Perrigo Company plc Reports Record Fourth Quarter And Fiscal Year Revenue, Adjusted Operating Income And Adjusted Margins. Conference call scheduled for 10 a.m. ET today.

DUBLIN, Aug. 14, 2014 /PRNewswire/ --

  • Fiscal fourth quarter net sales increased 18% year-over-year to a record $1.14 billion.
  • Fiscal fourth quarter adjusted net income increased 58% to $234 million, or $1.74 per diluted share; GAAP net income of $132 million, or $0.98 per diluted share, includes amortization expense and other charges.
  • Record quarterly adjusted gross margin of 44.5%, with GAAP gross margin of 36.3% and record quarterly adjusted operating margin of 28.4%, with GAAP operating margin of 17.3%.
  • Fiscal 2014 net sales increased 15% year-over-year to a record $4.06 billion, with organic growth of 7%.
  • Fiscal 2014 adjusted net income increased 40% to $740 million or $6.39 per diluted share; GAAP net income of $205 million, or $1.77 per diluted share, includes amortization expense and other charges.
  • Management expects full-year fiscal 2015 adjusted earnings range of $7.20 to $7.50 per diluted share, an increase of 13% to 17% over fiscal 2014 adjusted earnings per share, and reported earnings of between $4.05 and $4.35 per diluted share.

Perrigo Company plc (NYSE: PRGO; TASE) today announced results for its fourth quarter and fiscal year ended June 28, 2014.

Perrigo's Chairman, President and CEO Joseph C. Papa commented, "I am pleased to report that Perrigo has delivered year-over-year record sales and adjusted earnings for the ninth straight fiscal year. While the year was not without its challenges, including an historically weak cough/cold season among other headwinds, this team was able to deliver record results. I am proud of our top line organic growth of 7%, driven by $231 million in new product sales and great execution in our business segments. We transformed Perrigo into a truly global organization with the acquisition of Elan and are uniquely positioned to continue our growth, while making quality healthcare products more affordable for the world."

Refer to Tables I, II, III, and IV at the end of this press release for a reconciliation of non-GAAP adjustments to the current year and prior year periods and additional non-GAAP information. The Company's reported results are summarized in the attached Consolidated Statements of Income, Balance Sheets and Cash Flows.

Perrigo Company plc

(in millions, except per share amounts)

(see the attached Table I for reconciliation to GAAP numbers)

(YoY % Change may not calculate due to rounding)



Fiscal 2014

Fiscal 2013




Fourth Quarter

Ended

Fourth Quarter

Ended

YoY


6/28/2014

6/29/2013

% Change

Net Sales

$1,144.2

$967.2

18

%

Reported Net Income

$131.7

$118.5

11

%

Adjusted Net Income

$234.1

$148.1

58

%

Reported Diluted EPS

$0.98

$1.25

-22

%

Adjusted Diluted EPS

$1.74

$1.57

11

%

Diluted Shares

134.3

94.6

42

%

Fourth Quarter Results

Net sales in the quarter were $1.14 billion, an increase of 18% over the fourth quarter of fiscal 2013, driven primarily by new product sales of $65 million, $112 million in sales attributable the acquisition of Elan Corporation plc ("Elan"), and product acquisitions from Fera Pharmaceuticals, LLC ("Fera") and Aspen Global Inc. ("Aspen"). Excluding charges as outlined in Table I at the end of this release, fourth quarter fiscal 2014 adjusted net income increased 58% to $234 million or $1.74 per diluted share. Reported net income was $132 million, or $0.98 per diluted share. The difference between the reported net income and adjusted net income was attributable primarily to amortization expense and other items not related to the ongoing operations the Company's business.

Perrigo Company plc

(in millions, except per share amounts)

(see the attached Table I for reconciliation to GAAP numbers)

(YoY % Change may not calculate due to rounding)



Fiscal 2014

Fiscal 2013




Year Ended

 

Year Ended

 

YoY


6/28/2014

6/29/2013

% Change

Net Sales

$4,060.8

$3,539.8

15

%

Reported Net Income

$205.3

$441.9

-54

%

Adjusted Net Income

$739.5

$529.7

40

%

Reported Diluted EPS

$1.77

$4.68

-62

%

Adjusted Diluted EPS

$6.39

$5.61

14

%

Diluted Shares

115.6

94.5

22

%

Fiscal Year Results

Net sales in the year were $4.06 billion, an increase of 15% over fiscal 2013, driven primarily by $290 million in sales attributable to the Elan, Rosemont Pharmaceuticals, Ltd., Sergeant's Pet Care Products, Inc., Fera, Velcera Inc. and Aspen acquisitions and new product sales of $231 million. Excluding charges as outlined in Table I at the end of this release, fiscal 2014 adjusted net income increased 40% to $740 million or $6.39 per diluted share. Reported net income was $205 million, or $1.77 per diluted share. The difference between the reported net income and adjusted net income was attributable primarily to amortization expense and other items not related to the ongoing operations the Company's business

