Prestige Consumer Healthcare Inc (PBH) 2024 Q2 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Q2 2024 Prestige Consumer Healthcare Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Philip Terpolilli. Please go ahead.

美好的一天，感謝您的支持。歡迎參加 2024 年第二季 Prestige 消費者醫療保健收益電話會議。 （操作員指示）請注意，今天的會議正在錄製中。現在我想將會議交給今天的第一位演講者菲利普·特波利 (Philip Terpolilli)。請繼續。

Thanks, operator, and thank you to everyone who's joined today. On the call with me are Ron Lombardi, our Chairman, President and CEO; and Christine Sacco, our CFO.

謝謝接線員，也謝謝今天加入的所有人。與我通話的有我們的董事長、總裁兼執行長 Ron Lombardi；以及我們的財務長克里斯汀·薩科 (Christine Sacco)。

On today's call, we'll review our second quarter fiscal '24 results, discuss our full year outlook and then take questions from analysts. A slide presentation accompanies today's call can be accessed by visiting prestigeconsumerhealthcare.com, clicking on the Investors link and then on today's webcast and presentation.

在今天的電話會議上，我們將回顧 24 年第二季財報結果，討論全年前景，然後回答分析師的問題。您可以訪問 prestigeconsumerhealthcare.com，單擊“投資者”鏈接，然後觀看今天的網絡廣播和演示文稿，以訪問今天電話會議附帶的幻燈片演示文稿。

Remember some of the information contained in the presentation today includes non-GAAP financial measures. Reconciliations to the nearest GAAP financial measures 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 2 of the slide presentation that accompanies the call.

請記住，今天的簡報中包含的一些資訊包括非公認會計準則財務指標。我們的收益發布和投影片簡報中包含了與最接近的 GAAP 財務指標的調整。在今天的電話會議上，管理層將就風險和不確定性做出前瞻性聲明，這些風險和不確定性將在電話會議隨附的幻燈片演示文稿第二頁的完整安全港披露中詳細說明。

These are important to review and contemplate business environment uncertainty remains heightened due to high inflation, geopolitical events and supply chain constraints as well as other various 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 are available in our most recent SEC filings and most recent company 10-K.

這些對於審查和思考商業環境的不確定性非常重要，因為高通膨、地緣政治事件和供應鏈限制以及其他各種潛在影響仍然加劇。這意味著結果可能隨時發生變化，風險考慮因素的預測影響是基於截至目前可用資訊的最佳估計。有關風險因素和警示性聲明的更多信息，請參閱我們最新的 SEC 文件和最新的公司 10-K。

I'll now hand it over to our CEO, Ron Lombardi. Ron?

現在我將把它交給我們的執行長 Ron Lombardi。羅恩？

Thanks, Phil. Let's begin on Slide 5. Our Q2 results largely aligned to our expectations and built on a strong Q1 results. Net sales were $286 million in the second quarter, which were the second highest level of quarterly sales in company history and slightly ahead of what we anticipated back in August. We were pleased with this performance given we faced a challenging comparison from the prior year record results.

謝謝，菲爾。讓我們從投影片 5 開始。我們第二季的業績基本上符合我們的預期，並且建立在強勁的第一季業績的基礎上。第二季淨銷售額為 2.86 億美元，這是公司歷史上季度銷售額第二高的水平，略高於我們 8 月的預期。鑑於我們面臨與前一年創紀錄結果的挑戰性比較，我們對這一表現感到滿意。

Our portfolio diversity continues to be a strength with strong sales in certain U.S. brands and our international business mostly offsetting this tough comparison as well as the strategic exit of the private label business we've previously discussed. Revenue translated into strong earnings and cash flow. We generated $1.07 in earnings, up 5% versus the prior year while experiencing sequential and year-over-year improvement in gross margin as well as a consistent EBITDA margin. Strong free cash flow enabled to pay down of $55 million in debt, and we finished the quarter at 3x leverage. We will continue to reduce debt while assessing other strategic capital deployment opportunities.

我們的產品組合多樣性仍然是我們的優勢，某些美國品牌的強勁銷售和我們的國際業務在很大程度上抵消了這種艱難的比較以及我們之前討論過的自有品牌業務的戰略退出。收入轉化為強勁的利潤和現金流。我們實現了 1.07 美元的收益，比上年增長 5%，同時毛利率連續和同比改善，且 EBITDA 利潤率保持穩定。強勁的自由現金流使我們能夠償還 5500 萬美元的債務，本季末我們的槓桿率為 3 倍。我們將繼續減少債務，同時評估其他策略資本部署機會。

So in summary, halfway through the year, we are on track to achieve our full year forecast, delivering strong revenue and earnings, thanks to the execution of our proven business strategy.

