Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Q1 2015 Prestige Brands Holdings, Inc. Earnings Conference Call. My name is Marie, and I will be your operator for today. [Operator Instructions] As a reminder, this conference call is being recorded. But now, I would like to hand the call over to Dean Siegal, Director of Investor Relations. Please proceed.

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 Relations link, and then on the Q1 link. I am required to remind you that during this call, management may make forward-looking statements regarding their beliefs and expectations as to 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 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 day 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'd like to introduce Matt Mannelly, CEO; and Ron Lombardi, CFO.

Good morning. Thank you, Dean, and thank you, everyone, for joining us today this morning. We appreciate it. As Dean said, we have a investor presentation that we typically follow. So I'll try and tell you when to turn pages. This morning, similar to past calls, I'll start off and I'll talk a little bit about the highlights of the quarter. Ron will then give you a financial overview, and I'm going to make a couple of comments regarding M&A in terms of the market, as well as our outlook for the remainder of the year. So with that, if you would please turn to Page 5 of the presentation. I'd say in general, for us, we're quite pleased; a very solid start to the fiscal year. Our Q1 net revenue of $145.7 million was up 2.2% versus prior year, and our adjusted EPS up 2.5%. Cash flow of $29.2 million was up 36.1% versus prior year. And I think one of the things that I'm most pleased about is our core OTC consumption growth of 2.5%, excluding pediatrics and GI, is back growing again and we're quite pleased with that. From a brand building standpoint, we continue to invest in new product introductions, and Fresh Guard and Beano Dairy Defense were introductions that came through in the first quarter. We have several new advertising campaigns that broke, including Fresh Guard, Beano, as well as Clear Eyes. A new Clear Eyes campaign with our spokesperson, Vanessa Williams. And finally, very recent and very exciting news in terms of some "speedy," as I said, brand exposure through our sports marketing association with Daytona and recent Pocono champion, Dale Earnhardt Jr. And that's been a relationship that we have fostered the last couple of years, and we've gotten significant brand awareness for…

Thanks, Matt, and good morning, everyone. And I'll be starting on Slide 17. So as Matt has described so far, we are very pleased with our results during the quarter, given the challenging retail and competitive environment. Our 3-pronged strategy of focusing on core OTC growth, using our strong and consistent free cash flow to rapidly delever and to actively and aggressively participate in M&A continues to deliver results as evidenced in our first quarter results. Highlights for the quarter include: net revenue growth of 2.2% from our increasingly diversified portfolio and gross margins of 56.3%, which are positioned to increase to approximately 60% after we complete the Insight acquisition. We also reported adjusted EPS of $0.41 and free cash flow of approximately $29 million, which was 36% above the prior year's level. With a solid start to fiscal '15, we continue to believe we are well positioned to achieve our full year outlook for sales growth, adjusted EPS and free cash flow. Moving to Slide 18. We also announced today that we expect to launch financing for the Insight acquisition this afternoon. We expect to finance the acquisition principally through an add-on to our existing term loan and we expect to complete the acquisition by September 30, pending regulatory approval. We also anticipate that we will divest a small GI brand as part of the Insight portfolio in order to obtain regulatory approval. Our flexible capital structure and credit facility continues to provide us the ability to complete M&A transactions efficiently, as evidenced by the Care Pharma, Hydralyte and the soon-to-be-completed Insight transaction. In addition, our current capital structure and industry-leading financial profile continues to allow us to employ our aggressive and disciplined M&A strategy in both the short and long-term. Turning to Slide 19. We have our Q1…

