Exhibit 99.1
Prestige Brands Holdings, Inc. Reports Record Second Quarter Revenue of $168.4 Million;
Record Operating Income of $53.8 Million
Tarrytown, NY-(Business Wire)-November 7, 2013-Prestige Brands Holdings, Inc. (NYSE-PBH) today announced results for the second quarter and first six months of fiscal year 2014, which ended on September 30, 2013.
In addition to financial results reported in accordance with generally accepted accounting principles (GAAP), we have provided certain non-GAAP financial information in this release to aid investors in understanding the Company's performance. Each non-GAAP financial measure is defined and reconciled to its most closely related GAAP financial measure in the “About Non-GAAP Financial Measures” section at the end of this earnings release.
These results include reported second fiscal quarter revenues of $168.4 million, an increase of 4.1% over the prior year comparable period’s revenues of $161.9 million, or approximately 5.0% excluding the $1.4 million impact of the divested Phazyme® brand. Revenues increased 1.6% in the second fiscal quarter excluding the impact on revenues from the acquisition of Care Pharmaceuticals (Care) on July 1, 2013, and the impact of the divested Phazyme brand on the prior year’s revenues. Reported revenues for the six month period totaled $311.4 million, an increase of approximately 1% over the prior year six month period’s revenues of $308.9 million. Excluding the items mentioned above, revenues for the six month period increased 0.1% over the prior year’s comparable period.
Reported net income for the second fiscal quarter was $32.8 million, or $0.63 per diluted share, 71% higher than the prior year comparable quarter’s results of $19.2 million, or $0.38 per diluted share. The $13.6 million increase in net income is due to strong portfolio performance, a full quarter of ownership of Care, and favorable changes in state tax laws. Adjusted earnings per share increased 11.9% to $0.47 compared to the prior year’s adjusted earnings per share of $0.42. The current quarter’s adjusted earnings per share excludes items related to the Care acquisition and the impact of changes in state tax laws. The prior quarter’s adjusted earnings per share excludes items related to the acquisition of the GSK brands and other items.
Reported net income for the first six months of fiscal 2014 was $53.5 million, or $1.03 per diluted share, 57.8% higher than the prior year’s comparable period results of $33.9 million or $0.66 per diluted share. Adjusted earnings per share for the first half of fiscal 2014 were $0.88, compared to adjusted earnings per share of $0.77 in the prior year’s comparable period. The fiscal 2014 six month period includes $1.3 million in items related to the Care acquisition and a $9.1 million benefit from changes in state tax laws. The fiscal 2013 six month period includes $5.4 million of items largely associated with the acquisition of the GSK brands.
Reported operating income for the second fiscal quarter was a record $53.8 million compared to $51.2 million in the prior year’s comparable period. Increases in sales and gross margin percentages in the second fiscal quarter resulted in record operating income, an increase of 5.1% over the prior year’s comparable period. Reported operating income for the first six months of fiscal 2014 was $103.2 million, an increase of 8.6% over the prior year comparable period’s results of $95.0 million.
Reported revenues for the Over-The-Counter Healthcare segment (OTC) were $142.6 million for the second fiscal quarter, 3% higher than the prior year comparable period’s results of $137.9 million. The fiscal 2014 second quarter segment results include the impact of the Care acquisition as well as the divestiture of Phazyme®. Excluding the impact of the acquisition and the divestiture, our OTC business grew 0.5% during the second fiscal quarter. For the first six months of the current fiscal year, reported revenues for the OTC segment were $265.5 million, an increase of 1% over the prior year comparable period’s results of $264.1 million. Reported revenues for the Household Cleaning segment were $25.8 million in the second fiscal quarter, an increase of 8% over the prior year's second quarter results of $23.9 million. For the six month period, reported revenues for this segment were $45.9 million compared to $44.7 million in the prior year’s comparable period.
Commentary & Outlook
According to Matthew M. Mannelly, President and CEO, “We are very pleased with our strong performance in the second quarter. We are investing substantially in our core over-the-counter healthcare brands to create shareholder value for the long-term. Our three pronged strategy drives our business--brand building and innovation, aggressive and disciplined M & A, and generating consistent free cash flow that supports a strong balance sheet,” he said.
“We continue to believe that fiscal 2014 will be a transitional year for the company in light of the return of competitive brands to the marketplace. However, with our solid six month performance, we are
reconfirming our previously provided adjusted earnings per share estimate of $1.65 for the full fiscal year.” Mr. Mannelly continued, “In the second fiscal quarter, the Company generated $32.8 million in cash provided by operating activities. For the full year, we continue to expect our solid financial profile to generate cash provided by operating activities of approximately $125 million for use in rapid deleveraging and building meaningful M & A capacity.”
