Prestige Consumer Healthcare Inc. (PBH) Q1 2014 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen and welcome to the Q1 2014 Prestige Brands Holding Inc. Earnings Conference Call. My name is Emily and I will be your operator for today. [Operator Instructions] And as a reminder, this conference call is being recorded for replay purposes. I would now like to turn the call over to Dean Siegal, Director of Investor Relations and Communications. Please go ahead.

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 Investors link and then you will hit the presentation right there. I'm 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. You are cautioned not to place undue reliance on these forward-looking statements, which speak only 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 is filed with the U.S. Securities and Exchange Commission. Now I'd like to introduce Matt Mannelly, CEO; and Ron Lombardi, CFO.

Good morning. Thank you, Dean. And thank you, all, for joining us this morning since I know this is a very busy earnings week. Joining me also this morning, as Dean said, is Ron Lombardi, our CFO. Ron and I will take you through the presentation that's on our website. I will start out and provide some of the highlights of the first quarter, then I'll spend a little bit of time talking about Care Pharma, our recent acquisition, then Ron will walk you through the financials and I'll come back and wrap it up with a few comments and we'll then take some questions. So with that, if you'll turn to Slide 4. Slide 4 is a reminder. This is from our first ever Investor Day that we held at the end of May. And as we stated at the meeting, our long-term goal is to build Prestige into the best midsized public company in the consumer health care market. We think we can do this by focusing our efforts on delivering shareholder value through the long-term growth of sales, profits and cash flow. As we've said, we believe we can do this by creating innovative products against specific consumer needs and engaging in real partnerships with our retailers as well as our suppliers; and finally, by providing an environment or a culture that our people can thrive in. And with that, if you'd move to Slide 6. This slide also was highlighted that our Investor Day. And I think it's really a critical slide for us moving forward. And we talked about our proven formula for how we deliver continued EPS growth to our shareholders, and then talked about the combination that core OTC and free cash flow play in delivering solid EPS over time. And you can see that we delivered a strong 14.3% EPS growth in the first quarter. In addition, it highlights the third key prong of our long-term strategy and that's our proven and repeatable M&A strategy. And like I said, while this is a long-term strategy, we're pleased to announce, a few weeks ago, an exciting acquisition for Prestige, a terrific company called Care Pharma in Australia, which I'll speak a little bit more about a little bit later. So if you'll turn to Slide 7. In terms of the first quarter highlights, before Ron goes into the numbers, I would highlight the following. I think we had a very strong quarter, delivering over 14% growth of EPS in a very tough retail environment. $143 million in revenue is down 1.9%, excluding the sale of Phazyme. This is as a result primarily of the competitive returns to the marketplace, which we indicated at the start of the year was going to be a challenge we'd face in FY '14. We continue to make progress on the gross margin front, achieving a record 58.4% gross margin, and cash flow from operations was nearly $25 million. From an M&A standpoint, we're very pleased with our first international acquisition because it's such a good fit. And more importantly, it opens up possibilities for the future for us and I'll talk more about that a little later. And finally, from a brand building standpoint, we continue to invest in our core OTC for the long term. We're getting growth in '14 where we expected and we're seeing the anticipated declines due to the return to the marketplace of competitive brands as we expected as well. The first quarter marked 3 very important key new product introductions as well as a major new ad campaign for 1 of our key brands. If you'll move to Slide 8, you'll see that our core OTC portfolio, excluding the impact of pediatrics and the return of Tylenol and Motrin, as well as our GI category, where we shifted merchandising programs for Dramamine and moved advertising support for Beano to the beginning of the second quarter, the core OTC portfolio was up 4.5%. If you include these 2 categories, our core OTC was down 1.2% for the quarter. From a consumption standpoint, the patterns were similar, with the core OTC brands outperforming the category 3.6% to 3.1% ex-pediatrics and GI. And if you include it, we are up 8/10 of a point, with the category being up 3.1%. On to Slide 9, you can see that we had a very busy quarter from a new product standpoint, with 3 key new introductions in analgesics and GI that we talked about at our Investor Day. If you move to Slide 10, the first one, Goody's Headache Relief Shot we're really excited about because this is a very innovative new idea and form that we're bringing to the marketplace. And in our new TV ad campaign, which just broke last week, we talked about the fact that in sports, speed is everything. And in headache relief, speed is the only thing. And we believe Goody's is going to deliver on this in a convenient great tasting way. Slide 11, BC Cherry builds on a great franchise by adding the popular new flavor cherry and bringing it to the consumer in an innovative form, in terms of the new stick pack delivery system. As many of you know, BC and Goody's is very big in the South. You may also know that we signed a sponsorship agreement with the SEC. So as we roll into football season in the fall, we expect this -- that this -- we're very confident that this new flavor is going to bring fast relief to many football fans in the South and be quite successful there. Moving to Slide 12. Finally, from a new product standpoint, we introduced Fiber Choice Fruity Bites in the first quarter to promote better GI health. And one of the reasons we're particularly excited about this introduction is that in the product testing phase, it was ranked #1 in taste over the competition. So we're quite optimistic about the potential of this new item as well. Moving on to Slide 13. From a marketing standpoint, we're very excited. We introduced a major