Prestige Consumer Healthcare Inc (PBH) 2017 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Prestige Brands Holdings Incorporated Q3 2017 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

(Operator Instructions)

As a reminder, today's conference call is being recorded. I would now like to turn the conference call over to Phil Terpolilli, Director of Investor Relations. Please go ahead.

Thank you, operator, and thank you to everyone on the phone for joining us today to discuss our 3Q results. As a reminder, there is a slide presentation which accompanies this call. It can be accessed by visiting prestigebrands.com. Clicking on the investor link and then on today's webcast and presentation.

During this call Management may make forward-looking statements regarding their beliefs and expectations as the Company's future business prospects and results. All forward-looking statements involve risks and uncertainties which in many cases are beyond the control of the Company may cause actual results to differ materially from those in the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date of this conference call.

The complete Safe Harbor discloser appears on page 2 of the slides accompanying the call. Additional information concerning the factors that may cause actual results to differ materially from these forward-looking statements are contained in the Company's annual quarterly reports which are filed with the US Securities and Exchange Commission.

As a reminder, some of the information contained in this presentation includes adjustor results which exclude acquisition-related and other items. The reconciliation between adjusted results and reported results is included in today's earnings release along with a full set of disclosures about our non-GAAP financial. Now, I'd like to introduce Ron Lombardi, President and CEO; and Christine Sacco, CFO of Prestige Brands.

Thanks, Phil, and good morning everyone. On today's call we will cover the highlights of our third-quarter performance, review the financial results, and finish with an update of our full year outlook. At the end, as the operator mentioned, we will open up the call for questions.

With that, let's turn to page 5 and start. We are very pleased with our solid third quarter results and trends over the first nine months of the fiscal year. In the third quarter many positive factors contributed to our strong results. First, we saw a continuation of growth across our portfolio with net sales increasing over 8% to approximately $217 million in the third quarter.

This performance included strong organic growth of 2.8% while our invest for growth portion of the portfolio grew 4.3% versus the prior year. DenTek also contributed $17.3 million of revenue in the quarter and we continue to be pleased with the brand's performance over the last 12 months. Second, we experienced strong bottom line growth of over 15% with adjusted EPS of $0.61 during the quarter as our profitability benefited from our record level of sales.

Third, we realized adjusted free cash flow of nearly $50 million, which was used to pay down debt, and build our cash position ahead of the Fleet acquisitions. Finally, we continue to execute our M&A strategy as we divested three non-core brands and signed the fleet transaction during the quarter.

Turning to slide 6 we have an overview of our year-to-date results. For the nine-month period we generated revenue growth of just over 7% versus the prior-year and organic growth of 1%. Our international business also continues to perform favorably, in particular, organic sales growth at Care Pharma has grown in the high single digits year-to-date.

We also realize strong performance on the bottom line and for free cash flow with adjusted EPS of $1.83 which grew 10.9% year-to-date versus prior year and adjusted free cash flow which grew 10.7% on a year-to-date basis. Since the beginning of FY17 we have taken over $245 million of our industry-leading free cash flow and proceeds from our divestitures to reduce debt which has positioned us to successfully acquire Fleet which I will discuss in more detail later. Let's now turn to slide 7 which has our consumption and sales trends for our invest for growth portion of our business.

On the bottom of the slide you will see shipment trends strengthened noticeably from Q2. Q2 was impacted by a slowdown in our order patterns by our five largest customers in the last two weeks of the quarter. We are encouraged by this sequential improvement in Q3 as we saw shipment trends that these customers more closely matched consumption levels.

In terms of consumption, which is at the top of the page, certain categories like eye care and analgesics that experience a sequential drop in levels in Q2 rebounded in Q3. As we have discussed in the past we have seen variability in quarterly order patterns from our customers over the last few years, but over time we expect consumption levels for our brands to provide long-term stability for our sales.

Turning to slide 9, given the sizable portfolio changes made since early last year, I would like to review and highlight the increasingly favorable positioning of Prestige's portfolio for value creation looking forward. As you can see on slides 9 through 11, through numerous steps over the last 12 months, we have meaningfully evolved our portfolio towards a mix of brands that better positions us for long-term growth.

