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    Prestige Consumer Healthcare Inc. Reports Fiscal 2019 Second Quarter Results
    • Revenue was $239.4 Million in Q2 Fiscal 2019; Organic Revenue Growth of 1.6% Excluding Household Cleaning Divestiture
    • GAAP Diluted EPS Increased 4% to $0.59 in Q2; Adjusted EPS Increased 7% to $0.65
    • Reduced Debt by $100 Million From Cash Generation and Divestiture Proceeds
    • Reaffirming Previously Issued FY’19 Outlook

    TARRYTOWN, N.Y., Nov. 01, 2018 (GLOBE NEWSWIRE) -- Prestige Consumer Healthcare Inc. (NYSE:PBH), formerly Prestige Brands Holdings, Inc., today reported financial results for its second quarter and six months ended September 30, 2018.

    “We are pleased with second quarter results, driven by continued solid consumption trends across our diversified and leading consumer healthcare portfolio.  We reduced our debt by $100 million during the quarter, continuing our prudent capital allocation strategy.  Based on our results for the first six months of fiscal 2019 and expectations for the remainder of the year, we are well positioned to achieve our full-year fiscal 2019 guidance,” said Ron Lombardi, Chief Executive Officer of Prestige Consumer Healthcare.

    Second Fiscal Quarter Ended September 30, 2018
    Reported revenues in the second quarter of fiscal 2019 decreased 7.2% to $239.4 million, compared to $258.0 million in the second quarter of fiscal 2018.  Revenues increased 1.6% on an organic basis, which excludes the impact related to the divested Household Cleaning segment.  Organic revenues for the quarter were driven by continued strong consumption levels across the Company’s core brands, but were partially offset by the previously announced change in accounting policies around revenue recognition and the timing of related expenses as well as the transition of new packaging for the Company’s BC and Goody’s brands.

    Reported gross profit margin in the second quarter fiscal 2019 was 57.4%, compared to 55.8% for the second quarter of fiscal 2018 or 56.3% excluding adjustments related to the Fleet acquisition and integration in the prior year.  Sequentially, gross margin improved from 55.4% reported in first quarter fiscal 2019.  The quarter benefited from increasingly stabilized freight and warehouse costs and the divestiture of the Household Cleaning segment.  These improvements were partially offset by the expected BC and Goody’s packaging restage and the change in revenue recognition and the timing of related expenses.

    Reported net income for the second quarter of fiscal 2019 totaled $30.8 million versus the prior year comparable quarter’s net income of $30.7 million.  Diluted earnings per share were $0.59 for the second quarter of fiscal 2019 compared to $0.57 in the prior year comparable period. Non-GAAP adjusted net income for the second quarter of fiscal 2019 was $34.2 million, an increase over the prior year period’s adjusted net income of $32.5 million. Non-GAAP adjusted earnings per share were $0.65 per share for the second quarter of fiscal 2019 compared to $0.61 per share in the prior year comparable period.

    Adjustments to net income in the second quarter of fiscal 2019 and fiscal 2018 include integration, transition, purchase accounting, legal and various other costs associated with acquisitions and divestitures, and the related income tax effects of the adjustments.  Adjustments to net income in the second quarter of fiscal 2019 also include accelerated amortization of debt origination costs.

    First Half of Fiscal 2019 Ended September 30, 2018
    Reported revenues for the first six months of fiscal 2019 decreased 4.1% to $493.3 million compared to $514.6 million in the first six months of fiscal 2018. Revenues for the first six months of fiscal 2019 were driven by continued strong consumption levels across the Company’s legacy brands, offset by the divestiture of the non-core Household Cleaning segment in the second quarter of fiscal 2019.  Organic revenue increased 0.4% for the first six months as consumption gains were partially offset by changes in accounting policies around revenue recognition and the timing of related expenses, as well as timing the transition of new packaging for the Company’s BC and Goody’s brands.

    Reported gross profit margin in the first six months of fiscal 2019 was 56.4%, compared to 55.9% for the first six months of fiscal 2018 or 56.6% excluding adjustments related to the Fleet transition and integration in the prior year.  The gross profit margin was in-line with the same period in the previous year as the positive impact of the divestiture of the non-core Household Cleaning segment was partially offset by the change in accounting policies around revenue recognition and the timing of related expenses as well as higher freight and warehousing costs.

    Advertising and promotion expense for the first six months of fiscal 2019 was $74.2 million, or 15.0% of sales, compared to $76.1 million, or 14.8% of sales, in the prior year.  As expected, higher advertising and promotion expense as a percentage of sales was attributable to ongoing investments behind the Company’s long-term brand building strategy.

