailers and consumers that enables brand building and long-term growth. There are two examples of this on the right side of the page.

Speaker Change: <unk>.

Speaker Change: Further information concerning risk factors and cautionary statements are available on our most recent SEC filings and most recent company 10-K.

Speaker Change: I'll now hand, it over to our CEO Ron Lombardi Ron.

Ronald M. Lombardi: Thanks Bill.

Ronald M. Lombardi: Let's begin on slide five.

Ronald M. Lombardi: We are very pleased with our Q3 performance that exceeded our sales and earnings expectations and added to our strong results earlier in the fiscal year.

Ronald M. Lombardi: Net sales were $283 million in the third quarter up nearly 3% and ahead of our outlook.

Ronald M. Lombardi: For marketing, we continue to drive consumer awareness across TV and digital channels around the benefits of safe and effective eye drops like clear eyes and therapy. We also continue to invest in digital content, which helps consumers find the eyedrop solution that's best for them. Innovation is also another element to long-term success and generally fits into two categories. First, we establish claims which help differentiate products for consumers. For example, our 12 hours of hydrating comfort claim delivers the all-day release consumers desire. Second, we establish innovation across need states that offer specific solutions consumers seek. Clear Eyes Sensitive Eyes is an excellent example specifically formulated for sensitive eyes.

Ronald M. Lombardi: This performance was thanks to strengthen our ear and eye brands in the U S and continued strength in our international segment, which more than offset the impact from the strategic exit of the private label business. We've previously discussed.

Ronald M. Lombardi: As expected gross margin improved versus the prior year, enabling increased marketing reinvestment.

Ronald M. Lombardi: For EPS, we generated $1 six up 2% versus the prior year.

Ronald M. Lombardi: These results translated into robust free cash flow of approximately $70 million, enabling further debt reduction that had us finish the quarter at two nine times leverage.

Ronald M. Lombardi: We are now within the long term leverage target of operating with less than three times leverage that we outlined back in may.

Ronald M. Lombardi: The result of our strategy is a winning franchise that continues to experience solid growth. After certain supply disruptions in fiscal 23, we've returned to growth of over 10% year-to-date and will continue to grow in the mid-single-digit range over time, thanks to these characteristics. With that, I'll turn it over to Chris to discuss the finances. Thanks, Ron. Good morning, everyone.

Ronald M. Lombardi: We will discuss the benefits and capital deployment Optionality. This gives us later on in our remarks.

Ronald M. Lombardi: So in summary, our strong Q3 performance built on a solid first half and these results continue to enable robust free cash flow that can drive incremental shareholder value from our proven business strategy now.

Christine Sacco: Let's turn to slide eight and review our third quarter fiscal 24 financial results. As a reminder, the information in today's presentation includes certain non-GAAP information that is reconciled to the closest GAAP measure in our earnings. Q3 revenue of $282.7 million exceeded our expectations, increasing 2.6% from the prior year on both a reported and an organic basis. North American OTC segment revenues were flat versus the prior year, with strength in the eye and ear care category offset by headwinds related to the strategic exit of the private label business and weakness in certain non-core brands.

Ronald M. Lombardi: Now, let's turn to page six to discuss the strength and ear and eye care in more detail.

Ronald M. Lombardi: Ear and eye care is our third largest category on a percentage of revenue basis, representing over 15% of sales.

Ronald M. Lombardi: As shown on the left side of the page. This category contains a wide assortment of leading brands each designed to solve for a specific consumer need.

Ronald M. Lombardi: Clear eyes is a time tested and proven leader and redness relief and has a long heritage with consumers.

Speaker Change: There are tiers as well established as a leader in dry ice solutions for a consumer it stands for soothing relief.

Speaker Change: Hi, drops ointments and compresses define the category and help alleviate the discomfort associated with size.

Speaker Change: And lastly, shown here is the Bronx, the leading solution for ear care at home and without a doctor's visit.

Speaker Change: By strategy, we've created a portfolio that gives us market leading scale in eyecare with the number one position in units across OTC eye drops we leverage our broad learnings to provide unique insights. These.

Christine Sacco: International OTC segment revenues increased approximately 20% versus the prior year, with broad-based strengths that included solid double-digit growth for the HydroLite. As expected, EBITDA was approximately flat versus the prior year, attributable to higher A&M spend, while EBITDA margin was consistent with first half performance. EPS increased 2.2% in Q3 from the prior year, reflecting the benefit of our free cash flow and reducing debt in a more stable interest rate Let's turn to slide 9 for more detail and discuss year-to-date consolidated revenues. For the first nine months of fiscal 24, revenues were up 80 basis points to $848.4 million and grew 1.2% versus the prior year when excluding FDIC. By segment, excluding FX, North American segment revenues were approximately flat, while the international segment increased approximately 12% versus the prior year.

Speaker Change: These help establish category leadership with both retailers and consumers that enables brand building and long term growth.

Speaker Change: There are two examples of this on the right side of the page.

Speaker Change: For marketing, we continue to drive consumer awareness across TV and digital channels around the benefits of safe and effective eyedrops like clear eyes and thorough tiers. We also.

Speaker Change: Continue to invest in digital content, which helps consumer finds the eyedrop solutions access for them.

Speaker Change: Innovation is also another element to long term success and generally fits in two categories.

Speaker Change: First we established claims which helped differentiate products for consumers for example, our 12 hours of hydrating comfort claim delivers the all day relief consumers desire.

Speaker Change: We established innovation across need states that offer specific solutions consumers seek.

Speaker Change: <unk> sensitive eyes is an excellent example, specifically formulated for sensitive eyes.

Speaker Change: The result of our strategy is a winning franchise that continues to experience solid growth.

Speaker Change: After certain supply disruptions in fiscal 'twenty three we have returned to growth of over 10% year to date and continue to grow in the mid single digit range over time, thanks to these characteristics.

Christine Sacco: In North America, the largest category growth drivers for the first nine months were strong ear and eye care and dermatological category sales, which helped partially offset declines in women's health and the strategic exit of the private label business. Year-to-date, we also experienced solid high single-digit year-over-year growth in e-commerce. The international segment performed above our long-term expectations thanks to strong performance across numerous brands and geographies. However, total company growth margin of 55.7% in the first nine months was down slightly versus prior year, owing to challenging comparisons in Q1.

Speaker Change: With that I'll turn it over to Chris to discuss the financials.

Chris: Thanks, Ron Good morning, everyone, let's turn to slide eight and review our third quarter fiscal 'twenty four financial results.

Chris: As a reminder, the information in today's presentation includes certain non-GAAP information that is reconciled to the closest GAAP measure in our earnings release.

Chris: Q3 revenue of $282 $7 million exceeded our expectations, increasing two 6% from the prior year on both a reported and organic basis.

Speaker Change: North American OTC segment revenues were flat versus prior year with strength in the eye and ear care category offset by headwinds related to the strategic exit of the private label business and weakness in certain noncore brands.

