Irinquiries@prestigebrands.com
Prestige Consumer Healthcare Inc.
660 White Plains Road – Ste 250
Tarrytown, NY 10591
Telephone: 914-524-6819
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): August 5, 2021
(Exact Name of Registrant as Specified in Charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
(Address of Principal Executive Offices) (Zip Code)
(914 524-6800
(Registrant's telephone number, including area code)
(Former Name or Former Address, if Changed Since Last Report.)
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):
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
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).
| Emerging Growth Company | |||||
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.
☐
Item 2.02 Results of Operations and Financial Condition.
On August 5, 2021, Prestige Consumer Healthcare Inc. (the “Company”) announced financial results for the fiscal quarter ended June 30, 2021. A copy of the press release announcing the Company's earnings results for the fiscal quarter ended June 30, 2021 is attached hereto as Exhibit 99.1 and incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On August 5, 2021, representatives of the Company began making presentations to investors regarding the Company's financial results for the quarter ended June 30, 2021 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, 2022.
By filing this Current Report on Form 8-K and furnishing the information contained herein, the Company makes no admission as to the materiality of any information in this report that is required to be disclosed solely by reason of Regulation FD.
The information contained in the Investor Presentation is summary information that is intended to be considered in the context of the Company's Securities and Exchange Commission (“SEC”) filings and other public announcements that the Company may make, by press release or otherwise, from time to time. The Company undertakes no duty or obligation to publicly update or revise the information contained in this report, although it may do so from time to time as its management believes is warranted. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.
The information presented in Items 2.02 and 7.01 of this Current Report on Form 8-K and Exhibits 99.1 and 99.2 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, unless the Company specifically states that the information is to be considered “filed” under the Exchange Act or specifically incorporates it by reference into a filing under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
See Exhibit Index immediately following the signature page.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: August 5, 2021 | PRESTIGE CONSUMER HEALTHCARE INC. | ||||||||||
| By: | /s/ Christine Sacco | ||||||||||
| Christine Sacco | |||||||||||
| Chief Financial Officer | |||||||||||
EXHIBIT INDEX
| Exhibit | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
Exhibit 99.1
Prestige Consumer Healthcare Inc. Reports Fiscal 2022 First Quarter Results
•Revenue was $269.2 Million in Q1, up 17.3% versus Prior Year
•Record Diluted EPS of $1.14 in Q1, up 32.5% versus Prior Year
•Net Cash Provided by Operating Activities of $69.3 million and Free Cash Flow of $67.8 Million for First Quarter Fiscal 2022
•Raising Full-Year Fiscal 2022 Outlook to Reflect Strong Q1 Results, Expectations for Remainder of Year, and TheraTears Acquisition
TARRYTOWN, N.Y.--(GLOBE NEWSWIRE)-August 5, 2021-- Prestige Consumer Healthcare Inc. (NYSE:PBH) today reported financial results for its first quarter ended June 30, 2021.
“We are very pleased with our strong first quarter results, which included double-digit revenue growth leading to our second highest level of quarterly revenue in the Company’s history. The performance benefited from our proven brand-building strategy, which continues to drive solid consumption and share gains across our portfolio of leading brands. In addition, our business also benefited from a significant increase in demand in certain categories and channels previously impacted by the COVID-19 virus. Our strong topline increased our net income by 32% and EBITDA by 13%,” said Ron Lombardi, Chief Executive Officer of Prestige Consumer Healthcare.
First Fiscal Quarter Ended June 30, 2021
Reported revenues in the first quarter of fiscal 2022 increased 17.3% to $269.2 million versus $229.4 million in the first quarter of fiscal 2021. The revenue performance for the quarter was driven by continued strong performance across many of the Company’s key brands versus their respective categories, and improved demand for certain brands, categories and channels that had been impacted by the COVID-19 virus in the prior year first quarter.
Reported net income for the first quarter of fiscal 2022 totaled $57.8 million, compared to the prior year quarter’s net income of $43.7 million. Diluted earnings per share of $1.14 for the first quarter of fiscal 2022 compared to $0.86 in the prior year comparable period.
Free Cash Flow and Balance Sheet
The Company's net cash provided by operating activities for first quarter fiscal 2022 was $69.3 million, compared to $75.2 million during the prior year comparable period. Non-GAAP free cash flow in the first quarter of fiscal 2022 was $67.8 million compared to $72.6 million in the prior year first quarter. The change in free cash flow versus the prior year comparable period was attributable to the timing of receivables, partially offset by higher operating income.
The Company's net debt position as of June 30, 2021 was approximately $1.4 billion. During the first quarter the Company increased debt outstanding by $65 million in anticipation of the TheraTears acquisition closing. Subsequent to the quarter, on July 1, 2021 the Company completed a refinancing of its term loan, which now matures in 2028 and amends and replaces Prestige’s previous outstanding term loan at similar terms. Following the Akorn transaction, net debt was $1.6 billion and with an estimated covenant-defined leverage ratio of 4.3x.
