Perrigo Reports Record Revenue, Earnings and Cash Flow From Operations for Fiscal 2011

ALLEGAN, Mich., Aug. 16, 2011 /PRNewswire/ -- Perrigo Company (Nasdaq: PRGO; TASE) today announced results for its fourth quarter and full year ended June 25, 2011.

Perrigo's Chairman and CEO Joseph C. Papa commented, "For the fifth straight year, we delivered year-over-year record sales, earnings and cash flow from operations, while at the same time making meaningful investments in the facilities, production and people necessary to further enhance our own already high standards of excellent product quality. In addition, we announced the acquisition of Paddock Laboratories and the entry into blood glucose monitoring category that broaden our product offering. We are continuing along our strategic path in these challenging economic times to make quality healthcare more affordable to consumers around the globe."

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 from continuing operations for the fourth quarter of fiscal 2011 were approximately $705 million, an increase of 14% compared to last year. Reported income from continuing operations was approximately $86 million, or $0.91 per share, a strong increase over $49 million, or $0.53 per share, a year ago. Excluding the charges outlined in Table I at the end of this release, fourth quarter fiscal 2011 adjusted income from continuing operations was $95 million, or $1.02 per share.

Fiscal Year Results

Net sales from continuing operations for fiscal 2011 were $2.76 billion, an increase of 21% over fiscal 2010. The increase was driven primarily by the acquisitions of PBM Holdings, Inc. (PBM) and Orion Laboratories Pty Ltd. (Orion), as well as $192 million in new product sales. Reported gross profit was $945 million, up by 27%, and reported gross margin was 34.3%, up from 32.9% last year. The gross margin improvement was driven primarily by new products and the acquisition of PBM. Reported operating margin increased 300 basis points to 17.8% and adjusted operating margin increased 160 basis points to 19.6%. Reported income from continuing operations was $341 million, an increase of 52%. Adjusted income from continuing operations was $375 million, or an increase of 34% from fiscal 2010.

Consumer Healthcare

Consumer Healthcare segment net sales in the fourth quarter were $434 million, compared with $399 million in the fourth quarter last year, an increase of $35 million or 9%. The increase resulted from $18 million of new product sales, $12 million of higher sales volumes of existing products and approximately $5 million due to the impact of favorable changes in foreign currency exchange rates. Reported gross profit was $133 million, compared to $131 million a year ago. Adjusted gross profit was $134 million compared to $133 million a year ago. Adjusted gross margin decreased 220 basis points to 31.0%, largely driven increased investments in quality systems and lower manufacturing efficiencies year over year due to production process redesigns. Reported operating income was $74 million, compared with $69 million a year ago, and adjusted operating income was approximately $77 million compared to approximately $71 million a year ago. Adjusted operating margin remained constant at 17.9% compared to last year.      

For fiscal year 2011, Consumer Healthcare net sales increased $111 million or 7%, compared to fiscal 2010. The increase resulted from $51 million of higher sales volumes of existing products, primarily in the analgesics and cough/cold categories, $54 million of new product sales, and $22 million of sales attributable to the acquisition of Orion, as well as an approximate $7 million favorable impact from changes in foreign currency exchange rates. These increases were partially offset by a decline of $22 million in sales of existing products, primarily in the contract manufacturing and gastrointestinal categories. Reported gross profit was $531 million, compared to $523 million a year ago. Adjusted gross profit was $535 million, compared to $526 million a year ago. Adjusted gross margin decreased 180 basis points to 31.7%, driven by increased manufacturing and inventory costs related to quality improvement initiatives at our Michigan facilities. Reported operating income was $293 million, compared with $304 million a year ago, and adjusted operating income was approximately $303 million, compared to $310 million a year ago. Adjusted operating margin decreased 170 basis points to 18.0%.  

On April 13, 2011, the Company announced that its partner, Teva Pharmaceutical Industries, Ltd. (Nasdaq: TEVA), received final over-the-counter (OTC) approval to sell and distribute fexofenadine HCl 60 mg and 180 mg tablets.

On May 2, 2011, the Company announced that it received final approval from the U.S. Food and Drug Administration (FDA) for its abbreviated new drug application (ANDA) for OTC Minoxidil Foam.

On May 16, 2011, the Company announced that it received final approval from the FDA for its ANDA for OTC Ranitidine 150 (regular and cool mint) and expects to launch early in its fiscal 2012.

Nutritionals

The Nutritionals segment fourth quarter net sales were $123 million, compared to $84 million last year, an increase of 47%. This increase was due to the inclusion of a full quarter of sales from the PBM acquisition. Reported gross profit was $37 million, compared to $15 million a year ago, while adjusted gross margin increased 190 basis points to 32.9%. This increase was also due to the PBM acquisition. Reported operating income was $12 million, up from a loss of $1 million a year ago. Adjusted operating income increased to approximately $18 million, up from $12 million a year ago, as the adjusted operating margin percentage remained flat at 14.3%.