    Reported net income for the first six months of fiscal 2019 totaled $65.3 million versus the prior year comparable period net income of $64.5 million.  Diluted earnings per share were $1.24 for the first six months of fiscal 2019 compared to $1.20 per share in the prior year comparable period. Non-GAAP adjusted net income for the first six months of fiscal 2019 was $70.0 million, an increase over the prior year period’s adjusted net income of $68.0 million. Non-GAAP adjusted earnings per share were $1.33 per share for the first six months of fiscal 2019 compared to $1.27 per share in the first six months of fiscal 2018.

    Adjustments to net income in the first six months of fiscal 2019 and fiscal 2018 include integration, transition, purchase accounting, legal and various other costs associated with acquisitions and divestitures, and the related income tax effects of the adjustments.  Adjustments to net income in the first six months of fiscal 2019 also include accelerated amortization of debt origination costs.

    Free Cash Flow and Balance Sheet
    The Company's net cash provided by operating activities for the second fiscal quarter of 2019 was $39.3 million compared to $54.4 million during the same period a year earlier.  Non-GAAP adjusted free cash flow for the second fiscal quarter of 2019 was $44.1 million, compared to $54.8 million in the prior year comparable quarter.  Changes in cash flow were driven by the divestiture of the Household Cleaning segment as well as an increase in inventory related to the launch of new packaging for the Company’s BC and Goody’s brands.

    The Company's net debt position as of September 30, 2018 was approximately $1.9 billion.  At September 30, 2018 the Company's covenant-defined leverage ratio was approximately 5.2x.  The Company reduced debt by $100 million versus the first quarter fiscal 2019 through a combination of cash generation and approximately $50 million from Household Cleaning segment divestiture proceeds.

    Segment Review
    North American OTC Healthcare: Segment revenues totaled $216.0 million for the second quarter of fiscal 2019, compared to the prior year comparable quarter's revenues of $215.3 million. The second quarter fiscal 2019 result was favorably impacted by increased consumption among the majority of core OTC brands, but offset by the impacts of a change in accounting policies surrounding revenue recognition and the launch of new BC and Goody’s packaging.

    For the first six months of the current fiscal year, reported revenues for the North American OTC segment were $430.7 million compared to $431.1 million in the prior year comparable period.  The first six months of 2019 were favorably impacted by increased consumption among the majority of core OTC brands, but offset by the impacts of a change in accounting policies surrounding revenue recognition and the launch of new BC and Goody’s packaging.

    International OTC Healthcare: Segment fiscal second quarter 2019 revenues totaled $23.4 million, an increase of 11.7% versus $21.0 million reported in the prior year comparable period.  Higher revenues versus the prior year were driven by consumption growth and the normalization of differences in distributor orders and shipments experienced in first quarter.

    For the first six months of the current fiscal year, reported revenues for the International OTC Healthcare segment were $42.8 million, an increase of 2.3% over the prior year comparable period’s revenues of $41.9 million.

    Household Cleaning: As previously announced, the Company closed the sale of its Household Cleaning segment on July 2, 2018 and used net proceeds from the divestiture to pay down debt.  For the first quarter of fiscal 2019, the Household Cleaning segment generated $19.8 million in revenues with no reported revenue in the second quarter of 2019.

    Commentary and Outlook for Fiscal 2019
    Ron Lombardi, CEO, stated, “Our solid overall second quarter and first half of fiscal 2019 performance are the result of our successful long-term brand-building and portfolio evolution efforts.  In our second quarter, we delivered approximately 2% organic growth trends despite the temporary timing factors related to the change in revenue recognition and the BC & Goody’s restaged packaging.  In addition, freight and warehouse costs continue to improve to more normalized levels.  Meanwhile we used $100 million in the quarter from cash flow and the sale of Household Cleaning towards debt reduction.  This debt reduction demonstrates our ongoing commitment to disciplined capital allocation.”

    “We are reaffirming our fiscal 2019 outlook for revenue, profitability and cash flow.  Our consumer healthcare platform includes a strong and diverse portfolio of brands well positioned for continued long-term growth.  We remain focused on the execution of our three-pillar strategy of brand-building, maintaining a strong financial profile, and efficient capital allocation and look forward to continuing to use this approach to drive shareholder value over time,” he concluded.

       
      Fiscal 2019 Full-Year Outlook
    Revenue $985 to $995 million
    Organic Growth Percentage* 0.5% to 1.5%
    Adjusted E.P.S.* $2.84 to $2.92
    Adjusted Free Cash Flow* $205 million or more
       

    Fiscal Q2 Conference Call, Accompanying Slide Presentation and Replay
    The Company will host a conference call to review its second quarter results today, November 1, 2018 at 8:30 a.m. ET. The toll-free dial-in numbers are 844-233-9440 within North America and 574-990-1016 outside of North America. The conference ID number is 1375008. The Company provides 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 www.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 1375008.

