Prestige Brands Holdings announces results for third fiscal quarter ended December 31, 2009

Feb 5 2010

Prestige Brands Holdings, Inc. (NYSE:PBH) today announced results for the third fiscal quarter and nine months ending December 31, 2009.

“We are pleased with our improved profitability and continue to work to drive revenue in this challenging economy. We are increasing our focus on supporting our core brands. This quarter, we are particularly pleased with the performance on our core brands, Chloraseptic®, Little Remedies®, Clear Eyes® and New-Skin®”

Third Quarter

Net revenues from continuing operations for the third fiscal quarter ended December 31, 2009 were $75.4 million, $2.6 million or 3% below last year’s results of $78.0 million. Revenues of the divested Denorex®, Prell® and Zincon® shampoo brands in October, 2009, are reflected in discontinued operations for both the current year and the prior year comparable period.

Operating income for the third fiscal quarter was $23.7 million, $4.2 million or 22% greater than last year’s operating income of $19.5 million. The increase in operating income resulted from decreases in advertising and promotional (A&P) expenditures when compared to the higher levels during the prior year comparable period that were related to last year’s introductory spending levels to support Allergen Block products, and general and administrative (G&A) expenses. The reduction in G&A expense when compared to the prior year comparable period was primarily due to decreased legal, salary expenses and currency valuation expenses.

Net income from continuing operations for the third quarter ended December 31, 2009 was $10.3 million, $2.6 million or 34% greater than last year’s net income from continuing operations of $7.7 million. Earnings per share from continuing operations were $0.21 compared to $0.15 in the prior year comparable period.

Commenting on the results of the quarter, Matthew Mannelly, President and CEO said, “We are pleased with our improved profitability and continue to work to drive revenue in this challenging economy. We are increasing our focus on supporting our core brands. This quarter, we are particularly pleased with the performance on our core brands, Chloraseptic®, Little Remedies®, Clear Eyes® and New-Skin®,” he said.

Results by Segment

Over-The-Counter (OTC) Healthcare Products

Net revenues for the OTC segment in the fiscal third quarter were $46.2 million, $1.4 million or 3% below the prior year comparable period. Increases in sales of the Chloraseptic®, Clear Eyes® and Little Remedies® brands were offset by declines in the two Allergen Block products and the Murine® Ear line.

Household Products

Net revenues for the household products segment in the third fiscal quarter were $27.3 million, $900 thousand, or 3% less than last year. Sales increases on the Spic and Span® and Chore Boy® lines were offset by a decline for Comet®.

Personal Care Products

From this quarter forward, the results of this segment will exclude sales from the three shampoo brands divested in October, 2009, which are now reflected in discontinued operations. Net revenues from continuing operations for this segment were $2.0 million, $200 thousand or 10% below the prior year comparable period. The decline was primarily due to decreased sales of Cutex®.

Year-To-Date Results

For the nine month period ending December 31, 2009, total revenues from continuing operations were $230.6 million, 2% lower than the prior period results of $234.5 million. Operating income from continuing operations of $63.5 million was 6% greater than the prior year comparable results of $60.0 million, largely as a result of reduced advertising and promotion expenses when compared with the prior year period. Net income from continuing operations for the nine month period was $28.0 million, an increase of $4.7 million over the prior year comparable period’s results of $23.3 million.

Free Cash Flow and Debt Repayment

Free cash flow is a “non-GAAP financial measure” as that term is defined by the Securities and Exchange Commission in Regulation G. We view “free cash flow” as an important measure because it is an indicator of cash available for debt repayment and to fund acquisitions. We define “free cash flow” as operating cash flow less capital expenditures.

The Company’s free cash flow for the third quarter was $10.4 million, compared to $16.4 million in the prior year comparable quarter. The decrease in free cash flow is primarily a result of an increase in working capital partially offset by an increase in deferred income taxes. Free cash flow is comprised of operating cash flow of $10.6 million less capital expenditures of $170,000. This compares to the prior year comparable quarter’s operating cash flow of $16.7 million, less capital expenditures of $288,000. The free cash flow generated during the quarter ended December 31, 2009 combined with the funds generated from the divestiture of the three shampoo brands during the quarter allowed us to pay down $19.0 million on our term loan during the quarter. At December 31, 2009, total debt was reduced to $319.3 million.