Free Cash Flow and Debt Reduction
Free cash flow (“FCF”) is a “non-GAAP financial measure” and is presented here because management believes it is a commonly used measure of liquidity, indicative of cash available for debt repayment and acquisitions. Non-GAAP Free Cash Flow is defined and reconciled to GAAP Net Cash Provided by Operating Activities in the section entitled, “About Non-GAAP Financial Measures” below. The Company's FCF for the first half of the year ended September 30, 2013 was $53.3 million, a decrease of $1.8 million over the prior year comparable period's free cash flow of $55.1 million. The slight decrease in FCF year over year is largely due to the timing of sales in the second fiscal quarter. On a per share basis, FCF for the six months ended September 30, 2013 translates to $1.02 per share compared to $1.08 per share for the second fiscal quarter ended September 30, 2012.
At September 30, 2013, the Company’s net debt was $958.2 million and its covenant-defined leverage ratio was approximately 4.02. The Company’s strong FCF and debt repayment during the second fiscal quarter allowed for a reduction in the leverage ratio of approximately .15, even with the acquisition of Care on July 1, 2013.
Q2 Conference Call & Accompanying Slide Presentation
The Company will host a conference call to review its second quarter results on November 7, 2013 at 8:30 am EDT. The toll-free dial-in numbers are 866-700-6067 within North America and 617-213-8834 outside of North America. The conference pass code is "prestige". The Company will provide a live Internet webcast, a slide presentation to accompany the call, as well as an archived replay, all of which can be accessed from the Investor Relations page of the Company's website at http://prestigebrands.com. The slide presentation can be accessed just before the call from the Investor Relations page of the website by clicking on Webcasts and Presentations. 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 pass code is 55096031.
About Prestige Brands Holdings, Inc.
The Company markets and distributes brand name over-the-counter and household cleaning products throughout the U.S. and Canada, and in certain international markets. Core brands include Chloraseptic® sore throat treatments, Clear Eyes® eye care products, Compound W® wart treatments, The Doctor's® NightGuard® dental protector, the Little Remedies® and PediaCare® lines of pediatric over-the-counter products, Efferdent® denture care products, Luden's® throat drops, Dramamine® motion sickness treatment, BC® and Goody's® pain relievers, Beano® gas prevention, Debrox® earwax remover, and Gaviscon® antacid in Canada. Visit the Company's website at www.prestigebrands.com.
Note Regarding Forward-Looking Statements
This news release contains "forward-looking statements" within the meaning of the federal securities laws 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," “strategy,” "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 creating shareholder value, our expected future operating results including adjusted earnings per share and cash flow, our strategy and focus, our intention to invest in our core brands, development of innovative products, our generation of free cash flow, rapid deleveraging and aggressive and disciplined M&A. 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, including the impact of our advertising and promotional initiatives, competition in our industry, and the success of our new product introductions and integration of newly acquired products. A discussion of other factors that could cause results to vary is included in the Company's Annual Report on Form 10-K for the year ended March 31, 2013, Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, and other periodic reports filed with the Securities and Exchange Commission.
