News Release
Mallinckrodt plc Reports Fiscal 2014 First Quarter Financial Results And Revises Full-Year Guidance
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First quarter net sales of $540 million, up 8.0% on an
operational growth basis(1)
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First quarter adjusted diluted earnings per share of $0.88
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Guidance increased on full-year revenue and full-year adjusted
diluted earnings per share
DUBLIN--(BUSINESS WIRE)--Feb. 6, 2014--
Mallinckrodt
plc (NYSE: MNK), a global specialty pharmaceutical and medical
imaging business, today reported results for the first quarter of fiscal
2014, which ended December 27, 2013. The company also announced revised
guidance for fiscal 2014.
Net sales were $540.2 million for the first quarter of fiscal 2014, an
increase of 7.2%, compared with $504.0 million reported in the first
quarter of fiscal 2013. Operational growth was 8.0% as movements in
foreign exchange rates negatively impacted net sales.
On a non-GAAP basis, adjusted net income(1) for the first
fiscal quarter of 2014 was $51.2 million, compared with $37.6 million a
year ago. Non-GAAP adjusted diluted earnings per share were $0.88,
compared with $0.65 in the same quarter a year ago.
On a GAAP basis, net income for the first quarter of fiscal 2014 was
$45.6 million, or $0.79 per diluted share, compared with $19.2 million,
or $0.33 per diluted share, in the year-ago period. The increase in net
income reflects increased net sales and profits in the Specialty
Pharmaceuticals segment, lower separation costs following the spin-off
from the company's former parent and a lower effective tax rate that
reflects Mallinckrodt's structure as an independent company. These
results were partially offset by restructuring charges incurred in the
quarter.
“We’re off to a strong start in fiscal 2014, with solid momentum and
operational growth of 19.1% in our Specialty Pharmaceuticals segment,”
said Mark Trudeau, Chief Executive Officer and President, Mallinckrodt.
“Our first quarter results fully demonstrate the strength of our
specialty generics products performance, and these outcomes, combined
with effective restructuring efforts, are driving strong sales and
improved profitability, leading to our decision to raise guidance for
full-year revenue and adjusted diluted earnings per share. We’ll
continue to accelerate our growth in the Specialty Pharmaceuticals
segment through our pipeline assets, as well as business development and
licensing opportunities that are complementary or adjacent to our
existing businesses or channels.”
Gross profit was $255.6 million for the first quarter of fiscal 2014,
compared with $233.5 million in the prior-year period, representing an
increase of 9.5%. Gross profit, as a percentage of net sales, was 47.3%
for the quarter, versus 46.3% in the prior-year period.
Selling, general and administrative (SG&A) expenses for the first
quarter of fiscal 2014 were essentially flat at $146.2 million, compared
with $146.8 million in the same period in 2013. Higher internal and
third-party expenses associated with being an independent, public
company were offset by certain prior-year costs that did not recur in
the three months ended December 27, 2013. SG&A expenses as a percentage
of net sales were 27.1% in the first quarter of fiscal 2014, compared
with 29.1% in the prior year.
R&D expenses for the first quarter of fiscal 2014 were $39.0 million,
compared with $38.4 million in the prior-year period. R&D expenses as a
percentage of net sales were 7.2% in the first fiscal quarter of 2014,
compared with 7.6% in the prior year.
Separation costs for the first quarter of fiscal 2014 were $2.2 million,
compared with $12.0 million in the prior-year quarter. Separation costs
decreased following the spin-off from the company's former parent.
Restructuring charges were $8.0 million for the first quarter of fiscal
2014, compared with $0.2 million in the prior-year quarter. The increase
primarily reflects activities under the previously announced $100
million to $125 million restructuring program.
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 Specialty Pharmaceuticals segment for the first quarter
of fiscal 2014 were $309.5 million, an increase of 18.9%, compared with
$260.2 million in the prior-year period. Operational growth was 19.1%.
