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): August 3, 2017
PRESTIGE BRANDS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
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| | | | |
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) (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 (see General Instruction A.2. below):
[ ] 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 August 3, 2017, Prestige Brands Holdings, Inc. (the “Company”) announced financial results for the fiscal quarter ended June 30, 2017. A copy of the press release announcing the Company's earnings results for the fiscal quarter ended June 30, 2017 is attached hereto as Exhibit 99.1 and incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On August 3, 2017, representatives of the Company began making presentations to investors regarding the Company's financial results for the quarter ended June 30, 2017 using slides attached to this Current Report on Form 8-K as Exhibit 99.2 (the “Investor Presentation”) and incorporated herein by reference. 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: August 3, 2017 | PRESTIGE BRANDS HOLDINGS, INC. | |
| | | |
| By: | /s/ Christine Sacco | |
| | Christine Sacco | |
| | Chief Financial Officer | |
| | | |
| | | |
EXHIBIT INDEX
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| | |
Exhibit | | Description |
| | |
99.1 | | Press Release dated August 3, 2017 announcing the Company's financial results for the fiscal quarter ended June 30, 2017 (furnished only). |
99.2 | | Investor Presentation in use beginning August 3, 2017 (furnished only). |
Exhibit
Exhibit 99.1
Prestige Brands Holdings, Inc. Reports Fiscal 2018 First Quarter Results; Reaffirms Fiscal 2018 Outlook
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• | Revenue Increased 22.4% to $256.6 Million in Q1 Fiscal 2018; Revenue Growth of 3.0% Pro-forma for Fleet |
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• | Adjusted EPS Increased 12% to $0.66; GAAP Q1 Diluted EPS of $0.63 |
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• | Cash Flow From Operations Increased to $54.1 Million in Q1; Adjusted Free Cash Flow of $56.5 Million |
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• | Reaffirms Full Year FY’18 Revenue, Adjusted Cash Flow and Adjusted EPS Outlook |
TARRYTOWN, N.Y.--(BUSINESS WIRE)--August 3, 2017-- Prestige Brands Holdings, Inc. (NYSE:PBH) today reported financial results for its first quarter ended June 30, 2017.
“Our first quarter financial and operating performance delivered a strong start to the year, and we are pleased with our 3% adjusted revenue growth driven by solid consumption trends across the portfolio. Strong top-line, cash flow and profit results combined with our outlook for the remainder of fiscal 2018 position us well to achieve our guidance objectives for the full fiscal year,” said Ron Lombardi, Chief Executive Officer of Prestige Brands.
First Fiscal Quarter Ended June 30, 2017
Reported revenues in the first quarter of fiscal 2018 increased 22.4% to $256.6 million, compared to $209.6 million in the first quarter of fiscal 2017. Revenues for the quarter were driven by continued strong consumption levels across the Company’s legacy core brands and incremental revenue from the Fleet acquisition, which was partially offset by the divestitures of several non-core brands during fiscal 2017. The Fleet transaction contributed $54.9 million in revenues to first quarter performance and added approximately 100 basis points of pro-forma revenue growth to the legacy organic growth level of 2.0% for the quarter versus the prior year.
Reported gross profit margin in the first quarter fiscal 2018 was 55.9%, with adjusted gross profit margin of 56.9% excluding adjustments related to the Fleet transition and integration, compared to 58.0% for the first quarter of fiscal 2017. The gross profit margin year-over-year decline was primarily attributable to the addition of the high growth Fleet portfolio.
Advertising & promotion expense for the first quarter 2018 was $36.9 million, or 14.4% of sales, compared to $27.6 million or 13.2% of sales in the prior year. Higher advertising and promotion expense as a percentage of sales was attributable to ongoing investments behind the Company’s long-term brand building strategy.
Reported net income for the first quarter of fiscal 2018 totaled $33.8 million versus the prior year comparable quarter’s net loss of $5.5 million, which included a non-cash after-tax charge of $35.5 million (net of a tax benefit of $19.9 million) related to the divestiture of three non-core brands. Diluted earnings per share of $0.63 for the first quarter of fiscal 2018 compared to a $0.10 loss per share in the prior year comparable period. Non-GAAP adjusted net income for the first quarter of fiscal 2018 was $35.5 million, an increase of 13.1% over the prior year period’s adjusted net income of $31.4 million. Non-GAAP adjusted earnings per share were $0.66 per share for the first quarter of fiscal 2018 compared to $0.59 per share in the prior year comparable period.
Adjustments to net income in the first quarter of fiscal 2018 and fiscal 2017 include integration, transition, purchase accounting, legal and various other costs associated with acquisitions and divestitures, and the related income tax effects of the adjustments.
Free Cash Flow and Balance Sheet
The Company's net cash provided by operating activities for the first fiscal quarter of 2018 increased to $54.1 million from $51.3 million during the same period a year earlier due to continued growth in the legacy business and incremental cash flow related to the Fleet acquisition, partially offset by the loss of cash flow from divested brands. Non-GAAP adjusted free cash flow for the first fiscal quarter of 2018 was $56.5 million, up from $50.7 million in the prior year comparable quarter.
The Company's net debt position as of June 30, 2017 was approximately $2.1 billion, which increased versus the prior year driven by the acquisition of Fleet. At June 30, 2017 the Company's covenant-defined leverage ratio was approximately 5.6x, supported by the Company’s consistent and industry-leading free cash flow.
Segment Review
North American OTC Healthcare: Segment revenues totaled $215.8 million for the first quarter of fiscal 2018, 25.4% higher than the prior year comparable quarter's revenues of $172.1 million. The first quarter fiscal 2018 result was favorably impacted by increased consumption among the majority of core OTC brands as well as revenues from the acquisition of Fleet, partially offset by divestitures of non-core OTC brands.
