Perrigo Reports Record Sales and Earnings for Second Quarter Fiscal 2008
Second Quarter Results
Net sales for the second quarter of fiscal 2008 were a record $435.5million, an increase of $64.9 million, or 17 percent, compared with $370.6million last year. Reported net income was $34.3 million, or $0.36 per share,compared with $21.1 million, or $0.23 per share a year ago, which includedexpense for a product recall of $3.2 million after-tax, or $0.03 per share,and a restructuring charge of $417 thousand after-tax, or less than $0.01 pershare.
Perrigo Chairman and CEO, Joseph C. Papa, stated, "I am extremely pleasedwith our performance this quarter both financially and operationally. Recordsales were achieved through double digit sales growth in each of our businesssegments. Operating income grew 85 percent from last year on a 390 basispoint improvement in gross margins. These improvements, along with continuedfocus on working capital, generated $67 million in cash flow from operations,up $43 million from last year. These results also come before the largest newproduct launch in our history, Omeprazole, which we expect to start shippingby the end of our third fiscal quarter."
Six Months Results
Net sales for the six months ended December 29, 2007 were $818.2 million,an increase of $107.4 million, or 15 percent, compared with $710.8 millionlast year. Reported net income was $68.3 million, or $0.72 per share, comparedwith $38.0 million, or $0.41 per share last year. The year ago period includedexpense for a product recall of $3.9 million after-tax, or $0.04 per share,and a restructuring charge of $417 thousand after-tax, or less than $0.01 pershare.
Consumer Healthcare segment net sales in the quarter were a record $320.2million, up $44.3 million, or 16 percent, compared with $275.9 million a yearago. The sales increase resulted from $9.9 million in new product revenue;strong sales in the smoking cessation, analgesics and cough/cold productcategories and increases in non-U.S. businesses. Operating income was $38.5million, compared with $17.4 million a year ago. The income gain was a resultof the volume increase as well as benefits from supply chain and operationalefficiency improvements. Additionally, last year's second quarter included$3.2 million in after-tax costs related to a product recall.
On December 28, 2007, Perrigo announced it received final approval fromthe FDA for its Abbreviated New Drug Application (ANDA) for OTC CetirizineHydrochloride Tablets, 5 and 10 mg. The product will be marketed under storebrand labels and is comparable to McNeil Consumer Healthcare's Zyrtec(R)Tablets. Store brand shipments began in January.
For the first six months of 2008, Consumer Healthcare sales were $588.5million, up $70.7 million, or 14 percent, compared with $517.8 million lastyear. Operating income was $68.1 million, up $33.6 million, or 97 percent,compared with $34.5 million last year, which included after-tax costs of $3.9million related to a product recall.
On January 9, 2008, the Company announced it acquired Galpharm Healthcare,Ltd., a leading United Kingdom-based supplier of over-the-counter store brandproducts, for approximately $86 million. The acquisition is expected to addmore than $55 million in sales annually and be accretive to earnings in thefirst 12 months.
The Rx Pharmaceuticals segment reported sales of $38.7 million, including$5.0 million of service and royalty revenue, an increase of $10.4 million, or37 percent, compared with $28.3 million a year ago. Fiscal 2008 second quarterresults also included $6.9 million in sales of products acquired from GladesPharmaceuticals. Operating income was $8.4 million, up from $3.7 million lastyear as a resul
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