• Prestige Consumer Healthcare Inc. Reports Record Fiscal Year 2023

    المصدر: Nasdaq GlobeNewswire / 04 مايو 2023 06:00:01   America/New_York

    • Revenue of $285.9 Million in Q4 and $1,127.7 Million in Fiscal 2023
    • Organic Revenue Grew 8.0% in Q4 and 3.5% in Fiscal 2023
    • Achieved Leverage Ratio of 3.3x at Year End; Revising Long-term Leverage Target to Less than 3.0x
    • Initial Full-Year Fiscal 2024 Revenue and EPS Expectation of $1,135 to $1,140 Million and $4.27 to $4.32, respectively

    TARRYTOWN, N.Y., May 04, 2023 (GLOBE NEWSWIRE) -- Prestige Consumer Healthcare Inc. (NYSE:PBH) today reported financial results for its fourth quarter and fiscal year ended March 31, 2023.

    “We are pleased to exceed our fourth quarter and full-year fiscal 2023 guidance, which included organic growth above our long-term outlook and continued leverage reduction approaching 3.0x at year-end. Our consistent business performance for the full year is a result of our proven business strategy and the benefits of a diverse portfolio of brands in a dynamic consumer and retail environment. These attributes give us confidence in our business outlook for fiscal 2024 and our ability to drive shareholder value,” said Ron Lombardi, Chief Executive Officer of Prestige Consumer Healthcare.

    Fourth Fiscal Quarter Ended March 31, 2023

    Reported revenues in the fourth quarter of fiscal 2023 of $285.9 million increased 7.1% from $266.9 million in the fourth quarter of fiscal 2022. Revenues increased 8.0% excluding the impact of foreign currency. The strong revenue performance for the quarter was broad based across North America and International OTC segments versus the prior year comparable period.

    Reported net loss for the fourth quarter of fiscal 2023 was $240.6 million versus the prior year comparable quarter’s net income of $52.1 million. Diluted loss per share of $4.83 for the fourth quarter of fiscal 2023 compared to $1.02 diluted earnings per share in the prior year comparable period. Non-GAAP adjusted net income for the fourth quarter of fiscal 2023 was $53.7 million and compared to the prior year period’s adjusted net income of $46.3 million. Non-GAAP adjusted earnings per share of $1.07 per share for the fourth quarter of fiscal 2023 compared to $0.91 per share in the prior year comparable period.

    Adjustments to net income in the fourth quarter of fiscal 2023 include non-cash tradename impairments associated primarily with the Company’s DenTek, Summer’s Eve, and TheraTears brand names, goodwill impairments and associated tax adjustments. These impairments were due mostly to the impact of higher discount rate assumptions. The brands continue to generate value and remain important components of the Company’s brand portfolio and are well positioned for long-term growth. The adjustment to net income in both fourth quarter fiscal 2022 and fiscal 2023 reflects a tax rate adjustment to account for discrete items.

    Fiscal Year Ended March 31, 2023

    Reported revenues for the fiscal year 2023 totaled $1,127.7 million, an increase of 3.8%, compared to revenues of $1,086.8 million for the fiscal year 2022. Revenues increased 3.5% excluding the impact of foreign currency and a $12.6 million contribution from the acquisition of Akorn in Q1 fiscal 2023. Revenue growth for the fiscal year was driven by strong International OTC segment performance and improved demand for certain brands, categories and channels that had been impacted by the COVID-19 virus in the prior fiscal year.

    Reported net loss for fiscal 2023 of $82.3 million and adjusted net income of $212.0 million compared to the prior year’s net income and adjusted net income of $205.4 million and $206.3 million, respectively. Fiscal 2023 diluted loss per share and adjusted diluted earnings per share of $1.65 and $4.21, respectively, compared to diluted earnings per share and adjusted earnings per share of $4.04 and $4.06 in the prior year, respectively.

    Adjustments to net income in fiscal 2023 included non-cash tradename impairments associated primarily with the Company’s DenTek, Summer’s Eve, and TheraTears brand names, goodwill impairments and associated tax adjustments as well as a normalized tax rate adjustment to account for discrete items. 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.