new ad campaign last month featuring Vanessa Williams to deliver our healthy eyes message and we believe no one has better eyes to deliver that message than Vanessa Williams. Moving on to Slide 14, I'll spend a few minutes and I'll talk about the Care acquisition and tell you why we're excited about this and what we think the potential holds in the future. So if you move to Slide 15, just a little bit about Care Pharma for those of you that don't know much about it, since it's an Australian company. It's a great OTC company that's headquartered in Sydney, does approximately $20 million in Australian dollars. And has a very similar heritage to Prestige in that its management team really prides itself on developing new products to meet consumer needs and providing professional and consumer and marketing support to build the business long term, and they've been very successful at that over the last 10 to 15 years. It's made up of 35 employees, which includes a 17-person sales force to serve the retail marketplace. The customer base in Australia is different in that it's made up primarily of 5,000 independent pharmacies. However, Care Pharma's business model is very similar to ours in that they outsource manufacturing, so it's an asset-light model, which allows them to focus on their core competencies, which is sales, marketing and new product development, which again, is very similar to Prestige. If you move to Slide 16, this is a chart that should look familiar to you because it's very similar to many of our core brands in the U.S. in that they're market leaders in niche categories. So just to pick out a couple, the Fess brand; Fess is a line of saline nasal products and it's the #1 selling brand for nasal congestion, from flu -- from colds, flu, allergies or hay fever. And the tag line for Fess is, 'Fess beats colds and flu by a nose.' And all the products are non-medicated and target the different causes of nasal congestion. There's also a Fess product designed for travelers to help improve comfort during air travel and Fess for children. And from a children standpoint, Care is also very well-known for their line of pediatric OTC products. In addition to Fess, they market 3 little products, Little Eyes, Little Noses and Little Coughs. Coincidentally, none of these are related to our Little Remedies line, but we think there's great potential and synergies as a result of that. Little Eyes is the #1 eye wipe brand for kids and these are sterilized cleansing wipes to remove the secretion children get when they are sick. Little Coughs can be used in children as young as 6. And non-medicated Little Noses products help babies breathe easier when they have colds. Moving on to the next slide. From a strategic rational standpoint, these are some of the reasons why we believe this is such a great fit with Prestige. First of all, it gives us -- establishes a true local presence in Australia and New Zealand. You've also heard us talk quite a bit in the past about building platforms. This allows us to strengthen our platforms in cough, colds, eye, ear care and pediatrics. It also allows for consolidation of our Murine business into Care Pharma giving us direct control of that brand in the region. And even though we didn't announce the specific details, the financial profile and transaction economics were very attractive and very similar to our previous acquisitions. And finally, something I think that is very important to us is that, over time, this really is going to help serve as a regional platform to help deliver organic growth as well as acquisitions. So if you turn to Slide 18, to give you a little idea in terms of the road ahead, very similar to our other acquisitions. We have a very methodical plan in terms of how we integrate our acquisitions into the company. John Parkinson, our SVP of International and Malcolm Yesner, the CEO of Care Pharmaceutical are working off a very detailed and a very thorough 100-day plan as we speak right now, first 100-day plan. In terms of where we're going, as you can see here, step 1 in the acquisition, first and foremost, this is a very profitable and a great stand-alone OTC business for us, so it doesn't distract from the rest of our businesses. The management team there is very strong and proven in terms of their ability to do both build brand and M&A, similar to the competencies that we have at Prestige. In terms of the integration, this really gives us a hub in Asia Pacific for some of our aspirations there. It also allows us to leverage our supplier base to access technologies and expand our product offerings across the region as well. In terms of regional expansion, we'll be able to leverage Prestige's current distributor network to do that. We also are very excited from a product development standpoint in terms of some of the things they're doing and we'll be able to create not only a regional center of excellence for new product development there, but cross-fertilize with our U.S. new product development process as well. And then, as I said, finally, and most importantly, this is going to be an opportunity for us to actively pursue acquisitions and opportunities in this region. You can see on Slide 19 how our International business has methodically grown over time. First of all, with the acquisition of the GSK brand in North America last year, you can see how much more important International became. Now you can see International has taken really another step function in terms of importance. In addition to, and like I said, it opens up us to expand our presence in the attractive Australasia market. Slide 20. This also comes from our Investor Day presentation. And at that time, we talked about our ability to source M&A opportunities from multiple sources. Again, this latest acquisition, I think, proves it out quite well. And the reason is here's a good example of a business that's on the other side of the world, that we were able to access and get an exclusive process to Prestige to and bring into the fold. So we're quite excited about that and I think it really proves out our model. Page 21 also demonstrates the fact that we pursue a multitude of opportunities that span a number of different sources and transactions and processes, and all these contribute to our M&A strategy over the long term. So, with that, having given a little bit of a highlight in terms of the business, as well as Care Pharma, some background on it and where we're going, I'd now like to turn it over to Ron who'll take you through the financials.

