ALLEGAN, Mich., May 6 /PRNewswire-FirstCall/ -- Perrigo Company today announced results for its third quarter fiscal year 2008 and nine months ended March 29, 2008.
These reported results include an acquisition-related write-off of the in- process research and development (IPR&D) of $2.0 million after-tax and a charge for the write-off of the step-up of inventory acquired of $2.1 million after-tax, both related to our January 9, 2008 acquisition of Galpharm Healthcare, Ltd., a leading supplier of over-the-counter store brand pharmaceuticals in the United Kingdom. (Refer to Table II at the end of this press release for additional adjustments in the current year and prior year periods and additional non-GAAP disclosure information.)
Third Quarter results
Net sales for the third quarter of fiscal 2008 were a record $503.7 million, an increase of $141.4 million, or 39 percent, compared with $362.3 million last year. Reported net income was $40.0 million, or $0.42 per share, compared with net income of $17.1 million, or $0.18 per share a year ago. In the third quarter of fiscal 2008 and fiscal 2007, the Company recorded several net of tax charges, summarized as follows:
Excluding the impact of the charges noted above, adjusted net income for the third quarter of fiscal 2008 was $44.3 million, or $0.47 per share. For the third quarter of fiscal year 2007, adjusted net income was $22.1 million, or $0.24 per share.
(Refer to Table II at the end of this press release for additional non- GAAP disclosure information.)
Perrigo’s Chairman and CEO Joseph C. Papa commented, “For the second quarter in a row, we delivered record sales and earnings with successful launches of two of the largest products in our 120 year history, Omeprazole and Cetirizine. We also began shipping products from our Galpharm acquisition in the United Kingdom and launched Clobetasol Foam in Rx. The results this quarter clearly show the benefits of our long term commitment to our new product pipeline.”
Nine Months Results
Net sales for the nine months ended March 29, 2008 were $1,321.9 million, compared with $1,073.1 million last year, an increase of $249 million, or 23 percent. Reported net income for the nine months was $108.3 million, or $1.14 per share, compared with $55.0 million, or $0.59 per share last year. In the first nine months of fiscal 2008 and fiscal 2007, the Company recorded several net of tax charges, summarized as follows:
Excluding the impact of the charges noted above, adjusted net income for the nine months of fiscal 2008 was $112.6 million, or $1.18 per share. For the nine months of fiscal 2007, adjusted net income was $60.5 million, or $0.65 per share.
(Refer to Table II at the end of this press release for additional non- GAAP disclosure information.)
Consumer Healthcare
Consumer Healthcare segment net sales for the quarter were a record $373 million, up $111 million, or 42 percent, compared with $262 million last year. The sales increase included $97 million in new product revenue, led by Omeprazole and Cetirizine, strong sales in the cough/cold, analgesic and smoking cessation product categories. Reported operating income was $51.7 million, compared with $21.9 million last year. Adjusted operating income was $54.9 million, compared with adjusted operating income of $22.2 million a year ago.
On December 28, 2007, Perrigo announced it received final approval from the FDA for its Abbreviated New Drug Application (ANDA) for OTC Cetirizine Hydrochloride Tablets, 5 and 10 mg. The product is being marketed under store brand labels and is comparable to McNeil Consumer Healthcare’s Zyrtec(R) Tablets. Store brand shipments began in January.
On January 9, 2008, the Company announced it acquired Galpharm Healthcare, Ltd., a leading United Kingdom-based supplier of over-the-counter store brand products, for approximately $87 million. The acquisition is expected to add more than $55 million in net sales annually and be accretive to earnings in the first 12 months.
On March 4, 2008, Perrigo announced that it began shipping 20 mg Omeprazole delayed released tablets to its retail customers. This product delivers the same medicine at the same dose as Prilosec OTC(R) and is indicated for the treatment of frequent heartburn.
For the first nine months of fiscal 2008, Consumer Healthcare net sales were $961.5 million, up $181.5 million, or 23 percent, compared with $780.0 million last year. The sales gain was driven by new product sales of $117 million, largely Omeprazole, Cetirizine and Smoking Cessation products. Reported operating income was $120.5 million, compared with $56.8 million a year ago. Adjusted operating income was $123.8 million, compared with adjusted operating income of $57.7 million last year.
Rx Pharmaceuticals
The Rx Pharmaceutical segment reported third quarter net sales of $49.2 million, including $3.1 million of service and royalty revenue and an $8.5 million payment for termination of a license agreement. This represents an increase of $15.2 million, or 45 percent, compared with $34.0 million last year, of which $5.8 million was service and royalty revenue. Operating income was $11.3 million, up from $7.6 million a year ago, as a result of increased volume and improved margins.
For the first nine months of fiscal 2008, net sales were $122.8 million, including $11.9 million of service and royalty revenue and an $8.5 million payment for termination of a license agreement, resulting in an increase of $29.1 million, or 31 percent, compared with $93.7 million last year, of which $15.8 million was service and royalty revenue. Operating income was $27.2 million, up $10.2 million, or 60 percent, from $17.0 million in the year-ago period.
API
API segment third quarter net sales were $37.8 million, compared with $30.1 million last year, an increase of 26 percent. Operating income was $6.0 million, compared with $4.2 million last year. API performance in the quarter benefited from a one-time $4.9 million accrual reversal related to a long standing customer contract negotiation. For the first nine months of fiscal 2008, net sales were $111.2 million, up $22.7 million, or 26 percent from $88.5 million last year. Operating income was $16.7 million, compared with $14.9 million a year ago.
Other
The Other category, consisting of Israel Consumer Products and Israel Pharmaceutical and Diagnostic Products segments, reported third quarter net sales of $43.6 million, compared with $35.9 million a year ago, an increase of 22 percent. Operating income was $0.9 million, compared with $1.6 million last year. For the first nine months of fiscal 2008, net sales were $126.3 million, up $15.4 million, or 14 percent, compared with $110.9 million last year. Operating income was $6.9 million, compared with $7.0 million last year.
Unallocated Expenses
In the third quarter of fiscal 2008, unallocated expenses were $10.2 million, compared with $10.6 million a year ago. Both periods included an acquisition-related write-off of IPR&D. These pre-tax expenses were $2.8 million and $8.3 million, respectively. For the nine months in fiscal 2008, unallocated expenses were $15.7 million, compared with $18.7 million last year. Both periods included acquisition-related write-offs of IPR&D, which were $2.8 million and $8.3 million, respectively.
Outlook
The Company has refined its expected range of adjusted EPS for the full fiscal year to $1.55 to $1.60 per share, excluding acquisition and restructuring related charges. It has increased its full-year tax rate expectations to a range of 23 to 27 percent. The Company still expects to generate cash from operations in the range of $180 million to $200 million for the full fiscal year.
(Refer to Table III at the end of this press release for additional non- GAAP earnings guidance disclosure information.)
Perrigo’s Chairman and CEO Joseph C. Papa concluded, “In this dynamic environment, our focus continues to be executing our plan, maintaining quality, improving our customer service and lowering working capital. While we are very pleased with our performance to date, there is always work to be done to continue launching quality, affordable new healthcare products into the marketplace.”
Perrigo Company is a leading global healthcare supplier that develops, manufactures and distributes over-the-counter (OTC) and prescription pharmaceuticals, nutritional products, active pharmaceutical ingredients (API) and consumer products. 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 manufacturing facilities are the United States, Israel, Mexico and the United Kingdom. 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, 2007, 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.
CONTACT: Arthur J. Shannon, Vice President, Investor Relations and
Communication, +1-269-686-1709, ajshannon@perrigo.com
Web site: http://www.perrigo.com/
