Prestige Brands Holdings, Inc. Reports Record Fiscal 2015 Fourth Quarter and Full Year Results

Fourth Quarter Revenues Up 32.9%: Full Year Earnings Up 19.6%

TARRYTOWN, N.Y.--()--Prestige Brands Holdings, Inc. (NYSE:PBH) today reported strong financial results for its fourth quarter and fiscal year ended March 31, 2015.

Key fourth quarter and fiscal year highlights include:

  • Revenue increased 32.9% to a record $190.0 million and 19.6% to a record $714.6 million in Q4 and FY2015, respectively
  • Organic sales growth of 2.4% in Q4, excluding the impact of foreign exchange
  • Adjusted free cash flow increased 45.0% in Q4 to $50.1 million
  • Adjusted net income increased 33.1% to $24.8 million, or $0.47 per diluted share in Q4; FY15 adjusted net income increased 22.7% to $98.0 million, or $1.86 per diluted share.

“We are extremely pleased with our fourth quarter and full fiscal year results,” said Matthew M. Mannelly, President and CEO. “Our excellent fourth quarter results reflect continued strengthening of consumption trends across our core OTC and international brands resulting in record adjusted free cash flow of over $50 million during the quarter. Fiscal year 2015 was Prestige Brands’ greatest year to date,” he said. “This strong momentum positions the Company well as we enter fiscal 2016.”

Fourth Fiscal Quarter Ended March 31, 2015

Revenues in the fourth fiscal quarter increased 32.9% to a record $190.0 million, compared to $143.1 million in the fourth quarter of 2014. Organic sales growth for the quarter was 2.4% excluding the impact of foreign exchange, or 1.1% including the impact of foreign exchange. Reported net income totaled $23.8 million, or $0.45 per diluted share, compared to $16.0 million, or $0.30 per diluted share, in the fourth quarter of fiscal year 2014. Reported earnings per share increased 50.0% to $0.45 compared to $0.30 in the prior year comparable period. Adjusted net income increased 33.1% to $24.8 million, or $0.47 per diluted share, compared to $18.6 million, or $0.35 per diluted share, in the fourth quarter of fiscal year 2014. Adjustments to net income in the fourth quarter of fiscal 2015 consist of items related to the acquisitions of Insight and Hydralyte.

Fiscal Year Ended March 31, 2015

Revenues for the fiscal year ended March 31, 2015 totaled a record $714.6 million, an increase of 19.6%, compared to revenues of $597.4 million for the fiscal year ended March 31, 2014. Reported net income for fiscal year 2015 totaled $78.3 million, or $1.49 per diluted share, compared to $72.6 million, or $1.39 per diluted share, for fiscal year 2014. Adjusted net income for fiscal year 2015 totaled $98.0 million, or $1.86 per diluted share, compared to adjusted net income of $79.9 million, or $1.53 per diluted share, for fiscal 2014. Adjustments to net income in fiscal 2015 consist of items related to the Insight and Hydralyte acquisitions.

Segment Review

North American OTC Healthcare: Revenues totaled $156.2 million for the fourth quarter of 2015, a 39.2% increase over fourth quarter 2014 revenues of $112.2 million. For fiscal 2015, revenues totaled $563.5 million, compared to $479.7 million for fiscal 2014, an increase of 17.5%. Results for both periods were favorably impacted by increased consumption among core OTC brands as well as the Insight and Hydralyte acquisitions.

International OTC Healthcare: Revenues totaled $13.0 million for the fourth quarter of 2015, a 40.6% increase over fourth quarter 2014 revenues of $9.3 million. For fiscal 2015, revenue totaled $61.2 million compared to $29.9 million for fiscal 2014, an increase of 104.5%. The strong performance of the Care portfolio in Australia and the acquisition of Hydralyte impacted revenues for both periods.

Household Cleaning: Revenues totaled $20.8 million for the fourth quarter of 2015, compared with fourth quarter 2014 revenues of $21.6 million. Revenues for fiscal year 2015 totaled $89.9 million, a 2.5% increase over fiscal year 2014 revenue of $87.8 million.

