Mallinckrodt boasts strong cash flow, solid financial position for 2015

By Lisa Kerner

Charlotte, N.C., Nov. 23 – Mallinckrodt plc’s ability to generate about $1 billion of cash annually allows the company to buy back shares and delever quickly, according to president and chief executive officer Mark Trudeau.

The company completed another strong quarter after completing a “pivotal” year, Trudeau said during Mallinckrodt’s fourth-quarter earnings call on Monday.

Net sales were up 31% for the quarter at $882 million. For the full year, sales were up 60.8% at about $3.35 billion.

“We were particularly pleased that fourth quarter and full year net sales were driven by volume growth,” said Trudeau.

Last week, the company’s board authorized an incremental $500 million share repurchase program. It supplements the roughly $200 million remaining from the previously authorized share repurchase plan announced in January.

In addition, the board authorized management to reduce the company’s outstanding debt at its discretion, said Trudeau.

Solid financial position

“Strong growth in our specialty brand segment helped more than offset the challenging market environment in specialty generics, leading to the strong overall results we’ve announced today,” said executive vice president and chief financial officer Matthew Harbaugh on the call.

The company remains in a “solid financial position,” after completing four acquisitions since its spinoff, Harbaugh said.

At Sept. 25, Mallinckrodt had $366 million of cash, up about $141 million from June 26.

Overall total company full-year operating cash flow was about $896 million.

“Cash flow was strong in the fourth quarter, placing us in an enviable position to not only pursue incremental business development, but also to simultaneously repurchase shares and buy back debt,” Harbaugh said.

Long-term debt was about $6.47 billion at quarter end, compared to $3.87 billion for the year-ago period.

Fourth-quarter adjusted net income was $217 million, a 58.4% increase from the same quarter a year ago, according to the earnings news release.

Adjusted net income for the full year was $863.3 million, compared with $291.5 million last year. The increase was primarily attributable to the specialty brands segment.

Mallinckrodt is a Dublin-based pharmaceutical company with headquarters in St. Louis.

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