Document
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 11, 2017
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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02 Results of Operations and Financial Condition.
On May 11, 2017, Prestige Brands Holdings, Inc. (the “Company”) announced financial results for the fiscal quarter and year ended March 31, 2017. A copy of the press release announcing the Company's earnings results for the fiscal quarter and year ended March 31, 2017 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 11, 2017, representatives of the Company began making presentations to investors regarding the Company's financial results for the quarter and year ended March 31, 2017 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, 2018.
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.
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| | | |
Dated: May 11, 2017 | PRESTIGE BRANDS HOLDINGS, INC. | |
| | | |
| By: | /s/ Christine Sacco | |
| | Name: Christine Sacco | |
| | Title: Chief Financial Officer | |
EXHIBIT INDEX
|
| | |
Exhibit | | Description |
| | |
99.1 | | Press Release dated May 11, 2017 announcing the Company's financial results for the fiscal quarter and year ended March 31, 2017 (furnished only). |
99.2 | | Investor Relations Slideshow in use beginning May 11, 2017 (furnished only). |
Exhibit
Exhibit 99.1
Prestige Brands Holdings, Inc. Reports Fiscal 2017 Fourth Quarter and Full Year Results; Provides Fiscal 2018 Outlook
| |
– | Reported revenue increased 15.8% to $240.7 million and 9.4% to $882.1 million in Q4 and fiscal 2017, respectively. |
| |
– | Generated $147.8 million in fiscal 2017 GAAP net cash provided by operating activities and adjusted non-GAAP free cash flow of $196.0 million. |
| |
– | Anticipate 18 to 20% revenue growth in fiscal 2018. |
| |
– | Fiscal 2018 GAAP EPS guidance of $2.50 to 2.60; Non-GAAP Adjusted EPS outlook of $2.58-2.68. |
| |
– | C.B. Fleet acquisition successfully closed January 26th; integration and cost savings efforts tracking as anticipated. |
TARRYTOWN, N.Y.--(BUSINESS WIRE)--May 11, 2017-- Prestige Brands Holdings, Inc. (NYSE:PBH) today reported financial results for its fourth quarter and fiscal year ended March 31, 2017.
“Our solid overall fourth quarter performance was broad-based, benefitting from our diverse product offering, ongoing brand-building investments, and the strategic evolution of our portfolio throughout the fiscal year. Equally important, we closed the acquisition of C.B. Fleet in late January and are on schedule with integrating this well-positioned portfolio of brands into our existing business. This strong momentum positions our business well as we enter into fiscal 2018,” said Ron Lombardi, Chief Executive Officer of Prestige Brands.
Fiscal Fourth Quarter Ended March 31, 2017
Reported revenues in the fourth quarter of fiscal 2017 increased 15.8% to $240.7 million, compared to $207.9 million in the fourth quarter of fiscal 2016. Revenues for the quarter were driven by continued strong consumption levels across the Company’s core over-the-counter healthcare (OTC) and international brands, and incremental revenue from the DenTek® and C.B. Fleet (Fleet) acquisitions, partially offset by the divestitures of multiple non-core brands made earlier in the fiscal year. The Fleet transaction, which closed January 26th, contributed $38.7 million in revenues to fourth quarter performance. Excluding the impact of these acquisitions and divestitures, fourth quarter fiscal 2017 non-GAAP organic revenue growth increased 1.1% versus the prior year comparable quarter.
Reported net income for the fourth quarter of fiscal 2017 totaled $11.1 million, a decrease of 20.4% over the prior year comparable quarter’s net income of $13.9 million. Diluted earnings per share of $0.21 for the fourth quarter of fiscal 2017 compared to $0.26 in the prior year comparable period. Non-GAAP adjusted net income for the fourth quarter of fiscal 2017 was $28.8 million, an increase of 3.2% over the prior year period’s adjusted net income of $27.9 million. Non-GAAP adjusted earnings per share were $0.54 per share for the fourth quarter of fiscal 2017, compared to $0.52 per share in the prior year comparable period.
Adjustments to net income in the fourth quarter of fiscal 2017 and fiscal 2016 include integration, transition, purchase accounting, legal and various other costs associated with acquisitions and divestitures, loss on extinguishment of debt, and the related income tax effects of the adjustments.
Fiscal Year Ended March 31, 2017
Reported revenues for the fiscal year ended March 31, 2017 totaled $882.1 million, an increase of 9.4%, compared to revenues of $806.2 million for the fiscal year ended March 31, 2016. After adjusting for acquisitions and divestitures, organic revenues (a non-GAAP measure) for the fiscal year ended March 31, 2017 increased 1.0%.
Reported net income for fiscal year 2017 totaled $69.4 million, or $1.30 in earnings per diluted share, compared to $99.9 million, or $1.88 per diluted share, for fiscal year 2016. On a non-GAAP basis, adjusted net income for fiscal year 2017 totaled $126.6 million, or $2.37 per diluted share, an increase of 9.6% compared to adjusted net income of $115.5 million, or $2.17 per diluted share, for fiscal 2016.
Adjustments to net income in fiscal 2017 include integration, transition, purchase accounting, legal and various other costs associated with acquisitions and divestitures, a loss on extinguishment of debt, a net loss related to the divestiture of certain non-core brands and the related income tax effects of the adjustments. Adjustments to net income in the fiscal year 2016 included integration, transition, purchase accounting, legal and various other costs associated with acquisitions and divestitures, as well as costs associated with CEO transition.
Free Cash Flow and Balance Sheet
The Company's GAAP reported net cash provided by operating activities for the fourth fiscal quarter decreased to $7.4 million from $37.9 million a year earlier, owing primarily to various expenses related to the Fleet acquisition as well as income tax payments resulting from divestitures. Non-GAAP adjusted free cash flow for the fourth fiscal quarter was $46.8 million, down from $48.7 million in the prior year comparable quarter.
For the full-year fiscal 2017, GAAP net cash provided by operating activities was $147.8 million compared to $174.4 million in the prior year comparable period, while non-GAAP adjusted free cash flow of $196.0 increased versus $183.4 million in the prior year's period.
As expected, the Company's net debt position as of March 31, 2017 was approximately $2.2 billion, which increased versus the prior year driven by the acquisition of Fleet. At the end of fiscal 2017, the Company's covenant-defined leverage ratio was approximately 5.7x, supported by the Company’s consistent and industry-leading free cash flow. The company expects to reach an approximate 5.0x covenant-defined leverage ratio by the end of fiscal 2018.
Segment Review
North American OTC Healthcare: Segment revenues totaled $199.0 million for the fourth quarter of fiscal 2017, 16.4% higher than the prior year comparable quarter's revenues of $171.0 million. For fiscal 2017, reported revenues for the North American OTC Healthcare segment were $720.8 million, an increase of 9.6% compared to $657.9 million in the prior year comparable period. Results for both fiscal 2017 periods were favorably impacted by increased consumption among the majority of core OTC brands as well as revenues from the acquisitions of DenTek and Fleet, partially offset by divestitures of non-core OTC brands.
International OTC Healthcare: Segment fiscal Q4 2017 revenues totaled $20.2 million, 40.0% higher than the $14.5 million reported in the prior year comparable period. For the fiscal year 2017, reported revenues for the International OTC Healthcare segment were $73.3 million, an increase of 27.0% over the prior year comparable period’s revenues of $57.7 million. Fourth quarter and full-year revenues included an incremental benefit associated with revenues from DenTek and Fleet transactions.
Household Cleaning: Segment revenues totaled $21.4 million for the fourth quarter of fiscal 2017, compared with fourth quarter fiscal 2016 revenues of $22.4 million, a decrease of 4.3%. Reported revenues for fiscal year 2017 totaled $87.9 million, a 3.0% decrease over fiscal year 2016 revenues of $90.7 million.
Commentary and Outlook for Fiscal 2018
Ron Lombardi, President and CEO, stated, “In fiscal 2018, we expect continued organic growth in our existing business and incremental revenues from the acquisition of Fleet to drive growth. Embedded in our fiscal year 2018 revenue growth assumption is a pro-forma organic growth rate of 2.0% to 2.5%. We expect fiscal 2018 adjusted earnings per share in the range of $2.58 to $2.68, and adjusted non-GAAP projected free cash flow of $205 million or more. As has been our practice, we plan to continue using our industry-leading free cash flow to pay down debt and build M&A capacity,” he stated.
