Financial Data and Key Metrics Changes - The company reported net sales growth of 2.2% year-over-year, while organic net sales declined by 1.2% due to the impact of discontinued lower margin SKUs [6][20] - Gross margin expanded by 300 basis points to 39.5%, and operating margin increased by 130 basis points to 13.4% [6][22] - Adjusted diluted earnings per share (EPS) was $0.64, up from $0.56 in the prior quarter, reflecting a year-over-year growth of 14.3% [20][22] Business Line Data and Key Metrics Changes - In the global cough, cold, and pain products segment, net sales increased by 7% year-over-year, driven by strong seasonal selling, particularly in Europe [7] - CSCI (Consumer Self-Care International) saw organic net sales grow by 6.2%, while CSCA (Consumer Self-Care Americas) experienced a decline of 5.1% due to various factors including the discontinuation of low margin SKUs [7][8] - The infant formula segment faced challenges due to updated FDA guidelines, impacting production and safety stock levels [9][25] Market Data and Key Metrics Changes - Store-brand OTC dollar, volume, and value share grew over the last 13 weeks, indicating a consumer shift towards high-quality, value products [8] - The company anticipates continued market share gains in the Americas while focusing on rebuilding safety stock in the infant formula category [17] Company Strategy and Development Direction - The company aims to build a sustainable and value-accretive growth engine through four key pillars: consumerization and digitization, category growth partnerships, leveraging global supply chain, and optimizing a global operating model [12][14] - The anticipated launch of Opill is expected to create a new OTC category in the U.S., with a focus on innovative marketing strategies to drive consumer engagement [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and highlighted the unique market position with a $400 billion addressable market in the global self-care segment [12][13] - The company expects to normalize operations in the infant formula segment by mid-2024 and recapture most of the EPS impact from lower sales [30][25] Other Important Information - The company is working to address the impact of recent FDA guidelines on production and inventory management, which has led to lower customer in-stocks and lost sales [9][25] - The company reaffirmed its commitment to reducing net leverage, targeting around three times net debt to adjusted EBITDA by the end of 2025 [24] Q&A Session Summary Question: Impact of lower infant formula sales on 2023 guidance - Management indicated a $0.35 EPS impact from lower infant formula sales, with expectations to recapture this by mid-2024 as production normalizes [30] Question: Expected gross margin progression - Management expects to exceed the previously mentioned 200 basis points improvement in gross margin due to strategic pricing and portfolio optimization [32] Question: Store brand versus national brand share gains - Management confirmed a 0.7% volume share gain for store brands across categories, with positive trends continuing into October [36] Question: Price increases and consumer response - The company implemented nearly a 5% price increase, primarily in the infant formula segment, without significant pushback from retailers [41] Question: Production changes for phenylephrine products - Management noted that phenylephrine products account for only 2% of total net sales, with minimal impact expected from recent FDA discussions [45] Question: Response to SKU rationalization efforts - Management reported positive feedback from retailers regarding SKU rationalization, which has simplified operations and improved value creation [49][50] Question: Launch of Opill and its financial impact - The launch of Opill is expected to be dilutive in 2024, but management remains optimistic about maintaining EPS growth in the range of $2.90 to $3 [55]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _______________________________________________ FORM 10-Q _______________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-36353 Perrigo Company plc (Exact name ...

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Perrigo Company plc (NYSE:PRGO) Q2 2023 Earnings Conference Call August 8, 2023 8:30 AM ET Company Participants Brad Joseph - Vice President, Investor Relations Patrick Taylor - President and Chief Executive Officer Eduardo Bezerra - Executive Vice President and Chief Financial Officer Conference Call Participants Chris Schott - JPMorgan Alec Legg - Canaccord Genuity Daniel Biolsi - Hedgeye Operator Good Day and welcome to the Perrigo Second Quarter 2023 Financial Results Conference Call. All participants w ...

