Health and Happiness (H&H) International (SEHK:01112) H2 2025 Earnings call March 24, 2026 11:00 PM ET Company ParticipantsFei Luo - ChairmanJason Wang - CFOSuceka Li - Regional CEO of ChinaConference Call ParticipantsXiang Gao - Equity Research AnalystZihua Wang - Equity Research AnalystNone - AnalystFei LuoGood morning, everyone. Welcome to the H&H Group 2025 annual results presentation. In 2025, against a challenging macroeconomic environment, compared to 2024, our three business segments have returned t ...

Health and Happiness (H&H) International (SEHK:01112) H2 2025 Earnings call March 24, 2026 11:00 PM ET Company ParticipantsFei Luo - ChairmanJason Wang - CFOSuceka Li - Regional CEO of ChinaConference Call ParticipantsXiang Gao - Equity Research AnalystZihua Wang - Equity Research AnalystNone - AnalystFei LuoGood morning, everyone. Welcome to the H&H Group 2025 annual results presentation. In 2025, against a challenging macroeconomic environment, compared to 2024, our three business segments have returned t ...

Health and Happiness (H&H) International (SEHK:01112) H2 2025 Earnings call March 24, 2026 11:00 PM ET Speaker3Good morning, everyone. Welcome to the H&H Group 2025 annual results presentation. In 2025, against a challenging macroeconomic environment, compared to 2024, our three business segments have returned to our growth track. I would like to thank the management for the great effort. Our full-year revenue grew by 10.3% year-on-year. We have seen significant increase of our adjusted net profit and EBITD ...

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 Viewpoint - A class action lawsuit has been filed against Perrigo Company plc for failing to disclose significant issues in its infant formula business, leading to investor losses during the class period from February 27, 2023, to November 4, 2025 [2][7]. Allegation Details - The lawsuit alleges that Perrigo did not disclose the following: 1. The infant formula business acquired from Nestlé suffered from significant underinvestment in maintenance and operational improvements [7]. 2. Perrigo needed to make substantial capital and operational expenditures beyond previously stated cost estimates to remediate the infant formula business [7]. 3. There were significant manufacturing deficiencies in the facility for the infant formula business [7]. 4. As a result, the Company's financial results, including earnings and cash flow, were overstated [7]. Financial Impact - On November 5, 2025, Perrigo announced disappointing financial results for Q3 2025, leading to a significant reduction in its fiscal year 2025 outlook due to issues in the infant formula industry [7]. - The announcement included a reassessment of a previously announced investment of $240 million in the infant formula business, which was deemed "less strategic" [7]. - Following this news, Perrigo's stock price fell by $5.09, or 25.2%, closing at $15.10 per share on the same day [7].

Core Viewpoint - The Perrigo Company plc is facing a class action lawsuit due to alleged violations of the Securities Exchange Act of 1934, with claims that the company and its executives made misleading statements regarding the financial health of its infant formula business acquired from Nestlé [1][3]. Summary by Sections Class Action Details - The class action lawsuit is titled French v. Perrigo Company plc, and it covers securities purchases made between February 27, 2023, and November 4, 2025, with a deadline for lead plaintiff applications set for January 16, 2026 [1][2]. Acquisition and Allegations - Perrigo acquired Nestlé's Gateway infant formula plant for $170 million in November 2022, along with rights to the Good Start® brand [2]. - Allegations include significant underinvestment in the acquired infant formula business, necessitating higher-than-expected capital expenditures for remediation [3]. Financial Disclosures and Stock Impact - On February 27, 2024, Perrigo disclosed acquisition-related charges of $35 million to $45 million for remediation, alongside a 50% decline in earnings per share compared to the previous year, leading to a stock price drop of over 15% [4]. - On May 7, 2024, Perrigo reported net sales of $91 million, a decrease of 34.5%, and a gross margin decline of 90 basis points, resulting in a nearly 10% stock price drop [5]. - On August 6, 2025, adjusted gross profit decreased by $30 million (6.9%), with a reported gross margin of 34.4%, causing a stock price decline of more than 11% [6]. - On November 5, 2025, Perrigo announced a strategic review of its infant formula business, slashing its fiscal year 2025 outlook, which led to a stock price drop of over 25% [7].

Core Viewpoint - Perrigo Company is facing a class action lawsuit due to allegations of misleading investors about the value of its infant formula business, which has resulted in significant financial repercussions for the company [1][3]. Summary by Sections Company Overview - Perrigo Company (NYSE: PRGO) provides over-the-counter health and wellness solutions in the U.S., Europe, and internationally [1]. Class Action Details - The class period for the lawsuit is from February 27, 2024, to November 4, 2025 [1]. - The lawsuit was filed on behalf of all investors who acquired Perrigo securities during the class period [1]. Allegations - The complaint alleges that Perrigo failed to disclose several critical issues regarding its infant formula business: 1. Significant underinvestment in maintenance, operational improvements, and repairs [3]. 2. The need for substantial capital and operational expenditures beyond previously stated cost estimates to remediate the business [3]. 3. Significant manufacturing deficiencies in the infant formula facility [3]. 4. Overstated financial results, including earnings and cash flow, due to the above issues [3]. Financial Impact - On November 5, 2025, Perrigo announced disappointing financial results for Q3 2025, leading to a reduction in its fiscal year 2025 outlook primarily due to dynamics in the infant formula industry [4]. - The company is initiating a strategic review of its infant formula business and reassessing a previously announced investment of $240 million in this area [4]. - Following this announcement, Perrigo's stock price fell by $5.09, or 25.2%, closing at $15.10 per share on November 5, 2025 [4].

