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    Prestige Brands Holdings, Inc. Reports First Quarter Fiscal 2009 Results

    IRVINGTON, N.Y.--(BUSINESS WIRE)--Aug. 7, 2008--Prestige Brands Holdings, Inc. (NYSE:PBH), a consumer products company with a diversified portfolio of well-known brands, today announced results for the first quarter of fiscal year 2009, which ended on June 30, 2008.

    Total revenues for the first fiscal quarter ended June 30, 2008 were $73.5 million, a 6.5% decrease from total revenues of $78.6 million in the prior year comparable quarter. As indicated in our news release of July 23rd, this decline is largely attributable to pricing dynamics in the cryogenic segment of the over-the-counter wart treatment category affecting our Compound W(R) and Wartner(R) brands. A secondary factor is the continued absence of the Little Remedies(R) pediatric cough/cold products, which were voluntarily withdrawn from the marketplace in the fall of calendar year 2007. In addition, The Doctor's(R) NightGuard(TM) brand continued to experience declining sales due to the competition which came into the marketplace in last fiscal year's first quarter.

    Operating income of $21.2 million for the first quarter was $1.9 million, or 8.2% below last year's operating income of $23.1 million. The decline from last year was due to the sales decline, partially offset by favorable cost of sales and lower advertising and promotion expenses. G&A expenses were higher than prior year, primarily due to increased stock based compensation expenses.

    Interest expense of $8.8 million was $1.1 million lower than prior year due to lower debt outstanding, the Company having repaid $52.1 million during the previous fiscal year.

    Net income for the first quarter was $7.8 million, or $0.16 fully diluted earnings per share, 6.5% below last year's reported net income of $8.3 million, or $0.17 fully diluted earnings per share.

    Results by Segment for the First Fiscal Quarter

    Over-the-Counter Healthcare Products

    Revenues of $39.2 million were $3.2 million or 7.5% less than the prior year comparable period. The decline is primarily attributable to sales declines on the Compound W(R) and Wartner(R) wart treatment brands, largely attributed to negative pricing dynamics in the cryogenic segment. The continued absence of the Little Remedies(R) pediatric cough/cold products voluntarily withdrawn in the fall of calendar year 2007 and The Doctor's(R) Night Guard(TM) brand, which continued to experience intense competitive pressures, were secondary factors. These declines were partially offset by increases on the Clear Eyes(R), Murine(TM) ear care, Chloraseptic(R) and New Skin(R) brands.

    Household Products

    Revenues of $29.0 million were $0.9 million or $2.9% less than the prior year period. Sales increases for the Comet(R) brand, led by Comet Mildew SprayGel were offset by declines in the Spic and Span(R) and Chore Boy(R) brands.

    Personal Care Products

    Revenues for this segment were $5.3 million, $1.0 million less than the prior year quarter, in line with expectations.

    Free Cash Flow & Debt Repayment

    Free cash flow is a "non-GAAP" measure as that term is defined by the Securities and Exchange Commission in Regulation G. Free cash flow is presented here because management believes it is a commonly used measure of liquidity, and is an indication of cash available for debt repayment and acquisitions. The Company defines free cash flow as operating cash flow less capital expenditures.

    The Company's free cash flow for the first quarter ended June 30, 2008 was $15.3 million, composed of operating cash flow of $15.4 million less capital expenditures of $0.1 million, a $7.0 million increase over free cash flow of $8.3 million, composed of operating cash flow of $8.4 million less capital expenditures of $0.1 million generated in the prior year comparable quarter. During the quarter, the Company repaid $15.0 million of senior bank debt, bringing total debt to $396.2 million at June 30, 2008.

    Commentary

    According to Mark Pettie, Chairman and CEO, "Despite this quarter's results, we remain confident in the 2-4% revenue increase we have projected for the full fiscal year, with strengthened third and fourth quarter growth in particular. We expect this performance will be fueled by our innovative new products, many of which are currently launching, as well as continued growth of our focus brands. For the full year, we expect that net income will grow more rapidly than revenue. Looking at the current quarter, we will be investing heavily in advertising and promotion support behind our new Allergen Block products. Much of the revenue impact from this increased second quarter advertising and promotion support will be realized in the second half."

    Conference Call

    The Company will host a conference call to review its first fiscal quarter results on Thursday, August 7th at 8:30 a.m. EST. The dial in number is 866-578-5801. International callers may dial 617-213-8058. The passcode is 'prestige". The Company will provide a live internet webcast of the call, as well as an archived replay, which can be accessed by dialing 888-286-8010, or for international callers, 617-801-6888. The passcode for replay only is 53732046.

