Prestige Consumer Healthcare Inc. · NYSE:PBH
Prestige Consumer Healthcare — Prestige Brands Holdings — Q4 FY2012 Earnings Presentation
42 slides from Prestige Consumer Healthcare's earnings presentation, May 17, 2012
Slide 1: Review of Fourth Quarter & FY'12 Results
1 28-75-124 196-18-48 May 17, 2012 Review of Fourth Quarter & FY’12 Results Matthew M. Mannelly, CEO Ronald M. Lombardi, CFO Exhibit 99.2
Slide 2: Safe Harbor Disclosure
2 This presentation contains certain “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements about the Company’s growth strategies, investments in advertising and promotion, market position, product introductions and innovations, an
Slide 3: Agenda
3 FY’12 Q4: A Stellar Quarter Fiscal Year 2012: The Prestige Value Creation Formula Delivers Q4 & FY 2012 Financial Overview Prestige’s Strategy: Delivering Results; Poised for Success 1 2 3 Agenda 4 Our Latest Quarter: Excellent Performance Across the Board
Slide 4: FY'12 Objectives: Exceeded Expectations
4 FY’12 Objectives: Exceeded Expectations Drive Core OTC growth through proven, increased, and innovative A&P investment Continue development of long term potential of Blacksmith and Dramamine brands following successful integration Stabilize Household through marketing support, new products,
Slide 5: Q4 FY'12 Highlights
5 Strong financial performance for the quarter − Consolidated net revenue growth of 39.1%; 7.5%, excluding the impact of the GSK acquisition − Adjusted EPS(1) of $0.26, up 44.4% versus prior year, and above adjusted EPS provided in recent guidance of $0.23. GSK acquisition added $0.01 to Q4 adjust
Slide 6: FY'12 Q4: A Stellar Quarter
6 $30.4 FY’12 Q4 FY’11 Q4 +39.1% +53.3% +14.0% (2.2%) Net Revenue in millions FY’12 Q4: A Stellar Quarter Strong Momentum Across All Segments Industry Leading Organic Growth Double Digit OTC Growth Strongest Growth in Past 7 Quarters Improved Performance $134.0 +7.5% +10.9% $109.7 +48.9% $86.7 % Gro
Slide 7: Leading Net Organic Revenue Growth
7 Leading Net Organic Revenue Growth(1) Source: Company filings Note: (1) Organic sales growth excludes impact from acquisitions, divestitures, FX rate fluctuations and other factors (2) Represents core OTC organic net revenue growth (3) Represents total company organic net revenue growth excluding
Slide 8: Agenda
8 Our Latest Quarter: Excellent Performance Across the Board Fiscal Year 2012: The Prestige Value Creation Formula Delivers Q4 & FY 2012 Financial Overview Prestige’s Strategy: Delivering Results; Poised for Success 1 2 3 Agenda 4
Slide 9: Proven Value Creation Track Record
9 Proven Value Creation Track Record North America OTC Assets Prestige Value Creation Framework Drive Core OTC Organic Growth Exclusive OTC M&A Focus Strategic Portfolio Management PBH Stock Price +50% $9.00 $13.50 (1) Stock price prior to receipt of Genomma’s unsolicited bid (1) Analgesics Cough &
Slide 10: Robust Pipeline of New Product Introductions…
10 Robust Pipeline of New Product Introductions…
Slide 11: …Supported by a Portfolio of Targeted A&P Strategies
11 …Supported by a Portfolio of Targeted A&P Strategies
Slide 12: Efferdent Power Clean Crystals
12 Value-added innovation renews interest in the category by fulfilling an unmet need… …Generating incremental volume by bringing new users to the category… …And offering current users a new form Quickly and conveniently makes dentures look and feel cleaner Cleans in 3 minutes and packaged for
Slide 13: New Dramamine For Kids
13 34% of households with children ages 2-12 have a child with motion sickness(1) Estimated 1/3 of the moms use Dramamine Adult Formula but would prefer a kids’ dose Provides incremental volume by offering an adult’s and a children’s form Quick and easy motion sickness relief for children with
Slide 14: Building Long-Term Foundation for Pediatric Platform
14 Consumption Growth (FY’11 & FY’12) 148.2% 31.1% (3.6%) 69.0% 24.6% (5.2%) Category Category Prestige’s pediatric platform, including PediaCare® and Little Remedies®, represents approximately ~10% of revenues, after the impact of the GSK acquisition Significantly increased A&P support over las
Slide 15: Consumption Growth Driven by Increased A&P
15 Total A&P (% of Net Revenue)(1) Core OTC A&P (% of Net Revenue)(1) Note: Includes GSK brands in Q4 FY’12 (1) Adjusted in FY’11 to reflect normalized level of A&P spending for Pediacare Consumption Growth Being Driven by Increased & More Effective A&P and New Product Support Spent an Aggregate of
Slide 16: Consumption Growth Significantly Exceeding Category Growth
16 Category Prestige Q4 (Latest 12 Weeks) FY’12 (Latest 52 Weeks) +3.6% pts. +6.0% pts. +10.7% pts. +4.4% pts. +7.3% pts. +12.2% pts. vs. Category Source: IRI FDMx for the period ending 3/18/12; Prestige consumption data reflects IRI + POS Consumption Growth Significantly Exceeding Category Growth
Slide 17: Management's M&A Strategy Has Transformed Prestige
17 While Consistently Delivering Operating Results, Management’s M&A Strategy has Transformed Prestige ~$200 ~$300 ~$500 5 9 14 Avg. Top 10 Brand Scale: ~$20 ~$25 ~$35 + + GSK Brands + + ~$100 + ~$200 Core OTC Brands: Total OTC Revenue: Dollar values in millions
Slide 18: Proven Ability to Acquire, Integrate and Grow Acquired Brands
18 16.5% Blacksmith and Dramamine Brands Proven Brand Building Q4 Net Revenue Growth(1) Consumption Growth(1) New Product Development Incremental A&P Investments Attention at the Trade Category Blacksmith and Dramamine Brands Acquisition Excellence Seamless Transition with Customers Outsourced Model
Slide 19: The GSK Acquisition: A Transformative Event
19 The GSK Acquisition: A Transformative Event
Slide 20: Key GSK Brands Have Strong Consumer Franchises
20 Key GSK Brands Have Strong Consumer Franchises… Brand: Category leader and most recommended ear wax removal product by doctors and pharmacists Consumer: Choice driven by professional recommendation and choice at shelf Opportunities: – Continue strong A&P support – Innovation/new products
Slide 21: Supported by Compelling Marketing Strategies
21 …and Are Already Being Supported by Compelling Marketing Strategies Stronger media support and healthier investment into event marketing Rivalry ad campaign driven by heavy radio support in southern market Product endorsement by Richard Petty and Trace Atkins NASCAR sponsor Stronger med
Slide 22: GSK Brands Transition Timeline
22 March April May June Develop FY’13 brand strategies, sales quotas and fiscal plan Select Canadian distributor Finalize contract for new warehouse Visit third party manufacturers and conduct required quality assessments Finalize supplier and service provider agreements Conduct joint bu
Slide 23: Building Scale Platforms in Relevant OTC Categories
23 Analgesics 17% Cough & Cold 17% GI 14% Eye & Ear Care 14% Dermatologicals 9% Oral Care 8% Sleep Aids 1% Note: The remaining 20% of sales is comprised of Household (including Comet) and other brands (1) Based on FY2012 pro forma Prestige’s Portfolio Management Priority: Building Scale Platforms in
Slide 24: Agenda
24 Our Latest Quarter: Excellent Performance Across the Board Fiscal Year 2012: The Prestige Value Creation Formula Delivers Q4 & FY 2012 Financial Overview Prestige’s Strategy: Delivering Results; Poised for Success 1 2 3 Agenda 4
Slide 25: Summary Financial Performance
25 Summary Financial Performance Dollar values in millions, except per share data (1) These non-GAAP financial measures are reconciled to their most closely related GAAP financial measures in our earnings release in the “About Non-GAAP Financial Measures” section. Adjusted EPS is also reconciled to
Slide 26: Q4 Consolidated Financial Summary
26 Net Revenue grew by $37.6 million or 39.1% over year ago, driven by core OTC growth and acquisition of GSK brands – 7.5% growth for the Company, excluding acquisition of GSK brands – 14.0% growth in core OTC, excluding acquired core GSK brands – GSK brands acquisition added $30.4 million Hous
Slide 27: FY'12 Consolidated Financial Summary
27 FY’12 Consolidated Financial Summary Net Revenue grew by $104.6 million or 31.1% over year ago, driven by core OTC growth, full year impact of Blacksmith and Dramamine acquisitions, and Q4 impact of GSK brands acquisition – 3.2% organic Net Revenue growth for the total Company, including compar
Slide 28: Focused Initiatives to Stabilize Household are Gaining Traction
28 Recent Performance Comments FY’12 Net Revenue Growth vs. Prior Year FY’12 Consumption Category PBH HH Management has undertaken a long-term perspective to stabilizing the household segment Recent investment in promotional and new product activity has moderated the Net Revenue decline Expect