We successfully allocated capital through the acquisitions of DenTek and Fleet while we strategically divested multiple non-core brands which did not fit into our long-term strategy. The divestitures are opportunistic in nature and should be seen as a swap of capital to long-term brand building opportunities.

On slide 10, these charts really encompass the magnitude and effect of the portfolio evolution made this year as well as the transformation efforts made over the last several years. On a pro forma basis we expect to reach approximately $1 billion in revenue in FY18 with approximately 85% of this falling in the invest for growth business.

These two mile markers $1 billion in revenue and 85% of sales coming from investment for growth, were set out several years ago as we started our transformation. This portfolio evolution shifts the makeup of our organic growth portfolio with an increasing number of $100 million plus OTC brands at retail and three quarters of sales now coming through brands holding leading number one or number two positions in their categories.

Turning to slide 11, you will notice a meaningfully enhanced position for Prestige in multiple categories. For example, Summer's Eve has become our largest brand and fits well into our women's healthcare focus and efforts. In G.I., the PHASYME, Pedia-Lax, and especially the Fleet brand gives our portfolio meaningful scale and anchors our efforts around Fleet, Dramamine, and Beano which are all leaders in their niche categories.

Our growth over the past six years has come both organically as well as from our acquisitions. Increased scale in multiple categories positions as well to continue our long-term brand building efforts. Scale brands and scale platforms are beneficial to winning at retail and provides us with growing opportunities to partner with retailers of merchandising and promotional programs and increases our shelf presence.

Speaking of the women's healthcare in G.I. categories let's turn to page 12 which has more details. Slide 12 starts with Summer's Eve.

As we have discussed previously Summer's Eve competes in the feminine hygiene sub-segment of women's health with a number one position in this daily regimen category. It is important to recognize this is a scale brand that goes well beyond the legacy douche products. Today the external offerings of Summer's Eve includes washes, cloths, and sprays and represents approximately 80% of Summer's Eve's revenue.

A core competency of our Company is growing brands in the categories that they compete in. Looking forward we plan to quickly integrate the Summer's Eve brand and work with retailers to bring new product innovation, effective marketing, and overall support to these external offerings.

Turning to page 13, I would also like to highlight the Fleet brand which will become our largest brand in the G.I. category and help to anchor our efforts in this space. Fleet was among the original products developed by C.B. Fleet well over 100 years ago. Today the Fleet brand holds a leading number one share in the enema and suppository sub-categories.

It has grown successfully over the last few years winning share in multiple categories. Similar to Summer's Eve we see a clear innovation pipeline opportunity for incremental A&P support and connecting with consumers as well as healthcare professionals for this brand.

On slide 14 you can see that our integration play-book is consistent with Fleet as with our past acquisitions. As with prior acquisitions, we expect to quickly integrate sales and distribution, take advantage of our marketing and brand building approach, and execute on G&A integration efforts similar to past acquisitions. On the supply chain front we intend to take advantage of optimization efforts such as increased purchasing leverage but also through the new and distinct advantage of operating our own manufacturing facility in Lynchburg, Virginia.

With multiple visits to the facility now under our belt I am excited about the opportunities from sourcing, manufacturing, and R&D aspects and expect the factory to represent yet another competitive advantage for Prestige over time. At this point let me turn the call over to Chris who will walk us through the financial overview for the quarter

Thank you, Ron, and good morning, everyone. As Ron just described and as summarized on slide 16, we are pleased with our fiscal third quarter and year-to-date results. Our results for the third quarter include revenue growth of 8.3%, adjusted EPS growth of 15%, and adjusted free cash flow generation of just under $50 million.

Moving on to slide 17 we report our consolidated fiscal third quarter and nine month period ended December 31, 2016 results. As a reminder, the information in today's presentation includes adjusted results that are reconciled in our earnings release. For the third quarter revenues increased 8.3% versus the prior year and for the nine months ended December 31 revenues increased 7.2%.

