Thank you for standing by. My name is Romainy, and I'll prepare your conference operator today. At this time, I would like to welcome everyone to Q4 2024 for Prestige Consumer Healthcare Inc Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

After the speakers remarks there will be a question and answer session. [Operator Instructions] I would now like to turn the call over to Phil Terpolilli, Vice President of Investor Relations and Treasury. Please go ahead..

Thanks, operator, and thank you to everyone who's joined today. On the call with me are Ron Lombardi, our Chairman, President and CEO; and Christine Sacco, our CFO. On today's call, we'll review our fiscal 2024 results discuss our outlook for '25 and then take questions from analysts.

A slide presentation accompanies today's call and can be accessed by visiting prestigeconsumerhealthcare.com, clicking on the Investors link and then on today's webcast and presentation. Remember some of the information contained in the presentation today includes non-GAAP financial measures.

Reconciliations to the nearest GAAP financial measures are included in our earnings release and slide presentation. On today's call, management will make forward-looking statements around risks and uncertainties, which are detailed in a complete safe harbor disclosure on Page 2 of the slide presentation that accompanies the call.

These are important to review and contemplate business environment uncertainty remains heightened due to supply chain constraints, high inflation and geopolitical events, which have numerous potential impacts.

This means results could change at any time, and the forecasted impact of risk considerations is the best estimate based on the information available as of today's date. Further information concerning risk factors and cautionary statements are available in our most recent SEC filings and most recent company 10-K that was released this morning.

I'll now hand it over to our CEO, Ron Lombardi.

Ron?.

Hydralyte and Oral Hydration, Fess Nasal Sprays and Eye Care under the Murine, Zaditen and Clear Eyes brands. We've experienced solid growth over time throughout all geographies. We had another strong year in fiscal '24, achieving impressive 10% organic revenue growth against a tough prior year comparison.

Over the longer term, we've experienced over 20% sales growth annually on a 3-year basis. The markets continue to grow nicely on a multiyear basis and today represents approximately 15% of total company sales. Moving forward, we continue to focus on our leading and well positioned brands that can grow category and share over time, such as Hydralyte.

Although we expect growth to moderate against increasingly difficult comparisons, we continue to anticipate a 5% or more annual growth to this segment based on our strategy. Now let's finish up on Slide 13. Our brand-building efforts are complemented by aligning investments with channels that are important to consumers.

E-commerce continues to be the key example of this. Because an increasing portion of consumer shopping habits and our early investments have helped us drive continued strong performance across e-commerce counters. We grew e-commerce approximately 8% in the fiscal year, and it now represents approximately 15% of our sales.

Our success is driven by effective strategies we've touched on before, including targeted content and marketing, effectively managing our product assortment and making broad investments with each of our e-commerce partners to better connect with consumers.

Moving forward, we continue to expect strong e-commerce growth through these investments and long-term strategy. With that, I'll turn it over to Chris for a review of financials and an update on capital deployment..

Thanks, Ron. Good morning, everyone. Let's turn to Slide 15 and review our fourth quarter and fiscal '24 financial results. As a reminder, the information in today's presentation includes certain non-GAAP information that is reconciled to the closest GAAP measure in our earnings release.

Q4 revenue of $277 million compared to $285.9 million in the prior year was down 2.9% on an organic basis.

Strong consumption trends and strong organic international segment growth of 7% and were more than offset by supply chain pressures late in the fourth quarter that inhibited our ability to meet order demand as well as continued Women's Health category weakness and the strategic exit of the private label business.

Due to the lower revenue, we experienced a lower EBITDA margin and diluted EPS from the prior year, which was only partially offset by lower interest expense. Let's turn to Slide 16 for more detail on full year 2014 consolidated results.

For full year fiscal '24, revenues were approximately flat at $1.125 billion and grew 20 basis points versus the prior year when excluding FX. By segment, excluding FX, North American segment revenues were down 1.5% while the International segment increased approximately 11% versus the prior year.

In North America, the largest category growth drivers were strong Ear & Eye Care, GI and dermatological category sales, which helped partially offset the Q4 supply chain challenges, declines in Women's Health and the strategic exit of the private label business.

Our strong digital performance continued, and we finished the year with high single-digit year-over-year e-commerce growth. The International segment performed above our long-term expectations, thanks to strong performance across numerous brands and geographies.

Total company gross margin of 55.5% for fiscal '24 was up slightly versus prior year as anticipated, despite poor supply chain constraints and the resulting reduced fixed cost absorption.

