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Prestige Brands Holdings Inc.$29.18$.23.79%

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 Prestige Brands Holdings, Inc. Reports Fiscal 2017 Fourth Quarter and Full Year Results; Provides Fiscal 2018 Outlook
   Thursday, May 11, 2017 6:00:10 AM ET

--Generated $147.8 million in fiscal 2017 GAAP net cash provided by operating activities and adjusted non-GAAP free cash flow of $196.0 million.

--Anticipate 18% to 20% revenue growth in fiscal 2018.

--Fiscal 2018 GAAP EPS guidance of $2.50 to $2.60; Non-GAAP Adjusted EPS outlook of $2.58 to 2.68.

--C.B. Fleet acquisition successfully closed January 26th; integration and cost savings efforts tracking as anticipated.

Prestige Brands Holdings, Inc. (PBH ) today reported financial results for its fourth quarter and fiscal year ended March 31, 2017.

"Our solid overall fourth quarter performance was broad-based, benefiting from our diverse product offering, ongoing brand-building investments, and the strategic evolution of our portfolio throughout the fiscal year. Equally important, we closed the acquisition of C.B. Fleet in late January and are on schedule with integrating this well-positioned portfolio of brands into our existing business. This strong momentum positions our business well as we enter into fiscal 2018," said Ron Lombardi, Chief Executive Officer of Prestige Brands.



Fiscal Fourth Quarter Ended March 31, 2017

Reported revenues in the fourth quarter of fiscal 2017 increased 15.8% to $240.7 million, compared to $207.9 million in the fourth quarter of fiscal 2016. Revenues for the quarter were driven by continued strong consumption levels across the Company’s core over-the-counter healthcare (OTC) and international brands, and incremental revenue from the DenTek(R) and C.B. Fleet (Fleet) acquisitions, partially offset by the divestitures of multiple non-core brands made earlier in the fiscal year. The Fleet transaction, which closed January 26th, contributed $38.7 million in revenues to fourth quarter performance. Excluding the impact of these acquisitions and divestitures, fourth quarter fiscal 2017 non-GAAP organic revenue growth increased 1.1% versus the prior year comparable quarter.

Reported net income for the fourth quarter of fiscal 2017 totaled $11.1 million, a decrease of 20.4% over the prior year comparable quarter’s net income of $13.9 million. Diluted earnings per share of $0.21 for the fourth quarter of fiscal 2017 compared to $0.26 in the prior year comparable period. Non-GAAP adjusted net income for the fourth quarter of fiscal 2017 was $28.8 million, an increase of 3.2% over the prior year period’s adjusted net income of $27.9 million. Non-GAAP adjusted earnings per share were $0.54 per share for the fourth quarter of fiscal 2017, compared to $0.52 per share in the prior year comparable period.

Adjustments to net income in the fourth quarter of fiscal 2017 and fiscal 2016 include integration, transition, purchase accounting, legal and various other costs associated with acquisitions and divestitures, loss on extinguishment of debt, and the related income tax effects of the adjustments.

Fiscal Year Ended March 31, 2017

Reported revenues for the fiscal year ended March 31, 2017 totaled $882.1 million, an increase of 9.4%, compared to revenues of $806.2 million for the fiscal year ended March 31, 2016. After adjusting for acquisitions and divestitures, organic revenues (a non-GAAP measure) for the fiscal year ended March 31, 2017 increased 1.0%.

Reported net income for fiscal year 2017 totaled $69.4 million, or $1.30 in earnings per diluted share, compared to $99.9 million, or $1.88 per diluted share, for fiscal year 2016. On a non-GAAP basis, adjusted net income for fiscal year 2017 totaled $126.6 million, or $2.37 per diluted share, an increase of 9.6% compared to adjusted net income of $115.5 million, or $2.17 per diluted share, for fiscal 2016.

Adjustments to net income in fiscal 2017 include integration, transition, purchase accounting, legal and various other costs associated with acquisitions and divestitures, a loss on extinguishment of debt, a net loss related to the divestiture of certain non-core brands and the related income tax effects of the adjustments. Adjustments to net income in the fiscal year 2016 included integration, transition, purchase accounting, legal and various other costs associated with acquisitions and divestitures, as well as costs associated with CEO transition.

Free Cash Flow and Balance Sheet

The Company’s GAAP reported net cash provided by operating activities for the fourth fiscal quarter decreased to $7.4 million from $37.9 million a year earlier, owing primarily to various expenses related to the Fleet acquisition as well as income tax payments resulting from divestitures. Non-GAAP adjusted free cash flow for the fourth fiscal quarter was $46.8 million, down from $48.7 million in the prior year comparable quarter.

For the full-year fiscal 2017, GAAP net cash provided by operating activities was $147.8 million compared to $174.4 million in the prior year comparable period, while non-GAAP adjusted free cash flow of $196.0 increased versus $183.4 million in the prior year’s period.

As expected, the Company’s net debt position as of March 31, 2017 was approximately $2.2 billion, which increased versus the prior year driven by the acquisition of Fleet. At the end of fiscal 2017, the Company’s covenant-defined leverage ratio was approximately 5.7x, supported by the Company’s consistent and industry-leading free cash flow. The company expects to reach an approximate 5.0x covenant-defined leverage ratio by the end of fiscal 2018.

Segment Review

North American OTC Healthcare: Segment revenues totaled $199.0 million for the fourth quarter of fiscal 2017, 16.4% higher than the prior year comparable quarter’s revenues of $171.0 million. For fiscal 2017, reported revenues for the North American OTC Healthcare segment were $720.8 million, an increase of 9.6% compared to $657.9 million in the prior year comparable period. Results for both fiscal 2017 periods were favorably impacted by increased consumption among the majority of core OTC brands as well as revenues from the acquisitions of DenTek and Fleet, partially offset by divestitures of non-core OTC brands.

International OTC Healthcare: Segment fiscal Q4 2017 revenues totaled $20.2 million, 40.0% higher than the $14.5 million reported in the prior year comparable period. For the fiscal year 2017, reported revenues for the International OTC Healthcare segment were $73.3 million, an increase of 27.0% over the prior year comparable period’s revenues of $57.7 million. Fourth quarter and full-year revenues included an incremental benefit associated with revenues from DenTek and Fleet transactions.

Household Cleaning: Segment revenues totaled $21.4 million for the fourth quarter of fiscal 2017, compared with fourth quarter fiscal 2016 revenues of $22.4 million, a decrease of 4.3%. Reported revenues for fiscal year 2017 totaled $87.9 million, a 3.0% decrease over fiscal year 2016 revenues of $90.7 million.

Commentary and Outlook for Fiscal 2018

Ron Lombardi, President and CEO, stated, "In fiscal 2018, we expect continued organic growth in our existing business and incremental revenues from the acquisition of Fleet to drive growth. Embedded in our fiscal year 2018 revenue growth assumption is a pro-forma organic growth rate of 2.0% to 2.5%. We expect fiscal 2018 adjusted earnings per share in the range of $2.58 to $2.68, and adjusted non-GAAP projected free cash flow of $205 million or more. As has been our practice, we plan to continue using our industry-leading free cash flow to pay down debt and build M&A capacity," he stated.

"Our fiscal 2018 organic growth forecast reflects our strong, diversified portfolio and brand-building efforts, which position us well in the current challenging consumer and retail environment. We look forward to fiscal 2018 and the prospects surrounding both our legacy portfolio and the recent acquisition of Fleet," Mr. Lombardi concluded.

