Mallinckrodt plc Reports Fourth Quarter and Fiscal 2017 Results, Announces 2018 Guidance and Sets 2018 Strategic Priorities
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STAINES-UPON-THAMES, United Kingdom, Feb. 27, 2018 /PRNewswire/ -- Mallinckrodt Pharmaceuticals (NYSE: MNK), a leading global specialty pharmaceutical company, today reported results for the three months and fiscal year ended Dec. 29, 2017. Unless otherwise noted, the quarter comparisons are to the prior year comparable three-month period ended Dec. 30, 2016 and the fiscal year comparisons are to the prior fiscal year ended Sept. 30, 2016 as prescribed by GAAP. Net sales were $792.3 million in the fourth quarter, down 4.5%, or 4.8% on a constant-currency basis. GAAP gross profit was $421.0 million with gross profit as a percentage of net sales of 53.1%, compared with 53.7%, impacted by ongoing pricing pressures in the Specialty Generics segment, but partially offset by non-recurring supply chain benefits in the Specialty Brands segment. Adjusted gross profit was $592.8 million, compared with $623.9 million. Adjusted gross profit as a percentage of net sales was 74.8% versus 75.2%. "In 2017 we made strong progress in strategically reshaping our business to become an innovation-focused specialty pharmaceutical company," said Mark Trudeau, President and Chief Executive Officer of Mallinckrodt, "further building out a portfolio that, over the long term, should produce sustainable growth of at least mid-single digits, with potential for higher growth longer term. We see a number of potential commercial and development catalysts for growth in the year ahead, with possible product launches, clinical trial milestones and data readouts. The occurrence of any one or more of these events may provide further benefit to shareholders." "Looking ahead," Trudeau continued, "with the recent acquisitions of Sucampo and other transactions building out our roster of marketed brands as well as our branded pipeline, we are poised to begin fulfilling the promise of the innovative development portfolio we've built. In 2018 we will aggressively pursue key initiatives to support and accelerate progress as we solidify our transformation." Mallinckrodt's 2018 strategic initiatives include:
Returning to fourth quarter results, GAAP SG&A expenses in the quarter were $175.0 million or 22.1% of net sales, benefited from the reduction of contingent consideration, as compared to $368.3 million, or 44.4% of net sales in the comparable quarter, which was impacted by significant legal and pension settlement charges. Adjusted SG&A expenses were $212.6 million or 26.8% of net sales, compared with $217.2 million or 26.2%. Research and development expenses were $86.4 million or 10.9% of net sales in the fourth quarter, impacted by a $10.0 million up-front payment for the xenon gas licensing agreement. Income tax benefit was $1.599 billion versus $121.7 million, for an effective tax rate of negative 18,590.7% and positive 40.8%, respectively. Income tax benefit in the fourth quarter includes a one-time tax benefit of $1.5 billion from tax reform and finalization of the previously announced legal entity reorganization, which primarily related to a reduction in the interest-bearing deferred tax liabilities. As a result of adjustments primarily related to the foregoing factors, the adjusted effective tax rate was 13.0% compared with 15.7%. GAAP diluted earnings per share results from continuing operations was $17.40 in the fourth quarter compared with a loss per share from continuing operations of $1.67. Adjusted diluted earnings per share were $2.01 versus $1.91. Fiscal Year 2017 Results Net sales were $3.222 billion, down 4.7% compared with $3.381 billion; impacted by comparison with the extra selling week in 2016 and ongoing pressure in the Specialty Generics segment. Diluted earnings per share from continuing operations were $18.09 compared with $4.39, reflecting the benefits from tax reform and finalization of the previously announced legal entity reorganization. Adjusted diluted earnings per share were $7.49, compared with $7.85. BUSINESS SEGMENT RESULTS Specialty Brands Segment Net sales for the Specialty Brands segment were $582.2 million for the quarter, compared with $603.1 million, a decrease of 3.5%, or 3.7% on a