Net sales were
On a non-GAAP basis, adjusted net income(1) for the first
fiscal quarter of 2014 was
On a GAAP basis, net income for the first quarter of fiscal 2014 was
“We’re off to a strong start in fiscal 2014, with solid momentum and
operational growth of 19.1% in our
Gross profit was
Selling, general and administrative (SG&A) expenses for the first
quarter of fiscal 2014 were essentially flat at
R&D expenses for the first quarter of fiscal 2014 were
Separation costs for the first quarter of fiscal 2014 were
Restructuring charges were
The first-quarter fiscal 2014 effective tax rate of 26.3%, or 27.2% on a non-GAAP basis, is calculated on a stand-alone company basis. The 46.3% tax rate for the prior-year period was calculated reflecting the business as historically managed as part of the former parent.
BUSINESS SEGMENT RESULTS
Specialty Pharmaceuticals Segment
Net sales in the
Segment operating income in the quarter was
Global Medical Imaging Segment
Net sales in the company's Global Medical Imaging segment were
For the fiscal first quarter, operating income in the segment was
FISCAL 2014 OUTLOOK
Guidance:
Updated Guidance Category | October 2013 | February 2014 | |||||
Adjusted diluted earnings per share | $2.45 to $2.65 | $2.65 to $2.95 | |||||
Total Mallinckrodt net sales(2) | $2.15 billion to $2.25 billion | $2.2 billion to $2.3 billion | |||||
Specialty Pharmaceuticals segment net sales | $1.22 billion to $1.27 billion | $1.3 billion to $1.35 billion | |||||
Global Medical Imaging segment net sales | $885 million to $930 million | $850 million to $900 million | |||||
Methylphenidate ER net sales | At least $120 million | At least $150 million | |||||
Non-GAAP effective tax rate | 26% to 29% | 25% to 28% | |||||
Capital expenditures | $140 million to $160 million | No change | |||||
(2) Includes sales to former parent |
|||||||
CONFERENCE CALL AND WEBCAST
At
By telephone: For both "listen-only" participants and those participants who wish to take part in the question-and-answer portion of the call, the telephone dial-in number in the U.S. is 866-318-8614. For participants outside the U.S., the dial-in number is 617-399-5133. The access code for all callers is 81312057.
Through an audio replay: A replay of the call will be available beginning at 12:30pm/U.S. Eastern Standard Time on February 6, 2014, and ending at 11:59pm/U.S. Eastern Standard Time on February 13, 2014. The dial-in number for U.S. participants is 888-286-8010. For participants outside the U.S., the replay dial-in number is 617-801-6888. The replay access code for all callers is 83253336.
ABOUT
(1)NON-GAAP FINANCIAL MEASURES
This press release contains financial measures, including adjusted net
income, adjusted diluted earnings per share and operational growth,
which are considered "non-GAAP" financial measures under applicable
Adjusted net income represents net income, prepared in accordance with accounting principles generally accepted in the U.S. (GAAP), excluding the after-tax effects related to separation costs; restructuring and related charges, net; amortization; discontinued operations; and other items identified by the company. Adjusted diluted earnings per share represents adjusted net income divided by the number of diluted shares.
Operational growth measures the change in net sales between current- and prior-year periods using a constant currency, the exchange rate in effect during the applicable prior-year period. This measure is one of the performance metrics that determines management incentive compensation.
The company has provided these non-GAAP financial measures because they
are used by management, along with financial measures in accordance with
GAAP, to evaluate the company's operating performance. In addition, the
company believes that they will be used by certain investors to measure
These non-GAAP measures should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP. The company's definition of these non-GAAP measures may differ from similarly titled measures used by others.
Because non-GAAP financial measures exclude the effect of items that will increase or decrease the company's reported results of operations, management strongly encourages investors to review the company's consolidated financial statements and publicly filed reports in their entirety. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the tables accompanying this release.
