Perrigo Reports Record First Quarter Revenue And Adjusted Earnings And Raises Full Year Adjusted EPS Guidance - Fiscal first quarter adjusted net income increased 16% to a record $119 million, or $1.27 per diluted share, inclusive of an $0.08 tax benefit.

- Fiscal first quarter GAAP net income increased 50% to $106 million, or $1.12 per diluted share, due primarily to $0.21 per diluted share in acquisition-related costs in the first quarter of fiscal 2012.

- Management raises full-year fiscal 2013 adjusted earnings per share to be in a range of $5.45 to $5.65 per diluted share, an increase of 9% to 13% compared to fiscal 2012's $4.99 per diluted share, to reflect the acquisition of Sergeant's Pet Care Products, Inc., tax benefits and continued execution of the Company's core businesses.

ALLEGAN, Mich., Nov. 7, 2012 /PRNewswire/ -- Perrigo Company (Nasdaq: PRGO; TASE: PRGO) today announced results for its first quarter ended September 29, 2012.

(Logo: http://photos.prnewswire.com/prnh/20120301/DE62255LOGO )

Perrigo's Chairman and CEO Joseph C. Papa commented, "We have started fiscal 2013 well, delivering record first quarter revenue and adjusted earnings. We also delivered all-time record adjusted gross and operating margins. Store brand OTC market share continues to grow. Our Consumer Healthcare segment's revenue grew 9.4% from a record first quarter last year. Our Rx segment continued its excellent performance, which was driven by the acquisition of Paddock Labs, new product sales and strong organic Rx results, combined with our continued focus on quality and R&D. Clearly we are focused on the results from our Nutritionals segment and the team has an action plan in place for the rest of the year. We believe our value proposition continues to resonate well with consumers."

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

Perrigo Company
(in thousands, except per share amounts)
(see the attached Table I for reconciliation to GAAP numbers)






Fiscal 2013

Fiscal 2012



First Quarter

Ended

First Quarter

Ended

 

YoY


9/29/2012

9/24/2011

% Change





Net Sales

$769,810

$725,295

6.1%

Reported Net Income

$105,580

$70,458

49.8%

Adjusted Net Income

$119,467

$103,320

15.6%

Reported Diluted EPS

$1.12

$0.75

49.3%

Adjusted Diluted EPS

$1.27

$1.10

15.5%

Diluted Shares

94,335

93,953

0.4%

First Quarter Results

Net sales in the quarter were $770 million, an increase of 6% over the first quarter of fiscal 2012, driven primarily by $28 million attributable to the Paddock Laboratories, Inc. ("Paddock") and CanAm Care, LLC ("CanAm") acquisitions and new product sales of $26 million, partially offset by decreases in sales of certain existing products in the Nutritionals and API segments and $5 million due to unfavorable changes in foreign currency exchange rates. Excluding charges as outlined in Table I at the end of this release, first quarter fiscal 2013 adjusted net income increased 16% to $119 million, or $1.27 per share. Reported net income increased 50% to $106 million, or $1.12 per diluted share, due primarily to $0.21 per diluted share in acquisition-related costs in the first quarter of fiscal 2012.               

Consumer Healthcare

Consumer Healthcare Segment
(in thousands)
(see the attached Table II for reconciliation to GAAP numbers)






Fiscal 2013

Fiscal 2012



First Quarter

Ended

First Quarter

Ended

 

YoY


9/29/2012

9/24/2011

% Change





Net Sales

$450,416

$411,681

9.4%

Reported Gross Profit

$145,835

$129,358

12.7%

Adjusted Gross Profit

$146,850

$130,380

12.6%

Reported Operating Income

$79,288

$69,189

14.6%

Adjusted Operating Income

$81,551

$71,433

14.2%





Reported Gross Margin

32.4%

31.4%

+100 bps

Adjusted Gross Margin

32.6%

31.7%

+90 bps

Reported Operating Margin

17.6%

16.8%

+80 bps

Adjusted Operating Margin

18.1%

17.4%

+70 bps





Consumer Healthcare segment net sales increased 9% to $450 million due to an increase in sales of existing products of $36 million (contract, cough/cold and smoking cessation categories), new product sales of $13 million (gastrointestinal, cough/cold and dermatological categories) and $9 million in incremental sales attributable to the acquisition of CanAm. These combined increases were partially offset by a decline of $17 million in sales of existing products (analgesics and feminine hygiene categories) and a decline of $4 million due to discontinued products.

Adjusted gross and operating margins expanded 90 and 70 basis points, respectively, due to new products, product mix and cost controls in the Company's manufacturing plants.

Nutritionals

Nutritionals Segment
(in thousands)
(see the attached Table II for reconciliation to GAAP numbers)






Fiscal 2013

Fiscal 2012



First Quarter

Ended

First Quarter

Ended

 

YoY


9/29/2012

9/24/2011

% Change





Net Sales

$103,423

$119,861

-13.7%

Reported Gross Profit

$25,835

$29,569

-12.6%

Adjusted Gross Profit

$28,885

$35,418

-18.4%

Reported Operating Income

$3,883

$7,241

-46.4%

Adjusted Operating Income

$11,183

$16,705

-33.1%





Reported Gross Margin

25.0%

24.7%

+30 bps

Adjusted Gross Margin

27.9%

29.5%

-160 bps

Reported Operating Margin

3.8%

6.0%

-220 bps

Adjusted Operating Margin

10.8%

13.9%

-310 bps

The Nutritionals segment reported first quarter net sales of $103 million, compared with $120 million a year ago as existing product sales declined $20 million, partially offset by new product sales of $3 million (infant formula category). The decrease in sales was due primarily to a decline in existing product sales in the vitamin, minerals and dietary supplements ("VMS") category driven by increased competition and increased retail shipments of infant formula placed in the fourth quarter of fiscal 2012 in advance of the planned July 1st shutdown of the Company's Vermont Plant to perform an SAP conversion and prepare for the installation of a new packaging line. Reported and adjusted gross profit and margin were impacted by relatively lower volumes in infant formula and VMS, along with increased inventory costs.

