Good day, ladies and gentlemen, and welcome to the Prestige Brands Holdings Second Quarter Fiscal 2015 Earnings Call. My name is Darren, and I'll be your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. And now, I'd like to turn the call over to Mr. Dean Siegal, Director of Investor Relations. Please proceed, sir.

Good morning, and welcome. As a reminder, there's 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. I am required to remind you that during this call, management may make statements about their beliefs and expectations as to the company's future. 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. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this conference call. A complete Safe Harbor disclosure appears on Page 2 of the presentation accompanying this call. 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, which it files with the U.S. Securities and Exchange Commission. Now, I would like to introduce Matt Mannelly, CEO; and Ron Lombardi, CFO.

Thank you, Dean. Good morning, and thank you, everyone, for joining us this morning. As Dean referenced, we'll be working off a presentation that we put in the -- on the website. And therefore, I'd ask people to turn to Slide 5, where I'll start. I'll talk a little bit about Q2 performance and some of the highlights, some of the things we're doing. Ron will then take you to the financials, and then I'll close it and we'll open it up for some questions. So with that, we'll jump into it and I'd say, in general, we're very pleased with the performance in the second quarter, obviously. We're pleased on a number of fronts, I'd say. First of all, versus last year, last year second quarter was a very strong quarter, so we have said all along, to comp second quarter was going to be very difficult. But we're pleased versus the expectations that we set at the start of the year and we reiterated last quarter that we exceeded those expectations. And finally, we're pleased with the results given this retail environment, which continues to be very challenging, and I'll talk more about that. So when you add all those together, as I said, we're very pleased with the results for the quarter. Our revenue of $181 million is up 8.6% versus the prior year. And if you take out Insight, which just closed in September, we're up 1%. If you recall, we had said we thought we were going to be flat to slightly negative in the second quarter, so we exceeded that expectation. Our adjusted EPS, which Ron will talk more about, of $0.50 is up 6.4%, again exceeding our expectations. I think the next number, which we continue to point out as being very important,…

Thanks, Matt, and good morning, everyone. If you'll turn to 19, we'll start with the financial section of this morning's presentation. As Matt has described, we're very pleased with our results during the second quarter, given the continued challenging retail environment. Our diversified OTC portfolio and continued focus on brand building has resulted in strengthening consumption trends across many of our core OTC brands over the last 2 quarters, helping to drive the strong results realized so far this year. Results for the quarter included both solid revenue and EPS growth, along with consistent cash flow. Highlights for the quarter included net revenue growth of 8.6% from our increasingly diversified portfolio and the acquisition of Insight; adjusted EPS of $0.50, up 6.4% over the prior year; and adjusted free cash flow of $36.5 million, which was approximately 15% above the prior year's level. With our solid results for the quarter and year-to-date, we continue to believe we are well positioned to achieve our full year outlook for sales growth, adjusted EPS and adjusted free cash flow. Turning to Slide 20, we have our Q2 and year-to-date results. As a reminder, the information included in today's presentation includes adjusted results that exclude acquisition-related and other items. A reconciliation between these adjusted results and reported results is also included in today's earnings release. Our net revenue increased 8.6% to $181.3 million during the quarter or 1% above the prior year, excluding the impact of the Insight acquisition. Our nearly 9% sales growth was driven by strengthening consumption trends in many of our core OTC brands, which grew well above the category, and from the addition of Hydralyte and Insight. Our second quarter gross profit was in line with expectations and more importantly, above the previous fourth quarters levels. We expect our second…

