Loading...
01/11 03:45
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary reflects a mix of positive and negative elements. Basic financial performance is challenged by supply chain issues and declining revenue guidance, while product development and market strategy show potential for recovery and growth. Expenses are manageable with expected cash flow, but the lack of clear guidance and uncertainties in specific areas like Clear Eyes recovery and e-commerce order patterns contribute to a neutral sentiment. Given the market cap, the stock is likely to experience minor fluctuations, resulting in a neutral prediction for the next two weeks.
Revenue Q2 revenue of $274.1 million declined 3.4% from $283.8 million in the prior year. The decline was mainly due to lower eye and ear care category sales, largely because of Clear Eyes supply constraints, along with lower cough and cold category sales.
Gross Margin Total company gross margin of 55.7% in the first 6 months was up 60 basis points versus the prior year. This improvement was attributed to better cost management and product mix.
Adjusted EPS Adjusted EPS of $1.07 in Q2 was down slightly from $1.09 in the prior year. The decline was primarily offset by favorable timing of advertising and marketing (A&M) expenses, as well as improvements in interest expense and share count.
Free Cash Flow Free cash flow for the first half was $133.6 million, up approximately 10% versus the prior year. This increase was driven by strong financial performance and efficient cash management.
Leverage Ratio The leverage ratio remained stable at 2.4x, supported by consistent business performance and cash flow generation.
International Segment Revenue International segment revenues increased 2.7% versus the prior year for the first 6 months, driven by higher Hydralyte sales.
DenTek brand expansion: DenTek brand is expanding its reach in the dental care market with a focus on dental guards, which represent over half of the brand's revenue. The brand has achieved over 50% market share in the category, supported by innovative marketing campaigns like the Fantasy Guards campaign.
E-commerce growth: Double-digit e-commerce consumption growth continues, driven by long-term investments and successful participation in large-scale e-commerce sales events.
International OTC segment growth: International OTC segment revenues increased by 2.7% in the first half, supported by higher Hydralyte sales.
Clear Eyes supply chain improvement: Efforts are underway to improve Clear Eyes supply in the second half of fiscal 2026, which is critical to meeting the full-year revenue forecast.
Free cash flow generation: Generated $134 million in free cash flow in the first half, up 10% year-over-year, with a full-year target of $245 million or more.
Share repurchase program: Repurchased 1.6 million shares for approximately $110 million in the first half, with plans to continue opportunistic repurchases.
Acquisition of Pillar5: The company plans to acquire its eye care manufacturer, Pillar5, for approximately $100 million, with the transaction expected to close in Q3.
Supply Chain Constraints: The company is facing supply chain constraints, particularly affecting the Clear Eyes product line, which has led to lower sales in the eye and ear care category. This issue is expected to impact Q3 revenues as well.
High Inflation: High inflation is contributing to an uncertain business environment, potentially affecting costs and consumer purchasing behavior.
Geopolitical Events: Geopolitical events are adding to the uncertainty in the business environment, which could have various impacts on operations and financial performance.
E-commerce Order Variability: The company has experienced variability in e-commerce customer order patterns, which has impacted revenue timing and could continue to create forecasting challenges.
Tariff Costs: The company faces potential tariff costs of approximately $5 million for the year, although exposure is described as modest.
Clear Eyes Supply Chain Recovery: While improvements in Clear Eyes supply are expected in the second half, delays in inventory availability have already impacted sales and could continue to do so in the near term.
Advertising and Marketing Timing: The timing of advertising and marketing expenses has created fluctuations in financial performance, with Q3 expected to have the highest spend rate of the year.
Revenue Expectations: For fiscal '26, the company anticipates revenues of $1.1 billion to $1.115 billion, with organic growth down approximately 1.5% to 3% versus the prior year. For Q3, revenue is expected to be approximately $282 million, down versus the prior year due to Clear Eyes inventory timing and e-commerce retailer order adjustments.
Gross Margin Projections: The company expects a gross margin of 56.5% for the year, with Q3 gross margin projected at approximately 56%.
Adjusted EPS: The company anticipates adjusted EPS of $4.54 to $4.58 for the full year, which is the higher end of the prior range, and Q3 EPS of $1.14.
Free Cash Flow: The company maintains its outlook for full-year free cash flow of $245 million or more.
Clear Eyes Supply Improvement: The company is on track to improve Clear Eyes supply in the second half of fiscal '26, which underpins the full-year forecast.
E-commerce Growth: The company continues to experience double-digit year-over-year consumption growth in the e-commerce business, driven by long-term investments.
International OTC Segment Growth: The company maintains confidence in its long-term algorithm for 5% annual segment revenue growth in the International OTC segment.
Capital Deployment: The company plans to continue opportunistic share repurchases and anticipates the strategic acquisition of its eye care manufacturer, Pillar5, for approximately $100 million in Q3.
Share Repurchase: In Q2, the company repurchased over 1.1 million shares. For the first 6 months of fiscal '26, the company repurchased 1.6 million shares for approximately $110 million. The majority of these repurchases were opportunistic during Q2, and the company expects to continue share repurchases through the remainder of the year.
The earnings call summary reflects a mix of positive and negative elements. Basic financial performance is challenged by supply chain issues and declining revenue guidance, while product development and market strategy show potential for recovery and growth. Expenses are manageable with expected cash flow, but the lack of clear guidance and uncertainties in specific areas like Clear Eyes recovery and e-commerce order patterns contribute to a neutral sentiment. Given the market cap, the stock is likely to experience minor fluctuations, resulting in a neutral prediction for the next two weeks.
The earnings call revealed mixed signals. Strong revenue growth and capacity expansion plans are positive, but ongoing margin pressures and supply chain issues in eye care are concerning. The Q&A session highlighted confidence in supply normalization and strategic M&A, yet lacked clarity on certain impacts and specific metrics. Considering the market cap, these factors suggest a neutral stock price movement.
The earnings call presents a positive outlook with projected revenue growth of 11-14%, strong organic volume growth, and successful product launches. The company anticipates record free cash flow and is pursuing a significant sale leaseback transaction. Despite some margin pressure and inventory increases, these are expected to stabilize. The Q&A reveals optimism in demand and growth initiatives, with no major risks highlighted. The market cap suggests moderate reaction, leading to a positive stock price movement prediction of 2% to 8%.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
