11-7-13 6:00 AM EST | Email Article

Prestige Brands Holdings, Inc. (NYSE-PBH) today announced results for the second quarter and first six months of fiscal year 2014, which ended on September 30, 2013.

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.

These results include reported second fiscal quarter revenues of $168.4 million, an increase of 4.1% over the prior year comparable period’s revenues of $161.9 million, or approximately 5.0% excluding the $1.4 million impact of the divested Phazyme® brand. Revenues increased 1.6% in the second fiscal quarter excluding the impact on revenues from the acquisition of Care Pharmaceuticals (Care) on July 1, 2013, and the impact of the divested Phazyme brand on the prior year’s revenues. Reported revenues for the six month period totaled $311.4 million, an increase of approximately 1% over the prior year six month period’s revenues of $308.9 million. Excluding the items mentioned above, revenues for the six month period increased 0.1% over the prior year’s comparable period.

Reported net income for the second fiscal quarter was $32.8 million, or $0.63 per diluted share, 71% higher than the prior year comparable quarter’s results of $19.2 million, or $0.38 per diluted share. The $13.6 million increase in net income is due to strong portfolio performance, a full quarter of ownership of Care, and favorable changes in state tax laws. Adjusted earnings per share increased 11.9% to $0.47 compared to the prior year’s adjusted earnings per share of $0.42. The current quarter’s adjusted earnings per share excludes items related to the Care acquisition and the impact of changes in state tax laws. The prior quarter’s adjusted earnings per share excludes items related to the acquisition of the GSK brands and other items.

Reported net income for the first six months of fiscal 2014 was $53.5 million, or $1.03 per diluted share, 57.8% higher than the prior year’s comparable period results of $33.9 million or $0.66 per diluted share. Adjusted earnings per share for the first half of fiscal 2014 were $0.88, compared to adjusted earnings per share of $0.77 in the prior year’s comparable period. The fiscal 2014 six month period includes $1.3 million in items related to the Care acquisition and a $9.1 million benefit from changes in state tax laws. The fiscal 2013 six month period includes $5.4 million of items largely associated with the acquisition of the GSK brands.

Reported operating income for the second fiscal quarter was a record $53.8 million compared to $51.2 million in the prior year’s comparable period. Increases in sales and gross margin percentages in the second fiscal quarter resulted in record operating income, an increase of 5.1% over the prior year’s comparable period. Reported operating income for the first six months of fiscal 2014 was $103.2 million, an increase of 8.6% over the prior year comparable period’s results of $95.0 million.

Reported revenues for the Over-The-Counter Healthcare segment (OTC) were $142.6 million for the second fiscal quarter, 3% higher than the prior year comparable period’s results of $137.9 million. The fiscal 2014 second quarter segment results include the impact of the Care acquisition as well as the divestiture of Phazyme®. Excluding the impact of the acquisition and the divestiture, our OTC business grew 0.5% during the second fiscal quarter. For the first six months of the current fiscal year, reported revenues for the OTC segment were $265.5 million, an increase of 1% over the prior year comparable period’s results of $264.1 million. Reported revenues for the Household Cleaning segment were $25.8 million in the second fiscal quarter, an increase of 8% over the prior year's second quarter results of $23.9 million. For the six month period, reported revenues for this segment were $45.9 million compared to $44.7 million in the prior year’s comparable period.

Commentary & Outlook

According to Matthew M. Mannelly, President and CEO, “We are very pleased with our strong performance in the second quarter. We are investing substantially in our core over-the-counter healthcare brands to create shareholder value for the long-term. Our three pronged strategy drives our business--brand building and innovation, aggressive and disciplined M & A, and generating consistent free cash flow that supports a strong balance sheet,” he said.

“We continue to believe that fiscal 2014 will be a transitional year for the company in light of the return of competitive brands to the marketplace. However, with our solid six month performance, we are reconfirming our previously provided adjusted earnings per share estimate of $1.65 for the full fiscal year.” Mr. Mannelly continued, “In the second fiscal quarter, the Company generated $32.8 million in cash provided by operating activities. For the full year, we continue to expect our solid financial profile to generate cash provided by operating activities of approximately $125 million for use in rapid deleveraging and building meaningful M & A capacity.”