Thanks, Ron. So I'll just wrap with a few comments about the second half of FY '15 and kind of the road ahead. If you turn to Slide 24. I'd say the headline, again, for us is the strategies we've laid out and the strategic approach continues to create shareholder value for our shareholders. I'd say for the second half of the year, we are cautiously optimistic. And the reason I'd say that is we're very optimistic and very pleased, as I said, last quarter, our consumption trends are improving. And our consumption trends in the second quarter are even better than our first quarter consumption trends. So from that standpoint, I'm somewhat optimistic. I'm cautious because the retail environment continues to be challenging. For everyone on this call, I think you've seen all the retailer numbers in the last quarter and front-end comp store sales are basically flat to slightly negative to slightly positive for some retailers. And as a result, retailers continue to ratchet down inventory. And the way I've described it to people is, I think last year in the third quarter, for the industry, there was somewhat of a hammer for inventory reduction, led by some very large retailers. And what I would describe is this year what's happened, there hasn't been a hammer, but that screw has been turned tighter -- slightly tighter month-by-month. And in fact, one of the other largest retailers just announced in the last few weeks a $1 billion inventory reduction goal over the next couple of years. So you can see the retailers continue to look in this environment, to tightly manage the inventory and that's the reason for some of our cautious optimism. However, that said, with the consumption gains, and as I talked about earlier, it's the power…

[Operator Instructions] The first question is from the line of Joe Altobello from Raymond James.

I just wanted to start out, I guess, with the retail inventory level. It sounds like, Matt, this morning you're still pretty cautious there. Could you just give us a little bit of a 30,000-foot view of where that stands by channel, whether it's most acute in mass and drugs still or are you seeing it also in places like dollar and club as well?

I think, Joe, to your point you're seeing it the most in mass and drug. I mean, they're the ones that are proactively talking about it and proactively doing things. And they represent about probably 2/3 of our business. I'm not saying it's not happening in the others, but it's happening -- it continues to happen in those 2 channels. And as I've said in the past, it continues to happen because of lack of foot traffic. So that's what's really causing it. As long as there isn't foot traffic, as long as their front-end comp store sales aren't up, they're going to continue to tighten this. And I believe, if you -- as you follow other retailers, you're hearing this -- and manufacturers, you're hearing the same thing from other people.

I know, exactly. You guys are certainly not an outlier in that regard. But in terms of the inventory that retail -- I think in one of your exhibits, you showed at least a sequential increase from 1Q to 2Q. Is that seasonal? Or is that something that gets -- to get excited about?

Yes, it's somewhat seasonal, Joe. I mean, again, over the last few years -- and you've followed us for quite some time. That Q2 to Q3 time frame, that's straddled right there is the beginning of cough/cold and that's where some retail is taking cough/cold and so as a result, it's seasonal.

Okay, great. And then just 2 for Ron, just to clarify. And I apologize if I missed this. With Insight going forward, you expect G&A to be about $15 million a quarter, is that right?

We expect it to between 8%, 8.5% of sales going forward, Joe.

Okay. And then the $150 million of cash flow this year, that excludes the $20 million of payments, right?

Yes, that's correct. It excludes it.

Your next question is from the line of Frank Camma from Sidoti. Frank A. Camma - Sidoti & Company, Inc.: Just a clarification on the gross margin. So I mean, I think, Matt, you mentioned at the end that typically gross margin is weaker in the second half. But I thought Ron had said you were looking for a higher gross margin. I just wanted to clarify that.

Yes, Frank. I think that's a good call-out. I think it's both in a way, but go back and look at the history of the business over the last 4 years, we've run lower gross margins in the second half than the first half because cough/cold products typically have lower gross margins. However, to Ron's point, with the addition of Insight, which is gross margin accretive, we're expecting slightly higher gross margins for the quarter, but they may not be as high as you might think because of the legacy brands. Does that answer your question? Frank A. Camma - Sidoti & Company, Inc.: Yes. Yes, it does. It brings it down. I got you. Okay, and I was wondering if you could talk a little bit about what you're seeing so far. I know it's kind of early, but trends in the cough/cold season versus an on-average season.

Yes. Again, I think a good question, Frank. Just so you know, the season we -- everyone thinks of it, typically it starts October 1, right? We typically -- everyone in the industry looks at it an October to March time frame. And so here we are, first week in November, incidence levels up about 3% season to date. Now I'll tell you, actually for me, I think that's a little bit disappointing. However, I would also caution people on that. Candidly, it really doesn't matter what incidences are in October, it's such a small part of the season. It's really incidences in November and December, because that's when the season begins to heat up and that also will determine retailers in terms of their reorder patterns for the next quarter. So it's up about 3% in terms of incidences for the first 4, 5 weeks. And not to be negative, but we're kind of hoping for some sick people in the holiday time period. Frank A. Camma - Sidoti & Company, Inc.: And I guess just a follow-up to that. Could you comment just on the -- just specifically on the return of competitive products in cold/cough. I mean, is that still -- because you mentioned it across multiple categories this time, which obviously, they're out there. But if you were just to point to that category in particular, is it having as much a weight as last year? Is it more? Is it less? Just wondering about that in particular.

