Perrigo(US:PRGO)2025-05-07 10:41Financial Performance - Net sales for Q1 2025 were $1.04 billion, a decline of 3.5% year-over-year, primarily due to a 2.0% impact from divested businesses and exited product lines, and a 1.2% impact from currency translation [3]. - Organic net sales decreased by 0.4%, with higher sales in the Nutrition, Upper Respiratory, and Healthy Lifestyle categories offset by lost distribution of lower margin products and lower sales in the Digestive Health category [3]. - Adjusted diluted EPS increased by 106.9% to $0.60, driven by a rise in adjusted operating income and lower interest expenses [21]. - Reported gross margin improved to 37.6%, an increase of 450 basis points compared to the prior year, while adjusted gross margin expanded to 41.0%, up 440 basis points [17]. - Adjusted operating income rose by 57.6% to $147 million, with an adjusted operating margin of 14.0%, an increase of 550 basis points year-over-year [7]. - Reported gross profit was $200 million, an increase of $47 million or 30.3%, while adjusted gross profit rose to $210 million, up 28.7% [26]. - Reported operating income increased to $64 million, a rise of 307.4% compared to the prior year, with adjusted operating income flat at $86 million [28][34]. - Adjusted operating margin expanded to 20.4%, a 70 basis points increase year-over-year, driven by operating leverage [35]. - Adjusted operating income for the three months ended March 29, 2025, was $146.6 million, or 14.0% of reported net sales, compared to $93.0 million, or 8.6%, for the same period in 2024 [63]. - The company reported a diluted earnings per share of $0.60 for the three months ended March 29, 2025, compared to $0.29 for the same period in 2024 [63]. Sales and Revenue Trends - The company widened its fiscal 2025 outlook for reported net sales growth to a range of 0% to 3% and organic net sales growth to 1.5% to 4.5% [4]. - The infant formula business recovery contributed to a 16% growth in the Nutrition category, with global brands delivering organic growth of 5.9% [6]. - Consumer Self-Care Americas segment net sales were $621 million, down 3.6% compared to the prior year, with reported operating income increasing by 307.4% to $64 million [23]. - CSCI net sales were $423 million, down 3.4%, as organic net sales growth of 4.5% was offset by divested businesses and unfavorable currency impacts [31]. - Net sales for the three months ended March 29, 2025, were $1,043.9 million, a decrease of 3.4% compared to $1,082.1 million for the same period in 2024 [57]. - Consumer Self-Care Americas (CSCA) net sales were $620.7 million for the three months ended March 29, 2025, down 3.6% from $644.1 million in the prior year [76]. - Consumer Self-Care International (CSCI) net sales decreased by 3.4% to $423.1 million for the three months ended March 29, 2025, compared to $437.9 million in the same period last year [76]. Cost Management and Operational Efficiency - Project Energize is expected to deliver annualized pre-tax savings of $140 million to $170 million by the end of 2026, with gross annual savings of approximately $159 million achieved since the program's inception [11]. - The company is proactively engaging in scenario planning to mitigate macroeconomic uncertainties, including tariffs impacting the cost of goods sold [6]. - Cash from operations was a loss of $(65) million, compared to a loss of $(1) million in the prior year, primarily due to inventory rebuilding and restructuring costs [37]. - The company estimates a gross increase to global cost of goods sold in 2025 of approximately $30 million to $40 million in Q4, and $145 million to $155 million for the full year [40]. - The company plans to continue focusing on operational improvements and cost management strategies to enhance profitability in future periods [53]. Inventory and Debt Management - Total debt on the balance sheet was $3.63 billion, with cash and cash equivalents at $410 million as of March 29, 2025 [38]. - Cash and cash equivalents decreased to $409.9 million from $558.8 million at the end of the previous quarter [60]. - Total assets increased to $9,759.8 million, up from $9,647.7 million at the end of 2024 [60]. - Long-term debt remained stable at $3,591.3 million, slightly up from $3,581.7 million [60]. - The company reported a decrease in inventories to $1,155.0 million from $1,081.8 million, indicating improved inventory management [60]. Segment Performance - Upper Respiratory product sales increased by 5.8% to $137.9 million, driven by higher incidence levels of cough and cold compared to the prior year [82]. - Nutrition segment sales rose by 15.6% to $104.8 million, primarily due to a 19% increase in infant formula sales [82]. - Women's Health segment sales decreased by 44.6% to $15 million, impacted by initial retailer stocking of a new product launched at the end of the prior year quarter [82]. - Skin Care net sales were $112 million, a decrease of 2.8%, with a 0.5% increase excluding currency impact [85]. - Upper Respiratory net sales increased to $74 million, up 6.4%, or 9.1% excluding currency impact, driven by higher seasonal sell-in activities [85]. - Healthy Lifestyle segment saw net sales of $67 million, an increase of 3.0%, or 7.5% excluding currency impact, despite lower consumption in weight loss [85]. - Pain & Sleep-Aids net sales reached $54 million, up 4.2%, or 5.1% excluding currency impact, primarily due to improved supply of Solpadeine [85]. - VMS net sales decreased to $38 million, down 15.5%, or 12.9% excluding currency impact, mainly due to deprioritization of the nutraceuticals portfolio [85]. Research and Development - R&D expenses for the three months ended March 29, 2025, were $26.7 million, or 2.6% of reported net sales, compared to $29.0 million, or 2.7%, for the same period in 2024 [69]. - R&D expenses for CSCA were $15.1 million, representing 2.4% of reported net sales for the three months ended March 29, 2025 [78].