Balance Sheet and Adjusted Free Cash Flow

Adjusted free cash flow totaled $50.1 million for the fourth quarter of 2015, an increase of 45.0% over fourth quarter 2014 results of $34.5 million. For fiscal 2015, adjusted free cash flow was $163.7 million compared to adjusted free cash flow of $129.5 million for fiscal 2014, an increase of 26.4% The Company repaid $50.0 million of debt during the fourth quarter of fiscal 2015 and had a bank-defined net debt to EBITDA ratio of approximately 5.2. This is more than a half point reduction in debt since the closing of the Insight acquisition in September 2014.

Commentary and Outlook for FY2016

“Significant value creation initiatives are well underway for fiscal 2016,” Mr. Mannelly said. “Key among them is the stabilization and growth of Monistat and building our women’s health platform. We are investing in educating the healthcare professional about Monistat and, at the same time, creating new, more effective advertising to reach targeted consumers. Our core OTC and international portfolio continues to be the focus of our brand-building efforts and we will invest substantially in new product development within those platforms.”

Mr. Mannelly continued, “The progress we have made in building a diversified portfolio, strengthening consumption trends among our core OTC brands and expanding our international footprint in 2015 has us very well positioned as we enter fiscal 2016. I am proud of these accomplishments by the Prestige team, and I am confident in the Company’s future under the leadership of Ron Lombardi.”

“We are providing an outlook for fiscal year 2016, which we believe will be driven by organic growth in our legacy business and recent acquisitions,” Mr. Mannelly continued. “For fiscal year 2016, we anticipate revenue growth in the range of 10-12% including the impact of foreign exchange, adjusted earnings per share in the range of $2.05-$2.10, and adjusted free cash flow of approximately $175 million. We expect to continue to use our free cash flow to build M&A capacity and pay down debt. Our management team is focused on the three-prong strategy that continues to drive value for our shareholders: investing in core OTC brands and international, managing our industry-leading free cash flow, and executing strategic and disciplined M&A.”

Q4 and Fiscal Year Conference Call, Accompanying Slide Presentation and Replay

The Company will host a conference call to review its fourth quarter and full year results on May 14, 2015 at 8:30 am EDT. The toll-free dial-in numbers are 877-474-9503 within North America and 857-244-7556 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 69872014.

Non-GAAP Financial Information

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.

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, Australia, and in certain other international markets. Core brands include Monistat® women’s health products, Nix® lice treatment, 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 "outlook," "may," "will," "would," "expect," “intend,” “estimate,” “anticipate,” “believe,” 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 positioning in fiscal 2016, our creation of shareholder value, investments in advertising, promotion and product development, brand growth, our expected future operating results, including revenue growth, adjusted EPS, adjusted free cash flow, and our expected use of free cash flow for rapid deleveraging and building M&A capacity, and our execution of 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 fluctuating exchange rates, the ability to identify and consummate acquisitions at attractive valuations, the impact of our advertising and promotional initiatives, competition in our industry, supplier issues, and the success of our brand-building investments. 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, 2014, Quarterly Report on Form 10-Q for the quarter ended December 31, 2014, and other periodic reports filed with the Securities and Exchange Commission.

 

Prestige Brands Holdings, Inc.
Consolidated Statements of Income and Comprehensive Income
(Unaudited)

 
   

Three Months Ended
March 31,

   

Year Ended
March 31,

(In thousands, except per share data) 2015   2014 2015   2014
Revenues
Net sales $ 189,089 $ 141,592 $ 710,070 $ 592,454
Other revenues 957   1,461   4,553   4,927  
Total revenues 190,046 143,053 714,623 597,381
 
Cost of Sales
Cost of sales (exclusive of depreciation shown below) 79,976   64,216   308,400   261,830  
Gross profit 110,070   78,837   406,223   335,551  
 
Operating Expenses
Advertising and promotion 25,367 17,511 99,651 84,968
General and administrative 17,685 13,091 81,273 48,481
Depreciation and amortization 5,773   3,280   17,740   13,486  
Total operating expenses 48,825   33,882   198,664   146,935  
Operating income 61,245   44,955   207,559   188,616  
 
Other (income) expense
Interest income (25 ) (16 ) (92 ) (60 )
Interest expense 23,821 14,994 81,326 68,642
Gain on sale of asset (1,133 )
Loss on extinguishment of debt   3,274     18,286  
Total other expense 23,796   18,252   80,101   86,868  
Income before income taxes 37,449 26,703 127,458 101,748
Provision for income taxes 13,677   10,702   49,198   29,133  
Net income $ 23,772   $ 16,001   $ 78,260   $ 72,615  
 
