ALLEGAN, Mich., Oct. 27, 2011 /PRNewswire/ -- Perrigo Company (Nasdaq: PRGO; TASE: PRGO) today announced results for its first quarter ended September 24, 2011.
Perrigo’s Chairman and CEO Joseph C. Papa commented, “We have started fiscal 2012 well, delivering record revenue and adjusted earnings for the quarter. 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. Store brand OTC market share continued to grow. We believe our value proposition will continue 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 (from continuing operations, in thousands, except per share amounts) (see the attached Table I for reconciliation to GAAP numbers) | |||
Fiscal 2012 | Fiscal 2011 | ||
First Quarter Ended | First Quarter Ended | ||
9/24/2011 | 9/25/2010 | ||
Net Sales | $725,295 | $641,322 | |
Reported Income | $70,458 | $73,678 | |
Adjusted Income | $103,320 | $81,350 | |
Reported Diluted EPS | $0.75 | $0.79 | |
Adjusted Diluted EPS | $1.10 | $0.87 | |
Diluted Shares | 93,953 | 93,269 | |
First Quarter Results
Net sales from continuing operations for the first quarter of fiscal 2012 were $725 million, an increase of 13% over the first quarter of fiscal 2011. Excluding charges as outlined in Table I at the end of this release, first quarter fiscal 2012 adjusted income from continuing operations was $103 million, or $1.10 per share, an increase of 27% from first quarter fiscal 2011. Reported income from continuing operations was $70 million, or $0.75 per share, down 4% from $74 million, or $0.79 per share, a year ago. This decrease was primarily the result of $0.21 per diluted share of acquisition-related costs.
Consumer Healthcare
Consumer Healthcare segment net sales in the first quarter were $412 million compared with $396 million in the first quarter last year, an increase of $16 million or 4%. The improvement was due primarily to an increase in sales of existing products of $9 million, primarily in the cough/cold and smoking cessation categories, along with new product sales of $15 million, primarily in the cough/cold and analgesics categories. In addition, net sales increased by $3 million due to favorable changes in foreign currency exchange rates. These combined increases were partially offset by a decline of $12 million in sales of existing products within the gastrointestinal product category driven by competitive pressures on a key product. First quarter gross profit for fiscal 2012 increased 1%, or $1 million, compared to fiscal 2011. Adjusted gross margin decreased 90 basis points in the first quarter of fiscal 2012 compared to fiscal 2011 due primarily to increased competitive pressures within the gastrointestinal product category.
Reported operating income was $64 million, compared to $71 million a year ago, largely as a result of increased competitive pressures within the gastrointestinal product category. On an adjusted basis, operating income was $67 million compared to $73 million in fiscal 2011. Adjusted operating margin decreased 230 basis points year-over-year for the quarter due to higher research and development (R&D) as a result of higher Paragraph IV litigation expenses, increased spending on developmental materials and increased administrative expenses and selling and marketing investments in Australia.
On July 21, 2011, the Company announced that it received approval from the U.S. Food and Drug Administration (FDA) to market over-the-counter (OTC) coated nicotine polacrilex gum USP, 2 mg and 4 mg cinnamon flavor.
Nutritionals
The Nutritionals segment reported first quarter net sales of $120 million, compared with $123 million a year ago. The decrease in sales was primarily the result of a decline in existing product sales in the vitamin, minerals and dietary supplements (VMS) category driven by increased competition. Adjusted operating income was approximately $19 million compared to $24 million last year resulting from infant nutrition product mix, an increase in R&D due to the timing of clinical trials and a rise in infant nutrition commodities costs.
Last week, the Company announced that it entered into a supply agreement with the Founder Group (Founder Pharma), a Beijing based conglomerate. The Company will supply Founder Pharma branded infant formula, manufactured in its U.S. facilities, for sale and distribution by Founder Pharma in China.
Rx Pharmaceuticals
The Rx Pharmaceuticals segment first quarter net sales were $128 million compared with $69 million a year ago, an increase of 84%. The increase in revenue was due primarily to sales of $39 million from the first quarter fiscal 2012 acquisition of Paddock Labs, new product sales of over $5 million and a lower degree of pricing pressures as compared to the prior year. Adjusted operating income was $61 million, an increase of $41 million from last year.
On July 26, 2011, the Company announced that it closed the acquisition of Paddock Labs for approximately $547 million in cash.
On August 30, 2011, the Company announced that it received final approval from the FDA for its Abbreviated New Drug Application (ANDA) for Ketoconazole Foam, 2%. The Company commenced shipping of the product and was first to file, enabling 180 days of marketing exclusivity.
API
The API segment reported first quarter net sales of $48 million compared with $37 million a year ago. This increase was due primarily to a $5 million increase in sales of existing products and new product sales of $3 million, along with $2 million resulting from favorable changes in foreign currency exchange rates.
Adjusted operating income grew to $15 million, or 31.7% of net sales, compared to $11 million, or 28.9% of net sales, a year ago.
Other
Continuing operations for the Other category reported first quarter net sales of $18 million, compared with $16 million a year ago. This increase was due primarily to new product sales of $1 million, along with $1 million as a result of favorable changes in foreign currency exchange rates. Adjusted operating income was approximately $1 million, representing a decrease in adjusted operating margin of 290 basis points from last year due to product mix.
Guidance
Chairman and CEO Joseph C. Papa concluded, “The strength of our diversified business model was evident this quarter, and as we look forward to the rest of fiscal 2012, we expect this to continue. We now expect reported fiscal 2012 earnings from continuing operations to be between $3.92 and $4.07 per share. Excluding the charges outlined in Table III at the end of this release, we now expect fiscal 2012 adjusted diluted earnings from continuing operations to be between $4.65 and $4.80 per share, up from our previously announced guidance of between $4.50$4.65 per share. This new range implies a year-over-year growth rate of adjusted earnings from continuing operations of 16% to 20% over fiscal 2011 adjusted EPS. Additionally, the realization of an $0.08 tax benefit in the first quarter due to the closing of various tax audit resolutions and statutory expiries allows us to adjust our expected tax rate for the full-year to be in a range of 27% to 29% from our previous range of 29% to 31%.”
Perrigo will host a conference call to discuss fiscal 2012 first quarter at 10:00 a.m. (ET) on Thursday, October 27, 2011. The conference call will be available live via webcast to interested parties on the Perrigo website http://www.perrigo.com or by phone 877-248-9413, International 973-582-2737, and reference ID# 16311573. A taped replay of the call will be available beginning at approximately 2:00 p.m. (ET) Thursday, October 27, 2011, until midnight Friday, November 4, 2011. To listen to the replay, call 855-859-2056, International 404-537-3406, access code 16311573.
Perrigo Company is a leading global healthcare supplier that develops, manufactures and distributes OTC and generic prescription (Rx) pharmaceuticals, infant formulas, nutritional products, and active pharmaceutical ingredients (API). The Company is the world’s largest manufacturer of OTC pharmaceutical products and infant formulas, both for the store brand market. The Company’s primary markets and locations of manufacturing and logistics operations are the United States, Israel, Mexico, the United Kingdom 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 25, 2011, 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.
