Ireland | 001-35803 | 98-1088325 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit No. | Exhibit | |
99.1 | ||
MALLINCKRODT PUBLIC LIMITED COMPANY | ||||
(registrant) | ||||
Date: | November 6, 2018 | By: | /s/ Matthew K. Harbaugh | |
Matthew K. Harbaugh | ||||
Executive Vice President and Chief Financial Officer |
• | H.P. Acthar Gel (repository corticotropin injection) net sales were $290.1 million, a 6.0% decrease over $308.7 million, resulting from the residual impact of previously reported patient withdrawal issues. |
• | INOMAX® (nitric oxide) gas, for inhalation, net sales were $133.2 million, up 6.0%, over $125.7 million, due to continued consistent demand. |
• | OFIRMEV® (acetaminophen) injection net sales were $87.1 million compared with $75.4 million, an increase of 15.5%, benefiting from continued strong demand. |
• | Therakos® immunology platform net sales were $60.0 million compared with $55.3 million, an increase of 8.5%, or 8.6% on a constant-currency basis, on growth, particularly in Europe. |
• | AMITIZA net sales were $48.2 million. |
• | At the Mallinckrodt website: http://www.mallinckrodt.com/investors. |
• | By telephone: For both listen-only participants and those who wish to take part in the question-and-answer portion of the call, the telephone dial-in number in the U.S. is (877) 359-9508. For participants outside the U.S., the dial-in number is (224) 357-2393. Callers will need to provide the Conference ID of 1560208. |
• | Through an audio replay: A replay of the call will be available beginning at 11:30 a.m. Eastern Time on Tuesday, Nov. 6, 2018, and ending at 11:59 p.m. Eastern Time on Tuesday, Nov. 20, 2018. Dial-in numbers for U.S.-based participants are (855) 859-2056 or (800) 585-8367. Participants outside the U.S. should use the replay dial-in number of (404) 537-3406. All callers will be required to provide the Conference ID of 1560208. |
MALLINCKRODT PLC | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
(unaudited, in millions, except per share data) | |||||||||||
Three Months Ended | |||||||||||
September 28, 2018 | Percent of Net sales | September 29, 2017 | Percent of Net sales | ||||||||
Net sales | $ | 640.0 | 100.0 | % | $ | 600.6 | 100.0 | % | |||
Cost of sales | 326.2 | 51.0 | 268.0 | 44.6 | |||||||
Gross profit | 313.8 | 49.0 | 332.6 | 55.4 | |||||||
Selling, general and administrative expenses | 164.0 | 25.6 | 186.3 | 31.0 | |||||||
Research and development expenses | 78.5 | 12.3 | 46.9 | 7.8 | |||||||
Restructuring charges, net | 14.7 | 2.3 | 15.4 | 2.6 | |||||||
Losses on divestiture | 0.6 | 0.1 | 0.4 | 0.1 | |||||||
Operating income | 56.0 | 8.8 | 83.6 | 13.9 | |||||||
Interest expense | (93.6 | ) | (14.6 | ) | (92.6 | ) | (15.4 | ) | |||
Interest income | 2.0 | 0.3 | 1.3 | 0.2 | |||||||
Other income, net | 13.4 | 2.1 | 3.0 | 0.5 | |||||||
Loss from continuing operations before income taxes | (22.2 | ) | (3.5 | ) | (4.7 | ) | (0.8 | ) | |||
Income tax benefit | (125.2 | ) | (19.6 | ) | (57.8 | ) | (9.6 | ) | |||
Income from continuing operations | 103.0 | 16.1 | 53.1 | 8.8 | |||||||
Income from discontinued operations, net of income taxes | 10.8 | 1.7 | 10.6 | 1.8 | |||||||
Net income | $ | 113.8 | 17.8 | % | $ | 63.7 | 10.6 | % | |||
Basic earnings per share: | |||||||||||
Income from continuing operations | $ | 1.24 | $ | 0.55 | |||||||
Income from discontinued operations | 0.13 | 0.11 | |||||||||
Net income | 1.37 | 0.66 | |||||||||
