The Perrigo Company (NASDAQ: PRGO) today announced results for the third quarter and nine months of fiscal 2004 ended March 27, 2004.
Perrigo Company
(in thousands, except per share amounts)
Third Quarter Year-To-Date
2004 2003 2004 2003
Sales $230,740 $202,616 $685,639 $643,352
Net Income $17,739 $14,132 $72,482 $49,724
Diluted Shares 72,598 70,601 72,035 70,967
Diluted EPS $0.24 $0.20 $1.01 $0.70
Net sales for the third quarter were $230.7 million, compared with $202.6 million last year, an increase of 14 percent. Net income was $17.7 million, or $0.24 per share, compared with net income of $14.1 million, or $0.20 per share, a year ago.
Commenting on third quarter results, Perrigo Chairman, President and Chief Executive Officer, David T. Gibbons, said, "Our third quarter results were driven by strong growth in revenues, coming primarily from new products launched earlier in the year, new products shipping in the current period, and revenue from Peter Black Pharmaceuticals, a United Kingdom-based nutritional business acquired in December 2003. In the quarter, we recorded strong sales of loratadine D24, the store brand equivalent to Claritin-D® 24; had strong initial shipments of loratadine syrup and loratadine quick dissolve tablets; and experienced growth in the vitamin category.
"We are pleased with the excellent results for the quarter and the past nine months. Sales volume to date has exceeded expectations as new products have been well received and we were able to refill the cough and cold product pipeline following December's unusually high peak in demand. The incremental volume has translated into greater leverage with operating income improving by 15 percent to $90.6 million from $78.6 million last year. Both sales and profit growth contributed to operating cash flow to date of $104 million up 27 percent from $82 million last year."
Net sales for the nine months ended March 27, 2004 were $685.6 million, an increase of seven percent, compared with $643.4 million last year. Net income for the nine months was $72.5 million, or $1.01 per share, compared with $49.7 million, or $0.70 per share, last year. Excluding a tax benefit of $13.1 million, or $0.18 per share, in the current year and a favorable lawsuit settlement of $2 million after-tax, or $0.03 per share, last year, net income was $59.4 million, or $0.83 per share, compared with $47.7 million, or $0.67 per share, a year ago.
In the third quarter, the Company received final approval from the U.S. Food and Drug Administration (FDA) for three new products granted through the FDA's Abbreviated New Drug Application (ANDA) process.
1. Ibuprofen Chewable Tablets - In January 2004, the FDA determined that Ibuprofen Chewable Tablets, 50 mg and 100 mg, produced by Perrigo, are bioequivalent to Children's Motrin® Tablets, 50 mg, and Junior Strength Motrin® Tablets, 100 mg, marketed by McNeil Consumer Products Company. With this approval, Perrigo is eligible for 180 days of market exclusivity. Annual retail sales for the branded products are approximately $21 million.
2. Naproxen Sodium/Pseudoephedrine Tablets - In March 2004, the FDA determined that Naproxen Sodium and Pseudoephedrine Hydrocholoride Extended- release Tablets, 200 mg/120 mg, produced by Perrigo, are bioequivalent to Aleve® Cold and Sinus Extended-release Tablets, 200 mg/120 mg, marketed by Bayer Healthcare, LLC. Annual retail sales for the branded product exceed $20 million.
3. Miconazole Nitrate Cream - In March 2004, the FDA determined that Miconazole Nitrate Cream USP, 4%/2% Combination Pack, produced by Perrigo, is bioequivalent to Monistat® 3 Combination Pack, marketed by McNeil Personal Products Company. Annual retail sales for the branded product are approximately $18 million.
Over the past seven months, seven approvals have been granted to the Company and its alliance partners for ANDA products. Annual retail sales for the equivalent national brand products currently exceed $220 million.
Commenting on the outlook for the fourth quarter and full year, Mr. Gibbons stated, "Consistent with historical seasonality, we expect sequentially lower fourth quarter sales and profits and expect earnings to range from $0.07 to $0.09 per share. With year-to-date earnings of $1.01 per share, including an income tax benefit of $0.18 per share, we now expect earnings of $1.08 to $1.10 for the full year, compared with $0.76 per share for fiscal 2003, an increase of more than 40 percent.
