News Releases
IRVINGTON, N.Y.--(BUSINESS WIRE)--Nov. 8, 2007--Prestige Brands Holdings, Inc. (NYSE:PBH) today announced results for the second quarter and first half of fiscal year 2008, which ended on September 30, 2007.
Net revenues for the second fiscal quarter ended September 30, 2007 were $87.3 million, 3% higher than net revenues of $84.6 million in the prior year comparable period. Net revenues for the quarter would have been 4% higher, and organic sales for the quarter would have been 2% higher than the prior year quarter were it not for the industry-wide voluntary withdrawal of infant cough/cold products in which the Company participated that affected two Little Remedies(R) products. During the quarter, the Company increased its allowance for estimated returns by $1.1 million and its allowance for obsolescence by $0.8 million to reflect the two withdrawn items.
Operating income of $20.6 million was 15% lower than the prior year quarter operating income of $24.1 million. The reduction in operating income is primarily due to the impact of the Little Remedies withdrawal, as well as increased legal expenditures related to arbitration with OraSure Technologies, Inc., a supplier of Compound W Freeze Off(R), and four separate legal actions initiated by the Company involving infringements of its intellectual property relative to its The Doctor's(R) Night Guard(TM) products.
Net income for the second fiscal quarter of $6.8 million, or $0.14 per share, was below last fiscal year's second quarter net income of $8.8 million, or $0.18 per share. Excluding the effects of the voluntary Little Remedies withdrawal, net income would have been $8.1 million, or $0.16 per share.
First Six Months of Fiscal 2008
Net revenues for the first six months of fiscal 2008 were $165.9 million, an increase of 3% over the prior year comparable period results of $160.5 million. Operating income of $43.7 million was 8% below the comparable period's results of $47.5 million. Net income of $15.1 million, or $0.30 per share, was 11% below the comparable period's net income of $17.0 million, or $0.34 per share.
Q2 and Six Month Results by Segment
Over-the-Counter (OTC) Healthcare Products
Net revenues of OTC healthcare products increased 8% to $50.0 million over the comparable period's results of $46.3 million. Excluding the impact of the acquisition of Wartner(R) wart remover products in the second quarter of fiscal 2007 and the effects of the increased allowance for returns for the two Little Remedies(R) products, OTC organic sales increased by 5%. Increases in the segment were led by the successful introduction of new Murine(TM) Earigate(TM) and Clear Eyes(R) eye care products.
For the six month period ended September 30, 2007, OTC net revenues were $92.4 million compared to $85.9 million in the prior year comparable period, an increase of 8%.
Household Products
Net revenues for the household products segment were $31.4 million, even with the prior year comparable quarter. An increase in the Chore Boy(R) line of household scrubbers offset a decline in sales of Spic and Span(R) household cleaners. Revenues for Comet(R), the segment's largest brand, were even with the prior year comparable period. The sales increase generated from the successful introduction of Comet(R) SprayGel Mildew Stain Remover was offset by inventory reductions at one of our key mass merchandisers.
For the six month period ended September 30, 2007, net revenues for the household products segment were $61.3 million, even with the prior year comparable period.
Personal Care Products
Net revenues for the personal care products segment were $5.9 million, 16% lower than the prior year comparable period results of $7.0 million. Cutex(R) nail polish remover and Denorex(R) shampoo experienced sales decreases versus the prior year period in line with expectations. Revenues of Prell(R) shampoo were up slightly for the quarter.
For the first six months of fiscal 2008, net revenues were $12.2 million compared to $13.3 million in the prior year comparable period.
Free Cash Flow and Debt Repayment
Free cash flow is a "non-GAAP" financial measure as that term is defined by the Securities and Exchange Commission in Regulation G. Free cash flow is presented in this news release because management believes that 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 less capital expenditures.
The Company's free cash flow for the quarter ended September 30, 2007 was $13.0 million, composed of operating cash flow of $13.1 million less capital expenditures of $0.1 million. This compares to free cash flow of $21.3 million generated in the prior year quarter. The decline in free cash flow was driven by the year on year reduction in net income combined with an increase in working capital versus the prior year comparable period.