Consumer Healthcare

Consumer Healthcare Segment

(in millions)

(see the attached Table II for reconciliation to GAAP numbers)

(YoY % Change may not calculate due to rounding)



Fiscal 2014


Fiscal 2013





Fourth Quarter

Ended


Fourth Quarter

Ended


YoY


6/28/2014


6/29/2013


% Change








Net Sales

$606.9


$562.5


+8

%

Reported Gross Profit

$202.0


$199.1


+1

%

Adjusted Gross Profit

$205.7


$202.3


+2

%

Reported Operating Income

$104.7


$101.9


+3

%

Adjusted Operating Income

$113.3


$112.7


+1

%







Reported Gross Margin

33.3

%

35.4

%

-210 bps

Adjusted Gross Margin

33.9

%

36.0

%

-210 bps

Reported Operating Margin

17.3

%

18.1

%

-80 bps

Adjusted Operating Margin

18.7

%

20.0

%

-130 bps

Consumer Healthcare segment net sales were $607 million, reflecting an increase in sales of existing products of $52 million (primarily in the antacids and smoking cessation categories), new product sales of $15 million and $6 million attributable to the recent acquisition of OTC products from Aspen. These combined increases were offset by a decline of $29 million in sales of existing products (primarily in the contract manufacturing and animal health categories) due primarily to relatively lower sales in third party contract manufacturing and a delayed start to the flea and tick season in the U.S. due to weather. 

Adjusted gross margin contracted 210 basis points due to an under absorption of fixed production costs and lower sales of higher margin animal health products versus last year.   Adjusted operating margin included increased R&D investments as more products move from prescription to over-the-counter status.

Nutritionals

Nutritionals Segment

(in millions)

(see the attached Table II for reconciliation to GAAP numbers)

(YoY % Change may not calculate due to rounding)



Fiscal 2014


Fiscal 2013





Fourth Quarter

Ended


Fourth Quarter

Ended


YoY


6/28/2014


6/29/2013


% Change








Net Sales

$145.2


$149.7


-3

%

Reported Gross Profit

$36.8


$40.1


-8

%

Adjusted Gross Profit

$39.9


$43.2


-8

%

Reported Operating Income

$12.1


$17.2


-30

%

Adjusted Operating Income

$20.2


$24.5


-18

%








Reported Gross Margin

25.3

%

26.8

%

-150 bps

Adjusted Gross Margin

27.5

%

28.9

%

-140 bps

Reported Operating Margin

8.3

%

11.5

%

-320 bps

Adjusted Operating Margin

13.9

%

16.4

%

-250 bps

The Nutritionals segment reported fourth quarter net sales of $145 million as new product sales of $6 million were more than offset by $4 million in discontinued products and lower year-over-year sales in the infant/toddler food and VMS categories.

Fourth quarter gross margin was impacted by the timing of maintenance at the manufacturing facilities, while operating margin was impacted by increased promotional investments to support the launch of the branded probiotic insync®.

Rx Pharmaceuticals

Rx Pharmaceuticals Segment

(in millions)

(see the attached Table II for reconciliation to GAAP numbers)

(YoY % Change may not calculate due to rounding)



Fiscal 2014


Fiscal 2013





Fourth Quarter

Ended


Fourth Quarter

Ended


YoY


6/28/2014


6/29/2013


% Change








Net Sales

$253.4


$194.7


+30

%

Reported Gross Profit

$135.6


$92.3


+47

%

Adjusted Gross Profit

$153.1


$109.0


+40

%

Reported Operating Income

$89.3


$57.2


+56

%

Adjusted Operating Income

$122.3


$83.0


+47

%








Reported Gross Margin

53.5

%

47.4

%

+610 bps

Adjusted Gross Margin

60.4

%

56.0

%

+440 bps

Reported Operating Margin

35.2

%

29.4

%

+580 bps

Adjusted Operating Margin

48.3

%

42.7

%

+560 bps

The Rx Pharmaceuticals segment fourth quarter net sales increased 30% to $253 million due primarily to new product sales of $35 million and $20 million in sales related to the Fera acquisition.

