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    Prestige Brands Holdings, Inc. Reports Fiscal 2010 Third Quarter & Nine Month Results
    Q3 Earnings per Share From Continuing Operations $0.21 vs. $0.15 Last Year; Revenues Slightly Down
    IRVINGTON, N.Y., Feb 05, 2010 (BUSINESS WIRE) -- Prestige Brands Holdings, Inc. (NYSE:PBH) today announced results for the third fiscal quarter and nine months ending December 31, 2009.

    Third Quarter

    Net revenues from continuing operations for the third fiscal quarter ended December 31, 2009 were $75.4 million, $2.6 million or 3% below last year's results of $78.0 million. Revenues of the divested Denorex(R), Prell(R) and Zincon(R) shampoo brands in October, 2009, are reflected in discontinued operations for both the current year and the prior year comparable period.

    Operating income for the third fiscal quarter was $23.7 million, $4.2 million or 22% greater than last year's operating income of $19.5 million. The increase in operating income resulted from decreases in advertising and promotional (A&P) expenditures when compared to the higher levels during the prior year comparable period that were related to last year's introductory spending levels to support Allergen Block products, and general and administrative (G&A) expenses. The reduction in G&A expense when compared to the prior year comparable period was primarily due to decreased legal, salary expenses and currency valuation expenses.

    Net income from continuing operations for the third quarter ended December 31, 2009 was $10.3 million, $2.6 million or 34% greater than last year's net income from continuing operations of $7.7 million. Earnings per share from continuing operations were $0.21 compared to $0.15 in the prior year comparable period.

    Commenting on the results of the quarter, Matthew Mannelly, President and CEO said, "We are pleased with our improved profitability and continue to work to drive revenue in this challenging economy. We are increasing our focus on supporting our core brands. This quarter, we are particularly pleased with the performance on our core brands, Chloraseptic(R), Little Remedies(R), Clear Eyes(R) and New-Skin(R)," he said.

    Results by Segment

    Over-The-Counter (OTC) Healthcare Products

    Net revenues for the OTC segment in the fiscal third quarter were $46.2 million, $1.4 million or 3% below the prior year comparable period. Increases in sales of the Chloraseptic(R), Clear Eyes(R) and Little Remedies(R) brands were offset by declines in the two Allergen Block products and the Murine(R) Ear line.

    Household Products

    Net revenues for the household products segment in the third fiscal quarter were $27.3 million, $900 thousand, or 3% less than last year. Sales increases on the Spic and Span(R) and Chore Boy(R) lines were offset by a decline for Comet(R).

    Personal Care Products

    From this quarter forward, the results of this segment will exclude sales from the three shampoo brands divested in October, 2009, which are now reflected in discontinued operations. Net revenues from continuing operations for this segment were $2.0 million, $200 thousand or 10% below the prior year comparable period. The decline was primarily due to decreased sales of Cutex(R).

    Year-To-Date Results

    For the nine month period ending December 31, 2009, total revenues from continuing operations were $230.6 million, 2% lower than the prior period results of $234.5 million. Operating income from continuing operations of $63.5 million was 6% greater than the prior year comparable results of $60.0 million, largely as a result of reduced advertising and promotion expenses when compared with the prior year period. Net income from continuing operations for the nine month period was $28.0 million, an increase of $4.7 million over the prior year comparable period's results of $23.3 million.

    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 to fund acquisitions. We define "free cash flow" as operating cash flow less capital expenditures.

    The Company's free cash flow for the third quarter was $10.4 million, compared to $16.4 million in the prior year comparable quarter. The decrease in free cash flow is primarily a result of an increase in working capital partially offset by an increase in deferred income taxes. Free cash flow is comprised of operating cash flow of $10.6 million less capital expenditures of $170,000. This compares to the prior year comparable quarter's operating cash flow of $16.7 million, less capital expenditures of $288,000. The free cash flow generated during the quarter ended December 31, 2009 combined with the funds generated from the divestiture of the three shampoo brands during the quarter allowed us to pay down $19.0 million on our term loan during the quarter. At December 31, 2009, total debt was reduced to $319.3 million.

    Conference Call

    The Company will host a conference call to review its third quarter fiscal 2010 results on Friday, February 5, 2010 at 8:30am (EST). The toll free dial-in number is 866-277-1181. International callers may dial 617-597-5358. The conference pass code 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 only is 65721192.

    About Prestige Brands Holdings, Inc.

    Located in Irvington, NY, Prestige Brands Holdings, Inc. is a marketer and distributor of brand name over-the-counter healthcare products, household products and personal care products sold throughout the U.S., Canada, and certain international markets. Key brands include Chloraseptic(R) sore throat treatment, Compound W(R) wart remover, New-Skin(R) liquid bandage, Clear Eyes(R) and Murine(R) eye and ear care products, Little Remedies(R) pediatric over-the-counter products, 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 economic outlook for the Company and the demand for its products and future cash flows from operations. These 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 reports filed with the Securities and Exchange Commission.