Our continued strong absolute cash flow resulted in a debt pay down of $10.4 million on our term loan during the second fiscal quarter. Total debt has been reduced to $437.1 million at September 30, 2007.
Commentary
"Our second quarter saw continued progress on the path to sustainable organic growth," said Mark Pettie, Chairman and CEO. "Were it not for the industry-wide voluntary withdrawal affecting two of our Little Remedies(R) products, our organic sales would have been 2% above the year ago comparable period, aided by new product innovation in both our OTC and household businesses. In addition, efforts toward cost of goods savings are beginning to take effect and have already helped to shelter us from raw material increases," he said.
Conference Call
The Company will host a conference call to review its second quarter and six month results on Thursday, November 8, 2007 at 8:30 am (ET). The toll free number is 1-800-299-7635 within North America and 1-617-786-2901 outside North America. The conference pass code 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 1-617-801-6888 outside of North America. The pass code is 72463596.
About Prestige Brands Holdings, Inc.
Prestige Brands markets and distributes brand name over-the-counter healthcare, personal care and household products sold throughout the United States, Canada and certain international markets. Key brands include Compound W(R) wart treatment, Chloraseptic(R) sore throat relief products, New Skin(R) liquid bandage, Clear Eyes(R) and Murine(R) eye care products, Little Remedies(R) pediatric over-the-counter healthcare products, The Doctor's(R)NightGuard(TM), Cutex(R) nail polish remover, Comet(R) and Spic and Span(R) household cleaners, and other well-recognized brands.
Forward Looking Statements
Note: This news release contains "forward-looking statements" within the meaning of the federal securities laws and is intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" generally can be identified by the use of forward-looking terminology such as "assumptions," "target," "guidance," "outlook," "plans," "projection," "may," "will," "would," "expect," "intend," "estimate," "anticipate," "believe, "potential," or "continue" (or the negative or other derivatives of each of these terms) or similar terminology. The "forward-looking statements" include, without limitation, statements regarding the outlook for Prestige Brands Holdings' market and the demand for its products, earnings per share, future cash flows from operations, future revenues and margin requirement and expansion, the success of new product introductions, growth in costs and expenses, and the impact of acquisitions, divestitures, restructurings and other unusual items, including Prestige Brands Holdings' ability to integrate and obtain the anticipated results and synergies from its acquisitions. These projections and statements are based on management's estimates and assumptions with respect to future events and financial performance and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results could differ materially from those projected as a result of certain factors. A discussion of factors that could cause results to vary is included in the Company's Annual Report on Form 10-K and other periodic and other reports filed with the Securities and Exchange Commission.
Prestige Brands Holdings, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Six Months
Ended September 30 Ended September 30
------------------ -------------------
(In thousands, except per share
data) 2007 2006 2007 2006
-------- --------- --------- ---------
Revenues
Net sales $86,840 $ 84,033 $164,881 $159,600
Other revenues 497 518 1,067 874
-------- --------- --------- ---------
Total revenues 87,337 84,551 165,948 160,474
-------- --------- --------- ---------
Cost of Sales
Costs of sales 42,770 41,259 80,092 77,584
-------- --------- --------- ---------
Gross profit 44,567 43,292 85,856 82,890
-------- --------- --------- ---------
Operating Expenses
Advertising and promotion 11,017 9,455 18,803 16,857
General and administrative 10,184 7,259 17,830 13,693
Depreciation 129 219 253 439
Amortization of intangible
assets 2,627 2,193 5,254 4,386
-------- --------- --------- ---------
Total operating expenses 23,957 19,126 42,140 35,375
