Attached files
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| 8-K - 8-K - Prestige Consumer Healthcare Inc. | a8-kpressreleaseseptember2.htm |
| EX-99.1 - EXHIBIT 99.1 - Prestige Consumer Healthcare Inc. | exhibit991fy17-q2earningsr.htm |
Exhibit 99.2
This presentation contains certain “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, such
as statements regarding the Company’s expected financial performance, including revenue growth, adjusted EPS, and adjusted free cash flow,
expansion of market share for the Company’s Invest for Growth brands, the Company’s investment in digital, product development and
marketing initiatives, the Company’s focus on development of professional marketing, the Company’s ability to execute on the DenTek growth
strategy, and the Company’s ability to de-lever and increase M&A capacity. Words such as “trend,” “continue,” “will,” “expect,” “project,”
“anticipate,” “likely,” “estimate,” “may,” “should,” “could,” “would,” and similar expressions identify forward-looking statements. Such forward-
looking statements represent the Company’s expectations and beliefs and involve a number of known and unknown risks, uncertainties and
other factors that may cause actual results to differ materially from those expressed or implied by such forward-looking statements. These
factors include, among others, general economic and business conditions, regulatory matters, competitive pressures, the impact of the
Company’s digital, product development and marketing initiatives, supplier issues, unexpected costs, and other risks set forth in Part I, Item 1A.
Risk Factors in the Company’s Annual Report on Form 10-K for the year ended March 31, 2016 and in Part II, Item 1A. Risk Factors in the
Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date this presentation. Except to the extent required by applicable law, the Company
undertakes no obligation to update any forward-looking statement contained in this presentation, whether as a result of new information, future
events, or otherwise.
All adjusted GAAP numbers presented are footnoted and reconciled to their closest GAAP measurement in the attached reconciliation schedule
and in our earnings release in the “About Non-GAAP Financial Measures” section.
Agenda for Today's Discussion
I. Performance Highlights
II. Financial Oueruiew
Ill. FY 17 Outloo� and the Road Ahead
Second �u arter FY 17 Results 3
I. Performance Highlights
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* Invest for Growth portfolio comprised of Core OTC brands and International; reported on a constant currency basis. Core OTC brands reflect: Monistat (after Q2 FY 16), BC/Goody’s, Clear Eyes, Dramamine, Debrox, Chloraseptic, Luden’s,
Little Remedies, Compound W, Nix (after Q2 FY 16), Beano, Efferdent and The Doctor’s IRI multi-outlet + C-Store retail dollar sales for relevant period. International includes Canadian consumption for leading retailers, and Australia/ROW
shipment data as a proxy for consumption.
Q2 Revenue of $215.1 million, up 4.4% versus PY Q2
— Organic growth of (0.6%)(1) on a constant currency basis as top 5 retailers reduced inventory levels in the quarter
— Revenue growth of +0.9%(1) for Invest for Growth* portfolio
— DenTek contributed $17.2 million of revenue during the quarter, continuing its strong growth
Q2 consumption growth for Invest for Growth* portfolio of 1.5% outpaced revenue growth
— Consumption growth in-line with category†
International revenue up 8.9% in Q2 with particular strength in Care Pharma
— Revenue in Australia up 8.0% in Q2, and up 6.2% in 1H FY 17
Gross Margin of 57.6% in line with Q1 and expectations
Adjusted EPS of $0.63(2), up 5.0% versus the PY Q2
Strong Adjusted Free Cash Flow of $49.4 million(2), above the PY Q2 of $46.2 million
— Leverage of 4.5x(3) compared to 5.0x at the beginning of FY 17
Focus on enhancing and executing marketing plans for DenTek
Successfully completed transition of three brands divested in July from Manage for Cash portfolio
— Accelerated de-leveraging in first half, building meaningful M&A capacity
Invest for Growth portfolio is comprised of Core OTC brands and International; reported on a constant currency basis. (See slide 5 for additional details.)
IRI MULO period ending 10-2-16.*†
Invest for Growth portfolio is comprised of Core OTC brands and International; reported on a costant currency basis. (See slide 5 for additional details.)*
Source: Data reflects retail dollar sales percentage growth versus prior period for consumption growth and organic revenue growth.
FY 15 and FY 16 data shown as previously presented for Core OTC.
Q1 and Q2 FY 17 data for Invest for Growth portfolio comprised of Core OTC brands and International. (See slide 5 for additional details.)