For fiscal '25, we anticipate gross margin of 56% or more, with improvements from pricing actions and cost savings more than offsetting continued inflationary cost headwinds. Q1 gross margin is estimated to be approximately 55.5%.

As expected, advertising and marketing for fiscal '24 was up in both dollars and on a percentage of sales basis versus the prior year. For fiscal '25, we anticipate an A&M rate of greater than 14% of sales as we continue to identify long-term marketing opportunities consistent with our long-term objectives.

We would also anticipate this higher year-over-year rate of spend in the first quarter. Fiscal '24 G&A expenses of 9.4% of sales was largely consistent to the prior year. In fiscal '25, we anticipate G&A of approximately 9.5% with about $28 million of spend in Q1.

Adjusted diluted EPS of $4.21 was flat to the prior year with the benefit of our debt reduction efforts and share repurchases, offset by the lower Q4 revenue and associated cost headwinds. Our normalized Q4 tax rate was 23.6%.

For fiscal '25, we expect a tax rate of just under 24% and interest expense of approximately $52 million, down materially from the prior year. Now let's turn to Slide 17 and recap cash flow. For the full year fiscal '24, we generated approximately $240 million in free cash flow, up nicely versus the prior year as expected.

Our stable EBITDA margins and strong cash flow enabled us to invest behind our brands while continuing to reduce debt, finishing the year at 2.8 times leverage and net debt of $1.1 billion at March 31. Approximately 90% of our debt is fixed, and there are no maturities until 2028.

For fiscal '25, we anticipate a similar free cash flow profile of at least $240 million. As shown on the right side of the page, this cash generation is underpinned by our leading attributes that enable our financial profile.

Our business model, where the majority of revenue remains externally manufactured, results in low capital expenditures of 1% to 2% of sales annually. We are anticipating CapEx of just over 1% of sales in fiscal '25.

Our products have strong margins, thanks to the characteristics of the categories we participate in, their importance to consumers' health and the regulated nature of OTC that creates high barriers to competitive entry. We have meaningful tax benefit from past acquisitions that results in a cash tax rate in the high teens.

And we remain focused on profitability with continuous cost-saving efforts that help us maintain our strong mid-30s EBITDA margin profile. The result of this model is clear. We generate best-in-class sustainable free cash flow, and our free cash flow conversion remains strong.

This attractive profile gives us the ability to continue to deploy capital in multiple ways as shown on Page 18. Our strong financial profile and resulting free cash flow makes management of capital deployment a critical pillar in ensuring our success.

With approximately $1 billion of free cash flow anticipated over the next 4 years, we anticipate disciplined cash deployment against the various options of investing in our brands, M&A, share repurchases and deleveraging. The number one priority continues to remain investing in our strategic brands to ensure long-term success.

From there, we continue to pursue strategic M&A and continue to see an active marketplace. We have ample capacity to acquire additive businesses and our scale and long-term expertise in consumer health care gives us a long-term advantage in identifying, acquiring and successfully integrating transactions. Next, share repurchases.

By achieving meaningful leverage reduction over the last several years, and demonstrating a long-term sustainable and growing free cash flow profile, we believe a multiyear share repurchase program affords us the flexibility to offset dilution, return capital to shareholders in an opportunistic way and still remain flexible to pursue M&A and other deployment options.

The announced approval of up to $300 million in share repurchases is a testament to this outlook and our confidence in the long-term profitable growth of our company.

Finally, although we anticipate reducing debt and leverage in fiscal '25, our reduced leverage and attractive debt profile leaves us best positioned to prioritize the deployment options that I just walked through. With that, I'll turn it back to Ron..

Thanks, Chris. Let's turn to Slide 20 to discuss our outlook. In fiscal '25, we anticipate continued solid consumption growth of our leading portfolio, thanks to our proven brand building strategy.

That said, in the near term, we anticipate certain supply chain headwinds, particularly in Eye Care, to continue in the first half of fiscal '25 before recovering in the second half. This leaves our revenue and EPS outlook for the full year below our long-term expectations, entirely due to this first half forecast.

For full year fiscal '25, we anticipate revenue of $1.125 billion to $1.140 billion, and organic revenue growth of approximately 1% where we continue to anticipate a slight FX headwind. Q1 revenues are anticipated to be approximately $260 million, reflecting a continuation of the supply chain challenges experienced late in Q4.

Although it's very early to forecast, we currently expect Q2 revenues to decline slightly year-over-year, but we'll provide a full update in August.