    Non-GAAP and Other 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.

    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," “strategy,” "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 Company's expectations regarding future operating results including revenues, earnings per share and free cash flow, the Company's ability to continue to improve freight and warehousing costs, the Company’s ability to increase shareholder value and the Company’s ability to position itself for long-term success and growth.  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 the Company’s advertising and promotional and new product development initiatives, customer inventory management initiatives, general economic and business conditions, fluctuating foreign exchange rates, consumer trends, competitive pressures, and the ability of the Company’s third party manufacturers and logistics providers and suppliers to meet demand for its products and to reduce costs.  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, 2018 and other periodic reports filed with the Securities and Exchange Commission.

    About Prestige Consumer Healthcare Inc.
    The Company markets and distributes brand name over-the-counter healthcare products throughout the U.S. and Canada, Australia, and in certain other international markets. The Company’s brands include Monistat® and Summer’s Eve® women's health products, BC® and Goody's® pain relievers, Clear Eyes® eye care products, DenTek® specialty oral care products, Dramamine® motion sickness treatments, Fleet® enemas and glycerin suppositories, 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, 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.

    * See the “About Non-GAAP Financial Measures” section of this report for further presentation information.

                                                                               

             
    Prestige Consumer Healthcare Inc.
    Condensed Consolidated Statements of Income and Comprehensive Income
    (Unaudited)
             
        Three Months Ended
    September 30,
      Six Months Ended
    September 30,
    (In thousands, except per share data)   2018   2017   2018   2017
    Revenues                
    Net sales   $ 239,354     $ 257,930     $ 493,308     $ 514,417  
    Other revenues   3     96     29     182  
    Total revenues   239,357     258,026     493,337     514,599  
                     
    Cost of Sales                
    Cost of sales excluding depreciation   100,647     112,580     212,716     224,337  
    Cost of sales depreciation   1,238     1,348     2,526     2,688  
    Cost of sales   101,885     113,928     215,242     227,025  
    Gross profit   137,472     144,098     278,095     287,574  
                     
    Operating Expenses                
    Advertising and promotion   37,042     39,188     74,153     76,132  
    General and administrative   24,034     21,999     47,975     42,409  
    Depreciation and amortization   6,756     7,186     13,840     14,353  
    Gain on divestiture   (1,284 )       (1,284 )    
    Total operating expenses   66,548     68,373     134,684     132,894  
    Operating income   70,924     75,725     143,411     154,680  
                     
    Other (income) expense                
    Interest income   (33 )   (85 )   (133 )   (154 )
    Interest expense   27,103     26,921     53,143     53,331  
    Other expense (income), net   335     (432 )   422     (506 )
    Total other expense   27,405     26,404     53,432     52,671  
    Income before income taxes   43,519     49,321     89,979     102,009  
    Provision for income taxes   12,678     18,616     24,672     37,545  
    Net income   $ 30,841     $ 30,705     $ 65,307     $ 64,464  
                     
    Earnings per share:                
    Basic   $ 0.59     $ 0.58     $ 1.25     $ 1.21  
    Diluted   $ 0.59     $ 0.57     $ 1.24     $ 1.20  
                     
    Weighted average shares outstanding:                
    Basic   51,841     53,098     52,238     53,068  
    Diluted   52,153     53,539     52,545     53,524  
                     
    Comprehensive income, net of tax:                
    Currency translation adjustments   (2,145 )   2,716     (5,119 )   3,835  
    Unrecognized net gain on pension plans               1  
    Total other comprehensive (loss) income   (2,145 )   2,716     (5,119 )   3,836  
    Comprehensive income   $ 28,696     $ 33,421     $ 60,188     $ 68,300  
                                     


           
    Prestige Consumer Healthcare Inc.
    Condensed Consolidated Balance Sheets
    (Unaudited)
           
    (In thousands) September 30,
     2018
      March 31,
     2018
           
    Assets      
    Current assets      
    Cash and cash equivalents $ 36,910     $ 32,548  
    Accounts receivable, net of allowance of $14,433 and $12,734, respectively 153,849     140,881  
    Inventories 113,569     118,547  
    Deferred income tax assets     26  
    Prepaid expenses and other current assets 10,172     11,475  
    Total current assets 314,500     303,477  
           
    Property, plant and equipment, net 52,321     52,552  
    Goodwill 612,444     620,098  
    Intangible assets, net 2,715,070     2,780,916  
    Other long-term assets 3,360     3,569  
    Total Assets $ 3,697,695     $ 3,760,612  
           
