IRVINGTON, N.Y.--(BUSINESS WIRE)--Aug. 7, 2012-- Prestige Brands Holdings, Inc. today announced results for the first fiscal quarter ended June 30, 2012, including record first quarter revenues of $147.0 million, an increase of 54.2% over the prior year comparable period's revenues of $95.3 million. This growth is driven by the Company's core over-the-counter (OTC) healthcare brands, which experienced 4% organic growth, as well as by additional revenue from the Company's acquisition of 17 brands from GlaxoSmithKline (GSK) during the fourth quarter of fiscal 2012.

In addition to financial results reported in accordance with generally accepted accounting principles (GAAP), we have provided certain non-GAAP financial information to aid investors in understanding the company's performance. Each non-GAAP financial measure is defined and reconciled to its most closely related GAAP financial measure in the "About non-GAAP Financial Measures" section at the end of this earnings release.

Reported net income for the first fiscal quarter was $14.7 million, or $0.29 per diluted share, which was even with the prior year period's net income of $14.8 million, or $0.29 per diluted share. On a comparable basis, adjusted earnings per diluted share increased 52.2% to $0.35 for the first quarter of the current fiscal year compared to $0.23 in the prior year's first quarter. The current year period's reported net income included expenses related to a Transition Services Agreement (TSA), integration costs, and other costs totaling $3.3 million net of taxes, or $0.06 per diluted share. The prior year period's reported net income included $2.9 million, or $0.06 per diluted share, of adjustments related to a one-time net gain associated with a legal settlement, partially offset by other one-time costs.

Gross profit for the first fiscal quarter was $83.6 million, an increase of $33.7 million, or 67.7%, over the prior year comparable quarter of $49.9 million. Gross margin was 56.9% in the current quarter. In the prior year comparable quarter, gross margin was 52.3%. The year-over-year improvement of 460 bps in gross margin is primarily a result of a greater proportion of revenue generated from the higher gross margin OTC segment.

Operating income for the first fiscal quarter was $43.8 million, 60.9% higher than the prior year comparable period's results of $27.2 million. The increase includes the impact of the acquired GSK brands. Operating income for the first fiscal quarter of 2013 was impacted by $5.4 million of costs primarily associated with the TSA and integration costs. Adjusted operating income was $49.2 million, an increase of 75.7% over the prior year's first quarter adjusted operating income of $28.0 million, excluding acquisition-related costs in that period of $0.8 million.

Revenues for the OTC healthcare segment were $126.2 million, or 77.2% higher than the prior year's first quarter results of $71.2 million. The revenue increases in the OTC segment were fueled by continued increases in marketing support as well as the impact of the GSK acquisition. Strong sales gains were posted for Clear Eyes®, PediaCare®, Little Remedies® and Dramamine®. Revenues for the Company's nine legacy core OTC products increased approximately 4.0%, representing the eighth consecutive quarter of organic revenue increases for the legacy core OTC brands. The OTC healthcare segment represents approximately 86% of corporate revenues and 96% of brand contribution. Revenues for the Household Cleaning segment, which represents approximately 14% of corporate revenues and 4% of brand contribution, were $20.8 million for the first fiscal quarter, 13.6% lower than the prior year comparable period revenues of $24.1 million. These results reflect changes in the timing of promotional programs as well as the challenging retail environment in the household cleaning products category.

Commentary & Outlook

“The Company's #1 priority in the first quarter was the integration of the 17 acquired brands into our business and organization,” said Matthew M. Mannelly, President and CEO. “We are particularly pleased with our strong financial results during this important transition period. The TSA with GSK was successfully completed at the end of June, and our integration of the brands is on track and proceeding according to plan. Following this transformative acquisition, Prestige Brands is now the largest independent OTC products company in the U.S.”

“Our strong first quarter results in this challenging economic environment reflect both the increased level of marketing support and its effective execution in driving growth of our core OTC brands,” he said. “Our strategic emphasis on OTC continues to enhance our financial profile. In addition, our consistent free cash flow enables us to rapidly deliver. We are pleased with our progress and look forward to realizing the full effect of the GSK acquisition moving forward. I believe this strategy in action places our company in an excellent position to continue to deliver superior value to our stockholders. We remain confident in achieving our previously announced earnings guidance of $1.22-$1.32 per share for the fiscal year.”

Free Cash Flow and Debt Reduction

Free cash flow is a "non-GAAP financial measure" and is presented here because management believes it is a commonly used measure of liquidity, indicative of cash available for debt repayment and acquisitions. Non-GAAP Free Cash Flow is defined and reconciled to GAAP Net Cash Provided by Operating Activities in the section entitled, "About Non-GAAP Financial Measures" below. The Company's free cash flow for the first fiscal quarter ended June 30, 2012 was $13.5 million, a decrease of $1.9 million over the prior year comparable period's free cash flow of $15.4 million. The decrease in free cash flow is primarily due to the expected impact on accounts receivable timing associated with the TSA. The Company continues to expect free cash flow of $110 million for fiscal 2013, in line with what was previously stated.