Financial Data and Key Metrics Changes - In Q1 2023, Perrigo achieved constant currency net sales growth of 13% and organic net sales growth of 6.4% despite challenges from voluntary recalls and portfolio optimization initiatives [14][22] - Adjusted diluted EPS grew by 36% year-over-year, or 47% on a constant currency basis, reaching $0.45 per share [22][24] - Gross margin improved by 400 basis points, driven by both the legacy business and higher margin acquisitions [14][25] Business Line Data and Key Metrics Changes - The CSCA Nutrition business saw net sales grow by 10%, driven by strong growth in the Contract Infant Formula business and an additional $36 million from the GoodStart acquisition [18][19] - The OTC business grew by 9% in total, with U.S. OTC organic growth at 7.3% [16][18] - The CSCI business grew 24% in constant currency, with 11% organic growth, benefiting from strong EU consumption and strategic price increases [16][18] Market Data and Key Metrics Changes - European consumption is at a four-year high, driven by a strong cold season, with the Compeed brand seeing a 19% increase in consumer takeaway [14][15] - U.S. oral care consumption grew by 20%, with Perrigo regaining the number two share position in the categories it competes in [15][16] - The company reported strong demand in anti-parasite and insect repellent categories, contributing positively to CSCI growth [15] Company Strategy and Development Direction - The management is focused on operational execution and consistent delivery of results, with a strategy termed "optimize and accelerate" [6][7] - The integration of recent acquisitions, such as HRA and GoodStart, is on track, with expected significant benefits [7][10] - The company is investing in supply chain reinvention to optimize operations and standardize nearly 1,000 SKUs by early 2024 [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate challenges, including inflation and supply chain issues, while maintaining strong financial performance [30][31] - The elimination of a significant tax overhang has reduced uncertainty in the investment thesis [9][30] - The FDA's potential approval of the Opill oral contraceptive is seen as a significant opportunity for growth in the women's health space [13][51] Other Important Information - The company has successfully resolved a major tax assessment of $843 million without any payment required [9] - Operating cash flow for the quarter was $19 million, with cash on hand at $553 million [27][28] - The company is reaffirming its 2023 guidance, anticipating higher costs in the CSCA infant formula business but planning pricing actions to offset these costs [28][29] Q&A Session Summary Question: Can you provide more details on the gross margin improvement? - Management noted that the gross margin increased by 400 basis points, with contributions from various business segments, despite impacts from recalls and distribution transitions [37][39] Question: What is the expected impact of FDA changes on the infant formula business? - Management indicated that while there will be some negative impact on sales and margins due to new regulatory requirements, pricing actions will help offset these costs [42][44] Question: How is the company managing inventory levels? - Management stated that they are making progress in inventory management, but some categories still face challenges in returning to normal stock levels [46][48] Question: What are the expectations for the Opill product launch? - The potential launch of Opill is not included in current financial models, but management estimates it could generate approximately $100 million in revenue once approved [50][51] Question: How does the company view the competitive landscape between private label and national brands? - Management observed that private label volumes are growing while national brand volumes are declining, indicating a shift in consumer preferences [61][62]