“Our fiscal 2018 organic growth forecast reflects our strong, diversified portfolio and brand-building efforts, which position us well in the current challenging consumer and retail environment. We look forward to fiscal 2018 and the prospects surrounding both our legacy portfolio and the recent acquisition of Fleet,” Mr. Lombardi concluded.
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| |
| Fiscal 2018 Full-Year Outlook |
Revenue Growth | 18 to 20% |
Adjusted E.P.S.* | $2.58 to $2.68 |
Adjusted Free Cash Flow* | $205 million or more |
Board of Directors Chairman Appointment
The Company’s Board of Directors elected Ron Lombardi as Chairman of the Board. Gary E. Costley will remain the Company’s Lead Independent Director.
“Prestige Brands has achieved many operational and financial goals during Ron Lombardi’s tenure as CEO and I am pleased to announce the Board of Directors have elected Ron Chairman of the Board," stated Gary E. Costley. "Ron is a decisive and energetic leader who is well prepared to become Chairman of our Board. He has successfully guided Prestige to record results, is respected inside and outside the Company, consistently builds exceptional teams, and sets high standards of performance throughout our organization. The Board is confident he will provide outstanding leadership as Chairman, President and CEO in the coming years."
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 11, 2017 at 8:30 a.m. ET. The toll-free dial-in numbers are 877-233-9440 within North America and 574-990-1016 outside of North America. The conference ID number is 6720925. 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 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 6720925.
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.
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, adjusted earnings per share and adjusted free cash flow, the Company’s ability to meet organic growth targets, the Company’s use of free cash flow to pay down debt and build M&A capacity, and the success of the Company’s acquisition of Fleet and its brand building efforts. 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, the failure to successfully integrate the Fleet brands, general economic and business conditions, fluctuating foreign exchange rates, consumer trends, competitive pressures, and the ability of the Company’s third party manufacturers and suppliers to meet demand for its products. 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, 2016, Quarterly Report on Form 10-Q for the quarter ended December 31, 2016, and other periodic reports filed with the Securities and Exchange Commission.
About Prestige Brands Holdings, Inc.
The Company markets and distributes brand name over-the-counter and household cleaning products throughout the U.S. and Canada, Australia, and in certain other international markets. The Company's brands include Monistat® 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, Chloraseptic® sore throat treatments, Compound W® wart treatments, Little Remedies® pediatric over-the-counter products, The Doctor's® NightGuard® dental protector, Efferdent® denture care products, Luden's® throat drops, Beano® gas prevention, Debrox® earwax remover, Gaviscon® antacid in Canada, and
Hydralyte® rehydration products and the Fess® line of nasal and sinus care products in Australia. Visit the Company's website at www.prestigebrands.com.
* See the “About Non-GAAP Financial Measures” section of this report for further presentation information. Beginning April 1, 2017, organic revenue growth definition includes pro forma sales associated with the Fleet transaction as if the combination occurred April 1, 2016.
Prestige Brands Holdings, Inc.
Consolidated Statement of Income and Comprehensive Income
(Unaudited)
|
| | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, | | Year Ended March 31, |
(In thousands, except per share data) | | 2017 | | 2016 | | 2017 | | 2016 |
Revenues | | | | | | | | |
Net sales | | $ | 240,594 |
| | $ | 207,054 |
| | $ | 881,113 |
| | $ | 803,088 |
|
Other revenues | | 76 |
| | 801 |
| | 947 |
| | 3,159 |
|
Total revenues | | 240,670 |
| | 207,855 |
|
| 882,060 |
| | 806,247 |
|
| | | | | | | | |
Cost of Sales | | |
| | |
| | |
| | |
|
Cost of sales | | 110,487 |
| | 89,604 |
| | 381,774 |
| | 339,036 |
|
Gross profit | | 130,183 |
| | 118,251 |
|
| 500,286 |
| | 467,211 |
|
| | | | | | | | |
Operating Expenses | | |
| | |
| | |
| | |
|
Advertising and promotion | | 41,450 |
|
| 26,552 |
|
| 128,359 |
|
| 110,802 |
|
General and administrative | | 28,760 |
|
| 20,232 |
|
| 89,143 |
|
| 72,418 |
|
Depreciation and amortization | | 6,651 |
|
| 6,198 |
|
| 25,351 |
|
| 23,676 |
|
Loss on divestitures | | 268 |
| | — |
| | 51,820 |
| | — |
|
Total operating expenses | | 77,129 |
| | 52,982 |
| | 294,673 |
| | 206,896 |
|
Operating income | | 53,054 |
| | 65,269 |
| | 205,613 |
| | 260,315 |
|
| | | | | | | | |
Other (income) expense | | |
| | |
| | |
| | |
|
Interest income | | (54 | ) | | (71 | ) | | (203 | ) | | (162 | ) |
Interest expense | | 32,886 |
| | 23,218 |
| | 93,546 |
| | 85,322 |
|
Loss on extinguishment of debt | | 1,420 |
| | 17,519 |
| | 1,420 |
| | 17,970 |
|
Total other expense | | 34,252 |
| | 40,666 |
| | 94,763 |
| | 103,130 |
|
| | | | | | | | |
Income before income taxes | | 18,802 |
| | 24,603 |
| | 110,850 |
| | 157,185 |
|
Provision for income taxes | | 7,712 |
|
| 10,667 |
|
| 41,455 |
|
| 57,278 |
|
Net income | | $ | 11,090 |
| | $ | 13,936 |
|
| $ | 69,395 |
| | $ | 99,907 |
|
| | | | | | | | |
Earnings per share: | | |
| | |
| | |
| | |
|
Basic | | $ | 0.21 |
| | $ | 0.26 |
| | $ | 1.31 |
| | $ | 1.89 |
|
Diluted | | $ | 0.21 |
| | $ | 0.26 |
| | $ | 1.30 |
| | $ | 1.88 |
|
| | | | | | | | |
Weighted average shares outstanding: | | |
| | |
| | |
| | |
|
Basic | | 53,009 |
| | 52,833 |
| | 52,976 |
| | 52,754 |
|
Diluted | | 53,419 |
| | 53,252 |
| | 53,362 |
| | 53,143 |
|
| | | | | | | | |
Comprehensive income, net of tax: | | | | | | | | |
Currency translation adjustments | | 9,282 |
| | 6,449 |
| | (2,575 | ) | | (113 | ) |
Pension liability | | (252 | ) | | — |
| | (252 | ) | | — |
|
Total other comprehensive income (loss) | | 9,030 |
| | 6,449 |
| | (2,827 | ) | | (113 | ) |
Comprehensive income | | $ | 20,120 |
| | $ | 20,385 |
| | $ | 66,568 |
| | $ | 99,794 |
|
Prestige Brands Holdings, Inc.