Contact: Dean Siegal
914-524-6819
Prestige Brands Holdings, Inc.
Consolidated Statements of Income and Comprehensive Income
(Unaudited)
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended September 30, | | Six Months Ended September 30, |
| (In thousands, except per share data) | | 2013 | | 2012 | | 2013 | | 2012 |
| Revenues | | | | | | | | |
| Net sales | | $ | 167,004 |
| | $ | 161,323 |
| | $ | 309,105 |
| | $ | 307,243 |
|
| Other revenues | | 1,438 |
| | 532 |
| | 2,308 |
| | 1,609 |
|
| Total revenues | | 168,442 |
| | 161,855 |
| | 311,413 |
| | 308,852 |
|
| | | | | | | | | |
| Cost of Sales | | |
| | |
| | | | |
| Cost of sales (exclusive of depreciation shown below) | | 73,723 |
| | 71,310 |
| | 133,211 |
| | 134,703 |
|
| Gross profit | | 94,719 |
| | 90,545 |
| | 178,202 |
| | 174,149 |
|
| | | | | | | | | |
| Operating Expenses | | |
| | |
| | | | |
| Advertising and promotion | | 26,044 |
| | 23,508 |
| | 45,184 |
| | 43,833 |
|
| General and administrative | | 11,619 |
| | 12,585 |
| | 23,253 |
| | 28,736 |
|
| Depreciation and amortization | | 3,294 |
| | 3,296 |
| | 6,562 |
| | 6,591 |
|
| Total operating expenses | | 40,957 |
| | 39,389 |
| | 74,999 |
| | 79,160 |
|
| Operating income | | 53,762 |
| | 51,156 |
| | 103,203 |
| | 94,989 |
|
| | | | | | | | | |
| Other (income) expense | | |
| | |
| | | | |
| Interest income | | (25 | ) | | (3 | ) | | (28 | ) | | (5 | ) |
| Interest expense | | 16,464 |
| | 19,663 |
| | 32,372 |
| | 39,513 |
|
| Total other expense | | 16,439 |
| | 19,660 |
| | 32,344 |
| | 39,508 |
|
| | | | | | | | | |
| Income before income taxes | | 37,323 |
| | 31,496 |
| | 70,859 |
| | 55,481 |
|
| Provision for income taxes | | 4,531 |
| | 12,252 |
| | 17,375 |
| | 21,582 |
|
| Net income | | $ | 32,792 |
| | $ | 19,244 |
| | $ | 53,484 |
| | $ | 33,899 |
|
| | | | | | | | | |
| Earnings per share: | | |
| | |
| | | | |
| Basic | | $ | 0.64 |
| | $ | 0.38 |
| | $ | 1.04 |
| | $ | 0.67 |
|
| Diluted | | $ | 0.63 |
| | $ | 0.38 |
| | $ | 1.03 |
| | $ | 0.66 |
|
| | | | | | | | | |
| | | | | | | | | |
| Weighted average shares outstanding: | | |
| | |
| | | | |
| Basic | | 51,463 |
| | 50,364 |
| | 51,343 |
| | 50,353 |
|
| Diluted | | 52,219 |
| | 51,225 |
| | 52,130 |
| | 51,166 |
|
| | | | | | | | | |
| Comprehensive income, net of tax: | | | | | | | | |
| Currency translation adjustments | | 1,122 |
| | 66 |
| | 1,123 |
| | 24 |
|
| Total other comprehensive income | | 1,122 |
| | 66 |
| | 1,123 |
| | 24 |
|
| Comprehensive income | | $ | 33,914 |
| | $ | 19,310 |
| | $ | 54,607 |
| | $ | 33,923 |
|
Prestige Brands Holdings, Inc.
Consolidated Balance Sheets
(Unaudited)
|
| | | | | | | |
(In thousands) Assets | September 30,
2013 | | March 31,
2013 |
| Current assets | | | |
| Cash and cash equivalents | $ | 26,833 |
| | $ | 15,670 |
|
| Accounts receivable, net | 80,534 |
| | 73,053 |
|
| Inventories | 61,935 |
| | 60,201 |
|
| Deferred income tax assets | 6,427 |
| | 6,349 |
|
| Prepaid expenses and other current assets | 6,929 |
| | 8,900 |
|
| Total current assets | 182,658 |
| | 164,173 |
|
| | | | |
| Property and equipment, net | 11,256 |
| | 9,896 |
|
| Goodwill | 191,058 |
| | 167,546 |
|
| Intangible assets, net | 1,399,860 |
| | 1,373,240 |
|
| Other long-term assets | 23,244 |
| | 24,944 |
|
| Total Assets | $ | 1,808,076 |
| | $ | 1,739,799 |
|
| | | | |
| Liabilities and Stockholders' Equity | |
| | |
|
| Current liabilities | |
| | |
|
| Accounts payable | $ | 51,857 |
| | $ | 51,376 |
|
| Accrued interest payable | 13,951 |
| | 13,894 |
|
| Other accrued liabilities | 23,301 |
| | 31,398 |
|
| Total current liabilities | 89,109 |
| | 96,668 |
|
| | | | |
| Long-term debt | | | |
