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    Prestige Brands Holdings, Inc. Reports Second Quarter & Six Months Fiscal 2009 Results

    For the Quarter, Net Revenue Up 1%; Net Income Up 25%; Free Cash Flow Up 40%; Debt Paid Down $11 Million

    IRVINGTON, N.Y.--(BUSINESS WIRE)--Nov. 6, 2008--Prestige Brands Holdings, Inc. (NYSE:PBH) today announced results for the second quarter and first half of fiscal year 2009, which ended on September 30, 2008.

    Net revenues for the second fiscal quarter were $88.1 million, 1% above the prior year's comparable quarter net revenues of $87.3 million. This resulted primarily from increases in sales of the Clear Eyes(R), Comet(R) and Little Remedies(R) brands, as well as the introduction of two new products, Chloraseptic(TM) Allergen Block and Little Allergies(TM) Allergen Block. Partially offsetting those increases were declines in Murine(R) Ear, Compound W(R) and Wartner(R) brands.

    Quarterly operating income of $20.5 million was essentially flat to the prior year's comparable quarter operating income of $20.6 million. This was primarily due to higher advertising and promotion expenditures (A&P) to introduce the two new products, partially offset by higher gross margins and lower general and administrative expenses (G&A).

    Net income for the second fiscal quarter was $8.5 million, or $0.17 per share, an increase of 25% over the prior year's comparable quarter net income of $6.8 million, or $0.14 per share. The improvement in net income was primarily due to a $2.9 million, or a 30% reduction in interest expense which resulted from the significant repayment of debt over the past fiscal year, combined with comparatively lower interest rates.

    First Half of Fiscal 2009

    Net revenues for the first six months of fiscal 2009 were $161.6 million, a decrease of 2.6% from the prior year's comparable period revenues of $165.9 million. Operating income was $41.7 million, 4.6% below the comparable period's results of $43.7 million. Net income of $16.3 million, or $0.33 per share during the first six months, was 7.6% higher than the comparable period's net income of $15.1 or $0.30 per share.

    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 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 second quarter ended September 30, 2008 was $18.2 million, an increase of 40% over the prior year's comparable quarter. Free cash flow is composed of operating cash flow of $18.3 million less capital expenditures of $48,000. This compares to the prior year comparable quarter's free cash flow of $13.0 million, comprised of operating cash flow of $13.1 million less capital expenditures of $100,000. The increase was primarily due to an increase in net income and an improvement in working capital.

    The Company's continued strong cash flow resulted in debt repayments of $11.0 million during the second fiscal quarter. Total debt has been reduced to $385.2 million at September 30, 2008. During the past twelve months, the Company's senior secured term loan facility has been reduced by $51.9 million to $259.2 million with the average interest rate dropping to 4.75% in the current quarter from 7.74% for the year ago quarter.

    During the past twelve months, the Company's free cash flow has been used primarily to retire debt. As a result of the current banking and economic environment, the Company recently made the decision to enhance its liquidity position, and intends to reduce outstanding debt only modestly during the remainder of the fiscal year and build its cash reserves to approximately $30 million. Once that cash reserve objective is realized, the Company intends to resume debt repayments.

        Second Quarter Results by Segment
    
        Over-The-Counter (OTC) Healthcare Products
    

    Net revenues of the OTC healthcare products segment were $50.3 million for the second fiscal quarter, an increase of 1% over the prior year's comparable period revenues of $50.0 million. The increase was due to sales increases of the Clear Eyes(R), Little Remedies(R) and The Doctor's(R) brands, as well as the introduction of Chloraseptic(TM) Allergen Block and Little Allergies(TM) Allergen Block products. These sales gains were partially offset by declines in the Compound W(R) and Wartner(R) wart care brands resulting from unfavorable pricing dynamics specifically in the cryogenic segment of this category.

    Household Products

    Net revenues for the household products segment were $32.1 million for the second fiscal quarter, an increase of 2% over the prior year's comparable period revenues of $31.4 million. The increase is attributable to sales increases in the Comet(R) brand, led by Comet(R) Spray Gel Mildew Stain Remover introduced in the prior fiscal year. Sales declines in the Spic and Span(R) and Chore Boy(R) line partially offset this increase.

    Personal Care Products

    Net revenues for the personal care products segment, the Company's smallest business segment, were $5.6 million for the second fiscal quarter, a slight decrease from net revenues of $5.9 million in the prior year's comparable period.

    Commentary

    "In an increasingly challenging operating environment, we generally are pleased with the overall results of the second quarter and the quality of our earnings," said Mark Pettie, Chairman and CEO. "We expect the investments we made during the quarter to set the stage for improved organic growth in the second half. We are also pleased with steps that we undertook to strengthen our balance sheet by reducing debt and minimizing working capital in this economy. Combined with our operating results, these steps also enabled us to deliver another period of very solid cash flow."