Gross and operating margin expanded due primarily to higher margin product sales related to the Fera acquisition and favorable product mix despite higher clinical costs and continued investments to grow the specialty sales force.

API

API Segment

(in millions)

(see the attached Table II for reconciliation to GAAP numbers)

(YoY % Change may not calculate due to rounding)



Fiscal 2014


Fiscal 2013





Fourth Quarter

Ended


Fourth Quarter

Ended


YoY


6/28/2014


6/29/2013


% Change








Net Sales

$32.5


$40.9


-21

%

Reported Gross Profit

$16.8


$18.7


-10

%

Adjusted Gross Profit

$17.3


$19.2


-10

%

Reported Operating Income

$8.8


$10.0


-12

%

Adjusted Operating Income

$9.5


$10.5


-10

%








Reported Gross Margin

51.7

%

45.7

%

+600 bps

Adjusted Gross Margin

53.4

%

46.9

%

+650 bps

Reported Operating Margin

27.0

%

24.5

%

+250 bps

Adjusted Operating Margin

29.3

%

25.7

%

+360 bps

The API segment's fourth quarter net sales declined to $33 million due primarily to a decrease in sales of existing products of $17 million as a result of increased competition on certain products, partially offset by $8 million in new product sales.

Margins expanded due primarily to product mix.

Specialty Sciences

Specialty Sciences Segment

(in millions)

(see the attached Table II for reconciliation to GAAP numbers)



Fiscal 2014



Fourth Quarter

Ended



6/28/2014





Net Sales

$85.9


Reported Gross Profit

$18.1


Adjusted Gross Profit

$85.9


Reported Operating Income

$4.9


Adjusted Operating Income

$78.5





Reported Gross Margin

21.1

%

Adjusted Gross Margin

100.0

%

Reported Operating Margin

5.8

%

Adjusted Operating Margin

91.4

%

During the fourth quarter, the Company recognized $86 million of royalty revenue related to global sales of Multiple Sclerosis drug Tysabri®.

Reported gross and operating losses were impacted by $68 million of amortization expense and $6 million of restructuring charges, respectively. Operating expenses included administrative costs.

Closing

Excluding the charges outlined in Table III at the end of this release, the Company expects fiscal 2015 adjusted earnings to be between $7.20 and $7.50 per diluted share as compared to $6.39 in fiscal 2014. This range implies a year-over-year growth rate in adjusted earnings of 13% to 17% over fiscal 2014's adjusted earnings per diluted share. The Company also expects fiscal 2015 reported earnings to be between $4.05 and $4.35 per diluted share as compared to $1.77 in fiscal 2014. A reconciliation to GAAP measures are attached in Table III.

Chairman, President and CEO Joseph C. Papa concluded, "We enter fiscal 2015 excited about the prospects for our durable business model and plan to grow adjusted net income between 31% and 37% year-over-year. We expect to launch greater than $235 million in new products, including multiple products that have recently switched from prescription to OTC status, and are enthusiastic about the number of categories currently being considered to switch. We have the deepest Rx pipeline in our history and are excited about the global prospects for Tysabri®. For these reasons, we remain confident in our ability to make quality healthcare more affordable for consumers around the globe."

The conference call will be available live via webcast at 10 a.m. ET to interested parties in the investor relations section of the Perrigo website at http://perrigo.investorroom.com/events-webcasts or by phone at 877-248-9413, International 973-582-2737, and reference ID#68427536. A taped replay of the call will be available beginning at approximately 1:00 p.m. (ET) Thursday, August 14, until midnight Friday, August 29, 2014. To listen to the replay, dial 855-859-2056, International 404-537-3406, and use access code 68427536.

From its beginnings as a packager of generic home remedies in 1887, Perrigo Company plc, headquartered in Ireland, has grown to become a leading global healthcare supplier. Perrigo develops, manufactures and distributes over-the-counter (OTC) and generic prescription (Rx) pharmaceuticals, nutritional products and active pharmaceutical ingredients (API), and has a specialty sciences business comprised of assets focused on the treatment of Multiple Sclerosis. The Company is the world's largest manufacturer of OTC healthcare products for the store brand market and an industry leader in pharmaceutical technologies. Perrigo's mission is to offer uncompromised "Quality Affordable Healthcare Products®," and it does so across a wide variety of product categories primarily in the United States, United Kingdom, Mexico, Israel and Australia, as well as more than 40 other key markets worldwide, including Canada, China and Latin America. Visit Perrigo on the Internet (http://www.perrigo.com).

