Perrigo net sales increase 18% to $920M in third quarter 2013

Perrigo Company (Nasdaq: PRGO; TASE: PRGO) today announced results for its third quarter ended March 30, 2013.

Perrigo's Chairman and CEO Joseph C. Papa commented, "We are very pleased with our performance, as the team delivered all-time record quarterly revenue and adjusted diluted earnings per share. It was a very busy quarter for the team. We signed and closed the acquisition of Rosemont Pharmaceuticals, a specialty and generic prescription pharmaceutical company focused on the manufacturing and marketing of oral liquid formulations. We shipped Guaifenesin 600mg Extended-Release tablets with $135 million in branded sales. It is the first product that is generically equivalent to Mucinex® 600mg Extended-Release tablets. We launched the generic equivalents of Luxiq® Foam and Nicorette® mini lozenges and the authorized generic of Acetadote® injection. Finally, we filed an ANDA for the generic equivalent of Androgel® 1.62% and we believe we are the first to file. After the quarter ended, we closed our acquisition of Velcera, further expanding our recent entry into companion animal health and broadening our product offering. All of these great milestones were achieved while expanding margins in a record sales quarter." 

Refer to Table I at the end of this press release for adjustments in the current year and prior year periods and additional non-GAAP information. The Company's reported results are summarized in the attached Condensed Consolidated Statements of Income, Balance Sheets and Cash Flows.                                                                      

Third Quarter Results

Net sales in the quarter were a record $920 million, an increase of 18% over the third quarter of fiscal 2012, driven primarily by $61 million in strong base business growth, new product sales of $41 million and $40 million attributable to the Sergeant's and Rosemont acquisitions. Excluding charges as outlined in Table I at the end of this release, third quarter fiscal 2013 adjusted net income increased 1.1% to $134 million, or $1.42 per diluted share. Excluding a non-recurring tax benefit of $19 million in fiscal third quarter 2012; adjusted net income increased 18%. Reported net income decreased 3.3% to $112 million, or $1.18 per diluted share.

Consumer Healthcare

Consumer Healthcare segment net sales increased 20% to $537 million, driven by an increase in sales of existing products of $54 million (contract, cough/cold and analgesics categories), $31 million attributable to the recent acquisition of Sergeant's and new product sales of approximately $17 million (cough/cold and smoking cessation categories). These combined increases were partially offset by a decline of $9 million in sales of existing products (other categories) and $4 million in discontinued products.

The adjusted gross margin expanded 200 basis points due to the inclusion of Sergeant's, new products, increased manufacturing efficiencies and a favorable product mix. Third quarter operating expenses increased due primarily to approximately $12 million of incremental operating expenses from the acquisition of Sergeant's.

Nutritionals

 The Nutritionals segment reported third quarter net sales of $133 million, compared with $118 million a year ago. All product categories within the segment grew year-over-year and new product sales were $5 million. The disparities between the reported and adjusted operating income and margin are due to the absence of restructuring charges incurred in the third quarter of fiscal 2012 related to the Company's Florida location, which was closed in the fourth quarter of fiscal 2012.

Third quarter adjusted gross margin decreased due primarily to a larger proportion of sales from the lower margin VMS category and higher production inefficiencies in the infant formula category, while the adjusted operating margin was favorably impacted by lower employee-related expenses.

Rx Pharmaceuticals

 The Rx Pharmaceuticals segment third quarter net sales increased 22% to $189 million due primarily to new product sales of $18 million, $8 million in sales related to the February 11^th 2013 acquisition of Rosemont, and strong prescription volumes evidenced by an increase in existing product sales of $7 million.

The adjusted gross margin decreased due primarily to less favorable product mix. The adjusted operating margin was impacted by higher distribution, selling, general and administrative costs and the inclusion of Rosemont.

API

The API segment's net sales increased by 11% to $41 million due to an increase in existing product sales of $4 million primarily related to the continued successful launch of a customer's product.

Operating margins expanded on favorable mix of existing product sales offset slightly by higher distribution selling, general and administrative expenses.

Closing

Chairman, President and CEO Joseph C. Papa concluded, "While we've celebrated a record quarter, we are back to executing our plans for the final quarter of fiscal 2013. We're well positioned to save pet owners money as we enter this summer's flea and tick season and are anxiously awaiting additional new product approvals and launches. As always, we stand committed to bringing more forms of quality, affordable healthcare to more consumers."

Guidance

The Company is confirming the guidance which was provided on February 11, 2013, the closing date of the Rosemont acquisition, and continues to expect fiscal 2013 reported earnings to be between $4.67 and $4.87 per diluted share as compared to $4.18 in fiscal 2012. Excluding the charges outlined in Table III at the end of this release, the Company continues to expect fiscal 2013 adjusted earnings to be between $5.53 and $5.73 per diluted share as compared to $4.99 in fiscal 2012. This range implies a year-over-year growth rate in adjusted earnings of 11% to 15% over fiscal 2012's adjusted earnings from continuing operations per diluted share.               

The conference call will be available live via webcast to interested parties in the investor relations section of the Perrigo website at http://perrigo.investorroom.com/events-webcasts or by phone at 877-248-9413, International 973-582-2737, and reference ID# 31768198. A taped replay of the call will be available beginning at approximately 1:00 p.m. (ET) Tuesday, May 7, 2013 until midnight Friday, May 17, 2013. To listen to the replay, dial 855-859-2056, International 404-537-3406, and use access code 31768198.

From its beginnings as a packager of generic home remedies in 1887, Allegan, Michigan-based Perrigo Company has grown to become a leading global provider of quality, affordable healthcare products. Perrigo develops, manufactures and distributes over-the-counter (OTC) and generic prescription (Rx) pharmaceuticals, infant formulas, nutritional products, animal health, dietary supplements and active pharmaceutical ingredients (API). 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 logistics operations have evolved over the years to include the United States, Israel, Mexico, the United Kingdom, India, China and Australia. Visit Perrigo on the Internet (http://www.perrigo.com).

 SOURCE Perrigo Company