Prestige Consumer Healthcare Inc. (NYSE:PBH) today reported
financial results for its fourth quarter and fiscal year ended
March 31, 2023.
“We are pleased to exceed our fourth quarter and full-year
fiscal 2023 guidance, which included organic growth above our
long-term outlook and continued leverage reduction approaching 3.0x
at year-end. Our consistent business performance for the full year
is a result of our proven business strategy and the benefits of a
diverse portfolio of brands in a dynamic consumer and retail
environment. These attributes give us confidence in our business
outlook for fiscal 2024 and our ability to drive shareholder
value,” said Ron Lombardi, Chief Executive Officer of Prestige
Consumer Healthcare.
Fourth Fiscal Quarter Ended March 31, 2023
Reported revenues in the fourth quarter of fiscal 2023 of $285.9
million increased 7.1% from $266.9 million in the fourth quarter of
fiscal 2022. Revenues increased 8.0% excluding the impact of
foreign currency. The strong revenue performance for the quarter
was broad based across North America and International OTC segments
versus the prior year comparable period.
Reported net loss for the fourth quarter of fiscal 2023 was
$240.6 million versus the prior year comparable quarter’s net
income of $52.1 million. Diluted loss per share of $4.83 for the
fourth quarter of fiscal 2023 compared to $1.02 diluted earnings
per share in the prior year comparable period. Non-GAAP adjusted
net income for the fourth quarter of fiscal 2023 was $53.7 million
and compared to the prior year period’s adjusted net income of
$46.3 million. Non-GAAP adjusted earnings per share of $1.07 per
share for the fourth quarter of fiscal 2023 compared to $0.91 per
share in the prior year comparable period.
Adjustments to net income in the fourth quarter of fiscal 2023
include non-cash tradename impairments associated primarily with
the Company’s DenTek, Summer’s Eve, and TheraTears brand names,
goodwill impairments and associated tax adjustments. These
impairments were due mostly to the impact of higher discount rate
assumptions. The brands continue to generate value and remain
important components of the Company’s brand portfolio and are well
positioned for long-term growth. The adjustment to net income in
both fourth quarter fiscal 2022 and fiscal 2023 reflects a tax rate
adjustment to account for discrete items.
Fiscal Year Ended March 31, 2023
Reported revenues for the fiscal year 2023 totaled $1,127.7
million, an increase of 3.8%, compared to revenues of $1,086.8
million for the fiscal year 2022. Revenues increased 3.5% excluding
the impact of foreign currency and a $12.6 million contribution
from the acquisition of Akorn in Q1 fiscal 2023. Revenue growth for
the fiscal year was driven by strong International OTC segment
performance and improved demand for certain brands, categories and
channels that had been impacted by the COVID-19 virus in the prior
fiscal year.
Reported net loss for fiscal 2023 of $82.3 million and adjusted
net income of $212.0 million compared to the prior year’s net
income and adjusted net income of $205.4 million and $206.3
million, respectively. Fiscal 2023 diluted loss per share and
adjusted diluted earnings per share of $1.65 and $4.21,
respectively, compared to diluted earnings per share and adjusted
earnings per share of $4.04 and $4.06 in the prior year,
respectively.
Adjustments to net income in fiscal 2023 included non-cash
tradename impairments associated primarily with the Company’s
DenTek, Summer’s Eve, and TheraTears brand names, goodwill
impairments and associated tax adjustments as well as a normalized
tax rate adjustment to account for discrete items. Adjustments to
net income in fiscal 2022 included integration, transition,
purchase accounting, legal and various other costs associated with
the Akorn acquisition as well as a loss on extinguishment of debt
and the related income tax effects of the adjustments and a
normalized tax rate adjustment to account for discrete items.
Free Cash Flow and Balance Sheet
The Company's net cash provided by operating activities for
fourth quarter fiscal 2023 was $59.0 million, compared to $63.1
million during the prior year comparable period. Non-GAAP free cash
flow in the fourth quarter of fiscal 2023 was $56.4 million
compared to $60.0 million in the prior year comparable period. The
Company's net cash provided by operating activities for fiscal 2023
was $229.7 million, compared to $259.9 million during the prior
year. Non-GAAP free cash flow in fiscal 2023 was $221.9 million
compared to $253.7 million in the prior year, with the change
in free cash flow largely due to an increase in working capital as
the Company focused on increasing inventory to support service
levels.
The Company's net debt position as of March 31, 2023 was
approximately $1.3 billion, resulting in a covenant-defined
leverage ratio of 3.3x.
Share Repurchase Program Authorization
On May 2, 2023 the Company’s Board of Directors authorized the
repurchase of up to $25.0 million of the Company’s issued and
outstanding common stock. Under the authorization, the Company may
purchase common stock through May 2024 utilizing open market
transactions, transactions structured through investment banking
institutions, in privately-negotiated transactions, by direct
purchases of common stock or a combination of the foregoing in
compliance with the applicable rules and regulations of the
Securities and Exchange
Commission.
The timing of the purchases and the amount of stock repurchased is
subject to the Company's discretion and will depend on market and
business conditions, applicable legal and credit requirements and
other corporate considerations including the Company’s historical
strategy of pursuing accretive acquisitions and deleveraging.