Christine Sacco: This gross margin was as we expected and attributable to cost increases, partially offset by pricing actions and cost savings across our portfolio, which entirely offset the dollar amount of inflationary costs. For the full fiscal year, we continue to anticipate growth margins flat to up slightly versus fiscal 23, with Q4 estimated to increase nearly 200 basis points versus prior year to 55.5%. Advertising and marketing for the first nine months was up in dollars versus the prior year and flat on a percentage of sales basis at 13.6 percent.

Speaker Change: International OTC segment revenues increased approximately 20% versus the prior year with broad based strength that included solid double digit growth for the hydro <unk> brand.

Speaker Change: As expected EBITDA was approximately flat to prior year attributable to higher A&M spend while EBIT margin was consistent with first half performance.

Speaker Change: EPS increased two 2% in Q3 from the prior year, reflecting the benefit of our free cash flow and reducing debt in a more stable interest rate environment, let's.

Speaker Change: Let's turn to slide nine for more detail and discuss the year to date consolidated results.

Speaker Change: For the first nine months of fiscal 'twenty four revenues were up 80 basis points to $848 4 million and grew one 2% versus prior year when excluding FX.

Christine Sacco: For Q4, we anticipate an A&M rate of approximately 12.5% attributable to the timing of marketing opportunities. G&A expenses were 9.4% of sales in the first nine months, consistent with prior years. Diluted EPS of $3.19 was up versus $3.14 in the prior year, despite a headwind related to the timing impact of marketing spend and higher. We anticipate interest expense in Q4 of just over $15 million thanks to our debt reduction effort Finally, our Q3 tax rate was 23.8%, and we anticipate a similar rate in Q4. Now, let's turn to slide 10 and discuss cash. For the first nine months, we generated $175.6 million in free cash flow, up mid-single digits versus the prior year.

Speaker Change: By segment, excluding FX North American segment revenues were approximately flat, while the international segment increased approximately 12% versus the prior year.

Speaker Change: In North America, the largest category growth drivers for the first nine months were strong ear and eye care and dermatological category sales, which helped partially offset declines in women's health and the strategic exit of the private label business.

Speaker Change: Year to date, we also experienced solid high single digit year over year growth in the E Commerce channel.

Speaker Change: The international segment performed above our long term expectations, thanks to strong performance across numerous brands and geographies.

Speaker Change: Total company gross margin of 55, 7% in the first nine months was down slightly versus prior year, owing to challenging comparisons in Q1.

Speaker Change: This gross margin was as we expected and attributable to cost increases, partially offset by pricing actions and cost savings across our portfolio, which entirely offset the dollar amount of inflationary cost headwinds.

Speaker Change: For the full fiscal year, we continue to anticipate gross margin flat to up slightly versus fiscal 'twenty three with Q4 estimated to increase nearly 200 basis points versus prior year to 55, 5%.

Christine Sacco: At December 31st, our net debt was approximately $1.1 billion, nearly 90% of which is fixed, and we achieved a covenant-defined leverage ratio of 2.9 times, consistent with our long-term objectives. Although we anticipate reducing debt through the balance of the fiscal year, our reduced leverage and remaining debt being largely fixed at attractive rates unlocks further flexibility around capital deployment moving forward. With that, I'll turn it back to Ron.

Speaker Change: Advertising and marketing for the first nine months was up in dollars versus the prior year and flat on a percentage of sales basis at 13, 6%.

Speaker Change: For Q4, we anticipate an A&M rate of approximately 12, 5% attributable to the timing of marketing opportunities.

Speaker Change: G&A expenses were nine 4% of sales in the first nine months consistent with prior year.

Ronald M. Lombardi: Thanks, Chris. Let's turn to slide 12 to wrap things up. We are on pace to deliver excellent full-year results and exceed the earnings outlook that we began the year with. We are pleased with this improved EPS forecast, which is driven by our proven business strategy and a well-positioned and diversified portfolio. For Fiscal 24, we continue to anticipate revenues of $1,135,000,000 to $1,140,000 and organic revenue growth of approximately 1 to 2 percent versus Fiscal 23, or organic revenue growth of 2 to 3 percent, excluding the strategic exit of the Private Label Bank. For Q4, we are forecasting revenue of approximately $287 million, a slight year-over-year increase. This implies revenue for the full year at the lower end of our original guidance, driven largely by unfavorable foreign exchange. For EPS, we now anticipate diluted EPS of approximately $4.33 for fiscal 24.

Speaker Change: Diluted EPS of $3 19 was up versus $3 14 in the prior year, despite a headwind related to the timing impact of marketing spend and higher interest rates.

Speaker Change: We anticipate interest expense in Q4 of just over $15 million. Thanks.

Speaker Change: Thanks to our debt reduction efforts.

Speaker Change: Finally, our Q3 tax rate was 23, 8% and we anticipate a similar rate in Q4.

Speaker Change: Now, let's turn to slide 10, and discuss cash flow.

Speaker Change: For the first nine months, we generated $175 6 million and free cash flow up mid single digits versus the prior year.

Speaker Change: At December 31, our net debt was approximately $1 1 billion nearly 90% of which is fixed and we achieved a covenant defined leverage ratio of two nine times consistent with our long term objective.

Speaker Change: Although we anticipate reducing debt through the balance of the fiscal year, our reduced leverage and remaining debt being largely fixed at attractive rates unlocked further flexibility around capital deployment moving forward.

Speaker Change: With that I'll turn it back to Ron.

Ronald M. Lombardi: Thanks to our strong year-to-date results and the power of our cash flow. For Q4, we expect EPS of $1.14, up high single digits versus the prior year. Lastly, we continue to anticipate pre-cash flow of $240 million or more using cash flows for deleveraging through the balance of the year.

Ronald M. Lombardi: Thanks, Chris, Let's turn to slide 12 to wrap up.

Ronald M. Lombardi: We are on pace to deliver excellent full year results and exceed the earnings outlook that we began the year with.

Ronald M. Lombardi: We are pleased with this improved EPS forecast that is driven by our proven business strategy and are well positioned and diversified portfolio.

Ronald M. Lombardi: For fiscal 'twenty four we continue to anticipate revenues of $1 billion $1 $35 billion to $1 billion $1 40, and organic revenue growth of approximately 1% to 2% versus fiscal 'twenty, three or organic revenue growth of 2% to 3%, excluding the strategic exit of the private label.

Ronald M. Lombardi: With that, let's turn to slide 13 for a reminder about our business strategy and the long-term targets for financial growth. Even in today's evolving marketplace, our diverse portfolio of leading healthcare brands provides a great starting point that supports predictable, long-term top line organic growth of 2 to 3% annually. This level of growth is amplified by our industry-leading cash flows that accelerate this top-line growth into 6-8% organic EPS growth over the long term. Additionally, our strong free cash flow and resulting deleveraging creates additional optionality for capital deployment, including M&A, that can drive significant upside to this algorithm. We continue to assess go forward opportunities, and we have a long history of using our leading financial profile to help drive further upside, whether it be buying back stock, paying down debt, or doing M&A. We remain confident that our business attributes support this proven formula. We look forward to providing additional details on our expectations for next year on our May call. With that, I'll open it up for you, Operator.