International OTC Healthcare: Segment fiscal Q1 2018 revenues totaled $20.9 million, 32.2% higher than the $15.8 million reported in the prior year comparable period. First quarter revenues included an incremental benefit associated with revenues from the Fleet transaction, partially offset by a foreign currency headwind.
Household Cleaning: Segment revenues totaled $19.9 million for the first quarter of fiscal 2018 compared with first quarter fiscal 2017 revenues of $21.7 million, a decrease of 8.4%. Household segment revenues were unfavorably impacted by the loss of revenues associated with divestitures and the effects of currency.
Commentary and Outlook for Fiscal 2018
Ron Lombardi, CEO, stated, “We are pleased with the year-to-date trends in both our legacy Prestige portfolio, which grew 2%, and the Fleet acquisition. Fleet was a key cornerstone to our portfolio evolution in fiscal 2017 and allowed us to achieve our long-term target portfolio mix of 85% invest-for-growth and 15% manage-for-cash brands. In our first full quarter of ownership Fleet has exhibited strong revenue growth consistent with our expectations and the integration into our business is largely complete. When added to the solid performance of our legacy business, Fleet enabled us to achieve revenue growth at the high-end of our long-term target of 2% to 3%.”
“Our solid quarterly results and consumer takeaway, in a challenging retail environment, gives us increased conviction in our ability to achieve our fiscal 2018 guidance. Accordingly, we are reaffirming our fiscal 2018 expectation for total reported top-line growth of 18% to 20% and pro-forma revenue growth including Fleet of 2.0% to 2.5%. We are also reaffirming our fiscal 2018 adjusted earnings per share guidance in the range of $2.58 to $2.68 and projected adjusted 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,” Mr. Lombardi added. “We look forward to executing against our three pillar strategy as the year progresses and continuing to create long-term value for our stakeholders,” he 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 |
Fiscal Q1 Conference Call, Accompanying Slide Presentation and Replay
The Company will host a conference call to review its first quarter results today, August 3, 2017 at 8:30 a.m. ET. The toll-free dial-in numbers are 844-233-9440 within North America and 574-990-1016 outside of North America. The conference ID number is 48231229. The Company provides a live Internet webcast, a slide presentation to accompany the call, as well as an archived replay, all of which can be accessed from the Investor Relations page of the Company's website at www.prestigebrands.com. The slide presentation can be accessed just before the call from the Investor Relations page of the website by clicking on Webcasts and Presentations.
Telephonic replays will be available for two weeks following the completion of the call and can be accessed at 855-859-2056 within North America and at 404-537-3406 from outside North America. The conference ID is 48231229.
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, 2017, Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, 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, Fleet® enemas and glycerin suppositories, Chloraseptic® sore throat treatments, Compound W® wart treatments, Little Remedies® pediatric over-the-counter products, The Doctor's® NightGuard® dental protector, Efferdent® denture care products, Luden's® throat drops, 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.
Prestige Brands Holdings, Inc.
Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
(Unaudited)
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| | | | | | | |
| Three Months Ended June 30, |
(In thousands, except per share data) | 2017 | | 2016 |
Revenues | | | |
Net sales | $ | 256,487 |
| | $ | 208,770 |
|
Other revenues | 86 |
| | 805 |
|
Total revenues | 256,573 |
|
| 209,575 |
|
| | | |
Cost of Sales | | | |
Cost of sales excluding depreciation | 111,757 |
| | 87,984 |
|
Cost of sales depreciation | 1,340 |
|
| — |
|
Cost of sales | 113,097 |
|
| 87,984 |
|
Gross profit | 143,476 |
| | 121,591 |
|
| | | |
Operating Expenses | | | |
Advertising and promotion | 36,944 |
| | 27,635 |
|
General and administrative | 20,336 |
| | 19,457 |
|
Depreciation and amortization | 7,167 |
| | 6,832 |
|
Loss on divestitures | — |
| | 55,453 |
|
Total operating expenses | 64,447 |
| | 109,377 |
|
Operating income | 79,029 |
| | 12,214 |
|
| | | |
Other (income) expense | | | |
Interest income | (69 | ) | | (57 | ) |
Interest expense | 26,410 |
| | 21,184 |
|
Total other expense | 26,341 |
| | 21,127 |
|
Income (loss) before income taxes | 52,688 |
| | (8,913 | ) |
Provision (benefit) for income taxes | 18,929 |
| | (3,382 | ) |
Net income (loss) | $ | 33,759 |
| | $ | (5,531 | ) |
| | | |
Earnings (loss) per share: | | | |
Basic | $ | 0.64 |
| | $ | (0.10 | ) |
Diluted | $ | 0.63 |
| | $ | (0.10 | ) |
| | | |
Weighted average shares outstanding: | | | |
Basic | 53,038 |
| | 52,881 |
|
Diluted | 53,509 |
| | 52,881 |
|
| | | |
Comprehensive income (loss), net of tax: | | | |
Currency translation adjustments | 1,119 |
| | (5,824 | ) |
Unrecognized net gain on pension plans | 1 |
|
| — |
|
Total other comprehensive (loss) income | 1,120 |
| | (5,824 | ) |
Comprehensive income (loss) | $ | 34,879 |
| | $ | (11,355 | ) |
Prestige Brands Holdings, Inc.
