Prestige Consumer Healthcare Inc (PBH) 2010 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth quarter 2010 Prestige Brands Holdings, Inc.

conference call.

My name is Karma and I'll be your coordinator for today.

At this time, all participants are in a listen-only mode.

(Operator Instructions)

I would now like to turn the call over to your host for today, Mr.

Dean Siegal, Director of Investor Relations.

Please proceed.

Good morning, and welcome.

I am required to remind you that during this call, statements may be made by management of their beliefs and expectations as to the Company's future operating results.

Statements of management's expectations of what might occur with respect to future operating results are what is known as forward-looking statements.

All forward-looking statements involve risks and uncertainties, which in many cases are beyond the control of the Company and may cause actual results to differ materially from management's expectations.

Additional information concerning the factors that might cause actual results to differ from management's expectations is contained in the Company's annual and quarterly reports that it files with the U.S.

Securities & Exchange Commission.

Now I'd like to introduce Matt Mannelly.

Thank you, Dean.

And welcome to all of you joining us on the call this morning.

In addition to Dean joining me is Pete Anderson, our Chief Financial Officer.

I'd like to make very few brief comments and then turn it over to Pete to take you through the financials and then I will give some additional comments about the business after Pete is finished.

For us, it's been a very busy quarter on a variety of levels.

We reset our strategic direction over the last several months to determine the core brands we'll be focusing on.

We've increased our marketing spending on our core OTC brands.

We've improved our liquidity with the refinancing that was recently completed and we've realigned our management team in some key areas in the last quarter.

Let me turn the call over to Pete, who'll provide you with the numbers and all the financial details and then I will come back with some more commentary on the business.

So, here's Pete.

Thanks, Matt, and good morning, everyone.

As you may have seen in this morning's earnings release, our reported net revenues for the fourth quarter were $71.4 million, $2.8 million or 4% better than last year's net revenues.

We are pleased with the overall net sales performance for the quarter.

Despite a significant decline on the Allergen Block products and lower sales for Chloraseptic and Little Remedies due to a soft cold/flu season this year, our overall net sales of $67.8 million were nearly even with the previous year's net sales of $68.4 million.

Net sales for our core OTC brands, inclusive of the declines experienced on Chloraseptic and Little Remedies, were up 4% for the quarter.

Other revenues were up significantly in the fiscal year 2010 quarter.

This increase reflects improved royalty income for the household segment plus proceeds from a legal settlement on one of our OTC brands concluded during the fourth quarter.

Moving to the bottom line, our reported net income for the quarter was $3.3 million or $0.07 per share, compared to last year's reported net loss of $211.1 million.

As we reported in this morning's earnings release, the fiscal year 2010 results included $4.1 million of noncash expenses related to a loss on extinguishment of debt related to our March refinancing and an intangible impairment charge for one of the brands in our personal care segment.

Net income, adjusted to exclude the impacts of those charges, was $7.4 million or $0.15 per share, a decline of $1.6 million compared to last year's fourth quarter net income, adjusted to exclude the impact of noncash impairment charges.

While adjusted income for the quarter was below the prior year, it matched our expectations as media and consumer promotion expenses were increased against our core brands to drive consumer take away.

In addition, continuing G&A savings derived from our workforce reduction earlier in the year were more than offset in the fourth quarter due to an increase in bonus expense due to last year's bonus accrual reversal, compared to an expense in the current year.

For the year, adjusted net income was $37.2 million or $0.74 per share, an increase of over 10% compared to adjusted net income of $33.3 million or $0.67 per share for fiscal 2009.

Operating income for the fourth quarter, excluding the noncash charge related to the intangible impairment, was $18 million, 9% less than last year's operating income, excluding the noncash intangible writedowns of $19.9 million.

The decrease resulted from an increase in gross profit that was driven by the revenue increase, but that was offset by increased advertising and promotion and G&A expenses compared to last year's quarter.

During the fourth quarter, we generated $8.7 million of free cash flow, a $4.5 million decrease from last year's fourth quarter free cash flow of $13.2 million.

The majority of the decrease related to the refinancing, as we took out the debt we wound up paying interest expense in the quarter.

Otherwise, we would have had the interest payment in April, so it was really just a timing shift.

Since we completed that refinancing during the last week of March, we ended the quarter and the year with a balance sheet, which is a little different than usual.

Because approximately $28 million of our old 9.25 bonds were not tendered prior to the new bond offering in March, we actually left the year and the quarter with $328 million of debt.

