Prestige Consumer Healthcare Inc. Reports Record Results for Fiscal 2022

Tarrytown, New York, UNITED STATES


  • Company Exceeds Full-Year Earnings Outlook for Revenue, EPS, and Cash Flow
  • Revenue of $266.9 Million in Q4 and $1,086.8 Million for Full-Year Fiscal 2022, up 12.3% and 15.2% versus Prior Year, respectively
  • Adjusted Diluted EPS of $4.06 for Fiscal 2022, up 25.3% versus Prior Year
  • Net Cash Provided by Operating Activities of $259.9 Million and Record Non-GAAP Free Cash Flow of $253.7 Million in Full-Year Fiscal 2022
  • Initial Full-Year Fiscal 2023 Revenue Outlook of Approximately 3% to 4%
  • Board of Directors Authorizes New $50 million Share Repurchase Program

TARRYTOWN, N.Y., May 05, 2022 (GLOBE NEWSWIRE) -- Prestige Consumer Healthcare Inc. (NYSE:PBH) today reported financial results for its fourth quarter and fiscal year ended March 31, 2022.

“We are very pleased with our record fiscal 2022 that included double-digit revenue, earnings, and cash flow growth. This performance is the result of our proven business strategy and benefits of our leading portfolio of brands, which enabled us to continue delivering these outstanding results in a dynamic operating environment. The results are a continuation of our long history of delivering value for our stakeholders through successful execution of our business strategy. We look forward to discussing this history of success and what gives us confidence in future growth during tomorrow’s earnings call,” said Ron Lombardi, Chief Executive Officer of Prestige Consumer Healthcare.

Fourth Fiscal Quarter Ended March 31, 2022

Reported revenues in the fourth quarter of fiscal 2022 of $266.9 million increased 12.3% versus $237.8 million in the fourth quarter of fiscal 2021. Revenues increased 5.9% excluding the impact of foreign currency and a $16.3 million contribution from the acquisition of Akorn. The revenue performance for the quarter was driven by continued strong performance across many of the Company’s key brands including improved demand for certain brands, categories and channels that had been impacted by the COVID-19 virus in the prior year fourth quarter such as higher demand for cough & cold products.

Reported net income for the fourth quarter of fiscal 2022 totaled $52.1 million, compared to the prior year quarter’s net income of $35.5 million. Diluted earnings per share of $1.02 for the fourth quarter of fiscal 2022 compared to $0.70 in the prior year comparable period. On a non-GAAP basis, excluding discrete tax items, adjusted net income and adjusted diluted earnings per share in fiscal 2022 of $46.3 million and $0.91 per share, respectively, compared to $39.9 million and $0.79 per share, respectively, in the prior year comparable period.

The adjustment of net income in the fourth quarter fiscal 2022 reflects a tax rate adjustment to account for a discrete benefit associated with a change in the Company’s deferred state tax liabilities. The adjustment of net income in the fourth quarter fiscal 2021 includes a loss on extinguishment of debt and the related income tax effects.

Fiscal Year Ended March 31, 2022

Reported revenues for the fiscal year 2022 totaled $1,086.8 million, an increase of 15.2%, compared to revenues of $943.4 million for the fiscal year 2021. Revenues increased 10.1% excluding the impact of foreign currency and a $42.2 million contribution from the acquisition of Akorn. The revenue performance for the fiscal year 2022 was driven by consumption growth across the majority of the Company’s portfolio as well as improved demand for certain brands, categories and channels that had been impacted by the COVID-19 virus in the prior fiscal year.

Reported net income for fiscal 2022 totaled $205.4 million versus the prior year comparable period net income of $164.7 million. Diluted earnings per share were $4.04 for fiscal 2022 compared to $3.25 per share in the prior fiscal year. On a non-GAAP basis, adjusted net income and adjusted diluted earnings per share for fiscal 2022 were $206.3 million and $4.06, respectively, compared to $164.0 million and $3.24 per share, respectively, in the prior fiscal year.

