The Perrigo Company (NASDAQ: PRGO)(TASE: PRGO) today announced results for its fiscal year 2008 first quarter that ended September 29, 2007.
Perrigo Company
(in thousands, except per share amounts)
Fiscal 2008 Fiscal 2007
1st Quarter Ended 1st Quarter Ended
9/29/07 9/30/06
Sales $382,740 $340,215
Net Income $34,019 $16,882
Diluted EPS $0.36 $0.18
Diluted Shares 94,884 93,273
Sales for the first quarter of fiscal 2008 were $382.7 million, an increase of twelve percent. Net income was $34.0 million, or $0.36 per share, compared with $16.9 million, or $0.18 per share, a year ago, which included expense for a product recall of $0.7 million after-tax, or $0.01 per share.
Perrigo Chairman and CEO Joseph C. Papa stated, "In the first quarter we achieved both record sales and record earnings. It was another strong new product quarter with $11 million in new product sales, led by smoking cessation. On top of that, we had more than $20 million in incremental new business sales due to issues at a competitor. Improvements in supply chain initiatives, quality and inventory management also helped us deliver higher operating margins. The Rx segment similarly contributed strong operating results, led by our new products acquired from Glades. API again substantially outperformed our expectations, growing over 30 percent from last year in a very competitive marketplace. On top of this, our focus on working capital has paid off with $28 million of cash flow from operations in the quarter."
Mr. Papa continued, "We are raising our fiscal year 2008 earnings guidance to $1.12 to $1.22 per share, a growth of 26 to 37 percent over adjusted EPS last year. This range is exclusive of the Omeprazole new product launch. Our initial guidance was based, in part, on the public comments of our competitor that they would return to the market in December. With one solid quarter behind us, our team feels more comfortable in our ability to retain this business. With these positive tailwinds we are excited about our prospects for the rest of the year."
Consumer Healthcare
Consumer Healthcare segment sales in the first quarter were a record $268.3 million compared with $241.8 million in the first quarter last year, an increase of $26.5 million or 11 percent. The sales increase resulted from $10 million in revenue from new product sales, approximately $20 million in incremental new business and gains in non-U.S. businesses that was partially offset by the withdrawal of fiber laxatives and lower vitamin sales.
Operating income was $29.5 million, compared with $17.1 million a year ago as a result of higher gross margins from new products, supply chain efficiencies and international growth. Additionally, last year's quarter included higher inventory costs and costs related to a product recall.
On July 11, the Company announced it had closed its transaction to acquire Qualis, Inc., a manufacturer of store brand pediculicide products that compare to Rid® and Nix®. Shipments began this quarter.
Rx Pharmaceuticals
The Rx Pharmaceutical segment sales were $35.0 million, including $5.8 million in service and royalty revenues, compared with $31.4 million a year ago. Fiscal 2008 first quarter sales also included $6.6 million in sales of products acquired from Glades Pharmaceuticals. Operating income was $7.4 million, up from $5.8 million last year.
On September 19, the Company announced it had received final approval from the FDA for ciclopirox topical solution, 8% (equivalent to Penlac® Nail Lacquer), indicated for the treatment of fingernail and toenail infections. Shipments began immediately.
API
The API segment reported sales of $38.8 million compared with $29.8 million a year ago, reflecting strong sales in several key products. Operating income was $7.3 million, compared with $4.7 million last year, reflecting the higher sales volume and a favorable sales mix.
Other
The Other category, consisting of Israel Consumer Products and Israel Pharmaceutical and Diagnostic Products segments, reported sales of $40.7 million, compared with $37.2 million a year ago. Operating income was $2.5 million, compared with $2.7 million last year.
In the fiscal 2007 first quarter, unallocated expenses were $0.7 million compared with $4.5 million a year ago. The decrease was due primarily to a legal settlement.
Perrigo's Chairman and CEO Joseph C. Papa concluded, "I am very pleased with the momentum we have built and am excited about our full year prospects. Our focus on quality, supply chain improvements and improved customer service drove these results. Our on-going investment in R&D continues to add new products with the largest launch in our history expected soon. Looking ahead, Perrigo will continue to make quality healthcare more affordable for our customers and drive value for our shareholders."
Perrigo will host a conference call to discuss fiscal 2008 first quarter results at 10:00a.m. (ET) on Thursday, November 1. The conference call will be available live via web cast to interested parties on the Perrigo website http://www.perrigo.com/ or by phone 888-694-4676, International 973-582-2737, and reference ID# 9363591. A taped replay of the call will be available beginning at approximately 2:30 p.m. (ET) Thursday, November 1, until midnight Friday, November 9, 2007. To listen to the replay, call 877-519-4471, International 973-341-3080, access code 9363591.
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.