FY 15
4.1%
8.3%
3.3%
1.5%
3.5%
5.9%
4.4%
0.9%
FY 16
Q1
*
*
Q2
FY 17
1H: 2.4%
1H: 2.6%
Shipments to five largest mass and drug accounts have lagged
consumption over the last six quarters as retailers continue to
manage inventory levels
In Q2 FY 17 alone, consumption in these accounts outpaced
shipments by over $8.2 million
Adjusted for this difference, organic revenue growth for Q2 FY 17 on
a constant currency basis would have been +3.5%
Source: IRI MULO period ending 10-2-16.
($2.8)
$1.0
($4.3)
$0.9 $0.9
($8.2)
Q1 Q2 Q3 Q4 Q1 Q2
FY 16 FY 17
Co
ns
um
ption
>
Sh
ipm
en
ts
Sh
ipm
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ts
>
Co
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um
ptio
n
Expand Domestic And Int’l Distribution
Develop Alternate Channels and E-commerce
Increase Shelf Presence in UK and Germany
Use Digital To Drive Brand Awareness
Target High Value Consumers
Leverage Scale to Drive Efficiencies
Dental Professional Marketing
Secure the Hygienist Recommendation
Increase Sampling to Drive Trial
Grow The Category
New Category and Consumer Insights
Build Basket with Shopper Insights
Innovate With New Products
Pipeline to Deliver Top and Bottom Line Growth
Consumer Insight Innovation
Source: IRI MULO period ending 10-2-16.
Expanding Product Offerings: New Nix Ultra kills a resistant form of Lice called “Super Lice”
Innovative Marketing: Nix partnered with Google and IRI to develop the first ever Lice Tracker. Now
consumers and Healthcare Professionals can get real-time information on lice outbreaks
Digital Consumer Advertising: The first place consumers go to get information is on line. Nix’s new
advertising campaign will reach consumers with information where and when they need it
Strong Results: Latest 12 weeks consumption +53% and gained 7.1% ppts. market share
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II. Financial Oueruiew
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Solid overall financial performance in the quarter
− Revenue of $215.1 million, an increase of 4.4%
− Adjusted EPS of $0.63(2), up 5.0%
− Adjusted Free Cash Flow of $49.4 million(2), an increase of 6.9%
$215.1
$78.1
$49.4
$206.1
$75.6
$46.2
Total Revenue Adjusted EBITDA Adjusted EPS Adjusted Free Cash Flow
Q2 FY 17 Q2 FY 16
4.4%
3.3% 5.0% 6.9%
$0.63 $0.60
(2) (2) (2)
Dollar values in millions, except per share data.
Revenue growth of +4.4%
– Organic growth of (0.6%)
excluding the impact of Fx(1)
– DenTek contributed $17.2
million of revenue during
the quarter
Gross Margin of 57.6%
A&P 13.3% of Revenue, $0.7
million more than Q2 FY 16
Adjusted EBITDA Margin of
36.3%(2)
Adjusted Net Income +6.2%(2)
over Q2 FY 16, ahead of topline
growth
Dollar values in millions, except per share data.
(2)
(2)
(2)
(2)
Q2 FY 17 Q2 FY 16 % Chg Q2 FY 17 Q2 FY 16 % Chg
Total Revenue 215.1$ 206.1$ 4.4% 424.6$ 398.2$ 6.6%
Gross Margin 124.0 119.9 3.4% 245.6 232.2 5.8%
% Margin 57.6% 58.2% 57.8% 58.3%
A&P 28.6 27.9 2.5% 56.2 54.3 3.5%
% Total Revenue 13.3% 13.5% 13.2% 13.6%
Adjusted G&A 17.3 16.5 4.9% 34.6 32.6 6.0%
% Total Revenue 8.0% 8.0% 8.1% 8.2%
Adjusted EBITDA 78.1$ 75.6$ 3.3% 154.7$ 145.2$ 6.5%
% Margin 36.3% 36.7% 36.4% 36.5%
Adjusted Net Income 33.8$ 31.8$ 6.2% 65.2$ 59.2$ 10.1%
Adjusted Earnings Per Share 0.63$ 0.60$ 5.0% 1.22$ 1.12$ 8.9%
Net Debt at 9/30/16 of $1,472 million comprised of:
– Cash on hand of $30 million
– $752 million of term loan and revolver
– $750 million of bonds
Leverage ratio(3) of 4.5x
– Leverage below prior year level of 5.0x,
including acquisition of DenTek in Q4 FY 16
Dollar values in millions.
* 1H FY 17 increase in Other Non-Cash Operating Items reflects Q1 FY 17 after tax loss of approximately $35 million related to divestitures.