Adjustments to net income in fiscal 2022 included integration, transition, purchase accounting, legal and various other costs associated with the Akorn acquisition as well as a loss on extinguishment of debt and the related income tax effects of the adjustments and a normalized tax rate adjustment to account for discrete items. The adjustments of net income in fiscal 2021 related to a loss on extinguishment of debt as well as the final regulations issued during the period for certain tax elements imposed under the domestic Tax Cuts and Jobs Act, which resulted in a one-time discrete benefit associated with the utilization of foreign tax credits.

Free Cash Flow and Balance Sheet

The Company's net cash provided by operating activities for fourth quarter fiscal 2022 was $63.1 million, compared to $59.1 million during the prior year comparable period. Non-GAAP free cash flow in the fourth quarter of fiscal 2022 was $60.0 million compared to $54.2 million in the prior year fourth quarter. The Company's net cash provided by operating activities for fiscal 2022 was $259.9 million, compared to $235.6 million during the prior year comparable period. Non-GAAP adjusted free cash flow for fiscal 2022 was $253.7 million compared to $213.4 million in the prior fiscal year.

The Company's net debt position as of March 31, 2022 was approximately $1.5 billion, resulting in a covenant-defined leverage ratio of 3.8x.

Share Repurchase Program Authorization

On May 3, 2022 the Company’s Board of Directors authorized the repurchase of up to $50.0 million of the Company’s issued and outstanding common stock. Under the authorization, the Company may purchase common stock through May, 2023 utilizing open market transactions, transactions structured through investment banking institutions, in privately-negotiated transactions, by direct purchases of common stock or a combination of the foregoing in compliance with the applicable rules and regulations of the Securities and Exchange Commission.
               
The timing of the purchases and the amount of stock repurchased is subject to the Company's discretion and will depend on market and business conditions, applicable legal and credit requirements and other corporate considerations including the Company’s historical strategy of pursuing accretive acquisitions and deleveraging.

Segment Review

North American OTC Healthcare: Segment revenues of $232.9 million for the fourth quarter of fiscal 2022 increased 10.1% versus the prior year comparable quarter's segment revenues of $211.5 million. The fourth quarter fiscal 2022 revenue performance was driven by strong performance across a majority of the Company’s key brands versus their respective categories and increased demand in certain COVID-19 impacted categories such as cough & cold and motion sickness categories. The fourth quarter fiscal 2022 revenue performance also included an approximate $16 million contribution from the acquisition of Akorn.

For the fiscal year 2022, reported revenues for the North American OTC segment were $967.9 million, an increase of 14.0% compared to $849.3 million in the prior fiscal year, driven by similar factors attributable to the fourth quarter performance including an approximate $42 million contribution from the acquisition of Akorn.

International OTC Healthcare: Record segment fiscal fourth quarter 2022 revenues of $34.0 million increased 29.4% from $26.3 million reported in the prior year comparable period. The revenue increase versus the prior year related primarily to an increase in consumer activity in Australia, which drove a sharp rise in demand for Hydralyte and other COVID-19 impacted brands.

For the fiscal year 2022, reported revenues for the International OTC Healthcare segment were $118.9 million, an increase of 26.5% over the prior fiscal year revenues of $94.0 million. The increase was driven by similar factors attributable to the fourth quarter performance, along with a foreign currency benefit of $1.8 million.

Commentary and Outlook for Fiscal 2023

Ron Lombardi, Chief Executive Officer, stated, “During fiscal 2022 we generated record earnings and free cash flow even with a backdrop of resurgences of COVID-19 variants, supply chain challenges, and inflation. Furthermore, consistent with our long-term strategy, we deployed capital strategically by acquiring the TheraTears brand to add to our leading eye care portfolio, while still reducing net leverage. This record performance demonstrates once again that our business strategy and diversified portfolio of consumer healthcare brands gives us the ability to generate outstanding value across economic environments.”

“Building on the solid fiscal 2022 performance, we anticipate continued fiscal 2023 growth off the record year. We expect organic sales growth to track in-line with our long-term expectation of 2% to 3% driven by our time-tested brand-building attributes and pricing actions. We currently anticipate a manageable inflationary and supply chain environment thanks to our leading portfolio and largely domestic-based asset-light model, with the result being operating profits growing at or slightly above our rate of sales. This strong financial outlook will continue to support our long-term strategy of continued debt reduction and other strategic uses of capital to drive long-term shareholder value,” Mr. Lombardi concluded.