Ronald M. Lombardi: <unk>.

Ronald M. Lombardi: For Q4, we are forecasting revenue of approximately $287 million a slight year over year increase.

Ronald M. Lombardi: This implies revenue for the full year at the lower end of our original guidance driven largely by unfavorable FX.

Ronald M. Lombardi: For EPS, we now anticipate diluted EPS of approximately $4 33 for.

Ronald M. Lombardi: For fiscal 'twenty four.

Ronald M. Lombardi: Thanks to our strong year to date results and the power of our cash flow.

Ronald M. Lombardi: For Q4, we expect EPS of $1 14 up high single digits versus the prior year.

Ronald M. Lombardi: Lastly, we continue to anticipate free cash flow of $240 million or more using cash flows for deleveraging through the balance of the year.

Ronald M. Lombardi: With that let's turn to slide 13 for a reminder, around our business strategy and the long term targets for financial growth.

Ronald M. Lombardi: Even in today's evolving marketplace, our diverse portfolio of leading healthcare brands provide a great starting point that supports predictable long term top line organic growth of 2% to 3% annually.

Ronald M. Lombardi: This level of growth is amplified by our industry, leading cash flows that accelerate the topline growth into 6% to 8% organic EPS flow over the long term.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone. As well, we ask that you please wait for your name to be announced before proceeding with your question.

Ronald M. Lombardi: Equally important our strong free cash flow and resulting deleveraging creates additional optionality for capital deployment, including M&A that can drive significant upside to this algorithm.

Operator: One moment while we compile the Q&A route. The first question today will be from Rupesh Parker of Oppenheimer. Your line is open.

Ronald M. Lombardi: We continue to assess go forward opportunities and we have a long history of using our leading financial profile to help drive further upside whether it be buying back stock paying down debt or doing M&A.

Ronald M. Lombardi: Good morning, and thanks for taking my question. So I guess, given there's been a lot of concerns just about cough and cold, I would just love to hear your expectations for Q4 for that category. Good morning, Rupesh.

Ronald M. Lombardi: We remain confident that our business attributes support this proven formula.

Ronald M. Lombardi: We look forward to providing additional details on our expectations for next year on our May call.

Ronald M. Lombardi: So for starters, the cough cold part of our business is about 7% of revenue, and sales continue to be largely in line with what we anticipated at the start of the year and Q4 we would expect to be fairly close to the levels that we had last year. Okay, great.

Speaker Change: With that I'll open it up for questions operator.

Speaker Change: Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone.

Speaker Change: As well we ask that you. Please wait for your name to be announced before you proceed with your question one moment, while we compile the Q&A roster. The first question today will be coming from Rakesh Park Parker.

Ronald M. Lombardi: And then just on women's health, the business improved sequentially just from a decline perspective, just your latest thinking on that business and the expectations of getting back to growth there. Yeah, you know, as we said at the start of the year, we anticipated that this year was going to be kind of a recovery and stabilization for the two brands. You know, Monistat is definitely there. He got recovered earlier in the year.

Speaker Change: Oppenheimer Your line is open.

Speaker Change: Good morning, and thanks for taking my question.

Speaker Change: Alright, I guess youre given theres been a lot of concerns just about cough and cold I would just love to hear your expectations for Q4 for that category.

Speaker Change: Sure.

Ronald M. Lombardi: <unk> so for starters the cough cold.

Oppenheimer: Part of our business is about 7% of revenue and sales continued to be largely in line with what we anticipated.

Ronald M. Lombardi: And Summer's Eve continues to see improving trends, so both of those brands should be in a good position to begin growth. And then just for FY 25, I know you guys aren't ready to provide a guidance range, but are there any initial high-level puts and takes that we can think of as we look towards your next fiscal year? Yeah, you know, we finished up the prepared remarks today with that slide that we've talked about for a long time with our two to 3% top line growth and mid single-digit bottom line growth. So directionally, I think though, that's where you might want to consider starting and certainly we'll get into lots of detail on that.

Oppenheimer: At the start of the year and Q4, we would anticipate to be fairly close to the levels that we had last year.

Speaker Change: Okay, Great and then just on just on women's health business improved sequentially just from a decline perspective, just your latest thinking on that business and the expectations of getting back to growth there.

Speaker Change: Yes.

Ronald M. Lombardi: Yes.

Ronald M. Lombardi: We said at the start of the year, we anticipated that this year was going to be.

Speaker Change: And a recovery and stabilization for the two brands Monistat is definitely there.

Ronald M. Lombardi: Scott recovered earlier in the year.

Ronald M. Lombardi: Summer's Eve continues to see improving trends.

Speaker Change: And should both of those brands should be in a good position to begin growth for next year.

Ronald M. Lombardi: My final question, you know, given that you guys are in a really good position from a debt pay-down perspective; there's only a limited amount of valuable rate debt to pay down. So it seems like you have a lot more flexibility to actually deliver on the algorithm. So how does your team think about, you know, even investing more in the business, maybe even giving you could even see more accretion going forward for share buybacks? So just trying to get a sense of how flexibly you can invest more in the business because it does feel like you guys have more levers to deliver that 68% EPS. Yeah, excuse me. Rupesh, good morning. It's Chris.

Speaker Change: And then just just for FY 'twenty five I know you guys aren't ready to provide a guidance range, but is there any initial high level puts and takes that we can think of as we look towards your next fiscal year.

Chris: Yes, we finished up the prepared remarks today with that slide that we've talked about.

Ronald M. Lombardi: For a long time with our 2% to 3% top line growth and mid single digit bottom line growth. So directionally I think that's where where you might want to consider starting and certainly we will get into lots of detail on the may call.

Speaker Change: Great and my final question just given you guys are in a really good position from a debt Paydown perspective, Theres only a limited amount of variable rate debt to pay down. So it seems like you have a lot more flexibility to actually deliver on the algorithm. So how does your team think about.

Ronald M. Lombardi: With the excess cash maybe even investing more in the business just given you could even see more accretion going forward for share buybacks.

Ronald M. Lombardi: So just trying to get a sense of just the flexibility to invest more in the business.

Chris: So yeah, we did talk about continued deleveraging in Q4. But as Ron highlighted, you hit it right on the head as we head into fiscal 25 and beyond. Leverage now at 2.9, right? The remaining debt that we have is largely fixed, very attractive rates.

Speaker Change: Just feels like you guys have more levers to deliver that 6% to 8% EPS growth.

Chris: Yes, excuse me good morning, it's Chris So yes, we did talk about continued deleveraging in Q4, but as Brian highlighted you hit it right on the head as we head into fiscal 'twenty five and beyond leverage now at 209 right. The remaining debt that we have is largely fixed.

Chris: The attractive rates, so I think youre going to see increased optionality from us in terms of.

Chris: So I think you're going to see increased optionality from us in terms of whether it be, you know, M&A, buying back stock, or continuing de-levering. We have the optionality to do more than one. And we'll look forward to that as we go. Great. Thank you, Apostle On.

Chris: Whether it be M&A buying back stock and our continued delevering.