constant-currency basis. H.P. Acthar® Gel (repository corticotropin injection) net sales in the quarter were $295.2 million, a 9.3%2 decrease over $325.4 million impacted by the previously disclosed patient withdrawal issues. The company has taken a number of steps to address the issue, including engagement with payers, prescribers and patients, and we remain focused on returning H.P. Acthar Gel to growth. INOMAX® (nitric oxide) gas, for inhalation, generated net sales of $125.6 million, up 6.2%, or 6.1% on a constant-currency basis, over $118.3 million. OFIRMEV® (acetaminophen) injection net sales were $78.0 million compared with $72.5 million, an increase of 7.6%2. Net sales of the Therakos® immunology platform were $57.2 million compared with $47.4 million, an increase of 20.7%, or 18.4% on a constant-currency basis, benefited from a favorable comparison to the prior year. Specialty Generics Segment Net sales in the fourth quarter decreased 8.0% to $195.8 million, compared with $212.9 million. On a constant-currency basis, segment net sales declined 8.5%. LIQUIDITY Mallinckrodt's cash provided by operating activities in the fourth quarter was $278.8 million with free cash flow of $244.0 million. For the year, Mallinckrodt's cash provided by operating activities was $727.3 million with free cash flow of $541.2 million. During the fourth quarter, Mallinckrodt repurchased approximately 10% of the company, buying 9.4 million ordinary shares for $214.0 million. Through its cash generation and borrowings under Mallinckrodt's existing revolving credit facility in preparation for the Sucampo acquisition, Mallinckrodt's cash balance at the end of the fourth quarter was $1.261 billion. Following this transaction, the company remains focused on reducing its debt throughout the 2018 fiscal year. 2018 MALLINCKRODT FINANCIAL GUIDANCE Driven by its ongoing transformation, Mallinckrodt will prospectively classify the "Specialty Generics Disposal Group" as discontinued operations, which includes the Specialty Generics segment3, certain non-promoted branded products within the Specialty Brands segment, and the company's ongoing post-divestiture supply agreement. Beginning in the first quarter of fiscal 2018, the historical financial results attributable to the Specialty Generics Disposal Group will be reflected in our consolidated financial statements as discontinued operations. Mallinckrodt seeks to dispose of these products to further its strategic evolution to being a brands-focused innovation-driven specialty pharmaceutical growth company. Mallinckrodt's guidance for 2018 is provided exclusive of the aforementioned businesses.
Metric 2018 Guidance
(excluding foreign currency
impact)
---------------------------
Total net sales for
continuing operations Increase 3% to 6%
---------------------- ----------------
Net interest expense $370 million to $390 million
-------------------- ----------------------------
Adjusted effective tax rate 9% to 11%
--------------------------- --------
Adjusted diluted EPS $6.00 to $6.50
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The company has provided historical net sales for the new continuing operations portions of the business for fiscal 2017, the transition period, and fiscal 2016 this morning. Further, the company expects to provide fully recast financial statements prior to the next earnings announcement in early May. CONFERENCE CALL AND WEBCAST Mallinckrodt will hold a conference call on Tuesday, Feb. 27, 2018, beginning at 8:30 a.m. U.S. Eastern Time. This call can be accessed in three ways:
ABOUT MALLINCKRODT Mallinckrodt is a global business that develops, manufactures, markets and distributes specialty pharmaceutical products and therapies. Areas of focus include autoimmune and rare diseases in specialty areas like neurology, rheumatology, nephrology, pulmonology and ophthalmology; immunotherapy and neonatal respiratory critical care therapies; analgesics and gastrointestinal products. The company's Specialty Brands segment includes branded medicines and its Specialty Generics segment includes specialty generic drugs, active pharmaceutical ingredients and external manufacturing. To learn more about Mallinckrodt, visit www.mallinckrodt.com. Mallinckrodt uses its website as a channel of distribution of important company