Irinquiries@prestigebrands.com
Prestige Consumer Healthcare Inc.
660 White Plains Road – Ste 250
Tarrytown, NY 10591
Telephone: 914-524-6819
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 14, 2015
PRESTIGE BRANDS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware | 001-32433 | 20-1297589 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
660 White Plains Road, Tarrytown, New York 10591
(Address of principal executive offices, including Zip Code)
(914) 524-6800
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On May 14, 2015, Prestige Brands Holdings, Inc. (the “Company”) announced financial results for the fiscal quarter and year ended March 31, 2015. A copy of the press release announcing the Company's earnings results for the fiscal quarter and year ended March 31, 2015 is attached hereto as Exhibit 99.1 and incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
The information set forth in Item 2.02 above is incorporated by reference as if fully set forth herein.
On May 14, 2015, representatives of the Company began making presentations to investors regarding the Company's financial results for the quarter and year ended March 31, 2015 using slides containing the information attached to this Current Report on Form 8-K as Exhibit 99.2 (the “Investor Presentation”). The Company expects to use the Investor Presentation, in whole or in part, and possibly with modifications, in connection with presentations to investors, analysts and others during the fiscal year ended March 31, 2016.
By filing this Current Report on Form 8-K and furnishing the information contained herein, the Company makes no admission as to the materiality of any information in this report that is required to be disclosed solely by reason of Regulation FD.
The information contained in the Investor Presentation is summary information that is intended to be considered in the context of the Company's Securities and Exchange Commission (“SEC”) filings and other public announcements that the Company may make, by press release or otherwise, from time to time. The Company undertakes no duty or obligation to publicly update or revise the information contained in this report, although it may do so from time to time as its management believes is warranted. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.
The information presented in Items 2.02 and 7.01 of this Current Report on Form 8-K and Exhibits 99.1 and 99.2 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, unless the Company specifically states that the information is to be considered “filed” under the Exchange Act or specifically incorporates it by reference into a filing under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
See Exhibit Index immediately following the signature page.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: May 14, 2015 | PRESTIGE BRANDS HOLDINGS, INC. | ||
By: | /s/ Ronald M. Lombardi | ||
Name: Ronald M. Lombardi | |||
Title: Chief Financial Officer | |||
EXHIBIT INDEX
Exhibit | Description | |
99.1 | Press Release dated May 14, 2015 announcing the Company's financial results for the fiscal quarter and year ended March 31, 2015 (furnished only). | |
99.2 | Investor Relations Slideshow in use beginning May 14, 2015 (furnished only). | |
Exhibit 99.1
Prestige Brands Holdings, Inc. Reports Record Fiscal 2015 Fourth Quarter and Full Year Results
Fourth Quarter Revenues Up 32.9%: Full Year Earnings Up 19.6%
Tarrytown, NY-(Business Wire)-May 14, 2015--Prestige Brands Holdings, Inc. (NYSE: PBH) today reported strong financial results for its fourth quarter and fiscal year ended March 31, 2015.
Key fourth quarter and fiscal year highlights include:
• | Revenue increased 32.9% to a record $190.0 million and 19.6% to a record $714.6 million in Q4 and FY2015, respectively |
• | Organic sales growth of 2.4% in Q4, excluding the impact of foreign exchange |
• | Adjusted free cash flow increased 45.0% in Q4 to $50.1 million |
• | Adjusted net income increased 33.1% to $24.8 million, or $0.47 per diluted share in Q4; FY15 adjusted net income increased 22.7% to $98.0 million, or $1.86 per diluted share. |
“We are extremely pleased with our fourth quarter and full fiscal year results,” said Matthew M. Mannelly, President and CEO. “Our excellent fourth quarter results reflect continued strengthening of consumption trends across our core OTC and international brands resulting in record adjusted free cash flow of over $50 million during the quarter. Fiscal year 2015 was Prestige Brands’ greatest year to date,” he said. “This strong momentum positions the Company well as we enter fiscal 2016.”
Fourth Fiscal Quarter Ended March 31, 2015
Revenues in the fourth fiscal quarter increased 32.9% to a record $190.0 million, compared to $143.1 million in the fourth quarter of 2014. Organic sales growth for the quarter was 2.4% excluding the impact of foreign exchange, or 1.1% including the impact of foreign exchange. Reported net income totaled $23.8 million, or $0.45 per diluted share, compared to $16.0 million, or $0.30 per diluted share, in the fourth quarter of fiscal year 2014. Reported earnings per share increased 50.0% to $0.45 compared to $0.30 in the prior year comparable period. Adjusted net income increased 33.1% to $24.8 million, or $0.47 per diluted share, compared to $18.6 million, or $0.35 per diluted share, in the fourth quarter of fiscal year 2014. Adjustments to net income in the fourth quarter of fiscal 2015 consist of items related to the acquisitions of Insight and Hydralyte.
Fiscal Year Ended March 31, 2015
Revenues for the fiscal year ended March 31, 2015 totaled a record $714.6 million, an increase of 19.6%, compared to revenues of $597.4 million for the fiscal year ended March 31, 2014. Reported net income for fiscal year 2015 totaled $78.3 million, or $1.49 per diluted share, compared to $72.6 million, or $1.39 per diluted share, for fiscal year 2014. Adjusted net income for fiscal year 2015 totaled $98.0 million, or $1.86 per diluted share, compared to adjusted net income of $79.9 million, or $1.53 per diluted share, for fiscal 2014. Adjustments to net income in fiscal 2015 consist of items related to the Insight and Hydralyte acquisitions.
Segment Review
North American OTC Healthcare: Revenues totaled $156.2 million for the fourth quarter of 2015, a 39.2% increase over fourth quarter 2014 revenues of $112.2 million. For fiscal 2015, revenues totaled $563.5 million, compared to $479.7 million for fiscal 2014, an increase of 17.5%. Results for both periods were favorably impacted by increased consumption among core OTC brands as well as the Insight and Hydralyte acquisitions.
International OTC Healthcare: Revenues totaled $13.0 million for the fourth quarter of 2015, a 40.6% increase over fourth quarter 2014 revenues of $9.3 million. For fiscal 2015, revenue totaled $61.2 million compared to $29.9 million for fiscal 2014, an increase of 104.5%. The strong performance of the Care portfolio in Australia and the acquisition of Hydralyte impacted revenues for both periods.
Household Cleaning: Revenues totaled $20.8 million for the fourth quarter of 2015, compared with fourth quarter 2014 revenues of $21.6 million. Revenues for fiscal year 2015 totaled $89.9 million, a 2.5% increase over fiscal year 2014 revenue of $87.8 million.
Balance Sheet and Adjusted Free Cash Flow
Adjusted free cash flow totaled $50.1 million for the fourth quarter of 2015, an increase of 45.0% over fourth quarter 2014 results of $34.5 million. For fiscal 2015, adjusted free cash flow was $163.7 million compared to adjusted free cash flow of $129.5 million for fiscal 2014, an increase of 26.4% The Company repaid $50.0 million of debt during the fourth quarter of fiscal 2015 and had a bank-defined net debt to EBITDA ratio of approximately 5.2. This is more than a half point reduction in debt since the closing of the Insight acquisition in September 2014.
Commentary and Outlook for FY2016
“Significant value creation initiatives are well underway for fiscal 2016,” Mr. Mannelly said. “Key among them is the stabilization and growth of Monistat and building our women’s health platform. We are investing in educating the healthcare professional about Monistat and, at the same time, creating new, more effective advertising to reach targeted consumers. Our core OTC and international portfolio continues to be the focus of our brand-building efforts and we will invest substantially in new product development within those platforms.”
