Prestige Brands Holdings, Inc. Reports Record Fourth Quarter Revenues Up 15.3% and EPS of $0.37; Fis

Prestige Brands Holdings, Inc. Reports Record Fourth Quarter Revenues Up 15.3% and EPS of $0.37; Fiscal 13 Revenues Increase 41%; Reported EPS Up 74% to $1.27

Investor Day Slated for May 22nd


TARRYTOWN, N.Y.--(BUSINESS WIRE)-- Prestige Brands Holdings, Inc. (NYSE-PBH) today announced record results for the fourth quarter and the fiscal year ended March 31, 2013, driven by strong growth in both the legacy and acquired core brands in the Company's Over-the-Counter Healthcare (OTC) segment.

Revenues for the fourth fiscal quarter were $154.5 million, an increase of $20.5 million, or 15.3%, above the prior year comparable quarter's revenues of $134.0 million. The revenue increase was primarily due to the growth of the Company's 14 core OTC brands which increased 9.3% over the prior year comparable period. The prior year comparable period results include revenues from two months of ownership of 15 of the 17 brands acquired from GSK on January 31, 2012. The remaining two brands closed on March 30, 2012.

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.

Operating income for the fourth fiscal quarter was $50.2 million, an increase of $27.6 million, or 122%, over the prior year comparable quarter's operating income of $22.6 million. The prior year comparable period was impacted by $15.3 million of costs associated primarily with the GSK brands acquisition and an unsolicited proposal. Excluding these charges, operating income for the fourth quarter of fiscal 2013 would have increased 33%.

In the fourth fiscal quarter, the Company's diluted earnings per share were $0.37 compared to $0.00 in the prior year comparable period. The fiscal fourth quarter includes a deferred tax benefit and other items of $0.01 per share. Excluding this, fourth quarter earnings per share would have been $0.36, an increase of 38.5% over the prior year adjusted fourth quarter earnings per share of $0.26. The prior year fourth quarter was impacted by the costs noted above.

Reported gross profit for the fourth fiscal quarter was $88.1 million, 29% higher than the comparable quarter's gross profit of $68.5 million. The prior year's fourth quarter results included GSK brand acquisition and transition-related costs of $1.8 million. Excluding these costs, gross profit would have increased 25%. Gross margin was 57.0% in the fourth quarter of fiscal 2013 compared to 51.1% in the prior year comparable period, or adjusted gross margin of 52.5% excluding the charges noted above. The year-over-year improvement in gross margin is primarily a result of the higher proportion of revenue derived from the higher margin OTC segment.

Revenues for the OTC Healthcare segment were $133.8 million, 22% higher than the prior year's fourth quarter revenues of $109.7 million. The increase in revenue in this segment continues to be driven by consumption gains in the Company's core OTC brands, resulting from increased investment in advertising and promotion ("A&P") support behind them. Revenues for the Household Cleaning segment, which represents less than 15% of overall Company revenues, were $20.7 million, a decrease of 14.5% over the prior year's fourth quarter results of $24.3 million

Fiscal Year 2013

Revenues for fiscal 2013 were $623.6 million, an increase of $182.5 million or 41.4% over the prior year's revenues of $441.1 million. The increase is due primarily to the growth of revenues of the Company's core OTC brands, which grew 5.9% year-over-year, and a full year of ownership of the acquired GSK brands. In the prior year, the GSK brands contributed revenues for only the final two months of the fiscal year.

Reported diluted earnings per share for fiscal 2013 were $1.27, or 74.0% higher than $0.73 reported in the prior fiscal year. Adjusted earnings per share for the fiscal year were $1.50, a 52% increase over adjusted earnings per share of $0.99 in the prior year. Adjusted earnings per share for fiscal 2013 and fiscal 2012 exclude acquisition and transition-related costs, unsolicited proposal costs, and other adjustments, net of applicable taxes.