Financial Performance - Perrigo Company reported net sales of $4,451.6 million for the year ended December 31, 2022, an increase of 7.5% compared to $4,138.7 million in 2021[333]. - The cost of sales for 2022 was $2,996.2 million, resulting in a gross profit of $1,455.4 million, which is a slight increase from $1,416.2 million in 2021[333]. - Operating income decreased significantly to $78.9 million in 2022 from $410.4 million in 2021, reflecting a decline of 80.8%[333]. - The company incurred a net loss of $140.6 million in 2022, compared to a net loss of $68.9 million in 2021[333]. - Comprehensive loss for the year was $203.1 million, compared to a loss of $428.4 million in 2021, showing an improvement in overall financial performance[337]. - Net cash from operating activities was $307.3 million for 2022, compared to $156.3 million in 2021, indicating a significant increase of about 96.5%[340]. - The net loss for the year ended December 31, 2022, was $140.6 million, compared to a net loss of $68.9 million in 2021, indicating a deterioration in profitability[337]. Assets and Liabilities - Total assets increased to $11,017.3 million as of December 31, 2022, up from $10,425.7 million in 2021, reflecting a growth of approximately 5.7%[335]. - Long-term debt rose to $4,070.4 million, up from $2,916.7 million in 2021, marking an increase of approximately 39.5%[335]. - Total current liabilities decreased to $1,113.6 million from $1,587.9 million in 2021, a decline of approximately 30%[335]. - As of December 31, 2022, the total equity was $4,842.1 million, with accumulated earnings showing a deficit of $2,067.6 million[346]. - Cash and cash equivalents decreased significantly to $600.7 million from $1,864.9 million in the previous year, representing a decline of about 67.8%[340]. Acquisitions and Divestitures - The acquisition of HRA Pharma was completed for €1.8 billion (approximately $1.9 billion), generating net sales of $193.6 million and a net operating loss of $59.4 million from April 29, 2022, to December 31, 2022[410][411]. - The acquisition of Nestlé's Gateway infant formula plant and GoodStart brand for $110.0 million generated net sales of $42.7 million and operating income of $11.5 million from November 1, 2022, to December 31, 2022[419][420]. - The company has divested its Rx segment, which was reported as discontinued operations in 2021[352]. - The sale of the Latin American businesses to Advent International was completed for $23.9 million, resulting in a pre-tax loss of $1.4 million[433]. - The sale of the U.K.-based Rosemont Pharmaceuticals business generated cash consideration of approximately $195.0 million, resulting in a pre-tax loss of $21.1 million[437]. Goodwill and Intangible Assets - As of December 31, 2022, the goodwill related to the Company's Consumer Self-Care International segment was $1,446.0 million[304]. - Goodwill balance as of December 31, 2022, was $3,490.4 million, an increase from $2,999.4 million in 2021, primarily due to business acquisitions of $559.5 million[450]. - Total intangible assets as of December 31, 2022, amounted to $5,007.6 million, up from $3,683.8 million in 2021, with definite-lived intangibles increasing to $4,949.0 million[454]. - The total assets acquired from HRA Pharma were valued at $2,220.4 million, with goodwill of $559.5 million attributed to anticipated growth and synergies[415][418]. Research and Development - Research and development expenses were $123.1 million in 2022, slightly up from $122.0 million in 2021[333]. - The company incurs all research and development costs as expenses, including payments related to products under development and clinical trials[392]. Foreign Exchange and Interest Rate Risks - The Company is exposed to foreign exchange risk primarily due to operations in North America, Europe, China, and Australia[290]. - A 1% increase in interest rates would result in approximately $3.9 million of additional annual interest expense in 2023[295]. - The company entered into two non-designated currency option contracts with a total notional amount of $1.1 billion in September 2021, which was later increased to $2.0 billion in April 2022 due to market conditions[471]. - The company recorded a loss of $16.2 million and $20.9 million for the years ended December 31, 2022 and 2021, respectively, related to foreign currency options[471]. Internal Controls and Compliance - The company’s internal control over financial reporting was assessed as effective as of December 31, 2022, based on the COSO criteria[323]. - The company has not provided assurance that the FDA will approve the sale of daily oral contraceptives without a prescription in the United States[8]. Other Financial Metrics - The company reported interest expense of $156.0 million for 2022, an increase from $125.0 million in 2021[333]. - Cash dividends paid increased to $142.4 million in 2022 from $129.6 million in 2021, reflecting a rise of about 9.6%[343]. - The company reported a provision for credit losses of $3.2 million for the year ended December 31, 2022[357].