Condensed Consolidated Balance Sheets
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| | | | | | | |
(In thousands) Assets | June 30, 2017 | | March 31, 2017 |
| (Unaudited) | | |
Current assets | | | |
Cash and cash equivalents | $ | 44,135 |
| | $ | 41,855 |
|
Accounts receivable, net of allowance of $13,556 and $13,010, respectively | 134,725 |
| | 136,742 |
|
Inventories | 118,707 |
| | 115,609 |
|
Prepaid expenses and other current assets | 30,658 |
| | 40,228 |
|
Total current assets | 328,225 |
| | 334,434 |
|
| | | |
Property, plant and equipment, net | 50,469 |
| | 50,595 |
|
Goodwill | 615,451 |
| | 615,252 |
|
Intangible assets, net | 2,898,273 |
| | 2,903,613 |
|
Other long-term assets | 7,143 |
| | 7,454 |
|
Total Assets | $ | 3,899,561 |
| | $ | 3,911,348 |
|
| | | |
Liabilities and Stockholders' Equity | |
| | |
|
Current liabilities | |
| | |
|
Accounts payable | $ | 62,738 |
| | $ | 70,218 |
|
Accrued interest payable | 8,414 |
| | 8,130 |
|
Other accrued liabilities | 82,465 |
| | 83,661 |
|
Total current liabilities | 153,617 |
| | 162,009 |
|
| | | |
Long-term debt | | | |
Principal amount | 2,172,000 |
| | 2,222,000 |
|
Less unamortized debt costs | (26,591 | ) | | (28,268 | ) |
Long-term debt, net | 2,145,409 |
| | 2,193,732 |
|
| | | |
Deferred income tax liabilities | 724,545 |
| | 715,086 |
|
Other long-term liabilities | 17,443 |
| | 17,972 |
|
Total Liabilities | 3,041,014 |
| | 3,088,799 |
|
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| | | |
Stockholders' Equity | |
| | |
|
Preferred stock - $0.01 par value | |
| | |
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Authorized - 5,000 shares | |
| | |
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Issued and outstanding - None | — |
| | — |
|
Common stock - $0.01 par value | |
| | |
|
Authorized - 250,000 shares | | | |
Issued - 53,352 shares at June 30, 2017 and 53,287 shares at March 31, 2017 | 533 |
| | 533 |
|
Additional paid-in capital | 460,401 |
| | 458,255 |
|
Treasury stock, at cost - 352 shares at June 30, 2017 and 332 shares at March 31, 2017 | (7,621 | ) | | (6,594 | ) |
Accumulated other comprehensive loss, net of tax | (25,232 | ) | | (26,352 | ) |
Retained earnings | 430,466 |
| | 396,707 |
|
Total Stockholders' Equity | 858,547 |
| | 822,549 |
|
Total Liabilities and Stockholders' Equity | $ | 3,899,561 |
| | $ | 3,911,348 |
|
Prestige Brands Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
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| | | | | | | |
| Three Months Ended June 30, |
(In thousands) | 2017 | | 2016 |
Operating Activities | | | |
Net income (loss) | $ | 33,759 |
| | $ | (5,531 | ) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | |
Depreciation and amortization | 8,507 |
| | 6,832 |
|
Loss on divestitures | — |
| | 55,453 |
|
Loss on disposals of property and equipment | 490 |
| | — |
|
Deferred income taxes | 9,225 |
| | (9,660 | ) |
Amortization of debt origination costs | 1,746 |
| | 2,231 |
|
Excess tax benefits from share-based awards | 302 |
| | 550 |
|
Stock-based compensation costs | 1,713 |
| | 1,940 |
|
Changes in operating assets and liabilities, net of effects from acquisitions: | | | |
Accounts receivable | 1,543 |
| | 5,151 |
|
Inventories | (2,899 | ) | | (4,327 | ) |
Prepaid expenses and other current assets | 9,604 |
| | 5,697 |
|
Accounts payable | (8,024 | ) | | (3,401 | ) |
Accrued liabilities | (1,558 | ) | | (3,634 | ) |
Noncurrent assets and liabilities | (287 | ) | | — |
|
Net cash provided by operating activities | 54,121 |
| | 51,301 |
|
| | | |
Investing Activities | |
| | |
|
Purchases of property, plant and equipment | (2,554 | ) |
| (895 | ) |
Acquisition of Fleet escrow payment | 970 |
| | — |
|
Net cash used in investing activities | (1,584 | ) | | (895 | ) |
| | | |
Financing Activities | |
| | |
|
Term loan repayments | (50,000 | ) | | (50,000 | ) |
Payments of debt origination costs | — |
| | (9 | ) |
Proceeds from exercise of stock options | 433 |
| | 3,405 |
|
Fair value of shares surrendered as payment of tax withholding | (1,027 | ) | | (1,395 | ) |
Net cash used in financing activities | (50,594 | ) | | (47,999 | ) |
| | | |
Effects of exchange rate changes on cash and cash equivalents | 337 |
| | (760 | ) |
Increase in cash and cash equivalents | 2,280 |
| | 1,647 |
|
Cash and cash equivalents - beginning of period | 41,855 |
| | 27,230 |
|
Cash and cash equivalents - end of period | $ | 44,135 |
| | $ | 28,877 |
|
| | | |
Interest paid | $ | 24,298 |
| | $ | 18,337 |
|
Income taxes paid | $ | 2,230 |
| | $ | 1,357 |
|
Prestige Brands Holdings, Inc.