Mr. Mannelly continued, “The progress we have made in building a diversified portfolio, strengthening consumption trends among our core OTC brands and expanding our international footprint in 2015 has us very well positioned as we enter fiscal 2016. I am proud of these accomplishments by the Prestige team, and I am confident in the Company’s future under the leadership of Ron Lombardi.”
“We are providing an outlook for fiscal year 2016, which we believe will be driven by organic growth in our legacy business and recent acquisitions,” Mr. Mannelly continued. “For fiscal year 2016, we anticipate revenue growth in the range of 10-12% including the impact of foreign exchange, adjusted earnings per share in the range of $2.05-$2.10, and adjusted free cash flow of approximately $175 million. We expect to continue to use our free cash flow to build M&A capacity and pay down debt. Our management team is focused on the three-prong strategy that continues to drive value for our shareholders: investing in core OTC brands and international, managing our industry-leading free cash flow, and executing strategic and disciplined M&A.”
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 14, 2015 at 8:30 am EDT. The toll-free dial-in numbers are 877-474-9503 within North America and 857-244-7556 outside of North America. The conference pass code is "prestige". The Company will provide a live Internet webcast, a slide presentation to accompany the call, as well as an archived replay, all of which can be accessed from the Investor Relations page of 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 888-286-8010 within North America and at 617-801-6888 from outside North America. The pass code is 69872014.
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. Core brands include Monistat® women’s health products, Nix® lice treatment, Chloraseptic® sore throat treatments, Clear Eyes® eye care products, Compound W® wart treatments, The Doctor's® NightGuard® dental protector, the Little Remedies® and PediaCare® lines of pediatric over-the-counter products, Efferdent® denture care products, Luden's® throat drops, Dramamine® motion sickness treatment, BC® and Goody's® pain relievers, Beano® gas prevention, Debrox® earwax remover, and Gaviscon® antacid in Canada. 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 positioning in fiscal 2016, our creation of shareholder value, investments in advertising, promotion and product development, brand growth, our expected future operating results, including revenue growth, adjusted EPS, adjusted free cash flow, and our expected use of free cash flow for rapid deleveraging and building M&A capacity, and our execution of M&A. 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 fluctuating exchange rates, the ability to identify and consummate acquisitions at attractive valuations, the impact of our advertising and promotional initiatives, competition in our industry, supplier issues, and the success of our brand-building investments. 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, 2014, Quarterly Report on Form 10-Q for the quarter ended December 31, 2014, and other periodic reports filed with the Securities and Exchange Commission.
Contact: Dean Siegal
Prestige Brands Holdings, Inc.
914-524-6819
ICR
Kristen Nungesser
(646)277-1261
John Mills
(646)277-1254
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) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenues | ||||||||||||||||
Net sales | $ | 189,089 | $ | 141,592 | $ | 710,070 | $ | 592,454 | ||||||||
Other revenues | 957 | 1,461 | 4,553 | 4,927 | ||||||||||||
Total revenues | 190,046 | 143,053 | 714,623 | 597,381 | ||||||||||||
Cost of Sales | ||||||||||||||||
Cost of sales (exclusive of depreciation shown below) | 79,976 | 64,216 | 308,400 | 261,830 | ||||||||||||
Gross profit | 110,070 | 78,837 | 406,223 | 335,551 | ||||||||||||
Operating Expenses | ||||||||||||||||
Advertising and promotion | 25,367 | 17,511 | 99,651 | 84,968 | ||||||||||||
General and administrative | 17,685 | 13,091 | 81,273 | 48,481 | ||||||||||||
Depreciation and amortization | 5,773 | 3,280 | 17,740 | 13,486 | ||||||||||||
Total operating expenses | 48,825 | 33,882 | 198,664 | 146,935 | ||||||||||||
Operating income | 61,245 | 44,955 | 207,559 | 188,616 | ||||||||||||
Other (income) expense | ||||||||||||||||
Interest income | (25 | ) | (16 | ) | (92 | ) | (60 | ) | ||||||||
Interest expense | 23,821 | 14,994 | 81,326 | 68,642 | ||||||||||||
Gain on sale of asset | — | — | (1,133 | ) | — | |||||||||||
Loss on extinguishment of debt | — | 3,274 | — | 18,286 | ||||||||||||
Total other expense | 23,796 | 18,252 | 80,101 | 86,868 | ||||||||||||
Income before income taxes | 37,449 | 26,703 | 127,458 | 101,748 | ||||||||||||
Provision for income taxes | 13,677 | 10,702 | 49,198 | 29,133 | ||||||||||||
Net income | $ | 23,772 | $ | 16,001 | $ | 78,260 | $ | 72,615 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.45 | $ | 0.31 | $ | 1.50 | $ | 1.41 | ||||||||
Diluted | $ | 0.45 | $ | 0.30 | $ | 1.49 | $ | 1.39 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 52,356 | 51,893 | 52,170 | 51,641 | ||||||||||||
Diluted | 52,821 | 52,513 | 52,670 | 52,349 | ||||||||||||
Comprehensive income, net of tax: | ||||||||||||||||
Currency translation adjustments | (7,268 | ) | 2,414 | (24,151 | ) | 843 | ||||||||||
Total other comprehensive income (loss) | (7,268 | ) | 2,414 | (24,151 | ) | 843 | ||||||||||
Comprehensive income | $ | 16,504 | $ | 18,415 | $ | 54,109 | $ | 73,458 | ||||||||
Prestige Brands Holdings, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands) Assets | March 31, 2015 | March 31, 2014 | |||||
Current assets | |||||||
Cash and cash equivalents | $ | 21,318 | $ | 28,331 | |||
Accounts receivable, net | 87,858 | 65,050 | |||||
Inventories | 74,000 | 65,586 | |||||
Deferred income tax assets | 8,097 | 6,544 | |||||
Prepaid expenses and other current assets | 10,434 | 11,674 | |||||
Total current assets | 201,707 | 177,185 | |||||
Property and equipment, net | 13,744 | 9,597 | |||||
Goodwill | 290,651 | 190,911 | |||||
Intangible assets, net | 2,134,700 | 1,394,817 | |||||
Other long-term assets | 28,603 | 23,153 | |||||
Total Assets | $ | 2,669,405 | $ | 1,795,663 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities | |||||||
Accounts payable | $ | 46,115 | $ | 48,286 | |||
Accrued interest payable | 11,974 | 9,626 | |||||
Other accrued liabilities | 40,948 | 26,446 | |||||
Total current liabilities | 99,037 | 84,358 | |||||
Long-term debt | |||||||
Principal amount | 1,593,600 | 937,500 | |||||
Less unamortized discount | (4,889 | ) | (3,086 | ) | |||
Long-term debt, net of unamortized discount | 1,588,711 | 934,414 | |||||
Deferred income tax liabilities | 351,569 | 213,204 | |||||