Total indebtedness at June 30, 2012 was $1,107 million, reflecting recent net debt repayments of $28.0 million. Cash on the balance sheet totaled $4.4 million at June 30, 2012. The Company's bank-defined leverage ratio was approximately 4.75, down from approximately 5.25 at the time of the closing on the acquisition of the GSK brands.

Conference Call and Accompanying Slide Presentation

The Company will host a conference call to review its first quarter results on August 7, 2012 at 8:30 am EDT. The toll-free dial-in numbers are 800-901-5218 within North America and 617-786-4511 outside of North America. The conference pass code is "prestige". The Company will provide a live internet webcast, a slide presentation to accompany the call, as well as an archived replay, all of which can be accessed from the Investor Relations page of http://prestigebrands.com. The slide presentation can be accessed just before the call from the Investor Relations page of the website by clicking on Webcasts and Presentations. Telephonic replays will be available for two weeks following the completion of the call and can be accessed at 888-286-8010 within North America and at 617-801-6888 from outside North America. The pass code is 48717915.

About Prestige Brands Holdings, Inc.

The Company markets and distributes brand name over-the-counter and household cleaning products throughout the U.S., Canada, and certain international markets. Core brands include Chloraseptic® sore throat treatments, Clear Eyes® eye care products, Compound W® wart treatments, The Doctor's® NightGuard® dental protector, the Little Remedies® and PediaCare® lines of pediatric over-the-counter products, Efferdent® denture care products, Luden's® throat drops, Dramamine® motion sickness treatment, BC® and Goody's® pain relievers, Beano® gas prevention, Debrox® earwax remover, and Gaviscon® antacid.

Note Regarding Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of the federal securities laws that are 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 progress of the GSK integration, the growth of our portfolio and sales volume, our intentions regarding development of the brands we acquired from GSK, our outlook and expected financial results, including free cash flow and our plans to deliver superior value to our stockholders. 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 expected as a result of a variety of 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.

About Non-GAAP Financial Measures

We define Non-GAAP EBITDA as earnings before interest expense (income), income taxes, depreciation and amortization, income or loss from discontinued operations or the sale thereof and Non-GAAP Adjusted EBITDA as earnings before interest expense (income), income taxes, depreciation and amortization, income or loss from discontinued operations and the sale thereof, gain on settlement, loss on extinguishment of debt, certain other legal and professional fees and acquisition-related costs. We define Non-GAAP Adjusted Operating Income as Operating Income before certain other legal and professional fees, acquisition and integration-related costs. We define Non-GAAP Adjusted Net Income as Net Income before gain on settlement, loss on extinguishment of debt, certain other legal and professional fees, acquisition and integration-related costs, income or loss from discontinued operations and the sale thereof, the applicable tax impacts associated with these items and the tax impacts of state tax rate adjustments and other non-deductible items. Non-GAAP Adjusted EPS is calculated based on Non-GAAP Adjusted Net Income and the weighted average number of common and potential common shares outstanding during the period. We define Non-GAAP Free Cash Flow as net cash provided by operating activities less cash paid for capital expenditures. Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS and Non-GAAP Free Cash Flow may not be comparable to similarly titled measures reported by other companies.

We are presenting Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Operating Income, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS and Non-GAAP Free Cash Flow because they provide additional ways to view our operations, when considered with both our GAAP results and the reconciliation to net income and net cash provided by operating activities, respectively, which we believe provide a more complete understanding of our business than could be obtained absent this disclosure. Each of Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS and Non-GAAP Free Cash Flow is presented solely as a supplemental disclosure because: (i) we believe it is a useful tool for investors to assess the operating performance of the business without the effect of these items; (ii) we believe that investors will find this data useful in assessing our ability to pursue acquisitions or to service or incur indebtedness; and (iii) we use Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income and Non-GAAP Adjusted EPS internally to evaluate the performance of our personnel and also as a benchmark to evaluate our operating performance or compare our performance to that of our competitors. The use of Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS and Non-GAAP Free Cash Flow has limitations and you should not consider these measures in isolation from or as an alternative to GAAP measures such as operating income, net income, and net cash flow provided by operating activities, or cash flow statement data prepared in accordance with GAAP, or as a measure of profitability or liquidity.

The following tables set forth the reconciliation of Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS and Non-GAAP Free Cash Flow, all of which are non-GAAP financial measures, to GAAP Operating Income, GAAP Net Income, GAAP Diluted EPS and GAAP Net cash provided by operating activities, our most directly comparable financial measures presented in accordance with GAAP.

Source: Prestige Brands Holdings, Inc.

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