Segment Review
North American OTC Healthcare: Segment revenues of $242.3
million for the fourth quarter fiscal 2023 compared to the prior
year comparable quarter's segment revenues of $232.9 million. The
revenue performance for the quarter was driven by strong
performance across most of our key brands and categories compared
to the prior year comparable period.
For the fiscal year 2023, reported revenues for the North
American OTC segment were $973.8 million compared to $967.9 million
in the prior year comparable period. The change was driven by
increased demand for certain brands, categories and channels that
had previously been impacted by the COVID-19 virus, most notably
Cough & Cold products and an approximate $12.4 million
contribution from the acquisition of Akorn in the first quarter
fiscal 2023, partially offset by lower Women’s Health category
sales.
International OTC Healthcare: Fiscal fourth quarter 2023
revenues of $43.6 million increased 28.0% from $34.0 million
reported in the prior year comparable period. The revenue increase
versus the prior year fourth quarter was driven by increased
consumer demand across the segment’s key brands, partially offset
by a $1.3 million currency headwind.
For fiscal year 2023, reported revenues for the International
OTC Healthcare segment were $154.0 million, an increase of 29.5%
over the prior year’s revenues of $118.9 million. The increase
compared to the prior year was driven by large increases in the
segment’s Australia business led by the Hydralyte brand, partially
offset by a foreign currency headwind of $6.7 million. Segment
revenues increased 37.1% on a constant currency basis.
Commentary Initial Outlook for Fiscal 2024
Ron Lombardi, Chief Executive Officer, stated, “We are pleased
to generate record sales and earnings in fiscal 2023 that built off
our very strong fiscal 2022 performance. Robust growth in multiple
categories such as Cough & Cold and Gastrointestinal, as well
as our International segment, helped offset a continued limiting
supply chain. This continued growth speaks to the benefits of our
diversified portfolio, our long-term brand-building efforts, and
continued emphasis on customer service levels. In addition to
investing in these areas we also reduced our leverage, achieving
3.3x year-end leverage thanks to our strong cash flow profile.”
“We anticipate our consistent financial profile and proven
business attributes to drive results in the upcoming year. In
fiscal 2024, we expect top-line organic growth of 1% to 2%. This
builds off impressive organic growth over the last three years and
incorporates the planned strategic exit of private label revenues
that represent about one percentage point in annualized sales. We
anticipate earnings growth largely following sales growth, but
approximately mid-single-digits after excluding the impact of
higher interest rates versus prior year thanks to the benefits of
our business model and its strong financial profile and resulting
cash flows.”
“Our history of strong performance continues to enable leverage
reduction and additional financial flexibility. As a result, we now
expect to operate with a targeted leverage of below 3x over time
which allows further optionality for disciplined capital
deployment. We would expect to be below this target by year-end
fiscal 2024 with cash flow directed primarily to debt
reduction.”
“This fiscal 2024 outlook and our strong operating fundamentals
give us confidence in our ability to fuel a disciplined capital
allocation that allows us to focus on long-term top- and
bottom-line growth prospects. We look forward to executing our
proven business strategy and leveraging our diverse portfolio of
brands, retailers, and suppliers to create shareholder value,” Mr.
Lombardi concluded.
|
Fiscal 2024 Outlook |
Revenue |
$1,135 to $1,140 million |
Organic Revenue Growth |
1% to 2% |
Diluted E.P.S. |
$4.27 to $4.32 |
Free Cash Flow |
$240 million or more |
Fiscal Year End 2023 Conference Call, Accompanying Slide
Presentation and Replay
The Company will host a conference call to review its fourth
quarter and full-year fiscal 2023 results today, May 4, 2023 at
8:30 a.m. ET. 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. To
participate in the conference call via phone, participants may
register for the call here to receive dial-in details and a unique
pin. While not required, it is recommended to join 10 minutes prior
to the event start. The slide presentation can be
accessed from the Investor Relations page of the website by
clicking on Webcasts and Presentations.
A conference call replay will be available for approximately one
week following completion of the live call and can be accessed on
the Company’s Investor Relations page.
