EX-99.1 2 exhibit991.htm PRESS RELEASE exhibit991.htm
EXHIBIT 99.1


Prestige Brands Holdings, Inc. Reports Second Quarter & Six Months Fiscal 2011 Results

For the Quarter, EPS of $0.23 vs. $0.18; Income from Continuing Operations Up 28%; Completes Acquisition of Blacksmith Brands on November 1


Irvington, NY-November 4, 2010-Prestige Brands Holdings, Inc. (NYSE-PBH) today announced results for the second quarter and first half of fiscal year 2011, which ended on September 30, 2010. The Company also announced the completion on November 1, 2010 of the acquisition of Blacksmith Brands, Inc., which added five over-the-counter healthcare products to its business.

Income from continuing operations for the second fiscal quarter was $11.4 million, 28% higher than the prior year comparable period's results of $8.9 million resulting in earnings per share of $0.23 compared to $0.18 a year ago1. Net revenues from continuing operations for the second fiscal quarter were $78.3 million, $2.4 million or 3% below the prior year's comparable quarter net revenues of $80.7 million. Gross margin improved by 1.4 basis points for the quarter while advertising and promotion (A&P) and general and administrative (G&A) expenditures decreased compared to the second quarter in the prior fiscal year.

Commentary
“We are pleased with our results for the quarter as we continue to make progress against our stated primary objectives of growing our core OTC brands which grew once again this quarter.   Overall, revenues were in line with previously stated expectations as a result of heavy prior year H1N1 retailer buy in and continued competitive pressure in Household products. Profitability improved significantly as a result of gross margin improvement as well as prudent advertising and promotion investment in our priority brands,” said Matthew Mannelly, President and CEO. “In addition, we are excited by the recent acquisition of Blacksmith Brands which closed on November 1st,” he said. “This is a transformational event for Prestige, positioning the Company for growth, and taking a meaningful step toward our long-term commitment to OTC brands as the Company's focus. We will begin supporting these wonderful brands immediately in our efforts to accelerate their momentum in the marketplace. Furthermore, as we look to the second half of the fiscal year, we remain cautiously optimistic given the sluggish retail environment. We will continue to view this
 

1 The reported results reflect the September 1, 2010 divestiture of Cutex® nail polish remover.  Revenues from this brand are now classified as discontinued operations, and the results of both the second fiscal quarter and the prior year comparable quarter reflect this classification.  Beginning with the second fiscal quarter of FY11 and going forward, the remaining brands in the personal care segment will be reported as part of the over-the-counter healthcare segment since they account for less than one half of one percent of total revenues.

 
 
 

 
 
as an opportunity to build our brands and invest in our future growth. As we stated at the start of the year, we expect modest A&P growth over the course of the year as we build our brands and we are on track with those investments as we enter the heart of the cough/cold season.”
 
First Half of Fiscal 2011
Net revenues from continuing operations for the first six months of fiscal 2011 were $149.5 million, an increase of 0.5% over the prior year's comparable period's results of $148.8 million. Income from continuing operations was $20.6 million, an increase of 27.2%, compared to $16.2 million in the prior year’s comparable period.  This resulted in EPS from continuing operations of $0.41 per share, 28.1% higher than the prior year’s comparable period's results of $0.32 per share.

Free Cash Flow and Debt
Free cash flow is a “non-GAAP” financial measure as that term is defined by the Securities and Exchange Commission in Regulation G. Free cash flow is presented here because management believes it is a commonly used measure of liquidity, and indicative of cash available for debt repayment and acquisitions. The Company defines “free cash flow” as operating cash flow from continuing operations less capital expenditures.

The Company's free cash flow for the second quarter ended September 30, 2010 was $22.0 million, an increase of $300,000 or 1.4% over the prior year comparable quarter. Free cash flow is composed of operating cash flow from continuing operations of $22.1 million less capital expenditures of $100,000. This compares to the prior year comparable quarter's free cash flow of $21.7 million, composed of operating cash flow from continuing operation of $21.8 million less capital expenditures of $100,000.

Total indebtedness at September 30, 2010 was $295.5 million; however, subsequent to the end of the quarter, indebtedness increased $215.0 million as a result of indebtedness incurred to acquire Blacksmith Brands. At September 30, 2010, cash on the balance sheet totaled $55.0 million.