-------- --------- --------- ---------
Operating income 20,610 24,166 43,716 47,515
-------- --------- --------- ---------
Other income (expense)
Interest income 173 403 360 588
Interest expense (9,768) (10,146) (19,642) (20,123)
-------- --------- --------- ---------
Total other income (expense) (9,595) (9,743) (19,282) (19,535)
-------- --------- --------- ---------
Income before provision for
income taxes 11,015 14,423 24,434 27,980
Provision for income taxes 4,186 5,639 9,285 10,940
-------- --------- --------- ---------
Net income $ 6,829 $ 8,784 $ 15,149 $ 17,040
======== ========= ========= =========
Basic earnings per share $ 0.14 $ 0.18 $ 0.30 $ 0.35
======== ========= ========= =========
Diluted earnings per share $ 0.14 $ 0.18 $ 0.30 $ 0.34
======== ========= ========= =========
Weighted average shares
outstanding:
Basic 49,710 49,451 49,686 49,389
======== ========= ========= =========
Diluted 50,046 49,994 50,042 49,991
======== ========= ========= =========
Prestige Brands Holdings, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands)
Assets September 30, 2007 March 31, 2007
------------------ --------------
Current assets
Cash and cash equivalents $ 8,799 $ 13,758
Accounts receivable 46,512 35,167
Inventories 27,783 30,173
Deferred income tax assets 3,337 2,735
Prepaid expenses and other current
assets 3,628 1,935
------------------ --------------
Total current assets 90,059 83,768
Property and equipment 1,391 1,449
Goodwill 308,915 310,947
Intangible assets 651,903 657,157
Other long-term assets 8,310 10,095
------------------ --------------
Total Assets $ 1,060,578 $ 1,063,416
================== ==============
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 21,318 $ 19,303
Accrued interest payable 7,556 7,552
Other accrued liabilities 12,771 10,505
Current portion of long-term debt 3,550 3,550
------------------ --------------
Total current liabilities 45,195 40,910
Long-term debt 433,563 459,800
Other long-term liabilities 2,801 2,801
Deferred income tax liabilities 117,609 114,571
------------------ --------------
Total Liabilities 599,168 618,082
------------------ --------------
Stockholders' Equity
Preferred stock - $0.01 par value
Authorized - 5,000 shares
Issued and outstanding - None -- --
Common stock - $0.01 par value
Authorized - 250,000 shares
Issued - 50,060 shares 501 501
Additional paid-in capital 380,371 379,225
Treasury stock, at cost - 57 shares
at September 30, 2007
and 55 shares at March 31, 2007 (44) (40)
Accumulated other comprehensive
income 98 313
Retained earnings 80,484 65,335
------------------ --------------
Total stockholders' equity 461,410 445,334
------------------ --------------
Total Liabilities and Stockholders'
Equity $ 1,060,578 $ 1,063,416
================== ==============
Prestige Brands Holdings, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended September 30
-----------------------------
(In thousands) 2007 2006
-------------- --------------
Operating Activities
Net income $ 15,149 $ 17,040
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 5,507 4,825
Deferred income taxes 4,622 6,197
Amortization of deferred financing
costs 1,561 1,609
Stock-based compensation 1,146 224
Changes in operating assets and
liabilities
Accounts receivable (11,345) 2,595
Inventories 2,390 5,202
Prepaid expenses and other current
assets (1,692) (1,047)
Accounts payable 1,884 4,494
Income taxes payable -- (1,731)
Accrued liabilities 2,270 3,326
-------------- --------------
Net cash provided by operating
activities 21,492 42,734
-------------- --------------
Investing Activities
Purchases of equipment (194) (313)
Purchase of business (16) (31,242)
-------------- --------------
Net cash used for investing activities (210) (31,555)
-------------- --------------
Financing Activities
Repayment of long-term debt (26,237) (8,865)
Purchase of common stock for treasury (4) (6)
-------------- --------------
Net cash used for financing activities (26,241) (8,871)
-------------- --------------
Increase (decrease) in cash (4,959) 2,308
Cash - beginning of period 13,758 8,200
-------------- --------------
Cash - end of period $ 8,799 $ 10,508
============== ==============
Interest paid $ 18,078 $ 18,306
============== ==============
Income taxes paid $ 5,664 $ 6,287
============== ==============
Prestige Brands Holdings, Inc.
