- Revenue $232.2 Million in Q1 Fiscal 2020; Organic Revenue Flat as Expected
- EPS of $0.65 in Q1 Fiscal 2020
- Cash Flow From Operations of $52.8 Million in Q1; Non-GAAP Free Cash Flow of $50.8 Million
- Reduced Debt by $20 Million and Repurchased Approximately $30 million Shares in Q1 Fiscal 2020
- Reaffirming Previously Issued FY’20 Outlook
TARRYTOWN, N.Y., Aug. 01, 2019 (GLOBE NEWSWIRE) -- Prestige Consumer Healthcare Inc. (NYSE:PBH) today reported financial results for its first quarter fiscal 2020 ended June 30, 2019.
“Our first quarter represents a solid start to the fiscal year and we are reaffirming our fiscal year 2020 outlook. The business performance continues to benefit from solid consumption trends across our portfolio of leading brands, strong gross margins, a solid financial profile and cash generation. These attributes enabled us to invest behind our brands, opportunistically repurchase shares and further reduce debt during Q1” said Ron Lombardi, Chief Executive Officer of Prestige Consumer Healthcare.
First Fiscal Quarter Ended June 30, 2019
Reported revenues in the first quarter of fiscal 2020 decreased 8.6% to $232.2 million compared to $254.0 million in the first quarter of fiscal 2019. Revenues were flat on an organic basis, which excludes the impact related to the divested Household Cleaning segment and foreign currency. The revenue performance for the quarter was driven by strong international segment growth and consumption growth in the Company’s core brand portfolio domestically, offset by retailer inventory reductions.
Reported gross profit margin in the first quarter fiscal 2020 was 57.7%, compared to 55.4% for the prior year comparable period that included the divested Household Cleaning segment. First quarter fiscal 2020 gross profit margin increased sequentially from the fourth quarter fiscal 2019 gross margin of 57.4%.
Reported net income for the first quarter of fiscal 2020 totaled $33.9 million versus the prior year comparable quarter’s net income of $34.5 million or $35.8 million on a non-GAAP adjusted basis. Diluted earnings per share were $0.65 for the first quarter of fiscal 2020 compared to $0.65 diluted earnings per share, and $0.68 on a non-GAAP adjusted basis, in the prior year comparable period. The prior year comparable period results included profit contribution related to the divested Household Cleaning segment.
Adjustments to net income in the first quarter of fiscal 2019 included legal and various other costs associated with the Household Cleaning divestiture, and the related income tax effects of the adjustments.
Free Cash Flow and Balance Sheet
The Company's net cash provided by operating activities for the first fiscal quarter of 2020 decreased to $52.8 million from $55.9 million during the same period a year earlier. Non-GAAP free cash flow for the first fiscal quarter of 2020 was $50.8 million, compared to $53.4 million in the prior year comparable quarter. The Company’s business experienced continued strong cash conversion but was offset by the loss of cash flow from the divestiture of the Company’s Household Cleaning segment.
In the first quarter of fiscal 2020, the Company used its cash flow to reduce debt by $20 million. The Company also executed a portion of its previously-authorized $50 million share repurchase program, repurchasing 0.9 million shares at a total investment of $28.8 million. Subsequent to the quarter, the Company completed its share repurchase program during July 2019.
The Company's net debt position as of June 30, 2019 was approximately $1.8 billion, approximately flat versus the prior quarter as first quarter 2020 cash generation went primarily towards share repurchase. At June 30, 2019 the Company's covenant-defined leverage ratio was 5.0x.
Segment Review
North American OTC Healthcare: Segment revenues totaled $210.8 million for the first quarter of fiscal 2020, compared to the prior year comparable quarter's revenues of $214.8 million. The first quarter fiscal 2020 revenue performance was attributable to increased consumption among the majority of core OTC brands which was more than offset by retailer inventory reductions and unfavorable foreign currency of $0.5 million.
International OTC Healthcare: Segment fiscal first quarter 2020 revenues totaled $21.4 million, compared to $19.4 million reported in the prior year comparable period. Revenues versus the prior year first quarter benefitted from consumption growth and the timing of distributor orders and shipments, partially offset by unfavorable foreign currency of approximately $1 million.