Net sales in Brands were $59.6 million, compared with $46.6 million last
year, led by net sales from EXALGO® (hydromorphone HCl)
Extended-Release Tablets, CII. Net sales in Generics and Active
Pharmaceutical Ingredients (API) were $249.9 million, compared with
$213.6 million last year, primarily driven by net sales from
Methylphenidate HCl Extended-Release Tablets, USP CII (Methylphenidate
ER) and the net benefit from pricing actions on certain specialty
generics products.
Segment operating income in the quarter was $113.0 million, compared
with $35.0 million last year. Segment operating margin was 36.5%,
compared with 13.5% last year, reflecting growth in higher-margin
product lines and portfolio additions, as well as operating leverage due
to strong sales growth. Highlights for the quarter include the following:
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Net sales of Methylphenidate ER were $56.3 million in the first
quarter of fiscal 2014. Net sales in the first quarter of fiscal 2013
were $9.3 million following the product launch in December, 2012.
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Net sales of EXALGO were $36.2 million, compared with $29.3 million
last year, up 23.5% over the first fiscal quarter of 2013, due to
pricing actions in late fiscal year 2013.
Global Medical Imaging Segment
Net sales in the company's Global Medical Imaging segment were $218.6
million, versus $229.7 million in the first quarter of fiscal 2013. Net
sales of Contrast Media and Delivery Systems (CMDS) were $111.6 million,
compared with $121.4 million in the prior year, due to continuing price
pressures. Nuclear Imaging net sales were $107.0 million compared with
$108.3 million in the prior year.
For the fiscal first quarter, operating income in the segment was $4.4
million, compared with $49.1 million last year. Operating margin was
2.0%, compared with 21.4% last year, reflecting the negative impact of
higher raw material and production costs in Global Medical Imaging in
addition to lower net sales.
FISCAL 2014 OUTLOOK
Guidance: Mallinckrodt is providing updated guidance for fiscal
2014, which is summarized below in comparison to the previous guidance
issued on October 16, 2013 (excluding foreign currency impact).
CONFERENCE CALL AND WEBCAST
Mallinckrodt will hold a conference call for investors on Thursday,
February 6, 2014, beginning at 8:30am/U.S. Eastern Standard Time. This
call can be accessed in three ways:
At Mallinckrodt's website: http://investor.mallinckrodt.com.
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 MALLINCKRODT
Mallinckrodt is a global specialty pharmaceutical business that
develops, manufactures, markets and distributes specialty pharmaceutical
products and medical imaging agents. The company’s Specialty
Pharmaceuticals segment includes branded and specialty generic drugs and
active pharmaceutical ingredients, and the Global Medical Imaging
segment includes contrast media and nuclear imaging agents. Mallinckrodt
has approximately 5,500 employees worldwide and commercial presence in
roughly 70 countries. The company’s fiscal 2013 revenue totaled $2.2
billion. To learn more about Mallinckrodt, visit www.mallinckrodt.com.
(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
Securities and Exchange Commission rules and regulations.
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
Mallinckrodt's operating results. Management believes that presenting
these non-GAAP measures provides useful information about the company's
performance across reporting periods on a consistent basis by excluding
items that the company does not believe are indicative of its core
operating performance.
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 U.S. Drug Enforcement
Administration, our ability to obtain and/or timely transport
molybdenum-99 to our technetium-99m generator production facilities,
customer concentration, cost-containment efforts of customers,
purchasing groups, third-party payors and governmental organizations,
our ability to successfully develop or commercialize new products, our
ability to protect intellectual property rights, competition, our
ability to integrate acquisitions of technology, products and
businesses, product liability losses and other litigation liability, the
reimbursement practices of a small number of large public or private
issuers, complex reporting and payment obligation under healthcare
rebate programs, changes in laws and regulations, conducting business
internationally, foreign exchange rates, material health, safety and
environmental liabilities, litigation and violations, information
technology infrastructure and restructuring activities. These and other
factors are identified and described in more detail in the “Risk
Factors” section of Mallinckrodt’s Annual Report on Form 10-K for the
fiscal year ended September 27, 2013. We disclaim any obligation to
update these forward-looking statements other than as required by law.
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Source: Mallinckrodt plc
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