    Free Cash Flow and Balance Sheet

    The Company's net cash provided by operating activities for fourth quarter fiscal 2023 was $59.0 million, compared to $63.1 million during the prior year comparable period. Non-GAAP free cash flow in the fourth quarter of fiscal 2023 was $56.4 million compared to $60.0 million in the prior year comparable period. The Company's net cash provided by operating activities for fiscal 2023 was $229.7 million, compared to $259.9 million during the prior year. Non-GAAP free cash flow in fiscal 2023 was $221.9 million compared to $253.7 million in the prior year, with the change in free cash flow largely due to an increase in working capital as the Company focused on increasing inventory to support service levels.

    The Company's net debt position as of March 31, 2023 was approximately $1.3 billion, resulting in a covenant-defined leverage ratio of 3.3x.

    Share Repurchase Program Authorization

    On May 2, 2023 the Company’s Board of Directors authorized the repurchase of up to $25.0 million of the Company’s issued and outstanding common stock. Under the authorization, the Company may purchase common stock through May 2024 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 $242.3 million for the fourth quarter fiscal 2023 compared to the prior year comparable quarter's segment revenues of $232.9 million. The revenue performance for the quarter was driven by strong performance across most of our key brands and categories compared to the prior year comparable period.

    For the fiscal year 2023, reported revenues for the North American OTC segment were $973.8 million compared to $967.9 million in the prior year comparable period. The change was driven by increased demand for certain brands, categories and channels that had previously been impacted by the COVID-19 virus, most notably Cough & Cold products and an approximate $12.4 million contribution from the acquisition of Akorn in the first quarter fiscal 2023, partially offset by lower Women’s Health category sales.

    International OTC Healthcare: Fiscal fourth quarter 2023 revenues of $43.6 million increased 28.0% from $34.0 million reported in the prior year comparable period. The revenue increase versus the prior year fourth quarter was driven by increased consumer demand across the segment’s key brands, partially offset by a $1.3 million currency headwind.

    For fiscal year 2023, reported revenues for the International OTC Healthcare segment were $154.0 million, an increase of 29.5% over the prior year’s revenues of $118.9 million. The increase compared to the prior year was driven by large increases in the segment’s Australia business led by the Hydralyte brand, partially offset by a foreign currency headwind of $6.7 million. Segment revenues increased 37.1% on a constant currency basis.

    Commentary Initial Outlook for Fiscal 2024

    Ron Lombardi, Chief Executive Officer, stated, “We are pleased to generate record sales and earnings in fiscal 2023 that built off our very strong fiscal 2022 performance. Robust growth in multiple categories such as Cough & Cold and Gastrointestinal, as well as our International segment, helped offset a continued limiting supply chain. This continued growth speaks to the benefits of our diversified portfolio, our long-term brand-building efforts, and continued emphasis on customer service levels. In addition to investing in these areas we also reduced our leverage, achieving 3.3x year-end leverage thanks to our strong cash flow profile.”

    “We anticipate our consistent financial profile and proven business attributes to drive results in the upcoming year. In fiscal 2024, we expect top-line organic growth of 1% to 2%. This builds off impressive organic growth over the last three years and incorporates the planned strategic exit of private label revenues that represent about one percentage point in annualized sales. We anticipate earnings growth largely following sales growth, but approximately mid-single-digits after excluding the impact of higher interest rates versus prior year thanks to the benefits of our business model and its strong financial profile and resulting cash flows.”

    “Our history of strong performance continues to enable leverage reduction and additional financial flexibility. As a result, we now expect to operate with a targeted leverage of below 3x over time which allows further optionality for disciplined capital deployment. We would expect to be below this target by year-end fiscal 2024 with cash flow directed primarily to debt reduction.”

    “This fiscal 2024 outlook and our strong operating fundamentals give us confidence in our ability to fuel a disciplined capital allocation that allows us to focus on long-term top- and bottom-line growth prospects. We look forward to executing our proven business strategy and leveraging our diverse portfolio of brands, retailers, and suppliers to create shareholder value,” Mr. Lombardi concluded.

     Fiscal 2024 Outlook
    Revenue$1,135 to $1,140 million
    Organic Revenue Growth1% to 2%
    Diluted E.P.S.$4.27 to $4.32
    Free Cash Flow$240 million or more

    Fiscal Year End 2023 Conference Call, Accompanying Slide Presentation and Replay

    The Company will host a conference call to review its fourth quarter and full-year fiscal 2023 results today, May 4, 2023 at 8:30 a.m. ET. 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. To participate in the conference call via phone, participants may register for the call here to receive dial-in details and a unique pin. While not required, it is recommended to join 10 minutes prior to the event start.   The slide presentation can be accessed from the Investor Relations page of the website by clicking on Webcasts and Presentations.

