Exhibit 99.1
Prestige Brands Holdings, Inc. Reports Second Quarter & Six Months Fiscal 2008 Results
Irvington, NY, November 8, 2007—Prestige Brands Holdings, Inc. (NYSE-PBH) today announced results for the second quarter and first half of fiscal year 2008, which ended on September 30, 2007.
Net revenues for the second fiscal quarter ended September 30, 2007 were $87.3 million, 3% higher than net revenues of $84.6 million in the prior year comparable period. Net revenues for the quarter would have been 4% higher, and organic sales for the quarter would have been 2% higher than the prior year quarter were it not for the industry-wide voluntary withdrawal of infant cough/cold products in which the Company participated that affected two Little Remedies® products. During the quarter, the Company increased its allowance for estimated returns by $1.1 million and its allowance for obsolescence by $0.8 million to reflect the two withdrawn items.
Operating income of $20.6 million was 15% lower than the prior year quarter operating income of $24.1 million. The reduction in operating income is primarily due to the impact of the Little Remedies withdrawal, as well as increased legal expenditures related to arbitration with OraSure Technologies, Inc., a supplier of Compound W Freeze Off®, and four separate legal actions initiated by the Company involving infringements of its intellectual property relative to its The Doctor’s® Night Guard™ products.
Net income for the second fiscal quarter of $6.8 million, or $0.14 per share, was below last fiscal year’s second quarter net income of $8.8 million, or $0.18 per share. Excluding the effects of the voluntary Little Remedies withdrawal, net income would have been $8.1 million, or $0.16 per share.
First Six Months of Fiscal 2008
Net revenues for the first six months of fiscal 2008 were $165.9 million, an increase of 3% over the prior year comparable period results of $160.5 million. Operating income of $43.7 million was 8% below the comparable period’s results of $47.5 million. Net income of $15.1 million, or $0.30 per share, was 11% below the comparable period’s net income of $17.0 million, or $0.34 per share.
Q2 and Six Month Results by Segment
Over-the-Counter (OTC) Healthcare Products
Net revenues of OTC healthcare products increased 8% to $50.0 million over the comparable period’s results of $46.3 million. Excluding the impact of the acquisition of Wartner® wart remover products in the second quarter of fiscal 2007 and the effects of the increased allowance for returns for the two Little Remedies® products, OTC organic sales increased by 5%. Increases in the segment were led by the successful introduction of new Murine™ Earigate™ and Clear Eyes® eye care products.
For the six month period ended September 30, 2007, OTC net revenues were $92.4 million compared to $85.9 million in the prior year comparable period, an increase of 8%.
Household Products
Net revenues for the household products segment were $31.4 million, even with the prior year comparable quarter. An increase in the Chore Boy® line of household scrubbers offset a decline in sales of Spic and Span® household cleaners. Revenues for Comet®, the segment’s largest brand, were even with the prior year comparable period. The sales increase generated from the successful introduction of Comet® SprayGel Mildew Stain Remover was offset by inventory reductions at one of our key mass merchandisers.
For the six month period ended September 30, 2007, net revenues for the household products segment were $61.3 million, even with the prior year comparable period.
Personal Care Products
Net revenues for the personal care products segment were $5.9 million, 16% lower than the prior year comparable period results of $7.0 million. Cutex® nail polish remover and Denorex® shampoo experienced sales decreases versus the prior year period in line with expectations. Revenues of Prell® shampoo were up slightly for the quarter.
For the first six months of fiscal 2008, net revenues were $12.2 million compared to $13.3 million in the prior year comparable period.
Free Cash Flow and Debt Repayment
Free cash flow is a “non-GAAP” financial measure as that term is defined by the Securities and Exchange Commission in Regulation G. Free cash flow is presented in this news release because management believes that it is a commonly used measure of liquidity, and indicative of cash available for debt repayment and acquisitions. The Company defines “free cash flow” as operating cash flow less capital expenditures.
The Company’s free cash flow for the quarter ended September 30, 2007 was $13.0 million, composed of operating cash flow of $13.1 million less capital expenditures of $0.1 million. This compares to free cash flow of $21.3 million generated in the prior year quarter. The decline in free cash flow was driven by the year on year reduction in net income combined with an increase in working capital versus the prior year comparable period.
Our continued strong absolute cash flow resulted in a debt pay down of $10.4 million on our term loan during the second fiscal quarter. Total debt has been reduced to $437.1 million at September 30, 2007.
Commentary
“Our second quarter saw continued progress on the path to sustainable organic growth,” said Mark Pettie, Chairman and CEO. “Were it not for the industry-wide voluntary withdrawal affecting two of our Little Remedies® products, our organic sales would have been 2% above the year ago comparable period, aided by new product innovation in both our OTC and household businesses. In addition, efforts toward cost of goods savings are beginning to take effect and have already helped to shelter us from raw material increases,” he said.
