Perrigo Reports Record Revenue and Adjusted Earnings - Fiscal third quarter net sales increased 18% year over year to a record $920 million.

- Fiscal third quarter adjusted operating income increased 21% to a record $208 million, a 50 basis point expansion as a percent to sales.

- Fiscal third quarter GAAP operating income increased 22% to $179 million.

- Fiscal third quarter cash flow from operations was $151 million.

- Inclusive of recent acquisitions, management confirms February 11th guidance of full-year fiscal 2013 adjusted earnings range of $5.53 to $5.73 per diluted share and reported earnings of between $4.67 and $4.87 per diluted share.

ALLEGAN, Mich., May 7, 2013 /PRNewswire/ -- Perrigo Company (Nasdaq: PRGO; TASE: PRGO) today announced results for its third quarter ended March 30, 2013.

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

Perrigo's Chairman and CEO Joseph C. Papa commented, "We are very pleased with our performance, as the team delivered all-time record quarterly revenue and adjusted diluted earnings per share. It was a very busy quarter for the team. We signed and closed the acquisition of Rosemont Pharmaceuticals, a specialty and generic prescription pharmaceutical company focused on the manufacturing and marketing of oral liquid formulations. We shipped Guaifenesin 600mg Extended-Release tablets with $135 million in branded sales. It is the first product that is generically equivalent to Mucinex® 600mg Extended-Release tablets. We launched the generic equivalents of Luxiq® Foam and Nicorette® mini lozenges and the authorized generic of Acetadote® injection. Finally, we filed an ANDA for the generic equivalent of Androgel® 1.62% and we believe we are the first to file. After the quarter ended, we closed our acquisition of Velcera, further expanding our recent entry into companion animal health and broadening our product offering. All of these great milestones were achieved while expanding margins in a record sales quarter." 

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 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 Tables I and IV for reconciliation to GAAP numbers)

 










Fiscal 2013

Fiscal 2012





Third

 Quarter
Ended

Third

 Quarter
Ended

 

 

YoY




3/30/2013

3/31/2012

% Change









Net Sales

$919,825

$778,017

+18.2%



Reported Net Income

$111,924

$115,727

-3.3%



Adjusted Net Income

$134,073

$132,679

+1.1%



Reported Diluted EPS

$1.18

$1.23

-4.1%



Adjusted Diluted EPS

$1.42

$1.41

+0.7%



Adjusted Diluted EPS excluding 3Q 2012 Tax Benefit

$1.42

$1.21

+17.4%









Diluted Shares

94,519

94,124

+0.4%



                                                                          

Third Quarter Results

Net sales in the quarter were a record $920 million, an increase of 18% over the third quarter of fiscal 2012, driven primarily by $61 million in strong base business growth, new product sales of $41 million and $40 million attributable to the Sergeant's and Rosemont acquisitions. Excluding charges as outlined in Table I at the end of this release, third quarter fiscal 2013 adjusted net income increased 1.1% to $134 million, or $1.42 per diluted share. Excluding a non-recurring tax benefit of $19 million in fiscal third quarter 2012; adjusted net income increased 18%. Reported net income decreased 3.3% to $112 million, or $1.18 per diluted share.

Consumer Healthcare

 

Consumer Healthcare Segment

(in thousands)

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












Fiscal 2013

Fiscal 2012






Third

Quarter
Ended

Third

Quarter

Ended

YoY





3/30/2013

3/31/2012

% Change











Net Sales

$536,775

$448,848

+19.6%




Reported Gross Profit

$176,646

$140,417

+25.8%




Adjusted Gross Profit

$180,045

$141,427

+27.3%




Reported Operating Income

$95,921

$79,383

+20.8%




Adjusted Operating Income

$100,951

$81,804

+23.4%











Reported Gross Margin

32.9%

31.3%

+160 bps




Adjusted Gross Margin

33.5%

31.5%

+200 bps




Reported Operating Margin

17.9%

17.7%

+20 bps




Adjusted Operating Margin

18.8%

18.2%

+60 bps














Consumer Healthcare segment net sales increased 20% to $537 million, driven by an increase in sales of existing products of $54 million (contract, cough/cold and analgesics categories), $31 million attributable to the recent acquisition of Sergeant's and new product sales of approximately $17 million (cough/cold and smoking cessation categories). These combined increases were partially offset by a decline of $9 million in sales of existing products (other categories) and $4 million in discontinued products.

The adjusted gross margin expanded 200 basis points due to the inclusion of Sergeant's, new products, increased manufacturing efficiencies and a favorable product mix. Third quarter operating expenses increased due primarily to approximately $12 million of incremental operating expenses from the acquisition of Sergeant's.