| Principal amount | 985,000 |
| | 978,000 |
|
| Less unamortized discount | (6,302 | ) | | (7,100 | ) |
| Long-term debt, net of unamortized discount | 978,698 |
| | 970,900 |
|
| | | | |
| Deferred income tax liabilities | 198,721 |
| | 194,288 |
|
| Other long-term liabilities | 296 |
| | — |
|
| Total Liabilities | 1,266,824 |
| | 1,261,856 |
|
| | | | |
| | | | |
| Stockholders' Equity | |
| | |
|
| Preferred stock - $0.01 par value | |
| | |
|
| Authorized - 5,000 shares | |
| | |
|
| Issued and outstanding - None | — |
| | — |
|
| Preferred share rights | 283 |
| | 283 |
|
| Common stock - $0.01 par value | |
| | |
|
| Authorized - 250,000 shares | | | |
| Issued - 51,905 shares at September 30, 2013 and 51,311 shares at March 31, 2013 | 520 |
| | 513 |
|
| Additional paid-in capital | 410,664 |
| | 401,691 |
|
| Treasury stock, at cost - 191 shares at September 30, 2013 and 181 shares March 31, 2013 | (965 | ) | | (687 | ) |
| Accumulated other comprehensive income (loss), net of tax | 1,019 |
| | (104 | ) |
| Retained earnings | 129,731 |
| | 76,247 |
|
| Total Stockholders' Equity | 541,252 |
| | 477,943 |
|
| Total Liabilities and Stockholders' Equity | $ | 1,808,076 |
| | $ | 1,739,799 |
|
Prestige Brands Holdings, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
|
| | | | | | | |
| | Six Months Ended September 30, |
| (In thousands) | 2013 | | 2012 |
| Operating Activities | | | |
| Net income | $ | 53,484 |
| | $ | 33,899 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 6,562 |
| | 6,591 |
|
| Deferred income taxes | 4,355 |
| | 12,391 |
|
| Amortization of deferred financing costs | 1,975 |
| | 2,060 |
|
| Stock-based compensation costs | 2,487 |
| | 1,973 |
|
| Amortization of debt discount | 798 |
| | 812 |
|
| Lease termination costs | — |
| | 975 |
|
| (Gain) loss on sale or disposal of equipment | (3 | ) | | 51 |
|
| Changes in operating assets and liabilities, net of effects of acquisitions | | | |
| Accounts receivable | (5,712 | ) | | (24,530 | ) |
| Inventories | 821 |
| | (2,904 | ) |
| Prepaid expenses and other current assets | 2,619 |
| | 5,556 |
|
| Accounts payable | (1,125 | ) | | 15,150 |
|
| Accrued liabilities | (10,663 | ) | | 8,350 |
|
| Net cash provided by operating activities | 55,598 |
| | 60,374 |
|
| | | | |
| Investing Activities | |
| | |
|
| Purchases of property and equipment | (2,319 | ) | | (5,266 | ) |
| Proceeds from sale of property and equipment | 3 |
| | 15 |
|
| Acquisition of brands from GSK purchase price adjustments | — |
| | (226 | ) |
| Acquisition of Care Pharmaceuticals, less cash acquired | (55,215 | ) | | — |
|
| Net cash used in investing activities | (57,531 | ) | | (5,477 | ) |
| | | | |
| Financing Activities | |
| | |
|
| Repayment of long-term debt | (7,500 | ) | | (70,000 | ) |
| Repayments under revolving credit agreement | (35,500 | ) | | (8,000 | ) |
| Borrowings under revolving credit agreement | 50,000 |
| | 33,000 |
|
| Payment of deferred financing costs | (275 | ) | | — |
|
| Proceeds from exercise of stock options | 5,143 |
| | 80 |
|
| Excess tax benefits from share-based awards | 1,350 |
| | — |
|
| Fair value of shares surrendered as payment of tax withholding | (278 | ) | | — |
|
| Net cash provided by (used in) financing activities | 12,940 |
| | (44,920 | ) |
| | | | |
| Effects of exchange rate changes on cash and cash equivalents | 156 |
| | 14 |
|
| Increase in cash and cash equivalents | 11,163 |
| | 9,991 |
|
| Cash and cash equivalents - beginning of year | 15,670 |
| | 19,015 |
|
| Cash and cash equivalents - end of year | $ | 26,833 |
| | $ | 29,006 |
|
| | | | |
| Interest paid | $ | 29,516 |
| | $ | 36,524 |
|
| Income taxes paid | $ | 8,468 |
| | $ | 656 |
|
Prestige Brands Holdings, Inc.