                            
                                                 Fiscal 2018 Full-Year Outlook
                                                                   -----------------------------
Revenue Growth                                                               18% to 20%
Adjusted E.P.S.*                                                           $2.58 to $2.68
Adjusted Free Cash Flow*                                                $205 million or more
                                                                    

Board of Directors Chairman Appointment

The Company’s Board of Directors elected Ron Lombardi as Chairman of the Board. Gary E. Costley will remain the Company’s Lead Independent Director.

"Prestige Brands has achieved many operational and financial goals during Ron Lombardi’s tenure as CEO and I am pleased to announce the Board of Directors have elected Ron Chairman of the Board," stated Gary E. Costley. "Ron is a decisive and energetic leader who is well prepared to become Chairman of our Board. He has successfully guided Prestige to record results, is respected inside and outside the Company, consistently builds exceptional teams, and sets high standards of performance throughout our organization. The Board is confident he will provide outstanding leadership as Chairman, President and CEO in the coming years."

Q4 and Fiscal Year Conference Call, Accompanying Slide Presentation and Replay

The Company will host a conference call to review its fourth quarter and full year results on May 11, 2017 at 8:30 a.m. ET. The toll-free dial-in numbers are 877-233-9440 within North America and 574-990-1016 outside of North America. The conference ID number is 6720925. The Company will provide 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.prestigebrands.com. The slide presentation can be accessed just before the call from the Investor Relations page of the website by clicking on Webcasts and Presentations. Telephonic replays will be available for two weeks 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 6720925.

Non-GAAP 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," "strategy," "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, adjusted earnings per share and adjusted free cash flow, the Company’s ability to meet organic growth targets, the Company’s use of free cash flow to pay down debt and build M&A capacity, and the success of the Company’s acquisition of Fleet and its brand building efforts. 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, the failure to successfully integrate the Fleet brands, general economic and business conditions, fluctuating foreign exchange rates, consumer trends, competitive pressures, and the ability of the Company’s third party manufacturers and suppliers to meet demand for its products. 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, 2016, Quarterly Report on Form 10-Q for the quarter ended December 31, 2016, and other periodic reports filed with the Securities and Exchange Commission.

About Prestige Brands Holdings, Inc.

The Company markets and distributes brand name over-the-counter and household cleaning products throughout the U.S. and Canada, Australia, and in certain other international markets. The Company’s brands include Monistat(R) and Summer’s Eve(R) women’s health products, BC(R) and Goody’s(R) pain relievers, Clear Eyes(R) eye care products, DenTek(R) specialty oral care products, Dramamine(R) motion sickness treatments, Chloraseptic(R) sore throat treatments, Compound W(R) wart treatments, Little Remedies(R) pediatric over-the-counter products, The Doctor’s(R) NightGuard(R) dental protector, Efferdent(R) denture care products, Luden’s(R) throat drops, Beano(R) gas prevention, Debrox(R) earwax remover, Gaviscon(R) antacid in Canada, and Hydralyte(R) rehydration products and the Fess(R) line of nasal and sinus care products in Australia. Visit the Company’s website at www.prestigebrands.com.

* See the "About Non-GAAP Financial Measures" section of this report for further presentation information. Beginning April 1, 2017, organic revenue growth definition includes pro forma sales associated with the Fleet transaction as if the combination occurred April 1, 2016.

                                                                                                                                           
                                                                                                                                          Prestige Brands Holdings, Inc.
                                                                                                                             Consolidated Statement of Income and Comprehensive Income
                                                                                                                                                    (Unaudited)
                                                                                                                                                                                                                         
                                                                                                                  Three Months Ended March 31,                                                                                                                  Year Ended
                                                                                                                                                                                                                                                                 March 31,
                                                                                  -------------------------------------------------------------------------------------                                                 ------------------------------------------------------------------------------------
(In thousands, except per share data)                                                            2017                                 2016                                                                         2017                                 2016
---------------------------------------                                           -------------------------------                        ----------------------------------                                             ------------------------------                        ----------------------------------
Revenues
  Net sales                                                                          $ 240,594                                                 $ 207,054                                                                  $ 881,113                                                 $ 803,088
  Other revenues                                                                            76                                    801                                                     947                                  3,159  
                                                                                  ---------------------------------                      ------------------------------------                                           --------------------------------                      ------------------------------------
    Total revenues                                                                     240,670                                                   207,855                                                                    882,060                                                   806,247
Cost of Sales
  Cost of sales                                                                        110,487                                 89,604                                                 381,774                                339,036  
                                                                                  ---------------------------------                      ------------------------------------                                           --------------------------------                      ------------------------------------
    Gross profit                                                                       130,183                                118,251                                                 500,286                                467,211  
                                                                                  ---------------------------------                      ------------------------------------                                           --------------------------------                      ------------------------------------
Operating Expenses
  Advertising and promotion                                                             41,450                                                    26,552                                                                    128,359                                                   110,802
  General and administrative                                                            28,760                                                    20,232                                                                     89,143                                                    72,418
  Depreciation and amortization                                                          6,651                                                     6,198                                                                     25,351                                                    23,676
  Loss on divestitures                                                                     268                         --                                                  51,820                         --  
                                                                                  ---------------------------------                      ------------------------------------                                           --------------------------------                      ------------------------------------
    Total operating expenses                                                            77,129                                 52,982                                                 294,673                                206,896  
                                                                                  ---------------------------------                      ------------------------------------                                           --------------------------------                      ------------------------------------
    Operating income                                                                    53,054                                 65,269                                                 205,613                                260,315  
                                                                                  ---------------------------------                      ------------------------------------                                           --------------------------------                      ------------------------------------
Other (income) expense
  Interest income                                                                          (54 )                                                     (71 )                                                                     (203 )                                                    (162 )
  Interest expense                                                                      32,886                                                    23,218                                                                     93,546                                                    85,322
  Loss on extinguishment of debt                                                         1,420                                 17,519                                                   1,420                                 17,970  
                                                                                  ---------------------------------                      ------------------------------------                                           --------------------------------                      ------------------------------------
    Total other expense                                                                 34,252                                 40,666                                                  94,763                                103,130  
                                                                                  ---------------------------------                      ------------------------------------                                           --------------------------------                      ------------------------------------
    Income before income taxes                                                          18,802                                                    24,603                                                                    110,850                                                   157,185
  Provision for income taxes                                                             7,712                                 10,667                                                  41,455                                 57,278  
                                                                                  ---------------------------------                      ------------------------------------                                           --------------------------------                      ------------------------------------
    Net income                                                                       $  11,090                              $  13,936                                               $  69,395                              $  99,907  
                                                                                  ==== ======= ====================                      ======= ======= ====================                                           === ======= ====================                      ======= ======= ====================
Earnings per share:
  Basic                                                                              $    0.21                              $    0.26                                               $    1.31                              $    1.89  
                                                                                  ==== ======= ====================                      ======= ======= ====================                                           === ======= ====================                      ======= ======= ====================
  Diluted                                                                            $    0.21                              $    0.26                                               $    1.30                              $    1.88  
                                                                                  ==== ======= ====================                      ======= ======= ====================                                           === ======= ====================                      ======= ======= ====================
Weighted average shares outstanding:
  Basic                                                                                 53,009                                 52,833                                                  52,976                                 52,754  
                                                                                  =================================                      ====================================                                           ================================                      ====================================
  Diluted                                                                               53,419                                 53,252                                                  53,362                                 53,143  
                                                                                  =================================                      ====================================                                           ================================                      ====================================
                                                                                                                                                                                                                                                                                               