Second Quarter Results by Segment
Net revenues for the over-the-counter healthcare segment were $50.8 million, $900,000 lower than the prior year comparable quarter. Increases in Clear Eyes®, Little Remedies®, and Compound W® were off set by decreases in Chloraseptic and the Allergen Block products. Net revenues for the household cleaning segment were $27.5 million, $1.5 million or 5% less than the prior year comparable quarter. Comet® and Spic and Span® experienced declines in the competitive household category.

 
 

 
Conference Call
The Company will host a conference call to review its second quarter and six month results on Thursday, November 4, 2010 at 8:30am EST. The toll-free dial in numbers are 1-800-383-8119 within North America and 1-617- 597-5344 outside of North America. The conference passcode is “prestige”. Telephonic replays will be available for two weeks following the completion of the call and can be accessed at 1-888-286-8010 within North America and at 617-801-6888 outside North America. The passcode is 49548893.

About Prestige Brands Holdings, Inc.
The Company markets and distributes brand name over-the-counter and household cleaning products throughout the U.S., Canada, and certain international markets. Key brands include Chloraseptic® sore throat, Clear Eyes® eye care, Compound W® wart treatment, The Doctor's® NightGuard®, The Little Remedies® line of pediatric over-the-counter products, Comet® cleanser and, effective November 1st, PediaCare® children's over-the-counter products, Efferdent® and Effergrip® denture care products, Luden's® cough drops, and NasalCrom® allergy treatment.
 
 
Note Regarding Forward-Looking Statements
 
This news release contains "forward-looking statements" within the meaning of the federal securities laws and 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 intentions regarding development of the brands that it acquired on November 1, 2010 in the Blacksmith acquisition as well as the outlook for Prestige Brands Holdings' market and its core brands as well as prospects for the industry. 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. A discussion of factors that could cause results to vary is included in the Company's Annual Report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission.
 
Contact: Dean Siegal
914-524-6819

 
 
 

 
Prestige Brands Holdings, Inc.
Consolidated Statements of Operations
(Unaudited)
   
Three Months Ended September 30
 
Six Months Ended September 30
(In thousands, except share data)
 
2010
 
2009
 
2010
 
2009
Revenues
               
Net sales
 
$
77,488
   
$
80,308
   
$
148,009
   
$
147,805
 
Other revenues
 
815
   
421
   
1,529
   
1,037
 
Total revenues
 
78,303
   
80,729
   
149,538
   
148,842
 
                 
Cost of Sales
               
Cost of sales (exclusive of depreciation shown below)
 
35,713
   
37,936
   
68,977
   
69,526
 
Gross profit
 
42,590
   
42,793
   
80,561
   
79,316
 
                 
Operating Expenses
               
Advertising and promotion
 
8,240
   
9,675
   
15,726
   
18,343
 
General and administrative
 
8,101
   
10,481
   
15,514
   
18,675
 
Depreciation and amortization
 
2,413
   
2,703
   
4,823
   
4,911
 
Total operating expenses
 
18,754
   
22,859
   
36,063
   
41,929
 
                 
Operating income
 
23,836
   
19,934
   
44,498
   
37,387
 
                 
Other expense
               
Interest expense, net
 
5,373
   
5,642
   
10,835
   
11,295
 
Loss on extinguishment of debt
 
   
   
300
   
 
Total other expense
 
5,373
   
5,642
   
11,135
   
11,295
 
                 
Income from continuing operations before income taxes
 
18,463
   
14,292
   
33,363
   
26,092
 
Provision for income taxes
 
7,053
   
5,417
   
12,745
   
9,889
 
Income from continuing operations
 
11,410
   
8,875
   
20,618
   
16,203
 
                 
Discontinued Operations
               
Income from discontinued operations, net of income tax
 
162
   
1,048
   
560
   
2,045
 
                 
Loss on sale of discontinued operations, net of income tax benefit
 
(550
)
 
   
(550
)
 
 
Net income
 
$
11,022
   
$
9,923
   
$
20,628
   
$
18,248
 
                 
Basic earnings per share:
               
Income from continuing operations
 
$
0.23
   
$
0.18
   
$
0.41
   
$
0.32
 
Net income
 
$
0.22
   
$
0.20
   
$
0.41
   
$
0.36
 
                 
Diluted earnings per share:
               
