News Releases
Net Income of $10.6 Million Up 14% on Total Revenues of $80.l Million
IRVINGTON, N.Y.--(BUSINESS WIRE)--Feb. 5, 2007--Prestige Brands Holdings, Inc. (NYSE-PBH), a consumer products company with a diversified portfolio of well-recognized brands, today announced results for the third fiscal quarter and nine month period ended December 31, 2006. Highlights of the quarter include:
- Net income of $10.6 million, or $0.21 per diluted share, up 14% over the prior year comparable period
- Total revenues of $80.1 million, slightly higher than the prior year comparable period
- Free cash flow of $12.4 million was 12% higher than the prior year comparable period
- Term loan debt reduced by $18.5 million in the third fiscal quarter
Total revenues for the third quarter ended December 31, 2006 were $80.1 million, slightly higher than total revenues of $79.9 million in the prior year comparable period. Excluding the impact of the acquisitions of Chore Boy(R), Dental Concepts and Wartner(R), organic revenue declined by 6%. Chore Boy and Dental Concepts were acquired in October and November 2005, respectively; the Wartner(R) brand was acquired in September, 2006.
Operating income for the third quarter ended December 31, 2006 was $24.5 million, or 1% below the operating income of $24.7 million in the third quarter of fiscal 2006. The decline in operating income period to period resulted primarily from increases in advertising and promotion spending behind key brands.
Net income for the quarter grew 14% to $10.6 million or $0.21 per diluted share over net income of $9.3 million or $0.19 per diluted share for the comparable prior year period. Net income includes a $1.7 million tax benefit resulting from a reduction in the deferred income tax rate from 39.1% to 38.6% as a result of the implementation of certain tax planning strategies.
Q3 Results by Segment
The Company conducts operations through three principal business segments: Over-the-Counter Drug (OTC), Household Products, and Personal Care products.
OTC Drug
Revenues of the over-the-counter drug products segment for the third quarter ended December 31, 2006 were $45.6 million, 8% higher than the prior year comparable period net revenues of $42.1 million. Increases in this segment resulted from sales gains in several key brands including The Doctor's(R), Clear eyes(R), Little Remedies(R), Dermoplast(R) and New Skin(R). These gains were partially offset by sales declines in the Chloraseptic(R) and Compound W(R) brands.
Household Products
Revenues for the household products segment for the third quarter ended December 31, 2006 were $28.7 million, 7% less than the prior year comparable period net revenues of $30.8 million. Comet(R) and Spic and Span(R), the two core brands in this segment, each recorded declines, while Chore Boy(R) experienced increased sales.
The Comet and Spic and Span declines were primarily the result of comparisons against unusually strong year ago shipments, which included pipeline shipments supporting new distribution and significant promotional sales to one dollar store customer. However, both brands continued to post strong consumer consumption gains during the current quarter.
Personal Care
Revenues for the personal care segment for the third quarter ended December 31, 2006 were $5.8 million, 17% less than the prior year comparable period net revenues of $7.0 million. The decline in revenues was generally in line with the Company's expectations.
Free Cash Flow
Free cash flow is a "non GAAP financial measure" as that term is defined by the Securities and Exchange Commission in Regulation G. Free cash flow is presented in this news release because management believes that it is a commonly used measure of liquidity, and is indicative of cash available for debt repayment and acquisitions. The Company defines "free cash flow" as operating cash flow less capital expenditures.
The Company's free cash flow for the quarter ended December 31, 2006 was $12.4 million, composed of operating cash flows of $12.5 million, less capital expenditures of $0.1 million. Free cash flow for the nine month period ended December 31, 2006 was $54.9 million, composed of operating cash flows of $55.3 million, less capital expenditures of $0.4 million. The Company's free cash flow in 2006 is higher than reported net income as a result of the amortization of intangibles, changes in the components of working capital and the relatively low capital expenditures.
During the third fiscal quarter, the Company used free cash flow to reduce its term loan debt by $18.5 million, bringing debt reduction during the nine month period ended December 31, 2006 to a total of $27.4 million. The Company's debt has been reduced to $471.2 million at December 31, 2006, from $498.6 million at March 31, 2006.