The Company continued its investment in Advertising and Promotion ("A&P") during fiscal 2013 in support of its core OTC brands. A&P for the fiscal year was $90.6 million, 59% higher than the prior year spend of $57.1 million. A&P as a percent of revenue was 14.5% for fiscal 2013 compared to 13.0% in the prior year.

Commentary

"We are very pleased with the excellent growth shown in revenue and earnings per share for both the fourth quarter and fiscal year ended March 31, 2013. These results reflect the successful integration of the acquired GSK brands and meaningful growth in our core OTC brands," said Matthew M. Mannelly, CEO. "Revenues for our core OTC brands grew 9.3% in the fourth quarter and approximately 6% for the fiscal year, significantly ahead of category growth for both periods. Our increased investment in brand-building A&P was a key stimulus for these record results," he said.

"Our industry-leading and consistent cash flow from operations combined with a strengthened balance sheet helped us de-lever substantially in both the fourth quarter and for the fiscal year," Mr. Mannelly continued. "Our net debt was reduced by approximately $154 million in the fiscal year, and our leverage ratio fell by one full point since the acquisition of the GSK brands a year ago. Rapid pay-down of debt enables us to continue to be active and disciplined in M&A. This approach has resulted in our successful track record of integrating, innovating and growing acquired brands."

"Our strategies are in place and we are fully prepared to build on the success of fiscal 2013. As the largest independent OTC products company in the U.S., we are confident in our ability to continue to build brands, innovate within our portfolio, and invest appropriately for future value creation," he said.

Free Cash Flow and Debt Reduction

The Company's record free cash flow ("FCF") for the fourth fiscal quarter ended March 31, 2013 was $35.4 million, an increase of $16.2 million over the prior year comparable period's free cash flow of $19.2 million. For the fiscal year ended March 31, 2013, free cash flow totaled $127.3 million compared to $66.8 million in the prior year. FCF for the prior year comparable period was impacted by $15.1 million of working capital investments associated with the acquisition of the GSK brands, and other costs, net of related tax effects. On a per share basis, free cash flow for the fiscal fourth quarter and full fiscal year ended March 31, 2013 translates to $0.68 per share and $2.48 per share, respectively, compared to $0.38 per share and $1.32 per share for the fourth quarter and full fiscal year ended March 31, 2012, respectively.

The Company's net debt at March 31, 2013 was $962.3 million, reflecting a reduction of a total of $34.7 million during the fourth quarter. At March 31, 2013, the Company's covenant-defined leverage ratio was approximately 4.25x, down from approximately 5.25x at the time of the closing on the acquisition of the GSK brands on January 31, 2012.

Q4 Conference Call & Accompanying Slide Presentation

The Company will host a conference call to review its fourth quarter results on May 16, 2013 at 8:30 am EDT. The toll-free dial-in numbers are 866-318-8613 within North America and 617-399-5132 outside of North America. The conference pass code is "prestige". The Company will provide a live Internet webcast, a slide presentation to accompany the call, as well as an archived replay, all of which can be accessed from the Investors page of the Company's website at http://prestigebrands.com. The slide presentation can be accessed just before the call from the Investors page of the website by clicking on Events and Presentations. Telephonic replays will be available for two weeks following the completion of the call and can be accessed at 888-286-8010 within North America and at 617-801-6888 from outside North America. The pass code is 69473606.

Investor Day is Wednesday, May 22nd

The Company will host its first Investor Day on Wednesday, May 22nd beginning at 10:30am EST. CEO Matthew Mannelly and other members of senior management will present an overview of the Company's operational and financial strategy and highlight new advertising and marketing initiatives. The Company will provide a live Internet webcast, which can be accessed from the Investor Relations page of the Company's website at http://prestigebrands.com. Choose the "Click here for webcast" hyperlink and register for access. A replay of the full event will be available via the same URL three hours after the event. Visit the "News and Events" section of the Company's website for details of the events.