Income from continuing operations
 
$
0.23
   
$
0.18
   
$
0.41
   
$
0.32
 
Net income
 
$
0.22
   
$
0.20
   
$
0.41
   
$
0.36
 
                 
Weighted average shares outstanding:
               
Basic
 
50,053
   
50,012
   
50,045
   
49,997
 
Diluted
 
50,141
   
50,055
   
50,123
   
50,080
 

 
 
 

 
 

Prestige Brands Holdings, Inc.
Consolidated Balance Sheets
(Unaudited)

(In thousands)
Assets
September 30,
2010
 
March 31,
2010
Current assets
     
Cash and cash equivalents
$
55,032
   
$
41,097
 
Accounts receivable
32,256
   
30,621
 
Inventories
24,997
   
27,676
 
Deferred income tax assets
6,663
   
6,353
 
Prepaid expenses and other current assets
3,203
   
4,917
 
Current assets of discontinued operations
14
   
1,486
 
Total current assets
122,165
   
112,150
 
       
Property and equipment
1,207
   
1,396
 
Goodwill
111,489
   
111,489
 
Intangible assets
549,855
   
554,359
 
Other long-term assets
6,456
   
7,148
 
Long-term assets of discontinued operations
   
4,870
 
Total Assets
$
791,172
   
$
791,412
 
       
Liabilities and Stockholders' Equity
     
Current liabilities
     
Accounts payable
$
13,980
   
$
12,771
 
Accrued interest payable
6,428
   
1,561
 
Other accrued liabilities
9,912
   
11,733
 
Current portion of long-term debt
1,500
   
29,587
 
Total current liabilities
31,820
   
55,652
 
       
Long-term debt
     
Principal amount
294,000
   
298,500
 
Less unamortized discount
(3,658
)
 
(3,943
)
Long-term debt, net of unamortized discount
290,342
   
294,557
 
       
Deferred income tax liabilities
117,630
   
112,144
 
       
Total Liabilities
439,792
   
462,353
 
       
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 - 50,175 shares at September 30, 2010 and 50,154 shares at March 31, 2010
502
   
502
 
Additional paid-in capital
385,771
   
384,027
 
Treasury stock, at cost - 131 shares at September 30, 2010 and 124 shares at March 31, 2010
(114
)
 
(63
)
Retained earnings (accumulated deficit)
(34,779
)
 
(55,407
)
Total Stockholders' Equity
351,380
   
329,059
 
       
Total Liabilities and Stockholders' Equity
$
791,172
   
$
791,412
 

 
 
 

 
 

Prestige Brands Holdings, Inc.
Consolidated Statements of Cash Flows
(Unaudited)

 
Six Months Ended September 30
(In thousands)
2010
 
2009
Operating Activities
     
Net income
$
20,628
   
$
18,248
 
Adjustments to reconcile net income to net cash provided by operating activities:
     
Depreciation and amortization
5,052
   
6,084
 
Loss on sale of discontinued operations
890
   
 
Deferred income taxes
5,176
   
3,687
 
Amortization of deferred financing costs
504
   
956
 
Stock-based compensation costs
1,744
   
848
 
Loss on extinguishment of debt
300
   
 
Amortization of debt discount
285
   
 
Loss on disposition of equipment
125
   
 
Changes in operating assets and liabilities
     
Accounts receivable
(1,635
)
 
(3,127
)
Inventories
2,679
   
405
 
Inventories held for sale
1,100
   
82
 
Prepaid expenses and other current assets
1,714
   
(1,102
)
Accounts payable
1,209
   
5,546
 
Accrued liabilities
3,046
   
8,253
 
Net cash provided by operating activities
42,817
   
39,880
 
       
Investing Activities
     
Purchases of equipment
(254
)
 
(232
)
Proceeds from sale of discontinued operations
4,122
   
 
Net cash used for investing activities
3,868
   
(232
)
       
Financing Activities
     
Payment of deferred financing costs
(112
)
 
 
Repayment of long-term debt
(32,587
)
 
(40,000
)
Purchase of treasury stock
(51
)
 
 
Net cash used for financing activities
(32,750
)
 
(40,000
)
       