information, such as press releases, investor presentations and other financial information. It also uses its website to expedite public access to time-critical information regarding the company in advance of or in lieu of distributing a press release or a filing with the U.S. Securities and Exchange Commission (SEC) disclosing the same information. Therefore, investors should look to the Investor Relations page of the website for important and time-critical information. Visitors to the website can also register to receive automatic e-mail and other notifications alerting them when new information is made available on the Investor Relations page of the website. NON-GAAP FINANCIAL MEASURES This press release contains financial measures, including adjusted net income, adjusted diluted earnings per share, adjusted gross profit, adjusted SG&A, net sales growth on a constant-currency basis, adjusted effective tax rate, and free cash flow, which are considered "non-GAAP" financial measures under applicable SEC rules and regulations. Adjusted net income, adjusted gross profit and adjusted SG&A represent amounts prepared in accordance with accounting principles generally accepted in the U.S. (GAAP) and adjusted for certain items that management believes are not reflective of the operational performance of the business. The adjustments for these items are on a pre-tax basis for adjusted gross profit and adjusted SG&A and on an after-tax basis for adjusted net income. Adjustments to GAAP amounts include, as applicable to each measure, restructuring and related charges, net; amortization and impairment charges; discontinued operations; acquisition-related expenses; changes in fair value of contingent consideration obligations; inventory step-up expenses; significant legal and environmental charges; pension settlement charges; recurrent cash tax payments to the IRS associated with internal installment sales transactions; and other items identified by the company. Adjusted diluted earnings per share represent adjusted net income divided by the number of diluted shares. The adjusted effective tax rate is calculated as the income tax effects on continuing and discontinued operations plus the income tax impact included in Mallinckrodt's reconciliation of net income, divided by income from continuing and discontinued operations plus the pre-tax, non-income, tax-related adjustments included in its reconciliation of adjusted net income (excluding dilutive share impact). The income tax impact item included in its reconciliation of adjusted net income primarily represents the tax impact of adjustments between net income and adjusted net income as well as deferred tax benefits recognized upon pay down of intercompany installment notes created by internal sales of acquired intangible assets. Net sales growth on a constant-currency basis measures the change in net sales between current- and prior-year periods using a constant currency, the exchange rate in effect during the applicable prior-year period. Free cash flow for the fourth quarter represents net cash provided by operating activities of $278.8 million less capital expenditures of $34.8 million, each as prepared in accordance with GAAP. Free cash flow for the fiscal year represents net cash provided by operating activities of $727.3 million less capital expenditures of $186.1 million, each as prepared in accordance with GAAP. The company has provided these adjusted financial measures because they are used by management, along with financial measures in accordance with GAAP, to evaluate the company's operating performance. In addition, the company believes that they will be used by certain investors to measure Mallinckrodt's operating results. Management believes that presenting these adjusted measures provides useful information about the company's performance across reporting periods on a consistent basis by excluding items that the company does not believe are indicative of its core operating performance. These adjusted measures should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP. The company's definition of these adjusted measures may differ from similarly titled measures used by others. Because adjusted financial measures exclude the effect of items that will increase or decrease the company's reported results of