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What changed in Prestige Consumer Healthcare Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Prestige Consumer Healthcare Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+277 added−287 removedSource: 10-K (2024-05-15) vs 10-K (2023-05-05)

Top changes in Prestige Consumer Healthcare Inc.'s 2024 10-K

277 paragraphs added · 287 removed · 238 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

71 edited+11 added−13 removed54 unchanged
Biggest changeThe following table sets forth the percentage of gross sales for our U.S. customers across our six major distribution channels during each of the past three years ended March 31: Percentage of Gross Sales (1) Channel of Distribution 2023 2022 2021 Mass 33.6 34.3 34.5 Drug 25.6 25.4 22.4 Food 14.3 13.9 15.0 Dollar 6.5 6.3 7.7 Convenience 3.4 3.5 3.2 Club 1.3 1.6 1.8 Other (2) 15.3 15.0 15.4 (1) Includes estimates for some of our wholesale customers that service more than one distribution channel.
Biggest changeThe following table sets forth the percentage of gross revenues for our U.S. customers across our six major distribution channels during each of the past three years ended March 31: Percentage of Gross Revenues (1) Channel of Distribution 2024 2023 2022 Mass 34.6 33.6 34.3 Drug 22.8 25.6 25.4 Food 12.9 14.3 13.9 Dollar 6.6 6.5 6.3 Convenience 3.2 3.4 3.5 Club 1.2 1.3 1.6 Other (2) 18.7 15.3 15.0 (1) Includes estimates for some of our wholesale customers that service more than one distribution channel (2) Includes e-commerce retailers such as Amazon Due to the diversity of our product lines, we believe that each of these channels is important to our business, and we continue to seek opportunities for growth in each channel.
In an effort to ensure continued sales growth, we continue to focus on expanding our reliance on direct sales while reducing our reliance on brokers for our customers. Pursuing Strategic Acquisitions Acquisitions are a part of our overall strategy for growing revenue. We have a history of growth through acquisitions.
In an effort to ensure continued sales growth, we continue to focus on expanding our strategy of direct sales while reducing our reliance on brokers for our customers. Pursuing Strategic Acquisitions Acquisitions are a part of our overall strategy for growing revenue. We have a history of growth through acquisitions.
We enjoy broad distribution across each of the major retail channels, including mass merchandisers, drug, food, dollar, convenience, club and e-commerce stores.
We enjoy broad distribution across each of the major retail channels, including mass merchandisers, drug, food, dollar, convenience, club stores and e-commerce channels.
Our operations are subject to U.S. federal, state, local and foreign laws, rules and regulations relating to environmental concerns, including air emissions, wastewater discharges, solid and hazardous waste management activities, and the safety of our employees. We endeavor to take actions necessary to comply with such regulations, including periodic environmental and health and safety audits of our facilities.
Our operations are subject to U.S. federal, state and local and foreign laws, rules and regulations relating to environmental concerns, including air emissions, wastewater discharges, solid and hazardous waste management activities, and the safety of our employees. We endeavor to take actions necessary to comply with such regulations, including periodic environmental and health and safety audits of our facilities.
The audits, conducted by independent firms with expertise in environmental, health and safety compliance, include site visits as well as a review of documentary information, to determine compliance with such U.S. federal, state, local and foreign laws, rules and regulations.
The audits, conducted by independent firms with expertise in environmental, health and safety compliance, include site visits as well as a review of documentary information, to determine compliance with such U.S. federal, state and local and foreign laws, rules and regulations.
Major Brands Product Group Market Position (1) Market Segment (2) Brand Information North American OTC Healthcare: (3) BC and Goody's Analgesics #1 Analgesic Powders Founded over 90 years ago, the BC and Goody's brands feature over-the-counter, fast-acting pain relief powder Boudreaux's Butt Paste Dermatologicals #3 Baby Ointments Products include various diaper rash treatments and skin protectants manufactured with high-quality ingredients Chloraseptic Cough & Cold #1 Sore Throat Liquids and Lozenges (Medicated) Products include sprays and lozenges to relieve sore throats and mouth pain Clear Eyes Eye & Ear Care #2 Redness Relief Effective line of eye care products that provide soothing comfort, including relief from redness and itchiness Compound W Dermatologicals #1 Wart Removal Provides safe and effective at-home removal of common and plantar warts Debrox Eye & Ear Care #1 Ear Wax Removal Provides a safe and gentle way to remove excess ear wax or water from ear canal DenTek Oral Care #3 PEG Oral Care Products include dental guards, floss picks, interdental brushes, dental repair and kits, and tongue cleaners Dramamine Gastrointestinal #1 Motion Sickness Relief Includes non-drowsy, kids', original and nausea-free formulas Fleet Gastrointestinal #1 Adult Enemas and Suppositories Founded in 1869, products include enemas and other laxative products Gaviscon Gastrointestinal #2 Upset Stomach Remedies Creates a protective foam barrier to help block stomach acid from splashing up into the esophagus Luden's Cough & Cold #3 Cough Drops (Non-Medicated) Cough drop brand that is over 130 years old and includes a variety of flavors Monistat Women's Health #1 Vaginal Anti-Fungal Provides fast relief for yeast infections and is available in several different doses Nix Dermatologicals #1 Lice and Parasite Treatments Effective and safe lice and super lice treatments Summer's Eve Women's Health #1 Feminine Hygiene Offers a variety of feminine care products including washes, cloths, and sprays TheraTears Eye & Ear Care #3 Dry Eye Relief Doctor created and recommended brand for dry eye relief International OTC Healthcare: Fess Cough & Cold #1 Nasal Saline Sprays and Washes Helps relieve nasal and sinus congestion due to allergy, hay fever, colds and flu Hydralyte Gastrointestinal #1 Oral Rehydration Relieves symptoms of dehydration and helps replace water and electrolytes lost due to vomiting, diarrhea, heavy sweating, vigorous exercise and occasional hangovers (1) We have prepared the information included in this Annual Report on Form 10-K with regard to the market position for our brands based in part on data generated by Information Resources, Inc.
Major Brands Product Group Market Position (1) Market Segment (2) Brand Information North American OTC Healthcare: (3) BC and Goody's Analgesics #1 Analgesic Powders Founded over 90 years ago, the BC and Goody's brands feature over-the-counter, fast-acting pain relief powder Boudreaux's Butt Paste Dermatologicals #3 Baby Ointments Products include various diaper rash treatments and skin protectants manufactured with high-quality ingredients Chloraseptic Cough & Cold #1 Sore Throat Liquids and Lozenges (Medicated) Products include sprays and lozenges to relieve sore throats and mouth pain Clear Eyes Eye & Ear Care #2 Redness Relief Effective line of eye care products that provide soothing comfort, including relief from redness and itchiness Compound W Dermatologicals #1 Wart Removal Provides safe and effective at-home removal of common and plantar warts Debrox Eye & Ear Care #1 Ear Wax Removal Provides a safe and gentle way to remove excess ear wax or water from ear canal DenTek Oral Care #4 PEG Oral Care Products include dental guards, floss picks, interdental brushes, dental repair and kits, and tongue cleaners Dramamine Gastrointestinal #1 Motion Sickness Relief Includes non-drowsy, kids', original and nausea-free formulas Fleet Gastrointestinal #1 Adult Enemas and Suppositories Founded in 1869, products include enemas and other laxative products Gaviscon Gastrointestinal #3 Upset Stomach Remedies Creates a protective foam barrier to help block stomach acid from splashing up into the esophagus Luden's Cough & Cold #3 Cough Drops (Non-Medicated) Cough drop brand that is over 130 years old and includes a variety of flavors Monistat Women's Health #1 Vaginal Anti-Fungal Provides fast relief for yeast infections and is available in several different doses Nix Dermatologicals #1 Lice and Parasite Treatments Effective and safe lice and super lice treatments Summer's Eve Women's Health #1 Feminine Hygiene Offers a variety of feminine care products including washes, cloths, and sprays TheraTears Eye & Ear Care #3 Dry Eye Relief Doctor created and recommended brand for dry eye relief International OTC Healthcare: Fess Cough & Cold #1 Nasal Saline Sprays and Washes Helps relieve nasal and sinus congestion due to allergy, hay fever, colds and flu Hydralyte Gastrointestinal #1 Oral Rehydration Relieves symptoms of dehydration and helps replace water and electrolytes lost due to vomiting, diarrhea, heavy sweating, vigorous exercise and occasional hangovers (1) We have prepared the information included in this Annual Report on Form 10-K with regard to the market position for our brands based in part on data generated by Information Resources, Inc.
Any requests for these documents from us should be made in writing to: Prestige Consumer Healthcare Inc. 660 White Plains Road Tarrytown, New York 10591 Attention: Corporate Secretary We also make copies of the following policies available on our Internet site at https://ir.prestigebrands.com/corporate-governance/documents: • Corporate Governance Guidelines • Supplier Code of Conduct • Related Persons Transaction Policy • Code of Conduct • Code of Ethics for Senior Financial Employees We intend to disclose future amendments to these documents, policies and guidelines and any waivers of these documents, policies and guidelines, on our Internet website and/or through the filing of a Current Report on Form 8-K with the SEC, to the extent required under the Exchange Act. 12
Any requests for these documents from us should be made in writing to: Prestige Consumer Healthcare Inc. 660 White Plains Road Tarrytown, New York 10591 Attention: Corporate Secretary We also make copies of the following policies available on our Internet site at https://ir.prestigebrands.com/corporate-governance/documents: • Corporate Governance Guidelines • Supplier Code of Conduct • Related Persons Transaction Policy • Code of Conduct and Ethics • Code of Ethics for Senior Financial Employees • Clawback Policy We intend to disclose future amendments to these documents, policies and guidelines and any waivers of these documents, policies and guidelines, on our Internet website and/or through the filing of a Current Report on Form 8-K with the SEC, to the extent required under the Exchange Act. 12
We formed as a Delaware corporation in 1996 and are engaged in the development, manufacturing, marketing, sales and distribution of well-recognized, brand name, over-the-counter (“OTC”) health and personal care products to mass merchandisers, drug, food, dollar, convenience, club and e-commerce stores in North America (the United States and Canada) and in Australia and certain other international markets.
We formed as a Delaware corporation in 1996 and are engaged in the development, manufacturing, marketing, sales and distribution of well-recognized, brand name, over-the-counter (“OTC”) health and personal care products to mass merchandisers, drug, food, dollar, convenience, club stores and e-commerce channels in North America (the United States and Canada) and in Australia and certain other international markets.
None of our employees are a party to a collective bargaining agreement. Management believes that our relations with employees are good. Strategic Development and Empowerment We encourage all employees to achieve their full potential by participating in our mentorship opportunities, career development programs and Company-provided learning tools. We provide meaningful responsibility and development opportunities to our employees worldwide.
None of our employees are a party to a collective bargaining agreement. Management believes that our relations with employees are good. Strategic Development and Empowerment We encourage all employees to achieve their full potential by participating in our mentorship opportunities, career development programs and Company-provided learning tools. We provide responsibility and development opportunities to our employees worldwide.
We expect that for future periods, our top ten customers, including Walmart, will in the aggregate continue to account for a large portion of our sales. 6 Outsourcing and Manufacturing In order to maximize our competitiveness and efficiently allocate our resources, third-party manufacturers fulfill most of our manufacturing needs.
We expect that for future periods, our top ten customers, including Walmart and Amazon, will in the aggregate continue to account for a large portion of our sales. 6 Outsourcing and Manufacturing In order to maximize our competitiveness and efficiently allocate our resources, third-party manufacturers fulfill most of our manufacturing needs.
We have adopted a Code of Conduct and Ethics Policy, Code of Ethics for Senior Financial Employees, Policy and Procedures for Complaints Regarding Accounting, Internal Controls and Auditing Matters, Corporate Governance Guidelines, and Charters for our Audit, Compensation and Nominating and Corporate Governance Committees, as well as a Related Persons Transaction Policy and Stock Ownership Guidelines.
We have adopted a Code of Conduct and Ethics Policy, Code of Ethics for Senior Financial Employees, Policy and Procedures for Complaints Regarding Accounting, Internal Controls and Auditing Matters, Corporate Governance Guidelines, and Charters for our Audit, Compensation and Nominating and Corporate Governance Committees, as well as a Related Persons Transaction Policy, Stock Ownership Guidelines and a Clawback Policy.
Government regulations in both our U.S. and international markets can delay or prevent the introduction of some of our products. Our failure to comply with these regulations can also result in a product being removed from sale in a particular market, either temporarily or permanently.
Government regulations in both our U.S. and international markets can delay or prevent the introduction of some of our products. Our failure to comply with these regulations can also result in recalls or a product being removed from sale in a particular market, either temporarily or permanently.
If conditions cause further disruption in the global supply chain, the availability of labor and materials or otherwise increase costs, it may materially affect our operations and those of third parties on which we rely, including causing disruptions in the supply and distribution of our products.
If conditions cause further disruption in the global supply chain, the availability of labor and materials or otherwise further increase costs, it may materially affect our operations and those of third parties on which we rely, including causing material disruptions in the supply and distribution of our products.
Although we are in the process of negotiating long-term contracts with certain key manufacturers, we may not be able to reach a timely agreement, which could have a material adverse effect on our business and results of operations.
Although we are continually in the process of negotiating long-term contracts with certain key manufacturers, we may not be able to reach a timely agreement, which could have a material adverse effect on our business and results of operations.
We seek to ensure responsible sourcing of our products and to improve our suppliers’ environmental, labor, health and safety and ethical practices through our Supplier Code of Conduct. We seek to minimize our resource footprint at our locations with a focus on managing waste, water and energy consumption.
We seek to ensure responsible sourcing of our products and to improve our suppliers’ environmental, labor, health 9 and safety and ethical practices through our Supplier Code of Conduct. We seek to minimize our resource footprint at our locations with a focus on managing waste, water and energy consumption.
Investments in Advertising and Marketing We invest in advertising and marketing to drive the growth of our core brands. Our marketing strategy is focused primarily on consumer-oriented initiatives that target consumers via mass media, digital marketing, in-store programming and coupons.
Investments in Advertising and Marketing We invest in advertising and marketing to drive the growth of our brands. Our marketing strategy is focused primarily on consumer-oriented initiatives that target consumers via mass media, digital marketing, in-store programming and coupons.
Our ultimate success is dependent on several factors, including our ability to: • Develop and execute effective sales, advertising and marketing programs to maintain or grow our share versus competitors over time; • Establish and maintain our third-party manufacturing and distribution relationships to fulfill customer demands; • Develop innovative new products; • Continue to grow our presence in the United States and international markets through acquisitions and organic growth; and • Allocate capital effectively.
Our ultimate success is dependent on several factors, including our ability to: • Develop and execute effective sales, advertising and marketing programs to maintain or grow our market share versus competitors over time; • Establish and maintain our internal and third-party manufacturing and distribution relationships to fulfill customer demands; • Develop innovative new products; • Continue to grow our presence in the United States and international markets through acquisitions and organic growth; and • Allocate capital effectively.
A number of our products are regulated by the CPSC under the Federal Hazardous Substances Act (“FHSA”), the Poison Prevention Packaging Act of 1970 (the “PPPA”) and the Consumer Products Safety Improvement Act of 2008 (“CPSIA”).
A number of our products are also regulated by the CPSC under the Federal Hazardous Substances Act (“FHSA”), the Poison Prevention Packaging Act of 1970 (the “PPPA”) and the Consumer Products Safety Improvement Act of 2008 (“CPSIA”).
One of our strategies is to broaden the categories in which we participate and increase our share within those categories through ongoing product innovation.
One of our strategies is to broaden the categories in which we participate and increase our market share within those categories through ongoing product innovation.
The fact that we do not have long-term contracts with certain manufacturers means that they could cease manufacturing our products at any time and for any reason or initiate arbitrary and costly price increases, which could have a material adverse effect on our business and results of operations.
We do not have long-term contracts with certain manufacturers which means that they could cease manufacturing our products at any time and for any reason or initiate arbitrary and costly price increases, which could have a material adverse effect on our business and results of operations.
GEODIS provides warehouse services including storage, handling and shipping, as well as transportation services, with respect to our full line of products, including (i) complete management services, (ii) carrier claims administration, (iii) proof of delivery, (iv) procurement, (v) report generation, and (vi) freight payment services. 7 Competition The business of selling brand name consumer products in the OTC health and personal care market is highly competitive.
This facility provides warehouse services including storage, handling and shipping, as well as transportation services, with respect to our full line of products, including (i) complete management services, (ii) carrier claims administration, (iii) proof of delivery, (iv) procurement, (v) report generation, and (vi) freight payment services. 7 Competition The business of selling brand name consumer products in the OTC health and personal care market is highly competitive.
In addition, a small number of our products are subject to regulation under the PPPA and can only be legally marketed if they are dispensed in child-resistant packaging or labeled for use in households where there are no children.
In addition, a small number of our products that are subject to regulation under the PPPA can only be legally marketed if they are dispensed in child-resistant packaging or labeled for use in households where there are no children.
Some of the ways we encourage this is by: • Recruiting : With employees across the U.S. and the world, we understand the importance of hiring and advancement practices that seek diversity and equality at all levels of the organization as well as talent development. • Monitoring: We have a strict Code of Conduct and Ethics that fosters a work environment that is free from intimidation, harassment and violence.
Some of the ways we encourage this is by: • Recruiting : With employees across the U.S. and the world, we understand the importance of hiring and advancement practices that support diversity at all levels of the organization as well as talent development. • Monitoring : We have a strict Code of Conduct and Ethics that fosters a work environment that is free from intimidation, harassment and violence.
See “Competitive Strengths” above for additional information regarding our competitive strengths and Part I, Item 1A “Risk Factors” below for additional information regarding competition in our industry. Regulation Product Regulation The formulation, manufacturing, packaging, labeling, distribution, importation, sale and storage of our products are subject to extensive regulation by various U.S. federal agencies, including the U.S.