Slide 29: Net Income and EPS Reconciliation
29 Net Income and EPS Reconciliation Dollar values in millions, except per share data Note: These Non-GAAP financial measures are being reconciled to their reported GAAP amounts. For Further information about Non-GAAP financial measures, refer to our Earnings Release in the “About Non-GAAP Financial
Slide 30: Strong Cash Flow from Operations
30 Q4 adjusted cash flow, excluding the impact of acquisitions, totaled approximately $38.4 million Full year adjusted cash flow, excluding the impact of acquisitions totaled, approximately $82.6 million Debt Profile & Financial Compliance: Total Net Debt at 3/31/12 of $1,116 million comprised
Slide 31: High Cash Flow Conversion Drives Rapid Deleveraging
31 High Cash Flow Conversion Drives an Even More Rapid Deleveraging… Fiscal year ending March 31 Leverage ratio reflects Net Debt / covenant defined EBITDA = Excluding Acquisitions = Q3 FY’12 Guidance = Revised Guidance
Slide 32: Increased Acquisition Capacity
32 …Providing for Increased Acquisition Capacity While We Continue to Grow Core OTC Brands Comments Illustrative Financial Capacity Prestige is already in a position to continue its OTC acquisition strategy Prestige’s existing financing arrangements and rapid deleveraging ability create expanded
Slide 33: Agenda
33 Our Latest Quarter: Excellent Performance Across the Board Fiscal Year 2012: The Prestige Value Creation Formula Delivers Q4 & FY 2012 Financial Overview A Strategy at Work 1 2 3 Agenda 4 Prestige’s Strategy: Delivering Results; Poised for Success
Slide 34: What Sets Prestige Apart
34 1. #1 and #2 brands deliver nearly two-thirds of OTC revenue 2. Core OTC brands generating superior growth and market share gains 3. Scale platforms in highly relevant OTC categories 4. Management’s strategy has transformed Prestige to predominantly an OTC company 5. Proven ability to source, exe
Slide 35: Seven Straight Quarters of Organic Core OTC Growth
35 Applicable quarter Prior year comparable quarter Dollar values in millions Note: Excludes GSK acquisition Net Revenue YOY % Growth Seven Straight Quarters of Organic Core OTC Growth Excluding Acquisitions
Slide 36: Transformational
36 trans·for·ma·tion·al The act or an instance of transforming The state of being transformed A marked change for the better
Slide 37: The Transformed Prestige: An Improved Profile
37 The Transformed Prestige: An Improved Profile for Value Creation Pre-Current Mgmt.(1)(4) Current Profile(2)(3)(4) Change Core OTC Brands 5 14 +9 OTC as % of Revenue ~61% ~85% +24% Top 10 OTC Brands Average Scale ~$20 ~$35 +75% Key OTC Category Platforms 4 6 +2 OTC Addressable Market Size ~$10 BN
Slide 38: Now the Largest Independent U.S. OTC Platform
38 In Less Than Three Years, Prestige is Now the Largest Independent U.S. OTC Platform 38 #1 #2 #3 #4 #5 #6 #7 #8 #9 #10 #11 #12 #13 #14 #15 #16 #17 #18 #19 #20 #21 2011 Rank: + 2.5x in Less Than Three Years + 5 Spots Independent OTC Companies Legacy Dollar values in billions Source: Euromonitor (~$
Slide 39: Management's Strategy is Delivering Results
39 In Less Than Three Years, Management’s Strategy is Delivering Results Clear and consistent strategy focused on: – Transforming Prestige into an OTC company – Driving sustainable core OTC organic growth – Pursuing accretive OTC acquisitions – Building a highly talented leadership team with deep
Slide 40: Solid Outlook for 2013 and Beyond
40 Clear goals for FY’13 to build on success and momentum − Successfully integrate and transition the acquired brands • Supply and demand • Integration continues beyond end of TSA − Develop long-term potential of acquired GSK brands through tested brand investment strategy − Continue to participat
Slide 41: Delivering Value Now and Into the Future
41 OTC M&A Focus Debt Reduction Portfolio Strategy to Drive Organic Growth A&P Driven Growth for Core OTC Brands Investment in Multi-Year New Product Development Pipeline Select investment in Other Brands Significant Tax Shield Incremental to Free Cash Flow Generation Free Cash Flow Used f
Slide 42: 28-75-124 196-18-48 May 17, 2012
42 28-75-124 196-18-48 May 17, 2012
Prestige Brands Holdings — Q4 FY2012 Earnings Presentation on 6ix