Core Viewpoint - Perrigo Company plc is facing a class action lawsuit due to alleged securities fraud related to its infant formula business, which has experienced significant operational challenges and financial underperformance since its acquisition of Nestlé's Gateway infant formula plant [11]. Group 1: Acquisition and Financial Performance - In November 2022, Perrigo acquired Nestlé's Gateway infant formula plant and the rights to the Good Start brand for $170 million [3]. - The company reported fiscal year 2023 earnings on February 27, 2024, indicating a 50% decline in earnings per share compared to the previous year, attributed to remediation costs in the infant formula business [4]. - Following the earnings report, Perrigo's share price dropped by $4.87, or 15.14%, closing at $27.30 on February 27, 2024 [5]. Group 2: Ongoing Challenges and Market Reactions - On May 7, 2024, Perrigo reported a 34.5% decrease in net sales to $91 million for the first quarter, alongside a decline in gross margin [6]. - The share price fell by $3.28, or 9.8%, to close at $30.15 on May 7, 2024, following this announcement [7]. - On August 6, 2025, Perrigo disclosed that production issues led to scrapping approximately $11 million of inventory, resulting in a share price drop of $3.01, or 11.31%, to close at $23.61 [8]. Group 3: Strategic Review and Outlook Adjustments - On November 5, 2025, Perrigo announced a strategic review of its infant formula business and revised its fiscal year 2025 outlook, cutting net sales growth guidance to -2.5% to -3% from a previous expectation of 0% to 3% [9]. - The expected adjusted diluted earnings per share was also reduced to a range of $2.70 to $2.80, down from $2.90 to $3.10, indicating a significant cut in growth expectations [9]. - Following this news, Perrigo's stock price fell by $5.09, or 25.2%, closing at $15.10 per share on November 5, 2025 [10]. Group 4: Lawsuit Details - The class action lawsuit alleges that Perrigo made materially false and misleading statements regarding its business operations and failed to disclose significant issues within the acquired infant formula business [11]. - Specific allegations include underinvestment in maintenance and operational improvements, the need for substantial capital expenditures for remediation, and overstated financial results [11]. - Investors who purchased Perrigo securities during the class period are encouraged to participate in the lawsuit, with a deadline to file a lead plaintiff motion by January 16, 2026 [12].

Core Viewpoint - A class action lawsuit has been filed against Perrigo Company plc for securities fraud, alleging that the company made misleading statements regarding its infant formula business and failed to disclose significant operational issues [1][11]. Summary by Sections Lawsuit Details - The lawsuit was filed in the U.S. District Court for the Southern District of New York on behalf of shareholders who acquired Perrigo securities between February 27, 2023, and November 4, 2025 [1]. - Plaintiffs are pursuing claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 [1]. Financial Performance and Issues - In November 2022, Perrigo acquired Nestlé's Gateway infant formula plant and the rights to the Good Start brand for $170 million [3]. - On February 27, 2024, Perrigo reported a 50% decline in earnings per share compared to the previous year, attributing this to remediation costs in the infant formula business, which were estimated to be an additional $35 million to $45 million [4]. - Following this announcement, Perrigo's share price fell by $4.87, or 15.14%, closing at $27.30 [5]. - On May 7, 2024, the company reported a 34.5% decrease in net sales for the first quarter, with gross margin declining by 90 basis points [6]. - The share price dropped by $3.28, or 9.8%, to close at $30.15 on the same day [7]. - On August 6, 2025, Perrigo disclosed that production issues led to scrapping approximately $11 million of inventory, resulting in a share price decline of $3.01, or 11.31%, to close at $23.61 [8]. - On November 5, 2025, Perrigo announced a strategic review of its infant formula business and slashed its fiscal year 2025 outlook, cutting net sales growth guidance to -2.5% to -3% from a previous expectation of 0% to 3% [9]. - The stock price fell by $5.09, or 25.2%, to close at $15.10 on the same day [10]. Allegations in the Lawsuit - The lawsuit alleges that Perrigo's management made materially false and misleading statements and failed to disclose adverse facts about the infant formula business, including: 1. Significant underinvestment in maintenance and operational improvements [11]. 2. The need for substantial capital expenditures beyond stated estimates for remediation [11]. 3. Manufacturing deficiencies in the infant formula facility [11]. 4. Overstated financial results, including earnings and cash flow [11]. 5. Misleading positive statements regarding the company's business and prospects [11].