Perrigo(PRGO) - 2023 Q4 - Annual Results

Financial Performance - Fourth quarter net sales reached $1.2 billion, a 0.1% increase year-over-year, with organic net sales decreasing by 0.6%[3] - Fiscal year 2023 net sales totaled $4.7 billion, reflecting a 4.6% increase compared to the previous year, with organic net sales up 1.7%[8] - Adjusted diluted EPS for the fourth quarter was $0.86, a 14.7% increase from $0.75 in the prior year quarter[3] - Fiscal year 2023 adjusted diluted EPS was $2.58, up 24.6% from $2.07 in the previous year, despite a $0.15 unfavorable impact from HRA distributor transitions[8] - Reported net sales of $4.7 billion increased by $204 million, or 4.6%, driven by acquisitions of Gateway and HRA, and organic net sales growth of 1.7%[27] - Adjusted net income for fiscal 2023 was $352 million, or $2.58 per diluted share, compared to $281 million, or $2.07 per diluted share, in the prior year[31] - Reported net sales for the twelve months ended December 31, 2023, were $4,655.6 million, an increase from $4,451.6 million in 2022, representing a growth of 4.6%[75][81] Margins and Income - Fourth quarter GAAP gross margin improved to 36.9%, a 380 basis points increase from the prior year, while adjusted gross margin rose to 39.8%, a 140 basis points improvement[3] - Reported gross margin was 36.1%, a 340 basis points increase compared to the prior year, with adjusted gross margin expanding to 38.8%[29] - Reported operating income was $152 million in 2023, compared to $79 million in 2022, while adjusted operating income grew by $82 million, or 16.7%, to $574 million[30] - Adjusted operating income for consolidated continuing operations increased by 16.7% to $574.3 million for the full year[99] - Adjusted gross margin increased to 39.8% in December 2023 from 39.5% in September 2023, representing a 30 basis points improvement[100] Cash Flow and Debt - Fiscal year 2023 operating cash flow was $406 million, resulting in an operating cash flow conversion of 115%[8] - Cash from operations for fiscal 2023 was $406 million, an increase from $307 million in the previous year, with total debt remaining flat at $4 billion[39] - Cash conversion rate improved to 178% for the three months ended December 31, 2023[99] Future Outlook - The company expects fiscal 2024 organic net sales growth of 1.0%-3.0% and flat total net sales growth compared to the prior year[5] - Fiscal 2024 outlook includes organic net sales growth of 1.0% to 3.0% and reported net sales expected to be flat compared to the prior year[44] - Interest expense for fiscal 2024 is projected to be approximately $180 million, with an adjusted tax rate of around 20.5%[44] Segment Performance - The Consumer Self-Care International Segment reported net sales growth of 11.0%, with organic net sales increasing by 7.4%[36] - Adjusted operating income for the Consumer Self-Care International Segment increased by $63 million, or 28.1%, to $285 million[38] - For the twelve months ended December 31, 2023, Consumer Self-Care Americas (CSCA) reported net sales of $2,962.3 million, a 1.2% increase from $2,925.9 million in 2022[86] - Consumer Self-Care International (CSCI) net sales for the twelve months ended December 31, 2023, were $1,693.3 million, an 11.0% increase from $1,525.7 million in 2022[86] Losses and Impairments - The company reported a fourth quarter net loss of $28 million, or $(0.20) per diluted share, compared to a loss of $(0.09) per diluted share in the prior year[18] - The company reported a net loss of $32.3 million in Q4 2023, compared to a net loss of $23.6 million in Q4 2022, with diluted earnings per share of $(0.24) for Q4 2023 versus $(0.17) for Q4 2022[55] - The company incurred impairment charges of $90.0 million in Q4 2023, compared to no impairment charges in Q4 2022[55] - The company recorded a goodwill impairment charge of $90.0 million related to its Rare Diseases reporting unit during the three months ended December 31, 2023[73] Research and Development - Research and development expenses for the year totaled $122.5 million, slightly down from $123.1 million in 2022[55] - Research and Development (R&D) expenses for the three months ended December 31, 2023, were $29.7 million, accounting for 2.6% of reported net sales[71] - Research and Development (R&D) expenses for the twelve months ended December 31, 2023, were $122.5 million, accounting for 2.6% of reported net sales, compared to $123.1 million and 2.8% in 2022[74] Expenses - Selling, General and Administrative (SG&A) expenses for the same period were $306.6 million, representing 26.5% of reported net sales[71] - The company incurred restructuring and other charges of $106.5 million for the three months ended December 31, 2023[71] - Total restructuring and other expenses for the twelve months ended December 31, 2023, were $1,274.6 million, up from $1,210.1 million in 2022[74] Currency Impact - The company experienced a currency impact of $16.1 million for the three months ended December 31, 2023, affecting reported net sales[89]