Basic weighted-average shares outstanding | 83.2 | 96.7 | |||||||||
Diluted earnings per share: | |||||||||||
Income from continuing operations | $ | 1.21 | $ | 0.55 | |||||||
Income from discontinued operations | 0.13 | 0.11 | |||||||||
Net income | 1.34 | 0.66 | |||||||||
Diluted weighted-average shares outstanding | 85.0 | 97.0 |
MALLINCKRODT PLC | |||||||||||||||||||||||||||
NON-GAAP MEASURES | |||||||||||||||||||||||||||
(unaudited, in millions except per share data) | |||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||
September 28, 2018 | September 29, 2017 | ||||||||||||||||||||||||||
Gross profit | SG&A | Net income | Diluted net income per share | Gross profit | SG&A | Net income | Diluted net income per share | ||||||||||||||||||||
GAAP | $ | 313.8 | $ | 164.0 | $ | 113.8 | $ | 1.34 | $ | 332.6 | $ | 186.3 | $ | 63.7 | $ | 0.66 | |||||||||||
Adjustments: | |||||||||||||||||||||||||||
Intangible asset amortization | 182.7 | (1.6 | ) | 184.2 | 2.17 | 167.1 | (2.2 | ) | 169.3 | 1.75 | |||||||||||||||||
Restructuring and related charges, net (1) | 2.9 | (1.9 | ) | 19.5 | 0.23 | — | (0.7 | ) | 16.1 | 0.17 | |||||||||||||||||
Inventory step-up expense | 31.0 | — | 31.0 | 0.36 | 2.7 | — | 2.7 | 0.03 | |||||||||||||||||||
Income from discontinued operations | — | — | (10.8 | ) | (0.13 | ) | — | — | (10.6 | ) | (0.11 | ) | |||||||||||||||
Change in contingent consideration fair value | — | 4.2 | (4.2 | ) | (0.05 | ) | — | (3.9 | ) | 3.9 | 0.04 | ||||||||||||||||
Acquisition-related expenses | — | (0.7 | ) | 0.7 | 0.01 | — | (1.2 | ) | 1.2 | 0.01 | |||||||||||||||||
Divestitures | — | — | 0.6 | 0.01 | — | — | 0.4 | — | |||||||||||||||||||
Significant legal and environmental charges | — | 11.8 | (11.8 | ) | (0.14 | ) | — | — | — | — | |||||||||||||||||
Legal entity and intercompany financing reorganization (2) | — | — | (82.3 | ) | (0.97 | ) | — | — | 36.1 | 0.37 | |||||||||||||||||
U.S. Tax Reform (3) | — | — | (9.1 | ) | (0.11 | ) | — | — | — | — | |||||||||||||||||
Income taxes (4) | — | — | (53.5 | ) | (0.63 | ) | — | — | (106.5 | ) | (1.10 | ) | |||||||||||||||
As adjusted | $ | 530.4 | $ | 175.8 | $ | 178.1 | $ | 2.10 | $ | 502.4 | $ | 178.3 | $ | 176.3 | $ | 1.82 | |||||||||||
Percent of net sales | 82.9 | % | 27.5 | % | 27.8 | % | 83.6 | % | 29.7 | % | 29.4 | % | |||||||||||||||
(1) | Includes pre-tax accelerated depreciation. |
(2) | Represents the incremental tax effect associated with the intercompany financing and associated legal entity ownership reorganization commenced during the three months ended September 28, 2018 and the legal entity reorganization commenced during the three months ended September 29, 2017. |
(3) | Represents the incremental tax effect associated with the impact of the U.S. tax reform bill being signed into law. |
(4) | Includes tax effects of above adjustments, as well as certain installment sale transactions and other intercompany transactions. |
MALLINCKRODT PLC | ||||||||||||||||
SELECT PRODUCT LINE NET SALES AND CONSTANT-CURRENCY GROWTH | ||||||||||||||||
(unaudited, in millions) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
September 28, 2018 | September 29, 2017 | Percent change | Currency impact | Constant-currency growth | ||||||||||||
Specialty Brands | ||||||||||||||||
H.P. Acthar Gel | $ | 290.1 | $ | 308.7 | (6.0 | )% | — | % | (6.0 | )% | ||||||
Inomax | 133.2 | 125.7 | 6.0 | (0.1 | ) | 6.1 | ||||||||||
Ofirmev | 87.1 | 75.4 | 15.5 | — | 15.5 | |||||||||||