總而言之，今年過半，由於我們行之有效的業務策略的執行，我們有望實現全年預測，實現強勁的收入和盈利。

Now let's turn to Page 6 to discuss one example of brand building that's driving our success. Our Goody's headache powders define the form and have a long 100-plus-year history of helping consumers treat headaches and other elements, largely in the Southeastern United States. After acquiring the brand over 10 years ago, we went to work leveraging learnings from consumers to drive increased usage of the brand. We use these and expanded with new forms and flavors as well as with targeted offerings like Goody's Hangover that solve on-the-go pain release with great taste.

現在讓我們翻到第 6 頁來討論推動我們成功的品牌建立範例。我們的 Goody's 頭痛粉定義了這種形式，並在幫助消費者治療頭痛和其他疾病方面擁有 100 多年的悠久歷史，主要集中在美國東南部。十多年前收購該品牌後，我們開始利用消費者的經驗來提高品牌的使用率。我們使用這些產品，並擴展了新的形式和口味，以及像 Goody's Hangover 這樣的有針對性的產品，以美味的方式解決旅途中的疼痛問題。

Most recently, we leveraged these highly successful products with distinct marketing designed to attract new customers while deepening connections with existing ones. We've done this in 2 distinct ways. First, we've had wide-ranging media, emphasizing the concept of make the day count for consumers that has driven important brand visibility. Second, we've had successful national exposure on Thursday night football where the brands get to good marketing ads are driving increased interest in Goody's online.

最近，我們利用這些非常成功的產品進行獨特的行銷，旨在吸引新客戶，同時加深與現有客戶的聯繫。我們透過兩種不同的方式做到了這一點。首先，我們擁有廣泛的媒體，強調讓消費者過著有意義的日子的概念，這推動了重要的品牌知名度。其次，我們在周四橄欖球之夜上獲得了成功的全國曝光，品牌獲得了良好的營銷廣告，從而提高了人們對 Goody's 在線的興趣。

These recent marketing tactics are successfully leveraging our brand-building tool kit to drive share with consumers and retailers and the results are clear. In the fiscal year-to-date, we've grown Goody's headache powders over 3x faster than the overall analgesic category.

這些最近的營銷策略成功地利用我們的品牌建立工具包來推動與消費者和零售商的分享，結果是顯而易見的。在本財年迄今為止，我們的 Goody's 頭痛粉生產速度比整個鎮痛藥類別的生產速度快了 3 倍以上。

Now let's turn to Slide 7 for an update on e-commerce. Alongside these brand-building efforts is our emphasis in aligning investments with channels that are important to consumers. As consumer shopping habit shift, our end goal is to be readily available and prominent to consumers wherever they shop. E-commerce continues to be the key example of this. As shown on the left side of the page, we experienced strong 6% consumption growth in the first half of the fiscal year.

現在讓我們轉向幻燈片 7 了解電子商務的最新情況。除了這些品牌建立努力之外，我們還強調將投資與對消費者重要的管道結合。隨著消費者購物習慣的轉變，我們的最終目標是無論消費者在哪裡購物，都能隨時獲得並引人注目。電子商務仍然是這方面的關鍵例子。如頁面左側所示，本財年上半年我們的消費成長強勁，達到 6%。

Equally important is that we've achieved strong performance across all of our e-commerce partners and with a consistent profit profile. Our success is driven by effective strategies, including targeted content, effectively managing our product assortment and making broad investments with each of our e-commerce partners to better connect with consumers.

同樣重要的是，我們所有的電子商務合作夥伴都取得了強勁的業績，並且利潤狀況保持一致。我們的成功得益於有效的策略，包括有針對性的內容、有效管理我們的產品種類以及與每個電子商務合作夥伴進行廣泛的投資，以更好地與消費者建立聯繫。

Two recent examples are shown on the right side of the page. On the top, there are a few examples of online brand story pages, which help upgrade the user experience of learning about an overall brand while shopping actively for a specific product. On the bottom, is a reminder of investments around content. We continually refresh online content for each of our brands to help drive traffic and ultimately purchases as consumers seek solutions for their health care needs.

頁面右側顯示了兩個最近的範例。頂部有一些線上品牌故事頁面的範例，有助於提升用戶在積極購買特定產品的同時了解整體品牌的體驗。底部提醒人們圍繞內容進行投資。我們不斷刷新每個品牌的線上內容，以幫助增加流量並最終隨著消費者尋求滿足其醫療保健需求的解決方案而購買。

So in summary, we continue to win with consumers across e-commerce through our investments in online content and digital advertising and are well-positioned for further growth.

總而言之，我們透過對線上內容和數位廣告的投資，繼續贏得電子商務消費者的青睞，並為進一步成長做好了準備。

Now I'll pass it to Chris to walk through the financials.

現在我將把它交給克里斯來介紹一下財務狀況。

Thanks, Ron. Good morning, everyone. Let's turn to Slide 9 and review our second 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 release.