    A conference call replay will be available for approximately one week following completion of the live call and can be accessed on the Company’s Investor Relations page.

    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," "outlook," “look forward,” "projection," “plan,” “positioned,” "may," "will," "would," "expect," "anticipate," "believe,” "consistent," “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 Company’s use of cash flow to reduce debt and to delever, the impact of the planned strategic exit of private label revenues, the Company’s ability to grow. 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, 2022 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 (Loss) Income and Comprehensive (Loss) Income 
    (Unaudited)
     
     Three Months Ended March
    31,    		 Year
    Ended March 31,
    (In thousands, except per share data)2023 2022 2023 2022
    Total Revenues 285,869   266,936  1,127,725   1,086,812 
            
    Cost of Sales       
    Cost of sales excluding depreciation 130,252   116,281  494,883   458,942 
    Cost of sales depreciation 1,853   1,793  7,548   7,224 
    Cost of sales 132,105   118,074  502,431   466,166 
    Gross profit 153,764   148,862  625,294   620,646 
            
    Operating Expenses       
    Advertising and marketing 30,868   36,935  145,061   157,343 
    General and administrative 27,666   26,753  107,354   107,459 
    Depreciation and amortization 6,010   6,692  25,077   24,868 
    Goodwill and tradename impairment 370,217   1,057  370,217   1,057 
    Total operating expenses 434,761   71,437  647,709   290,727 
    Operating (loss) income (280,997)  77,425  (22,415)  329,919 
            
    Other expense (income)       
    Interest expense, net 18,976   15,973  69,164   64,287 
    Loss on extinguishment of debt —   —  —   2,122 
    Other expense (income), net (451)  487  2,336   1,052 
    Total other expense, net 18,525   16,460  71,500   67,461 
    (Loss) income before income taxes (299,522)  60,965  (93,915)  262,458 
    (Benefit) provision for income taxes (58,970)  8,879  (11,609)  57,077 
    Net (loss) income$(240,552) $52,086 $(82,306) $205,381 
            
    (Loss) earnings per share:       
    Basic$(4.83) $1.03 $(1.65) $4.09 
    Diluted$(4.83) $1.02 $(1.65) $4.04 
            
    Weighted average shares outstanding:       
    Basic 49,797   50,363  49,889   50,259 
    Diluted 49,797   50,972  49,889   50,842 
            
    Comprehensive (loss) income, net of tax:       
    Currency translation adjustments (2,409)  3,741  (12,076)  (1,296)
    Unrealized gain on interest rate swaps —   188  —   1,819 
    Unrecognized net gain on pension plans 334   246  334   246 
    Net loss on termination of pension plan —   —  (790)  — 
    Total other comprehensive (loss) income (2,075)  4,175  (12,532)  769 
    Comprehensive (loss) income$(242,627) $56,261 $(94,838) $206,150 
                   


    Prestige Consumer Healthcare Inc.
    Consolidated Balance Sheet
    (Unaudited)
     
    (In thousands)March 31,
     2023 2022
    Assets   
    Current assets   
    Cash and cash equivalents$58,489  $27,185 
    Accounts receivable, net of allowance of $20,205 and $19,720, respectively 167,016   139,330 
    Inventories 162,121   120,342 
    Prepaid expenses and other current assets 4,117   6,410 
    Total current assets 391,743   293,267 
        
    Property, plant and equipment, net 70,412   71,300 
    Operating lease right-of-use assets 14,923   20,372 
    Finance lease right-of-use assets, net 4,200   6,858 
    Goodwill 527,553   578,976 
    Intangible assets, net 2,341,893   2,696,635 
    Other long-term assets 3,005   3,273 
    Total Assets$3,353,729  $3,670,681 
        
    Liabilities and Stockholders' Equity   
    Current liabilities   
    Accounts payable$62,743  $55,760 
    Accrued interest payable 15,688   4,437 
    Operating lease liabilities, current portion 6,926   6,360 
    Finance lease liabilities, current portion 2,834   2,752 
    Other accrued liabilities 72,524   74,113 
    Total current liabilities 160,715   143,422 
        