That's an increase of $8.8 million from our balance at the end of the third quarter.

Now, the bonds were retired at par on April 15, 2010, using cash on the balance sheet.

So, for modeling purposes, our current debt level was $300 million.

That $300 million is evenly split between bank debt, which is at LIBOR plus 3.25%, with a LIBOR floor of 1.5%, and bonds at 8.25%.

A key element of our refinancing effort was to restore the $30 million revolver, which eliminates the need to hold the big cash cushion on our balance sheet in lieu of a revolver.

A normal level of cash for us to cover operational and working capital needs is approximately $5 million.

In addition, we now also have a $200 million accordion feature, which will give us the ability to make acquisitions if the appropriate opportunity presents itself.

Now, I'd like to turn back to our operating performance for the quarter.

Cost of sales for the quarter of $35.9 million was $1.5 million or 4% greater than the prior year.

As a percent of revenue, cost of sales increased slightly from 50.2% in fiscal year 2009 to 50.3% in fiscal year 2010.

Our A&P expense of $6.6 million was $1 million or 18% greater than A&P expenditures of $5.6 million last year.

The increased spending year-to-year was primarily due to a 28% increase in media and consumer promotion spending against our core brands.

As we told you on the last call, a key element of our strategy going forward is to reallocate A&P dollars to beef up our spending against the core OTC and household product brands.

And we did that by pulling some support from non-core brands.

Our G&A expense of $8.1 million was $1.9 million greater than the prior year's fourth quarter expense of $6.2 million.

The primary driver of the G&A increase was related to bonus expense.

In fiscal year 2009, the Company paid no bonus and, therefore, we booked a reversal of accrued expenses in the fourth quarter.

For fiscal year 2010, the Company achieved targets for a bonus payout, so this year's quarter reflects the accrual for that bonus payment.

Now, let's briefly review the fourth quarter financial results by segment.

Net revenues for the OTC segment of $42.6 million were $2.8 million or 7% greater than last year.

Looking at it just on a net sales basis, net sales were $39.5 million, 1% below prior year net sales of $39.8 million.

Increased sales for Clear Eyes, Murine, Compound W, Dermoplast, and The Doctor's Brands were offset by declines on Chloraseptic and Little Remedies and the Allergen Block products.

The increase in other revenues was due to the settlement of an intellectual property lawsuit involving one of our brands.

Gross profit for the segment was $26.2 million, 9% higher than last year's gross profit of $24 million, due to the revenue increase.

Contribution margin of $21.3 million for this segment was 9% greater than last year's contribution margin of $19.5 million, due to the gross profit increase.

Our A&P spending for the segment of $5 million was $500,000 or 11% greater than last year's A&P spending of $4.5 million.

Household products net revenues of $27 million were $300,000 greater than last year.

Sales increases on the Spic and Span and Chore Boy brands were partially offset by a slight decline on the Comet brand.

Gross profit of $8.6 million was $800,000 below the prior year.

The decline in gross profit was due to sales mix and costs related to the Comet Powder transition to our new supplier.

The household products segment contribution margin for the quarter of $7 million was $1.3 million below last year's fourth quarter contribution of $8.3 million.

A&P expense of $1.6 million was $600,000 greater than the prior year's expenditure of $1 million.

And finally, net revenues for the personal care segment of $1.8 million were $300,000 or 14% below last year's fourth quarter.

This decline was primarily due to decreased sales for Cutex.

Gross profit of $600,000 was $300,000 below last year and contribution margin of $500,000 was $300,000 less than last year, primarily as a result of the sales decline.

And now, I'll turn the call back to Matt, who will provide additional perspective on the quarter and our 2011 fiscal year.

Thanks,Pete.

As Pete said, I am generally pleased.

I am actually quite pleased with our revenue performance for the quarter.

As he also said, our profitability numbers are a reflection of what we said we would do in our February conference call, increase our A&P support behind the core OTC brands to drive long-term growth.

As Pete also said, the G&A line reflects really our achievement of reaching target, which allowed us to allocate funds for bonus incentive plan for all our employees, which, as he explained, we had a reversal in FY 2009 Q4.

During the second half of fiscal year 2010 , as I said, we reset our strategic direction and we reset it against three pillars.

First, we're focused on the core brands we believe will drive our long-term growth.

Second, we identified and developed appropriate news to bring to our various franchises.

And third, with the refinancing we positioned ourselves to pursue appropriate acquisitions.

