News Releases

    Printer Friendly Version View printer-friendly version
    << Back
    Prestige Brands Holdings, Inc. Reports Fiscal 2016 Fourth Quarter and Full Year Results; Company Exceeds Fourth Quarter and Full Year Outlook

    Fourth Quarter Revenues Up 9.4%: Full Year Revenues Up 12.8%

    Adjusted Free Cash Flow Increased 12.0% to $183.4 Million in FY2016

    TARRYTOWN, N.Y.--(BUSINESS WIRE)--May 12, 2016-- Prestige Brands Holdings, Inc. (NYSE:PBH) today reported financial results for its fourth quarter and fiscal year ended March 31, 2016.

    Key fourth quarter and fiscal year highlights include:

    • Reported revenue increased 9.4% to $207.9 million and 12.8% to $806.2 million in Q4 and FY2016, respectively.
    • Organic sales grew 5.0% in Q4 and 2.8% in FY2016, on a constant currency basis.
    • Adjusted net income increased 12.7% to $27.9 million, or $0.52 per diluted share, in Q4.
    • FY16 adjusted net income increased 17.8% to $115.5 million, or $2.17 per diluted share.
    • Adjusted free cash flow increased 12.0% to $183.4 million in FY2016.

    Fiscal Fourth Quarter Ended March 31, 2016

    Reported revenues in the fiscal fourth quarter of 2016 increased 9.4% to $207.9 million, compared to $190.0 million in the fiscal fourth quarter of 2015. Organic sales growth for the fourth quarter was 3.7%, or 5.0% on a constant currency basis. Revenues for the quarter were driven by continued strong consumption levels across the Company’s core over-the-counter healthcare (OTC) and international brands, and incremental revenue from the DenTek® acquisition.

    Reported net income totaled $13.9 million, or $0.26 per diluted share, compared to $23.8 million, or $0.45 per diluted share, in the fourth quarter of fiscal year 2015. Adjusted net income increased 12.7% to $27.9 million, or $0.52 per diluted share, compared to $24.8 million, or $0.47 per diluted share, in the fourth quarter of fiscal year 2015. Adjustments to net income in the fourth quarter of fiscal 2016 consisted of items related to the acquisition of DenTek and the refinancing of the 2012 Senior Notes. Adjustments to net income in the prior year comparable quarter were related to the Insight and Hydralyte acquisitions.

    Fiscal Year Ended March 31, 2016

    Reported revenues for the fiscal year ended March 31, 2016 totaled $806.2 million, an increase of 12.8%, compared to revenues of $714.6 million for the fiscal year ended March 31, 2015. Organic revenues for the fiscal year ended March 31, 2016 increased 2.8% on a constant currency basis. Foreign currency fluctuations negatively impacted reported revenues for the fiscal year by $13.9 million.

    Reported net income for fiscal year 2016 totaled $99.9 million, or $1.88 per diluted share, compared to $78.3 million, or $1.49 per diluted share, for fiscal year 2015. Adjusted net income for fiscal year 2016 totaled $115.5 million, or $2.17 per diluted share, an increase of 17.8% compared to adjusted net income of $98.0 million, or $1.86 per diluted share, for fiscal 2015. Adjustments to net income in fiscal 2016 consisted of items related to the acquisition of DenTek, CEO transition costs and the refinancing of the 2012 Senior Notes. Adjustments to net income in the prior year were related to the acquisitions of Insight and Hydralyte.

    Adjusted Free Cash Flow and Balance Sheet

    Adjusted free cash flow totaled $48.7 million for the fourth quarter of fiscal 2016, compared to fourth quarter fiscal 2015 results of $50.1 million. For fiscal year 2016, adjusted free cash flow increased 12.0% to $183.4 million compared to adjusted free cash flow of $163.7 million for fiscal year 2015. The Company’s consistent and industry-leading free cash flow resulted in a bank-defined net debt to EBITDA ratio of ~5.0 at the end of fiscal year 2016.

    Segment Review

    North American OTC Healthcare: Reported revenues totaled $171.1 million for the fourth quarter of 2016, a 9.2% increase over fourth quarter 2015 revenues of $156.6 million. For fiscal year 2016, reported revenues totaled $657.9 million, compared to $566.9 million for fiscal year 2015, an increase of 16.0%. Results for both periods were favorably impacted by increased consumption among core OTC brands as well as revenues from DenTek for two months.

