) third quarter fiscal 2012 (ended March 31, 2012) adjusted
earnings of $1.41 handsomely beat the Zacks Consensus Estimate of
$1.21 per share. Third quarter earnings increased 31.8% from the
year-ago period. Earnings were boosted by higher revenues.
Net sales in the reported quarter climbed 12.5% to $778 million.
Revenues were aided by the inclusion of $70 million of net sales
from Paddock Laboratories (acquired by Perrigo in 2011) and CanAm
Care (whose assets were acquired by Perrigo in January 2012).
Moreover, newly launched products boosted sales by $64 million
in the third quarter of fiscal 2012. However, revenues fell short
of the Zacks Consensus Estimate of $825 million.
Quarter in Detail
Perrigo reports revenue from the following five segments:
Consumer HealthCare (CHC), Nutritionals, Rx Pharmaceuticals, Active
Pharmaceutical Ingredients (API) and other.
: Perrigo reported CHC revenue of $449 million in the third
quarter, up 6% over the prior year. The revenue growth was driven
by the new product sales, primarily in the cough/cold and
dermatological units. Segmental sales were also aided by the
inclusion of results of CanAm Care.
: Perrigo reported Nutritional quarterly revenue of $118 million,
which declined 4.8% from the prior-year quarter as sales of infant
formula and vitamin, mineral and supplement (VMS) products
declined. Infant formula sales were impacted by a decline in birth
rates in the U.S.
Moreover, competitor product recalls which benefited the prior
year quarter were missing in the reported quarter, thus pulling
down infant formula revenues. We note that Perrigo has benefited
from product recalls by competitors such as
Johnson & Johnson
) in the past few quarters. VMS sales were negatively impacted by
: The Rx Pharmaceuticals segment performed impressively with net
sales climbing 84% to $156 million in third quarter of fiscal 2012.
The huge increase was primarily driven by the acquisition of
Active Pharmaceutical Ingredients (API):
The company reported API sales of $37 million, down approximately
10% over the prior year. Reduced demand coupled with pricing
pressures negatively impacted net sales of the segment during the
: Segmental sales improved 12% to $19 million.
During the third quarter of fiscal 2012, gross margin at Perrigo
climbed 190 basis points to 37.6% on an adjusted basis. Adjusted
operating expenses climbed 9% to $121.1 million in the reported
Fiscal 2012 Guidance Upped
Apart from announcing financial results, Perrigo upped its
earnings projection for fiscal 2012. The company now expects to end
fiscal 2012 with adjusted earnings per share in the range of
$4.90-$5.00 (old guidance: $4.70-$4.80). The Zacks Consensus
Estimate for fiscal 2012 currently stands at $4.78 per share.
We currently have a Neutral recommendation on Perrigo. The stock
carries a Zacks #3 Rank (short-term Hold rating).
We believe Perrigo has a sustainable and diversified product
portfolio. The company's strong position in the brand OTC
pharmaceutical market coupled with the growing generics and API
businesses are expected to drive growth in the coming quarters. We
are also impressed by Perrigo's strong pipeline.
JOHNSON & JOHNS (JNJ): Free Stock Analysis
PERRIGO COMPANY (PRGO): Free Stock Analysis
To read this article on Zacks.com click here.