Core Points - Perrigo Company plc plans to release its first quarter 2025 financial results on May 7, 2025, at 8:30 A.M. (EST) [1] - The earnings conference call will be accessible via webcast and phone, with a replay available from May 7 to May 14, 2025 [2] - Perrigo is a leading provider of Consumer Self-Care Products and OTC health solutions aimed at enhancing individual well-being [3]

Core Viewpoint - J.P. Morgan analysts indicate that Perrigo Company plc's first-quarter 2025 earnings will be significantly influenced by the potential impact of tariffs, which could affect near-term earnings [1][4]. Group 1: Earnings Forecast - Analysts project adjusted earnings of 55 cents per share and sales of $1.09 billion for Perrigo [1]. - The company is expected to face a low to mid-single-digit impact on global cost of goods sold (COGS) on an annualized basis due to tariffs [2]. Group 2: Business Impact - The oral care and infant formula segments are particularly affected, with sourcing from China and India [3]. - While the company aims to mitigate the impact through supply chain efficiencies and price increases, challenges remain in predicting short-term effects on earnings [3]. Group 3: Market Reaction - Perrigo's stock has declined by 4.70%, trading at $24.13 [4]. - The company has historically struggled to pass on price increases in a timely manner, making it difficult to absorb rising costs due to lower profit margins compared to peers [5].

Core Insights - Perrigo's international revenue performance is crucial for assessing its financial resilience and growth prospects [1][2] - The company's reliance on international markets influences its earnings durability and growth capabilities [2][9] Revenue Performance - Total revenue for the recent quarter was $1.14 billion, a decline of 1.6% year-over-year [4] - Revenue from "All other countries" was $27 million, representing 2.37% of total revenue, with a significant surprise decline of -33.11% compared to expectations of $40.37 million [5] - European revenue was $379.1 million, accounting for 33.30% of total revenue, which was a surprise decline of -9.54% from the consensus estimate of $419.08 million [6] Future Revenue Predictions - Analysts predict total revenue of $1.11 billion for the current fiscal quarter, indicating a 2.3% increase from the previous year [7] - Expected contributions from "All other countries" and Europe are projected to be 3.4% ($38.07 million) and 35.7% ($395.74 million) of total revenue, respectively [7] - For the full year, total annual revenue is expected to reach $4.42 billion, marking a 1.1% increase compared to last year [8] Market Observations - The intricacies of global interdependence and geopolitical factors are closely monitored by analysts, impacting earnings forecasts for companies with international operations [10] - The company's stock has increased by 16.7% over the past month, outperforming the S&P 500, which declined by 4.1% [13]

Group 1 - Perrigo Company is undergoing a transformation into a Consumer Self-Care Company, focusing on operational execution and leveraging unique assets [3] - The company has introduced a 3S plan: Stabilize, Streamline, and Strengthen, aimed at delivering value to shareholders [3] - The 2025 Investor Day presentation will include discussions on forward-looking statements and adjusted financial measures that are non-GAAP in nature [4][5]

