EXHIBIT 99.1
Prestige Brands Holdings, Inc. Reports Third Quarter & Nine Months Results
Irvington, NY, February 8, 2008—Prestige Brands Holdings, Inc. (NYSE-PBH), a consumer products company with a diversified portfolio of well-known brands in over-the-counter healthcare products, household products and personal care products, today announced results for the third fiscal quarter and nine months ended December 31, 2007.
Third Quarter Results
Revenues for the third quarter ended December 31, 2007 were $80.2 million, slightly ahead of last year’s comparable period revenues of $80.1 million, despite the negative effects of a weak cough/cold season and the industry-wide voluntary pediatric cough /cold product withdrawal in October which affected two Little Remedies® products.
Operating income of $22.9 million for the third fiscal quarter was $1.6 million or 7% below last year’s third quarter operating income of $24.5 million. The decline in operating income was due to a gross profit decrease primarily due to unfavorable sales mix and an increase in advertising and promotional spending, partially offset by a decline in general and administrative expenses. A&P expenses were 7% higher than those of the prior year comparable period primarily because of the Company continuing support behind the new product launches of Murine™ Earigate™ and Comet® SprayGel Mildew Stain Remover. General and administrative expenses declined in the quarter due to reductions to incentive compensation accruals partly offset by increased legal expenses.
Net income for the third quarter ended December 31, 2007 was $8.4 million or $0.17 per diluted share. This was 6% below the comparable prior period’s adjusted net income of $8.9 million or $0.18 per diluted share, which reflects reported net income of $10.6 million less an adjustment of $1.7 million ($0.03 per diluted share) resulting from a favorable non-cash income tax benefit.
Commenting on the results, Mark Pettie, Chairman and CEO said, “Our third quarter revenue results were mixed in aggregate. We are quite pleased with the solid organic growth we enjoyed across many of our largest OTC and Household brands and the continued strong success of our Murine™ Earigate™ and Comet® SprayGel Mildew Stain Remover new product launches. However, the effect of two well publicized events, namely a weak cough/cold season and the industry-wide voluntary pediatric cough/cold product withdrawal, negated much of the growth.”
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Results by Segment
Over-The-Counter Healthcare Products
Revenues for the OTC segment in the third fiscal quarter were $45.1 million, or 1% below the prior year comparable quarter. The slight decline was due to a weak cough/cold season affecting sales of Chloraseptic®, the industry-wide voluntary withdrawal of pediatric cough/cold products affecting two Little Remedies® products, and continuing competitive pressures on The Doctor’s® NightGuard™ dental protector. Partially offsetting the above declines were continuing strong sales of the Murine™ brand, led by new Murine™ Earigate™, and strong sales of Clear Eyes®.
Household Products
Revenues for the household products segment in the third fiscal quarter were $30.1 million, 5% higher than the prior year comparable quarter, primarily due to strong sales of Comet® SprayGel Mildew Stain Remover, this segment’s newest product.
Personal Care Products
The smallest segment of the Company’s business registered revenues of $5.1 million, 13% below last year’s third quarter results.
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. We view “free cash flow” as an important measure because it is an indicator of cash available for debt repayment and other corporate purposes. We define “free cash flow” as operating cash flow less capital expenditures.
The Company’s free cash flow for the three months ended December 31, 2007 was $13.6 million, composed of operating cash flows of $13.8 million less capital expenditures of $0.2 million. The $13.6 million of free cash flow was an improvement over the $12.4 million of free cash flow, composed of operating cash flows of $12.5 million less capital expenditures of $0.1 million, generated in the prior year’s comparable quarter.
During the third fiscal quarter, the Company used free cash flow to reduce its term loan debt by $10.9 million. Year to date, the Company has reduced its debt by $37.1 million to $426.2 million at December 31, 2007.
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Year-To-Date Results
For the nine month period ended December 31, 2007, revenues were $246.2 million, 2% higher than the prior period comparable results of $240.6 million. Operating income of $66.6 million was 8% below the prior year comparable period, largely as a result of increased advertising and promotion expenses and increased general and administrative expenses. Net income for the nine month period ended December 31, 2007 was $23.6 million, 9% below the comparable period’s adjusted net income of $26.0 million, which reflects an adjustment of $1.7 million ($0.03 per diluted share) resulting from the favorable non-cash income tax benefit mentioned above.