Condensed Consolidated Statements of Income
Business Segments
(Unaudited)
|
| | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2017 |
(In thousands) | North American OTC Healthcare | | International OTC Healthcare | | Household Cleaning | | Consolidated |
Total segment revenues* | $ | 215,815 |
| | $ | 20,898 |
| | $ | 19,860 |
| | $ | 256,573 |
|
Cost of sales | 86,501 |
| | 9,950 |
| | 16,646 |
| | 113,097 |
|
Gross profit | 129,314 |
| | 10,948 |
| | 3,214 |
| | 143,476 |
|
Advertising and promotion | 32,808 |
| | 3,690 |
| | 446 |
| | 36,944 |
|
Contribution margin | $ | 96,506 |
| | $ | 7,258 |
| | $ | 2,768 |
| | 106,532 |
|
Other operating expenses | |
| | | | |
| | 27,503 |
|
Operating income | |
| | | | |
| | 79,029 |
|
Other expense | |
| | | | |
| | 26,341 |
|
Income before income taxes | | | | | | | 52,688 |
|
Provision for income taxes | |
| | | | |
| | 18,929 |
|
Net income | | | | | | | $ | 33,759 |
|
*Intersegment revenues of $1.4 million were eliminated from the North American OTC Healthcare segment.
|
| | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2016 |
(In thousands) | North American OTC Healthcare | | International OTC Healthcare | | Household Cleaning | | Consolidated |
Total segment revenues* | $ | 172,080 |
| | $ | 15,804 |
| | $ | 21,691 |
| | $ | 209,575 |
|
Cost of sales** | 64,234 |
| | 6,948 |
| | 16,802 |
| | 87,984 |
|
Gross profit | 107,846 |
| | 8,856 |
| | 4,889 |
| | 121,591 |
|
Advertising and promotion | 25,040 |
| | 2,124 |
| | 471 |
| | 27,635 |
|
Contribution margin | $ | 82,806 |
| | $ | 6,732 |
| | $ | 4,418 |
| | 93,956 |
|
Other operating expenses*** | |
| | | | |
| | 81,742 |
|
Operating income | |
| | | | |
| | 12,214 |
|
Other expense | |
| | | | |
| | 21,127 |
|
Loss before income taxes | | | | | | | (8,913 | ) |
Benefit for income taxes | |
| | | | |
| | (3,382 | ) |
Net loss | | | | | | | $ | (5,531 | ) |
* Intersegment revenues of $1.2 million were eliminated from the North American OTC Healthcare segment.
**Certain immaterial amounts related to cost of sales were reclassified between the International OTC Healthcare segment and the North American OTC Healthcare segment. There were no changes to the condensed consolidated financial statements for any periods presented.
***Other operating expenses includes a pre-tax loss on sale of assets of $55.5 million recognized for assets held for sale related to Pediacare, New Skin and Fiber Choice. These assets and corresponding contribution margin are included within the North American OTC Healthcare segment.
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 on a constant currency basis, Constant Currency Non-GAAP Organic Revenue Growth Percentage, Non-GAAP Proforma Revenues on a constant currency basis, Constant Currency Non-GAAP Proforma Revenue Growth Percentage, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Gross Margin Percentage, Non-GAAP Adjusted Advertising and Promotion Expense, Non-GAAP Adjusted Advertising and Promotion Expense Percentage, Non-GAAP Adjusted General and Administrative Expense, Non-GAAP Adjusted General and Administrative Expense Percentage, Non-GAAP EBITDA, Non-GAAP EBITDA Margin, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow, Non-GAAP Adjusted Free Cash Flow and Net Debt. We use these NGFMs internally, along with GAAP information, in evaluating our operating performance and in making financial and operational decisions. We believe that the presentation of these NGFMs provides investors with greater transparency, and provides a more complete understanding of our business than could be obtained absent these disclosures, because the supplemental data relating to our financial condition and results of operations provides additional ways to view our operation when considered with both our GAAP results and the reconciliations below. In addition, we believe that the presentation of each of these NGFMs is useful to investors for period-to-period comparisons of results in assessing shareholder value, and we use these NGFMs internally to evaluate the performance of our personnel and also to evaluate our operating performance and compare our performance to that of our competitors.
These NGFMs are not in accordance with GAAP, should not be considered as a measure of profitability or liquidity, and may not be directly comparable to similarly titled NGFMs reported by other companies. These NGFMs have limitations and they should not be considered in isolation from or as an alternative to their most closely related GAAP measures reconciled below. Investors should not rely on any single financial measure when evaluating our business. We recommend investors review the GAAP financial measures included in this earnings release. When viewed in conjunction with our GAAP results and the reconciliations below, we believe these NGFMs provide greater transparency and a more complete understanding of factors affecting our business than GAAP measures alone.
NGFMs Defined
We define our NGFMs presented herein as follows:
| |
• | Non-GAAP Organic Revenues on a constant currency basis: GAAP Total Revenues excluding revenues associated with products acquired or divested in the periods presented and excluding the impact of foreign currency exchange rates. |
| |
• | Constant Currency Non-GAAP Organic Revenue Growth Percentage: Calculated as the change in Non-GAAP Organic Revenues on a constant currency basis from prior year divided by prior year Non-GAAP Organic Revenues on a constant currency basis. |
| |
• | Non-GAAP Proforma Revenues on a constant currency basis: Non-GAAP Organic Revenues on a constant currency basis plus revenues associated with acquisitions. |
| |
• | Constant Currency Non-GAAP Proforma Revenue Growth Percentage: Calculated as the change in Non-GAAP Proforma Revenues on a constant currency basis from prior year divided by prior year Non-GAAP Proforma Revenues on a constant currency basis. |
| |
• | Non-GAAP Adjusted Gross Margin: GAAP Gross Profit minus 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 and divestiture costs. |
| |
• | Non-GAAP Adjusted General and Administrative Expense Percentage: Calculated as Non-GAAP Adjusted General and Administrative expense divided by GAAP Total Revenues. |
| |
• | Non-GAAP EBITDA: GAAP Net Income (Loss) less interest expense (income), income taxes provision (benefit), and depreciation and amortization. |
| |
• | Non-GAAP EBITDA Margin: Calculated as Non-GAAP EBITDA divided by GAAP Total Revenues. |
| |
• | Non-GAAP Adjusted EBITDA: Non-GAAP EBITDA less certain other legal and professional fees, integration, transition and other acquisition related costs, divestiture costs, 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 (Loss) before certain other legal and professional fees, integration, transition and other acquisition related costs, divestiture costs, gain/loss on divestitures, applicable tax impact associated with these items and normalized tax rate adjustment. |
| |
• | Non-GAAP Adjusted EPS: Calculated as Non-GAAP Adjusted Net Income, divided by the weighted average number of common and potential common shares outstanding during the period. |
| |
• | Non-GAAP Free Cash Flow: GAAP Net cash provided by operating activities less cash paid for capital expenditures. |
| |
• | Non-GAAP Adjusted Free Cash Flow: Non-GAAP Free Cash Flow plus cash payments made for integration, transition, and other costs associated with acquisitions and divestitures. |
| |
• | Net Debt: Calculated as total principal amount of debt outstanding of ($2,172,000 at June 30, 2017) less cash and cash equivalents ($44,135 at June 30, 2017). Amounts in thousands. |
The following tables set forth the reconciliations of each of our NGFMs to their most directly comparable financial measures presented in accordance with GAAP.