Financial Data and Key Metrics Changes - Perrigo reported a constant currency net sales increase of 12% in Q3 2022 and 14% year-to-date, with organic net sales growth of 8% in the quarter and 11% year-to-date, exceeding the long-term target of 3% [8][9] - Constant currency diluted EPS for the quarter was $0.65, up 44% year-over-year, despite higher interest expenses and a slightly increased share count [9][24] - Gross margin increased by 210 basis points year-over-year, contributing to a constant currency adjusted operating income growth of 32% [9][25] Business Line Data and Key Metrics Changes - Women's health sales grew 100% due to the addition of HRA brands, driven by increased demand for emergency contraception [10] - Skincare sales increased by 28%, while upper respiratory sales grew by 19% due to higher instances of cough and cold in Europe [11] - Nutrition business saw an 18% increase, driven by heightened infant formula demand amid a national brand shortage [12] Market Data and Key Metrics Changes - Perrigo gained market share across all US business units and major categories, with significant gains in e-commerce and store brands [8][14] - The total US OTC market growth slowed to 2.3% in the latest 13 weeks, while Perrigo's retail growth was up 5.8% [15] - The company expects unfavorable currency translation to impact full-year 2022 net sales by approximately $230 million [16] Company Strategy and Development Direction - The integration of HRA remains a cornerstone of Perrigo's growth strategy, with total synergy estimates raised to €50 million by the end of 2024 [17][31] - The company is focused on reducing leverage, aiming for around 3x net leverage by the end of 2024, while continuing to invest in supply chain initiatives [67][69] - Strategic pricing actions and cost-saving measures are being implemented to offset inflationary pressures [16][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by inflation and macroeconomic factors but expressed confidence in achieving 2023 financial goals [7][22] - The company remains optimistic about its fundamentals, with expectations for gross margin expansion and market share growth [22][73] - Management indicated that the supply chain reinvention program is expected to deliver significant incremental operating income in 2023 [19] Other Important Information - Perrigo's cash on the balance sheet was $469 million at the end of Q3, down from $485 million at the end of Q2 [29] - The company invested $70 million in capital expenditures and returned $107 million to shareholders through dividends in the first nine months of the year [30] Q&A Session Summary Question: Can you provide details on the Gateway acquisition's revenue run rate and its impact on capacity? - Management indicated that the Gateway acquisition will significantly enhance capacity and is expected to contribute to operating income [35][39] Question: How did the HRA business perform relative to expectations? - The HRA business is performing as planned, with a gross margin impact of over 200 basis points in the quarter [41][42] Question: What is the outlook for gross margins in 2023? - Management expects gross margins to improve, with recovery from previous freight cost increases and ongoing supply chain initiatives [50][52] Question: How will operating expenses trend going forward? - A slight increase in operating expenses is anticipated in Q4 due to seasonal factors and increased promotional activities [46] Question: What are the capital allocation priorities moving forward? - The primary focus is on reducing leverage while continuing to invest in strategic initiatives that yield significant operating income returns [67][69]

Financial Data and Key Metrics Changes - The company reported a consolidated GAAP loss from continuing operations of $65 million for Q2 2022, translating to a loss of $0.48 per diluted share. Adjusted net income from continuing operations was $59 million, with adjusted diluted EPS at $0.43, or $0.49 on a constant currency basis, compared to $0.50 in the prior year quarter [28][29] - Net sales increased by 14.3%, with organic net sales growing by 17.2%, driven by strong consumer demand [30] - Gross profits grew by 8.7%, or 17% on a constant currency basis, despite inflationary pressures [30] Business Line Data and Key Metrics Changes - Consumer Self Care Americas (CSCA) net sales increased by 17%, driven by strong demand for cough and cold products and nutrition [32] - The Consumer Self Care International (CSCI) segment saw net sales increase by 25.8% on a constant currency basis, with organic net sales growing by 10.6% [33] - The women's health business grew by 77%, primarily due to the addition of HRA businesses and increased demand related to recent judicial decisions in the U.S. [14] Market Data and Key Metrics Changes - The upper respiratory revenues grew by 44% globally, attributed to a rebound in cough-cold sales compared to the previous year [13] - The nutrition business saw a 31% increase, primarily driven by infant formula demand due to a competitor's recall [14] - E-commerce sales grew more than 25% in the first half of the year, now accounting for over 12% of global sales [17] Company Strategy and Development Direction - The company is focused on optimizing and accelerating its self-care strategy, with plans to integrate the HRA portfolio and achieve related cost synergies [24] - A global supply chain initiative is underway, aiming for $100 million to $300 million in net cost savings over five years [20][22] - The company is expanding its product categories to include women's health and skin care, with skin care now being the second largest global category [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing challenges from inflation and labor shortages but expressed confidence in achieving gross margin recovery [19][43] - The company anticipates continued strong demand for its products, particularly in the context of the upcoming cough-cold season [48] - Management remains optimistic about the future, highlighting a strong pipeline of innovation and the successful execution of their self-care strategy [64] Other Important Information - The company closed on a $2.6 billion senior secured credit facility, locking in favorable rates [8] - The FDA approved the first-ever branded Rx to OTC switch for Nasonex, marking a significant regulatory achievement [18] - The company is committed to maintaining its dividend growth, with a strong track record of 18 consecutive years of increases [35] Q&A Session Summary Question: Update on trade inventory levels and growth outlook - Management confirmed that inventory levels are appropriate, with no significant influence on business going forward [39][40] Question: Comments on gross margin expectations - Management indicated that costs have continued to rise, but they remain on track to achieve their gross margin recovery goals [45] Question: Impact of recession on business - Management noted a more balanced portfolio now, with a shift towards store brands benefiting from potential downtrading during a recession [60] Question: Update on HRA deal accretion - Management confirmed that the $150 million operating profit impact from the HRA acquisition remains on track, though currency adjustments may affect it [62]

Perrigo Company plc (NYSE:PRGO) Q1 2022 Earnings Conference Call May 11, 2022 8:30 AM ET Company Participants Bradley Joseph - Vice President of Investor Relations Murray Kessler - President and Chief Executive Officer Raymond Silcock - Chief Financial Officer Conference Call Participants Chris Schott - JPMorgan Elliot Wilbur - Raymond James Operator Good day and welcome to the Perrigo First Quarter 2022 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instruction ...