Free Cash Flow and Debt Reduction

Free cash flow (“FCF”) is a “non-GAAP financial measure” and is presented here because management believes it is a commonly used measure of liquidity, indicative of cash available for debt repayment and acquisitions. Non-GAAP Free Cash Flow is defined and reconciled to GAAP Net Cash Provided by Operating Activities in the section entitled, “About Non-GAAP Financial Measures” below. The Company's FCF for the first half of the year ended September 30, 2013 was $53.3 million, a decrease of $1.8 million over the prior year comparable period's free cash flow of $55.1 million. The slight decrease in FCF year over year is largely due to the timing of sales in the second fiscal quarter. On a per share basis, FCF for the six months ended September 30, 2013 translates to $1.02 per share compared to $1.08 per share for the second fiscal quarter ended September 30, 2012.

At September 30, 2013, the Company’s net debt was $958.2 million and its covenant-defined leverage ratio was approximately 4.02. The Company’s strong FCF and debt repayment during the second fiscal quarter allowed for a reduction in the leverage ratio of approximately .15, even with the acquisition of Care on July 1, 2013.

Q2 Conference Call & Accompanying Slide Presentation

The Company will host a conference call to review its second quarter results on November 7, 2013 at 8:30 am EDT. The toll-free dial-in numbers are 866-700-6067 within North America and 617-213-8834 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 Investor Relations page of the Company's website at http://prestigebrands.com. The slide presentation can be accessed just before the call from the Investor Relations page of the website by clicking on Webcasts 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 55096031.

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," “strategy,” "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 creating shareholder value, our expected future operating results including adjusted earnings per share and cash flow, our strategy and focus, our intention to invest in our core brands, development of innovative products, our generation of free cash flow, rapid deleveraging and aggressive and disciplined M&A. 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, 2013, Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, 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

September 30,

Six Months Ended

September 30,

(In thousands, except per share data) 2013           2012 2013         2012
Revenues
Net sales $       167,004 $       161,323 $       309,105 $       307,243
Other revenues 1,438   532   2,308   1,609  
Total revenues 168,442 161,855 311,413 308,852
 
Cost of Sales
Cost of sales (exclusive of depreciation shown below) 73,723   71,310   133,211   134,703  
Gross profit 94,719   90,545   178,202   174,149  
 
Operating Expenses
Advertising and promotion 26,044 23,508 45,184 43,833
General and administrative 11,619 12,585 23,253 28,736
Depreciation and amortization 3,294   3,296   6,562   6,591  
Total operating expenses 40,957   39,389   74,999   79,160  
Operating income 53,762   51,156   103,203   94,989  
 
Other (income) expense
Interest income (25 ) (3 ) (28

)

 

(5

)

 

Interest expense 16,464   19,663   32,372   39,513  
Total other expense 16,439   19,660   32,344   39,508  
 
Income before income taxes 37,323 31,496 70,859 55,481
Provision for income taxes 4,531   12,252   17,375 21,582  
Net income $       32,792   $      

19,244

  $       53,484   $       33,899  
 
Earnings per share:
Basic $       0.64   $       0.38   $       1.04   $       0.67  
Diluted $       0.63   $       0.38   $       1.03   $       0.66  
 
 
Weighted average shares outstanding:
Basic 51,463   50,364   51,343   50,353  
Diluted 52,219   51,225   52,130   51,166  
 
Comprehensive income, net of tax:
Currency translation adjustments 1,122   66   1,123   24  
Total other comprehensive income 1,122   66   1,123   24  
Comprehensive income $       33,914   $       19,310   $       54,607   $       33,923  
 
                     
Prestige Brands Holdings, Inc.
Consolidated Balance Sheets
(Unaudited)
 
(In thousands)

Assets

September 30,

2013

March 31,

2013

Current assets
Cash and cash equivalents $   26,833 $   15,670
Accounts receivable, net 80,534 73,053
Inventories 61,935 60,201
Deferred income tax assets 6,427 6,349
Prepaid expenses and other current assets 6,929   8,900  
Total current assets 182,658 164,173
 
