Okay, good afternoon, everyone. I'm Susan Anderson, Senior Analyst at Canaccord Genuity, and I'm excited to have here Prestige Consumer Healthcare. And in particular, Ron Lombardi, CEO, and also Chris Sacco, CFO and now COO, and then also Phil Terpolilli, VP IR and Treasury. So, Ron, I think maybe we could start out if you could provide a little update on where Prestige is at today and where you see the company going over the next few years.
Sure, thanks, Susan. Good morning. Good morning to everybody. Thanks for joining us today. You know, we've been on a journey over the last, you know, four or five years where we've been focused on increasing the company's capital allocation optionality by focusing on delevering the company, taking our debt down, and at the end of December, as we've been talking about this fiscal year, we actually got our term loan paid off in full, so our capital structure is made up of a couple of great bond tranches that are attractively priced, but the importance of that is it continues to allow us to focus on the $1 billion of free cash flow that we expect to generate over the next four years and use that to invest, to grow value for the company and our investors, so it's been a while coming.
We've been talking about it for a long time, but we continue to feel good about, first and foremost, being long-term stewards and brand builders of the portfolio we have and being able to take that cash flow to invest going forward.
Great. And then maybe if you guys could talk about just the industry-leading margins in the mid-30% range, which I think is important to that free cash flow, and also how that gives you, you know, pretty flexible capital allocation priorities. So maybe also if you can go into that.
Chris, do you want to start?
Sure. So Susan's talking about our EBITDA margins in the low to mid-30s as a % of sales. I think if you go back in time, even through our very tumultuous COVID period, you'll see that we held those margins. It starts with the space that we're in, right? Consumers need base products. They're going to the shelf, stable, stable top line. And then so gross margin for us at about 56% this year, very strong. We, of course, like other companies, look to expand that through continuous cost improvements, through pricing, through new product innovation, which is how we largely get margin. But we talk about wanting to reinvest that in the business. And so maintaining the EBITDA margin is where we focus. And again, in.
Cold cough season, which has been a pretty slow start this year. Maybe if you could talk about what % of your business is levered to the cold cough season and how it's trended so far, and then what you're expecting for the rest of the season.
Sure. I'll let Phil give the cough cold update for us.
Yeah. So we talk about cough and cold representing a smaller percentage of our sales than other companies you may speak to out there. So representing, call it 7%-8% of our business. So certainly a sizable portion, but not as large as those others. To date, we've seen that soft cough cold season that others have talked about, but because of the magnitude for us, it's a bit less of an impact. We expected that going into the year. And you really have to go back to kind of pre-COVID to set sort of an appropriate baseline around this category. We also have a business in Australia that has some exposure to the category. So we use that as a guidepost when we manage our year going into the next fiscal. So that's how we think about cough and cold.
It's a smaller percentage of our business, as I mentioned, but nothing sort of out of line with what we've expected thus far.
Okay, great. And then just in terms of inflation, we're finally seeing a lot of that inflation abate, with the exception of a few areas, I guess. Maybe if you could talk about, you know, how that's, how you see that impacting the P&L this year, and then also coupled with that, maybe pricing for this year, is that changing how you think about pricing as well?
Sure. So I guess you can't talk about inflation without going back to the beginning of COVID, right, where we saw elevated levels of inflation. I like to remind people for us, you know, the max year, the highest point was about $20 million of gross inflation. To give you an order of magnitude, when you hear other companies talking about much larger numbers, manageable. We talk about having leading brands in niche categories where we have pricing power. In many instances, exceptionally strong share of category, 50%, 60%. During those three years of COVID, we were able to offset inflation dollar for dollar with pricing and cost saving efforts. So it dropped to the bottom line impact was negated largely through our pricing power. How we think about it going forward, you know, we largely get price through new product development, right?
A new proposition to a consumer, which allows for a higher gross margin, generally speaking. We think we can take price probably more surgically, right, where there's inflationary pressures, but certainly not, we're not in the period we were in a few years ago. So we think we're well positioned to take price should the need arise. But as we sit here today, it's largely labor for us, right? It's the conversion costs of making the product, and that's been around since we all started working.
Great and then maybe if you could talk about.