    Long-term debt, net 1,345,788   1,476,658 
    Deferred income tax liabilities 380,434   444,917 
    Long-term operating lease liabilities, net of current portion 9,876   16,088 
    Long-term finance lease liabilities, net of current portion 1,667   4,501 
    Other long-term liabilities 8,165   7,484 
    Total Liabilities 1,906,645   2,093,070 
        
    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 – 54,857 shares at March 31, 2023 and 54,430 shares at March 31, 2022 548   544 
    Additional paid-in capital 535,356   515,583 
    Treasury stock, at cost – 5,165 shares at March 31, 2022 and 4,151 at March 31, 2022 (189,114)  (133,648)
    Accumulated other comprehensive loss, net of tax (31,564)  (19,032)
    Retained earnings 1,131,858   1,214,164 
    Total Stockholders' Equity 1,447,084   1,577,611 
    Total Liabilities and Stockholders' Equity$3,353,729  $3,670,681 
            


    Prestige Consumer Healthcare Inc.
    Consolidated Statement of Cash Flows
    (Unaudited)
     
     Year Ended March 31,
    (In thousands)2023 2022
    Operating Activities   
    Net (loss) income$(82,306) $205,381 
    Adjustments to reconcile net (loss) income to net cash provided by operating activities:   
    Depreciation and amortization 32,625   32,092 
    Loss on sale or disposal of property and equipment 273   271 
    Deferred income taxes (60,765)  9,979 
    Amortization of debt origination costs 4,364   4,230 
    Stock-based compensation costs 12,405   9,039 
    Loss on extinguishment of debt —   2,122 
    Non-cash operating lease cost 6,311   6,706 
    Impairment loss 370,217   1,057 
    Other 447   (9)
    Changes in operating assets and liabilities, net of effects from acquisition:   
    Accounts receivable (24,927)  (24,654)
    Inventories (42,225)  663 
    Prepaid expenses and other current assets 2,259   1,448 
    Accounts payable 7,258   9,154 
    Accrued liabilities 10,742   9,616 
    Operating lease liabilities (6,687)  (6,448)
    Other (275)  (725)
    Net cash provided by operating activities 229,716   259,922 
        
    Investing Activities   
    Purchases of property, plant and equipment (7,784)  (9,642)
    Acquisitions —   (247,046)
    Other (3,800)  177 
    Net cash used in investing activities (11,584)  (256,511)
        
    Financing Activities   
    Term Loan repayments (135,000)  (600,000)
    Proceeds from refinancing of Term Loan —   597,000 
    Borrowings under revolving credit agreement 20,000   85,000 
    Repayments under revolving credit agreement (20,000)  (85,000)
    Payment of debt costs —   (6,111)
    Payments of finance leases (2,752)  (2,582)
    Proceeds from exercise of stock options 7,372   7,040 
    Fair value of shares surrendered as payment of tax withholding (5,466)  (2,916)
    Repurchase of common stock (50,000)  — 
    Net cash used in financing activities (185,846)  (7,569)
    Effects of exchange rate changes on cash and cash equivalents (982)  (959)
    Increase (decrease) in cash and cash equivalents 31,304   (5,117)
    Cash and cash equivalents - beginning of year 27,185   32,302 
    Cash and cash equivalents - end of year$58,489  $27,185 
    Interest paid$54,243  $61,364 
    Income taxes paid$40,739  $46,568
           


    Prestige Consumer Healthcare Inc.
    Consolidated Statement of Income
    Business Segments
    (Unaudited)
     
     Three Months Ended March 31, 2023
    (In thousands)North American
    OTC
    Healthcare    		 International
    OTC
    Healthcare    		 Consolidated
    Total segment revenues*$242,318 $43,551 $285,869 
    Cost of sales 114,836  17,269  132,105 
    Gross profit 127,482  26,282  153,764 
    Advertising and marketing 24,367  6,501  30,868 
    Contribution margin$103,115 $19,781  122,896 
    Other operating expenses**     403,893 
    Operating loss    $(280,997)

    *Intersegment revenues of $1.5 million were eliminated from the North American OTC Healthcare segment.
    **Other operating expenses for the three months ended March 31, 2023 includes a tradename impairment charge of $321.4 million and a goodwill impairment charge of $48.8 million.