Segment Review
North American OTC Healthcare: Segment revenues of $242.4 million for the first quarter of fiscal 2022 compared to the prior year comparable quarter's segment revenues of $210.7 million. The first quarter fiscal 2022 revenue performance was driven by strong performance across a majority of the Company’s key brands versus their respective categories and increased demand in certain COVID-19 impacted categories such as motion sickness and certain travel-related channels.
International OTC Healthcare: Segment fiscal first quarter 2022 revenues of $26.8 million increased from $18.7 million reported in the prior year comparable period. The revenue increase versus the prior year related primarily to an increase in consumer activity in Australia which drove a sharp rise in demand for Hydralyte and other COVID-19 impacted brands, along with a foreign currency benefit of approximately $2 million.
Commentary and Updated Outlook for Fiscal 2022
Ron Lombardi, Chief Executive Officer, stated, “Our strong first quarter performance included solid mid-single-digit growth for our baseline portfolio along with a ~$25M boost from a higher than anticipated rebound in COVID-impacted areas such as travel and Australia. While the strong performance was partially attributable to lapping an unusual prior year period, the attributes of our leading brands and our continued market share gains over the past twelve months have us well positioned to benefit as consumer habits continue to shift and evolve. This leaves us well-positioned to anticipate continued market share, revenue and earnings growth in the remainder of the year.”
“In addition, we anticipate the newly acquired TheraTears and other brands, acquired on July 1, to add incremental revenue and earnings to our base business momentum. The addition of TheraTears will further enhance Prestige’s leading eye care portfolio and generate additional long-term growth opportunities for the Company. We anticipate the acquisition of these brands generating approximately $40 million and $0.07 of revenue and Diluted EPS, respectively, to our fiscal ’22.”
“We are raising our fiscal 2022 financial outlook to reflect our strong first quarter results, continuation of the recovery of COVID-impacted brands experienced in the first quarter, continued solid momentum behind our base business, and the acquisition of TheraTears. We are off to a running start in fiscal 2022, which increases our conviction that our strategy continues to position for solid top- and bottom-line growth for the full-year and will enable our continued disciplined capital allocation strategy to lead to very strong shareholder returns,” Mr. Lombardi concluded.
Prior Fiscal 2022 Outlook | Current Fiscal 2022 Outlook | |||||||
Revenue | $957 to $962 million | $1,045 million or more | ||||||
Organic Growth | 1.5% to 2.0% | ~6% | ||||||
Adjusted Diluted EPS | $3.58 or more | $3.90 or more | ||||||
Adjusted Free Cash Flow | $225 million or more | $245 million or more | ||||||
Fiscal First Quarter 2022 Conference Call, Accompanying Slide Presentation and Replay
The Company will host a conference call to review its first quarter results today, August 5, 2021 at 8:30 a.m. ET. The toll-free dial-in numbers are 844-233-9440 for the U.S. & Canada and 574-990-1016 internationally. The conference ID number is 5362477. 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.prestigeconsumerhealthcare.com. The slide presentation can be accessed from the Investor Relations page of the website by clicking on Webcasts and Presentations.
Telephonic replays will be available for approximately one week 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 5362477.
Non-GAAP and Other Financial Information
In addition to financial results reported in accordance with generally accepted accounting principles (GAAP), we have provided certain non-GAAP financial information in this release to aid investors in understanding the Company's performance. Each non-GAAP financial measure is defined and reconciled to its most closely related GAAP financial measure in the “About Non-GAAP Financial Measures” section at the end of this earnings release.
Note Regarding Forward-Looking Statements
This news release contains "forward-looking statements" within the meaning of the federal securities laws that are intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" generally can be identified by the use of forward-looking terminology such as "guidance," "strategy," "outlook," "projection," "may," "will," "would," "expect," "anticipate," "believe”, "enables," “positioned” 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 future operating results including revenues, organic growth, adjusted earnings per share, and adjusted free cash flow, the consumption and market share gains for the Company’s products, the Company’s ability to benefit from changing consumer habits, the impact from the Company’s acquisition of TheraTears, the Company’s ability to execute on its capital allocation strategy, and the Company’s ability to create strong shareholder returns. 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 COVID-19 pandemic and business and economic conditions, consumer trends, the impact of the Company’s advertising and marketing and new product development initiatives, customer inventory management initiatives, fluctuating foreign exchange rates, competitive pressures, and the ability of the Company’s third party manufacturers and logistics providers and suppliers to meet demand for its products and to reduce costs. A discussion of other factors that could cause results to vary is included in the Company's Annual Report on Form 10-K for the year ended March 31, 2021 and other periodic reports filed with the Securities and Exchange Commission.