We anticipate EPS of $4.40 to $4.46 for fiscal '25 or approximately 5% to 6% growth versus the prior year, driven by gross margin expansion and lower interest expense, thanks to our strong cash generation. We expect Q1 EPS of approximately $0.86. Lastly, we expect solid free cash flow of $240 million or more in fiscal '25.

The stable profile for the prior year gives ample support to our multiyear $300 million share repurchase program and continued disciplined capital deployment optionality that maximizes long-term shareholder value. Now let's turn to Slide 21 to wrap things up.

This page is a reminder that our diverse portfolio of leading health care brands provide a great starting point that supports long-term top line organic growth of 2% to 3% annually.

While we are certainly disappointed with our Q4 performance and anticipated fiscal '25 first half weakness from these near-term supply challenges, we remain fully committed to our proven business strategy and long-term business outlook. We continue to focus on brand building that is the key enabler to our long-term success.

Our superior financial profile has generated consistent and increasing cash flow over the long term that leaves us increased accretive capital deployment optionality of over $1 billion in free cash flow in the next 4 years that Chris discussed previously.

We remain confident in the big picture that our business attributes support a proven formula of solid organic growth, leading free cash flow generation and a proven capital deployment strategy that will unlock shareholder value. With that, I'll open it up for questions.

Operator?.

[Operator Instructions] And your first question comes from the line of Rupesh Parikh with Oppenheimer. Please go ahead..

So just going back to supply chain commentary, 2 questions here.

So first, what's the confidence in resolving some of the challenges by the second half? And then from a guidance perspective, is there a way to quantify what percentage point headwind it is to your top line growth in the implied guide?.

So your first question, I guess, the level of confidence that we have is there's a plan in place for both of the Clear Eyes supplier to get back to historic levels. And at this point, they're in line with expectations at this point.

So we expect in the quarter ended June, that we'll see increasing recovery, the beginnings of things stabilizing in the second half and then a recovery -- excuse me, second quarter and then a recovery in the second half..

And then, Rupesh, you were asking about quantifying the impact of the supply chain disruptions to the revenue guidance?.

Yes, it's Chris. So for the year, that's about 1 point of a headwind, right? And as Ron just commented, we would expect the impact to be greater in the first half, certainly, first quarter with some recovery as we move throughout the year. We do expect some modest pipe in the back half of the year.

So when I put that all together, I'm at about a 1 point headwind for the year..

Great. And then maybe just my follow-up question.

So Chris, just on the guide, again, I'm not sure how much clarity you can provide, but as we think about your EPS guidance, any -- how should we think about what's implied for debt paydowns and buybacks at this juncture?.

Yes. So at this point, we would normally in our guidance, assume all of the free cash flow is going to debt paydown. Obviously, with $135 million of variable debt as we begin this fiscal, that would imply we're building cash on the balance sheet.

I commented on the attractive long-term fixed debt that we have about $1 billion of notes that don't have a maturity until 2028. So the guide right now is contemplating essentially no share buybacks..

Okay.

So essentially, if the cash builds, can we just model interest income? Is that the way to think about it?.

That's correct..

Your next question comes from the line of Susan Anderson with Canaccord Genuity. Please go ahead..

I guess maybe just a follow-up on the supply chain issues as it relates to the Eye care. I guess I'm curious if your competitors are also having some of the same issues with supply or is it just your brands, not sure if they use the same supply or not? And then I think there was an issue with quality at one of your suppliers a couple of years ago.

So I'm just curious kind of how do you gain confidence that the supplier has fixed these issues?.

Susan, so first of all, the 2 suppliers that we have for the Clear Eyes brand are primarily exclusive to our brands. So others that compete in the industry have their own supply chain and would be subject to different factors. So that's the first part of it.

The second part of it, the quality -- we had a recall a couple of years ago, and it was actually related to a former supplier that we left because we had quality concerns about, and we got caught up in the very tail end of that. So that was actually a number of years ago and a minimal impact on us.

I think this is also a good point to comment on how we think about managing our sterile Eye care. We've partnered with 2 quality suppliers, who have been partners with us for very long periods of time.

Our eye care business has been growing nicely for quite a while now, and we've been in catch-up mode, trying to keep up with demand, and we've actually worked with both of them to expand capacity.

And one of those suppliers, who did some upgrades late in calendar '23 and early into calendar '24, is in the process of recovering those maintenance upgrades and on a path back to having what we believe are going to be higher levels of output later in the year.