    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 cleaning products sold throughout the U.S., Canada, and in certain international markets. Key brands include Compound W(R) wart remover, Chloraseptic(R) sore throat treatments, New-Skin(R) liquid bandage, Clear Eyes(R) and Murine(R) eye and ear care products, Little Remedies(R) pediatric over-the-counter products, The Doctor's(R) NightGuard(TM) dental protector, Cutex(R) nail polish remover, Comet(R) and Spic and Span(R) household cleaners, and other well-known brands.

    Forward-Looking Statements

    Note: This news release contains "forward-looking statements" within the meaning of the federal securities laws and 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 Ended June 30
                                               ---------------------------
    (In thousands, except share data)              2008          2007
                                               ------------- -------------
    Revenues
     Net sales                                 $     72,916  $     78,041
     Other revenues                                     618           570
                                               ------------- -------------
        Total revenues                               73,534        78,611
    
    Costs of Sales
     Costs of sales                                  34,272        37,322
                                               ------------- -------------
        Gross profit                                 39,262        41,289
                                               ------------- -------------
    
    Operating Expenses
     Advertising and promotion                        7,319         7,786
     General and administrative                       7,973         7,646
     Depreciation and amortization                    2,756         2,751
                                               ------------- -------------
        Total operating expenses                     18,048        18,183
                                               ------------- -------------
    
        Operating income                             21,214        23,106
                                               ------------- -------------
    
    Other (income) expense
     Interest income                                    (73)         (187)
     Interest expense                                 8,756         9,874
                                               ------------- -------------
        Total other (income) expense                  8,683         9,687
                                               ------------- -------------
    
     Income before income taxes                      12,531        13,419
    
     Provision for income taxes                       4,750         5,099
                                               ------------- -------------
        Net income                             $      7,781  $      8,320
                                               ------------- -------------
    
    Basic earnings per share                   $       0.16  $       0.17
                                               ============= =============
    
    Diluted earnings per share                 $       0.16  $       0.17
                                               ============= =============
    
    Weighted average shares outstanding:
      Basic                                          49,880        49,660
                                               ============= =============
      Diluted                                        50,035        50,038
                                               ============= =============
    
                        Prestige Brands Holdings, Inc.
                         Consolidated Balance Sheets
                                 (Unaudited)
    (In thousands)
    
    Assets                                   June 30, 2008  March 31, 2008
                                             -------------- --------------
    Current assets
      Cash and cash equivalents              $       6,370  $       6,078
      Accounts receivable                           38,325         44,219
      Inventories                                   28,811         29,696
      Deferred income tax assets                     3,006          3,066
      Prepaid expenses and other current
       assets                                        4,004          2,316
                                             -------------- --------------
    Total current assets                            80,516         85,375
    
    Property and equipment                           1,365          1,433
    Goodwill                                       308,915        308,915
    Intangible assets                              644,056        646,683
    Other long-term assets                           7,316          6,750
                                             -------------- --------------
    
    Total Assets                             $   1,042,168  $   1,049,156
                                             ============== ==============
    
    Liabilities and Stockholders' Equity
    Current liabilities
      Accounts payable                       $      17,935  $      20,539
      Accrued interest payable                       2,604          5,772
      Income taxes payable                           1,762             --
      Other accrued liabilities                      6,328          8,030
      Current portion of long-term debt              3,550          3,550
                                             -------------- --------------
    Total current liabilities                       32,179         37,891
    
    Long-term debt                                 392,675        407,675
    Other long-term liabilities                      2,377          2,377
    Deferred income tax liabilities                125,781        122,140
                                             -------------- --------------
    
    Total Liabilities                              553,012        570,083
                                             -------------- --------------
    
    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 at June 30 and
       March 31, 2008                                  501            501
    Additional paid-in capital                     380,993        380,364
    Treasury stock, at cost - 101 shares and
     59 shares at June 30 and March 31,
     2008, respectively                                (57)           (47)
    Accumulated other comprehensive income             684           (999)
    Retained earnings                              107,035         99,254
                                             -------------- --------------
    Total stockholders' equity                     489,156        479,073
                                             -------------- --------------
    
    Total Liabilities and Stockholders'
     Equity                                  $   1,042,168  $   1,049,156
                                             ============== ==============
    
                        Prestige Brands Holdings, Inc.
                    Consolidated Statements of Cash Flows
                                 (Unaudited)
    