謝謝，羅恩。大家，早安。讓我們轉向投影片 9，回顧一下我們 24 年第二季的財務表現。提醒一下，今天演示文稿中的信息包括某些非 GAAP 信息，這些信息已與我們收益發布中最接近的 GAAP 衡量標準進行了調整。

Q2 revenue of $286.3 million were largely as expected and decreased 70 basis points from the prior year after excluding the effects of foreign currency. As Ron highlighted earlier, Q2 faced the most difficult comparison to the prior year and also includes about a 1-point headwind related to the strategic exit of the private label business. EBITDA and EPS both increased 4.2% and 5.4%, respectively in Q2 from the prior year, largely attributable to the timing of A&M spend. EBITDA margin in the quarter remained consistent with our long-term expectations.

第二季營收為 2.863 億美元，基本上符合預期，在排除外匯影響後比上年下降 70 個基點。正如 Ron 早些時候強調的那樣，第二季度面臨著與上一年相比最困難的情況，並且還包括與自有品牌業務策略退出相關的約 1 個百分點的阻力。第二季 EBITDA 和 EPS 分別較上年同期成長 4.2% 和 5.4%，主要歸功於 A&M 支出的時機。本季的 EBITDA 利潤率與我們的長期預期保持一致。

Let's turn to Slide 10 for more detail around consolidated results for the first half. For the first 6 months of fiscal '24, revenues were approximately flat at $566 million. By segment, excluding FX, North America segment revenues declined while the International segment increased 8.5% versus the prior year. In North America, the largest category growth drivers in the first half were strong dermatological and eye and ear care sales, which helped partially offset declines in women's health. Our International segment performed slightly above our long-term expectations, thanks to strong performance across numerous brands.

讓我們轉向幻燈片 10，以了解有關上半年綜合結果的更多詳細資訊。 2024 財年的前 6 個月，營收基本持平，為 5.66 億美元。按部門劃分，不包括外匯，北美部門收入下降，而國際部門收入較上年增長 8.5%。在北美，上半年最大的類別成長動力是皮膚科和眼耳護理產品的強勁銷售，這有助於部分抵消女性健康方面的下降。由於眾多品牌的強勁表現，我們的國際業務表現略高於我們的長期預期。

We continue to experience solid mid-single-digit year-over-year growth in the e-commerce channel, as Ron highlighted. Total company gross margin of 55.6% in the first 6 months was down slightly versus the prior year, owing to challenging comparisons in Q1. This gross margin was as we expected and attributable to cost increases, partially offset by pricing actions and cost savings across our portfolio, which offset the dollar amount of inflationary cost headwinds. For the full fiscal year, we continue to anticipate gross margin flat to up slightly versus fiscal '23 with Q3 estimated to be flat with Q2. As a percent of sales, advertising and marketing came in at 13.5% for the first 6 months.

正如羅恩所強調的那樣，我們在電子商務管道中繼續實現中個位數的穩健同比增長。由於第一季的比較具有挑戰性，前 6 個月公司總毛利率為 55.6%，較前一年略有下降。這一毛利率符合我們的預期，歸因於成本增加，部分被我們投資組合的定價行動和成本節約所抵消，從而抵消了通膨成本逆風的美元金額。對於整個財年，我們繼續預計毛利率將與 23 財年持平或略有上升，其中第三季預計將與第二季持平。前 6 個月，廣告和行銷佔銷售額的百分比為 13.5%。

For fiscal '24, we still anticipate an A&M rate of just over 13% of sales and up in dollars versus prior year, with approximately 14% of spend in Q3. G&A expenses were 9.5% of sales in the first 6 months, consistent with the prior year. Finally, diluted EPS of $2.13 was up slightly versus $2.11 despite a headwind related to the timing impact of cost increases and higher interest rates. For the balance of fiscal '24, we still anticipate an interest expense of approximately $67 million, with lower sequential interest expense in Q3.

對於 24 財年，我們仍然預期 A&M 佔銷售額的比例略高於 13%，以美元計算，較上年有所上升，第三季的支出約為 14%。前 6 個月的一般管理費用佔銷售額的 9.5%，與前一年持平。最後，儘管成本增加和利率上升的時間影響帶來了不利因素，但稀釋後每股收益為 2.13 美元，較 2.11 美元略有上升。對於 24 財年的餘額，我們仍預期利息支出約為 6,700 萬美元，第三季的利息支出將較低。

Finally, our Q2 tax rate was 23.9%, and we still anticipate a tax rate of approximately 24% for the remaining quarters of fiscal '24.

最後，我們第二季的稅率為 23.9%，我們仍然預計 24 財年剩餘季度的稅率約為 24%。

Now let's turn to Slide 11 and discuss cash flow. For the first half, we generated $106.1 million in free cash flow, down mid-single digits versus the prior year due to the timing of working capital. We continue to maintain industry-leading free cash flow and are maintaining our outlook for the full year of $240 million or more.