Therakos | 60.0 | 55.3 | 8.5 | (0.1 | ) | 8.6 | ||||||||||
Amitiza | 48.2 | — | — | — | — | |||||||||||
BioVectra | 13.9 | 16.0 | (13.1 | ) | (4.2 | ) | (8.9 | ) | ||||||||
Other | 7.5 | 19.5 | (61.5 | ) | (0.1 | ) | (61.4 | ) | ||||||||
Specialty Brands Total | $ | 640.0 | $ | 600.6 | 6.6 | % | (0.1 | )% | 6.7 | % |
MALLINCKRODT PLC | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
(unaudited, in millions, except per share data) | |||||||||||
Nine Months Ended | |||||||||||
September 28, 2018 | Percent of Net sales | September 29, 2017 | Percent of Net sales | ||||||||
Net sales | $ | 1,844.3 | 100.0 | % | $ | 1,760.7 | 100.0 | % | |||
Cost of sales | 936.7 | 50.8 | 808.3 | 45.9 | |||||||
Gross profit | 907.6 | 49.2 | 952.4 | 54.1 | |||||||
Selling, general and administrative expenses | 520.7 | 28.2 | 618.5 | 35.1 | |||||||
Research and development expenses | 223.9 | 12.1 | 144.2 | 8.2 | |||||||
Restructuring charges, net | 96.5 | 5.2 | 26.3 | 1.5 | |||||||
Losses (gains) on divestiture | 0.6 | — | (56.6 | ) | (3.2 | ) | |||||
Operating income | 65.9 | 3.6 | 220.0 | 12.5 | |||||||
Interest expense | (280.1 | ) | (15.2 | ) | (279.0 | ) | (15.8 | ) | |||
Interest income | 6.6 | 0.4 | 2.8 | 0.2 | |||||||
Other income (expense), net | 17.5 | 0.9 | (70.6 | ) | (4.0 | ) | |||||
Loss from continuing operations before income taxes | (190.1 | ) | (10.3 | ) | (126.8 | ) | (7.2 | ) | |||
Income tax benefit | (222.0 | ) | (12.0 | ) | (153.4 | ) | (8.7 | ) | |||
Income from continuing operations | 31.9 | 1.7 | 26.6 | 1.5 | |||||||
Income from discontinued operations, net of income taxes | 79.5 | 4.3 | 499.1 | 28.3 | |||||||
Net income | $ | 111.4 | 6.0 | % | $ | 525.7 | 29.9 | % | |||
Basic earnings per share: | |||||||||||
Income from continuing operations | $ | 0.38 | $ | 0.27 | |||||||
Income from discontinued operations | 0.94 | 5.02 | |||||||||
Net income | 1.32 | 5.28 | |||||||||
Basic weighted-average shares outstanding | 84.2 | 99.5 | |||||||||
Diluted earnings per share: | |||||||||||
Income from continuing operations | $ | 0.37 | $ | 0.27 | |||||||
Income from discontinued operations | 0.93 | 5.00 | |||||||||
Net income | 1.31 | 5.27 | |||||||||
Diluted weighted-average shares outstanding | 85.2 | 99.8 |
MALLINCKRODT PLC | |||||||||||||||||||||||||||
NON-GAAP MEASURES | |||||||||||||||||||||||||||
(unaudited, in millions except per share data) | |||||||||||||||||||||||||||
Nine Months Ended | |||||||||||||||||||||||||||
September 28, 2018 | September 29, 2017 | ||||||||||||||||||||||||||
Gross profit | SG&A | Net income | Diluted net income per share | Gross profit | SG&A | Net income | Diluted net income per share | ||||||||||||||||||||
GAAP | $ | 907.6 | $ | 520.7 | $ | 111.4 | $ | 1.31 | $ | 952.4 | $ | 618.5 | $ | 525.7 | $ | 5.27 | |||||||||||
Adjustments: | |||||||||||||||||||||||||||
Intangible asset amortization | 540.0 | (4.9 | ) | 544.8 | 6.39 | 501.6 | (6.8 | ) | 508.4 | 5.09 | |||||||||||||||||
Restructuring and related charges, net (1) | 3.0 | (1.9 | ) | 101.4 | 1.19 | — | (2.1 | ) | 28.4 | 0.28 | |||||||||||||||||
Inventory step-up expense | 79.5 | — | 79.5 | 0.93 | 8.6 | — | 8.6 | 0.09 | |||||||||||||||||||
Income from discontinued operations | — | — | (79.5 | ) | (0.93 | ) | — | — | (499.1 | ) | (5.00 | ) | |||||||||||||||
Change in contingent consideration fair value | — | 33.3 | (33.3 | ) | (0.39 | ) | — | (4.1 | ) | 4.1 | 0.04 | ||||||||||||||||
Acquisition-related expenses | — | (3.8 | ) | 3.8 | 0.04 | — | (2.3 | ) | 2.3 | 0.02 | |||||||||||||||||