     Year Ended March 31, 2023
    (In thousands)North American
    OTC
    Healthcare    		 International
    OTC
    Healthcare    		 Consolidated
    Total segment revenues*$973,774 $153,951 $1,127,725 
    Cost of sales 441,844  60,587  502,431 
    Gross profit 531,930  93,364  625,294 
    Advertising and marketing 123,926  21,135  145,061 
    Contribution margin$408,004 $72,229  480,233 
    Other operating expenses**     502,648 
    Operating loss    $(22,415)

    *Intersegment revenues of $4.3 million were eliminated from the North American OTC Healthcare segment.
    **Other operating expenses for the year ended March 31, 2023 includes a tradename impairment charge of $321.4 million and a goodwill impairment charge of $48.8 million.

     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.

    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 (Loss), 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 acquisitions where the acquired brands were not included in both periods presented 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 (Loss) before interest expense, net, (benefit) 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 associated with acquisition, costs associated with acquisition in general and administrative expenses, goodwill and tradename impairment, 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 (Loss): GAAP Net Income (Loss) before inventory step-up charges associated with acquisition, costs associated with acquisition in general and administrative expenses, goodwill and tradename impairment, 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 (Loss), 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: Calculated as Non-GAAP free cash flow plus cash payments associated with acquisition.
    • Net Debt: Calculated as total principal amount of debt outstanding ($1,360,000 at March 31, 2023 and $1,495,000 at March 31, 2022) less cash and cash equivalents ($58,489 at March 31, 2023 and $27,185 at March 31, 2022). 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,
      2023   2022   2023   2022 
    (In thousands)       
    GAAP Total Revenues$285,869  $266,936  $1,127,725  $1,086,812 
    Revenue Change 7.1%    3.8%  
    Adjustments:       
    Revenues associated with acquisition (1) —   —   (12,624)  — 
    Impact of foreign currency exchange rates —   (2,120)  —   (9,372)
    Total adjustments —   (2,120)  (12,624)  (9,372)
    Non-GAAP Organic Revenues$285,869  $264,816  $1,115,101  $1,077,440 
    Non-GAAP Organic Revenue Change 8.0%    3.5%  

    (1) Revenues of our Akorn acquisition for the three months ended June 30, 2022 are excluded for purposes of calculating Non-GAAP organic revenues.

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

     Three Months Ended
    March 31,    		 Year Ended
    March 31,
      2023   2022   2023   2022 
    (In thousands)       
    GAAP Total Revenues$285,869  $266,936  $1,127,725  $1,086,812 
            
    GAAP Gross Profit$153,764  $148,862  $625,294  $620,646 
    GAAP Gross Profit as a Percentage of GAAP Total Revenue 53.8%  55.8%  55.4%  57.1%
    Adjustments:       
    Inventory step-up charges associated with acquisition (1) —   —   —   1,567 
    Total adjustments —   —   —   1,567 
    Non-GAAP Adjusted Gross Margin$153,764  $148,862  $625,294  $622,213 
    Non-GAAP Adjusted Gross Margin as a Percentage of GAAP Total Revenues 53.8%  55.8%  55.4%  57.3%

    (1) Inventory step-up charges related 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,
      2023   2022   2023   2022 
    (In thousands)       
    GAAP General and Administrative Expense (1)$27,666  $27,810  $107,354   108,516 
    GAAP General and Administrative Expense as a Percentage of GAAP Total Revenue 9.7%  10.4%  9.5%  10.0%
            
    Adjustments:       
    Costs associated with acquisition (2) —   —   —   5,127 
    Total adjustments —   —   —   5,127 
    Non-GAAP Adjusted General and Administrative Expense$27,666  $27,810  $107,354  $103,389 
    Non-GAAP Adjusted General and Administrative Expense as a Percentage of GAAP Total Revenues 9.7%  10.4%  9.5%  9.5%