Our refinancing completed during the fourth quarter gives us liquidity for at least another six years and, importantly, provides the finances to shop for acquisitions to become part of our strategic growth picture moving forward.

Also, during Q4 we realigned the organization with management changes in the areas of marketing and legal.

We have a new CMO, Tim Conners, who joins us from Matrix Initiatives.

Tim brings excellent sales and marketing experience from large and small companies within the OTC industry.

We also have a new General Counsel, Eric Klee, who was recently promoted from his inhouse position.

Eric has significant experience in the M&A area.

You know, we give our employees yearly reviews and we do the same thing for our brands, taking a look at the performance of each one and assessing what we did right and where we can do better.

So, what I'd like to do is give you an update on the performance of several brands and then I'll follow that with a few words about fiscal year 2011 and why I am cautiously optimistic as we move into the new fiscal year.

First, let me say we are proud to have six brands in our portfolio that are number one or number two in their category.

And these brands are Chloraseptic, Compound W, Clear Eyes, Comet Powder, The Doctor's Nightguard, and New-Skin.

I think it goes without saying that our goal is to have all number one brands and that's what we strive for.

We've identified our core brands, those which we believe hold the most promise for growth.

Those brands are Chloraseptic, Clear Eyes, Compound W, Doctor's Nightguard, and Little Remedies.

Now, let's review some of our key brands beginning with our OTC business.

OTC is our largest segment, which contains five core brands.

The OTC segment increased an impressive 7% in the fourth quarter.

Clear Eyes, Compound W, and The Doctor's grew very nicely during the quarter.

Clear Eyes has consistently been a strong performer for us.

Q4 sales were up almost 5% versus the year ago period and ahead of overall category growth.

Leading the way for this brand were two SKUs, Clear Eyes Tears, which was up almost 17% in Q4 versus the year ago period, and Clear Eyes Contact Lens Relief, which was up over 30% versus last year.

Our impactful new package graphics and packaged copy and memorable advertising has helped this brand achieve some terrific numbers on a steady basis over the last several quarters.

Compound W also has had very strong growth, significantly out growing the category and picking up market share for both Q4 and the 52-week period.

Compound W grew almost 9% quarter-to-quarter and about 6 percentage points ahead of the growth of the category overall.

For the full fiscal year, Compound W was up 5% and significantly above the category trend.

One of the reasons why Compound W is one of our core brands is because the name is extendible into other areas of skincare.

A good example of this is the upcoming introduction of Compound W Skin Tag Treatment in Canada.

In the future, we hope to expand that new product into other geographies as well.

Our oral care products, The Doctor's Nightguard and Doctor's Brush Picks, performed well, up 3% and 11% respectively for the quarter, reflecting the positive effects of increased TV advertising for Nightguard.

This product treats night time bruxism or teeth grinding, a problem affecting millions.

The Doctor's Brush Picks, the world's best interproximal tooth pick, benefited from the halo effect of these advertising efforts on Nightguard as well.

Little Remedies is another terrific brand for us in our full line of OTC healthcare products for children.

It was up more than 13% during fiscal year 2010 versus year ago and significantly ahead of category growth.

The brand trend for the quarter also significantly out stripped category performance.

One place you'll find the full range of Little Remedies products is at the Babies R Us chain.

It's a great place to see virtually all the SKUs we make for so many children's everyday health problems.

Three new products under the Little Remedies brand will be launched this fiscal year.

These include products in moisture therapy, a treatment for cradle cap, and an all natural new honey elixir for colds.

The Little Remedies line for us is the first at Prestige to really go digital.

We've been engaging consumer parents by Tweeting and Facebooking our way into their lives.

We're sponsoring online contests, hosting mommy blogs, and registering our consumer for new product news and special offers, all with the goal of spreading the compelling message about Little Remedies to parents seeking kids products that contain everything you want and nothing you don't.

I am also pleased with the continued success of our number one selling liquid bandage, New-Skin, which was up approximately 7% for the quarter and the year.

The full line includes the liquid and spray on bandage products and scar therapy and poison ivy treatment products.

Although New-Skin is not one of our core brands, I believe it holds great promise going forward.

With a name like New-Skin, we can continue to extend it into other areas of OTC skincare, as we talked about with the new Canadian product.

The impact of the weaker cold and flu season has negatively affected Chloraseptic Sore Throat Treatments.