operations, management strongly encourages investors to review the company's consolidated financial statements and publicly filed reports in their entirety. A reconciliation of certain of these historical adjusted financial measures to the most directly comparable GAAP financial measures is included in the tables accompanying this release. Further information regarding non-GAAP financial measures can be found on the Investor Relations page of the company's website. CAUTIONARY STATEMENTS RELATED TO FORWARD-LOOKING STATEMENTS Statements in this document that are not strictly historical, including statements regarding future financial condition and operating results, economic, business, competitive and/or regulatory factors affecting Mallinckrodt's businesses and any other statements regarding events or developments the company believes or anticipates will or may occur in the future, may be "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, and involve a number of risks and uncertainties. There are a number of important factors that could cause actual events to differ materially from those suggested or indicated by such forward-looking statements and you should not place undue reliance on any such forward-looking statements. These factors include risks and uncertainties related to, among other things: general economic conditions and conditions affecting the industries in which Mallinckrodt operates; the commercial success of Mallinckrodt's products; Mallinckrodt's ability to realize anticipated growth, synergies and cost savings from acquisitions; conditions that could necessitate an evaluation of Mallinckrodt's goodwill and/or intangible assets for possible impairment; changes in laws and regulations; Mallinckrodt's ability to successfully integrate acquisitions of operations, technology, products and businesses generally and to realize anticipated growth, synergies and cost savings; Mallinckrodt's and Mallinckrodt's licensers' ability to successfully develop or commercialize new products; Mallinckrodt's and Mallinckrodt's licensers' ability to protect intellectual property rights; Mallinckrodt's ability to receive procurement and production quotas granted by the U.S. Drug Enforcement Administration; customer concentration; Mallinckrodt's reliance on certain individual products that are material to its financial performance; cost containment efforts of customers, purchasing groups, third-party payers and governmental organizations; the reimbursement practices of a small number of public or private insurers; pricing pressure on certain of Mallinckrodt's products due to legal changes or changes in insurers' reimbursement practices resulting from recent increased public scrutiny of healthcare and pharmaceutical costs; limited clinical trial data for H.P. Acthar Gel; complex reporting and payment obligations under healthcare rebate programs; Mallinckrodt's ability to navigate price fluctuations; future changes to U.S. and foreign tax laws; Mallinckrodt's ability to achieve expected benefits from restructuring activities; complex manufacturing processes; competition; product liability losses and other litigation liability; ongoing governmental investigations; material health, safety and environmental liabilities; retention of key personnel; conducting business internationally; the effectiveness of information technology infrastructure; and cybersecurity and data leakage risks. These and other factors are identified and described in more detail in the "Risk Factors" section of Mallinckrodt's Annual Report on Form 10-K for the fiscal year ended December 29, 2017, which the company expects to file later today. The forward-looking statements made herein speak only as of the date hereof and Mallinckrodt does not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise, except as required by law. 1 Generally accepted accounting principles in the United States 2 The as-reported and constant currency growth percentages are identical for H.P. Acthar Gel and OFIRMEV. 3 Excludes external manufacturing operations which will remain a continuing operation CONTACTS Investor Relations Daniel J. Speciale, CPA Media Meredith Fischer
MALLINCKRODT PLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in millions, except per share data)
Three Months Ended
December 29, Percent of December 30, Percent of