Consolidated Balance Sheet
(Unaudited)
|
| | | | | | | |
(In thousands)
| March 31, |
Assets | 2017 | | 2016 |
Current assets | | | |
Cash and cash equivalents | $ | 41,855 |
| | $ | 27,230 |
|
Accounts receivable, net | 136,742 |
| | 95,247 |
|
Inventories | 115,609 |
| | 91,263 |
|
Deferred income tax assets | — |
| | 10,108 |
|
Prepaid expenses and other current assets | 40,228 |
| | 25,165 |
|
Total current assets | 334,434 |
| | 249,013 |
|
| | | |
Property, plant and equipment, net | 50,595 |
| | 15,540 |
|
Goodwill | 615,252 |
| | 360,191 |
|
Intangible assets, net | 2,903,613 |
| | 2,322,723 |
|
Other long-term assets | 7,454 |
| | 1,324 |
|
Total Assets | $ | 3,911,348 |
| | $ | 2,948,791 |
|
| | | |
Liabilities and Stockholders' Equity | |
| | |
|
Current liabilities | |
| | |
|
Accounts payable | $ | 70,218 |
| | $ | 38,296 |
|
Accrued interest payable | 8,130 |
| | 8,664 |
|
Other accrued liabilities | 83,661 |
| | 59,724 |
|
Total current liabilities | 162,009 |
| | 106,684 |
|
| | | |
Long-term debt | | | |
Principal amount | 2,222,000 |
| | 1,652,500 |
|
Less unamortized debt costs | (28,268 | ) | | (27,191 | ) |
Long-term debt, net | 2,193,732 |
| | 1,625,309 |
|
| | | |
Deferred income tax liabilities | 715,086 |
| | 469,622 |
|
Other long-term liabilities | 17,972 |
| | 2,840 |
|
Total Liabilities | 3,088,799 |
| | 2,204,455 |
|
| | | |
| | | |
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 – 53,287 shares at March 31, 2017 and 53,066 shares at March 31, 2016 | 533 |
| | 530 |
|
Additional paid-in capital | 458,255 |
| | 445,182 |
|
Treasury stock, at cost – 332 shares at March 31, 2017 and 306 at March 31, 2016 | (6,594 | ) | | (5,163 | ) |
Accumulated other comprehensive loss, net of tax | (26,352 | ) | | (23,525 | ) |
Retained earnings | 396,707 |
| | 327,312 |
|
Total Stockholders' Equity | 822,549 |
| | 744,336 |
|
| | | |
Total Liabilities and Stockholders' Equity | $ | 3,911,348 |
| | $ | 2,948,791 |
|
Prestige Brands Holdings, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
|
| | | | | | | |
| Year Ended March 31, |
(In thousands) | 2017 | | 2016 |
Operating Activities | | | |
Net income | $ | 69,395 |
| | $ | 99,907 |
|
Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Depreciation and amortization | 25,792 |
| | 23,676 |
|
Loss on divestitures and sales of property and equipment | 51,820 |
| | — |
|
Deferred income taxes | (5,778 | ) | | 46,152 |
|
Long term income taxes payable | 581 |
| | (332 | ) |
Amortization of debt origination costs | 8,633 |
| | 8,994 |
|
Stock-based compensation costs | 8,148 |
| | 9,954 |
|
Loss on extinguishment of debt | 1,420 |
| | 17,970 |
|
Premium payment on 2012 Senior Notes | — |
| | (10,158 | ) |
Lease termination costs | 524 |
| | — |
|
Loss (gain) on sale or disposal of property and equipment | 573 |
| | (35 | ) |
Changes in operating assets and liabilities, net of effects from acquisitions | | | |
Accounts receivable | (18,938 | ) | | 1,824 |
|
Inventories | (10,262 | ) | | (3,005 | ) |
Prepaid expenses and other assets | (1,996 | ) | | (7,921 | ) |
Accounts payable | 21,447 |
| | (11,348 | ) |
Accrued liabilities | 2,497 |
| | (1,328 | ) |
Noncurrent assets and liabilities | (6,084 | ) | | — |
|
Net cash provided by operating activities | 147,772 |
| | 174,350 |
|
| | | |
Investing Activities | |
| | |
|
Purchases of property and equipment | (2,977 | ) |
| (3,568 | ) |
Proceeds from divestitures | 110,717 |
| | — |
|
Proceeds from the sale of property and equipment | 85 |
| | 344 |
|
Proceeds from Insight Pharmaceuticals working capital arbitration settlement | — |
| | 7,237 |
|
Proceeds from DenTek working capital arbitration settlement | 1,419 |
| | — |
|
Acquisition of DenTek, less cash acquired | — |
| | (226,984 | ) |
Acquisition of C.B. Fleet, less cash acquired | (803,839 | ) | | — |
|
Net cash used in investing activities | (694,595 | ) | | (222,971 | ) |
| | | |
Financing Activities | |
| | |
|
Proceeds from issuance of 2016 Senior Notes | — |
| | 350,000 |
|
Repayment of 2012 Senior Notes | — |
| | (250,000 | ) |
Borrowings under Bridge term loans | — |
| | 80,000 |
|
Repayments under Bridge term loans | — |
| | (80,000 | ) |
Proceeds from issuance of Term Loan | 1,427,000 |
| | — |
|
Term Loan repayments resulting from refinancing | (687,000 | ) | | — |
|
Term Loan repayments | (175,500 | ) | | (60,000 | ) |
Borrowings under revolving credit agreement | 110,000 |
| | 115,000 |
|
Repayments under revolving credit agreement | (105,000 | ) | | (96,100 | ) |
Payments of debt origination costs | (11,140 | ) | | (11,828 | ) |
Proceeds from exercise of stock options | 4,028 |
| | 6,689 |
|
Proceeds from restricted stock exercises | — |
| | 544 |
|
Excess tax benefits from share-based awards | 900 |
| | 1,960 |
|
Fair value of shares surrendered as payment of tax withholding | (1,431 | ) | | (2,229 | ) |
Net cash provided by financing activities | 561,857 |
| | 54,036 |
|
| | | |
Effects of exchange rate changes on cash and cash equivalents | (409 | ) | | 497 |
|
Increase in cash and cash equivalents | 14,625 |
| | 5,912 |
|
Cash and cash equivalents - beginning of year | 27,230 |
| | 21,318 |
|
Cash and cash equivalents - end of year | $ | 41,855 |
| | $ | 27,230 |
|
| | | |
Interest paid | $ | 85,209 |
| | $ | 79,132 |
|
Income taxes paid | $ | 47,999 |
| | $ | 15,352 |
|
Prestige Brands Holdings, Inc.
Consolidated Statement of Income
Business Segments
(Unaudited)
|
| | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2017 |
(In thousands) | North American OTC Healthcare | | International OTC Healthcare | | Household Cleaning | | Consolidated |
Gross segment revenues | $ | 201,003 |
|
| $ | 20,226 |
|
| $ | 21,377 |
|
| $ | 242,606 |
|
Elimination of intersegment revenues | (2,012 | ) |
| — |
|
| — |
|
| (2,012 | ) |
Third-party segment revenues | 198,991 |
|
| 20,226 |
|
| 21,377 |
|
| 240,594 |
|
Other revenues | 33 |
|
| 11 |
|
| 32 |
|
| 76 |
|
Total segment revenues | 199,024 |
|
| 20,237 |
|
| 21,409 |
|
| 240,670 |
|
Cost of sales | 84,736 |
|
| 9,067 |
|
| 16,684 |
|
| 110,487 |
|
Gross profit | 114,288 |
|
| 11,170 |
|
| 4,725 |
|
| 130,183 |
|
Advertising and promotion | 35,814 |
|
| 4,564 |
|
| 1,072 |
|
| 41,450 |
|
Contribution margin | $ | 78,474 |
|
| $ | 6,606 |
|
| $ | 3,653 |
|
| $ | 88,733 |
|
Other operating expenses | |
|
|
|
| |
|
| 35,679 |
|
Operating income | |
|
|
|
| |
|
| 53,054 |
|
Other expense | |
|
|
|
| |
|
| 34,252 |
|
Income before income taxes |
|
|
|
|
|
|
|
| 18,802 |
|
Provision for income taxes | |
|
|
|
| |
|
| 7,712 |
|
Net income |
|
|
|
|
|
|
|
| $ | 11,090 |
|
|
| | | | | | | | | | | | | | | |
| Year Ended March 31, 2017 |
(In thousands) | North American OTC Healthcare | | International OTC Healthcare | | Household Cleaning | | Consolidated |
Gross segment revenues | $ | 724,991 |
|
| $ | 73,287 |
|
| $ | 87,035 |
|
| $ | 885,313 |
|
Elimination of intersegment revenues | (4,200 | ) |
| — |
|
| — |
|
| (4,200 | ) |
Third-party segment revenues | 720,791 |
|
| 73,287 |
|
| 87,035 |
|
| 881,113 |
|
Other revenues | 33 |
|
| 17 |
|
| 897 |
|
| 947 |
|
Total segment revenues | 720,824 |
|
| 73,304 |
|
| 87,932 |
|
| 882,060 |
|
Cost of sales | 282,750 |
|
| 30,789 |
|
| 68,235 |
|
| 381,774 |
|
Gross profit | 438,074 |
|
| 42,515 |
|
| 19,697 |
|
| 500,286 |
|
Advertising and promotion | 112,465 |
|
| 13,434 |
|
| 2,460 |
|
| 128,359 |
|
Contribution margin | $ | 325,609 |
|
| $ | 29,081 |
|
| $ | 17,237 |
|
| $ | 371,927 |
|
Other operating expenses* | |
|
|
|
| |
|
| 166,314 |
|
Operating income | |
|
|
|
| |
|
| 205,613 |
|
Other expense | |
|
|
|
| |
|
| 94,763 |
|
Income before income taxes |
|
|
|
|
|
|
|
| 110,850 |
|
Provision for income taxes | |
|
|
|
| |
|
| 41,455 |
|
Net income | | | | | | | $ | 69,395 |
|
*Other operating expenses for the twelve months ended March 31, 2017 includes a pre-tax net loss of $51.8 million related to divestitures. These divestitures include Pediacare, New Skin, Fiber Choice, e.p.t, Dermoplast, and license rights in certain geographic areas pertaining to Comet. The assets and corresponding contribution margin associated with the pre-tax net loss on divestitures related to Pediacare, New Skin, Fiber Choice, e.p.t and Dermoplast are included within the North American OTC Healthcare segment, while the pre-tax gain on sale of license rights related to Comet are included in the Household Cleaning segment.