These results reflect our strong and diverse portfolio of brands including increases in our international and DenTek businesses. Organic revenues increased 2.8% in the third fiscal quarter on a constant currency basis versus the prior-year and for the nine months ended December 31 organic revenues increased 1% on a constant currency basis. These results were driven by continued strong consumption for our invest for growth portfolio.

Our second quarter gross margin of 57.5% was in line with our expectations. With the change versus prior year primarily reflecting the impact of sales mix from strong growth from DenTek which has a lower gross margin than the overall portfolio but has a more consistent EBITDA margin.

A&P spending was 14.2% of net sales for the third quarter, an increase of $800,000 when compared to the prior year. A&P spending for the nine months ended December 31 was up $2.6 million versus the prior-year and reflects our continued focus on investing in brand building and new product development within our invest for growth portfolio. Continuing further down the P&L, adjusted G&A spending for the third quarter came in at 8.7% for net sales up 10 basis points from the same period last year.

Year-to-date adjusted G&A was 8.3% of sales in line with expectations. Our adjusted EBITDA for the fiscal third quarter increased 7.4% over the prior comparable quarter and equated to a EBITDA margin of 34.6%. Adjusted EBITDA for the nine months ended December 31 increased 6.8% versus the prior-year and the EBITDA margin for the nine month period was 35.8%.

Third quarter EPS growth was approximately 15% on total reported revenue growth of 8.3%. Our adjusted EPS grew faster than net sales in both the three and nine month periods ended December 31, 2016 compared to the prior year period as a result of our ability to use our industry-leading strong free cash flow and divestiture proceeds to delever and reduce interest expense. Nine-month adjusted EPS of $1.83 per share increased 10.9% versus the same period a year ago.

Moving on to slide 18 you see the reconciliation of reported net income to adjusted free cash flow. For the fiscal third quarter we continue to deliver strong adjusted free cash flow of $49.6 million, an increase of 8.3% over the third quarter of the prior-year. For the nine months ended December 31 we generated just under $150 million of adjusted free cash flow which was up 10.7% versus the comparable prior nine-month period driven by increased EBITDA and a lower interest expense.

With the inclusion of gross proceeds related to divestitures of non-core brands, we have reduced our debt by over $245 million since the beginning of FY17 and ended Q3 at a covenant defined leverage ratio of approximately 4.3 times. In addition, we accumulated cash on hand during the third quarter reaching approximately $63 million temporarily ahead of the anticipated Fleet transaction. Upon closing last week, the Fleet transaction was financed primarily through term loan.

As noted in her updated credit agreement filed earlier this week, our amended term loan consolidated our existing term loan and created a new class of term loan to finance the Fleet acquisition. The loan matures in 2024 and bears an initial interest rate of LIBOR plus 275 basis points. Given our continued robust cash flow generation we expect to be at a pro forma covenant defined leverage ratio of approximately 5.7 times at fiscal year end 2017.

This concludes my comments and I will turn it back to Ron.

Thanks, Chris. Let's continue on slide 20 with an update to our fiscal outlook and some closing remarks. For FY17 we are reaffirming our outlook for revenues, adjusted EPS, and adjusted free cash flow for the full year exclusive of the Fleet acquisition which closed January 26.

For net sales, although we are pleased with the Q3 performance, please remember that recent strategic divestitures in Q3 will have an impact on our fourth quarter top-line results. As a result, we anticipate top-line revenues to come in at the lower end of our guided range for the year. For adjusted EPS we anticipate coming in at the high-end of our $2.30 to $2.36 range or plus 6% to plus 9% year-over-year growth based on a strong profitability year-to-date.

Finally, we are reaffirming our adjusted free cash flow outlook of $190 million or more for the year. In closing, our legacy business continues to perform well and is well positioned to gain share while generating industry-leading free cash flow heading into FY18 and beyond. We are excited about the opportunities ahead for us with the recent acquisition of Fleet and look forward to the integration process that is all ready off to a swift start.

With that, let's open up the lines for questions.

(Operator Instructions)

Our first question comes from Joe Altobello with Raymond James.