(4)
(2)
Three Months Ended Six Months Ended
Q2 FY 17 Q2 FY 16 Q2 FY 17 Q2 FY 16
Net Income - As Reported 32.2$ 31.8$ 26.7$ 58.0$
Depreciation & Amortization 6.0 5.7 12.8 11.4
Other Non-Cash Operating Items 3.6 14.4 53.5 31.5
Working Capital 7.7 (4.8) 7.2 (10.3)
Operating Cash Flow 49.5$ 47.1$ 100.3$ 90.6$
Additions to Proper y and Equipment (0.5) (0.9) (1.4) (1.7)
Payments Associ ted with M&A 0.4 - 0.7 -
Adjusted Free Cash Flow 49.4$ 46.2$ 99.6$ 88.9$
*
Ill. FY 17 Outlook and the Road Ahead
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Revenue growth of +4% to +6%
— 1H +5.0% to +7.0%
— 2H +2.5% to +4.5%
— Organic growth of +1.5% to +2.0%
Revenue growth of +4.5% to +6.0%
— 1H Actual +6.6%
— No change
— Continuing to expect organic growth of 1.5% to
2.0% in 2H
Adjusted EPS +6% to +9% ($2.30 to $2.36)(5) No change
Adjusted Free Cash Flow of $185 million(6) or more No change
Portfolio of recognizable brands in
attractive consumer health industry
Established expertise in brand-
building and product innovation
Demonstrated ability to gain market
share long-term
Target revenue contribution from
Core OTC and International brands
from ~80% to ~85%
Strong and consistent cash flow
driven by industry leading EBITDA
margins, capital-lite business model
& significant benefit of deferred taxes
Rapid deleveraging allows for
expanded acquisition capacity and
continued investment in brand
building
Non-core brands’ contribution to
cash flow
Debt repayment reduces cash
interest expense and adds to EPS
Demonstrated track record of 7
acquisitions during the past 6 years
Effective consolidation platform
positioned for consistent pipeline of
opportunities
Proven ability to source from varied
sellers
Fragmented industry and acquisition
activity creates a consistent pipeline
of opportunity
Care
Second Qu arter FY 17 Results �,.
(1) Organic Revenue Growth on a constant currency basis is a Non-GAAP financial measure and is reconciled to its most closely
related GAAP financial measure in our earnings release in the “About Non-GAAP Financial Measures” section.
(2) Adjusted G&A, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted EPS, Adjusted Free Cash Flow are
Non-GAAP financial measures and are reconciled to their most closely related GAAP financial measures in the attached
Reconciliation Schedules and in our earnings release in the “About Non-GAAP Financial Measures” section.
(3) Leverage ratio reflects net debt / covenant defined EBITDA.
(4) Operating cash flow is equal to GAAP net cash provided by operating activities.
(5) Adjusted EPS for FY 17 is a projected Non-GAAP financial measure, is reconciled to projected GAAP EPS in our earnings release
in the “About Non-GAAP Financial Measures” section and is calculated based on projected GAAP EPS of $1.55 to $1.61 plus
$0.08 of costs associated with DenTek integration plus $0.67 of costs associated with the loss on sale of assets, resulting in
$2.30 to $2.36.
(6) Adjusted Free Cash Flow for FY 17 is a projected Non-GAAP financial measure, is reconciled to projected GAAP Net Cash
Provided by Operating Activities in our earnings release in the “About Non-GAAP Financial Measures” section and is calculated
based on projected Net Cash Provided by Operating Activities of $191 million less projected capital expenditures of $4 million
plus payments associated with acquisitions of $3 million.