Comprehensive income, net of tax:
  Currency translation adjustments                                                       9,282                                                     6,449                                                                     (2,575 )                                                    (113 )
  Pension liability                                                                       (252 )                                          --                                                    (252 )                                          --  
                                                                                  ---------------------------------                      ------------------------------------                                           --------------------------------                      ------------------------------------
Total other comprehensive income (loss)                                                  9,030                                  6,449                                                  (2,827 )                                                    (113 )
                                                                                  ---------------------------------                      ------------------------------------                                           --------------------------------                      ------------------------------------
Comprehensive income                                                                 $  20,120                              $  20,385                                               $  66,568                              $  99,794  
                                                                                  ==== ======= ====================                      ======= ======= ====================                                           === ======= ====================                      ======= ======= ====================
                                                                                                                                                                                                                                                                                               
                                                                                    
                                                                                                Prestige Brands Holdings, Inc.
                                                                                                  Consolidated Balance Sheet
                                                                                                          (Unaudited)
                                                                                                                            
(In thousands)                                                                                                                                                          March 31,
--------------------------------------------------------------------------------                                           --------------------------------------------------------------------------------------------
Assets                                                                                                                                      2017                                     2016
                                                                                                                           ---------------------------------------                     ---------------------------------------
  Current assets
  Cash and cash equivalents                                                                                                      $    41,855                                                 $    27,230
  Accounts receivable, net                                                                                                           136,742                                                      95,247
  Inventories                                                                                                                        115,609                                                      91,263
  Deferred income tax assets                                                                                                  --                                                      10,108
  Prepaid expenses and other current assets                                                                                           40,228                                   25,165  
                                                                                                                           --------------------------------------                      --------------------------------------
Total current assets                                                                                                                 334,434                                                     249,013
                                                                                                                                                                                        
Property, plant and equipment, net                                                                                                    50,595                                                      15,540
Goodwill                                                                                                                             615,252                                                     360,191
Intangible assets, net                                                                                                             2,903,613                                                   2,322,723
Other long-term assets                                                                                                                 7,454                                    1,324  
                                                                                                                           --------------------------------------                      --------------------------------------
Total Assets                                                                                                                     $ 3,911,348                              $ 2,948,791  
                                                                                                                           ======= ========= ====================                      ======= ========= ====================
                                                                                                                                                                                        
Liabilities and Stockholders’ Equity
Current liabilities
  Accounts payable                                                                                                               $    70,218                                                 $    38,296
  Accrued interest payable                                                                                                             8,130                                                       8,664
  Other accrued liabilities                                                                                                           83,661                                   59,724  
                                                                                                                           --------------------------------------                      --------------------------------------
Total current liabilities                                                                                                            162,009                                  106,684  
                                                                                                                           --------------------------------------                      --------------------------------------
Long-term debt
  Principal amount                                                                                                                 2,222,000                                                   1,652,500
  Less unamortized debt costs                                                                                                        (28,268 )                                                   (27,191 )
                                                                                                                           --------------------------------------                      --------------------------------------
  Long-term debt, net                                                                                                              2,193,732                                1,625,309  
                                                                                                                           --------------------------------------                      --------------------------------------
                                                                                                                                                                                        
Deferred income tax liabilities                                                                                                      715,086                                                     469,622
Other long-term liabilities                                                                                                           17,972                                    2,840  
                                                                                                                           --------------------------------------                      --------------------------------------
Total Liabilities                                                                                                                  3,088,799                                2,204,455  
                                                                                                                           --------------------------------------                      --------------------------------------
                                                                                                                                                                                        
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 - 53,287 shares at March 31, 2017 and 53,066 shares at March                                                         533                                                         530
31, 2016
Additional paid-in capital                                                                                                           458,255                                                     445,182
Treasury stock, at cost - 332 shares at March 31, 2017 and 306 at                                                        (6,594 )                                                    (5,163 )
March 31, 2016
Accumulated other comprehensive loss, net of tax                                                                                     (26,352 )                                                   (23,525 )
Retained earnings                                                                                                                    396,707                                  327,312  
                                                                                                                           --------------------------------------                      --------------------------------------
Total Stockholders’ Equity                                                                                                           822,549                                  744,336  
                                                                                                                           --------------------------------------                      --------------------------------------
                                                                                                                                                                                        
Total Liabilities and Stockholders’ Equity                                                                                       $ 3,911,348                              $ 2,948,791  
                                                                                                                           ======= ========= ====================                      ======= ========= ====================
                                                                                                                                                                                                          
                                                                     
                                                                                      Prestige Brands Holdings, Inc.
                                                                                   Consolidated Statement of Cash Flows
                                                                                                (Unaudited)
                                                                                                             
                                                                                                                                                 Year Ended March 31,
                                                                                                            -----------------------------------------------------------------------------------------------
(In thousands)                                                                                                              2017                                   2016
-----------------------------------------------------------------                                           ----------------------------------                        ----------------------------------
Operating Activities
Net income                                                                                                        $  69,395                                                 $  99,907
Adjustments to reconcile net income to net cash provided by
operating activities:
    Depreciation and amortization                                                                                    25,792                                                    23,676
    Loss on divestitures and sales of property and equipment                                                         51,820                                            --
    Deferred income taxes                                                                                            (5,778 )                                                  46,152
    Long term income taxes payable                                                                                      581                                                      (332 )
    Amortization of debt origination costs                                                                            8,633                                                     8,994
    Stock-based compensation costs                                                                                    8,148                                                     9,954
    Loss on extinguishment of debt                                                                                    1,420                                                    17,970
    Premium payment on 2012 Senior Notes                                                                     --                                                   (10,158 )
    Lease termination costs                                                                                             524                                            --
    Loss (gain) on sale or disposal of property and equipment                                                           573                                                       (35 )
Changes in operating assets and liabilities, net of effects from
acquisitions
      Accounts receivable                                                                                           (18,938 )                                                   1,824
      Inventories                                                                                                   (10,262 )                                                  (3,005 )
      Prepaid expenses and other assets                                                                              (1,996 )                                                  (7,921 )
      Accounts payable                                                                                               21,447                                                   (11,348 )
      Accrued liabilities                                                                                             2,497                                                    (1,328 )
      Noncurrent assets and liabilities                                                                              (6,084 )                                          --  
                                                                                                            ------------------------------------                      ------------------------------------
  Net cash provided by operating activities                                                                         147,772                                174,350  
                                                                                                            ------------------------------------                      ------------------------------------
                                                                                                                                                                                       
Investing Activities
Purchases of property and equipment                                                                                  (2,977 )                                                  (3,568 )
Proceeds from divestitures                                                                                          110,717                                            --
Proceeds from the sale of property and equipment                                                                         85                                                       344
Proceeds from Insight Pharmaceuticals working capital arbitration                                            --                                                     7,237
settlement
Proceeds from DenTek working capital arbitration settlement                                                           1,419                                            --
Acquisition of DenTek, less cash acquired                                                                    --                                                  (226,984 )
Acquisition of C.B. Fleet, less cash acquired                                                                      (803,839 )                                          --  
                                                                                                            ------------------------------------                      ------------------------------------
  Net cash used in investing activities                                                                            (694,595 )                                                (222,971 )
                                                                                                            ------------------------------------                      ------------------------------------
                                                                                                                                                                                       