 Initial Fiscal 2023 Outlook
Revenue$1,120 to 1,130 million
Organic Revenue Growth2% to 3%
Diluted E.P.S.$4.18 to $4.23
Free Cash Flow$260 million or more

Fiscal Fourth Quarter and Full Year 2022 Conference Call, Accompanying Slide Presentation and Replay

The Company will host a conference call to review its fourth quarter and full-year results tomorrow, May 6, 2022 at 8:30 a.m. ET. The toll-free dial-in numbers are 844-233-9440 for the U.S. & Canada and 574-990-1016 internationally. The conference ID number is 3389356. The Company provides a live Internet webcast, a slide presentation to accompany the call, as well as an archived replay, all of which can be accessed from the Investor Relations page of the Company's website at www.prestigeconsumerhealthcare.com. The slide presentation can be accessed from the Investor Relations page of the website by clicking on Webcasts and Presentations.

Telephonic replays will be available for approximately one week following the completion of the call and can be accessed at 855-859-2056 within North America and at 404-537-3406 from outside North America. The conference ID is 3389356.

Non-GAAP and Other Financial Information

In addition to financial results reported in accordance with generally accepted accounting principles (GAAP), we have provided certain non-GAAP financial information in this release to aid investors in understanding the Company's performance. Each non-GAAP financial measure is defined and reconciled to its most closely related GAAP financial measure in the “About Non-GAAP Financial Measures” section at the end of this earnings release.

Note Regarding Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of the federal securities laws that are intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" generally can be identified by the use of forward-looking terminology such as "guidance," "strategy," "outlook," "projection," “plan,” "may," "will," "would," "expect," "anticipate," "believe”, "confidence," or "continue" (or the negative or other derivatives of each of these terms) or similar terminology. The "forward-looking statements" include, without limitation, statements regarding the Company's future operating results including revenues, organic growth, diluted earnings per share, and free cash flow, the impact of supply chain issues and inflation on the Company’s performance, the Company’s ability to execute on its brand-building and capital allocation strategy, and the timing and amount of and source of funds for the Company’s share repurchases. These statements are based on management's estimates and assumptions with respect to future events and financial performance and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results could differ materially from those expected as a result of a variety of factors, including the impact of business and economic conditions, including as a result of COVID-19 and geopolitical instability, consumer trends, the impact of the Company’s advertising and marketing and new product development initiatives, customer inventory management initiatives, fluctuating foreign exchange rates, competitive pressures, and the ability of the Company’s manufacturing operations and third party manufacturers and logistics providers and suppliers to meet demand for its products and to avoid inflationary cost increases and disruption as a result of labor shortages. A discussion of other factors that could cause results to vary is included in the Company's Annual Report on Form 10-K for the year ended March 31, 2021 and other periodic reports filed with the Securities and Exchange Commission.

About Prestige Consumer Healthcare Inc.

Prestige Consumer Healthcare is a leading consumer healthcare products company with sales throughout the U.S. and Canada, Australia, and in certain other international markets. The Company’s diverse portfolio of brands include Monistat® and Summer’s Eve® women's health products, BC® and Goody's® pain relievers, Clear Eyes® and TheraTears® eye care products, DenTek® specialty oral care products, Dramamine® motion sickness treatments, Fleet® enemas and glycerin suppositories, Chloraseptic® and Luden's® sore throat treatments and drops, Compound W® wart treatments, Little Remedies® pediatric over-the-counter products, Boudreaux’s Butt Paste® diaper rash ointments, Nix® lice treatment, Debrox® earwax remover, Gaviscon® antacid in Canada, and Hydralyte® rehydration products and the Fess® line of nasal and sinus care products in Australia. Visit the Company's website at www.prestigeconsumerhealthcare.com

Prestige Consumer Healthcare Inc.
Consolidated Statement of Income and Comprehensive Income
(Unaudited)

  Three Months Ended March 31, Year 
Ended March 31,
(In thousands, except per share data)  2022  2021   2022   2021 
Total Revenues  266,936  237,761   1,086,812   943,365 
         