Other long-term liabilities | 2,464 | 327 | |||||
Total Liabilities | 2,041,781 | 1,232,303 | |||||
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 – 52,562 shares and 52,021 shares at March 31, 2015 and 2014, respectively | 525 | 520 | |||||
Additional paid-in capital | 426,584 | 414,387 | |||||
Treasury stock, at cost – 266 shares at March 31, 2015 and 206 at March 31, 2014 | (3,478 | ) | (1,431 | ) | |||
Accumulated other comprehensive income (loss), net of tax | (23,412 | ) | 739 | ||||
Retained earnings | 227,405 | 149,145 | |||||
Total Stockholders' Equity | 627,624 | 563,360 | |||||
Total Liabilities and Stockholders' Equity | $ | 2,669,405 | $ | 1,795,663 | |||
Prestige Brands Holdings, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Year Ended March 31, | |||||||
(In thousands) | 2015 | 2014 | |||||
Operating Activities | |||||||
Net income | $ | 78,260 | $ | 72,615 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 17,740 | 13,486 | |||||
Gain on sale of asset | (1,133 | ) | — | ||||
Deferred income taxes | 28,922 | 19,012 | |||||
Long term income taxes payable | 2,294 | — | |||||
Amortization of deferred financing costs | 6,735 | 7,102 | |||||
Stock-based compensation costs | 6,918 | 5,146 | |||||
Loss on extinguishment of debt | — | 18,286 | |||||
Premium payment on 2010 Senior Notes | — | (15,527 | ) | ||||
Amortization of debt discount | 2,086 | 3,410 | |||||
Lease termination costs | 785 | — | |||||
Loss (gain) on sale or disposal of property and equipment | 321 | (3 | ) | ||||
Changes in operating assets and liabilities, net of effects of acquisitions | |||||||
Accounts receivable | 1,608 | 9,735 | |||||
Inventories | 15,360 | (2,850 | ) | ||||
Prepaid expenses and other current assets | 4,664 | (2,130 | ) | ||||
Accounts payable | (17,637 | ) | (4,641 | ) | |||
Accrued liabilities | 9,332 | (12,059 | ) | ||||
Net cash provided by operating activities | 156,255 | 111,582 | |||||
Investing Activities | |||||||
Purchases of property and equipment | (6,101 | ) | (2,764 | ) | |||
Proceeds from sale of property and equipment | — | 3 | |||||
Proceeds from sale of business | 18,500 | — | |||||
Proceeds from sale of asset | 10,000 | — | |||||
Acquisition of Insight Pharmaceuticals, less cash acquired | (749,666 | ) | — | ||||
Acquisition of the Hydralyte brand | (77,991 | ) | — | ||||
Acquisition of Care Pharmaceuticals, less cash acquired | — | (55,215 | ) | ||||
Net cash used in investing activities | (805,258 | ) | (57,976 | ) | |||
Financing Activities | |||||||
Proceeds from issuance of 2013 Senior Notes | — | 400,000 | |||||
Repayment of 2010 Senior Notes | — | (250,000 | ) | ||||
Term loan borrowings | 720,000 | — | |||||
Term loan repayments | (130,000 | ) | (157,500 | ) | |||
Borrowings under revolving credit agreement | 124,600 | 50,000 | |||||
Repayments under revolving credit agreement | (58,500 | ) | (83,000 | ) | |||
Payment of deferred financing costs | (16,072 | ) | (7,466 | ) | |||
Proceeds from exercise of stock options | 3,954 | 5,907 | |||||
Proceeds from restricted stock exercises | 57 | — | |||||
Excess tax benefits from share-based awards | 1,330 | 1,650 | |||||
Fair value of shares surrendered as payment of tax withholding | (2,104 | ) | (744 | ) | |||
Net cash provided by (used in) financing activities | 643,265 | (41,153 | ) | ||||
Effects of exchange rate changes on cash and cash equivalents | (1,275 | ) | 208 | ||||
Increase (decrease) in cash and cash equivalents | (7,013 | ) | 12,661 | ||||
Cash and cash equivalents - beginning of year | 28,331 | 15,670 | |||||
Cash and cash equivalents - end of year | $ | 21,318 | $ | 28,331 | |||
Interest paid | $ | 70,155 | $ | 62,357 | |||
Income taxes paid | $ | 11,939 | $ | 11,020 | |||
Prestige Brands Holdings, Inc.
Consolidated Statements of Income
Business Segments
(Unaudited)
Three Months Ended March 31, 2015 | |||||||||||||||
(In thousands) | North American OTC Healthcare | International OTC Healthcare | Household Cleaning | Consolidated | |||||||||||
Gross segment revenues | $ | 156,489 | $ | 13,023 | $ | 20,028 | $ | 189,540 | |||||||
Elimination of intersegment revenues | (451 | ) | — | — | (451 | ) | |||||||||
Third-party segment revenues | 156,038 | 13,023 | 20,028 | 189,089 | |||||||||||
Other revenues | 159 | 2 | 796 | 957 | |||||||||||
Total segment revenues | 156,197 | 13,025 | 20,824 | 190,046 | |||||||||||
Cost of sales | 58,776 | 4,894 | 16,306 | 79,976 | |||||||||||
Gross profit | 97,421 | 8,131 | 4,518 | 110,070 | |||||||||||
Advertising and promotion | 22,324 | 2,771 | 272 | 25,367 | |||||||||||
Contribution margin | $ | 75,097 | $ | 5,360 | $ | 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 | $ | 566,256 | $ | 61,116 | $ | 86,085 | $ | 713,457 | |||||||
Elimination of intersegment revenues | (3,387 | ) | — | — | (3,387 | ) | |||||||||
Third-party segment revenues | 562,869 | 61,116 | 86,085 | 710,070 | |||||||||||
Other revenues | 637 | 64 | 3,852 | 4,553 | |||||||||||
Total segment revenues | 563,506 | 61,180 | 89,937 | 714,623 | |||||||||||
Cost of sales | 216,781 | 22,820 | 68,799 | 308,400 | |||||||||||
Gross profit | 346,725 | 38,360 | 21,138 | 406,223 | |||||||||||
Advertising and promotion | 86,897 | 10,922 | 1,832 | 99,651 | |||||||||||
Contribution margin | $ | 259,828 | $ | 27,438 | $ | 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 | |||||||||||||
Three Months Ended March 31, 2014 | |||||||||||||||
(In thousands) | North American OTC Healthcare | International OTC Healthcare | Household Cleaning | Consolidated | |||||||||||
Gross segment revenues | $ | 112,782 | $ | 9,236 | $ | 20,431 | $ | 142,449 | |||||||
Elimination of intersegment revenues | (857 | ) | — | — | (857 | ) | |||||||||
Third-party segment revenues | 111,925 | 9,236 | 20,431 | 141,592 | |||||||||||
Other revenues | 299 | 28 | 1,134 | 1,461 | |||||||||||
Total segment revenues | 112,224 | 9,264 | 21,565 | 143,053 | |||||||||||
Cost of sales | 44,377 | 3,699 | 16,140 | 64,216 | |||||||||||
Gross profit | 67,847 | 5,565 | 5,425 | 78,837 | |||||||||||
Advertising and promotion | 15,606 | 1,409 | 496 | 17,511 | |||||||||||
Contribution margin | $ | 52,241 | $ | 4,156 | $ | 4,929 | $ | 61,326 | |||||||
Other operating expenses | 16,371 | ||||||||||||||
Operating income | 44,955 | ||||||||||||||
Other expense | 18,252 | ||||||||||||||
Income before income taxes | 26,703 | ||||||||||||||
Provision for income taxes | 10,702 | ||||||||||||||
Net income | $ | 16,001 | |||||||||||||
Year Ended March 31, 2014 | |||||||||||||||
(In thousands) | North American OTC Healthcare | International OTC Healthcare | Household Cleaning | Consolidated | |||||||||||
Gross segment revenues | $ | 482,138 | $ | 29,872 | $ | 83,629 | $ | 595,639 | |||||||