Household Cleaning: As previously announced, the Company sold its Household Cleaning segment on July 2, 2018 and used net proceeds from the divestiture to pay down debt. For the first quarter of fiscal 2019, the Household Cleaning segment generated $19.8 million in revenues, with no reported revenue in subsequent quarters.
Commentary and Outlook for Fiscal 2020
Ron Lombardi, CEO, stated, “We are pleased with our start to fiscal 2020, with solid revenue and profit results reinforcing confidence in our financial outlook for the year.”
“Looking forward, we are pleased with the continuing overall top-line trends of our core portfolio, including market share gains for the majority of the Company’s core brands. Regarding operations, following a strategic analysis we have decided to transition to a new third-party logistics provider and location over the balance of fiscal 2020 in order to best meet the needs of our business and customers for the long-term. We are maintaining our profit outlook on an adjusted basis and expect near-term costs associated with the transition to result in long-term savings to our business.”
“Our stable financial profile and profit outlook for fiscal 2020 enables a disciplined capital allocation approach in which we anticipate our primary use of cash being debt reduction. We continue to benefit from a diverse portfolio of leading brands and remain confident in our long-term growth prospects,” Mr. Lombardi concluded.
| Fiscal 2020 Full-Year Outlook | |
| Revenue | $951 to $961 million |
| Organic Growth Percentage* | Approximately Flat |
| Adjusted E.P.S.* | $2.76 to $2.83 |
| Adjusted Free Cash Flow* | $200 million or more |
Fiscal Q1 2020 Conference Call, Accompanying Slide Presentation and Replay
The Company will host a conference call to review its first quarter results today, August 1, 2019 at 8:30 a.m. ET. The toll-free dial-in numbers are 844-233-9440 within North America and 574-990-1016 outside of North America. The conference ID number is 5433939. 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 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 5433939.
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 "assumptions," "target," "guidance," "prospects," "outlook," "plans," "projection," "may," "will," "would," "expect," "intend," "estimate," "anticipate," "believe”, "potential," 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 expectations regarding future operating results including revenues, organic growth, earnings per share and free cash flow, the Company’s disciplined capital allocation, the Company’s ability to reduce debt and the Company’s ability to position itself for long-term growth. 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 the Company’s advertising and promotional and new product development initiatives, customer inventory management initiatives, general economic and business conditions, fluctuating foreign exchange rates, consumer trends, competitive pressures, the impact of the transition to a new third party logistics provider, and the ability of the Company’s third party manufacturers and logistics providers and suppliers to meet demand for its products and to reduce costs. 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, 2019 and other periodic reports filed with the Securities and Exchange Commission.
About Prestige Consumer Healthcare Inc.
Prestige Consumer Healthcare markets, sells, manufactures and distributes consumer healthcare products to retail outlets 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® 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.
Phil Terpolilli, 914-524-6819
irinquiries@prestigebrands.com
* See the “About Non-GAAP Financial Measures” section of this report for further presentation information.
Prestige Consumer Healthcare Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)
| Three Months Ended June 30, | ||||||||
| (In thousands, except per share data) | 2019 | 2018 | ||||||
| Revenues | ||||||||
| Net sales | $ | 232,133 | $ | 253,954 | ||||
| Other revenues | 21 | 26 | ||||||
| Total revenues | 232,154 | 253,980 | ||||||
| Cost of Sales | ||||||||
| Cost of sales excluding depreciation | 97,100 | 112,069 | ||||||