Cost of Sales        
Cost of sales excluding depreciation  116,281  99,047   458,942   389,670 
Cost of sales depreciation  1,793  1,658   7,224   6,223 
Cost of sales  118,074  100,705   466,166   395,893 
Gross profit  148,862  137,056   620,646   547,472 
         
Operating Expenses        
Advertising and marketing  36,935  36,417   157,343   140,589 
General and administrative  27,810  23,823   108,516   85,540 
Depreciation and amortization  6,692  5,879   24,868   23,941 
Total operating expenses  71,437  66,119   290,727   250,070 
Operating income  77,425  70,937   329,919   297,402 
         
Other expense (income)        
Interest expense, net  15,973  18,983   64,287   82,328 
Loss on extinguishment of debt    12,327   2,122   12,327 
Other expense (income), net  487  (746)  1,052   (1,366)
Total other expense, net  16,460  30,564   67,461   93,289 
Income before income taxes  60,965  40,373   262,458   204,113 
Provision for income taxes  8,879  4,859   57,077   39,431 
Net income $52,086 $35,514  $205,381  $164,682 
         
Earnings per share:        
Basic $1.03 $0.71  $4.09  $3.28 
Diluted $1.02 $0.70  $4.04  $3.25 
         
Weighted average shares outstanding:        
Basic  50,363  50,031   50,259   50,210 
Diluted  50,972  50,512   50,842   50,605 
         
Comprehensive income, net of tax:        
Currency translation adjustments  3,741  (2,106)  (1,296)  20,333 
Unrealized gain on interest rate swaps  188  698   1,819   3,045 
Unrecognized net gain (loss) on pension plans  246  (1,162)  246   1,172 
Net gain on pension distribution reclassified to net income          (190)
Total other comprehensive income (loss)  4,175  (2,570)  769   24,360 
Comprehensive income $56,261 $32,944  $206,150  $189,042 

Prestige Consumer Healthcare Inc.
Consolidated Balance Sheet
(Unaudited)

(In thousands)March 31,
  2022   2021 
Assets   
Current assets   
Cash and cash equivalents$27,185  $32,302 
Accounts receivable, net of allowance of $19,720 and $16,457, respectively 139,330   114,671 
Inventories 120,342   114,959 
Prepaid expenses and other current assets 6,410   7,903 
Total current assets 293,267   269,835 
    
Property, plant and equipment, net 71,300   70,059 
Operating lease right-of-use assets 20,372   23,722 
Finance lease right-of-use assets, net 6,858   8,986 
Goodwill 578,976   578,079 
Intangible assets, net 2,696,635   2,475,729 
Other long-term assets 3,273   2,863 
Total Assets$3,670,681  $3,429,273 
    
Liabilities and Stockholders' Equity   
Current liabilities   
Accounts payable$55,760  $45,978 
Accrued interest payable 4,437   6,312 
Operating lease liabilities, current portion 6,360   5,858 
Finance lease liabilities, current portion 2,752   2,588 
Other accrued liabilities 74,113   61,402 
Total current liabilities 143,422   122,138 
    
Long-term debt, net 1,476,658   1,479,653 
Deferred income tax liabilities 444,917   434,050 
Long-term operating lease liabilities, net of current portion 16,088   19,706 
Long-term finance lease liabilities, net of current portion 4,501   6,816 
Other long-term liabilities 7,484   8,612 
Total Liabilities 2,093,070   2,070,975 
    
Stockholders' Equity   
Preferred stock - $0.01 par value   
Authorized - 5,000 shares   
Issued and outstanding - None     
Common stock - $0.01 par value   
Authorized - 250,000 shares   
Issued – 54,430 shares at March 31, 2022 and 53,999 shares at March 31, 2021 544   540 
Additional paid-in capital 515,583   499,508 
Treasury stock, at cost – 4,151 shares at March 31, 2022 and 4,088 at March 31, 2021 (133,648)  (130,732)
Accumulated other comprehensive loss, net of tax (19,032)  (19,801)
Retained earnings 1,214,164   1,008,783 
Total Stockholders' Equity 1,577,611   1,358,298 
Total Liabilities and Stockholders' Equity$3,670,681  $3,429,273 

Prestige Consumer Healthcare Inc.
Consolidated Statement of Cash Flows
(Unaudited)

