The Perrigo Company (NASDAQ: PRGO) today announced results for the first quarter of fiscal 2005 ended Sept. 25, 2004.
Perrigo Company
(In thousands, except per share amounts)
Fiscal 2005 Fiscal 2004
1st Quarter Ended 1st Quarter Ended
9/25/04 9/27/03
Sales $227,719 $211,839
Net Income $17,578 $16,508
Diluted EPS $0.24 $0.23
Diluted Shares 73,043 71,809
Net sales for the first quarter of fiscal 2005 were $227.7 million, an increase of eight percent from $211.8 million last year. Net income was $17.6 million, or $0.24 per share, compared with $16.5 million, or $0.23 per share, a year ago.
David T. Gibbons, Perrigo Chairman, President and Chief Executive Officer, stated, "We are pleased with our consolidated first quarter results and the good start to fiscal 2005. The increase in earnings is attributable to the strong performance of the U.S.-based Consumer Healthcare segment, which experienced volume growth in the allergy, cough/cold and vitamin categories and good control of expenses."
Consumer Healthcare
Consumer Healthcare net sales increased four percent to $199.5 million, compared with $192.8 million in the first quarter of fiscal 2004. The increase was due to the strong sales of the loratadine family of allergy medications, the sell-in of cough/cold products and higher unit sales of vitamins. Operating income increased 12 percent, or $2.9 million, to $27.8 million, compared with $24.9 million last year. Mr. Gibbons stated, "Our Consumer Healthcare business again demonstrated excellent operating leverage. Sales increased four percent, gross margin increased seven percent and operating income was up 12 percent. Our purchasing initiatives and manufacturing productivity projects are paying off."
Pharmaceuticals
The Pharmaceuticals segment recorded operating expenses of $1.3 million, compared with $0.3 million a year ago as the Company continued to fund its start-up generic prescription drug business.
United Kingdom
First quarter net sales of the United Kingdom Operations increased $10.6 million to $23.2 million. The December 2003 acquisition of Peter Black Pharmaceuticals accounted for approximately $9 million of the increase and currency fluctuations accounted for approximately $2 million. Operating income declined from $0.4 million last year to $0.2 million this year. The implementation of the merger integration plan for the Wrafton and Peter Black businesses continues to reduce the United Kingdom breakeven operating level. The turnaround will be evident in improved operating income over the last three quarters of fiscal 2005.
Mexico
The Mexico Operations experienced a sales decline of $1.5 million, compared with the first quarter last year, due to lower volume of government and distributor sales. The disappointing sales led to a loss for the quarter. The business is making good progress in changing its business model, with retail store brand sales growing 30 percent in the quarter, and now representing one-third of total sales.
New Product Approvals
On Oct. 5, the Company announced it had received final approval from the Food and Drug Administration (FDA) for over-the-counter Nicotine Gum and prescription Ibuprofen Oral Suspension, granted through the FDA's Abbreviated New Drug Application (ANDA) process.
Mr. Gibbons noted, "While ibuprofen suspension is a relatively small product, it is significant in that it is our first generic prescription drug approval. We are pleased with the quick approval of the filing and our first step forward in the generic Rx field."
Outlook
Commenting on the first quarter, Mr. Gibbons noted, "We were a user of cash as we built additional inventory to help get us ready to meet our customers' delivery requirements and aggressive promotional programs during the upcoming cold and flu season. We are confident that inventories and receivables will be managed downward over the course of the season, as we have done in the past.
"For the full year, we look forward to continued growth in our core businesses, improvements in our operations outside the U.S., and further progress in developing our new generic drug business. We continue to expect year-over-year revenue growth of four to five percent and earnings growth of three to five percent, even as we invest in our generic drug initiative," said Gibbons.
Perrigo will host a conference call to discuss first quarter fiscal 2005 results at 11 a.m. (ET) today. The call and replay will be available via webcast on the Company's Web site at http://www.perrigo.com/investor/ , or by phone, toll free, at 800-473-6123. A taped replay of the call will be available beginning at approximately 2:30 p.m. (ET) Tuesday, Oct. 26 until midnight Friday, Oct. 29. To listen to the replay, call 877-519-4471, access code 5294098.
The Company is furnishing this earnings release to the Securities and Exchange Commission via Form 8-K.
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 (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. Please see the "Cautionary Note Regarding Forward-Looking Statements" on pages 27 - 33 of the Company's Form 10-K for the year ended June 26, 2004 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.
