Prestige Brands repays $15 million of term loan debt; additional debt pay down likely in fiscal 2009

By Jennifer Lanning Drey

Portland, Ore., May 15 - Prestige Brands Holdings, Inc. used free cash flow generated in the fourth quarter of fiscal 2008 to pay down $15 million of its term loan during the period, Mark Pettie, chief executive officer of Prestige, said during the company's quarterly earnings conference call held Thursday.

The company ended fiscal 2008 with a debt balance of $411.2 million after repaying a total of $52.1 million during the year.

Pettie said absent any acquisitions - which the company is starting the fiscal year with a strong bias against - free cash flow generated in 2009 will continue to be applied toward paying down debt.

"While we are always attentive to strategically appropriate opportunities, our bias entering this year continues to be a focus on fully implementing our key organic growth thrusts," Pettie said.

For the full-year fiscal 2008, Prestige's free cash flow was $44.5 million. Fourth-quarter free cash flow was $9.6 million, down from $16.5 million in the same period in 2007. The quarterly decrease was primarily related to an increase in accounts receivable.

Growth expected in '09

During Wednesday's call, Pettie reaffirmed Prestige's previously stated target of 2% to 4% revenue growth for fiscal 2009.

For the fourth quarter of fiscal 2008, Prestige reported revenues of $80.4 million, demonstrating a 3% increase over the comparable prior-year period. The increase was driven by the company's over-the-counter health care and household products segments.

Net income for the quarter was $10.4 million, showing a 24% increase over the fiscal 2007 period.

"We're pleased with the improvements for the fiscal year from both a sales and earnings standpoint, but more importantly we enter fiscal 2009 with a growing sense of momentum," Pettie said.

The company's growth plan for fiscal 2009 includes putting more of its resources toward growing its focus brands, which Prestige believes have the highest growth potential going forward.

Additionally, the company will increase its emphasis on what it considers "breakthrough innovation" and plans to release new products in areas including its allergen, Chloraseptic brand and saline lines.

Prestige also plans to focus on international growth, particularly in Canada, which the company believes may be underdeveloped by as much as 50%.

Prestige Brands is an Irvington, N.Y.-based marketer and distributor of brand name over-the-counter health care, personal care and household products.

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