Prestige Brands Holdings, Inc. Reports Fiscal First Quarter 2011 Results
Irvington, NY, August 5, 2010—Prestige Brands Holdings, Inc. (NYSE-PBH) today announced results for the first quarter of fiscal 2011, which ended on June 30, 2010.
Net income from continuing operations for the first quarter was $9.6 million, or $0.19 of fully diluted earnings per share, 20% higher than the prior year’s comparable period’s net income of $8.0 million or $0.16 per fully diluted share.
Total revenues for the quarter ended June 30, 2010 were $73.4 million, 3% higher than the prior year comparable quarter’s results of $71.0 million.
Operating income for the first fiscal quarter was $21.3 million, 15% higher than the prior year’s comparable period results of $18.5 million. The increase in operating income was due to an increase in gross profit resulting from higher revenues combined with favorable advertising and promotion (A&P) and general and administrative (G&A) expenditures.
Commentary
“This quarter’s results affirm the strength of our core OTC business model and the overall direction of our strategic plan,” said Matthew Mannelly, President and CEO. “We are pleased with the growth of our core OTC brands as well as their long-term potential. We remain confident in achieving our long-term goals, however, we are realistic about the overall economic environment and the challenges we face for the full year. In particular, given last years’ heavy retailer buy-in of cough/cold products in anticipation of H1N1, the second quarter will be challenging from a revenue standpoint. Retailers have told us as well as our competitors that this buy-in will not be repeated this year in the second quarter.”
Mr. Mannelly concluded, “We continue to look at optimizing our growth portfolio as a marathon, not a sprint. With our refinancing in place, we are focused on both organic growth in our core OTC brands as well as pursuing appropriate outside OTC opportunities.”
Results by Segment for the First Fiscal Quarter
Over-the-Counter Healthcare Products (OTC)
Net revenues of $44.3 million for the OTC segment were $4.0 million or 10% higher than the prior year comparable period results of $40.3 million. The increase was driven by sales of Clear Eyes®, Compound W®, Wartner®, New Skin®, Murine® Tears, Percogesic®, and Sleep-Eze® in Canada, partially offset by decreases on the Allergen Block products and Earigate®.
Of the Company’s six core brands, five are in the OTC segment. These include Chloraseptic®, Clear Eyes®, Compound W®, Little Remedies®, and The Doctor’s® NightGuard®. Revenues for our core OTC brands were up 16% in the aggregate over the prior year comparable quarter.
Household Products
Revenues for this segment were $26.5 million, 3% less than the comparable first quarter of fiscal 2010. A sales increase on the Spic and Span® brand was offset by declines on the Comet® and Chore Boy® brands.
Personal Care Products
Revenues for this segment were $2.6 million, 22% below the prior year comparable quarter’s revenues of $3.3 million. The sales decline traces to distribution losses for the Cutex® brand in the fall of 2010.
Free Cash Flow
Free cash flow is a “non-GAAP” 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 is an indication of cash available for debt repayment and acquisitions. The Company defines free cash flow as operating cash flows less capital expenditures.
The Company’s free cash flow for the first quarter ended June 30, 2010 was $20.6 million, composed of operating cash flow of $20.7 million, less capital expenditures of $0.1 million. This is a $2.6 million increase over the comparable quarter’s free cash flow of $18.0 million, composed of operating cash flow of $18.1 million, less capital expenditures of $0.1 million.
Conference Call
The Company will host a conference call today at 8:30 a.m. EDT. To access the call, listeners calling from within North America may dial 800-299-0433 at least 15 minutes prior to the start of the call. To access the call from outside North America, callers should dial 617-801-9712. The conference passcode is “prestige”. The Company will provide a live internet webcast as well as an archived replay, which can be accessed from the Investor Relations page of http://prestigebrandsinc.com. Telephonic replays will be available for two weeks following the completion of the call and can be accessed at 888-286-8010 within North America, and at 617-801-6888 from outside North America. The passcode is 79554986.