Reconciliation of GAAP Total Revenues to Non-GAAP Organic Revenues on a Constant Currency basis and Non-GAAP Proforma Revenues on a Constant Currency Basis and related growth percentages:
|
| | | | | | | |
| Three Months Ended June 30, |
| 2017 | | 2016 |
(In thousands) | | | |
GAAP Total Revenues | $ | 256,573 |
| | $ | 209,575 |
|
Revenue Growth | 22.4 | % | | |
Adjustments: | | | |
Revenues associated with acquisitions (1) | (54,887 | ) | | — |
|
Revenues associated with divested brands(2) | — |
| | (11,039 | ) |
Impact of foreign currency exchange rates (3) | — |
| | (752 | ) |
Non-GAAP Organic Revenues on a constant currency basis | $ | 201,686 |
| | $ | 197,784 |
|
Constant Currency Non-GAAP Organic Revenue Growth | 2.0 | % | | |
| | | |
Non-GAAP Organic Revenues on a constant currency basis | $ | 201,686 |
| | $ | 197,784 |
|
Revenues associated with acquisitions (4) | 54,887 |
| | 51,201 |
|
Non-GAAP Proforma Revenues on a constant currency basis | $ | 256,573 |
| | $ | 248,985 |
|
Constant Currency Non-GAAP Proforma Revenue Growth | 3.0 | % | | |
(1) Revenues of our Fleet acquisition are excluded for purposes of calculating Non-GAAP organic revenues on a constant currency basis. 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 on a constant currency basis. These revenue adjustments relate to our North American OTC Healthcare segment and our Household Cleaning segment.
(3) Foreign currency exchange rate adjustments relate to all segments.
(4) Revenues of our Fleet acquisition are included for purposes of calculating Non-GAAP proforma revenues on a constant currency basis. These revenue adjustments relate to our North American and International OTC Healthcare segments.
Reconciliation of GAAP Gross Profit to Non-GAAP Adjusted Gross Margin and related Non-GAAP Adjusted Gross Margin percentage:
|
| | | | | | | |
| Three Months Ended June 30, |
| 2017 | | 2016 |
(In thousands) | | | |
GAAP Total Revenues | $ | 256,573 |
|
| $ | 209,575 |
|
| | | |
GAAP Gross Profit | $ | 143,476 |
| | $ | 121,591 |
|
Adjustments: | | | |
Integration, transition and other costs associated with acquisitions (1) | 2,576 |
| | — |
|
Total adjustments | 2,576 |
| | — |
|
Non-GAAP Adjusted Gross Margin | $ | 146,052 |
| | $ | 121,591 |
|
Non-GAAP Adjusted Gross Margin as a Percentage of GAAP Total Revenues | 56.9 | % | | 58.0 | % |
(1) 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 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 June 30, |
| 2017 | | 2016 |
(In thousands) | | | |
GAAP Advertising and Promotion Expense | $ | 36,944 |
| | $ | 27,635 |
|
GAAP Advertising and Promotion Expense as a Percentage of GAAP Total Revenue | 14.4 | % | | 13.2 | % |
Adjustments: | | | |
Integration, transition and other costs associated with acquisitions (1) | 39 |
| | — |
|
Total adjustments | 39 |
| | — |
|
Non-GAAP Adjusted Advertising and Promotion Expense | $ | 36,905 |
| | $ | 27,635 |
|
Non-GAAP Adjusted Advertising and Promotion Expense as a Percentage of GAAP Total Revenues | 14.4 | % | | 13.2 | % |
(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 June 30, |
| 2017 | | 2016 |
(In thousands) | | | |
GAAP General and Administrative Expense | $ | 20,336 |
| | $ | 19,457 |
|
GAAP General and Administrative Expense as a Percentage of GAAP Total Revenue | 7.9 | % | | 9.3 | % |
| | | |
Adjustments: | | | |
Legal and professional fees associated with acquisitions and divestitures (1) | 373 |
| | 484 |
|
Integration, transition and other costs associated with acquisitions and divestitures (1) | 211 |
| | 1,641 |
|
Total adjustments | 584 |
| | 2,125 |
|
Non-GAAP Adjusted General and Administrative Expense | $ | 19,752 |
| | $ | 17,332 |
|
Non-GAAP Adjusted General and Administrative Expense Percentage as a Percentage of GAAP Total Revenues | 7.7 | % | | 8.3 | % |
(1) 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 (Loss) to Non-GAAP EBITDA and related Non-GAAP EBITDA Margin, Non-GAAP Adjusted EBITDA and related Non-GAAP Adjusted EBITDA Margin:
|
| | | | | | | |
| Three Months Ended June 30, |
| 2017 | | 2016 |
(In thousands) | | | |
GAAP Net Income (Loss) | $ | 33,759 |
| | $ | (5,531 | ) |
Interest expense, net | 26,341 |
|
| 21,127 |
|
Provision (benefit) for income taxes | 18,929 |
| | (3,382 | ) |
Depreciation and amortization | 8,507 |
|
| 6,832 |
|
Non-GAAP EBITDA | 87,536 |
| | 19,046 |
|
Non-GAAP EBITDA Margin | 34.1 | % | | 9.1 | % |
Adjustments: | | | |
Integration, transition and other costs associated with acquisitions and divestitures in Cost of Goods Sold(1) | 2,576 |