|
| | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2016 |
(In thousands) | North American OTC Healthcare | | International OTC Healthcare | | Household Cleaning | | Consolidated |
Gross segment revenues | $ | 171,253 |
| | $ | 14,457 |
| | $ | 21,577 |
| | $ | 207,287 |
|
Elimination of intersegment revenues | (233 | ) | | — |
| | — |
| | (233 | ) |
Third-party segment revenues | 171,020 |
| | 14,457 |
| | 21,577 |
| | 207,054 |
|
Other revenues | (1 | ) | | 3 |
| | 799 |
| | 801 |
|
Total segment revenues | 171,019 |
| | 14,460 |
| | 22,376 |
| | 207,855 |
|
Cost of sales | 67,739 |
| | 5,329 |
| | 16,536 |
| | 89,604 |
|
Gross profit | 103,280 |
| | 9,131 |
| | 5,840 |
| | 118,251 |
|
Advertising and promotion | 23,286 |
| | 2,776 |
| | 490 |
| | 26,552 |
|
Contribution margin | $ | 79,994 |
| | $ | 6,355 |
| | $ | 5,350 |
| | $ | 91,699 |
|
Other operating expenses | |
| | | | |
| | 26,430 |
|
Operating income | |
| | | | |
| | 65,269 |
|
Other expense | |
| | | | |
| | 40,666 |
|
Income before income taxes | | | | | | | 24,603 |
|
Provision for income taxes | | | | | | | 10,667 |
|
Net income | | | | | | | $ | 13,936 |
|
|
| | | | | | | | | | | | | | | |
| Year Ended March 31, 2016 |
(In thousands) | North American OTC Healthcare | | International OTC Healthcare | | Household Cleaning | | Consolidated |
Gross segment revenues | $ | 660,518 |
| | $ | 57,670 |
| | $ | 87,561 |
| | $ | 805,749 |
|
Elimination of intersegment revenues | (2,661 | ) | | — |
| | — |
| | (2,661 | ) |
Third-party segment revenues | 657,857 |
| | 57,670 |
| | 87,561 |
| | 803,088 |
|
Other revenues | 14 |
| | 43 |
| | 3,102 |
| | 3,159 |
|
Total segment revenues | 657,871 |
| | 57,713 |
| | 90,663 |
| | 806,247 |
|
Cost of sales | 250,018 |
| | 21,676 |
| | 67,342 |
| | 339,036 |
|
Gross profit | 407,853 |
| | 36,037 |
| | 23,321 |
| | 467,211 |
|
Advertising and promotion | 97,393 |
| | 11,114 |
| | 2,295 |
| | 110,802 |
|
Contribution margin | $ | 310,460 |
| | $ | 24,923 |
| | $ | 21,026 |
| | $ | 356,409 |
|
Other operating expenses | |
| | | | |
| | 96,094 |
|
Operating income | |
| | | | |
| | 260,315 |
|
Other expense | |
| | | | |
| | 103,130 |
|
Income before income taxes | | | | | | | 157,185 |
|
Provision for income taxes | |
| | | | |
| | 57,278 |
|
Net income | | | | | | | $ | 99,907 |
|
About Non-GAAP Financial Measures
We have pursued various strategic initiatives and completed a number of acquisitions in recent years that have resulted in revenues that would not have otherwise been recognized. The frequency and the amount of such revenues vary significantly based on the size, timing and complexity of the transaction. 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 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 Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow, and Non-GAAP Adjusted Free Cash Flow. 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 products acquired or divested in the periods presented. |
| |
• | Non-GAAP Adjusted Gross Margin: GAAP Gross Profit minus inventory set-up charges and certain integration, transition and other acquisition 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 other 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 other legal and professional fees, integration, transition and other acquisition related costs, divestiture costs, and costs associated with our CEO transition. |
| |
• | 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 less interest expense (income), income taxes, 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 inventory set-up charges, certain other legal and professional fees, integration, transition and other acquisition related costs, divestiture costs, costs associated with our CEO transition, loss on extinguishment of debt, and gain/loss on divestitures. |
| |
• | Non-GAAP Adjusted EBITDA Margin: Calculated as Non-GAAP Adjusted EBITDA divided by GAAP Total Revenues. |
| |
• | Non-GAAP Adjusted Net Income: GAAP Net Income before certain other legal and professional fees, integration, transition and other acquisition related costs, divestiture costs, costs associated with our CEO transition, accelerated amortization |
of debt origination costs due to sale of assets, additional interest expense on debt refinancing, loss on extinguishment of debt, gain/loss on divestitures, applicable tax impacts associated with these items, income tax related to adjustments and other non-deductible items.
| |
• | 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, transition, and other costs associated with acquisitions and divestitures, premium payment on extinguishment of Senior Notes, additional interest expense on debt refinancing, pension obligation funding and additional income tax payments associated with divestitures. |
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 growth percentages:
|
| | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | Year Ended March 31, |
| 2017 | | 2016 | | 2017 | | 2016 |
(In thousands) | | | | | | | |
GAAP Total Revenues | $ | 240,670 |
| | $ | 207,855 |
| | $ | 882,060 |
| | $ | 806,247 |
|
Revenue Growth | 15.8 | % | | | | 9.4 | % | | |
Adjustments: | | | | | | | |
Revenues associated with acquisitions (1) | (43,125 | ) | | — |
| | (94,293 | ) | | — |
|
Revenues associated with divested brands (2) | — |
| | (12,460 | ) | | — |
| | (26,002 | ) |
Total adjustments | (43,125 | ) | | (12,460 | ) | | (94,293 | ) | | (26,002 | ) |
Non-GAAP Organic Revenues | $ | 197,545 |
| | $ | 195,395 |
| | $ | 787,767 |
| | $ | 780,245 |
|
Organic Revenue Growth | 1.1 | % | | | | 1.0 | % | | |
(1) Revenues of our acquisitions, Fleet and DenTek, are excluded for purposes of calculating Non-GAAP organic revenues. These revenue adjustments relate to our North American and International OTC Healthcare segments.
(2) Revenues of our divested brands have been excluded from the current year and the prior year for purposes of calculating Non-GAAP organic revenues. These revenue adjustments relate to our North American OTC Healthcare segment and our Household Cleaning segment.
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, |
| 2017 | | 2016 | | 2017 | | 2016 |
(In thousands) | | | | | | | |
GAAP Total Revenues | $ | 240,670 |
| | $ | 207,855 |
|
| $ | 882,060 |
| | $ | 806,247 |
|
| | | | | | | |
GAAP Gross Profit | $ | 130,183 |
| | $ | 118,251 |
|
| $ | 500,286 |
| | $ | 467,211 |
|
Adjustments: | | | | | | | |
Inventory step-up charges and other costs associated with acquisitions (1) | 1,664 |
| | 1,387 |
| | 1,664 |
| | 1,387 |
|
Integration, transition and other costs associated with acquisitions | 1,367 |
| | — |
| | 1,367 |
| | — |
|
Total adjustments | 3,031 |
| | 1,387 |
| | 3,031 |
| | 1,387 |
|
Non-GAAP Adjusted Gross Margin | $ | 133,214 |
| | $ | 119,638 |
| | $ | 503,317 |
| | $ | 468,598 |
|
Non-GAAP Adjusted Gross Margin % | 55.4 | % | | 57.6 | % | | 57.1 | % | | 58.1 | % |
(1) Inventory step-up charges relate to our North American and International OTC Healthcare segments.