現在讓我們轉向幻燈片 11 並討論現金流。上半年，我們產生了 1.061 億美元的自由現金流，由於營運資金的時間安排，與上年相比下降了中個位數。我們繼續保持業界領先的自由現金流，並維持全年 2.4 億美元或更多的預期。

At September 30, our net debt was approximately $1.2 billion, $1 billion of which is fixed and we achieved a covenant-defined leverage ratio of 3x. We still anticipate being below 3x leverage by fiscal year-end, absent other strategic uses of cash flow. This is consistent with our objective of targeting to operate below 3x leverage over the long term. With that, I'll turn it back to Ron.

截至 9 月 30 日，我們的淨債務約為 12 億美元，其中 10 億美元是固定債務，我們實現了契約定義的 3 倍槓桿率。如果沒有其他現金流的策略用途，我們仍然預期到財年末槓桿率將低於 3 倍。這與我們長期以低於 3 倍槓桿率運作的目標是一致的。這樣，我會把它轉回給羅恩。

Thanks, Chris. Let's turn to Slide 13 to wrap up. More than halfway through the year, we have solid business momentum, thanks to our proven business strategy and leading consumer health care portfolio. We are reaffirming our full year outlook, thanks to our diverse portfolio of brands.

謝謝，克里斯。讓我們用投影片 13 來總結一下。今年過半，得益於我們行之有效的業務策略和領先的消費者醫療保健產品組合，我們的業務勢頭強勁。由於我們多元化的品牌組合，我們重申了全年展望。

For fiscal '24, we continue to anticipate revenues of $1.135 billion to $1.140 billion, and organic revenue growth of approximately 1% to 2% versus fiscal '23 or organic revenue growth of 2% to 3% after excluding the exit of the noncore private label business. For Q3, we anticipate revenue of $280 million, a year-over-year increase consistent with the full year growth expectation.

對於24 財年，我們繼續預期收入為11.35 億至11.4 億美元，與23 財年相比，有機收入增長約1% 至2%，或在排除非核心私營企業退出後有機收入增長2% 至3 %標籤業務。對於第三季度，我們預計營收為 2.8 億美元，年成長與全年成長預期一致。

As a reminder, our fiscal Q3 is typically the most difficult quarter of the year to forecast given the holiday season and the potential lumpiness of retailer order patterns during this period. For EPS, we continue to anticipate diluted EPS of $4.27 and to $4.32 for the full year, most likely at the higher end of the range, thanks to the power of our cash flow. For Q3, we anticipate EPS of $1.04, up slightly versus the prior year.

提醒一下，考慮到假期季節以及在此期間零售商訂單模式的潛在波動，我們的第三財季通常是一年中最難預測的季度。對於每股收益，我們繼續預計全年攤薄每股收益為 4.27 美元，並達到 4.32 美元，這很可能處於該範圍的較高端，這要歸功於我們現金流的力量。對於第三季度，我們預計每股收益為 1.04 美元，比去年同期略有上升。

Lastly, we continue to anticipate free cash flow of $240 million or more, and we still expect being below 3x leverage by fiscal year-end as we continue to execute our disciplined capital deployment strategy. With that, I'll open it up for questions. Operator?

最後，我們繼續預期自由現金流將達到 2.4 億美元或更多，隨著我們繼續執行嚴格的資本部署策略，我們仍然預計到財年末槓桿率將低於 3 倍。有了這個，我將打開它來提問。操作員？

(Operator Instructions) Our first question comes from the line of Rupesh Parikh with Oppenheimer.

（操作員說明）我們的第一個問題來自 Rupesh Parikh 和 Oppenheimer 的線路。

So I guess I wanted to kick it off just with the Women's Health segment. Just curious if you can just give us color in terms of how you're thinking about the recovery. I think earlier year you expected it to improve later this year, but just curious the latest thinking on women's health.

所以我想我想從女性健康部分開始。只是好奇您能否告訴我們您對復甦的看法。我想早些時候您預計今年晚些時候情況會有所改善，但只是好奇有關女性健康的最新想法。

I think as we talked about on the last quarterly call, the category is slowing down. We continue to feel good about the Summer's Eve positioning. We've got some new products expected later in the year, and we continue to focus on it. So continue to feel good about the brand's positioning and expect things to turn later in the year, early into next year.

我認為正如我們在上一季電話會議上討論的那樣，該類別正在放緩。我們仍然對夏夜的定位感覺良好。我們預計將在今年稍後推出一些新產品，我們將繼續關注它。因此，繼續對品牌的定位保持良好的態度，並期望事情在今年稍後、明年年初出現轉變。

Great. And then on the competitive front, just curious if you're seeing any changes from private label competition or even other branded players.

偉大的。然後在競爭方面，只是好奇您是否看到自有品牌競爭甚至其他品牌參與者有任何變化。

No. No real change in share or new entrance that's disrupting anything, Rupesh. So it's kind of just the overall category trends at this point.

不。Rupesh，份額或新入口的真正變化不會擾亂任何事情。所以這只是目前的整體類別趨勢。

Great. And then we've all seen, I guess, the bankruptcy of Rite Aid. So just curious as well if you're seeing any shift between channels, just given changing consumer dynamics and just what's happening with some of the challenges in the pharmacy channel.