Increase (decrease) in cash
13,935
   
(352
)
Cash - beginning of period
41,097
   
35,181
 
       
Cash - end of period
$
55,032
   
$
34,829
 
       
Interest paid
$
5,179
   
$
10,350
 
Income taxes paid
$
5,103
   
$
6,307
 


 
 

 
Prestige Brands Holdings, Inc.
Consolidated Statements of Operations
Business Segments
(Unaudited)
 
For the Three Months Ended September 30, 2010
 
Over-the-
Counter
Healthcare
 
Household
Cleaning
 
Consolidated
(In thousands)
         
Net sales
$
50,658
 
$
26,830
   
$
77,488
 
Other revenues
181
 
634
   
815
 
           
Total revenues
50,839
 
27,464
   
78,303
 
Cost of sales
17,798
 
17,915
   
35,713
 
           
Gross profit
33,041
 
9,549
   
42,590
 
Advertising and promotion
6,912
 
1,328
   
8,240
 
           
Contribution margin
$
26,129
 
$
8,221
   
34,350
 
Other operating expenses
       
10,514
 
           
Operating income
       
23,836
 
Other expense
       
5,373
 
Provision for income taxes
       
7,053
 
Income from continuing operations
       
11,410
 
Income from discontinued operations, net of income tax
       
162
 
Loss on sale of discontinued operations, net of income tax benefit
       
(550
)
           
Net income
       
$
11,022
 
 
For the Six Months Ended September 30, 2010
 
Over-the-
Counter
Healthcare
 
Household
Cleaning
 
Consolidated
(In thousands)
         
Net sales
$
95,364
 
$
52,645
   
$
148,009
 
Other revenues
195
 
1,334
   
1,529
 
           
Total revenues
95,559
 
53,979
   
149,538
 
Cost of sales
33,649
 
35,328
   
68,977
 
           
Gross profit
61,910
 
18,651
   
80,561
 
Advertising and promotion
12,075
 
3,651
   
15,726
 
           
Contribution margin
$
49,835
 
$
15,000
   
64,835
 
Other operating expenses
       
20,337
 
           
Operating income
       
44,498
 
Other expense
       
11,135
 
Provision for income taxes
       
12,745
 
Income from continuing operations
       
20,618
 
Income from discontinued operations, net of income tax
       
560
 
Loss on sale of discontinued operations, net of income tax benefit
       
(550
)
           
Net income
       
$
20,628
 

 
 
 

 
 

Prestige Brands Holdings, Inc.
Consolidated Statements of Operations
Business Segments
(Unaudited)

 
For the Three Months Ended September 30, 2009
 
Over-the-
Counter
Healthcare
 
Household
Cleaning
 
Consolidated
(In thousands)
         
Net sales
$
51,706
 
$
28,602
   
$
80,308
 
Other revenues
10
 
411
   
421
 
           
Total revenues
51,716
 
29,013
   
80,729
 
Cost of sales
19,453
 
18,483
   
37,936
 
           
Gross profit
32,263
 
10,530
   
42,793
 
Advertising and promotion
7,390
 
2,285
   
9,675
 
           
Contribution margin
$
24,873
 
$
8,245
   
33,118
 
Other operating expenses
       
13,184
 
           
Operating income
       
19,934
 
Other expense
       
5,642
 
Provision for income taxes
       
5,417
 
Income from continuing operations
       
8,875
 
Income from discontinued operations, net of income tax
       
1,048
 
           
Net income
       
$
9,923
 


 
For the Six Months Ended September 30, 2009
 
Over-the-
Counter
Healthcare
 
Household
Cleaning
 
Consolidated
(In thousands)
         
Net sales
$
92,362
 
$
55,443
   
$
147,805
 
Other revenues
20
 
1,017
   
1,037
 
           
Total revenues
92,382
 
56,460
   
148,842
 
Cost of sales
33,242
 
36,284
   
69,526
 
           
Gross profit
59,140
 
20,176
   
79,316
 
Advertising and promotion
14,139
 
4,204
   
18,343
 
           
Contribution margin
$
45,001
 
$
15,972
   
60,973
 
Other operating expenses
       
23,586
 
           
Operating income
       
37,387
 
Other expense
       
11,295
 
Provision for income taxes
       
9,889
 
Income from continuing operations
       
16,203
 
Income from discontinued operations, net of income tax
       
2,045
 
           
Net income
       
$
18,248