| Cost of sales depreciation | 987 | 1,288 | ||||||
| Cost of sales | 98,087 | 113,357 | ||||||
| Gross profit | 134,067 | 140,623 | ||||||
| Operating Expenses | ||||||||
| Advertising and promotion | 34,801 | 37,111 | ||||||
| General and administrative | 21,706 | 23,941 | ||||||
| Depreciation and amortization | 6,074 | 7,084 | ||||||
| Total operating expenses | 62,581 | 68,136 | ||||||
| Operating income | 71,486 | 72,487 | ||||||
| Other (income) expense | ||||||||
| Interest income | (43 | ) | (100 | ) | ||||
| Interest expense | 25,063 | 26,040 | ||||||
| Other expense, net | 416 | 87 | ||||||
| Total other expense | 25,436 | 26,027 | ||||||
| Income before income taxes | 46,050 | 46,460 | ||||||
| Provision for income taxes | 12,125 | 11,994 | ||||||
| Net income | $ | 33,925 | $ | 34,466 | ||||
| Earnings per share: | ||||||||
| Basic | $ | 0.66 | $ | 0.65 | ||||
| Diluted | $ | 0.65 | $ | 0.65 | ||||
| Weighted average shares outstanding: | ||||||||
| Basic | 51,697 | 52,640 | ||||||
| Diluted | 52,047 | 52,942 | ||||||
| Comprehensive income, net of tax: | ||||||||
| Currency translation adjustments | (224 | ) | (2,974 | ) | ||||
| Total other comprehensive loss | (224 | ) | (2,974 | ) | ||||
| Comprehensive income | $ | 33,701 | $ | 31,492 | ||||
Prestige Consumer Healthcare Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| (In thousands) | June 30, 2019 | March 31, 2019 | |||||
| Assets | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 29,042 | $ | 27,530 | |||
| Accounts receivable, net of allowance of $12,059 and $12,965, respectively | 142,927 | 148,787 | |||||
| Inventories | 129,388 | 119,880 | |||||
| Prepaid expenses and other current assets | 9,164 | 4,741 | |||||
| Total current assets | 310,521 | 300,938 | |||||
| Property, plant and equipment, net | 51,387 | 51,176 | |||||
| Operating lease right-of-use asset | 16,097 | — | |||||
| Goodwill | 578,309 | 578,583 | |||||
| Intangible assets, net | 2,501,358 | 2,507,210 | |||||
| Other long-term assets | 3,038 | 3,129 | |||||
| Total Assets | $ | 3,460,710 | $ | 3,441,036 | |||
| Liabilities and Stockholders' Equity | |||||||
| Current liabilities | |||||||
| Accounts payable | $ | 62,109 | $ | 56,560 | |||
| Accrued interest payable | 13,937 | 9,756 | |||||
| Operating lease liabilities, current portion | 5,099 | — | |||||
| Other accrued liabilities | 62,346 | 60,663 | |||||
| Total current liabilities | 143,491 | 126,979 | |||||
| Long-term debt, net | 1,779,380 | 1,798,598 | |||||
| Deferred income tax liabilities | 403,750 | 399,575 | |||||
| Long-term operating lease liability, net of current portion | 12,526 | — | |||||
| Other long-term liabilities | 19,940 | 20,053 | |||||
| Total Liabilities | 2,359,087 | 2,345,205 | |||||
| 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 - 53,741 shares at June 30, 2019 and 53,670 shares at March 31, 2019 | 537 | 536 | |||||
| Additional paid-in capital | 480,805 | 479,150 | |||||
| Treasury stock, at cost - 2,848 shares at June 30, 2019 and 1,871 shares at March 31, 2019 | (89,493 | ) | (59,928 | ) | |||
| Accumulated other comprehensive loss, net of tax | (25,971 | ) | (25,747 | ) | |||
| Retained earnings | 735,745 | 701,820 | |||||
| Total Stockholders' Equity | 1,101,623 | 1,095,831 | |||||
| Total Liabilities and Stockholders' Equity | $ | 3,460,710 | $ | 3,441,036 | |||
Prestige Consumer Healthcare Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Three Months Ended June 30, | |||||||
| (In thousands) | 2019 | 2018 | |||||
| Operating Activities | |||||||
| Net income | $ | 33,925 | $ | 34,466 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 7,061 | 8,372 | |||||
| Loss on disposal of property and equipment | 20 | 1 | |||||
| Deferred income taxes | 4,206 | 6,755 | |||||
| Amortization of debt origination costs | 851 | 920 | |||||
| Stock-based compensation costs | 1,381 | 1,657 | |||||
| Non-cash operating lease cost | 1,338 | — | |||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | 5,808 | (4,357 | ) | ||||
| Inventories | (8,939 | ) | (9,303 | ) | |||
| Prepaid expenses and other current assets | (4,335 | ) | 623 | ||||
| Accounts payable | 5,306 | 16,479 | |||||
| Accrued liabilities | 7,616 | 347 | |||||