Financing Activities
Proceeds from issuance of 2016 Senior Notes                                                                  --                                                   350,000
Repayment of 2012 Senior Notes                                                                               --                                                  (250,000 )
Borrowings under Bridge term loans                                                                           --                                                    80,000
Repayments under Bridge term loans                                                                           --                                                   (80,000 )
Proceeds from issuance of Term Loan                                                                               1,427,000                                            --
Term Loan repayments resulting from refinancing                                                                    (687,000 )                                          --
Term Loan repayments                                                                                               (175,500 )                                                 (60,000 )
Borrowings under revolving credit agreement                                                                         110,000                                                   115,000
Repayments under revolving credit agreement                                                                        (105,000 )                                                 (96,100 )
Payments of debt origination costs                                                                                  (11,140 )                                                 (11,828 )
Proceeds from exercise of stock options                                                                               4,028                                                     6,689
Proceeds from restricted stock exercises                                                                     --                                                       544
Excess tax benefits from share-based awards                                                                             900                                                     1,960
Fair value of shares surrendered as payment of tax withholding                                                       (1,431 )                                                  (2,229 )
                                                                                                            ------------------------------------                      ------------------------------------
  Net cash provided by financing activities                                                                         561,857                                 54,036  
                                                                                                            ------------------------------------                      ------------------------------------
Effects of exchange rate changes on cash and cash equivalents                                                          (409 )                                                     497
Increase in cash and cash equivalents                                                                                14,625                                                     5,912
Cash and cash equivalents - beginning of year                                                                        27,230                                 21,318  
                                                                                                            ------------------------------------                      ------------------------------------
Cash and cash equivalents - end of year                                                                           $  41,855                              $  27,230  
                                                                                                            ======= ======= ====================                      ======= ======= ====================
                                                                                                                                                                                       
Interest paid                                                                                                     $  85,209                              $  79,132  
                                                                                                            ======= ======= ====================                      ======= ======= ====================
Income taxes paid                                                                                                 $  47,999                              $  15,352  
                                                                                                            ======= ======= ====================                      ======= ======= ====================
                                                                                                                                                                                       
                                        
                                                                                                                               Prestige Brands Holdings, Inc.
                                                                                                                              Consolidated Statement of Income
                                                                                                                                      Business Segments
                                                                                                                                         (Unaudited)
                                                                                
                                                                                                                                                                     Three Months Ended March 31, 2017
                                                                               -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(In thousands)                                                                           North American                        International                            Household                           Consolidated
                                                                                         OTC Healthcare                                          OTC Healthcare                                               Cleaning
------------------------------------                                           -------------------------------                        ----------------------------------                        ----------------------------------                        -------------------------------
Gross segment revenues                                                            $ 201,003                                                 $  20,226                                                 $  21,377                                              $ 242,606
Elimination of intersegment revenues                                                 (2,012 )                                          --                         --                              (2,012 )
                                                                               ---------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Third-party segment revenues                                                        198,991                                                    20,226                                                    21,377                                                240,594
Other revenues                                                                           33                                     11                                     32                                  76  
                                                                               ---------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Total segment revenues                                                              199,024                                                    20,237                                                    21,409                                                240,670
Cost of sales                                                                        84,736                                  9,067                                 16,684                             110,487  
                                                                               ---------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Gross profit                                                                        114,288                                                    11,170                                                     4,725                                                130,183
Advertising and promotion                                                            35,814                                  4,564                                  1,072                              41,450  
                                                                               ---------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Contribution margin                                                               $  78,474                              $   6,606                              $   3,653                           $  88,733
                                                                               ==== ======= ====================                      ======= ======= ====================                      ======= ======= ====================
Other operating expenses                                                                                                                                                                                                                                        35,679  
                                                                                                                                                                                                                                                          ---------------------------------
Operating income                                                                                                                                                                                                                                                53,054
Other expense                                                                                                                                                                                                                                                   34,252  
                                                                                                                                                                                                                                                          ---------------------------------
Income before income taxes                                                                                                                                                                                                                                      18,802
Provision for income taxes                                                                                                                                                                                                                                       7,712  
                                                                                                                                                                                                                                                          ---------------------------------
Net income                                                                                                                                                                                                                                                   $  11,090  
                                                                                                                                                                                                                                                          ==== ======= ====================
                                                                                                                                                                                                                                                                        
                                        
                                                                                                                                                                         Year Ended March 31, 2017
                                                                               -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(In thousands)                                                                           North American                        International                            Household                           Consolidated
                                                                                         OTC Healthcare                                          OTC Healthcare                                               Cleaning
------------------------------------                                           -------------------------------                        ----------------------------------                        ----------------------------------                        -------------------------------
Gross segment revenues                                                            $ 724,991                                                 $  73,287                                                 $  87,035                                              $ 885,313
Elimination of intersegment revenues                                                 (4,200 )                                          --                         --                              (4,200 )
                                                                               ---------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Third-party segment revenues                                                        720,791                                                    73,287                                                    87,035                                                881,113
Other revenues                                                                           33                                     17                                    897                                 947  
                                                                               ---------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Total segment revenues                                                              720,824                                                    73,304                                                    87,932                                                882,060
Cost of sales                                                                       282,750                                 30,789                                 68,235                             381,774  
                                                                               ---------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Gross profit                                                                        438,074                                                    42,515                                                    19,697                                                500,286
Advertising and promotion                                                           112,465                                 13,434                                  2,460                             128,359  
                                                                               ---------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Contribution margin                                                               $ 325,609                              $  29,081                              $  17,237                           $ 371,927
                                                                               ==== ======= ====================                      ======= ======= ====================                      ======= ======= ====================
Other operating expenses*                                                                                                                                                                                                                                      166,314  
                                                                                                                                                                                                                                                          ---------------------------------
Operating income                                                                                                                                                                                                                                               205,613
Other expense                                                                                                                                                                                                                                                   94,763  
                                                                                                                                                                                                                                                          ---------------------------------
Income before income taxes                                                                                                                                                                                                                                     110,850
Provision for income taxes                                                                                                                                                                                                                                      41,455  
                                                                                                                                                                                                                                                          ---------------------------------
Net income                                                                                                                                                                                                                                                   $  69,395  
                                                                                                                                                                                                                                                          ==== ======= ====================
                                                                                                                                                                                                                                                                        

*Other operating expenses for the twelve months ended March 31, 2017 includes a pre-tax net loss of $51.8 million related to divestitures. These divestitures include Pediacare, New Skin, Fiber Choice, e.p.t, Dermoplast, and license rights in certain geographic areas pertaining to Comet. The assets and corresponding contribution margin associated with the pre-tax net loss on divestitures related to Pediacare, New Skin, Fiber Choice, e.p.t and Dermoplast are included within the North American OTC Healthcare segment, while the pre-tax gain on sale of license rights related to Comet are included in the Household Cleaning segment.