FORWARD-LOOKING STATEMENTS
Any statements contained in this communication that do not describe
historical facts may constitute forward-looking statements as that term
is defined in the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements include, but are not limited to, statements
about future financial condition and operating results, economic,
business, competitive and/or regulatory factors affecting our business.
Any forward-looking statements contained herein are based on our
management's current beliefs and expectations, but are subject to a
number of risks, uncertainties and changes in circumstances, which may
cause actual results or company actions to differ materially from what
is expressed or implied by these statements. The factors that could
cause actual future results to differ materially from current
expectations include, but are not limited to, our ability to receive
procurement and production quotas granted by the
MALLINCKRODT PLC | ||||||||||||||||||
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF INCOME | ||||||||||||||||||
(unaudited, in millions, except per share data) | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||
December 27, 2013 |
Percent of
Net sales |
December 28, 2012 |
Percent of
Net sales |
|||||||||||||||
Net sales | $ | 540.2 | 100.0 | % | $ | 504.0 | 100.0 | % | ||||||||||
Cost of sales | 284.6 | 52.7 | 270.5 | 53.7 | ||||||||||||||
Gross profit | 255.6 | 47.3 | 233.5 | 46.3 | ||||||||||||||
Selling, general and administrative expenses | 146.2 | 27.1 | 146.8 | 29.1 | ||||||||||||||
Research and development expenses | 39.0 | 7.2 | 38.4 | 7.6 | ||||||||||||||
Separation costs | 2.2 | 0.4 | 12.0 | 2.4 | ||||||||||||||
Restructuring charges, net | 8.0 | 1.5 | 0.2 | — | ||||||||||||||
Gains on divestiture and license | (12.9 | ) | (2.4 | ) | (0.7 | ) | (0.1 | ) | ||||||||||
Operating income | 73.1 | 13.5 | 36.8 | 7.3 | ||||||||||||||
Interest expense | (9.8 | ) | (1.8 | ) | (0.1 | ) | — | |||||||||||
Interest income | 0.3 | 0.1 | — | — | ||||||||||||||
Other income, net | (0.6 | ) | (0.1 | ) | 0.2 | — | ||||||||||||
Income from continuing operations before income taxes | 63.0 | 11.7 | 36.9 | 7.3 | ||||||||||||||
Provision for income taxes | 16.6 | 3.1 | 17.1 | 3.4 | ||||||||||||||
Income from continuing operations | 46.4 | 8.6 | 19.8 | 3.9 | ||||||||||||||
Loss from discontinued operations, net of income taxes | (0.8 | ) | (0.1 | ) | (0.6 | ) | (0.1 | ) | ||||||||||
Net income | $ | 45.6 | 8.4 | $ | 19.2 | 3.8 | ||||||||||||
Basic earnings per share: | ||||||||||||||||||
Income from continuing operations | $ | 0.80 | $ | 0.34 | ||||||||||||||
Gain (loss) from discontinued operations | (0.01 | ) | (0.01 | ) | ||||||||||||||
Net income | 0.79 | 0.33 | ||||||||||||||||
Diluted earnings per share: | ||||||||||||||||||
Income from continuing operations | $ | 0.79 | $ | 0.34 | ||||||||||||||
Gain (loss) from discontinued operations | (0.01 | ) | (0.01 | ) | ||||||||||||||
Net income | 0.78 | 0.33 | ||||||||||||||||
Weighted-average number of shares outstanding(1): | ||||||||||||||||||
Basic | 57.8 | 57.7 | ||||||||||||||||