About Prestige Consumer Healthcare Inc.
Prestige Consumer Healthcare is a leading consumer healthcare products company with sales throughout the U.S. and Canada, Australia, and in certain other international markets. The Company’s diverse portfolio of brands include Monistat® and Summer’s Eve® women's health products, BC® and Goody's® pain relievers, Clear Eyes® and TheraTears® eye care products, DenTek® specialty oral care products, Dramamine® motion sickness treatments, Fleet® enemas and glycerin suppositories,
Chloraseptic® and Luden's® sore throat treatments and drops, Compound W® wart treatments, Little Remedies® pediatric over-the-counter products, Boudreaux’s Butt Paste® diaper rash ointments, Nix® lice treatment, 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.prestigeconsumerhealthcare.com.
Prestige Consumer Healthcare Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)
| Three Months Ended June 30, | ||||||||||||||
| (In thousands, except per share data) | 2021 | 2020 | ||||||||||||
| Total Revenues | $ | 269,181 | $ | 229,394 | ||||||||||
| Cost of Sales | ||||||||||||||
| Cost of sales excluding depreciation | 108,335 | 94,124 | ||||||||||||
| Cost of sales depreciation | 1,834 | 1,402 | ||||||||||||
| Cost of sales | 110,169 | 95,526 | ||||||||||||
| Gross profit | 159,012 | 133,868 | ||||||||||||
| Operating Expenses | ||||||||||||||
| Advertising and marketing | 39,439 | 27,750 | ||||||||||||
| General and administrative | 22,471 | 19,934 | ||||||||||||
| Depreciation and amortization | 5,760 | 6,065 | ||||||||||||
| Total operating expenses | 67,670 | 53,749 | ||||||||||||
| Operating income | 91,342 | 80,119 | ||||||||||||
| Other (income) expense | ||||||||||||||
| Interest expense, net | 15,077 | 21,941 | ||||||||||||
| Other (income) expense, net | (105) | 10 | ||||||||||||
| Total other expense, net | 14,972 | 21,951 | ||||||||||||
| Income before income taxes | 76,370 | 58,168 | ||||||||||||
| Provision for income taxes | 18,615 | 14,462 | ||||||||||||
| Net income | $ | 57,755 | $ | 43,706 | ||||||||||
| Earnings per share: | ||||||||||||||
| Basic | $ | 1.15 | $ | 0.87 | ||||||||||
| Diluted | $ | 1.14 | $ | 0.86 | ||||||||||
| Weighted average shares outstanding: | ||||||||||||||
| Basic | 50,139 | 50,264 | ||||||||||||
| Diluted | 50,671 | 50,808 | ||||||||||||
| Comprehensive income (loss), net of tax: | ||||||||||||||
| Currency translation adjustments | (1,492) | 10,590 | ||||||||||||
| Unrecognized gain on interest rate swaps | 520 | 309 | ||||||||||||
| Total other comprehensive (loss) income | (972) | 10,899 | ||||||||||||
| Comprehensive income | $ | 56,783 | $ | 54,605 | ||||||||||
Prestige Consumer Healthcare Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands) | June 30, 2021 | March 31, 2021 | |||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 163,624 | $ | 32,302 | |||||||
| Accounts receivable, net of allowance of $14,659 and $16,457, respectively | 130,346 | 114,671 | |||||||||
| Inventories | 105,546 | 114,959 | |||||||||
| Prepaid expenses and other current assets | 9,008 | 7,903 | |||||||||
| Total current assets | 408,524 | 269,835 | |||||||||
| Property, plant and equipment, net | 69,825 | 70,059 | |||||||||
| Operating lease right-of-use assets | 22,345 | 23,722 | |||||||||
| Finance lease right-of-use assets, net | 8,344 | 8,986 | |||||||||
| Goodwill | 577,840 | 578,079 | |||||||||
| Intangible assets, net | 2,469,714 | 2,475,729 | |||||||||
| Other long-term assets | 2,522 | 2,863 | |||||||||
| Total Assets | $ | 3,559,114 | $ | 3,429,273 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 30,963 | $ | 45,978 | |||||||
| Accrued interest payable | 17,067 | 6,312 | |||||||||
| Operating lease liabilities, current portion | 5,974 | 5,858 | |||||||||
| Finance lease liabilities, current portion | 2,607 | 2,588 | |||||||||
| Other accrued liabilities | 68,435 | 61,402 | |||||||||
| Total current liabilities | 125,046 | 122,138 | |||||||||
| Long-term debt, net | 1,545,352 | 1,479,653 | |||||||||
| Deferred income tax liabilities | 439,428 | 434,050 | |||||||||
| Long-term operating lease liabilities, net of current portion | 18,329 | 19,706 | |||||||||
| Long-term finance lease liabilities, net of current portion | 6,157 | 6,816 | |||||||||
| Other long-term liabilities | 8,555 | 8,612 | |||||||||
| Total Liabilities | 2,142,867 | 2,070,975 | |||||||||