Non-GAAP and Other Financial InformationIn
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," "outlook," “look
forward,” "projection," “plan,” “positioned,” "may," "will,"
"would," "expect," "anticipate," "believe,” "consistent,"
“confidence,” 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, diluted earnings per share, and
free cash flow, the Company’s use of cash flow to reduce debt and
to delever, the impact of the planned strategic exit of private
label revenues, the Company’s ability to grow. 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 business and economic conditions, including as a result
of COVID-19 and geopolitical instability, 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 manufacturing operations and third party
manufacturers and logistics providers and suppliers to meet demand
for its products and to avoid inflationary cost increases and
disruption as a result of labor shortages. 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,
2022 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. |
Consolidated Statement of (Loss) Income and Comprehensive
(Loss) Income |
(Unaudited) |
|
|
Three Months Ended March 31, |
|
Year Ended March 31, |
(In thousands, except per share data) |
2023 |
|
2022 |
|
2023 |
|
2022 |
Total Revenues |
|
285,869 |
|
|
|
266,936 |
|
|
1,127,725 |
|
|
|
1,086,812 |
|
|
|
|
|
|
|
|
|
Cost of
Sales |
|
|
|
|
|
|
|
Cost of sales excluding depreciation |
|
130,252 |
|
|
|
116,281 |
|
|
494,883 |
|
|
|
458,942 |
|
Cost of sales depreciation |
|
1,853 |
|
|
|
1,793 |
|
|
7,548 |
|
|
|
7,224 |
|
Cost of sales |
|
132,105 |
|
|
|
118,074 |
|
|
502,431 |
|
|
|
466,166 |
|
Gross profit |
|
153,764 |
|
|
|
148,862 |
|
|
625,294 |
|
|
|
620,646 |
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
|
|
|
|
|
|
Advertising and marketing |
|
30,868 |
|
|
|
36,935 |
|
|
145,061 |
|
|
|
157,343 |
|
General and administrative |
|
27,666 |
|
|
|
26,753 |
|
|
107,354 |
|
|
|
107,459 |
|
Depreciation and amortization |
|
6,010 |
|
|
|
6,692 |
|
|
25,077 |
|
|
|
24,868 |
|
Goodwill and tradename impairment |
|
370,217 |
|
|
|
1,057 |
|
|
370,217 |
|
|
|
1,057 |
|
Total operating expenses |
|
434,761 |
|
|
|
71,437 |
|
|
647,709 |
|
|
|
290,727 |
|
Operating (loss) income |
|
(280,997 |
) |
|
|
77,425 |
|
|
(22,415 |
) |
|
|
329,919 |
|
|
|
|
|
|
|
|
|
Other expense
(income) |
|
|
|
|
|
|
|
Interest expense, net |
|
18,976 |
|
|
|
15,973 |
|
|
69,164 |
|
|
|
64,287 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
— |
|
|
|
2,122 |
|
Other expense (income), net |
|
(451 |
) |
|
|
487 |
|
|
2,336 |
|
|
|
1,052 |
|
Total other expense, net |
|
18,525 |
|
|
|
16,460 |
|
|
71,500 |
|
|
|
67,461 |
|
(Loss) income before income taxes |
|
(299,522 |
) |
|
|
60,965 |
|
|
(93,915 |
) |
|
|
262,458 |
|
(Benefit) provision for income taxes |
|
(58,970 |
) |
|
|
8,879 |
|
|
(11,609 |
) |
|
|
57,077 |
|
Net (loss) income |
$ |
(240,552 |
) |
|
$ |
52,086 |
|
$ |
(82,306 |
) |
|
$ |
205,381 |
|
|
|
|
|
|
|
|
|
(Loss) earnings per
share: |
|
|
|
|
|
|
|
Basic |
$ |
(4.83 |
) |
|
$ |
1.03 |
|
$ |
(1.65 |
) |
|
$ |
4.09 |
|
Diluted |
$ |
(4.83 |
) |
|
$ |
1.02 |
|
$ |
(1.65 |
) |
|
$ |
4.04 |
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
|
49,797 |
|
|
|
50,363 |
|
|
49,889 |
|
|
|
50,259 |
|
Diluted |
|
49,797 |
|
|
|
50,972 |
|
|
49,889 |
|
|
|
50,842 |
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income,
net of tax: |
|
|
|
|
|
|
|
Currency translation adjustments |
|
(2,409 |
) |
|
|
3,741 |
|
|
(12,076 |
) |
|
|
(1,296 |
) |
Unrealized gain on interest rate swaps |
|
— |
|
|
|
188 |
|
|
— |
|
|
|
1,819 |
|
Unrecognized net gain on pension plans |
|
334 |
|
|
|
246 |
|
|
334 |
|
|
|
246 |
|
Net loss on termination of
pension plan |
|
— |
|
|
|
— |
|
|
(790 |
) |
|
|
— |
|
Total other comprehensive
(loss) income |
|
(2,075 |
) |
|
|
4,175 |
|
|
(12,532 |
) |
|
|
769 |
|
Comprehensive (loss)
income |
$ |
(242,627 |
) |
|
$ |
56,261 |
|
$ |
(94,838 |
) |
|
$ |
206,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prestige Consumer Healthcare Inc. |
Consolidated Balance Sheet |
(Unaudited) |
|
(In
thousands) |
March 31, |
|
2023 |
|
2022 |
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
58,489 |
|
|
$ |
27,185 |
|
Accounts receivable, net of allowance of $20,205 and $19,720,
respectively |
|
167,016 |
|
|
|
139,330 |
|
Inventories |
|
162,121 |
|
|
|
120,342 |
|
Prepaid expenses and other current assets |
|
4,117 |
|
|
|
6,410 |
|
Total current assets |
|
391,743 |
|
|
|
293,267 |
|
|
|
|
|
Property, plant and equipment,
net |
|
70,412 |
|
|
|
71,300 |
|
Operating lease right-of-use
assets |
|
14,923 |
|
|
|
20,372 |
|
Finance lease right-of-use
assets, net |
|
4,200 |
|
|
|
6,858 |
|
Goodwill |
|
527,553 |
|
|
|
578,976 |
|
Intangible assets, net |
|
2,341,893 |
|
|
|
2,696,635 |
|
Other long-term assets |
|
3,005 |
|
|
|
3,273 |
|
Total Assets |
$ |
3,353,729 |
|
|
$ |
3,670,681 |
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
62,743 |
|
|
$ |
55,760 |
|
Accrued interest payable |
