Prestige Brands Holdings, Inc. : Reports Record Fourth Quarter Revenues Up 39.1%; Record Core Organic OTC Revenues Up 14.0%; EPS Exceeds Recent Guidance
05/17/2012| 05:35am US/Eastern
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Prestige Brands Holdings, Inc. (NYSE: PBH) today announced record
results for the fourth quarter and fiscal year ended March 31, 2012,
driven by strong Over-the-Counter Healthcare ("OTC") organic growth and
the completion of the acquisition of 17 brands from GlaxoSmithKline (the
"GSK Brands"), the largest acquisition in the Company's history.
Revenues for the fourth fiscal quarter were $134.0 million, $37.6
million or 39.1% above the prior year comparable quarter's results of
$96.4 million. Organic revenues for the fourth fiscal quarter grew $7.2
million, or 7.5% over the prior year comparable quarter. Revenues from
the Company's nine legacy core OTC brands increased $8.2 million or
14.0% over the prior year comparable quarter. These brands are
Chloraseptic®, Clear Eyes®, Compound W®, Little Remedies®, The Doctor's®
NightGuard®, Efferdent®, PediaCare®, Dramamine® and Luden's®. Revenues
from two months of ownership of the GSK Brands accounted for $30.4
million of the increase. The GSK Brands' acquisition increases the core
brand group by five. These brands are Beano®, BC® and Goody's®, and
Debrox® in the U.S., and Gaviscon® in Canada.
Gross profit for the fourth fiscal quarter was $68.5 million, $22.2
million, or 47.9% above the prior year comparable quarter of $46.3
million. Excluding charges associated with inventory valuation step-up
adjustments of $1.8 million related to the GSK Brands' acquisition,
gross profit would have been $70.3 million in the current quarter. Gross
margin was 51.1% in the current quarter, which was impacted by 1.4
percentage points from the inventory step-up charges noted above.
Excluding these charges, gross margin would have improved to 52.5%. In
the prior year comparable quarter, gross margin was 48.1%, which was
impacted by 3.8 percentage points from the inventory step-up adjustments
of $3.7 million associated with the Blacksmith Brands and Dramamine
acquisitions. Excluding these charges, gross margin would have been
51.9%. The year-over-year improvement in gross margin is primarily a
result of a higher proportion of revenue generated from the OTC segment.
The Company continued its investment in Advertising and Promotion
("A&P") during the quarter in support of its core OTC brands and certain
recently acquired OTC brands. A&P for the quarter was $18.5 million,
$4.4 million, or 31.3% above the prior year comparable quarter spend of
$14.1 million. A&P as a percent of revenue was 13.8% during the fourth
fiscal quarter, a modest decline from 14.7% in the prior year comparable
quarter. The prior year comparable period included a higher advertising
spend against brands newly acquired in the Blacksmith Brands and
Dramamine® acquisitions, which was affected by seasonality. Excluding
this factor, the normalized A&P spending level continued to increase.
Operating income for the fourth fiscal quarter was $22.6 million, $4.0
million or 21.1% higher than the prior year comparable quarter of $18.6
million. Operating income for fiscal 2012 was impacted by $15.2 million
of costs primarily associated with the GSK Brands' acquisition
(including transaction costs of $8.1 million, an inventory step-up
adjustment of $1.8 million and GSK transition costs of $3.6 million) and
$1.7 million of costs associated with the evaluation of the Genomma Lab
unsolicited proposal. Excluding these charges, operating income would
have been $37.8 million. Operating income for the prior year comparable
quarter included $4.5 million of costs associated with the acquisitions
of Blacksmith and Dramamine®, including an inventory step-up adjustment
of $3.7 million and transaction costs of $0.8 million. Excluding these
charges, the prior year operating income would have been $23.1 million.
On a comparable basis, excluding the charges noted above in the current
and prior year quarter, operating income in the current quarter
increased 63.3%.