| 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 - 54,211 shares at June 30, 2021 and 53,999 shares at March 31, 2021 | 542 | 540 | |||||||||
| Additional paid-in capital | 503,588 | 499,508 | |||||||||
Treasury stock, at cost - 4,151 shares at June 30, 2021 and 4,088 shares at March 31, 2021 | (133,648) | (130,732) | |||||||||
| Accumulated other comprehensive loss, net of tax | (20,773) | (19,801) | |||||||||
| Retained earnings | 1,066,538 | 1,008,783 | |||||||||
| Total Stockholders' Equity | 1,416,247 | 1,358,298 | |||||||||
| Total Liabilities and Stockholders' Equity | $ | 3,559,114 | $ | 3,429,273 | |||||||
Prestige Consumer Healthcare Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Three Months Ended June 30, | |||||||||||
| (In thousands) | 2021 | 2020 | |||||||||
| Operating Activities | |||||||||||
| Net income | $ | 57,755 | $ | 43,706 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 7,594 | 7,467 | |||||||||
| Loss on disposal of property and equipment | 26 | 42 | |||||||||
| Deferred income taxes | 5,876 | 6,147 | |||||||||
| Amortization of debt origination costs | 759 | 1,400 | |||||||||
| Stock-based compensation costs | 1,878 | 1,464 | |||||||||
| Non-cash operating lease cost | 1,691 | 1,831 | |||||||||
| Other | — | 50 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (15,879) | 39,734 | |||||||||
| Inventories | 9,384 | 51 | |||||||||
| Prepaid expenses and other current assets | (1,049) | (4,019) | |||||||||
| Accounts payable | (15,551) | (32,386) | |||||||||
| Accrued liabilities | 18,439 | 11,588 | |||||||||
| Operating lease liabilities | (1,578) | (1,812) | |||||||||
| Other | (40) | (109) | |||||||||
| Net cash provided by operating activities | 69,305 | 75,154 | |||||||||
| Investing Activities | |||||||||||
| Purchases of property, plant and equipment | (1,500) | (2,553) | |||||||||
| Other | 177 | — | |||||||||
| Net cash used in investing activities | (1,323) | (2,553) | |||||||||
| Financing Activities | |||||||||||
| Term loan repayments | (20,000) | (56,000) | |||||||||
| Borrowings under revolving credit agreement | 85,000 | — | |||||||||
| Repayments under revolving credit agreement | — | (55,000) | |||||||||
| Payments of finance leases | (638) | (336) | |||||||||
| Proceeds from exercise of stock options | 2,204 | 1,216 | |||||||||
| Fair value of shares surrendered as payment of tax withholding | (2,916) | (1,242) | |||||||||
| Net cash provided by (used in) financing activities | 63,650 | (111,362) | |||||||||
| Effects of exchange rate changes on cash and cash equivalents | (310) | 1,942 | |||||||||
| Increase (decrease) in cash and cash equivalents | 131,322 | (36,819) | |||||||||
| Cash and cash equivalents - beginning of period | 32,302 | 94,760 | |||||||||
| Cash and cash equivalents - end of period | $ | 163,624 | $ | 57,941 | |||||||
| Interest paid | $ | 3,389 | $ | 5,571 | |||||||
| Income taxes paid | $ | 2,388 | $ | 2,182 | |||||||
Prestige Consumer Healthcare Inc.
Condensed Consolidated Statements of Income
Business Segments
(Unaudited)
| Three Months Ended June 30, 2021 | |||||||||||||||||
| (In thousands) | North American OTC Healthcare | International OTC Healthcare | Consolidated | ||||||||||||||
| Total segment revenues* | 242,393 | 26,788 | 269,181 | ||||||||||||||
| Cost of sales | 99,404 | 10,765 | 110,169 | ||||||||||||||
| Gross profit | 142,989 | 16,023 | 159,012 | ||||||||||||||
| Advertising and marketing | 35,230 | 4,209 | 39,439 | ||||||||||||||
| Contribution margin | $ | 107,759 | $ | 11,814 | $ | 119,573 | |||||||||||
| Other operating expenses | 28,231 | ||||||||||||||||
| Operating income | $ | 91,342 | |||||||||||||||
*Intersegment revenues of $1.0 million were eliminated from the North American OTC Healthcare segment.
| Three Months Ended June 30, 2020 | |||||||||||||||||
| (In thousands) | North American OTC Healthcare | International OTC Healthcare | Consolidated | ||||||||||||||
| Total segment revenues* | $ | 210,658 | $ | 18,736 | $ | 229,394 | |||||||||||
| Cost of sales | 87,827 | 7,699 | 95,526 | ||||||||||||||
| Gross profit | 122,831 | 11,037 | 133,868 | ||||||||||||||
| Advertising and marketing | 24,680 | 3,070 | 27,750 | ||||||||||||||
| Contribution margin | $ | 98,151 | $ | 7,967 | $ | 106,118 | |||||||||||
| Other operating expenses | 25,999 | ||||||||||||||||
| Operating income | $ | 80,119 | |||||||||||||||
* Intersegment revenues of $1.0 million were eliminated from the North American OTC Healthcare segment.