| Operating lease liabilities | (1,368 | ) | — | ||||
| Other | (93 | ) | (108 | ) | |||
| Net cash provided by operating activities | 52,777 | 55,852 | |||||
| Investing Activities | |||||||
| Purchases of property, plant and equipment | (1,956 | ) | (2,469 | ) | |||
| Net cash used in investing activities | (1,956 | ) | (2,469 | ) | |||
| Financing Activities | |||||||
| Borrowings under revolving credit agreement | 15,000 | 20,000 | |||||
| Repayments under revolving credit agreement | (35,000 | ) | (20,000 | ) | |||
| Proceeds from exercise of stock options | 275 | 880 | |||||
| Fair value of shares surrendered as payment of tax withholding | (799 | ) | (2,281 | ) | |||
| Repurchase of common stock | (28,766 | ) | (49,978 | ) | |||
| Net cash used in financing activities | (49,290 | ) | (51,379 | ) | |||
| Effects of exchange rate changes on cash and cash equivalents | (19 | ) | (283 | ) | |||
| Increase in cash and cash equivalents | 1,512 | 1,721 | |||||
| Cash and cash equivalents - beginning of period | 27,530 | 32,548 | |||||
| Cash and cash equivalents - end of period | $ | 29,042 | $ | 34,269 | |||
| Interest paid | $ | 19,966 | $ | 20,907 | |||
| Income taxes paid | $ | 1,807 | $ | 334 | |||
Prestige Consumer Healthcare Inc.
Condensed Consolidated Statements of Income
Business Segments
(Unaudited)
| Three Months Ended June 30, 2019 | |||||||||||||||
| (In thousands) | North American OTC Healthcare | International OTC Healthcare | Household Cleaning | Consolidated | |||||||||||
| Total segment revenues* | $ | 210,784 | $ | 21,370 | $ | — | $ | 232,154 | |||||||
| Cost of sales | 88,811 | 9,276 | — | 98,087 | |||||||||||
| Gross profit | 121,973 | 12,094 | — | 134,067 | |||||||||||
| Advertising and promotion | 31,014 | 3,787 | — | 34,801 | |||||||||||
| Contribution margin | $ | 90,959 | $ | 8,307 | $ | — | 99,266 | ||||||||
| Other operating expenses | 27,780 | ||||||||||||||
| Operating income | 71,486 | ||||||||||||||
| Other expense | 25,436 | ||||||||||||||
| Income before income taxes | 46,050 | ||||||||||||||
| Provision for income taxes | 12,125 | ||||||||||||||
| Net income | $ | 33,925 | |||||||||||||
*Intersegment revenues of $0.8 million were eliminated from the North American OTC Healthcare segment.
| Three Months Ended June 30, 2018 | |||||||||||||||
| (In thousands) | North American OTC Healthcare | International OTC Healthcare | Household Cleaning | Consolidated | |||||||||||
| Total segment revenues* | $ | 214,775 | $ | 19,394 | $ | 19,811 | $ | 253,980 | |||||||
| Cost of sales | 89,153 | 7,616 | 16,588 | 113,357 | |||||||||||
| Gross profit | 125,622 | 11,778 | 3,223 | 140,623 | |||||||||||
| Advertising and promotion | 33,258 | 3,423 | 430 | 37,111 | |||||||||||
| Contribution margin | $ | 92,364 | $ | 8,355 | $ | 2,793 | 103,512 | ||||||||
| Other operating expenses | 31,025 | ||||||||||||||
| Operating income | 72,487 | ||||||||||||||
| Other expense | 26,027 | ||||||||||||||
| Income before income taxes | 46,460 | ||||||||||||||
| Benefit for income taxes | 11,994 | ||||||||||||||
| Net income | $ | 34,466 | |||||||||||||
* Intersegment revenues of $2.7 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 Growth 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 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 divestiture, allocated cost that remain after divestiture and impact of foreign currency exchange rates in the periods presented.
- Non-GAAP Organic Revenue Growth 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 certain transition and divestiture-related costs.
- 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 certain transition and divestiture-related costs.
- 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 (Loss) less net interest expense (income), income taxes provision (benefit), 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 certain transition and divestiture-related costs.
- Non-GAAP Adjusted EBITDA Margin: Calculated as Non-GAAP Adjusted EBITDA divided by GAAP Total Revenues.
- Non-GAAP Adjusted Net Income: GAAP Net Income (Loss) before certain transition and divestiture-related costs, applicable tax impact associated with these items and normalized tax rate adjustment.