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, household and personal care products sold throughout the U.S., Canada and certain international markets. Key brands include Compound W® wart remover, Chloraseptic® sore throat and allergy treatment, New-Skin® liquid bandage, Clear Eyes® and Murine® eye and ear care products, The Doctor’s® NightGuard® dental protector, Little Remedies® pediatric over-the-counter products, Cutex® nail polish remover, Comet® and Spic and Span® household products, and other well-known brands.
Forward-Looking Statements
Note: 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 the Company’s future performance, liquidity, and borrowing capacity of Prestige Brands Holdings. 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 and other reports filed with the Securities and Exchange Commission.
Contact: Dean Siegal
914-524-6819
| | | Three Months Ended June 30 |
| (In thousands, except share data) | | 2010 | | 2009 |
| Revenues | | | | |
| Net sales | | $ | 72,706 | | | $ | 70,395 | |
| Other revenues | | 719 | | | 617 | |
| Total revenues | | 73,425 | | | 71,012 | |
| | | | | |
| Cost of Sales | | | | |
| Cost of sales (exclusive of depreciation shown below) | | 34,546 | | | 33,181 | |
| Gross profit | | 38,879 | | | 37,831 | |
| | | | | |
| Operating Expenses | | | | |
| Advertising and promotion | | 7,598 | | | 8,765 | |
| General and administrative | | 7,414 | | | 8,195 | |
| Depreciation and amortization | | 2,547 | | | 2,345 | |
| Total operating expenses | | 17,559 | | | 19,305 | |
| | | | | |
| Operating income | | 21,320 | | | 18,526 | |
| | | | | |
| Other expense | | | | |
| Interest expense | | 5,461 | | | 5,654 | |
| Loss on extinguishment of debt | | 300 | | | — | |
| Total other expense | | 5,761 | | | 5,654 | |
| | | | | |
| Income from continuing operations before income taxes | | 15,559 | | | 12,872 | |
| Provision for income taxes | | 5,944 | | | 4,878 | |
| Income from continuing operations | | 9,615 | | | 7,994 | |
| | | | | |
| Discontinued Operations | | | | |
| Income (loss) from discontinued operations, net of income tax | | (10 | ) | | 331 | |
| | | | | |
| Net income | | $ | 9,605 | | | $ | 8,325 | |
| | | | | |
| Basic earnings per share: | | | | |
| Income from continuing operations | | $ | 0.19 | | | $ | 0.16 | |
| Net income | | $ | 0.19 | | | $ | 0.17 | |
| | | | | |
| Diluted earnings per share: | | | | |
| Income from continuing operations | | $ | 0.19 | | | $ | 0.16 | |
| Net income | | $ | 0.19 | | | $ | 0.17 | |
| | | | | |
| Weighted average shares outstanding: | | | | |
| Basic | | 50,038 | | | 49,982 | |
| Diluted | | 50,105 | | | 50,095 | |
Prestige Brands Holdings, Inc.