Conference Call
The Company will host a conference call to review its third quarter fiscal 2008 results on Friday, February 8, 2008 at 8:30 am (EST). The toll free dial in number is 866-271-0675. International callers may dial 617-213-8892. The conference password is “prestige”. We will have a live internet webcast of the call, as well as an archived replay, which can be accessed from the Investor Relations page of www.prestigebrandsinc.com. The archived replay will be available for two weeks following completion of the call. The dial in numbers are 888-286-8010 (domestic) and 617-801-6888 (international). The pass code for the replay is 51390487.
About Prestige Brands Holdings, Inc.
Located in Irvington, New York, Prestige Brands Holdings, Inc. is a marketer and distributor of brand name over-the-counter healthcare, personal care and household products sold throughout the U.S, Canada, and certain international markets. Key brands include Compound W® wart remover, Chloraseptic® sore throat treatment, New-Skin® liquid bandage, Clear Eyes® and Murine™ eye care products, Little Remedies® pediatric over-the-counter healthcare products, The Doctor’s® NightGuard™ dental protector, Cutex® nail polish remover, Comet® and Spic and Span® household products, and other well-known brands.
Forward-Looking Statements
Note: This news release contains, and our upcoming conference call may include, "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
3
Prestige Brands Holdings, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended December 31 | Nine Months Ended December 31 | |||||||||||||||
| (In thousands, except per share data) | 2007 | 2006 | 2007 | 2006 | ||||||||||||
| Revenues | ||||||||||||||||
| Net sales | $ | 79,644 | $ | 79,564 | $ | 244,525 | $ | 239,164 | ||||||||
| Other revenues | 578 | 560 | 1,645 | 1,434 | ||||||||||||
| Total revenues | 80,222 | 80,124 | 246,170 | 240,598 | ||||||||||||
| Cost of Sales | ||||||||||||||||
| Costs of sales | 38,783 | 36,766 | 118,875 | 114,350 | ||||||||||||
| Gross profit | 41,439 | 43,358 | 127,295 | 126,248 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Advertising and promotion | 9,572 | 8,952 | 28,375 | 25,809 | ||||||||||||
| General and administrative | 6,209 | 7,068 | 24,039 | 20,761 | ||||||||||||
| Depreciation | 126 | 177 | 379 | 616 | ||||||||||||
| Amortization of intangible assets | 2,627 | 2,627 | 7,881 | 7,013 | ||||||||||||
| Total operating expenses | 18,534 | 18,824 | 60,674 | 54,199 | ||||||||||||
| Operating income | 22,905 | 24,534 | 66,621 | 72,049 | ||||||||||||
| Other income (expense) | ||||||||||||||||
| Interest income | 164 | 199 | 524 | 787 | ||||||||||||
| Interest expense | (9,490 | ) | (10,355 | ) | (29,132 | ) | (30,478 | ) | ||||||||
| Total other income (expense) | (9,326 | ) | (10,156 | ) | (28,608 | ) | (29,691 | ) | ||||||||
Income before provision for income taxes | 13,549 | 14,378 | 38,013 | 42,358 | ||||||||||||
| Provision for income taxes | 5,160 | 3,735 | 14,445 | 14,675 | ||||||||||||
| Net income | $ | 8,419 | $ | 10,643 | $ | 23,568 | $ | 27,683 | ||||||||
| Basic earnings per share | $ | 0.17 | $ | 0.21 | $ | 0.47 | $ | 0.56 | ||||||||
| Diluted earnings per share | $ | 0.17 | $ | 0.21 | $ | 0.47 | $ | 0.55 | ||||||||
Weighted average shares outstanding: Basic | 49,799 | 49,535 | 49,744 | 49,425 | ||||||||||||
| Diluted | 50,035 | 50,024 | 50,040 | 50,016 | ||||||||||||
4
Prestige Brands Holdings, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands)
| Assets | December 31, 2007 | March 31, 2007 | ||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 11,554 | $ | 13,758 | ||||