Thanks, Matt. And good morning, everyone. We'll start the financial review with an overview on the first quarter results on Slide 23, along with a reminder that unless otherwise noted, the financial information we're discussing today excludes acquisition-related items and other costs to arrive at adjusted results. A reconciliation between reported results and the adjusted results can be found in schedules included in today's earnings release. As Matt highlighted earlier, we are pleased with our financial performance for the quarter, which delivers against our long-term strategy during this transitional year. Results for the quarter included strong gains in gross margin, excellent EPS growth, as well as solid and consistent cash flow. I'll give you more details on each of these starting on Slide 24, where we have more details to our Q1 results. Our solid Q1 results were largely in line with expectations and consistent with the transformative nature expected for the year as Matt discussed earlier. Excluding the impact of the sale of by Phazyme, a non-core brand we divested last fall, our net revenues decreased less than 2% from the prior year to $143 million during the quarter. This decline is largely due to the impact of Q4 cough/cold trends, the return of previously recalled brands to the category and the change in promotional timing compared to last year for several of our GI brands. Excluding these items, our core OTC revenue grew 4.5% over the prior year and realized strong consumption gains. Our Q1 gross margins increased by 1.2 points over the prior year to a record level of 58.4%, reflecting the continued increase in OTC sales, as a percent of total sales, and from ongoing cost improvement programs that we have in place. Our first quarter gross margin also benefits from a seasonal decline in promotional and merchandising programs as compared to other quarters during the year. A&P spending declined slightly as compared to the prior year due to a shift in the timing of GI promotional programs. In addition, spending has been moved to later in the year to better match new product promotional programs at retail. G&A, as a percent of sales, was flat compared to the prior year at 7.7%, and is expected to increase slightly over the $11.1 million level to be more in line with what was realized during Q3 and Q4 last year. EBITDA margin gains and lower interest expense resulted in an increase of about $3 million in adjusted net income to approximately $21 million during the quarter, an increase of 17.5% over the prior year. And adjusted EPS grew to a record $0.40 during the quarter, an increase of almost 38% and $0.05 over the prior year's level of $0.35 during the quarter. Turning to Slide 25, we have a reconciliation of reported net income and EPS to adjusted results. As a reminder, our earnings release contains a full set of disclosures about our non-GAAP financials. Reported results for Q1 include costs associated with the acquisition of Care Pharma this year and items related to the GSK integration and the unsolicited offer in the prior year. This year's adjustments did not impact EPS as they did not round to $0.01. In addition, we expect $500,000 of Care Pharma-related items in Q2 at this time. The Care acquisition closed with an effective date of July 1, which is the beginning of our second quarter. Turning to Slide 26, we have a summary of cash flow for the quarter. Prestige's industry-leading financial profile of high EBITDA margins, significant tax attributes and low capital spending allowed it to continue to generate significant cash flow during the quarter. The business generated approximately $23 million of cash flow from operations during the quarter, which was behind the prior year due to the positive impact that the GSK transition services agreement had on cash flow timing in the prior year. We continue to anticipate full-year cash flow from operations of $125 million. June's net debt balance was $941 million and our debt to covenant defined EBITDA ratio was 4.16x, which is well below our covenant of 7.1x. We paid down our revolver and increased our cash on hand during the quarter in order to fund the Care Pharma acquisition that closed in early July. In addition to this, we amended our revolver to increase its size to $95 million from $75 million and lowered the interest rate by 25 basis points to provide additional flexibility going forward. At this point, I'd like to turn the discussion back over to Matt

