EXHIBIT 99.1
Prestige Brands Holdings, Inc. Reports Second Quarter & Six Months Fiscal 2011 Results
For the Quarter, EPS of $0.23 vs. $0.18; Income from Continuing Operations Up 28%; Completes Acquisition of Blacksmith Brands on November 1
Irvington, NY-November 4, 2010-Prestige Brands Holdings, Inc. (NYSE-PBH) today announced results for the second quarter and first half of fiscal year 2011, which ended on September 30, 2010. The Company also announced the completion on November 1, 2010 of the acquisition of Blacksmith Brands, Inc., which added five over-the-counter healthcare products to its business.
Income from continuing operations for the second fiscal quarter was $11.4 million, 28% higher than the prior year comparable period's results of $8.9 million resulting in earnings per share of $0.23 compared to $0.18 a year ago1. Net revenues from continuing operations for the second fiscal quarter were $78.3 million, $2.4 million or 3% below the prior year's comparable quarter net revenues of $80.7 million. Gross margin improved by 1.4 basis points for the quarter while advertising and promotion (A&P) and general and administrative (G&A) expenditures decreased compared to the second quarter in the prio r fiscal year.
“We are pleased with our results for the quarter as we continue to make progress against our stated primary objectives of growing our core OTC brands which grew once again this quarter. Overall, revenues were in line with previously stated expectations as a result of heavy prior year H1N1 retailer buy in and continued competitive pressure in Household products. Profitability improved significantly as a result of gross margin improvement as well as prudent advertising and promotion investment in our priority brands,” said Matthew Mannelly, President and CEO. “In addition, we are excited by the recent acquisition of Blacksmith Brands which closed on November 1st,” he said. “This is a transformational event for Prestige, positioning the Company for growth, and taking a meaningful step toward our long-term commitment to OTC brands as the Company's focus. We will begin supporting these wonderful brands immediately in our efforts to accelerate their momentum in the marketplace. Furthermore, as we look to the second half of the fiscal year, we remain cautiously optimistic given the sluggish retail environment. We will continue to view this
1 The reported results reflect the September 1, 2010 divestiture of Cutex® nail polish remover. Revenues from this brand are now classified as discontinued operations, and the results of both the second fiscal quarter and the prior year comparable quarter reflect this classification. Beginning with the second fiscal quarter of FY11 and going forward, the remaining brands in the personal care segment will be reported as part of the over-the-counter healthcare segment since they account for less than one half of one percent of total revenues.
as an opportunity to build our brands and invest in our future growth. As we stated at the start of the year, we expect modest A&P growth over the course of the year as we build our brands and we are on track with those investments as we enter the heart of the cough/cold season.”
First Half of Fiscal 2011
Net revenues from continuing operations for the first six months of fiscal 2011 were $149.5 million, an increase of 0.5% over the prior year's comparable period's results of $148.8 million. Income from continuing operations was $20.6 million, an increase of 27.2%, compared to $16.2 million in the prior year’s comparable period. This resulted in EPS from continuing operations of $0.41 per share, 28.1% higher than the prior year’s comparable period's results of $0.32 per share.
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 here because management believes 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 from continuing operations less capital expenditures.
The Company's free cash flow for the second quarter ended September 30, 2010 was $22.0 million, an increase of $300,000 or 1.4% over the prior year comparable quarter. Free cash flow is composed of operating cash flow from continuing operations of $22.1 million less capital expenditures of $100,000. This compares to the prior year comparable quarter's free cash flow of $21.7 million, composed of operating cash flow from continuing operation of $21.8 million less capital expenditures of $100,000.
Total indebtedness at September 30, 2010 was $295.5 million; however, subsequent to the end of the quarter, indebtedness increased $215.0 million as a result of indebtedness incurred to acquire Blacksmith Brands. At September 30, 2010, cash on the balance sheet totaled $55.0 million.
Second Quarter Results by Segment Net revenues for the over-the-counter healthcare segment were $50.8 million, $900,000 lower than the prior year comparable quarter. Increases in Clear Eyes®, Little Remedies®, and Compound W® were off set by decreases in Chloraseptic and the Allergen Block products. Net revenues for the household cleaning segment were $27.5 million, $1.5 million or 5% less than the prior year comparable quarter. Comet® and Spic and Span® experienced declines in the competitive household category.
The Company will host a conference call to review its second quarter and six month results on Thursday, November 4, 2010 at 8:30am EST. The toll-free dial in numbers are 1-800-383-8119 within North America and 1-617- 597-5344 outside of North America. The conference passcode 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 617-801-6888 outside North America. The passcode is 49548893.