Elimination of intersegment revenues | (3,185 | ) | — | — | (3,185 | ) | |||||||||
Third-party segment revenues | 478,953 | 29,872 | 83,629 | 592,454 | |||||||||||
Other revenues | 749 | 42 | 4,136 | 4,927 | |||||||||||
Total segment revenues | 479,702 | 29,914 | 87,765 | 597,381 | |||||||||||
Cost of sales | 184,796 | 12,646 | 64,388 | 261,830 | |||||||||||
Gross profit | 294,906 | 17,268 | 23,377 | 335,551 | |||||||||||
Advertising and promotion | 77,083 | 5,264 | 2,621 | 84,968 | |||||||||||
Contribution margin | $ | 217,823 | $ | 12,004 | $ | 20,756 | $ | 250,583 | |||||||
Other operating expenses | 61,967 | ||||||||||||||
Operating income | 188,616 | ||||||||||||||
Other expense | 86,868 | ||||||||||||||
Income before income taxes | 101,748 | ||||||||||||||
Provision for income taxes | 29,133 | ||||||||||||||
Net income | $ | 72,615 | |||||||||||||
About Non-GAAP Financial Measures
We define Non-GAAP Adjusted Total Revenues excluding acquisitions and divestitures and the impact of current year foreign exchange rates as Total Revenues excluding revenues associated with products acquired or divested in the periods presented and the impact of current year foreign exchange rates on total revenues. We define Non-GAAP Adjusted EBITDA as earnings before interest expense (income), income taxes, depreciation and amortization, certain other legal and professional fees, and other acquisition-related costs. 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. 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, the applicable tax impacts associated with these items and the tax impacts of state tax rate adjustments and other non-deductible items. Non-GAAP Adjusted EPS is calculated based on Non-GAAP Adjusted Net Income, divided by the weighted average number of common and potential common shares outstanding during the period. We define Non-GAAP Adjusted Free Cash Flow as net cash provided by operating activities less premium payments to extinguish debt, accelerated interest payments due to debt refinancing and cash paid for capital expenditures, plus payments for integration, transition and other payments associated with acquisitions. Non-GAAP Adjusted Total Revenues excluding acquisitions and divestitures and the impact of current year foreign exchange rates, 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, and Non-GAAP Adjusted Free Cash Flow may not be comparable to similarly titled measures reported by other companies.
We are presenting Non-GAAP Adjusted Total Revenues excluding acquisitions and divestitures and exchange rates, 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, 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 Adjusted Total Revenues excluding acquisitions and divestitures and exchange rates, 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, 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 Adjusted Total Revenues excluding acquisitions and divestitures and exchange rates, 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, 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 Adjusted Total Revenues excluding acquisitions and divestitures and exchange rates, 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, 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 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 Adjusted Total Revenues excluding acquisitions and divestitures and exchange rates, 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 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 Adjusted Total Revenues excluding acquisitions and divestitures and exchange rates:
Three Months Ended March 31, | Year Ended March 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands) | |||||||||||||||
GAAP Total Revenues | $ | 190,046 | $ | 143,053 | $ | 714,623 | $ | 597,381 | |||||||
Adjustments: | |||||||||||||||
Care Pharma and Hydralyte revenues (1) | (4,452 | ) | — | (23,043 | ) | — | |||||||||
Insight revenues (2) | (40,978 | ) | — | (97,068 | ) | — | |||||||||
Total adjustments | (45,430 | ) | — | (120,111 | ) | — | |||||||||
Non-GAAP Adjusted Total Revenues excluding acquisitions and divestitures | 144,616 | 143,053 | 594,512 | 597,381 | |||||||||||
Organic Revenue Growth (decline) | 1.1 | % | (0.5 | )% | |||||||||||
Impact of current year foreign exchange rates (3) | (1,805 | ) | (3,839 | ) | |||||||||||
Non-GAAP Adjusted Total Revenues excluding acquisitions and divestitures and impact of current year foreign exchange rates | $ | 144,616 | $ | 141,248 | $ | 594,512 | $ | 593,542 | |||||||
Constant Currency Organic Revenue Growth | 2.4 | % | 0.2 | % | |||||||||||
(1) Revenue adjustments relate to our International OTC Healthcare segment
(2) Revenue adjustments relate to our North American OTC Healthcare segment
(3) Foreign 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, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands) | |||||||||||||||
GAAP Total Revenues | $ | 190,046 | $ | 143,053 | $ | 714,623 | $ | 597,381 | |||||||
GAAP Gross Profit | $ | 110,070 | $ | 78,837 | $ | 406,223 | $ | 335,551 | |||||||
Adjustments: | |||||||||||||||
Inventory step-up charges and other costs associated with Care and Hydralyte acquisitions (1) | — | — | 246 | 577 | |||||||||||
Inventory step-up charges associated with Insight acquisition (2) | — | — | 1,979 | — | |||||||||||
Care acquisition related inventory costs (1) | — | — | — | 407 | |||||||||||
Total adjustments | — | — | 2,225 | 984 | |||||||||||
Non-GAAP Adjusted Gross Margin | $ | 110,070 | $ | 78,837 | $ | 408,448 | $ | 336,535 | |||||||
Non-GAAP Adjusted Gross Margin % | 57.9 | % | 55.1 | % | 57.2 | % | 56.3 | % | |||||||
(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
Reconciliation of GAAP General and Administrative Expense to Non-GAAP Adjusted General and Administrative Expense and Non-GAAP Adjusted General and Administrative Expense percentage:
Three Months Ended March 31, | Year Ended March 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands) | |||||||||||||||
GAAP General and Administrative Expense | $ | 17,685 | $ | 13,091 | $ | 81,273 | $ | 48,481 | |||||||
Adjustments: | |||||||||||||||
Legal and professional fees associated with acquisitions and divestitures | 640 | 443 | 10,974 | 1,111 | |||||||||||
Stamp/Duty Tax on Australian acquisition | — | — | 2,940 | — | |||||||||||
Integration, transition and other costs associated with acquisitions | 920 | — | 10,533 | — | |||||||||||
Total adjustments | 1,560 | 443 | 24,447 | 1,111 | |||||||||||
Non-GAAP Adjusted General and Administrative Expense | $ | 16,125 | $ | 12,648 | $ | 56,826 | $ | 47,370 | |||||||
Non-GAAP Adjusted General and Administrative Expense Percentage | 8.5 | % | 8.8 | % | 8.0 | % | 7.9 | % | |||||||
Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA and Non-GAAP Adjusted EBITDA Margin:
Three Months Ended March 31, | Year Ended March 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands) | |||||||||||||||
GAAP Net Income | $ | 23,772 | $ | 16,001 | $ | 78,260 | $ | 72,615 | |||||||
Interest expense, net | 23,796 | 14,978 | 81,234 | 68,582 | |||||||||||
Provision for income taxes | 13,677 | 10,702 | 49,198 | 29,133 | |||||||||||
Depreciation and amortization | 5,773 | 3,280 | 17,740 | 13,486 | |||||||||||
Non-GAAP EBITDA: | 67,018 | 44,961 | 226,432 | 183,816 | |||||||||||
Adjustments: | |||||||||||||||
Inventory step-up charges and other costs associated with Care and Hydralyte acquisitions (1) | — | — | 246 | 577 | |||||||||||
Inventory step-up charges associated with Insight acquisition (2) | — | — | 1,979 | — | |||||||||||
Care acquisition related inventory costs (1) | — | — | — | 407 | |||||||||||
Legal and professional fees associated with acquisitions and divestitures (3) | 640 | 443 | 10,974 | 1,111 | |||||||||||
Stamp/Duty Tax on Australian acquisition (3) | — | — | 2,940 | — | |||||||||||
Integration, transition and other costs associated with acquisitions (3) | 920 | — | 10,533 | — | |||||||||||
Gain on sale of asset | — | — | (1,133 | ) | — | ||||||||||
Loss on extinguishment of debt | — | 3,274 | — | 18,286 | |||||||||||
Total adjustments | 1,560 | 3,717 | 25,539 | 20,381 | |||||||||||
Non-GAAP Adjusted EBITDA | $ | 68,578 | $ | 48,678 | $ | 251,971 | $ | 204,197 | |||||||
Non-GAAP Adjusted EBITDA Margin | 36.1 | % | 34.0 | % | 35.3 | % | 34.2 | % | |||||||
(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) 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, | ||||||||||||||||||||||||||
2015 | 2015 Adjusted EPS | 2014 | 2014 Adjusted EPS | 2015 | 2015 Adjusted EPS | 2014 | 2014 Adjusted EPS | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||
GAAP Net Income | $ | 23,772 | $ | 0.45 | $ | 16,001 | $ | 0.30 | $ | 78,260 | $ | 1.49 | $ | 72,615 | $ | 1.39 | |||||||||||
Adjustments: | |||||||||||||||||||||||||||
Inventory step-up charges and other costs associated with Care and Hydralyte acquisitions (1) | — | — | — | — | 246 | — | 577 | 0.01 | |||||||||||||||||||
Inventory step-up charges associated with Insight acquisition (2) | — | — | — | — | 1,979 | 0.04 | — | — | |||||||||||||||||||
Care acquisition related inventory costs (1) | — | — | — | — | — | — | 407 | 0.01 | |||||||||||||||||||
Legal and professional fees associated with acquisitions and divestitures (3) | 640 | 0.01 | 443 | 0.01 | 10,974 | 0.21 | 1,111 | 0.02 | |||||||||||||||||||
Stamp/Duty Tax on Australian acquisition (3) | — | — | — | — | 2,940 | 0.05 | — | — | |||||||||||||||||||
Integration, transition and other costs associated with acquisitions (3) | 920 | 0.02 | — | — | 10,533 | 0.20 | — | — | |||||||||||||||||||
Accelerated amortization of debt discount and debt issue costs | — | — | 365 | 0.01 | 218 | — | 5,477 | 0.10 | |||||||||||||||||||
Gain on sale of asset | — | — | — | — | (1,133 | ) | (0.02 | ) | — | — | |||||||||||||||||
Loss on extinguishment of debt | — | — | 3,274 | 0.06 | — | — | 18,286 | 0.35 | |||||||||||||||||||
Tax impact of adjustments | (549 | ) | (0.01 | ) | (1,459 | ) | (0.03 | ) | (5,968 | ) | (0.11 | ) | (9,100 | ) | (0.17 | ) | |||||||||||
Impact of state tax adjustments | — | — | — | — | — | — | (9,465 | ) | (0.18 | ) | |||||||||||||||||
Total adjustments | 1,011 | 0.02 | 2,623 | 0.05 | 19,789 | 0.37 | 7,293 | 0.14 | |||||||||||||||||||
Non-GAAP Adjusted Net Income and Adjusted EPS | $ | 24,783 | $ | 0.47 | $ | 18,624 | $ | 0.35 | $ | 98,049 | $ | 1.86 | $ | 79,908 | $ | 1.53 | |||||||||||
(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) Adjustments relate to G&A expenses
Reconciliation of GAAP Net Income to Adjusted Non-GAAP Free Cash Flow:
Three Months Ended March 31, | Year Ended March 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands) | |||||||||||||||
GAAP Net Income | $ | 23,772 | $ | 16,001 | $ | 78,260 | $ | 72,615 | |||||||
Adjustments: | |||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities as shown in the Statement of Cash Flows | 22,048 | 15,300 | 64,668 | 50,912 | |||||||||||
Changes in operating assets and liabilities, net of effects from acquisitions as shown in the Statement of Cash Flows | 6,293 | (579 | ) | 13,327 | (11,945 | ) | |||||||||
Total adjustments | 28,341 | 14,721 | 77,995 | 38,967 | |||||||||||
GAAP Net cash provided by operating activities | 52,113 | 30,722 | 156,255 | 111,582 | |||||||||||
Premium payment on 2010 Senior Notes | — | 2,759 | — | 15,527 | |||||||||||
Accelerated interest payments due to debt refinancing | — | 1,162 | — | 4,675 | |||||||||||
Purchases of property and equipment | (2,401 | ) | (106 | ) | (6,101 | ) | (2,764 | ) | |||||||
Non-GAAP Free Cash Flow | 49,712 | 34,537 | 150,154 | 129,020 | |||||||||||
Integration, transition and other payments associated with acquisitions | 362 | — | 13,563 | 512 | |||||||||||
Adjusted Non-GAAP Free Cash Flow | $ | 50,074 | $ | 34,537 | $ | 163,717 | $ | 129,532 | |||||||
Outlook for Fiscal Year 2016:
Reconciliation of Projected GAAP EPS to Projected Non-GAAP Adjusted EPS:
2016 Projected EPS | |||||||
Low | High | ||||||
Projected FY'16 GAAP EPS | $ | 2.00 | $ | 2.05 | |||
Adjustments: | |||||||
Costs associated with term loan refinancing and CEO retirement | 0.05 | 0.05 | |||||
Total Adjustments | 0.05 | 0.05 | |||||
Projected Non-GAAP Adjusted EPS | $ | 2.05 | $ | 2.10 | |||
Reconciliation of Projected GAAP Net cash provided by operating activities to Projected Non-GAAP Adjusted Free Cash Flow:
2016 Projected Free Cash Flow | |||
(In millions) | |||
Projected FY'16 GAAP Net cash provided by operating activities | $ | 181 | |
Additions to property and equipment for cash | (6 | ) | |
Projected Non-GAAP Adjusted Free Cash Flow | $ | 175 | |
Review of Fourth Quarter and Full Year FY 15 Results May 14, 2015 Exhibit 99.2
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 2 This presentation contains certain “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements about the Company’s product expansion and development plans, investments in brand building and marketing, debt reduction and future financing capacity, consumption growth and market position of the Company’s brands, M&A strategy and market activity, future financial performance, and creation of shareholder value. Words such as "continue," "will," “expect,” “project,” “anticipate,” “likely,” “estimate,” “may,” “should,” “could,” “would,” and similar expressions identify forward-looking statements. Such forward-looking statements represent the Company’s expectations and beliefs and involve a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include, among others, the inability to identify and consummate future acquisitions at attractive valuations, the failure to successfully commercialize new products, the severity of the cold and flu season, the inability of third party suppliers to meet demand, competitive pressures, the effectiveness of the Company’s brand building and marketing investments, fluctuating foreign exchange rates, and other risks set forth in Part I, Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended March 31, 2014 and in Part II, Item 1A. Risk Factors in the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2014. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this presentation. Except to the extent required by applicable law, the Company undertakes no obligation to update any forward-looking statement contained in this presentation, whether as a result of new information, future events, or otherwise. Safe Harbor Disclosure
