Core Insights - The company reported a 2% decline in CORE organic net sales and a $4 million decrease in CORE operating income for the fourth quarter, with CORE EPS at $0.76, down $0.02 year over year [1] - For the full year 2025, all-in operating income grew by 2% and EPS increased by 7% to $2.75, while on a CORE basis, operating income rose by 7% and CORE EPS increased by 14% [1][4] Financial Performance - Management presented results through two lenses: "all-in" (historical operations) and "CORE Perrigo," which excludes infant formula and announced divestitures [2] - The company reported a non-cash $1.3 billion goodwill impairment in 2025, which does not affect cash flow, but is expected to create a $0.60 EPS headwind in 2026 [6][8] - The company ended 2025 with $532 million in cash and generated fourth-quarter operating cash flow of $175 million, totaling $239 million for the full year [20] Strategic Initiatives - The CEO highlighted the "Three-S plan" aimed at simplifying, streamlining, and strengthening the business, with evidence of market share gains and over $100 million in new U.S. store-brand distribution [3][7] - A two-year program targeting annualized pre-tax savings of $80–$100 million was launched, involving a workforce reduction of approximately 7% [5][15] - The company is pursuing a sale of its dermacosmetics business and conducting a strategic review of its infant formula segment to reduce debt and improve margins [5][21] Market Trends and Outlook - The company gained market share across most U.S. OTC categories, reversing years of decline, and noted positive momentum in Europe despite a soft market environment [9] - Looking ahead, management anticipates a difficult start to 2026 for category consumption, with U.S. OTC dollar sales down 5.1% over the last 13 weeks compared to the previous year [10] - Management expects low- to mid-single-digit revenue growth in infant formula in 2026, which is anticipated to help deplete higher inventory levels [22] Future Guidance - For 2026, management guided CORE EPS to be in the range of $2.25 to $2.55, with all-in EPS expected to be between $2.00 and $2.30 [19] - The company described 2026 as a "transition year," with an unfavorable EPS impact of approximately $0.60 due to manufacturing under-absorption [14] - Management reiterated capital allocation priorities of investing in the business, reducing debt, and returning value through dividends, with expectations of achieving net leverage below 3x in the next two to three years [21]

Financial Data and Key Metrics Changes - For the full year 2025, the company reported a 2% increase in operating income and a 7% increase in EPS, finishing at $2.75, aligning with revised guidance [8][4] - CORE Perrigo operating income increased by 7%, with CORE EPS up 14% [8] - In Q4 2025, CORE organic net sales declined by 2%, with CORE operating income down by $4 million or 2%, resulting in CORE EPS of $0.76, a decline of $0.02 [8][11] Business Line Data and Key Metrics Changes - CSCI's full year core organic net sales decreased by 0.2%, while fourth quarter core organic net sales decreased by 1.4% due to consumer softness in the OTC category [17] - CSCA's full year core organic net sales increased by 3%, but fourth quarter core organic net sales decreased by 2.4%, driven by lower contract manufacturing revenue [18] - All-in net sales for the quarter and full year included declines in infant formula net sales of approximately 25% and 10% respectively [18] Market Data and Key Metrics Changes - The U.S. OTC market dollar sales were down 5.1% over the last 13 weeks compared to the previous year, with a 4.3% decline in Q4 and a 1.2% decline for the full year 2025 [11] - Despite market challenges, the company gained solid market share across most categories, reversing years of decline [5][6] Company Strategy and Development Direction - The company is focused on its Three-S plan to simplify, streamline, and strengthen the business, with new reporting segments to be introduced in Q1 2026 [4][10] - The strategy includes enhancing consumer-centric innovation, demand generation, and targeted geographic expansion [12][14] - The company aims to grow share in key brands and deliver on its innovation pipeline while managing costs effectively [14][22] Management's Comments on Operating Environment and Future Outlook - Management views 2026 as a transition year, expecting temporary headwinds but confident in long-term growth and value creation [5][12] - The company anticipates CORE Perrigo organic net sales growth in 2026 to range from -3.5% to +0.5%, with core EPS projected between $2.25 and $2.55 [12][22] - Management highlighted the importance of addressing under absorption and operational enhancements to improve margins and cash flow [40][41] Other Important Information - The company reported a goodwill impairment charge of $1.3 billion for 2025, which does not impact strategy or cash flows [15] - A new operational enhancement