    (1) Includes tradename impairment of $1.1 million in both the three months and year ended March 31, 2022.
    (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 (Loss) 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,
      2023   2022   2023   2022 
    (In thousands)       
    GAAP Net (Loss) Income$(240,552) $52,086  $(82,306) $205,381 
    Interest expense, net 18,976   15,973   69,164   64,287 
    (Benefit) provision for income taxes (58,970)  8,879   (11,609)  57,077 
    Depreciation and amortization 7,863   8,485   32,625   32,092 
    Non-GAAP EBITDA (272,683)  85,423   7,874   358,837 
    Non-GAAP EBITDA Margin (95.4)%  32.0%  0.7%  33.0%
            
    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 
    Goodwill and tradename impairment 370,217   —   370,217   — 
    Loss on extinguishment of debt —   —   —   2,122 
    Total adjustments 370,217   —   370,217   8,816 
    Non-GAAP Adjusted EBITDA$97,534  $85,423  $378,091  $367,653 
    Non-GAAP Adjusted EBITDA Margin 34.1%  32.0%  33.5%  33.8%

    (1) Inventory step-up charges related 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 (Loss) Income and GAAP Diluted Earnings Per Share to Non-GAAP Adjusted Net Income (Loss) and related Non-GAAP Adjusted Earnings Per Share:

     Three Months Ended March 31, Year Ended March 31,
      2023 2023
    Adjusted EPS    		  2022 2022
    Adjusted EPS    		  2023 2023
    Adjusted EPS    		  2022 2022
    Adjusted EPS
    (In thousands, except per share data)           
    GAAP Net (Loss) Income and
    Diluted EPS (1)    		$(240,552)$(4.78) $52,086 $1.02  $(82,306)$(1.63) $205,381 $4.04 
    Adjustments:           
    Inventory step-up charges and other costs associated with acquisition in Cost of Sales (2) —  —   —  —   —  —   1,567  0.03 
    Costs associated with acquisition in General and Administrative Expense (3) —  —   —  —   —  —   5,127  0.10 
    Goodwill and tradename impairment 370,217  7.35   —  —   370,217  7.35   —  — 
    Loss on extinguishment of debt —  —   —  —   —  —   2,122  0.04 
    Tax impact of adjustments (4) (88,852) (1.76)  —  —   (88,852) (1.76)  (2,134) (0.04)
    Normalized tax rate adjustment (5) 12,915  0.26   (5,753) (0.11)  12,915  0.26   (5,753) (0.11)
    Total adjustments 294,280  5.85   (5,753) (0.11)  294,280  5.85   929  0.02 
    Non-GAAP Adjusted Net Income and Adjusted EPS$53,728 $1.07  $46,333 $0.91  $211,974 $4.21  $206,310 $4.06 

    (1) Reported GAAP is calculated using diluted shares outstanding. Diluted shares outstanding are 50,358 for the three months ended March 31, 2023 and 50,384 for the year ended March 31, 2023.
    (2) Inventory step-up charges related to our North American OTC Healthcare segment.
    (3) Costs related to the consummation of the acquisition process such as insurance costs, legal and other acquisition related professional fees.
    (4) 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.
    (5) Income tax adjustment to adjust for discrete income tax items.
    Note: Amounts may not add due to rounding.

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

     Three Months Ended
    March 31,    		 Year Ended
    March 31,
      2023   2022   2023   2022 
    (In thousands)       
    GAAP Net (Loss) Income$(240,552) $52,086  $(82,306) $205,381 
    Adjustments:       
    Adjustments to reconcile net (loss) income to net cash provided by operating activities as shown in the Statement of Cash Flows 309,410   13,207   365,877   65,487 
    Changes in operating assets and liabilities as shown in the Statement of Cash Flows (9,871)  (2,167)  (53,855)  (10,946)
    Total adjustments 299,539   11,040   312,022   54,541 
    GAAP Net cash provided by operating activities 58,987   63,126   229,716   259,922 
    Purchases of property and equipment (2,558)  (3,161)  (7,784)  (9,642)
    Non-GAAP Free Cash Flow 56,429   59,965   221,932   250,280 
    Payments associated with acquisition (1) —   —   —   3,465 
    Non-GAAP Adjusted Free Cash Flow$56,429  $59,965  $221,932  $253,745 

    (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 2024:

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

    (In millions) 
    Projected FY'24 GAAP Net cash provided by operating activities$250 
    Additions to property and equipment for cash (10)
    Projected FY'24 Non-GAAP Free Cash Flow$240 
        

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


     


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