2017 2016 Net sales
Net sales
---
Net sales $792.3 100.0% $829.9 100.0%
Cost of sales 371.3 46.9 384.1 46.3
----- -----
Gross profit 421.0 53.1 445.8 53.7
Selling, general and
administrative
expenses 175.0 22.1 368.3 44.4
Research and
development expenses 86.4 10.9 66.2 8.0
Restructuring charges,
net (0.9) (0.1) 3.8 0.5
Non-restructuring
impairment charges 63.7 8.0 214.3 25.8
Gains on divestiture
and license (0.3) - - -
---- ---
Operating income
(loss) 97.1 12.3 (206.8) (24.9)
Interest expense (90.1) (11.4) (91.3) (11.0)
Interest income 1.8 0.2 0.5 0.1
Other loss, net (0.2) - (0.9) (0.1)
---- ----
Income (loss) from
continuing operations
before income taxes 8.6 1.1 (298.5) (36.0)
Income tax benefit (1,598.8) (201.8) (121.7) (14.7)
-------- ------
Income (loss) from
continuing operations 1,607.4 202.9 (176.8) (21.3)
Income from
discontinued
operations, net of
income taxes 1.3 0.2 23.6 2.8
--- ----
Net income (loss) $1,608.7 203.0% $(153.2) (18.5)%
======== =======
Basic earnings per share:
Income (loss) from
continuing operations $17.43 $(1.67)
Income from
discontinued
operations 0.01 0.22
Net income (loss) 17.45 (1.45)
Diluted earnings per share:
Income (loss) from
continuing operations $17.40 $(1.67)
Income from
discontinued
operations 0.01 0.22
Net income (loss) 17.41 (1.45)
Weighted-average number of shares
outstanding:
Basic 92.2 105.7
Diluted 92.4 105.7
MALLINCKRODT PLC
NON-GAAP MEASURES
(unaudited, in millions except per share data)
Three Months Ended
December 29, 2017 December 30, 2016
Gross SG&A Net Diluted Gross SG&A Net Diluted
profit income profit (loss)
net income net (loss)
income income
per
share per share
---------
GAAP $421.0 $175.0 $1,608.7 $17.41 $445.8 $368.3 $(153.2) $(1.45)
Adjustments:
Intangible asset
amortization 169.8 (1.7) 171.5 1.86 174.0 (1.7) 175.7 1.65
Restructuring and related
charges, net (1) 0.5 (1.1) 0.7 0.01 0.5 (1.0) 5.3 0.05
Inventory step-up expense 1.5 - 1.5 0.02 3.6 - 3.6 0.03
Income from discontinued
operations - - (1.3) (0.01) - - (23.6) (0.22)
Change in contingent
consideration fair value - 45.5 (45.5) (0.49) - (1.3) 1.3 0.01
Acquisition related
expenses - (5.1) 5.1 0.06 - (0.1) 0.1 -
Non-restructuring
impairment charges - - 63.7 0.69 - - 207.0 1.95
Significant legal and
environmental charges - - - - - (102.0) 102.0 0.96
Pension settlement charge - - - - - (45.0) 45.0 0.42
Reorganization of legal
entity ownership (2) - - (1,082.0) (11.71) - - - -
U.S. Tax Reform (3) - - (457.4) (4.95) - - - -
Income taxes (4) - - (78.8) (0.85) - - (159.6) (1.50)
As adjusted $592.8 $212.6 $186.2 $2.01 $623.9 $217.2 $203.6 $1.91
====== ====== ====== ====== ====== ======
Percent of net sales 74.8% 26.8% 23.5% 75.2% 26.2% 24.5%
(1) Includes pre-tax accelerated
depreciation.
(2) Represents the incremental tax and
interest expense associated with
non-cash internal legal entity
reorganization. Of the total
adjustment, $8.9 million represents
a one-time charge to interest
expense related to the reduction in
the Company's interest-bearing
deferred tax liabilities.
(3) Represents the incremental tax and
interest expense associated with the
impact of the U.S. tax reform bill
being signed into law. Of the total
adjustment, $0.5 million represents
a one-time reduction to interest
expense related to the reduction in
the Company's interest-bearing
deferred tax liabilities.
(4) Includes tax effects of above
adjustments as well as the
elimination of deferred tax benefits
recognized upon pay down of
intercompany installment notes
created by internal sales of
acquired intangible assets.
MALLINCKRODT PLC
SEGMENT NET SALES AND CONSTANT-CURRENCY GROWTH
(unaudited, in millions)
Three Months Ended
December 29, December 30, Percent Currency Constant-
2017 2016 impact currency
change growth
------
Specialty
Brands $582.2 $603.1 (3.5)% 0.2% (3.7)%
Specialty
Generics 195.8 212.9 (8.0) 0.5 (8.5)
778.0 816.0 (4.7) 0.3 (5.0)
Other(1) 14.3 13.9 2.9 - 2.9
Net sales $792.3 $829.9 (4.5)% 0.3% (4.8)%
====== ======
(1) Represents net sales from an
ongoing, post-divestiture supply
agreement with the acquirer of the
contrast media and delivery systems
("CMDS") business. Amounts for
periods prior to the divestiture
represent the reclassification of
intercompany sales to third-party
sales to conform with the expected
presentation of the ongoing supply
agreement.