Thank you, Ron. If you turn to Page 21. I thought before I get into really the outlook for the remainder of FY '15, you may recall last quarter, if you look at the investment presentation, I shared some thoughts regarding the M&A environment. I think things have happened -- much has happened since that time, so I wanted to briefly to kind of communicate our perspective regarding what's happening with this important pillar for Prestige. And as Ron has pointed out, it's 1 of our 3 key strategies in terms of delivering shareholder value, along with driving core OTC growth and exceptional free cash flow. So if you turn to Page 22. I think, if you step back and look at it, what's going on in the marketplace, there's potentially a significant pool of M&A opportunities that have resulted from a number of actions taken by the large pharma companies. If you look here, you can see everything from a joint venture with GSK and Novartis. And when you look at the combined portfolio, I think there are opportunities there for potential rationalization. Those companies have done that in the past. And in fact, Prestige has a history with GSK in terms of portfolio rationalization and buying some of their brands. The second one is Bayer's acquisition of Merck, which is a $14 billion acquisition. And again, when you combine that portfolio, there's potentially some opportunities for rationalization. And it's primarily North America-focused. And then finally, and the reason I bring this up, this topic, is really what P&G announced last week, on Friday I believe, in terms of their divestiture and their plan to focus on 80 brands and really divest 90 to 100 smaller brands, and most of those under $100 million. And they participate in the…

[Operator Instructions] And we have our first question and it comes from the line of Joe Altobello from Oppenheimer. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: First question, in terms of the M&A environment, Matt, you sound very upbeat on it this morning. Once Insight closes, I guess you guys will be about 5.8x levered pro forma. So on October 1, assuming it closes on the 30th of September, how big of a deal do you think you could do? And what leverage ratio are you willing to go up to?

Joe, let me start, and then I'll turn it over to Matt. So the first question really is, are we ready to address another M&A opportunity? Clearly, we've got to get Insight integrated and behind us. But really the answer to what level of leverage we'll be comfortable with depends on the profile of the target. So there's no one answer. Clearly, with how well Insight fits, we're comfortable at 5.7x.

Joe, I -- let me add to that a little bit. I think to kind of build on what Ron said. Our criteria is strategic, executional and financial. If a brand or brands in those portfolios or others were to be available in terms of -- to us and it was strategically correct, we clearly would pursue it and could pursue something of significance, and I'll talk about that in a minute. Because the other thing is, as Ron said, it's execution as well and our organization in terms of the way we built the organization, we're prepared to execute these type of acquisitions. From a financial standpoint, all right, for us, there are a number of different ways to fund acquisitions, all right? And I think, I'll just go back to, as an example, when we did the GSK North America brands, the acquisition was larger than our market cap at that time. So I think that took some people by surprise saying, "How could Prestige do something that big?" And I would say the same thing right now, our -- when we close, I think will be at a 5.7x, right, Ron?

That's correct.

We'll be at a 5.7x. I think people would say, "Well, clearly, they don't have that much capacity." Number one, we do have debt capacity. Number two, the type of acquisitions we do, and if it's within our criteria and everything, it frees up -- it allows us to do things, to acquire additional debt. And there are other things that we can do. There are other resources available to us to fund acquisitions. And if it proves to be financially viable that we could create shareholder value, we've said in the past and we continue to say that we'd consider those alternatives in terms of financing. Does that answer your question, Joe? Joseph Altobello - Oppenheimer & Co. Inc., Research Division: It does, it does, and that's helpful. And then secondly, just shifting gears a little bit in terms of the retail inventory environment. Your shipments, as you pointed out this morning, are still well below consumption for, now, 3 quarters. Where does inventory levels -- or where do inventory levels stand at retail? And are you starting to see the light at the end of the tunnel when it comes to destocking?

