Perrigo Posts Record Revenue and Earnings, Raises Guidance

The Allegan generic drug and store brand health and beauty products maker Perrigo Co. (Nasdaq: PRGO) Tuesday reported sharply higher sales and revenue for its second fiscal quarter and six months, ended Dec. 25.

Second quarter net income was $89.8 million or 96 cents a share, up from $62.8 million or 68 cents a share a year earlier. Revenue was $717.5 million, up from $582.4 million.

For the six months, net income was $163.5 million or $1.75 a share, up from $113.9 million or $1.22 a share a year earlier. Revenue was $1.36 billion, up from $1.11 billion a year earlier.

Perrigo also raised its full-year fiscal 2011 adjusted diluted earnings from continuing operations guidance to between $3.75 and $3.90 per share from previously announced $3.60 to $3.75 per share

"We delivered all-time record quarterly revenue and earnings, and record second quarter cash flow," Perrigo chairman and CEO Joseph C. Papa said. "Our prescription, nutritionals and API segments all contributed to this strong performance. The performance came from core business strength, new product sales of over $63 million, and operating execution. Our Consumer Healthcare segment performed well and is enjoying strong demand for its products; however, despite improving sequentially, we continued to experience throughput pressures in manufacturing. We will continue to improve during each coming quarter and expect to have those issues behind us by the end of our fiscal year. More consumers are benefitting from the value proposition of Perrigo's quality, affordable healthcare products and we look forward to serving even more of them in the future." 

Without one-time acquisition costs, quarterly net income was $98.4 million or $1.05 a share, up from $67.5 million or 73 cents a share a year earlier. Six month net income was $179.7 million or $1.93 a share, up from $134.1 million or $1.44 a share a year earlier.

The company said its quarterly sales increase was driven by the acquisitions of PBM Holdings Inc. and Orion Laboratories Pty. Ltd. as well as $63 million in new product sales. For the six months, the increase was driven primarily by strong results in the prescription, nutritionals and active pharmaceutical ingredients segments and included consolidated new product sales of about $112 million.

Excluding charges as outlined in Table I at the end of this release, second quarter fiscal 2011 adjusted income from continuing operations was $98 million, or $1.05 per share. 

Consumer Healthcare segment net sales for the second quarter were $430 million compared with $417 million for the second quarter last year, an increase of 3 percent. For the first six months of fiscal 2011, Consumer Healthcare net sales increased $28 million, or 4 percent, compared to fiscal 2010. 

Nutritionals segment net sales for the second quarter were $133 million, compared with $61 million for the second quarter last year, an increase of 119 percent. The increase was due primarily to additional sales of approximately $86 million attributable to the acquisition of PBM. The increase was partially offset by a decrease in sales of existing products of approximately $15 million. Reported operating income was $20 million, compared with approximately $3 million a year ago. The increase was driven largely by the acquisition of PBM. The Vitamins, Minerals and Supplements category also added to the increase as a result of improvements in operational efficiencies and lower material costs. For the first six months of fiscal 2011, Nutritionals net sales increased $139 million or 119 percent, compared to fiscal 2010.  The increase resulted from $161 million of sales attributable to the acquisition of PBM and $3 million of new product sales in the VMS category. This growth was partially offset by $25 million in decreased sales of existing products in the VMS category.  

Prescription pharmaceuticals second quarter net sales were $98 million, compared with $57 million a year ago, an increase of 72 percent. This increase was due primarily to new product sales of $31 million mainly related to the authorized generic of Aldara and the generic version of Xyzal, as well as approximately $5 million of increased sales volume in the company's existing products. Reported operating income was $33 million, an increase of $15 million from last year. For the first six months of fiscal 2011, net sales for the prescription pharmaceuticals segment increased 61 percent from fiscal 2010 to $167 million. Net sales increased due primarily to $48 million in new product sales and $9 million in sales of existing products.  

The active pharmaceutical ingredients segment reported second quarter net sales of $40 million compared with $35 million a year ago, an increase of 14 percent. The increase was due primarily to new product sales of $17 million related primarily to European sales of temozolomide. The increase was offset partially by an approximately $11 million decrease in sales of existing products and a decrease of approximately $2 million due to unfavorable changes in foreign currency exchange rates. Reported operating income increased $5 million due to higher margin new product sales, decreased operating expenses and improved financial operating leverage. For the first six months of fiscal 2011, net sales increased 14 percent to approximately $78 million, compared to $68 million in fiscal 2010. Reported operating margin increased 13.1 percentage points to 26.2 percent from last year's 13.1 percent.  

Added Papa: "The strength across our businesses continued this quarter, driving record results. As we look forward to the second half of fiscal 2011, we expect this strength to continue. Our teams are executing on their plans, which are the foundation for sustaining our growth."

To listen to a replay of the conference call discussing these results, call (800) 642-1687 in the United States or (706) 645-9291 elsewhere, using the access code 36915185. 

Perrigo develops, manufactures and distributes OTC and generic prescription pharmaceuticals, infant formulas, nutritional products, active pharmaceutical ingredients and pharmaceutical and medical diagnostic products. Perrigo is the world's largest store brand manufacturer of over-the-counter pharmaceutical products and infant formulas. The company's primary markets and locations of manufacturing and logistics operations are the United States, Israel, Mexico, the United Kingdom and Australia.

More at www.perrigo.com.