In the fourth fiscal quarter, the Company's diluted earnings per share
from continuing operations was $0.00, which included the GSK acquisition
and the impact of the above noted costs. This compares to $0.13 in the
prior year comparable quarter, which also included the impact of the
above noted costs. Excluding the impact of the charges noted above in
each quarter, diluted earnings per share from continuing operations in
the fourth fiscal quarter would have been $0.26 compared to $0.18 in the
prior year comparable quarter, an increase of 44.4%.
Commentary
"We are pleased with the excellent revenue and adjusted EPS growth in
the Company's fourth fiscal quarter. We recorded our seventh consecutive
quarter of organic core OTC growth achieving the highest growth rate in
almost two years. With this organic growth performance, Prestige ranks
near the top of many CPG industry participants" commented Matthew M.
Mannelly, President and CEO. "In less than three years, our clear and
consistent value creation strategy has taken hold. We have transformed
Prestige into the largest independent OTC products company in the U.S.
with a proven ability to generate consistent organic growth in our core
OTC business coupled with a leading free cash flow profile," he said.
"This quarter's revenue increase reflects the success of our core OTC
brand-building strategy, and includes two months of revenues from this
quarter's GSK Brands' acquisition. Consumption was driven by increased
A&P support resulting in our brands' growth significantly exceeding
category growth. Our nine legacy core OTC brands increased almost 15%
despite the soft cough/cold season."
"For the fiscal year, we achieved record revenues and earnings growth,
which exceeded our expectations. Our consistently strong free cash flow
continued in fiscal 2012, and helped fund the most transformative event
in our history-the acquisition of 17 brands from GSK," Mr. Mannelly
said. "This is a meaningful step toward continued shareholder value
creation. Our M&A strategy in action has transformed Prestige into a
company with approximately 90% of profits derived from higher growth,
higher margin OTC brands," he said.
"The integration of the GSK Brands, our third acquisition in the past
year and a half, is proceeding on schedule. We are excited by the
potential created by this opportunity, which significantly enhances our
portfolio by adding five new core OTC brands. This acquisition closely
aligns with our operating model and we believe it is highly cash
generative," he said.
"We've made a steadfast commitment to creating value by driving core OTC
growth, acquiring with an exclusive OTC focus, and strategically
managing our portfolio. We have much to do in fiscal 2013. Our new
product pipeline is robust. We will continue to develop the potential of
our two prior acquisitions, Blacksmith Brands and Dramamine®.
Furthermore, we will endeavor to participate in M&A within the OTC space
to continue the strategic transformation process. Our confidence in our
future is reflected in the guidance we previously provided for fiscal
year 2013, anticipating diluted adjusted earnings per share to be in the
range of $1.22 to $1.32, which represents an increase of approximately
23% to 33% from our current adjusted EPS," Mr. Mannelly said. "Based on
our strong fourth quarter performance, I am bullish regarding our
ability to deliver strong results in fiscal 2013."
Results by Segment for the Fourth Fiscal Quarter
Revenues for the OTC segment in the fourth fiscal quarter were $109.7
million, an increase of 53.3% over the prior year comparable period
revenues of $71.6 million. This was due to revenue increases in six of
the Company's nine core OTC brands, as well as the addition of two
months of revenues from the newly acquired GSK Brands.
Revenues for the Household Cleaning segment for the fourth fiscal
quarter were $24.3 million, a 2.2% reduction over the prior year
comparable quarter revenues of $24.8 million. The rate of reduction in
this segment has improved over the prior year comparable quarter,
primarily as a result of increased distribution of Spic and Span®, as
well as the fourth quarter introduction of the Comet® line of stainless
steel cleaners.
Fiscal Year 2012
Revenues for fiscal 2012 were $441.1 million, an increase of 31.1%, or
$104.6 million, over the prior year's revenues of $336.5 million.
Organic revenues for the Company grew $10.7 million or 3.2% during
fiscal 2012 over the prior year comparable period. Revenues from the GSK
acquisition accounted for $30.4 million of the increase. Blacksmith
Brands and Dramamine® contributed $63.5 million of the increase for the
period prior to the anniversary of their respective purchases.