                                        
                                                                                                                                                                     Three Months Ended March 31, 2016
                                                                               -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(In thousands)                                                                           North American                        International                            Household                           Consolidated
                                                                                         OTC Healthcare                                          OTC Healthcare                                               Cleaning
------------------------------------                                           -------------------------------                        ----------------------------------                        ----------------------------------                        -------------------------------
Gross segment revenues                                                            $ 171,253                                                 $  14,457                                                 $  21,577                                              $ 207,287
Elimination of intersegment revenues                                                   (233 )                                          --                         --                                (233 )
                                                                               ---------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Third-party segment revenues                                                        171,020                                                    14,457                                                    21,577                                                207,054
Other revenues                                                                           (1 )                                                       3                                    799                                 801  
                                                                               ---------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Total segment revenues                                                              171,019                                                    14,460                                                    22,376                                                207,855
Cost of sales                                                                        67,739                                  5,329                                 16,536                              89,604  
                                                                               ---------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Gross profit                                                                        103,280                                                     9,131                                                     5,840                                                118,251
Advertising and promotion                                                            23,286                                  2,776                                    490                              26,552  
                                                                               ---------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Contribution margin                                                               $  79,994                              $   6,355                              $   5,350                           $  91,699
                                                                               ==== ======= ====================                      ======= ======= ====================                      ======= ======= ====================
Other operating expenses                                                                                                                                                                                                                                        26,430  
                                                                                                                                                                                                                                                          ---------------------------------
Operating income                                                                                                                                                                                                                                                65,269
Other expense                                                                                                                                                                                                                                                   40,666  
                                                                                                                                                                                                                                                          ---------------------------------
Income before income taxes                                                                                                                                                                                                                                      24,603
Provision for income taxes                                                                                                                                                                                                                                      10,667  
                                                                                                                                                                                                                                                          ---------------------------------
Net income                                                                                                                                                                                                                                                   $  13,936  
                                                                                                                                                                                                                                                          ==== ======= ====================
                                                                                                                                                                                                                                                                        
                                        
                                                                                                                                                                         Year Ended March 31, 2016
                                                                               -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(In thousands)                                                                           North American                        International                       Household Cleaning                       Consolidated
                                                                                         OTC Healthcare                                          OTC Healthcare
------------------------------------                                           -------------------------------                        ----------------------------------                        ----------------------------------                        -------------------------------
Gross segment revenues                                                            $ 660,518                                                 $  57,670                                                 $  87,561                                              $ 805,749
Elimination of intersegment revenues                                                 (2,661 )                                          --                         --                              (2,661 )
                                                                               ---------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Third-party segment revenues                                                        657,857                                                    57,670                                                    87,561                                                803,088
Other revenues                                                                           14                                     43                                  3,102                               3,159  
                                                                               ---------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Total segment revenues                                                              657,871                                                    57,713                                                    90,663                                                806,247
Cost of sales                                                                       250,018                                 21,676                                 67,342                             339,036  
                                                                               ---------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Gross profit                                                                        407,853                                                    36,037                                                    23,321                                                467,211
Advertising and promotion                                                            97,393                                 11,114                                  2,295                             110,802  
                                                                               ---------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Contribution margin                                                               $ 310,460                              $  24,923                              $  21,026                           $ 356,409
                                                                               ==== ======= ====================                      ======= ======= ====================                      ======= ======= ====================
Other operating expenses                                                                                                                                                                                                                                        96,094  
                                                                                                                                                                                                                                                          ---------------------------------
Operating income                                                                                                                                                                                                                                               260,315
Other expense                                                                                                                                                                                                                                                  103,130  
                                                                                                                                                                                                                                                          ---------------------------------
Income before income taxes                                                                                                                                                                                                                                     157,185
Provision for income taxes                                                                                                                                                                                                                                      57,278  
                                                                                                                                                                                                                                                          ---------------------------------
Net income                                                                                                                                                                                                                                                   $  99,907  
                                                                                                                                                                                                                                                          ==== ======= ====================
                                                                                                                                                                                                                                                                        

About Non-GAAP Financial Measures

We have pursued various strategic initiatives and completed a number of acquisitions in recent years that have resulted in revenues that would not have otherwise been recognized. The frequency and the amount of such revenues vary significantly based on the size, timing and complexity of the transaction. 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 Adjusted Gross Margin, Non-GAAP Adjusted Gross Margin Percentage, Non-GAAP Adjusted Advertising and Promotion Expense, Non-GAAP Adjusted Advertising and Promotion Expense Percentage Non-GAAP Adjusted General and Administrative Expense, Non-GAAP Adjusted General and Administrative Expense Percentage, Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted EBITDA Margin, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Free Cash Flow, and Non-GAAP Adjusted Free Cash Flow. 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 products acquired or divested in the periods presented.

-- Non-GAAP Adjusted Gross Margin: GAAP Gross Profit minus inventory set-up charges and certain integration, transition and other acquisition related costs.

-- Non-GAAP Adjusted Gross Margin Percentage: Calculated as Non-GAAP Adjusted Gross Margin divided by GAAP Total Revenues.

-- Non-GAAP Adjusted Advertising and Promotion Expense: GAAP Advertising and Promotion expenses minus certain integration, transition and other acquisition related costs.

-- Non-GAAP Adjusted Advertising and Promotion Expense Percentage: Calculated as Non-GAAP Adjusted Advertising and Promotion expense divided by GAAP Total Revenues.

-- Non-GAAP Adjusted General and Administrative Expense: GAAP General and Administrative expenses minus certain other legal and professional fees, integration, transition and other acquisition related costs, divestiture costs, and costs associated with our CEO transition.

-- 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 less interest expense (income), 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 set-up charges, certain other legal and professional fees, integration, transition and other acquisition related costs, divestiture costs, costs associated with our CEO transition, loss on extinguishment of debt, and gain/loss on divestitures.

-- Non-GAAP Adjusted EBITDA Margin: Calculated as Non-GAAP Adjusted EBITDA divided by GAAP Total Revenues.

-- Non-GAAP Adjusted Net Income: GAAP Net Income before certain other legal and professional fees, integration, transition and other acquisition related costs, divestiture costs, costs associated with our CEO transition, accelerated amortization of debt origination costs due to sale of assets, additional interest expense on debt refinancing, loss on extinguishment of debt, gain/loss on divestitures, applicable tax impacts associated with these items, income tax related to adjustments and other non-deductible items.

-- 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 integration, transition, and other costs associated with acquisitions and divestitures, premium payment on extinguishment of Senior Notes, additional interest expense on debt refinancing, pension obligation funding and additional income tax payments associated with divestitures.

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 growth percentages:

                                                                                                                                                   
                                                                                                                        Three Months Ended March 31,                                                                                                                      Year Ended
                                                                                                                                                                                                                                                                           March 31,
                                                                                       ----------------------------------------------------------------------------------------                                                 ----------------------------------------------------------------------------------------
                                                                                                       2017                                   2016                                                                           2017                                   2016
                                                                                       -------------------------------------                     -------------------------------------                                          -------------------------------------                     -------------------------------------
(In thousands)
GAAP Total Revenues                                                                          $ 240,670                              $ 207,855                                                   $ 882,060                              $ 806,247  
                                                                                       ------- ------- --------------------                      ------- ------- --------------------                                           ------- ------- --------------------                      ------- ------- --------------------
Revenue Growth                                                                                    15.8 %                                                                                                                                    9.4 %
                                                                                       ====================================                                                                                                     ====================================
Adjustments:
--------------------------------------------
Revenues associated with acquisitions (1)                                                      (43,125 )                                          --                                                                        (94,293 )                                          --
Revenues associated with divested brands (2)                                            --                                (12,460 )                                                               --                                (26,002 )
                                                                                       ------------------------------------                      ------------------------------------                                           ------------------------------------                      ------------------------------------
Total adjustments                                                                              (43,125 )                                                 (12,460 )                                                                      (94,293 )                                                 (26,002 )
                                                                                       ------------------------------------                      ------------------------------------                                           ------------------------------------                      ------------------------------------
Non-GAAP Organic Revenues                                                                    $ 197,545                              $ 195,395                                                   $ 787,767                              $ 780,245  
                                                                                       ======= ======= ====================                      ======= ======= ====================                                           ======= ======= ====================                      ======= ======= ====================
Organic Revenue Growth                                                                             1.1 %                                                                                                                                    1.0 %
                                                                                       ====================================                                                                                                     ====================================
                                                                                                                                                                                                                                                                                           

(1) Revenues of our acquisitions, Fleet and DenTek, are excluded for purposes of calculating Non-GAAP organic revenues. These revenue adjustments relate to our North American and International OTC Healthcare segments. (2) Revenues of our divested brands have been excluded from the current year and the prior year for purposes of calculating Non-GAAP organic revenues. These revenue adjustments relate to our North American OTC Healthcare segment and our Household Cleaning segment.