|
15,688 |
|
|
|
4,437 |
|
Operating lease liabilities, current portion |
|
6,926 |
|
|
|
6,360 |
|
Finance lease liabilities, current portion |
|
2,834 |
|
|
|
2,752 |
|
Other accrued liabilities |
|
72,524 |
|
|
|
74,113 |
|
Total current liabilities |
|
160,715 |
|
|
|
143,422 |
|
|
|
|
|
Long-term debt, net |
|
1,345,788 |
|
|
|
1,476,658 |
|
Deferred income tax
liabilities |
|
380,434 |
|
|
|
444,917 |
|
Long-term operating lease
liabilities, net of current portion |
|
9,876 |
|
|
|
16,088 |
|
Long-term finance lease
liabilities, net of current portion |
|
1,667 |
|
|
|
4,501 |
|
Other long-term
liabilities |
|
8,165 |
|
|
|
7,484 |
|
Total Liabilities |
|
1,906,645 |
|
|
|
2,093,070 |
|
|
|
|
|
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 – 54,857 shares at March 31, 2023 and 54,430 shares at March
31, 2022 |
|
548 |
|
|
|
544 |
|
Additional paid-in
capital |
|
535,356 |
|
|
|
515,583 |
|
Treasury stock, at cost –
5,165 shares at March 31, 2022 and 4,151 at March 31, 2022 |
|
(189,114 |
) |
|
|
(133,648 |
) |
Accumulated other
comprehensive loss, net of tax |
|
(31,564 |
) |
|
|
(19,032 |
) |
Retained earnings |
|
1,131,858 |
|
|
|
1,214,164 |
|
Total Stockholders'
Equity |
|
1,447,084 |
|
|
|
1,577,611 |
|
Total Liabilities and
Stockholders' Equity |
$ |
3,353,729 |
|
|
$ |
3,670,681 |
|
|
|
|
|
|
|
|
|
Prestige Consumer Healthcare Inc. |
Consolidated Statement of Cash Flows |
(Unaudited) |
|
|
Year Ended March 31, |
(In
thousands) |
2023 |
|
2022 |
Operating
Activities |
|
|
|
Net (loss) income |
$ |
(82,306 |
) |
|
$ |
205,381 |
|
Adjustments to reconcile net
(loss) income to net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
|
32,625 |
|
|
|
32,092 |
|
Loss on sale or disposal of property and equipment |
|
273 |
|
|
|
271 |
|
Deferred income taxes |
|
(60,765 |
) |
|
|
9,979 |
|
Amortization of debt origination costs |
|
4,364 |
|
|
|
4,230 |
|
Stock-based compensation costs |
|
12,405 |
|
|
|
9,039 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
2,122 |
|
Non-cash operating lease cost |
|
6,311 |
|
|
|
6,706 |
|
Impairment loss |
|
370,217 |
|
|
|
1,057 |
|
Other |
|
447 |
|
|
|
(9 |
) |
Changes in operating assets
and liabilities, net of effects from acquisition: |
|
|
|
Accounts receivable |
|
(24,927 |
) |
|
|
(24,654 |
) |
Inventories |
|
(42,225 |
) |
|
|
663 |
|
Prepaid expenses and other current assets |
|
2,259 |
|
|
|
1,448 |
|
Accounts payable |
|
7,258 |
|
|
|
9,154 |
|
Accrued liabilities |
|
10,742 |
|
|
|
9,616 |
|
Operating lease liabilities |
|
(6,687 |
) |
|
|
(6,448 |
) |
Other |
|
(275 |
) |
|
|
(725 |
) |
Net cash provided by operating activities |
|
229,716 |
|
|
|
259,922 |
|
|
|
|
|
Investing
Activities |
|
|
|
Purchases of property, plant
and equipment |
|
(7,784 |
) |
|
|
(9,642 |
) |
Acquisitions |
|
— |
|
|
|
(247,046 |
) |
Other |
|
(3,800 |
) |
|
|
177 |
|
Net cash used in investing activities |
|
(11,584 |
) |
|
|
(256,511 |
) |
|
|
|
|
Financing
Activities |
|
|
|
Term Loan repayments |
|
(135,000 |
) |
|
|
(600,000 |
) |
Proceeds from refinancing of
Term Loan |
|
— |
|
|
|
597,000 |
|
Borrowings under revolving
credit agreement |
|
20,000 |
|
|
|
85,000 |
|
Repayments under revolving
credit agreement |
|
(20,000 |
) |
|
|
(85,000 |
) |
Payment of debt costs |
|
— |
|
|
|
(6,111 |
) |
Payments of finance
leases |
|
(2,752 |
) |
|
|
(2,582 |
) |
Proceeds from exercise of
stock options |
|
7,372 |
|
|
|
7,040 |
|
Fair value of shares
surrendered as payment of tax withholding |
|
(5,466 |
) |
|
|
(2,916 |
) |
Repurchase of common
stock |
|
(50,000 |
) |
|
|
— |
|
Net cash used in financing activities |
|
(185,846 |
) |
|
|
(7,569 |
) |
Effects of exchange rate
changes on cash and cash equivalents |
|
(982 |
) |
|
|
(959 |
) |
Increase (decrease) in cash
and cash equivalents |
|
31,304 |
|
|
|
(5,117 |
) |
Cash and cash equivalents -
beginning of year |
|
27,185 |
|
|
|
32,302 |
|
Cash and cash equivalents -
end of year |
$ |
58,489 |
|
|
$ |
27,185 |
|
Interest paid |
$ |
54,243 |
|
|
$ |
61,364 |
|
Income taxes paid |
$ |
40,739 |
|
|
$ |
46,568 |
|
|
|
|
|
|
|
Prestige Consumer Healthcare Inc. |
Consolidated Statement of Income |
Business Segments |
(Unaudited) |
|
|
Three Months Ended March 31, 2023 |
(In
thousands) |
North American OTCHealthcare |
|
International OTCHealthcare |
|
Consolidated |
Total segment revenues* |
$ |
242,318 |
|
$ |
43,551 |
|
$ |
285,869 |
|
Cost of sales |
|
114,836 |
|
|
17,269 |
|
|
132,105 |
|
Gross profit |
|
127,482 |
|
|
26,282 |
|
|
153,764 |
|
Advertising and marketing |
|
24,367 |
|
|
6,501 |
|
|
30,868 |
|
Contribution margin |
$ |
103,115 |
|
$ |
19,781 |
|
|
122,896 |
|
Other operating
expenses** |
|
|
|
|
|
403,893 |
|
Operating loss |
|
|
|
|
$ |
(280,997 |
) |
*Intersegment revenues of $1.5 million were eliminated from the
North American OTC Healthcare segment.**Other operating expenses
for the three months ended March 31, 2023 includes a tradename
impairment charge of $321.4 million and a goodwill impairment
charge of $48.8 million.