Conference Call
The Company will host a conference call to review its second quarter and six month results on Thursday, November 8, 2007 at 8:30 am (ET). The toll free number is 1-800-299-7635 within North America and 1-617-786-2901 outside North America. The conference pass code is “prestige”. Telephonic replays will be available for two weeks following the completion of the call and can be accessed at 1-888-286-8010 within North America, and at 1-617-801-6888 outside of North America. The pass code is 72463596.
About Prestige Brands Holdings, Inc.
Prestige Brands markets and distributes brand name over-the-counter healthcare, personal care and household products sold throughout the United States, Canada and certain international markets. Key brands include Compound W(R) wart treatment, Chloraseptic(R) sore throat relief products, New Skin(R) liquid bandage, Clear Eyes(R) and Murine(R) eye care products, Little Remedies(R) pediatric over-the-counter healthcare products, The Doctor's(R)NightGuard(TM), Cutex(R) nail polish remover, Comet(R) and Spic and Span(R) household cleaners, and other well-recognized brands.
Forward Looking Statements
Note: This news release contains "forward-looking statements" within the meaning of the federal securities laws and is intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" generally can be identified by the use of forward-looking terminology such as "assumptions," "target," "guidance," "outlook," "plans," "projection," "may," "will," "would," "expect," "intend," "estimate," "anticipate," "believe, "potential," or "continue" (or the negative or other derivatives of each of these terms) or similar terminology. The "forward-looking statements" include, without limitation, statements regarding the outlook for Prestige Brands Holdings' market and the demand for its products, earnings per share, future cash flows from operations, future revenues and margin requirement and expansion, the success of new product introductions, growth in costs and expenses, and the impact of acquisitions, divestitures, restructurings and other unusual items, including Prestige Brands Holdings' ability to integrate and obtain the anticipated results and synergies from its acquisitions. These projections and statements are based on management's estimates and assumptions with respect to future events and financial performance and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results could differ materially from those projected as a result of certain factors. A discussion of factors that could cause results to vary is included in the Company's Annual Report on Form 10-K and other periodic and other reports filed with the Securities and Exchange Commission.
Contact: Dean Siegal
914-524-6819
Prestige Brands Holdings, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended September 30 | Six Months Ended September 30 | |||||||||||||||
(In thousands, except per share data) | 2007 | 2006 | 2007 | 2006 | ||||||||||||
Revenues | ||||||||||||||||
| Net sales | $ | 86,840 | $ | 84,033 | $ | 164,881 | $ | 159,600 | ||||||||
| Other revenues | 497 | 518 | 1,067 | 874 | ||||||||||||
| Total revenues | 87,337 | 84,551 | 165,948 | 160,474 | ||||||||||||
Cost of Sales | ||||||||||||||||
| Costs of sales | 42,770 | 41,259 | 80,092 | 77,584 | ||||||||||||
| Gross profit | 44,567 | 43,292 | 85,856 | 82,890 | ||||||||||||
Operating Expenses | ||||||||||||||||
| Advertising and promotion | 11,017 | 9,455 | 18,803 | 16,857 | ||||||||||||
| General and administrative | 10,184 | 7,259 | 17,830 | 13,693 | ||||||||||||
| Depreciation | 129 | 219 | 253 | 439 | ||||||||||||
| Amortization of intangible assets | 2,627 | 2,193 | 5,254 | 4,386 | ||||||||||||
| Total operating expenses | 23,957 | 19,126 | 42,140 | 35,375 | ||||||||||||
| Operating income | 20,610 | 24,166 | 43,716 | 47,515 | ||||||||||||
Other income (expense) | ||||||||||||||||
| Interest income | 173 | 403 | 360 | 588 | ||||||||||||