 Year Ended March 31,
(In thousands) 2022   2021 
Operating Activities   
Net income$205,381  $164,682 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization 32,092   30,164 
Loss on sale or disposal of property and equipment 271   220 
Deferred income taxes 9,979   18,628 
Amortization of debt origination costs 4,230   4,979 
Stock-based compensation costs 9,039   8,543 
Loss on extinguishment of debt 2,122   12,327 
Non-cash operating lease cost 6,706   7,082 
Impairment loss 1,057   2,434 
Other (9)  (7,854)
Changes in operating assets and liabilities:   
   Accounts receivable (24,654)  36,872 
   Inventories 663   2,972 
   Prepaid expenses and other current assets 1,448   (3,227)
   Accounts payable 9,154   (17,342)
   Accrued liabilities 9,616   (14,912)
   Operating lease liabilities (6,448)  (6,718)
   Other (725)  (3,243)
Net cash provided by operating activities 259,922   235,607 
    
Investing Activities   
Purchases of property, plant and equipment (9,642)  (22,243)
Acquisitions (247,046)   
Other 177    
Net cash used in investing activities (256,511)  (22,243)
    
Financing Activities   
Proceeds from issuance of senior notes    600,000 
Repayment of senior notes    (600,000)
Term Loan repayments (600,000)  (195,000)
Proceeds from refinancing of Term Loan 597,000    
Borrowings under revolving credit agreement 85,000   15,000 
Repayments under revolving credit agreement (85,000)  (70,000)
Payment of debt costs (6,111)  (17,718)
Payments of finance leases (2,582)  (1,443)
Proceeds from exercise of stock options 7,040   2,851 
Fair value of shares surrendered as payment of tax withholding (2,916)  (1,242)
Repurchase of common stock    (11,867)
Net cash provided by (used in) financing activities (7,569)  (279,419)
Effects of exchange rate changes on cash and cash equivalents (959)  3,597 
Decrease in cash and cash equivalents (5,117)  (62,458)
Cash and cash equivalents - beginning of year 32,302   94,760 
Cash and cash equivalents - end of year$27,185  $32,302 
Interest paid$61,364  $80,290 
Income taxes paid$46,568  $34,381 

Prestige Consumer Healthcare Inc.
Consolidated Statement of Income
Business Segments
(Unaudited)

 Three Months Ended March 31, 2022
(In thousands)North American OTC
Healthcare
 International OTC
Healthcare
 Consolidated
Total segment revenues*$232,903 $34,033 $266,936
Cost of sales 104,345  13,729  118,074
Gross profit 128,558  20,304  148,862
Advertising and marketing 32,084  4,851  36,935
Contribution margin$96,474 $15,453  111,927
Other operating expenses     34,502
Operating income    $77,425

*Intersegment revenues of $0.6 million were eliminated from the North American OTC Healthcare segment.

 Year Ended March 31, 2022
(In thousands)North American OTC
Healthcare
 International OTC
Healthcare
 Consolidated
Total segment revenues*$967,881 $118,931 $1,086,812
Cost of sales 419,162  47,004  466,166
Gross profit 548,719  71,927  620,646
Advertising and marketing 138,714  18,629  157,343
Contribution margin$410,005 $53,298  463,303
Other operating expenses     133,384
Operating income    $329,919

*Intersegment revenues of $3.0 million were eliminated from the North American OTC Healthcare segment.

 Three Months Ended March 31, 2021
(In thousands)North American OTC
Healthcare
 International OTC
Healthcare
 Consolidated
Total segment revenues*$211,468 $26,293 $237,761
Cost of sales 91,321  9,384  100,705
Gross profit 120,147  16,909  137,056
Advertising and marketing 31,304  5,113  36,417
Contribution margin$88,843 $11,796  100,639
Other operating expenses     29,702
Operating income    $70,937

*Intersegment revenues of $0.8 million were eliminated from the North American OTC Healthcare segment.

 Year Ended March 31, 2021
(In thousands)North American OTC
Healthcare
 International OTC
Healthcare
 Consolidated
Total segment revenues*$849,319 $94,046 $943,365
Cost of sales 359,100  36,793  395,893
Gross profit 490,219  57,253  547,472
Advertising and marketing 122,857  17,732  140,589
Contribution margin$367,362 $39,521  406,883
Other operating expenses     109,481
Operating income    $297,402

* Intersegment revenues of $3.2 million were eliminated from the North American OTC Healthcare segment.