Diluted | 58.4 | 57.7 | ||||||||||||||||
(1) For periods prior to the separation from Covidien, weighted-average number of shares reflects the number of ordinary shares of Mallinckrodt outstanding immediately following the separation. |
MALLINCKRODT PLC | |||||||||||||||||||
NON-GAAP MEASURES | |||||||||||||||||||
(unaudited, in millions except per share data, net of tax) | |||||||||||||||||||
Three Months Ended | |||||||||||||||||||
December 27, 2013 | December 28, 2012 | ||||||||||||||||||
Net income |
Diluted
net income per share |
Net income |
Diluted
net income per share (2) |
||||||||||||||||
GAAP | $ | 45.6 | $ | 0.78 | $ | 19.2 | $ | 0.33 | |||||||||||
Adjustments (net of tax): | |||||||||||||||||||
Separation costs | 1.5 | 0.03 | 11.7 | 0.20 | |||||||||||||||
Restructuring and related charges, net (1) | 5.2 | 0.09 | 0.6 | 0.01 | |||||||||||||||
Amortization expense | 5.4 | 0.09 | 5.5 | 0.10 | |||||||||||||||
Loss from discontinued operations | 0.8 | 0.01 | 0.6 | 0.01 | |||||||||||||||
Gain on intellectual property license | (7.3 | ) | (0.13 | ) | — | — | |||||||||||||
As adjusted | $ | 51.2 | $ | 0.88 | $ | 37.6 | $ | 0.65 | |||||||||||
(1) Includes pre-tax accelerated depreciation of $0.1 million and $0.8 million for the three months ended December 27, 2013 and December 28, 2012, respectively. |
|||||||||||||||||||
(2) For periods prior to the separation from Covidien, weighted-average number of shares reflects the number of ordinary shares of Mallinckrodt outstanding immediately following the separation. |
|||||||||||||||||||
MALLINCKRODT PLC | ||||||||||||||||||||||
SEGMENT NET SALES AND OPERATIONAL GROWTH | ||||||||||||||||||||||
(unaudited, in millions) | ||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||
December 27, 2013 |
December 28, 2012 |
Percent
change |
Currency impact | Operational growth | ||||||||||||||||||
Specialty Pharmaceuticals | ||||||||||||||||||||||
Specialty Generics and API | $ | 249.9 | $ | 213.6 | 17.0 | % | (0.3 | )% | 17.3 | % | ||||||||||||
Brands | 59.6 | 46.6 | 27.9 | — | 27.9 | |||||||||||||||||
309.5 | 260.2 | 18.9 | (0.2 | ) | 19.1 | |||||||||||||||||
Global Medical Imaging | ||||||||||||||||||||||
Contrast Media and Delivery Systems | 111.6 | 121.4 | (8.1 | ) | (2.5 | ) | (5.6 | ) | ||||||||||||||
Nuclear Imaging | 107.0 | 108.3 | (1.2 | ) | 0.3 | (1.5 | ) | |||||||||||||||
218.6 | 229.7 | (4.8 | ) | (1.2 | ) | (3.6 | ) | |||||||||||||||
Other(1) | 12.1 | 14.1 | (14.2 | ) | (5.0 | ) | (9.2 | ) | ||||||||||||||
Net Sales | $ | 540.2 | $ | 504.0 | 7.2 | % | (0.8 | )% | 8.0 | % | ||||||||||||
(1) Represents net sales to our former parent. |
MALLINCKRODT PLC | ||||||||||||||
SELECT PRODUCT LINE NET SALES | ||||||||||||||
(unaudited, in millions) | ||||||||||||||
Three Months Ended | ||||||||||||||
December 27, 2013 |
December 28, 2012 |
Percent
change |
||||||||||||
Specialty Pharmaceuticals | ||||||||||||||
Oxycodone (API) and oxycodone-containing tablets | $ | 11.6 | $ | 37.3 | (68.9 | )% | ||||||||
Hydrocodone (API) and hydrocodone-containing tablets | 30.1 | 31.6 | (4.7 | ) | ||||||||||