Earnings per share:
Basic $ 0.45   $ 0.31   $ 1.50   $ 1.41  
Diluted $ 0.45   $ 0.30   $ 1.49   $ 1.39  
 
Weighted average shares outstanding:
Basic 52,356   51,893   52,170   51,641  
Diluted 52,821   52,513   52,670   52,349  
 
Comprehensive income, net of tax:
Currency translation adjustments (7,268 ) 2,414   (24,151 ) 843  
Total other comprehensive income (loss) (7,268 ) 2,414   (24,151 ) 843  
Comprehensive income $ 16,504   $ 18,415   $ 54,109   $ 73,458  
 
 

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

 
(In thousands)

Assets

    March 31,
2015
  March 31,
2014
Current assets
Cash and cash equivalents $ 21,318 $ 28,331
Accounts receivable, net 87,858 65,050
Inventories 74,000 65,586
Deferred income tax assets 8,097 6,544
Prepaid expenses and other current assets 10,434   11,674  
Total current assets 201,707 177,185
 
Property and equipment, net 13,744 9,597
Goodwill 290,651 190,911
Intangible assets, net 2,134,700 1,394,817
Other long-term assets 28,603   23,153  
Total Assets $ 2,669,405   $ 1,795,663  
 
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 46,115 $ 48,286
Accrued interest payable 11,974 9,626
Other accrued liabilities 40,948   26,446  
Total current liabilities 99,037   84,358  
 
Long-term debt
Principal amount 1,593,600 937,500
Less unamortized discount (4,889 ) (3,086 )
Long-term debt, net of unamortized discount 1,588,711   934,414  
 
Deferred income tax liabilities 351,569 213,204
Other long-term liabilities 2,464   327  
Total Liabilities 2,041,781   1,232,303  
 
 
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 – 52,562 shares and 52,021 shares at March 31, 2015 and 2014, respectively 525 520
Additional paid-in capital 426,584 414,387
Treasury stock, at cost – 266 shares at March 31, 2015 and 206 at March 31, 2014 (3,478 ) (1,431 )
Accumulated other comprehensive income (loss), net of tax (23,412 ) 739
Retained earnings 227,405   149,145  
Total Stockholders' Equity 627,624   563,360  
 
Total Liabilities and Stockholders' Equity $ 2,669,405   $ 1,795,663  
 
 

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

 
    Year Ended March 31,
(In thousands) 2015   2014
Operating Activities
Net income $ 78,260 $ 72,615
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 17,740 13,486
Gain on sale of asset (1,133 )
Deferred income taxes 28,922 19,012
Long term income taxes payable 2,294
Amortization of deferred financing costs 6,735 7,102
Stock-based compensation costs 6,918 5,146
Loss on extinguishment of debt 18,286
Premium payment on 2010 Senior Notes (15,527 )
Amortization of debt discount 2,086 3,410
Lease termination costs 785
Loss (gain) on sale or disposal of property and equipment 321 (3 )
Changes in operating assets and liabilities, net of effects of acquisitions
Accounts receivable 1,608 9,735
Inventories 15,360 (2,850 )
Prepaid expenses and other current assets 4,664 (2,130 )
Accounts payable (17,637 ) (4,641 )
Accrued liabilities 9,332   (12,059 )
Net cash provided by operating activities 156,255   111,582  
 
Investing Activities
Purchases of property and equipment (6,101 ) (2,764 )
Proceeds from sale of property and equipment 3
Proceeds from sale of business 18,500
Proceeds from sale of asset 10,000
Acquisition of Insight Pharmaceuticals, less cash acquired (749,666 )
Acquisition of the Hydralyte brand (77,991 )
Acquisition of Care Pharmaceuticals, less cash acquired   (55,215 )
Net cash used in investing activities (805,258 ) (57,976 )
 
Financing Activities
Proceeds from issuance of 2013 Senior Notes 400,000
Repayment of 2010 Senior Notes (250,000 )
Term loan borrowings 720,000
Term loan repayments (130,000 ) (157,500 )
Borrowings under revolving credit agreement 124,600 50,000
Repayments under revolving credit agreement (58,500 ) (83,000 )
Payment of deferred financing costs (16,072 ) (7,466 )
Proceeds from exercise of stock options 3,954 5,907
Proceeds from restricted stock exercises 57
Excess tax benefits from share-based awards 1,330 1,650
Fair value of shares surrendered as payment of tax withholding (2,104 ) (744 )
Net cash provided by (used in) financing activities 643,265   (41,153 )
 