Property and equipment, net 11,256 9,896
Goodwill 191,058 167,546
Intangible assets, net 1,399,860 1,373,240
Other long-term assets 23,244   24,944  
Total Assets $   1,808,076   $   1,739,799  
 
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 51,857 $ 51,376
Accrued interest payable 13,951 13,894
Other accrued liabilities 23,301   31,398  
Total current liabilities 89,109   96,668  
 
Long-term debt
Principal amount 985,000 978,000
Less unamortized discount (6,302 ) (7,100 )
Long-term debt, net of unamortized discount 978,698   970,900  
 
Deferred income tax liabilities 198,721 194,288
Other long-term liabilities 296    
Total Liabilities 1,266,824   1,261,856  
 
 
Stockholders' Equity
Preferred stock - $0.01 par value
Authorized - 5,000 shares
Issued and outstanding - None
Preferred share rights 283 283
Common stock - $0.01 par value
Authorized - 250,000 shares
Issued - 51,905 shares at September 30, 2013 and 51,311 shares at March 31, 2013 520 513
Additional paid-in capital 410,664 401,691
Treasury stock, at cost - 191 shares at September 30, 2013 and 181 shares March 31, 2013 (965 ) (687 )
Accumulated other comprehensive income (loss), net of tax 1,019 (104 )
Retained earnings 129,731   76,247  
Total Stockholders' Equity 541,252   477,943  
Total Liabilities and Stockholders' Equity $   1,808,076   $   1,739,799  
 
         
Prestige Brands Holdings, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
 
Six Months Ended September 30,
(In thousands) 2013       2012
Operating Activities

Net income

$   53,484 $   33,899
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 6,562 6,591
Deferred income taxes 4,355 12,391
Amortization of deferred financing costs 1,975 2,060
Stock-based compensation costs 2,487 1,973
Amortization of debt discount 798 812
Lease termination costs 975
(Gain) loss on sale or disposal of equipment (3 ) 51
Changes in operating assets and liabilities, net of effects of acquisitions
Accounts receivable (5,712 ) (24,530 )
Inventories 821 (2,904 )
Prepaid expenses and other current assets 2,619 5,556
Accounts payable (1,125 ) 15,150
Accrued liabilities (10,663 ) 8,350  
Net cash provided by operating activities 55,598   60,374  
 
Investing Activities
Purchases of property and equipment (2,319 ) (5,266 )
Proceeds from sale of property and equipment 3 15
Acquisition of brands from GSK purchase price adjustments (226 )
Acquisition of Care Pharmaceuticals, less cash acquired (55,215 )  
Net cash used in investing activities (57,531 ) (5,477 )
 
Financing Activities
Repayment of long-term debt (7,500 ) (70,000 )
Repayments under revolving credit agreement (35,500 ) (8,000 )
Borrowings under revolving credit agreement 50,000 33,000
Payment of deferred financing costs (275 )
Proceeds from exercise of stock options 5,143 80
Excess tax benefits from share-based awards 1,350
Fair value of shares surrendered as payment of tax withholding (278 )  
Net cash provided by (used in) financing activities 12,940   (44,920 )
 
Effects of exchange rate changes on cash and cash equivalents 156 14
Increase in cash and cash equivalents 11,163 9,991
Cash and cash equivalents - beginning of year 15,670   19,015  
Cash and cash equivalents - end of year $   26,833   $   29,006  
 
Interest paid $   29,516   $   36,524  
Income taxes paid $   8,468   $   656  
 
               
Prestige Brands Holdings, Inc.
Consolidated Statements of Income
Business Segments
(Unaudited)
 
 
Three Months Ended September 30, 2013 Six Months Ended September 30, 2013
                       
OTC

Healthcare

Household

Cleaning

Consolidated OTC

Healthcare

Household

Cleaning

Consolidated
(In thousands)
Net sales $   142,454 $   24,550 $   167,004 $   265,222 $   43,883 $   309,105
Other revenues 155   1,283   1,438   312   1,996   2,308
Total revenues 142,609 25,833 168,442 265,534 45,879 311,413
Cost of sales 55,325   18,398   73,723   100,336   32,875   133,211
Gross profit 87,284 7,435 94,719 165,198 13,004 178,202
Advertising and promotion 25,313   731   26,044   43,545   1,639   45,184
Contribution margin $   61,971   $   6,704   68,675 $   121,653   $   11,365   133,018
Other operating expenses 14,913   29,815
Operating income 53,762 103,203
Other expense 16,439   32,344
Income before income taxes 37,323 70,859
Provision for income taxes 4,531   17,375
Net income $   32,792   $   53,484
 