See “Competitive Strengths and Growth Strategy” above for additional information regarding our competitive strengths and Part I, Item 1A “Risk Factors” below for additional information regarding competition in our industry. Regulation Product Regulation The formulation, manufacturing, packaging, labeling, distribution, importation, sale and storage of our products are subject to extensive regulation by various U.S. federal agencies, including the U.S.
Our Regulatory and Quality team is guided by a senior member of management and staffed by individuals with appropriate quality, legal and regulatory experience. Our Regulatory, Quality and Operations teams work closely with our third-party manufacturers and our own manufacturing operation on quality-related matters.
Our Regulatory and Quality team is guided by a senior member of management and staffed by individuals with appropriate quality and regulatory experience. Our Regulatory, Quality and Operations teams work closely with our third-party manufacturers and our own manufacturing operations on quality-related matters.
Recognizing that financial resources are limited, we allocate our resources to focus on our core brands with the most impactful, consumer-relevant initiatives that we believe have the greatest opportunities for growth and financial success. Customers Our senior management team and dedicated sales force strive to maintain long-standing relationships with our top 25 U.S. customers.
Recognizing that financial resources are limited, we allocate our resources to focus on our core brands with the most impactful, consumer-relevant initiatives that we believe have the greatest opportunities for growth and financial success. Customers Our senior management team and dedicated sales force strive to maintain long-standing relationships with our top customers.
We believe that our emphasis on strong customer relationships, speed and flexibility and leading sales technology capabilities, combined with consistent marketing support programs and ongoing product innovation, will continue to maximize our competitiveness in the increasingly complex retail environment. During 2023, 2022, and 2021, Walmart accounted for approximately 19.7%, 20.5%, and 21.6%, respectively, of our gross revenues.
We believe that our emphasis on strong customer relationships, speed and flexibility and leading sales technology capabilities, combined with consistent marketing support programs and ongoing product innovation, will continue to maximize our competitiveness in the increasingly complex retail environment. During 2024, 2023, and 2022, Walmart accounted for approximately 19.7%, 19.7%, and 20.5%, respectively, of our gross revenues.
Our products are sold through multiple channels, including mass merchandisers, drug, food, dollar, convenience, club and e-commerce stores, which reduces our exposure to any single distribution channel. 4 Market Position During 2023, approximately 58.1% of our total revenues were from major brands with a number one market position, compared with approximately 67.5% and 69.2% of total revenues during 2022 and 2021, respectively.
Our products are sold through multiple channels, including mass merchandisers, drug, food, dollar, convenience, club and e-commerce stores, which reduces our exposure to any single distribution channel. 4 Market Position During 2024, approximately 58.6% of our total revenues were from major brands with a number one market position, compared with approximately 58.1% and 67.5% of total revenues during 2023 and 2022, respectively.
If the FDA or a foreign governmental authority chooses to audit a particular third-party manufacturing facility, we require the third-party manufacturer to notify us immediately and update us on the progress of the audit as it proceeds.
If the FDA or a foreign governmental authority chooses to inspect a particular third-party manufacturing facility, we require the third-party manufacturer to notify us immediately and update us on the progress of the inspection as it proceeds.
In 2023, these brands included BC and Goody's, Chloraseptic , Compound W , Debrox, Dramamine, Fess, Fleet, Hydralyte, Monistat, Nix, and Summer's Eve .
In 2024, these brands included BC and Goody's, Chloraseptic , Compound W , Debrox, Dramamine, Fess, Fleet, Hydralyte, Monistat, Nix, and Summer's Eve .
Our diverse portfolio of products provides us with multiple sources of growth and minimizes our reliance on any one product or category. We provide significant marketing support to our portfolio, which is designed to enhance our sales growth and our long-term profitability across our major brands and other significant brands, sometimes referred to as core brands.
Our diverse portfolio of products provides us with multiple sources of growth and minimizes our reliance on any one product or category. We provide significant marketing support to our portfolio, which is designed to enhance our sales growth and our long-term profitability across our major brands and other significant brands.
This approach results in minimal capital expenditures and maximizes our cash flow, which allows us to reinvest to support our marketing initiatives, fund brand acquisitions or repay outstanding indebtedness. At March 31, 2023, we had relationships with 135 third-party manufacturers.
This approach results in minimal capital expenditures and maximizes our cash flow, which allows us to reinvest to support our marketing initiatives, fund brand acquisitions or repay outstanding indebtedness. At March 31, 2024, we had relationships with 122 third-party manufacturers.
We monitor our own manufacturing operations and our third-party manufacturers' compliance with FDA and relevant foreign regulations and perform periodic audits to ensure compliance. This continual evaluation process is designed to ensure that our manufacturing processes and products are of high quality and in compliance with known regulatory and quality requirements.
We monitor our own manufacturing operations and our third-party manufacturers' compliance with FDA and relevant foreign regulations and perform periodic audits to ensure compliance. This internal audit process is designed to ensure that our manufacturing processes and products are of high quality and in compliance with known regulatory and quality requirements.
We have continued to see changes in the purchasing patterns of our consumers, including a reduction in the frequency of visits to retailers and a shift in many markets to purchasing our products online. The volatile environment has impacted the supply of labor and raw materials and exacerbated rising input costs.
We have continued to see changes in the purchasing patterns of our end customers, including a reduction in the frequency of visits to retailers and a shift in many markets to purchasing our products online. 10 The volatile environment has impacted the supply of labor and raw materials and exacerbated rising input costs.
Warehousing and Distribution We manage product distribution in the continental United States through one facility, which is owned and operated by GEODIS Logistics LLC ("GEODIS"), a third-party provider since fiscal 2020.
Warehousing and Distribution We manage product distribution in the continental United States through one facility, which is owned and operated by a third-party provider since fiscal 2020.
We believe our business model allows us to integrate acquisitions in an efficient manner, while also providing opportunities to realize significant cost savings. Growing Our International Business International sales beyond the borders of North America represented 13.7%, 10.9% and 10.0% of total revenues in 2023, 2022, and 2021, respectively.
We believe our business model allows us to integrate acquisitions in an efficient manner, while also providing opportunities to realize significant cost savings. Growing Our International Business International sales beyond the borders of North America represented 14.8%, 13.7% and 10.9% of total revenues in 2024, 2023, and 2022, respectively.
We believe that most of the raw materials and packaging components used to produce our products at our manufacturing facility in Virginia and at our third-party manufacturing facilities are generally available through multiple sources acquired on both a contract and purchase order basis but are also subject to inflationary pressure.
We believe that most of the raw materials and packaging components used to produce our products at our manufacturing facilities and at our third-party manufacturing facilities are generally available through multiple sources acquired on both a contract and purchase order basis but are also subject to inflationary pressure and production delays.
Our business, business model, competitive strengths and growth strategy face various risks that are described in "Risk Factors" in Part I, Item 1A of this Annual Report on Form 10-K. 2 The following summarizes the percent of our net revenues by segment: March 31, (In thousands) 2023 2022 2021 Segment: North American OTC Healthcare 86.3 % 89.1 % 90.0 % International OTC Healthcare 13.7 10.9 10.0 Total 100.0 % 100.0 % 100.0 % For additional information concerning our business segments, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 20 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K. 3 Major Brands and Market Position Our major brands, set forth in the table below, have strong levels of consumer awareness and retail distribution across all major channels.
Our business, business model, competitive strengths and growth strategy face various risks that are described in "Risk Factors" in Part I, Item 1A of this Annual Report on Form 10-K. 2 The following summarizes the percent of our net revenues by segment during each of the past three fiscal years: March 31, 2024 2023 2022 Segment: North American OTC Healthcare 85.2 % 86.3 % 89.1 % International OTC Healthcare 14.8 13.7 10.9 Total 100.0 % 100.0 % 100.0 % For additional information concerning our business segments, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 20 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K. 3 Major Brands and Market Position Our major brands, set forth in the table below, have strong levels of consumer awareness and retail distribution across all major channels.
Reference to a year (e.g., “2023”) refers to our fiscal year ended March 31 of that year.
Reference to a year (e.g., “2024”) refers to our fiscal year ended March 31 of that year.
We intend to move the manufacture of certain of our more regulated products to our own manufacturing facility, which will subject our facility to increased regulatory requirements and scrutiny with respect to both our existing and new operations there.
We recently moved the manufacture of certain of our more regulated products to our own manufacturing facility, which will subject our facility to increased regulatory requirements and scrutiny with respect to both our existing and new operations there.
Additional or shifting governmental regulation has and in the future could also require reformulation of certain products to meet new standards, recalls or discontinuance of certain products not able to be reformulated, additional record-keeping requirements, increased documentation of the properties of certain products, additional or different labeling, additional scientific substantiation, expanded adverse event reporting or other new requirements.
The adoption of new regulations or changes in the interpretation of existing governmental regulation has and in the future could also require reformulation of certain products to meet new standards, recalls or discontinuance of certain products not able to be reformulated, additional record-keeping requirements, increased documentation of the properties of certain products, additional or different labeling, additional scientific substantiation, expanded adverse event reporting or other new requirements.
(“IRI”), for the 52-week period ended March 26, 2023. International information was derived from several sources. Fess and Hydralyte data are for the Australian market.
(“IRI”), for the 52-week period ended March 24, 2024. International information was derived from several sources. Fess and Hydralyte data are for the Australian market.
We continue to build on our long commitment of equal employment opportunity and anti-discrimination by consciously and proactively promoting inclusion and equity of people with unique cultural and ethnic heritage, color and backgrounds, gender identification and sexual orientation, and other traits.
We continue to build on our long commitment of equal employment opportunity and anti-discrimination by supporting inclusion and equality of people with unique cultural and ethnic heritage, color and backgrounds, gender identification and sexual orientation, and other traits.
Our branded competitors include, among others, AbbVie Inc., Alcon, Bausch + Lomb, Bayer AG, Combe, Haleon plc, Johnson & Johnson, Mondelez International, Reckitt Benckiser Group plc, Sanofi, Scholl's Wellness Company, Sunstar Group, The Honey Pot Company, and The Procter & Gamble Company.
Our branded competitors include, among others, AbbVie Inc., Alcon, Bausch + Lomb, Bayer AG, Combe, Compass Diversified, Haleon plc, Kenvue, Mondelez International, Reckitt Benckiser Group plc, Sanofi, Scholl's Wellness Company, Sunstar Group, and The Procter & Gamble Company.
These brands accounted for approximately 81.9%, 81.4%, and 80.3% of our total revenues for 2023, 2022, and 2021, respectively.
These brands accounted for approximately 83.3%, 81.9%, and 81.4% of our total revenues for 2024, 2023, and 2022, respectively.
Our trademarks and tradenames are how we convey that the products we sell are “brand name” products. Our ownership of these trademarks and tradenames is very important to our business, as it allows us to compete based on the value and goodwill associated with these marks. Additionally, we own or license patents on innovative and proprietary technology.
Our ownership of these trademarks and tradenames is very important to our business, as it allows us to compete based on the value and goodwill associated with these marks. Additionally, we own or license patents on innovative and proprietary technology.
Of those, we had long-term contracts with 25 manufacturers that produced items that accounted for approximately 69.8% of our gross sales for 2023, compared to 23 manufacturers with long-term contracts that accounted for approximately 69.0% of our gross sales in 2022.
Of those, we had long-term contracts with 26 manufacturers that produced items that accounted for approximately 72.0% of our gross revenues for 2024, compared to 25 manufacturers with long-term contracts that accounted for approximately 69.8% of our gross revenues in 2023.
The following are some of the most significant registered trademarks we own in the United States and/or Canada: BC , Boudreaux's Butt Paste, Chloraseptic, Clear Eyes, Compound W, Debrox, DenTek, Dramamine, Fleet, Gaviscon , Goody's, Hydralyte, Luden's, Monistat, Nix, Summer's Eve, Fess and TheraTears.
The following are some of the most significant registered trademarks we own in the United States and/or Canada: BC , Boudreaux's Butt Paste, Chloraseptic, Clear Eyes, Compound W, Debrox, DenTek, Dramamine, Fleet, Gaviscon , Goody's, Luden's, Monistat, Nix, Summer's Eve and TheraTears. Our trademarks and tradenames are how we convey that the products we sell are “brand name” products.
We must also comply with product labeling and packaging regulations that may vary from country to country. In addition, we are subject to FTC and state regulations, as well as foreign regulations, relating to our product claims and advertising. Impact of Regulations Compliance with these various regulations has an impact on capital expenditures, earnings and our competitive position.
In addition, we are subject to FTC and state regulations, as well as foreign regulations, relating to our product claims and advertising. Impact of Regulations Compliance with these various regulations has an impact on capital expenditures, earnings and our competitive position.
Although we have not experienced a material disruption to our overall supply chain to date, we have and may continue to experience shortages, delays and backorders for certain ingredients and products, difficulty scheduling shipping for our products, as well as price increases from many of our suppliers for both shipping and product costs.
We have and may continue to experience shortages, delays and backorders for certain ingredients and products, difficulty scheduling shipping for our products, as well as price increases from many of our suppliers for both shipping and product costs.
By empowering our employees to develop and enhance their skills through enterprise-wide tools, videos and coursework that focus on continuous learning and professional and personal development, we encourage all of our employees to reach their full potential, which in turn helps our organization succeed.
By empowering our employees to develop and enhance their skills through enterprise-wide tools, videos and coursework that focus on continuous learning and professional and personal development, we encourage all of our employees to reach their full potential, which in turn helps our organization succeed. 11 Health and Safety We are committed to providing a safe work environment for our employees and require employees to share this concern by abiding to rigorous safety measures.
We encourage employees to become involved in their respective communities, and we enable office locations the freedom to develop programs that are appropriate to their community needs.
We seek out opportunities to be active members of our communities to enhance the lives of our neighbors and consumers. We encourage employees to become involved in their respective communities, and we enable office locations the freedom to develop programs that are appropriate to their community needs.
Those changes have and will continue to require capital investments in facilities and equipment to meet the requirements, as well as additional product development, material and production costs which may impact our earnings, financial condition and ability to compete. If we fail to comply with these regulations, we could be subject to enforcement actions and the imposition of penalties.
Those changes have and will continue to require capital investments in facilities and equipment to meet the requirements, require us to incur additional compliance costs, as well as additional product development, material and production costs, which may impact our financial condition and ability to compete.
The extent to which these conditions impact our results and liquidity will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity and duration of any further COVID-19 outbreaks, global supply chain constraints, the high inflationary environment and further global instability.
The extent to which these conditions impact our results and liquidity will depend on future developments, which are highly uncertain and cannot be predicted, including global supply chain constraints, inflation, global conflicts and instability, and the potential for further outbreaks of severe illnesses.
Economic Environment There has been economic uncertainty in the United States and globally due to several factors, including global supply chain constraints, rising interest rates, a high inflationary environment, geopolitical events and the effects from the COVID-19 pandemic.
Given our agility in advertising and marketing support and product diversity, the quarterly timing of this advertising and marketing support and impact to earnings is difficult to predict. Economic Environment There has been economic uncertainty in the United States and globally due to several factors, including global supply chain constraints, rising interest rates, a high inflationary environment and geopolitical events.
Approximately 88% of our workforce operates in the United States, 11% in Australia and Asia and 1% in Europe. 71% of our employees are salaried and 29% are paid hourly wages, mostly in production. We employ only a few part time employees. Our workforce is 50% female and 50% male.
Our Employees As of March 31, 2024, we had approximately 570 global employees. Approximately 82% of our workforce operates in the United States, 16% in Australia and Asia and 2% in Europe. 59% of our employees are salaried and 41% are paid hourly wages. We employ only a few part time employees. Our workforce is 53% female and 47% male.
In addition to relying on contract manufacturers, we operate a manufacturing facility in Lynchburg, Virginia, which manufactures products accounting for approximately 13% of our gross sales. We intend to move the manufacture of certain of our more highly regulated products to our facility in the future.
In addition to relying on contract manufacturers, we operate a manufacturing facility in Lynchburg, Virginia, which manufactures products representing approximately 11% of our gross revenues.
Other Regulations We are also subject to a variety of other regulations in various foreign markets, including regulations pertaining to import/export, antitrust and pharmacovigilance issues. To the extent we decide to commence or expand operations in additional countries, we may be required to obtain an approval, license or certification from the country’s ministry of health or comparable 9 agency.
To the extent we decide to commence or expand operations in additional countries, we may be required to obtain an approval, license or certification from the country’s ministry of health or comparable agency. We must also comply with product labeling and packaging regulations that may vary from country to country.
OTC Healthcare products are medical devices regulated by the FDA through a system that may involve pre-market clearance. During the review process, the FDA makes an affirmative determination as to the sufficiency of the label directions, cautions and warnings for the medical devices in question.
During the review process, the FDA makes an affirmative determination as to the safety and efficacy of the device, as well as the sufficiency of the label indications, directions, cautions and warnings for the medical devices in question. Certain of our products are considered cosmetics regulated by the FDA through the FDC Act and the Fair Packaging and Labeling Act.
OTC drug products are New Drug Application (“NDA”) or Abbreviated New Drug Application (“ANDA”) products and are manufactured and labeled in accordance with an FDA-approved submission. These products are subject to reporting requirements as set forth in FDA regulations.
These specific OTC drug products cannot be marketed until FDA approves the NDA or ANDA, and, 8 after approval, are manufactured and labeled in accordance with an FDA-approved submission. These products are subject to reporting requirements as set forth in FDA regulations. Certain of our U.S.
Our team employs a process to investigate and resolve any potential conduct or ethics concern that may violate our mission of diversity and inclusion. We use a third-party reporting avenue for employees to exercise any such concern with anonymity and confidentiality.