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

                                                                                                                                                                        
                                                                                                                                               Three Months Ended March 31,                                                                                                                  Year Ended
                                                                                                                                                                                                                                                                                              March 31,
                                                                                                               -------------------------------------------------------------------------------------                                                 -----------------------------------------------------------------------------------
                                                                                                                              2017                                 2016                                                                         2017                                2016
                                                                                                               ----------------------------------                     -------------------------------------                                          --------------------------------                     -------------------------------------
(In thousands)
--------------------------------------------------------------------
GAAP Total Revenues                                                                                               $ 240,670                              $ 207,855                                              $ 882,060                              $ 806,247  
                                                                                                               ==== ======= ====================                      ======= ======= ====================                                           == ======= ====================                      ======= ======= ====================
                                                                                                                                                                                                                                                                                                           
GAAP Gross Profit                                                                                                 $ 130,183                              $ 118,251                                              $ 500,286                              $ 467,211  
                                                                                                               ---- ------- --------------------                      ------- ------- --------------------                                           -- ------- --------------------                      ------- ------- --------------------
Adjustments:
--------------------------------------------------------------------
Inventory step-up charges and other costs associated with                                                             1,664                                                     1,387                                                                     1,664                                                     1,387
acquisitions (1)
Integration, transition and other costs associated with acquisitions                                                  1,367                         --                                                  1,367                         --  
                                                                                                               ---------------------------------                      ------------------------------------                                           -------------------------------                      ------------------------------------
Total adjustments                                                                                                     3,031                                  1,387                                                  3,031                                  1,387  
                                                                                                               ---------------------------------                      ------------------------------------                                           -------------------------------                      ------------------------------------
Non-GAAP Adjusted Gross Margin                                                                                    $ 133,214                              $ 119,638                                              $ 503,317                              $ 468,598  
                                                                                                               ==== ======= ====================                      ======= ======= ====================                                           == ======= ====================                      ======= ======= ====================
Non-GAAP Adjusted Gross Margin %                                                                                       55.4 %                                                    57.6 %                                                                    57.1 %                                                    58.1 %
                                                                                                               =================================                      ====================================                                           ===============================                      ====================================
                                                                                                                                                                                                                                                                                                                           

(1) Inventory step-up charges relate to our North American and International OTC Healthcare segments.

Reconciliation of GAAP Advertising and Promotion Expense and related GAAP Advertising and Promotion Expense percentage to Non-GAAP Adjusted Advertising and Promotion Expense and related Non-GAAP Adjusted Advertising and Promotion Expense percentage:

                                                                                                                                                                           
                                                                                                                                                  Three Months Ended March 31,                                                                                                             Year Ended March 31,
                                                                                                                   ------------------------------------------------------------------------------------                                                 -----------------------------------------------------------------------------------
                                                                                                                                 2017                                 2016                                                                         2017                                2016
                                                                                                                   ---------------------------------                     -------------------------------------                                          --------------------------------                     -------------------------------------
(In thousands)
GAAP Advertising and Promotion Expense                                                                                $ 41,450                              $  26,552                                              $ 128,359                              $ 110,802  
                                                                                                                   ==== ====== ====================                      ======= ======= ====================                                           == ======= ====================                      ======= ======= ====================
GAAP Advertising and Promotion Expense as a Percentage of GAAP Total                                                      17.2 %                                                    12.8 %                                                                    14.6 %                                                    13.7 %
Revenue
                                                                                                                   ==========  ====================                      ==============  ====================                                           =========  ====================                      ==============  ====================
Adjustments:
Integration, transition and other costs associated with acquisitions (1)                                                 2,242                         --                                                  2,242                         --  
                                                                                                                   --------------------------------                      ------------------------------------                                           -------------------------------                      ------------------------------------
Total adjustments                                                                                                        2,242                         --                                                  2,242                         --  
                                                                                                                   --------------------------------                      ------------------------------------                                           -------------------------------                      ------------------------------------
Non-GAAP Adjusted Advertising and Promotion Expense                                                                   $ 39,208                              $  26,552                                              $ 126,117                              $ 110,802  
                                                                                                                   ==== ====== ====================                      ======= ======= ====================                                           == ======= ====================                      ======= ======= ====================
Non-GAAP Adjusted Advertising and Promotion Expense as a Percentage                                                       16.3 %                                                    12.8 %                                                                    14.3 %                                                    13.7 %
of GAAP Total Revenues
                                                                                                                   ==========  ====================                      ==============  ====================                                           =========  ====================                      ==============  ====================
                                                                                                                                                                                                                                                                                                                              

(1) Acquisition related items represent costs related to integrating the advertising agencies of the recently acquired businesses.

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,
                                                                                                               ----------------------------------------------------------------------------------------                                                 ----------------------------------------------------------------------------------
                                                                                                                               2017                                   2016                                                                           2017                                2016
                                                                                                               -------------------------------------                     -------------------------------------                                          -------------------------------------                     -------------------------------
(In thousands)
GAAP General and Administrative Expense                                                                              $  28,760                              $  20,232                                                   $  89,143                         $ 72,418  
                                                                                                               ======= ======= ====================                      ======= ======= ====================                                           ======= ======= ====================                      == ====== ====================
GAAP General and Administrative Expense as a Percentage of GAAP                                                           11.9 %                                                     9.7 %                                                                         10.1 %                                               9.0 %
Total Revenue
                                                                                                               ==============  ====================                      ==============  ====================                                           ==============  ====================                      ========  ====================
Adjustments:
Costs associated with CEO transition (1)                                                                        --                                            --                                                                 --                                               1,406
Legal and professional fees associated with acquisitions and                                                             3,431                                                     1,096                                                                          6,560                                               2,112
divestitures (2)
Integration, transition and other costs associated with acquisitions                                                     5,756                                    289                                                       9,455                              289  
and divestitures (2)
                                                                                                               --------------  --------------------                      --------------  --------------------                                           --------------  --------------------                      --------  --------------------
Total adjustments                                                                                                        9,187                                  1,385                                                      16,015                            3,807  
                                                                                                               ------------------------------------                      ------------------------------------                                           ------------------------------------                      ------------------------------
Non-GAAP Adjusted General and Administrative Expense                                                                 $  19,573                              $  18,847                                                   $  73,128                         $ 68,611  
                                                                                                               ======= ======= ====================                      ======= ======= ====================                                           ======= ======= ====================                      == ====== ====================
Non-GAAP Adjusted General and Administrative Expense as a Percentage                                                       8.1 %                                                     9.1 %                                                                          8.3 %                                               8.5 %
of GAAP Total Revenues
                                                                                                               ==============  ====================                      ==============  ====================                                           ==============  ====================                      ========  ====================
                                                                                                                                                                                                                                                                                                                             