Income from continuing operations for fiscal 2012 of $37.2 million was
27.5% higher than fiscal 2011 income from continuing operations of $29.2
million. Income from continuing operations for fiscal 2012 was impacted
by $12.9 million of costs primarily associated with the GSK acquisition
(including transaction costs of $8.4 million, an inventory step-up
adjustment of $1.1 million and GSK transition costs of $2.2 million),
costs associated with the evaluation of the Genomma Lab unsolicited
proposal of $1.1 million, and $0.1 million of costs as a result of the
net amount of the combined loss on extinguishment of debt and settlement
gain, net of related tax effects.
Income from continuing operations for fiscal 2011 was impacted by costs
of $10.5 million associated with the Blacksmith and Dramamine
acquisitions and $0.2 million of a loss associated with the
extinguishment of debt, net of related tax effects. Excluding these
impacts, income from continuing operations would have been $50.1 million
for the current fiscal year compared to $39.9 million for the prior
fiscal year, an increase of 25.8%.
Diluted earnings per share from continuing operations for fiscal 2012
was $0.73, which includes the impact of the above noted costs, compared
to $0.58 in the prior fiscal year, which included the costs associated
with the Blacksmith and Dramamine acquisitions and the extinguishment of
debt. Excluding the impact of these charges in the fiscal year, diluted
earnings per share from continuing operations in fiscal 2012 would have
been $0.99 compared to $0.79 in the prior fiscal year.
Outlook
For fiscal year 2013, which began on April 1, 2012, the Company had
previously announced that it expects to report diluted adjusted earnings
per share in the range of $1.22 to $1.32. This estimate excludes costs
related to the GSK acquisition, and related Transition Services
Agreement and integration costs, and costs related to the unsolicited
Genomma Lab offer.
Free Cash Flow and Debt
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. The Company defines "free cash flow" as net cash provided
by operating activities minus capital expenditures.
The Company's FCF for the fourth quarter ended March 31, 2012 was $19.2
million, a decrease of 22.4% over the prior year comparable period's FCF
of $24.8 million. FCF for the fourth quarter was impacted by $8.4
million of working capital investments associated with the GSK
acquisition, and $10.5 million of other costs, net of related tax
effects. Excluding the impact of these charges, FCF for the fourth
quarter ended March 31, 2012 would have been $38.1 million.
For fiscal 2012, FCF totaled $66.8 million, a decrease of 22.3% over the
prior year comparable period's FCF of $86.0 million. FCF for fiscal 2012
was impacted by $8.4 million of working capital investments associated
with the GSK acquisition and $6.7 million of adjustments, net of related
tax effects. Excluding the impact of these charges, FCF for fiscal 2012
would have been $81.9 million.
Conference Call and Accompanying Slide Presentation
The Company will host a conference call to review its fourth quarter and
year end results on May 17, 2012 at 8:30 am EST. The toll-free dial-in
numbers are 800-884-5695 within North America and 617-786-2960 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 Company's Investor Relations page of 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 20647616.
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. Core brands now 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® analgesics, Gaviscon® antacid, Beano® gas
treatment, and Debrox® earwax remover.
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," "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.
