Perrigo Reports Record Fourth Quarter and Fiscal Year Revenue, Earnings and Cash Flow From Operations

ALLEGAN, Mich., Aug. 16, 2012 /PRNewswire/ -- Perrigo Company (Nasdaq: PRGO; TASE) today announced results for its fourth quarter and full year ended June 30, 2012.

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Perrigo's Chairman and CEO Joseph C. Papa commented, "For the sixth straight year, we delivered year-over-year record sales and earnings while continuing to make investments in our facilities and production processes which we believe will further enhance our own already high standards of excellent product quality. During this fiscal year, we also announced the acquisition of CanAm Care to broaden our diabetes category offerings, multiple supply agreements for infant formula in China and numerous new product launches. The penetration of store brand share in the U.S. market continues to gain momentum as retailers and patients continue to turn to high quality, affordable alternatives for their healthcare needs. We look forward to another great year, with many new products in the pipeline across all segments."

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 disclosure information.

The Company's reported results are summarized in the attached Consolidated Statements of Income, Balance Sheets and Cash Flows.                                                                                

Fourth Quarter Results
Net sales for the fourth quarter of fiscal 2012 were approximately $832 million, an increase of 18% compared to last year. Excluding the charges outlined in Table I at the end of this release, fourth quarter fiscal 2012 adjusted income from continuing operations was $121 million, or $1.28 per diluted share, up from $95 million, or $1.02 per diluted share, a year ago.

Fiscal Year Results
Net sales from fiscal 2012 were $3.2 billion, an increase of 15% over fiscal 2011. The increase was driven primarily by $245 million of net sales attributable to the Paddock Labs and CanAm Care acquisitions and new product sales of $211 million, which excludes $6 million of new products launched by Paddock Labs. Reported gross profit was $1.1 billion, up 16%, and reported gross margin was 34.5%, slightly up from 34.3% last year. Adjusted gross profit was $1.2 billion, up 21%, and adjusted gross margin was 37.1%, up from 35.4% last year. The gross margin improvement was driven primarily by new products and the acquisition of Paddock Labs. Reported operating margin increased 10 basis points to 17.9%, and adjusted operating margin increased 200 basis points to 21.6%. Reported income from continuing operations was $393 million, an increase of 15%. Adjusted income from continuing operations was $469 million, or an increase of 25% from fiscal 2011.

Consumer Healthcare
Consumer Healthcare segment net sales in the fourth quarter were $484 million, compared with $434 million in the fourth quarter last year, an increase of $50 million or 12%. The increase resulted from increased sales of existing products of $30 million (primarily in the cough/cold, analgesics and smoking cessation categories), $26 million of new product sales (primarily in the gastrointestinal and dermatological care categories) and $10 million attributable to sales from the CanAm Care acquisition. These increases were partially offset by a decline in sales of existing products of $12 million, primarily in the gastrointestinal and contract categories, as well as a $4 million decline in sales due to unfavorable changes in foreign currency exchange rates. Reported gross profit was $150 million, compared to $133 million a year ago. Adjusted gross profit was $151 million compared to $134 million a year ago. Adjusted gross margin increased 20 basis points to 31.2%. Reported operating income was $79 million, compared with $74 million a year ago, and adjusted operating income was $82 million compared to $77 million a year ago. Adjusted operating margin decreased 100 basis points to 16.9% due to higher spending on sales and marketing promotions to support new product launches and the inclusion of expenses related to the CanAm Care acquisition.

For fiscal year 2012, Consumer Healthcare net sales increased $131 million or 8%, compared to fiscal 2011. The increase was due to new product sales of $102 million (mainly in the cough/cold, gastrointestinal, diabetes and dermatological care categories), an increase in existing product sales of $48 million (mainly in the cough/cold, feminine hygiene and smoking cessation categories) and $18 million in sales attributable to the CanAm Care acquisition. These increases were partially offset by a decline of $34 million in sales of existing products (mainly in the gastrointestinal, analgesics and contract manufacturing categories). Sales were negatively affected by approximately $4 million due to unfavorable changes in foreign currency exchange rates.

Nutritionals
The Nutritionals segment fourth quarter net sales were $135 million, compared to $123 million last year, an increase of 10%. This increase was due primarily to new product sales of $13 million (primarily in the infant formula category) attributable to retail shipments in advance of a planned July 1^st shutdown of the Company's Vermont Plant to do an SAP conversion and to prepare for the installation of a new packaging line. Reported gross profit was $38 million, compared to $37 million a year ago. Reported operating income was $14 million, up from $12 million a year ago while the reported operating margin increased 60 basis points. Adjusted operating income increased to approximately $22 million, up from $18 million a year ago, as the adjusted operating margin increased 200 basis points to 16.3% due to the decision to restructure operations at the Company's Florida facility.