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 3 Agenda for Today’s Discussion I. Fourth Quarter FY 15 Performance Highlights II. FY 15 Year in Review III. Financial Overview IV. FY 16 Outlook and the Road Ahead
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 4
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 5 Fourth Quarter FY 15 Performance Highlights Q4 consolidated Revenue of $190.0 million, up 32.9% versus PY Q4 – Organic growth of +2.4%(1) on a constant currency basis, and +1.1% on a reported basis versus PY Q4 Core OTC consumption growth of +7.0% (ex. PediaCare), and +3.3% (total Core OTC) – 84% of Core OTC portfolio with consumption growth Adjusted Gross Margin of 57.9%(2) versus 55.1% in the PY Q4, and up from 57.2% in Q3 Adjusted EPS of $0.47(2), up 34.3% versus the PY Q4 Strong Adjusted Free Cash Flow of $50.1(2) million, up 45.0% versus the PY Q4 – Leverage of ~5.2x(3), down from 5.7x at the time of Insight acquisition Consistent and innovative marketing support building long-term brand equity in core OTC brands – Clear Eyes achieved #1 market share for the first time – Chloraseptic and Luden’s gained 4.3 share points through strong digital programs – Little Remedies experienced strong consumption gains across all segments as a result of TV and digital marketing support
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 6
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 7 FY 15: Successful Execution Against Drivers of Long-Term Shareholder Value Creation Strong organic growth in Core OTC and international Portfolio strategy achieving desired results Margin expansion and efficiency gains allow for re-investment in A&P Consistent and increasing free cash flow Proven and repeatable M&A strategy 1 2 3 4 5 Well-Positioned for FY 16 and Beyond
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 8 5.2% 3.9% (3.5%) 3.5% 7.7% 4.8% (6.9%) 0.4% FY 12 FY 13 FY 14 FY 15 Accelerated Core OTC Growth Trends 5.2% 7.1% (1.8%) 4.1% 8.7% 8.3% (4.9%) 0.9% O rg a n ic Sa les G ro w th C o n s u m p ti o n G ro w th (0.8%) (1.1%) 10.7% 5.8% (2.5%) (4.9%) 4.3% 5.4% Q1 Q2 Q3 Q4 0.5% 3.6% 5.6% 7.0% (1.9%) 1.5% 2.4% 3.3% FY 15 1 Accelerating Performance Through the Year Total Core OTC Brands (Excl. Insight) Total Core OTC Brands excluding PediaCare (Excl. Insight) Source: IRI multi-outlet + C-Store retail dollar sales growth for relevant period. Data reflects retail dollar sales percentage growth versus prior period.
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 9 FY 15 Core OTC Growth Broad Based Led by Largest Brands % of Core OTC Portfolio with Consumption Growth in FY 15 84% 6.0% 13.3% 15.6% 16.2% Q1 Q2 Q3 Q4 Growth of Largest Brands Accelerating 1.6% 2.5% 5.1% 4.6% Q1 Q2 Q3 Q4 Y/Y Retail Sales % Growth Core OTC, includes Insight Pharmaceuticals. Source: IRI multi-outlet + C-Store, L-52 period ending March 22, 2015. % of Core OTC Retail Sales Represented by Growing Brands Recently Acquired 0.4% 3.6% 4.5% 5.3% Q1 Q2 Q3 Q4 1
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 10 Core OTC International Other OTC Household Contribution to Portfolio: # of Brands: Investment: Targeted Mix Over Time(4)(5): FY 15 % Organic Growth: (Constant Currency)(1) Invest for Growth Manage for Cash Flow Generation ~25% of Total Brands ~75% of Total Brands 63% 15% Portfolio Strategy Achieving Desired Results +2.9%* (0.3%) +2.0%(1) Organic Growth* High Maintain ~78% ~85% Current Target ~22% ~15% Current Target 2 11% 11% * Excluding PediaCare
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 11 10.3% 8.6% 7.3% 7.9% 8.0% FY 11 FY 12 FY 13 FY 14 FY 15 52.4% 51.6% 56.3% 56.3% 57.2% FY 11 FY 12 FY 13 FY 14 FY 15 Adjusted Gross Margin(2) Margin Expansion and Efficiency Gains Drives Increased A&P Investment Adjusted G&A % Net Sales(2) $39.3 $53.9 $87.2 $85.0 $99.7 FY 11 FY 12 FY 13 FY 14 FY 15 A&P (% of Net Sales) 11.8% 12.3% 14.0% 14.2% 13.9% 3 Dollar values in millions.
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 12 Increasing Our A&P Spend and Expanding Our Marketing Toolkit In Store Merchandising and Sports Marketing Broad Media Support 3 New and Innovative Products
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 13 Little Remedies Differentiation Positions it well for Long-Term Success 3 New Products Driving Growth Digital Execution Connecting with Moms Consumption +3.7% in L-26 Weeks; +8.5% in L-12 Weeks Source: IRI multi-outlet + C-Store, L-26 and L-12 periods ending March 22, 2015. BabyCenter Integration Website Facebook Page Reformulated Extensions Effective solutions that are more natural with no artificial flavors or unnecessary ingredients
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 14 FY 15 Learnings Are Positioning A $100MM Brand for Growth New Marketing Campaign Developing HCP Relationship Letting consumers know that yeast infections are “No Big Deal” because there’s Monistat “Prescription strength cure without the prescription” “Starts curing on contact” Reinforcing strategy, messaging and communication with Health Care Professionals 3
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 15 Strong and Consistent Cash Flow Leads to Rapid Delevering and Increased M&A Capacity FY 15 FY 16E FY 17E ~$1.5 BN +$2.0 BN ~$0.5 BN Leverage Ratio(3) Illustrative Financing Capacity(6) ~5.6x ~5.2x ~4.4x ~4.0x Q2 FY 15 FY 15 FY 16E FY 17E Reduced Net Debt by >$150 million in FY 15 excluding acquisitions Projected expanded M&A capability of $1.6 billion in FY 16E and +$2.0 billion by FY 17E $59 $86 $67 $127 $130 $164 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 Adjusted Free Cash Flow(2) +26% Dollar values in millions. 4
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 16 Proven and Repeatable M&A Strategy in Favorable Environment Six Acquisitions Completed in Past Five Years for TEV of ~$2BN 5 TEV Acquired by Year ~$190 ~$76 ~$660 ~$50 ~$800 FY 11 FY 12 FY 13 FY 14 FY 15 North American Brands Dollar values in millions.