               
Three Months Ended September 30, 2012 Six Months Ended September 30, 2012
                       
OTC

Healthcare

Household

Cleaning

Consolidated OTC

Healthcare

Household

Cleaning

Consolidated
(In thousands)
Net sales $   137,771 $   23,552 $   161,323 $   263,775 $   43,468 $   307,243
Other revenues 164   368   532   345   1,264   1,609
Total revenues 137,935 23,920 161,855 264,120 44,732 308,852
Cost of sales 53,469   17,841   71,310   100,868   33,835   134,703
Gross profit 84,466 6,079 90,545 163,252 10,897 174,149
Advertising and promotion 22,046   1,462   23,508   39,899   3,934   43,833
Contribution margin $   62,420   $   4,617   67,037 $   123,353   $   6,963   130,316
Other operating expenses 15,881   35,327
Operating income 51,156 94,989
Other expense 19,660   39,508
Income before income taxes 31,496 55,481
Provision for income taxes 12,252   21,582
Net income $   19,244   $   33,899
 

About Non-GAAP Financial Measures

We define Non-GAAP EBITDA as earnings before interest expense (income), income taxes, depreciation and amortization, income or loss from discontinued operations or the sale thereof and Non-GAAP Adjusted EBITDA as earnings before interest expense (income), income taxes, depreciation and amortization, income or loss from discontinued operations and the sale thereof, gain on settlement, loss on extinguishment of debt, certain other legal and professional fees, and acquisition-related costs. We define Non-GAAP Adjusted Gross Margin as Gross Profit before certain acquisition and integration-related costs. We define Non-GAAP Adjusted Operating Income as Operating Income minus certain other legal and professional fees, acquisition and other integration costs. We define Non-GAAP Adjusted Net Income as Net Income before gain on settlement, loss on extinguishment of debt, certain other legal and professional fees, acquisition and integration-related costs, income or loss from discontinued operations and sale thereof, the applicable tax impacts associated with these items and the tax impacts of state tax rate adjustments and other non-deductible items. Non-GAAP Adjusted EPS is calculated based on Non-GAAP Adjusted Net Income, divided by the weighted average number of common and potential common shares outstanding during the period. We define Non-GAAP Free Cash Flow as Net Cash provided by operating activities less cash paid for capital expenditures. Non-GAAP Free Cash Flow per Share is calculated based on Non-GAAP Free Cash Flow, divided by the weighted average number of common and potential common shares outstanding during the period. Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow and Non-GAAP Free Cash Flow per Share may not be comparable to similarly titled measures reported by other companies.

We are presenting Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow and Non-GAAP Free Cash Flow per Share because they provide additional ways to view our operations, when considered with both our GAAP results and the reconciliation to net income and net cash provided by operating activities, respectively, which we believe provide a more complete understanding of our business than could be obtained absent this disclosure. Each of Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow and Non-GAAP Free Cash Flow per Share is presented solely as a supplemental disclosure because (i) we believe it is a useful tool for investors to assess the operating performance of the business without the effect of these items; (ii) we believe that investors will find this data useful in assessing shareholder value; and (iii) we use Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income and Non-GAAP Adjusted EPS internally to evaluate the performance of our personnel and also as a benchmark to evaluate our operating performance or compare our performance to that of our competitors. The use of Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow and Non-GAAP Free Cash Flow per Share has limitations, and you should not consider these measures in isolation from or as an alternative to GAAP measures such as Operating income, Net income, and Net cash flow provided by operating activities, or cash flow statement data prepared in accordance with GAAP, or as a measure of profitability or liquidity.

The following tables set forth the reconciliation of Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow and Non-GAAP Free Cash Flow per Share, all of which are non-GAAP financial measures, to GAAP Gross Profit, GAAP Operating Income, GAAP Net Income, GAAP Diluted EPS and GAAP Net cash provided by operating activities, our most directly comparable financial measures presented in accordance with GAAP.