    Prestige Brands Holdings, Inc.

    Consolidated Statements of Operations (Unaudited)

    Three Months Ended December 31

    Nine Months Ended December 31

    (In thousands, except share data)

    2009

    2008

    2009

    2008
    Revenues
    Net sales $ 74,997 $ 77,345 $ 229,130 $ 232,582
    Other revenues 451 621 1,511 1,921
    Total revenues 75,448 77,966 230,641 234,503
    Cost of Sales
    Cost of sales 35,641 36,480 108,670 109,789
    Gross profit 39,807 41,486 121,971 124,714
    Operating Expenses
    Advertising and promotion 6,099 11,349 24,645 32,129
    General and administrative 7,411 8,311 26,088 25,647
    Depreciation and amortization 2,596 2,311 7,781 6,926
    Total operating expenses 16,106 21,971 58,514 64,702
    Operating income 23,701 19,515 63,457 60,012
    Other (income) expense
    Interest income - (14 ) - (143 )
    Interest expense 5,558 7,065 16,853 22,656
    Total other expense 5,558 7,051 16,853 22,513
    Income from continuing operations before income taxes

    18,143

    12,464

    46,604

    37,499

    Provision for income taxes 7,807 4,724 18,594 14,212
    Income from continuing operations 10,336 7,740 28,010 23,287
    Discontinued Operations

    Income from discontinued operations, net of income tax

    87

    278

    661

    1,034

    Gain on sale of discontinued operations, net of income tax

    157 - 157 -
    Net income $ 10,580 $ 8,018 $ 28,828 $ 24,321
    Basic earnings per share:
    Income from continuing operations $ 0.21 $ 0.15 $ 0.56 $ 0.47
    Net income $ 0.21 $ 0.16 $ 0.58 $ 0.49
    Diluted earnings per share:
    Income from continuing operations $ 0.21 $ 0.15 $ 0.56 $ 0.47
    Net income $ 0.21 $ 0.16 $ 0.58 $ 0.49
    Weighted average shares outstanding:
    Basic 50,030 49,960 50,008 49,921
    Diluted 50,074 50,040 50,078 50,038

    Prestige Brands Holdings, Inc.
    Consolidated Balance Sheets (Unaudited)

    (In thousands)
    Assets

    December 31,
    2009

    March 31,
    2009

    Current assets
    Cash and cash equivalents $ 34,262 $ 35,181
    Accounts receivable 30,618 36,025
    Inventories 34,092 25,939
    Deferred income tax assets 5,045 4,022
    Prepaid expenses and other current assets 2,022 1,358
    Current assets of discontinued operations - 1,038
    Total current assets 106,039 103,563
    Property and equipment 1,297 1,367
    Goodwill 114,240 114,240
    Intangible assets 561,828 569,137
    Other long-term assets 3,170 4,602
    Long-term assets of discontinued operations - 8,472
    Total Assets $ 786,574 $ 801,381
    Liabilities and Stockholders' Equity
    Current liabilities
    Accounts payable $ 16,904 $ 15,898
    Accrued interest payable 2,446 5,371
    Other accrued liabilities 13,258 9,407
    Current portion of long-term debt 3,550 3,550
    Total current liabilities 36,158 34,226
    Long-term debt 315,787 374,787
    Deferred income tax liabilities 109,776 97,983
    Total Liabilities 461,721 506,996
    Commitments and Contingencies - Note 16
    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 - 50,154 shares at December 31, 2009 and 50,060 shares at March 31, 2009

    502 501
    Additional paid-in capital 383,600 382,803

    Treasury stock, at cost - 124 shares at December 31, 2009
    and March 31, 2009

    (63

    )

    (63

    )

    Accumulated other comprehensive loss (492 ) (1,334 )
    Accumulated deficit (58,694 ) (87,522 )
    Total Stockholders' Equity 324,853 294,385
    Total Liabilities and Stockholders' Equity $ 786,574 $ 801,381

    Prestige Brands Holdings, Inc.
    Consolidated Statements of Cash Flows
    (Unaudited)

