Perrigo(PRGO) - 2024 Q4 - Annual Report

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].