| | — |
|
Integration, transition and other costs associated with acquisitions and divestitures in Advertising and Promotion Expense(1) | 39 |
| | — |
|
Integration, transition and other costs associated with acquisitions and divestitures in General and Administrative Expense(1) | 211 |
| | 1,641 |
|
Legal and professional fees associated with acquisitions and divestitures (1) | 373 |
| | 484 |
|
Loss on divestitures | — |
| | 55,453 |
|
Total adjustments | 3,199 |
| | 57,578 |
|
Non-GAAP Adjusted EBITDA | $ | 90,735 |
| | $ | 76,624 |
|
Non-GAAP Adjusted EBITDA Margin | 35.4 | % | | 36.6 | % |
(1) 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 (Loss) to Non-GAAP Adjusted Net Income and related Non-GAAP Adjusted Earnings Per Share:
|
| | | | | | | | | | | | | |
| Three Months Ended June 30, |
| 2017 | 2017 Adjusted EPS | | 2016 | 2016 Adjusted EPS |
(In thousands) | | | | | |
GAAP Net Income (Loss) | $ | 33,759 |
| $ | 0.63 |
| | $ | (5,531 | ) | $ | (0.10 | ) |
Adjustments: | | | | | |
Integration, transition and other costs associated with acquisitions and divestitures in Cost of Goods Sold(1) | 2,576 |
| 0.05 |
| | — |
| — |
|
Integration, transition and other costs associated with acquisitions and divestitures in Advertising and Promotion Expense(1) | 39 |
| — |
| | — |
| — |
|
Integration, transition and other costs associated with acquisitions and divestitures in General and Administrative Expense(1) | 211 |
| — |
| | 1,641 |
| 0.03 |
|
Legal and professional fees associated with acquisitions and divestitures (1) | 373 |
| 0.01 |
| | 484 |
| 0.01 |
|
Loss on divestitures | — |
| — |
| | 55,453 |
| 1.04 |
|
Tax impact of adjustments (2) | (1,167 | ) | (0.02 | ) | | (20,658 | ) | (0.39 | ) |
Normalized tax rate adjustment (3) | (302 | ) | (0.01 | ) | | — |
| — |
|
Total adjustments | 1,730 |
| 0.03 |
| | 36,920 |
| 0.69 |
|
Non-GAAP Adjusted Net Income and Adjusted EPS | $ | 35,489 |
| $ | 0.66 |
| | $ | 31,389 |
| $ | 0.59 |
|
(1) 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.
(2) The income tax adjustments are determined using applicable rates in the taxing jurisdictions in which the above adjustments relate and includes both current and deferred income tax expense (benefit) based on the specific nature of the specific Non-GAAP performance measure.
(3) Income tax adjustment to adjust for discrete income tax items.
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Free Cash Flow and Non-GAAP Adjusted Free Cash Flow:
|
| | | | | | | |
| Three Months Ended June 30, |
| 2017 | | 2016 |
(In thousands) | | | |
GAAP Net Income (Loss) | $ | 33,759 |
| | $ | (5,531 | ) |
Adjustments: | | | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities as shown in the Statement of Cash Flows | 21,983 |
| | 57,346 |
|
Changes in operating assets and liabilities, net of effects from acquisitions as shown in the Statement of Cash Flows | (1,621 | ) | | (514 | ) |
Total adjustments | 20,362 |
| | 56,832 |
|
GAAP Net cash provided by operating activities | 54,121 |
| | 51,301 |
|
Purchases of property and equipment | (2,554 | ) |
| (895 | ) |
Non-GAAP Free Cash Flow | 51,567 |
| | 50,406 |
|
Integration, transition and other payments associated with acquisitions and divestitures(1) | 4,948 |
| | 331 |
|
Non-GAAP Adjusted Free Cash Flow | $ | 56,515 |
| | $ | 50,737 |
|
(1) 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.
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 | $ | 2.51 |
| | $ | 2.61 |
|
Adjustments: | | | |
Costs associated with Fleet integration(1) | 0.07 |
| | 0.07 |
|
Total Adjustments | 0.07 |
| | 0.07 |
|
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), 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 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), 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.
exhibit992pbhfy18q1
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, adjusted EPS, and adjusted free cash flow;
the Company’s expected leverage; the Company’s focus on brand-building, supply chain and product development initiatives; and the ability to
achieve synergies from the Fleet acquisition. 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, regulatory matters, competitive pressures, difficulties successfully integrating the Fleet brands, manufacturing
facility and R&D resources, supplier issues, unexpected costs or liabilities, 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, 2017. 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.