About Non-GAAP Financial Measures
In addition to financial results reported in accordance with GAAP, we disclose certain Non-GAAP financial measures ("NGFMs"), including, but not limited to, Non-GAAP Organic Revenues, Non-GAAP Organic Revenue Change Percentage, Non-GAAP EBITDA, Non-GAAP EBITDA Margin, Non-GAAP Free Cash Flow, Non-GAAP Adjusted Free Cash Flow, Non-GAAP Adjusted Diluted EPS, and Net Debt. We use these NGFMs internally, along with GAAP information, in evaluating our operating performance and in making financial and operational decisions. We believe that the presentation of these NGFMs provides investors with greater transparency, and provides a more complete understanding of our business than could be obtained absent these disclosures, because the supplemental data relating to our financial condition and results of operations provides additional ways to view our operation when considered with both our GAAP results and the reconciliations below. In addition, we believe that the presentation of each of these NGFMs is useful to investors for period-to-period comparisons of results in assessing shareholder value, and we use these NGFMs internally to evaluate the performance of our personnel and also to evaluate our operating performance and compare our performance to that of our competitors.
These NGFMs are not in accordance with GAAP, should not be considered as a measure of profitability or liquidity, and may not be directly comparable to similarly titled NGFMs reported by other companies. These NGFMs have limitations and they should not be considered in isolation from or as an alternative to their most closely related GAAP measures reconciled below. Investors should not rely on any single financial measure when evaluating our business. We recommend investors review the GAAP financial measures included in this earnings release. When viewed in conjunction with our GAAP results and the reconciliations below, we believe these NGFMs provide greater transparency and a more complete understanding of factors affecting our business than GAAP measures alone.
NGFMs Defined
We define our NGFMs presented herein as follows:
•Non-GAAP Organic Revenues: GAAP Total Revenues excluding impact of foreign currency exchange rates in the periods presented.
•Non-GAAP Organic Revenue Change Percentage: Calculated as the change in Non-GAAP Organic Revenues from prior year divided by prior year Non-GAAP Organic Revenues.
•Non-GAAP EBITDA: GAAP Net Income before interest expense, net, provision for income taxes, and depreciation and amortization.
•Non-GAAP EBITDA Margin: Calculated as Non-GAAP EBITDA divided by GAAP Total Revenues.
•Non-GAAP Free Cash Flow: Calculated as GAAP Net cash provided by operating activities less cash paid for capital expenditures.
•Non-GAAP Adjusted Free Cash Flow: Calculated as Non-GAAP free cash flow plus cash payments associated with acquisition.
•Non-GAAP Adjusted Diluted EPS: Calculated as GAAP Diluted EPS before costs associated with acquisition.
•Net Debt: Calculated as total principal amount of debt outstanding ($1,560,000 at June 30, 2021) less cash and cash equivalents ($163,624 at June 30, 2021). Amounts in thousands.
The following tables set forth the reconciliations of each of our NGFMs (other than Net Debt, which is reconciled above) to their most directly comparable financial measures presented in accordance with GAAP.