    International OTC Healthcare: Reported revenues totaled $14.4 million for the fourth quarter of fiscal 2016, a 14.7% increase over fourth quarter fiscal year 2015 revenues of $12.6 million. Revenues increased 24.7%, excluding $1.0 million of foreign currency impact. For fiscal year 2016, reported revenues totaled $57.7 million compared to $57.8 million for fiscal year 2015. Revenues increased 16.2%, excluding $8.1 million of foreign currency impact. The strong performance of the Care Pharma portfolio in Australia favorably impacted reported revenues for fiscal year 2016. The results also include revenues from two months of ownership of DenTek in the United Kingdom and Germany.

    Household Cleaning: Reported revenues totaled $22.4 million for the fourth quarter of fiscal 2016, compared with fourth quarter fiscal 2015 revenues of $20.8 million, an increase of 7.5%. Reported revenues for fiscal year 2016 totaled $90.7 million, a 0.8% increase over fiscal year 2015 revenues of $89.9 million.

    Commentary and Outlook for FY2017

    “Our strong overall performance in the fourth quarter enabled us to exceed our previous outlook for the quarter and full fiscal year,” said Ron Lombardi, President and CEO. “The solid results, which include an organic growth rate of 2.8% for the full fiscal year on a constant currency basis, reflect continued successful execution of our brand-building strategy and positive consumption trends across our core OTC and international brands. Based on our strong finish to fiscal 2016, we believe we are well-positioned for another strong year in fiscal 2017.”

    “We completed the acquisition of DenTek in February 2016, our seventh acquisition in the past six years,” Mr. Lombardi said. “The DenTek integration is proceeding on schedule, and we are excited by the growth opportunities of this leading oral care brand.”

    Mr. Lombardi continued, “In fiscal 2017, we expect continued organic growth in our existing business and incremental revenues from the acquisition of DenTek. We anticipate full fiscal year 2017 revenue growth in the range of 6.0%-8.0% including the impact of foreign exchange, adjusted earnings per share in the range of $2.30-$2.36 following top line growth, and adjusted non-GAAP projected free cash flow of $185 million or more. As has been our practice, we expect to continue to use our industry-leading free cash flow to pay down debt and build M&A capacity.”

    Q4 and Fiscal Year Conference Call, Accompanying Slide Presentation and Replay

    The Company will host a conference call to review its fourth quarter and full year results on May 12, 2016 at 8:30 am EDT. The toll-free dial-in numbers are 877-784-9650 within North America and 530-379-4717 outside of North America. The conference ID number is 88898382. 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 the Company's website at 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 855-859-2056 within North America and at 404-537-3406 from outside North America. The conference ID is 88898382.

    Investor Day Scheduled for May 25, 2016

    In addition, the Company will host an investor day on Wednesday, May 25th beginning at 9 am EDT in New York City. The CEO, Ron Lombardi, and other members of senior management will present an update on the Company’s strategy for long-term growth. The Company will provide a live internet webcast, which can be accessed from the Investor Relations page of http://prestigebrands.com. Choose the “Click Here for Webcast” hyperlink and register for access. A replay of the full event will be available through the same URL four to eight hours after the event. Visit the News and Events section of the Company’s website at http://prestigebrands.com for details.

    Non-GAAP Financial Information

    In addition to financial results reported in accordance with generally accepted accounting principles (GAAP), we have provided certain non-GAAP financial information in this release 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.

    About Prestige Brands Holdings, Inc.

    The Company markets and distributes brand name over-the-counter and household cleaning products throughout the U.S. and Canada, Australia, and in certain other international markets. The Company’s brands include Monistat® women’s health products, BC® and Goody’s® pain relievers, Clear Eyes® eye care products, DenTek® specialty oral care products, Dramamine® motion sickness treatments, Chloraseptic® sore throat treatments, Compound W® wart treatments, Little Remedies® pediatric over-the-counter products, The Doctor's® NightGuard® dental protector, Efferdent® denture care products, Luden's® throat drops, Beano® gas prevention, Debrox® earwax remover, Gaviscon® antacid in Canada, and Hydralyte® rehydration products and the Fess® line of nasal and sinus care products in Australia. Visit the Company's website at www.prestigebrands.com.

    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 "outlook," "may," "will," "would," "expect," “intend,” “estimate,” “anticipate,” “believe,” 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 our expected future operating results, including revenue growth, the impact of foreign exchange rates, adjusted EPS, and adjusted non-GAAP projected free cash flow; our expected use of free cash flow for deleveraging and building M&A capacity; the integration of the DenTek acquisition and incremental revenues from it; and our anticipated organic growth in the legacy business. 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, including the impact of our advertising and promotional initiatives, general economic and business conditions, regulatory matters, competition in our industry, supplier issues, the success of our brand-building investments and integration of newly acquired brands. A discussion of other factors that could cause results to vary is included in the Company's Annual Report on Form 10-K for the year ended March 31, 2015, Quarterly Report on Form 10-Q for the quarter ended December 31, 2015, and other periodic reports filed with the Securities and Exchange Commission.