偉大的。然後我們都看到了 Rite Aid 的破產。因此，考慮到消費者動態的變化以及藥房管道中正在發生的一些挑戰，您是否會看到管道之間的任何轉變，也很好奇。

Hey, it's Chris. So first of all, concerning Rite Aid specifically, we're not anticipating a disruption to our full year outlook as a result of the filing. For context, they're not one of our top 10 customers globally. That said, we have seen some channel shift mainly into mass and e-commerce, but as we've talked about, generally positive for us, right? Our share online is generally higher than it is in brick-and-mortar. And we're well positioned, right? We're channel-agnostic from a gross margin perspective.

嘿，這是克里斯。因此，首先，就 Rite Aid 而言，我們預計該申請不會影響我們的全年前景。就上下文而言，他們不是我們全球十大客戶之一。也就是說，我們已經看到一些管道主要轉向大眾和電子商務，但正如我們所說，這對我們來說總體上是積極的，對嗎？我們的線上份額通常高於實體份額。我們處於有利位置，對嗎？從毛利率的角度來看，我們與通路無關。

So we always say we want our products to be available to consumers wherever they shop. And so we wouldn't anticipate a channel shift meaningfully impacting us.

因此，我們總是說我們希望消費者無論在哪裡購物都可以買到我們的產品。因此，我們預期通路轉變不會對我們產生有意義的影響。

This question comes from the line of Susan Anderson with Canaccord.

這個問題來自Susan Anderson 和Canaccord 的對話。

Nice job on the quarter. I was wondering if maybe you could talk about the cold cough season. It sounds like it was a driver of your sales. I guess there's been some mix commentary out there. Just curious how you've seen it start out and how you expect it to play out or how you're modeling it for the season.

本季工作做得很好。我想知道你是否可以談談感冒咳嗽季節。聽起來這是您銷售的動力。我想那裡有一些混合評論。只是好奇你如何看待它的開始以及你期望它如何發揮或你如何為這個賽季建模。

So we've been talking about kind of 3 factors to consider for the cough cold season for us, and it's been consistent really since the beginning of the year. The first is for our business, we've got expanded capacity versus last year. So we're able to ship more because we can get more from the supply chain. The second impact that we've considered is the change or changes in how the retailers are planning the season and what level of inventory they may keep on hand for cough cold. And then, of course, the third is the cough cold incident level.

因此，我們一直在討論感冒咳嗽季節需要考慮的 3 個因素，而且自今年年初以來一直如此。首先是我們的業務，與去年相比，我們的產能有所擴大。所以我們能夠運送更多，因為我們可以從供應鏈中獲得更多。我們考慮的第二個影響是零售商如何規劃季節以及他們可能為咳嗽感冒保留的庫存水準的變化。當然，第三個是咳嗽感冒事件等級。

So as we sit here today, those street factors continue to line up with what we thought about for the year. So we are anticipating cough cold for the year to be in line with last year. So as our supply is better this year, it's offset by an anticipated lower level of incident levels and likely lower stocking for cough cold outside of the traditional season. So that's how we're viewing it at this point.

因此，當我們今天坐在這裡時，這些街頭因素仍然與我們今年的想法一致。因此，我們預計今年的咳嗽感冒情況將與去年持平。因此，由於今年我們的供應量有所改善，因此預期的事件水平較低以及傳統季節之外咳嗽感冒的庫存可能會減少，從而抵消了這一影響。這就是我們目前的看法。

Okay. Great. That's helpful. And then maybe if you could talk about the dynamic in the quarter between pricing and unit growth. And then I know in the past, you talked about kind of volumes normalizing as we go into the back half, I guess, how do you feel about that dynamic? And would you expect then the growth there to be more equal as we look forward?

好的。偉大的。這很有幫助。然後也許您可以談談本季定價和單位成長之間的動態。然後我知道在過去，你談到了當我們進入後半部分時，交易量會正常化，我想，你對這種動態有何看法？您是否期望那裡的成長會像我們預期的那樣更加平等？

Yes. So that's exactly right. We're still benefiting from certain pricing actions that will roll over largely in the second half of this year. So probably easier to talk first half in totality, right? We were up slightly on an organic basis, and that was largely driven by price. In the second half, we anticipate that to reverse, and therefore, consistent with our original guide, we still expect our growth to be about half price, half volume for the year.

是的。所以這是完全正確的。我們仍然受益於某些定價行動，這些行動將在今年下半年大部分延續。所以從整體來說前半部可能比較容易，對嗎？我們的有機成長略有上升，這主要是由價格推動的。在下半年，我們預計這種情況會發生逆轉，因此，與我們最初的指導一致，我們仍然預計今年的成長將是價格一半左右，銷售量一半左右。

Okay. Great. And then if I could maybe just add one more on the capital allocation. I guess, how are you thinking about you're at 3x leverage, so almost reaching your goal by the end of the year? I guess, how are you thinking about beyond that, balancing share repurchases and debt paydown and then also M&A opportunities as we look forward.