Nutritionals

 

 

Nutritionals Segment

(in thousands)

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

 










Fiscal 2013

Fiscal 2012





Third

 Quarter
Ended

Third

 Quarter

Ended

 

 

YoY




3/30/2013

3/31/2012

% Change









Net Sales

$133,344

$117,683

+13.3%



Reported Gross Profit

$30,976

$30,350

+2.1%



Adjusted Gross Profit

$34,026

$33,371

+2.0%



Reported Operating Income

$6,965

$1,845

+277.5%



Adjusted Operating Income

$14,275

$15,563

-8.3%









Reported Gross Margin

23.2%

25.8%

-260 bps



Adjusted Gross Margin

25.5%

28.4%

-290 bps



Reported Operating Margin

5.2%

1.6%

+360 bps



Adjusted Operating Margin

10.7%

13.2%

-250 bps



The Nutritionals segment reported third quarter net sales of $133 million, compared with $118 million a year ago. All product categories within the segment grew year-over-year and new product sales were $5 million. The disparities between the reported and adjusted operating income and margin are due to the absence of restructuring charges incurred in the third quarter of fiscal 2012 related to the Company's Florida location, which was closed in the fourth quarter of fiscal 2012.

Third quarter adjusted gross margin decreased due primarily to a larger proportion of sales from the lower margin VMS category and higher production inefficiencies in the infant formula category, while the adjusted operating margin was favorably impacted by lower employee-related expenses.

Rx Pharmaceuticals

 

 

Rx Pharmaceuticals Segment

(in thousands)

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

 










Fiscal 2013

Fiscal 2012





Third

 Quarter

Ended

Third

 Quarter

Ended

 

 

YoY




3/30/2013

3/31/2012

% Change









Net Sales

$189,410

$155,591

+21.7%



Reported Gross Profit

$96,516

$83,333

+15.8%



Adjusted Gross Profit

$109,661

$91,907

+19.3%



Reported Operating Income

$73,419

$67,257

+9.2%



Adjusted Operating Income

$86,627

$75,831

+14.2%









Reported Gross Margin

51.0%

53.6%

-260 bps



Adjusted Gross Margin

57.9%

59.1%

-120 bps



Reported Operating Margin

38.8%

43.2%

-440 bps



Adjusted Operating Margin

45.7%

48.7%

-300 bps



 

The Rx Pharmaceuticals segment third quarter net sales increased 22% to $189 million due primarily to new product sales of $18 million, $8 million in sales related to the February 11th 2013 acquisition of Rosemont, and strong prescription volumes evidenced by an increase in existing product sales of $7 million.

The adjusted gross margin decreased due primarily to less favorable product mix. The adjusted operating margin was impacted by higher distribution, selling, general and administrative costs and the inclusion of Rosemont.

API

 

 

API Segment

(in thousands)

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










Fiscal 2013

Fiscal 2012





Third

 Quarter
Ended

Third

 Quarter

Ended

 

 

YoY




3/30/2013

3/31/2012

% Change









Net Sales

$41,114

$36,951

+11.3%



Reported Gross Profit

$20,915

$18,675

+12.0%



Adjusted Gross Profit

$21,413

$19,165

+11.7%



Reported Operating Income

$11,728

$10,462

+12.1%



Adjusted Operating Income

$12,226

$10,952

+11.6%









Reported Gross Margin

50.9%

50.5%

+40 bps



Adjusted Gross Margin

52.1%

51.9%

+20 bps



Reported Operating Margin

28.5%

28.3%

+20 bps



Adjusted Operating Margin

29.7%

29.6%

+10 bps



The API segment's net sales increased by 11% to $41 million due to an increase in existing product sales of $4 million primarily related to the continued successful launch of a customer's product.

Operating margins expanded on favorable mix of existing product sales offset slightly by higher distribution selling, general and administrative expenses.

Closing

Chairman, President and CEO Joseph C. Papa concluded, "While we've celebrated a record quarter, we are back to executing our plans for the final quarter of fiscal 2013. We're well positioned to save pet owners money as we enter this summer's flea and tick season and are anxiously awaiting additional new product approvals and launches. As always, we stand committed to bringing more forms of quality, affordable healthcare to more consumers."

Guidance

The Company is confirming the guidance which was provided on February 11, 2013, the closing date of the Rosemont acquisition, and continues to expect fiscal 2013 reported earnings to be between $4.67 and $4.87 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 continues to expect fiscal 2013 adjusted earnings to be between $5.53 and $5.73 per diluted share as compared to $4.99 in fiscal 2012. This range implies a year-over-year growth rate in adjusted earnings of 11% to 15% over fiscal 2012's adjusted earnings from continuing operations per diluted share.               

The conference call will be available live via webcast 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# 31768198. A taped replay of the call will be available beginning at approximately 1:00 p.m. (ET) Tuesday, May 7, 2013 until midnight Friday, May 17, 2013. To listen to the replay, dial 855-859-2056, International 404-537-3406, and use access code 31768198.