Hi. Thanks. Good morning. First question, Ron, I missed that quick comment that you added right there about revenue in the fourth quarter being for the lower end of expectations. Could you repeat that?

Sure. Good morning, Joe. So what I said was we are keeping the full-year guidance at plus 4.5% to plus 6%, but expect to be at the bottom end of the range as a result of the brands we divested in Q3.

Got it. Okay. Thank you. If you look at shipments versus consumption for your Invest for Growth brands the last two years, obviously shipments have trailed consumption. This year, year to date, and particularly in the third quarter, you saw a nice reversal of that. How comfortable are you that is now behind us? The destocking is now behind us. Could you see the potential of a re-stock as we enter FY18?

First of all, Joe, as we talked about in the past, the consumption numbers and our sales numbers do not reconcile exactly, so you don't get an exact one-for-one change in revenue from period to period in relationship to the change you see in consumption. For the first thing, if you go back to the second quarter, we had a bigger impact by our top-five customers in terms of consumption versus our shipments to them in Q2. I think it was over $5 million of an impact -- closer to $8 million. Chris just corrected me.

In Q3 we saw, amongst our top customers, a very close relationship in total between consumption and shipment, so we didn't actually realize a benefit in Q3 from what we saw in Q2. There was no pick-up, if you will, so sales closely matched consumption for us for that group. That is the first thing.

The second is, we have been facing a slight headwind for quite a while now of retailers in general reducing inventory through lots of different ways, whether regional grocers are closing their own distribution centers and moving to a distributor to supply them or reductions in store accounts and so forth. And we continue to expect that will happen in the future, Joe

Okay. Just one last one, if I could. Fleet closed a little bit sooner than I would have expected in the quarter. Was there any contribution to earnings per share in fiscal 4Q?

Hey, Joe. This is Chris. As you think about Fleet for the two months for the end of FY17, I think on the top line we had filed an 8-K in connection with our the lender presentation. You can look at the LTM sales ended 9/30 for a Fleet of 205 and take two months as an estimate. Then, for the transitional sub period, we expect adjusted EPS to be essentially breakeven maybe slightly better.

Okay. Great. Thank you.

Thank you, Joe.

Our next question comes from Stephanie Wissink with Piper Jaffray.

Thanks. Good morning, everyone. Just a couple of follow-up questions, Ron, on your comments on the manufacturing facility. It sounds like there are maybe some near-term opportunity than what you had talked about before. If you could elaborate a little bit more on what products within your portfolio you think you might be able to leverage that capacity. That would be very helpful.

Sure. Let me answer that question in three categories. The first is, R&D, new product and quality resources at the factory that we think that in combination with what we've got going on here in Tarrytown can be additive, so combining and coordinating those efforts can be beneficial. That is the first part of it.

The second is we can take a look at their purchases and see where we can work together to combine that level of purchases for purchasing synergies to help reduce our costs by bundling purchases across common suppliers. Those are nearer term activities.

Then mid and longer term is the opportunity to do what I have been calling fill the factory, which is find the right products in our existing portfolio that sit within the manufacturing process and infrastructures in Lynchburg and look to move those products there over time. And moving any product that is OTC can take two years or more. It is not unique to us. That is more of a longer term opportunity, but certainly high on the list of things we want to execute against

Ron, are there any investments that you need to make in that facility in terms of technology or process that we should be thinking about in terms of CapEx?

Sure. That facility has been well invested and managed for quite a while. We didn't step into a situation where we need to catch up on capital spending. We will look to make investments to help make them more efficient and expand their capacities, and then longer term we will evaluate what investment might be needed that is associated with the products that we might put in their. We have talked about in the past, even that scenario is not going to be highly capital intensive.

Final question for us is just on international. That was a nice source of upside in the quarter. Can you talk about your portfolio today and maybe some of the recent acquisitions and how you think about the international opportunity for the brand portfolio going forward?