| Accounts receivable | 38,977 | 35,167 | ||||||
| Inventories | 30,659 | 30,173 | ||||||
| Deferred income tax assets | 3,094 | 2,735 | ||||||
| Prepaid expenses and other current assets | 2,002 | 1,935 | ||||||
| Total current assets | 86,286 | 83,768 | ||||||
| Property and equipment | 1,437 | 1,449 | ||||||
| Goodwill | 308,915 | 310,947 | ||||||
| Intangible assets | 649,277 | 657,157 | ||||||
| Other long-term assets | 7,528 | 10,095 | ||||||
| Total Assets | $ | 1,053,443 | $ | 1,063,416 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 18,703 | $ | 19,303 | ||||
| Accrued interest payable | 4,574 | 7,552 | ||||||
| Other accrued liabilities | 11,711 | 10,505 | ||||||
| Current portion of long-term debt | 3,550 | 3,550 | ||||||
| Total current liabilities | 38,538 | 40,910 | ||||||
| Long-term debt | 422,675 | 459,800 | ||||||
| Other long-term liabilities | 2,801 | 2,801 | ||||||
| Deferred income tax liabilities | 120,066 | 114,571 | ||||||
| Total Liabilities | 584,080 | 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 | 379,983 | 379,225 | ||||||
Treasury stock, at cost – 57 shares at December 31, 2007 and 55 shares at March 31, 2007 | (45 | ) | (40 | ) | ||||
| Accumulated other comprehensive income | 21 | 313 | ||||||
| Retained earnings | 88,903 | 65,335 | ||||||
| Total stockholders’ equity | 469,363 | 445,334 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 1,053,443 | $ | 1,063,416 | ||||
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Prestige Brands Holdings, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended December 31 | ||||||||
| (In thousands) | 2007 | 2006 | ||||||
| Operating Activities | ||||||||
| Net income | $ | 23,568 | $ | 27,683 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 8,260 | 7,629 | ||||||
| Deferred income taxes | 7,366 | 7,686 | ||||||
| Amortization of deferred financing costs | 2,283 | 2,422 | ||||||
| Stock-based compensation | 758 | 439 | ||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | (3,810 | ) | 4,812 | |||||
| Inventories | (486 | ) | 2,707 | |||||
| Prepaid expenses and other current assets | (66 | ) | (765 | ) | ||||
| Accounts payable | (795 | ) | 1,366 | |||||
| Income taxes payable | -- | (1,584 | ) | |||||
| Accrued liabilities | (1,772 | ) | 2,894 | |||||
| Net cash provided by operating activities | 35,306 | 55,289 | ||||||
| Investing Activities | ||||||||
| Purchases of equipment | (364 | ) | (429 | ) | ||||
| Change in other assets due to purchase price adjustments | (16 | ) | 386 | |||||
| Purchase of business | -- | (31,242 | ) | |||||
| Net cash used for investing activities | (380 | ) | (31,285 | ) | ||||
| Financing Activities | ||||||||
| Repayment of long-term debt | (37,125 | ) | (27,392 | ) | ||||
| Purchase of common stock for treasury | (5 | ) | (10 | ) | ||||
| Net cash used for financing activities | (37,130 | ) | (27,402 | ) | ||||
| Decrease in cash | (2,204 | ) | (3,398 | ) | ||||
| Cash - beginning of period | 13,758 | 8,200 | ||||||
| Cash - end of period | $ | 11,554 | $ | 4,802 | ||||
| Supplemental Cash Flow Information | ||||||||
| Fair value of assets acquired | $ | -- | $ | 35,096 | ||||
| Fair value of liabilities assumed | -- | (3,854 | ) | |||||
| Cash paid to purchase business | $ | -- | $ | 31,242 | ||||
| Interest paid | $ | 29,828 | $ | 30,749 | ||||
| Income taxes paid | $ | 6,911 | $ | 8,790 | ||||
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Segment Results of Operations
| Three Months Ended December 31, 2007 | ||||||||||||||||