Methylphenidate ER | 56.3 | 9.3 | 505.4 | |||||||||||
Other controlled substances | 120.2 | 99.5 | 20.8 | |||||||||||
Other | 31.7 | 35.9 | (11.7 | ) | ||||||||||
Specialty Generics and API | 249.9 | 213.6 | 17.0 | |||||||||||
EXALGO | 36.2 | 29.3 | 23.5 | |||||||||||
Other | 23.4 | 17.3 | 35.3 | |||||||||||
Brands | 59.6 | 46.6 | 27.9 | |||||||||||
Specialty Pharmaceuticals Total | $ | 309.5 | $ | 260.2 | 18.9 | % | ||||||||
Global Medical Imaging | ||||||||||||||
Optiray | $ | 72.1 | $ | 79.4 | (9.2 | )% | ||||||||
Other | 39.5 | 42.0 | (6.0 | ) | ||||||||||
Contrast Media and Delivery Systems | 111.6 | 121.4 | (8.1 | ) | ||||||||||
Nuclear Imaging | 107.0 | 108.3 | (1.2 | ) | ||||||||||
Global Medical Imaging Total | $ | 218.6 | $ | 229.7 | (4.8 | )% |
MALLINCKRODT PLC | ||||||||||||||||||
SEGMENT OPERATING INCOME | ||||||||||||||||||
(unaudited, in millions) | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||
December 27, 2013 |
Percent of
segment Net sales |
December 28, 2012 |
Percent of
segment Net sales |
|||||||||||||||
Specialty Pharmaceuticals | $ | 113.0 | 36.5 | % | $ | 35.0 | 13.5 | % | ||||||||||
Global Medical Imaging | 4.4 | 2.0 | % | 49.1 | 21.4 | % | ||||||||||||
Segment operating income | 117.4 | 84.1 | ||||||||||||||||
Unallocated amounts: | ||||||||||||||||||
Corporate and allocated expenses | (25.2 | ) | (25.4 | ) | ||||||||||||||
Intangible asset amortization | (8.8 | ) | (8.9 | ) | ||||||||||||||
Restructuring and related charges, net (1) | (8.1 | ) | (1.0 | ) | ||||||||||||||
Separation costs | (2.2 | ) | (12.0 | ) | ||||||||||||||
Total operating income | $ | 73.1 | $ | 36.8 | ||||||||||||||
(1) Includes accelerated depreciation of $0.1 million and $0.8 million for the three months ended December 27, 2013 and December 28, 2012, respectively. |
MALLINCKRODT PLC | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(unaudited, in millions) | |||||||||
December 27, 2013 |
September 27, 2013 |
||||||||
Assets | |||||||||
Current Assets: | |||||||||
Cash and cash equivalents | $ | 287.8 | $ | 275.5 | |||||
Accounts receivable, net | 396.8 | 400.8 | |||||||
Inventories | 428.9 | 403.1 | |||||||
Deferred income taxes | 163.5 | 171.1 | |||||||
Prepaid expenses and other current assets | 131.8 | 134.4 | |||||||
Total current assets | 1,408.8 | 1,384.9 | |||||||
Property, plant and equipment, net | 997.3 | 997.4 | |||||||
Goodwill | 532.0 | 532.0 | |||||||
Intangible assets, net | 413.3 | 422.1 | |||||||
Other assets | 218.0 | 220.2 | |||||||
Total Assets | $ | 3,569.4 | $ | 3,556.6 | |||||
Liabilities and Shareholders' Equity | |||||||||
Current Liabilities: | |||||||||
Current maturities of long-term debt | $ | 1.4 | $ | 1.5 | |||||
Accounts payable | 144.5 | 120.9 | |||||||
Accrued payroll and payroll-related costs | 32.7 | 66.5 | |||||||
Accrued branded rebates | 37.5 | 34.6 | |||||||
Accrued and other current liabilities | 337.9 | 376.7 | |||||||
Total current liabilities | 554.0 | 600.2 | |||||||
Long-term debt | 918.0 | 918.3 | |||||||
Pension and postretirement benefits | 105.9 | 108.0 | |||||||
Environmental liabilities | 38.7 | 39.5 | |||||||