MALLINCKRODT PLC
SELECT PRODUCT LINE NET SALES
(unaudited, in millions)
Three Months Ended
December 29, December 30, Percent Currency Constant-
2017 2016 impact currency
change growth
------
Specialty Brands
H.P. Acthar Gel $295.2 $325.4 (9.3)% - % (9.3)%
Inomax 125.6 118.3 6.2 0.1 6.1
Ofirmev 78.0 72.5 7.6 - 7.6
Therakos 57.2 47.4 20.7 2.3 18.4
Hemostasis 12.3 13.4 (8.2) - (8.2)
Other 13.9 26.1 (46.7) 0.6 (47.3)
Specialty Brands Total $582.2 $603.1 (3.5)% 0.2% (3.7)%
====== ======
Specialty Generics
Hydrocodone (API) and
hydrocodone-containing
tablets $22.0 $23.2 (5.2)% - % (5.2)%
Oxycodone (API) and oxycodone-
containing tablets 18.2 24.3 (25.1) - (25.1)
Methylphenidate ER 13.5 22.0 (38.6) - (38.6)
Other controlled substances 90.6 104.9 (13.6) - (13.6)
Other 51.5 38.5 33.8 2.8 31.0
Specialty Generics Total $195.8 $212.9 (8.0)% 0.5% (8.5)%
====== ======
MALLINCKRODT PLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in millions, except per share data)
Fiscal Year Ended
December 29, Percent of September 30, Percent of
2017 2016
Net sales Net sales
--- ---------
Net sales $3,221.6 100.0% $3,380.8 100.0%
Cost of sales 1,565.3 48.6 1,525.8 45.1
------- -------
Gross profit 1,656.3 51.4 1,855.0 54.9
Selling, general and
administrative
expenses 920.9 28.6 925.3 27.4
Research and
development expenses 277.3 8.6 262.2 7.8
Restructuring charges,
net 31.2 1.0 33.3 1.0
Non-restructuring
impairment charges 63.7 2.0 16.9 0.5
Gains on divestiture
and license (56.9) (1.8) - -
----- ---
Operating income 420.1 13.0 617.3 18.3
Interest expense (369.1) (11.5) (384.6) (11.4)
Interest income 4.6 0.1 1.3 -
Other income (loss),
net 6.0 0.2 (0.6) -
--- ----
Income from continuing
operations before
income taxes 61.6 1.9 233.4 6.9
Income tax benefit (1,709.6) (53.1) (255.6) (7.6)
-------- ------
Income from continuing
operations 1,771.2 55.0 489.0 14.5
Income from
discontinued
operations, net of
income taxes 363.2 11.3 154.7 4.6
----- -----
Net income $2,134.4 66.3% $643.7 19.0%
======== ======
Basic earnings per share:
Income from continuing
operations $18.13 $4.42
Income from
discontinued
operations 3.72 1.40
Net income 21.85 5.82
Diluted earnings per share:
Income from continuing
operations $18.09 $4.39
Income from
discontinued
operations 3.71 1.39
Net income 21.80 5.77
Weighted-average number of shares
outstanding:
Basic 97.7 110.6
Diluted 97.9 111.5
MALLINCKRODT PLC
NON-GAAP MEASURES
(unaudited, in millions except per share data)
Fiscal Year Ended
December 29, 2017 September 30, 2016
Gross SG&A Net Diluted Gross SG&A Net Diluted
profit income profit income
net net
income income
per per
share share
-----
GAAP $1,656.3 $920.9 $2,134.4 $21.80 $1,855.0 $925.3 $643.7 $5.77
Adjustments:
Intangible asset
amortization 685.8 (8.7) 694.5 7.09 692.8 (7.3) 700.1 6.28
Restructuring and related
charges, net (1) 2.1 (3.2) 36.4 0.37 1.8 (3.1) 38.2 0.34
Inventory step-up expense 10.1 - 10.1 0.10 24.3 - 24.3 0.22
Income from discontinued
operations - - (363.2) (3.71) - - (154.7) (1.39)
Change in contingent
consideration fair value - 41.4 (41.4) (0.42) - (4.4) 4.4 0.04
Acquisition related
expenses - (7.4) 7.4 0.08 - (6.9) 6.9 0.06
Non-restructuring
impairment charges - - 63.7 0.65 - - 16.9 0.15
Debt refinancing - - 10.0 0.10 - - - -
Pension settlement charges - (69.2) 69.2 0.71 - - - -
Intrathecal divestiture - - (56.6) (0.58) - - - -
Significant legal and
environmental charges - - - - - (14.5) 14.5 0.13
Reorganization of legal
entity ownership (2) - - (1,045.9) (10.68) - - - -
U.S. Tax Reform (3) - - (457.4) (4.67) - - - -
Income taxes (4) - - (327.8) (3.35) - - (418.6) (3.75)
As adjusted $2,354.3 $873.8 $733.4 $7.49 $2,573.9 $889.1 $875.7 $7.85
======== ====== ====== ======== ====== ======
Percent of net sales 73.1% 27.1% 22.8% 76.1% 26.3% 25.9%
(1) Includes pre-tax accelerated
depreciation.
