Top Companies Report

32. Prestige Brands

June 29, 2012

Sales: $344 million (estimated) for personal care and household products.
Corporate sales: $441.1 million for the year ended March 31, 2012.

Key Personnel: MatthewM.Mannelly, president and CEO; RonLombardi, chief financial officer; TimothyJ.Connors, chief marketing officer; SamuelC.Cowley, general counsel and VP, business development; JohnParkinson, senior vice president, international; JeanBoyko, senior vice president, science and technology; PaulHennessey, vice president, operations.

Major Products: Personal care, skin care, oral and OTC healthcare products including Chap-et Lip Balm, Cloverine, Debrox earwax remover, Dermoplast, Efferdent Denture Cleanser, EffergripDenture Adhesive, Ezo denture, Gly-Oxide Oral Rinse, Kerodex, Kwellada-PLice Treatment, Remedies, New-Skin Liquid Bandage, New-Skin Scar Fade, Outgro, Oxipor Psoriasis Lotion, The Doctor’s Night Guard. Household care products include Comet, Cinch and Spic and Span cleaners and Chore Boy scrubbing pads. The company also sells a number of GI-related medications and pain relievers for oral ingestion.

New Products: Efferdent Power Clean Crystals, Comet Stainless Steel Cleaners, New-Skin Anti-Chafing Spray.

Comments: Prestige Brands Holdings, Inc. record results for the fourth quarter and fiscal year ended March 31, 2012, were driven by strong OTC organic growth and the completion of the acquisition of 17 brands from GlaxoSmithKline, which was the largest acquisition in the company’s history. In that deal, Prestige picked up Beano, BC, Goody’s and Debrox in the US and Gaviscon in Canada, products that mainly fall outside of Happi’s scope.

Corporate revenues for fiscal 2012 were $441.1 million, an increase of 31.1% over the prior year’s revenues of $336.5 million. OTC healthcare sales reached $344.2 million and household products coming in at 93.5 million.

Organic revenues for the company grew 3.2% during fiscal 2012 over the prior year comparable period. Revenues from the GSK acquisition accounted for $30.4 million of the increase. Blacksmith Brands and Dramamine contributed $63.5 million of the increase for the period prior to the anniversary of their respective purchases.

Income from continuing operations for fiscal 2012 of $37.2 million was 27.5% higher than fiscal 2011 income from continuing operations of $29.2 million. Income from continuing operations for fiscal 2012 was impacted by $12.9 million of costs primarily associated with the GSK acquisition and costs associated with the evaluation of the Genomma Lab unsolicited proposal. (That’s right; Avon wasn’t the only company with unwanted advances this past year.)

“In less than three years, our clear and consistent value creation strategy has taken hold,” said Matthew M. Mannelly, president and CEO. “We have transformed Prestige into the largest independent OTC products company in the US with a proven ability to generate consistent organic growth in our core OTC business coupled with a leading free cash flow profile,” he said.

According to Mannelly, the firm’s M&A strategy has transformed Prestige into a company with approximately “90% of profits derived from higher growth, higher margin OTC brands.”

Revenues for the household cleaning segment fell 5.7%, during 2012 versus 2011. Comet revenues decreased primarily due to softer consumer consumption of non-abrasive products, however Chore Boy and Spic and Span revenues increased as a result of increased promotional activity, and expanded distribution and consumer demand for Spic and Span sprays and Chore Boy copper scrubbers, the company said.

Prestige Brands’ principal customer relationships include Walmart, Walgreens, CVS, Target and Dollar Tree—and sales to its top five and 10 customers accounted for approximately 40.0% and 50.1% of total gross sales, respectively, in 2012 compared with approximately 41.7% and 53.0%, respectively, in 2011 and approximately 45.6% and 57.3%, respectively, in 2010. No single customer other than Walmart accounted for more than 10% of the firm’s gross sales in any of those years and none of its other top five customers accounted for less than 3% of our gross sales in any of those years. During 2012, 2011 and 2010, Walmart accounted for approximately 18.9%, 20.3% and 24.4%, respectively, of gross revenues.

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