好的。偉大的。然後我是否可以在資本配置上再加一項。我想，您如何看待您的槓桿率為 3 倍，並且幾乎在年底前達到您的目標？我想，除此之外，您如何考慮平衡股票回購和債務償還，以及我們預期的併購機會。

So really, it's no different than it's been for the last few years, Susan, which is we'll continue to evaluate any M&A opportunities that come up, look at stock buyback as a way to offset dilution of shares each year and then longer term, we'll consider a dividend. But again, our leverage target is below 3, which is that next phase, and we'll get there -- anticipating getting there at the end of March. So we continue to feel good about the capital allocation optionality that we have going forward.

所以說真的，這與過去幾年沒有什麼不同，蘇珊，我們將繼續評估出現的任何併購機會，將股票回購視為每年抵消股票稀釋的一種方式，然後是長期的，我們將考慮股息。但同樣，我們的槓桿目標低於 3，這是下一階段，我們將實現這一目標——預計在 3 月底實現這一目標。因此，我們繼續對未來的資本配置選擇感到滿意。

This question comes from the line of Jon Andersen with William Blair.

這個問題來自喬恩·安徒生和威廉·布萊爾的台詞。

During the first half of the year, your sales essentially flat, but you've reaffirmed the full year outlook for 1% to 2% growth, which means we're going to expect to see an acceleration in sales growth in the second half of the year. Could you talk about your visibility to that and what some of the underlying drivers are of that improvement on a year-over-year basis that you're expecting in the second half?

今年上半年，你們的銷售額基本上持平，但你們重申了全年成長 1% 至 2% 的前景，這意味著我們預計下半年銷售額將加速成長那一年。您能否談談您對此的看法以及您預計下半年實現同比改善的一些潛在驅動因素是什麼？

So the first place I'll start with Jon is comps. And as I mentioned during the prepared remarks today is for the second quarter in particular, we comped the highest level of quarterly sales ever in the company's history. As a reminder, last year, we were still in kind of a funny ramp-up in return to normal activities and catch up in supply chain and a number of other factors last year that kind of drove the comp. So as we get into the second half of our year, we begin to return to, I think, more of a normal level of comp to help drive year-over-year gains. That's really the big factor.

所以我首先要從喬恩開始的是比較。正如我在今天準備的發言中提到的，特別是第二季度，我們取得了公司歷史上最高的季度銷售額水準。提醒一下，去年我們仍然處於有趣的成長狀態，以恢復正常活動並趕上供應鏈以及去年推動競爭的許多其他因素。因此，當我們進入下半年時，我認為我們開始恢復到更多正常的薪資水平，以幫助推動同比成長。這確實是一個重要因素。

Okay. And you mentioned, Ron, in your response on -- to the question on cough cold that one of the factors there you're considering is changes in retailers' planned inventory levels, I guess, thinking they might hold less inventory this year than last year. Is that comment specific to cough cold or is there a broader trend now with things normalizing from a supply chain standpoint where retailers are looking to just kind of hold less inventory in aggregate? And could that affect your shipments?

好的。羅恩，您在回答有關咳嗽感冒的問題時提到，您正在考慮的因素之一是零售商計劃庫存水平的變化，我猜，認為他們今年的庫存可能會比去年少年。這種評論是針對咳嗽感冒還是現在有更廣泛的趨勢，從供應鏈的角度來看，情況正在正常化，零售商正在尋求減少整體庫存？這會影響你們的出貨嗎？

Yes. So particularly the cough cold, right, last year, the supply chain of -- many suppliers for cough cold were trying to catch up. So retailers are trying to carry as much inventory as they could because of that uncertainty in the supply chain. And then just as importantly, right, last year, cough cold incident levels were happening all year long. So retailers were carrying a different level of inventory to support a year-round cold incident level rather than the historical seasonal. And I think as we get into this year, we're starting to see signs that return to seasonal peaks and valleys.

是的。特別是咳嗽感冒，去年，許多咳嗽感冒供應商的供應鏈都在努力迎頭趕上。因此，由於供應鏈的不確定性，零售商正試圖保留盡可能多的庫存。同樣重要的是，去年，咳嗽感冒事件全年都在發生。因此，零售商持有不同水平的庫存來支持全年的寒冷事件水平，而不是歷史季節性水平。我認為，隨著今年的到來，我們開始看到回歸季節性高峰和低谷的跡象。

So it's really a different inventory profile held by the retailers rather than lower levels, if you see the fine difference there. And then, yes, right, we're hearing a lot of the same things you are from other CPG companies that their businesses are being impacted by retailers thinking about carrying lower levels of inventory. Not so much in our categories and specifically our subsections of our categories, right. So at this point, really no major impact that we would expect -- and our outlook for the year, I think, is supporting the levels we would expect going forward.