Year-To-Date Results
For the nine month period ended December 31, 2006, total revenues of $240.6 million were 11% higher than the prior period results of $216.7 million. Excluding the effects of acquisitions, year-to-date organic sales were up 3%. For the same period, operating income was up 13% largely as a result of the increase in sales, and lower advertising and promotion spending, partially offset by the increase in general and administrative expenses. Net income for the nine month period ended December 31, 2006 was $27.7 million, an increase of 22% over the comparable period last year.
Outlook
The Company expects its full year organic revenue growth will be in line with its previously stated long-term growth range of 3-4%. Total revenues will increase at a greater rate due to acquisitions. Net income is expected to grow less rapidly than total revenue growth.
Conference Call
The Company will host a conference call to review its third quarter and nine month results on Tuesday, February 6th at 8:30am EST. The toll free number is 866-770-7125 within North America and 617-213-8066 from outside North America. The conference pass code is "prestige". Telephonic replays will be available for two weeks following 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 12780289.
About Prestige Brands Holdings, Inc.
Located in Irvington, New York, Prestige Brands Holdings, Inc. is a marketer and distributor of brand name over-the-counter products, personal care and household products sold throughout the U.S. and Canada. Key brands include Compound W(R) wart remover, Chloraseptic(R) sore throat treatment, New-Skin(R) liquid bandage, Clear eyes(R) and Murine(R) eye care products, Little Remedies(R) pediatric over-the-counter products, Cutex(R) nail polish remover, Comet(R) and Spic and Span(R) household products, and other well-known brands.
Forward Looking Statements
Note: This news release contains "forward-looking statements" within the meaning of the federal securities laws and is intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" generally can be identified by the use of forward-looking terminology such as "assumptions," "target," "guidance," "outlook," "plans," "projection," "may," "will," "would," "expect," "intend," "estimate," "anticipate," "believe, "potential," or "continue" (or the negative or other derivatives of each of these terms) or similar terminology. The "forward-looking statements" include, without limitation, statements regarding the outlook for Prestige Brands Holdings' market and the demand for its products, earnings per share, future cash flows from operations, future revenues and margin requirement and expansion, the success of new product introductions, growth in costs and expenses, and the impact of acquisitions, divestitures, restructurings and other unusual items, including Prestige Brands Holdings' ability to integrate and obtain the anticipated results and synergies from its acquisitions. These projections and statements are based on management's estimates and assumptions with respect to future events and financial performance and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results could differ materially from those projected as a result of certain factors. A discussion of factors that could cause results to vary is included in the Company's Annual Report on Form 10-K and other periodic and other reports filed with the Securities and Exchange Commission.
Prestige Brands Holdings, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Nine Months
Ended December 31 Ended December 31
------------------ -------------------
(In thousands, except per
share data) 2006 2005 2006 2005
--------- -------- --------- ---------
Revenues
Net sales $ 79,564 $79,829 $239,164 $216,577
Other revenues 560 27 1,434 77
--------- -------- --------- ---------
Total revenues 80,124 79,856 240,598 216,654
--------- -------- --------- ---------
Cost of Sales
Costs of sales 36,766 38,726 114,350 103,224
--------- -------- --------- ---------
Gross profit 43,358 41,130 126,248 113,430
--------- -------- --------- ---------
Operating Expenses
Advertising and promotion 8,952 7,385 25,809 26,307
General and administrative 7,068 6,159 20,761 15,182
Depreciation 177 520 616 1,495
Amortization of intangible
assets 2,627 2,314 7,013 6,610
--------- -------- --------- ---------
Total operating expenses 18,824 16,378 54,199 49,594
--------- -------- --------- ---------
Operating income 24,534 24,752 72,049 63,836
--------- -------- --------- ---------