Our team employs a process to investigate and resolve any potential conduct or ethics concern. We use a third-party reporting avenue for employees to exercise any such concern with anonymity and confidentiality. Raising a concern honestly or participating in an investigation cannot be the basis for any adverse employment action, including termination, suspension, loss of benefits, threats, harassment or discrimination.
As an example of this philosophy, in 2023 we launched a number of new products, including Summer’s Eve Spa Renewing Wash, Compound W Total Care, Nix Lice Prevention Spray, Tagamet Cool Mint, and Fleet Fresh & Clean Enemas .
In 2023, we launched Summer’s Eve Spa Renewing Wash, Compound W Total Care , Nix Lice Prevention Spray , Tagamet Cool Mint, and Fleet Fresh & Clean Enemas. While there is always a risk that sales of existing products may be reduced by new product introductions, our goal is to grow the overall sales of our brands.
Our dietary supplement products are governed by the Dietary Supplement Health and Education Act of 1994 ("DSHEA"), which defines and regulates dietary supplements. Under DSHEA, supplements are also effectively regulated by the FDA for GMPs.
Our dietary supplement products are governed by the Dietary Supplement Health and Education Act of 1994 ("DSHEA"), which defines and regulates dietary supplements. Under DSHEA, FDA published a final rule that requires persons who manufacture, package, label or hold a dietary supplement to establish and follow cGMPs.
Intellectual Property We own a number of trademark registrations and applications in the United States, Canada and other foreign countries.
If we fail to comply with these regulations, we could be subject to enforcement actions and the imposition of penalties, which could adversely impact our financial condition. Intellectual Property We own a number of trademark registrations and applications in the United States, Canada and other foreign countries.
We seek to comply with all U.S. federal, state and/or local occupational safety and health standards and report our safety records in accordance with the Occupational Safety and Health Administration ("OSHA"). We also seek to comply with the applicable safety and health standards in all other countries in which we have employees, including Australia, United Kingdom and Singapore.
We also seek to comply with the applicable safety and health standards in all other countries in which we have employees, including Australia, the United Kingdom and Singapore. Our Community We seek to be a responsible corporate citizen, and we resolve to live by our principles as we continue to grow our global business.
In accordance with the FDC Act and FDA regulations, we and our third-party manufacturers of U.S. products must also comply with the FDA’s current Good Manufacturing Practices (“GMPs”). The FDA inspects our facilities and those of our third-party manufacturers periodically to determine that both we and our third-party manufacturers are complying with GMPs.
MoCRA provides new FDA authorities related to records access, mandatory recalls, adverse event reporting, facility registration, product listing and safety substantiation of products. In accordance with the FDC Act and FDA regulations, we and our third-party manufacturers of U.S. products must also comply with the FDA’s current Good Manufacturing Practices (“cGMPs”).
If we or our manufacturers fail to comply with applicable regulations, we could become subject to significant claims or penalties or be required to discontinue the sale of the non-compliant products. In addition, the adoption of new regulations or changes in the interpretations of existing regulations may result in significant additional compliance costs or discontinuation of product sales.
If we or our manufacturers fail to comply with applicable regulations, we could be issued a list of deficiencies, which could lead to significant claims or penalties or be required to recall or discontinue the sale and/or manufacturing of the non-compliant products. Most of our U.S.
Most of our U.S. OTC drug products are regulated pursuant to the FDA’s monograph system. The monographs set out the active ingredients and labeling indications that are permitted for certain broad categories of U.S. OTC drug products.
OTC drug products are regulated pursuant to the FDA’s monograph system, initially established in 1972. The monograph system establishes conditions, such as active ingredients, uses or indications, doses, routes of administration, labeling and testing, under which certain broad categories of U.S. OTC drug products are generally recognized as safe and effective for their intended use.
Health and Safety We are committed to providing a safe work environment for our employees and require employees to share this concern by abiding to rigorous safety measures. To enable this and assure that the message of health, safety and well-being are part of our 11 work culture, we conduct regular training programs at our production facility.
To enable this and assure that the message of health, safety and well-being are part of our work culture, we conduct regular training programs at our production facilities. We seek to comply with all U.S. federal, state and/or local occupational safety and health standards and report our safety records in accordance with the Occupational Safety and Health Administration ("OSHA").
Certain of our products are considered cosmetics regulated by the FDA through the Federal Food, Drug, and Cosmetic Act ("FDC Act") and the Fair Packaging and Labeling Act. The FDA does not require pre-market clearance for cosmetics but manufacturers must ensure the products are not adulterated or misbranded.
The FDA does not require pre-market clearance for cosmetics but manufacturers must ensure the products are not adulterated or misbranded. Furthermore, Congress passed the Modernization of Cosmetics Regulation Act of 2022 (“MoCRA”) in December 2023, which expands FDA authority to regulate cosmetics.
Moving forward, OTC drug products will fall under the requirements 8 of The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") signed into law on March 27, 2020, which includes the Over-the-Counter Monograph Safety, Innovation, and Reform Act. These new requirements are expected to be delineated by the FDA in the next few years. Certain of our U.S.
The Coronavirus Aid, Relief, and Economic Security ("CARES") Act, signed into law on March 27, 2020, and the Over-the-Counter Monograph Safety, Innovation, and Reform Act have revised this OTC monograph framework. Products that comply with monograph requirements do not require pre-market approval from the FDA.
Removed
In 2022, we launched DenTek Fresh Protect Dental Guards, Dramamine Nausea Ginger Chews, BC Max Strength Lemonade-flavored powder, Summer’s Eve Spa Luxurious Wash and Clear Eyes Sensitive. While there is always a risk that sales of existing products may be reduced by new product introductions, our goal is to grow the overall sales of our brands.
Added
As an example of this philosophy, in 2024 we launched a number of new products, including Summer’s Eve Ultimate Odor Protection line , Monistat's Maintain Boric Acid Suppositories, Clear Eyes Nighttime Restoring Drops, and Dentek Gum Health Advanced Cleaning kit.
Removed
(2) Includes e-commerce retailers such as Amazon. Due to the diversity of our product lines, we believe that each of these channels is important to our business, and we continue to seek opportunities for growth in each channel.
Added
During 2024, Amazon accounted for approximately 10.9% of our gross revenues.
Removed
When the FDA has finalized a particular monograph, it has concluded that a properly labeled product formulation is generally recognized as safe and effective and not misbranded. A tentative final monograph indicates that the FDA has not made a final determination about products in a category to establish safety and efficacy for a product and its uses.
Added
One of our suppliers, a privately owned pharmaceutical manufacturer with whom we have a long-term supply agreement, accounted for more than 10% of our gross revenues during 2024, 2023 and 2022.
Removed
However, unless there is a serious safety or efficacy issue, the FDA typically will exercise enforcement discretion and permit companies to sell products conforming to a tentative final monograph until the final monograph is published. Products that comply with either final or tentative final monograph standards do not require pre-market approval from the FDA. Certain of our U.S.
Added
During 2024, 2023 and 2022, the manufacturer accounted for approximately 20% of our gross revenues while we accounted for a significant portion of their gross revenues over that time period. No other single third-party supplier accounts for 10% or more of our gross revenues.
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Given our agility in advertising and marketing support and product diversity, the quarterly timing of this advertising and marketing support and impact to earnings is difficult to predict.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese risks include product development or launch delays, competitor actions, regulatory approval hurdles, and the failure of new products and line extensions to achieve anticipated levels of market acceptance. A negative outcome in any of these risks could adversely impact our results of operations and financial condition. Regulatory Risks We face risks associated with doing business internationally .
Biggest changeNew product development and marketing efforts, including efforts to enter markets or product categories in which we have limited or no prior experience, have inherent risks. These risks include product development or launch delays, competitor actions, regulatory approval hurdles, and the failure of new products and line extensions to achieve anticipated levels of market acceptance.
Our provision for income taxes is subject to volatility and could be adversely affected by several factors, some of which are outside of our control, including: • Changes in the income allocation methods for state taxes, and the determination of which states or countries have jurisdiction to tax our Company; • An increase in non-deductible expenses for tax purposes, including certain stock-based compensation, executive compensation and impairment of goodwill; • Transfer pricing adjustments; • Tax assessments resulting from tax audits or any related tax interest or penalties that could significantly affect our income tax provision for the period in which the settlement takes place; • Tax liabilities from acquired businesses; • Changes in accounting principles; and • Changes in tax laws or related interpretations, accounting standards, regulations, and interpretations in multiple tax jurisdictions in which we operate.
Our provision for income taxes is subject to volatility and could be adversely affected by several factors, some of which are outside of our control, including: • Changes in the income allocation methods for state taxes, and the determination of which states or countries have jurisdiction to tax our Company; • An increase in non-deductible expenses for tax purposes, including certain stock-based compensation, executive compensation and impairment of goodwill; • Transfer pricing adjustments; • Tax assessments resulting from tax audits or any related tax interest or penalties that could significantly affect our income tax provision for the period in which the settlement takes place; • Tax liabilities from acquired businesses; 24 • Changes in accounting principles; and • Changes in tax laws or related interpretations, accounting standards, regulations, and interpretations in multiple tax jurisdictions in which we operate.
These systems include programs and processes relating to internal communications and communications with other parties, ordering and managing materials from suppliers, converting materials to finished products, marketing and selling products to customers (including through e-commerce channels), customer order entry and order fulfillment, shipping product to customers, billing customers and receiving and applying payment, processing transactions, summarizing and reporting results of operations, complying with regulatory, legal or tax requirements, collecting and storing customer, consumer, employee, investor, and other stakeholder information and personal data, and other processes necessary to manage the Company's business.
These systems include programs and processes relating to internal communications and communications with other parties, ordering and managing materials from suppliers, converting materials to finished products, marketing and selling products to customers (including through e-commerce channels), customer order entry and order fulfillment, shipping product to customers, billing customers and receiving and applying payment, processing transactions, summarizing and reporting results of operations, complying with regulatory, legal and tax requirements, collecting and storing customer, consumer, employee, investor, and other stakeholder information and personal data, and other processes necessary to manage the Company's business.
If we are unable to maintain our current distribution network, product offerings for retail sale, inventory levels and in-store and online positioning of our products, our sales and operating results could be adversely affected. In addition, competitors may attempt to gain market share by offering products at prices at or below those typically offered by us.
If we are unable to maintain our current distribution network, 14 product offerings for retail sale, inventory levels and in-store and online positioning of our products, our sales and operating results could be adversely affected. In addition, competitors may attempt to gain market share by offering products at prices at or below those typically offered by us.
We could also lose revenue if our consumers change brands, our customers refuse to buy our products, or investors choose not to invest in our debt or common stock if we do not meet their ESG and sustainability expectations. For example, since 2020, some of our major customers requested we respond to various questionnaires to evaluate our ESG efforts.
We could also lose revenue if our consumers change brands, our customers refuse to buy our products, or investors 19 choose not to invest in our debt or common stock if we do not meet their ESG and sustainability expectations. For example, since 2020, some of our major customers requested we respond to various questionnaires to evaluate our ESG efforts.
These restrictions limit our ability to, among other things: • Borrow money or issue guarantees; • Pay dividends, repurchase stock from, or make other restricted payments to, stockholders; • Make investments or acquisitions; • Use assets as security in other transactions; • Sell assets or merge with or into other companies; • Enter into transactions with affiliates; • Sell stock in our subsidiaries; and • Limits our subsidiaries' ability to pay dividends or make other payments to us.
These restrictions limit our ability to, among other things: • Borrow money or issue guarantees; • Pay dividends, repurchase stock from, or make other restricted payments to, stockholders; • Make investments or acquisitions; • Use assets as security in other transactions; 22 • Sell assets or merge with or into other companies; • Enter into transactions with affiliates; • Sell stock in our subsidiaries; and • Limits our subsidiaries' ability to pay dividends or make other payments to us.
In addition, the lenders may be able to terminate any commitments they had made to supply us with additional funding. As a result, any default by us 23 under our credit agreement, indentures governing the senior notes or any other financing agreement could have a material adverse effect on our financial condition.
In addition, the lenders may be able to terminate any commitments they had made to supply us with additional funding. As a result, any default by us under our credit agreement, indentures governing the senior notes or any other financing agreement could have a material adverse effect on our financial condition.
The fact that we do not have long-term contracts with certain manufacturers means that they could cease manufacturing our products at any time and for any reason or initiate costly price increases, which could have a material adverse effect on our business and results of operations.
The fact that we do not have long-term contracts with certain manufacturers also means that they could cease manufacturing our products at any time and for any reason or initiate costly price increases, which could have a material adverse effect on our business and results of operations.
We believe our products are safe and effective when used in accordance with label directions. However, adverse publicity about ingredients used in our products may discourage consumers from buying our products containing those ingredients, which would have an adverse impact on our sales. From time to time we are subject to various product liability claims.
We believe our products are safe and effective when used in accordance with label directions. However, adverse publicity about ingredients used in our products may discourage consumers from buying our products containing those ingredients, which would have an adverse impact on our sales. 16 From time to time we are subject to various product liability claims.
Many of these competitors are larger and have substantially greater resources than we do, and may therefore have the ability to spend more aggressively on research and development and advertising and marketing, and to respond more effectively to changing business and economic conditions, including in connection with inflation or recessionary conditions.
Many of these competitors are larger and have substantially greater resources than we do, and they may therefore have the ability to spend more aggressively on research and development and advertising and marketing, and to respond more effectively to changing business and economic conditions, including in connection with inflation or recessionary conditions.
Although we require by contract that our distributors maintain strict compliance with all applicable laws, and have the right to terminate those relationships should we determine a distributor is in material non-compliance, we cannot ensure that our foreign distributors and sales agents will 18 steadfastly comply with all such laws.
Although we require by contract that our distributors maintain strict compliance with all applicable laws, and have the right to terminate those relationships should we determine a distributor is in material non-compliance, we cannot ensure that our foreign distributors and sales agents will steadfastly comply with all such laws.
If we fail to manage these risks effectively, we may not be able to continue our international operations, and our business and results of operations may be materially adversely affected. Regulatory matters governing our industry could have a significant negative effect on our sales and operating costs.
If we fail to manage these risks effectively, we may not be able to continue our international operations, and our business and results of operations may be materially adversely affected. 18 Regulatory matters governing our industry could have a significant negative effect on our sales and operating costs.
If we increase the price of our products in order to maintain our current gross margins for our products, the increase may adversely affect demand for, and sales of, our products, which could have a material adverse effect on our business, financial condition and results of operations.
If we increase the price of our products in order to maintain our current gross margins for our products, the increase may adversely affect demand for, and sales of, our products, which could have a material adverse effect on our financial condition and results of operations.
In the event that such analysis would result in the fair value being lower than the 20 carrying value, we would be required to record an impairment charge. A significant charge in our financial statements would negatively impact our financial condition and results of operations.
In the event that such analysis would result in the fair value being lower than the carrying value, we would be required to record an impairment charge. A significant charge in our financial statements would negatively impact our financial condition and results of operations.
Risks Related to Acquisitions and Product Development Our inability to successfully identify, negotiate, complete and integrate suitable acquisition candidates and to obtain necessary financing could have an adverse impact on our growth and our business, financial condition and results of operations.
Risks Related to Acquisitions and Product Development Our inability to successfully identify, negotiate, complete and integrate suitable acquisition candidates and to obtain necessary financing could have an adverse impact on our growth and our financial condition and results of operations.
Conversely, we have, and may be required in the future to, initiate litigation against others to protect the value of our intellectual property and the related goodwill or enforce an agreement or contract that has been breached.
Conversely, we have, and may 23 be required in the future to, initiate litigation against others to protect the value of our intellectual property and the related goodwill or enforce an agreement or contract that has been breached.
New product innovations by our competitors, or our failure to develop new products, the failure of a new product launch by the Company, or the obsolescence of one or more of our products, could have a 13 material adverse effect on our business, financial condition and results of operations.
New product innovations by our competitors, or our failure to develop new products, the failure of a new product launch by the Company, or the obsolescence of one or more of our products, could have a material adverse effect on our business, financial condition and results of operations.
We have recorded impairment charges resulting from changes in our long-term assumptions for certain brands including the discount rate, future revenue growth, expected inflationary pressures and other long-term estimates.
We have recorded impairment charges resulting from changes in our long-term assumptions for certain brands, including the discount rate, future revenue growth, expected 20 inflationary pressures and other long-term estimates.
Volatility and increases in commodity raw material (e.g. resins) and packaging component prices, labor, energy, and transportation costs, and other input costs, including as a result of supply chain issues or shortages, could significantly affect our profit margin and could have a significant impact on our financial condition and results of operations if our raw material suppliers, third-party manufacturers, logistics providers or distributors pass along those costs to us.
Volatility and increases in commodity raw material (e.g. resins) and packaging component prices, labor, energy, and transportation costs, and other input costs, including as a result of supply chain issues or shortages, could significantly affect our profit margin and could have a material adverse impact on our financial condition and results of operations if our raw material suppliers, third-party manufacturers, logistics providers or distributors pass along those costs to us.
This increased focus on sustainability may result in new laws, regulations and requirements that could cause disruptions in or increased costs associated with developing, manufacturing and distributing our 19 products.
This increased focus on sustainability may result in new laws, regulations and requirements that could cause disruptions in or increased costs associated with developing, manufacturing and distributing our products.
Whether or not successful, product liability claims could result in negative publicity that could adversely affect the reputation of our brands and our business, sales 16 and financial condition. Additionally, we may be required to pay for losses or injuries purportedly caused by our products, which could negatively impact our financial condition.
Whether or not successful, product liability claims could result in negative publicity that could adversely affect the reputation of our brands and our sales and financial condition. Additionally, we may be required to pay for losses or injuries purportedly caused by our products, which could negatively impact our financial condition.