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, and in certain international markets. Core brands include Chloraseptic® sore throat treatments, Clear Eyes® eye care products, Compound W® wart treatments, The Doctor's® NightGuard® dental protector, the Little Remedies® and PediaCare® lines of pediatric over-the-counter products, Efferdent® denture care products, Luden's® throat drops, Dramamine® motion sickness treatment, BC® and Goody's® pain relievers, Beano® gas prevention, Debrox® earwax remover, and Gaviscon® antacid in Canada. Visit the Company's website at www.prestigebrands.com.

Note Regarding Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of the federal securities laws that are intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" generally can be identified by the use of forward-looking terminology such as "assumptions," "target," "guidance," "outlook," "plans," "projection," "may," "will," "would," "expect," "intend," "estimate," "anticipate," "believe", "potential," or "continue" (or the negative or other derivatives of each of these terms) or similar terminology. The "forward-looking statements" include, without limitation, statements regarding our ability to build brands, innovate our product portfolio, invest to create value, and our acquisition capacity. 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 our advertising and promotional initiatives, competition in our industry, and the success of our new product introductions and integration of newly acquired 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, 2012, Quarterly Report on Form 10-Q for the quarter ended December 31, 2012, and other periodic reports filed with the Securities and Exchange Commission.

       
 

Prestige Brands Holdings, Inc.

Consolidated Statements of Income and Comprehensive Income

(Unaudited)

 
Three Months Ended March 31,Year Ended March 31,
(In thousands, except per share data)2013   20122013   2012
Revenues
Net sales$153,659$133,160$620,394$437,838
Other revenues854 836 3,203 3,247 
Total revenues154,513133,996623,597441,085
 
Cost of Sales
Cost of sales (exclusive of depreciation shown below)66,443 65,508 276,381 213,701 
Gross profit88,070 68,488 347,216 227,384 
 
Operating Expenses
Advertising and promotion23,25918,54790,63057,127
General and administrative11,35324,33451,46756,700
Depreciation and amortization3,285 3,051 13,235 10,734 
Total operating expenses37,897 45,932 155,332 124,561 
Operating income50,173 22,556 191,884 102,823 
 
Other (income) expense
Interest income(4)(14)(13)(18)
Interest expense18,24216,36184,42041,338
Gain on settlement(5,063)
Loss on extinguishment of debt1,443 5,409 1,443 5,409 
Total other expense19,681 21,756 85,850 41,666 
Income before income taxes30,492800106,03461,157
Provision for income taxes11,143 815 40,529 23,945 
Net income (loss)$19,349 $(15)$65,505 $37,212 
 
Earnings per share:
Basic$0.38 $ $1.29 $0.74 
Diluted$0.37 $ $1.27 $0.73 
 
Weighted average shares outstanding:
Basic51,147 50,314 50,633 50,270 
Diluted51,913 50,992 51,440 50,748 
 
Comprehensive income, net of tax:
Currency translation adjustments(114)57 (91)(13)
Total other comprehensive income (loss)(114)57 (91)(13)
Comprehensive income$19,235 $42 $65,414 $37,199 
 
 
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Prestige Brands Holdings, Inc.

Consolidated Balance Sheets

(Unaudited)

 
(In thousands)

Assets

March 31,
2013
March 31,
2012
Current assets
Cash and cash equivalents$15,670$19,015
Accounts receivable, net73,05360,228
Inventories60,20151,113
Deferred income tax assets6,3495,283
Prepaid expenses and other current assets8,900 11,396 
Total current assets164,173147,035
 
Property and equipment, net9,8961,304
Goodwill167,546173,702
Intangible assets, net1,373,2401,400,522
Other long-term assets24,944 35,713 
Total Assets$1,739,799 $1,758,276 
 
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable$51,376$26,726
Accrued interest payable13,89413,889
Other accrued liabilities31,398 23,308 
Total current liabilities96,668 63,923 
 
Long-term debt
Principal amount978,0001,135,000
Less unamortized discount(7,100)(11,092)
Long-term debt, net of unamortized discount970,900