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 March 31, | | Year Ended March 31, |
| 2017 | | 2016 | | 2017 | | 2016 |
(In thousands) | | | | | | | |
GAAP Advertising and Promotion Expense | $ | 41,450 |
|
| $ | 26,552 |
|
| $ | 128,359 |
|
| $ | 110,802 |
|
GAAP Advertising and Promotion Expense as a Percentage of GAAP Total Revenue | 17.2 | % | | 12.8 | % | | 14.6 | % | | 13.7 | % |
Adjustments: | | | | | | | |
Integration, transition and other costs associated with acquisitions (1) | 2,242 |
| | — |
| | 2,242 |
| | — |
|
Total adjustments | 2,242 |
| | — |
| | 2,242 |
| | — |
|
Non-GAAP Adjusted Advertising and Promotion Expense | $ | 39,208 |
| | $ | 26,552 |
| | $ | 126,117 |
| | $ | 110,802 |
|
Non-GAAP Adjusted Advertising and Promotion Expense as a Percentage of GAAP Total Revenues | 16.3 | % | | 12.8 | % | | 14.3 | % | | 13.7 | % |
(1) Acquisition related items represent costs related to integrating the advertising agencies of the recently acquired businesses.
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 March 31, | | Year Ended March 31, |
| 2017 | | 2016 | | 2017 | | 2016 |
(In thousands) | | | | | | | |
GAAP General and Administrative Expense | $ | 28,760 |
|
| $ | 20,232 |
|
| $ | 89,143 |
|
| $ | 72,418 |
|
GAAP General and Administrative Expense as a Percentage of GAAP Total Revenue | 11.9 | % | | 9.7 | % | | 10.1 | % | | 9.0 | % |
Adjustments: | | | | | | | |
Costs associated with CEO transition (1) | — |
| | — |
| | — |
| | 1,406 |
|
Legal and professional fees associated with acquisitions and divestitures (2) | 3,431 |
| | 1,096 |
| | 6,560 |
| | 2,112 |
|
Integration, transition and other costs associated with acquisitions and divestitures (2) | 5,756 |
| | 289 |
| | 9,455 |
| | 289 |
|
Total adjustments | 9,187 |
| | 1,385 |
| | 16,015 |
| | 3,807 |
|
Non-GAAP Adjusted General and Administrative Expense | $ | 19,573 |
| | $ | 18,847 |
| | $ | 73,128 |
| | $ | 68,611 |
|
Non-GAAP Adjusted General and Administrative Expense as a Percentage of GAAP Total Revenues | 8.1 | % | | 9.1 | % | | 8.3 | % | | 8.5 | % |
(1) Costs relate to search fees associated with CEO and CFO transition and certain accelerated stock compensation costs related to our former CEO.
(2) Acquisition related items represent costs related to integrating recently acquired businesses, 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 process 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 March 31, | | Year Ended March 31, |
| 2017 | | 2016 | | 2017 | | 2016 |
(In thousands) | | | | | | | |
GAAP Net Income | $ | 11,090 |
| | $ | 13,936 |
|
| $ | 69,395 |
| | $ | 99,907 |
|
Interest expense, net | 32,832 |
| | 23,147 |
| | 93,343 |
| | 85,160 |
|
Provision for income taxes | 7,712 |
|
| 10,667 |
|
| 41,455 |
|
| 57,278 |
|
Depreciation and amortization | 7,092 |
|
| 6,198 |
|
| 25,792 |
|
| 23,676 |
|
Non-GAAP EBITDA | 58,726 |
| | 53,948 |
| | 229,985 |
| | 266,021 |
|
Non-GAAP EBITDA Margin | 24.4 | % | | 26.0 | % | | 26.1 | % | | 33.0 | % |
Adjustments: | | | | | | | |
Inventory step-up charges and other costs associated with acquisitions(1) | 1,664 |
| | 1,387 |
| | 1,664 |
| | 1,387 |
|
Integration, transition and other costs associated with acquisitions and divestitures in Cost of Goods Sold (3) | 1,367 |
| | — |
| | 1,367 |
| | — |
|
Integration, transition and other costs associated with acquisitions and divestitures in Advertising and Promotion Expense(3) | 2,242 |
| | — |
| | 2,242 |
| | — |
|
Integration, transition and other costs associated with acquisitions and divestitures in General and Administrative Expense(3) | 5,756 |
| | 289 |
| | 9,455 |
| | 289 |
|
Costs associated with CEO transition (2) | — |
| | — |
| | — |
| | 1,406 |
|
Legal and professional fees associated with acquisitions and divestitures (3) | 3,431 |
| | 1,096 |
| | 6,560 |
| | 2,112 |
|
Loss on extinguishment of debt | 1,420 |
| | 17,519 |
| | 1,420 |
| | 17,970 |
|
(Gain) loss on divestitures | 268 |
| | — |
| | 51,820 |
| | — |
|
Total adjustments | 16,148 |
| | 20,291 |
| | 74,528 |
| | 23,164 |
|
Non-GAAP Adjusted EBITDA | $ | 74,874 |
| | $ | 74,239 |
| | $ | 304,513 |
| | $ | 289,185 |
|
Non-GAAP Adjusted EBITDA Margin | 31.1 | % | | 35.7 | % | | 34.5 | % | | 35.9 | % |
(1) Inventory step-up charges relate to our North American and International OTC Healthcare segments.
(2) Costs relate to search fees associated with CEO and CFO transition and certain accelerated stock compensation costs related to our former CEO.
(3) Acquisition related items represent costs related to integrating recently acquired businesses, 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 process such as insurance costs, legal and other acquisition related professional fees.
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, |
| 2017 | 2017 Adjusted EPS | | 2016 | 2016 Adjusted EPS | | 2017 | 2017 Adjusted EPS | | 2016 | 2016 Adjusted EPS |
(In thousands) | | | | | | | | | | | |
GAAP Net Income | $ | 11,090 |
| $ | 0.21 |
| | $ | 13,936 |
| $ | 0.26 |
| | $ | 69,395 |
| $ | 1.30 |
| | $ | 99,907 |
| $ | 1.88 |
|
Adjustments: | | | | | | | | | | | |
Inventory step-up charges and other costs associated with acquisitions (1) | 1,664 |
| 0.03 |
| | 1,387 |
| 0.03 |
| | 1,664 |
| 0.03 |
| | 1,387 |
| 0.03 |
|
Integration, transition and other costs associated with acquisitions and divestitures in Cost of Goods Sold (2) | 1,367 |
| 0.03 |
| | — |
| — |
| | 1,367 |
| 0.03 |
| | — |
| — |
|
Integration, transition and other costs associated with acquisitions and divestitures in Advertising and Promotion Expense(2) | 2,242 |
| 0.04 |
| | — |
| — |
| | 2,242 |
| 0.04 |
| | — |
| — |
|
Integration, transition and other costs associated with acquisitions and divestitures in General and Administrative Expense (2) | 5,756 |
| 0.11 |
| | 289 |
| 0.01 |
| | 9,455 |
| 0.18 |
| | 289 |
| 0.01 |
|
Costs associated with CEO transition (3) | — |
| — |
| | — |
| — |
| | — |
| — |
| | 1,406 |
| 0.02 |
|
Legal and professional fees associated with acquisitions and divestitures (2) | 3,431 |
| 0.06 |
| | 1,096 |
| 0.02 |
| | 6,560 |
| 0.12 |
| | 2,112 |
| 0.04 |
|
Accelerated amortization of debt origination costs (4) | 575 |
| 0.01 |
| | — |
| — |
| | 1,706 |
| 0.03 |
| | — |
| — |
|
Additional interest expense as a result of Term Loan debt refinancing (5) | 9,184 |
| 0.17 |
| | — |
| — |
| | 9,184 |
| 0.17 |
| | — |
| — |
|
Loss on extinguishment of debt | 1,420 |
| 0.03 |
| | 17,519 |
| 0.33 |
| | 1,420 |
| 0.03 |
| | 17,970 |
| 0.34 |
|
(Gain) loss on divestitures | 268 |
| 0.01 |
| | — |
| — |
| | 51,820 |
| 0.97 |
| | — |
| — |
|
Tax impact of adjustments (6) | (9,438 | ) | (0.18 | ) | | (6,294 | ) | (0.13 | ) | | (28,024 | ) | (0.53 | ) | | (7,608 | ) | (0.15 | ) |
Income tax related to adjustments (7) | 1,278 |
| 0.02 |
| | — |
| — |
| | (199 | ) | — |
| | — |
| — |
|
Total adjustments | 17,747 |
| 0.33 |
| | 13,997 |
| 0.26 |
| | 57,195 |
| 1.07 |
| | 15,556 |
| 0.29 |
|
Non-GAAP Adjusted Net Income and Adjusted EPS | $ | 28,837 |
| $ | 0.54 |
| | $ | 27,933 |
| $ | 0.52 |
| | $ | 126,590 |
| $ | 2.37 |
| | $ | 115,463 |
| $ | 2.17 |
|
(1) Inventory set-up charges relate to our North American and International OTC Healthcare segments.