In what started out as a very strong sales trend, with retailers stocking up early in the season in September, October, and November in preparation for the swine flu, candidly ended much weaker, affected by lower incidents of the regular seasonal flu and the virtual disappearance of the swine flu.

For the quarter, sales were down after being up for the first three quarters.

However, the brand continues to out pace category growth and we did gain market share in the fourth quarter.

A number of new promotional advertising PR and packaging efforts are now underway to prepare for the upcoming cold season and remind consumers that Chloraseptic can be used to treat sore throats all year long.

Now, I'd like to turn to household products.

Our household products segment where, as you know, Comet Powder is the major product.

The entire household products category continues to be extremely competitive and price sensitive.

And we believe this has heightened during the economic downturn, as consumer behaviors have changed.

Comet Powder continues as the number one abrasive cleanser and was up over 2% year-over-year, but down for the quarter.

Comet Bathroom Sprays and Mildew Stain Remover were also down as a result of competitive activity.

We anticipate these pressures will continue to present challenges in the current fiscal year.

However, the good news is that a number of measures are now in place to reverse this trend.

Comet Powder will soon launch new packaging with updated graphics and feature a new promotional pack during the first quarter.

Wal-Mart will be the first to introduce the new look package, which we believe will enhance consumer appeal.

For Comet Mildew Stain Remover, we're introducing a powerful new formula, which sticks to mildew stains six times longer for more effective cleaning.

Consumers are going to learn about the new, more effective products through new TV and print advertising efforts, which are beginning next month.

We also continue to believe international markets are an opportunity for us and we have not lost site of that.

International Q4 revenues were up 40% year-over-year, leading to an overall fiscal year gain of 18%.

This increase is largely a result of increased shipments of Murine Eye Care Products to the Australia region and also, as we look north of the border, our Canadian business is also trending up.

We look forward to the success of the new Compound W Skin Tags Treatment in Canada and to the introduction of other U.S.

products into that market as well.

Overall, as I said, it has been an exceptionally busy quarter for us as we finish up one fiscal year and enter the next.

We enter fiscal 2011 with an air of, I'd say, cautious optimism.

First of all, I'm optimistic because our core OTC brands were up in sales 3% year-over-year.

We have good momentum going forward on our core OTC brands, Clear Eyes, Compound W, Doctor's Nightguard, Chloraseptic, and Little Remedies.

We also have compelling marketing plans for these brands and I look forward to realizing the fruits of our labor in 2011.

One of the reasons I use the word cautious is because, while the macroeconomic environment is showing some signs of improvement, we've yet to see that translate to increased consumer spending in our key retail channels.

Comp store growth continues to be a challenge for mass and drug, as you are well aware.

From a company standpoint, we've realigned the organization to be more customer and consumer focused.

We've brought on a new Chief Marketing Officer and we've also developed a new sales team compensation structure to better drive profitable revenue at our individual key accounts.

Finally, we're pleased that we've completed our refinancing, reinstated our revolver and accordion feature, and are fully liquid now for the next six years.

And this really enables us to more seriously consider strategic acquisitions and be more aggressive in this arena, which I believe will be part of our plan for growth going forward, should the right opportunity arise.

With that, thank you all for your attention and we will now open the call to

(Operator Instructions)

And the first question comes from the line of Joe Altobello from Oppenheimer.

Please proceed.

Thanks.

Good morning, guys.

Good morning, Joe.

First question, I just want to go back to the legal settlement.

I don't think you guys broke it out, but looks like it's about $3.1 million or so.

Is that -- is that correct?

Joe, that -- at the terms of the agreement don't allow us to specifically spell out what the settlement was.

Okay.

So, another way to ask that is your royalty revenue, but for the legal settlement, there was nothing unusual this quarter versus previous quarters?

We had to add significant increase in our royalty revenue for this quarter as well.

For the household.

Yep.

No, but for the legal settlement I should say?

So, what I'm saying is, if you look at the other revenues and you look at it by segment, you'll see that the household, which has the bulk of the royalty income, was up compared to last year and that's in the normal course of business.

The OTC side is where the settlement was.

Okay.

Got it.

Now, in terms of your core brands, could you break out what your core brands overall, and not just OTC, but core brands overall were up versus your non-core brands in sales?

Well, as I said, our core OTC brands, I believe, were up 3% year-over-year.

4% for the quarter.

4% for the quarter.

So, as I said, we're really focusing on the core OTC brands primarily, which is why I'm pleased with the revenue growth there.

Okay.