Yes, I think, Frank, again, what we said was it's going to take -- we've said all along. It's going to take 2 seasons for that to play out. We're starting the second season right now, right? And I think -- so we don't really -- we'll know more at the end of this season. What we know up until the start of the season is -- and I've said this. I said this last quarter, it's probably impacted us a little more on PediaCare than we thought and it's impacted us a little less on Little Remedies than we thought. So I think for us, this season's important that we -- and we've said, we said it last year, to get through 2 seasons to see what the impact is and how we manage the businesses accordingly moving forward. Does that answer your question?

And the last question comes from Karru Martinson from Deutsche Bank.

Just on the cough and cold season last year. I think we were down about 15% in the third quarter. I mean, is the thought process here -- certainly you don't have a crystal ball, but the thought process here that we are up against a little bit more of a straightforward comp?

Yes, that's exactly right. And I think you recall just correctly, last year we were down significantly in the first half of the season and we were actually at a low for 15 years. In the prior year, for the full year, we were at a 10-year high. So our anticipation was coming into the year, that if we comped last year in the third quarter with the quarter that we're going into right now, we would expect decent comps because of what happened in the third quarter last year. That is our business judgment and we'll see how it plays out.

And we certainly have been hearing from other retailers about the decline in traffic, foot traffic especially in mass and drug. But my question is, where is that foot traffic going? What channel is absorbing that?

Well, I think you're seeing a number of things that are happening from what we see and what we're told, et cetera. And I think you're seeing some of that traffic is going to e-commerce. Now I don't believe that traffic is going as much to e-commerce in our categories because we're needs-based products and they need them right away, all right? But some of it's going there. And candidly, some of it's not going to retail; it's going to other basic needs that consumers have. So I think that's one of the reasons why -- those are 2 of reasons why foot traffic is down.

Okay. And in terms of the decline in some of those other needs in terms of like gas prices and so forth, I mean, do you feel that, that has a corresponding impact on your categories? Or is that just kind of a, hey, it's great if it comes; if not, we just kind of continue on?

Well, again, I think that's a good question. I think, first of all, OTC, the reason we've said this in the past, one of the reasons among the reasons that we like the business and why we move so much towards OTC is, in good times or bad economically, OTC continues to chug along, whether it's at plus 1% or 2%, it's steady. It's not a sexy industry, but it's steady. So we think we'll get that steady growth, whether the economy is growing strongly or not. That said, the second part of your question is, hey, it doesn't hurt that from a consumer standpoint, a consumption standpoint, that gas prices are coming down. And that hopefully, should help store traffic in the next quarter or 2, I would expect.

All right. And just lastly, and my apologies for being a broken record of asking the same question over the years. But when you guys look at acquisitions and manufacturing assets, is that something that you would consider as you kind of look at this aggressive and disciplined strategy in the size of acquisitions that you're looking at?

Yes, I think the answer there, which I think I've given this in the past is, 5 years ago, we said we'd never buy anything that had bricks and mortar. And that we've said is, we're not running from it anymore, but we're not running to it. We like our operating model. We love our free cash flow. It allows us to do a number of things. That said, if we found the right acquisition that had bricks and mortar, a plant that could benefit what we're buying as well as other elements of the portfolio, we would consider it and have considered it. But again, we would consider it and have considered it under the guise of our aggressive and disciplined strategy of how we look at M&A.

Thank you. That's the end of the question and answers. I'd now like to turn the call over to Matt Mannelly for closing remarks.

All right, again, thank you very much, everyone, for taking time out of your schedule today. We appreciate it. As I said, we're very pleased with the results and we look forward to speaking with everyone in the next quarter. Take care and have a good day.

Thank you. Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a good day.