Effects of exchange rate changes on cash and cash equivalents (1,275 ) 208
Increase (decrease) in cash and cash equivalents (7,013 ) 12,661
Cash and cash equivalents - beginning of year 28,331   15,670  
Cash and cash equivalents - end of year $ 21,318   $ 28,331  
 
Interest paid $ 70,155   $ 62,357  
Income taxes paid $ 11,939   $ 11,020  
 
 

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

 
    Three Months Ended March 31, 2015

(In thousands)

North
American
OTC
Healthcare

 

International
OTC
Healthcare

 

Household
Cleaning

  Consolidated
Gross segment revenues $ 156,489 $ 13,023 $ 20,028 $ 189,540
Elimination of intersegment revenues (451 )     (451 )
Third-party segment revenues 156,038 13,023 20,028 189,089
Other revenues 159   2   796   957  
Total segment revenues 156,197 13,025 20,824 190,046
Cost of sales 58,776   4,894   16,306   79,976  
Gross profit 97,421 8,131 4,518 110,070
Advertising and promotion 22,324   2,771   272   25,367  
Contribution margin $ 75,097   $ 5,360   $ 4,246   $ 84,703  
Other operating expenses 23,458  
Operating income 61,245
Other expense 23,796  
Income before income taxes 37,449
Provision for income taxes 13,677  
Net income $ 23,772  
 
 
    Year Ended March 31, 2015

(In thousands)

North
American
OTC
Healthcare

 

International
OTC
Healthcare

 

Household
Cleaning

  Consolidated
Gross segment revenues $ 566,256 $ 61,116 $ 86,085 $ 713,457
Elimination of intersegment revenues (3,387 )     (3,387 )
Third-party segment revenues 562,869 61,116 86,085 710,070
Other revenues 637   64   3,852   4,553  
Total segment revenues 563,506 61,180 89,937 714,623
Cost of sales 216,781   22,820   68,799   308,400  
Gross profit 346,725 38,360 21,138 406,223
Advertising and promotion 86,897   10,922   1,832   99,651  
Contribution margin $ 259,828   $ 27,438   $ 19,306   $ 306,572  
Other operating expenses 99,013  
Operating income 207,559
Other expense 80,101  
Income before income taxes 127,458
Provision for income taxes 49,198  
Net income $ 78,260  
 
 
    Three Months Ended March 31, 2014

(In thousands)

North
American
OTC
Healthcare

 

International
OTC
Healthcare

 

Household
Cleaning

  Consolidated
Gross segment revenues $ 112,782 $ 9,236 $ 20,431 $ 142,449
Elimination of intersegment revenues (857 )     (857 )
Third-party segment revenues 111,925 9,236 20,431 141,592
Other revenues 299   28   1,134   1,461  
Total segment revenues 112,224 9,264 21,565 143,053
Cost of sales 44,377   3,699   16,140   64,216  
Gross profit 67,847 5,565 5,425 78,837
Advertising and promotion 15,606   1,409   496   17,511  
Contribution margin $ 52,241   $ 4,156   $ 4,929   $ 61,326  
Other operating expenses 16,371  
Operating income 44,955
Other expense 18,252  
Income before income taxes 26,703
Provision for income taxes 10,702  
Net income $ 16,001  
 
 
    Year Ended March 31, 2014

(In thousands)

North
American
OTC
Healthcare

 

International
OTC
Healthcare

 

Household
Cleaning

  Consolidated
Gross segment revenues $ 482,138 $ 29,872 $ 83,629 $ 595,639
Elimination of intersegment revenues (3,185 )     (3,185 )
Third-party segment revenues 478,953 29,872 83,629 592,454
Other revenues 749   42   4,136   4,927  
Total segment revenues 479,702 29,914 87,765 597,381
Cost of sales 184,796   12,646   64,388   261,830  
Gross profit 294,906 17,268 23,377 335,551
Advertising and promotion 77,083   5,264   2,621   84,968  
Contribution margin $ 217,823   $ 12,004   $ 20,756   $ 250,583  
Other operating expenses 61,967  
Operating income 188,616
Other expense 86,868  
Income before income taxes 101,748
Provision for income taxes 29,133  
Net income $ 72,615  
 