(2) Acquisition related items represent costs related to integrating recently acquired businesses, 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 process such as legal and other acquisition related professional fees.
(3) Costs relate to search fees associated with CEO and CFO transition and certain accelerated stock compensation costs related to our former CEO.
(4) Higher amortization of debt origination costs resulting from debt payments on our term loan from the proceeds from divestitures.
(5) Primarily bank commitment fees related to the recently acquired Fleet business.
(6) 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.
(7) Income tax adjustments relate primarily to the expiration of certain statute of limitations associated with certain tax reserves and a normalized tax rate of 35.5%.
Reconciliation of GAAP Net Income to Non-GAAP Free Cash Flow and Non-GAAP Adjusted Free Cash Flow:
|
| | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | Year Ended March 31, |
| 2017 | | 2016 | | 2017 | | 2016 |
(In thousands) | | | | | | | |
GAAP Net Income | $ | 11,090 |
| | $ | 13,936 |
|
| $ | 69,395 |
| | $ | 99,907 |
|
Adjustments: | | | | | | | |
Adjustments to reconcile net income to net cash provided by operating activities as shown in the Statement of Cash Flows | 21,347 |
| | 34,206 |
| | 91,713 |
| | 96,221 |
|
Changes in operating assets and liabilities, net of effects from acquisitions as shown in the Statement of Cash Flows | (25,013 | ) | | (10,243 | ) | | (13,336 | ) | | (21,778 | ) |
Total adjustments | (3,666 | ) | | 23,963 |
| | 78,377 |
| | 74,443 |
|
GAAP Net cash provided by operating activities | 7,424 |
| | 37,899 |
| | 147,772 |
| | 174,350 |
|
Purchases of property and equipment | (1,042 | ) | | (1,028 | ) | | (2,977 | ) |
| (3,568 | ) |
Non-GAAP Free Cash Flow | 6,382 |
| | 36,871 |
| | 144,795 |
| | 170,782 |
|
Premium payment on extinguishment of 2012 Senior Notes | — |
| | 10,158 |
| | — |
| | 10,158 |
|
Integration, transition and other payments associated with acquisitions and divestitures (1) | 8,304 |
| | 1,665 |
| | 10,448 |
| | 2,461 |
|
Additional interest on Term Loan refinance (2) | 9,184 |
| | — |
| | 9,184 |
| | — |
|
Pension contribution | 6,000 |
| | — |
| | 6,000 |
| | — |
|
Additional income tax payments associated with divestitures (3) | 16,956 |
| | — |
| | 25,545 |
| | — |
|
Non-GAAP Adjusted Free Cash Flow | $ | 46,826 |
| | $ | 48,694 |
| | $ | 195,972 |
| | $ | 183,401 |
|
(1) Acquisition related items represent payments related to integrating recently acquired businesses, 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 process such as legal and other acquisition related professional fees.
(2) Primarily bank commitment fees related to the recently acquired Fleet business.
(3) Additional income tax payments resulting from divestitures.
Outlook for Fiscal Year 2018:
Reconciliation of Projected GAAP EPS to Projected Non-GAAP Adjusted EPS:
|
| | | | | | | |
| 2018 Projected EPS |
| Low | | High |
Projected FY'18 GAAP EPS | $ | 2.50 |
| | $ | 2.60 |
|
Adjustments: | | | |
Costs associated with Fleet integration (1) | 0.08 |
| | 0.08 |
|
Total adjustments | 0.08 |
| | 0.08 |
|
Projected Non-GAAP Adjusted EPS | $ | 2.58 |
| | $ | 2.68 |
|
(1) Acquisition related items represent costs related to integrating recently acquired businesses, including (but not limited to) warehouse consolidation, costs to exit or convert contractual obligations, severance, information system conversion and consulting costs, and certain costs related to the consummation of the acquisition process such as legal and other acquisition related professional fees.
Reconciliation of Projected GAAP Net cash provided by operating activities to Projected Non-GAAP Adjusted Free Cash Flow:
|
| | | |
| 2018 Projected Free Cash Flow |
(In millions) | |
Projected FY'18 GAAP Net cash provided by operating activities | $ | 210 |
|
Additions to property and equipment for cash | (10 | ) |
Projected Non-GAAP Free Cash Flow | 200 |
|
Payments associated with acquisitions (1) | 8 |
|
Tax effect of payments associated with acquisitions | (3 | ) |
Projected Non-GAAP Adjusted Free Cash Flow | $ | 205 |
|
(1) Acquisition related items represent costs related to integrating recently acquired businesses, including (but not limited to) warehouse consolidation, costs to exit or convert contractual obligations, severance, information system conversion and consulting costs, and certain costs related to the consummation of the acquisition process such as legal and other acquisition related professional fees.
exhibit992prestigebrands
Exhibit 99.2
This presentation contains certain “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, such
as statements regarding the Company’s expected financial performance, including revenue growth, organic growth, adjusted EPS, adjusted free
cash flow, and adjusted EBITDA; the Company’s expected leverage; the Company’s ability to repeat its M&A strategy; the expected growth and
market position of the Company’s core brands; the Company’s brand-building and product development initiatives; and the Company’s ability to
create long-term value. Words such as “trend,” “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, general economic and business
conditions, competitive pressures, the impact of the Company’s product development and brand-building initiatives, difficulties successfully
integrating the Fleet brands, manufacturing facility and R&D resources, supplier issues, 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, 2016 and in Part II, Item 1A. Risk Factors in the Company’s Quarterly
Report on Form 10-Q for the quarter ended December 31, 2016. 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.
All adjusted GAAP numbers presented are footnoted and reconciled to their closest GAAP measurement in the attached reconciliation schedule
or in our earnings release in the “About Non-GAAP Financial Measures” section.
Q4 Revenue of $240.7 million, up 15.8% versus PY Q4
— Organic revenue growth of 1.1%(1)
— Revenue growth of 1.9%(1) for Invest for Growth* portfolio
— Strong consumption gains at Care Pharma, which resulted in sales growth of +11.5%
Consistent gross margin for legacy business
Adjusted EPS of $0.54(2), up 3.8% versus PY Q4
Continued solid Adjusted Free Cash Flow of $46.8 million(2), resulting in a leverage of 5.7x(3)
Completed the acquisition of C.B. Fleet on January 26th, 2017
Significant integration activity achieved and on plan to be largely completed by the end of Q1 FY 18
FY 18 priorities include brand building and supply chain integration
Invest for Growth portfolio comprised of Core OTC brands and International. Core OTC brands reflect: Monistat, BC/Goody’s, Clear Eyes, DenTek, Dramamine, Debrox, Chloraseptic, Luden’s, Little Remedies, Compound W, Nix, Beano, Efferdent and The
Doctor’s IRI multi-outlet + C-Store retail dollar sales for relevant period. International includes Canadian consumption for leading retailers, and Australia/ROW shipment data as a proxy for consumption.*
Manage for CashInvest for Growth
July 2016 December 2016 December 2016 December 2016
February 2016 January 2017
$225MM $825MM
2.5%
1.8%
LTM Growth
2.3%
1.2%
LTM Growth
2.4%
1.7%
LTM Growth
Prestige Brands Prestige Categories
Source: IRI multi-outlet + C-Store retail dollar sales for the period ending 03/29/2017
Consumer research and shopper insights identify unmet needs
Match new product opportunities to each brand’s unique positioning
Goal to launch 3 to 5 meaningful new product innovations annually
Recent new products introduced across our portfolio
Extend Brand Through
Better Consumer
Experience or Claims
Innovate Through
Technology
Expand Brand in New
Channels C-Stores On-the-Go e-Commerce
“Order-to-cash” integrated sales platform complete
Cross sharing of international resources begins
Launched “Simply” Summer’s Eve line, additional NPD identified
Integrated Women’s Health sales efforts
Warehouse and freight consolidated into existing footprint
Fleet R&D lab expanding to new brands
Closed Fleet’s New Jersey executive office
Consolidated support into PBH structure; exits completed by Q1 FY 18
$86 $127
$164 $196
FY 11 FY 13 FY 15 FY 17
$101
$218 $252
$305
FY 11 FY 13 FY 15 FY 17
$334
$620 $715
$882
FY 11 FY 13 FY 15 FY 17
17.6% CAGR 20.2% CAGR
14.7% CAGR
$0.79
$1.50 $1.86
$2.37
FY 11 FY 13 FY 15 FY 17
20.1% CAGR
Dollar values in millions, except Adjusted EPS.