           

    Prestige Brands Holdings, Inc.

    Consolidated Statements of Income and Comprehensive Income

    (Unaudited)

     

    Three Months Ended
    March 31,

    Year Ended

    March 31,

    (In thousands, except per share data) 2016   2015 2016   2015
    Revenues
    Net sales $   207,054 $   189,089 $   803,088 $   710,070
    Other revenues 801   957   3,159   4,553  

    Total revenues

    207,855 190,046 806,247 714,623
     
    Cost of Sales
    Cost of sales (exclusive of depreciation shown below) 89,604   79,976   339,036   308,400  
    Gross profit 118,251   110,070   467,211   406,223  
     
    Operating Expenses
    Advertising and promotion 26,552 25,367 110,802 99,651
    General and administrative 20,232 17,685 72,418 81,273
    Depreciation and amortization 6,198   5,773   23,676   17,740  
    Total operating expenses 52,982   48,825   206,896   198,664  
    Operating income 65,269   61,245   260,315   207,559  
     
    Other (income) expense
    Interest income (71 ) (25 ) (162 ) (92 )
    Interest expense 23,218 23,821 85,322 81,326
    Gain on sale of asset (1,133 )
    Loss on extinguishment of debt 17,519     17,970    
    Total other expense 40,666   23,796   103,130   80,101  
    Income before income taxes 24,603 37,449 157,185 127,458
    Provision for income taxes 10,667   13,677   57,278   49,198  
    Net income $   13,936   $   23,772   $   99,907   $   78,260  
     
    Earnings per share:
    Basic $   0.26   $   0.45   $   1.89   $   1.50  
    Diluted $   0.26   $   0.45   $   1.88   $   1.49  
     
    Weighted average shares outstanding:
    Basic 52,833   52,356   52,754   52,170  
    Diluted 53,252   52,821   53,143   52,670  
     
    Comprehensive income, net of tax:
    Currency translation adjustments 6,449   (7,268 ) (113 ) (24,151 )
    Total other comprehensive income (loss) 6,449   (7,268 ) (113 ) (24,151 )
    Comprehensive income $   20,385   $   16,504   $   99,794   $   54,109  
     
       

    Prestige Brands Holdings, Inc.

    Consolidated Balance Sheets

    (Unaudited)

     

    (In thousands)

    March 31,
    Assets 2016   2015
    Current assets
    Cash and cash equivalents $   27,230 $   21,318
    Accounts receivable, net 95,247 87,858
    Inventories 91,263 74,000
    Deferred income tax assets 10,108 8,097
    Prepaid expenses and other current assets 25,165   10,434  
    Total current assets 249,013 201,707
     
    Property and equipment, net 15,540 13,744
    Goodwill 360,191 290,651
    Intangible assets, net 2,322,723 2,134,700
    Other long-term assets 1,324   1,165  
    Total Assets $   2,948,791   $   2,641,967  
     
    Liabilities and Stockholders' Equity
    Current liabilities
    Accounts payable $ 38,296 $ 46,115
    Accrued interest payable 8,664 11,974
    Other accrued liabilities 59,724   40,948  
    Total current liabilities 106,684   99,037  
     
    Long-term debt
    Principal amount 1,652,500 1,593,600
    Less unamortized debt costs (27,191 ) (32,327 )
    Long-term debt, net 1,625,309   1,561,273  
     
    Deferred income tax liabilities 469,622 351,569
    Other long-term liabilities 2,840   2,464  
    Total Liabilities 2,204,455   2,014,343  
     
    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 – 53,066 shares at March 31, 2016 and 52,562 shares at March 31, 2015 530 525
    Additional paid-in capital 445,182 426,584
    Treasury stock, at cost – 306 shares at March 31, 2016 and 266 at March 31, 2015 (5,163 ) (3,478 )
    Accumulated other comprehensive income (loss), net of tax (23,525 ) (23,412 )
    Retained earnings 327,312   227,405  
    Total Stockholders' Equity 744,336   627,624  
     
    Total Liabilities and Stockholders' Equity $   2,948,791   $   2,641,967  
     
       

    Prestige Brands Holdings, Inc.