Consolidated Segment Operations
(Unaudited)
Three Months Ended September 30, 2007
------------------------------------------
Over-the-
Counter Household Personal
Healthcare Cleaning Care Consolidated
---------- --------- -------- ------------
Net sales $ 50,003 30,925 $ 5,912 $ 86,840
Other revenues -- 497 -- 497
---------- --------- -------- ------------
Total revenues 50,003 31,422 5,912 87,337
Cost of sales 19,688 19,587 3,495 42,770
---------- --------- -------- ------------
Gross profit 30,315 11,835 2,417 44,567
Advertising and promotion 8,154 2,575 288 11,017
---------- --------- -------- ------------
Contribution margin $ 22,161 $ 9,260 $ 2,129 33,550
========== ========= ========
Other operating expenses 12,940
------------
Operating income 20,610
Other (income) expense 9,595
Provision for income taxes 4,186
------------
Net income $ 6,829
============
Six Months Ended September 30, 2007
------------------------------------------
Over-the-
Counter Household Personal
Healthcare Cleaning Care Consolidated
---------- --------- -------- ------------
Net sales $ 92,429 $ 60,270 $ 12,182 $ 164,881
Other revenues -- 1,039 28 1,067
---------- --------- -------- ------------
Total revenues 92,429 61,309 12,210 165,948
Cost of sales 35,074 37,980 7,038 80,092
---------- --------- -------- ------------
Gross profit 57,355 23,329 5,172 85,856
Advertising and promotion 14,035 4,203 565 18,803
---------- --------- -------- ------------
Contribution margin $ 43,320 $ 19,126 $ 4,607 67,053
========== ========= ========
Other operating expenses 23,337
------------
Operating income 43,716
Other (income) expense 19,282
Provision for income taxes 9,285
------------
Net income $ 15,149
============
Prestige Brands Holdings, Inc.
Consolidated Segment Operations
(Unaudited)
Three Months Ended September 30, 2006
------------------------------------------
Over-the-
Counter Household Personal
Healthcare Cleaning Care Consolidated
---------- --------- -------- ------------
Net sales $ 46,255 $ 30,732 $ 7,046 $ 84,033
Other revenues -- 518 -- 518
---------- --------- -------- ------------
Total revenues 46,255 31,250 7,046 84,551
Cost of sales 18,001 18,941 4,317 41,259
---------- --------- -------- ------------
Gross profit 28,254 12,309 2,729 43,292
Advertising and promotion 7,058 2,020 377 9,455
---------- --------- -------- ------------
Contribution margin $ 21,196 $ 10,289 $ 2,352 33,837
========== ========= ========
Other operating expenses 9,671
------------
Operating income 24,166
Other (income) expense 9,743
Provision for income taxes 5,639
------------
Net income $ 8,784
============
Six Months Ended September 30, 2006
------------------------------------------
Over-the-
Counter Household Personal
Healthcare Cleaning Care Consolidated
---------- --------- -------- ------------
Net sales $ 85,853 $ 60,470 $ 13,277 $ 159,600
Other revenues -- 874 -- 874
---------- --------- -------- ------------
Total revenues 85,853 61,344 13,277 160,474
Cost of sales 32,398 37,095 8,091 77,584
---------- --------- -------- ------------
Gross profit 53,455 24,249 5,186 82,890
Advertising and promotion 12,483 3,710 664 16,857
---------- --------- -------- ------------
Contribution margin $ 40,972 $ 20,539 $ 4,522 66,033
========== ========= ========
Other operating expenses 18,518
------------
Operating income 47,515
Other (income) expense 19,535
Provision for income taxes 10,940
------------
Net income $ 17,040
============
CONTACT: Prestige Brands Holdings, Inc.
Dean Siegal, 914-524-6819
SOURCE: Prestige Brands Holdings, Inc.