Forward-looking statements in this news release include, without
limitation, statements regarding the impact of our M&A strategy, our
ability to integrate and develop the brands that we acquire, our new
product pipeline, and our outlook for adjusted earnings per share and
our plans for growth. These statements are based on management's
estimates and assumptions with respect to future events and financial
performance and are believed to be reasonable, although they 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
(Unaudited)
Three Months Ended
March 31,
Year Ended March 31,
(In thousands, except per share data)
2012
2011
2012
2011
Revenues
Net sales
$
133,160
$
95,629
$
437,838
$
333,715
Other revenues
836
734
3,247
2,795
Total revenues
133,996
96,363
441,085
336,510
Cost of Sales
Cost of sales (exclusive of depreciation shown below)
65,508
50,058
213,701
165,632
Gross profit
68,488
46,305
227,384
170,878
Operating Expenses
Advertising and promotion
18,547
14,122
57,127
42,897
General and administrative
24,334
11,019
56,700
41,960
Depreciation and amortization
3,051
2,540
10,734
9,876
Total operating expenses
45,932
27,681
124,561
94,733
Operating income
22,556
18,624
102,823
76,145
Other (income) expense
Interest income
(14
)
(1
)
(18
)
(1
)
Interest expense
16,361
8,810
41,338
27,318
Gain on settlement
--
--
(5,063
)
--
Loss on extinguishment of debt
5,409
--
5,409
300
Total other expense
21,756
8,809
41,666
27,617
Income from continuing operations before income taxes
800
9,815
61,157
48,528
Provision for income taxes
815
3,401
23,945
19,349
Income (loss) from continuing operations
(15
)
6,414
37,212
29,179
Discontinued Operations
Income from discontinued operations, net of income tax
--
--
--
591
Loss on sale of discontinued operations, net of income tax
--
--
--
(550
)
Net income (loss)
$
(15
)
$
6,414
$
37,212
$
29,220
Basic earnings per share:
Income from continuing operations
$
--
$
0.13
$
0.74
$
0.58
Income from discontinued operations and loss on sale of discontinued
operations
--
--
--
--
Net income
$
--
$
0.13
$
0.74
$
0.58
Diluted earnings per share:
Income from continuing operations
$
--
$
0.13
$
0.73
$
0.58
Income from discontinued operations and loss on sale of discontinued
operations
--
--
--
--
Net income
$
--
$
0.13
$
0.73
$
0.58
Weighted average shares outstanding:
Basic
50,314
50,129
50,270
50,081
Diluted
50,992
50,555
50,748
50,338
Prestige Brands Holdings, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands)
Assets
March 31,
2012
March 31,
2011
Current assets
Cash and cash equivalents
$
19,015
$
13,334
Accounts receivable, net
60,228
44,393
Inventories
51,113
39,751
Deferred income tax assets
5,283
5,292
Prepaid expenses and other current assets
11,396
4,812
Total current assets
147,035
107,582
Property and equipment, net
1,304
1,444
Goodwill
173,702
154,896
Intangible assets, net
1,400,522
786,361
Other long-term assets
35,713
6,635
Total Assets
$
1,758,276
$
1,056,918
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable
$
26,726
$
21,615
Accrued interest payable
13,889
10,313
Other accrued liabilities
23,308
22,280
Total current liabilities
63,923
54,208
Long-term debt
Principal amount
1,135,000
492,000
Less unamortized discount
(11,092
)
(5,055
)
Long-term debt, net of unamortized discount
1,123,908
486,945
Deferred income tax liabilities
167,717
153,933
Total Liabilities
1,355,548
695,086
Stockholders' Equity
Preferred stock - $0.01 par value
Authorized - 5,000 shares
Issued and outstanding - None
--
--
Preferred share rights
283
--
Common stock - $0.01 par value
Authorized - 250,000 shares
Issued - 50,466 shares and 50,276 shares at March 31, 2012 and 2011,
respectively
505
503
Additional paid-in capital
391,898
387,932
Treasury stock, at cost - 181 shares at March 31, 2012 and 160
shares at March 31, 2011
(687
)
(416
)
Accumulated other comprehensive loss, net of tax
(13
)
--
Retained earnings (accumulated deficit)
10,742
(26,187
)
Total Stockholders' Equity