Consolidated Statements of Income
Business Segments
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, 2013 | | Six Months Ended September 30, 2013 |
| | OTC Healthcare | | Household Cleaning | | Consolidated | | OTC Healthcare | | Household Cleaning | | Consolidated |
| (In thousands) | | | | | | | | | | | |
| Net sales | $ | 142,454 |
| | $ | 24,550 |
| | $ | 167,004 |
| | $ | 265,222 |
| | $ | 43,883 |
| | $ | 309,105 |
|
| Other revenues | 155 |
| | 1,283 |
| | 1,438 |
| | 312 |
| | 1,996 |
| | 2,308 |
|
| Total revenues | 142,609 |
| | 25,833 |
| | 168,442 |
| | 265,534 |
| | 45,879 |
| | 311,413 |
|
| Cost of sales | 55,325 |
| | 18,398 |
| | 73,723 |
| | 100,336 |
| | 32,875 |
| | 133,211 |
|
| Gross profit | 87,284 |
| | 7,435 |
| | 94,719 |
| | 165,198 |
| | 13,004 |
| | 178,202 |
|
| Advertising and promotion | 25,313 |
| | 731 |
| | 26,044 |
| | 43,545 |
| | 1,639 |
| | 45,184 |
|
| Contribution margin | $ | 61,971 |
| | $ | 6,704 |
| | 68,675 |
| | $ | 121,653 |
| | $ | 11,365 |
| | 133,018 |
|
| Other operating expenses | |
| | |
| | 14,913 |
| | | | | | 29,815 |
|
| Operating income | |
| | |
| | 53,762 |
| | | | | | 103,203 |
|
| Other expense | |
| | |
| | 16,439 |
| | | | | | 32,344 |
|
| Income before income taxes | | | | | 37,323 |
| | | | | | 70,859 |
|
| Provision for income taxes | |
| | |
| | 4,531 |
| | | | | | 17,375 |
|
| Net income | |
| | |
| | $ | 32,792 |
| | | | | | $ | 53,484 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, 2012 | | Six Months Ended September 30, 2012 |
| | OTC Healthcare | | Household Cleaning | | Consolidated | | OTC Healthcare | | Household Cleaning | | Consolidated |
| (In thousands) | | | | | | | | | | | |
| Net sales | $ | 137,771 |
| | $ | 23,552 |
| | $ | 161,323 |
| | $ | 263,775 |
| | $ | 43,468 |
| | $ | 307,243 |
|
| Other revenues | 164 |
| | 368 |
| | 532 |
| | 345 |
| | 1,264 |
| | 1,609 |
|
| Total revenues | 137,935 |
| | 23,920 |
| | 161,855 |
| | 264,120 |
| | 44,732 |
| | 308,852 |
|
| Cost of sales | 53,469 |
| | 17,841 |
| | 71,310 |
| | 100,868 |
| | 33,835 |
| | 134,703 |
|
| Gross profit | 84,466 |
| | 6,079 |
| | 90,545 |
| | 163,252 |
| | 10,897 |
| | 174,149 |
|
| Advertising and promotion | 22,046 |
| | 1,462 |
| | 23,508 |
| | 39,899 |
| | 3,934 |
| | 43,833 |
|
| Contribution margin | $ | 62,420 |
| | $ | 4,617 |
| | 67,037 |
| | $ | 123,353 |
| | $ | 6,963 |
| | 130,316 |
|
| Other operating expenses | |
| | |
| | 15,881 |
| | | | | | 35,327 |
|
| Operating income | |
| | |
| | 51,156 |
| | | | | | 94,989 |
|
| Other expense | |
| | |
| | 19,660 |
| | | | | | 39,508 |
|
| Income before income taxes | | | | | 31,496 |
| | | | | | 55,481 |
|
| Provision for income taxes | |
| | |
| | 12,252 |
| | | | | | 21,582 |
|
| Net income | |
| | |
| | $ | 19,244 |
| | | | | | $ | 33,899 |
|
About Non-GAAP Financial Measures
We define Non-GAAP EBITDA as earnings before interest expense (income), income taxes, depreciation and amortization, income or loss from discontinued operations or the sale thereof and Non-GAAP Adjusted EBITDA as earnings before interest expense (income), income taxes, depreciation and amortization, income or loss from discontinued operations and the sale thereof, gain on settlement, loss on extinguishment of debt, certain other legal and professional fees, and acquisition-related costs. We define Non-GAAP Adjusted Gross Margin as Gross Profit before certain acquisition and integration-related costs.We define Non-GAAP Adjusted Operating Income as Operating Income minus certain other legal and professional fees, acquisition and other integration costs. We define Non-GAAP Adjusted Net Income as Net Income before gain on settlement, loss on extinguishment of debt, certain other legal and professional fees, acquisition and integration-related costs, income or loss from discontinued operations and sale thereof, the applicable tax impacts associated with these items and the tax impacts of state tax rate adjustments and other non-deductible items. Non-GAAP Adjusted EPS is calculated based on Non-GAAP Adjusted Net Income, divided by the weighted average number of common and potential common shares outstanding during the period. We define Non-GAAP Free Cash Flow as Net Cash provided by operating activities less cash paid for capital expenditures. Non-GAAP Free Cash Flow per Share is calculated based on Non-GAAP Free Cash Flow, divided by the weighted average number of common and potential common shares outstanding during the period. Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow and Non-GAAP Free Cash Flow per Share may not be comparable to similarly titled measures reported by other companies.