(2) Represents the incremental tax and
interest expense associated with
non-cash internal legal entity
reorganization. Of the total
adjustment, $8.9 million represents
a one-time charge to interest
expense related to the reduction in
the Company's interest-bearing
deferred tax liabilities.
(3) Represents the incremental tax and
interest expense associated with the
impact of the U.S. tax reform bill
being signed into law. Of the total
adjustment, $0.5 million represents
a one-time reduction to interest
expense related to the reduction in
the Company's interest-bearing
deferred tax liabilities.
(4) Includes tax effects of above
adjustments as well as the
elimination of deferred tax benefits
recognized upon pay down of
intercompany installment notes
created by internal sales of
acquired intangible assets.
MALLINCKRODT PLC
SEGMENT NET SALES AND CONSTANT-CURRENCY GROWTH
(unaudited, in millions)
Fiscal Year Ended
December 29, September 30, Percent Currency Constant-
2017 2016 impact currency
change growth
------
Specialty
Brands $2,325.3 $2,300.6 1.1% (0.1)% 1.2%
Specialty
Generics 839.5 1,025.2 (18.1) 0.2 (18.3)
3,164.8 3,325.8 (4.8) - (4.8)
Other(1) 56.8 55.0 3.3 - 3.3
Net sales $3,221.6 $3,380.8 (4.7)% - % (4.7)%
======== ========
(1) Represents net sales from an
ongoing, post-divestiture supply
agreement with the acquirer of the
CMDS business. Amounts for periods
prior to the divestiture represent
the reclassification of
intercompany sales to third-party
sales to conform with the expected
presentation of the ongoing supply
agreement.
MALLINCKRODT PLC
SELECT PRODUCT LINE NET SALES
(unaudited, in millions)
Fiscal Year Ended
December 29, September 30, Percent Currency Constant-
2017 2016 impact currency
change growth
------
Specialty Brands
H.P. Acthar Gel $1,195.1 $1,160.4 3.0% - % 3.0%
Inomax 505.2 474.3 6.5 - 6.5
Ofirmev 302.5 284.3 6.4 - 6.4
Therakos 214.9 207.6 3.5 (1.7) 5.2
Hemostasis 55.1 42.5 29.6 - 29.6
Other 52.5 131.5 (60.1) 0.1 (60.2)
Specialty Brands Total $2,325.3 $2,300.6 1.1% (0.1)% 1.2%
======== ========
Specialty Generics
Hydrocodone (API) and
hydrocodone-containing
tablets $85.3 $146.5 (41.8)% - % (41.8)%
Oxycodone (API) and oxycodone-
containing tablets 78.8 126.2 (37.6) - (37.6)
Methylphenidate ER 71.7 103.5 (30.7) - (30.7)
Other controlled substances 409.6 468.1 (12.5) - (12.5)
Other 194.1 180.9 7.3 1.0 6.3
Specialty Generics Total $839.5 $1,025.2 (18.1)% 0.2% (18.3)%
====== ========
MALLINCKRODT PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in millions)
December 29, December 30,
2017 2016
---- ----
Assets
Current Assets:
Cash and cash equivalents $1,260.9 $342.0
Accounts receivable, net 445.8 431.0
Inventories 340.4 350.7
Prepaid expenses and other
current assets 84.1 131.9
Notes receivable 154.0 -
Current assets held for
sale - 310.9
Total current assets 2,285.2 1,566.5
Property, plant and
equipment, net 966.8 881.5
Goodwill 3,482.7 3,498.1
Intangible assets, net 8,375.0 9,000.5
Other assets 171.2 259.7
Total Assets $15,280.9 $15,206.3
========= =========
Liabilities and Shareholders' Equity
Current Liabilities:
Current maturities of long-
term debt $313.7 $271.2
Accounts payable 113.3 112.1
Accrued payroll and
payroll-related costs 98.5 76.1
Accrued interest 57.0 68.7
Income taxes payable 15.8 101.7
Accrued and other current