               

Reconciliation of GAAP Total Revenues to Non-GAAP Total Revenues excluding acquisitions and divestitures:

 

Three Months Ended

September 30,

Six Months Ended

September 30,

 

2013       2012 2013       2012
(In thousands)
GAAP Total Revenues $   168,442   $   161,855   $   311,413   $   308,852  
 

Adjustments: (1)

Care revenues (5,429 ) (5,429 )
Phazyme revenues   (1,394 )   (3,044 )
Total adjustments (5,429 ) (1,394 ) (5,429 ) (3,044 )
Non-GAAP Total Revenues excluding acquisitions and divestitures $   163,013   $   160,461   $   305,984   $   305,808  
       

(1) Revenue adjustments relate to our OTC Healthcare segment

 

                 

Reconciliation of GAAP Total Revenues to Non-GAAP Adjusted Total Revenues and GAAP Gross Profit to Non-GAAP Adjusted Gross Margin:

 

 

Three Months Ended

September 30,

Six Months Ended

September 30,

2013       2012 2013       2012
(In thousands)
GAAP Total Revenues $   168,442   $   161,855   $   311,413   $   308,852  

Adjustments: (1)

Additional sales costs associated with GSK       411  
Total adjustments       411  
Non-GAAP Adjusted Total Revenues $   168,442   $   161,855   $   311,413   $   309,263  
 
GAAP Gross Profit $   94,719   $   90,545   $   178,202   $   174,149  

Adjustments:

 
Inventory step-up charge associated with acquisitions 577 577 23
Care acquisition related inventory costs 407 407
Additional sales costs associated with GSK 411
Additional product testing costs associated with GSK 220
Additional supplier transaction costs associated with GSK   1,661     1,661  
Total adjustments 984   1,661   984   2,315  
Non-GAAP Adjusted Gross Margin $   95,703   $   92,206   $   179,186   $   176,464  

Non-GAAP Adjusted Gross Margin %

56.8 % 57.0 % 57.5 % 57.1 %
 

(1) Revenue adjustments relate to our OTC Healthcare segment

 
                 

Reconciliation of GAAP Operating Income to Non-GAAP Adjusted Operating Income:

 

Three Months Ended

September 30,

Six Months Ended

September 30,

 

2013       2012 2013       2012
(In thousands)
GAAP Operating Income $   53,762   $   51,156   $   103,203   $   94,989

Adjustments:

 
Inventory step-up charge associated with acquisitions 577 577 23
Care acquisition related inventory costs 407 407
Additional sales costs associated with GSK 411
Additional product testing costs associated with GSK 220
Additional supplier transition costs associated with GSK 1,661 1,661
Legal and professional fees associated with acquisitions (2) 85 39 668 98
Unsolicited proposal costs (2) 534
Transition and integration costs associated with GSK (2)   1,684     5,811
Total adjustments 1,069   3,384   1,652   8,758
Non-GAAP Adjusted Operating Income $   54,831   $   54,540   $   104,855   $   103,747
       

(2) Adjustments related to G&A expenses

               

Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA:

 

Three Months Ended

September 30,

Six Months Ended

September 30,

2013       2012 2013       2012
(In thousands)
GAAP Net Income $   32,792 $   19,244 $   53,484 $   33,899
Interest expense, net 16,439 19,660 32,344 39,508
Income tax provision 4,531 12,252 17,375 21,582
Depreciation and amortization 3,294   3,296   6,562   6,591
Non-GAAP EBITDA: 57,056   54,452   109,765   101,580

Adjustments:

 
Inventory step-up charge associated with acquisitions 577 577 23
Care acquisition related inventory costs 407 407
Additional sales costs associated with GSK 411
Additional product testing costs associated with GSK 220
Additional supplier transaction costs associated with GSK 1,661 1,661
Legal and professional fees associated with acquisitions (2) 85 39 668 98
Unsolicited proposal costs (2) 534
Transition and integration costs associated with GSK(2)   1,684     5,811
Total adjustments 1,069   3,384   1,652   8,758
Non-GAAP Adjusted EBITDA $   58,125   $   57,836   $   111,417   $   110,338
 