Thanks, Ron. If you'll move to Slide 28, please? Talk a little bit about the outlook for FY '14 and beyond and then we'll open it up to some questions. From my perspective, a few comments as we look to the remainder of '14 and beyond. First of all, as we've consistently discussed, with the return of some of the key brands, this really is a transitional year for us. We're pleased with our EPS delivery in the first quarter in this environment and we're confident that we have the right strategies intact to continue to deliver our long-term EPS goals. We're going to continue to stay the course and focus on building our brands for the long term. We're excited we have new ad campaigns coming in the second quarter for Goody's, Gaviscon, PediaCare and Beano. We also just started ship of our innovative new PediaCare single-dose squeezable packet. And we'll be offering marketing and support to those new products that I mentioned that we introduced in the first quarter, that marketing support will begin to be turned on in the second quarter. In addition, we're going to continue to invest in our new product pipeline for FY '15 and '16 that we talked quite a bit about at Investor Day as well. For Care Pharma, we're going to focus on the integration into the company and all the details and executional excellence that's required with each one of our acquisitions. And I really believe this has become a competency of ours that we've developed over time. And for this one, in addition to the normal diligence for this acquisition, it also is going to allow us to bring some additional senior management horsepower to the Asia Pacific region. John Parkinson, our Senior Vice President of International will relocate to Asia Pacific. And John has previously lived in Asia Pacific for over 20 years, so we're excited about that. In addition, Malcolm Yesner, who has experience throughout Asia, will also play a significant role and an active role in our Asia Pacific expansion plans. In terms of the second quarter, from our perspective, there are a few things that we look at in the second quarter. First of all, cough/cold buys tend to move from year-to-year. They never flow the exact same way. Therefore, this season's cough/cold buy may be different than last season's based on the retailers; also based on the retail environment, as well as any pressure on retail or working capital. So that'll all play out over the next few months. In addition, in the second quarter, we'll begin to more heavily support our recent new product introductions beginning in that quarter. And as you know, we typically ramp up our marketing support as the year goes on. From an FY '14 standpoint, in addition to ramping up that marketing and support, I think Ron also mentioned, that as we move in the cough/cold season, our gross margin tends to come down as well. From an FY '14 standpoint, we remain comfortable with the original EPS consensus of the companies that cover us today of $1.61. And as Ron said, and I said previously, we expect an incremental $0.04 accretion this year from Care Pharma, excluding the onetime cost. I think importantly, as we articulated on the Investor Day, we will continue to stay the strategic course by investing in our core OTCs over time, continuing to deliver the excellent free cash flow to de-lever and we're going to remain aggressive and disciplined in our M&A efforts. So with that, if you move to Slide 29, again, this is the last slide from our Investor Day, and it really speaks to the fact that I think is very important that all 3 of our key strategies work together and all of them are important in allowing us to really deliver the long-term value creation and superior EPS growth to our shareholders. And we believe that we can continue to do that. So with that, I will open it up to questions.

[Operator Instructions] Your first question comes from the line of Jon Andersen of William Blair.

It's actually Ryan Sundby in for Jon. Matt, I wanted to start with just a few questions on Care. Can you maybe touch on some of the strategic benefits of going to a direct control there with Murine and Clear Eyes? And maybe some of the things that you would like to change now that you fully own and control the brand there?

Well, I think, inherently, Ryan, we have a distributor model throughout the world. And like a lot of companies, as you get bigger, your goal oftentimes, oftentimes, not always, is to move from a distributor model to a direct sales force model because you control your brand much more. So that's the inherent value in terms of we now have a direct sales force that controls our brand more. So that's really one of the biggest benefits.

And then, I guess, Matt, do you view any of the Care brands as part of your core OTC portfolio? And any interest in bringing any of those brands back over to the U.S.?

Ryan, good question. I'd say we look at this portfolio in total, given that its $20 million Australian dollars. But that said, of that portfolio, the biggest brand in that portfolio and a very well-recognized brand in that region is Fess. And I don't know if we bring those -- we haven't decided. We actually have some people coming over next -- on Monday. People arrive this weekend from Australia. And a good part of the time that they're spending over here next week is with our new products group to talk about how we exchange ideas, formulas, product technologies, so that we can cross-fertilize across the regions over time.