Apostle On: Have the optionality to do more than one.

Apostle On: And we look forward to that as we head into fiscal 'twenty five.

Apostle On: Great. Thank you I'll pass it along.

Chris: Thank you. One moment while we prepare for the next question. The next question will be coming from Susan Anderson of Common Core. Your line is open. Hi, good morning.

Susan Kay Anderson: Thank you one moment, while we prepare for the next question.

Chris: Our next question will be coming from Susan Anderson of Canaccord. Your line is open.

Susan Kay Anderson: Hi, good morning, nice job on the quarter.

Susan Kay Anderson: Nice job on the quarter. I was wondering if maybe you could talk about kind of the puts and takes in the P&L. That's changed a little bit to raise the bottom line while keeping the top line the same. And then also just on North America sales ending up flattish. It looks like really nice growth in ear and eye care.

Susan Kay Anderson: I was wondering if maybe you could talk about kind of the puts and takes in the P&L.

Susan Kay Anderson: That's changed a little bit to raise the bottom line, while keeping the top line. The same and then also just on the North America sales ended up flattish it looks like really nice growth and ear and eye care, maybe if you could talk about the other categories. And then also I think you mentioned that noncore brands you maybe saw some weakness.

Chris: Maybe if you could talk about the other categories. And then also, I think you mentioned that non-core brands; you maybe saw some weakness there. If you could talk about what brands those were, thanks. Yeah, Susan. Maybe I'll start and then Ron could take the second part of your question.

Chris: There if you could talk about.

Susan: What brands thanks.

Chris: Yes, maybe I'll start and then Ron could take the second part of your question. So the Q3 beat.

Chris: So the Q3 beat was really timing behind a strong international performance. You know, we talk about the nature of that business being a distributor model, and sometimes, quarter-to-quarter results could be a bit lumpy, and we did see that, so hence no real change to our full-year outlook. On the bottom line, EPS was really helped by a more stable interest rate environment. So, as we've said, you know, the power of our cash flow and our ability to de-lever in fiscal 24 was really offset by the rising interest rate environment, and as we head into a more stable environment, we would expect to continue to see that leverage you've seen in the past from us on the bottom line, as Ron was highlighting earlier, as Those two areas continue to have a lot of momentum and do well. Over time, we would expect that the non-core and tail brands would decline.

Really timing behind a strong international performance, we talk about the nature of that business being a distributor model and sometimes quarter to quarter results can be a bit lumpy and we did see that so hence no real change to our full year outlook.

Chris: On the bottom line EPS really helped by a more stable interest rate environment. So.

Chris: As we've said the power of our cash flow and our ability to delever in fiscal 'twenty four it was really offset by the rising interest rate environment and as we head into a more stable environment. We would expect it to continue to see that leverage you've seen in the past from us on the bottom line as Ron was highlighting earlier as a result of our capital deployment.

Speaker Change: Do you want to take the great part of that.

Chris: So in terms of performance across the portfolio.

Chris: We called out the ear and eye in international and the release and on the prepared remarks today.

Chris: Those two areas continue to have a lot of momentum and do well over time, we would expect that the noncore and tail brands with decline.

Chris: You may get a little bit of peaks and valleys from quarter to quarter, so there wasn't anything out of line across the tail part of the portfolio in terms of performance during the year. Great. And then maybe you could talk about or give some color on just what you saw in the quarter on units versus pricing and just kind of your expectations for the rest of the year in terms of volumes versus pricing as those price increases kind of taper off. Yeah, Susan. Hi, it's Chris.

Chris: You may get a little bit of peaks and valleys from quarter to quarter. So there wasn't anything out of line.

Chris: Across the tail part of the portfolio in terms of in terms of performance during the quarter.

Chris: Great.

Chris: And then maybe if you could talk about or give some color on just what you saw in the quarter on units versus pricing and just kind of your expectations for the rest of the year in terms of volumes versus pricing.

Chris: Nice increases kind of taper off.

Chris: Yes, Susan Hi, Chris So we're still benefiting from certain pricing actions that we took in fiscal 'twenty. Three we still expect the full year to be split about half from price growth from price about half volume year to date were pretty consistent with that for Q3 pricing was a little bit less than half right as we start to lap continue.

Chris: So we're still benefiting from certain pricing actions that we took in fiscal 23. We still expect the full year to be split about half from price growth and about half volume. Year to date, we're pretty consistent with that. For Q3, pricing was a little bit less than half, right, as we start to continue through the year. We do expect that to continue in the fourth quarter.

Chris: Through the year, we do expect that to continue in the fourth quarter.

Chris: But I think what's important is, unlike some others, you know, our volumes have really remained pretty stable. Last year, we talked about two-thirds of our growth coming from price, but we still had volume growth. This year, we talk about half and half, and the year is proving out. We fall in line with that, so it really speaks to the stability of our part of the store and the needs-based nature of our product. Okay, great. Thanks.

Chris: But I think what's important is unlike some others are volumes have really remained pretty stable last year, we talked about two thirds of our growth coming from price, but we still had volume growth. This year, we talk about half and half in the year is proving out.

Chris: To fall in line with that so really speaks to the stability of our part of the store and the needs based nature of our of our products.

Speaker Change: Okay, great. Thanks, and then maybe one last question. If you could just talk about the cost savings that you have put in place to help our gross margin back given the inflationary pressures I guess have you started to see those flow through the P&L and how should we think about that as we look out the next few quarters. Thanks.

Chris: And then maybe one last question, if you could just talk about the cost savings that you have put in place to help work gross margin back given the inflationary pressures, I guess, have you started to see those flow through the P&L? And how should we think about that as we look out the next few quarters? Thanks.

Chris: Yeah, sure. So we have begun to see the benefit of that. You know, we were up 130 basis points in the third quarter year over year.

Speaker Change: Yes, sure. So we have begun to see the benefit of that.

Speaker Change: We're up 130 basis points in the third quarter year over year.

Chris: Some of that is price, but less than half. The other half, or a bit more, is coming from those cost savings you mentioned. We have seen a little bit of deflation on freight, and that started to flow through the P&L in the third quarter, and we're calling the fourth quarter essentially in line with the third quarter in terms of gross margin, still on track for the year to be flat to slightly up slightly. So, in line with what we expected as we started. Great. Thanks so much.

Speaker Change: Some of that is price, but less than half the other half.

Chris: Or a bit more is coming from those cost savings you mentioned, we have seen a little bit of deflation on freight and that started to flow through the P&L in the third quarter.

Chris: Recall in the fourth quarter essentially in line with the third quarter in terms of.

Chris: Gross margin is still on track for the year to be flat to up slightly so in line with what we expected as we started this year.

Speaker Change: Great. Thanks, so much good luck the rest of the year.

Chris: Good luck for the rest of the year. Thank you. One moment for the next question. And our next question will be coming from Jon Anderson of William Blair. Your line is open. Thanks, operator. Good morning, everybody.

Jon Anderson: Thank you one moment for the next question.

Jon Anderson: And our next question will be coming from John Anderson of <unk>.