    Liabilities and Stockholders' Equity      
    Current liabilities      
    Accounts payable $ 66,251     $ 61,390  
    Accrued interest payable 9,665     9,708  
    Other accrued liabilities 70,057     52,101  
    Total current liabilities 145,973     123,199  
           
    Long-term debt, net 1,895,835     1,992,952  
    Deferred income tax liabilities 440,853     442,518  
    Other long-term liabilities 21,796     23,333  
    Total Liabilities 2,504,457     2,582,002  
           
           
    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 - 53,609 shares at September 30, 2018 and 53,396 shares at March 31, 2018 536     534  
    Additional paid-in capital 474,137     468,783  
    Treasury stock, at cost - 1,871 shares at September 30, 2018 and 353 shares at March 31, 2018 (59,928 )   (7,669 )
    Accumulated other comprehensive loss, net of tax (24,434 )   (19,315 )
    Retained earnings 802,927     736,277  
    Total Stockholders' Equity 1,193,238     1,178,610  
    Total Liabilities and Stockholders' Equity $ 3,697,695     $ 3,760,612  
                   


       
    Prestige Consumer Healthcare Inc.
    Condensed Consolidated Statements of Cash Flows
    (Unaudited)
       
      Six Months Ended September 30,
    (In thousands) 2018   2017
    Operating Activities      
    Net income $ 65,307     $ 64,464  
    Adjustments to reconcile net income to net cash provided by operating activities:      
    Depreciation and amortization 16,366     17,041  
    Gain on divestiture (1,284 )    
    Loss on disposal of property and equipment 37     1,461  
    Deferred income taxes 339     16,321  
    Amortization of debt origination costs 3,021     3,494  
    Excess tax benefits from share-based awards     470  
    Stock-based compensation costs 4,328     4,726  
    Other 247      
    Changes in operating assets and liabilities:      
    Accounts receivable (7,718 )   (9,345 )
    Inventories (4,145 )   (3,409 )
    Prepaid expenses and other current assets 1,302     17,123  
    Accounts payable 4,187     8,008  
    Accrued liabilities 14,339     (11,869 )
    Other (1,219 )   55  
    Net cash provided by operating activities 95,107     108,540  
           
    Investing Activities      
    Purchases of property, plant and equipment (5,074 )   (4,785 )
    Acquisition of Fleet escrow receipt     970  
    Proceeds from divestiture 65,912      
    Net cash provided by (used in) investing activities 60,838     (3,815 )
           
    Financing Activities      
    Term loan repayments (100,000 )   (105,000 )
    Borrowings under revolving credit agreement 30,000      
    Repayments under revolving credit agreement (30,000 )    
    Proceeds from exercise of stock options 1,028     1,466  
    Fair value of shares surrendered as payment of tax withholding (2,281 )   (1,075 )
    Repurchase of common stock (49,978 )    
    Net cash used in financing activities (151,231 )   (104,609 )
           
    Effects of exchange rate changes on cash and cash equivalents (352 )   1,006  
    Increase in cash and cash equivalents 4,362     1,122  
    Cash and cash equivalents - beginning of period 32,548     41,855  
    Cash and cash equivalents - end of period $ 36,910     $ 42,977  
           
    Interest paid $ 49,147     $ 49,404  
    Income taxes paid $ 2,444     $ 9,037  
                   


                   
    Prestige Consumer Healthcare Inc.
    Condensed Consolidated Statements of Income
    Business Segments
    (Unaudited)
                   
      Three Months Ended September 30, 2018
    (In thousands) North American
    OTC Healthcare
      International
    OTC Healthcare
      Household
    Cleaning
      Consolidated
    Total segment revenues* $ 215,950     $ 23,407     $     $ 239,357  
    Cost of sales 92,007     9,878         101,885  
    Gross profit 123,943     13,529         137,472  
    Advertising and promotion 33,325     3,717         37,042  
    Contribution margin $ 90,618     $ 9,812     $     100,430  
    Other operating expenses             29,506  
    Operating income             70,924  
    Other expense             27,405  
    Income before income taxes             43,519  
    Provision for income taxes             12,678  
    Net income             $ 30,841  
                       
    * Intersegment revenues of $1.6 million were eliminated from the North American OTC Healthcare segment.
                       