liabilities 452.1 557.1
Current liabilities held
for sale - 120.3
--- -----
Total current liabilities 1,050.4 1,307.2
Long-term debt 6,420.9 5,880.8
Pension and postretirement
benefits 67.1 136.4
Environmental liabilities 73.2 73.0
Deferred income taxes 689.0 2,398.1
Other income tax
liabilities 94.1 70.4
Other liabilities 364.2 356.1
Total Liabilities 8,758.9 10,222.0
Shareholders' Equity:
Preferred shares - -
Ordinary shares 18.4 23.6
Ordinary shares held in
treasury at cost (1,564.7) (919.8)
Additional paid-in capital 5,492.6 5,424.0
Retained earnings 2,588.6 529.0
Accumulated other
comprehensive income (12.9) (72.5)
----- -----
Total Shareholders' Equity 6,522.0 4,984.3
------- -------
Total Liabilities and
Shareholders' Equity $15,280.9 $15,206.3
========= =========
MALLINCKRODT PLC
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
(unaudited, in millions)
Fiscal Year Ended Three Months Fiscal Year
Ended Ended
----------------- ------------- ------------
December 29, December 30, September 30,
2017 2016 2016
---- ---- ----
Cash Flows From Operating Activities:
Net income (loss) $2,134.4 $(153.2) $643.7
Adjustments to reconcile net cash from
operating activities:
Depreciation and
amortization 808.3 203.2 834.5
Share-based
compensation 59.2 11.0 42.9
Deferred income taxes (1,744.1) (204.3) (432.9)
Non-cash impairment
charges 63.7 214.3 16.9
Inventory provisions 34.1 8.5 29.2
Gain on disposal of
discontinued
operations (418.1) - (95.3)
Other non-cash items (21.4) (9.2) 29.6
Changes in assets and liabilities, net
of the effects of acquisitions:
Accounts receivable,
net (16.2) 36.5 31.2
Inventories (23.6) (26.3) (17.3)
Accounts payable (25.8) 5.4 (9.7)
Income taxes (34.2) 0.6 93.9
Other (89.0) 109.1 17.9
----- ----- ----
Net cash from
operating activities 727.3 195.6 1,184.6
----- ----- -------
Cash Flows From Investing Activities:
Capital expenditures (186.1) (65.2) (182.9)
Acquisitions and
intangibles, net of
cash acquired (76.3) (1.8) (245.4)
Proceeds from disposal
of discontinued
operations, net of
cash 576.9 - 266.7
Other 3.9 (10.2) 6.0
--- ----- ---
Net cash from
investing activities 318.4 (77.2) (155.6)
----- ----- ------
Cash Flows From Financing Activities:
Issuance of external
debt 1,465.0 190.0 98.3
Repayment of external
debt and capital
leases (917.2) (86.7) (568.6)
Debt financing costs (12.7) - (0.1)
Proceeds from exercise
of share options 4.1 0.4 14.0
Repurchase of shares (651.7) (158.8) (652.9)
Other (17.7) 1.2 (53.0)
----- --- -----
Net cash from
financing activities (130.2) (53.9) (1,162.3)
------ ----- --------
Effect of currency
rate changes on cash 2.5 (3.0) 0.3
--- ---- ---
Net change in cash,
cash equivalents and
restricted cash 918.0 61.5 (133.0)
Cash, cash equivalents
and restricted cash
at beginning of
period 361.1 299.6 432.6
Cash, cash equivalents
and restricted cash
at end of period $1,279.1 $361.1 $299.6
======== ====== ======
Cash and cash
equivalents at end of
period $1,260.9 $342.0 $280.5
Restricted cash
included in prepaid
expenses and other
assets at end of
period - 0.1 0.1
Restricted cash
included in other
long-term assets at
end of period 18.2 19.0 19.0
Cash, cash equivalents
and restricted cash
at end of period $1,279.1 $361.1 $299.6
======== ====== ======
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Company Codes: NYSE:MNK |