Three Months Ended Sept. 30, Six Months Ended Sept. 30,
2016 2015 2016 2015
(In Thousands)
GAAP Total Revenues $ 215,052 $ 206,065 $ 424,627 $ 398,197
Adjustments:
DenTek revenues (17,214) - (33,841) -
Revenues associated with divested brands - (6,922) - (6,922)
Total adjustments (17,214) (6,922) (33,841) (6,922)
Non-GAAP Organic Revenues 197,838 199,143 390,786 391,275
Organic Revenue Growth (Decline) (0.7%) (0.1%)
Impact of foreign currency exchange rates (76) (905)
Non-GAAP Organic Revenues on a constant currency basis $ 197,838 $ 199,067 $ 390,786 $ 390,370
Constant Currency Organic Revenue Growth (0.6%) 0.1%
Three Months Ended Sept. 30, Six Months Ended Sept. 30,
2016 2015 2016 2015
(In Thousands)
GAAP General and Administrative Expense $ 18,795 $ 16,462 $ 38,252 $ 34,051
Adjustments:
Costs Associated with CEO transition - - - 1,406
Legal and professional fees associated with acquisitions and
divestitures 101 - 585 -
Integration, transition and other costs associated with
acquisitions and divestitures 1,420 - 3,061 -
Total adjustments 1,521 - 3,646 1,406
Non-GAAP Adjusted General and Administrative Expense $ 17,274 $ 16,462 $ 34,606 $ 32,645
Non-GAAP Adjusted General and Administrative Expense
Percentage 8.0% 8.0% 8.1% 8.2%
Three Months Ended Sept. 30, Six Months Ended Sept. 30,
2016 2015 2016 2015
(In Thousands)
GAAP Net (Loss) Income $ 32,195 $ 31,803 $ 26,664 $ 57,976
Interest expense, net 20,830 20,667 41,957 42,551
(Benefit) provision for income taxes 18,033 17,428 14,651 31,425
Depreciation and amortization 6,016 5,687 12,848 11,407
Non-GAAP EBITDA 77,074 75,585 96,120 143,359
Adjustments:
Costs associated with CEO transitions - - - 1,406
Legal and professional fees associated with acquisitions and
divestitures 101 - 585 -
Integration, transition and other costs associated with
acquisitions and divestitures 1,420 - 3,061 -
Loss on extinguishment of debt - - - 451
(Gain) loss on sale of assets (496) - 54,957 -
Total adjustments 1,025 - 58,603 1,857
Non-GAAP Adjusted EBITDA $ 78,099 $ 75,585 $ 154,723 $ 145,216
Non-GAAP Adjusted EBITDA Margin 36.3% 36.7% 36.4% 36.5%
Three Months Ended Sept. 30, Six Months Ended Sept. 30,
2016 2015 2016 2015
Net
Income EPS
Net
Income EPS
Net
Income EPS
Net
Income EPS
(In Thousands)
GAAP Net Income $ 32,195 $ 0.60 $ 31,803 $ 0.60 $ 26,664 $ 0.50 $ 57,976 $ 1.09
Adjustments:
Costs associated with CEO transition - - - - - - 1,406 0.03
Legal and professional fees associated with
acquisitions and divestitures 101 - - - 585 0.01 - -
Integration, transition and other costs associated
with acquisitions and divestitures 1,420 0.03 - - 3,061 0.06 -
Accelerated amortization of debt origination costs
due to sale of assets 1,131 0.02 - - 1,131 0.02 -
Loss on extinguishment of debt - - - - - - 451 0.01
(Gain) loss on sale of assets (496) (0.01) - - 54,957 1.03 - -
Tax impact of adjustments (566) (0.01) - - (21,224) (0.40) (657) (0.01)
Total Adjustments 1,590 0.03 - - 38,510 0.72 1,200 0.03
Non-GAAP Adjusted Net Income and Adjusted EPS $ 33,785 $ 0.63 $ 31,803 $ 0.60 $ 65,174 $ 1.22 $ 59,176 $ 1.12
Three Months Ended Sept. 30, Six Months Ended Sept. 30,
2016 2015 2016 2015
(In Thousands)
GAAP Net (Loss) Income $ 32,195 $ 31,803 $ 26,664 $ 57,976
Adjustments:
Adjustments to reconcile net (loss) income to net
cash provided by operating activities as shown in
the Statement of Cash Flows 9,592 20,040 66,388 42,896
Changes in operating assets and liabilities, net of
effects from acquisitions as shown in the
Statement of Cash Flows
7,744 (4,774) 7,230 (10,282)
Total Adjustments 17,336 15,266 73,618 32,614
GAAP Net cash provided by operating activities 49,531 47,069 100,282 90,590
Purchase of property and equipment (509) (903) (1,404) (1,683)
Non-GAAP Free Cash Flow 49,022 46,166 98,878 88,907
Integration, transition and other payments
associated with acquisitions and divestitures 352 - 683 -
Non-GAAP Adjusted Free Cash Flow $ 49,374 $ 46,166 $ 99,561 $ 88,907
2017 Projected EPS
Low High
Projected FY'17 GAAP EPS $ 1.55 $ 1.61
Adjustments:
Costs associated with DenTek integration 0.08 0.08
Loss on sale of assets 0.67 0.67
Total Adjustments 0.75 0.75
Projected Non-GAAP Adjusted EPS $ 2.30 $ 2.36
2017
Projected
Free Cash
Flow
(In millions)
Projected FY'17 GAAP Net Cash provided by operating activities $ 191
Additions to property and equipment for cash (4)
Projected Non-GAAP Free Cash Flow 187
Payments associated with acquisitions 3
Adjusted Non-GAAP Projected Free Cash Flow 190