       
      Six Months Ended September 30, 2018
    (In thousands) North American
    OTC Healthcare
      International
    OTC Healthcare
      Household
    Cleaning
      Consolidated
    Total segment revenues* $ 430,725     $ 42,801     $ 19,811     $ 493,337  
    Cost of sales 181,160     17,494     16,588     215,242  
    Gross profit 249,565     25,307     3,223     278,095  
    Advertising and promotion 66,583     7,140     430     74,153  
    Contribution margin $ 182,982     $ 18,167     $ 2,793     203,942  
    Other operating expenses             60,531  
    Operating income             143,411  
    Other expense             53,432  
    Income before income taxes             89,979  
    Provision for income taxes             24,672  
    Net income             $ 65,307  
                       
    * Intersegment revenues of $4.3 million were eliminated from the North American OTC Healthcare segment.
                       


                   
      Three Months Ended September 30, 2017
    (In thousands) North American
    OTC Healthcare
      International
    OTC Healthcare
      Household
    Cleaning
      Consolidated
    Total segment revenues* $ 215,302     $ 20,957     $ 21,767     $ 258,026  
    Cost of sales 87,184     9,296     17,448     113,928  
    Gross profit 128,118     11,661     4,319     144,098  
    Advertising and promotion 35,064     3,593     531     39,188  
    Contribution margin $ 93,054     $ 8,068     $ 3,788     104,910  
    Other operating expenses             29,185  
    Operating income             75,725  
    Other expense             26,404  
    Income before income taxes             49,321  
    Provision for income taxes             18,616  
    Net income             $ 30,705  
                       
    * Intersegment revenues of $2.3 million were eliminated from the North American OTC Healthcare segment.
                       


       
      Six Months Ended September 30, 2017
    (In thousands) North American
    OTC Healthcare
      International
    OTC Healthcare
      Household
    Cleaning
      Consolidated
    Total segment revenues* $ 431,117     $ 41,855     $ 41,627     $ 514,599  
    Cost of sales 173,685     19,246     34,094     227,025  
    Gross profit 257,432     22,609     7,533     287,574  
    Advertising and promotion 67,872     7,283     977     76,132  
    Contribution margin $ 189,560     $ 15,326     $ 6,556     211,442  
    Other operating expenses             56,762  
    Operating income             154,680  
    Other expense             52,671  
    Income before income taxes             102,009  
    Provision for income taxes             37,545  
    Net income             $ 64,464  
                       
    * Intersegment revenues of $3.7 million were eliminated from the North American OTC Healthcare segment.
                       

    About Non-GAAP Financial Measures

    In addition to financial results reported in accordance with GAAP, we disclose certain Non-GAAP financial measures ("NGFMs"), including, but not limited to, Non-GAAP Organic Revenues, Non-GAAP Organic Revenue Growth Percentage, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Gross Margin Percentage, Non-GAAP Adjusted Advertising and Promotion Expense, Non-GAAP Adjusted Advertising and Promotion Expense Percentage, Non-GAAP Adjusted General and Administrative Expense,  Non-GAAP Adjusted General and Administrative Expense Percentage, Non-GAAP EBITDA, Non-GAAP EBITDA Margin, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow, Non-GAAP Adjusted Free Cash Flow and Net Debt.  We use these NGFMs internally, along with GAAP information, in evaluating our operating performance and in making financial and operational decisions.  We believe that the presentation of these NGFMs provides investors with greater transparency, and provides a more complete understanding of our business than could be obtained absent these disclosures, because the supplemental data relating to our financial condition and results of operations provides additional ways to view our operation when considered with both our GAAP results and the reconciliations below.  In addition, we believe that the presentation of each of these NGFMs is useful to investors for period-to-period comparisons of results in assessing shareholder value, and we use these NGFMs internally to evaluate the performance of our personnel and also to evaluate our operating performance and compare our performance to that of our competitors.

    These NGFMs are not in accordance with GAAP, should not be considered as a measure of profitability or liquidity, and may not be directly comparable to similarly titled NGFMs reported by other companies.  These NGFMs have limitations and they should not be considered in isolation from or as an alternative to their most closely related GAAP measures reconciled below.  Investors should not rely on any single financial measure when evaluating our business.  We recommend investors review the GAAP financial measures included in this earnings release.  When viewed in conjunction with our GAAP results and the reconciliations below, we believe these NGFMs provide greater transparency and a more complete understanding of factors affecting our business than GAAP measures alone.