Other income (expense)
Interest income 199 144 787 451
Interest expense (10,355) (9,670) (30,478) (27,158)
--------- -------- --------- ---------
Total other income (expense) (10,156) (9,526) (29,691) (26,707)
--------- -------- --------- ---------
Income before provision for
income taxes 14,378 15,226 42,358 37,129
Provision for income taxes 3,735 5,881 14,675 14,481
--------- -------- --------- ---------
Net income $ 10,643 $ 9,345 $ 27,683 $ 22,648
========= ======== ========= =========
Basic earnings per share $ 0.21 $ 0.19 $ 0.56 $ 0.46
========= ======== ========= =========
Diluted earnings per share $ 0.21 $ 0.19 $ 0.55 $ 0.45
========= ======== ========= =========
Weighted average shares outstanding:
Basic 49,535 48,929 49,425 48,874
========= ======== ========= =========
Diluted 50,024 50,010 50,016 50,007
========= ======== ========= =========
Prestige Brands Holdings, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands) December 31, March 31,
2006 2006
------------ ------------
Assets
Current assets
Cash and cash equivalents $ 4,802 $ 8,200
Accounts receivable 35,230 40,042
Inventories 31,780 33,841
Deferred income tax assets 2,522 3,227
Prepaid expenses and other current assets 1,466 701
------------ ------------
Total current assets 75,800 86,011
Property and equipment 1,453 1,653
Goodwill 303,928 297,935
Intangible assets 659,784 637,197
Other long-term assets 11,200 15,849
------------ ------------
Total Assets $1,052,165 $1,038,645
============ ============
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 20,500 $ 18,065
Accrued interest payable 4,872 7,563
Income taxes payable 211 1,795
Other accrued liabilities 10,167 4,582
Current portion of long-term debt 3,550 3,730
------------ ------------
Total current liabilities 39,300 35,735
Long-term debt 467,688 494,900
Other accrued liabilities 2,801 --
Deferred income tax liabilities 105,490 98,603
------------ ------------
Total Liabilities 615,279 629,238
------------ ------------
Stockholders' Equity
Preferred stock - $0.01 par value
Authorized - 5,000 shares
Issued and outstanding - None -- --
Common stock - $0.01 par value
Authorized - 250,000 shares
Issued - 50,060 shares at December 31,
2006 and 50,056 shares at March 31, 2006 501 501
Additional paid-in capital 379,009 378,570
Treasury stock, at cost - 55 shares at
December 31, 2006 and 18 shares at March
31, 2006 (40) (30)
Accumulated other comprehensive income 476 1,109
Retained earnings 56,940 29,257
------------ ------------
Total stockholders' equity 436,886 409,407
------------ ------------
Total Liabilities and Stockholders' Equity $1,052,165 $1,038,645
============ ============
Prestige Brands Holdings, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
December 31
-------------------
(In thousands) 2006 2005
--------- ---------
Operating Activities
Net income $ 27,683 $ 22,648
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 7,629 8,105
Deferred income taxes 7,686 11,543
Amortization of deferred financing costs 2,422 1,727
Stock-based compensation 439 230
Changes in operating assets and liabilities
Accounts receivable 4,812 2,681
Inventories 2,707 (6,997)
Prepaid expenses and other current assets (765) 271
Accounts payable 1,366 (3,549)
Income taxes payable (1,584) (2,135)
Accrued liabilities 2,894 1,312
--------- ---------
Net cash provided by operating activities 55,289 35,836
--------- ---------
Investing Activities
Purchases of equipment (429) (452)
Purchase of intangibles -- (22,623)
Purchase of business (30,856) (30,555)
--------- ---------
Net cash used for investing activities (31,285) (53,630)
--------- ---------
Financing Activities
Proceeds from the issuance of notes -- 30,000
Repayment of long-term debt (27,392) (7,797)
Payment of deferred financing costs -- (13)
Purchase of common stock for treasury (10) (21)
Additional costs associated with initial public
offering -- (63)
--------- ---------
Net cash provided by (used for) financing
activities (27,402) 22,106
--------- ---------
Increase (decrease) in cash (3,398) 4,312
Cash - beginning of period 8,200 5,334
--------- ---------
Cash - end of period $ 4,802 $ 9,646
========= =========
Supplemental Cash Flow Information
Fair value of assets acquired $ 34,710 $ 33,909
Fair value of liabilities assumed (3,854) (3,354)
--------- ---------
Cash paid to purchase business $ 30,856 $ 30,555
========= =========
Interest paid $ 30,749 $ 28,206
========= =========
Income taxes paid $ 8,790 $ 1,335
========= =========
Prestige Brands Holdings, Inc.