    Consolidated Statements of Cash Flows

    (Unaudited)

     
    Year Ended March 31,

    (In thousands)

    2016   2015
    Operating Activities
    Net income $   99,907 $   78,260
    Adjustments to reconcile net income to net cash provided by (used in) operating activities:
    Depreciation and amortization 23,676 17,740
    Gain on sale of asset (1,133 )
    Deferred income taxes 46,152 28,922
    Long term income taxes payable (332 ) 2,294
    Amortization of debt origination costs 8,994 8,821
    Stock-based compensation costs 9,954 6,918
    Loss on extinguishment of debt 17,970
    Premium payment on 2012 Senior Notes (10,158 )
    Lease termination costs 785
    (Gain) loss on sale or disposal of property and equipment (35 ) 321
    Changes in operating assets and liabilities, net of effects from acquisitions
    Accounts receivable 1,824 1,608
    Inventories (3,005 ) 15,360
    Prepaid expenses and other current assets (7,921 ) 4,664
    Accounts payable (11,348 ) (17,637 )
    Accrued liabilities (1,328 ) 9,332  
    Net cash provided by operating activities 174,350   156,255  
     
    Investing Activities
    Purchases of property and equipment (3,568 ) (6,101 )
    Proceeds from the sale of property and equipment 344
    Proceeds from sale of business 18,500
    Proceeds from sale of asset 10,000
    Proceeds from Insight Pharmaceuticals working capital arbitration settlement 7,237
    Acquisition of DenTek, less cash acquired (226,984 )
    Acquisition of Insight Pharmaceuticals, less cash acquired (749,666 )
    Acquisition of the Hydralyte brand   (77,991 )
    Net cash used in investing activities (222,971 ) (805,258 )
     
    Financing Activities
    Proceeds from issuance of 2016 Senior Notes 350,000
    Repayment of 2012 Senior Notes (250,000 )
    Borrowings under Bridge term loans 80,000
    Repayments under Bridge term loans (80,000 )
    Term loan borrowings 720,000
    Term loan repayments (60,000 ) (130,000 )
    Borrowings under revolving credit agreement 115,000 124,600
    Repayments under revolving credit agreement (96,100 ) (58,500 )
    Payments of debt origination costs (11,828 ) (16,072 )
    Proceeds from exercise of stock options 6,689 3,954
    Proceeds from restricted stock exercises 544 57
    Excess tax benefits from share-based awards 1,960 1,330
    Fair value of shares surrendered as payment of tax withholding (2,229 ) (2,104 )
    Net cash provided by financing activities 54,036   643,265  
     
    Effects of exchange rate changes on cash and cash equivalents 497 (1,275 )
    Increase (decrease) in cash and cash equivalents 5,912 (7,013 )
    Cash and cash equivalents - beginning of year 21,318   28,331  
    Cash and cash equivalents - end of year $   27,230   $   21,318  
     
    Interest paid $   79,132   $   70,155  
    Income taxes paid $   15,352   $   11,939  
     
       

    Prestige Brands Holdings, Inc.

    Consolidated Statements of Income

    Business Segments

    (Unaudited)

     

    Three Months Ended March 31, 2016

    (In thousands)

    North
    American
    OTC
    Healthcare

     

    International
    OTC
    Healthcare

     

    Household

    Cleaning

      Consolidated
    Gross segment revenues $   171,294 $   14,416 $   21,577 $   207,287
    Elimination of intersegment revenues (233 )     (233 )
    Third-party segment revenues 171,061 14,416 21,577 207,054
    Other revenues   2   799   801  
    Total segment revenues 171,061 14,418 22,376 207,855
    Cost of sales 69,873   3,195   16,536   89,604  
    Gross profit 101,188 11,223 5,840 118,251
    Advertising and promotion 23,286   2,776   490   26,552  
    Contribution margin $   77,902   $   8,447   $   5,350   $   91,699  
    Other operating expenses 26,430  
    Operating income 65,269
    Other expense 40,666  
    Income before income taxes 24,603
    Provision for income taxes 10,667  
    Net income $   13,936  
     
       
    Year Ended March 31, 2016

    (In thousands)

    North
    American
    OTC
    Healthcare

     

    International
    OTC
    Healthcare

     

    Household
    Cleaning

      Consolidated
    Gross segment revenues* $   660,518 $   57,670 $   87,561 $   805,749
    Elimination of intersegment revenues (2,661 )     (2,661 )
    Third-party segment revenues 657,857 57,670 87,561 803,088
    Other revenues* 14   43   3,102   3,159  
    Total segment revenues 657,871 57,713 90,663 806,247
    Cost of sales 252,152   19,542   67,342   339,036  
    Gross profit 405,719 38,171 23,321 467,211
    Advertising and promotion 97,393   11,114   2,295   110,802  
    Contribution margin $   308,326   $   27,057   $   21,026   $   356,409  
    Other operating expenses 96,094  
    Operating income 260,315
    Other expense 103,130  
    Income before income taxes 157,185
    Provision for income taxes 57,278  
    Net income $   99,907  
     