Okay. And then, I guess, just the last one here. Matt, you touched on the ability to build a platform and a beachhead for the rest of Asia Pac. Can you just give us a little more color on your aspirations there? Maybe what countries, what brands you'd be interested in taking their time horizon and how you would actually do that, organically or through acquisition?

Yes. I think, Ryan, it's still early for us to talk about that. I think we're in the process right now, because, as you know, every country has different regulatory, so we're sorting through what Care Pharma products can go onto other countries, how we can leverage our distributors. But I think what this acquisition, what I can tell you what it does signal is that, that region, Australasia, as they call it, is going to be a region of focus for us, both for organic growth as well as M&A activity. And that's why we're moving our head of International, John Parkinson, over to that region. So that also signals that we have serious aspirations in terms of organic growth and M&A over time for that region.

Your next question comes from the line of Joe Altobello, Oppenheimer.

This is Christina [ph] in for Joe. I was just wondering if you could talk about organic growth for the year. And where you expect -- which quarter you expect the biggest organic growth?

Well, Christina [ph], we don't typically really give -- breakdown our guidance by quarters. As we said last year, we were very upfront with everyone saying with the sale of Phazyme and with the return of some competitive brands, Tylenol and Motrin, et cetera and to name a few, that this was going to be a transitional year for us. So we would expect that we'll continue to look for a tough retail environment. We'll look for growth from those new product introductions early in the year to ramp up as we ramp up marketing support. And as we said, the guidance we gave was $638 million to $648 million over the course of the year.

Okay, and then is the acquisition of Care have any impact on margins this year or going forward?

Christina [ph], it won't have any meaningful impact on the margin because of the size of the acquisition. So it has $20 million Australia sales as compared to our $624 million revenue last year.

Okay, and then just one follow-up question; do you have a long-term target of where you would like International sales to be as a percentage of overall sales?

No, Christina [ph]. We haven't set a specific number. I think, again, we try and look at things over the long term. If you look at the last 3 years, it's gone from 10% to 15% of our portfolio. And I've made this statement before; I would expect over the next 3 years that number will change fairly significantly as well.

Your next question comes from the line of Frank Camma from Sidoti. Frank A. Camma - Sidoti & Company, LLC: Just a couple of quick questions on the new products, specifically on the Goody's Headache Relief Shot. You mentioned there's a TV ad, I assume, is that a regional TV ad, not a national TV ad, correct?

Correct. That just broke last week, Frank. Frank A. Camma - Sidoti & Company, LLC: And a question on the distribution there, really a two-part question. One, near term, what distribution are you currently in with Goody's, specifically the new product, the Headache Relief Shot? And where do you see -- can you see that being a broader distribution over time?

I think the answer is we've got strong distribution from the key national accounts, Frank, all of our key national accounts. And I would expect we would be able to -- based on performance, we would be able to add SKUs, which means distribution gains over time, but I think we need to prove the success and then we'll be able to add additional SKUs. Frank A. Camma - Sidoti & Company, LLC: When you say its national distribution today, I mean do you mean it's in like Walmart in the Northeast today? Or is it just...

Yes, it is, Frank. In Walmart, it's in a majority of Walmart stores across the country. Not all of them, but the majority of them. Frank A. Camma - Sidoti & Company, LLC: Okay, I didn't realize that, Okay. I thought -- but is the biggest channel with Goody's, is it more of a convenience center channel? Am I correct about that or is it...

Well, yes, Frank. Actually, it's a good point. The convenience channel is going to be a very big channel for Goody's or Headache Relief Shot, specifically, for that type of product. And I think I'm glad you brought it up, because that channel, which is supplied through wholesalers, the convenience channel takes a longer period of time to build up. So when you shift to a major national account, you'll get distribution fairly quickly versus the convenience channel, it's a much slower bill. Frank A. Camma - Sidoti & Company, LLC: Right, because it's more fragmented, correct? I mean it's that, essentially.

Correct. Frank A. Camma - Sidoti & Company, LLC: Okay. I guess just one final question, if you could. So you did mention this a couple of times, I just wanted a little clarity. On the gross margin side, you expect promotions essentially to eat in into your gross margins a little during the cold and cough season specifically, that's what you're alluding to essentially?