    Conference Call

    The Company will host a conference call to review its second quarter and six month results on Thursday, November 6, 2008 at 8:30 am. The toll free dial in number is 1-866-700-7173 within North America and 1-617-213-8838 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 North America. The pass code is 55096352.

    About Prestige Brands Holdings, Inc.

    Prestige Brands markets and distributes brand name over-the-counter healthcare, personal care and household products 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 and ear care products, Little Remedies(R) pediatric over-the-counter healthcare products, The Doctor's(R) Night Guard(TM) dental protector, 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," "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 the Company's market and the demand for its products, future revenues, future debt retirement and our ability to manage costs and expenses, including those associated with interest rate risk. 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 actual 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         Six Months
                                   Ended September 30  Ended September 30
                                   ------------------- -------------------
    (In thousands, except per
     share data)                     2008      2007      2008      2007
                                   --------- --------- --------- ---------
    Revenues
     Net sales                      $87,369   $86,840  $160,285  $164,881
     Other revenues                     682       497     1,300     1,067
                                   --------- --------- --------- ---------
        Total revenues               88,051    87,337   161,585   165,948
                                   --------- --------- --------- ---------
    
    Cost of Sales
     Costs of sales                  41,792    42,770    76,064    80,092
                                   --------- --------- --------- ---------
        Gross profit                 46,259    44,567    85,521    85,856
                                   --------- --------- --------- ---------
    
    Operating Expenses
     Advertising and promotion       13,638    11,017    20,957    18,803
     General and administrative       9,363    10,184    17,336    17,830
     Depreciation and amortization    2,757     2,756     5,513     5,507
                                   --------- --------- --------- ---------
        Total operating expenses     25,758    23,957    43,806    42,140
                                   --------- --------- --------- ---------
    
        Operating income             20,501    20,610    41,715    43,716
                                   --------- --------- --------- ---------
    
    Other (income) expense
     Interest income                    (56)     (173)     (129)     (360)
     Interest expense                 6,835     9,768    15,591    19,642
                                   --------- --------- --------- ---------
        Total other (income)
         expense                      6,779     9,595    15,462    19,282
                                   --------- --------- --------- ---------
    
        Income before income taxes   13,722    11,015    26,253    24,434
    
    Provision for income taxes        5,200     4,186     9,950     9,285
                                   --------- --------- --------- ---------
        Net income                  $ 8,522   $ 6,829  $ 16,303  $ 15,149
                                   ========= ========= ========= =========
    
    
    Basic earnings per share        $  0.17   $  0.14  $   0.33  $   0.30
                                   ========= ========= ========= =========
    
    Diluted earnings per share      $  0.17   $  0.14  $   0.33  $   0.30
                                   ========= ========= ========= =========
    
    Weighted average shares
     outstanding:
      Basic                          49,924    49,710    49,902    49,686
                                   ========= ========= ========= =========
      Diluted                        50,037    50,046    50,036    50,042
                                   ========= ========= ========= =========
    
    
                        Prestige Brands Holdings, Inc.
                         Consolidated Balance Sheets
                                 (Unaudited)
    (In thousands)
    Assets                                         September   March 31,
                                                     30, 2008      2008
                                                   ----------- -----------
    Current assets
     Cash and cash equivalents                     $   12,630  $    6,078
     Accounts receivable                               42,494      44,219
     Inventories                                       25,372      29,696
     Deferred income tax assets                         3,249       3,066
     Prepaid expenses and other current assets          3,144       2,316
                                                   ----------- -----------
    Total current assets                               86,889      85,375
    
    Property and equipment                              1,284       1,433
    Goodwill                                          309,879     308,915
    Intangible assets                                 641,428     646,683
    Other long-term assets                              6,450       6,750
                                                   ----------- -----------
    
    Total Assets                                   $1,045,930  $1,049,156
                                                   =========== ===========
    
    Liabilities and Stockholders' Equity
    Current liabilities
     Accounts payable                              $   17,430  $   20,539
     Accrued interest payable                           5,428       5,772
     Other accrued liabilities                         11,158       8,030
     Current portion of long-term debt                  3,550       3,550
                                                   ----------- -----------
    Total current liabilities                          37,566      37,891
    
    Long-term debt                                    381,675     407,675
    Other long-term liabilities                            --       2,377
    Deferred income tax liabilities                   128,272     122,140
                                                   ----------- -----------
    