program is expected to deliver annualized pre-tax savings of $80 million to $100 million, with a global workforce reduction of approximately 7% [22][23] Q&A Session Summary Question: Outlook for 2026 and pressures in the first half - Management indicated that the decline is largely transitory, with expectations for stabilization and share growth in the second half of 2026 [30][31] Question: Update on liquidity and leverage position - The company plans to use proceeds from the dermacosmetics sale to reduce debt while maintaining dividend commitments [34] Question: Recovery of margins in the OTC business - Management expects margin recovery to be transitory, with improvements anticipated in the second half of 2026 and into 2027 [40] Question: Path to normalizing operations and margins in the infant formula business - The strategic review is ongoing, with various options being assessed, including potential partnerships and divestments [42] Question: Categories with negative growth driving guidance - Preventative categories are performing better, while cough, cold, and certain pain segments are currently weaker [46] Question: Capital allocation and dividend priorities - The company remains committed to its capital allocation priorities, focusing on business investment, reducing leverage, and maintaining dividends [49]

Financial Data and Key Metrics Changes - For the full year 2025, the company reported a 2% increase in operating income and a 7% increase in EPS, finishing at $2.75, in line with revised guidance [8] - CORE Perrigo operating income was up 7%, with CORE EPS up 14% [8] - In Q4 2025, CORE organic net sales declined by 2%, with CORE operating income down by $4 million or 2%, resulting in CORE EPS of $0.76, a decline of $0.02 [8][11] Business Line Data and Key Metrics Changes - CSCI's full year core organic net sales decreased by 0.2%, while full year core operating income grew by 11.6% [17] - CSCA's full year core organic net sales increased by 3%, but fourth quarter core organic net sales decreased by 2.4% [18] - All-in net sales for the quarter and full year included declines in infant formula net sales of approximately 25% and 10% respectively [18] Market Data and Key Metrics Changes - The U.S. OTC market dollar sales were down 5.1% over the last 13 weeks compared to the previous year, with a 4.3% decline in Q4 and a 1.2% decline for the full year 2025 [11] - Despite market challenges, the company gained solid market share across most categories, reversing years of decline [5][6] Company Strategy and Development Direction - The company is focused on its Three-S plan to simplify, streamline, and strengthen the business, with new reporting segments to be introduced in Q1 2026 [4][10] - The strategy includes enhancing consumer-centric innovation, demand generation, and targeted geographic expansion [12][14] - The company aims to grow share in key brands and deliver on its innovation pipeline while managing costs effectively [14][22] Management's Comments on Operating Environment and Future Outlook - Management views 2026 as a transition year, expecting temporary headwinds but confident in long-term growth and value creation [5][12] - The company anticipates CORE Perrigo organic net sales growth in 2026 to range from -3.5% to +0.5%, with core EPS projected between $2.25 and $2.55 [12][24] - Management highlighted the importance of operational enhancement programs to improve productivity and streamline operations [22] Other Important Information - The company reported a goodwill impairment charge of $1.3 billion for 2025, which does not impact strategy or cash flows [15] - The company plans to implement a global workforce reduction of approximately 7% as part of its operational enhancement program [22] Q&A Session Summary Question: Outlook for 2026 and pressures in the first half - Management indicated that the decline is largely transitory, with expectations for recovery in the second half driven by share growth and innovation [30][32] Question: Update on liquidity and leverage position - Management confirmed that capital allocation priorities remain unchanged, focusing on business investment, debt reduction, and shareholder returns [34] Question: Recovery of margins in the OTC business - Management expects margin recovery to be transitory, with improvements anticipated as market conditions normalize [40] Question: Path to normalizing operations and margins in the infant formula business - The strategic review is ongoing, with management assessing options for optimization and potential divestments [42] Question: Categories with negative growth driving guidance - Management noted that cough, cold, and certain pain segments are underperforming, while preventative categories are doing better [46] Question: Comfort with dividend level and long-term leverage goals - Management reiterated commitment to dividends while aiming to reduce leverage over the next 2 to 3 years [50]