The Care business has been performing very well for quite a while now, including the first nine months of this year. That is based out of Australia. The Fleet business has a nice concentration of business through their Singapore office and through the Asian region, so we will be looking for opportunities to combine our efforts there to take advantage of an increasing scale in that region. About 20% of Fleet's business is international with it highly concentrated in that Asian region, so we are excited about that opportunity.

With the DenTek acquisition that we completed about a year ago, they were more concentrated in Europe with a nice business in the UK and a growing business in Germany. We combined that into our efforts in that region and have been able to take advantage of looking to grow that part of the DenTek in the Prestige business as well.

So these are nice small incremental opportunities for us that are lower risk in terms of execution and looking to grow. It has fit very nicely with what we have internationally and is the right size incremental steps for us in those regions.

Thanks, Ron. I appreciate it. Best of luck.

Thank you, Steph.

Our next question comes from Jason Gere with KeyBanc Capital.

Good morning, guys. Nice quarter. Two questions. The first one, if you just go back on some of earlier questions on the sales view for the fourth quarter. Two parts, obviously, saying the low end of the 4.5% to 5% and then even just the organic sales still. I think you are comfortable with the 1.5% to 2%.

I do understand from the total sales perspective -- if you could give some context in terms of the divestiture impact? We are estimating maybe 3.5% hit there. If that is the case and FX is negligible, it would still imply that, based on your organic sales guidance and based on the strength you saw in the third quarter, that the fourth-quarter organic sales would be flat to up 1%.

I guess all that put together in a question is, DenTek is coming into the comp base, the flu season might be picking up now, so I'm just wondering if you could talk about what you were seeing out there that keeps that range where it is? Why it wouldn't be a little bit better? I do know the challenges of what you're dealing with the retailers, but I'm just wondering if there is anything that we are missing or any additional color you can put there.

First of all, we see variability in our business quarter to quarter, whether it is changes in underlying incident levels or changes in order patterns from our retail customers. Just take a look at each of the three quarters this year. First quarter was kind of flattish. Second quarter was a tougher quarter for us. Third quarter rebounded in a number of ways. That's, first of all, the underlying background of which we start by predicting what might happen this quarter.

The second part around organic growth, we do have a number of benefits in Q4 for starting with DenTek now falling into the organic growth number for us. Inherent in our Q4 outlook is an organic assumption of around 2%, 2.25% growth in Q4. Keeping in mind the fourth quarter last year was particularly strong, so we do have a tough comp against it. Cough/cold does show some improvements over last year. As a reminder it makes up about 7.5% or so of our new pro forma business, so it doesn't move the needle like it used to when it was nearly a quarter of our business.

I think there is some questions to your answers. Did we hit them all?

Yes. That's fine. In terms of the net divestiture, it might be helpful, too, that the impact was in the ballpark, in terms of a low-to-mid single-digit impact from the divestitures, the net effect, Chris?

The way we think about it; the impact to our year-to-date results for the divestitures is around $6 million top line, per quarter, sorry. That's the impact of Q4.

Okay. That's great. Then the other question I have is that I know you talked about some of the categories you saw consumption pick up. I think you talked about eye and analgesic.

Were there any categories that you were hoping to see a re-acceleration that you didn't? Are there any -- is it more of the category rather than the retailer? Are there any merchandising efforts that you're doing to maybe try to reinvigorate some of that growth? Just maybe some color around that.

For starters, we compete in a lot of different categories, so we tend to look at the summation of it. In general, the third quarter in total was generally an improvement for us, and we felt good about it and what to expect for Q4. That's the first part of it.

Then in terms of retailer impact, we're not really expecting anything meaningful to hit us in the fourth quarter.

Okay. Great. Thanks for the color on the questions.

Thank you, Jason.

The next question comes from Jon Anderson with William Blair.

A question on Fleet. At this point, as you think about not the fourth quarter of 2017, but as we think about FY18, which is fast approaching, how are you currently thinking about the economic contribution or the accretion from the Fleet business? I know you've talked about certain expectations, but as you think about it all-in, in the context of the sales profile of the business, the margin profile of the business, your new term-loan structure, could you talk a little bit more about what kind of level of accretion we should be expecting? Thanks.