Assets | | | June 30, 2010 | | | | March 31, 2010 | |
| Current assets | | | | | | | | |
| Cash and cash equivalents | | $ | 33,106 | | | $ | 41,097 | |
| Accounts receivable | | | 28,543 | | | | 30,621 | |
| Inventories | | | 28,076 | | | | 29,162 | |
| Deferred income tax assets | | | 6,745 | | | | 6,353 | |
| Prepaid expenses and other current assets | | | 2,888 | | | | 4,917 | |
| Total current assets | | | 99,358 | | | | 112,150 | |
| | | | | | | | | |
| Property and equipment | | | 1,243 | | | | 1,396 | |
| Goodwill | | | 111,489 | | | | 111,489 | |
| Intangible assets | | | 556,840 | | | | 559,229 | |
| Other long-term assets | | | 6,705 | | | | 7,148 | |
| Total Assets | | $ | 775,635 | | | $ | 791,412 | |
| | | | | | | | | |
| Liabilities and Stockholders' Equity | | | | | | | | |
| Current liabilities | | | | | | | | |
| Accounts payable | | $ | 12,112 | | | $ | 12,771 | |
| Accrued interest payable | | | 3,443 | | | | 1,561 | |
| Other accrued liabilities | | | 10,161 | | | | 11,733 | |
| Current portion of long-term debt | | | 1,500 | | | | 29,587 | |
| Total current liabilities | | | 27,216 | | | | 55,652 | |
| | | | | | | | | |
| Long-term debt | | | | | | | | |
| Principal amount | | | 298,125 | | | | 298,500 | |
| Less unamortized discount | | | (3,801 | ) | | | (3,943 | ) |
| Long-term debt, net of unamortized discount | | | 294,324 | | | | 294,557 | |
| | | | | | | | | |
| Deferred income tax liabilities | | | 114,574 | | | | 112,144 | |
| | | | | | | | | |
| Total Liabilities | | | 436,114 | | | | 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 - 50,173 shares at June 30, 2010 and 50,154 shares at March 31, 2010 | | | 502 | | | | 502 | |
| Additional paid-in capital | | | 384,884 | | | | 384,027 | |
| Treasury stock, at cost — 124 shares at June 30, 2010 and March 31, 2010 | | | (63 | ) | | | (63 | ) |
| Accumulated other comprehensive income (loss) | | | — | | | | — | |
| Retained earnings (accumulated deficit) | | | (45,802 | ) | | | (55,407 | ) |
| Total Stockholders' Equity | | | 339,521 | | | | 329,059 | |
| | | | | | | | | |
| Total Liabilities and Stockholders' Equity | | $ | 775,635 | | | $ | 791,412 | |
| | | | Three Months Ended June 30 | |
| (In thousands) | | | 2010 | | | | 2009 | |
| Operating Activities | | | | | | | | |
| Net income | | $ | 9,605 | | | $ | 8,325 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
| Depreciation and amortization | | | 2,547 | | | | 2,777 | |
| Deferred income taxes | | | 2,036 | | | | 2,430 | |
| Amortization of deferred financing costs | | | 397 | | | | 480 | |
| Impairment of goodwill and intangible assets | | | | | | | | |
| Stock-based compensation cost | | | 857 | | | | 671 | |
| Loss on extinguishment of debt | | | 300 | | | | — | |
| Loss on disposition of equipment | | | 126 | | | | — | |
| Changes in operating assets and liabilities | | | | | | | | |
| Accounts receivable | | | 2,078 | | | | 3,010 | |
| Inventories | | | 1,086 | | | | 528 | |
| Prepaid expenses and other current assets | | | 2,029 | | | | (1,452 | ) |
| Accounts payable | | | (659 | ) | | | 584 | |
| Income taxes payable | | | — | | | | 1,551 | |
| Accrued liabilities | | | 310 | | | | (836 | ) |
| Net cash provided by operating activities | | | 20,712 | | | | 18,068 | |
| | | | | | | | | |
| Investing Activities | | | | | | | | |
| Purchases of equipment | | | (130 | ) | | | (98 | ) |
| Net cash provided by (used for) investing activities | | | (130 | ) | | | (98 | ) |
| | | | | | | | | |
| Financing Activities | | | | | | | | |