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 17 M&A Has Established A Portfolio of Strong Brands Creating Attractive Category Platforms Sleep Aids Oral Care Skin Care Analgesics GI Women’s Health Cough & Cold Eye & Ear Care 5 International Sales <$50MM
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 18 M&A Has Established A Portfolio of Strong Brands Creating Attractive Category Platforms Sleep Aids Oral Care Skin Care Analgesics GI Women’s Health Cough & Cold Eye & Ear Care 5 International Sales >$100MM
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 19 $88 $134 $204 $252 FY 10 FY 12 FY 14 FY 15 $290 $438 $597 $715 FY 10 FY 12 FY 14 FY 15 Net Sales Strategy Has Delivered Consistently Strong Financial Performance $0.67 $0.99 $1.53 $1.86 FY 10 FY 12 FY 14 FY 15 $59 $67 $130 $164 FY 10 FY 12 FY 14 FY 15 Dollar values in millions, except Adjusted EPS. Adjusted Free Cash Flow(2) Adjusted EPS(2) Adjusted EBITDA(2)
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 20
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 21 Key Financial Results for Fourth Quarter Performance Excellent overall financial performance in the quarter exceeded expectations − Achieved organic growth of 2.4%(1) excluding the impact of foreign currency − Revenue of $190.0 million, an increase of 32.9% − Adjusted EPS of $0.47(2), up 34.3% − Adjusted Free Cash Flow growth of 45.0% to $50.1 million(2) $143.1 $48.7 $34.5 $190.0 $68.6 $50.1 Total Revenue Adjusted EBITDA Adjusted EPS Adjusted Free Cash Flow Q4 FY 15 Q4 FY 14 32.9% 40.9% 34.3% 45.0% $0.35 $0.47 (2) (2) (2) Dollar values in millions, except per share data.
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 22 Mar '15 Mar '14 % Chg Mar '15 Mar '14 % Chg Total Revenue 190.0$ 143.1$ 32.9% 714.6$ 597.4$ 19.6% Adj. Gross Margin 110.1 78.8 39.6% 408.4 336.5 21.4% % Margin 57.9% 55.1% 57.2% 56.3% A&P 25.4 17.5 44.9% 99.7 85.0 17.3% % Total Revenue 13.3% 12.2% 13.9% 14.2% Adj. G&A 16.1 12.6 27.5% 56.8 47.4 20.0% % Total Revenue 8.5% 8.8% 8.0% 7.9% Adjusted EBITDA 68.6$ 48.7$ 40.9% 252.0$ 204.2$ 23.4% % Margin 36.1% 34.0% 35.3% 34.2% Adjusted Net Income 24.8$ 18.6$ 33.1% 98.0$ 79.9$ 22.7% Adjusted Earnings Per Share 0.47$ 0.35$ 34.3% 1.86$ 1.53$ 21.6% FY 15 Fourth Quarter and Fiscal Year Consolidated Financial Summary Q4 Revenue growth of +32.9%, or +34.5%(1) on a constant currency basis, Fiscal Year +20.4% Q4 Adjusted Gross Margin 57.9%(2), highest in 6 quarters Q4 Adjusted EBITDA Margin of 36.1%(2), Fiscal Year of 35.3% Q4 and FY Adjusted EPS growth ahead of Revenue growth, Q4 +34.3%(2) and FY +21.6% 3 Months Ended 12 Months Ended (2) (2) (2) (2) (2) Dollar values in millions, except per share data.
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 23 Q4 FY 15 Q4 FY 14 FY 15 FY 14 Net Income - As Reported 23.8$ 16.0$ 78.3$ 72.6$ Depreciation & Amortization 5.8 3.3 17.7 13.5 Other Non-Cash Operating Items 16.3 12.0 46.9 37.4 Working Capital 6.3 (0.6) 13.3 (11.9) Operating Cash Flow 52.1$ 30.7$ 156.3$ 111.6$ Premium Payment on Notes - 2.8 - 15.5 Accelerated Interest Payments - 1.2 - 4.7 Additions to Property and Equipment (2.4) (0.1) (6.1) (2.8) Integration, Transition and Other Payments Associated with Acquisitions 0.4 - 13.6 0.5 Adjusted Free Cash Flow 50.1$ 34.5$ 163.7$ 129.5$ Debt Profile & Financial Compliance: Net Debt at 3/31/15 of $1,572 million comprised of: – Cash on hand of $21 million – $944 million of term loan and revolver – $650 million of bonds Leverage ratio(3) of ~5.2x Recent term loan refinancing continues to support rapid deleveraging Exceptional Free Cash Flow Trends Cash Flow Comments (7) (2) Dollar values in millions.
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 24
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 25 Staying the Strategic Course to continue Shareholder Value Creation Continue category platform expansion/development Capitalize on brand opportunities across channels of distribution Prioritize new product development and innovation Little Remedies point of difference creates greatest long-term brand potential in pediatric portfolio moving forward Power of Prestige’s portfolio growing and delivering results New and significant Monistat advertising and Health Care Professional “HCP” investments launching in Q1 Expand Nix distribution and product offering Prioritize and invest in feminine hygiene new product pipeline Industry dynamics resulting in continued robust environment Big pharma portfolio rationalization continues Committed to aggressive and disciplined M&A strategy Strong core OTC and international portfolio momentum going into FY 16 Consumer confidence improving Retailers cautiously optimistic, bottom line focused Fx impact on top line continues FY 16 outlook: — Revenue growth of +10% to +12% (including $10MM negative Fx impact) ● 1H +20% to +23%, 2H +1.5% to +2.0% — Adjusted EPS +10% to +13% ($2.05 to $2.10)(8) — Free cash flow of $175MM(9) or more — Continued A&P investment in portfolio, Insight brands in particular Insight Growth Plan FY 16 Full Year Outlook M&A Strategy Brand Building
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 26 Key Drivers of Long-Term Shareholder Value Develop a Portfolio of Leading Brands Capitalize on Efficient and Effective Operating Model Deliver Robust and Consistent Free Cash Flow Execute Proven and Repeatable M&A Strategy Portfolio of recognizable brands in attractive consumer health industry Established expertise in brand building and product innovation Demonstrated ability to gain market share long-term Target Revenue contribution from Core OTC and International brands from ~78% to ~85% Demonstrated track record of 6 acquisitions during the past 5 years Effective consolidation platform positioned for consistent pipeline of opportunities Proven ability to source from varied sellers Fragmented industry and recent wave of acquisitions creates a robust pipeline Strong and consistent cash flow driven by industry leading EBITDA margins, capital-lite business model and significant deferred tax assets Rapid deleveraging allows for expanded acquisition capacity and continued investment in brand building Non-core brands’ role contributes to cash flow Debt repayment reduces cash interest expense and adds to EPS Efficient asset-lite model with best-in-class outsourced manufacturing and distribution partners Scalable operating platform key to Revenue expansion from $300MM to $800MM and beyond Business model enables gross margin expansion and G&A absorption Continued cost efficiencies expected with GM targeted at 60% and savings reinvested in A&P
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 27 Q&A
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 28 Appendix (1) Revenue Growth on a constant currency basis is a Non-GAAP financial measure and is reconciled to its most closely related GAAP financial measure in our earnings release in the “About Non-GAAP Financial Measures” section. (2) Adjusted Gross Margin, Adjusted G&A, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted EPS and Adjusted Free Cash Flow are Non-GAAP financial measures and are reconciled to their most closely related GAAP financial measures in our earnings release in the “About Non-GAAP Financial Measures” section, and are also reconciled on slides 29 through 32. (3) Leverage ratio reflects net debt / covenant defined EBITDA. (4) Pro forma Net Sales is projected for FY 15 as if Insight and Hydralyte were acquired on April 1, 2014. (5) Based on Company's organic long-term plan. Source: Company data. (6) Assumes max leverage of 5.75x and average EBITDA acquisition multiple consistent with previous acquisitions. (7) Operating cash flow is equal to GAAP net cash provided by operating activities. (8) Adjusted EPS for FY 16 is a projected Non-GAAP financial measure, is reconciled to projected GAAP EPS in our earnings release in the “About Non-GAAP Financial Measures” section and is calculated based on projected GAAP EPS of $2.00 to $2.05 plus $0.05 of cost associated with term loan refinancing and CEO retirement totaling $2.05 to $2.10. (9) Adjusted Free Cash Flow for FY 16 is a projected Non-GAAP financial measure, is reconciled to projected GAAP Net Cash Provided by Operating Activities in our earnings release in the “About Non-GAAP Financial Measures” section and is calculated based on projected Net Cash Provided by Operating Activities of $181 million less projected capital expenditures of $6 million.