PERRIGO COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
First Quarter
2005 2004
Net sales $227,719 $211,839
Cost of sales 163,006 151,819
Gross profit 64,713 60,020
Operating expenses
Distribution 4,193 3,522
Research and development 6,354 5,713
Selling and administration 27,540 25,440
Total 38,087 34,675
Operating income 26,626 25,345
Interest and other, net (840) (449)
Income before income taxes 27,466 25,794
Income tax expense 9,888 9,286
Net income $17,578 $16,508
Earnings per share
Basic $0.25 $0.24
Diluted $0.24 $0.23
Weighted average shares outstanding
Basic 70,948 70,040
Diluted 73,043 71,809
PERRIGO COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 25, June 26, September 27,
2004 2004 2003
Assets (unaudited) (unaudited)
Current assets
Cash and cash equivalents $136,544 $161,252 $83,046
Investment securities 5,270 10,448 -
Accounts receivable 112,624 86,040 99,200
Inventories 181,837 174,253 149,872
Current deferred income taxes 29,306 29,877 30,359
Prepaid expenses and other current
assets 11,017 11,359 10,844
Total current assets 476,598 473,229 373,321
Property and equipment 463,241 462,185 431,777
Less accumulated depreciation 240,144 234,544 216,389
223,097 227,641 215,388
Goodwill 35,919 35,919 35,919
Non-current deferred income taxes 8,761 8,137 6,677
Other non-current assets 17,755 14,168 19,140
$762,130 $759,094 $650,445
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $83,516 $88,858 $67,616
Notes payable 9,465 9,528 7,191
Payroll and related taxes 20,857 41,387 22,354
Accrued expenses 44,751 43,689 41,276
Accrued income taxes 7,417 - 15,264
Current deferred income taxes 4,044 4,024 2,965
Total current liabilities 170,050 187,486 156,666
Non-current deferred income taxes 29,259 29,606 25,538
Other non-current liabilities 6,898 5,770 4,727
Shareholders' equity
Preferred stock, without par
value, 10,000 shares authorized - - -
Common stock, without par value,
200,000 shares authorized 109,396 104,160 90,363
Unearned compensation (1,075) (514) (56)
Accumulated other comprehensive
income 2,817 2,892 187
Retained earnings 444,785 429,694 373,020
Total shareholders' equity 555,923 536,232 463,514
$762,130 $759,094 $650,445
Supplemental Disclosures of Balance
Sheet Information
Allowance for doubtful accounts $7,971 $8,296 $9,321
Allowance for inventory $21,124 $22,888 $21,602
Working capital $306,548 $285,743 $216,655
Preferred stock, shares issued - - -
Common stock, shares issued 71,208 70,882 69,994
PERRIGO COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
First Quarter
2005 2004
Cash Flows (For) From Operating Activities
Net income $17,578 $16,508
Adjustments to derive cash flows
Depreciation and amortization 7,092 7,031
Share-based compensation 1,578 1,318
Deferred income taxes (410) (77)
Changes in operating assets and
liabilities, net of a purchase of assets
Accounts receivable (25,543) (12,352)
Inventories (6,676) 10,276
Accounts payable (5,463) (4,439)
Payroll and related taxes (20,535) (18,175)
Accrued expenses 1,062 4,712
Accrued income taxes 7,422 9,705
Other 918 (6,312)
Net cash (for) from
operating activities (22,977) 8,195
Cash Flows (For) From Investing Activities
Additions to property and equipment (2,394) (4,993)
Purchase of assets (5,000) -
Issuance of note receivable - (10,000)
Investment in equity subsidiaries - (1,000)
Purchase of securities (1,000) -
Proceeds from sales of securities 6,000 -
Net cash (for) from
investing activities (2,394) (15,993)
Cash From (For) Financing Activities
Borrowings (repayments) of
short-term debt, net (92) (1,631)
Tax benefit of stock transactions 118 -
Issuance of common stock 3,101 400
Repurchase of common stock (122) (343)
Cash dividends (2,487) (1,751)
Net cash from (for)
financing activities 518 (3,325)
Net decrease in cash and
cash equivalents (24,853) (11,123)
Cash and cash equivalents, at
beginning of period 161,252 93,827
Effect of exchange rate changes on cash 145 342
Cash and cash equivalents, at end
of period $136,544 $83,046
Supplemental Disclosures of Cash
Flow Information
Cash paid during the period for:
Interest $141 $162
Income taxes paid $815 $579
Income taxes refunded $4,062 -
PERRIGO COMPANY
SEGMENT INFORMATION
(in thousands)
First Quarter
2005 2004
(unaudited) (unaudited)
Segment Sales
Consumer Healthcare $199,535 $192,759
UK Operations 23,218 12,663
Mexico Operations 4,966 6,417
Pharmaceuticals - -
Total $227,719 $211,839
Segment Operating Income (Loss)
Consumer Healthcare $27,832 $24,900
UK Operations 209 434
Mexico Operations (116) 290
Pharmaceuticals (1,299) (279)
Total $26,626 $25,345
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/
http://www.perrigo.com/investor