About Non-GAAP Financial Measures

We define Non-GAAP Adjusted Total Revenues excluding acquisitions and divestitures and the impact of current year foreign exchange rates as Total Revenues excluding revenues associated with products acquired or divested in the periods presented and the impact of current year foreign exchange rates on total revenues. We define Non-GAAP Adjusted EBITDA as earnings before interest expense (income), income taxes, depreciation and amortization, certain other legal and professional fees, and other acquisition-related costs. Non-GAAP Adjusted EBITDA margin is calculated as Non-GAAP Adjusted EBITDA divided by GAAP Total Revenues. We define Non-GAAP Adjusted Gross Margin as Gross Profit before inventory step up charges and certain other acquisition and integration-related costs. Non-GAAP Adjusted Gross Margin percentage is calculated based on Non-GAAP Adjusted Gross Margin divided by GAAP Total Revenues. We define Non-GAAP Adjusted General and Administrative expenses as General and Administrative expenses minus certain other legal and professional fees, acquisition and other integration costs. Non-GAAP Adjusted General and Administrative expense percentage is calculated based on Non-GAAP Adjusted General and Administrative expense divided by GAAP Total Revenues. We define Non-GAAP Adjusted Net Income as Net Income before inventory step-up charges, certain other legal and professional fees, other acquisition and integration-related costs, 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 Adjusted Free Cash Flow as net cash provided by operating activities less premium payments to extinguish debt, accelerated interest payments due to debt refinancing and cash paid for capital expenditures, plus payments for integration, transition and other payments associated with acquisitions. Non-GAAP Adjusted Total Revenues excluding acquisitions and divestitures and the impact of current year foreign exchange rates, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, 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 Adjusted Net Income, Non-GAAP Adjusted EPS, and Non-GAAP Adjusted Free Cash Flow may not be comparable to similarly titled measures reported by other companies.

We are presenting Non-GAAP Adjusted Total Revenues excluding acquisitions and divestitures and exchange rates, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, 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 Adjusted Net Income, Non-GAAP Adjusted EPS, and Non-GAAP Adjusted Free Cash Flow, because they provide additional ways to view our operation when considered with both our GAAP results and the reconciliation to net income and net cash provided by operating activities, respectively, which we believe provides a more complete understanding of our business than could be obtained absent this disclosure. Each of Non-GAAP Adjusted Total Revenues excluding acquisitions and divestitures and exchange rates, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, 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 Adjusted Net Income, Non-GAAP Adjusted EPS, and Non-GAAP Adjusted Free Cash Flow 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 Adjusted Total Revenues excluding acquisitions and divestitures and exchange rates, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, 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 Adjusted Net Income, Non-GAAP Adjusted EPS, and Non-GAAP Adjusted Free Cash Flow 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 Adjusted Total Revenues excluding acquisitions and divestitures and exchange rates, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, 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 Adjusted Net Income, Non-GAAP Adjusted EPS, and Non-GAAP Adjusted Free Cash Flow have limitations, and you should not consider these measures in isolation from or as an alternative to GAAP measures such as General and Administrative expense, 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 Adjusted Total Revenues excluding acquisitions and divestitures and exchange rates, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, 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 Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Adjusted Free Cash Flow, all of which are non-GAAP financial measures, to GAAP Gross Profit, GAAP General and Administrative expense, 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 Adjusted Total Revenues excluding acquisitions and divestitures and exchange rates:

 
   

Three Months Ended
March 31,

 

Year Ended
March 31,

2015   2014 2015   2014
(In thousands)
GAAP Total Revenues $ 190,046   $ 143,053   $ 714,623   $ 597,381  

Adjustments:

Care Pharma and Hydralyte revenues (1) (4,452 ) (23,043 )
Insight revenues (2) (40,978 )   (97,068 )  
Total adjustments (45,430 )   (120,111 )  
Non-GAAP Adjusted Total Revenues excluding acquisitions and divestitures 144,616   143,053   594,512   597,381  
Organic Revenue Growth (decline) 1.1 % (0.5 )%
Impact of current year foreign exchange rates (3) (1,805 ) (3,839 )