    NGFMs Defined

    We define our NGFMs presented herein as follows:

    • Non-GAAP Organic Revenues:  GAAP Total Revenues excluding revenues associated with divestiture and allocated cost that remain after divestiture in the periods presented.
    • Non-GAAP Organic Revenue Growth Percentage:  Calculated as the change in Non-GAAP Organic Revenues from prior year divided by prior year Non-GAAP Organic Revenues.
    • Non-GAAP Adjusted Gross Margin: GAAP Gross Profit minus certain integration, transition, acquisition and divestiture-related costs.
    • Non-GAAP Adjusted Gross Margin Percentage: Calculated as Non-GAAP Adjusted Gross Margin divided by GAAP Total Revenues.
    • Non-GAAP Adjusted Advertising and Promotion Expense: GAAP Advertising and Promotion expenses minus certain integration, transition, and acquisition-related costs.
    • Non-GAAP Adjusted Advertising and Promotion Expense Percentage: Calculated as Non-GAAP Adjusted Advertising and Promotion expense divided by GAAP Total Revenues.
    • Non-GAAP Adjusted General and Administrative Expense: GAAP General and Administrative expenses minus certain integration, transition, acquisition and divestiture-related costs.
    • Non-GAAP Adjusted General and Administrative Expense Percentage: Calculated as Non-GAAP Adjusted General and Administrative expense divided by GAAP Total Revenues.
    • Non-GAAP EBITDA: GAAP Net Income (Loss) less net interest expense (income), income taxes provision (benefit), and depreciation and amortization.
    • Non-GAAP EBITDA Margin: Calculated as Non-GAAP EBITDA divided by GAAP Total Revenues.
    • Non-GAAP Adjusted EBITDA: Non-GAAP EBITDA less certain integration, transition, acquisition and divestiture-related costs and gain on divestiture.
    • Non-GAAP Adjusted EBITDA Margin: Calculated as Non-GAAP Adjusted EBITDA divided by GAAP Total Revenues.
    • Non-GAAP Adjusted Net Income: GAAP Net Income (Loss) before certain integration, transition, acquisition and divestiture-related costs, gain on divestiture, accelerated amortization of debt origination costs, applicable tax impact associated with these items and normalized tax rate adjustment.
    • Non-GAAP Adjusted EPS: Calculated as Non-GAAP Adjusted Net Income, divided by the weighted average number of common and potential common shares outstanding during the period.
    • Non-GAAP Free Cash Flow: GAAP Net cash provided by operating activities less cash paid for capital expenditures.
    • Non-GAAP Adjusted Free Cash Flow: Non-GAAP Free Cash Flow plus cash payments made for integration and transition costs associated with acquisition and divestiture.
    • Net Debt: Calculated as total principal amount of debt outstanding ($1,913,000 at September 30, 2018) less cash and cash equivalents ($36,910 at September 30, 2018).  Amounts in thousands.

    The following tables set forth the reconciliations of each of our NGFMs to their most directly comparable financial measures presented in accordance with GAAP.

    Reconciliation of GAAP Total Revenues to Non-GAAP Organic Revenues and related Non-GAAP Organic Revenue Growth percentage:

           
      Three Months Ended
    September 30,
      Six Months Ended
    September 30,
      2018
      2017   2018   2017
    (In thousands)              
    GAAP Total Revenues $ 239,357     $ 258,026     $ 493,337     $ 514,599  
    Revenue Growth   (7.2 )%       (4.1 )%    
    Adjustments:              
    Revenues associated with divestiture       (21,767 )   (19,811 )   (41,627 )
    Allocated costs that remain after divestiture       (700 )       (1,400 )
    Total adjustments       (22,467 )   (19,811 )   (43,027 )
    Non-GAAP Organic Revenues $ 239,357     $ 235,559     $ 473,526     $ 471,572  
    Non-GAAP Organic Revenue Growth   1.6 %       0.4 %    
                         

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

           
      Three Months Ended
    September 30,
      Six Months Ended
    September 30,
      2018   2017   2018   2017
    (In thousands)              
    GAAP Total Revenues $ 239,357     $ 258,026     $ 493,337     $ 514,599  
                   
    GAAP Gross Profit $ 137,472     $ 144,098     $ 278,095     $ 287,574  
    GAAP Gross Profit as a Percentage of GAAP Total Revenue 57.4 %   55.8 %   56.4 %   55.9 %
    Adjustments:              
    Integration, transition and other costs associated with divestiture and acquisition (1)     1,143     170     3,719  
    Total adjustments     1,143     170     3,719  
    Non-GAAP Adjusted Gross Margin $ 137,472     $ 145,241     $ 278,265     $ 291,293  
    Non-GAAP Adjusted Gross Margin as a Percentage of GAAP Total Revenues 57.4 %   56.3 %   56.4 %   56.6 %
                           
    (1) Items related to divestiture and acquisition represent costs related to divesting of assets sold and integrating recently acquired business, including (but not limited to) costs to exit or convert contractual obligations, severance, information system conversion and consulting costs.
                           