Financial Data and Key Metrics Changes - For the full year 2025, the company reported a 2% increase in operating income and a 7% increase in EPS, finishing at $2.75, aligning with revised guidance [8][11] - CORE Perrigo operating income grew by 7%, with CORE EPS up 14% [8] - In Q4 2025, CORE organic net sales declined by 2%, while CORE operating income decreased by $4 million or 2%, resulting in CORE EPS of $0.76, a decline of $0.02 [8][11] Business Line Data and Key Metrics Changes - CSCI's full year core organic net sales decreased by 0.2%, while fourth quarter core organic net sales decreased by 1.4% due to consumer softness in the OTC category [18] - CSCA's full year core organic net sales increased by 3%, but fourth quarter core organic net sales decreased by 2.4%, driven by lower contract manufacturing revenue [19] - All-in net sales for the infant formula segment declined by approximately 25% in Q4 and 10% for the full year [19] Market Data and Key Metrics Changes - The U.S. OTC market experienced a 5.1% decline in dollar sales over the last 13 weeks compared to the previous year, with a 4.3% decline in Q4 and a 1.2% decline for the full year 2025 [11] - Despite market challenges, the company gained solid market share across most categories, reversing years of decline [5][6] Company Strategy and Development Direction - The company is focused on its Three-S plan to simplify, streamline, and strengthen the business, with new reporting segments to be introduced in Q1 2026 [4][10] - The strategy includes enhancing consumer-centric innovation, geographic expansion, and strengthening retailer partnerships [12][13] - The company aims to improve operational efficiency through a two-year operational enhancement program, targeting annualized pre-tax savings of $80 million to $100 million [22][24] Management's Comments on Operating Environment and Future Outlook - Management views 2026 as a transition year, expecting temporary headwinds but confident in long-term growth potential [12][13] - The company anticipates CORE Perrigo organic net sales growth in 2026 to range from -3.5% to +0.5%, with core EPS projected between $2.25 and $2.55 [12][23] - Management highlighted the importance of addressing under absorption and inventory levels, particularly in the infant formula segment [12][61] Other Important Information - The company recorded a goodwill impairment charge of $1.3 billion in 2025, which does not impact its strategy or cash flows [16] - The company ended 2025 with $532 million in cash and a net leverage ratio of 4 times, slightly above projections [20] Q&A Session Summary Question: Outlook for 2026 and pressures in the first half - Management indicated that the decline is largely transitory, with expectations for stabilization and share growth in the second half of 2026 [32][34] Question: Liquidity and leverage position - The company plans to use proceeds from the dermacosmetics sale to reduce debt while maintaining dividend commitments [36] Question: Recovery of margins in the OTC business - Management expects margin recovery to be transitory, with improvements anticipated in the second half of 2026 and into 2027 [42] Question: Infant formula business and strategic review - The strategic review is ongoing, with management assessing options for optimization and potential divestments [44] Question: Categories with negative growth - The cough and cold categories are currently underperforming, while preventative categories like VMS are doing better [47] Question: Capital allocation and dividend priorities - The company remains committed to its capital allocation priorities, including maintaining dividends while reducing leverage [50][51]

Core Insights - Perrigo Company plc has signed an agreement to sell its Dermacosmetics branded business to Kairos Bidco AB for up to €327 million, which includes €300 million in upfront cash and up to €27 million in potential future milestone payments [1][2] - This transaction is part of Perrigo's 'Three-S' plan aimed at stabilizing, streamlining, and strengthening the organization by focusing on high-growth opportunities [1][2] - The Dermacosmetics business generated approximately €125 million in net sales in 2024, contributing about 5% to Perrigo's adjusted operating income for that year [3] Financial Details - The expected net proceeds from the transaction will be directed towards previously announced capital allocation priorities, including strengthening the company's balance sheet [2] - The transaction is anticipated to close in the first quarter of 2026, pending customary closing conditions and regulatory approvals [3] Strategic Focus - The sale allows Perrigo to sharpen its focus on core self-care categories that align with its One Perrigo model, enhancing its ability to drive sustainable growth and deliver greater value [2] - KKR, the acquiring firm, aims to leverage its global network and operational expertise to accelerate growth in the Dermacosmetics business [2][9]