|
Year Ended March 31, 2023 |
(In
thousands) |
North American OTCHealthcare |
|
International OTCHealthcare |
|
Consolidated |
Total segment revenues* |
$ |
973,774 |
|
$ |
153,951 |
|
$ |
1,127,725 |
|
Cost of sales |
|
441,844 |
|
|
60,587 |
|
|
502,431 |
|
Gross profit |
|
531,930 |
|
|
93,364 |
|
|
625,294 |
|
Advertising and marketing |
|
123,926 |
|
|
21,135 |
|
|
145,061 |
|
Contribution margin |
$ |
408,004 |
|
$ |
72,229 |
|
|
480,233 |
|
Other operating
expenses** |
|
|
|
|
|
502,648 |
|
Operating loss |
|
|
|
|
$ |
(22,415 |
) |
*Intersegment revenues of $4.3 million were eliminated from the
North American OTC Healthcare segment.**Other operating expenses
for the year ended March 31, 2023 includes a tradename impairment
charge of $321.4 million and a goodwill impairment charge of $48.8
million.
|
Three Months Ended March 31, 2022 |
(In
thousands) |
North American OTCHealthcare |
|
International OTCHealthcare |
|
Consolidated |
Total segment revenues* |
$ |
232,903 |
|
$ |
34,033 |
|
$ |
266,936 |
Cost of sales |
|
104,345 |
|
|
13,729 |
|
|
118,074 |
Gross profit |
|
128,558 |
|
|
20,304 |
|
|
148,862 |
Advertising and marketing |
|
32,084 |
|
|
4,851 |
|
|
36,935 |
Contribution margin |
$ |
96,474 |
|
$ |
15,453 |
|
|
111,927 |
Other operating expenses |
|
|
|
|
|
34,502 |
Operating income |
|
|
|
|
$ |
77,425 |
*Intersegment revenues of $0.6 million were
eliminated from the North American OTC Healthcare segment.
|
Year Ended March 31, 2022 |
(In
thousands) |
North American OTCHealthcare |
|
International OTCHealthcare |
|
Consolidated |
Total segment revenues* |
$ |
967,881 |
|
$ |
118,931 |
|
$ |
1,086,812 |
Cost of sales |
|
419,162 |
|
|
47,004 |
|
|
466,166 |
Gross profit |
|
548,719 |
|
|
71,927 |
|
|
620,646 |
Advertising and marketing |
|
138,714 |
|
|
18,629 |
|
|
157,343 |
Contribution margin |
$ |
410,005 |
|
$ |
53,298 |
|
|
463,303 |
Other operating expenses |
|
|
|
|
|
133,384 |
Operating income |
|
|
|
|
$ |
329,919 |
* Intersegment revenues of $3.0 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
Adjusted Gross Margin, Non-GAAP Adjusted Gross Margin Percentage,
Non-GAAP Adjusted General and Administrative Expense, Non-GAAP
Adjusted General and Administrative Expense Percentage Non-GAAP
EBITDA, Non-GAAP EBITDA Margin, Non-GAAP Adjusted EBITDA, Non-GAAP
Adjusted EBITDA Margin, Non-GAAP Adjusted Net Income (Loss),
Non-GAAP Adjusted Diluted EPS, Non-GAAP Free Cash Flow, Non-GAAP
Adjusted Free Cash Flow and Net Debt. We use these NGFMs
internally, along with GAAP information, in evaluating our
operating performance and in making financial and operational
decisions. We believe that the presentation of these NGFMs provides
investors with greater transparency, and provides a more complete
understanding of our business than could be obtained absent these
disclosures, because the supplemental data relating to our
financial condition and results of operations provides additional
ways to view our operation when considered with both our GAAP
results and the reconciliations below. In addition, we believe that
the presentation of each of these NGFMs is useful to investors for
period-to-period comparisons of results in assessing shareholder
value, and we use these NGFMs internally to evaluate the
performance of our personnel and also to evaluate our operating
performance and compare our performance to that of our
competitors.