Any disruption could result in increased costs, expense and/or shipping times, and could harm our reputation and cause us to incur customer fees and penalties. We could also incur significantly higher costs and experience longer lead times should we be required to replace our distribution center, the third-party distribution manager or the manufacturing facility.
Any disruption could result in increased costs, expense and/or shipping times, and could harm our reputation and cause us to incur customer fees and penalties. We could also incur significantly higher costs and experience longer lead times should we be required to replace our distribution center, the third-party distribution manager or our manufacturing facilities.
The scope of the laws that may be applicable to us is often uncertain and may be conflicting, particularly with respect to foreign laws.
The scope of the laws that may be applicable to us is often uncertain and may be conflicting, particularly with 21 respect to foreign laws.
In addition, a serious disruption caused by performance or contractual issues with our third-party distribution manager, or labor shortages or contagious disease outbreaks or other public health emergencies at our distribution center or manufacturing facility could also materially impact our product distribution.
In addition, a serious disruption caused by performance or contractual issues with our third-party distribution manager, or labor shortages or contagious disease outbreaks or other public health emergencies at our distribution center or manufacturing facilities could also materially impact our product distribution.
The FDC Act and FDA regulations require that the manufacturing processes of our facilities and third-party manufacturers of U.S. products must also comply with the FDA’s GMPs. The FDA inspects our facilities and those of our third-party manufacturers periodically to determine if we and our third-party manufacturers are complying with GMPs.
The FDC Act and FDA regulations require that the manufacturing processes of our facilities and third-party manufacturers of U.S. products must also comply with the FDA’s cGMPs. The FDA inspects our facilities and those of our third-party manufacturers periodically to determine if we and our third-party manufacturers are complying with cGMPs.
As a result, we may have difficulty enforcing these implied warranties, and we may bear all or a significant portion of any product liability obligations rather than transferring this risk to our third-party manufacturers.
As a result, we may have difficulty enforcing these implied warranties, and we may be required to bear all or a significant portion of any product liability obligations rather than transferring this risk to our third-party manufacturers.
In addition, our failure to comply with FDA, FTC, EPA or any other federal and state regulations, or with similar regulations in foreign markets, that cover our product registration, product claims and advertising, including direct claims and advertising by us, may result in enforcement actions and imposition of penalties, litigation by private parties, or otherwise materially adversely affect the distribution and sale of our products, which could have a material adverse effect on our business, financial condition and results of operations.
In addition, our or our third-party manufacturers or distributors failure to comply with FDA, FTC, EPA or any other federal and state regulations, or with similar regulations in foreign markets, that cover our product registration, product claims and advertising, including direct claims and advertising by us, may result in enforcement actions and imposition of penalties, litigation by private parties, or otherwise materially adversely affect the distribution and sale of our products, which could have a material adverse effect on our business, financial condition and results of operations.
Risks of doing business internationally include, but are not limited to: • Political instability or declining economic conditions in the countries or regions where we operate or rely on third-party manufacturers or suppliers, which adversely affect sales of our products or our ability to obtain adequate supply of our products; • Currency controls that restrict or prohibit the payment of funds or the repatriation of earnings to the United States; • Fluctuating foreign exchange rates that result in unfavorable increases in the price of our products or cause increases in the cost of certain products purchased from our foreign third-party manufacturers; • Compliance with laws and regulations concerning ethical business practices; • Trade restrictions and exchange controls; • Difficulties in staffing and managing international operations; • Difficulty protecting our intellectual property rights in these markets; and • Increased costs of compliance with general business and tax regulations in these countries or regions.
Risks of doing business internationally include, but are not limited to the following: • Political instability or declining economic conditions in the countries or regions where we operate or rely on third-party manufacturers or suppliers, which could adversely affect sales of our products in these countries or regions or our ability to obtain adequate supply of our products; • Currency controls that restrict or prohibit the payment of funds or the repatriation of earnings to the United States; • Fluctuating foreign exchange rates that result in unfavorable increases in the price of our products or cause increases in the cost of certain products purchased from our foreign third-party manufacturers; • Requirements under laws and regulations concerning ethical business practices; • Trade restrictions and exchange controls; • Difficulties in staffing and managing international operations; • Difficulty protecting our intellectual property rights and avoiding diversion of our products in these markets; and • Increased costs of compliance with general business and tax regulations in these countries or regions.
Because of the unique manufacturing requirements of certain products, the Company may be unable to timely identify or qualify new suppliers or at the quantities, quality and price levels needed. In addition, identifying alternative manufacturers without adequate lead times may involve additional manufacturing expense, delay in production, or product disadvantage in the marketplace.
Because of the unique manufacturing requirements of certain products, the Company may be unable to timely identify or qualify new suppliers or at the quantities, quality and price levels needed. In addition, identifying alternative manufacturers without adequate lead times may involve additional manufacturing expense or delay in production.
The manufacturers we use have and may continue to increase the cost to us of many of the products we purchase, which has impacted and could continue to adversely affect our margins in the event we are unable to pass along these increased costs to our customers or identify and qualify new manufacturers.
In this economic environment, the manufacturers we use have and may continue to increase the cost to us of many of the products we purchase, which has impacted and could continue to adversely affect our margins in the event we are unable to pass along these increased costs to our customers or identify and qualify new manufacturers.
Risks Related to our Financing Our indebtedness could adversely affect our financial condition, and the significant amount of cash required to service our debt would not be available to reinvest in our business. At March 31, 2023, our total indebtedness, including current maturities, was approximately $1.4 billion.
Risks Related to our Financing Our indebtedness could adversely affect our financial condition, and the significant amount of cash required to service our debt would not be available to reinvest in our business. At March 31, 2024, our total indebtedness, including current maturities, was approximately $1.1 billion.
Although we are in the process of negotiating long-term contracts with certain key manufacturers, we may not be able to reach a timely agreement, which could have a material adverse effect on our business and results of operations.
Although we are continually in the process of negotiating long-term contracts with certain key manufacturers, we may not be able to reach a timely agreement on acceptable terms, which could have a material adverse effect on our business and results of operations.
In the event that our primary third-party manufacturers are unable or unwilling to ship products to us in a timely manner to address these shortages, we would have to rely on secondary manufacturing relationships or, to the extent unavailable, identify and qualify new manufacturing relationships.
In the event that our primary third-party manufacturers are unable or unwilling to ship products to us in a timely manner, we would have to rely on secondary manufacturing relationships or, to the extent unavailable, identify and qualify new manufacturing relationships.
We expect that for future periods, our top ten customers, including Walmart, will, in the aggregate, continue to account for a large and potentially increasing portion of our sales. Many of our customers have sought to obtain lower pricing, logistics or other changes to the customer-supplier relationship.
We expect that for future periods, our top ten customers, including Walmart and Amazon, will, in the aggregate, continue to account for a large and potentially increasing portion of our sales. Many of our customers have sought to obtain lower pricing, more strict logistics requirements or other changes to the customer-supplier relationship.
If we are unable to maintain these manufacturing relationships or are unable to successfully transfer manufacturing to another third-party or our own manufacturing facility, we may be unable to meet customer demand, and our business and sales could suffer as a result. Many of our products are produced by a limited number of third-party manufacturers.
In addition, if we are unable to maintain these manufacturing relationships or are unable to successfully transfer manufacturing to another third-party or our own manufacturing facility, we may be unable to meet customer demand, and our business and sales could suffer. Many of our products are produced by a limited number of third-party manufacturers.
In addition, we may be subject to examination of our income tax returns by the Internal Revenue Service and other tax authorities. If tax authorities challenge the relative mix of our U.S. and international income, or successfully assert the jurisdiction to tax our earnings, our future effective income tax rates could be adversely affected. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
In addition, we may be subject to examination of our income tax returns by the Internal Revenue Service and other tax authorities. If tax authorities challenge the relative mix of our U.S., state and international income, or successfully assert the jurisdiction to tax our earnings, our future effective income tax rates could be adversely affected. ITEM 1B.
Our calculation of consumption levels may not accurately reflect actual retail consumption given limitations of tracked data. Product liability claims and product recalls and related negative publicity could adversely affect our sales and operating results. We are dependent on consumers’ perception of the safety and quality of our products.
Our calculation of consumption levels may not accurately reflect actual retail consumption given limitations of tracked data and consumption levels could significantly differ from reported revenues. Product liability claims and product recalls and related negative publicity could adversely affect our sales and operating results. We are dependent on consumers’ perception of the safety and quality of our products.
In addition, we could be required to: • Suspend manufacturing operations; • Modify product formulations or processes; • Suspend the sale or require a recall of non-compliant products; or • Change product labeling, packaging, distribution, storage, marketing, or advertising, or take other corrective action.
In addition, we or our third-party manufacturers or distributors could be required to: • Suspend manufacturing operations; • Modify product formulations or processes; • Suspend the sale or require a recall of non-compliant products; or • Change product labeling, packaging, distribution, storage, marketing, or advertising, or take other corrective action.
If a significant number of our smaller customers, or any of our significant customers, elect not to purchase products from us, our financial condition and results of operations could be materially adversely affected.
If a significant number of our smaller customers, or any of our significant customers, elect not to purchase products from us or materially reduce the quantity of products they purchase from us, our financial condition and results of operations could be materially adversely affected.
We have experienced other adverse impacts from COVID-19, and we could experience adverse impacts from other pandemics, in a number of ways, including, but not limited to, the following: • supply chain delays or disruptions due to closed supplier facilities or distribution centers, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas; • shutdown of our manufacturing facility due to illness or government order; 15 • reduced consumer demand for certain of our products as a result of the economic downturn, discontinuance of government stimulus and assistance programs or restrictions on in-person purchases; • change in demand for or availability of our products as a result of retailers or distributors modifying their restocking, fulfillment, or shipping practices; • decrease in our ability to develop innovative products due to reprioritization of suppliers and/or retailers; • increase in working capital needs and/or an increase in trade accounts receivable write-offs as a result of increased financial pressures on our suppliers or customers; • impairment in the carrying value of goodwill or intangible assets or a change in the useful life of finite-lived intangible assets from sustained changes in consumer purchasing behaviors, government restrictions, or financial results; • increase in raw material and other input costs resulting from labor shortages, supply chain disruptions, and market volatility; and • fluctuation in foreign currency exchange rates or interest rates resulting from market uncertainties.
Our sales are also impacted by demand for our products depending on consumers’ activities, lifestyles and financial resources. 15 We could experience adverse impacts from public health emergencies in a number of ways, including, but not limited to, the following: • supply chain delays or disruptions due to closed supplier facilities or distribution centers, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas; • shutdown of our manufacturing facilities due to illness or government order; • reduced consumer demand for certain of our products as a result of the economic downturn, discontinuance of government stimulus and assistance programs or restrictions on in-person purchases; • change in demand for or availability of our products as a result of retailers or distributors modifying their restocking, fulfillment, or shipping practices; • decrease in our ability to develop innovative products due to reprioritization of suppliers and/or retailers; • increase in working capital needs and/or an increase in trade accounts receivable write-offs as a result of increased financial pressures on our suppliers or customers; • impairment in the carrying value of goodwill or intangible assets or a change in the useful life of finite-lived intangible assets from sustained changes in consumer purchasing behaviors, government restrictions, or financial results; • increase in raw material and other input costs resulting from labor shortages, supply chain disruptions, and market volatility; and • fluctuation in foreign currency exchange rates or interest rates resulting from market uncertainties.
Moreover, the effects of the COVID-19 pandemic could exacerbate the other risks described in this “Risk Factors” section of this Annual Report on Form 10-K. Consumption trends for our products may not correlate to our results of operations. We regularly review consumption levels for our brands to provide an indication of the strength of our expected results of operations.
Moreover, the effects of a pandemic could exacerbate the other risks described in this “Risk Factors” section of this Annual Report on Form 10-K. Consumption trends for our products may not correlate to our results of operations. We regularly review and may disclose certain consumption levels to provide an indication of the strength of our expected results of operations.
All acquisitions entail various risks such that after completing an acquisition, we may also experience: • Difficulties in integrating any acquired companies, suppliers, personnel and products into our existing business; • Difficulties in realizing the benefits of the acquired company or products, including expected returns, margins, synergies and profitability, which can also result in subsequent impairments to the book value of the acquired assets; • Higher costs of integration than we anticipated; • Exposure to unexpected liabilities of the acquired business; • Difficulties in retaining key employees of the acquired business who are necessary to operate the business; • Difficulties in maintaining uniform standards, controls, procedures and policies throughout our acquired companies; or • Adverse customer or stockholder reaction to the acquisition.
All acquisitions entail various risks such that after completing an acquisition, we may also experience: • Difficulties in integrating any acquired companies, suppliers, personnel and products into our existing business; • Difficulties in realizing the benefits of the acquired company or products, including expected returns, margins, synergies and profitability, which can also result in subsequent impairments to the book value of the acquired assets; • Higher costs of integration than we anticipated; • Exposure to unexpected liabilities of the acquired business; • Difficulties in retaining key employees of the acquired business who are necessary to operate the business; • Difficulties in maintaining uniform standards, controls, procedures and policies throughout our acquired companies; or • Adverse customer or stockholder reaction to the acquisition. 17 As a result, any acquisitions we pursue or complete could adversely impact our financial condition and results from operations.
Certain product categories have been impacted by higher inflation due to, among other things, the continuing impacts of the COVID-19 pandemic, Russia’s invasion of Ukraine, labor shortages, global supply chain disruptions and the uncertain economic and geopolitical environment, which has negatively impacted our gross margin.
Certain product categories have been impacted by higher inflation due to, among other things, the continuing impacts of labor shortages, global supply chain disruptions and the uncertain economic and geopolitical environment, which has negatively impacted our gross margin.
If the debt under the senior credit facility and indentures governing the senior notes had both been accelerated, the aggregate amount immediately due and payable as of March 31, 2023 would have been approximately $1.4 billion.
If the debt under the senior credit facility and indentures governing the senior notes were both accelerated, the aggregate amount immediately due and payable as of March 31, 2024 would have been approximately $1.1 billion.
ITEM 1A. RISK FACTORS Risks Related to our Business and Industry Price increases for raw materials, packaging, labor, energy and transportation costs, and other manufacturer, logistics provider or distributor demands could continue to have an adverse impact on our margins. The costs to manufacture and distribute our products are subject to fluctuation based on a variety of factors.
Price increases for raw materials, packaging, labor, energy and transportation costs, and other manufacturer, logistics provider or distributor demands, could continue to have an adverse impact on our margins. 13 The costs to manufacture and distribute our products are subject to fluctuation based on a variety of factors.
We intend to move the manufacture of certain of our more highly regulated products to our own manufacturing facility, which will subject our facility to increased regulatory requirements and scrutiny with respect to both our existing and new operations there.
We have successfully moved the manufacture of certain of our more highly regulated products to our own manufacturing facilities, which will subject our facility to increased regulatory requirements and scrutiny with respect to both our existing and new operations there.
As a result, any serious disruption could have a material adverse effect on our business, financial condition and results of operations. The continuation of the COVID-19 pandemic, further outbreaks of COVID-19, or any future outbreak of other highly infectious diseases or public health emergencies could have a material adverse impact on our results of operations and financial condition.
As a result, any serious disruption could have a material adverse effect on our business, financial condition and results of operations. Any future outbreak of other highly infectious diseases or public health emergencies could have a material adverse impact on our results of operations and financial condition.
In general, the consequences of not securing adequate, high quality and timely supplies of merchandise would negatively impact inventory levels, which could damage our reputation, result in lost customers and sales, and could have a material adverse effect on our financial condition and results of operations.
In general, the consequences of not securing adequate, high quality and timely supplies of merchandise has negatively impacted inventory levels, which has adversely impacted our sales, could damage our reputation and result in lost customers, and could have a material adverse effect on our financial condition and results of operations if such shortages continue.
A natural disaster, such as tornado, earthquake, flood, or fire, could damage our inventory and/or materially impair our ability to distribute our products to customers in a timely manner or at a reasonable cost.
A natural disaster, such as tornado, earthquake, flood, or fire at our distribution center or our own or a third-party manufacturing facility could damage our inventory and/or materially impair our ability to distribute our products to customers in a timely manner or at a reasonable cost.
At March 31, 2023, the book value of our current assets was $391.7 million. Although the book value of our total assets was $3,353.7 million, approximately $2,869.4 million was in the form of intangible assets, including goodwill of $527.6 million, a significant portion of which may not be available to satisfy our creditors in the event our debt is accelerated.
At March 31, 2024, the book value of our current assets was $375.0 million. Although the book value of our total assets was $3,318.4 million, approximately $2,848.3 million was in the form of intangible assets, including goodwill of $527.7 million, a significant portion of which may not be available to satisfy our creditors in the event our debt is accelerated.
While the COVID-19 pandemic has not negatively impacted our results of operations to date, the extent to which it, and the related global economic downturn, could affect our business, results of operations and financial condition in future quarters will depend on developments that are highly uncertain and cannot be predicted, including the severity and duration of any further outbreak and recovery period, the availability, acceptance and efficacy of vaccines, future actions taken by governmental authorities and other third parties in response to the pandemic, and the impact on our customers, employees and suppliers, distributors and other service providers.
The extent to which a global pandemic, and the related global economic downturn, could affect our business, results of operations and financial condition depends on developments that are highly uncertain and cannot be predicted, including the severity and duration of any outbreak and recovery period, the availability, acceptance and efficacy of vaccines, future actions taken by governmental authorities and other third parties in response to the pandemic, and the impact on our customers, employees and suppliers, distributors and other service providers.
Of those, we had long-term contracts with 25 manufacturers that produced items that accounted for approximately 69.8% of our gross sales for 2023, compared to 23 manufacturers with long-term contracts that produced approximately 69.0% of gross sales in 2022.