About Prestige Brands Holdings, Inc. The Company markets and distributes brand name over-the-counter and household cleaning products throughout the U.S., Canada, and certain international markets. Key brands include Chloraseptic® sore throat, Clear Eyes® eye care, Compound W® wart treatment, The Doctor's® NightGuard®, The Little Remedies® line of pediatric over-the-counter products, Comet® cleanser and, effective November 1st, PediaCare® children's over-the-counter products, Efferdent® and Effergrip® denture care products, Luden's® cough drops, and NasalCrom® allergy treatment.
Note Regarding Forward-Looking Statements
This news release contains "forward-looking statements" within the meaning of the federal securities laws and that are 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 our intentions regarding development of the brands that it acquired on November 1, 201 0 in the Blacksmith acquisition as well as the outlook for Prestige Brands Holdings' market and its core brands as well as prospects for the industry. These 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 expected as a result of a variety of 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 reports filed with the Securities and Exchange Commission.
Prestige Brands Holdings, Inc.
Consolidated Statements of Operations | | | Three Months Ended September 30 | | Six Months Ended September 30 |
| (In thousands, except share data) | | 2010 | | 2009 | | 2010 | | 2009 |
| Revenues | | | | | | | | |
| Net sales | | $ | 77,488 | | | $ | 80,308 | | | $ | 148,009 | | | $ | 147,805 | |
| Other revenues | | 815 | | | 421 | | | 1,529 | | | 1,037 | |
| Total revenues | | 78,303 | | | 80,729 | | | 149,538 | | | 148,842 | |
| | | | | | | | | |
| Cost of Sales | | | | | | | | |
| Cost of sales (exclusive of depreciation shown below) | | 35,713 | | | 37,936 | | | 68,977 | | | 69,526 | |
| Gross profit | | 42,590 | | | 42,793 | | | 80,561 | | | 79,316 | |
| | | | | | | | | |
| Operating Expenses | | | | | | | | |
| Advertising and promotion | | 8,240 | | | 9,675 | | | 15,726 | | | 18,343 | |
| General and administrative | | 8,101 | | | 10,481 | | | 15,514 | | | 18,675 | |
| Depreciation and amortization | | 2,413 | | | 2,703 | | | 4,823 | | | 4,911 | |
| Total operating expenses | | 18,754 | | | 22,859 | | | 36,063 | | | 41,929 | |
| | | | | | | | | |
| Operating income | | 23,836 | | | 19,934 | | | 44,498 | | | 37,387 | |
| | | | | | | | | |
| Other expense | | | | | | | | |
| Interest expense, net | | 5,373 | | | 5,642 | | | 10,835 | | | 11,295 | |
| Loss on extinguishment of debt | | — | | | — | | | 300 | | | — | |
| Total other expense | | 5,373 | | | 5,642 | | | 11,135 | | | 11,295 | |
| | | | | | | | | |
| Income from continuing operations before income taxes | | 18,463 | | | 14,292 | | | 33,363 | | | 26,092 | |
| Provision for income taxes | | 7,053 | | | 5,417 | | | 12,745 | | | 9,889 | |
| Income from continuing operations | | 11,410 | | | 8,875 | | | 20,618 | | | 16,203 | |
| | | | | | | | | |
| Discontinued Operations | | | | | | | | |
| Income from discontinued operations, net of income tax | | 162 | | | 1,048 | | | 560 | | | 2,045 | |
| | | | | | | | | |
| Loss on sale of discontinued operations, net of income tax benefit | | (550 | ) | | — | | | (550 | ) | | — | |
| Net income | | $ | 11,022 | | | $ | 9,923 | | | $ | 20,628 | | | $ | 18,248 | |
| | | | | | | | | |
| Basic earnings per share: | | | | | | | | |
| Income from continuing operations | | $ | 0.23 | | | $ | 0.18 | | | $ | 0.41 | | | $ | 0.32 | |
| Net income | | $ | 0.22 | | | $ | 0.20 | | | $ | 0.41 | | | $ | 0.36 | |
| | | | | | | | | |
| Diluted earnings per share: | | | | | | | | |
| Income from continuing operations | | $ | 0.23 | | | $ | 0.18 | | | $ | 0.41 | | | $ | 0.32 | |
| Net income | | $ | 0.22 | | | $ | 0.20 | | | $ | 0.41 | | | $ | 0.36 | |
| | | | | | | | | |
| Weighted average shares outstanding: | | | | | | | | |
| Basic | | 50,053 | | | 50,012 | | | 50,045 | | | 49,997 | |
| Diluted | | 50,141 | | | 50,055 | | | 50,123 | | | 50,080 | |