These NGFMs are not in accordance with GAAP,
should not be considered as a measure of profitability or
liquidity, and may not be directly comparable to similarly titled
NGFMs reported by other companies. These NGFMs have limitations and
they should not be considered in isolation from or as an
alternative to their most closely related GAAP measures reconciled
below. Investors should not rely on any single financial measure
when evaluating our business. We recommend investors review the
GAAP financial measures included in this earnings release. When
viewed in conjunction with our GAAP results and the reconciliations
below, we believe these NGFMs provide greater transparency and a
more complete understanding of factors affecting our business than
GAAP measures alone.
NGFMs Defined
We define our NGFMs presented herein as follows:
- Non-GAAP Organic Revenues: GAAP Total Revenues
excluding revenues associated with acquisitions where the acquired
brands were not included in both periods presented and the 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 Adjusted Gross Margin:
GAAP Gross Profit minus inventory step-up charges associated with
acquisition.
- Non-GAAP Adjusted Gross Margin
Percentage: Calculated as Non-GAAP Adjusted Gross Margin divided by
GAAP Total Revenues.
- Non-GAAP Adjusted General and
Administrative Expense: GAAP General and Administrative expenses
minus costs associated with acquisition.
- Non-GAAP Adjusted General and
Administrative Expense Percentage: Calculated as Non-GAAP Adjusted
General and Administrative expense divided by GAAP Total
Revenues.
- Non-GAAP EBITDA: GAAP Net Income
(Loss) before interest expense, net, (benefit) provision for income
taxes, and depreciation and amortization.
- Non-GAAP EBITDA Margin: Calculated
as Non-GAAP EBITDA divided by GAAP Total Revenues.
- Non-GAAP Adjusted EBITDA: Non-GAAP
EBITDA less inventory step-up charges associated with acquisition,
costs associated with acquisition in general and administrative
expenses, goodwill and tradename impairment, and loss on
extinguishment of debt.
- Non-GAAP Adjusted EBITDA Margin:
Calculated as Non-GAAP Adjusted EBITDA divided by GAAP Total
Revenues.
- Non-GAAP Adjusted Net Income
(Loss): GAAP Net Income (Loss) before inventory step-up charges
associated with acquisition, costs associated with acquisition in
general and administrative expenses, goodwill and tradename
impairment, loss on extinguishment of debt, applicable tax impact
associated with these items, and normalized tax rate
adjustment.
- Non-GAAP Adjusted Diluted EPS:
Calculated as Non-GAAP Adjusted Net Income (Loss), divided by the
diluted weighted average number of shares outstanding during the
period.
- 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.
- Net Debt: Calculated as total
principal amount of debt outstanding ($1,360,000 at March 31,
2023 and $1,495,000 at March 31, 2022) less cash and cash
equivalents ($58,489 at March 31, 2023 and $27,185 at
March 31, 2022). Amounts in thousands.
The following tables set forth the reconciliations of each of
our NGFMs to their most directly comparable financial measures
presented in accordance with GAAP.
Reconciliation of GAAP Total Revenues to Non-GAAP
Organic Revenues and related Non-GAAP Organic Revenue Change
percentage:
|
Three Months Ended March 31, |
|
Year Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
(In
thousands) |
|
|
|
|
|
|
|
GAAP Total Revenues |
$ |
285,869 |
|
|
$ |
266,936 |
|
|
$ |
1,127,725 |
|
|
$ |
1,086,812 |
|
Revenue Change |
|
7.1 |
% |
|
|
|
|
3.8 |
% |
|
|
Adjustments: |
|
|
|
|
|
|
|
Revenues associated with
acquisition (1) |
|
— |
|
|
|
— |
|
|
|
(12,624 |
) |
|
|
— |
|
Impact of foreign currency
exchange rates |
|
— |
|
|
|
(2,120 |
) |
|
|
— |
|
|
|
(9,372 |
) |
Total adjustments |
|
— |
|
|
|
(2,120 |
) |
|
|
(12,624 |
) |
|
|
(9,372 |
) |
Non-GAAP Organic Revenues |
$ |
285,869 |
|
|
$ |
264,816 |
|
|
$ |
1,115,101 |
|
|
$ |
1,077,440 |
|
Non-GAAP Organic Revenue
Change |
|
8.0 |
% |
|
|
|
|
3.5 |
% |
|
|
(1) Revenues of our Akorn acquisition for the three months ended
June 30, 2022 are excluded for purposes of calculating Non-GAAP
organic revenues.