Jon Anderson: William Blair Your line is open.

Jon Anderson: Thanks, operator, good morning, everybody.

Jon Anderson: Good morning, John.

Jon Anderson: Let's see any any.

Operator: Let's see, anything going on from a channel perspective of note, strength in certain areas, softness in others, and then if you could talk about retail inventory levels and any thoughts around shipments relative to consumption going forward. So, the first question was around channel shifts.

Jon Anderson: And going on from a channel perspective of note.

Jon Anderson: Strength in.

Jon Anderson: Certain areas softness in others and then.

Jon Anderson: If you could talk about.

Jon Anderson: Retail inventory levels.

Jon Anderson: Thoughts around shipments relative to consumption going forward.

Operator: So.

Jon Anderson: Because your first question was around channel shift.

Ronald M. Lombardi: During the third quarter, it was fairly consistent with what we've seen since the beginning of our fiscal year, which is, people are moving around within within channels and shopping a little differently as they look for better price/value propositions to deal with inflation. You know, that's really been the most noticeable impact on the high level of inflation, at least for our business. So those trends have been fairly consistent over the last year or so, and nothing different. And again, we have a broad distribution of our brands, so we really don't mind where the consumer chooses to shop.

Jon Anderson: The third quarter were fairly consistent with what we've seen since the beginning of our fiscal year, which is <unk>.

Ronald M. Lombardi: People are moving around within within channels and shopping a little differently as they look for a better price value propositions to deal with.

Ronald M. Lombardi: Inflation, that's really been.

Ronald M. Lombardi: The most notable impact on the high level of inflation at least for our business. So those trends have been fairly consistent over the last year or so and.

Ronald M. Lombardi: Nothing different than again, we have.

Ronald M. Lombardi: Our distribution of our brands. So we really don't mind, where the consumer chooses to shop by products are widely available.

Ronald M. Lombardi: Our products are widely available. And then, in terms of retailer inventory destocking, it's been fairly steady for us for the fiscal year. We haven't seen any meaningful net impact on our business. Unlike other parts of the store and maybe others, I didn't hear you mention e-commerce. I may have missed it.

Ronald M. Lombardi: And then in terms of retailer inventory Destocking thats been fairly.

Ronald M. Lombardi: Steady for us.

Ronald M. Lombardi: For the fiscal year, we haven't seen any meaningful net impact on our business so far.

Ronald M. Lombardi: Unlike other parts of the store and maybe other CPG companies that.

Ronald M. Lombardi: That you are hearing from.

Ronald M. Lombardi: I Didnt hear you mentioned E Commerce I may have missed it how did the online business perform from a growth standpoint, and where does that sit now as a percent of your total business.

Chris: How did the online business perform from a growth standpoint, and where does it sit now as a percent of your total business? Sure, Jon. Hey, good morning.

Speaker Change: Sure John Hey, Good morning, So E Commerce was up high single digits for us in the third quarter.

Chris: So e-commerce was up high single digits for us in the third quarter, and right now, it's sitting at about 15% of our sales. So still nice, nice growth, even as we compare some significant growth from prior periods. Right, and I think, Ron, given your comments around just consumers looking for better value propositions, and that's kind of a common theme now, are there any changes on the, you know, market share front for your brands? Talked to, we've talked about kind of organic growth, but not so much share, and have you seen any change from a competitive standpoint relative to private label in any of your categories? Yeah, in general, we haven't seen any share loss or share shift as a result of consumers moving away from our products to lower priced or private labeling in particular.

Chris: Right now it's sitting at about 15% of our sales are still nice nice growth, even as we comp some significant growth from prior period.

Chris: Great.

Chris: And.

Chris: <unk>.

Chris: Ron given your comments around just consumers looking for better value propositions.

Chris: The common theme now are.

Chris: Are there any changes on the.

Chris: Market share front for your brands talked we've talked about kind of organic growth but.

Chris: Not so much share and you have seen any change from.

Chris: Competitive standpoint relative to private label in any of your categories.

Chris: Yes in general we haven't seen any share loss or share shifts as a result of consumers moving away from our our products to lower priced or private label in particular so.

Chris: So, you know, it goes back to incidents and occasions for our products. You know, if you're in the category once every year, once every two years, and you're looking for that trusted brand, it's not the time you take a chance to try something different. So that attribute, you know, we've talked about for a long time as being important, an important consideration when you think about our brand. Okay. It's just one more. It sounds like, just, you know, given where you are right now, from a balance sheet perspective, and continued strong cash generation looking forward, you are probably going to look more aggressively at M&A, you know, as a use of excess free cash. I mean, is that accurate? And I like it.

Chris: It goes back to the incident.

Chris: <unk> for our product.

Chris: In the category once every year once every two years and Youre looking for that trusted brand is not the time you take a chance to try something different to save a few pennies.

Chris: No.

Chris: Attribute we've talked about for a long time as being important.

Speaker Change: An important consideration when you think about our brands and our position.

Chris: Okay.

Speaker Change: I guess one more.

Speaker Change: It sounds like just.

Chris: Given where you are right now from a balance sheet perspective.

Speaker Change: And continued strong cash generation looking forward.

Speaker Change: You probably.

Speaker Change: Going to look more aggressively to M&A.

Speaker Change: As the use of excess free cash I mean is that accurate.

Speaker Change: So like.

Ronald M. Lombardi: What are you, like, what's on your shopping list? What are you really, you know, looking for? What criteria, you know, from a category product? Operational perspective, you know, is important to you as you evaluate, you know, M&A opportunities? You know, interestingly enough, Jon, there really hasn't been a change in how we think about M&A from two years ago or today, even though our leverage is down meaningfully. You know, we've got a very well-defined criteria of what we look for in leading brands that define categories that are set up for long-term growth. And that's been the success behind our M&A over the last years, and that hasn't changed. So I wouldn't say we're going to be more aggressive.

Speaker Change: What are you.

Speaker Change: Whats on your shopping list what are you really looking for what criteria.

Ronald M. Lombardi: From a category products operational perspective.

Ronald M. Lombardi: It is important to you as you evaluate M&A opportunities.

Ronald M. Lombardi: Interestingly enough John there really hasnt been a change in how we think about M&A.

Ronald M. Lombardi: From two years ago or today, even though our leverage is down meaningfully.

Ronald M. Lombardi: <unk> got a very well defined criteria of what we look for leading brands that defined categories that are set up for long term growth and thats been the success behind our M&A over the last 10, plus years and that Hasnt changed so I wouldn't say, we're going to be more aggressive we're going to continue to look.

Ronald M. Lombardi: We're going to continue to look for opportunities that fit that criteria. There is a lot of activity out there. Seems like we don't go a week without something showing up.

Ronald M. Lombardi: For opportunities that fit that criteria, there's a lot of activity out there it seems like.

Ronald M. Lombardi: Go a week without pumping showing up but we stick to what we know will create value for the shareholders over the long term and I think both in Chris's comments in mind today.