Debt refinancing | — | — | — | — | — | — | 10.0 | 0.10 | |||||||||||||||||||
Pension settlement charge | — | — | — | — | — | — | 69.2 | 0.69 | |||||||||||||||||||
Divestitures | — | — | 0.6 | 0.01 | — | — | (56.6 | ) | (0.57 | ) | |||||||||||||||||
Significant legal and environmental charges | — | 11.8 | (11.8 | ) | (0.14 | ) | — | — | — | — | |||||||||||||||||
Gain on repurchase of debt | — | — | (6.5 | ) | (0.08 | ) | — | — | — | — | |||||||||||||||||
Legal entity and intercompany financing reorganization (2) | — | — | (82.3 | ) | (0.97 | ) | — | — | 36.1 | 0.36 | |||||||||||||||||
U.S. Tax Reform (3) | — | — | (9.1 | ) | (0.11 | ) | — | — | — | — | |||||||||||||||||
Income taxes (4) | — | — | (179.4 | ) | (2.11 | ) | — | — | (219.1 | ) | (2.20 | ) | |||||||||||||||
As adjusted | $ | 1,530.1 | $ | 555.2 | $ | 439.6 | $ | 5.16 | $ | 1,462.6 | $ | 603.2 | $ | 418.0 | $ | 4.19 | |||||||||||
Percent of net sales | 83.0 | % | 30.1 | % | 23.8 | % | 83.1 | % | 34.3 | % | 23.7 | % | |||||||||||||||
(1) | Includes pre-tax accelerated depreciation. |
(2) | Represents the incremental tax effect associated with the intercompany financing and associated legal entity ownership reorganization commenced during the three months ended September 28, 2018 and the legal entity reorganization commenced during the three months ended September 29, 2017. |
(3) | Represents the incremental tax effect associated with the impact of the U.S. tax reform bill being signed into law. |
(4) | Includes tax effects of above adjustments, as well as certain installment sale transactions and other intercompany transactions. |
MALLINCKRODT PLC | ||||||||||||||||
SELECT PRODUCT LINE NET SALES AND CONSTANT-CURRENCY GROWTH | ||||||||||||||||
(unaudited, in millions) | ||||||||||||||||
Nine Months Ended | ||||||||||||||||
September 28, 2018 | September 29, 2017 | Percent change | Currency impact | Constant-currency growth | ||||||||||||
Specialty Brands | ||||||||||||||||
H.P. Acthar Gel | $ | 827.1 | $ | 899.9 | (8.1 | )% | — | % | (8.1 | )% | ||||||
Inomax | 404.0 | 379.6 | 6.4 | — | 6.4 | |||||||||||
Ofirmev | 254.7 | 224.5 | 13.5 | — | 13.5 | |||||||||||
Therakos | 174.2 | 157.7 | 10.5 | 2.0 | 8.5 | |||||||||||
Amitiza | 119.2 | — | — | — | — | |||||||||||
BioVectra | 35.7 | 36.4 | (1.9 | ) | 0.4 | (2.3 | ) | |||||||||
Other | 29.4 | 62.6 | (53.0 | ) | 0.6 | (53.6 | ) | |||||||||
Specialty Brands Total | $ | 1,844.3 | $ | 1,760.7 | 4.7 | % | 0.2 | % | 4.5 | % |
MALLINCKRODT PLC | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(unaudited, in millions) | |||||||
September 28, 2018 | December 29, 2017 | ||||||
Assets | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 290.7 | $ | 1,260.9 | |||
Accounts receivable, net | 349.6 | 275.4 | |||||
Inventories | 143.4 | 128.7 | |||||
Prepaid expenses and other current assets | 117.7 | 74.7 | |||||
Notes receivable | — | 154.0 | |||||
Current assets held for sale | 1,136.8 | 391.5 | |||||
Total current assets | 2,038.2 | 2,285.2 | |||||
Property, plant and equipment, net | 439.3 | 413.2 | |||||
Goodwill | 3,675.4 | 3,482.7 | |||||
Intangible assets, net | 8,585.2 | 8,261.0 | |||||
Long-term assets held for sale | — | 742.7 | |||||
Other assets | 170.5 | 156.2 | |||||
Total Assets | $ | 14,908.6 | $ | 15,341.0 | |||
Liabilities and Shareholders' Equity | |||||||
Current Liabilities: | |||||||
Current maturities of long-term debt | $ | 16.7 | $ | 313.7 | |||