~3.2x ~3.5x
~5.0x ~4.3x ~4.3x ~5.2x ~5.0x
~5.7x ~5.0x
FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18
$59
$86 $67
$127 $130
$164 $183
$196 $205
FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18
Dollar values in millions.
* Peak leverage of 5.75x at close of the Insight Acquisition in September 2014
*
Solid overall financial performance in Q4 and FY 17
− Q4 Revenue of $240.7 million, an increase of 15.8%
− FY 17 Adjusted EBITDA(2) of $304.5 million
− Q4 Adjusted EPS of $0.54(2), up 3.8% vs prior year, and FY 17 Adjusted EPS of $2.37(2), up 9.2%
− Transitional quarter with C.B. Fleet integration, which contributed $38.7 million in Revenue and was $0.01 dilutive to EPS in Q4
$240.7
$74.9
$207.9
$74.2
Total Revenue Adjusted EBITDA Adjusted EPS
Q4 FY 17 Q4 FY 16
15.8%
0.9% 3.8%
$0.54 $0.52
(2) (2)
Dollar values in millions, except per share data.
$882.1
$304.5
$806.2
$289.2
Total Revenue Adjusted EBITDA Adjusted EPS
FY 17 FY 16
9.4%
5.3%
9.2%
$2.37 $2.17
(2) (2)
Revenue growth of +15.8%
– Organic growth of 1.1%(1)
– Fleet contributed $38.7
million of revenue
Adjusted Gross Margin of 55.4%
Adjusted A&P 16.3% of Revenue,
or $39.2 million
Adjusted EBITDA Margin of
31.1%(2)
Adjusted Net Income +3.2%(2)
over Q4 FY 16
– Fleet contributed $0.01 loss
due to transitional quarter
Dollar values in millions, except per share data.
* Includes depreciation as a component of Adjusted Gross Profit
Q4 FY 17 Q4 FY 16 % Chg FY 17 FY 16 % Chg
Total Revenue 240.7$ 207.9$ 15.8% 882.1$ 806.2$ 9.4%
Adjusted Gross Profit(2) * 133.2 119.6 11.3% 503.3 468.6 7.4%
% Adjusted Margin 55.4% 57.6% 57.1% 58.1%
Adjusted A&P(2) 39.2 26.6 47.7% 126.1 110.8 13.8%
% Total Revenue 16.3% 12.8% 14.3% 13.7%
Adjusted G&A(2) 19.6 18.8 3.9% 73.1 68.6 6.6%
% Total Revenue 8.1% 9.1% 8.3% 8.5%
Adjusted EBITDA(2) 74.9$ 74.2$ 0.9% 304.5$ 289.2$ 5.3%
% Margin 31.1% 35.7% 34.5% 35.9%
Adjusted Net Income(2) 28.8$ 27.9$ 3.2% 126.6$ 115.5$ 9.6%
Adjusted Earnings Per Share(2) 0.54$ 0.52$ 3.8% 2.37$ 2.17$ 9.2%
Net Debt in March of $2,180 million comprised of:
– Cash on hand of $41.9 million
– $1,472 million of term loan and revolver
– $750 million of bonds
Leverage ratio(3) of 5.7x
$46.8 $48.7
Adjusted Free Cash Flow
$196.0
$183.4
Adjusted Free Cash Flow
6.9%
(3.8%)
Q4 FY 17 Q4 FY 16
Dollar values in millions.
(2) (2)
Strong momentum in our largest brands and international business going into FY 18
Expect core OTC to outperform category growth
Headwinds continue at retail, while Prestige’s portfolio of need-based brands continues to be well positioned
for future long-term growth
Revenue growth of +18% to +20% ($1,040 to $1,060 million)
Organic growth of +2.0% to +2.5%
Adjusted EPS +9% to +13% ($2.58 to $2.68)
Adjusted Free Cash Flow of $205 million or more
(1) Organic Revenue Growth 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 A&P, Adjusted G&A, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted
EPS, Adjusted Free Cash Flow are Non-GAAP financial measures and are reconciled to their most closely related GAAP financial
measures in the attached Reconciliation Schedules and / or in our earnings release in the “About Non-GAAP Financial Measures”
section.
(3) Leverage ratio reflects net debt / covenant defined EBITDA.
(4) Adjusted EPS for FY 18 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 $2.50 to $2.60 plus
$0.08 of costs associated with Fleet integration, resulting in $2.58 to $2.68.
(5) Adjusted Free Cash Flow for FY 18 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 $210 million less projected capital expenditures of $10 million
plus payments associated with acquisitions of $8 million less tax effect of payments associated with acquisitions of $3 million
Dollar values in thousands.
Three Months Ended Mar. 31, Twelve Months Ended March. 31,
2017 2016 2017 2016
GAAP Total Revenues 240,670$ 207,855$ 882,060$ 806,247$
Adjustments:
Revenues associated with acquisitions (43,125) - (94,293) -
Revenues associated with divested brands - (12,460) - (26,002)
Total adjustments (43,125) (12,460) (94,293) (26,002)
Non-GAAP Organic Revenues 197,545$ 195,395$ 787,767$ 780,245$
Organic Revenue Growth 1.1% 1.0%
Dollar values in thousands.
Three Months Ended Mar. 31, Twelve Months Ended March. 31,
2017 2016 2017 2016
GAAP General and Administrative Expense 28,760$ 20,232$ 89,143$ 72,418$
Adjustments:
Costs Associated with CEO transition - - - 1,406
Legal and professional fees associated with acquisitions and divestitures 3,431 1,096 6,560 2,112
Integration, transition and other costs associated with acquisitions and divestitures 5,756 289 9,455 289
Total adjustments 9,187 1,385 16,015 3,807
Non-GAAP Adjusted General and Administrative Expense 19,573$ 18,847$ 73,128$ 68,611$
Non-GAAP Adjusted General and Administrative Expense Percentage 8.1% 9.1% 8.3% 8.5%
Dollar values in thousands.
Three Months Ended Mar. 31, Twelve Months Ended March. 31,
2017 2016 2017 2016
GAAP Net (Loss) Income 11,090$ 13,936$ 69,395$ 99,907$
Interest expense, net 32,832 23,147 93,343 85,160
(Benefit) provision for income taxes 7,712 10,667 41,455 57,278
Depreciation and amortization 7,092 6,198 25,792 23,676
Non-GAAP EBITDA 58,726 53,948 229,985 266,021
Adjustments:
Inventory step-up charges associated with acquisitions 1,664 1,387 1,664 1,387
Costs associated with CEO transitions - - - 1,406
Legal and professional fees associated with acquisitions and divestitures 3,431 1,096 6,560 2,112
Integration, transition and other costs associated with acquisitions and divestitures 9,365 289 13,064 289
Loss on extinguishment of debt 1,420 17,519 1,420 17,970
(Gain) loss on divestitures 268 - 51,820 -
Total adjustments 16,148 20,291 74,528 23,164
Non-GAAP Adjusted EBITDA 74,874$ 74,239$ 304,513$ 289,185$
Non-GAAP Adjusted EBITDA Margin 31.1% 35.7% 34.5% 35.9%
Dollar values in thousands.
2011 2012 2013 2014 2015 2016 2017
GAAP Net Income 29,220$ 37,212$ 65,505$ 72,615$ 78,260$ 99,907$ 69,395$
Income from Disc Ops (591) - - - - - -
Loss on sale of disc ops 550 - - - - - -
Interest Expense, net 27,317 41,320 84,407 68,582 81,234 85,160 93,343
Provision for income taxes 19,349 23,945 40,529 29,133 49,198 57,278 41,455
Depreciation and amortization 9,876 10,734 13,235 13,486 17,740 23,676 25,792
Non-GAAP EBITDA 85,721 113,211 203,676 183,816 226,432 266,021 229,985
Sales costs related to acquisitions - - 411 - - - -
Inventory step up 7,273 1,795 23 577 2,225 1,387 1,664
Inventory related acquisition costs - - 220 407 - - -
Add'l supplier costs - - 5,426 - - - -
Costs associated with CEO transition - - - - - 1,406
Legal and other professional fees associated with acquisitions 7,729 13,807 98 1,111 10,974 2,112 6,560
Integration, transition, and other Acq costs - 3,588 5,811 - 10,533 289 13,064
Stamp Duty - - - - 2,940 - -
Unsolicited porposal costs - 1,737 534 - - - -
Loss on extinguishment of debt 300 5,409 1,443 18,286 - 17,970 1,420
Gain on settlement - (5,063) - - - - -
Gain on sale of asset - - - - (1,133) - 51,820
Adjustments to EBITDA 15,302 21,273 13,966 20,381 25,539 23,164 74,528
Non-GAAP Adjusted EBITDA 101,023$ 134,484$ 217,642$ 204,197$ 251,971$ 289,185$ 304,513$
Dollar values in thousands.