About Non-GAAP Financial Measures

In addition to financial results reported in accordance with GAAP, we disclose certain Non-GAAP financial measures ("NGFMs"), including, but not limited to, Non-GAAP Organic Revenues, Non-GAAP Organic Revenue Change Percentage, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Gross Margin Percentage, Non-GAAP Adjusted General and Administrative Expense, Non-GAAP Adjusted General and Administrative Expense Percentage Non-GAAP EBITDA, Non-GAAP EBITDA Margin, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted Diluted EPS, Non-GAAP Free Cash Flow, Non-GAAP Adjusted Free Cash Flow and Net Debt. We use these NGFMs internally, along with GAAP information, in evaluating our operating performance and in making financial and operational decisions. We believe that the presentation of these NGFMs provides investors with greater transparency, and provides a more complete understanding of our business than could be obtained absent these disclosures, because the supplemental data relating to our financial condition and results of operations provides additional ways to view our operation when considered with both our GAAP results and the reconciliations below. In addition, we believe that the presentation of each of these NGFMs is useful to investors for period-to-period comparisons of results in assessing shareholder value, and we use these NGFMs internally to evaluate the performance of our personnel and also to evaluate our operating performance and compare our performance to that of our competitors.

These NGFMs are not in accordance with GAAP, should not be considered as a measure of profitability or liquidity, and may not be directly comparable to similarly titled NGFMs reported by other companies. These NGFMs have limitations and they should not be considered in isolation from or as an alternative to their most closely related GAAP measures reconciled below. Investors should not rely on any single financial measure when evaluating our business. We recommend investors review the GAAP financial measures included in this earnings release. When viewed in conjunction with our GAAP results and the reconciliations below, we believe these NGFMs provide greater transparency and a more complete understanding of factors affecting our business than GAAP measures alone.

NGFMs Defined

We define our NGFMs presented herein as follows:

  • Non-GAAP Organic Revenues:   GAAP Total Revenues excluding revenues associated with products acquired in the current period and the impact of foreign currency exchange rates in the periods presented.
  • Non-GAAP Organic Revenue Change Percentage:   Calculated as the change in Non-GAAP Organic Revenues from prior year divided by prior year Non-GAAP Organic Revenues.
  • Non-GAAP Adjusted Gross Margin: GAAP Gross Profit minus inventory step-up charges associated with acquisition.
  • Non-GAAP Adjusted Gross Margin Percentage: Calculated as Non-GAAP Adjusted Gross Margin divided by GAAP Total Revenues.
  • Non-GAAP Adjusted General and Administrative Expense: GAAP General and Administrative expenses minus costs associated with acquisition.
  • Non-GAAP Adjusted General and Administrative Expense Percentage: Calculated as Non-GAAP Adjusted General and Administrative expense divided by GAAP Total Revenues.
  • Non-GAAP EBITDA: GAAP Net Income before interest expense, net, provision for income taxes, and depreciation and amortization.
  • Non-GAAP EBITDA Margin: Calculated as Non-GAAP EBITDA divided by GAAP Total Revenues.
  • Non-GAAP Adjusted EBITDA: Non-GAAP EBITDA less inventory step-up charges, costs associated with acquisition in general and administrative expenses, and loss on extinguishment of debt.
  • Non-GAAP Adjusted EBITDA Margin: Calculated as Non-GAAP Adjusted EBITDA divided by GAAP Total Revenues.
  • Non-GAAP Adjusted Net Income: GAAP Net Income before inventory step-up charges, costs associated with acquisition in general and administrative expenses, loss on extinguishment of debt, applicable tax impact associated with these items, and normalized tax rate adjustment.
  • Non-GAAP Adjusted Diluted EPS: Calculated as Non-GAAP Adjusted Net Income, divided by the diluted weighted average number of shares outstanding during the period.
  • Non-GAAP Free Cash Flow: Calculated as GAAP Net cash provided by operating activities less cash paid for capital expenditures.
  • Non-GAAP Adjusted Free Cash Flow: Non-GAAP Free Cash Flow plus cash payments made for transition and other costs associated with the acquisition.
  • Net Debt: Calculated as total principal amount of debt outstanding ($1,495,000 at March 31, 2022 and $1,495,000 at March 31, 2021) less cash and cash equivalents ($27,185 at March 31, 2022 and $32,302 at March 31, 2021). Amounts in thousands.