Prestige Brands Holdings, Inc. Consolidated Balance Sheets
| September 30, 2010 | | March 31, 2010 |
| Current assets | | | |
| Cash and cash equivalents | $ | 55,032 | | | $ | 41,097 | |
| Accounts receivable | 32,256 | | | 30,621 | |
| Inventories | 24,997 | | | 27,676 | |
| Deferred income tax assets | 6,663 | | | 6,353 | |
| Prepaid expenses and other current assets | 3,203 | | | 4,917 | |
| Current assets of discontinued operations | 14 | | | 1,486 | |
| Total current assets | 122,165 | | | 112,150 | |
| | | | |
| Property and equipment | 1,207 | | | 1,396 | |
| Goodwill | 111,489 | | | 111,489 | |
| Intangible assets | 549,855 | | | 554,359 | |
| Other long-term assets | 6,456 | | | 7,148 | |
| Long-term assets of discontinued operations | — | | | 4,870 | |
| Total Assets | $ | 791,172 | | | $ | 791,412 | |
| | | | |
| Liabilities and Stockholders' Equity | | | |
| Current liabilities | | | |
| Accounts payable | $ | 13,980 | | | $ | 12,771 | |
| Accrued interest payable | 6,428 | | | 1,561 | |
| Other accrued liabilities | 9,912 | | | 11,733 | |
| Current portion of long-term debt | 1,500 | | | 29,587 | |
| Total current liabilities | 31,820 | | | 55,652 | |
| | | | |
| Long-term debt | | | |
| Principal amount | 294,000 | | | 298,500 | |
| Less unamortized discount | (3,658 | ) | | (3,943 | ) |
| Long-term debt, net of unamortized discount | 290,342 | | | 294,557 | |
| | | | |
| Deferred income tax liabilities | 117,630 | | | 112,144 | |
| | | | |
| Total Liabilities | 439,792 | | | 462,353 | |
| | | | |
| 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 - 50,175 shares at September 30, 2010 and 50,154 shares at March 31, 2010 | 502 | | | 502 | |
| Additional paid-in capital | 385,771 | | | 384,027 | |
| Treasury stock, at cost - 131 shares at September 30, 2010 and 124 shares at March 31, 2010 | (114 | ) | | (63 | ) |
| Retained earnings (accumulated deficit) | (34,779 | ) | | (55,407 | ) |
| Total Stockholders' Equity | 351,380 | | | 329,059 | |
| | | | |
| Total Liabilities and Stockholders' Equity | $ | 791,172 | | | $ | 791,412 | |
Prestige Brands Holdings, Inc. Consolidated Statements of Cash Flows
| | Six Months Ended September 30 |
| (In thousands) | 2010 | | 2009 |
| Operating Activities | | | |
| Net income | $ | 20,628 | | | $ | 18,248 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 5,052 | | | 6,084 | |
| Loss on sale of discontinued operations | 890 | | | — | |
| Deferred income taxes | 5,176 | | | 3,687 | |
| Amortization of deferred financing costs | 504 | | | 956 | |
| Stock-based compensation costs | 1,744 | | | 848 | |
| Loss on extinguishment of debt | 300 | | | — | |
| Amortization of debt discount | 285 | | | — | |
| Loss on disposition of equipment | 125 | | | — | |
| Changes in operating assets and liabilities | | | |
| Accounts receivable | (1,635 | ) | | (3,127 | ) |
| Inventories | 2,679 | | | 405 | |
| Inventories held for sale | 1,100 | | | 82 | |
| Prepaid expenses and other current assets | 1,714 | | | (1,102 | ) |
| Accounts payable | 1,209 | | | 5,546 | |
| Accrued liabilities | 3,046 | | | 8,253 | |
| Net cash provided by operating activities | 42,817 | | | 39,880 | |
| | | | |
| Investing Activities | | | |
| Purchases of equipment | (254 | ) | | (232 | ) |
| Proceeds from sale of discontinued operations | 4,122 | | | — | |
| Net cash used for investing activities | 3,868 | | | (232 | ) |
| | | | |
| Financing Activities | | | |
| Payment of deferred financing costs | (112 | ) | | — | |
| Repayment of long-term debt | (32,587 | ) | | (40,000 | ) |
| Purchase of treasury stock | (51 | ) | | — | |
| Net cash used for financing activities | (32,750 | ) | | (40,000 | ) |
| | | | |
| Increase (decrease) in cash | 13,935 | | | (352 | ) |
| Cash - beginning of period | 41,097 | | | 35,181 | |
| | | | |
| Cash - end of period | $ | 55,032 | | | $ | 34,829 | |
| | | | |
| Interest paid | $ | 5,179 | | | $ | 10,350 | |
| Income taxes paid | $ | 5,103 | | | $ | 6,307 | |