First of all, we will give a full outlook at the May call for FY18 for the total business, and we will give some color around what to expect for a contribution for the Fleet business in FY18. A couple of general comments: When you compare the Fleet opportunity to the other acquisitions that we've done, in general this business has more momentum and has a very strong history of being well-managed and heavily invested behind.

So we are stepping into the shoes of a very well performing, strong performing business, and our intent is to continue to invest behind that and expect the solid trends that Fleet has realized in the last couple of years to continue into 2018. I think if you go back and look at how we talked about the contribution of the business when we announced it, sales growing on top of the base of $205 million and an underlying EBITDA contribution that resulted in a 5.7 times EBITDA leverage this quarter. You can back in to those numbers, Jon. But more importantly, we will give a full detailed outlook for FY18 in May.

Great. That's helpful. I had a question about what you are seeing from a channel perspective in the business, the core business. Are there particular channels where you are seeing more health than other channels? If you could provide a little bit of your view of that?

It sounds like the inventory de-stock that affected the business in Q2 did not roll forward to Q3, although there is a little bit of a headwind here just an overall industry effort to moderate levels in the channel. What are you seeing specifically in terms of some of your channels?

Separately, is e-commerce even a factor for you at this point, and how are you tackling that? Thank you.

Maybe I will start with the last question and work backwards. E-commerce for us is a very, very small part of our business, although it is growing very rapidly. To begin with, the categories we compete in by nature, e-commerce is not a place that consumers go to look for products. We are incident based generally, so if you wake up and you need a product because someone in your household is suffering, it's not go online and buy it. It is get in the car and go to the local retailer to acquire it.

Our strategy and our focus is to be there, have as many of our products available online. We have many of them today through a number of different e-commerce partners. We want to support all of our retailers' e-commerce efforts, not any one in particular. And be there so that when our customers do show up online and buy products, we are available and ready for them. That is our strategy, is to be there when they show up. So that's the e-commerce part.

In terms of the rest of the channels we compete in, I would say for the most part they have all been fairly steady. No channel in particular has driven our growth to date. Although, we continue to do well in the convenience channel, that is an ongoing effort for us as we look to continue to expand our distribution and the products you can find in the convenience channel. In general, they are all fairly steady for us.

Then I think the last question you had in that group was the ongoing retailer focus on being more efficient in the level of inventories that they carry. We would expect that to continue as well.

Great. Last one for me is the advertising and promotion investment. The ratio has been hovering around 14% or so. I know that is actually up quite a bit from -- if you go back five or six years.

Are you at a level here in this range where you feel like you are providing the level of support needed, particularly for the Investment for Growth brands, such that you are getting the ROI you want on that and don't see a need to step that up?

Then the second part of that question is, are you seeing any kind of shift in the kind of spending you are doing, where you are maybe moving away from traditional advertising investment and doing more in-store shopper marketing type programs? Which you may be getting an opportunity to do more of that now that you've got larger scale brands. Thanks.

In general, digital is a growing area of investment for us. In general, we are looking to continue to grow and expand our activities around that.

In terms of the percent of sales, although we are mindful of it, we keep an eye on it, we manage our A&P spending based on dollars. If you factored in the effect of FX this year, our spending on a year-to-date basis is actually up about $5.5 million over last year, which is the way that we look at it. So we build up our activities and initiatives brand by brand, dollar by dollar and execute that way.

Back to your question about are we shifting the kind of A&P activities? We have a different answer brand by brand. In some cases, we are doing a lot more digital than we used to. In some cases it is flat, for example, Efferdent is a brand that digital activities are more moderate when you compare it against Dramamine, where we continue to grow the focus on digital there as well as a number of other brands.

We don't have one answer. We answer that question and build our marketing plans brand by brand based on the kind of consumer we are trying to connect with. In general, we are going to look to continue to increase dollars that we invest over time to grow our top line.

Thanks. Congratulations on a nice quarter.

Thanks, Jon.

Our next question comes from Linda Bolton-Weiser with B. Riley.