Perrigo will host a conference call to discuss third quarter fiscal 2004 results at 11:00 a.m. (ET) today. The call and replay will be available via webcast on the Company's Web site at www.perrigo.com/investor/ or by phone, toll free, 888-489-0147. A taped replay of the call will be available beginning at approximately 2:30 p.m. (ET) Friday, April 23 until midnight Friday, April 30. To listen to the replay, call 800-642-1687, access code 6891689.
The Company is furnishing this earnings release to the Securities and Exchange Commission via Form 8-K and it is hereby incorporated by reference. The information provided on Form 8-K includes a summary of each non-GAAP financial measure included in this earnings release and the reasons management believes these non-GAAP financial measures are useful to investors.
Perrigo Company is the nation's largest manufacturer of over-the-counter (non-prescription) pharmaceutical and nutritional products sold by supermarket, drug, and mass merchandise chains under their own labels. The Company's products include over-the-counter pharmaceuticals such as analgesics, cough and cold remedies, gastrointestinal, and feminine hygiene products, and nutritional products, such as vitamins, nutritional supplements and nutritional drinks. Visit Perrigo on the Internet (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. Please see the "Cautionary Note Regarding Forward-Looking Statements" on pages 25 - 30 of the Company's Form 10-K for the year ended June 28, 2003 for a discussion of certain important factors that relate to forward-looking statements contained in this press release. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. 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.
Claritin® is a registered trademark of Schering-Plough Corporation.
Motrin® is a registered trademark of McNeil Consumer Products Company.
Aleve® is a registered trademark of Bayer Healthcare, LLC.
Monistat® is a registered trademark of McNeil Personal Products Company.
PERRIGO COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
Third Quarter Year-To-Date
2004 2003 2004 2003
Net sales $230,740 $202,616 $685,639 $643,352
Cost of sales 164,108 143,910 487,125 458,671
Gross profit 66,632 58,706 198,514 184,681
Operating expenses
Distribution 4,117 3,814 11,472 11,924
Research and development 6,685 5,468 18,584 16,237
Selling and administration 29,318 26,899 77,831 81,049
Subtotal 40,120 36,181 107,887 109,210
Unusual litigation - - - (3,128)
Total 40,120 36,181 107,887 106,082
Operating income 26,512 22,525 90,627 78,599
Interest and other, net (1,206) (373) (2,159) (1,095)
Income before income taxes 27,718 22,898 92,786 79,694
Income tax expense 9,979 8,766 20,304 29,970
Net income $17,739 $14,132 $72,482 $49,724
Earnings per share
Basic $0.25 $0.20 $1.03 $0.71
Diluted $0.24 $0.20 $1.01 $0.70
Weighted average shares outstanding
Basic 70,296 69,337 70,103 69,781
Diluted 72,598 70,601 72,035 70,967
Dividends declared per share $0.04 $0.03 $0.10 $0.03
PERRIGO COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 27, June 28, March 29,
2004 2003 2003
Assets (unaudited) (unaudited)
Current assets
Cash and cash equivalents $156,417 $93,827 $105,233
Accounts receivable 102,299 87,018 84,973
Inventories 154,847 160,326 156,043
Current deferred income taxes 30,041 32,643 26,828
Prepaid expenses and other current
assets 19,846 5,383 6,064
Total current assets 463,450 379,197 379,141
Property and equipment 468,056 429,115 417,673
Less accumulated depreciation 241,724 210,337 206,907
226,332 218,778 210,766
Goodwill 35,919 35,919 35,919
Non-current deferred income taxes 8,062 3,968 4,209
Other non-current assets 12,884 6,108 6,127
$746,647 $643,970 $636,162
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $89,289 $72,186 $73,489
Notes payable 9,746 8,980 8,741
Payroll and related taxes 35,530 40,535 34,539