We are presenting Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow and Non-GAAP Free Cash Flow per Share because they provide additional ways to view our operations, when considered with both our GAAP results and the reconciliation to net income and net cash provided by operating activities, respectively, which we believe provide a more complete understanding of our business than could be obtained absent this disclosure. Each of Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow and Non-GAAP Free Cash Flow per Share is presented solely as a supplemental disclosure because (i) we believe it is a useful tool for investors to assess the operating performance of the business without the effect of these items; (ii) we believe that investors will find this data useful in assessing shareholder value; and (iii) we use Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income and Non-GAAP Adjusted EPS internally to evaluate the performance of our personnel and also as a benchmark to evaluate our operating performance or compare our performance to that of our competitors. The use of Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow and Non-GAAP Free Cash Flow per Share has limitations, and you should not consider these measures in isolation from or as an alternative to GAAP measures such as Operating income, Net income, and Net cash flow provided by operating activities, or cash flow statement data prepared in accordance with GAAP, or as a measure of profitability or liquidity.
The following tables set forth the reconciliation of Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow and Non-GAAP Free Cash Flow per Share, all of which are non-GAAP financial measures, to GAAP Gross Profit, GAAP Operating Income,
GAAP Net Income, GAAP Diluted EPS and GAAP Net cash provided by operating activities, our most directly comparable financial measures presented in accordance with GAAP.
Reconciliation of GAAP Total Revenues to Non-GAAP Total Revenues excluding acquisitions and divestitures:
|
| | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Six Months Ended September 30, |
| | 2013 | | 2012 | | 2013 | | 2012 |
| (In thousands) | | | | | | | |
| GAAP Total Revenues | $ | 168,442 |
| | $ | 161,855 |
| | $ | 311,413 |
| | $ | 308,852 |
|
Adjustments: (1) | | | | | | | |
| Care revenues | (5,429 | ) | | — |
| | (5,429 | ) | | — |
|
| Phazyme revenues | — |
| | (1,394 | ) | | — |
| | (3,044 | ) |
| Total adjustments | (5,429 | ) | | (1,394 | ) | | (5,429 | ) | | (3,044 | ) |
| Non-GAAP Total Revenues excluding acquisitions and divestitures | $ | 163,013 |
| | $ | 160,461 |
| | $ | 305,984 |
| | $ | 305,808 |
|
(1) Revenue adjustments relate to our OTC Healthcare segment
Reconciliation of GAAP Total Revenues to Non-GAAP Adjusted Total Revenues and GAAP Gross Profit to Non-GAAP Adjusted Gross Margin:
|
| | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Six Months Ended September 30, |
| | 2013 | | 2012 | | 2013 | | 2012 |
| (In thousands) | | | | | | | |
| GAAP Total Revenues | $ | 168,442 |
| | $ | 161,855 |
| | $ | 311,413 |
| | $ | 308,852 |
|
Adjustments: (1) | | | | | | | |
| Additional sales costs associated with GSK | — |
| | — |
| | — |
| | 411 |
|
| Total adjustments | — |
| | — |
| | — |
| | 411 |
|
| Non-GAAP Adjusted Total Revenues | $ | 168,442 |
| | $ | 161,855 |
| | $ | 311,413 |
| | $ | 309,263 |
|
| | | | | | | | |
| GAAP Gross Profit | $ | 94,719 |
| | $ | 90,545 |
| | $ | 178,202 |
| | $ | 174,149 |
|
| Adjustments: | | | | | | | |
| Inventory step-up charge associated with acquisitions | 577 |
| | — |
| | 577 |
| | 23 |
|
| Care acquisition related inventory costs | 407 |
| | — |
| | 407 |
| | — |
|
| Additional sales costs associated with GSK | — |
| | — |
| | — |
| | 411 |
|