Reconciliation of GAAP Total Revenues to Non-GAAP Organic Revenues and related Non-GAAP Organic Revenue Change percentage:
| Three Months Ended June 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| (In thousands) | |||||||||||
| GAAP Total Revenues | $ | 269,181 | $ | 229,394 | |||||||
| Revenue Change | 17.3 | % | |||||||||
| Adjustments: | |||||||||||
| Impact of foreign currency exchange rates | — | 3,543 | |||||||||
| Total adjustments | — | 3,543 | |||||||||
| Non-GAAP Organic Revenues | $ | 269,181 | $ | 232,937 | |||||||
| Non-GAAP Organic Revenue Change | 15.6 | % | |||||||||
Reconciliation of GAAP Net Income to Non-GAAP EBITDA and related Non-GAAP EBITDA Margin:
| Three Months Ended June 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| (In thousands) | |||||||||||
| GAAP Net Income | $ | 57,755 | $ | 43,706 | |||||||
| Interest expense, net | 15,077 | 21,941 | |||||||||
| Provision for income taxes | 18,615 | 14,462 | |||||||||
| Depreciation and amortization | 7,594 | 7,467 | |||||||||
| Non-GAAP EBITDA | $ | 99,041 | $ | 87,576 | |||||||
| Non-GAAP EBITDA Margin | 36.8 | % | 38.2 | % | |||||||
Reconciliation of GAAP Net Income to Non-GAAP Free Cash Flow:
| Three Months Ended June 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| (In thousands) | |||||||||||
| GAAP Net Income | $ | 57,755 | $ | 43,706 | |||||||
| Adjustments: | |||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities as shown in the Statement of Cash Flows | 17,824 | 18,401 | |||||||||
| Changes in operating assets and liabilities as shown in the Statement of Cash Flows | (6,274) | 13,047 | |||||||||
| Total adjustments | 11,550 | 31,448 | |||||||||
| GAAP Net cash provided by operating activities | 69,305 | 75,154 | |||||||||
| Purchases of property and equipment | (1,500) | (2,553) | |||||||||
| Non-GAAP Free Cash Flow | $ | 67,805 | $ | 72,601 | |||||||
Outlook for Fiscal Year 2022:
Reconciliation of Projected GAAP Diluted EPS to Projected Non-GAAP Adjusted Diluted EPS:
| Projected FY'22 GAAP Diluted EPS | $ | 3.80 | ||||||
| Adjustments: | ||||||||
Costs associated with acquisition (1) | 0.10 | |||||||
| Total Adjustments | 0.10 | |||||||
| Projected Non-GAAP Adjusted Diluted EPS | $ | 3.90 | ||||||
(1) Items related to acquisition represent costs related to integrating recently acquired business including (but not limited to), costs to exit or convert contractual obligations, severance, information system conversion and consulting costs, and certain costs related to the consummation of the acquisition process such as costs associated with refinancing our Term Loan, 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:
| (In millions) | ||||||||
| Projected FY'22 GAAP Net cash provided by operating activities | $ | 240 | ||||||
| Purchases of property and equipment | (10) | |||||||
| Projected Non-GAAP Free Cash Flow | 230 | |||||||
Payments associated with acquisition (1) | 15 | |||||||
| Projected Non-GAAP Adjusted Free Cash Flow | $ | 245 | ||||||
(1) Payments related to acquisition represent costs related to integrating recently acquired business including (but not limited to), costs to exit or convert contractual obligations, severance, information system conversion and consulting costs, and certain costs related to the consummation of the acquisition process such as costs associated with refinancing our Term Loan, insurance costs, legal and other acquisition-related professional fees.
First Quarter FY 2022 Results August 5th, 2021 Exhibit 99.2
F I R S T Q U A R T E R F Y 2 2 R E S U L T S 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 revenues, adjusted EPS, free cash flow, and organic revenue growth, and the related impact of the TheraTears acquistion; the Company’s ability to perform well in the currently evolving environment and execute on its brand-building strategy; the expected market share and consumption trends for the Company’s brands, and the recovery of COVID-impacted categories; the Company’s ability to easily integrate and create value from its acquisition of TheraTears; and the Company’s ability to execute on its disciplined capital allocation strategy. Words such as “trend,” “continue,” “will,” “expect,” “project,” “may,” “should,” “could,” “would,” and similar expressions identify forward-looking statements. Such forward-looking statements represent the Company’s expectations and beliefs and involve a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include, among others, the impact of the COVID-19 pandemic, including on economic and business conditions, government actions, consumer trends, retail management initiatives, and disruptions to the distribution and supply chain; competitive pressures; the impact of the Company’s advertising and marketing and new product development initiatives; customer inventory management initiatives; fluctuating foreign exchange rates; difficulty integrating TheraTears 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, 2021. 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 August 5, 2021 earnings release in the “About Non-GAAP Financial Measures” section. Safe Harbor Disclosure 2