Of those, we had long-term contracts with 26 manufacturers that produced items that accounted for approximately 72.0% of our gross revenues for 2024, compared to 25 manufacturers with long-term contracts that produced approximately 69.8% of gross revenues in 2023.
Our capital structure and ability to engage in strategic transactions is limited in significant respects by the restrictive covenants in our senior credit facility and the indentures governing our senior notes. 22 Our senior credit facility and the indentures governing our senior notes impose restrictions that could impede our ability to enter into certain corporate transactions, as well as increase our vulnerability to adverse economic and industry conditions, by limiting our flexibility in planning for, and reacting to, changes in our business and industry.
Our senior credit facility and the indentures governing our senior notes impose restrictions that could impede our ability to enter into certain corporate transactions, as well as increase our vulnerability to adverse economic and industry conditions, by limiting our flexibility in planning for, and reacting to, changes in our business and industry.
Our sales are impacted by consumer spending levels, the availability of our products at retail stores or for online purchase, and our ability to manufacture and distribute products to our customers and consumers in an effective and efficient manner. Our sales are also impacted by demand for our products depending on consumers’ activities, lifestyles and financial resources.
Our sales are impacted by consumer spending levels, the availability of our products at retail stores or for online purchase, and our ability to manufacture and distribute products to our customers and consumers in an effective and efficient manner.
Future price adjustments by our competitors or our inability to react with price adjustments of our own could result in a loss of market share, which could have a material adverse effect on our financial condition and results of operations. We primarily depend on third-party manufacturers to produce the products we sell.
Future price adjustments by our competitors or our inability to react with price adjustments of our own could result in a loss of market share, which could have a material adverse effect on our financial condition and results of operations.
If we were to lose the exclusive right to use one or more of our intellectual property rights, the loss of such exclusive right could have a material adverse effect on our financial condition and results of operations.
If we were to lose the exclusive right to use one or more of our intellectual property rights, the loss of such exclusive right could have a material adverse effect on our financial condition and results of operations. In addition, other parties may infringe our intellectual property rights and may thereby dilute the value of our brands in the marketplace.
We depend on a limited number of customers with whom we have no long-term agreements for a large portion of our gross sales, and the loss of one or more of these customers or changes in their strategies and policies could reduce our gross sales and have a material adverse effect on our financial condition and results of operations. 14 During 2023, Walmart, which accounted for approximately 19.7% of our gross sales, was our only customer that accounted for more than 10% of our gross revenues.
We depend on a limited number of customers with whom we have no long-term agreements for a large portion of our gross revenues, and the loss of one or more of these customers or changes in their strategies and policies could reduce our gross revenues and have a material adverse effect on our financial condition and results of operations.
In addition, other parties may infringe on our intellectual property rights and may thereby dilute the value of our brands in the marketplace. Brand dilution could cause confusion in the marketplace and adversely affect the value that consumers associate with our brands, which could negatively impact our business and sales.
Brand dilution could cause confusion in the marketplace and adversely affect the value that consumers associate with our brands, which could negatively impact our business and sales.
We may also be required to expend significant capital and other resources to protect against or respond to or alleviate problems caused by a security breach. 21 As we conduct our operations, we move data across national borders, and consequently we are subject to a variety of continuously evolving and developing laws and regulations in the United States and abroad regarding privacy, data protection and data security.
As we conduct our operations, we move data across national borders, and consequently we are subject to a variety of continuously evolving and developing laws and regulations in the United States and abroad regarding privacy, data protection and data security.
Disruption in our third-party distribution center or our Virginia manufacturing facility may prevent us from meeting customer demand, and our sales and financial condition may suffer as a result.
Disruption in our third-party distribution center or our manufacturing facilities may prevent us from meeting customer demand, and our sales and financial condition may materially suffer as a result. Our product distribution in the United States is managed by a third-party through one primary distribution center in Clayton, Indiana.
Our activities are also regulated by various agencies of the states, localities and foreign countries in which our products and their constituent materials and components are manufactured and sold.
In addition, our and our suppliers’ operations are subject to the oversight of the Occupational Safety and Health Administration and some suppliers by the National Labor Relations Board. Our activities are also regulated by various agencies of the states, localities and foreign countries in which our products and their constituent materials and components are manufactured and sold.
The market for our products depends to a significant extent upon the goodwill associated with our trademarks, tradenames and patents. Our trademarks and tradenames convey that the products we sell are “brand name” products. We believe consumers ascribe value to our brands, some of which are over 100 years old.
Our trademarks and tradenames convey that the products we sell are “brand name” products. We believe consumers ascribe value to our brands, some of which are over 100 years old. We own or license the material trademarks, tradenames and patents used in connection with the manufacturing, packaging, marketing and sale of our products.
Claims could be based on allegations that, among other things, our products contain contaminants, include inadequate instructions or warnings regarding their use, or include inadequate warnings concerning side effects and interactions with other substances.
Claims could be based on allegations that, among other things, our products contain contaminants, include inadequate instructions or warnings regarding their use, or include inadequate warnings concerning side effects and interactions with other substances. For example, we previously acquired a low sales volume talcum-based product as part of a larger acquisition, which was subsequently discontinued in 2017.
These provisions would apply even if an acquisition or other significant corporate transaction was considered beneficial by some of our stockholders.
These provisions would apply even if an acquisition or other significant corporate transaction was considered beneficial by some of our stockholders. If a change in control or change in management is delayed or prevented by these provisions, the market price of our outstanding securities could be adversely impacted.
In addition, any acquisition could adversely affect our operating results as a result of higher interest costs from any acquisition-related debt and higher amortization expenses related to the acquired intangible assets. 17 In the event that we decide to divest of a brand or product line, we may encounter difficulty finding, or be unable to find, a buyer on acceptable terms in a timely manner.
In addition, any acquisition could adversely affect our operating results as a result of higher interest costs from any acquisition-related debt and higher amortization expenses related to the acquired intangible assets.
Efforts to meet these standards could impact our costs, and failure to meet our customers’ expectations could impact our sales and business reputation. Risks Related to Intellectual Property and Data Privacy and Security If we are unable to protect our intellectual property rights, our ability to compete effectively in the market for our products could be negatively impacted.
Risks Related to Intellectual Property and Data Privacy and Security If we are unable to protect our intellectual property rights, our ability to compete effectively in the market for our products could be negatively impacted. The market for our products depends to a significant extent upon the goodwill associated with our trademarks, tradenames and patents.
This could be exacerbated by rising costs and other economic conditions that shift consumer demand to lower-priced products, as well as supply chain issues that result in reduced availability for our products. Competitive pricing may require us to reduce prices, which may result in lost revenue or a reduction of our profit margins.
The introduction or expansion of store brand products that compete with our products at a lower price point has and could impact our sales and results of operations. This could be exacerbated by rising costs and other economic conditions that shift consumer demand to lower-priced products, as well as supply chain issues that result in reduced availability for our products.
Although most of our material intellectual property is registered in the United States and in applicable foreign countries, we may not be successful in asserting protection.
These rights prevent our competitors or new entrants to the market from using our valuable brand names and technologies. Therefore, trademark, tradename and patent protection is critical to our business. Although most of our material intellectual property is registered in the United States and in applicable foreign countries, we may not be successful in asserting protection of our intellectual property.
If a change in control or change in management is delayed or prevented by these provisions, the market price of our outstanding securities could be adversely impacted. 24 Changes in our provision for income taxes or adverse outcomes resulting from examination of our income tax returns could adversely affect our results.
Changes in our provision for income taxes or adverse outcomes resulting from examination of our income tax returns or a determination of tax jurisdiction could adversely affect our results.
Adverse conditions in or volatility in financial markets or the economy could adversely impact consumer confidence, resulting in reduced consumer spending leading to reduced consumption of our products. The COVID-19 pandemic and the Russian invasion of Ukraine have both caused volatility in the global economy, including by creating supply chain issues and rising costs.
Adverse conditions or volatility in financial markets or the economy, including rising interest rates, inflation from rising costs, unemployment, bank failures, and the lack of consumer financing, could adversely impact consumer confidence and reduce disposable income, resulting in reduced consumer spending leading to reduced consumption of our products.
The successful development and introduction of new products involves substantial research, development, marketing and promotional expenditures, which the Company may be unable to recover if the new products do not gain widespread market acceptance. New product development and marketing efforts, including efforts to enter markets or product categories in which we have limited or no prior experience, have inherent risks.
The Company's future performance and growth depends on our ability to successfully develop and introduce new products and product line extensions. The successful development and introduction of new products involves substantial research, development, marketing and promotional expenditures, which the Company may not be able to recover if the new products do not gain widespread market acceptance.
Any increase in SOFR or other interest rates, which have been rising in fiscal 2023 and are expected to continue to rise in fiscal 2024, will increase our cost of servicing our variable rate debt and further limit our ability to fund working capital, capital expenditures, and acquisitions.
If new debt is added to current debt levels, the related risks described above could increase. Any increase in applicable interest rates will increase our cost of servicing our variable rate debt and further limit our ability to fund working capital, capital expenditures, and acquisitions.
At March 31, 2023, we had $168.7 million of borrowing capacity available under our revolving credit facility to support our operating activities.
At March 31, 2024, we had $171.0 million of borrowing capacity available under our revolving credit facility to support our operating activities. Our capital structure and ability to engage in strategic transactions is limited in significant respects by the restrictive covenants in our senior credit facility and the indentures governing our senior notes.
Approximately 14% of our total 2023 revenues were attributable to our international business. We generally rely on brokers and distributors for the sale of our products in foreign countries. In addition, some of our third-party manufacturers are located outside the United States.
A negative outcome in any of these risks could adversely impact our results of operations and financial condition. Regulatory Risks We face risks associated with doing business internationally . Approximately 15% of our total 2024 revenues were attributable to our international business. We generally rely on brokers and distributors for the sale of our products in foreign countries.
Other factors beyond our control could also adversely impact demand for our products, including rising interest rates, inflation from rising costs, unemployment, bank failures, and the lack of consumer financing. Any reduction in consumer demand for our products could have a material adverse impact on our results of operations and financial condition.
Existing volatility in the global economy, including from supply chain issues and rising costs, has not materially impacted consumer spending on our products, but further worsening of these conditions could have a material adverse impact on our results of operations and financial condition.
Our product distribution in the United States is managed by a third-party through one primary distribution center in Clayton, Indiana, and we operate one manufacturing facility located in Lynchburg, Virginia, which manufactures many of the Summer's Eve and Fleet products, comprising approximately 13% of our gross revenues.
We also operate a manufacturing facility in Lynchburg, Virginia, which manufactures products representing approximately 11% of our gross revenues.
Removed
The introduction or expansion of store brand products that compete with our products at a lower price point has recently and could continue to impact our sales and results of operations.
Added
ITEM 1A. RISK FACTORS Risks Related to our Business and Industry We primarily depend on third-party manufacturers to produce the products we sell. If these third-party manufacturers are unable to produce our products in sufficient quantities to meet customer demand, our business and results of operations may be materially adversely impacted.
Removed
From time to time, certain of the Company's manufacturers have had difficulty meeting demand, which can and has caused shortages of our products. Without adequate supplies of quality merchandise, our sales could decrease materially and our business could suffer.
Added
Certain of the Company's manufacturers are currently having, and have had in the past, difficulty meeting demand, which is and has caused shortages of our products, particularly eye care products. These shortages have negatively impacted our results of operations in the fourth quarter of fiscal 2024, and we expect further shortages may have a negative impact on our sales.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES We lease our corporate headquarters located in Tarrytown, New York. Primary functions performed at the Tarrytown facility include marketing, sales, operations, quality control, regulatory affairs, finance, information technology and legal. The lease expires on December 31, 2027. Our logistics provider, GEODIS, has leased a warehouse on our behalf located in Clayton, Indiana.
Biggest changeITEM 2. PROPERTIES We lease our corporate headquarters located in Tarrytown, New York. Primary functions performed at the Tarrytown facility include marketing, sales, operations, quality control, regulatory affairs, finance, information technology and legal. The lease expires on December 31, 2027. Our logistics provider, GEODIS Logistics LLC ("GEODIS"), has leased a warehouse on our behalf located in Clayton, Indiana.
This property serves as our primary warehouse. The lease expires on September 30, 2024. We own an office and manufacturing facility in Lynchburg, Virginia. 25 All of our properties are utilized by both our North American OTC Healthcare segment and our International OTC Healthcare segment.
This property serves as our primary warehouse. The lease expires on September 30, 2024. We own an office and manufacturing facility in Lynchburg, Virginia. These properties are utilized by both our North American OTC Healthcare segment and our International OTC Healthcare segment.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe believe the resolution of routine matters and other incidental claims, taking our reserves into account, will not have a material adverse effect on our business, financial condition or results of operations. ITEM 4. MINE SAFETY DISCLOSURES None. 26 Part II
Biggest changeWe believe the resolution of routine matters and other incidental claims, taking our reserves into account, will not have a material adverse effect on our business, financial condition or results of operations. ITEM 4. MINE SAFETY DISCLOSURES None. 27 Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change"Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" of this Annual Report on Form 10-K is incorporated herein by reference. 27 PERFORMANCE GRAPH The following graph (“Performance Graph”) compares our cumulative total stockholder return since March 31, 2018, with the cumulative total stockholder return for the Russell 2000 Index, Standard & Poor's SmallCap 600 Index and our peer group index.
Biggest changeInformation required to be disclosed by this Item will be contained in the Company’s 2024 Proxy Statement under the headings “Security Ownership of Certain Beneficial Owners and Management” and “Securities Authorized for Issuance Under Equity Compensation Plans”, which information is incorporated herein by reference. 28 PERFORMANCE GRAPH The following graph (“Performance Graph”) compares our cumulative total stockholder return since March 31, 2019, with the cumulative total stockholder return for the Russell 2000 Index, Standard & Poor's SmallCap 600 Index and our peer group indexes.
The Company is included in each of the Standard & Poor's SmallCap 600 Index and the Russell 2000 Index. The Performance Graph assumes that the value of the investment in the Company’s common stock and each index was $100.00 on March 31, 2018.
The Company is included in each of the Standard & Poor's SmallCap 600 Index and the Russell 2000 Index. The Performance Graph assumes that the value of the investment in the Company’s common stock and each index was $100.00 on March 31, 2019.
(2) The Old Peer Group index is comprised of: (i) B&G Food Holdings Corp., (ii) Hain Celestial Group, Inc., (iii) Church & Dwight Co., Inc., (iv) Helen of Troy, Ltd., (v) Vista Outdoors, Inc., (vi) Tupperware Brands Corporation, (vii) Revlon, Inc., (viii) Jazz Pharmaceuticals PLC, (ix) Edgewell Personal Care Company, (x) Energizer Holdings, Inc., (xi) Calavo Growers, Inc., (xii) Primo Water Corporation, (xiii) Lannet Co., and (xiv) Usana Health Sciences, Inc. 28 The Performance Graph shall not be deemed incorporated by reference by any general statement incorporating by reference this Annual Report on Form 10-K into any filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such Acts. 29 ITEM 6.
(2) The Old Peer Group index is comprised of:(i) B&G Food Holdings Corp., (ii) Hain Celestial Group, Inc., (iii) Church & Dwight Co., Inc., (iv) Helen of Troy, Ltd., (v) Vista Outdoors, Inc., (vi) Tupperware Brands Corporation, (vii) Pacira BioSciences, Inc., (viii) Jazz Pharmaceuticals PLC, (ix) Edgewell Personal Care Company, (x) Energizer Holdings, Inc., (xi) Calavo Growers, Inc., (xii) Primo Water Corporation, (xiii) Lannet Co., (xiv) Usana Health Sciences, Inc., and (xv) Corcept Therapeutics Incorporated. 29 The Performance Graph shall not be deemed incorporated by reference by any general statement incorporating by reference this Annual Report on Form 10-K into any filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such Acts. 30 ITEM 6.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on The New York Stock Exchange (“NYSE”) under the symbol “PBH.” Holders As of May 1, 2023, there were 16 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on The New York Stock Exchange (“NYSE”) under the symbol “PBH.” Holders As of May 10, 2024, there were 15 holders of record of our common stock.
Revlon, Inc., which was included in the Old Peer Group, was replaced in the New Peer Group as it ceased to be a relevant peer due to bankruptcy. Corcept Therapeutics Incorporated and Pacira BioSciences, Inc. were added as replacements based on their similar financial profiles.
Lannet Co., which was included in the Old Peer Group, was replaced in the New Peer Group as it ceased to be a relevant peer due to bankruptcy. Hostess Brands, Inc. was added as a replacement based on their similar financial profile.
March 31, Company/Market/Peer Group 2018 2019 2020 2021 2022 2023 Prestige Consumer Healthcare Inc. $ 100.00 $ 88.70 $ 108.77 $ 130.72 $ 156.99 $ 185.71 Russell 2000 Index 100.00 102.05 77.57 151.14 142.39 125.87 S&P SmallCap 600 Index 100.00 101.57 75.27 147.02 148.83 135.71 New Peer Group Index (1) 100.00 103.20 85.21 136.77 133.54 111.41 Old Peer Group Index (2) 100.00 103.77 84.32 131.89 127.66 107.30 (1) The New Peer Group index is comprised of: (i) B&G Food Holdings Corp., (ii) Hain Celestial Group, Inc., (iii) Church & Dwight Co., Inc., (iv) Helen of Troy, Ltd., (v) Vista Outdoors, Inc., (vi) Tupperware Brands Corporation, (vii) Pacira BioSciences, Inc., (viii) Jazz Pharmaceuticals PLC, (ix) Edgewell Personal Care Company, (x) Energizer Holdings, Inc., (xi) Calavo Growers, Inc., (xii) Primo Water Corporation, (xiii) Lannet Co., (xiv) Usana Health Sciences, Inc., and (xv) Corcept Therapeutics Incorporated.