| Additional product testing costs associated with GSK | — |
| | — |
| | — |
| | 220 |
|
| Additional supplier transaction costs associated with GSK | — |
| | 1,661 |
| | — |
| | 1,661 |
|
| Total adjustments | 984 |
| | 1,661 |
| | 984 |
| | 2,315 |
|
| Non-GAAP Adjusted Gross Margin | $ | 95,703 |
| | $ | 92,206 |
| | $ | 179,186 |
| | $ | 176,464 |
|
| Non-GAAP Adjusted Gross Margin % | 56.8 | % | | 57.0 | % | | 57.5 | % | | 57.1 | % |
(1) Revenue adjustments relate to our OTC Healthcare segment
Reconciliation of GAAP Operating Income to Non-GAAP Adjusted Operating Income:
|
| | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Six Months Ended September 30, |
| | 2013 | | 2012 | | 2013 | | 2012 |
| (In thousands) | | | | | | | |
| GAAP Operating Income | $ | 53,762 |
| | $ | 51,156 |
| | $ | 103,203 |
| | $ | 94,989 |
|
| Adjustments: | | | | | | | |
| Inventory step-up charge associated with acquisitions | 577 |
| | — |
| | 577 |
| | 23 |
|
| Care acquisition related inventory costs | 407 |
| | — |
| | 407 |
| | — |
|
| Additional sales costs associated with GSK | — |
| | — |
| | — |
| | 411 |
|
| Additional product testing costs associated with GSK | — |
| | — |
| | — |
| | 220 |
|
| Additional supplier transition costs associated with GSK | — |
| | 1,661 |
| | — |
| | 1,661 |
|
Legal and professional fees associated with acquisitions (2) | 85 |
| | 39 |
| | 668 |
| | 98 |
|
Unsolicited proposal costs (2) | — |
| | — |
| | — |
| | 534 |
|
Transition and integration costs associated with GSK (2) | — |
| | 1,684 |
| | — |
| | 5,811 |
|
| Total adjustments | 1,069 |
| | 3,384 |
| | 1,652 |
| | 8,758 |
|
| Non-GAAP Adjusted Operating Income | $ | 54,831 |
| | $ | 54,540 |
| | $ | 104,855 |
| | $ | 103,747 |
|
(2) Adjustments related to G&A expenses
Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA:
|
| | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Six Months Ended September 30, |
| | 2013 | | 2012 | | 2013 | | 2012 |
| (In thousands) | | | | | | | |
| GAAP Net Income | $ | 32,792 |
| | $ | 19,244 |
| | $ | 53,484 |
| | $ | 33,899 |
|
| Interest expense, net | 16,439 |
| | 19,660 |
| | 32,344 |
| | 39,508 |
|
| Income tax provision | 4,531 |
| | 12,252 |
| | 17,375 |
| | 21,582 |
|
| Depreciation and amortization | 3,294 |
| | 3,296 |
| | 6,562 |
| | 6,591 |
|
| Non-GAAP EBITDA: | 57,056 |
| | 54,452 |
| | 109,765 |
| | 101,580 |
|
| Adjustments: | | | | | | | |
| Inventory step-up charge associated with acquisitions | 577 |
| | — |
| | 577 |
| | 23 |
|
| Care acquisition related inventory costs | 407 |
| | — |
| | 407 |
| | — |
|
| Additional sales costs associated with GSK | — |
| | — |
| | — |
| | 411 |
|
| Additional product testing costs associated with GSK | — |
| | — |
| | — |
| | 220 |
|
| Additional supplier transaction costs associated with GSK | — |
| | 1,661 |
| | — |
| | 1,661 |
|
Legal and professional fees associated with acquisitions (2) | 85 |
| | 39 |
| | 668 |
| | 98 |
|
Unsolicited proposal costs (2) | — |
| | — |
| | — |
| | 534 |
|
Transition and integration costs associated with GSK(2) | — |
| | 1,684 |
| | — |
| | 5,811 |
|
| Total adjustments | 1,069 |
| | 3,384 |
| | 1,652 |
| | 8,758 |
|
| Non-GAAP Adjusted EBITDA | $ | 58,125 |
| | $ | 57,836 |
| | $ | 111,417 |
| | $ | 110,338 |
|
(2) Adjustments related to G&A expenses
Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income and related Adjusted Earnings Per Share:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Six Months Ended September 30, |
| | 2013 | 2013 Adjusted EPS | | 2012 | 2012 Adjusted EPS | | 2013 | 2013 Adjusted EPS | | 2012 | 2012 Adjusted EPS |
| (In thousands) | | | | | | | | | | | |
| GAAP Net Income | $ | 32,792 |
| $ | 0.63 |
| | $ | 19,244 |
| $ | 0.38 |
| | $ | 53,484 |
| $ | 1.03 |
| | $ | 33,899 |
| $ | 0.66 |