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 29 2010 2011 2012 2013 2014 2015 GAAP General and Administrative expenses 34,195$ 41,960$ 56,700$ 51,467$ 48,481$ 81,273$ Adjustments Legal and other professional fees associated with acquisitions - 7,729 13,807 98 1,111 10,974 Transition and other acquisition costs - - 3,588 5,811 - 13,473 Unsolicited porposal costs - - 1,737 534 - - Total adjustments - 7,729 19,132 6,443 1,111 24,447 Non-GAAP Adjusted G&A 34,195$ 34,231$ 37,568$ 45,024$ 47,370$ 56,826$ Non-GAAP Adjusted G&A % 11.8% 10.3% 8.6% 7.3% 7.9% 8.0% 2010 2011 2012 2013 2014 2015 GAAP Gross Margin 150,494$ 167,273$ 224,118$ 343,737$ 335,551$ 406,223$ Adjustments Inventory step up associated with acquisitions - 7,273 1,795 23 577 2,225 Additional inventory transition and supplier costs associated with acquisitions - - - 5,646 407 - Total adjustments - 7,273 1,795 5,669 984 2,225 Non-GAAP Adjusted Gross Margin 150 4 4 174 546 225 913 349 06 336 535 408 448 Non-GAAP Adjusted Gross Margin % 52.0% 52.4% 51.6% 56.3% 56.3% 57.2% Reconciliation Schedules Adjusted Gross Margin Dollar values in thousands. Adjusted G&A
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 30 2010 2011 2012 2013 2014 2015 Net Income EPS Net Income EPS Net Income EPS Net Income EPS Net Income EPS Net Income EPS GAAP Net Income 32,115$ 0.64$ 29,220$ 0.58$ 37,212$ 0.73$ 65,505$ 1.27$ 72,615$ 1.39$ 78,260$ 1.49$ Adjustments Income from discontinued ops. - - (591) (0.01) - - - - - - - - Loss on sale of discontinued ops. - - 550 0.01 - - - - - - - - Incremental interest expense to finance Acquisition - - 800 0.02 - - - - - - - - Sales costs related to acquisitions - - - - - - 411 0.01 - - - - Inventory step up - - 7,273 0.14 1,795 0.04 23 - 577 0.01 2,225 0.04 Inventory related acquisition costs - - - - - - 220 - 407 0.01 - - Add'l supplier costs - - - - - - 5,426 0.11 - - - - Legal and other professional fees associated with acquisitions - - 7,729 0.15 13,807 0.27 98 - 1,111 0.02 10,974 0.21 Transition and other Acq costs - - - - 3,588 0.07 5,811 0.11 - - 10,533 0.20 Stamp Duty - - - - - - - - - - 2,940 0.05 Unsolicited porposal costs - - - - 1,737 0.03 534 0.01 - - - - Loss on extinguishment of debt 2,656 0.05 300 0.01 5,409 0.11 1,443 0.03 18,286 0.35 - - Impairment of GW - - - - - - - - - - - - Gain on settlement - - - - (5,063) (0.10) - - - - - - Gain on sale of asset - - - - - - - - - - (1,133) (0.02) Accelerated amortization of debt discounts and debt issue costs - - - - - - 7,746 0.15 5,477 0.10 218 - Tax impact on adjustments (1,009) (0.01) (5,513) (0.11) (8,091) (0.16) (8,329) (0.16) (9,100) (0.17) (5,968) (0.11) Impact of state tax adjustments (352) (0.01) - - (237) - (1,741) (0.03) (9,465) (0.18) - - Total adjustments 1,295 0.03 10,548 0.21 12,945 0.26 11,642 0.23 7,293 0.14 19,789 0.37 Non-GAAP Adjusted Net Income and Non-GAAP Adjusted EPS 33,410$ 0.67$ 39,768$ 0.79$ 50,157$ 0.99$ 77,147$ 1.50$ 79,908$ 1.53$ 98,049$ 1.86$ Reconciliation Schedules Cont’d Adjusted Net Income and Adjusted EPS Dollar values in thousands, except per share data.
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 31 2010 2011 2012 2013 2014 2015 GAAP Net Income 32,115$ 29,220$ 37,212$ 65,505$ 72,615$ 78,260$ Income from Disc Ops 112 (591) - - - - Loss on sale of disc ops (157) 550 - - - - Interest Expense, net 22,935 27,317 41,320 84,407 68,582 81,234 Provision for income taxes 20,664 19,349 23,945 40,529 29,133 49,198 Depreciation and amortization 10,001 9,876 10,734 13,235 13,486 17,740 Non-GAAP EBITDA 85,670 85,721 113,211 203,676 183,816 226,432 Sales costs related to acquisitions - - - 411 - - Inventory step up - 7,273 1,795 23 577 2,225 Inventory related acquisition costs - - - 220 407 - Add'l supplier costs - - - 5,426 - - Legal and other professional fees associated with acquisitions - 7,729 13,807 98 1,111 10,974 Transition and other Acq costs - - 3,588 5,811 - 10,533 Stamp Duty - - - - - 2,940 Unsolicited porposal costs - - 1,737 534 - - Loss on extinguishment of debt 2,656 300 5,409 1,443 18,286 - Impairment of GW - - - - - - Gain on settlement - - (5,063) - - - Gain on sale of asset - - - - - (1,133) Not shown in ER - - - - - - Adjustments to EBITDA 2,656 15,302 21,273 13,966 20,381 25,539 Non-GAAP Adjusted EBITDA 88,326$ 101,023$ 134,484$ 217,642$ 204,197$ 251,971$ Reconciliation Schedules Cont’d Adjusted EBITDA Dollar values in thousands.
F o u r t h Q u a r t e r & F Y 1 5 R e s u l t s 32 2010 2011 2012 2013 2014 2015 GAAP Net Income 32,115$ 29,220$ 37,212$ 65,505$ 72,615$ 78,260$ Adjustments Adjustments to reconcile net income to net cash provided by operating activities as shown in the statement of cash flows 31,137 26,095 35,674 59,497 50,912 64,668 Changes in operating assets and liabilities, net of effects from acquisitions as shown in the statement of cash flows (3,825) 31,355 (5,434) 12,603 (11,945) 13,327 Total adjustments 27,312 57,450 30,240 72,100 38,967 77,995 GAAP Net cash provided by operating activities 59,427 86,670 67,452 137,605 111,582 156,255 Purchases of property and equipment (673) (655) (606) (10,268) (2,764) (6,101) Non-GAAP Free Cash Flow 58,754 86,015 66,846 127,337 108,818 150,154 Premiuim payment on 2010 Senior Notes - - - - 15,527 - Accelerated interest payments due to debt refinancing - - - - 4,675 - Integration, transition and other payments associated with acquisitions - - - - 512 13,563 Total adjustments - - - - 20,714 13,563 Non-GAAP Adjusted Free Cash Flow 58,754$ 86,015$ 66,846$ 127,337$ 129,532$ 163,717$ Reconciliation Schedules Cont’d Adjusted Free Cash Flow Dollar values in thousands.