| Over-the-Counter | Household | Personal | ||||||||||||||
| Healthcare | Cleaning | Care | Consolidated | |||||||||||||
| Net sales | $ | 45,015 | $ | 29,568 | $ | 5,061 | $ | 79,644 | ||||||||
| Other revenues | 51 | 527 | -- | 578 | ||||||||||||
| Total revenues | 45,066 | 30,095 | 5,061 | 80,222 | ||||||||||||
| Cost of sales | 16,994 | 18,332 | 3,457 | 38,783 | ||||||||||||
| Gross profit | 28,072 | 11,763 | 1,604 | 41,439 | ||||||||||||
| Advertising and promotion | 7,045 | 2,271 | 256 | 9,572 | ||||||||||||
| Contribution margin | $ | 21,027 | $ | 9,492 | $ | 1,348 | 31,867 | |||||||||
| Other operating expenses | 8,962 | |||||||||||||||
| Operating income | 22,905 | |||||||||||||||
| Other (income) expense | 9,326 | |||||||||||||||
| Provision for income taxes | 5,160 | |||||||||||||||
| Net income | $ | 8,419 | ||||||||||||||
| Nine Months Ended December 31, 2007 | ||||||||||||||||
| Over-the-Counter | Household | Personal | ||||||||||||||
| Healthcare | Cleaning | Care | Consolidated | |||||||||||||
| Net sales | $ | 137,444 | $ | 89,838 | $ | 17,243 | $ | 244,525 | ||||||||
| Other revenues | 51 | 1,566 | 28 | 1,645 | ||||||||||||
| Total revenues | 137,495 | 91,404 | 17,271 | 246,170 | ||||||||||||
| Cost of sales | 52,068 | 56,312 | 10,495 | 118,875 | ||||||||||||
| Gross profit | 85,427 | 35,092 | 6,776 | 127,295 | ||||||||||||
| Advertising and promotion | 21,080 | 6,474 | 821 | 28,375 | ||||||||||||
| Contribution margin | $ | 64,347 | $ | 28,618 | $ | 5,955 | 98,920 | |||||||||
| Other operating expenses | 32,299 | |||||||||||||||
| Operating income | 66,621 | |||||||||||||||
| Other (income) expense | 28,608 | |||||||||||||||
| Provision for income taxes | 14,445 | |||||||||||||||
| Net income | $ | 23,568 | ||||||||||||||
7
Prestige Brands Holdings, Inc.
Segment Results of Operations
| Three Months Ended December 31, 2006 | ||||||||||||||||
Over-the-Counter Healthcare | Household Cleaning | Personal Care | Consolidated | |||||||||||||
| Net sales | $ | 45,574 | $ | 28,155 | $ | 5,835 | $ | 79,564 | ||||||||
| Other revenues | -- | 560 | -- | 560 | ||||||||||||
| Total revenues | 45,574 | 28,715 | 5,835 | 80,124 | ||||||||||||
| Cost of sales | 15,800 | 17,787 | 3,179 | 36,766 | ||||||||||||
| Gross profit | 29,774 | 10,928 | 2,656 | 43,358 | ||||||||||||
| Advertising and promotion | 7,089 | 1,595 | 268 | 8,952 | ||||||||||||
| Contribution margin | $ | 22,685 | $ | 9,333 | $ | 2,388 | 34,406 | |||||||||
| Other operating expenses | 9,872 | |||||||||||||||
| Operating income | 24,534 | |||||||||||||||
| Other (income) expense | 10,156 | |||||||||||||||
| Provision for income taxes | 3,735 | |||||||||||||||
| Net income | $ | 10,643 | ||||||||||||||
| Nine Months Ended December 31, 2006 | ||||||||||||||||
Over-the-Counter Healthcare | Household Cleaning | Personal Care | Consolidated | |||||||||||||
| Net sales | $ | 131,427 | $ | 88,625 | $ | 19,112 | $ | 239,164 | ||||||||
| Other revenues | -- | 1,434 | -- | 1,434 | ||||||||||||
| Total revenues | 131,427 | 90,059 | 19,112 | 240,598 | ||||||||||||
| Cost of sales | 48,198 | 54,882 | 11,270 | 114,350 | ||||||||||||
| Gross profit | 83,229 | 35,177 | 7,842 | 126,248 | ||||||||||||
| Advertising and promotion | 19,573 | 5,304 | 932 | 25,809 | ||||||||||||
| Contribution margin | $ | 63,656 | $ | 29,873 | $ | 6,910 | 100,439 | |||||||||
| Other operating expenses | 28,390 | |||||||||||||||
| Operating income | 72,049 | |||||||||||||||
| Other (income) expense | 29,691 | |||||||||||||||
| Provision for income taxes | 14,675 | |||||||||||||||
| Net income | $ | 27,683 | ||||||||||||||