And the second supplier, who we've worked with again for quite a while, had an extended break as they did some quality upgrades and what we initially thought might be a 1-week shutdown turned into something longer and they're just getting back up into production levels as we speak here.

So I've been with the company for about 14 years, and I've never seen disruption like this in our eye care before, where both of the suppliers where we've been working with and making investments in, had a simultaneous disruption. So very much unexpected and very unusual, highly unusual..

And then I was just curious, is this just impacting the North America business? Or is it also in impacting the international markets? Or is that a different supplier? And then I think you mentioned that you purchased maybe a small plant in Australia to help with some production.

I guess, just curious, it doesn't sound like it, but is this changing maybe your capital light strategy of using mostly third-party suppliers? Or is it just a little bit of leaning into some projection on your own?.

So the first question about the international Eye care supply, there's a small amount that comes from the 2 North American suppliers. The vast majority of the product, though, for international eye care comes from other suppliers. So there's a little bit of impact, but nothing material.

Now to your question about the acquisition of the Care Pharma supplier that closed in the fourth quarter. So they've been a long-term supplier of both Hydralyte and FESS powdered products, family-owned.

And when the founder approached us and said that they were considering selling the business, we stepped back and said, I think the best thing for us to do is to own this. Their primary business is making Hydralyte and FESS powdered products. So it's primarily supporting the Care Pharma business.

So in a lot of ways, it made sense for us and continues to give us a competitive advantage to own that facility and make those products for ourselves. So it's not unlike what we've got going on in the Lynchburg, Virginia facility, both with the Fleet and the Summers Eve product that's been made there.

Historically, I've commented in the past how that gives us an advantage. There's some level of vertical integration.

And then as I also announced in the -- earlier in the call today, we started commercial production of Monistat product there in recent months after a multiyear tech transfer and investment program where we expanded manufacturing capacity to include Monistat cream products. So no change in our strategy, Susan.

If it makes sense and gives us an advantage to have more control and investment over the product, we'll continue to do that..

And Susan, this is Chris. I would just piggyback on that by saying no change to the CapEx that we contemplate or have been experiencing in the past few years or we guided to fiscal '25 at about 1% to 2% of sales..

Your next question comes from the line of [Indiscernible] with William Blair Please go ahead..

Trevor on here for John Anderson this morning. Just 2 questions for us. The first, if you could help kind of ballpark the quarter in the sales miss. It looks like the sales miss was about $10 million.

How much of that was related to the supply chain issues? And how much was related to the issues or the challenges faced in the Women's Health categories?.

This is Chris. So for Q4, the vast majority of the miss related to Eye care. You can see a decline in the category. Remember also that Clear Eyes isn't the only brand within the category, right? And we've been experiencing, as Ron mentioned in his remarks, considerable consumption gains and demand for Eye Care.

And so regarding the actual versus our expectation that was the vast majority of the miss..

Trevor, if I can add to your question about the Women's Health. Again, the 2 brands that I commented on earlier, Monistat has largely been stabilized, and we actually saw some growth in the fourth quarter. For Monistat, we continue to feel good about the position of that brand and its growth opportunity for fiscal '25.

Summers Eve continues on its journey of getting stabilized and getting positioned to return to growth. Consumption trends continue to improve. We began the launch of some new products during the quarter, and they'll roll out into retail over the next handful of months here.

And it's really the on-the-go and the sprays portion of the category that continues to be disrupted by the change in consumer habits.

So if you break up the Summers Eve category into wash and lights, we actually are seeing consumption growth and the new products do well there, and it's the continued decline in the sprays portion that's dragging down the total brand..

Next question comes from the line of Mitchell Pinheiro with Sturdivant. Please go ahead..

Just back to the supply chain issues. So it seems -- this came as -- it seemed it came as a surprise to you.

Was there any -- was there no like sort of forewarning about your suppliers' plans for maintenance and improvements and things like that? Or can you talk a little bit about how that all came about?.

Yes. It was unexpected. Really, the intent or the size of the impact was unexpected. As I said, we've been working with both of the suppliers to expand capacity. And the first supplier who went down for maintenance upgrades earlier in the calendar year was expected to come up at historic production levels and then start to increase.

And we saw as a matter of fact, the opposite of that. They came out at lower levels, and they've been working to recover back to historic levels before we expect them to see increases. So it kind of unfolded as the quarter played out.