|
| Adjustments: | | | | | | | | | | | |
| Inventory step-up charge associated with acquisitions | 577 |
| 0.01 |
| | — |
| — |
| | 577 |
| 0.01 |
| | 23 |
| — |
|
| Care acquisition related inventory costs | 407 |
| 0.01 |
| | — |
| — |
| | 407 |
| 0.01 |
| | — |
| — |
|
| Additional sales costs associated with GSK | — |
| — |
| | — |
| — |
| | — |
| — |
| | 411 |
| 0.01 |
|
| Additional product testing costs associated with GSK | — |
| — |
| | — |
| — |
| | — |
| — |
| | 220 |
| 0.01 |
|
| Additional supplier transition costs associated with GSK | — |
| — |
| | 1,661 |
| 0.03 |
| | — |
| — |
| | 1,661 |
| 0.03 |
|
Legal and professional fees associated with acquisitions (2) | 85 |
| — |
| | 39 |
| — |
| | 668 |
| 0.01 |
| 13,907 |
| 98 |
| — |
|
Unsolicited proposal costs (2) | — |
| — |
| | — |
| — |
| | — |
| — |
| | 534 |
| 0.01 |
|
Transition and integration costs associated with GSK (2) | — |
| — |
| | 1,684 |
| 0.03 |
| | — |
| — |
| | 5,811 |
| 0.11 |
|
| Tax impact of adjustments | (133 | ) | (0.01 | ) | | (1,300 | ) | (0.02 | ) | | (356 | ) | (0.01 | ) | | (3,407 | ) | (0.06 | ) |
| Impact of state tax adjustments | (9,085 | ) | (0.17 | ) | | — |
| — |
| | (9,085 | ) | (0.17 | ) | | — |
| — |
|
| Total adjustments | (8,149 | ) | (0.16 | ) | | 2,084 |
| 0.04 |
| | (7,789 | ) | (0.15 | ) | | 5,351 |
| 0.11 |
|
| Non-GAAP Adjusted Net Income and Adjusted EPS | $ | 24,643 |
| $ | 0.47 |
| | $ | 21,328 |
| $ | 0.42 |
| | $ | 45,695 |
| $ | 0.88 |
| | $ | 39,250 |
| $ | 0.77 |
|
(2) Adjustments related to G&A expenses
Reconciliation of GAAP Net Cash Provided by Operating Activities to Non-GAAP Free Cash Flow:
|
| | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Six Months Ended September 30, |
| | 2013 | | 2012 | | 2013 | | 2012 |
| (In thousands) | | | | | | | |
| GAAP Net cash provided by operating activities | $ | 32,800 |
| | $ | 45,632 |
| | $ | 55,598 |
| | $ | 60,374 |
|
| Additions to property and equipment for cash | (955 | ) | | (4,068 | ) | | (2,319 | ) | | (5,266 | ) |
| Non-GAAP Free Cash Flow | $ | 31,845 |
| | $ | 41,564 |
| | $ | 53,279 |
| | $ | 55,108 |
|
| | | | | | | | |
| Non-GAAP Free Cash Flow per Share | $ | 0.61 |
| | $ | 0.81 |
| | $ | 1.02 |
| | $ | 1.08 |
|
Reconciliation of GAAP Net Income and EPS to Non-GAAP Free Cash Flow and Non-GAAP Free Cash Flow per Share:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Six Months Ended September 30, |
| | 2013 | 2013 Free Cash Flow per Share | | 2012 | 2012 Free Cash Flow per Share | | 2013 | 2013 Free Cash Flow per Share | | 2012 | 2012 Free Cash Flow per Share |
| (In thousands) | | | | | | | | | | | |
| GAAP Net Income | $ | 32,792 |
| $ | 0.63 |
| | $ | 19,244 |
| $ | 0.38 |
| | $ | 53,484 |
| $ | 1.03 |
| | $ | 33,899 |
| $ | 0.66 |
|
| Adjustments: | | | | | | | | | | | |
| Adjustments to reconcile net income to net cash provided by operating activities as shown in the Statement of Cash Flows | 3,681 |
| 0.07 |
| | 12,096 |
| 0.24 |
| | 16,174 |
| 0.31 |
| | 24,853 |
| 0.49 |
|
| Changes in operating assets and liabilities, net of effects from acquisitions as shown in the Statement of Cash Flows | (3,673 | ) | (0.07 | ) | | 14,292 |
| 0.27 |
| | (14,060 | ) | (0.27 | ) | | 1,622 |
| 0.03 |
|
| Total adjustments | 8 |
| — |
| | 26,388 |
| 0.51 |
| | 2,114 |
| 0.04 |
| | 26,475 |
| 0.52 |
|
| GAAP Net cash provided by operating activities | 32,800 |
| 0.63 |
| | 45,632 |
| 0.89 |
| | 55,598 |
| 1.07 |
| | 60,374 |
| 1.18 |
|
| Additions to property and equipment for cash | (955 | ) | (0.02 | ) | | (4,068 | ) | (0.08 | ) | | (2,319 | ) | (0.05 | ) | | (5,266 | ) | (0.10 | ) |
| Non-GAAP Free Cash Flow per Share | $ | 31,845 |
| $ | 0.61 |
| | $ | 41,564 |
| $ | 0.81 |
| | $ | 53,279 |
| $ | 1.02 |
| | $ | 55,108 |
| $ | 1.08 |
|