| Proceeds from the issuance of debt | | | — | | | | — | |
| Payment of deferred financing costs | | | (111 | ) | | | — | |
| Repayment of long-term debt | | | (28,462 | ) | | | (17,000 | ) |
| Purchase of common stock for treasury | | | — | | | | — | |
| Net cash used for financing activities | | | (28,573 | ) | | | (17,000 | ) |
| | | | | | | | | |
| Increase (decrease) in cash | | | (7,991 | ) | | | 970 | |
| Cash - beginning of period | | | 41,097 | | | | 35,181 | |
| | | | | | | | | |
| Cash - end of period | | $ | 33,106 | | | $ | 36,151 | |
| | | | | | | | | |
| Interest paid | | $ | 3,182 | | | $ | 8,085 | |
| Income taxes paid | | $ | 342 | | | $ | 1,100 | |
Consolidated Statements of Operations
Business Segments
(Unaudited)
| | | For the Three Months Ended June 30, 2010 | |
| | | Over-the- Counter | | | | | | Personal Care | | | Consolidated | |
| (In thousands) | | | | | | | | | | | | |
| Net sales | | $ | 44,323 | | | $ | 25,814 | | | $ | 2,569 | | | $ | 72,706 | |
| Other revenues | | | 14 | | | | 701 | | | | 4 | | | | 719 | |
| | | | | | | | | | | | | | | | | |
| Total revenues | | | 44,337 | | | | 26,515 | | | | 2,573 | | | | 73,425 | |
| Cost of sales | | | 15,582 | | | | 17,412 | | | | 1,552 | | | | 34,546 | |
| | | | | | | | | | | | | | | | | |
| Gross profit | | | 28,755 | | | | 9,103 | | | | 1,021 | | | | 38,879 | |
| Advertising and promotion | | | 5,154 | | | | 2,324 | | | | 120 | | | | 7,598 | |
| | | | | | | | | | | | | | | | | |
| Contribution margin | | $ | 23,601 | | | $ | 6,779 | | | $ | 901 | | | | 31,281 | |
| Other operating expenses | | | | | | | | | | | | | | | 9,961 | |
| | | | | | | | | | | | | | | | | |
| Operating income | | | | | | | | | | | | | | | 21,320 | |
| Other expense | | | | | | | | | | | | | | | 5,761 | |
| Provision for income taxes | | | | | | | | | | | | | | | 5,944 | |
| Income from continuing operations | | | | | | | | | | | | | | | 9,615 | |
| Loss from discontinued operations, net of income benefit | | | | | | | | | | | | | | | (10 | ) |
| | | | | | | | | | | | | | | | | |
| Net income | | | | | | | | | | | | | | $ | 9,605 | |
Prestige Brands Holdings, Inc.
Consolidated Statements of Operations
Business Segments
(Unaudited)
| | | For the Three Months Ended June 30, 2009 | |
| | | Over-the- Counter | | | | | | Personal Care | | | Consolidated | |
| (In thousands) | | | | | | | | | | | | |
| Net sales | | $ | 40,272 | | | $ | 26,841 | | | $ | 3,282 | | | $ | 70,395 | |
| Other revenues | | | 11 | | | | 606 | | | | — | | | | 617 | |
| | | | | | | | | | | | | | | | | |
| Total revenues | | | 40,283 | | | | 27,447 | | | | 3,282 | | | | 71,012 | |
| Cost of sales | | | 13,528 | | | | 17,801 | | | | 1,852 | | | | 33,181 | |
| | | | | | | | | | | | | | | | | |
| Gross profit | | | 26,755 | | | | 9,646 | | | | 1,430 | | | | 37,831 | |
| Advertising and promotion | | | 6,740 | | | | 1,919 | | | | 106 | | | | 8,765 | |
| | | | | | | | | | | | | | | | | |
| Contribution margin | | $ | 20,015 | | | $ | 7,727 | | | $ | 1,324 | | | | 29,066 | |
| Other operating expenses | | | | | | | | | | | | | | | 10,540 | |
| | | | | | | | | | | | | | | | | |
| Operating income | | | | | | | | | | | | | | | 18,526 | |
| Other expense | | | | | | | | | | | | | | | 5,654 | |
| Provision for income taxes | | | | | | | | | | | | | | | 4,878 | |
| Income from continuing operations | | | | | | | | | | | | | | | 7,994 | |
| Income from discontinued operations, net of income tax | | | | | | | | | | | | | | | 331 | |
| | | | | | | | | | | | | | | | | |
| Net income | | | | | | | | | | | | | | $ | 8,325 | |