Q1 Revenue of $256.6 million, up 22.4% versus prior year Q1
Revenue growth of 3.0%(1) pro forma for the Fleet acquisition
Excluding Fleet, organic Revenue growth of 2.0%(1) (ex-Fx)
Gross margin slightly ahead of expectations
Adjusted EPS of $0.66(2), up 11.9% versus prior year Q1
Continued solid Adjusted Free Cash Flow of $56.5 million(2), resulting in leverage of 5.6x(3)
Fleet integration largely completed
Fleet business performance in-line with expectations
FY 18 priorities include brand building and supply chain opportunities
4.3%
1.8%
FY18 YTD
Prestige Brands Prestige Categories
Source: IRI multi-outlet + C-Store retail dollar sales for the Fiscal YTD period ending 07/16/2017
Consumer insights and research drive what we do
Ongoing new product development pipeline
Digital and content marketing aimed at connecting
with consumers
Channel development including Mass, Dollar, Drug,
Convenience, Online
Source: IRI MULO through latest period
Connecting with a new generation of consumers
Target is sensory oriented consumer: Flavors, Colors, Music
Experiential, lifestyle, and entertainment focused
Collaborative flavor development
Mass
Dollar
Club
Drug
Convenience
Fleet brand represents ~20% of
acquired portfolio
Fleet delivers highly effective relief
in a fraction of the time
Over 140 years of heritage
#1 Doctor recommended brand
#1
#1
Other
Health Care Professionals (“HCPs”)
Currently Recommending Fleet Enemas
97% 100% 98%HCPs Brand
Awareness:
“Order-to-cash” integrated sales platform complete
Cross sharing of international resources
Successful Summer’s Eve “Simply” launch
Long-term NPD pipeline
Integrated Women’s Health sales efforts
Warehouse and freight consolidated into existing footprint
Fleet R&D lab expanding to new brands
Long-term “fill the factory” opportunities
Closed Fleet’s New Jersey executive office
Consolidated support into PBH structure; exits completed
Strong overall financial performance in the quarter
− Revenue of $256.6 million, an increase of 22.4%
− Adjusted EPS of $0.66(2), up 11.9%
− Adjusted Free Cash Flow increase of 11.4% to $56.5 million(2)
$256.6
$90.7
$56.5
$209.6
$76.6
$50.7
Total Revenue Adjusted EBITDA Adjusted EPS Adjusted Free Cash Flow
Q1 FY 17Q1 FY 18
22.4%
18.4%
11.9% 11.4%
$0.59$0.66
(2) (2) (2)
Dollar values in millions, except per share data.
Revenue growth of +22.4%
– Revenue growth of 3.0%(1) , pro forma for the Fleet acquisition
– Organic growth of 2.0%(1) (ex-Fx)
– Fleet contributed $54.9 million of Revenue during the quarter
– Impact of divested brands of $11.0 million
Adjusted Gross Margin of 56.9%(2) slightly ahead of expectations
Adjusted A&P 14.4%(2) of Revenue, $9.3 million more than prior year
period reflecting ongoing brand building investments
Adjusted EPS growth of ~12%(2)
Adjusted EBITDA growth of over ~18%(2)
Dollar values in millions, except per share data.
Q1 FY 18 Q1 FY 17 % Chg
Total Revenue 256.6$ 209.6$ 22.4%
Adjusted Gross Margin(2) 146.1 121.6 20.1%
% Margin 56.9% 58.0%
Adjusted A&P(2) 36.9 27.6 33.5%
% Total Revenue 14.4% 13.2%
Adjusted G&A(2) 19.8 17.3 14.0%
% Total Revenue 7.7% 8.3%
D&A (ex. COGS D&A) 7.2 6.8 4.9%
% Total Revenue 2.8% 3.3%
Adjusted Operating Income(2) 82.2$ 69.8$ 17.8%
% Margin 32.0% 33.3%
Adjusted Earnings Per Share(2) 0.66$ 0.59$ 11.9%
Adjusted EBITDA(2) 90.7$ 76.6$ 18.4%
% Margin 35.4% 36.6%
Net Debt in June of $2,128 million comprised of:
– Cash on hand of $44.1 million
– $1,422 million of term loan and revolver
– $750 million of bonds
Leverage ratio of 5.6x(3)
Leverage ratio of approximately 5.0x(3) expected at
end of fiscal 2018
Q1 debt prepayment of $50 million
$56.5
$50.7
Adjusted Free Cash Flow
11.4%
Q1 FY 18 Q1 FY 17
Dollar values in millions.
(2)
Strong momentum in our largest brands and international business realized in Q1
Continue to gain share across portfolio
Prestige’s portfolio of need-based brands continues to be well positioned for long-term growth despite
continued headwinds at retail
Revenue growth of +18% to +20% ($1,040 to $1,060 million)
Pro forma for the Fleet acquisition, Revenue growth of +2.0% to +2.5%
Adjusted EPS +9% to +13% ($2.58 to $2.68)(4)
Adjusted Free Cash Flow of $205 million or more(5)
(1) Organic Revenue Growth on a constant currency basis and Proforma Revenue Growth on a constant currency basis are Non-
GAAP financial measures and are reconciled to the most closely related GAAP financial measure in the attached Reconciliation
Schedules and / or our earnings release in the “About Non-GAAP Financial Measures” section.
(2) Adjusted Gross Margin, Adjusted A&P, Adjusted G&A, Adjusted EBITDA, Adjusted Operating Income, Adjusted Net Income,
Adjusted EPS, Adjusted Free Cash Flow and Net Debt are Non-GAAP financial measures and are reconciled to their most closely
related GAAP financial measures in the attached Reconciliation Schedules and / or in our earnings release in the “About Non-
GAAP Financial Measures” section.
(3) Leverage ratio reflects net debt / covenant defined EBITDA.
(4) Adjusted EPS for FY 18 is a projected Non-GAAP financial measure, is reconciled to projected GAAP EPS in the attached
Reconciliation Schedules and / or in our earnings release in the “About Non-GAAP Financial Measures” section and is calculated
based on projected GAAP EPS less costs associated with Fleet integration.
(5) Adjusted Free Cash Flow for FY 18 is a projected Non-GAAP financial measure, is reconciled to projected GAAP Net Cash
Provided by Operating Activities in the attached Reconciliation Schedules and / or in our earnings release in the “About Non-
GAAP Financial Measures” section and is calculated based on projected Net Cash Provided by Operating Activities less projected
capital expenditures plus payments associated with acquisitions less tax effect of payments associated with acquisitions.