Non-GAAP Adjusted Total Revenues excluding acquisitions and divestitures and impact of current year foreign exchange rates

$ 144,616   $ 141,248   $ 594,512   $ 593,542  
Constant Currency Organic Revenue Growth 2.4 % 0.2 %
(1)   Revenue adjustments relate to our International OTC Healthcare segment
(2) Revenue adjustments relate to our North American OTC Healthcare segment
(3) Foreign exchange rate adjustments relate to all segments
 

Reconciliation of GAAP Gross Profit to Non-GAAP Adjusted Gross Margin and related Adjusted Gross Margin percentage:

 
   

Three Months Ended
March 31,

 

Year Ended
March 31,

2015   2014 2015   2014
(In thousands)
GAAP Total Revenues $ 190,046   $ 143,053   $ 714,623   $ 597,381  
 
GAAP Gross Profit $ 110,070   $ 78,837   $ 406,223   $ 335,551  

Adjustments:

Inventory step-up charges and other costs associated with Care and Hydralyte acquisitions (1)

246 577
Inventory step-up charges associated with Insight acquisition (2) 1,979
Care acquisition related inventory costs (1)       407  
Total adjustments     2,225   984  
Non-GAAP Adjusted Gross Margin $ 110,070   $ 78,837   $ 408,448   $ 336,535  
Non-GAAP Adjusted Gross Margin % 57.9 % 55.1 % 57.2 % 56.3 %
 
(1)   Inventory step-up charges and other costs relate to our International OTC Healthcare segment
(2) Inventory step-up charges relate to our North American OTC Healthcare segment
 

Reconciliation of GAAP General and Administrative Expense to Non-GAAP Adjusted General and Administrative Expense and Non-GAAP Adjusted General and Administrative Expense percentage:

 
   

Three Months Ended
March 31,

 

Year Ended
March 31,

2015   2014 2015   2014
(In thousands)
GAAP General and Administrative Expense $ 17,685   $ 13,091   $ 81,273   $ 48,481  

Adjustments:

Legal and professional fees associated with acquisitions and divestitures 640 443 10,974 1,111
Stamp/Duty Tax on Australian acquisition 2,940
Integration, transition and other costs associated with acquisitions 920     10,533    
Total adjustments 1,560   443   24,447   1,111  
Non-GAAP Adjusted General and Administrative Expense $ 16,125   $ 12,648   $ 56,826   $ 47,370  
Non-GAAP Adjusted General and Administrative Expense Percentage 8.5 % 8.8 % 8.0 % 7.9 %
 

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

 
   

Three Months Ended
March 31,

 

Year Ended
March 31,

2015   2014 2015   2014
(In thousands)
GAAP Net Income $ 23,772 $ 16,001 $ 78,260 $ 72,615
Interest expense, net 23,796 14,978 81,234 68,582
Provision for income taxes 13,677 10,702 49,198 29,133
Depreciation and amortization 5,773   3,280   17,740   13,486  
Non-GAAP EBITDA: 67,018   44,961   226,432   183,816  

Adjustments:

Inventory step-up charges and other costs associated with Care and Hydralyte acquisitions (1) 246 577
Inventory step-up charges associated with Insight acquisition (2) 1,979
Care acquisition related inventory costs (1) 407
Legal and professional fees associated with acquisitions and divestitures (3) 640 443 10,974 1,111
Stamp/Duty Tax on Australian acquisition (3) 2,940
Integration, transition and other costs associated with acquisitions (3) 920 10,533
Gain on sale of asset (1,133 )
Loss on extinguishment of debt   3,274     18,286  
Total adjustments 1,560   3,717   25,539   20,381  
Non-GAAP Adjusted EBITDA $ 68,578   $ 48,678   $ 251,971   $ 204,197  
Non-GAAP Adjusted EBITDA Margin 36.1 % 34.0 % 35.3 % 34.2 %
(1)   Inventory step-up charges and other costs relate to our International OTC Healthcare segment
(2) Inventory step-up charges relate to our North American OTC Healthcare segment
(3) Adjustments relate to G&A expenses
 

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

 
    Three Months Ended March 31,   Year Ended March 31,
2015  

2015
Adjusted
EPS

  2014  

2014
Adjusted
EPS

2015

 