    Total Liabilities                                 547,513     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                              501         501
    Additional paid-in capital                        381,941     380,364
    Treasury stock, at cost - 119 shares and 59
     shares at
    September 30 and March 31, 2008, respectively         (62)        (47)
    Accumulated other comprehensive income                480        (999)
    Retained earnings                                 115,557      99,254
                                                   ----------- -----------
    Total stockholders' equity                        498,417     479,073
                                                   ----------- -----------
    
    Total Liabilities and Stockholders' Equity     $1,045,930  $1,049,156
                                                   =========== ===========
    
    
                        Prestige Brands Holdings, Inc.
                    Consolidated Statements of Cash Flows
                                 (Unaudited)
    
                                                        Six Months Ended
                                                           September 30
                                                       -------------------
    (In thousands)                                       2008      2007
                                                       --------- ---------
    Operating Activities
    Net income                                         $ 16,303  $ 15,149
    Adjustments to reconcile net income to net cash
    provided by operating activities:
       Depreciation and amortization                      5,513     5,507
       Deferred income taxes                              5,042     4,622
       Amortization of deferred financing costs           1,159     1,561
       Stock-based compensation                           1,577     1,146
       Changes in operating assets and liabilities
         Accounts receivable                              1,725   (11,345)
         Inventories                                      4,324     2,390
         Prepaid expenses and other current assets         (828)   (1,692)
         Accounts payable                                (1,582)    1,884
         Accrued liabilities                                407     2,270
                                                       --------- ---------
     Net cash provided by operating activities           33,640    21,492
                                                       --------- ---------
    
    Investing Activities
    Purchases of equipment                                 (109)     (194)
    Business acquisition purchase price adjustments        (964)      (16)
                                                       --------- ---------
     Net cash used for investing activities              (1,073)     (210)
                                                       --------- ---------
    
    Financing Activities
    Repayment of long-term debt                         (26,000)  (26,237)
    Purchase of common stock for treasury                   (15)       (4)
                                                       --------- ---------
     Net cash used for financing activities             (26,015)  (26,241)
                                                       --------- ---------
    
    Increase (Decrease) in cash                           6,552    (4,959)
    Cash - beginning of period                            6,078    13,758
                                                       --------- ---------
    
    Cash - end of period                               $ 12,630  $  8,799
                                                       ========= =========
    
    Interest paid                                      $ 14,775  $ 18,078
                                                       ========= =========
    Income taxes paid                                  $  4,761  $  5,664
                                                       ========= =========
    
    
                        Prestige Brands Holdings, Inc.
                    Consolidating Statements of Operations
                                 (Unaudited)
    
                                  Three Months Ended September 30, 2008
                                ------------------------------------------
                                Over-the-
                                  Counter  Household Personal
                                Healthcare Cleaning    Care   Consolidated
                                ---------- --------- -------- ------------
    
    Net sales                      $50,318   $31,482   $5,569      $87,369
    Other revenues                      24       658       --          682
                                ---------- --------- -------- ------------
    
    Total revenues                  50,342    32,140    5,569       88,051
    Cost of sales                   17,567    20,937    3,288       41,792
                                ---------- --------- -------- ------------
    
    Gross profit                    32,775    11,203    2,281       46,259
    Advertising and promotion       10,654     2,731      253       13,638
                                ---------- --------- -------- ------------
    
    Contribution margin            $22,121   $ 8,472   $2,028       32,621
                                ========== ========= ========
    Other operating expenses                                        12,120
                                                              ------------
    
    Operating income                                                20,501
    Other (income) expense                                           6,779
    Provision for income taxes                                       5,200
                                                              ------------
    
    Net income                                                     $ 8,522
                                                              ============
    
                                   Six Months Ended September 30, 2008
                                ------------------------------------------
                                Over-the-
                                  Counter  Household Personal
                                Healthcare Cleaning    Care   Consolidated
                                ---------- --------- -------- ------------
    
    Net sales                      $89,564   $59,886  $10,835     $160,285
    Other revenues                      24     1,276       --        1,300
                                ---------- --------- -------- ------------
    
    Total revenues                  89,588    61,162   10,835      161,585
    Cost of sales                   30,775    38,860    6,429       76,064
                                ---------- --------- -------- ------------
    
    Gross profit                    58,813    22,302    4,406       85,521
    Advertising and promotion       15,691     4,801      465       20,957
                                ---------- --------- -------- ------------
    
    Contribution margin            $43,122   $17,501  $ 3,941       64,564
                                ========== ========= ========
    Other operating expenses                                        22,849
                                                              ------------
    
    Operating income                                                41,715
    Other (income) expense                                          15,462
    Provision for income taxes                                       9,950
                                                              ------------
    
    Net income                                                    $ 16,303
                                                              ============
    
    
                        Prestige Brands Holdings, Inc.
                    Consolidating Statements of 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
                                                              ============
    

    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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