Three Months Ended Mar. 31, Twelve Months Ended March. 31,
2017 2016 2017 2016
Net
Income EPS
Net
Income EPS
Net
Income EPS
Net
Income EPS
GAAP Net Income 11,090$ 0.21$ 13,936$ 0.26$ 69,395$ 1.30$ 99,907$ 1.88$
Adjustments:
Inventory step-up charges and other costs associate with acquisitions 1,664 0.03 1,387 0.03 1,664 0.03 1,387 0.03
Costs associated with CEO transition - - - - - - 1,406 0.02
Legal and professional fees associated with acquisitions and divestitures 3,431 0.06 1,096 0.02 6,560 0.12 2,112 0.04
Integration, transition and other costs associated with acquisitions and divestitures 9,365 0.18 289 0.01 13,064 0.24 289 0.01
Accelerated amortization of debt orgination costs 575 0.01 - - 1,706 0.03 - -
Additional interest expense from Term Loan B-4 debt refinancing 9,184 0.17 - - 9,184 0.17 - -
Loss on extinguishment of debt 1,420 0.03 17,519 0.33 1,420 0.03 17,970 0.34
(Gain) loss on divestitures 268 0.01 - - 51,820 0.97 - -
Tax impact of adjustments (9,438) (0.18) (6,294) (0.13) (28,024) (0.52) (7,608) (0.15)
Tax impacts related to tax reserve adjustments 1,278 0.02 - - (199) - - -
Total Adjustments 17,747 0.33 13,997 0.26 57,195 1.07 15,556 0.29
Non-GAAP Adjusted Net Income and Adjusted EPS 28,837$ 0.54$ 27,933$ 0.52$ 126,590$ 2.37$ 115,463$ 2.17$
Dollar values in thousands.
2011 2012 2013 2014 2015 2016 2017
Net
Income EPS
Net
Income EPS
Net
Income EPS
Net
Income EPS
Net
Income EPS
Net
Income EPS
Net
Income EPS
GAAP Net Income 29,220$ 0.58$ 37,212$ 0.73$ 65,505$ 1.27$ 72,615$ 1.39$ 78,260$ 1.49$ 99,907$ 1.88$ 69,395$ 1.30$
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 - - - - - - - - - - 9,184 0.17
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 1,387 0.03 1,664 0.03
Inventory related acquisition costs - - - - 220 - 407 0.01 - - - - - -
Add'l supplier costs - - - - 5,426 0.11 - - - - - - - -
Costs associated with CEO transition - - - - - - - - - - 1,406 0.02 - -
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 2,112 0.04 6,560 0.12
Integration, Transition, and other Acq costs - - 3,588 0.07 5,811 0.11 - - 10,533 0.20 289 0.01 13,064 0.24
Stamp Duty - - - - - - - - 2,940 0.05 - - - -
Unsolicited porposal costs - - 1,737 0.03 534 0.01 - - - - - - - -
Loss on extinguishment of debt 300 0.01 5,409 0.11 1,443 0.03 18,286 0.35 - - 17,970 0.34 1,420 0.03
Gain on settlement - - (5,063) (0.10) - - - - - - - - - -
(Gain) loss on divestitures - - - - - - - - - - - - 51,820 0.97
(Gain) loss 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 - - - 1,706 0.03
Tax impact on adjustments (5,513) (0.11) (8,091) (0.16) (8,329) (0.16) (9,100) (0.17) (5,968) (0.11) (7,608) (0.15) (28,024) (0.52)
Impact of state tax adjustments - - (237) - (1,741) (0.03) (9,465) (0.18) - - - - (199) -
Total adjustments 10,548 0.21 18,008 0.36 11,642 0.23 7,293 0.14 19,789 0.37 15,556 0.29 57,195 1.07
Non-GAAP Adjusted Net Income and Non-GAAP Adjusted EPS 39,768$ 0.79$ 55,220$ 1.09$ 77,147$ 1.50$ 79,908$ 1.53$ 98,049$ 1.86$ $115,463 2.17$ $126,590 2.37$
Dollar values in thousands.
Three Months Ended Mar. 31, Twelve Months Ended March. 31,
2017 2016 2017 2016
GAAP Net (Loss) Income 11,090$ 13,936$ 69,395$ 99,907$
Adjustments:
Adjustments to reconcile net (loss) income to net cash provided by operating activities
as shown in the Statement of Cash Flows 21,347 34,206 91,713 96,221
Changes in operating assets and liabilities, net of effects from acquisitions as shown in
the Statement of Cash Flows
(25,013) (10,243) (13,336) (21,778)
Total Adjustments (3,666) 23,963 78,377 74,443
GAAP Net cash provided by operating activities 7,424 37,899 147,772 174,350
Purchase of property and equipment (1,042) (1,028) (2,977) (3,568)
Non-GAAP Free Cash Flow 6,382 36,871 144,795 170,782
Premium payment on extinguishment of 2012 Senior Notes - 10,158 - 10,158
Integration, transition and other payments associated with acquisitions and divestitures 8,304 1,665 10,448 2,461
Additioanl interest on Term Loan B-4 debt refinancing 9,184 - 9,184 -
Pension contribution 6,000 - 6,000 -
Additional income tax payments associated with divestitures 16,956 - 25,545 -
Non-GAAP Adjusted Free Cash Flow 46,826$ 48,694$ 195,972$ 183,401$
Dollar values in thousands, except per share data.
2010 2011 2012 2013 2014 2015 2016 2017
GAAP Net Income 32,115$ 29,220$ 37,212$ 65,505$ 72,615$ 78,260$ 99,907$ 69,395$
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 96,221 91,713
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 (21,778) (13,336)
Total adjustments 27,312 57,450 30,240 72,100 38,967 77,995 74,443 78,377
GAAP Net cash provided by operating activities 59,427 86,670 67,452 137,605 111,582 156,255 174,350 147,772
Purchases of property and equipment (673) (655) (606) (10,268) (2,764) (6,101) (3,568) (2,977)
Non-GAAP Free Cash Flow 58,754 86,015 66,846 127,337 108,818 150,154 170,782 144,795
Premiuim payment on 2010 Senior Notes - - - - 15,527 - - -
Premiuim payment on extinguishment of 2012 Senior Notes - - - - - - 10,158 -
Accelerated interest payments due to debt refinancing - - - - 4,675 - - 9,184
Integration, transition and other payments associated with acquisitions - - - - 512 13,563 2,461 10,448
Pension contribution - - - - - - 6,000
Additional income tax payments associated with divestitures - - - - - - 25,545
Total adjustments - - - - 20,714 13,563 12,619 51,177
Non-GAAP Adjusted Free Cash Flow 58,754$ 86,015$ 66,846$ 127,337$ 129,532$ 163,717$ 183,401$ 195,972$
2018 Projected EPS
Low High
Projected FY'18 GAAP EPS $ 2.50 $ 2.60
Adjustments:
Costs associated with Fleet integration(1) 0.08 0.08
Total Adjustments 0.08 0.08
Projected Non-GAAP Adjusted EPS $ 2.58 $ 2.68
Dollar values in millions, except per share data.
(1) Acquisition related items represent costs related to integrating recently acquired businesses including (but not limited to), warehouse consolidation, costs to exit or convert contractual obligations, severance, information system conversion and consulting costs;
and certain costs related to the consummation of the acquisition process such as legal and other acquisition related professional fees.
2018 Projected
Free Cash Flow
Projected FY'18 GAAP Net Cash provided by operating activities $ 210
Additions to property and equipment for cash (10)
Projected Non-GAAP Free Cash Flow 200
Payments associated with acquisitions 8
Tax effect of payments associated with acquisitions (3)
Adjusted Non-GAAP Projected Free Cash Flow $ 205