402,728
361,832
Total Liabilities and Stockholders' Equity
$
1,758,276
$
1,056,918
Prestige Brands Holdings, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Year Ended March 31,
(In thousands)
2012
2011
Operating Activities
Net income
$
37,212
$
29,220
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
10,734
10,108
Loss on sale of discontinued operations
--
890
Deferred income taxes
13,793
9,324
Amortization of deferred financing costs
1,630
1,043
Stock-based compensation costs
3,078
3,575
Loss on extinguishment of debt
5,409
300
Amortization of debt discount
1,030
702
Loss on disposal of equipment
--
153
Changes in operating assets and liabilities, net of effects of
acquisitions
Accounts receivable
(15,854
)
4,918
Inventories
3,710
12,443
Prepaid expenses and other current assets
(3,009
)
154
Accounts payable
5,127
1,784
Accrued liabilities
4,592
12,056
Net cash provided by operating activities
67,452
86,670
Investing Activities
Purchases of equipment
(606
)
(655
)
Proceeds from sale of property and equipment
--
12
Proceeds from sale of discontinued operations
--
4,122
Acquisition of Blacksmith, net of cash acquired
--
(202,044
)
Proceeds from escrow of Blacksmith acquisition
1,200
--
Acquisition of Dramamine
--
(77,115
)
Acquisition of GSK Brands
(662,800
)
--
Net cash used in investing activities
(662,206
)
(275,680
)
Financing Activities
Proceeds from issuance of Senior Notes
250,000
100,250
Proceeds from issuance of 2012 Term Loan and 2010 Term Loan
650,100
112,936
Repayment of 2010 Term Loan
(242,000
)
--
Payment of deferred financing costs
(33,284
)
(830
)
Repayment of long-term debt
(25,000
)
(51,087
)
Proceeds from exercise of stock options
889
331
Shares surrendered as payment of tax withholding
(271
)
(353
)
Net cash provided by financing activities
600,434
161,247
Effects of exchange rate changes on cash and cash equivalents
1
--
Increase (decrease) in cash and cash equivalents
5,681
(27,763
)
Cash and cash equivalents - beginning of year
13,334
41,097
Cash and cash equivalents - end of year
$
19,015
$
13,334
Interest paid
$
34,977
$
17,509
Income taxes paid
$
12,865
$
11,894
Prestige Brands Holdings, Inc.
Consolidated Statements of Operations
Business Segments
(Unaudited)
Three Months Ended March 31, 2012
OTC
Healthcare
Household
Cleaning
Consolidated
(In thousands)
Net sales
$
109,570
$
23,590
$
133,160
Other revenues
167
669
836
Total revenues
109,737
24,259
133,996
Cost of sales
45,953
19,555
65,508
Gross profit
63,784
4,704
68,488
Advertising and promotion
17,149
1,398
18,547
Contribution margin
$
46,635
$
3,306
49,941
Other operating expenses
27,385
Operating income
22,556
Other expense
21,756
Provision for income taxes
815
Loss from continuing operations
(15
)
Income from discontinued operations, net of income tax
--
Loss on sale of discontinued operations, net of income tax
--
Net loss
$
(15
)
Three Months Ended March 31, 2011
OTC
Healthcare
Household
Cleaning
Consolidated
(In thousands)
Net sales
$
71,390
$
24,239
$
95,629
Other revenues
175
559
734
Total revenues
71,565
24,798
96,363
Cost of sales
33,233
16,825
50,058
Gross profit
38,332
7,973
46,305
Advertising and promotion
12,834
1,288
14,122
Contribution margin
$
25,498
$
6,685
32,183
Other operating expenses
13,559
Operating income
18,624
Other expense
8,809
Provision for income taxes
3,401
Income from continuing operations
6,414
Income from discontinued operations, net of income tax
--
Loss on sale of discontinued operations, net of income tax
--
Net income
$
6,414
Year Ended March 31, 2012
OTC
Healthcare
Household
Cleaning
Consolidated
(In thousands)
Net sales
$
344,282
$
93,556
$
437,838
Other revenues
719
2,528
3,247
Total revenues
345,001
96,084
441,085
Cost of sales
143,151
70,550
213,701
Gross profit
201,850
25,534
227,384
Advertising and promotion
51,895
5,232
57,127
Contribution margin
$
149,955
$
20,302
170,257
Other operating expenses
67,434
Operating income
102,823
Other expense
41,666