March 31, Company/Market/Peer Group 2019 2020 2021 2022 2023 2024 Prestige Consumer Healthcare Inc. $ 100.00 $ 122.63 $ 147.37 $ 176.99 $ 209.36 $ 242.53 Russell 2000 Index 100.00 76.01 148.10 139.53 123.34 147.65 S&P SmallCap 600 Index 100.00 74.11 144.76 146.54 133.62 154.90 New Peer Group Index (1) 100.00 82.63 132.34 131.72 111.78 117.81 Old Peer Group Index (2) 100.00 82.57 132.53 129.41 107.96 111.74 (1) The New Peer Group index is comprised of: (i) B&G Food Holdings Corp., (ii) Hain Celestial Group, Inc., (iii) Church & Dwight Co., Inc., (iv) Helen of Troy, Ltd., (v) Vista Outdoors, Inc., (vi) Tupperware Brands Corporation, (vii) Pacira BioSciences, Inc., (viii) Jazz Pharmaceuticals PLC, (ix) Edgewell Personal Care Company, (x) Energizer Holdings, Inc., (xi) Calavo Growers, Inc., (xii) Primo Water Corporation, (xiii) Hostess Brands, Inc., (xiv) Usana Health Sciences, Inc., and (xv) Corcept Therapeutics Incorporated.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIncrease (Decrease) (In thousands) 2023 % 2022 % Amount % North American OTC Healthcare Analgesics $ 116,582 10.3 $ 117,868 10.8 $ (1,286) (1.1) Cough & Cold 100,218 8.9 86,855 8.0 13,363 15.4 Women's Health 231,754 20.5 249,136 22.9 (17,382) (7.0) Gastrointestinal 156,957 13.9 152,191 14.0 4,766 3.1 Eye & Ear Care 151,879 13.5 149,454 13.9 2,425 1.6 Dermatologicals 119,822 10.6 117,173 10.8 2,649 2.3 Oral Care 85,542 7.6 85,239 7.8 303 0.4 Other OTC 11,020 1.0 9,965 0.9 1,055 10.6 Total North American OTC Healthcare 973,774 86.3 967,881 89.1 5,893 0.6 International OTC Healthcare Analgesics 2,680 0.2 1,455 0.1 1,225 84.2 Cough & Cold 26,770 2.4 20,225 1.9 6,545 32.4 Women's Health 19,597 1.7 15,373 1.4 4,224 27.5 Gastrointestinal 69,626 6.3 52,368 4.8 17,258 33.0 Eye & Ear Care 19,197 1.7 13,995 1.3 5,202 37.2 Dermatologicals 3,919 0.3 3,213 0.3 706 22.0 Oral Care 12,085 1.1 12,282 1.1 (197) (1.6) Other OTC 77 — 20 — 57 285.0 Total International OTC Healthcare 153,951 13.7 118,931 10.9 35,020 29.4 Total Consolidated $ 1,127,725 100.0 $ 1,086,812 100.0 $ 40,913 3.8 Total segment revenues for 2023 were $1,127.7 million, an increase of $40.9 million, or 3.8%, versus 2022.
Biggest changeIncrease (Decrease) (In thousands) 2024 % 2023 % Amount % North American OTC Healthcare Analgesics $ 111,996 10.0 $ 116,582 10.3 $ (4,586) (3.9) Cough & Cold 93,575 8.3 100,218 8.9 (6,643) (6.6) Women's Health 217,103 19.3 231,754 20.5 (14,651) (6.3) Gastrointestinal 160,889 14.3 156,957 13.9 3,932 2.5 Eye & Ear Care 156,553 13.9 151,879 13.5 4,674 3.1 Dermatologicals 123,288 11.0 119,822 10.6 3,466 2.9 Oral Care 83,212 7.4 85,542 7.6 (2,330) (2.7) Other OTC 11,644 1.0 11,020 1.0 624 5.7 Total North American OTC Healthcare 958,260 85.2 973,774 86.3 (15,514) (1.6) International OTC Healthcare Analgesics 5,455 0.5 2,680 0.2 2,775 103.5 Cough & Cold 25,445 2.3 26,770 2.4 (1,325) (4.9) Women's Health 23,318 2.1 19,597 1.7 3,721 19.0 Gastrointestinal 70,721 6.2 69,626 6.3 1,095 1.6 Eye & Ear Care 22,870 2.0 19,197 1.7 3,673 19.1 Dermatologicals 5,814 0.5 3,919 0.3 1,895 48.4 Oral Care 13,093 1.2 12,085 1.1 1,008 8.3 Other OTC 381 — 77 — 304 394.8 Total International OTC Healthcare 167,097 14.8 153,951 13.7 13,146 8.5 Total Consolidated $ 1,125,357 100.0 $ 1,127,725 100.0 $ (2,368) (0.2) Total segment revenues for 2024 were $1,125.4 million, a decrease of $2.4 million, or 0.2%, versus 2023.
The impairment charges recorded on the finite-lived intangible assets were the result of our reassessment of the long-term sales projections for the associated non-core brands during our annual planning cycle, the largest of which pertains to the strategic exit of our DenTek private label business. The assets impaired are all part of our North American OTC Healthcare segment.
The impairment charges recorded on the finite-lived intangible assets were the result of our reassessment of the long-term sales projections for the associated non-core brands during our annual planning cycle, the largest of which pertains to the strategic exit of our DenTek private label business. The assets impaired were all part of our North American OTC Healthcare segment.
After adding a core brand to our portfolio, we seek to increase its sales, market share and distribution in both existing and new channels through our established retail distribution network. We pursue this growth through increased spending on advertising and marketing support, new sales and marketing strategies, improved packaging and formulations and innovative development of brand extensions.
After adding a brand to our portfolio, we seek to increase its sales, market share and distribution in both existing and new channels through our established retail distribution network. We pursue this growth through increased spending on advertising and marketing support, new sales and marketing strategies, improved packaging and formulations and innovative development of brand extensions.
Although we make efforts to minimize the impact of inflationary factors, including raising prices to our customers, a high rate of pricing volatility associated with crude oil supplies or other raw materials used in our products may have an adverse effect on our operating results.
Although we make efforts to minimize the impact of inflationary factors, including by raising prices to our customers, a high rate of pricing volatility associated with crude oil supplies or other raw materials used in our products may have an adverse effect on our operating results.
If conditions cause further disruption in the global supply chain, the availability of labor and materials or otherwise increase costs, it may materially affect our operations and those of third parties on which we rely, including causing disruptions in the supply and distribution of our products.
If conditions cause further disruption in the global supply chain, the availability of labor and materials or otherwise further increase costs, it may materially affect our operations and those of third parties on which we rely, including causing material disruptions in the supply and distribution of our products.
While management prepares various analyses to estimate the respective variables, a change in assumptions or market conditions, as well as changes in the anticipated attrition rates, could have a significant impact on the future amounts recorded as non-cash compensation expense.
While management prepares various analyses to estimate the respective variables, a change in assumptions or market conditions, as well as changes in the anticipated or actual attrition rates, could have a significant impact on the future amounts recorded as non-cash compensation expense.
Additionally, the credit agreement governing the 2012 Term Loan and the 2012 ABL Revolver and the indentures governing the 2021 Senior Notes and 41 the 2019 Senior Notes contain cross-default provisions, whereby a default pursuant to the terms and conditions of certain indebtedness will cause a default on the remaining indebtedness under the credit agreement governing the 2012 Term Loan and the 2012 ABL Revolver and the indentures governing the 2021 Senior Notes and the 2019 Senior Notes.
Additionally, the credit agreement governing the 2012 Term Loan and the 2012 ABL Revolver and the indentures governing the 2021 Senior Notes and the 2019 Senior Notes contain cross-default provisions, whereby a default pursuant to the terms and conditions of certain indebtedness will cause a default on the remaining indebtedness under the credit agreement governing the 2012 Term Loan and the 2012 ABL Revolver and the indentures governing the 2021 Senior Notes and the 2019 Senior Notes.
Specifically, we must: • Have a leverage ratio of less than 6.50 to 1.0 for the quarter ended March 31, 2023 and going forward (defined as, with certain adjustments, the ratio of our consolidated total net debt as of the last day of the fiscal quarter to our trailing twelve month consolidated net income before interest, taxes, depreciation, amortization, non-cash charges and certain other items (“EBITDA”)); • Have an interest coverage ratio of greater than 2.25 to 1.0 for the quarter ended March 31, 2023 and going forward (defined as, with certain adjustments, the ratio of our consolidated EBITDA to our trailing twelve month consolidated cash interest expense); and • Have a fixed charge ratio of greater than 1.0 to 1.0 (defined as, with certain adjustments, the ratio of our consolidated EBITDA minus capital expenditures to our trailing twelve month consolidated interest paid, taxes paid and other specified payments).
Specifically, we must: • Have a leverage ratio of less than 6.50 to 1.0 for the quarter ended March 31, 2024 and going forward (defined as, with certain adjustments, the ratio of our consolidated total net debt as of the last day of the fiscal quarter to our trailing twelve month consolidated net income before interest, taxes, depreciation, amortization, non-cash charges and certain other items (“EBITDA”)); • Have an interest coverage ratio of greater than 2.25 to 1.0 for the quarter ended March 31, 2024 and going forward (defined as, with certain adjustments, the ratio of our consolidated EBITDA to our trailing twelve month consolidated cash interest expense); and • Have a fixed charge ratio of greater than 1.0 to 1.0 (defined as, with certain adjustments, the ratio of our consolidated EBITDA minus capital expenditures to our trailing twelve month consolidated interest paid, taxes paid and other specified payments).
ABL Amendment No. 7 provided for (i) an extension of the maturity date of the 2012 ABL Revolver to December 11, 2024, which was five years from the effective date of ABL Amendment No. 7, (ii) increased flexibility under the 2012 ABL Revolver, including additional investment, restricted payment, and debt incurrence flexibility, (iii) an initial applicable margin for borrowings under the 2012 ABL Revolver that is 1.00% with respect to LIBOR borrowings and 0.0% with respect to base-rate borrowings (which may be increased to 1.25% or 1.50% for LIBOR borrowings and 0.25% or 0.50% for base-rate borrowings, depending on average excess availability under the facility during the prior fiscal quarter), and (iv) a commitment fee to the lenders under the 2012 ABL Revolver in respect of the unutilized commitments thereunder of 0.25% per annum.
ABL Amendment No. 7 provided for (i) an extension of the maturity date of the 2012 ABL Revolver to December 11, 2024, which was five years from the effective date of ABL Amendment No. 7, (ii) increased flexibility under the 2012 ABL Revolver, including additional investment, restricted payment, and debt incurrence flexibility, (iii) an initial applicable margin for borrowings under the 2012 ABL Revolver that was 1.00% with respect to LIBOR borrowings and 0.0% with respect to base-rate borrowings (which could be increased to 1.25% or 1.50% for LIBOR borrowings and 0.25% or 0.50% for base-rate borrowings, depending on average excess availability under the facility during the prior fiscal quarter), and (iv) a commitment fee to the lenders under the 2012 ABL Revolver in respect of the unutilized commitments thereunder of 0.25% per annum.
They are also subject to an annual impairment test or more frequently if events or changes in circumstances indicate that the asset may be impaired. Additionally, at each reporting period 33 an evaluation must be made to determine whether events and circumstances continue to support an indefinite useful life.
They are also subject to an annual impairment test or more frequently if events or changes in circumstances indicate that the asset may be impaired. Additionally, at each reporting period 34 an evaluation must be made to determine whether events and circumstances continue to support an indefinite useful life.
Our fixed charge requirement remains level throughout the term of the agreement. At March 31, 2023, we were in compliance with the applicable financial and restrictive covenants under the credit agreement governing the 2012 Term Loan and the 2012 ABL Revolver and the indentures governing the 2021 Senior Notes and the 2019 Senior Notes.
Our fixed charge requirement remains level throughout the term of the agreement. At March 31, 2024, we were in compliance with the applicable financial and restrictive covenants under the credit agreement governing the 2012 Term Loan and the 2012 ABL Revolver and the indentures governing the 2021 Senior Notes and the 2019 Senior Notes.
We estimate our future obligations for interest on our variable rate debt by assuming the weighted average interest rates in effect on each variable rate debt obligation at March 31, 2023 remain constant into the future. This is an estimate, as actual rates will vary over time.
We estimate our future obligations for interest on our variable rate debt by assuming the weighted average interest rates in effect on each variable rate debt obligation at March 31, 2024 remain constant into the future. This is an estimate, as actual rates will vary over time.
In addition, we assume that the average balance outstanding for the last month of fiscal 2023 remains the same for the remaining term of the agreement. The actual balance outstanding may fluctuate significantly in future periods, depending on the availability of cash flow from operations and future investing and financing considerations.
In addition, we assume that the average balance outstanding for the last month of fiscal 2024 remains the same for the remaining term of the agreement. The actual balance outstanding may fluctuate significantly in future periods, depending on the availability of cash flow from operations and future investing and financing considerations.
Redemptions and Restrictions: We have the option to redeem all or a portion of the 2019 Senior Notes at any time on or after January 15, 2023 at the redemption prices set forth in the indenture governing the 2019 Senior Notes, plus accrued and unpaid interest, if any.
We have the option to redeem all or a portion of the 2019 Senior Notes at any time on or after January 15, 2023 at the redemption prices set forth in the indenture governing the 2019 Senior Notes, plus accrued and unpaid interest, if any.
In subsequent years, we have utilized portions of our accordion feature to increase the amount of our borrowing capacity under the 2012 ABL Revolver to the current amount of $175.0 million and reduced our borrowing rate on the 2012 ABL Revolver. We have also amended the 2012 Term Loan several times.
In subsequent years, we have utilized portions of our accordion feature to increase the amount of our borrowing capacity under the 2012 ABL Revolver to the current amount of $200.0 million and reduced our borrowing rate on the 2012 ABL Revolver. We have also amended the 2012 Term Loan several times.
Additionally, a 50-basis point decrease in the terminal growth rate used for each reporting unit would also not have resulted in any of our other reporting units' fair value being less than their carrying value. Indefinite-Lived Intangible Assets Indefinite-lived intangibles are tested for impairment annually and whenever events and circumstances indicate that impairment may have occurred.
Additionally, a 50-basis point decrease in the terminal growth rate used for each reporting unit would not have resulted in any of our reporting units' fair value being less than their carrying value. 35 Indefinite-Lived Intangible Assets Indefinite-lived intangibles are tested for impairment annually and whenever events and circumstances indicate that impairment may have occurred.
Recent Accounting Pronouncements A description of recently issued and adopted accounting pronouncements is included in the notes to the Consolidated Financial Statements in Item 8, Note 1 of this Annual Report. 36 Results of Operations 2023 compared to 2022 Total Segment Revenues The following table represents total revenue by segment, including product groups, for each of the fiscal years ended March 31, 2023 and 2022.
Recent Accounting Pronouncements A description of recently issued and adopted accounting pronouncements is included in the notes to the Consolidated Financial Statements in Item 8, Note 1 of this Annual Report. 37 Results of Operations 2024 compared to 2023 Total Segment Revenues The following table represents total revenue by segment, including product groups, for each of the fiscal years ended March 31, 2024 and 2023.
The following table represents our contribution margin and contribution margin as a percentage of total segment revenues, by segment for each of the fiscal years ended March 31, 2023 and 2022.
The following table represents our contribution margin and contribution margin as a percentage of total segment revenues, by segment for each of the fiscal years ended March 31, 2024 and 2023.
In addition, we considered our market capitalization at February 28, 2023, as compared to the aggregate fair values of our reporting units, to assess the reasonableness of our estimates pursuant to the discounted cash flow methodology. An impairment charge is then recognized for the amount by which the carrying amount exceeds the reporting unit's fair value.
In addition, we considered our market capitalization at February 29, 2024, as compared to the aggregate fair values of our reporting units, to assess the reasonableness of our estimates pursuant to the discounted cash flow methodology. An impairment charge is then recognized for the amount by which the carrying amount exceeds the reporting unit's fair value.
We have continued to see changes in the purchasing patterns of our consumers, including a reduction in the frequency of visits to retailers and a shift in many markets to purchasing our products online. The volatile environment has impacted the supply of labor and raw materials and exacerbated rising input costs.
We 31 have continued to see changes in the purchasing patterns of our end customers, including a reduction in the frequency of visits to retailers and a shift in many markets to purchasing our products online. The volatile environment has impacted the supply of labor and raw materials and exacerbated rising input costs.
As of March 31, 2023, we had an aggregate of $1.4 billion of outstanding indebtedness, which consisted of the following: • $400.0 million of 5.125% 2019 Senior Notes due January 15, 2028; • $600.0 million of 3.750% 2021 Senior Notes due April 1, 2031; and • $360.0 million of borrowings under the Term B-5 Loans due July 1, 2028.
As of March 31, 2024, we had an aggregate of $1.1 billion of outstanding indebtedness, which consisted of the following: • $400.0 million of 5.125% 2019 Senior Notes due January 15, 2028; • $600.0 million of 3.750% 2021 Senior Notes due April 1, 2031; and • $135.0 million of borrowings under the Term B-5 Loans due July 1, 2028.
As of March 31, 2023, we had no balance outstanding on the 2012 ABL Revolver and a borrowing capacity of $168.7 million. Interest Rate Swaps In January 2020, we entered into two interest rate swaps to hedge a total of $400.0 million of our variable interest debt.
As of March 31, 2024, we had no balance outstanding on the 2012 ABL Revolver and a borrowing capacity of $171.0 million. Interest Rate Swaps In January 2020, we entered into two interest rate swaps to hedge a total of $400.0 million of our variable interest debt.
At February 28, 2022, in conjunction with the annual test for goodwill impairment, we recorded an impairment charge of $0.3 million to write off the remaining goodwill related to our Painstop brand in our International OTC Healthcare segment.