Financial Performance - Net sales for the year ended December 31, 2024, were $4,373.4 million, a decrease of 6.0% compared to $4,655.6 million in 2023 [346]. - Gross profit for 2024 was $1,542.7 million, down from $1,680.4 million in 2023, reflecting a gross margin of approximately 35.3% [346]. - Operating income decreased to $112.9 million in 2024 from $151.9 million in 2023, indicating a decline of 25.7% [346]. - The company reported a net loss of $171.8 million for 2024, compared to a net loss of $12.7 million in 2023 [346]. - Basic earnings per share for continuing operations was $(1.17) in 2024, compared to $(0.03) in 2023 [346]. - Comprehensive loss for 2024 was $344.9 million, significantly down from a comprehensive income of $25.0 million in 2023 [351]. - Cash flows from operating activities for 2024 were $362.9 million, a decrease from $405.5 million in 2023 [354]. - The company reported a net cash increase from investing activities of $78.8 million in 2024, compared to a net cash decrease of $77.5 million in 2023 [354]. Assets and Liabilities - Total assets decreased to $9,647.7 million as of December 31, 2024, from $10,809.1 million in 2023, a decline of 10.7% [349]. - Total liabilities decreased to $5,328.3 million in 2024 from $6,041.2 million in 2023, a reduction of 11.8% [349]. - The company's cash, cash equivalents, and restricted cash decreased to $558.8 million in 2024 from $751.3 million in 2023 [349]. - Goodwill and indefinite-lived intangible assets decreased to $3,325.4 million in 2024 from $3,534.4 million in 2023 [349]. - Total inventories as of December 31, 2024, amounted to $1,081.8 million, a decrease from $1,140.9 million as of December 31, 2023 [441]. Impairments and Charges - The company incurred impairment charges of $88.9 million in 2024, compared to $90.0 million in 2023 [354]. - The company recorded a goodwill impairment of $22.1 million related to the Rare Diseases Business in 2024, following the announcement of its sale [452]. - The carrying value of the net assets held for sale of the Rare Diseases Business exceeded their fair value, leading to an impairment charge of $34.1 million, including a goodwill impairment of $22.1 million [421]. Foreign Exchange and Interest Rate Risks - The Company is exposed to foreign exchange risk, primarily from the movement of the U.S. dollar relative to the euro [307]. - The Company utilizes foreign exchange derivatives to mitigate fluctuations in exchange rates [311]. - A 1% increase in interest rates would result in approximately $2.3 million of additional annual interest expense in 2025 [312]. - The company utilizes various strategies to manage interest rate risk, including fixed-rate and variable-rate debt, as well as treasury-lock agreements and interest rate swaps [378]. - The notional amounts of foreign currency forward contracts totaled $502.5 million as of December 31, 2024, compared to $253.6 million as of December 31, 2023 [494]. Sales and Revenue Breakdown - Revenue from the U.S. market was $2,649.3 million, down from $2,916.8 million in 2023, representing a decline of 9.2% [413]. - Contract manufacturing revenue was $306.2 million for 2024, compared to $337.3 million in 2023, reflecting a decrease of 9.2% [417]. - The Upper Respiratory product category generated $500.3 million in sales for 2024, down from $561.4 million in 2023, a decline of 10.3% [415]. - The Nutrition product category saw a decline in sales to $449.5 million in 2024 from $563.2 million in 2023, a decrease of 20.2% [415]. - Total net sales in Europe for 2024 were $1,604.6 million, slightly down from $1,622.5 million in 2023, a decrease of 1.2% [413]. Acquisitions and Divestitures - The sale of the Rare Diseases Business to Esteve Healthcare S.L. was completed for a total consideration of $244.5 million, resulting in a pre-tax gain of $5.8 million [419][420]. - The acquisition of HRA Pharma was completed for 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 [427][428]. - The acquisition of Nestlé's Gateway Infant Formula Plant and GoodStart brand was completed for $110.0 million, generating net sales of $42.7 million and operating income of $11.5 million from November 1, 2022, to December 31, 2022 [430][431]. Legal and Regulatory Matters - Legal contingencies are recorded when a loss is considered probable and can be reasonably estimated, with reserves established for certain legal matters [395]. - The company retained certain pre-closing liabilities from the sale of the Rx business, subject to indemnity obligations from Altaris Capital Partners [438]. Cash Flow and Financing Activities - Issuances of long-term debt in 2024 totaled $1,091.2 million, a significant increase from $295.1 million in 2023 [354]. - Total borrowings outstanding as of December 31, 2024, amounted to $3,618.1 million, a decrease from $4,073.4 million in 2023 [500]. - The company recorded cash outflows of $45.8 million related to the settlement of cross-currency swaps as part of cash flows for investing activities for the year ended December 31, 2024 [479].

Core Insights - Perrigo Company plc (PRGO) reported adjusted earnings of 93 cents per share in Q4 2024, surpassing the Zacks Consensus Estimate of 92 cents, marking an 8% year-over-year increase due to improved margins and lower variable expenses [1] - Net sales for the quarter declined 1.6% year over year to $1.14 billion, falling short of the Zacks Consensus Estimate of $1.20 billion, primarily due to lost sales from exited businesses and product lines [1][2] - For the full year 2024, Perrigo's revenues totaled $4.37 billion, a decrease of 6.1% year over year, with adjusted earnings of $2.57 per share, down 0.4% from the previous year [7] Sales Performance - In the Consumer Self Care Americas (CSCA) segment, net sales were flat year over year at $744 million, with growth in Nutrition, Skin Care, and Women's Health categories offset by declines in Pain & Sleep Aids, Upper Respiratory, and Digestive Health categories [5] - The Consumer Self Care International (CSCI) segment reported net sales of $394 million, down 4.5% year over year due to product line exits and unfavorable currency movements, although organic sales increased by 1.8% [6] Future Outlook - Perrigo is set to host a virtual Investor Day to present its strategic plan for 2025-2027 and provide financial guidance for the full year 2025 [8]