Ronald M. Lombardi: But we stick to what we know will create value for shareholders, and I think both Chris's comments and mine today are a reminder that we continue to be very well positioned to create value for our shareholders with our cash flow and our lower level of leverage, continuing to invest in the business, M&A, de-levering even lower over time, and stock buyback. So we have a lot of optionality to create value, and I think that's the important focus of which M&A is certainly important. Yeah, that's a good approach. And I guess, you know, with your free cash flow yield in the high single digits, looking at stock buybacks is not a bad thing either. So thanks for the time. I appreciate it.

Ronald M. Lombardi: As a reminder, that we continue to be very well positioned to create value for our shareholders with our cash flow in a lower level of leverage whether it's continuing to invest in the business M&A delevering, even lower over time stock buybacks. So we have a lot of optionality to create.

Ronald M. Lombardi: And I think that's the important focus of which M&A is certainly an important factor.

Ronald M. Lombardi: Factor of it.

Ronald M. Lombardi: Yes, that's a good approach and I guess with your free cash flow yield in the high single digits.

Ronald M. Lombardi: Looking at stock buybacks, we've done a bad thing either so thanks for the time appreciate it.

Operator: Thank you. One moment for the next question. And our next question will be coming from Linda Bolton Weiser of D.A. Davidson. Your line is open. Yes, hi. Good morning.

Speaker Change: Thank you John.

Speaker Change: Thank you one moment to the next question.

Speaker Change: And our next question will be coming from Linda Bolton Weiser.

Speaker Change: D. A Davidson your line is open.

Speaker Change: Yes, hi, good morning, So I was wondering so a little more.

Linda Bolton Weiser: So I was wondering just a little more about channels, distribution channels. I was curious, you don't talk very much about the club channels. And like, are you in them?

Speaker Change: Discussion of of channels distribution channels I was curious you don't talk very much about the club channels and.

Speaker Change: Like are you in one and which brands would lend themselves to the club channels and is that something you'd like to do more of in that channel and then also same kind of question about the dollar stores, what's your approach there.

Ronald M. Lombardi: And which brands would lend themselves to the club channels? And is that something you'd like to do more of in that channel? And then also, same kind of question about the dollar stores, what's your approach there? Which brands are most penetrated into the dollar stores? And how are you thinking about those channels? Thanks. Morning, Linda. So club isn't a big channel for us. It's very small.

Ronald M. Lombardi: Brands are most penetrated into dollar stores and how are you thinking about those channels. Thanks.

Ronald M. Lombardi: Sure Good morning, Linda So club isn't.

Linda: A big channel for Us it's very small.

Ronald M. Lombardi: And if, largely due to the nature of our products, sick, think of Monistat, you're not going to buy a three pack that you'd find in the clubhouse. But it doesn't mean that we don't focus on opportunity there. Clear eyes, and BC and Goody, are some examples where we do sell through a club that's largely B2B, where the small convenience channel may go in and buy product. So it's more the end of it then.

Linda: Largely due to the nature of our products if you think.

Ronald M. Lombardi: Think of Monistat youre not going to buy a three pack like you would find in the club offering.

Ronald M. Lombardi: Doesn't mean that we don't focus for opportunity there clear eyes.

Ronald M. Lombardi: And BC and goody's.

Ronald M. Lombardi: Some examples where we do sell through clubs thats largely be to be where the small convenience channel may go in and byproduct for resale.

Ronald M. Lombardi: More of that end of it then consumer tax doesn't mean, we don't look at it for opportunities to grow but just by the sheer nature of our products its not an important channel for us.

Ronald M. Lombardi: It doesn't mean we don't look at it for opportunities to grow, but just by the sheer nature of our product, dollar is, and it's been a nice growing channel for us over time. If you go into some of the leading dollar retailers, you'll see expanding consumer health care aisles where they're looking to expand the branded offering of products that are out there. So we have great product distribution in dollars that's there with unique pack sizes and count sizes so that the margin in that channel is consistent for us as it would be in any other channel. So, you know, we look at it as partners with all of our retail channels, retail partners to help them be successful. So that's a little bit about clubs and dollars. Okay, thank you, and, um...

Ronald M. Lombardi: <unk> is and it's been a nice.

Ronald M. Lombardi: This.

Ronald M. Lombardi: Growing channel for us over time, if you go into some of the leading dollar.

Ronald M. Lombardi: Retailers Youll see expanding consumer healthcare idles, where they're looking to expand a branded offering.

Ronald M. Lombardi: Our products that are out there so.

Ronald M. Lombardi: We have great.

Ronald M. Lombardi: Product distribution in dollar.

Ronald M. Lombardi: There with unique pack sizes account sizes, so that the margin in that channel is consistent for us as it would be in any other channels. So we look at it to partner with all of our retail channel.

Ronald M. Lombardi: Retail partners to help them be successful.

Ronald M. Lombardi: So thats, a little bit about club and dollar for us.

Speaker Change: Okay. Thank you and.

Linda Bolton Weiser: On private label, I know you said you're not really seeing any big shifts or anything regarding market share. But I just wanted to clarify is it, I would think it's the case that private label might have a higher share in track channels versus non-track channels. But I don't know. Can you confirm that?

Ronald M. Lombardi: Just on private label I know, you said youre, not really seeing any big shifts or anything regarding market share but.

Linda Bolton Weiser: Just wanted to clarify is it I would think it's the case that private label might have.

Linda Bolton Weiser: Higher share in tracked channels versus non tracked channels.

Linda Bolton Weiser: But I don't know, okay can you confirm that what would that be the case.

Ronald M. Lombardi: Would that be the case? I believe it is, Linda, and probably skews more heavily to the track side of the business. The other thing, you know, I'll remind the folks on the call today, is that our number one job is to have differentiated, efficacious products so that when the consumer gets to the shelf... There's something different about our products versus private label or anything, so that we're not losing just on price. So, you know, that's what we think about when we come to work every day, making sure that we've got the best product out there that meets what consumers are looking for. And that's been consistent over time and why we continue to hold our share, and grow our share in the categories that we lead. Okay, sounds good. And then just finally, I wanted to ask, we've been seeing a lot about recalls of various eyedrop products. Does any of that affect whether is it an eyedrop or is it cough syrup?

Ronald M. Lombardi: I believe it is.

Ronald M. Lombardi: Under.

Ronald M. Lombardi: Probably skews more heavily to the track.

Ronald M. Lombardi: <unk> side of the business.

Ronald M. Lombardi: The other thing.

Ronald M. Lombardi: Ill remind the folks on the call today right.

Ronald M. Lombardi: Our number one job is to have differentiated efficacious products, so that when the consumer gets to the shelf.

Speaker Change: There is something.

Ronald M. Lombardi: Different about our products versus private label or any competitor.

Ronald M. Lombardi: <unk> that we're not losing just on price so.

Ronald M. Lombardi: That's what we think about when we come to work every day is making sure that we've got the best product.

Ronald M. Lombardi: Out there that meets what consumers are looking for and that's been consistent over time and why we continue to hold our share grow our share in the categories that we lead over the long term.

Ronald M. Lombardi: Okay that sounds good and then.

Ronald M. Lombardi: Just finally I wanted to ask I mean, we've been hit.

