Prestige Consumer Healthcare Inc. · NYSE:PBH
Prestige Consumer Healthcare — Prestige Brands Holdings — Q3 FY2012 Earnings Presentation
33 slides from Prestige Consumer Healthcare's earnings presentation, Feb 9, 2012
Slide 1: Review of Third Quarter F'12 Results
February 9, 2012 Review of Third Quarter F’12 Results Matthew M. Mannelly, CEO Ronald M. Lombardi, CFO Exhibit 99.2
Slide 2: Safe Harbor Disclosure
2 Safe Harbor Disclosure 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 acquisition strategy, ability to integrate acquisitions, the impact of acquisitions on the compa
Slide 3: Third Quarter Highlights
3 Solid financial performance for Q3 – Q3 revenue of $106.3 million, up 17.3%, or $15.7 million over the prior year comparable quarter – Revenue growth of over 3% for Core OTC brands in the aggregate, the sixth consecutive quarter of growth – EPS, excluding adjustments(1) , was $0.25 compared to t
Slide 4: Delivering Consistent Organic Core OTC Growth In a Challenging Environment
4 Delivering Consistent Organic Core OTC Growth In a Challenging Environment Applicable quarter Dollar values in millions $38.6 $35.4 $33.1 $33.4 $39.0 $40.5 $39.0 $40.5 $35.9 $37.0 $40.6 $41.8 1.1% 14.1% 8.4% 10.7% 4.1% 3.2% -- 5.0% 10.0% 15.0% 20.0% 25.0% -- $10 $20 $30 $40 $50 Q2 '11 Q3 '11 Q4 '1
Slide 5: Driving Consumption That Has Consistently Exceeded The Categories
5 Driving Consumption That Has Consistently Exceeded The Categories, Leading to Solid Company Sales Growth (Dollars in Millions) Consumption Growth Net Sales / % Growth +17.3% +3.2% Dollar values in millions Notes: Consumption is based on IRI (FDM) for 12 week period ending December 25, 2011.
Slide 6: Cough/Cold Brands: Strong Performance Despite Soft Start To Season
6 (0.8%) (0.8%) 0.5% 2.3% 0.3% 10.8% 14.6% 1.8% 0.3% 7.2% Category Brand PBH Cough/Cold Brands: Strong Performance +7.2%(1) Despite Soft Start To Cough/Cold Season (-6.5%)(2) (1) Based on IRI Consumption Data (FDM) for the 12 week period ending December 25, 2011. (2) Source: FAN National 2011-2012 W
Slide 7: Little Remedies: Portrait of a Brand On The Move
7 Little Remedies: Portrait of a Brand On The Move Tag Line: “Everything Kids Need And Nothing They Don’t” Target Audience: Parents and caregivers who prefer products with no artificial ingredients Consumption: Up almost 15% for Q3 and 39% fiscal YTD(1) Media & Marketing Tools Used: (1) Based on IRI
Slide 8: Luden's: Over Years Old And Still Young
8 Luden’s: Over 100 Years Old And Still Young Tag Line: “Surprisingly soothing. Simply delicious.” Target Audience: Sufferers of minor throat irritation, all ages Consumption: Up slightly for the period and almost 7% YTD(1) Media & Marketing Tools Used: (1) Based on IRI Consumption Data (FDM) for th
Slide 9: Household Stabilizing Effort Includes New Product Introductions in Q4
9 Household Stabilizing Effort Includes New Product Introductions in Q4 Today’s homes and consumers need specialty cleaners Available in Cream, Powder and Spray for multi-surface cleaning Increases Comet shelf position and importance to retailers Introducing New Comet Stainless Steel Cleaners!
Slide 10: The Transformed Prestige
10 OTC Portfolio Sales have grown from $200M to $500M and increased from 57% to 85% of total Sales in the last two years: by mid 2012, we will have 13 Core OTC Brands and two new scale OTC platforms. The Transformed Prestige: – We are stronger, more diverse in our OTC businesses – More innovativ
Slide 11: Financial Overview
11 Financial Overview Ronald M. Lombardi, CFO
Slide 12: Consistent Financial Performance
12 Consistent Financial Performance Q3 FY 2011 Q3 FY 2012 A&P investment behind core OTC brands driving share and revenue gains. Beginning to “comp” Blacksmith acquisition. Revenue gains driving Net Income and EPS growth. Consistent cash flow from operations, with prior year favorably impacted
Slide 13: Consolidated Financial Summary (Quarter)
13 Consolidated Financial Summary Net Revenue grew by $15.6 million, or 17.3%, over year ago. – 3.2% growth in legacy core OTC. – Acquisitions added $16.6 million. – Excluding acquisitions, revenues ($1.0 million) as overall OTC gains were offset by a soft start to cough / cold season and lower HH
Slide 14: Consolidated Financial Summary (Year to Date)
14 Consolidated Financial Summary Net Revenue grew by $67 million, or 27.9%, over year ago. – 5.7% growth in legacy core OTC. – Acquisitions added $68.7 million. As expected, gross margin was 1.6 ppt lower than last year largely due to the impact of the acquired Blacksmith Brands and HH. A&P i
Slide 15: Net Income and EPS Reconciliation
15 Net Income and EPS Reconciliation Dollar values in millions, except per share data (1) These non-GAAP financial measures are being reconciled to their most closely related GAAP financial measures. For further information about non-GAAP financial measures, refer to our earnings release in the “Abo
Slide 16: Prestige Strength: Cash Flow from Operations
16 Prestige Strength: Cash Flow from Operations Quarterly and Year-to-Date Cash Flow From Operations are impacted by this year’s higher sales volumes and the impact of the Blacksmith acquisition on the prior year’s results. Debt Profile & Covenant Compliance: Total Indebtedness at 12/31/11, $434