       
    Three Months Ended March 31, 2015

    (In thousands)

    North
    American
    OTC
    Healthcare

     

    International
    OTC
    Healthcare

     

    Household

    Cleaning

      Consolidated
    Gross segment revenues* $   156,940 $   12,572 $   20,028 $   189,540
    Elimination of intersegment revenues (451 )     (451 )
    Third-party segment revenues 156,489 12,572 20,028 189,089
    Other revenues 159   2   796   957  
    Total segment revenues 156,648 12,574 20,824 190,046
    Cost of sales 58,776   4,894   16,306   79,976  
    Gross profit 97,872 7,680 4,518 110,070
    Advertising and promotion 22,324   2,771   272   25,367  
    Contribution margin $   75,548   $   4,909   $   4,246   $   84,703  
    Other operating expenses 23,458  
    Operating income 61,245
    Other expense 23,796  
    Income before income taxes 37,449
    Provision for income taxes 13,677  
    Net income $   23,772  
     
       
    Year Ended March 31, 2015

    (In thousands)

    North
    American
    OTC
    Healthcare

     

    International
    OTC
    Healthcare

     

    Household
    Cleaning

      Consolidated
    Gross segment revenues* $   569,643 $   57,729 $   86,085 $   713,457
    Elimination of intersegment revenues (3,387 )     (3,387 )
    Third-party segment revenues 566,256 57,729 86,085 710,070
    Other revenues 637   64   3,852   4,553  
    Total segment revenues 566,893 57,793 89,937 714,623
    Cost of sales 216,781   22,820   68,799   308,400  
    Gross profit 350,112 34,973 21,138 406,223
    Advertising and promotion 86,897   10,922   1,832   99,651  
    Contribution margin $   263,215   $   24,051   $   19,306   $   306,572  
    Other operating expenses 99,013  
    Operating income 207,559
    Other expense 80,101  
    Income before income taxes 127,458
    Provision for income taxes 49,198  
    Net income $   78,260  
     

    *Certain immaterial amounts relating to intersegment revenues and other revenues were reclassified between the International OTC Healthcare segment and the North American OTC Healthcare segment. There were no changes to the consolidated financial statements for any periods presented.

    About Non-GAAP Financial Measures

    We define Non-GAAP Organic Revenues as Total Revenues excluding revenues associated with products acquired or divested in the periods presented. We define Non-GAAP Organic Revenues on a Constant Currency basis as Total Revenues excluding acquisitions and divestitures and the impact of current year foreign exchange rates on total revenues. We define Non-GAAP Total Revenues on a Constant Currency basis as Total Revenues excluding the impact of currency exchange rates on total revenues. We define Non-GAAP Adjusted EBITDA as earnings before interest expense (income), income taxes, depreciation and amortization, inventory step-up charges, certain other legal and professional fees, other acquisition-related costs, costs associated with our CEO transition, gain on sale of asset, and loss on extinguishment of debt. Non-GAAP Adjusted EBITDA Margin is calculated as Non-GAAP Adjusted EBITDA divided by GAAP Total Revenues. We define Non-GAAP Adjusted Gross Margin as Gross Profit before inventory step up charges, and certain other acquisition and integration-related costs. Non-GAAP Adjusted Gross Margin percentage is calculated based on Non-GAAP Adjusted Gross Margin divided by GAAP Total Revenues. We define Non-GAAP Adjusted General and Administrative expenses as General and Administrative expenses minus certain other legal and professional fees, acquisition and other integration costs, and costs associated with our CEO transition. Non-GAAP Adjusted General and Administrative expense percentage is calculated based on Non-GAAP Adjusted General and Administrative expense divided by GAAP Total Revenues. We define Non-GAAP Adjusted Net Income as Net Income before inventory step-up charges, certain other legal and professional fees, other acquisition and integration-related costs, costs associated with our CEO transition, accelerated amortization of debt origination costs, gain on sale of asset, loss on extinguishment of debt, and the applicable tax impacts associated with these items and other non-deductible items. Non-GAAP Adjusted EPS is calculated based on Non-GAAP Adjusted Net Income, divided by 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. We define Non-GAAP Adjusted Free Cash Flow as net cash provided by operating activities less purchases of property and equipment plus payments associated with a premium on extinguishment of the 2012 Senior Notes and acquisitions for integration, transition, and other payments associated with acquisitions. Non-GAAP Organic Revenues, Non-GAAP Organic Revenues on a Constant Currency basis, Non-GAAP Total Revenues on a Constant Currency basis, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Gross Margin percentage, Non-GAAP Adjusted General and Administrative Expense, Non-GAAP Adjusted General and Administrative Expense percentage, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow, and Non-GAAP Adjusted Free Cash Flow may not be comparable to similarly titled measures reported by other companies.