At February 28, 2022, in conjunction with the annual test for goodwill impairment, which coincides with our annual strategic planning process, we recorded an impairment charge of $0.3 million to write off the remaining goodwill related to our Painstop brand in our International OTC Healthcare segment.
Although we do not believe that inflation has had a material impact on our financial condition or results of operations for the three most recent fiscal years, the COVID-19 pandemic, the Russian invasion of Ukraine and other supply and labor disruptions may have an inflationary impact on our costs and a high rate of inflation in the future could have a material adverse effect on our financial condition and results of operations.
Although we do not believe that inflation has had a material impact on our financial condition or results of operations for the three most recent fiscal years, supply and labor disruptions may have an inflationary impact on our costs and a high rate of inflation in the future could have a material adverse effect on our financial condition and results of operations.
We performed a sensitivity analysis of our weighted average cost of capital, and we determined that a 50-basis point increase in the weighted average cost of capital used to value all of our indefinite-lived intangible assets would have resulted in an additional impairment of $46.5 million.
We performed a sensitivity analysis of our weighted average cost of capital, and we determined that a 50-basis point increase in the weighted average cost of capital used to value all of our indefinite-lived intangible assets would have resulted in an impairment charge of $3.2 million.
Interest Expense, Net Interest expense, net was $69.2 million during 2023 versus $64.3 million during 2022. The average cost of borrowing increased to 4.8% for 2023 from 4.1% for 2022. The average indebtedness decreased to $1.5 billion during 2023 from $1.6 billion in 2022.
Interest Expense, Net Interest expense, net was $67.2 million during 2024 versus $69.2 million during 2023. The average cost of borrowing increased to 5.4% for 2024 from 4.8% for 2023. The average indebtedness decreased to $1.3 billion during 2024 from $1.5 billion in 2023.
On April 4, 2023, we entered into Amendment No. 8 ("ABL Amendment No. 8") to the 2012 ABL Revolver. ABL Amendment No. 8 provides for the replacement of LIBOR with Secured Overnight Financing Rate ("SOFR") as our reference rate.
On April 4, 2023, we entered into Amendment No. 8 ("ABL Amendment No. 8") to the 2012 ABL Revolver. ABL Amendment No. 8 provides for the replacement of LIBOR with SOFR as our reference rate. On December 8, 2023, we entered into Amendment No. 9 ("ABL Amendment No. 9") to the 2012 ABL Revolver.
Goodwill Goodwill is tested for impairment annually and whenever events and circumstances indicate that impairment may have occurred. As of February 28, 2023 (our annual impairment review date), we had 14 reporting units with goodwill.
Goodwill Goodwill is tested for impairment annually and whenever events and circumstances indicate that impairment may have occurred. As of February 29, 2024 (our annual impairment review date), we had 13 reporting units with goodwill.
In the event that the long-term projections indicate that the carrying value is in excess of the undiscounted cash flows expected to result from the use of the intangible assets, management is required to record an impairment charge. The impairment charge is measured as the excess of the carrying amount of the intangible asset over its fair value.
In the event that the long-term projections indicate that the carrying value is in excess of the undiscounted cash flows expected to result from the use of the intangible assets, management is required to record an impairment charge.
Capital Resources 2012 Term Loan and 2012 ABL Revolver: On January 31, 2012, Prestige Brands, Inc. (the “Borrower") entered into a senior secured credit facility, which originally consisted of (i) the $660.0 million 2012 Term Loan with a 7-year maturity and (ii) the $50.0 million 2012 ABL Revolver with a 5-year maturity.
(the “Borrower") entered into a senior secured credit facility, which originally consisted of (i) the $660.0 million 2012 Term Loan with a 7-year maturity and (ii) the $50.0 million 2012 ABL Revolver with a 5-year maturity.
In performing this analysis, management considers current information and future events, such as competition, changing consumer needs, technological advances and changes in advertising support for our trademarks and tradenames, that could cause subsequent evaluations to utilize different assumptions.
Future events, such as competition, changing consumer needs, technological advances and changes in advertising support for our trademarks and tradenames, could cause subsequent evaluations to utilize different assumptions.
Since we have made optional payments that exceed all of our required quarterly payments, we will not be required to make another payment on the 2012 Term Loan until maturity on July 1, 2028. 40 On December 11, 2019, we entered into Amendment No. 7 ("ABL Amendment No. 7") to the 2012 ABL Revolver.
Since we have made optional payments that exceed all of our required quarterly payments, we will not be required to make another payment on the 2012 Term Loan until maturity on July 1, 2028. 41 On June 12, 2023, we entered into Term Loan Amendment No. 7, effective July 1, 2023.
As a percentage of North American OTC Healthcare revenues, gross profit decreased to 54.6% during 2023 from 56.7% during 2022, primarily due to increased supply chain costs and product mix, partly offset by pricing actions. International OTC Healthcare Segment Gross profit for the International OTC Healthcare segment increased $21.4 million, or 29.8%, during 2023 versus 2022.
As a percentage of North American OTC Healthcare revenues, gross profit increased to 55.2% during 2024 from 54.6% during 2023, primarily due to product mix and pricing actions, partly offset by increased supply chain costs. International OTC Healthcare Segment Gross profit for the International OTC Healthcare segment increased $2.2 million, or 2.3%, during 2024 versus 2023.
International OTC Healthcare Segment Contribution margin for the International OTC Healthcare segment increased $18.9 million, or 35.5%, during 2023 versus 2022. As a percentage of International OTC Healthcare revenues, contribution margin for the International OTC Healthcare segment increased to 46.9% during 2023 from 44.8% during 2022.
International OTC Healthcare Segment Contribution margin for the International OTC Healthcare segment increased $1.5 million, or 2.1%, during 2024 versus 2023. As a percentage of International OTC Healthcare revenues, contribution margin for the International OTC Healthcare segment decreased to 44.1% during 2024 from 46.9% during 2023.
Although we have not experienced a material disruption to our overall supply chain to date, we have and may continue to experience shortages, delays and backorders for certain ingredients and products, difficulty scheduling shipping for our products, as well as price increases from many of our suppliers for both shipping and product costs.
We have and may continue to experience shortages, delays and backorders for certain ingredients and products, difficulty scheduling shipping for our products, as well as price increases from many of our suppliers for both shipping and product costs.
As a percentage of total revenues, gross profit decreased to 55.4% in 2023 from 57.1% in 2022, primarily due to increased supply chain costs and product mix. North American OTC Healthcare Segment Gross profit for the North American OTC Healthcare segment decreased $16.8 million, or 3.1%, during 2023 versus 2022.
As a percentage of total revenues, gross profit increased to 55.5% in 2024 from 55.4% in 2023, primarily due to product mix and pricing actions, partly offset by increased supply chain costs. North American OTC Healthcare Segment Gross profit for the North American OTC Healthcare segment decreased $3.0 million, or 0.6%, during 2024 versus 2023.
As a percentage of North American OTC Healthcare revenues, contribution margin for the North American OTC Healthcare segment decreased to 41.9% during 2023 from 42.4% during 2022. The contribution margin decrease as a percentage of revenues was primarily due to the decrease in gross margin noted above, partly offset by a decrease in advertising and marketing spend in 2023.
As a percentage of North American OTC Healthcare revenues, contribution margin for the North American OTC Healthcare segment decreased to 41.5% during 2024 from 41.9% during 2023. The contribution margin decrease as a percentage of revenues was primarily due to an increase in advertising and marketing spend in 2024.
Our analysis at February 28, 2023 determined that all other indefinite-lived intangible assets tested had a fair value that exceeded their carrying value by at least 10%, with the exception of Monistat within our North American Women’s Health reporting unit.
Our analysis at February 29, 2024 determined that all indefinite-lived intangible assets had a fair value that exceeded their carrying value by at least 10%, with the exception of Summer’s Eve and TheraTears within our North American Women’s Health reporting unit and North American Eye & Ear Care reporting unit, respectively.
For the year ended March 31, 2023, the average interest rate on the 2012 Term Loan was 5.7% and the average interest rate on the amounts borrowed under the 2012 ABL Revolver was 2.5%.
There were no borrowings under the 2012 ABL Revolver at any time during 2024. For the year ended March 31, 2023, the average interest rate on the 2012 Term Loan was 4.8% and the average interest rate on the amounts borrowed under the 2012 ABL Revolver was 2.5%.
Bank National Association, as trustee. We used the net proceeds from the 2021 Senior Notes to redeem all $600.0 million of our outstanding 2016 Senior Notes, which were due in 2024, and to pay related fees and expenses.
Bank National Association, as trustee. We used the net proceeds from the 2021 Senior Notes to redeem all $600.0 million of our then-outstanding 2016 Senior Notes, which were due in 2024, and to pay related fees and expenses. Interest, Redemptions and Restrictions: For the year ended March 31, 2024, the average interest rate on the 2012 Term Loan was 7.3%.
The goodwill impairment charges were primarily a result of increased discount rates due to current macroeconomic conditions. Intangible asset impairment represented $321.4 million and was comprised of $298.7 million of indefinite-lived intangible assets ( Summer's Eve , DenTek and TheraTears ) and $22.7 million of several of our non-core finite-lived intangible assets.
Intangible asset impairment represented $321.4 million and was comprised of $298.7 million of indefinite-lived intangible assets ( Summer's Eve , DenTek and TheraTears ) and $22.7 million of several of our non-core finite-lived intangible assets.
This change was primarily due to increased net debt repayments of $132.0 million, and the repurchase of shares of our common stock in conjunction with our share repurchase program of $50.0 million in 2023. 2022 compared to 2021 Operating Activities Net cash provided by operating activities was $259.9 million for 2022 compared to $235.6 million for 2021.
This change was primarily due to an increase in net debt repayments of $90.0 million, partly offset by a decrease in the repurchase of shares of our common stock in conjunction with our share repurchase program of $25.0 million and an increase in proceeds from the exercise of stock options of $10.7 million. 2023 compared to 2022 Operating Activities Net cash provided by operating activities was $229.7 million for 2023 compared to $259.9 million for 2022.
The extent to which these conditions impact our results and liquidity will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity and duration of any further COVID-19 outbreaks, global supply chain constraints, the high inflationary environment and further global instability.
The extent to which these conditions impact our results and liquidity will depend on future developments, which are highly uncertain and cannot be predicted, including global supply chain constraints, inflation, global conflicts and instability, and the potential for further outbreaks of severe illnesses.
At February 28, 2021, in conjunction with the annual test for impairment of intangible assets, there were no additional indicators of impairment of our finite-lived intangible assets and accordingly, no additional impairment charge was taken. 35 At February 28, 2022, in conjunction with the annual test for impairment of intangible assets, an impairment charge of $0.7 million was recorded.
At February 29, 2024, in conjunction with the annual test for impairment of finite-lived intangible assets, there were no indicators of impairment under the analysis and accordingly, no impairment charge was taken.
North American OTC Healthcare Segment Revenues for the North American OTC Healthcare segment increased $5.9 million, or 0.6%, during 2023 versus 2022. The $5.9 million increase was primarily attributable to increased sales in the Cough & Cold category and Gastrointestinal category, partly offset primarily by a decrease in the Women's Health category.
The $15.5 million decrease was primarily attributable to a decrease in sales in the Women's Health, Cough & Cold, and Analgesics categories, partly offset by an increase in sales in the Eye & Ear Care, Gastrointestinal, and Dermatologicals categories. International OTC Healthcare Segment Revenues for the International OTC Healthcare segment increased $13.1 million, or 8.5%, during 2024 versus 2023.
The discount rate utilized in the analysis, as well as future cash flows, may be influenced by such factors as changes in interest rates and rates of inflation.
In performing the discounted cash flow analysis, management considers current information and assumptions regarding future sales, gross margins, and advertising and marketing expenses, and the discount rate utilized in the analysis, as well as future cash flows, may be influenced by such factors as changes in interest rates and rates of inflation.
As a percentage of International OTC Healthcare revenues, gross profit remained relatively flat during 2023 compared to 2022. Increases in supply chain costs were mainly offset by product mix. Contribution Margin Contribution margin is our segment measure of profitability. It is defined as gross profit less advertising and marketing expenses.
As a percentage of International OTC Healthcare revenues, gross profit decreased to 57.2% during 2024 from 60.6% during 2023, primarily due to increased supply chain costs and product mix. Contribution Margin Contribution margin is our segment measure of profitability. It is defined as gross profit less advertising and marketing expenses.
Additionally, a 50-basis point decrease in the terminal growth rate used for each of our indefinite-lived intangible assets' would have resulted in an additional impairment of $23.3 million.
Additionally, a 50-basis point decrease in the terminal growth rate used for each of our indefinite-lived intangible assets would not have resulted in any of our indefinite-lived intangible assets' fair values being less than their carrying values.
The credit agreement governing the 2012 Term Loan and the 2012 ABL Revolver and the indentures governing the 2021 Senior Notes and the 2019 Senior Notes contain provisions that restrict us from undertaking specified corporate actions, such as asset dispositions, acquisitions, dividend payments, repurchases of common shares outstanding, changes of control, incurrences of indebtedness, issuance of equity, creation of liens, making of loans and transactions with affiliates.
Subject to certain limitations, in the event of a change of control (as defined in the indenture governing the 2021 Senior Notes), the Borrower will be required to make an offer to purchase the 2021 Senior Notes at a price equal to 101% of the aggregate principal amount of the notes repurchased, plus accrued and unpaid interest, if any, to the date of repurchase. 42 The credit agreement governing the 2012 Term Loan and the 2012 ABL Revolver and the indentures governing the 2021 Senior Notes and the 2019 Senior Notes contain provisions that restrict us from undertaking specified corporate actions, such as asset dispositions, acquisitions, dividend payments, repurchases of common shares outstanding, changes of control, incurrences of indebtedness, issuance of equity, creation of liens, making of loans and transactions with affiliates.
Year Ended March 31, $ Change (In thousands) 2023 2022 2021 2023 vs. 2022 2021 vs. 2020 Net cash provided by (used in): Operating activities $ 229,716 $ 259,922 $ 235,607 $ (30,206) $ 24,315 Investing activities (11,584) (256,511) (22,243) 244,927 (234,268) Financing activities (185,846) (7,569) (279,419) (178,277) 271,850 Effects of exchange rate changes on cash and cash equivalents (982) (959) 3,597 (23) (4,556) Net change in cash and cash equivalents $ 31,304 $ (5,117) $ (62,458) $ 36,421 $ 57,341 39 2023 compared to 2022 Operating Activities Net cash provided by operating activities was $229.7 million for 2023 compared to $259.9 million for 2022.
Year Ended March 31, $ Change (In thousands) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Net cash provided by (used in): Operating activities $ 248,926 $ 229,716 $ 259,922 $ 19,210 $ (30,206) Investing activities (20,111) (11,584) (256,511) (8,527) 244,927 Financing activities (241,015) (185,846) (7,569) (55,169) (178,277) Effects of exchange rate changes on cash and cash equivalents 180 (982) (959) 1,162 (23) Net change in cash and cash equivalents $ (12,020) $ 31,304 $ (5,117) $ (43,324) $ 36,421 2024 compared to 2023 Operating Activities Net cash provided by operating activities was $248.9 million for 2024 compared to $229.7 million for 2023.
We performed a sensitivity analysis on our weighted average cost of capital, and we determined that a 50-basis point increase in the weighted average cost of capital would not have resulted in any of our other reporting units' fair value being less than their carrying value.
We performed a sensitivity analysis on our weighted average cost of capital, and we determined that a 50-basis point increase in the weighted average cost of capital would have resulted in an impairment charge of $9.1 million.
The decrease in general and administrative expenses was primarily due to acquisition costs in the prior year associated with the Akorn acquisition, partly offset by increases in compensation costs in the current year. Depreciation and Amortization Depreciation and amortization expense was $25.1 million for 2023 versus $24.9 million for 2022.
The decrease in general and administrative expenses was primarily due to a decrease in professional fees, partly offset by an increase in compensation costs. Depreciation and Amortization Depreciation and amortization expense was $22.6 million for 2024 versus $25.1 million for 2023.
We have financed our operations, and expect to continue to finance our operations over the next twelve months, with a combination of funds generated from operations and borrowings. Our principal uses of cash are for operating expenses, debt service, capital expenditures, share repurchases, and acquisitions.
In the past, we have supplemented this source of cash with various debt facilities, primarily in connection with acquisitions. We have financed our operations, and expect to continue to finance our operations over the next twelve months, with a combination of funds generated from operations and borrowings.
At March 31, 2023 and 2022, goodwill and intangible assets were apportioned among similar product groups within our operating segments as follows: March 31, 2023 (In thousands) North American OTC Healthcare International OTC Healthcare Consolidated Goodwill $ 498,936 $ 28,617 $ 527,553 Intangible assets Indefinite-lived 2,092,852 76,050 2,168,902 Finite-lived 154,552 18,439 172,991 Intangible assets, net 2,247,404 94,489 2,341,893 Total $ 2,746,340 $ 123,106 $ 2,869,446 32 March 31, 2022 (In thousands) North American OTC Healthcare International OTC Healthcare Consolidated Goodwill $ 548,291 $ 30,685 $ 578,976 Intangible assets Indefinite-lived 2,391,517 85,042 2,476,559 Finite-lived 198,353 21,723 220,076 Intangible assets, net 2,589,870 106,765 2,696,635 Total $ 3,138,161 $ 137,450 $ 3,275,611 At March 31, 2023, the brands with the highest carrying value were Monistat, BC/Goody's, Summer's Eve, TheraTears and Fleet , comprising 57.5% of our total intangible assets value.