Statements of Segment Operations
(Unaudited)
Three Months Ended December 31, 2006
-------------------------------------------
Over-the-
Counter Household Personal
Drug Cleaning Care Consolidated
----------- --------- -------- ------------
(In thousands)
Net sales $ 45,574 $ 28,155 $ 5,835 $ 79,564
Other revenues -- 560 -- 560
----------- --------- -------- ------------
Total revenues 45,574 28,715 5,835 80,124
Cost of sales 15,800 17,787 3,179 36,766
----------- --------- -------- ------------
Gross profit 29,774 10,928 2,656 43,358
Advertising and promotion 7,089 1,595 268 8,952
----------- --------- -------- ------------
Contribution margin $ 22,685 $ 9,333 $ 2,388 34,406
=========== ========= ========
Other operating expenses 9,872
------------
Operating income 24,534
Other (income) expense 10,156
Provision for income taxes 3,735
------------
Net income $ 10,643
============
Nine Months Ended December 31, 2006
-------------------------------------------
Over-the-
Counter Household Personal
Drug Cleaning Care Consolidated
----------- --------- -------- ------------
(In thousands)
Net sales $ 131,427 $ 88,625 $19,112 $ 239,164
Other revenues -- 1,434 -- 1,434
----------- --------- -------- ------------
Total revenues 131,427 90,059 19,112 240,598
Cost of sales 48,198 54,882 11,270 114,350
----------- --------- -------- ------------
Gross profit 83,229 35,177 7,842 126,248
Advertising and promotion 19,572 5,305 932 25,809
----------- --------- -------- ------------
Contribution margin $ 63,657 $ 29,872 $ 6,910 100,439
=========== ========= ========
Other operating expenses 28,390
------------
Operating income 72,049
Other (income) expense 29,691
Provision for income taxes 14,675
------------
Net income $ 27,683
============
Prestige Brands Holdings, Inc.
Statements of Segment Operations
(Unaudited)
Three Months Ended December 31, 2005
-------------------------------------------
Over-the-
Counter Household Personal
Drug Cleaning Care Consolidated
----------- --------- -------- ------------
(In thousands)
Net sales $ 42,051 $ 30,771 $ 7,007 $ 79,829
Other revenues -- 27 -- 27
----------- --------- -------- ------------
Total revenues 42,051 30,798 7,007 79,856
Cost of sales 15,821 18,951 3,954 38,726
----------- --------- -------- ------------
Gross profit 26,230 11,847 3,053 41,130
Advertising and promotion 4,926 1,735 724 7,385
----------- --------- -------- ------------
Contribution margin $ 21,304 $ 10,112 $ 2,329 33,745
=========== ========= ========
Other operating expenses 8,993
------------
Operating income 24,752
Other (income) expense 9,526
Provision for income taxes 5,881
------------
Net income $ 9,345
============
Nine Months Ended December 31, 2005
-------------------------------------------
Over-the-
Counter Household Personal
Drug Cleaning Care Consolidated
----------- --------- -------- ------------
(In thousands)
Net sales $ 116,199 $ 78,783 $21,595 $ 216,577
Other revenues -- 77 -- 77
----------- --------- -------- ------------
Total revenues 116,199 78,860 21,595 216,654
Cost of sales 43,044 47,873 12,307 103,224
----------- --------- -------- ------------
Gross profit 73,155 30,987 9,288 113,430
Advertising and promotion 18,192 5,245 2,870 26,307
----------- --------- -------- ------------
Contribution margin $ 54,963 $ 25,742 $ 6,418 87,123
=========== ========= ========
Other operating expenses 23,287
------------
Operating income 63,836
Other (income) expense 26,707
Provision for income taxes 14,481
------------
Net income $ 22,648
============
CONTACT:
For Prestige Brands Holdings, Inc.
Dean Siegal
914-524-6819
SOURCE:
Prestige Brands Holdings, Inc.