Provision for income taxes
23,945
Income from continuing operations
37,212
Income from discontinued operations, net of income tax
--
Loss on sale of discontinued operations, net of income tax
--
Net income
$
37,212
Year Ended March 31, 2011
OTC
Healthcare
Household
Cleaning
Consolidated
(In thousands)
Net sales
$
234,042
$
99,673
$
333,715
Other revenues
543
2,252
2,795
Total revenues
234,585
101,925
336,510
Cost of sales
97,710
67,922
165,632
Gross profit
136,875
34,003
170,878
Advertising and promotion
36,752
6,145
42,897
Contribution margin
$
100,123
$
27,858
127,981
Other operating expenses
51,836
Operating income
76,145
Other expense
27,617
Provision for income taxes
19,349
Income from continuing operations
29,179
Income from discontinued operations, net of income tax
591
Loss on sale of discontinued operations, net of income tax
(550
)
Net income
$
29,220
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 Income from Continuing Operations as Income
from Continuing Operations before incremental interest expense to
finance future acquisitions, gain on settlement, loss on extinguishment
of debt, certain other legal and professional fees, acquisition-related
costs, the applicable tax impacts associated with these items and the
tax impacts of state tax rate adjustments and other non-deductible
items. 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-related costs, income or loss from
discontinued operations and the sale thereof, the applicable tax impacts
associated with these items and the tax impacts of state tax rate
adjustments and other non-deductible items. We define Non-GAAP Free Cash
Flow as net cash provided by operating activities less cash paid for
capital expenditures. Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA,
Non-GAAP Adjusted Net Income and Non-GAAP Free Cash Flow 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 Income from Continuing Operations, Non-GAAP Adjusted Net Income
and Non-GAAP Free Cash Flow 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 Income from Continuing Operations, Non-GAAP Adjusted Net Income
and Non-GAAP Free Cash Flow 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 our ability to pursue acquisitions or service or incur
indebtedness; and (iii) we use Non-GAAP EBITDA/Non-GAAP Adjusted EBITDA
and Non-GAAP Adjusted Net Income 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
Income from Continuing Operations, Non-GAAP Adjusted Net Income and
Non-GAAP Free Cash Flow has limitations and you should not consider
these measures in isolation from or as an alternative to GAAP measures
such as operating income, income from continuing operations, 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 Income from Continuing
Operations, Non-GAAP Adjusted Net Income and Non-GAAP Free Cash Flow,
all of which are non-GAAP financial measures, to GAAP net income and
GAAP Net cash provided by operating activities, respectively, our most
directly comparable financial measures presented in accordance with GAAP.
Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA:
Three Months Ended March 31,
2012
2011
(In thousands)
GAAP Net Income (Loss)
$
(15
)
$
6,414
Income from discontinued operations
--
--
Interest expense, net
16,347
8,809
Income tax provision
815
3,401
Depreciation and amortization
3,051
2,540
Non-GAAP EBITDA:
20,198
21,164
Adjustments:
Inventory step-up charges associated with acquisitions
1,795
3,729
Legal and professional fees associated with acquisitions
8,142
802
Transition costs associated with GSK
3,588
--
Unsolicited proposal costs
1,737
--
Loss on extinguishment of debt
5,409
--
Total adjustments
20,671
4,531
Non-GAAP Adjusted EBITDA
$
40,869
$
25,695
Year Ended March 31,
2012
2011
(In thousands)
GAAP Net Income
$
37,212
$
29,220
Income from discontinued operations
--
(591
)
Loss on sale of discontinued operations
--
550
Interest expense, net
41,320
27,317
Income tax provision
23,945
19,349
Depreciation and amortization
10,734
9,876