因此，如果您看到其中的細微差別，那麼這實際上是零售商持有的庫存狀況不同，而不是較低的水平。然後，是的，是的，我們從其他消費品公司那裡聽到了很多同樣的事情，他們的業務正受到零售商考慮降低庫存水準的影響。在我們的類別中，特別是我們類別的子部分中，沒有那麼多，對吧。因此，在這一點上，實際上並沒有我們預期的重大影響——我認為，我們今年的前景正在支持我們預期的未來水平。

Okay. That's helpful. Last one for me. On gross margin, improved, I think, a little bit sequentially. And is that the -- I guess the first question on that is, was that seasonal? Or are you seeing early signs of some of your efforts to, I guess, restore gross margins after a couple of years of gross margin erosion, which was largely, I think, are solely due to just kind of the price/cost dynamic? Are you starting to feel like you've got some traction such that we could see ongoing gross margin improvement from here?

好的。這很有幫助。最後一張給我。我認為毛利率略有改善。我想第一個問題是，這是季節性的嗎？或者，我想，在幾年的毛利率下降之後，您是否看到了一些努力恢復毛利率的早期跡象，我認為，這很大程度上完全是由於價格/成本動態造成的？您是否開始覺得自己已經獲得了一些吸引力，以至於我們可以看到毛利率持續改善？

Jon, it's Chris. So really the latter. Gross margin in -- coming in this quarter for Q2 as expected compared to the outlook we gave in May. Q3, we said should approximate Q2, right? And we're still calling the year to be flat to up slightly. So we are starting to see some relief on certain costs sequentially like logistics costs, freight that you're hearing from people, but it's a little bit more marginal for us just given the magnitude of freight as a percent of our sales that we've talked about in the mid-single-digit range. So we're seeing a little bit of recovery there and some of our cost-saving efforts are starting to pay off. No reason to think we can't continue to march back to more normalized levels.

喬恩，是克里斯。所以確實是後者。與我們 5 月給出的前景相比，本季第二季的毛利率符合預期。 Q3，我們說應該近似Q2，對吧？我們仍然認為今年將持平或小幅上漲。因此，我們開始看到某些成本連續有所緩解，例如物流成本、您從人們那裡聽到的運費，但考慮到運費占我們銷售額的百分比，這對我們來說有點邊際。談論的範圍在中間個位數範圍內。因此，我們看到那裡出現了一些復甦，我們節省成本的一些努力開始得到回報。沒有理由認為我們不能繼續回到更正常化的水平。

And then maybe I will squeeze one more in on -- is the comments on capital -- excuse me, on leverage, wanting to operate below 3x long term. Is that fairly new I guess I missed that. I hadn't heard that before. And then does that kind of maybe limit your willingness to engage in M&A in term as you work to achieve that goal?

然後也許我會再補充一點——是關於資本的評論——對不起，關於槓桿，希望長期營運低於3倍。這是相當新的嗎？我想我錯過了。我以前沒聽過。那麼，在您努力實現這一目標的過程中，這是否會限制您參與併購的意願？

Yes. So Jon, I think we announced that back on the May call at the start of the fiscal year that it was our new phase, right? Prior to that, I think we were between 4.5% and 3% or something like that. So it really, I think, is just reemphasizing our focus on operating at lower levels of leverage over time. It really doesn't (inaudible) us in terms of optionality. And it's our job if an M&A opportunity shows up that we think is compelling for the shareholders to figure out how to get it done and we would rise above 3% for a period of time if it made sense. So it's not meant to put a feeling on things, but rather just emphasize the importance of operating at lower levels of leverage going forward.

是的。喬恩，我想我們在本財年開始時的五月電話會議上就宣布這是我們的新階段，對嗎？在此之前，我認為我們的比例在 4.5% 到 3% 之間或類似的水平。因此，我認為，這實際上只是再次強調我們隨著時間的推移以較低的槓桿水平運作的重點。就可選性而言，它確實不（聽不清楚）我們。如果出現併購機會，我們認為這對股東來說是有吸引力的，需要弄清楚如何完成它，這就是我們的工作，如果有意義的話，我們將在一段時間內將股價上漲到 3% 以上。因此，這並不是為了給人一種感覺，而只是強調未來以較低槓桿水平運作的重要性。

One moment for our last question. This question comes from the line of Keonhee Kim with Morningstar.

請稍等一下我們的最後一個問題。這個問題來自 Keonhee Kim 和晨星公司的對話。

Congrats on a solid quarter. You guys have identified product innovation as one of your key priorities and talked about launching Dramamine in the nausea category as an example. And it's been great to see that win shares in that space over the few quarters. And so I guess, looking at your other portfolio, what other brands or which product category do you kind of view that you can do a similar thing with?