For fiscal year 2011, Nutritionals net sales increased 94% to $503 million compared to $259 million in fiscal 2010 due to the PBM acquisition, which added incremental revenues of $283 million, including approximately $9 million in new product sales. New product sales within VMS (Vitamins, Minerals and Supplements) were approximately $8 million. The increase was offset by a decline of $46 million due primarily to SKU rationalization within VMS. Reported gross profit was $159 million, compared to approximately $39 million a year ago, while adjusted gross profit was $171 million, compared to $50 million a year ago. Adjusted gross margin increased 1,480 basis points to 34.0%, due largely to the acquisition of PBM, along with operational improvements within VMS. Reported operating income was $68 million, compared with $2 million a year ago, and adjusted operating income was $91 million, compared to $17 million a year ago. Adjusted operating margin increased 1,140 basis points to 18.1%.

Rx Pharmaceuticals

The Rx Pharmaceuticals segment fourth quarter net sales were $92 million, compared with $83 million a year ago, an increase of 12%. This increase was due primarily to new product sales of $10 million. Reported gross profit was $50 million, compared to approximately $31 million a year ago. Gross margin increased 1,760 basis points to 54.4% as a result of the Company switching from selling the authorized generic of imiquimod cream to its own product. Reported operating income was $38 million, an increase of $25 million from last year, and adjusted operating income was $41 million, compared to $21 million a year ago. Adjusted operating margin increased 1,910 basis points from last year to 44.6%.  

For fiscal year 2011, net sales for the Rx Pharmaceuticals segment increased 45% over fiscal 2010 to $344 million from $238 million. The increase was due primarily to new product sales of $81 million, due largely to sales of the generic version of Aldara®, along with favorable pricing on select products. Reported gross profit was $163 million, compared to $108 million a year ago. Adjusted gross profit was $174 million, compared to $119 million a year ago. Adjusted gross margin increased 60 basis points to 50.7% due to new product sales, favorable pricing on select products, and gross profit from higher sales volumes of existing products. Reported operating income was $120 million, compared with approximately $49 million a year ago, and adjusted operating income was $131 million, compared to $78 million a year ago. Adjusted operating margin increased 520 basis points to 38.2%.  

On May 18, 2011 the Company and its partner Synthon Pharmaceuticals, Inc. received tentative approval from the FDA for its ANDA for Levocetirizine Solution, 2.5 mg/5ml.

On June 15, 2011 the Company and its partner Teva announced that they began shipping Triamcinolone Acetonide Nasal Spray.

API

The API segment reported fourth quarter net sales of $37 million, compared with $39 million a year ago. Reported operating income decreased approximately $1 million to $6 million, while adjusted operating income decreased $2 million compared to last year. Adjusted operating margin decreased 500 basis points to 19.3%.  

For fiscal year 2011, net sales increased 11% or $16 million over fiscal 2010, to $156 million. Reported operating income increased approximately $23 million over last year, and adjusted operating income increased $14 million over last year to $40 million. The increases were due largely to new product sales of $32 million, driven primarily by temozolomide sales in Europe. Sales were offset by decreased sales volumes of existing products, a decrease in revenues related to the sale of dossier agreements and unfavorable changes in foreign currency exchange rates. Adjusted operating margin increased 730 basis points to 25.9%.  

Other

Continuing operations for the Other category, consisting of the Israel Pharmaceutical and Diagnostic Products operating segment, reported fourth quarter net sales of $18 million compared with $15 million a year ago. The segment reported adjusted operating income of $0.6 million, compared to $1 million a year ago. Net sales for fiscal 2011 increased 17% to $67 million, up from approximately $58 million a year ago. Adjusted operating income for the segment was $3 million compared to approximately $5 million for fiscal 2010.  

Guidance

Chairman and CEO Joseph C. Papa concluded, "We had strong performance and execution across our businesses during fiscal 2011 and in fiscal 2012 we look to build on that success. We expect fiscal 2012 reported diluted earnings from continuing operations to be between $3.79 and $3.94 per share as compared to $3.64 in fiscal 2011. Excluding the charges outlined in Table III at the end of this release, we expect fiscal 2012 adjusted diluted earnings from continuing operations to be between $4.50 and $4.65 per share as compared to $4.01 in fiscal 2011. This new range implies a year-over-year growth rate of adjusted earnings from continuing operations of 12% to 16% over fiscal 2011 adjusted diluted earnings per share."

Perrigo will host a conference call to discuss fiscal 2011 fourth quarter and year end results at 10:00 a.m. (ET) on Tuesday, August 16. 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# 84462142. A taped replay of the call will be available beginning at approximately 2:00 p.m. (ET) Tuesday, August 16, 2011, until midnight Friday, September 2, 2011. To listen to the replay, call 800-642-1687, International 706-645-9291, access code 84462142.

Perrigo Company is a leading global healthcare supplier that develops, manufactures and distributes OTC and generic prescription (Rx) pharmaceuticals, infant formulas, nutritional products, and active pharmaceutical ingredients (API). The Company is the world's largest manufacturer of OTC pharmaceutical products and infant formulas, both for the store brand market. The Company's primary markets and locations of manufacturing and logistics operations are the United States, Israel, Mexico, the United Kingdom 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 25, 2011, 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