(1) Costs relate to search fees associated with CEO and CFO transition and certain accelerated stock compensation costs related to our former CEO. (2) Acquisition related items represent costs related to integrating recently acquired businesses, including (but not limited to) costs to exit or convert contractual obligations, severance, information system conversion and consulting costs, and certain costs related to the consummation of the acquisition process such as insurance costs, legal and other acquisition 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 March 31,                                                                                                                 Year Ended March 31,
                                                                                                               ----------------------------------------------------------------------------------------                                                 ----------------------------------------------------------------------------------------
                                                                                                                               2017                                   2016                                                                           2017                                   2016
                                                                                                               -------------------------------------                     -------------------------------------                                          -------------------------------------                     -------------------------------------
(In thousands)
--------------------------------------------------------------------
GAAP Net Income                                                                                                      $  11,090                                                 $  13,936                                                                      $  69,395                                                 $  99,907
Interest expense, net                                                                                                   32,832                                                    23,147                                                                         93,343                                                    85,160
Provision for income taxes                                                                                               7,712                                                    10,667                                                                         41,455                                                    57,278
Depreciation and amortization                                                                                            7,092                                  6,198                                                      25,792                                 23,676  
                                                                                                               ------------------------------------                      ------------------------------------                                           ------------------------------------                      ------------------------------------
Non-GAAP EBITDA                                                                                                         58,726                                 53,948                                                     229,985                                266,021  
                                                                                                               ====================================                      ====================================                                           ====================================                      ====================================
Non-GAAP EBITDA Margin                                                                                                    24.4 %                                                    26.0 %                                                                         26.1 %                                                    33.0 %
--------------------------------------------------------------------                                           ==============  ====================                      ==============  ====================                                           ==============  ====================                      ==============  ====================
Adjustments:
--------------------------------------------------------------------
Inventory step-up charges and other costs associated with                                                                1,664                                                     1,387                                                                          1,664                                                     1,387
acquisitions(1)
Integration, transition and other costs associated with acquisitions                                                     1,367                                            --                                                                          1,367                                            --
and divestitures in Cost of Goods Sold (3)
Integration, transition and other costs associated with acquisitions                                                     2,242                                            --                                                                          2,242                                            --
and divestitures in Advertising and Promotion Expense(3)
Integration, transition and other costs associated with acquisitions                                                     5,756                                                       289                                                                          9,455                                                       289
and divestitures in General and Administrative Expense(3)
Costs associated with CEO transition (2)                                                                        --                                            --                                                                 --                                                     1,406
Legal and professional fees associated with acquisitions and                                                             3,431                                                     1,096                                                                          6,560                                                     2,112
divestitures (3)
Loss on extinguishment of debt                                                                                           1,420                                                    17,519                                                                          1,420                                                    17,970
(Gain) loss on divestitures                                                                                                268                         --                                                      51,820                         --  
                                                                                                               ------------------------------------                      ------------------------------------                                           ------------------------------------                      ------------------------------------
Total adjustments                                                                                                       16,148                                 20,291                                                      74,528                                 23,164  
                                                                                                               ------------------------------------                      ------------------------------------                                           ------------------------------------                      ------------------------------------
Non-GAAP Adjusted EBITDA                                                                                             $  74,874                              $  74,239                                                   $ 304,513                              $ 289,185  
                                                                                                               ======= ======= ====================                      ======= ======= ====================                                           ======= ======= ====================                      ======= ======= ====================
Non-GAAP Adjusted EBITDA Margin                                                                                           31.1 %                                                    35.7 %                                                                         34.5 %                                                    35.9 %
                                                                                                               ====================================                      ====================================                                           ====================================                      ====================================
                                                                                                                                                                                                                                                                                                                                   

(1) Inventory step-up charges relate to our North American and International OTC Healthcare segments. (2) Costs relate to search fees associated with CEO and CFO transition and certain accelerated stock compensation costs related to our former CEO. (3) Acquisition related items represent costs related to integrating recently acquired businesses, including (but not limited to) costs to exit or convert contractual obligations, severance, information system conversion and consulting costs, and certain costs related to the consummation of the acquisition process such as insurance costs, legal and other acquisition related professional fees.

Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income and related Adjusted Earnings Per Share:

                                                                                                                                                                                                                                                                                             
                                                                                                                                                                                                          Three Months Ended March 31,                                                                                                                                                                                                                Year Ended March 31,
                                                                                                               -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                     -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                               2017                             2017 Adjusted EPS                            2016                             2016 Adjusted EPS                                               2017                             2017 Adjusted EPS                            2016                             2016 Adjusted EPS
                                                                                                               --------------------------------------------------------- -------------------------------------                     --------------------------------------------------------- -------------------------------------                     --------------------------------------------------------- -------------------------------------                     --------------------------------------------------------- -------------------------------------
(In thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                          
--------------------------------------------------------------------
GAAP Net Income                                                                                                      $  11,090           $    0.21                              $  13,936           $    0.26                              $  69,395           $    1.30                              $  99,907           $    1.88  
                                                                                                               ------- ------- -------------------- -------------------- ------- ------- --------------------                      ------- ------- -------------------- -------------------- ------- ------- --------------------                      ------- ------- -------------------- -------------------- ------- ------- --------------------                      ------- ------- -------------------- -------------------- ------- ------- --------------------
Adjustments:
--------------------------------------------------------------------
Inventory step-up charges and other costs associated with                                                                1,664                                                      0.03                                                     1,387                                                      0.03                                                     1,664                                                      0.03                                                     1,387                                                      0.03
acquisitions (1)
Integration, transition and other costs associated with acquisitions                                                     1,367                                                      0.03                                            --                                            --                                                     1,367                                                      0.03                                            --                                            --
and divestitures in Cost of Goods Sold (2)
Integration, transition and other costs associated with acquisitions                                                     2,242                                                      0.04                                            --                                            --                                                     2,242                                                      0.04                                            --                                            --
and divestitures in Advertising and Promotion Expense(2)
Integration, transition and other costs associated with acquisitions                                                     5,756                                                      0.11                                                       289                                                      0.01                                                     9,455                                                      0.18                                                       289                                                      0.01
and divestitures in General and Administrative Expense (2)
Costs associated with CEO transition (3)                                                                        --                                            --                                            --                                            --                                            --                                            --                                                     1,406                                                      0.02
Legal and professional fees associated with acquisitions and                                                             3,431                                                      0.06                                                     1,096                                                      0.02                                                     6,560                                                      0.12                                                     2,112                                                      0.04
divestitures (2)
Accelerated amortization of debt origination costs (4)                                                                     575                                                      0.01                                            --                                            --                                                     1,706                                                      0.03                                            --                                            --
Additional interest expense as a result of Term Loan debt                                                                9,184                                                      0.17                                            --                                            --                                                     9,184                                                      0.17                                            --                                            --
refinancing (5)
Loss on extinguishment of debt                                                                                           1,420                                                      0.03                                                    17,519                                                      0.33                                                     1,420                                                      0.03                                                    17,970                                                      0.34
(Gain) loss on divestitures                                                                                                268                                                      0.01                                            --                                            --                                                    51,820                                                      0.97                                            --                                            --
Tax impact of adjustments (6)                                                                                           (9,438 )                                                   (0.18 )                                                  (6,294 )                                                   (0.13 )                                                 (28,024 )                                                   (0.53 )                                                  (7,608 )                                                   (0.15 )
Income tax related to adjustments (7)                                                                                    1,278                0.02                         --      --                                   (199 )                       --                         --      --  
                                                                                                               ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- ------------------------------------
Total adjustments                                                                                                       17,747                0.33                                 13,997                0.26                                 57,195                1.07                                 15,556                0.29  
                                                                                                               ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- ------------------------------------
Non-GAAP Adjusted Net Income and Adjusted EPS                                                                        $  28,837           $    0.54                              $  27,933           $    0.52                              $ 126,590           $    2.37                              $ 115,463           $    2.17  
                                                                                                               ======= ======= ==================== ==================== ======= ======= ====================                      ======= ======= ==================== ==================== ======= ======= ====================                      ======= ======= ==================== ==================== ======= ======= ====================                      ======= ======= ==================== ==================== ======= ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