The following tables set forth the reconciliations of each of our NGFMs to their most directly comparable financial measures presented in accordance with GAAP.

Reconciliation of GAAP Total Revenues to Non-GAAP Organic Revenues and related Non-GAAP Organic Revenue Change percentage:

 Three Months Ended
March 31,
 Year Ended
March 31,
  2022   2021   2022  2021
(In thousands)       
GAAP Total Revenues$266,936  $237,761  $1,086,812  $943,365
Revenue Change 12.3%    15.2%  
Adjustments:       
Revenues associated with acquisition (1) (16,334)     (42,420)  
Impact of foreign currency exchange rates    (1,065)     4,822
Total adjustments (16,334)  (1,065)  (42,420)  4,822
Non-GAAP Organic Revenues$250,602  $236,696  $1,044,392  $948,187
Non-GAAP Organic Revenue Change 5.9%    10.1%  

(1) Revenues of our Akorn acquisition are excluded for purposes of calculating Non-GAAP organic revenues.

Reconciliation of GAAP Gross Profit to Non-GAAP Adjusted Gross Margin and related Non-GAAP Adjusted Gross Margin percentage:

 Three Months Ended
March 31,
 Year Ended
March 31,
  2022   2021   2022   2021 
(In thousands)       
GAAP Total Revenues$266,936  $237,761  $1,086,812  $943,365 
        
GAAP Gross Profit$148,862  $137,056  $620,646  $547,472 
GAAP Gross Profit as a Percentage of GAAP Total Revenue 55.8%  57.6%  57.1%  58.0%
Adjustments:       
Inventory step-up charges associated with acquisition(1)       1,567    
Total adjustments       1,567    
Non-GAAP Adjusted Gross Margin$148,862  $137,056  $622,213  $547,472 
Non-GAAP Adjusted Gross Margin as a Percentage of GAAP Total Revenues 55.8%  57.6%  57.3%  58.0%

(1) Inventory step-up charges relate to our North American OTC Healthcare segment.

Reconciliation of GAAP General and Administrative Expense and related GAAP General and Administrative Expense percentage to Non-GAAP Adjusted General and Administrative expense and related Non-GAAP Adjusted General and Administrative Expense percentage:

 Three Months Ended
March 31,
 Year Ended
March 31,
  2022   2021   2022   2021 
(In thousands)       
GAAP General and Administrative Expense$27,810  $23,823  $108,516  $85,540 
GAAP General and Administrative Expense as a Percentage of GAAP Total Revenue 10.4%  10.0%  10.0%  9.1%
        
Adjustments:       
Costs associated with acquisition(1)       5,127    
Total adjustments       5,127    
Non-GAAP Adjusted General and Administrative Expense$27,810  $23,823  $103,389  $85,540 
Non-GAAP Adjusted General and Administrative Expense as a Percentage of GAAP Total Revenues 10.4%  10.0%  9.5%  9.1%

(1) Costs related to the consummation of the acquisition process such as insurance costs, legal and other acquisition related professional fees.

Reconciliation of GAAP Net Income to Non-GAAP EBITDA and related Non-GAAP EBITDA Margin, Non-GAAP Adjusted EBITDA and related Non-GAAP Adjusted EBITDA Margin:

 Three Months Ended
March 31,
 Year Ended
March 31,
  2022   2021   2022   2021 
(In thousands)       
GAAP Net Income$52,086  $35,514  $205,381  $164,682 
Interest expense, net 15,973   18,983   64,287   82,328 
Provision for income taxes 8,879   4,859   57,077   39,431 
Depreciation and amortization 8,485   7,537   32,092   30,164 
Non-GAAP EBITDA 85,423   66,893   358,837   316,605 
Non-GAAP EBITDA Margin 32.0%  28.1%  33.0%  33.6%
        