    Reconciliation of GAAP Advertising and Promotion Expense and related GAAP Advertising and Promotion Expense percentage to Non-GAAP Adjusted Advertising and Promotion Expense and related Non-GAAP Adjusted Advertising and Promotion Expense percentage:

           
      Three Months Ended
    September 30,
      Six Months Ended
    September 30,
      2018   2017   2018   2017
    (In thousands)              
    GAAP Advertising and Promotion Expense $ 37,042     $ 39,188     $ 74,153     $ 76,132  
    GAAP Advertising and Promotion Expense as a Percentage of GAAP Total Revenue 15.5 %   15.2 %   15.0 %   14.8 %
    Adjustments:              
    Integration, transition and other costs associated with acquisition(1)     (231 )       (192 )
    Total adjustments     (231 )       (192 )
    Non-GAAP Adjusted Advertising and Promotion Expense $ 37,042     $ 39,419     $ 74,153     $ 76,324  
    Non-GAAP Adjusted Advertising and Promotion Expense as a Percentage of GAAP Total Revenues 15.5 %   15.3 %   15.0 %   14.8 %
                           
    (1) Acquisition related items represent costs related to integrating the advertising agencies of the recently acquired business.
                           

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

           
      Three Months Ended
    September 30,
      Six Months Ended
    September 30,
      2018   2017   2018   2017
    (In thousands)              
    GAAP General and Administrative Expense(1) $ 24,034     $ 21,999     $ 47,975     $ 42,409  
    GAAP General and Administrative Expense as a Percentage of GAAP Total Revenue 10.0 %   8.5 %   9.7 %   8.2 %
                   
    Adjustments:              
    Integration, transition and other costs associated with divestiture and acquisition (2) 2,850     888     4,272     1,472  
    Total adjustments 2,850     888     4,272     1,472  
    Non-GAAP Adjusted General and Administrative Expense $ 21,184     $ 21,111     $ 43,703     $ 40,937  
    Non-GAAP Adjusted General and Administrative Expense Percentage as a Percentage of GAAP Total Revenues 8.9 %   8.2 %   8.9 %   8.0 %
                           
    (1) Certain immaterial amounts have been reclassified out of general and administrative expense into other expense for 2017.
    (2) Items related to divestiture and acquisition represent costs related to divesting of assets sold and integrating recently acquired business including (but not limited to), costs to exit or convert contractual obligations, severance, information system conversion and consulting costs; and certain costs related to the consummation of the acquisition and divestiture processes such as insurance costs, legal and other acquisition related professional fees.
                           

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

           
      Three Months Ended
    September 30,
      Six Months Ended
    September 30,
      2018   2017   2018   2017
    (In thousands)              
    GAAP Net Income $ 30,841     $ 30,705     $ 65,307     $ 64,464  
    Interest expense, net 27,070     26,836     53,010     53,177  
    Provision for income taxes 12,678     18,616     24,672     37,545  
    Depreciation and amortization 7,994     8,534     16,366     17,041  
    Non-GAAP EBITDA 78,583     84,691     159,355     172,227  
    Non-GAAP EBITDA Margin 32.8 %   32.8 %   32.3 %   33.5 %
    Adjustments:              
    Integration, transition and other costs associated with divestiture and acquisition in Cost of Goods Sold (1)     1,143     170     3,719  
    Integration, transition and other costs associated with acquisition in Advertising and Promotion Expense(1)     (231 )       (192 )
    Integration, transition and other costs associated with divestiture and acquisition in General and Administrative Expense (1) 2,850     888     4,272     1,472  
    Gain on divestiture (1,284 )       (1,284 )    
    Total adjustments 1,566     1,800     3,158     4,999  
    Non-GAAP Adjusted EBITDA $ 80,149     $ 86,491     $ 162,513     $ 177,226  
    Non-GAAP Adjusted EBITDA Margin 33.5 %   33.5 %   32.9 %   34.4 %
                           
    (1) Items related to divestiture and acquisition represent costs related to divesting of assets sold and integrating recently acquired business including (but not limited to), costs to exit or convert contractual obligations, severance, information system conversion and consulting costs; and certain costs related to the consummation of the acquisition and divestiture processes such as insurance costs, legal and other acquisition related professional fees.
                           