Reconciliation of GAAP Gross Profit and related GAAP
Gross Profit percentage to Non-GAAP Adjusted Gross
Marginand related Non-GAAP Adjusted Gross Margin
percentage:
|
Three Months Ended March 31, |
|
Year Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
(In
thousands) |
|
|
|
|
|
|
|
GAAP Total Revenues |
$ |
285,869 |
|
|
$ |
266,936 |
|
|
$ |
1,127,725 |
|
|
$ |
1,086,812 |
|
|
|
|
|
|
|
|
|
GAAP Gross Profit |
$ |
153,764 |
|
|
$ |
148,862 |
|
|
$ |
625,294 |
|
|
$ |
620,646 |
|
GAAP Gross Profit as a
Percentage of GAAP Total Revenue |
|
53.8 |
% |
|
|
55.8 |
% |
|
|
55.4 |
% |
|
|
57.1 |
% |
Adjustments: |
|
|
|
|
|
|
|
Inventory step-up charges
associated with acquisition (1) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,567 |
|
Total adjustments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,567 |
|
Non-GAAP Adjusted Gross
Margin |
$ |
153,764 |
|
|
$ |
148,862 |
|
|
$ |
625,294 |
|
|
$ |
622,213 |
|
Non-GAAP Adjusted Gross Margin
as a Percentage of GAAP Total Revenues |
|
53.8 |
% |
|
|
55.8 |
% |
|
|
55.4 |
% |
|
|
57.3 |
% |
(1) Inventory step-up charges related to our
North American OTC Healthcare segment.
Reconciliation of GAAP General and Administrative
Expense and related GAAP General and Administrative Expense
percentage to Non-GAAP Adjusted General and Administrative expense
and related Non-GAAP Adjusted General and Administrative Expense
percentage:
|
Three Months Ended March 31, |
|
Year Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
(In
thousands) |
|
|
|
|
|
|
|
GAAP General and
Administrative Expense (1) |
$ |
27,666 |
|
|
$ |
27,810 |
|
|
$ |
107,354 |
|
|
|
108,516 |
|
GAAP General and
Administrative Expense as a Percentage of GAAP Total Revenue |
|
9.7 |
% |
|
|
10.4 |
% |
|
|
9.5 |
% |
|
|
10.0 |
% |
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
Costs associated with
acquisition (2) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,127 |
|
Total adjustments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,127 |
|
Non-GAAP Adjusted General and
Administrative Expense |
$ |
27,666 |
|
|
$ |
27,810 |
|
|
$ |
107,354 |
|
|
$ |
103,389 |
|
Non-GAAP Adjusted General and
Administrative Expense as a Percentage of GAAP Total Revenues |
|
9.7 |
% |
|
|
10.4 |
% |
|
|
9.5 |
% |
|
|
9.5 |
% |
(1) Includes tradename impairment of $1.1
million in both the three months and year ended March 31, 2022.(2)
Costs related to the consummation of the acquisition process such
as insurance costs, legal and other acquisition related
professional fees.
Reconciliation of GAAP Net (Loss) Income to Non-GAAP
EBITDA and related Non-GAAP EBITDA Margin, Non-GAAP Adjusted EBITDA
and related Non-GAAP Adjusted EBITDA Margin:
|
Three Months Ended March 31, |
|
Year Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
(In
thousands) |
|
|
|
|
|
|
|
GAAP Net (Loss) Income |
$ |
(240,552 |
) |
|
$ |
52,086 |
|
|
$ |
(82,306 |
) |
|
$ |
205,381 |
|
Interest expense, net |
|
18,976 |
|
|
|
15,973 |
|
|
|
69,164 |
|
|
|
64,287 |
|
(Benefit) provision for income
taxes |
|
(58,970 |
) |
|
|
8,879 |
|
|
|
(11,609 |
) |
|
|
57,077 |
|
Depreciation and
amortization |
|
7,863 |
|
|
|
8,485 |
|
|
|
32,625 |
|
|
|
32,092 |
|
Non-GAAP EBITDA |
|
(272,683 |
) |
|
|
85,423 |
|
|
|
7,874 |
|
|
|
358,837 |
|
Non-GAAP EBITDA Margin |
|
(95.4 |
)% |
|
|
32.0 |
% |
|
|
0.7 |
% |
|
|
33.0 |
% |
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
Inventory step-up charges
associated with acquisition in Cost of Sales (1) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,567 |
|
Costs associated with
acquisition in General and Administrative Expense (2) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,127 |
|
Goodwill and tradename
impairment |
|
370,217 |
|
|
|
— |
|
|
|
370,217 |
|
|
|
— |
|
Loss on extinguishment of
debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,122 |
|
Total adjustments |
|
370,217 |
|
|
|
— |
|
|
|
370,217 |
|
|
|
8,816 |
|
Non-GAAP Adjusted EBITDA |
$ |
97,534 |
|
|
$ |
85,423 |
|
|
$ |
378,091 |
|
|
$ |
367,653 |
|
Non-GAAP Adjusted EBITDA
Margin |
|
34.1 |
% |
|
|
32.0 |
% |
|
|
33.5 |
% |
|
|
33.8 |
% |
(1) Inventory step-up charges related to our North American OTC
Healthcare segment. (2) Costs related to the consummation of the
acquisition process such as insurance costs, legal and other
acquisition related professional fees.
