News Releases
IRVINGTON, N.Y.--(BUSINESS WIRE)--Feb. 8, 2008--Prestige Brands Holdings, Inc. (NYSE: PBH), a consumer products company with a diversified portfolio of well-known brands in over-the-counter healthcare products, household products and personal care products, today announced results for the third fiscal quarter and nine months ended December 31, 2007.
Third Quarter Results
Revenues for the third quarter ended December 31, 2007 were $80.2 million, slightly ahead of last year's comparable period revenues of $80.1 million, despite the negative effects of a weak cough/cold season and the industry-wide voluntary pediatric cough /cold product withdrawal in October which affected two Little Remedies(R) products.
Operating income of $22.9 million for the third fiscal quarter was $1.6 million or 7% below last year's third quarter operating income of $24.5 million. The decline in operating income was due to a gross profit decrease primarily due to unfavorable sales mix and an increase in advertising and promotional spending, partially offset by a decline in general and administrative expenses. A&P expenses were 7% higher than those of the prior year comparable period primarily because of the Company continuing support behind the new product launches of Murine(TM) Earigate(TM) and Comet(R) SprayGel Mildew Stain Remover. General and administrative expenses declined in the quarter due to reductions to incentive compensation accruals partly offset by increased legal expenses.
Net income for the third quarter ended December 31, 2007 was $8.4 million or $0.17 per diluted share. This was 6% below the comparable prior period's adjusted net income of $8.9 million or $0.18 per diluted share, which reflects reported net income of $10.6 million less an adjustment of $1.7 million ($0.03 per diluted share) resulting from a favorable non-cash income tax benefit.
Commenting on the results, Mark Pettie, Chairman and CEO said, "Our third quarter revenue results were mixed in aggregate. We are quite pleased with the solid organic growth we enjoyed across many of our largest OTC and Household brands and the continued strong success of our Murine(TM) Earigate(TM) and Comet(R) SprayGel Mildew Stain Remover new product launches. However, the effect of two well publicized events, namely a weak cough/cold season and the industry-wide voluntary pediatric cough/cold product withdrawal, negated much of the growth."
Results by Segment
Over-The-Counter Healthcare Products
Revenues for the OTC segment in the third fiscal quarter were $45.1 million, or 1% below the prior year comparable quarter. The slight decline was due to a weak cough/cold season affecting sales of Chloraseptic(R), the industry-wide voluntary withdrawal of pediatric cough/cold products affecting two Little Remedies(R) products, and continuing competitive pressures on The Doctor's(R) NightGuard(TM) dental protector. Partially offsetting the above declines were continuing strong sales of the Murine(TM) brand, led by new Murine(TM) Earigate(TM), and strong sales of Clear Eyes(R).
Household Products
Revenues for the household products segment in the third fiscal quarter were $30.1 million, 5% higher than the prior year comparable quarter, primarily due to strong sales of Comet(R) SprayGel Mildew Stain Remover, this segment's newest product.
Personal Care Products
The smallest segment of the Company's business registered revenues of $5.1 million, 13% below last year's third quarter results.
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. We view "free cash flow" as an important measure because it is an indicator of cash available for debt repayment and other corporate purposes. We define "free cash flow" as operating cash flow less capital expenditures.
The Company's free cash flow for the three months ended December 31, 2007 was $13.6 million, composed of operating cash flows of $13.8 million less capital expenditures of $0.2 million. The $13.6 million of free cash flow was an improvement over the $12.4 million of free cash flow, composed of operating cash flows of $12.5 million less capital expenditures of $0.1 million, generated in the prior year's comparable quarter.
During the third fiscal quarter, the Company used free cash flow to reduce its term loan debt by $10.9 million. Year to date, the Company has reduced its debt by $37.1 million to $426.2 million at December 31, 2007.
Year-To-Date Results
For the nine month period ended December 31, 2007, revenues were $246.2 million, 2% higher than the prior period comparable results of $240.6 million. Operating income of $66.6 million was 8% below the prior year comparable period, largely as a result of increased advertising and promotion expenses and increased general and administrative expenses. Net income for the nine month period ended December 31, 2007 was $23.6 million, 9% below the comparable period's adjusted net income of $26.0 million, which reflects an adjustment of $1.7 million ($0.03 per diluted share) resulting from the favorable non-cash income tax benefit mentioned above.
Conference Call
The Company will host a conference call to review its third quarter fiscal 2008 results on Friday, February 8, 2008 at 8:30 am (EST). The toll free dial in number is 866-271-0675. International callers may dial 617-213-8892. The conference password is "prestige". We will have a live internet webcast of the call, as well as an archived replay, which can be accessed from the Investor Relations page of www.prestigebrandsinc.com. The archived replay will be available for two weeks following completion of the call. The dial in numbers are 888-286-8010 (domestic) and 617-801-6888 (international). The pass code for the replay is 51390487.