And then lastly, the bonus accrual in SG&A, Pete, could you tell us what the reversal was last year?

I just don't recall offhand and what the bonus accrual for this year was, what the swing was year-over-year?

We didn't give it, Joe, but what I can tell you is that for anybody that's doing modeling that if you were to look at our G&A, that a $32 million G&A for the year is what I would model.

And that's good for fiscal 2011?

Yes, correct.

Okay.

Alright, thanks, guys.

Thanks, Joe.

And the next question comes from the line of Chris Serra from Banc of America.

Please proceed.

Hey guys, I just want to understand, I guess, the legal dispute.

I understand you can't talk a lot about the specifics, but am I right to assume that's a one-time favorability or are you guys catching revenue on an ongoing basis over this?

Chris, again, we're not allowed to disclose the details of that settlement per the agreement, so I can just tell you that I can't tell you the details of it because under court order we're not allowed to disclose it.

I apologize.

But, I mean, yes, you can't even get into the nature -- I guess because here's what I'm struggling with, right.

I hear your commentary.

Like you're saying, you're cautiously optimistic about fiscal 2011 and I think the first reason you cited was that OTC was up 3%, but excluding the legal settlement I think it was kind of flat, right?

So, if this is an ongoing thing, if that's the way to think about it, then I get that, that makes sense, but if not, then it looks like -- I mean I know cold and flu had an impact, but I'm trying to understand why you'd be more optimistic about this business?

Even in the quarter, the net sales were down excluding that settlement, so if the settlement is ongoing, then, yes, that makes sense.

But, I mean, you can't speak at all to that, to whether it's --

Chris, without getting into the details, there will be benefits from the settlement ongoing.

However, our other revenue is so small, I mean, I am really more cautiously optimistic because I go back to those core OTC brands.

If I look at consumer trends of those brands in the last quarter, that's the biggest reason why I am cautiously optimistic.

And, Chris, the other reason to be cautiously optimistic is because, as we go through the F 2011 year, after Q1 we will not be lapping relatively strong Allergen Block sales.

As we've talked about over the last two quarters, clearly inhibiting our overall sales growth has been tough comps versus Allergen Block and as time goes on, those comps are clearly getting easier.

Got it.

That makes sense.

And then, I guess on the A&P line and you guys are right, you said you're definitely going to see somewhat of a reallocation of advertising towards core brands.

That's great.

That's healthy.

But this -- I guess this quarter alone, it was more than just a reallocation.

So, was there any kind of flow of investment I should be thinking about?

I know Q4 of last year was a particularly -- maybe it was a particularly small quarter, but it looks like you guys are pacing ahead as a percentage of sales on a year-on-year basis, not just a reallocation.

How should I be thinking about what I'm seeing in the trend?

Yes, Chris, I think that's a really fair question.

And I think what I have said in the past quarters and I would stand by now is when you look at our FY 2011 as planned right now, we are not planning on -- as I said, we're going to focus that A&P support against the core OTC brands.

We are not planning on double digit A&P increases for fiscal year 2011.

All right?

We're planning on reallocating modest increases, so from -- it's a good question and from your vantage point I would not model in double-digit A&P increases this is year.

That's not the intent.

I think, Chris, if you look back at the third quarter, you'll see that we actually underspent the prior year's A&P.

So, if you were to look at the second half of this year, A&P spending is flat to down in total.

So, I think that's kind of the way you really need to look at it.

Great.

That's really helpful.

And then, I guess just two real quick other ones.

One, which brand had the intangible impairment and then can you just -- what's skin tags?

I am not familiar with that.

Okay.

So, the brand in personal care that had the impairment was Cutex.

And that's reflective of some of the distribution losses that we saw this year as some retailers have looked at the nail polish remover category as one where they're content to just have their store brands.

Chris, the second one, skin tags, think of warts as basically dead skin on different parts of your body, alright?

It's also occurs in youth a lot more.

Skin tags is live skin, it's stubs or whatever, it's mostly on older people, okay?

A lot of women, in terms of it gets from rubbing up clothes or jewelry or whatever against -- around your neck or different things like that.

So, it's little protrusions, but it's live skin that a lot of people go into doctors to have it taken off of them and this allows them to do it at home without expensive doctor's visits.

Perfect.

Thank you, guys.

And the next question comes from the line of Karru Martinson from Deutsche Bank.

Please proceed.

Well, I had a question about skin tags as well and now that I know the answer I probably glad I didn't ask it.