Prestige Brands Holdings, Inc. Consolidated Statements of Operations | | For the Three Months Ended September 30, 2010 |
| | Over-the- Counter Healthcare | | Household Cleaning | | Consolidated |
| (In thousands) | | | | | |
| Net sales | $ | 50,658 | | $ | 26,830 | | | $ | 77,488 | |
| Other revenues | 181 | | 634 | | | 815 | |
| | | | | | |
| Total revenues | 50,839 | | 27,464 | | | 78,303 | |
| Cost of sales | 17,798 | | 17,915 | | | 35,713 | |
| | | | | | |
| Gross profit | 33,041 | | 9,549 | | | 42,590 | |
| Advertising and promotion | 6,912 | | 1,328 | | | 8,240 | |
| | | | | | |
| Contribution margin | $ | 26,129 | | $ | 8,221 | | | 34,350 | |
| Other operating expenses | | | | | 10,514 | |
| | | | | | |
| Operating income | | | | | 23,836 | |
| Other expense | | | | | 5,373 | |
| Provision for income taxes | | | | | 7,053 | |
| Income from continuing operations | | | | | 11,410 | |
| Income from discontinued operations, net of income tax | | | | | 162 | |
| Loss on sale of discontinued operations, net of income tax benefit | | | | | (550 | ) |
| | | | | | |
| Net income | | | | | $ | 11,022 | |
| | For the Six Months Ended September 30, 2010 |
| | Over-the- Counter | | | | Consolidated |
| (In thousands) | | | | | |
| Net sales | $ | 95,364 | | $ | 52,645 | | | $ | 148,009 | |
| Other revenues | 195 | | 1,334 | | | 1,529 | |
| | | | | | |
| Total revenues | 95,559 | | 53,979 | | | 149,538 | |
| Cost of sales | 33,649 | | 35,328 | | | 68,977 | |
| | | | | | |
| Gross profit | 61,910 | | 18,651 | | | 80,561 | |
| Advertising and promotion | 12,075 | | 3,651 | | | 15,726 | |
| | | | | | |
| Contribution margin | $ | 49,835 | | $ | 15,000 | | | 64,835 | |
| Other operating expenses | | | | | 20,337 | |
| | | | | | |
| Operating income | | | | | 44,498 | |
| Other expense | | | | | 11,135 | |
| Provision for income taxes | | | | | 12,745 | |
| Income from continuing operations | | | | | 20,618 | |
| Income from discontinued operations, net of income tax | | | | | 560 | |
| Loss on sale of discontinued operations, net of income tax benefit | | | | | (550 | ) |
| | | | | | |
| Net income | | | | | $ | 20,628 | |
Prestige Brands Holdings, Inc. Consolidated Statements of Operations
| | For the Three Months Ended September 30, 2009 |
| | Over-the- Counter Healthcare | | Household Cleaning | | Consolidated |
| (In thousands) | | | | | |
| Net sales | $ | 51,706 | | $ | 28,602 | | | $ | 80,308 | |
| Other revenues | 10 | | 411 | | | 421 | |
| | | | | | |
| Total revenues | 51,716 | | 29,013 | | | 80,729 | |
| Cost of sales | 19,453 | | 18,483 | | | 37,936 | |
| | | | | | |
| Gross profit | 32,263 | | 10,530 | | | 42,793 | |
| Advertising and promotion | 7,390 | | 2,285 | | | 9,675 | |
| | | | | | |
| Contribution margin | $ | 24,873 | | $ | 8,245 | | | 33,118 | |
| Other operating expenses | | | | | 13,184 | |
| | | | | | |
| Operating income | | | | | 19,934 | |
| Other expense | | | | | 5,642 | |
| Provision for income taxes | | | | | 5,417 | |
| Income from continuing operations | | | | | 8,875 | |
| Income from discontinued operations, net of income tax | | | | | 1,048 | |
| | | | | | |
| Net income | | | | | $ | 9,923 | |
| | For the Six Months Ended September 30, 2009 |
| | | | | | Consolidated |
| (In thousands) | | | | | |
| Net sales | $ | 92,362 | | $ | 55,443 | | | $ | 147,805 | |
| Other revenues | 20 | | 1,017 | | | 1,037 | |
| | | | | | |
| Total revenues | 92,382 | | 56,460 | | | 148,842 | |
| Cost of sales | 33,242 | | 36,284 | | | 69,526 | |
| | | | | | |
| Gross profit | 59,140 | | 20,176 | | | 79,316 | |
| Advertising and promotion | 14,139 | | 4,204 | | | 18,343 | |
| | | | | | |
| Contribution margin | $ | 45,001 | | $ | 15,972 | | | 60,973 | |
| Other operating expenses | | | | | 23,586 | |
| | | | | | |
| Operating income | | | | | 37,387 | |
| Other expense | | | | | 11,295 | |
| Provision for income taxes | | | | | 9,889 | |
| Income from continuing operations | | | | | 16,203 | |
| Income from discontinued operations, net of income tax | | | | | 2,045 | |
| | | | | | |
| Net income | | | | | $ | 18,248 | |