Three Months Ended Jun. 30,
2017 2016
(In Thousands)
GAAP Total Revenues 256,573$ 209,575$
Revenue Growth 22.4%
Adjustments:
Revenues associated with acquisitions (54,887) -
Revenues associated with divested brands - (11,039)
Impact of foregn currency exchange rates - (752)
Non-GAAP Organic Revenues on a constant currency basis 201,686 197,784
Constant Currency Non-GAAP Organic Revenue Growth 2.0%
Non-GAAP Organic Revenues on a constant currency basis 201,686 197,784
Revenues associated with acquisitions 54,887 51,201
Non-GAAP Proforma Revenues on a constant currency basis 256,573 248,985
Constant Currency Non-GAAP Proforma Revenue Growth 3.0%
Three Months Ended Jun. 30,
2017 2016
(In Thousands)
GAAP Total Revenues 256,573$ 209,575$
GAAP Gross Profit 143,476$ 121,591$
Adjustments:
Integration, transition and other costs associated with
acquisitions 2,576 -
Total adjustments 2,576 -
Non-GAAP Adjusted Gross Margin 146,052$ 121,591$
Non-GAAP Adjusted Gross Margin as a Percentage of GAAP Total
Revenues 56.9% 58.0%
Three Months Ended Jun. 30,
7 2016
(In Thousands)
GAAP Advertising and Promotion Expense 36,944 27,635$
GAAP Advertising and Promotion Expense as a Percentage of
GAAP Total Revenue 14.4% 13.2%
Adjustments:
Integrati n, t ansi ion and other costs associated with
acquisitions 39 -
Total adjustments 39 -
Non-GAAP Adjusted Advertising and Promotion Expense 36,905 27,635$
Non-GAAP Adjusted Adv rtising and Prom ion Expense as a
Percentage of GAAP Total Revenues 14 4 13.2%
Three Months Ended Jun. 30,
2017 2016
(In Thousands)
GAAP General and Administrative Expense 20,336$ 19,457$
GAAP General and Administrative Expense as a Percentage of
GAAP Total Revenue 7.9% 9.3%
Adjustments:
Legal and professional fees associated with acquisitions and
divestitures 373 484
Integration, transition and other costs associated with
acquisitions and divestitures 211 1,641
Total adjustments 584 2,125
Non-GAAP Adjusted General and Administrative Expense 19,752$ 17,332$
Non-GAAP Adjusted General and Administrative Expense as a
Percentage of GAAP Total Revenues 7.7% 8.3%
Three Months Ended Jun. 30,
2017 2016
(In Thousands)
GAAP Net Income (Loss) 33,759$ (5,531)$
Interest expense, net 26,341 21,127
Provision (benefit) for income taxes 18,929 (3,382)
Depreciation and amortization 8,507 6,832
Non-GAAP EBITDA 87,536 19,046
Non-GAAP EBITDA Margin 34.1% 9.1%
Adjustments:
Integration, transition and other costs associated with acquisitions
and divestitures in Cost of Goods Sold 2,576 -
Integration, transition and other costs associated with acquisitions
and divestitures in Advertising and Promotion Expense 39 -
Integration, transition and other costs associated with acquisitions
and divestitures in General and Administrative Expense 211 1,641
Legal and professional fees associated with acquisitions and
divestitures 373 484
Loss on divestitures - 55,453
Total adjustments 3,199 57,578
Non-GAAP Adjusted EBITDA 90,735$ 76,624$
Non-GAAP Adjusted EBITDA Margin 35.4% 36.6%
Three Months Ended June 30,
2017
2017
Adjusted
EPS 2016
2016
Adjusted
EPS
(In Thousands)
GAAP Net Income (Loss) 33,759$ 0.63$ (5,531)$ (0.10)$
Adjustments:
Integration, transition and other costs associated
with acquisitions and divestitures in Cost of Goods
Sold 2,576 0.05 - -
Integration, transition and other costs associated
with acquisitions and divestitures in Advertising and
Promotion Expense 39 - - -
Integration, transition and other costs associated
with acquisitions and divestitures in General and
Administrative Expense 211 - 1,641 0.03
Legal and professional fees associated with
acquisitions and divestitures 373 0.01 484 0.01
Loss on divestitures - - 55,453 1.04
Tax impact of adjustments (1,167) (0.02) (20,658) (0.39)
Normalized tax rate adjustment (302) (0.01) - -
Total adjustments 1,730 0.03 36,920 0.69
Non-GAAP Adjusted Net Income and Adjusted EPS 35,489$ 0.66$ 31,389$ 0.59$
Three Months Ended Jun. 30,
2017 2016
(In Thousands)
GAAP Net Income (Loss) 33,759$ (5,531)$
Adjustments:
A justments to reconcile net income (loss) to net
cash provided by operating activities as shown in
the Statement of Cash Flows 21,983 57,346
Changes in operating assets and liabilities, net of
effects from acquisitions as shown in the
Statement of Cash Flows
(1,621) (514)
Total Adjustments 20,362 56,832
GAAP N t cash provided by operating activities 54,121 51,301
Purchase of property and equipment (2,554) (895)
Non-GAAP Free Cash Flow 51,567 50,406
Integration, transition and other payments
associated with acquisitions and divestitures 4,948 331
Non-GAAP Adjusted Free Cash Flow 56,515$ 50,737$
2018 Projected EPS
Low High
Projected FY'18 GAAP EPS 2.51$ 2.61$
Adjustments:
Costs associated with Fleet integration 0.07 0.07
Total Adjustments 0.07 0.07
Projected Non-GAAP Adjusted EPS 2.58$ 2.68$
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
ayments associated with acquisitions 8
Tax ffect of payme ts associated with acquisitions (3)
Projected Non-GAAP Adjusted Free Cash Flow 205$