Net sales for fiscal 2012 decreased $2 million to $501 million compared to fiscal 2011. Existing product sales within the infant formula category were lower due to the absence of increased demand when a competitor's product returned to the market following a prior recall. In addition, the VMS product category net sales decreased by approximately $14 million due primarily to SKU rationalization as a result of increased competition. These decreases were partially offset by increased sales in the infant and toddler foods product category of $13 million.

Rx Pharmaceuticals
The Rx Pharmaceuticals segment fourth quarter net sales were $157 million, compared with $92 million a year ago, an increase of 70%. This increase was due to net sales of $58 million from the Paddock Labs acquisition and new product sales of $11 million. Reported gross profit was $74 million, compared to $50 million a year ago, while adjusted gross profit was $82 million, compared to $53 million a year ago. Reported gross margin decreased 730 basis points to 47.1%, while the adjusted gross margin decreased 510 basis points to 52.5%, due primarily to certain pre-launch production costs, relative product mix and production variances. Reported operating income was $54 million, an increase of $16 million from last year, and adjusted operating income was $64 million, compared to $41 million a year ago. Adjusted operating margin decreased 410 basis points from last year to 40.5%.

Net sales for fiscal 2012 increased 80%, or $274 million, compared to fiscal 2011 due to net sales of $228 million from the Paddock Labs acquisition, new product sales of $29 million and growth in the base business. Reported gross margin increased 20 basis points to 47.7%, and reported operating margin increased 120 basis points to 36.2% from a year ago. Adjusted gross margin increased 660 basis points to 57.3%, and adjusted operating margin increased 780 basis points to 46.0% from a year ago.

API
The API segment reported fourth quarter net sales of $38 million, compared with $37 million a year ago. Reported operating income increased $12 million to $18 million compared to last year, while adjusted operating income increased $11 million compared to $7 million last year. Reported operating margin increased 3,010 basis points to 46.8%, while the adjusted operating margin increased 2,870 basis points to 48.0%. The performance of the API segment was favorably impacted due to a commercial agreement with a customer to supply a generic product that was launched in the fourth quarter of fiscal 2012, which unexpectedly received 180-day exclusivity status.

Net sales for fiscal 2012 increased 6%, or $10 million, compared to fiscal 2011 due to $12 million of increased demand in the U.S. for fluticasone and $7 million of new product sales. The Company also recognized $4 million in sales due to the commercial agreement mentioned above. These increases were partially offset by pricing pressures on a key product of $8 million, along with a $2 million negative impact due to unfavorable changes in foreign currency exchange rates.

Other
Continuing operations for the Other category, consisting of the Israel Pharmaceutical and Diagnostic Products operating segment, reported fourth quarter net sales of $17 million compared with $18 million a year ago. The segment reported adjusted operating income of $0.6 million, flat to last year. Net sales for fiscal 2012 increased 9% to $73 million, up from $67 million a year ago. Adjusted operating income was $4 million compared to $3 million for fiscal 2011. 

Guidance
Chairman and CEO Joseph C. Papa concluded, "We had strong performance and execution across our businesses during fiscal 2012. With macroeconomic tailwinds blowing in our favor, we look to build on that success in fiscal 2013."

The Company expects fiscal 2013 reported earnings from continuing operations to be between $4.77 and $4.97 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 expects fiscal 2013 adjusted earnings to be between $5.30 and $5.50 per diluted share as compared to $4.99 in fiscal 2012. This new range implies a year-over-year growth rate in adjusted earnings of 6% to 10% over fiscal 2012's adjusted earnings from continuing operations per diluted share. 

Perrigo will host a conference call to discuss fiscal fourth quarter and fiscal year 2012 results at 10:00 a.m. (ET) on Thursday, August 16, 2012. The conference call will be available live via webcast to interested parties on the Perrigo website http://www.perrigo.com or by phone 877-248-9413, International 973-582-2737, and reference ID# 10926008. A taped replay of the call will be available beginning at approximately 2:00 p.m. (ET) Thursday, August 16, 2012, until midnight Friday, September 7, 2012. To listen to the replay, call 855-859-2056, International 404-537-3406, access code 10926008.          

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, 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).

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, 2012, 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.

SOURCE Perrigo Company