Goodwill and Intangible Assets At March 31, 2024 and 2023, goodwill and intangible assets were apportioned among similar product groups within our operating segments as follows: March 31, 2024 (In thousands) North American OTC Healthcare International OTC Healthcare Consolidated Goodwill $ 498,936 $ 28,797 $ 527,733 Intangible assets Indefinite-lived 2,092,853 74,309 2,167,162 Finite-lived 135,932 17,489 153,421 Intangible assets, net 2,228,785 91,798 2,320,583 Total $ 2,727,721 $ 120,595 $ 2,848,316 33 March 31, 2023 (In thousands) North American OTC Healthcare International OTC Healthcare Consolidated Goodwill $ 498,936 $ 28,617 $ 527,553 Intangible assets Indefinite-lived 2,092,852 76,050 2,168,902 Finite-lived 154,552 18,439 172,991 Intangible assets, net 2,247,404 94,489 2,341,893 Total $ 2,746,340 $ 123,106 $ 2,869,446 At March 31, 2024, the brands with the highest carrying value were Monistat, BC/Goody's, Summer's Eve, TheraTears and Fleet , comprising 58.0% of our total intangible assets value.
Since we have made optional payments that exceed all of our required quarterly payments, we will not be required to make another payment on the 2012 Term Loan until maturity on July 1, 2028. 42 Commitments As of March 31, 2023, we had ongoing commitments under various contractual and commercial obligations as follows: Payments Due by Period (In millions) Less than 1 to 3 4 to 5 After 5 Contractual Obligations Total 1 Year Years Years Years Long-term debt $ 1,360.0 $ — $ — $ 400.0 $ 960.0 Interest on long-term debt (1) 434.7 73.5 146.0 142.1 73.1 Purchase obligations: Inventory costs (2) 249.2 225.2 11.7 10.2 2.1 Other costs (3) 25.2 23.1 0.8 0.8 0.5 Operating leases 16.5 6.6 6.5 3.2 0.2 Finance leases 4.5 2.8 1.6 0.1 — Total contractual cash obligations (4) $ 2,090.1 $ 331.2 $ 166.6 $ 556.4 $ 1,035.9 (1) Represents the estimated interest obligations on the outstanding balances at March 31, 2023 of the 2021 Senior Notes, 2019 Senior Notes, Term B-5 Loans, and 2012 ABL Revolver, assuming scheduled principal payments (based on the terms of the loan agreements).
Commitments As of March 31, 2024, we had ongoing commitments under various contractual and commercial obligations as follows: 43 Payments Due by Period (In millions) Less than 1 to 3 4 to 5 After 5 Contractual Obligations Total 1 Year Years Years Years Long-term debt $ 1,135.0 $ — $ — $ 535.0 $ 600.0 Interest on long-term debt (1) 283.8 54.6 108.2 76.0 45.0 Purchase obligations: Inventory costs (2) 276.2 257.7 11.9 6.6 — Other costs (3) 38.3 26.9 7.6 3.6 0.2 Operating leases 12.2 4.6 4.3 1.9 1.4 Finance leases 1.7 1.5 0.2 — — Total contractual cash obligations (4) $ 1,747.2 $ 345.3 $ 132.2 $ 623.1 $ 646.6 (1) Represents the estimated interest obligations on the outstanding balances at March 31, 2024 of the 2021 Senior Notes, 2019 Senior Notes, Term B-5 Loans, and 2012 ABL Revolver, assuming scheduled principal payments (based on the terms of the loan agreements).
(In thousands) Increase (Decrease) Gross Profit 2023 % 2022 % Amount % North American OTC Healthcare $ 531,930 54.6 $ 548,719 56.7 $ (16,789) (3.1) International OTC Healthcare 93,364 60.6 71,927 60.5 21,437 29.8 $ 625,294 55.4 $ 620,646 57.1 $ 4,648 0.7 Gross profit for 2023 increased $4.6 million, or 0.7%, versus 2022.
(In thousands) Increase (Decrease) Gross Profit 2024 % 2023 % Amount % North American OTC Healthcare $ 528,899 55.2 $ 531,930 54.6 $ (3,031) (0.6) International OTC Healthcare 95,549 57.2 93,364 60.6 2,185 2.3 $ 624,448 55.5 $ 625,294 55.4 $ (846) (0.1) Gross profit for 2024 decreased $0.8 million, or 0.1%, versus 2023.
The contribution margin increase as a percentage of revenues was primarily due to lower advertising and marketing spend as a percent of net sales. General and Administrative General and administrative expenses were $107.4 million for 2023 versus $107.5 million for 2022.
The contribution margin decrease as a percentage of revenues was primarily due to the decrease in gross profit margin noted above. General and Administrative General and administrative expenses were $106.2 million for 2024 versus $107.4 million for 2023.
Economic Environment There has been economic uncertainty in the United States and globally due to several factors, including global supply chain constraints, rising interest rates, a high inflationary environment, geopolitical events and the effects from the COVID-19 pandemic.
Economic Environment There has been economic uncertainty in the United States and globally due to several factors, including global supply chain constraints, rising interest rates, a high inflationary environment and geopolitical events. We expect economic conditions will continue to be highly volatile and uncertain, put pressure on prices and supply, and could affect demand for our products.
(In thousands) Increase (Decrease) Contribution Margin 2023 % 2022 % Amount % North American OTC Healthcare $ 408,004 41.9 $ 410,005 42.4 $ (2,001) (0.5) International OTC Healthcare 72,229 46.9 53,298 44.8 18,931 35.5 $ 480,233 42.6 $ 463,303 42.6 $ 16,930 3.7 North American OTC Healthcare Segment Contribution margin for the North American OTC Healthcare segment decreased $2.0 million, or 0.5%, during 2023 versus 2022.
(In thousands) Increase (Decrease) Contribution Margin 2024 % 2023 % Amount % North American OTC Healthcare $ 397,405 41.5 $ 408,004 41.9 $ (10,599) (2.6) International OTC Healthcare 73,728 44.1 72,229 46.9 1,499 2.1 $ 471,133 41.9 $ 480,233 42.6 $ (9,100) (1.9) North American OTC Healthcare Segment Contribution margin for the North American OTC Healthcare segment decreased $10.6 million, or 2.6%, during 2024 versus 2023.
In conjunction with the redemption of the 2016 Senior Notes, we wrote off related debt costs of $2.7 million and paid a premium to redeem the 2016 Senior Notes of $9.6 million in the year ended March 31, 2021. 2019 Senior Notes: On December 2, 2019, the Borrower issued $400.0 million aggregate principal amount of 5.125% senior notes due January 15, 2028 (the "2019 Senior Notes") pursuant to an indenture dated December 2, 2019, among the Borrower, the guarantors party thereto (including the Company) and U.S.
There were no changes to interest terms as a result of this amendment. 2019 Senior Notes: On December 2, 2019, the Borrower issued $400.0 million aggregate principal amount of 5.125% senior notes due January 15, 2028 (the "2019 Senior Notes") pursuant to an indenture dated December 2, 2019, among the Borrower, the guarantors party thereto (including the Company) and U.S.
In a manner similar to goodwill, future events, such as competition, technological advances and changes in advertising support for our trademarks and tradenames, could cause subsequent evaluations to utilize different assumptions. Once that analysis is completed, a discount rate is applied to the cash flows to estimate fair value.
Accordingly, management’s projections are utilized to assimilate all of the facts, circumstances and expectations related to the trademark or tradename and estimate the cash flows over its useful life. In a manner similar to goodwill, future events, such as competition, technological advances and changes in advertising support for our trademarks and tradenames, could cause subsequent evaluations to utilize different assumptions.
The $24.3 million increase in net cash provided by operating activities was due to an increase in net income after non-cash items, partly offset by increased working capital. Investing Activities Net cash used in investing activities was $256.5 million for 2022 compared $22.2 million for 2021.
The $19.2 million increase in net cash provided by operating activities was due to decreased working capital and an increase in net income before non-cash items. 40 Investing Activities Net cash used in investing activities was $20.1 million for 2024 compared to $11.6 million for 2023.
If circumstances warrant a change to a finite life, the carrying value of the intangible asset would then be amortized prospectively over the estimated remaining useful life. Management tests the indefinite-lived intangible assets for impairment by comparing the carrying value of the intangible asset to its estimated fair value.
At each reporting period, management analyzes current events and circumstances to determine whether the indefinite life classification for a trademark or tradename continues to be valid. If circumstances warrant a change to a finite life, the carrying value of the intangible asset would then be amortized prospectively over the estimated remaining useful life.
The $35.0 million increase was mainly attributable to increased sales in our Australian subsidiary, primarily related to an increase in sales of Hydralyte (included in the Gastrointestinal category) as a result of easing COVID-19 restrictions, as well as an overall increase in consumer illnesses which benefited most categories. 37 Gross Profit The following table represents our gross profit and gross profit as a percentage of total segment revenues, by segment for each of the fiscal years ended March 31, 2023 and 2022.
The $13.1 million increase was mainly attributable to an increase in sales in the Women's Health, Eye & Ear Care and Analgesics categories. 38 Gross Profit The following table represents our gross profit and gross profit as a percentage of total segment revenues, by segment for each of the fiscal years ended March 31, 2024 and 2023.
The effective tax rate on income before income taxes was 12.4% during 2023 versus 21.7% during 2022. The decrease in the effective tax rate in 2023 compared to 2022 was due to the impact of discrete items primarily pertaining to goodwill impairment charges taken in 2023.
The increase in the effective tax rate in 2024 compared to 2023 was due to the impact of discrete items primarily pertaining to goodwill impairment charges taken in 2023. Results of Operations 2023 compared to 2022 For a discussion of fiscal 2023 compared to 2022, please refer to Part II, Item 7.
We currently do not expect these tax provisions to have a material impact to our consolidated financial statements. We will continue to monitor and evaluate impact as further regulatory guidance becomes available. 31 Critical Accounting Estimates Our significant accounting policies are described in the notes to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
These effects could have a material adverse impact on our business, liquidity, capital resources, and results of operations and those of the third parties on which we rely. 32 Critical Accounting Estimates Our significant accounting policies are described in the notes to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
Goodwill and Tradename Impairment As a result of our impairment analysis at February 28, 2023, we recorded total goodwill and intangible asset impairment charges of $370.2 million in 2023. Goodwill impairment represented $48.8 million and related to our North American Women's Health and North American Oral Care reporting units.
Goodwill impairment represented $48.8 million and related to our North American Women's Health and North American Oral Care reporting units. The goodwill impairment charges were primarily a result of increased discount rates due to macroeconomic conditions.
At February 28, 2021, in conjunction with the annual test for goodwill impairment, we recorded an impairment charge of $1.2 million to adjust the carrying amount of goodwill related to our Painstop brand in our International OTC Healthcare segment to its fair value.
The impairment charge is measured as the excess of the carrying amount of the intangible asset over its fair value. 36 At February 28, 2022, in conjunction with the annual test for impairment of intangible assets, we recorded an impairment charge of $0.7 million.
The impairment charges were primarily a result of increased discount rates due to current macroeconomic conditions. Our analysis at February 28, 2023 determined that all other reporting units had a fair value that exceeded their carrying value by at least 10%.
Our analysis at February 29, 2024 determined that all reporting units had a fair value that exceeded their carrying value by at least 10%, with the exception of the North American Women's Health reporting unit.
Results of Operations 2022 compared to 2021 For a discussion of fiscal 2022 compared to 2021, please refer to Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2022 Annual Report on Form 10-K , filed with the SEC on May 6, 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2023 Annual Report on Form 10-K, filed with the SEC on May 5, 2023. Liquidity and Capital Resources Liquidity Our primary source of cash comes from our cash flow from operations.
Since quoted market prices are seldom available for trademarks and tradenames such as ours, we utilize present value techniques to estimate fair value. Accordingly, management’s projections are utilized to assimilate all of the facts, circumstances and expectations related to the trademark or tradename and estimate the cash flows over its useful life.
Management tests the indefinite-lived intangible assets for impairment by comparing the carrying value of the intangible asset to its estimated fair value. Since quoted market prices are seldom available for trademarks and tradenames such as ours, we utilize present value techniques to estimate fair value.
We utilize the excess earnings method to estimate the fair value of our individual indefinite-lived intangible assets.
We utilize the excess earnings method to estimate the fair value of our individual indefinite-lived intangible assets. The discount rate utilized in the analysis, as well as future cash flows, may be influenced by such factors as changes in interest rates and rates of inflation.
Additionally, management anticipates that in the normal course of operations, we will be in compliance with the financial and restrictive covenants during fiscal 2024. During the year ended March 31, 2022, we made a required repayment of $1.5 million as well as voluntary principal payments of $103.5 million against the outstanding balance under our 2012 Term Loan.
Additionally, management anticipates that in the normal course of operations, we will be in compliance with the financial and restrictive covenants during fiscal 2025. Since we have made optional payments that exceed all of our required quarterly payments, we will not be required to make another payment on the 2012 Term Loan until maturity on July 1, 2028.
At the completion of the promotional program, the estimated amounts are adjusted to actual results. Goodwill and Intangible Assets Goodwill and intangible assets amounted to $2,869.4 million and $3,275.6 million at March 31, 2023 and 2022, respectively.
At the completion of the promotional program, the estimated amounts are adjusted to actual results.
International OTC Healthcare Segment Revenues for the International OTC Healthcare segment increased $35.0 million, or 29.4%, during 2023 versus 2022.
North American OTC Healthcare Segment Revenues for the North American OTC Healthcare segment decreased $15.5 million, or 1.6%, during 2024 versus 2023.
Loss on Extinguishment of Debt During 2022, we recorded a loss on extinguishment of debt of $2.1 million, related to the amendment of our 2012 Term Loan on July 1, 2021. Income Taxes The (benefit) provision for income taxes during 2023 was a benefit of $(11.6) million versus a provision of $57.1 million in 2022.
Income Taxes The provision (benefit) for income taxes during 2024 was a provision of $66.7 million versus a benefit of $(11.6) million in 2023. The effective tax rate on income (loss) before income taxes was 24.2% during 2024 versus 12.4% during 2023.
The increase was primarily due to acquisitions of $247.0 million in 2022, partly offset by a decrease in capital expenditures in 2022. Financing Activities Net cash used in financing activities was $7.6 million for 2022 compared to $279.4 million for 2021.
The increase in net cash used in investing activities was primarily due to a manufacturing acquisition in Australia in 2024. Financing Activities Net cash used in financing activities was $241.0 million for 2024 compared to $185.8 million for 2023.
We finalized our analysis of the fair values of the assets acquired and liabilities assumed as of the date of acquisition.
During 2022, we incurred acquisition-related costs of $5.1 million, which are included in General and administrative expense. We finalized our analysis of the fair values of the assets acquired and liabilities assumed as of the date of acquisition. Based on this analysis, we allocated $195.9 million to non-amortizable intangible assets and $29.5 million to amortizable intangible assets.
Removed
During 2022, we incurred acquisition-related costs of $5.1 million, which are included in General and administrative expense. In connection with the acquisition, we also entered into a supply arrangement with Akorn for a term of three years with optional renewals at prevailing market rates.
Added
Certain of our third-party manufacturers are currently having, and have had in the past, difficulty meeting demand, which is and has caused shortages of our products, particularly eye care products. These shortages have negatively impacted our results of operations in the fourth quarter of fiscal 2024, and we expect further shortages may have a negative impact on our sales.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed0 unchanged
Biggest changeHolding other variables constant, including levels of indebtedness, a one percentage point increase in interest rates on our variable rate debt would have had an adverse impact on pre-tax loss and cash flows for the year ended March 31, 2023 of approximately $4.6 million. 43 Foreign Currency Exchange Rate Risk During the years ended March 31, 2023 and 2022, approximately 13.9% and 13.2%, respectively, of our net revenues were denominated in currencies other than the U.S.
Biggest changeHolding other variables constant, including levels of indebtedness, a one percentage point increase in interest rates on our variable rate debt would have had an adverse impact on pre-tax income and cash flows for the year ended March 31, 2024 of approximately $2.7 million. 44 Foreign Currency Exchange Rate Risk During the years ended March 31, 2024 and 2023, approximately 14.2% and 13.9%, respectively, of our net revenues were denominated in currencies other than the U.S.
Dollar. As such, we are exposed to transactions that are sensitive to foreign currency exchange rates, including insignificant foreign currency forward exchange agreements. These transactions are primarily with respect to the Canadian and Australian Dollar. We performed a sensitivity analysis with respect to exchange rates for the year ended March 31, 2023 and 2022.
Dollar. As such, we are exposed to transactions that are sensitive to foreign currency exchange rates, including insignificant foreign currency forward exchange agreements. These transactions are primarily with respect to the Canadian and Australian Dollar. We performed a sensitivity analysis with respect to exchange rates for the year ended March 31, 2024 and 2023.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk We are exposed to interest rate risk because our 2012 Term Loan and 2012 ABL Revolver are variable rate debt. At March 31, 2023, approximately $360.0 million of our debt carries a variable rate of interest.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk We are exposed to interest rate risk because our 2012 Term Loan and 2012 ABL Revolver are variable rate debt. At March 31, 2024, approximately $135.0 million of our debt carries a variable rate of interest.
Holding all other variables constant, and assuming a hypothetical 10.0% adverse change in foreign currency exchange rates, this analysis resulted in a 10.6% impact on pre-tax loss of approximately $9.0 million for the year ended March 31, 2023 and a 2.6% impact on pre-tax income of approximately $6.8 million for the year ended March 31, 2022. 44
Holding all other variables constant, and assuming a hypothetical 10.0% adverse change in foreign currency exchange rates, this analysis resulted in a 3.3% impact on pre-tax income of approximately $9.0 million for the year ended March 31, 2024 and a 10.6% impact on pre-tax loss of approximately $9.0 million for the year ended March 31, 2023. 45

Other PBH 10-K year-over-year comparisons