PERRIGO COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
First Quarter
2008 2007
Net sales $382,740 $340,215
Cost of sales 266,022 247,400
Gross profit 116,718 92,815
Operating expenses
Distribution 7,074 7,384
Research and development 16,320 13,047
Selling and administration 47,275 46,672
Total 70,669 67,103
Operating income 46,049 25,712
Interest, net 4,655 4,586
Other income, net (1,183) (61)
Income before income taxes 42,577 21,187
Income tax expense 8,558 4,305
Net income $34,019 $16,882
Earnings per share
Basic $0.37 $0.18
Diluted $0.36 $0.18
Weighted average shares outstanding
Basic 93,142 92,168
Diluted 94,884 93,273
Dividends declared per share $0.045 $0.043
PERRIGO COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Sept. 29, June 30, Sept. 30,
2007 2007 2006
Assets (unaudited) (unaudited)
Current assets
Cash and cash equivalents $46,837 $30,305 $33,027
Investment securities 32,487 49,110 27,922
Accounts receivable 283,443 282,045 230,239
Inventories 314,597 295,114 326,538
Current deferred income taxes 41,372 41,400 52,215
Income taxes refundable 5,596 - -
Assets held for sale 2,746 2,746 -
Prepaid expenses and other current
assets 20,264 18,340 21,068
Total current assets 747,342 719,060 691,009
Property and equipment 665,239 664,096 617,813
Less accumulated depreciation 343,033 333,024 298,260
322,206 331,072 319,553
Restricted cash 400,000 422,000 400,000
Goodwill 199,730 196,218 183,205
Other intangible assets 187,467 159,977 137,876
Non-current deferred income taxes 49,184 54,908 43,380
Other non-current assets 40,723 41,919 40,651
$1,946,652 $1,925,154 $1,815,674
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $170,639 $164,318 $172,680
Notes payable 11,677 11,776 5,740
Payroll and related taxes 38,425 46,226 41,458
Accrued customer programs 48,638 48,218 45,084
Accrued liabilities 44,142 47,333 41,164
Accrued income taxes - 29,460 17,501
Current deferred income taxes 15,214 17,125 9,837
Current portion of long-term debt 15,314 15,381 -
Total current liabilities 344,049 379,837 333,464
Non-current liabilities
Long-term debt 642,629 650,762 678,272
Non-current deferred income taxes 101,424 103,775 105,427
Other non-current liabilities 87,324 36,311 36,922
Total non-current liabilities 831,377 790,848 820,621
Shareholders' equity
Preferred stock, without par value,
10,000 shares authorized - - -
Common stock, without par value,
200,000 shares authorized 521,117 519,419 510,132
Accumulated other comprehensive
income 47,864 56,676 17,461
Retained earnings 202,245 178,374 133,996
Total shareholders' equity 771,226 754,469 661,589
$1,946,652 $1,925,154 $1,815,674
Supplemental Disclosures of Balance
Sheet Information
Allowance for doubtful accounts $8,622 $9,421 $12,195
Allowance for inventory $34,947 $36,210 $40,992
Working capital $403,293 $339,223 $357,545
Preferred stock, shares issued - - -
Common stock, shares issued 93,566 93,395 92,556
PERRIGO COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
First Quarter
2008 2007
Cash Flows From (For) Operating Activities
Net income $34,019 $16,882
Adjustments to derive cash flows
Depreciation and amortization 15,570 13,502
Share-based compensation 1,958 2,434
Deferred income taxes 2,120 (1,157)
Sub-total 53,667 31,661
Changes in operating assets and liabilities
Accounts receivable (3,389) 8,550
Inventories (21,356) (25,211)
Accounts payable 7,665 (5,785)
Payroll and related taxes (7,437) (12,423)
Accrued customer programs 420 (4,450)
Accrued liabilities (3,584) (4,203)
Accrued income taxes 2,276 3,474
Other (563) 1,983
Sub-total (25,968) (38,065)
Net cash from (for)
operating activities 27,699 (6,404)
Cash Flows (For) From Investing Activities
Purchase of securities (73,418) (52,340)
Proceeds from sales of securities 89,182 51,074
Asset acquisition (12,401) -
Additions to property and equipment (4,364) (8,113)
Net cash for investing activities (1,001) (9,379)
Cash (For) From Financing Activities
Repayments of short-term debt, net (99) (14,331)
Borrowings of long-term debt 30,000 55,000
Repayments of long-term debt (38,000) -
Tax (expense) benefit of stock
transactions (135) 616
Issuance of common stock 4,155 2,222
Repurchase of common stock (4,280) (11,238)
Cash dividends (4,214) (3,939)
Net cash (for) from
financing activities (12,573) 28,330
Net increase in cash and
cash equivalents 14,125 12,547
Cash and cash equivalents, at
beginning of period 30,305 19,018
Effect of exchange rate changes on cash 2,407 1,462
Cash and cash equivalents, at end of period $46,837 $33,027
Supplemental Disclosures of Cash
Flow Information
Cash paid/received during the period for:
Interest paid $10,019 $8,309
Interest received $5,189 $4,700
Income taxes paid $588 $1,797
Income taxes refunded $672 $-
Table I
PERRIGO COMPANY
SEGMENT INFORMATION
(in thousands)
(unaudited)
First Quarter
2008 2007
Segment Sales
Consumer Healthcare $268,259 $241,809
Rx Pharmaceuticals 34,960 31,425
API 38,814 29,779
Other 40,707 37,202
Total $382,740 $340,215
Segment Operating Income
Consumer Healthcare $29,549 $17,100
Rx Pharmaceuticals 7,445 5,787
API 7,276 4,658
Other 2,489 2,664
Unallocated expenses (710) (4,497)
Total $46,049 $25,712
First Call Analyst:
FCMN Contact: pblain@perrigo.com
SOURCE: Perrigo Company
CONTACT: Arthur J. Shannon, Vice President, Investor Relations and
Communication, +1-269-686-1709, ajshannon@perrigo.com; or Ernest J. Schenk,
Manager, Investor Relations and Communication, +1-269-673-9212,
eschenk@perrigo.com
Web site: http://www.perrigo.com/