- Non-GAAP Adjusted EPS: Calculated as Non-GAAP Adjusted Net Income, divided by the weighted average number of common and potential common shares outstanding during the period.
- Non-GAAP Free Cash Flow: 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 costs associated with divestiture.
- Net Debt: Calculated as total principal amount of debt outstanding ($1,793,000 at June 30, 2019) less cash and cash equivalents ($29,042 at June 30, 2019). 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 Growth percentage:
| Three Months Ended June 30, | |||||||
| 2019 | 2018 | ||||||
| (In thousands) | |||||||
| GAAP Total Revenues | $ | 232,154 | $ | 253,980 | |||
| Revenue Growth | (8.6 | )% | |||||
| Adjustments: | |||||||
| Revenues associated with divestiture | — | (19,811 | ) | ||||
| Allocated costs that remain after divestiture | — | (659 | ) | ||||
| Impact of foreign currency exchange rates | — | (1,402 | ) | ||||
| Total adjustments | — | (21,872 | ) | ||||
| Non-GAAP Organic Revenues | $ | 232,154 | $ | 232,108 | |||
| Non-GAAP Organic Revenue Growth as a Percentage of GAAP Total Revenues | — | % | |||||
Reconciliation of GAAP Gross Profit to Non-GAAP Adjusted Gross Margin and related Non-GAAP Adjusted Gross Margin percentage:
| Three Months Ended June 30, | |||||||
| 2019 | 2018 | ||||||
| (In thousands) | |||||||
| GAAP Total Revenues | $ | 232,154 | $ | 253,980 | |||
| GAAP Gross Profit | $ | 134,067 | $ | 140,623 | |||
| GAAP Gross Profit as a Percentage of GAAP Total Revenue | 57.7 | % | 55.4 | % | |||
| Adjustments: | |||||||
| Transition and other costs associated with divestiture (1) | — | 170 | |||||
| Total adjustments | — | 170 | |||||
| Non-GAAP Adjusted Gross Margin | $ | 134,067 | $ | 140,793 | |||
| Non-GAAP Adjusted Gross Margin as a Percentage of GAAP Total Revenues | 57.7 | % | 55.4 | % | |||
(1) Items related to divestiture represent costs related to divesting of assets sold, including (but not limited to) costs to exit or convert contractual obligations.
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 June 30, | |||||||
| 2019 | 2018 | ||||||
| (In thousands) | |||||||
| GAAP General and Administrative Expense | $ | 21,706 | $ | 23,941 | |||
| GAAP General and Administrative Expense as a Percentage of GAAP Total Revenue | 9.3 | % | 9.4 | % | |||
| Adjustments: | |||||||
| Transition and other costs associated with divestiture (1) | — | 1,422 | |||||
| Total adjustments | — | 1,422 | |||||
| Non-GAAP Adjusted General and Administrative Expense | $ | 21,706 | $ | 22,519 | |||
| Non-GAAP Adjusted General and Administrative Expense Percentage as a Percentage of GAAP Total Revenues | 9.3 | % | 8.9 | % | |||
(1) Items related to divestiture represent costs related to divesting of assets sold including (but not limited to), costs to exit or convert contractual obligations, severance and consulting costs; and certain costs related to the consummation of the divestiture process such as insurance costs, legal and other 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 June 30, | |||||||
| 2019 | 2018 | ||||||
| (In thousands) | |||||||
| GAAP Net Income | $ | 33,925 | $ | 34,466 | |||
| Interest expense, net | 25,020 | 25,940 | |||||
| Provision for income taxes | 12,125 | 11,994 | |||||
| Depreciation and amortization | 7,061 | 8,372 | |||||
| Non-GAAP EBITDA | 78,131 | 80,772 | |||||
| Non-GAAP EBITDA Margin | 33.7 | % | 31.8 | % | |||
| Adjustments: | |||||||
| Transition and other costs associated with divestiture in Cost of Goods Sold (1) | — | 170 | |||||
| Transition and other costs associated with divestiture in General and Administrative Expense (1) | — | 1,422 | |||||
| Total adjustments | — | 1,592 | |||||
| Non-GAAP Adjusted EBITDA | $ | 78,131 | $ | 82,364 | |||
| Non-GAAP Adjusted EBITDA Margin | 33.7 | % | 32.4 | % | |||
(1) Items related to divestiture represent costs related to divesting of assets sold including (but not limited to), costs to exit or convert contractual obligations, severance and consulting costs; and certain costs related to the consummation of the divestiture process such as insurance costs, legal and other related professional fees.
Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income and related Non-GAAP Adjusted Earnings Per Share:
| Three Months Ended June 30, | |||||||||||||
| 2019 | 2019 Adjusted EPS | 2018 | 2018 Adjusted EPS | ||||||||||
| (In thousands, except per share data) | |||||||||||||
| GAAP Net Income | $ | 33,925 | $ | 0.65 | $ | 34,466 | $ | 0.65 | |||||
| Adjustments: | |||||||||||||
| Transition and other costs associated with divestiture in Cost of Goods Sold (1) | — | — | 170 | — | |||||||||
| Transition and other costs associated with divestiture in General and Administrative Expense (1) | — | — | 1,422 | 0.03 | |||||||||
| Tax impact of adjustments (2) | — | — | (404 | ) | — | ||||||||
| Normalized tax rate adjustment (3) | — | — | 193 | — | |||||||||
| Total adjustments | — | — | 1,381 | 0.03 | |||||||||
| Non-GAAP Adjusted Net Income and Adjusted EPS | $ | 33,925 | $ | 0.65 | $ | 35,847 | $ | 0.68 | |||||
(1) Items related to divestiture represent costs related to divesting of assets sold including (but not limited to), costs to exit or convert contractual obligations, severance and consulting costs; and certain costs related to the consummation of the divestiture process such as insurance costs, legal and other related professional fees.
(2) 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.
(3) Income tax adjustment to adjust for discrete income tax items.
Reconciliation of GAAP Net Income to Non-GAAP Free Cash Flow and Non-GAAP Adjusted Free Cash Flow:
| Three Months Ended June 30, | |||||||
| 2019 | 2018 | ||||||
| (In thousands) | |||||||
| GAAP Net Income | $ | 33,925 | $ | 34,466 | |||
| Adjustments: | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities as shown in the Statement of Cash Flows | 14,857 | 17,705 | |||||
| Changes in operating assets and liabilities as shown in the Statement of Cash Flows | 3,995 | 3,681 | |||||
| Total adjustments | 18,852 | 21,386 | |||||
| GAAP Net cash provided by operating activities | 52,777 | 55,852 | |||||
| Purchases of property and equipment | (1,956 | ) | (2,469 | ) | |||
| Non-GAAP Free Cash Flow | 50,821 | 53,383 | |||||
| Transition and other payments associated with divestiture (1) | — | 189 | |||||
| Non-GAAP Adjusted Free Cash Flow | $ | 50,821 | $ | 53,572 | |||
(1) Payments related to divestiture represent costs related to divesting of assets sold including (but not limited to), costs to exit or convert contractual obligations, severance and consulting costs; and certain costs related to the consummation of the divestiture process such as insurance costs, legal and other related professional fees.
Outlook for Fiscal Year 2020:
Reconciliation of Projected GAAP EPS to Projected Non-GAAP Adjusted EPS:
| 2020 Projected EPS | |||||||
| Low | High | ||||||
| Projected FY'20 GAAP EPS | $ | 2.61 | $ | 2.68 | |||
| Adjustments: | |||||||
| Integration of new logistics provider(1) | 0.15 | 0.15 | |||||
| Total Adjustments | 0.15 | 0.15 | |||||
| Projected Non-GAAP Adjusted EPS | $ | 2.76 | $ | 2.83 | |||
(1) Represents costs to integrate our new logistics provider into our operations.
Reconciliation of Projected GAAP Net cash provided by operating activities to Projected Non-GAAP Adjusted Free Cash Flow:
| 2020 Projected Free Cash Flow | |||
| (In millions) | |||
| Projected FY'20 GAAP Net cash provided by operating activities | $ | 205 | |
| Additions to property and equipment for cash | (15 | ) | |
| Projected Non-GAAP Free Cash Flow | 190 | ||
| Payments associated with integration of new logistics provider | 10 | ||
| Projected Non-GAAP Adjusted Free Cash Flow | $ | 200 | |