Yes, Joe, I think that's a really relevant question for right now. And what I would say is, I think, as of now -- I think, if you go back to the third quarter of last year, and you've heard this from a lot of companies, not just us, that's when inventory reduction really started. And it was a huge hit for a lot of people at that time in our third quarter, which is fourth quarter for a lot of other people. From what we said, and others I'm sure said too, that it's not a long-term strategy. They can't keep doing that. There's going to be out of stocks. So I think you're seeing that some companies, that pendulum has swung back a little bit, and I think inventory right now, to your point, not having inventory is quite reasonable and probably, actually, in our favor to a certain extent, right? And -- so we don't expect significant inventory reductions at this point. That said, when I say cautiously optimistic, retailers have proven that at the end of a quarter, or if they're not getting revenue, there are 2 places they go, inventory and in-store personnel. So I wouldn't rule out in the next year if foot traffic doesn't improve or it gets worse, that at times, they try and pinch inventory or in-store personnel to try and improve performance. So that's why I'm cautiously optimistic. But in general, inventory is in good shape right now. Does that answer your question? Joseph Altobello - Oppenheimer & Co. Inc., Research Division: It does. It does.

And our next question comes from the line of Frank Camma from Sidoti. Frank A. Camma - Sidoti & Company, LLC: Just wondering on Insight. Obviously, you're just really getting through Hydralyte here and still integrating that. But what can you do ahead of time to kind of get the jump on that as far as integration and such? And what are your plans there as far as combining everything?

I'll give you a couple of tangible examples, Frank, because this is what I mean by "it's a core competency for us," all right? We have already -- we don't own the business, let's be clear, right? Frank A. Camma - Sidoti & Company, LLC: Right.

We don't own the business today, so we don't make any decisions on Insight, et cetera. But for our own people internally, we have already met with our entire sales force and taking them through a deep dive of Insight in terms of the business, the brands, what we expect to do, et cetera, well in advance of us closing to educate our sales force because they're going out there trying to get the revenue. We have already announced personnel decisions internally in terms of we have someone who's heading up the entire Insight business, as well as a Director of Marketing to take over for Insight that we've already announced. And those people are in place full-time before us even closing. And the other thing that's important is, very similar to GSK, which was also a major acquisition for us, we have formed a working group and a steering committee that right now meets biweekly to go through the issues, actions, decisions, thoughts, et cetera, on what we need to be doing on Insight for us to prepare for the -- so the day we close, we hit the ground running. So we have plans, functional plans by every area right now that we're reviewing biweekly. And once we close, those meetings will move to weekly. Does that give you a flavor? Frank A. Camma - Sidoti & Company, LLC: Absolutely, absolutely. And the other question is, when you do close this, obviously, you become pretty, significantly more relevant to U.S. retailers at least. I mean is that going to help move the needle, you think, as far as -- I mean, we hear about certain -- I know you just answered this question a little bit, but I hear about certain retailers, at least in certain categories, going back to stocking the shelves? Do you think that will help open up the -- your shelf space a little bit?

I think where it helps, Frank, candidly for us is it helps more within the portfolio as opposed to across the portfolio, right? Frank A. Camma - Sidoti & Company, LLC: Correct.

So when we do these acquisitions, if we acquire more brands in cough/cold or analgesics, or in this case, we're building a fem hy platform, we have more clout with the cough/cold or fem hy buyers. And that's where we gain traction in terms of being able to participate in more of their programs, have greater shelf space, et cetera. So that's where we see the potential for us in terms of working with retailers.

[Operator Instructions] But our next question comes from the line of Linda Bolton from BED [ph].

Can I ask you about just the gross margin? I guess it was a little bit lower than I would've expected in the quarter. And in reading your presentation, you say gross margin reflects current retail and competitive environment. So do you mean, it's sort of a more protracted effort to do more trade promo given the environment, or is there particular initiatives that you had in the quarter? And I guess you already said the gross margin will be similar in the second quarter. But I'm just trying to gauge if this is like a permanent change kind of in the business because of competition or something else going on?