    We are presenting Non-GAAP Organic Revenues, Non-GAAP Organic Revenues on a Constant Currency basis, Non-GAAP Total Revenues on a Constant Currency basis, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Gross Margin percentage, Non-GAAP Adjusted General and Administrative Expense, Non-GAAP Adjusted General and Administrative Expense percentage, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow, and Non-GAAP Adjusted Free Cash Flow, because they provide additional ways to view our operation when considered with both our GAAP results and the reconciliation to net income and net cash provided by operating activities, respectively, which we believe provides a more complete understanding of our business than could be obtained absent this disclosure. Each of Non-GAAP Organic Revenues, Non-GAAP Organic Revenues on a Constant Currency basis, Non-GAAP Total Revenues on a Constant Currency basis, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Gross Margin percentage, Non-GAAP Adjusted General and Administrative Expense, Non-GAAP Adjusted General and Administrative Expense percentage, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow, and Non-GAAP Adjusted 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 shareholder value; and (iii) we use Non-GAAP Organic Revenues, Non-GAAP Organic Revenues on a Constant Currency basis, Non-GAAP Total Revenues on a Constant Currency basis, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Gross Margin percentage, Non-GAAP Adjusted General and Administrative Expense, Non-GAAP Adjusted General and Administrative Expense percentage, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow, and Non-GAAP Adjusted Free Cash Flow 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 Organic Revenues, Non-GAAP Organic Revenues on a Constant Currency basis, Non-GAAP Total Revenues on a Constant Currency basis, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Gross Margin percentage, Non-GAAP Adjusted General and Administrative Expense, Non-GAAP Adjusted General and Administrative Expense percentage, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow, and Non-GAAP Adjusted Free Cash Flow have limitations, and you should not consider these measures in isolation from or as an alternative to GAAP measures such as Total Revenues, General and Administrative expense, 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 Organic Revenues, Non-GAAP Organic Revenues on a Constant Currency basis, Non-GAAP Total Revenues on a Constant Currency basis, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Gross Margin percentage, Non-GAAP Adjusted General and Administrative Expense, Non-GAAP Adjusted General and Administrative Expense percentage, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow, and Non-GAAP Adjusted Free Cash Flow, all of which are non-GAAP financial measures, to GAAP Gross Profit, GAAP General and Administrative expense, 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.

    Reconciliation of GAAP Total Revenues to Non-GAAP Organic Revenues and Non-GAAP Organic Revenues on a Constant Currency basis and related growth percentages:

           

    Three Months Ended
    March 31,

    Year Ended

    March 31,

    2016   2015 2016   2015

    (In thousands)

    GAAP Total Revenues $   207,855   $   190,046   $   806,247   $   714,623  

    Adjustments:

    Hydralyte revenues (1) (1,217 )
    Insight revenues (2) (73,630 )
    DenTek revenues (3) (10,687 )   (10,687 )  
    Total adjustments (10,687 )   (85,534 )  
    Non-GAAP Organic Revenues 197,168   190,046   720,713   714,623  
    Organic Revenue Growth (Decline) 3.7 %   0.9 %  
    Impact of foreign currency exchange rates (4)   (2,257 )   (13,862 )
    Non-GAAP Organic Revenues on a constant currency basis $   197,168   $   187,789   $   720,713   $   700,761  
    Constant Currency Organic Revenue Growth 5.0 % 2.8 %
     
    (1)   Revenue adjustments relate to our International OTC Healthcare segment
    (2) Revenue adjustments relate to our North American OTC Healthcare segment
    (3) Revenue adjustments relate to our North American and International OTC Healthcare segment
    (4) Foreign currency exchange rate adjustments relate to all segments
     

    Reconciliation of GAAP Total Revenues to Non-GAAP Total Revenues on a Constant Currency basis and related growth percentages:

           

    Three Months Ended
    March 31,

    Year Ended

    March 31,

    2016   2015 2016   2015

    (In thousands)