Reconciliation of GAAP Net (Loss) Income and GAAP
Diluted Earnings Per Share to Non-GAAP Adjusted Net Income (Loss)
and related Non-GAAP Adjusted Earnings Per Share:
|
Three Months Ended March 31, |
|
Year Ended March 31, |
|
|
2023 |
|
2023 Adjusted EPS |
|
|
2022 |
|
2022 Adjusted EPS |
|
|
2023 |
|
2023 Adjusted EPS |
|
|
2022 |
|
2022 Adjusted EPS |
(In thousands, except
per share data) |
|
|
|
|
|
|
|
|
|
|
|
GAAP Net (Loss) Income and Diluted EPS (1) |
$ |
(240,552 |
) |
$ |
(4.78 |
) |
|
$ |
52,086 |
|
$ |
1.02 |
|
|
$ |
(82,306 |
) |
$ |
(1.63 |
) |
|
$ |
205,381 |
|
$ |
4.04 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Inventory step-up charges and
other costs associated with acquisition in Cost of Sales (2) |
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
1,567 |
|
|
0.03 |
|
Costs associated with
acquisition in General and Administrative Expense (3) |
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
5,127 |
|
|
0.10 |
|
Goodwill and tradename
impairment |
|
370,217 |
|
|
7.35 |
|
|
|
— |
|
|
— |
|
|
|
370,217 |
|
|
7.35 |
|
|
|
— |
|
|
— |
|
Loss on extinguishment of
debt |
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
2,122 |
|
|
0.04 |
|
Tax impact of adjustments
(4) |
|
(88,852 |
) |
|
(1.76 |
) |
|
|
— |
|
|
— |
|
|
|
(88,852 |
) |
|
(1.76 |
) |
|
|
(2,134 |
) |
|
(0.04 |
) |
Normalized tax rate adjustment
(5) |
|
12,915 |
|
|
0.26 |
|
|
|
(5,753 |
) |
|
(0.11 |
) |
|
|
12,915 |
|
|
0.26 |
|
|
|
(5,753 |
) |
|
(0.11 |
) |
Total adjustments |
|
294,280 |
|
|
5.85 |
|
|
|
(5,753 |
) |
|
(0.11 |
) |
|
|
294,280 |
|
|
5.85 |
|
|
|
929 |
|
|
0.02 |
|
Non-GAAP Adjusted Net Income
and Adjusted EPS |
$ |
53,728 |
|
$ |
1.07 |
|
|
$ |
46,333 |
|
$ |
0.91 |
|
|
$ |
211,974 |
|
$ |
4.21 |
|
|
$ |
206,310 |
|
$ |
4.06 |
|
(1) Reported GAAP is calculated using diluted
shares outstanding. Diluted shares outstanding are 50,358 for the
three months ended March 31, 2023 and 50,384 for the year ended
March 31, 2023.(2) Inventory step-up charges related to our North
American OTC Healthcare segment.(3) Costs related to the
consummation of the acquisition process such as insurance costs,
legal and other acquisition related professional fees.(4) The
income tax adjustments are determined using applicable rates in the
taxing jurisdictions in which the above adjustments relate and
includes both current and deferred income tax expense (benefit)
based on the specific nature of the specific Non-GAAP performance
measure.(5) Income tax adjustment to adjust for discrete income tax
items.Note: Amounts may not add due to rounding.
Reconciliation of GAAP Net (Loss) Income to Non-GAAP
Free Cash Flow and Non-GAAP Adjusted Free Cash Flow:
|
Three Months Ended March 31, |
|
Year Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
(In
thousands) |
|
|
|
|
|
|
|
GAAP Net (Loss) Income |
$ |
(240,552 |
) |
|
$ |
52,086 |
|
|
$ |
(82,306 |
) |
|
$ |
205,381 |
|
Adjustments: |
|
|
|
|
|
|
|
Adjustments to reconcile net
(loss) income to net cash provided by operating activities as shown
in the Statement of Cash Flows |
|
309,410 |
|
|
|
13,207 |
|
|
|
365,877 |
|
|
|
65,487 |
|
Changes in operating assets
and liabilities as shown in the Statement of Cash Flows |
|
(9,871 |
) |
|
|
(2,167 |
) |
|
|
(53,855 |
) |
|
|
(10,946 |
) |
Total adjustments |
|
299,539 |
|
|
|
11,040 |
|
|
|
312,022 |
|
|
|
54,541 |
|
GAAP Net cash provided by
operating activities |
|
58,987 |
|
|
|
63,126 |
|
|
|
229,716 |
|
|
|
259,922 |
|
Purchases of property and
equipment |
|
(2,558 |
) |
|
|
(3,161 |
) |
|
|
(7,784 |
) |
|
|
(9,642 |
) |
Non-GAAP Free Cash Flow |
|
56,429 |
|
|
|
59,965 |
|
|
|
221,932 |
|
|
|
250,280 |
|
Payments associated with
acquisition (1) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,465 |
|
Non-GAAP Adjusted Free Cash
Flow |
$ |
56,429 |
|
|
$ |
59,965 |
|
|
$ |
221,932 |
|
|
$ |
253,745 |
|
(1) Payments related to the consummation of the
acquisition process such as insurance costs, legal and other
acquisition related professional fees.
Outlook for Fiscal Year 2024:
Reconciliation of Projected GAAP Net cash provided by
operating activities to Projected Non-GAAP Free Cash
Flow:
(In
millions) |
|
Projected FY'24 GAAP Net cash provided by operating activities |
$ |
250 |
|
Additions to property and
equipment for cash |
|
(10 |
) |
Projected FY'24 Non-GAAP Free
Cash Flow |
$ |
240 |
|
|
|
|
|
Investor Relations ContactPhil Terpolilli, CFA,
914-524-6819irinquiries@prestigebrands.com
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