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, personal care and household products sold throughout the U.S, Canada, and certain international markets. Key brands include Compound W(R) wart remover, Chloraseptic(R) sore throat treatment, New-Skin(R) liquid bandage, Clear Eyes(R) and Murine(TM) eye care products, Little Remedies(R) pediatric over-the-counter healthcare products, The Doctor's(R) NightGuard(TM) dental protector, Cutex(R) nail polish remover, Comet(R) and Spic and Span(R) household products, and other well-known brands.
Forward-Looking Statements
Note: This news release contains, and our upcoming conference call may include, "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 Nine Months
Ended December 31 Ended December 31
------------------ -------------------
(In thousands, except per share
data) 2007 2006 2007 2006
-------- --------- --------- ---------
Revenues
Net sales $79,644 $ 79,564 $244,525 $239,164
Other revenues 578 560 1,645 1,434
-------- --------- --------- ---------
Total revenues 80,222 80,124 246,170 240,598
-------- --------- --------- ---------
Cost of Sales
Costs of sales 38,783 36,766 118,875 114,350
-------- --------- --------- ---------
Gross profit 41,439 43,358 127,295 126,248
-------- --------- --------- ---------
Operating Expenses
Advertising and promotion 9,572 8,952 28,375 25,809
General and administrative 6,209 7,068 24,039 20,761
Depreciation 126 177 379 616
Amortization of intangible
assets 2,627 2,627 7,881 7,013
-------- --------- --------- ---------
Total operating expenses 18,534 18,824 60,674 54,199
-------- --------- --------- ---------
Operating income 22,905 24,534 66,621 72,049
-------- --------- --------- ---------
Other income (expense)
Interest income 164 199 524 787
Interest expense (9,490) (10,355) (29,132) (30,478)
-------- --------- --------- ---------
Total other income (expense) (9,326) (10,156) (28,608) (29,691)
-------- --------- --------- ---------
Income before provision for
income taxes 13,579 14,378 38,013 42,358
Provision for income taxes 5,160 3,735 14,445 14,675
-------- --------- --------- ---------
Net income $ 8,419 $ 10,643 $ 23,568 $ 27,683
======== ========= ========= =========
Basic earnings per share $ 0.17 $ 0.21 $ 0.47 $ 0.56
======== ========= ========= =========
Diluted earnings per share $ 0.17 $ 0.21 $ 0.47 $ 0.55
======== ========= ========= =========
Weighted average shares
outstanding:
Basic 49,799 49,535 49,744 49,425
======== ========= ========= =========
Diluted 50,035 50,024 50,040 50,016
======== ========= ========= =========
Prestige Brands Holdings, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands)
Assets December 31, 2007 March 31, 2007
----------------- ---------------
Current assets
Cash and cash equivalents $ 11,554 $ 13,758
Accounts receivable 38,977 35,167
Inventories 30,659 30,173
Deferred income tax assets 3,094 2,735
Prepaid expenses and other current
assets 2,002 1,935
----------------- ---------------
Total current assets 86,286 83,768
Property and equipment 1,437 1,449
Goodwill 308,915 310,947
Intangible assets 649,277 657,157
Other long-term assets 7,528 10,095
----------------- ---------------
Total Assets $1,053,443 $ 1,063,416
================= ===============
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 18,703 $ 19,303
Accrued interest payable 4,574 7,552
Other accrued liabilities 11,711 10,505
Current portion of long-term debt 3,550 3,550
----------------- ---------------
Total current liabilities 38,538 40,910
Long-term debt 422,675 459,800
Other long-term liabilities 2,801 2,801
Deferred income tax liabilities 120,066 114,571
----------------- ---------------
Total Liabilities 584,080 618,082
----------------- ---------------
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 379,983 379,225
Treasury stock, at cost - 57 shares
at December 31, 2007
and 55 shares at March 31, 2007 (45) (40)
Accumulated other comprehensive
income 21 313
Retained earnings 88,903 65,335
----------------- ---------------
Total stockholders' equity 469,363 445,334
----------------- ---------------
Total Liabilities and Stockholders'
Equity $1,053,443 $ 1,063,416
================= ===============
Prestige Brands Holdings, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended December 31
-----------------------------
(In thousands) 2007 2006
-------------- --------------
Operating Activities
Net income $ 23,568 $ 27,683
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 8,260 7,629
Deferred income taxes 7,366 7,686
Amortization of deferred financing
costs 2,283 2,422
Stock-based compensation 758 439
Changes in operating assets and
liabilities
Accounts receivable (3,810) 4,812
Inventories (486) 2,707
Prepaid expenses and other current
assets (66) (765)
Accounts payable (795) 1,366
Income taxes payable -- (1,584)
Accrued liabilities (1,772) 2,894
-------------- --------------
Net cash provided by operating
activities 35,306 55,289
-------------- --------------
Investing Activities
Purchases of equipment (364) (429)
Change in other assets due to purchase
price adjustments (16) 386
Purchase of business -- (31,242)
-------------- --------------
Net cash used for investing activities (380) (31,285)
-------------- --------------
Financing Activities
Repayment of long-term debt (37,125) (27,392)
Purchase of common stock for treasury (5) (10)
-------------- --------------
Net cash used for financing activities (37,130) (27,402)
-------------- --------------
Decrease in cash (2,204) (3,398)
Cash - beginning of period 13,758 8,200
-------------- --------------
Cash - end of period $ 11,554 $ 4,802
============== ==============
Supplemental Cash Flow Information
Fair value of assets acquired $ -- $ 35,096
Fair value of liabilities assumed -- (3,854)
-------------- --------------
Cash paid to purchase business $ -- $ 31,242
============== ==============
Interest paid $ 29,828 $ 30,749
============== ==============
Income taxes paid $ 6,911 $ 8,790
============== ==============
Prestige Brands Holdings, Inc.