Ronald M. Lombardi: Seeing a lot about recalls the various eyedrop products does any of that effect.

Ronald M. Lombardi: Okay is it eyedropper event.

Ronald M. Lombardi: I don't know. There have been some recalls. Is any of that benefiting you in any way? Yeah, it's great.

Ronald M. Lombardi: <unk> costs were up.

Ronald M. Lombardi: I know there's been some recalls.

Speaker Change: Is any of that benefiting you in any way.

Speaker Change: Yes, the press has reported on eye care Eyedrop.

Ronald M. Lombardi: The press is reporting on iCare, iDrop, recalls from foreign suppliers for brands you probably never heard of or will hear from again, I guess. You know, over the long term, I think it's helpful to the branded players and clear eyes and fair tiers, in particular where, you know, it just reinforces the importance of staying with trusted brands that you know from companies that you can count on that have disciplined supply chains. You know, our eye care suppliers are long-term suppliers. We focus on quality products on time, not saving the last penny, you know, no matter where you chase them. So, over the long-term, it's both good for our brands and the industry as consumers are reminded of the importance of those trusted brands. Quality Products Okay, thank you very much. I appreciate it. Thank you, Linda. Thank you.

Ronald M. Lombardi: Recalls.

Ronald M. Lombardi: Foreign suppliers.

Ronald M. Lombardi: Core brands, you've probably never heard over we'll hear from again I guess.

Ronald M. Lombardi: Over the long term I think it's helpful to the branded players and clear eyes and third tiers in particular, where it just reinforces the importance of staying with trusted brands that you know from companies that you can count on that have disciplined supply chain.

Ronald M. Lombardi: Our eyecare suppliers are long term suppliers, we focus on quality product on time, not saving the last penny no matter, where you chase it so over the long term, it's both good for our brands in the industry.

Ronald M. Lombardi: As consumers.

Ronald M. Lombardi: <unk> of the importance of those trusted brands and quality product.

Speaker Change: Okay. Thank you very much I appreciate it.

Speaker Change: Thank you Linda.

Operator: One moment for the next question, and our next question will be coming from Mitchell. Pinheiro, Sterling, your line is open.

Speaker Change: Thank you one moment for the next question.

Mitchell Brad Pinheiro: And our next question will be coming from Mitchell.

Mitchell Brad Pinheiro: And now.

Operator: Jeremy.

Mitchell Brad Pinheiro: Hey, good morning. A couple questions for you. And this is just sort of anecdotal, but, you know, I kind of look at the Eye and Ear Care ever since you purchased TheraTears, and I noticed that category continues to, especially in the drug channel, to have real spotty inventory coverage. Is it, is there something, and I'm not saying it's all TheraTears, it's the entire category of brands and even the private label. Is there, is there anything specific to either the drug channel that where inventory levels are low, or is it just execution at various drug retailers that make that shelf coverage look spotty? Yeah, so first of all, right, the eye care category in general has been fast growing, for quite a while now so right with that increasing demand it over indexes a bit to the drug channel right it's a bit more of a serious condition and people think about it you know with seriousness so we see that across our brands that are more serious affliction related that the drug channel over indexes a bit and then in addition to that right there's some nuances in the eye care supply chain where you know periodic shutdowns as they do maintenance and other things can put a little bit of a pause in delivery for all the players in there we talked about that last year in the quarter ended December where we had a little bit of a pause in supply so it can happen to any of the brands so you put all those elements together it may be why you go into the drug channel and they may look a little bit of a little bit short on Inventory. Okay, thank you.

Mitchell Brad Pinheiro: Your line is open.

Mitchell Brad Pinheiro: Hey, good morning.

Mitchell Brad Pinheiro: Yes.

Speaker Change: A couple of questions for you.

Mitchell Brad Pinheiro: And this is just sort.

Mitchell Brad Pinheiro: Anecdotal, but I kind of look at the <unk> in your care ever since you purchased Terra tears and I noticed that category continues to.

Mitchell Brad Pinheiro: Especially in the drug channel to have real spotty inventory coverage is it is there something and I must say, it's all three tiers with the entire category of <unk>.

Mitchell Brad Pinheiro: Brands and even the private label is there.

Mitchell Brad Pinheiro: Is there anything specific to either the drug channel that where inventory levels are low or is it just execution that various drug retailers that make that.

Mitchell Brad Pinheiro: Shelf coverage look.

Mitchell Brad Pinheiro: Spotty.

Speaker Change: Yes so.

Mitchell Brad Pinheiro: First of all right the eye care category in general has been fast growing.

Mitchell Brad Pinheiro: For quite a while now so right, we've got increasing demand it over indexes a bit to the drug channel right, it's a bit more of a serious.

Mitchell Brad Pinheiro: Condition and people think about it with seriousness so we.

Mitchell Brad Pinheiro: We see that across our brands that are more serious inflection related at the drug channel.

Mitchell Brad Pinheiro: Overindexes a bit.

Mitchell Brad Pinheiro: And then in addition to that right. There's some nuances in the eye care supply chain, where periodic shutdowns as they do maintenance and other things can put a little bit of a pause and delivery for all the players in there we talked about that last year and the quarter ended December where we had a little bit.

Mitchell Brad Pinheiro: Of of a pause.

Mitchell Brad Pinheiro: In supply so it can happen to any of the brand. So you put all of those elements together maybe why.

Mitchell Brad Pinheiro: You go into the drug channel in May look a little bit a little bit short on.

Mitchell Brad Pinheiro: Inventory.

Mitchell Brad Pinheiro: Okay.

Chris: And then when it comes to, you know, you look at the gross margin longer term, you're slowly recovering from levels, you know, five years ago or more. But are those levels, you know, 37, 57, 58 percent, are they achievable? longer term? Or is there something structural? And maybe it is just the math that causes the gross margin to be that we won't get back to that level? Yeah, hi Mitch. Morning, Chris.

Speaker Change: Okay. Thank you and then.

Mitch: When it comes to.

Speaker Change: You look at the gross margin.

Mitch: Longer term.

Mitch: Youre slowly recovering.

Mitch: From levels five years ago or more.

Mitch: Are those levels, you know 37 50, 758%.

Mitch: Are they achievable.

Mitch: Longer term.

Mitch: Or is there something structural and maybe is it just the math that causes the gross margin.

Mitch: But it won't we won't get back to that level.

Speaker Change: Yes, Hi, Mitch good morning, Chris So there is nothing structural going on within our gross margin can we see a path back to more normalized margins absolutely.

Chris: So there's nothing structural going on within the gross margin. Can we see a pass back to more normalized margins? Absolutely.

Chris: When you say that just math, the math is going to dictate the timing. So, as we've said, in each of these past three years, we have offset inflationary pressures dollar for dollar with cost savings and pricing. But, as you mentioned, the math takes the margin part of it a little while to catch up.

Speaker Change: When you say is it just math the math is going to dictate the timing. So as we've said in each of the past three years, we have offset inflationary pressures dollar for dollar with cost savings and pricing, but as you mentioned the math takes the margin part of it a little while to catch up. So we have line of sight several years out to cost saving measures.