Well, no. On gross margin, Frank, all right, on gross margin, if you recall, and it's been this way for the company for a number of years. This has happened the last few. We typically have a slightly lower gross margin on cough/cold products. And so in the second half, when cough/cold products sell more, that tends to bring down our gross margin. And that statement is consistent this year as with past years.

Your next question comes from the line of Elizabeth Bland with Janney Capital Markets.

This is actually John San Marco. What was the promotional timing issue for GI you called out as a OTC headwind? Can you just explain that?

Yes. That promotional is in our GI, and specifically, that's Dramamine, where we did some promotional work for Dramamine in the first quarter last year and that promotional work, in terms of shippers, is going to be spread throughout quarters 2 and 3 in this year. In terms of the shipping of the shippers, does that make sense?

Yes. And then moving on, do you think your due diligence activity on Care had an impact on OTC revenue growth at all?

No, I don't think it did, John. I think, again, think back to the last couple of calls and the Investor Day. We've been very consistent and clear saying that OTC revenue, we've had great core growth for the last 14 quarters, and trying to comp those quarters, quarter after quarter, and then you combine that with the competitive returns. We've said all along that OTC revenue growth in '14 we knew was going to slow. And we needed to do the right things in '14 with these competitive returns to make sure that we're successful in the out years. So I think we've said it up front that, that was going to happen and I think it's playing out.

I guess then maybe more broadly and I know you had a very extensive diligence process and brought a team of your lieutenants along. I guess, do you think it had any impact on the business? Are you pretty comfortable that the business ran fine on autopilot while you were doing due diligence?

Well, yes, I don't -- I think it ran fine. The business wasn't on autopilot, those people -- this is a working group. The diligence phase of Care Pharma was a fairly tight time frame, John. So it was -- given that it was a $20 million acquisition, it's not like it was GSK brands, which was a $200 million revenue acquisition that the diligence occurred over several months. It was very different than that.

Got it. And then just the last one. I was -- I mean I know it's not a substantial figure in dollar terms, but I think it's strategically important. It doesn't look like you have any revenue synergies in this year's rev guidance; is that right? And then I guess, my question would be why wouldn't revenue synergies would be fairly immediate?

Well, we don't have it in because first of all, we are -- we have a distributor currently in Australia that will be -- we'll work with as we transition out. Those things don't take place at the exact same time. And then second of all, we're working with Care Pharma to develop the specific plan for the synergies. So that's why -- both those reasons are why that will come in '15 versus '14.

[Operator Instructions] Your next question comes from the line of Carla Casella of JPMorgan. Carla Casella - JP Morgan Chase & Co, Research Division: I'm just wondering if you can talk about the timing of competitive marketing on the kind of children's cough/cold, the Children's Tylenol, the ad spend, are you see that accelerate? Or was this a big quarter for that or was it just the initial kind of really a relaunch that you saw this quarter?

Well, Carla, it's a good question because I'd say first of all, we're going to see the implications of it throughout the year as we said. And I think your question about was this the initial impact, it was because -- for a couple of reasons. A few products just started to ship back into the marketplace in this quarter. And then second of all, the second impact of that, Carla, is retailers, as they get ready for resets, all right, which happen a couple of times a year, they draw down their current inventory and, for example, they bought some of these products that just came back to build up for the reset. So that causes you to get less orders at the beginning of the year than you normally would have because of that. So there are a couple of reasons for it, and as I said, it's going to -- it'll have implications throughout the year. Carla Casella - JP Morgan Chase & Co, Research Division: Okay. And then -- but I would assume you're probably planning that they do a bigger launch when you get to the cough/cold season? The -- or wintertime?

Well, the shipments will be in before then. Then the question is, from a consumption standpoint, when you say launch, the marketing support that's put behind it, right? Carla Casella - JP Morgan Chase & Co, Research Division: Right. That's what I mean, the marketing support. Do you see more that it's the ship and not as much of the marketing support yet?

Correct. Correct. Carla Casella - JP Morgan Chase & Co, Research Division: Okay. And then, are you planning any special marketing that you haven't done in the past, any additional?

Well, yes. We have -- again, we've known this, so we developed a plan this year, a marketing support plan with that in mind and have put strategies and specific tactics, marketing and merchandising tactics, in place with our key accounts to maximize our revenue, so the answer is yes.

I'd now like to turn the call over to Mr. Mannelly for closing remarks.

Okay. Thank you very much, again. We appreciate everyone's time. I know this is a very busy week and a very busy day for earnings. So thank you, and we look forward to speaking to you soon. Take care.

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