Segment Results of Operations
Three Months Ended December 31, 2007
------------------------------------------
Over-the-
Counter Household Personal
Healthcare Cleaning Care Consolidated
---------- --------- -------- ------------
Net sales $45,015 $29,568 $5,061 $79,644
Other revenues 51 527 -- 578
---------- --------- -------- ------------
Total revenues 45,066 30,095 5,061 80,222
Cost of sales 16,994 18,332 3,457 38,783
---------- --------- -------- ------------
Gross profit 28,072 11,763 1,604 41,439
Advertising and promotion 7,045 2,271 256 9,572
---------- --------- -------- ------------
Contribution margin $21,027 $ 9,492 $1,348 31,867
========== ========= ========
Other operating expenses 8,962
------------
Operating income 22,905
Other (income) expense 9,326
Provision for income taxes 5,160
------------
Net income $ 8,419
============
Nine Months Ended December 31, 2007
------------------------------------------
Over-the-
Counter Household Personal
Healthcare Cleaning Care Consolidated
---------- --------- -------- ------------
Net sales $137,444 $89,838 $17,243 $244,525
Other revenues 51 1,566 28 1,645
---------- --------- -------- ------------
Total revenues 137,495 91,404 17,271 246,170
Cost of sales 52,068 56,312 10,495 118,875
---------- --------- -------- ------------
Gross profit 85,427 35,092 6,776 127,295
Advertising and promotion 21,080 6,474 821 28,375
---------- --------- -------- ------------
Contribution margin $ 64,347 $28,618 $ 5,955 98,920
========== ========= ========
Other operating expenses 32,299
------------
Operating income 66,621
Other (income) expense 28,608
Provision for income taxes 14,445
------------
Net income $ 23,568
============
Prestige Brands Holdings, Inc.
Segment Results of Operations
Three Months Ended December 31, 2006
------------------------------------------
Over-the-
Counter Household Personal Consolidated
Healthcare Cleaning Care
---------- --------- -------- ------------
Net sales $45,574 $28,155 $5,835 $79,564
Other revenues -- 560 -- 560
---------- --------- -------- ------------
Total revenues 45,574 28,715 5,835 80,124
Cost of sales 15,800 17,787 3,179 36,766
---------- --------- -------- ------------
Gross profit 29,774 10,928 2,656 43,358
Advertising and promotion 7,089 1,595 268 8,952
---------- --------- -------- ------------
Contribution margin $22,685 $ 9,333 $2,388 34,406
========== ========= ========
Other operating expenses 9,872
------------
Operating income 24,534
Other (income) expense 10,156
Provision for income taxes 3,735
------------
Net income $10,643
============
Nine Months Ended December 31, 2006
------------------------------------------
Over-the-
Counter Household Personal Consolidated
Healthcare Cleaning Care
---------- --------- -------- ------------
Net sales $131,427 $88,625 $19,112 $239,164
Other revenues -- 1,434 -- 1,434
---------- --------- -------- ------------
Total revenues 131,427 90,059 19,112 240,598
Cost of sales 48,198 54,882 11,270 114,350
---------- --------- -------- ------------
Gross profit 83,229 35,177 7,842 126,248
Advertising and promotion 19,573 5,304 932 25,809
---------- --------- -------- ------------
Contribution margin $ 63,656 $29,873 $ 6,910 100,439
========== ========= ========
Other operating expenses 28,390
------------
Operating income 72,049
Other (income) expense 29,691
Provision for income taxes 14,675
------------
Net income $ 27,683
============
CONTACT: Prestige Brands Holdings, Inc.
Dean Siegal, 914-524-6819
SOURCE: Prestige Brands Holdings, Inc.