Chris: So we have a line of sight several years out to cost-saving measures. We feel good about them and our ability to start to recover margin. We'll talk about that in May, but there is certainly nothing structural that would prevent us.

Chris: Feel good about them and our ability to start to recover margin will talk about in may but there is certainly nothing structural that would prevent us from doing that.

Chris: Yeah, and I guess the same question for for A&M spend. I mean, it's been very consistent is, you know, on a percentage of sales basis. Is there?

Chris: And I guess the same the same question for <unk> spend I mean, it's been very consistent.

Chris: On a percentage of sales basis.

Ronald M. Lombardi: Are there any plans for either, you know, any changes there directionally at A&M over the longer term? Yeah, Mitch, we'll continue to look to spend more dollars in A&M over time, right? The percent is one thing, but you put dollars to work, right? You write checks.

Chris: There.

Chris: Is there are there any plans for either.

Mitch: Any changes there directionally.

Speaker Change: On A&M over the longer term.

Ronald M. Lombardi: Yes mix will continue to look to spend more dollars in A&M over over time. The percent is one thing, but you put dollars to work right Youre right check so.

Ronald M. Lombardi: So as we said, as our gross margin ticks up, it'll give us an opportunity to continue to look for opportunities to spend spend more dollars to support the long-term brain building. Any marketing company should always start with the desire to spend more money. That's how we think about it.

Ronald M. Lombardi: As we said as our gross margin picks up that will give us an opportunity to continue to look for opportunities to spend and spend more dollars to support the long term.

Ronald M. Lombardi: Long term brand building initiatives any marketing company should always start with the desire to spend more money.

Ronald M. Lombardi: So that's how we think about it.

Ronald M. Lombardi: Great.

Ronald M. Lombardi: I guess the last question is... Just on on leverage. So you've come down here below three seems to be a comfortable level for many investors in the consumer space. And I'm curious whether, when you decide, you know, on an acquisition, or maybe it's a share repurchase, but I'm curious whether there's a level of leverage where you don't want to exceed and, or, you know, like, you would like to be in a spot where you can get back to the below-three level quicker than you've had in the past. Yeah, you know, as we've For a long time, we operated the business essentially around five plus, on average, as you know, we were smaller than that, so when you did a $500 million or $700 million acquisition, it really moved the needle and took a while to get back down. The market has spoken, and they appreciate companies with lower levels of leverage because it de-risks you and gives you more optionality over time.

Speaker Change: I guess last question is.

Ronald M. Lombardi: Yes.

Ronald M. Lombardi: On leverage.

Ronald M. Lombardi: You've come down here below three <unk>.

Ronald M. Lombardi: Seems to be a comfortable level for for many investors in the consumer space and.

Ronald M. Lombardi: I am curious whether.

Ronald M. Lombardi: When do you decide.

Ronald M. Lombardi: On an acquisition.

Ronald M. Lombardi: Or maybe it's share.

Ronald M. Lombardi: Share repurchase, but I'm curious.

Ronald M. Lombardi: Whether there is a level of leverage where you don't want to exceed and ore.

Ronald M. Lombardi: No.

Ronald M. Lombardi: Like.

Ronald M. Lombardi: You would like to be in a spot where you can get.

Ronald M. Lombardi: Back to the below three level quicker than <unk> had in the past.

Ronald M. Lombardi: Yes.

Ronald M. Lombardi: As we've said.

Ronald M. Lombardi: We look to operate the business at lower levels of leverage than we have historically.

Ronald M. Lombardi: For a long time, we operated the business essentially around five plus on average as we were smaller than someone you did a $500 million or a $700 million acquisition. It really move the needle and took a while to get back down there.

Ronald M. Lombardi: Market has spoken they appreciate companies with lower levels of leverage.

Ronald M. Lombardi: Because it de risks you and gives you more optionality over time and that was one of the themes that we've talked about not only today, but over the last last year or so so although we don't set a ceiling right we want to be able to step back and evaluate every opportunity that may create value for our shareholders. It's our job to.

Ronald M. Lombardi: And that was one of the themes that we've talked about not only today but over the last year or so. So although we don't set a ceiling, we wanna be able to step back and evaluate every opportunity that may create value for our shareholders. It's our job to figure out how to do it the right way in a way that's...

Ronald M. Lombardi: Figure out how to do it the right way in a way that's appreciated so.

Ronald M. Lombardi: So never say never. But I don't see us operating anywhere near the peak levels we did historically. But it doesn't mean that there might be an opportunity where we pop above three for a very short period of time and then get back into this targeted range. Directionally, that's how we think about things. But, you know, clearly operating at lower levels of leverage. And talking about all that optionality is where we want to be. And then just one more, just relative to what you mentioned earlier about, you know, there's, you're getting a lot of, you've seen a lot of deal books come your way, and a steady flow. But I'm, I'm curious, Are there any differences in sort of M&A pricing?

Ronald M. Lombardi: Never say never I don't see us operating anywhere near the peak levels, we did historically, but.

Ronald M. Lombardi: It doesn't mean that there might be an opportunity where we pop above three.

Ronald M. Lombardi: In a very short period of time, and then get back into this targeted range of less than three over time. So directionally. That's how we think about things, but clearly operating at lower levels of leverage and.

Ronald M. Lombardi: And talking about all of that Optionality is where we want to be going forward.

Ronald M. Lombardi: Okay.

Ronald M. Lombardi: Just one more just.

Ronald M. Lombardi: Relative to you mentioned earlier.

Ronald M. Lombardi: About.

Ronald M. Lombardi: Youre getting a lot of that you've seen a lot of deal books come your way.

Ronald M. Lombardi: Steady slow, but I'm curious.

Ronald M. Lombardi: Are you.

Ronald M. Lombardi: Is there any difference in sort of M&A pricing are you seeing.

Ronald M. Lombardi: Are you seeing, you know, any change in, you know, small deals versus large deals, anything, anything you could share color-wise with the flow that, Yeah, hey Mitch, it's Chris. So really, for the kinds of things that we look at, there hasn't been any change. You know, we do read some of the headlines that you see out there with very large multiples for large deals in very big categories. But that's not the nature of the kinds of things that we look at. So we got this question about two years ago when we announced TheraTiers. People kept asking us, you know, there was a two handle in front of some of the press on some of the larger deals. And we kept saying the pricing was pretty consistent. TheraTiers was done at about 10 times.

Chris: Any change in Reno small deals versus large deals.

Chris: Anything anything you could share color wise with the flow that youre seeing.

Ronald M. Lombardi: Yeah, Hey, Mike, It's Craig so really for the kinds of things that we look at there hasnt been any change.

Chris: We do read some of the headlines that you see out there with very large multiples for large deals in very big categories.

Chris: That's not the nature of the kinds of things that we look at so we got this question about two years ago, when we announced their tiered people kept asking us.

Chris: Two handle in front of some of the press on some larger deals.

Chris: We kept saying the pricing has remained pretty consistent they're tiers was done at about 10 times. So.