                                                Three Months Ended June 30
                                                --------------------------
    (In thousands)                                  2008         2007
                                                ------------ -------------
    Operating Activities
    Net income                                  $     7,781  $      8,320
    Adjustments to reconcile net income to net
     cash provided by operating activities:
       Depreciation and amortization                  2,756         2,751
       Deferred income taxes                          2,669         2,934
       Amortization of deferred financing costs         622           780
       Stock-based compensation                         629           460
       Changes in operating assets and
        liabilities
         Accounts receivable                          5,894        (1,948)
         Inventories                                    885         1,663
         Prepaid expenses and other current
          assets                                     (1,688)         (483)
         Accounts payable                            (1,077)       (2,911)
         Income taxes payable                         1,762         1,144
         Accrued liabilities                         (4,870)       (4,302)
                                                ------------ -------------
     Net cash provided by operating activities       15,363         8,408
                                                ------------ -------------
    
    Investing Activities
    Purchases of equipment                              (61)         (111)
                                                ------------ -------------
     Net cash used for investing activities             (61)         (111)
                                                ------------ -------------
    
    Financing Activities
    Repayment of long-term debt                     (15,000)      (15,887)
    Purchase of common stock for treasury               (10)           (4)
                                                ------------ -------------
     Net cash used for financing activities         (15,010)      (15,891)
                                                ------------ -------------
    
    Increase (Decrease) in cash                         292        (7,594)
    Cash - beginning of period                        6,078        13,758
                                                ------------ -------------
    
    Cash - end of period                        $     6,370  $      6,164
                                                ============ =============
    
    Interest paid                               $    11,302  $     12,036
                                                ============ =============
    Income taxes paid                           $       440  $        551
                                                ============ =============
    
                        Prestige Brands Holdings, Inc.
                    Consolidating Statements of Operations
                                 (Unaudited)
    
                                     Three Months Ended June 30, 2008
                                ------------------------------------------
                                Over-the-
                                  Counter  Household Personal
                                Healthcare Cleaning    Care   Consolidated
                                ---------- --------- -------- ------------
    
    Net sales                   $   39,246 $  28,404 $  5,266 $     72,916
    Other revenues                      --       618       --          618
                                ---------- --------- -------- ------------
    
    Total revenues                  39,246    29,022    5,266       73,534
    Cost of sales                   13,208    17,923    3,141       34,272
                                ---------- --------- -------- ------------
    
    Gross profit                    26,038    11,099    2,125       39,262
    Advertising and promotion        5,037     2,070      212        7,319
                                ---------- --------- -------- ------------
    
    Contribution margin         $   21,001 $   9,029 $  1,913       31,943
                                ========== ========= ========
    Other operating expenses                                        10,729
                                                              ------------
    
    Operating income                                                21,214
    Other (income) expense                                           8,683
    Provision for income taxes                                       4,750
                                                              ------------
    
    Net income                                                $      7,781
                                                              ============
                                     Three Months Ended June 30, 2007
                                ------------------------------------------
                                Over-the-
                                  Counter  Household Personal
                                Healthcare Cleaning    Care   Consolidated
                                ---------- --------- -------- ------------
    
    Net sales                   $   42,426 $  29,345 $  6,270 $     78,041
    Other revenues                      --       542       28          570
                                ---------- --------- -------- ------------
    
    Total revenues                  42,426    29,887    6,298       78,611
    Cost of sales                   15,386    18,393    3,543       37,322
                                ---------- --------- -------- ------------
    
    Gross profit                    27,040    11,494    2,755       41,289
    Advertising and promotion        5,881     1,628      277        7,786
                                ---------- --------- -------- ------------
    
    Contribution margin         $   21,159 $   9,866 $  2,478       33,503
                                ========== ========= ========
    Other operating expenses                                        10,397
                                                              ------------
    
    Operating income                                                23,106
    Other (income) expense                                           9,687
    Provision for income taxes                                       5,099
                                                              ------------
    
    Net income                                                $      8,320
                                                              ============
    

    CONTACT: Prestige Brands Holdings, Inc.
    Dean Siegal, 914-524-6819

    SOURCE: Prestige Brands Holdings, Inc.

    Primary IR Contact

    Irinquiries@prestigebrands.com
    Prestige Consumer Healthcare Inc.
    660 White Plains Road – Ste 250
    Tarrytown, NY 10591
    Telephone: 914-524-6819

    Transfer Agent

    AST
    6201 15th Avenue
    Brooklyn, NY 11219
    Telephone: (800) 937-5449
    help@astfinancial.com
    https://www.astfinancial.com

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