And then for the second supplier, it wasn't anticipated that they were going to be shutting down for some quality upgrades. And that shutdown as it unfolded went from what was initially thought to be very short, maybe a week to a month or more for the shutdown and then the return back to commercial released production.

So as you just said, it was unexpected both in terms of timing, the way it unfolded and the size of the impact on the business, not only in the fourth quarter, but what we expect over the first half of fiscal '25..

And was there any gross margin impact in the quarter as a result? I mean, I realize that it's sort of variable costs, but I didn't know perhaps if you were spending extra money to secure product or something from somewhere else and having an impact on the cost of goods..

Yes, Mitchell, it's Chris. So for the fourth quarter, the impact was minimal, right? We lose the leverage, because of more fixed cost in nature such as warehousing as an example, that would impact margin when the top line misses like that. But gross margin came in, in line with our expectations largely and so not meaningful..

And then you talked, Chris, about the gross margin. It sounds like you said 55%, I guess, and 0.5% is sort of your expectations for Q1.

So is it just a gradual build through the year? Is there anything driving that other than just to your point about sort of losing a little bit of that fixed cost leverage in the first half?.

Yes.

Certainly, we'll provide more color as we go through the year, Mitch, but there is a bit of a step-up in the back half for things we just talked about, like leverage on the increased supply and also the timing of certain pricing actions, but really cost-saving efforts that we expect to -- as the inventory flows through on the P&L cost saving measures that may be in place in the first half, but really will flow through the P&L in the back half.

So a moderate step-up as you work through the year..

And then you just touched on my last question was just on pricing.

It was -- as the issues in the fourth quarter, what was the pricing impact versus volume?.

Yes. It was as expected. We set this year out to say about half of our growth we assumed would come from price and half from volume. That's has improved from last year. If you remember, we were two-third price, and that's exactly what we experienced to your point, absent the last couple of weeks of the quarter there.

And I just also mention for fiscal '25, Mitch, which may have been your follow-up question. We have opportunities, think about the positioning of the brands where we have continued inflationary pressures. We think we have opportunity to take additional price. And again, for next year, we would anticipate that's about half of our growth..

I guess one more question.

Any -- do you anticipate any change in retail channel performance? Or is it going to be more of the same with the drugstore mass e-commerce? Is it going to be the same type of percentage distribution from -- in retail?.

Yes, Mitch, I think at this point for fiscal '25, we would probably anticipate the same kind of trends that we've seen begin to stabilize over the last couple of quarters in terms of where consumers have shifted to shopping. But I think, again, the important thing for us is it really doesn't matter. Our products are broadly distributed.

Our margins are consistent across channel. We look to support and invest behind all of our retail partners no matter what channel that they're in. So we kind of expect things to kind of stay where they are. But for us, it doesn't really matter..

Your next question comes from the line of Linda Bolton-Weiser with D.A. Davidson. Please go ahead..

Yes. So in passing through the breakdown of your gross margin performance by International versus North America. The North American gross margin was actually still up really strongly year-over-year, and it was the International gross margin that's been down for a couple -- down year-over-year in a few quarters.

So I guess my first question is, are you saying the gross margin would have been even up more in North America because it was already up really strongly? And then secondly, why is the International gross margin trending down year-over-year?.

Linda, this is Chris. So as I mentioned to Mitch, the gross margin impact for Q4, I'm speaking specifically for North America, was a modest impact due to the sales mix. But yes, we have seen some nice improvements in the North American gross margin, largely driven by cost savings and pricing actions that we've taken.

On the International front, it's really the number one driver there is mix. Mix of product, mix in the region. I think to Hydralyte as an example, was a higher percentage of our sales, which is a larger gross margin than other products in the region and then inflation internationally just as it is here in North America.

So the biggest driver of the International piece is the mix..

And then just to go one more question on the supply issue. It sounded like that second supplier you were describing, that the shutdown was because of quality-related upgrades. So I mean, that actually sounds a little negative. Like it sounds like they had some, whatever, FDA crackdown or something on them.

So I guess, going forward, are you thinking you're going to stay with that supplier? Or why wouldn't that be a reason to again look for a different supplier?.

Yes. So thanks, Linda. So the quality upgrades are proactive and looking to continue to set the right manufacturing environment to produce quality product on time. So we can -- we plan to continue to stay with them. We think they're a high-quality supplier and are focused on quality product on time.

So we think it's the right kind of thing to be proactive to shut down and do things ahead of a problem..

