Physicians Formula Holdings, Inc. Provides Outlook for Full Year 2012

Expects Net Sales to Grow 7% to 10% for Full Year 2012 Versus 2011

Anticipates $0.07 to $0.15 of Earnings Per Share for Full Year 2012, Up From An Expected $(0.04) to $(0.14) of Loss Per Share for Full Year 2011

AZUSA, Calif., Jan. 12, 2012 (GLOBE NEWSWIRE) — Physicians Formula Holdings, Inc. (Nasdaq:FACE) (“Physicians Formula” or the “Company”) today announced its guidance for full year 2012. Specifically:

  • Net Sales are anticipated to grow between 7 and 10% for full year 2012 versus full year 2011. The sales growth will be driven by expected increased retail productivity of the Company’s color cosmetics products, as well as a larger-than-originally planned expansion of its new skin care platform to several new retailers in 2012.
     
  • Driven by increased spending to support the larger-than-originally planned national skin care rollout, the Company will increase its brand investment spending in absolute dollar terms in 2012 versus 2011; however, on a percent of net sales basis, the brand investments will be at similar levels year-over-year.
     
  • Including the impact of this higher investment spending, the Company expects its earnings per diluted common share to be between $0.07 and $0.15 for full year 2012. This compares to an expected loss per basic common share of $(0.04) to $(0.14) for full year 2011.
     
  • Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”), as defined in the Company’s credit agreement, is expected to be between $10 million and $12 million for full year 2012. The Company noted that it did not give Adjusted EBITDA guidance in 2011.
     
  • Net cash from operating activities is expected to be between $8 million and $11 million for full year 2012. This metric is expected to be positive for full year 2011.

The Company noted that it is not providing quarterly guidance. However, it reiterated that net sales growth is typically stronger in the first and fourth quarters compared to the second and third quarters, and that it does not expect 2012 to differ materially from these historic trends. Similarly, profitability is typically stronger in the first, second and fourth quarters than it is in the third quarter.

Ingrid Jackel, Chairwoman and Chief Executive Officer, stated, “We are excited by our prospects for 2012. Our investment strategy in 2011 has clearly paid dividends, as we were the fastest growing color cosmetic brand among the top eight brands at point-of-sale over the last 52 weeks, according to AC Nielsen. In 2012, we intend to reap the benefits of those investments, expanding the productivity of our color cosmetic business and the distribution of our new skin care platform. As a result, we expect to generate strong growth in net sales in 2012, and to return the Company to profitability.”

The Company plans to hold a conference call in mid-March, 2012 to announce full year 2011 results. However, the Company has already noted that it expects the loss per common share for full year 2011 to be at the more favorable end of the $(0.04) and $(0.14) guidance range, before the impact of one-time refinancing costs incurred in November 2011. These one-time costs are estimated to be equivalent to $(0.06) per common share in the fourth quarter of 2011. 

Description of Adjusted EBITDA

Pursuant to our credit agreements, Adjusted EBITDA is defined as net income (loss) before depreciation, amortization, interest expense, income taxes, goodwill and intangible asset impairment charges, stock-based compensation and non-cash inventory obsolescence charges. 

Adjusted EBITDA is a financial measure not computed in accordance with United States generally accepted accounting principles, or GAAP. The Company believes that this non-GAAP measure, when presented in conjunction with comparable GAAP measures, is useful to both management and investors in analyzing the Company’s ongoing business and operating performance. The Company believes that providing the non-GAAP information to investors, in addition to the GAAP presentation, allows investors to view the Company’s financial results in the way that management views financial results. Management believes Adjusted EBITDA is useful as a supplemental measure of the Company’s financial results because it removes costs not related to the Company’s operating performance. Management believes that Adjusted EBITDA should be considered in addition to, but not as a substitute for items presented in accordance with GAAP that are presented in this press release. With the exception of net interest expense and the provision (benefit) for income taxes, the reconciling items are components within cost of sales and selling, general and administrative expenses on the Company’s accompanying condensed consolidated statements of operations.

About Physicians Formula Holdings, Inc.

Physicians Formula is an innovative cosmetics and skin care company operating in the mass market prestige, or “masstige”, market. Under its Physicians Formula brand name, created in 1937, the Company develops, markets and distributes innovative, premium-priced products for the mass market channel. Physicians Formula differentiates itself by addressing skin imperfections through a problem-solving approach, rather than focusing on changing fashion trends. Currently, Physicians Formula products are sold in 25,700 stores including those operated by Wal-Mart, Target, CVS and Rite Aid.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, forward-looking statements can be identified by words such as “anticipates,” “estimates,” “expects,” “believes,” “plans,” “predicts,” and similar terms. In particular, this press release may include forward-looking statements about management’s expectations regarding the Company’s refinancing, strategy, liquidity, financial performance and outlook. These forward-looking statements are based on current expectations, estimates and projections about the Company’s business and its industry, based on management’s beliefs and assumptions. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to: the loss of any significant retailer customers; the demand for the Company’s products; the Company’s ability to expand its product offerings; the competitive environment in the Company’s business; the Company’s operations and ability to achieve cost savings; the effect of technological and regulatory changes; the Company’s cash needs and financial performance; the Company’s ability to comply with the financial covenants in its debt agreements; changes in general economic or market conditions; and other factors discussed in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including the Risk Factors contained in the Company’s filings with the SEC, and available at www.physiciansformula.com and the SEC’s website at www.sec.gov. You are urged to consider these factors carefully in evaluating the forward-looking statements in this release and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. Unless otherwise required by law, the Company expressly disclaims any obligation to update publicly any forward-looking statements, whether as result of new information, future events or otherwise.

(FACE/F)

CONTACT: Anne Rakunas          ICR, Inc.          (310) 954-1113

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