On the retailer shelf allocations with them pulling back on Cutex, what are you seeing in the mass and the drug store channel?

Are you seeing continued consolidation of SKUs and how are you kind of modeling that out for yourselves going forward?

Yes, I think that's a really good question.

And I think if you read a lot of the retailer's releases over the last several quarters, there's been a lot of talk about consolidation, SKU rationalization and I don't think at retail, as I said, we're not seeing comp store sales increases cross the drug chain or the mass and still haven't.

I think, and candidly I'm starting to feel this way really in the last month, I think the retailers are starting now -- the pendulum is starting to swing back a little bit and retailers are saying, "Hey, you know what?

If we want to get comp store growth, we have to drive consumers into the stores and private label can't do that for us and maybe we've cut too many SKUs." And I think the retailers are starting to say, "We need these brands to be a little bit more healthy." So, I actually am starting to see and feel from retailers that we talk to that that pace is starting to slow and actually turn a little bit in the brand's favor.

Okay.

And what exactly do we cycle out of the Allergen Block product?

Again, I think, Karru, the first -- our fiscal first quarter that we're in right now was a relatively heavy quarter and then we started to see it tail off beginning in our second quarter.

And by heavy quarter you mean that there was a lot of sell-in for that product?

Yes, because again, allergies are very seasonal to the spring and late summer months, so really the quarter April to June was by far the heaviest quarter and then it tailed off from there.

Okay.

But, now you also spent advertising on that.

Is that part of that just going to get reallocated and, as you said, we're not going see a huge increase?

Is that part of the swing factor?

Yes.

Absolutely.

That's exactly correct.

Because we invested quite significantly in that and we did that, in my opinion, at the expense of those core growth brands and that's what I mean by reallocation and putting that support behind the core brands -- core OTC brands that I think is really going to benefit us long-term.

Okay.

And just lastly on acquisitions, as you said you have the financial flexibility, you have the long runway here.

What is it that you're looking for and in terms of size, fit, and perhaps what is kind of the time horizon here of what's in the pipeline?

I think what I would say is, I think our preference would obviously be OTC.

I think our preference would be I'll call it the smaller niche categories.

We don't really want to get into big categories where all the 800-pound gorillas are stomping around.

I think in terms of size, I think we've proven that we can take small brands and grow them into bigger brands, so I think for us we've got a fair amount of flexibility in size right now as we grow.

In terms of timing, there is stuff coming to the market.

We're involved in some stuff and for us it's a matter of it's got to be the right thing that makes sense for the brand, not acquisition for acquisition sake.

But, I think the difference between six months ago is we are actively in those discussions today versus six to nine months ago we were saying we're not in the market, so there is a significant change for us on that front.

Okay.

Thank you very much, guys.

Okay.

And the next question comes from the line of Reza Vahabzadeh from Barclays Capital.

Please proceed.

Good morning.

Hi, Reza.

Just on that acquisition criteria, is there a maximum leverage that you would also tolerate on the first day of the acquisition?

Yes, we're in the low threes now and we'd consider, for the right acquisition, going up on a pro forma basis to the four or below and with the idea that anything we've ever done has kicked off enough cash that it gets us back down into the low threes pretty quickly.

I am sorry, did you say low fours?

No, I said four or below.

Four or below.

Okay.

Got it.

And then you talked about the household product lines with Comet being down slightly, Spic and Span being up.

Can you just comment on why Comet was down but the other one was up?

Well, I think in the -- for Comet, that bathroom spray there was some new introductions in the last quarter and I think also there's just a lot of price wars going on right now in the household cleaning segment.

I think Spic and Span, we've had some success there in the dollar channel specifically and I think that's what's driving our numbers on Spic and Span.

Got it.

Now, you talked about the, in terms of price competition, do you anticipate needing to reinvest more in pricing in one form or fashion sometime during fiscal 2011?

I think, right now, my comment would be on OTC my preference is not to get into pricing.

It's get into brand building and supporting the brands and on household, our preference is still to build the brand, but I think in household we have to be more cognizant of what the competition is doing, because if you price yourself too far above the competition, you're going to be in trouble.

So, I think we just have to be more sensitive to it in household.

Got it.

Thank you.

Okay.

Thank you.

And we have no further questions at this time.

Okay.

Thank you very much.

We appreciate everyone's attendance on the call this morning and look forward to speaking to you again soon.

Thank you.

This concludes the presentation for today, ladies and gentlemen.

You may now disconnect.

Have a wonderful day.