Core Viewpoint - Perrigo Company plc is focused on consumerizing, simplifying, and scaling its global self-care platform, aiming for stable and reliable performance [1] Group 1: Business Strategy - The company has a unique complementary business model where store brands and infant formula generate cash for investments in higher margin, higher growth brands [2] - The strategy is anchored in a 'Three-S' plan: 'Stabilizing' Consumer Self-Care Americas, 'Streamlining' the global portfolio, and 'Strengthening' key 'High-Grow' brands [3] - Management emphasizes the importance of consumer-led innovation and a robust global supply chain to serve a wide consumer base [2] Group 2: Financial Targets - For fiscal year 2025, the company targets all-in net sales growth of 1% to 3%, organic net sales growth of 2.5% to 4.5%, and an adjusted gross margin of approximately 40% [7] - The adjusted diluted earnings per share (EPS) is projected to be in the range of $2.90 to $3.10, reflecting a growth of 13% to 21% [7] - Long-term targets include organic net sales CAGR of 2.5% to 4.5% and adjusted gross margin expansion of 200 to 400 basis points by 2027 [7] Group 3: Leadership Insights - President and CEO Patrick Lockwood-Taylor expressed optimism about the company's future opportunities and the strategic path forward [4] - The management team has faced challenges over the past 21 months and has effectively pivoted to stabilize and strengthen the business [4] - The company anticipates significant earnings growth and cash flow, alongside a growing dividend, which could lead to notable total shareholder returns [4]

Core Insights - Perrigo reported revenue of $1.14 billion for the quarter ended December 2024, a decrease of 1.6% year-over-year, and an EPS of $0.93, up from $0.86 in the same quarter last year [1] - The revenue fell short of the Zacks Consensus Estimate of $1.2 billion, resulting in a surprise of -4.77%, while the EPS exceeded the consensus estimate of $0.92 by +1.09% [1] Financial Performance - Net Sales for Consumer Self-Care Americas (CSCA) were $744.10 million, below the average estimate of $766.89 million, with no year-over-year change [4] - Net Sales for Consumer Self-Care International (CSCI) reached $394.10 million, compared to the average estimate of $422.82 million, reflecting a year-over-year decline of 4.5% [4] - Specific categories within CSCA showed varied performance: - Oral care sales were $70.60 million, down 7.4% year-over-year and below the estimate of $72.34 million [4] - Nutrition sales increased by 14% to $145.70 million, slightly below the estimate of $147.32 million [4] - Healthy Lifestyle sales were $85.50 million, down 6.7% year-over-year, and below the estimate of $92.30 million [4] - Upper Respiratory sales were $130.30 million, down 4.9% year-over-year, and below the estimate of $133.24 million [4] Profitability Metrics - Adjusted Gross Profit for Consumer Self-Care International (CSCI) was $194.40 million, below the average estimate of $220.42 million [4] - Adjusted Gross Profit for Consumer Self-Care Americas (CSCA) was $229.10 million, also below the average estimate of $256.58 million [4] Stock Performance - Perrigo's shares returned +0.9% over the past month, contrasting with a -2.2% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - Perrigo reported quarterly earnings of $0.93 per share, exceeding the Zacks Consensus Estimate of $0.92 per share, and showing an increase from $0.86 per share a year ago, indicating a positive earnings surprise of 1.09% [1] - However, the company posted revenues of $1.14 billion, which fell short of the Zacks Consensus Estimate by 4.77% and decreased from $1.16 billion year-over-year, highlighting challenges in revenue performance [2] Earnings Performance - Over the last four quarters, Perrigo has surpassed consensus EPS estimates three times, demonstrating some consistency in earnings performance [2] - The company had a previous quarter expectation of $0.82 per share but reported $0.81, resulting in a negative surprise of -1.22% [1] Stock Performance and Outlook - Perrigo shares have declined approximately 3.2% since the beginning of the year, contrasting with the S&P 500's gain of 1.3%, indicating underperformance relative to the broader market [3] - The company's earnings outlook is crucial for future stock movements, with current consensus EPS estimates for the upcoming quarter at $0.57 on revenues of $1.13 billion, and $3.05 on revenues of $4.61 billion for the current fiscal year [7] Industry Context - The Medical - Products industry, to which Perrigo belongs, is currently ranked in the bottom 49% of over 250 Zacks industries, suggesting a challenging environment for stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact investor sentiment and stock performance [5]