Deferred income taxes | 317.3 | 310.1 | |||||||
Other income tax liabilities | 149.7 | 153.1 | |||||||
Other liabilities | 176.5 | 171.8 | |||||||
Total Liabilities | 2,260.1 | 2,301.0 | |||||||
Shareholders' Equity: | |||||||||
Preferred shares | — | — | |||||||
Ordinary shares | 11.6 | 11.5 | |||||||
Ordinary shares held in treasury at cost | (0.9 | ) | — | ||||||
Additional paid-in capital | 1,110.8 | 1,102.1 | |||||||
Retained earnings | 79.1 | 33.5 | |||||||
Accumulated other comprehensive income | 108.7 | 108.5 | |||||||
Total Shareholders' Equity | 1,309.3 | 1,255.6 | |||||||
Total Liabilities and Shareholders' Equity | $ | 3,569.4 | $ | 3,556.6 |
MALLINCKRODT PLC | ||||||||||
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS | ||||||||||
(unaudited, in millions) | ||||||||||
Three Months Ended | ||||||||||
December 27, 2013 |
December 28, 2012 |
|||||||||
Cash Flows From Operating Activities: | ||||||||||
Net income | $ | 45.6 | $ | 19.2 | ||||||
Loss from discontinued operations, net of income taxes | 0.8 | 0.6 | ||||||||
Income from continuing operations | 46.4 | 19.8 | ||||||||
Adjustments to reconcile net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 35.1 | 33.7 | ||||||||
Share-based compensation | 3.3 | 3.5 | ||||||||
Deferred income taxes | 15.0 | 1.6 | ||||||||
Other non-cash items | (3.8 | ) | (1.1 | ) | ||||||
Changes in assets and liabilities, net of the effects of acquisitions: | ||||||||||
Accounts receivable, net | 4.9 | (2.6 | ) | |||||||
Inventories | (33.2 | ) | (41.7 | ) | ||||||
Accounts payable | 21.3 | — | ||||||||
Income taxes | (8.3 | ) | 12.1 | |||||||
Accrued and other liabilities | (66.4 | ) | (83.4 | ) | ||||||
Other | 7.8 | (0.9 | ) | |||||||
Net cash provided by (used in) operating activities | 22.1 | (59.0 | ) | |||||||
Cash Flows From Investing Activities: | ||||||||||
Capital expenditures | (21.7 | ) | (42.8 | ) | ||||||
Acquisition, net of cash acquired | — | (88.1 | ) | |||||||
Restricted cash | 4.1 | 0.5 | ||||||||
Other | 5.0 | 0.2 | ||||||||
Net cash (used in) investing activities | (12.6 | ) | (130.2 | ) | ||||||
Cash Flows From Financing Activities: | ||||||||||
Repayment of capital leases | (0.3 | ) | (0.3 | ) | ||||||
Excess tax benefit from share-based compensation | 1.3 | 1.9 | ||||||||
Net transfers to parent | — | 187.6 | ||||||||
Proceeds from stock option exercises | 4.2 | — | ||||||||
Repurchase of shares | (0.9 | ) | — | |||||||
Other | (0.1 | ) | — | |||||||
Net cash provided by financing activities | 4.2 | 189.2 | ||||||||
Effect of currency rate changes on cash | (1.4 | ) | — | |||||||
Net increase in cash and cash equivalents | 12.3 | — | ||||||||
Cash and cash equivalents at beginning of period | 275.5 | — | ||||||||
Cash and cash equivalents at end of period | $ | 287.8 | $ | — |
Source:
Mallinckrodt plc
John Moten, 314-654-6650
Vice President,
Investor Relations
john.moten@mallinckrodt.com
or
Lynn
Phillips, 314-654-3263
Manager, Media Relations
lynn.phillips@mallinckrodt.com
or
Meredith
Fischer, 314-654-3318
Senior Vice President, Communications
meredith.fischer@mallinckrodt.com