F I R S T Q U A R T E R F Y 2 2 R E S U L T S Agenda for Today’s Discussion I. Performance Update II. Financial Overview III. FY 22 Outlook 3
F I R S T Q U A R T E R F Y 2 2 R E S U L T S I. Performance Update
F I R S T Q U A R T E R F Y 2 2 R E S U L T S Strong Q1 Results & Well Positioned for FY 22 ◼ Impressive consumption growth and market share(2) gains across the portfolio ◼ Sharp rebound in COVID-impacted categories added ~$25 million of revenue ◼ Strong growth of 5% across the remainder of the portfolio ◼ Record quarterly earnings in Q1 ◼ Solid financial profile and Free Cash Flow(3) generation consistent with strategy ◼ Opportunistic acquisition of Akorn Consumer Health assets closed July 1st ◼ Continued focus on disciplined capital allocation Q1 Sales Drivers Disciplined Capital Allocation Superior Earnings and FCF 5 Record Q1 Results Driven by Share Gains & COVID Recovery
F I R S T Q U A R T E R F Y 2 2 R E S U L T S Consumer Behavior Driving Rapid Recovery 6 100 256 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 Dramamine Returned to Long-Term Growth Trajectory While Winning Market Share(2) Case Study: DramamineKey Commentary Sharp recovery in certain impacted brands driving record growth More foot traffic and travel are driving a return to more normalized trends Continuing to invest opportunistically where applicable to drive brand building Indexed Q1 Net Sales
F I R S T Q U A R T E R F Y 2 2 R E S U L T S Portfolio Overview Strategic Acquisition of Complementary TheraTears Brand Strategic Rationale 7 77% 23% 2020A Net Sales $13 $58 Million $45 Scale TheraTears Brand with Leading Position in Dry Eye Segment Creates new $100MM+ Platform in Growing Eye Care Category Enhances Offering with Addition of Complementary Dry Eye Relief Synergistic Acquisition with Clear Value Creation Opportunities Dollar values in millions Asset-light Acquisition Enables Ease of Integration
F I R S T Q U A R T E R F Y 2 2 R E S U L T S Large Addressable Market $100MM+ Eye Care Portfolio with Comprehensive Offering Leading Market Positions Targeted Product Offering Well-Positioned to Execute on Market Opportunity 8 53% 27% 15% 5% $1.3 Billion CY 2020 Retail Sales1 Dry Eye Redness Other #3 Dry eye lubricant brand at retail(2) #1 Redness relief brand at retail(2) Complete Redness Relief Offering Full Portfolio of Dry Eye Solutions Allergy 1. IRI MULO + C-Store as of 12/27/20
F I R S T Q U A R T E R F Y 2 2 R E S U L T S 9 Clear Eyes: Proven Success Executing Against our Playbook Innovation Digital Investments Broad Distribution Proven History of Expertise & Growth in Eye Care Winning Campaigns eCommerce Drug Mass
F I R S T Q U A R T E R F Y 2 2 R E S U L T S II. Financial Overview
F I R S T Q U A R T E R F Y 2 2 R E S U L T S Q1 FY 22 Performance Highlights Q1 FY 22 Q1 FY 21 Dollar values in millions, except per share data. $269.2 $99.0 $1.14 $229.4 $87.6 $0.86 Revenue EBITDA Diluted EPS 17.3% 13.1% 32.5% Revenue of $269.2 million, up 17.3% vs. PY Record Diluted EPS of $1.14, up 32.5% vs. PY Solid EBITDA(3) growth of 13.1% vs. PY 11 (3)
F I R S T Q U A R T E R F Y 2 2 R E S U L T S Q1 FY 22 Q1 FY 21 % Chg Total Revenue 269.2$ 229.4$ 17.3% Gross Margin 159.0 133.9 18.8% % Margin 59.1% 58.4% A&M 39.4 27.8 42.1% % Total Revenue 14.7% 12.1% G&A 22.5 19.9 12.7% % Total Revenue 8.3% 8.7% D&A 5.8 6.1 (5.0%) Operating Income 91.4$ 80.1$ 14.0% % Margin 33.9% 34.9% Diluted EPS 1.14$ 0.86$ 32.5% EBITDA 99.0$ 87.6$ 13.1% % Margin 36.8% 38.2% 3 Months Ended Comments ◼ Revenue up 17.3% vs. PY – Strong growth of ~5% across base portfolio – Sharp rebound in COVID-impacted categories added ~$25 million in Revenue – eCommerce consumption growth continued as consumers continue to shift online ◼ Gross Margin of 59.1%, up ~70 bps vs. PY driven by sales volume & mix ◼ A&M of 14.7% of Revenue ◼ G&A of 8.3% of Revenue ◼ Diluted EPS up 32.5% vs. PY FY 22 First Quarter Consolidated Financial Summary Dollar values in millions, except per share data 12 (3)
F I R S T Q U A R T E R F Y 2 2 R E S U L T S $67.8 $72.6 Free Cash Flow Free Cash Flow Comments ◼ Q1 Free Cash Flow(3) of $67.8 million down vs. PY, affected by timing – Raising full year outlook for Free Cash Flow(3) ◼ Net Debt(3) at June 30 of $1.4 billion – Proactively built cash balance ahead of Akorn closing ◼ Following acquisition of Akorn, Net Debt(3) at July 1 of $1.6 billion – Effective purchase price for Akorn of ~$200 million, net of present value of tax attributes of ~$30 million – Effective purchase price represents ~10x Pro Forma Adjusted EBITDA, including synergies – Resulting estimated Leverage Ratio(4) of 4.3x Industry Leading Free Cash Flow Trends Q1 FY 22 Q1 FY 21 (6.6%) (3) Dollar values in millions 13