(1) Inventory set-up charges relate to our North American and International OTC Healthcare segments. (2) Acquisition related items represent costs related to integrating recently acquired businesses, including (but not limited to) costs to exit or convert contractual obligations, severance, information system conversion and consulting costs, and certain costs related to the consummation of the acquisition process such as legal and other acquisition related professional fees. (3) Costs relate to search fees associated with CEO and CFO transition and certain accelerated stock compensation costs related to our former CEO. (4) Higher amortization of debt origination costs resulting from debt payments on our term loan from the proceeds from divestitures. (5) Primarily bank commitment fees related to the recently acquired Fleet business. (6) 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. (7) Income tax adjustments relate primarily to the expiration of certain statute of limitations associated with certain tax reserves and a normalized tax rate of 35.5%.

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

                                                                                                                                                                       
                                                                                                                                            Three Months Ended March 31,                                                                                                                 Year Ended March 31,
                                                                                                           ----------------------------------------------------------------------------------------                                                 ----------------------------------------------------------------------------------------
                                                                                                                           2017                                   2016                                                                           2017                                   2016
                                                                                                           -------------------------------------                     -------------------------------------                                          -------------------------------------                     -------------------------------------
(In thousands)
----------------------------------------------------------------
GAAP Net Income                                                                                                  $  11,090                              $  13,936                                                   $  69,395                              $  99,907  
                                                                                                           ------- ------- --------------------                      ------- ------- --------------------                                           ------- ------- --------------------                      ------- ------- --------------------
Adjustments:
Adjustments to reconcile net income to net cash provided by                                                         21,347                                                    34,206                                                                         91,713                                                    96,221
operating activities as shown in the Statement of Cash Flows
Changes in operating assets and liabilities, net of effects from                                                   (25,013 )                                                 (10,243 )                                                                      (13,336 )                                                 (21,778 )
acquisitions as shown in the Statement of Cash Flows
                                                                                                           --------------  --------------------                      --------------  --------------------                                           --------------  --------------------                      --------------  --------------------
Total adjustments                                                                                                   (3,666 )                                                  23,963                                                      78,377                                 74,443  
                                                                                                           ------------------------------------                      ------------------------------------                                           ------------------------------------                      ------------------------------------
GAAP Net cash provided by operating activities                                                                       7,424                                                    37,899                                                                        147,772                                                   174,350
Purchases of property and equipment                                                                                 (1,042 )                                                  (1,028 )                                                                       (2,977 )                                                  (3,568 )
                                                                                                           ------------------------------------                      ------------------------------------                                           ------------------------------------                      ------------------------------------
Non-GAAP Free Cash Flow                                                                                              6,382                                                    36,871                                                                        144,795                                                   170,782
Premium payment on extinguishment of 2012 Senior Notes                                                      --                                                    10,158                                                                 --                                                    10,158
Integration, transition and other payments associated with                                                           8,304                                                     1,665                                                                         10,448                                                     2,461
acquisitions and divestitures (1)
Additional interest on Term Loan refinance (2)                                                                       9,184                                            --                                                                          9,184                                            --
Pension contribution                                                                                                 6,000                                            --                                                                          6,000                                            --
Additional income tax payments associated with divestitures (3)                                                     16,956                         --                                                      25,545                         --  
                                                                                                           ------------------------------------                      ------------------------------------                                           ------------------------------------                      ------------------------------------
Non-GAAP Adjusted Free Cash Flow                                                                                 $  46,826                              $  48,694                                                   $ 195,972                              $ 183,401  
                                                                                                           ======= ======= ====================                      ======= ======= ====================                                           ======= ======= ====================                      ======= ======= ====================
                                                                                                                                                                                                                                                                                                                               

(1) Acquisition related items represent payments related to integrating recently acquired businesses, including (but not limited to) costs to exit or convert contractual obligations, severance, information system conversion and consulting costs, and certain costs related to the consummation of the acquisition process such as legal and other acquisition related professional fees. (2) Primarily bank commitment fees related to the recently acquired Fleet business. (3) Additional income tax payments resulting from divestitures.

Outlook for Fiscal Year 2018:

Reconciliation of Projected GAAP EPS to Projected Non-GAAP Adjusted EPS:

                                               
                                                                                                                   2018 Projected EPS
                                                                                      ----------------------------------------------------------------------------
                                                                                                    Low                         High
                                                                                      -------------------------------------------------- -------------------------
Projected FY’18 GAAP EPS                                                                $ 2.50       $                 2.60
                                                                                      --- ---- -------------------- -------------------- --- --------------------
Adjustments:                                                                                                         
Costs associated with Fleet integration (1)                                               0.08                         0.08
                                                                                      ----------------------------- -------------------- -------------------------
Total adjustments                                                                         0.08                         0.08
                                                                                      ----------------------------- -------------------- -------------------------
Projected Non-GAAP Adjusted EPS                                                         $ 2.58       $                 2.68
                                                                                      === ==== ==================== ==================== === ====================
                                                                                                                                              

(1) Acquisition related items represent costs related to integrating recently acquired businesses, including (but not limited to) warehouse consolidation, costs to exit or convert contractual obligations, severance, information system conversion and consulting costs, and certain costs related to the consummation of the acquisition process such as legal and other acquisition related professional fees.

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

                                                                  
                                                                                                               2018 Projected Free Cash Flow
                                                                                                         -----------------------------------------
(In millions)
--------------------------------------------------------------
Projected FY’18 GAAP Net cash provided by operating activities                                                   $       210
Additions to property and equipment for cash                                                                             (10 )
                                                                                                         ----------------------------------------
Projected Non-GAAP Free Cash Flow                                                                                        200
Payments associated with acquisitions (1)                                                                                  8
Tax effect of payments associated with acquisitions                                                                       (3 )
                                                                                                         ----------------------------------------
Projected Non-GAAP Adjusted Free Cash Flow                                                                       $       205  
                                                                                                         ========= ========= ====================
                                                                                                                              

(1) Acquisition related items represent costs related to integrating recently acquired businesses, including (but not limited to) warehouse consolidation, costs to exit or convert contractual obligations, severance, information system conversion and consulting costs, and certain costs related to the consummation of the acquisition process such as legal and other acquisition related professional fees.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170511005365r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170511005365/en/

SOURCE: Prestige Brands Holdings, Inc.

Prestige Brands Holdings, Inc. 
Phil Terpolilli, 914-524-6819 
pterpolilli@prestigebrands.com


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