And then finally, I've had some experience with like, I follow Clorox. They had some supply issues, well, there was due to a cyber-attack different story. But still when you have supply issues, you're going to lose maybe even some shelf space and you're certainly going to lose some market share just in the near term in a quarter or two.

So what are you figuring in, in terms of expectations for that? And then are you specifically figuring on extra advertising and promo or extra merchandising spend in order to get back that market share that you're inevitably going to lose?.

Yes. So first of all, I don't -- we're not of the opinion that the expected recovery here in the Eye Care supply chain is going to result in us losing share.

We don't think we're going to be out that shelf in any significant way that's going to cause consumers to start reaching for a brand that they've never used and don't have a history of trust with, right? The difference between OTC products and other consumer categories like household cleaning, right, and we were big in that category for a long time, is right, the trust associated with putting drops into your eyes is a pretty significant barrier, which is why Eye Care has one of the lowest levels of private label penetration in OTC.

So at this point, we don't expect a loss of distribution or loss of shelf presence to lose share..

And how many weeks of inventory do you think retailers in general have on hand of some of these products?.

Yes, it's really all over the place depending on the retailer, right? The best-in-class, world-class retailers with a great supply chain carry maybe 8 weeks something like that and other business models may carry 2 or more times that amount depending on their business set up.

Again, I think the other thing that's important to note for Clear Eyes right, if you go to the shelf and look, we have a very broad offering of assortment. So think about our redness treatment. We have Max Red. We have Original Strength Redness. We have 1 ounce, we have 0.5 ounce.

And then we have other products that have redness relief in addition to other efficacy treatment. So when you go to the shelf, you're looking for Clear Eyes, there's going to be options out there. So you usually buy the 1 ounce Max Red, you may reach for the 0.5 ounce Max red as an example..

And then -- sorry, just one last one from me. On the capital allocation, like do you think that just to make sure these issues get worked through and everything, are you maybe just pulling back a little on your thoughts about doing some M&A? I know you're in a position to do something balance sheet-wise.

But do you think these delays that just to get things moved over. And then on the share repurchase, $300 million, I mean, if you do $50 million a year, that's 6 years.

So are you planning 6 years for the $300 million? Or -- and then why wouldn't there be any figured in for FY '25?.

So let me start on the topic in general, and then I'll let Chris answer a couple of the specifics. And I'm glad you brought this topic up.

I think one of the things that's important that doesn't get lost in our fourth quarter and fiscal '24 performance is our continued strong cash flow generation and the success that we've had and the progress we made in deleveraging. And to your point, Linda, we are sitting now with lots of different optionality around capital allocation.

Our Board approved a $300 million multiyear stock buyback, which Chris will talk about in a second. With leverage at 2.8 times, we expect it to likely to continue to go lower and have the continued ability to think about M&A. We're in a position to evaluate opportunities as they show up.

So this lever capital allocation as a meaningful value creator shouldn't be lost in the hiccup of what happened late in the first quarter and the recovery in the first half of fiscal '25. So thanks for bringing the topic up. I'll let Chris comment on some of the particulars..

Linda, so maybe just to use your example of a $300 million program with $50 million a year, I'll remind you that over the next or $75 million, excuse me, over the next 4 years, we expect to generate about $1 billion of free cash flow.

And so I think we have ample capacity as we sit here today to do more than one thing, right? That's what Ron is referring to, right? This is the lowest level of leverage the company has experienced, and that enables increased optionality. And so why nothing in for fiscal '25, it's going to be fluid.

As we said, our #1 priority will remain to invest in our business. Our number two priority is now to execute on disciplined M&A., to answer that question specifically. Our third priority now is our share repo program, right, with the fourth being deleveraging.

So as I think to fiscal '25 specifically, our first objective on the share repo program is going to be to offset share dilution similar to what we've done in the last couple of years. Further buybacks will be opportunistic now and in the future because they'll be balanced against the M&A landscape and the opportunities that we see there.

For fiscal '25, specifically with $135 million left of variable debt, we would look to continue to delever as we work through likely paying that off as we exit fiscal '25. So I think the message here is a multiyear program to provide optimal flexibility.

We have the stable and consistent cash flows and now appropriate leverage levels to be able to do more than one thing, and that's what I think our message was for today..

That concludes our Q&A session. I will now turn the conference back over to Ron Lombardi, CEO, for closing remarks..

Thank you, operator, and thanks to everyone for joining us today, and we look forward to providing an update on our next call. Have a good morning..

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect..