Prestige Consumer Healthcare Inc. · NYSE:PBH
Prestige Consumer Healthcare — Prestige Brands Holdings — Proxy Contest (March 2012)
39 slides from Prestige Consumer Healthcare's proxy contest presentation, Mar 22, 2012
Slide 1: Delivering Value Now and Into the Future
March 22, 2012 Delivering Value Now and Into the Future
Slide 2: Note Regarding Forward-Looking Statements
Note Regarding Forward - Looking Statements This presentation contains “forward - looking statements” within the meaning of the federal securities laws. “Forward - looking statements” generally can be identified by the use of forward - looking terminology such as “assumptions,” “target,” “guidance,”
Slide 3: Additional Information
Additional Information This presentation does not constitute an offer to buy or a solicitation of an offer to sell any securities. No tender offer for the shares of the Company has commenced at this time. If a tender offer is commenced, the Company will file a solicitation/recommendation statement o
Slide 4: Certain Information Regarding Participants
Certain Information Regarding Participants The Company, its directors and certain of its executive officers may be deemed to be participants in the solicitation of proxies from the Company’s stockholders in connection with its 2012 Annual Meeting of Stockholders. Security holders may obtain informat
Slide 5: Agenda
Agenda 5 Prestige’s Business and Strategy: The Platform for Future Growth Prestige’s Business and Strategy: Platform for Value Creation Current Management’s Track Record: Delivering Value and Results Review of Genomma Lab’s Unsolicited Proposal 1 2 3 Overview 1 4
Slide 6: Overview: Genomma Lab proposal rejected by Board
Genomma Lab made an unsolicited proposal to acquire Prestige Brands (“Prestige”) for $16.60 per share, which was unanimously rejected by the Prestige Board of Directors Genomma Lab’s inadequate proposal is not compelling, highly conditional, and opportunistic – Genomma Lab intercepted Prestige's
Slide 7: Management Has a Proven Track Record of Delivering Shareholder Value
Management has transformed the Company through a strategy focused on: – Driving sustainable core OTC organic growth – Pursuing accretive OTC acquisitions – Transforming Prestige into an OTC focused company This has resulted in increased shareholder value with the stock price up 83% since current
Slide 8: Agenda
Agenda 8 Overview Current Management’s Track Record of Delivering Value and Results Current Management’s Track Record: Delivering Value and Results Review of Genomma Lab’s Unsolicited Proposal 1 2 3 Prestige’s Business and Strategy: Platform for Value Creation 2 4
Slide 9: Overview of Prestige's Business and Strategy
Overview of Prestige’s Business and Strategy 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
Slide 10: #1 and #2 Brands Deliver Nearly Two-Thirds of OTC Revenue
Source: IRI FDMx + POS (As of 2/9/12) (1) Market share based on IRI FDMx retail dollar sales 10 Core Brand Retail Sales (in millions) Category Market Position Market Share (1) $52 Powder Analgesics #1 98% $55 Eye Allergy/ Redness Relief #2 19% $41 Denture Cleanser Tablets #2 30% $39 Wart Removal #2
Slide 11: Increased Investment Behind a Proven Brand-Building Strategy
Increased Investment Behind a Proven Brand - Building Strategy A proven brand - building strategy An innovator dedicated to extending its brands with meaningful new product introductions A dedicated sales force focused on the food, drug, and mass channels 11 Core OTC A&P Spending (% of Revenue
Slide 12: Core OTC Brands Generating Superior Growth and Market Share Gains
12.2% 9.7% 5.0% 0.8% 0.3% (0.7%) Core OTC Total OTC Total Company Prestige Category Note: Excludes acquired GSK brands Source: IRI + POS retail dollar sales for the 52 - Week period ending 2/9/12; Category reflects IRI only Consumption Growth 12 …Resulting in Core OTC Brands Generating Superior Grow
Slide 13: Portfolio of Highly Relevant, Scale OTC Category Platforms
Current Portfolio is Comprised of Highly Relevant , Scale OTC Category Platforms 13 Three power platforms with ~$100 million in revenue and a total of six power platforms in excess of ~$50 million in revenue Dollar values in millions Adult Aspirin - Based Analgesics Cough/ Cold GI Eye Care Dermato
Slide 14: Management's Strategy has Transformed Prestige
14 Management’s Strategy has Transformed Prestige Pre - Current Mgmt. (1) Current Profile (2)( 3 ) Dollar values in millions; unless otherwise specified (1) Based on LTM ending September 2009 (Capital IQ) (2) Reflects internal estimates for pro forma Prestige including GSK brands (As of 3/31/12E) (3
Slide 15: Proven Ability to Source, Execute, and Integrate Acquisitions
15 Strategic characteristics: – OTC brands with scale – Recognized by both consumers and retailers – Complementary to our existing core categories – Provide entry into new platforms Financial characteristics: – High gross margins – Accretive to revenues, earnings and cash flow Prestige leverag
Slide 16: Strong Market Reaction to Management's Strategy
Strong Market Reaction to Management’s Strategy 16 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00 $18.00 $20.00 Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar 12/16/2010 - Announced acquisition for $76MM 12/20/2011 - Announced acquisition for $660MM Source: Capital IQ Note: As of Feb
Slide 17: Valuable Tax Attributes
Amortization Period Remaining Average Annual Tax Amortization Annual Cash Savings Present Value of Cash Tax Savings (1) Existing Brands 6 – 14 Years ~$45 ~$15 ~$75 GSK Brands 15 Years ~$40 ~$15 ~$135 Total ~$85 ~$30 ~$210 Valuable Tax Attributes 17 Dollar values in millions (1) Assumes 39% tax rate
Slide 18: Leading Margins and Cash Flow Generation
Leading Margins and Cash Flow Generation 18 Source: Capital IQ Note: Trademarks belong to respective owners (1) Represents LTM period for peers (2) Free Cash Flow defined as Operating Cash Flow – Capital Expenditures EBITDA Margin (1 ) Free Cash Flow (% Sales) (1)(2) Median: 18.9% Median: 10.5% ~18%
Slide 19: High Cash Flow Conversion Drives Deleveraging
6.1x 4.6x 4.7x 4.3x 4.1x 3.9x 3.2x 3.5x ~5.25x < 5.0x ~4.0x ~3.5x ~2.5x ~2.0x Pre-IPO 2005 2006 2007 2008 2009 2010 LTM 12/31 Pro Forma 2012E 2013E 2014E 2015E 2016E 2017E High Cash Flow Conversion Drives Deleveraging… Fiscal year ending March 31 Leverage ratio reflects Net Debt / EBITDA multiple =
Slide 20: Increased Acquisition Capacity
20 < 5.0x ~4.0x ~3.5x FY2013E FY2014E FY2015E ~$375 MM ~$900 MM ~$1.6 BN FY2013E FY2014E FY2015E Prestige Leverage (Net Debt/EBITDA) Illustrative Financial Capacity …Providing for Increased Acquisition Capacity While We Continue to Grow Core OTC Brands Fiscal year ending March 31 Post - GSK: 5.25x
Slide 21: Agenda
Agenda 21 Overview Prestige’s Business and Strategy: Platform for Value Creation Proven Management Team with Strong Track Record Review of Genomma Lab’s Unsolicited Proposal 1 2 3 Current Management’s Track Record: Delivering Value and Results 3 4
Slide 22: Proven Management Team
Ron Lombardi CFO Tim Connors EVP Sales & Marketing Paul Hennessey VP Operations Sam Cowley Secretary & General Counsel John Parkinson SVP International Jean Boyko SVP Science & Technology Matthew Mannelly President & CEO Proven Management Team Waterbury International Holdings Part of New Management
Slide 23: Tested Shareholder Value Creation Framework
Delivering Value Now and Into the Future Through a Tested Shareholder Value Creation Framework OTC M&A Focus Debt Reduction Portfolio Strategy to Drive Organic Growth A&P Driven Growth for Core OTC Brands Selective Investment in Non - Core/MFC Brands Stabilization of Household Performance Si
Slide 24: Prestige has Delivered Superior Shareholder Value
83.2% 35.7% 62.9% Prestige S&P 500 Peer Index Prestige has Delivered Superior Shareholder Value Source: Capital IQ Note: As of February 17, 2012; 1 - Day prior to the proposal submitted by Genomma Lab (1) Peer index includes CHD, ENR, HELE, JAH, NWL, TUP, PRGO, PG, RB, CL, CLX, WNI, WDFC (2) Since D
Slide 25: Strong Financial Outlook with Upside
25 Strong Financial Outlook with Upside Analyst Estimates Consensus Company Guidance Analyst Estimates Consensus Company Guidance EPS $0.19 – $0.24 $0.22 $0.23 (1) $1.10 – $1.25 $1.19 $1.22 – $1.32 (1) +$0.01 +$0.03 – $0.13 Source : Wall Street research Note: Consensus based on average of analyst es
Slide 26: Largest Independent US OTC Platform
US OTC Retail Sales Largest Independent US OTC Platform #1 #2 #3 #4 #5 #6 #7 #8 #9 #10 #11 #12 #13 #14 #15 #16 #17 #18 #19 #20 #21 2.8 1.3 1.2 1.2 1.2 1.1 0.9 0.9 0.8 ~0.5 ~0.3 0.3 0.3 0.2 ~0.2 0.1 0.1 0.1 0.1 0.1 0.1 2011 Rank : + 2.5x in T wo Years + 5 Spots Legacy 26 Independent OTC Companies Dol
Slide 27: Agenda
Agenda 27 Overview Prestige’s Business and Strategy: Platform for Value Creation Current Management’s Track Record: Delivering Value and Results Review of Genomma Lab’s Proposal 1 2 3 Review of Genomma Lab’s Unsolicited Proposal 4
Slide 28: Timeline of Genomma Lab's Unsolicited Proposal
Timeline of Genomma Lab’s Unsolicited Proposal February 18 th (Saturday of Presidents’ Day Weekend ) – Genomma Lab requests meeting with Prestige and informs Prestige it intends to halt trading on Bolsa on February 20 th for deal announcement February 20 th (Monday of Presidents’ Day Weekend) –
Slide 29: Rationale for Rejection of Genomma Lab's Proposal
Prestige’s Rationale for Rejection of Genomma Lab’s Unsolicited Proposal Genomma Lab’s Timing is Opportunistic Proposal Lacks Detail and is Highly Conditional 29 Proposal is Inadequate and Not Compelling Genomma Lab intercepted Prestige's rising stock price and expanding trading multiple – After G
Slide 30: Genomma Lab's Timing is Opportunistic
$8 $9 $10 $11 $12 $13 $14 $15 $16 $17 $18 12/12 12/26 1/9 1/23 2/6 2/20 Genomma Lab’s Timing is Opportunistic Prestige closed acquisition of 17 GSK brands three weeks prior to Genomma Lab’s proposal Prestige has outperformed the market since GSK announcement by a factor of 2x Stock price at ti
Slide 31: Genomma Lab's Timing is Opportunistic: Trading Multiples
Genomma Lab’s Timing is Opportunistic 31 Trading Multiples (1) 9.5x 11.3x 15.1x Source: Capital IQ (1) Forward estimates based on average of consensus estimates (2) Peer index includes CHD, ENR, HELE, JAH, NWL, TUP, PRGO, PG, RB, CL, CLX, WNI, WDFC (3) Excludes TSA, integration, acquisition related
Slide 32: Genomma Lab's Proposal is Inadequate and Not Compelling
9.3x 8.3x 13.6x Genomma Lab’s Proposal Adjusted for Tax Attributes (2) Genomma Lab’s Proposal is Inadequate and Not Compelling 32 23% 39% Genomma Proposal Average Premium Last 20 Years $16.60 23% premium well below 39% average premium paid for U.S. targets over the last 20 years Premium would ha
Slide 33: Proposal is Both Opportunistic and Inadequate
Potential Normalized Trading Range $ 15.25 $14.00 $14.00 $ 18.00 $ 14.50 $15.00 Analyst Targets (Discounted) Market Indexed Adjusted Stock Price Adjusted EPS Guidance at "Intercepted" P/E Multiple Genomma Lab’s Proposal is Both Opportunistic and Inadequate 33 Note: Trademarks belong to respective ow
Slide 34: Independent Board Open to Compelling Proposals that Provide Certainty
Independent Board Open to Compelling Proposals that Provide Certainty Highly qualified, independent Board Industry experience ideally positions current Board to drive company strategy Committed to acting in best interests of all stockholders Taken steps to quickly resolve uncertainty created
Slide 35: Appendix
35 Appendix
Slide 36: Board of Directors: Gary E. Costley
Board of Directors Gary E. Costley, Ph.D. (Lead Director) Chairman & CEO, International Multifoods (Retired) Gary E. Costley, Ph.D., Lead Director, has served as a director since November 2004 and lead director since September 2009. Most recently, Dr. Costley served as managing partner at C&G Capita
Slide 37: Board of Directors: Charles J. Hinkaty
Board of Directors Charles J. Hinkaty Former President and Chief Executive Officer of Del Laboratories, Inc . Charles J. Hinkaty, Director, was appointed as a director in May 2010. Mr. Hinkaty was the President and Chief Executive Officer of Del Laboratories, Inc. from August 2005 through his retire
Slide 38: Matthew M. Mannelly, President and CEO
Matthew M. Mannelly President and CEO Matthew M. Mannelly, Director, President and Chief Executive Officer, has served as President and Chief Executive Officer of the Company since September 2009. Prior to joining the Company, he served as the President and Chief Executive Officer of Cannondale Bicy
Slide 39: Slide 39
Prestige Brands Holdings — Proxy Contest (March 2012) on 6ix