Slide 17: January 31, 2012 PBH Purchases OTC Brands from GSK
17 17 January 31, 2012 PBH Purchases OTC Brands from GSK
Slide 18: GSK Transaction Strengthens Prestige's Strategic and Financial Profile
18 Strengthens Core OTC by adding new brands and category depth Reduces sensitivity to seasonality of Cough/Cold brands OTC now represents 85% of sales and 90% of contribution 18 Accretive to gross margins and EBITDA margins Increases A&P support with focus on Core brands Highly cash gen
Slide 19: GSK Transaction Adds Four Core Brands
19 Analgesics 17% Cough & Cold 17% GI 14% Eye & Ear Care 14% Dermatological s 9% Oral Care 8% Sleep Aids 1% Note: The remaining 20% of sales is comprised of Household (including Comet) and other brands. = New Core Brand GSK Transaction Adds Four Core Brands That Strengthen Prestige’s Existing Platfo
Slide 20: Acquisitions Transform PBH; 90% of Contribution Margin Now From OTC
20 83% 17% Acquisitions Transform PBH; 90% of Contribution Margin Now From OTC Household OTC Household OTC OTC + + ® ® ® ® ® Personal Care GSK Brands + ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® Household
Slide 21: GSK Transaction Creates a Larger, More Diversified Business
21 21 GSK Transaction Creates a Larger, More Diversified and Competitive Business Capacity Drawn at Close Revenues ~$400 ~$600 Key Category Platforms 4 6 Core Brands 9 13 A&P Spending ~12% ~14% Margins ~32% ~35% Cash Flow from Operations ~$75 MM ~$ 110 MM Pre-Transaction Post-Transaction Dollar valu
Slide 22: Acquired Brands: BC/Goody's, Beano, Debrox, Gaviscon
22 BC/Goody’s - Headache Powders & Pain Relievers – Unique 80 year southern heritage with ~ 16% share in Southern market – #1 share of powdered aspirin segment – Rivalry ad campaign driven by heavy radio support in southern markets; Richard Petty and Trace Adkins; NASCAR sponsor – Strong C store p
Slide 23: Industry Leading Margins and Free Cash Flow Conversion
23 23 Prestige Strengthens Industry Leading Margins and Free Cash Flow Conversion Mean: 10.9% E B I T D A M a rg in ( 1 ) (C a p it a l Spend ing a s % of S a le s ) Mean: 20.5% Pro Forma Source: Capital IQ (1) Represents nine months ending December 2011 for Prestige; Represents LTM period for all o
Slide 24: High Cash Flow Conversion Expected to Lead to Rapid Deleveraging
24 24 High Cash Flow Conversion Expected to Lead to Continued Rapid Deleveraging Leverage Ratio Fiscal year ending March 31 Leverage ratio reflects Net Debt / EBITDA Source: CapitalIQ Fiscal Year = Excluding Acquisitions
Slide 25: Financing Well Received By Market
25 Financing Well Received By Market Fac tor s Strong Market Fundamentals Public Company OTC Focused Strategy Held Ratings B1/B+ Compelling Road Show Significantly Over-Subscribed Pricing Drives Shareholder Value
Slide 26: Financing Overview
26 $250 million Senior Unsecured Notes Coupon: 8.125% Tenor: 8 Years Guarantors: Jointly and severally guaranteed on a senior basis Redemption: NC-4, then callable with a premium of 1/2 coupon in year 5, 1/4 coupon in year 6 and par thereafter CIC: Put to issuer at 101% Equity Clawback: Up
Slide 27: Proven Track Record of Successful Integrations
27 27 Proven Track Record of Successful Integrations Consistent with Prestige’s business model Seamless transition with customers Timely integration Investing in brands Achieving transaction objectives / synergies November 2010 January 2011 January 2012 North American Brands
Slide 28: Robust Integration Planning & Processes
28 28 Integration ~5 month pre-acquisition evaluation period Extensive reviews – Financial – Commercial – Operational – Regulatory Unprecedented external diligence Developed Preliminary “100- day plan” – Key objectives – Potential risks – Key integration milestones Planning & Preparation Due
Slide 29: Detailed Transition Plan in Process at Close
29 Integrate and realign sales structure across classes of trade and core customers Canada: opportunity as a result of doubling the business Expand and secure distribution base: C-store & club opportunities Increase marketing support for new core brands – BC/Goody’s, Beano, Gaviscon and Debr
Slide 30: Acquisition and Integration Costs
30 Acquisition and Integration Costs Actual Estimate Q3 FY 2012 Q4 FY 2012 Adjustments Acquisition Related Deal Costs 4.9$ 11.0$ Integration Costs 2.0 TSA Costs 4.5 Purchase Accounting - Inventory 2.5 Other Costs - Write off of 2010 Finance Costs 5.0 Tax Impact of Adjustments (1.9) (9.7) Total Adjus
Slide 31: Well Positioned to Create Long Term Shareholder Value
31 Well Positioned to Create Long Term Shareholder Value Meaningful step towards commitment to long-term OTC strategy Strong consumer franchises in respective categories Adds two attractive new scale OTC platforms in Powdered Analgesics and Gastrointestinal Improves overall gross margin and EBITDA m
Slide 32: Clear Roadmap for Value Creation
32 Clear Roadmap for Value Creation Drive Core OTC Organic Growth Exclusive OTC M&A Focus Strategic Portfolio Management
Slide 33: Exhibit 99.2 February 9, 2012
33 Exhibit 99.2 February 9, 2012
Prestige Brands Holdings — Q3 FY2012 Earnings Presentation on 6ix