Note: Certain statements in this press release are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. These statements relate to future events or the Company's future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the Company or its industry to be materially different from those expressed or implied by any forward-looking statements. In particular, statements about the Company's expectations, beliefs, plans, objectives, assumptions, future events or future performance contained in this press release are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "could," "would," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "potential" or the negative of those terms or other comparable terminology.

Please see the Company's documents filed with the Securities and Exchange Commission, including the Company's annual reports filed on Form 10-K and quarterly reports on Form 10-Q, and any amendments thereto for a discussion of certain important risk factors that relate to forward-looking statements contained in this report. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the Company's control. These and other important factors may cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Any forward-looking statements are made only as of the date hereof, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

PERRIGO COMPANY PLC

CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share amounts)



Fiscal Year Ended


June 28, 2014


June 29, 2013


June 30, 2012

Net sales

$

4,060.8



$

3,539.8



$

3,173.2


Cost of sales

2,613.1



2,259.8



2,077.7


Gross profit

1,447.7



1,280.0



1,095.6











Operating expenses









Distribution

55.3



47.5



39.1


Research and development

152.5



115.2



105.8


Selling

208.6



186.1



148.3


Administration

411.3



240.2



224.4


Write-off of in-process research and development

6.0



9.0




Restructuring

47.0



2.9



8.8


Total

880.7



600.9



526.4











Operating income

567.0



679.1



569.2











Interest, net

103.5



65.8



60.7


Other expense (income), net

12.4



0.9



(3.5)


Loss on sales of investments

12.7



4.7




Loss on extinguishment of debt

165.8






Income from continuing operations before income taxes

272.6



607.7



512.0


Income tax expense

67.3



165.8



119.0


Income from continuing operations

205.3



441.9



393.0


Income from discontinued operations, net of tax





8.6


Net income

$

205.3



$

441.9



$

401.6











Earnings per share









Basic









Continuing operations

$

1.78



$

4.71



$

4.22


Discontinued operations





0.09


Basic earnings per share

$

1.78



$

4.71



$

4.31


Diluted









Continuing operations

$

1.77



$

4.68



$

4.18


Discontinued operations





0.09


Diluted earnings per share

$

1.77



$

4.68



$

4.27


Weighted average shares outstanding









Basic

115.1



93.9



93.2


Diluted

115.6



94.5



94.1


Dividends declared per share

$

0.39



$

0.35



$

0.31


 

 

PERRIGO COMPANY PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)



Fiscal Year Ended


June 28, 2014


June 29, 2013


June 30, 2012










Net income

$

205.3



$

441.9



$

401.6


Other comprehensive income (loss):









Foreign currency translation adjustments

83.8



26.9



(76.7)


Change in fair value of derivative financial instruments, net of tax of

    $(1.2) million, $3.2 million, and $5.1 million, respectively

(11.6)



6.0



(9.4)


Change in fair value of investment securities, net of tax of $1.2 million,

    $0.0 million, and $0.1 million, respectively

2.4



4.4



(1.0)


Post-retirement liability adjustments, net of tax of $0.0 million, $0.2 million,

    and $0.3 million, respectively

(12.0)



0.3



(0.6)


Other comprehensive income (loss), net of tax

62.6



37.6



(87.6)


Comprehensive income

$

267.9



$

479.6



$

314.0


 

 

PERRIGO COMPANY PLC

CONSOLIDATED BALANCE SHEETS

(in millions)



June 28,

 2014


June 29,

 2013

Assets






Current assets






Cash and cash equivalents

$

799.5



$

779.9


Investment securities

5.9




Accounts receivable, net of allowance for doubtful accounts of $2.7 million and $2.1 million, respectively

935.1



651.9


Inventories

631.6



703.9


Current deferred income taxes

62.8



47.1


Prepaid expenses and other current assets

116.0



54.1


Total current assets

2,550.9



2,236.9


Non-current assets






Fixed assets, net

779.9



681.4


Goodwill and other indefinite-lived intangible assets

3,543.8



1,174.1


Other intangible assets, net

6,787.0



1,157.6


Non-current deferred income taxes

23.6



20.3


Other non-current assets

195.0



80.6


Total non-current assets

11,329.3



3,114.0


Total assets

13,880.2



5,350.8


Liabilities and shareholders' equity






Current liabilities






Accounts payable

$

364.3



$

382.0


Short-term debt

2.1



5.0


Payroll and related taxes

112.3



82.1


Accrued customer programs

256.5



131.7


Accrued liabilities

179.4



95.7


Accrued income taxes

17.4



11.6


Current deferred income taxes

1.1



0.2


Current portion of long-term debt

141.6



41.2


Total current liabilities

1,074.7



749.4


Non-current liabilities






Long-term debt, less current portion

3,090.5



1,927.8


Non-current deferred income taxes

727.9



127.8


Other non-current liabilities

293.4



213.2


Total non-current liabilities

4,111.8



2,268.8


Total liabilities

5,186.5



3,018.2


Shareholders' equity






Controlling interest:






Preferred shares, $0.0001 par value, 10 million shares authorized




Ordinary shares, €0.001 par value, 10 billion shares authorized

6,678.2



538.5


Accumulated other comprehensive income

139.6



77.0


Retained earnings

1,875.1



1,715.9



8,692.9



2,331.4


Noncontrolling interest

0.8



1.2


Total shareholders' equity

8,693.7



2,332.6


Total liabilities and shareholders' equity

$

13,880.2



$

5,350.8








Supplemental Disclosures of Balance Sheet Information






Preferred shares, issued and outstanding




Ordinary shares, issued and outstanding

133.8



94.1


 

 

PERRIGO COMPANY PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)



Fiscal Year Ended


June 28, 2014


June 29, 2013


June 30, 2012

Cash Flows From (For) Operating Activities









Net income

$

205.3



$

441.9



$

401.6


Adjustments to derive cash flows









Loss on extinguishment of debt

165.8






Write-off of in-process research and development

6.0



9.0




Gain on sale of pipeline development projects





(3.5)


Losses on sales of investments

12.7



4.7




Gain on sale of business





(8.6)


Restructuring and asset impairment

47.0



2.9



8.7


Depreciation and amortization

358.9



160.2



135.3


Share-based compensation

24.6



18.4



19.0


Income tax benefit from exercise of stock options

(2.5)



(1.4)



(1.8)


Excess tax benefit of stock transactions

(5.7)



(15.7)



(12.9)


Deferred income taxes

(53.8)



5.7



27.5


Subtotal

758.3



625.6



565.2


Changes in operating assets and liabilities, net of asset and business acquisitions and disposition









Accounts receivable

(226.7)



(37.0)



(49.3)


Inventories

83.0



(94.6)



5.4


Accounts payable

(24.9)



6.5



(23.6)


Payroll and related taxes

(55.5)



(11.9)



5.0


Accrued customer programs

113.1



12.6



(1.6)


Accrued liabilities

23.0



8.4



4.2


Accrued income taxes

(10.7)



28.9



13.7


Other

33.9



15.3



(5.7)


Subtotal

(64.8)



(71.8)



(51.8)


Net cash from operating activities

693.5



553.8



513.4


Cash Flows (For) From Investing Activities









Acquisitions of businesses, net of cash acquired

(1,605.8)



(852.3)



(582.3)


Purchase of securities

(15.0)






Proceeds from sale of securities

81.4



8.6




Additions to property and equipment

(171.6)



(104.1)



(120.2)


Proceeds from sales of property and equipment

6.2






Proceeds from sale of intangible assets and pipeline development projects





10.5


Proceeds from sale of business





8.6


Acquisitions of assets





(0.8)


Net cash for investing activities

(1,704.8)



(947.8)



(684.1)


Cash Flows (For) From Financing Activities









Purchase of noncontrolling interest

(7.2)






Borrowings (repayments) of short-term debt, net

(3.0)



5.0



(2.7)


Premium on early retirement of debt

(133.5)






Net proceeds from debt issuances

3,293.6



637.3



1,089.2


Repayments of long-term debt

(2,035.0)



(40.0)



(610.0)


Deferred financing fees

(48.8)



(6.0)



(5.1)


Excess tax benefit of stock transactions

5.7



15.7



12.9


Issuance of common stock

9.8



10.7



11.6


Repurchase of common stock

(7.5)



(12.4)



(8.2)


Cash dividends

(46.1)



(33.0)



(29.0)


Net cash from financing activities

1,028.0



577.2



458.7


Effect of exchange rate changes on cash

2.9



(5.8)



4.4


Net increase in cash and cash equivalents

19.6



177.4



292.4


Cash and cash equivalents, beginning of period

779.9



602.5



310.1


Cash and cash equivalents, end of period

$

799.5



$

779.9



$

602.5




Fiscal Year Ended


June 28, 2014


June 29, 2013


June 30, 2012

Supplemental Disclosures of Cash Flow Information









Cash paid/received during the year for:









Interest paid

$

98.4



$

58.5



$

53.7


Interest received

$

2.4



$

3.9



$

4.0


Income taxes paid

$

93.2



$

133.2



$

82.3


Income taxes refunded

$

4.3



$

1.3



$

0.9