Yes, Linda, again, I think a very fair question, a very relevant question to what's going on in the marketplace right now. I think, I'd say a couple -- I'd try and answer it a couple of different ways. Let me step back and say, we've said in the past, we reiterated here, that with the acquisition and with our cost improvement programs, that we're tracking to move towards approximately a 60% gross margin, once we close and some of those cost initiatives come into play, et cetera. Second of all, our gross margin, if you look at our gross margin in Q1, it's very similar with the last 3 quarters, so we're really in line with that's been going on. To your point, it does reflect the current retail and competitive environment. We have moved some funds up top in terms of couponing and discounts, et cetera, as a result of the retail and competitive environment to help drive foot traffic at the retailers, all right? The other thing that I would say is I wouldn't call it permanent, and the reason I say that is, we track our spending and -- we call it push pull. What's our push spend and what's our pull spend? Meaning, what do we move through the trade and what do we move in terms of consumer spend? And we clearly, if you look at what we've done for brand building over the last 3 to 4 years, we like to keep within certain bandwidths or ratios in terms of push-pull. We're still within this bandwidth. So given our track record of brand building and given the fact that we monitor push-pull on a quarterly basis, I don't see us ever getting that far out of line of what we want do from being a consumer products company and a brand building company and having a certain ratio. So I'm not concerned about it long term because I know what our philosophy is in terms of brand building and what's the bandwidth that we want to be in. Does that help answer what you're looking for?

Yes, very much so. So also, when you talk about the Hydralyte transitioning to your own sales force, is that going to be smooth? Or sometimes, I've seen sales disruption result, but are you pretty confident that's going to be a smooth transition?

I have a lot of confidence that it's not only going to be a smooth transition, but it's going to be beneficial sooner rather than later because by us having our own direct sales force calling on those key accounts in Australia, I think we have more control over it. So -- and we have a high degree of confidence on our sales force in Australia, based on the results they delivered in the first year of the acquisition. So I'm very confident in the transition, and I'm not that worried about any disruption.

Great. And then I would just be interested if you have any view, I don't know how much you can say. But with regard to P&G's announcement on their divestitures of brands. I mean, I would think they would try to do as much in big chunks as possible, that's more efficient for them. So it would be a two-step process, maybe sale to a private equity firm, and then they would break off pieces maybe to resell. Do agree with that view? Or do you think it's going to be truly more of a piecemeal, or do you just have any opinion on that?

Yes, I don't -- well, first of all, whether it's P&G, or GSK-Novartis, or Bayer-Merck, or any -- Pfizer, anyone, that's their decision, it's not ours. And if you look at it, the big companies have typically, when they've gone through, I'll say more wholesale rationalization, they've tried to package things. And again, I think that plays in our favor in terms of we have the ability to buy packages. But as I've said, we don't control the selling side. We just need to be prepared and ready on the buying side. And I think we believe that we can compete in portfolio or packaging or individual process for those $100 million and under brands. So I think that scenario, as I said in here, I think it's going to take 12 to 24 months for a lot of that to kind of sort its way out executionally. But again, the reason we talked about it today was the latest announcement last week isn't just the only sign of that happening, it just happens to bring it to the forefront now. But when you step back and look at it, it's going on in a lot of places. So I think that's our point of view on it right now.

Okay. And then finally, can I just ask about the A&P spending? It's kind of roughly, kind of flattish year-over-year. You had a very high ratio last year in the second quarter. I don't know, Ron, if you can comment on what to expect. I would expect you would try to drive consumption again in the second quarter. But then, should we expect to see bigger increases in the second half once you fold in Monistat and start investing behind that?

The answer is yes, I think you will. And I think that's based on our history, Linda, that we've proven every acquisition that we've done, we've increased the spend behind those brands. And -- well, first, we do the work and once we feel we've got the work done and we've got the right solutions, we start spending immediately. So I would think in the second half, you would see that spend. I think if you look at our track record, you'll see that -- well, just take last year as an example. You'll see that the first quarter, even ex-acquisitions, first quarter is typically a low quarter for us from a spend standpoint, and then we start increasing it from there. So I think you would expect it to be up in the second quarter.

Ladies and gentlemen, that concludes your Q&A session. But now, I'd like to hand back to Matt Mannelly for closing remarks.

Okay. Thank you very much. We appreciate everyone taking time to join us today during this summer season, and we look forward to talking to you on the next call. Thank you.