Perrigo Sales, Profits Both Jump 15 Percent For Fiscal Year

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ALLEGAN — The generic drug and store-brand health and beauty products maker Perrigo Co. (Nasdaq: PRGO) Thursday reported net income fo $393 million or $4.18 a share in its fiscal year ended June 30, up 15 percent from $340.6 million or $3.64 a share in the prior fiscal year.

Revenue from continuing operations also rose 15 percent to a record $3.17 billion from $2.76 billion a year earlier.

In the fourth quarter, net income was $107.1 million or $1.14 a share, up from $85.6 million or 91 cents a share a year earlier. Revenue for the quarter was $831.8 million, up from $704.6 million in the prior fiscal year.

Management announced that it expects full-year fiscal 2013 adjusted earnings per share to be in a range of $5.30 to $5.50 per diluted share, an increase of 6 to 10 percent from fiscal 2012’s $4.99 per diluted share.

“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,” said Perrigo chairman and CEO Joseph C. Papa. “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.”

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 percent. 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.

For fiscal year 2012, Consumer Healthcare net sales increased $131 million or 8 percent, 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.

The Nutritionals segment fourth quarter net sales were $135 million, compared to $123 million last year, an increase of 10 percent. 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.

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.

The Prescription Pharmaceuticals segment fourth quarter net sales were $157 million, compared with $92 million a year ago, an increase of 70 percent. 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. Reported operating income was $54 million, an increase of $16 million from last year.

Net sales for fiscal 2012 increased 80 percent, 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 percent.

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. Reported operating margin increased 3,010 basis points to 46.8 percent. 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 percent, 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.

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. Net sales for fiscal 2012 increased 9 percent to $73 million, up from $67 million a year ago.

For a replay of a conference call discussing the results, call (855) 859-2056 in the United States or (404) 537-3406 elsewhere, using access code 10926008.

From its beginnings as a packager of generic home remedies in 1887, Allegan, Perrigo grown to become a global provider of quality, affordable health care products. Perrigo develops, manufactures and distributes over-the-counter and generic prescription pharmaceuticals, infant formulas, nutritional products, dietary supplements and active pharmaceutical ingredients. 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.

More at www.perrigo.com.

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