Adjustments:       
Inventory step-up charges associated with acquisition in Cost of Sales(1)       1,567    
Costs associated with acquisition in General and Administrative Expense(2)       5,127    
Loss on extinguishment of debt    12,327   2,122   12,327 
Total adjustments    12,327   8,816   12,327 
Non-GAAP Adjusted EBITDA$85,423  $79,220  $367,653  $328,932 
Non-GAAP Adjusted EBITDA Margin 32.0%  33.3%  33.8%  34.9%

(1) Inventory step-up charges relate to our North American OTC Healthcare segment.
(2) Costs related to the consummation of the acquisition process such as insurance costs, legal and other acquisition related professional fees.

Reconciliation of GAAP Net Income and GAAP Diluted Earnings Per Share to Non-GAAP Adjusted Net Income and related Non-GAAP Adjusted Earnings Per Share:

 Three Months Ended March 31, Year Ended March 31,
  2022 2022
Adjusted EPS
  2021 2021
Adjusted EPS
  2022 2022
Adjusted EPS
  2021 2021
Adjusted EPS
(In thousands, except per share data)           
GAAP Net Income and Diluted EPS$52,086 $1.02  $35,514 $0.70  $205,381 $4.04  $164,682 $3.25 
Adjustments:           
Inventory step-up charges and other costs associated with acquisition in Cost of Sales(1)           1,567  0.03      
Costs associated with acquisition in General and Administrative Expense(2)           5,127  0.10      
Loss on extinguishment of debt      12,327  0.24   2,122  0.04   12,327  0.24 
Tax impact of adjustments(3)      (2,986) (0.06)  (2,134) (0.04)  (2,986) (0.06)
Normalized tax rate adjustment(4) (5,753) (0.11)  (4,919) (0.10)  (5,753) (0.11)  (10,025) (0.20)
Total adjustments (5,753) (0.11)  4,422  0.09   929  0.02   (684) (0.01)
Non-GAAP Adjusted Net Income and Adjusted EPS$46,333 $0.91  $39,936 $0.79  $206,310 $4.06  $163,998 $3.24 

(1) Inventory step-up charges relate to our North American OTC Healthcare segment.
(2) Costs related to the consummation of the acquisition process such as insurance costs, legal and other acquisition related professional fees.
(3) The income tax adjustments are determined using applicable rates in the taxing jurisdictions in which the above adjustments relate and includes both current and deferred income tax expense (benefit) based on the specific nature of the specific Non-GAAP performance measure.
(4) Income tax adjustment to adjust for discrete income tax items.
Note: Amounts may not add due to rounding.

Reconciliation of GAAP Net Income to Non-GAAP Free Cash Flow and Non-GAAP Adjusted Free Cash Flow:

 Three Months Ended
March 31,
 Year Ended
March 31,
  2022   2021   2022   2021 
(In thousands)       
GAAP Net Income$52,086  $35,514  $205,381  $164,682 
Adjustments:       
Adjustments to reconcile net income to net cash provided by operating activities as shown in the Statement of Cash Flows 13,207   29,904   65,487   76,523 
Changes in operating assets and liabilities as shown in the Statement of Cash Flows (2,167)  (6,331)  (10,946)  (5,598)
Total adjustments 11,040   23,573   54,541   70,925 
GAAP Net cash provided by operating activities 63,126   59,087   259,922   235,607 
Purchases of property and equipment (3,161)  (4,896)  (9,642)  (22,243)
Non-GAAP Free Cash Flow 59,965   54,191   250,280   213,364 
Payments associated with acquisition (1)       3,465    
Non-GAAP Adjusted Free Cash Flow$59,965  $54,191  $253,745  $213,364 

(1) Payments related to the consummation of the acquisition process such as insurance costs, legal and other acquisition related professional fees.

Outlook for Fiscal Year 2023:

Reconciliation of Projected GAAP Net cash provided by operating activities to Projected Non-GAAP Free Cash Flow:

(In millions) 
Projected FY'23 GAAP Net cash provided by operating activities$270 
Additions to property and equipment for cash (10)
Projected Non-GAAP Free Cash Flow$260 

Investor Relations Contact
Phil Terpolilli, CFA, 914-524-6819
irinquiries@prestigebrands.com