(2) Adjustments related to G&A expenses

               

Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income and related Adjusted Earnings Per Share:

 
Three Months Ended September 30, Six Months Ended September 30,

 

2013    

2013

Adjusted

EPS

    2012    

2012

Adjusted

EPS

2013    

2013

Adjusted

EPS

    2012    

2012

Adjusted

EPS

(In thousands)                
GAAP Net Income $   32,792       $   0.63   $   19,244       $   0.38   $   53,484       $   1.03   $   33,899       $   0.66  

Adjustments:

Inventory step-up charge

associated with acquisitions

577 0.01 577 0.01 23

Care acquisition related

inventory costs

407 0.01 407 0.01

Additional sales costs

associated with GSK

411 0.01

Additional product testing

costs associated with GSK

220 0.01

Additional supplier transition

costs associated with GSK

1,661 0.03 1,661 0.03

Legal and professional fees

associated with acquisitions (2)

85 39 668 0.01 98
Unsolicited proposal costs (2) 534 0.01

Transition and integration

costs associated with GSK (2)

1,684 0.03 5,811 0.11

Tax impact of adjustments

(133 ) (0.01 ) (1,300 ) (0.02 ) (356 ) (0.01 ) (3,407 ) (0.06 )

Impact of state tax

adjustments

(9,085 )     (0.17 )         (9,085 )     (0.17 )        

Total adjustments

(8,149 )     (0.16 ) 2,084       0.04   (7,789 )     (0.15 ) 5,351       0.11  

Non-GAAP Adjusted Net

Income and Adjusted EPS

$   24,643       $   0.47   $   21,328       $   0.42   $   45,695       $   0.88   $   39,250       $   0.77  
               

(2) Adjustments related to G&A expenses

                   

Reconciliation of GAAP Net Cash Provided by Operating Activities to Non-GAAP Free Cash Flow:

 

Three Months Ended

September 30,

Six Months Ended

September 30,

2013       2012 2013       2012
(In thousands)
GAAP Net cash provided by operating activities $   32,800 $   45,632 $   55,598 $   60,374
Additions to property and equipment for cash (955 ) (4,068 ) (2,319 ) (5,266 )
Non-GAAP Free Cash Flow $   31,845   $   41,564   $   53,279   $   55,108  
 
Non-GAAP Free Cash Flow per Share $   0.61   $   0.81   $   1.02   $   1.08  
 
             

Reconciliation of GAAP Net Income and EPS to Non-GAAP Free Cash Flow and Non-GAAP Free Cash Flow per Share:

 
Three Months Ended September 30, Six Months Ended September 30,
2013  

2013 Free

Cash

Flow per

Share

      2012  

2012 Free

Cash

Flow per

Share

2013  

2013 Free

Cash Flow

per Share

      2012  

2012 Free

Cash

Flow per

Share

(In thousands)        
GAAP Net Income $   32,792     $   0.63   $   19,244     $   0.38   $   53,484     $   1.03   $   33,899     $   0.66  

Adjustments:

 

Adjustments to reconcile net

income to net cash provided by

operating activities as shown in

the Statement of Cash Flows

3,681 0.07 12,096 0.24 16,174 0.31 24,853 0.49

Changes in operating assets and

liabilities, net of effects from

acquisitions as shown in the

Statement of Cash Flows

(3,673 )   (0.07 ) 14,292     0.27   (14,060 )   (0.27 ) 1,622     0.03  
Total adjustments 8       26,388     0.51   2,114     0.04   26,475     0.52  

GAAP Net cash provided by

operating activities

32,800 0.63 45,632 0.89 55,598 1.07 60,374 1.18

Additions to property and

equipment for cash

(955 )   (0.02 ) (4,068 )   (0.08 ) (2,319 )   (0.05 ) (5,266 )   (0.10 )

Non-GAAP Free Cash Flow per

Share

$   31,845     $   0.61   $   41,564     $   0.81   $   53,279     $   1.02   $   55,108     $   1.08  
               

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Morningstar - - Prestige Brands Holdings, Inc. Reports Record Second Quarter Revenue of $168.4 Million; Record Operating Income of $53.8 Million
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