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

           
      Three Months Ended
    September 30,
      Six Months Ended
    September 30,
      2018 2018
    Adjusted EPS
      2017 2017
    Adjusted EPS
      2018 2018
    Adjusted EPS
      2017 2017
    Adjusted EPS
    (In thousands, except per share data)                      
    GAAP Net Income $ 30,841   $ 0.59     $ 30,705   $ 0.57     $ 65,307   $ 1.24     $ 64,464   $ 1.20  
    Adjustments:                      
    Integration, transition and other costs associated with divestiture and acquisition in Cost of Goods Sold (1)       1,143   0.02     170       3,719   0.07  
    Integration, transition and other costs associated with acquisition in Advertising and Promotion Expense(1)       (231 )           (192 )  
    Integration, transition and other costs associated with divestiture and acquisition in General and Administrative Expense (1) 2,850   0.05     888   0.02     4,272   0.08     1,472   0.03  
    Gain on divestiture (1,284 ) (0.02 )         (1,284 ) (0.02 )      
    Accelerated amortization of debt origination costs 706   0.01           706   0.01        
    Tax impact of adjustments (2) 824   0.02     (658 ) (0.01 )   420   0.01     (1,825 ) (0.03 )
    Normalized tax rate adjustment (3) 222       614   0.01     415   0.01     312    
    Total adjustments 3,318   0.06     1,756   0.04     4,699   0.09     3,486   0.07  
    Non-GAAP Adjusted Net Income and Adjusted EPS $ 34,159   $ 0.65     $ 32,461   $ 0.61     $ 70,006   $ 1.33     $ 67,950   $ 1.27  
                                                           
    (1) Items related to divestiture and acquisition represent costs related to divesting of assets sold and integrating recently acquired business including (but not limited to), costs to exit or convert contractual obligations, severance, information system conversion and consulting costs; and certain costs related to the consummation of the acquisition and divestiture processes such as insurance costs, legal and other acquisition related professional fees.
    (2) The income tax adjustments are determined using applicable rates in the taxing jurisdictions in which the above adjustments relate and includes both current and deferred income tax expense (benefit) based on the specific nature of the specific Non-GAAP performance measure.
    (3) Income tax adjustment to adjust for discrete income tax items.
                                                           

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

           
      Three Months Ended
    September 30,
      Six Months Ended
    September 30,
      2018   2017   2018   2017
    (In thousands)              
    GAAP Net Income $ 30,841     $ 30,705     $ 65,307     $ 64,464  
    Adjustments:              
    Adjustments to reconcile net income to net cash provided by operating activities as shown in the Statement of Cash Flows 5,349     21,530     23,054     43,513  
    Changes in operating assets and liabilities as shown in the Statement of Cash Flows 3,065     2,184     6,746     563  
    Total adjustments 8,414     23,714     29,800     44,076  
    GAAP Net cash provided by operating activities 39,255     54,419     95,107     108,540  
    Purchases of property and equipment (2,605 )   (2,231 )   (5,074 )   (4,785 )
    Non-GAAP Free Cash Flow 36,650     52,188     90,033     103,755  
    Integration, transition and other payments associated with divestiture and acquisition (1) 7,429     2,654     7,618     7,602  
    Non-GAAP Adjusted Free Cash Flow $ 44,079     $ 54,842     $ 97,651     $ 111,357  
                                   
    (1) Payments related to divestiture and acquisition represent costs related to divesting of assets sold and integrating recently acquired business including (but not limited to), costs to exit or convert contractual obligations, severance, information system conversion and consulting costs; and certain costs related to the consummation of the acquisition and divestiture processes such as insurance costs, legal and other acquisition related professional fees.
                                   

    Outlook for Fiscal Year 2019:

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

       
      2019 Projected EPS
      Low   High
    Projected FY'19 GAAP EPS $ 2.75     $ 2.83  
    Adjustments:      
    Sale of Household Cleaning business (1) 0.07     0.07  
    Tax adjustment 0.02     0.02  
    Total Adjustments 0.09     0.09  
    Projected Non-GAAP Adjusted EPS $ 2.84     $ 2.92  
                   
    (1) Represents costs related to the sale of our Household Cleaning business including (but not limited to) costs to exit or convert contractual obligations, severance, consulting costs and certain costs related to the consummation of the divestiture process such as legal and other divestiture related professional fees, net of taxes, partly offset by the gain on sale of our Household Cleaning business.
                   

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

       
      2019
    Projected
    Free Cash
    Flow
    (In millions)  
    Projected FY'19 GAAP Net cash provided by operating activities $ 195  
    Additions to property and equipment for cash (13 )
    Projected Non-GAAP Free Cash Flow 182  
    Payments associated with divestiture(1) 23  
    Projected Non-GAAP Adjusted Free Cash Flow $ 205  
           
    (1) Divestiture related items represent costs related to divesting of business sold including (but not limited to) taxes, costs to exit or convert contractual obligations, severance, consulting costs and certain costs related to the consummation of the divestiture process such as legal and other divestiture related professional fees.
           


    Prestige Brands Holdings, Inc.
    Phil Terpolilli, 914-524-6819
    irinquiries@prestigebrands.com

    New Prestige Consumer Healthcare Logo.jpg

    Prestige Consumer Healthcare 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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