Operating income and margin were impacted by higher combined research and development and distribution, selling, general and administration expenses as a percent to net sales, though they were lower on a dollar basis, year-over-year.

Rx Pharmaceuticals

Rx Pharmaceuticals Segment
(in thousands)
(see the attached Table II for reconciliation to GAAP numbers)






Fiscal 2013

Fiscal 2012



First Quarter

Ended

First Quarter

Ended

 

YoY


9/29/2012

9/24/2011

% Change





Net Sales

$162,942

$127,627

27.7%

Reported Gross Profit

$86,684

$41,460

109.1%

Adjusted Gross Profit

$95,086

$75,992

25.1%

Reported Operating Income

$68,504

$24,485

179.8%

Adjusted Operating Income

$76,906

$58,673

31.1%





Reported Gross Margin

53.2%

32.5%

+2,070 bps

Adjusted Gross Margin

58.4%

59.5%

-110 bps

Reported Operating Margin

42.0%

19.2%

+2,280 bps

Adjusted Operating Margin

47.2%

46.0%

+120 bps

The Rx Pharmaceuticals segment first quarter net sales increased 28% to $163 million due primarily to incremental net sales of $19 million from the July 26, 2011 Paddock acquisition, new product sales of $8 million and improved pricing on select products.

Year-over-year percent changes in reported gross profit and operating income were impacted by the absence of a one-time charge of $27 million to cost of sales as a result of the step-up of inventory value related to the Paddock acquisition in the first quarter of fiscal 2012.

API

API Segment
(in thousands)
(see the attached Table II for reconciliation to GAAP numbers)






Fiscal 2013

Fiscal 2012



First Quarter

Ended

First Quarter

Ended

 

YoY


9/29/2012

9/24/2011

% Change





Net Sales

$36,419

$47,644

-23.6%

Reported Gross Profit

$21,360

$21,608

-1.1%

Adjusted Gross Profit

$21,823

$22,129

-1.4%

Reported Operating Income

$13,319

$14,215

-6.3%

Adjusted Operating Income

$13,782

$14,736

-6.5%





Reported Gross Margin

58.7%

45.4%

+1,330 bps

Adjusted Gross Margin

59.9%

46.4%

+1,350 bps

Reported Operating Margin

36.6%

29.8%

+680 bps

Adjusted Operating Margin

37.8%

30.9%

+690 bps

The API segment's net sales declined by 24% to $36 million due primarily to a decrease in existing product sales of approximately $17 million as a result of increased competition and pricing pressures on select products, along with a negative impact of $2 million due to changes in foreign currency, partially offset by $7 million related to the launch of a customer's product with 180-day exclusivity status.

Gross and operating margins were positively impacted by the product launch referred to above.

Other

The Other category reported decreased first quarter net sales of approximately $17 million, compared with $18 million a year ago, due primarily to the impact of unfavorable changes in foreign currency exchange rates.

Adjusted operating income was approximately $1 million, representing an increase in adjusted operating margin of 100 basis points from last year due to product mix.

Guidance

Chairman, President and CEO Joseph C. Papa concluded, "The strength of our diversified business model was evident this quarter. Margin expansion remains a top priority for the Company and we continue to make ROIC positive investments in operations and products. As we look forward to the rest of fiscal 2013, we continue to expect strong new product launches and further conversion of consumers to store brand."

The Company expects fiscal 2013 reported earnings to be between $4.71 and $4.91 per diluted share as compared to $4.18 in fiscal 2012. Excluding the charges outlined in Table III at the end of this release, the Company expects fiscal 2013 adjusted earnings to be between $5.45 and $5.65 per diluted share as compared to $4.99 in fiscal 2012 reflecting the acquisition of Sergeant's Pet Care Products, Inc., the realization of tax benefits and continued execution of the core businesses. This new range implies a year-over-year growth rate in adjusted earnings of 9% to 13% over fiscal 2012's adjusted earnings from continuing operations per diluted share.            

The conference call will be available live via webcast to interested parties on the Perrigo website http://perrigo.investorroom.com/events-webcasts or by phone at 877-248-9413, International 973-582-2737, and reference ID# 46994711. A taped replay of the call will be available beginning at approximately 2:00 p.m. (ET) Wednesday, November 7, 2012 until midnight Friday, November 23, 2012. To listen to the replay, dial 855-859-2056, International 404-537-3406, and use access code 46994711.           

From its beginnings as a packager of generic home remedies in 1887, Perrigo Company, based in Allegan, Michigan, has grown to become a leading global provider of quality, affordable healthcare products. The Company develops, manufactures and distributes over-the-counter ("OTC") and generic prescription ("Rx") pharmaceuticals, nutritional products and active pharmaceutical ingredients ("API") and is the world's largest manufacturer of OTC pharmaceutical products for the store brand market. 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 certain other markets throughout the world, including Canada, China and Latin America. Visit Perrigo on the Internet (http://www.perrigo.com).