    Nine Months Ended December 31

    (In thousands) 2009 2008
    Operating Activities
    Net income $ 28,828 $ 24,321
    Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation and amortization 8,679 8,273
    Gain on sale of discontinued operations (253 ) -
    Deferred income taxes 10,254 7,393
    Amortization of deferred financing costs 1,432 1,696
    Stock-based compensation 1,658 2,248
    Changes in operating assets and liabilities
    Accounts receivable 6,407 9,588
    Inventories (8,281 ) 945
    Inventories held for sale - -
    Prepaid expenses and other current assets (664 ) (527 )
    Accounts payable 1,006 (2,450 )
    Accrued liabilities 1,424 1,860
    Net cash provided by operating activities 50,490 53,347
    Investing Activities
    Purchases of equipment (402 ) (397 )
    Proceeds from sale of discontinued operations 7,993 -
    Business acquisition purchase price adjustments - (4,191 )
    Net cash provided by (used for) investing activities 7,591 (4,588 )
    Financing Activities
    Repayment of long-term debt (59,000 ) (26,887 )
    Purchase of common stock for treasury - (16 )
    Net cash used for financing activities (59,000 ) (26,903 )
    Increase (Decrease) in cash (919 ) 21,856
    Cash - beginning of period 35,181 6,078
    Cash - end of period $ 34,262 $ 27,934
    Interest paid $ 18,345 $ 24,276
    Income taxes paid $ 9,820 $ 7,251

    Prestige Brands Holdings, Inc.

    Notes to Consolidated Financial Statements

    Business Segments

    Three Months Ended December 31, 2009

    Over-the-Counter
    Healthcare

    Household
    Cleaning

    Personal
    Care

    Consolidated
    (In thousands)
    Net sales

    $

    46,160

    $

    26,828

    $

    2,009

    $

    74,997

    Other revenues 9 437 5 451
    Total revenues 46,169 27,265 2,014 75,448
    Cost of sales 16,919 17,481 1,241 35,641
    Gross profit 29,250 9,784 773 39,807
    Advertising and promotion 5,146 877 76 6,099
    Contribution margin $ 24,104 $ 8,907 $ 697 33,708
    Other operating expenses 10,007
    Operating income 23,701
    Other expense 5,558
    Provision for income taxes 7,807
    Income from continuing operations

    10,336

    Income from discontinued operations, net of income tax

    87

    Gain on sale of assets, net of income tax

    157
    Net income $ 10,580
    Nine Months Ended December 31, 2009

    Over-the-Counter
    Healthcare

    Household
    Cleaning

    Personal
    Care

    Consolidated

    (In thousands)
    Net sales

    $

    137,800

    $

    82,271

    $

    9,059

    $

    229,130

    Other revenues 29 1,454 28 1,511
    Total revenues 137,829 83,725 9,087 230,641
    Cost of sales 49,664 53,765 5,241 108,670
    Gross profit 88,165 29,960 3,846 121,971
    Advertising and promotion 19,264 5,080 301 24,645
    Contribution margin $ 68,901 $ 24,880 $ 3,545 97,326
    Other operating expenses 33,869
    Operating income 63,457
    Other expense 16,853
    Provision for income taxes 18,594
    Income from continuing operations 28,010

    Income from discontinued operations, net of income tax

    661

    Gain on sale of assets, net of income tax

    157
    Net income $ 28,828

    Three Months Ended December 31, 2008

    Over-the-Counter
    Healthcare

    Household
    Cleaning

    Personal
    Care

    Consolidated
    (In thousands)
    Net sales

    $

    47,526

    $

    27,586

    $

    2,233

    $

    77,345

    Other revenues 69 552 - 621
    Total revenues 47,595 28,138 2,233 77,966
    Cost of sales 16,892 18,253 1,335 36,480
    Gross profit 30,703 9,885 898 41,486
    Advertising and promotion 9,459 1,794 96 11,349
    Contribution margin $ 21,244 $ 8,091 $ 802 30,137
    Other operating expenses 10,622
    Operating income 19,515
    Other expense 7,051
    Provision for income taxes 4,724
    Income from continuing operations 7,740
    Income from discontinued operations, net of income tax

    278

    Net income $ 8,018

    Nine Months Ended December 31, 2008

    Over-the-Counter
    Healthcare

    Household
    Cleaning

    Personal
    Care

    Consolidated
    (In thousands)
    Net sales

    $

    137,090

    $

    87,472

    $

    8,020

    $

    232,582

    Other revenues 93 1,828 - 1,921
    Total revenues 137,183 89,300 8,020 234,503
    Cost of sales 47,667 57,113 5,009 109,789
    Gross profit 89,516 32,187 3,011 124,714
    Advertising and promotion 25,150 6,595 384 32,129
    Contribution margin $ 64,366 $ 25,592 $ 2,627 92,585
    Other operating expenses 32,573
    Operating income 60,012
    Other expense 22,513
    Provision for income taxes 14,212
    Income from continuing operations 23,287
    Income from discontinued operations, net of income tax

    1,034

    Net income

    $ 24,321

    SOURCE: Prestige Brands Holdings, Inc.

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

    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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