| Interest expense | (9,768 | ) | (10,146 | ) | (19,642 | ) | (20,123 | ) | ||||||||
| Total other income (expense) | (9,595 | ) | (9,743 | ) | (19,282 | ) | (19,535 | ) | ||||||||
Income before provision for income taxes | 11,015 | 14,423 | 24,434 | 27,980 | ||||||||||||
| Provision for income taxes | 4,186 | 5,639 | 9,285 | 10,940 | ||||||||||||
| Net income | $ | 6,829 | $ | 8,784 | $ | 15,149 | $ | 17,040 | ||||||||
| Basic earnings per share | $ | 0.14 | $ | 0.18 | $ | 0.30 | $ | 0.35 | ||||||||
| Diluted earnings per share | $ | 0.14 | $ | 0.18 | $ | 0.30 | $ | 0.34 | ||||||||
Weighted average shares outstanding: Basic | 49,710 | 49,451 | 49,686 | 49,389 | ||||||||||||
| Diluted | 50,046 | 49,994 | 50,042 | 49,991 | ||||||||||||
Prestige Brands Holdings, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands)
Assets | September 30, 2007 | March 31, 2007 | ||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 8,799 | $ | 13,758 | ||||
| Accounts receivable | 46,512 | 35,167 | ||||||
| Inventories | 27,783 | 30,173 | ||||||
| Deferred income tax assets | 3,337 | 2,735 | ||||||
| Prepaid expenses and other current assets | 3,628 | 1,935 | ||||||
| Total current assets | 90,059 | 83,768 | ||||||
| Property and equipment | 1,391 | 1,449 | ||||||
| Goodwill | 308,915 | 310,947 | ||||||
| Intangible assets | 651,903 | 657,157 | ||||||
| Other long-term assets | 8,310 | 10,095 | ||||||
| Total Assets | $ | 1,060,578 | $ | 1,063,416 | ||||
Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 21,318 | $ | 19,303 | ||||
| Accrued interest payable | 7,556 | 7,552 | ||||||
| Other accrued liabilities | 12,771 | 10,505 | ||||||
| Current portion of long-term debt | 3,550 | 3,550 | ||||||
| Total current liabilities | 45,195 | 40,910 | ||||||
| Long-term debt | 433,563 | 459,800 | ||||||
| Other long-term liabilities | 2,801 | 2,801 | ||||||
| Deferred income tax liabilities | 117,609 | 114,571 | ||||||
| Total Liabilities | 599,168 | 618,082 | ||||||
Stockholders’ Equity | ||||||||
| Preferred stock - $0.01 par value | ||||||||
Authorized – 5,000 shares | ||||||||
Issued and outstanding – None | -- | -- | ||||||
| Common stock - $0.01 par value | ||||||||
Authorized – 250,000 shares | ||||||||
Issued – 50,060 shares | 501 | 501 | ||||||
| Additional paid-in capital | 380,371 | 379,225 | ||||||
Treasury stock, at cost – 57 shares at September 30, 2007 and 55 shares at March 31, 2007 | (44 | ) | (40 | ) | ||||
| Accumulated other comprehensive income | 98 | 313 | ||||||
| Retained earnings | 80,484 | 65,335 | ||||||
| Total stockholders’ equity | 461,410 | 445,334 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 1,060,578 | $ | 1,063,416 | ||||
Prestige Brands Holdings, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended September 30 | ||||||||
(In thousands) | 2007 | 2006 | ||||||
Operating Activities | ||||||||
| Net income | $ | 15,149 | $ | 17,040 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 5,507 | 4,825 | ||||||
| Deferred income taxes | 4,622 | 6,197 | ||||||
| Amortization of deferred financing costs | 1,561 | 1,609 | ||||||
| Stock-based compensation | 1,146 | 224 | ||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | (11,345 | ) | 2,595 | |||||
| Inventories | 2,390 | 5,202 | ||||||
| Prepaid expenses and other current assets | (1,692 | ) | (1,047 | ) | ||||
| Accounts payable | 1,884 | 4,494 | ||||||
| Income taxes payable | -- | (1,731 | ) | |||||
| Accrued liabilities | 2,270 | 3,326 | ||||||
| Net cash provided by operating activities | 21,492 | 42,734 | ||||||
Investing Activities | ||||||||
| Purchases of equipment | (194 | ) | (313 | ) | ||||
| Purchase of business | (16 | ) | (31,242 | ) | ||||
| Net cash used for investing activities | (210 | ) | (31,555 | ) | ||||
Financing Activities | ||||||||
| Repayment of long-term debt | (26,237 | ) | (8,865 | ) | ||||
| Purchase of common stock for treasury | (4 | ) | (6 | ) | ||||
| Net cash used for financing activities | (26,241 | ) | (8,871 | ) | ||||