Financial Data and Key Metrics Changes - For the full year 2021, adjusted EPS was $2.06, down 12% from the previous year due to a weak cough/cold season and supply chain disruptions [10][21] - Fourth quarter net sales grew 5%, adjusted operating income increased 12%, and adjusted diluted EPS rose 28% compared to the previous year [11][20] - Full year net sales increased 1.2%, while organic net sales declined 0.7% primarily due to lower cough/cold product sales [25][26] Business Line Data and Key Metrics Changes - Consumer Self-Care Americas (CSCA) net sales grew 5% in Q4, driven by a rebound in cough/cold products [27] - Consumer Self-Care International (CSCI) net sales increased 4.6% in Q4, with a strong performance in cough/cold products and skincare [29] - Full year net sales for CSCI increased 3.6%, while organic sales were flat due to a weak cough and flu season [30] Market Data and Key Metrics Changes - In the U.S., cough/cold product sales grew 28% in Q4, reflecting a return to strong demand [11][12] - The U.S. OTC market grew 17.5%, Nutrition grew 24.7%, and Oral Care grew 9.1% in Q4 [12] - European demand for essential products increased by 33%, while self-care products grew by 2% [12] Company Strategy and Development Direction - The company aims to focus solely on consumer self-care following the divestiture of its Rx business for $1.6 billion [7] - Plans to acquire HRA Pharma for €1.8 billion, expected to add €400 million in revenue and €150 million in operating income by 2023 [7] - The company is focused on executing its self-care strategy, integrating HRA, and stabilizing gross margins through supply chain redesign [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about entering 2022 with strong top-line momentum and consumer demand [12][14] - Gross margin pressure is expected to continue in the first half of 2022, with improvements anticipated in the second half [15] - The company is committed to achieving its original financial objectives and expects adjusted EPS in the range of $2.10 to $2.30 for 2022 [15][32] Other Important Information - The company settled a significant Irish tax issue for €266 million, reducing financial overhangs [7][8] - Cash on the balance sheet at year-end was $1.9 billion, down from $2.1 billion at the end of Q3 [31] Q&A Session Summary Question: Gross margin dynamics and second half margin improvement - Management discussed factors affecting margin improvement, including the impact of Rx divestiture and pricing actions [34][36] Question: 2023 EPS range and recovery from 2021 impacts - Management maintained a mid-$3 EPS target for 2023, driven by cough/cold recovery and HRA contributions [39][40] Question: G&A management and R&D sustainability - Management indicated ongoing opportunities for G&A management and confirmed R&D levels remain stable [44][47] Question: New product flow and Rx-OTC switches - Management highlighted ongoing opportunities in Rx-OTC switches and a robust pipeline of new products [50][52] Question: Growth outlook for CSCA vs. CSCI - Management noted that both segments are expected to have similar growth rates, with a focus on cough/cold recovery [55][58] Question: Cough/cold inventory and forecast conservatism - Management acknowledged potential conservatism in forecasts regarding inventory replenishment [61][62] Question: Addressing manufacturing inefficiencies - Management outlined plans for improving manufacturing efficiencies without significant facility rationalization [64][66]