Accrued expenses 49,308 36,590 36,469
Accrued income taxes - 5,568 8,815
Current deferred income taxes 4,095 2,683 3,225
Total current liabilities 187,968 166,542 165,278
Non-current deferred income taxes 26,315 25,484 29,355
Other non-current liabilities 5,490 3,520 3,193
Shareholders' equity
Preferred stock, without par
value, 10,000 shares authorized - - -
Common stock, without par value,
200,000 shares authorized 99,622 88,990 82,564
Unearned compensation (631) (111) (262)
Accumulated other comprehensive
income 3,801 1,282 348
Retained earnings 424,082 358,263 355,686
Total shareholders' equity 526,874 448,424 438,336
$746,647 $643,970 $636,162
Supplemental Disclosures of Balance
Sheet Information
Allowance for doubtful accounts $7,606 $10,242 $9,907
Allowance for inventory $22,493 $21,717 $19,806
Working capital $275,482 $212,655 $213,863
Preferred stock, shares issued - - -
Common stock, shares issued 70,595 70,034 69,425
PERRIGO COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Year-To-Date
2004 2003
Cash Flows From Operating
Activities
Net income $72,482 $49,724
Adjustments to derive cash flows
Depreciation and amortization 21,270 19,777
Compensation - stock options 3,848 3,998
Deferred income taxes 35 3,108
Changes in operating assets and liabilities,
net of amounts acquired in a
business acquisition
Accounts receivable (11,150) (2,845)
Inventories 13,551 (712)
Accounts payable 13,074 (750)
Payroll and related taxes (5,001) 3,195
Accrued income taxes (5,572) 718
Accrued expenses 9,879 4,038
Other (8,208) 1,682
Net cash from operating activities 104,208 81,933
Cash Flows For Investing Activities
Additions to property and equipment (18,638) (19,458)
Issuance of note receivable (10,000) -
Acquisition of a business (12,061) -
Investment in equity subsidiaries (2,000) (1,233)
Net cash for investing activities (42,699) (20,691)
Cash Flows From (For) Financing Activities
Borrowings (repayments) of
short-term debt, net 789 776
Tax benefit of stock transactions 813 153
Issuance of common stock 7,911 1,353
Repurchase of common stock (1,940) (33,682)
Cash dividends (6,664) (1,737)
Net cash from (for)
financing activities 909 (33,137)
Net Increase in Cash and Cash Equivalents 62,418 28,105
Cash and Cash Equivalents at
beginning of period 93,827 76,824
Effect of exchange rate changes on cash 172 304
Cash and Cash Equivalents at end
of period $156,417 $105,233
Supplemental Disclosures of Cash Flow Information
Cash paid during the year for
Interest $467 $598
Income taxes $25,188 $26,854
PERRIGO COMPANY
SEGMENT INFORMATION
(in thousands)
(unaudited)
Third Quarter Year-To-Date
2004 2003 2004 2003
Segment Sales
Consumer Healthcare $203,964 $183,560 $617,477 $583,913
UK Operations 21,789 11,039 49,417 36,223
Mexico Operations 4,987 8,017 18,745 23,216
Pharmaceuticals - - - -
Total $230,740 $202,616 $685,639 $643,352
Segment Operating Income
Consumer Healthcare $28,771 $21,020 $91,538 $74,360
UK Operations 159 624 1,493 2,402
Mexico Operations (771) 881 600 1,837
Pharmaceuticals (1,647) - (3,004) -
Total $26,512 $22,525 $90,627 $78,599
PERRIGO COMPANY
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except per share amounts)
(unaudited)
Third Quarter Year-To-Date
2004 2003 2004 2003
Net income (GAAP) $17,739 $14,132 $72,482 $49,724
Less: income tax benefit - - 13,100 -
Less: unusual litigation, net of tax - - - 2,000
Net income before income tax benefit
and unusual litigation $17,739 $14,132 $59,382 $47,724
Earnings per share:
Basic $0.25 $0.20 $0.85 $0.68
Diluted $0.24 $0.20 $0.83 $0.67
Weighted average shares outstanding:
Basic 70,296 69,337 70,103 69,781
Diluted 72,598 70,601 72,035 70,967
SOURCE: Perrigo Company
CONTACT: Ernest J. Schenk, Manager, Investor Relations and Communication
of Perrigo Company, +1-269-673-9212, E-mail: Investor@perrigo.com
Web site: http://www.perrigo.com/