Accounts payable | 76.6 | 77.3 | |||||
Accrued payroll and payroll-related costs | 89.0 | 78.4 | |||||
Accrued interest | 77.0 | 57.0 | |||||
Income taxes payable | 43.4 | 15.5 | |||||
Accrued and other current liabilities | 437.5 | 368.5 | |||||
Current liabilities held for sale | 182.4 | 140.0 | |||||
Total current liabilities | 922.6 | 1,050.4 | |||||
Long-term debt | 6,174.0 | 6,420.9 | |||||
Pension and postretirement benefits | 65.2 | 67.1 | |||||
Environmental liabilities | 49.8 | 62.8 | |||||
Deferred income taxes | 668.9 | 749.1 | |||||
Other income tax liabilities | 127.6 | 94.1 | |||||
Long-term liabilities held for sale | — | 22.6 | |||||
Other liabilities | 296.9 | 352.0 | |||||
Total Liabilities | 8,305.0 | 8,819.0 | |||||
Shareholders' Equity: | |||||||
Preferred shares | — | — | |||||
Ordinary shares | 18.5 | 18.4 | |||||
Ordinary shares held in treasury at cost | (1,618.5 | ) | (1,564.7 | ) | |||
Additional paid-in capital | 5,521.3 | 5,492.6 | |||||
Retained earnings | 2,701.0 | 2,588.6 | |||||
Accumulated other comprehensive loss | (18.7 | ) | (12.9 | ) | |||
Total Shareholders' Equity | 6,603.6 | 6,522.0 | |||||
Total Liabilities and Shareholders' Equity | $ | 14,908.6 | $ | 15,341.0 |
MALLINCKRODT PLC | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(unaudited, in millions) | |||||||
Nine Months Ended | |||||||
September 28, 2018 | September 29, 2017 | ||||||
Cash Flows From Operating Activities: | |||||||
Net income | $ | 111.4 | $ | 525.7 | |||
Adjustments to reconcile net cash from operating activities: | |||||||
Depreciation and amortization | 597.0 | 606.5 | |||||
Share-based compensation | 27.9 | 46.1 | |||||
Deferred income taxes | (232.7 | ) | (128.7 | ) | |||
Loss (gain) on divestiture | 0.6 | (418.1 | ) | ||||
Other non-cash items | (3.7 | ) | 40.8 | ||||
Changes in assets and liabilities, net of the effects of acquisitions: | |||||||
Accounts receivable, net | (59.0 | ) | (34.7 | ) | |||
Inventories | 43.1 | (18.2 | ) | ||||
Accounts payable | (0.1 | ) | (30.2 | ) | |||
Income taxes | 16.7 | (68.1 | ) | ||||
Other | (20.1 | ) | (72.6 | ) | |||
Net cash from operating activities | 481.1 | 448.5 | |||||
Cash Flows From Investing Activities: | |||||||
Capital expenditures | (93.3 | ) | (151.3 | ) | |||
Acquisitions, net of cash | (699.9 | ) | (35.9 | ) | |||
Proceeds from divestiture, net of cash | 313.2 | 576.9 | |||||
Other | 28.8 | 0.5 | |||||
Net cash from investing activities | (451.2 | ) | 390.2 | ||||
Cash Flows From Financing Activities: | |||||||
Issuance of external debt | 657.2 | 540.0 | |||||
Repayment of external debt and capital lease obligation | (1,563.4 | ) | (887.5 | ) | |||
Debt financing costs | (12.0 | ) | (12.7 | ) | |||
Proceeds from exercise of share options | 1.0 | 4.0 | |||||
Repurchase of shares | (57.4 | ) | (437.7 | ) | |||
Other | (24.3 | ) | (18.6 | ) | |||
Net cash from financing activities | (998.9 | ) | (812.5 | ) | |||
Effect of currency rate changes on cash | (0.9 | ) | 2.7 | ||||
Net change in cash, cash equivalents and restricted cash | (969.9 | ) | 28.9 | ||||
Cash, cash equivalents and restricted cash at beginning of period | 1,279.1 | 361.1 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 309.2 | $ | 390.0 | |||
Cash and cash equivalents at end of period | $ | 290.7 | $ | 371.8 | |||
Restricted cash included in other assets at end of period | 18.5 | 18.2 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 309.2 | $ | 390.0 |