Non-GAAP EBITDA:
113,211
85,721
Adjustments:
Inventory step-up charges associated with acquisitions
1,795
7,273
Legal and professional fees associated with acquisitions
13,807
7,729
Transition costs associated with GSK
3,588
--
Unsolicited proposal costs
1,737
--
Gain on settlement
(5,063
)
--
Loss on extinguishment of debt
5,409
300
Total adjustments
21,273
15,302
Non-GAAP Adjusted EBITDA
$
134,484
$
101,023
Reconciliation of GAAP Income from Continuing Operations to Non-GAAP
Adjusted Income from Continuing Operations:
Three Months Ended March 31,
2012
2011
(In thousands)
GAAP Income (Loss) from Continuing Operations
$
(15
)
$
6,414
Adjustments:
Inventory step-up charges associated with acquisitions
1,795
3,729
Acquisition related costs
8,142
802
Transition costs associated with GSK
3,588
--
Unsolicited proposal costs
1,737
--
Loss on extinguishment of debt
5,409
--
Tax impact of adjustments
(7,816
)
(2,094
)
Total adjustments
12,855
2,437
Non-GAAP Adjusted Income from Continuing Operations
$
12,840
$
8,851
Year Ended March 31,
2012
2011
(In thousands)
GAAP Income from Continuing Operations
$
37,212
$
29,179
Adjustments:
Incremental interest expense to finance Dramamine
--
800
Inventory step-up charges associated with acquisitions
1,795
7,273
Acquisition related costs
13,807
7,729
Transition costs associated with GSK
3,588
--
Unsolicited proposal costs
1,737
--
Gain on settlement
(5,063
)
--
Loss on extinguishment of debt
5,409
300
Tax impact of adjustments
(8,091
)
(5,213
)
Tax impact of state rate adjustments and other non-deductible items
(237
)
--
Total adjustments
12,945
10,889
Non-GAAP Adjusted Income from Continuing Operations
$
50,157
$
40,068
Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income and
related Diluted Earnings Per Share:
Three Months Ended March 31,
2012
2011
Diluted
Diluted
2012
EPS
2011
EPS
(In thousands)
GAAP Net Income (Loss)
$
(15
)
$
--
$
6,414
$
0.13
Adjustments:
Inventory step-up charge associated with acquisitions
1,795
0.04
3,729
0.07
Legal and professional fees associated with acquisitions
8,142
0.16
802
0.02
Transition costs associated with GSK
3,588
0.07
--
--
Unsolicited proposal costs
1,737
0.03
--
--
Loss on extinguishment of debt
5,409
0.11
--
--
Tax impact of adjustments
(7,816
)
(0.15
)
(2,094
)
(0.04
)
Total adjustments
12,855
0.26
2,437
0.05
Non-GAAP Adjusted Net Income and Adjusted EPS
$
12,840
$
0.26
$
8,851
$
0.18
Year Ended March 31,
2012
2011
Diluted
Diluted
2012
EPS
2011
EPS
(In thousands)
GAAP Net Income
$
37,212
$
0.73
$
29,220
$
0.58
Adjustments:
Income from discontinued operations
--
--
(591
)
(0.01
)
Loss on sale of discontinued operations
--
--
550
0.01
Incremental interest expense to finance Dramamine
--
--
800
0.02
Inventory step-up charge associated with acquisitions
1,795
0.04
7,273
0.14
Legal and professional fees associated with acquisitions
13,807
0.27
7,729
0.15
Transition costs associated with GSK
3,588
0.07
--
--
Unsolicited proposal costs
1,737
0.03
--
--
Gain on settlement
(5,063
)
(0.10
)
--
--
Loss on extinguishment of debt
5,409
0.11
--
--
Tax impact of adjustments
(8,091
)
(0.16
)
(5,213
)
(0.10
)
Tax impact of state rate adjustments and other non-deductible items
(237
)
--
--
--
Total adjustments
12,945
0.26
10,548
0.21
Non-GAAP Adjusted Net Income and Adjusted EPS
$
50,157
$
0.99
$
39,768
$
0.79
Reconciliation of GAAP Net Cash Provided by Operating Activities to
Non-GAAP Free Cash Flow:
Three Months Ended March 31,
2012
2011
(In thousands)
GAAP Net cash provided by operating activities
$
19,459
$
25,011
Additions to property and equipment for cash
(248
)
(250
)
Non-GAAP Free Cash Flow
$
19,211
$
24,761
Year Ended March 31,
2012
2011
(In thousands)
GAAP Net cash provided by operating activities
$
67,452
$
86,670
Additions to property and equipment for cash
(606
)
(655
)
Non-GAAP Free Cash Flow
$
66,846
$
86,015
Prestige Brands Holdings, Inc. Dean Siegal, 914-524-6819
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