2015
Adjusted
EPS

  2014  

2014
Adjusted
EPS

(In thousands)        
GAAP Net Income $ 23,772     $ 0.45   $ 16,001     $ 0.30   $ 78,260     $ 1.49   $ 72,615     $ 1.39  

Adjustments:

Inventory step-up charges and other costs associated with Care and Hydralyte acquisitions (1) 246 577 0.01
Inventory step-up charges associated with Insight acquisition (2) 1,979 0.04
Care acquisition related inventory costs (1) 407 0.01
Legal and professional fees associated with acquisitions and divestitures (3) 640 0.01 443 0.01 10,974 0.21 1,111 0.02
Stamp/Duty Tax on Australian acquisition (3) 2,940 0.05
Integration, transition and other costs associated with acquisitions (3) 920 0.02 10,533 0.20
Accelerated amortization of debt discount and debt issue costs 365 0.01 218 5,477 0.10
Gain on sale of asset (1,133 ) (0.02 )
Loss on extinguishment of debt 3,274 0.06 18,286 0.35
Tax impact of adjustments (549 ) (0.01 ) (1,459 ) (0.03 ) (5,968 ) (0.11 ) (9,100 ) (0.17 )
Impact of state tax adjustments                   (9,465 )   (0.18 )
Total adjustments 1,011     0.02   2,623     0.05   19,789     0.37   7,293     0.14  
Non-GAAP Adjusted Net Income and Adjusted EPS $ 24,783     $ 0.47   $ 18,624     $ 0.35   $ 98,049     $ 1.86   $ 79,908     $ 1.53  
(1)   Inventory step-up charges and other costs relate to our International OTC Healthcare segment
(2) Inventory step-up charges relate to our North American OTC Healthcare segment
(3) Adjustments relate to G&A expenses
 

Reconciliation of GAAP Net Income to Adjusted Non-GAAP Free Cash Flow:

 
   

Three Months Ended
March 31,

 

Year Ended
March 31,

2015   2014 2015   2014
(In thousands)
GAAP Net Income $ 23,772   $ 16,001   $ 78,260   $ 72,615  

Adjustments:

Adjustments to reconcile net income to net cash provided by operating activities as shown in the Statement of Cash Flows 22,048 15,300 64,668 50,912
Changes in operating assets and liabilities, net of effects from acquisitions as shown in the Statement of Cash Flows 6,293   (579 ) 13,327   (11,945 )
Total adjustments 28,341   14,721   77,995   38,967  
GAAP Net cash provided by operating activities 52,113 30,722 156,255 111,582
Premium payment on 2010 Senior Notes 2,759 15,527
Accelerated interest payments due to debt refinancing 1,162 4,675
Purchases of property and equipment (2,401 ) (106 ) (6,101 ) (2,764 )
Non-GAAP Free Cash Flow 49,712 34,537 150,154 129,020
Integration, transition and other payments associated with acquisitions 362     13,563   512  
Adjusted Non-GAAP Free Cash Flow $ 50,074   $ 34,537   $ 163,717   $ 129,532  
 

Outlook for Fiscal Year 2016:

Reconciliation of Projected GAAP EPS to Projected Non-GAAP Adjusted EPS:

 
      2016 Projected EPS
Low   High
Projected FY'16 GAAP EPS $ 2.00     $ 2.05

Adjustments:

 
Costs associated with term loan refinancing and CEO retirement 0.05     0.05
Total Adjustments 0.05     0.05
Projected Non-GAAP Adjusted EPS $ 2.05     $ 2.10
 

Reconciliation of Projected GAAP Net cash provided by operating activities to Projected Non-GAAP Adjusted Free Cash Flow:

 
     

2016
Projected
Free Cash
Flow

(In millions)
Projected FY'16 GAAP Net cash provided by operating activities $ 181
Additions to property and equipment for cash (6 )
Projected Non-GAAP Adjusted Free Cash Flow $ 175  
 

Contacts

Prestige Brands Holdings, Inc.
Dean Siegal, 914-524-6819
or
ICR
Kristen Nungesser, 646-277-1261
or
John Mills, 646-277-1254

Contacts

Prestige Brands Holdings, Inc.
Dean Siegal, 914-524-6819
or
ICR
Kristen Nungesser, 646-277-1261
or
John Mills, 646-277-1254