| Increase (decrease) in cash | (4,959 | ) | 2,308 | |||||
| Cash - beginning of period | 13,758 | 8,200 | ||||||
| Cash - end of period | $ | 8,799 | $ | 10,508 | ||||
| Interest paid | $ | 18,078 | $ | 18,306 | ||||
| Income taxes paid | $ | 5,664 | $ | 6,287 | ||||
Consolidated Segment Operations
(Unaudited)
Three Months Ended September 30, 2007 | ||||||||||||||||
Over-the-Counter | Household | Personal | ||||||||||||||
Healthcare | Cleaning | Care | Consolidated | |||||||||||||
| Net sales | $ | 50,003 | 30,925 | $ | 5,912 | $ | 86,840 | |||||||||
| Other revenues | -- | 497 | -- | 497 | ||||||||||||
| Total revenues | 50,003 | 31,422 | 5,912 | 87,337 | ||||||||||||
| Cost of sales | 19,688 | 19,587 | 3,495 | 42,770 | ||||||||||||
| Gross profit | 30,315 | 11,835 | 2,417 | 44,567 | ||||||||||||
| Advertising and promotion | 8,154 | 2,575 | 288 | 11,017 | ||||||||||||
| Contribution margin | $ | 22,161 | $ | 9,260 | $ | 2,129 | 33,550 | |||||||||
| Other operating expenses | 12,940 | |||||||||||||||
| Operating income | 20,610 | |||||||||||||||
| Other (income) expense | 9,595 | |||||||||||||||
| Provision for income taxes | 4,186 | |||||||||||||||
| Net income | $ | 6,829 | ||||||||||||||
Six Months Ended September 30, 2007 | ||||||||||||||||
Over-the-Counter | Household | Personal | ||||||||||||||
Healthcare | Cleaning | Care | Consolidated | |||||||||||||
| Net sales | $ | 92,429 | $ | 60,270 | $ | 12,182 | $ | 164,881 | ||||||||
| Other revenues | -- | 1,039 | 28 | 1,067 | ||||||||||||
| Total revenues | 92,429 | 61,309 | 12,210 | 165,948 | ||||||||||||
| Cost of sales | 35,074 | 37,980 | 7,038 | 80,092 | ||||||||||||
| Gross profit | 57,355 | 23,329 | 5,172 | 85,856 | ||||||||||||
| Advertising and promotion | 14,035 | 4,203 | 565 | 18,803 | ||||||||||||
| Contribution margin | $ | 43,320 | $ | 19,126 | $ | 4,607 | 67,053 | |||||||||
| Other operating expenses | 23,337 | |||||||||||||||
| Operating income | 43,716 | |||||||||||||||
| Other (income) expense | 19,282 | |||||||||||||||
| Provision for income taxes | 9,285 | |||||||||||||||
| Net income | $ | 15,149 | ||||||||||||||
Prestige Brands Holdings, Inc.
Consolidated Segment Operations
(Unaudited)
Three Months Ended September 30, 2006 | ||||||||||||||||
Over-the-Counter Healthcare | Household Cleaning | Personal Care | Consolidated | |||||||||||||
| Net sales | $ | 46,255 | $ | 30,732 | $ | 7,046 | $ | 84,033 | ||||||||
| Other revenues | -- | 518 | -- | 518 | ||||||||||||
| Total revenues | 46,255 | 31,250 | 7,046 | 84,551 | ||||||||||||
| Cost of sales | 18,001 | 18,941 | 4,317 | 41,259 | ||||||||||||
| Gross profit | 28,254 | 12,309 | 2,729 | 43,292 | ||||||||||||
| Advertising and promotion | 7,058 | 2,020 | 377 | 9,455 | ||||||||||||
| Contribution margin | $ | 21,196 | $ | 10,289 | $ | 2,352 | 33,837 | |||||||||
| Other operating expenses | 9,671 | |||||||||||||||
| Operating income | 24,166 | |||||||||||||||
| Other (income) expense | 9,743 | |||||||||||||||
| Provision for income taxes | 5,639 | |||||||||||||||
| Net income | $ | 8,784 | ||||||||||||||
Six Months Ended September 30, 2006 | ||||||||||||||||
Over-the-Counter Healthcare | Household Cleaning | Personal Care | Consolidated | |||||||||||||
| Net sales | $ | 85,853 | $ | 60,470 | $ | 13,277 | $ | 159,600 | ||||||||
| Other revenues | -- | 874 | -- | 874 | ||||||||||||
| Total revenues | 85,853 | 61,344 | 13,277 | 160,474 | ||||||||||||
| Cost of sales | 32,398 | 37,095 | 8,091 | 77,584 | ||||||||||||
| Gross profit | 53,455 | 24,249 | 5,186 | 82,890 | ||||||||||||
| Advertising and promotion | 12,483 | 3,710 | 664 | 16,857 | ||||||||||||
| Contribution margin | $ | 40,972 | $ | 20,539 | $ | 4,522 | 66,033 | |||||||||
| Other operating expenses | 18,518 | |||||||||||||||
| Operating income | 47,515 | |||||||||||||||
| Other (income) expense | 19,535 | |||||||||||||||
| Provision for income taxes | 10,940 | |||||||||||||||
| Net income | $ | 17,040 | ||||||||||||||