Hi. Could you maybe just refresh us on some of the key innovations that you have had so far this fiscal year? Then just going forward, are there any particular categories that you think lend themselves well to innovation that you think you will be focusing on a lot in FY18 for innovation? Thanks.

Sure. New product launches we have had this year, I will just focus on some of our core brands in the key new products. We have been supporting the Clear Eyes' preservative free launch, which we think is a major innovation in the category. Compound W and Nix have also benefited from some new technology and innovation that we have launched this year, Linda.

That is an important part of our marketing initiatives for all of our brands. We develop long term new product development pipelines and plans and execute against them on an ongoing basis. We generally do not discuss what we are going to launch next year in advance of it, for obvious competitive reasons. But that is a key pillar in our marketing and A&P initiatives, in terms of how we look to not only grow our brands and our share, but over time grow the categories that we compete in and lead.

For Dramamine naturals has not only been a big driver in the Dramamine growth, but it has also been a big driver in increasing the overall size of motion sickness category. And Fleet, as I said before, had been very well managed and invested behind, and a result of that has been a very good and solid new product development pipeline that we are excited to get behind and look forward at launching a number of new products including in Q4 here. We will have some news on some new products that we will be launching over the next few months for the Summer's Eve brand.

Great. Thanks very much.

Sure. Thank you, Linda.

Our next question comes from Frank Camma with Sidoti.

Morning, guys. Congratulations. Two quick questions, one is a follow-up on the proportional activities so I make sure I understand this. Because sometimes you have activity that really just goes against revenue, right? That revenue charge sometimes actually goes down into actual dollars. Can you explain how that has evolved over the last couple of years, and maybe whether product mix impacts that?

Sure. There are a number of brands in our portfolio that respond well to promotional in-store activity and others where it is less impactful. For example, in the vaginal yeast infection, the [VAF] category, at shelf activity doesn't tend to move the needle for us there as much as maybe the eye care or the denture cleaning in the Efferdent category. So that is a big part of the consideration of where we're going to do those activities.

The other thing is, as a brand building company, in-store promotional activity isn't a really strong long-term brand building lever. It doesn't build the base and build long-term connections and association with consumers. As a brand building company, we would tend to put our dollars in other areas rather than promotional. The fact of the matter is, it is effective in certain cases and helpful, not only to our efforts but to retailers. It's a partnership.

That is how we begin to look at it. Is it beneficial to what we are trying to accomplish with a retailer partner? Is it beneficial to what we are trying to do short term? Then, are we better off reallocating those dollars to long-term brand building initiatives? Again, each brand has a little bit of a different formula when you think about those factors, but in general that's how we think about it

Okay. The second question is related to just specifically to Monistat and where you are at with doing the doctor detailing? I assume that -- or maybe I'm wrong -- but the dollars you spend in that are actually through A&P, or are they through another category when you spend those actual dollars?

Our doctor detailing and our healthcare initiatives are in the A&P line, Frank. That is a long-term initiative, as we have talked about in the past. We continue to feel good about that approach. Over time, you tweak the things that you do, but the overall strategy around communicating to the healthcare practitioners about the benefit of Monistat versus prescription is the right thing for us to do. It's the right area of investment, and we think it is working.

We continue to build share for Monistat even with some headwinds where underlying incident levels were down earlier in the year. We are still building our share there. We continue to think it is the right initiative for that brand over the long term.

Do any of the other newer brands make any sense in that category, or in that approach, like Summer's Eve, or Fleet, or is that just they're already widely known? I'm just curious.

Yes. Both the Fleet [whip] brand and the Summer's Eve brand had their own healthcare communication initiatives. They were going to do healthcare practitioner conventions and that kind of thing and doing a little bit of doctor detailing around the Fleet brand. We will look to continue to invest in that and see where combining our Monistat efforts makes sense.

Okay. Great. Thank you.

Thank you, Frank.

Ladies and gentlemen, this does conclude today's question-and-answer period. I would now like to turn the call back over to our host for closing comments.

Thank you. I would like to thank everyone for joining us today and have a good morning

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.