F I R S T Q U A R T E R F Y 2 2 R E S U L T S III. FY 22 Outlook
F I R S T Q U A R T E R F Y 2 2 R E S U L T S Outlook: Raising FY 22 Expectations ◼ Remain well-positioned in dynamic environment ◼ Sharp rebound in certain COVID-impacted categories ◼ Strong organic growth enabled by long-term brand building strategy ◼ FY 22 Revenue of $1.045 billion or higher — Organic growth of ~6% — $40 million of Revenue attributable to Akorn ◼ FY 22 Adjusted Diluted EPS(5) estimate of $3.90 or more — Akorn adds ~$0.07 of Adjusted EPS ◼ FY 22 Adjusted Free Cash Flow(5) guidance of $245 or more ◼ Continue to execute disciplined capital allocation strategy Top Line Trends Free Cash Flow & Allocation EPS 15
F I R S T Q U A R T E R F Y 2 2 R E S U L T S Q&A
F I R S T Q U A R T E R F Y 2 2 R E S U L T S Appendix (1) Organic Revenue is a Non-GAAP financial measure and is reconciled to the most closely related GAAP financial measure in the attached Reconciliation Schedules and / or our earnings release dated August 5, 2021 in the “About Non-GAAP Financial Measures” section. (2) Total company consumption and market share are based on domestic IRI multi-outlet + C-Store retail sales for the period ending June 13, 2021, retail sales from other 3rd parties for certain untracked channels in North America for leading retailers, Australia consumption based on IMS data, and other international net revenues as a proxy for consumption. (3) EBITDA, EBITDA Margin, Free Cash Flow and Net Debt are Non-GAAP financial measures and are reconciled to their most closely related GAAP financial measures in the attached Reconciliation Schedules and / or in our earnings release dated August 5, 2021 in the “About Non-GAAP Financial Measures” section. (4) Leverage ratio reflects net debt / covenant defined EBITDA. (5) Adjusted Diluted EPS and Adjusted Free Cash Flow for FY 22 are projected Non-GAAP financial measures and are reconciled to projected GAAP Diluted EPS and GAAP Net Cash Provided by Operating Activities in the attached Reconciliation Schedules and / or in our earnings release in the “About Non-GAAP Financial Measures” sections. 17
F I R S T Q U A R T E R F Y 2 2 R E S U L T S 18 Reconciliation Schedules Organic Revenue Three Months Ended June 30, Year Ended March 31, 2021 2020 (In Thousands) GAAP Total Revenues 269,181$ 229,394$ Revenue Change 17.3% Adjustments: Impact of foreign currency exchange rates - 3,543 Total adjustments -$ 3,543$ Non-GAAP Organic Revenues 269,181$ 232,937$ Non-GAAP Organic Revenue Change 15.6% EBITDA Three Months Ended June 30, Year Ended March 31, 2021 2020 (In Thousands) GAAP Net Income 57,755$ 43,706$ Interest expense, net 15,077 21,941 Provision for income taxes 18,615 14,462 Depreciation and amortization 7,594 7,467 Non-GAAP EBITDA 99,041$ 87,576$ Non-GAAP EBITDA Margin 36.8% 38.2%
F I R S T Q U A R T E R F Y 2 2 R E S U L T S Three Months Ended June 30, Year Ended March 31, 2021 2020 (In Thousands) GAAP Net Income 57,755$ 43,706$ Adjustments: Adjustments to reconcile net income to net cash provided by operating activities as shown in the Statement of Cash Flows 17,824 18,401 Changes in operating assets and liabilities as shown in the Statement of Cash Flows (6,274) 13,047 Total adjustments 11,550 31,448 GAAP Net cash provided by operating activities 69,305 75,154 Purchase of property and equipment (1,500) (2,553) Non-GAAP Free Cash Flow 67,805$ 72,601$ 19 Reconciliation Schedules (Continued) Free Cash Flow
F I R S T Q U A R T E R F Y 2 2 R E S U L T S 20 Reconciliation Schedules (Continued) Projected EPS Projected Free Cash Flow (In millions) Projected FY'22 GAAP Net Cash provided by operating activities 240$ Purchases of property and equipment (10) Projected Non-GAAP Free Cash Flow 230 Payments associated with acquisition (1) 15 Projected Non-GAAP Adjusted Free Cash Flow 245$ (1) Payments related to acquisition represent costs related to integrating recently acquired business including (but not limited to), costs to exit or convert contractual obligations, severance, information system conversion and consulting costs, and certain costs related to the consummation of the acquisition process such as costs associated with refinancing our Term Loan, insurance costs, legal and other acquisition-related professional fees. (1) Items related to acquisition represent costs related to integrating recently acquired business including (but not limited to), costs to exit or convert contractual obligations, severance, information system conversion and consulting costs, and certain costs related to the consummation of the acquisition process such as costs associated with refinancing our Term Loan, insurance costs, legal and other acquisition-related professional fees. Projected FY'22 GAAP Diluted EPS 3.80$ Adjustments: Costs associated with acquisition (1) 0.10 Total Adjustments 0.10 Projected Non-GAAP Adjusted Diluted EPS 3.90$