Financial Performance - Fiscal Year 2024 adjusted EPS was $2.57, at the midpoint of the company's guidance range, despite a reported loss of $(1.17) per share[1]. - Fourth Quarter 2024 net sales were $1.14 billion, a decline of 1.6%, with organic growth of 0.7% offset by divestitures and currency translation impacts of 2.3%[3]. - Fiscal Year 2024 net sales totaled $4.37 billion, a decrease of 6.1%, with organic net sales down 4.5% due to lower cough and cold demand and SKU prioritization actions[5]. - Reported net loss for the fiscal year was $(161) million, or $(1.17) per diluted share, compared to a net loss of $(4) million in the prior year[53]. - For the twelve months ended December 31, 2024, reported net sales were $4,373.4 million, a decline of 6.0% from $4,655.6 million in 2023[100]. Operating Income and Margins - Fourth Quarter 2024 adjusted operating income increased by $27 million, or 16.0%, to $194 million, driven by Project Energize and Supply Chain Reinvention programs[3]. - Reported operating margin for Q4 2024 was 10.0%, an increase of 1,130 basis points year-over-year, while adjusted operating margin expanded to 17.0%[3]. - Adjusted operating income for the fiscal year increased by 6.0% to $609 million, with an adjusted operating margin of 13.9%, expanding by 160 basis points[51][52]. - Adjusted operating income for CSCA for the three months ended December 31, 2024, was $145.8 million, representing 19.6% of reported net sales, compared to $143.0 million or 19.2% in 2023[116]. - Adjusted operating income for CSCI for the three months ended December 31, 2024, was $83.4 million, which is 21.2% of reported net sales, up from $65.1 million or 15.8% in 2023[116]. Cash Flow and Assets - Fiscal Year 2024 operating cash flow was $363 million, reflecting a cash flow conversion rate of 103%[11]. - Cash from operations for fiscal year 2024 was $363 million, down from $406 million in the previous year, resulting in a cash conversion rate of approximately 103%[70]. - As of December 31, 2024, cash and cash equivalents were $559 million, with total debt at $3.62 billion after repaying $400 million in senior notes[71]. - Total assets decreased to $9,647.7 million as of December 31, 2024, from $10,809.1 million in 2023[90]. - Total liabilities decreased to $5,328.3 million as of December 31, 2024, from $6,041.2 million in 2023[90]. Sales by Segment - Consumer Self-Care International (CSCI) net sales were $394 million, down 4.5%, while organic net sales grew 1.8% driven by higher sales in Upper Respiratory and Pain & Sleep-Aids categories[3]. - Consumer Self-Care Americas (CSCA) net sales were flat at $744 million, with growth in Nutrition and Skin Care offset by lost distribution of lower margin products[3]. - CSCA net sales for the fiscal year decreased by 9.1% to $2.69 billion, with organic net sales declining by 8.6%[57][58]. - CSCI net sales for fiscal year 2024 were $1.68 billion, a decrease of 0.8% compared to the prior year, primarily due to divested businesses and currency translation impacts[64]. - Nutrition segment net sales increased by 14.8% to $145.7 million for the three months ended December 31, 2024, driven by a 17% increase in infant formula products[129]. Gross Profit and Margins - Reported gross profit decreased by $33 million, or 13.0%, to $217 million, with a reported gross margin of 29.1%, down 440 basis points year-over-year[29][30]. - Reported gross profit for the fiscal year decreased by $138 million, or 8.2%, to $1.54 billion, with a reported gross margin of 35.3%, down 80 basis points[49][50]. - Adjusted gross margin was 51.7%, a decrease of 40 basis points compared to the prior year, influenced by divested businesses and lower sales volumes[66]. - Adjusted gross profit for the twelve months ended December 31, 2024, was $1,697.9 million, accounting for 38.8% of reported net sales, consistent with the prior year[99]. - Adjusted gross profit for Q4 2024 was $423.9 million, a decrease of $36.4 million or 7.9% compared to Q4 2023[134]. Strategic Initiatives - Project Energize is expected to deliver annualized pre-tax savings of $140 million to $170 million by 2026, with $40 million to $60 million reinvested[13]. - The company plans to share its 2025-2027 strategic plan at an upcoming Investor Day event[11]. - The company anticipates ongoing restructuring-related charges as part of its strategic initiatives[81]. - The company reported a gain on divestitures and investment securities of $28.1 million during the twelve months ended December 31, 2024[107][109]. - The divestiture of the HRA Pharma Rare Diseases Business significantly impacted the Digestive Health and Other segment, which saw a 50.0% decrease in net sales to $25 million[133].