From its beginnings as a packager of generic home remedies in 1887, Allegan, Michigan-based Perrigo Company has grown to become a leading global provider of quality, affordable healthcare products. Perrigo develops, manufactures and distributes over-the-counter (OTC) and generic prescription (Rx) pharmaceuticals, infant formulas, nutritional products, animal health, dietary supplements and active pharmaceutical ingredients (API). The Company is the world's largest manufacturer of OTC pharmaceutical products for the store brand market. The Company's primary markets and locations of logistics operations have evolved over the years to include the United States, Israel, Mexico, the United Kingdom, India, China and Australia. 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 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 other comparable terminology. 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, including those discussed under "Risk Factors" in the Company's Form 10-K for the year ended June 30, 2012, as well as the Company's subsequent filings with the Securities and Exchange Commission, may cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. The forward-looking statements in this press release 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

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

(unaudited)


















Three Months Ended


Nine Months Ended


March 30,
2013


March 31,
2012


March 30,
2013


March 31,
2012









Net sales

$         919,825


$         778,017


$      2,572,594


$      2,341,482

Cost of sales

588,464


498,744


1,648,799


1,539,755

Gross profit

331,361


279,273


923,795


801,727









Operating expenses








Distribution

12,569


10,181


35,035


29,540

Research and development

28,526


27,950


84,244


78,736

Selling and administration

111,660


87,991


305,480


278,080

Restructuring


7,081



7,081

Total operating expenses

152,755


133,203


424,759


393,437









Operating income

178,606


146,070


499,036


408,290









Interest, net

16,070


16,651


47,237


44,862

Other expense (income), net

841


(5,202)


855


(4,221)

Losses on sales of investments

1,608



4,657


Income before income taxes

160,087


134,621


446,287


367,649

Income tax expense

48,163


18,894


122,828


81,725

Net income

$         111,924


$         115,727


$         323,459


$         285,924









Earnings per share








Basic earnings per share

$               1.19


$               1.24


$               3.45


$               3.07

Diluted earnings per share

$               1.18


$               1.23


$               3.42


$               3.04









Weighted average shares outstanding








Basic

93,989


93,330


93,833


93,152

Diluted

94,519


94,124


94,443


94,028









Dividends declared per share

$               0.09


$               0.08


$               0.26


$               0.23








PERRIGO COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)










Three Months Ended


Nine Months Ended


March 30,
2013


March 31,
2012


March 30,
2013


March 31,
2012

Net income

$         111,924


$         115,727


$         323,459


$         285,924

Other comprehensive income (loss):








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

1,638


2,642


8,344


(6,650)

Foreign currency translation adjustments

4,784


22,214


38,234


(43,598)

Change in fair value of investment securities, net of tax

295



1,332


(933)

Post-retirement liability adjustments, net of tax


(28)


(41)


(69)

Other comprehensive income (loss), net of tax

6,717


24,828


47,869


(51,250)

Comprehensive income

$         118,641


$         140,555


$         371,328


$         234,674









PERRIGO COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)








March 30,
2013


June 30,
2012


March 31,
2012

Assets






Current assets






Cash and cash equivalents

$               300,827


$               602,489


$               554,280

Accounts receivable, net

618,666


572,582


560,740

Inventories

684,741


547,455


589,947

Current deferred income taxes

43,068


45,738


51,269

Income taxes refundable

5,479


1,047


766

Prepaid expenses and other current assets

44,847


26,610


33,886

Total current assets

1,697,628


1,795,921


1,790,888

Property and equipment

1,236,444


1,118,837


1,096,749

Less accumulated depreciation

(593,186)


(540,487)


(532,335)


643,258


578,350


564,414

Goodwill and other indefinite-lived intangible assets

1,127,954


820,122


830,689

Other intangible assets, net

938,544


729,253


752,600

Non-current deferred income taxes

17,223


13,444


12,390

Other non-current assets

71,281


86,957


89,073


$            4,495,888


$            4,024,047


$            4,040,054













Liabilities and Shareholders' Equity






Current liabilities






Accounts payable

$               325,415


$               317,341


$               307,017

Short-term debt

4,513


90


Payroll and related taxes

72,832


89,934


74,450

Accrued customer programs

128,676


116,055


103,868

Accrued liabilities

83,260


76,406


83,886

Accrued income taxes

17,639


12,905


20,530

Current portion of long-term debt

41,285


40,000


40,000

Total current liabilities

673,620


652,731


629,751

Non-current liabilities






Long-term debt, less current portion

1,331,684


1,329,235


1,454,620

Non-current deferred income taxes

80,474


24,126


19,543

Other non-current liabilities

184,782


165,310


163,466

Total non-current liabilities

1,596,940


1,518,671


1,637,629

Shareholders' Equity






Controlling interest:






Preferred stock, without par value, 10,000 shares authorized



Common stock, without par value, 200,000 shares authorized

530,780


504,708


496,320

Accumulated other comprehensive income

87,273


39,404


75,800

Retained earnings

1,605,894


1,306,925


1,198,740


2,223,947


1,851,037


1,770,860

Noncontrolling interest

1,381


1,608


1,814

Total shareholders' equity

2,225,328


1,852,645


1,772,674


$            4,495,888


$            4,024,047


$            4,040,054







Supplemental Disclosures of Balance Sheet Information






Allowance for doubtful accounts

$                   2,219


$                   2,556


$                   2,483

Working capital

$            1,024,008


$            1,143,190


$            1,161,137

Preferred stock, shares issued and outstanding



Common stock, shares issued and outstanding

94,022


93,484


93,405