恭喜季度業績穩健。你們已將產品創新視為你們的首要任務之一，並以在噁心類別中推出茶苯海明為例。很高興看到在幾個季度中贏得了該領域的份額。所以我想，看看你的其他產品組合，你認為還有哪些品牌或哪個產品類別可以做類似的事情？

Yes. So thanks for the question. So yes, new product development and innovation is an important marketing element of how we think about long-term brand building. And if you look over time at our brands, you've seen that we've posted in new products and innovation and refreshments to the product offering really across the broad portfolio. Everything from brands that we don't talk about like Stye, where we launched a new Stye drop a few years ago, and it quickly rose to one of the better-selling SKUs within the Stye category to Summer's Eve where we've launched spa products over the last couple of years. It's our largest brand.

是的。謝謝你的提問。所以，是的，新產品開發和創新是我們考慮長期品牌建立的重要行銷要素。如果您長期觀察我們的品牌，您會發現我們在廣泛的產品組合中發布了新產品、創新和更新的產品。從我們不談論的品牌，如 Stye，我們在幾年前推出了一款新的 Stye drop，並迅速成為 Stye 類別中最暢銷的 SKU 之一，到 Summer's Eve，我們推出了 spa過去幾年的產品。這是我們最大的品牌。

So it's an important element across the portfolio and is a big driver of not only share in sales, but growing the categories for our retail partners. So going forward, you'll continue to see that element of long-term brand building show up across our portfolio.

因此，它是整個產品組合中的重要元素，不僅是銷售份額的重要推動力，而且是我們零售合作夥伴類別成長的重要推動力。因此，展望未來，您將繼續看到長期品牌建立的元素出現在我們的產品組合中。

Great. That's helpful. And as more large pharmas kind of spin out their consumer division, as J&J (inaudible) this year and Sanofi kind of planning to do the same thing by next year. Do you think you'll feel more competitive pressures in the industry? Or do you expect the landscape to be more or less same as usual?

偉大的。這很有幫助。隨著越來越多的大型製藥公司分拆其消費者部門，強生（聽不清楚）今年和賽諾菲計劃在明年做同樣的事情。您認為您會感受到業界更大的競爭壓力嗎？或者你認為風景會和平常一樣嗎？

Yes. We would expect it to be more of the same whether these big consumer health care companies are embedded in a big global CPG company or independent like we've seen Kenvue and Haleon lately. They're focused on different things than we are. They're looking for move-the-needle opportunities which are big brands, big categories, different regions that we compete in as part of their business objectives. So we're going to continue to focus on those niche smaller categories that we can be successful in can define the categories and we'll likely look for opportunities to acquire brands that they may shed as they further focus on those bigger opportunities. So nothing new there. That's been the case for the last 10 to 20 years. So more of the same.

是的。我們預計，無論這些大型消費者醫療保健公司是嵌入到大型全球消費品公司中，還是像我們最近看到的 Kenvue 和 Haleon 那樣獨立，情況都會更加相似。他們關注的事情與我們不同。他們正在尋找大品牌、大類別、不同地區的重大機會，作為他們業務目標的一部分。因此，我們將繼續專注於那些我們可以成功定義類別的利基較小類別，並且我們可能會尋找機會收購他們可能會放棄的品牌，因為他們進一步專注於這些更大的機會。所以沒有什麼新鮮事。過去10到20年都是這樣。所以更多的是相同的。

Got it. That's helpful. And just one last question for me. With the FDA cracking down on products across different categories, such as the oral decongestion pills and eye drops, do you feel pretty strongly about your portfolio? Or are there any threats that maybe we should be thinking about?

知道了。這很有幫助。還有最後一個問題想問我。隨著 FDA 對不同類別的產品（例如口服減充血藥和眼藥水）進行打擊，您對您的產品組合有強烈的感覺嗎？或者是否有任何我們應該考慮的威脅？

Yes. So quality is the starting point for everything we do here, right? We need to deliver and sell a quality product that delivers against what the consumer expects out of it. So we start there. The recent announcements around recalls of sterile eye care products that have been sourced outside of North America and from suppliers that aren't necessarily proven over the long term is just a reminder of the importance of it and just something that we continue to focus on.

是的。所以品質是我們在這裡所做的一切的起點，對嗎？我們需要提供和銷售符合消費者期望的優質產品。所以我們從這裡開始。最近關於召回來自北美以外地區和供應商的無菌眼部護理產品的公告，這些產品不一定經過長期驗證，這只是提醒我們它的重要性，也是我們繼續關注的事情。

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Ron Lombardi, President and CEO, for closing remarks.

謝謝。我目前沒有提出任何進一步的問題。現在我想請總裁兼執行長 Ron Lombardi 致閉幕詞。

Thank you, operator, and thanks to everyone who's joined us on the call today, and we look forward to updating you on our next quarterly call. Have a great day.

謝謝接線員，也感謝今天加入我們電話會議的所有人，我們期待在下一次季度電話會議上向您通報最新情況。祝你有美好的一天。

Thank you. This does conclude the program, and you may now disconnect.

謝謝。這確實結束了程序，您現在可以斷開連接。