    GAAP Total Revenues $   207,855 $   190,046 $   806,247 $   714,623
    Impact of foreign currency exchange rates (1)   (2,257 )   (13,862 )
    Non-GAAP Total Revenues on a constant currency basis $   207,855   $   187,789   $   806,247   $   700,761  
    Constant Currency Revenue Growth 10.7 % 15.1 %
     
    (1)   Foreign currency exchange rate adjustments relate to all segments
     

    Reconciliation of GAAP Gross Profit to Non-GAAP Adjusted Gross Margin and related Adjusted Gross Margin percentage:

           

    Three Months Ended
    March 31,

    Year Ended
    March 31,

    2016   2015 2016   2015

    (In thousands)

    GAAP Total Revenues $   207,855   $   190,046   $   806,247   $   714,623  
     
    GAAP Gross Profit $   118,251   $   110,070   $   467,211   $   406,223  

    Adjustments:

    Inventory step-up charges and other costs associated with the Hydralyte acquisition (1) 246
    Inventory step-up charges associated with Insight acquisition (2) 1,979
    Inventory step-up charges and other costs associated with the DenTek acquisition (3) 1,387     1,387    
    Total adjustments 1,387     1,387   2,225  
    Non-GAAP Adjusted Gross Margin $   119,638   $   110,070   $   468,598   $   408,448  
    Non-GAAP Adjusted Gross Margin % 57.6 % 57.9 % 58.1 % 57.2 %
     
    (1)   Inventory step-up charges and other costs relate to our International OTC Healthcare segment
    (2) Inventory step-up charges relate to our North American OTC Healthcare segment
    (3) Inventory step-up charges relate to our North American and International OTC Healthcare segments
     

    Reconciliation of GAAP General and Administrative Expense to Non-GAAP Adjusted General and Administrative Expense and related Non-GAAP Adjusted General and Administrative Expense percentage:

           

    Three Months Ended
    March 31,

    Year Ended
    March 31,

    2016   2015 2016   2015

    (In thousands)

    GAAP General and Administrative Expense $   20,232   $   17,685   $   72,418   $   81,273  

    Adjustments:

    Costs associated with CEO transition 1,406
    Legal and professional fees associated with acquisitions 1,096 640 2,112 10,974
    Stamp/Duty Tax on Australian acquisition 2,940
    Integration, transition and other costs associated with acquisitions 289   920   289   10,533  
    Total adjustments 1,385   1,560   3,807   24,447  
    Non-GAAP Adjusted General and Administrative Expense $   18,847   $   16,125   $   68,611   $   56,826  
    Non-GAAP Adjusted General and Administrative Expense Percentage 9.1 % 8.5 % 8.5 % 8.0 %
     

    Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA and related Non-GAAP Adjusted EBITDA Margin:

           

    Three Months Ended
    March 31,

    Year Ended
    March 31,

    2016   2015 2016   2015

    (In thousands)

    GAAP Net Income $   13,936 $   23,772 $   99,907 $   78,260
    Interest expense, net 23,147 23,796 85,160 81,234
    Provision for income taxes 10,667 13,677 57,278 49,198
    Depreciation and amortization 6,198   5,773   23,676   17,740  
    Non-GAAP EBITDA: 53,948   67,018   266,021   226,432  

    Adjustments:

    Inventory step-up charges and other costs associated with the Hydralyte acquisition (1) 246
    Inventory step-up charges associated with Insight acquisition (2) 1,979
    Inventory step-up charges and other costs associated with the DenTek acquisition (3) 1,387 1,387
    Costs associated with CEO transition (4) 1,406
    Legal and professional fees associated with acquisitions (4) 1,096 640 2,112 10,974
    Stamp/Duty Tax on Australian acquisition (4) 2,940
    Integration, transition and other costs associated with acquisitions (4) 289 920 289 10,533
    Gain on sale of asset (1,133 )
    Loss on extinguishment of debt 17,519     17,970    
    Total adjustments 20,291   1,560   23,164   25,539  
    Non-GAAP Adjusted EBITDA $   74,239   $   68,578   $   289,185   $   251,971  
    Non-GAAP Adjusted EBITDA Margin 35.7 % 36.1 % 35.9 % 35.3 %
     
    (1)   Inventory step-up charges and other costs relate to our International OTC Healthcare segment
    (2) Inventory step-up charges relate to our North American OTC Healthcare segment
    (3) Inventory step-up charges relate to our North American and International OTC Healthcare segments
    (4) Adjustments relate to G&A expenses
     

    Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income and related Adjusted Earnings Per Share:

           
    Three Months Ended March 31, Year Ended March 31,
    2016

    2016
    Adjusted
    EPS

      2015

    2015
    Adjusted
    EPS

    2016

    2016
    Adjusted
    EPS

      2015

    2015
    Adjusted
    EPS

    (In thousands)

    GAAP Net Income $   13,936   $   0.26   $   23,772   $   0.45   $   99,907   $   1.88   $   78,260   $   1.49  

    Adjustments:

    Inventory step-up charges and other costs associated the Hydralyte acquisition (1) 246
    Inventory step-up charges associated with Insight acquisition (2) 1,979 0.04
    Inventory step-up charges and other costs associated with the DenTek acquisition (3) 1,387 0.03 1,387 0.03
    Costs associated with CEO transition (4) 1,406 0.02
    Legal and professional fees associated with acquisitions (4) 1,096 0.02 640 0.01 2,112 0.04 10,974 0.21
    Stamp/Duty Tax on Australian acquisition(4) 2,940 0.05
    Integration, transition and other costs associated with acquisitions (4) 289 0.01 920 0.02 289 0.01 10,533 0.20
    Accelerated amortization of debt origination costs 218
    Gain on sale of asset (1,133 ) (0.02 )
    Loss on extinguishment of debt 17,519 0.33 17,970 0.34
    Tax impact of adjustments (6,294 ) (0.13 ) (549 ) (0.01 ) (7,608 ) (0.15 ) (5,968 ) (0.11 )
    Total adjustments 13,997   0.26   1,011   0.02   15,556   0.29   19,789   0.37  
    Non-GAAP Adjusted Net Income and Adjusted EPS $   27,933   $   0.52   $   24,783   $   0.47   $   115,463   $   2.17   $   98,049   $   1.86  
                   
    (1)   Inventory step-up charges and other costs relate to our International OTC Healthcare segment
    (2) Inventory step-up charges relate to our North American OTC Healthcare segment
    (3) Inventory step-up charges relate to our North American and International OTC Healthcare segments
    (4) Adjustments relate to G&A expenses
     

    Reconciliation of GAAP Net Income to Non-GAAP Free Cash Flow and Non-GAAP Adjusted Free Cash Flow:

           

    Three Months Ended
    March 31,

    Year Ended
    March 31,
    2016   2015 2016   2015

    (In thousands)

    GAAP Net Income $   13,936   $   23,772   $   99,907   $   78,260  

    Adjustments:

    Adjustments to reconcile net income to net cash provided by operating activities as shown in the Statement of Cash Flows

    34,206 22,048 96,221 64,668

    Changes in operating assets and liabilities, net of effects from acquisitions as shown in the Statement of Cash Flows

    (10,243 ) 6,293   (21,778 ) 13,327  
    Total adjustments 23,963   28,341   74,443   77,995  
    GAAP Net cash provided by operating activities 37,899 52,113 174,350 156,255
    Purchases of property and equipment (1,028 ) (2,401 ) (3,568 ) (6,101 )
    Non-GAAP Free Cash Flow 36,871 49,712 170,782 150,154
    Premium payment on extinguishment of 2012 Senior Notes 10,158 10,158
    Integration, transition and other payments associated with acquisitions 1,665   362   2,461   13,563  
    Adjusted Non-GAAP Free Cash Flow $   48,694   $   50,074   $   183,401   $   163,717  
           

    Outlook for Fiscal Year 2017:

    Reconciliation of Projected GAAP EPS to Projected Non-GAAP Adjusted EPS:

       
    2017 Projected EPS
    Low   High
    Projected FY'17 GAAP EPS $   2.22     $   2.28
    Adjustments:  
    Costs associated with DenTek integration 0.08     0.08
    Total adjustments 0.08     0.08
    Projected Non-GAAP Adjusted EPS $   2.30     $   2.36
       

    Reconciliation of Projected GAAP Net cash provided by operating activities to Projected Non-GAAP Free Cash Flow:

       

    2017
    Projected
    Free Cash
    Flow

    (In millions)

    Projected FY'17 GAAP Net cash provided by operating activities $   190
    Additions to property and equipment for cash (8 )
    Projected Non-GAAP Free Cash Flow 182
    Payments associated with acquisitions 3  
    Adjusted Non-GAAP Projected Free Cash Flow $   185  
     

    Source: Prestige Brands Holdings, Inc.

    Prestige Brands Holdings, Inc.
    Dean Siegal, 914-524-6819
    or
    John Mills, 646-277-1254

    Primary IR Contact

    Irinquiries@prestigebrands.com
    Prestige Brands Holdings, 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

    Subscribe

    Stay up to date with investor news, stock information and SEC filings.
    Subscribe »