Company Strategy - A2 Milk Co agreed to acquire an infant formula plant in New Zealand [1] - The acquisition targets further growth in the Chinese market [1]

Summary of Conference Call Company Overview - The company discussed its ongoing strategy, emphasizing that it is on track with its 3S plan: stabilizing the business, streamlining operations, and strengthening the brand [1][2] - The company operates in a dynamic consumer environment, particularly in the U.S. market [2] Key Industry Insights - The U.S. store brand is gaining market share, with a category-led growth model showing meaningful results [3][4] - Infant formula, which constitutes about 10% of revenue, remains a strategic priority, with investments calibrated to balance resilience and maximize returns [3][7] - The fastest-growing segment of the infant formula market currently lacks a store brand equivalent, presenting a significant opportunity [8] Financial Performance - The company reaffirmed its fiscal year 2025 financial outlook, expecting organic net sales growth towards the lower end of the target range of 1.5% to 4.5% [8] - The Americas business is expected to drive growth, with a projected organic growth of approximately $200 million in the second half compared to the first half [9] - The OTC business is anticipated to contribute 75% of the growth, with net new business wins of $70 to $80 million [10] - The company is on track to deliver an adjusted gross margin target of 40% [11] Strategic Initiatives - Project Energize and supply chain reinvention are yielding tangible benefits, with brand-building investments showing early results [5] - The company is focusing on regaining share among new mothers in the infant formula category, with new SKUs being rolled out [22][24] - The company has seen a strengthening of store brand OTC share, benefiting from consumer trading down to private label products [28] Market Dynamics - The company did not experience significant destocking at retail, and its OTC store brand has grown share [26] - The company is leveraging its extensive portfolio of 100 molecules to drive growth across multiple brands and geographies [35][38] - The UK market has achieved 80% household penetration, indicating strong brand presence [40] Future Outlook - The company expects significant revenue growth from the recovery of the infant formula segment and increasing store brand OTC household penetration [66] - There is a focus on improving operational leverage and expanding into new markets to enhance margins [71] - The company aims to improve free cash flow over net sales and reduce net leverage to attract more investors [76] Additional Considerations - The company anticipates a potential impact of $10 to $20 million on COGS due to tariffs, with plans to offset this through pricing strategies [61][63] - The company is committed to long-term value creation and is focused on executing its strategy with discipline [15][16]

Business Model & Strategy - Perrigo 拥有独特、互补且可扩展的业务模式，通过品牌和商店品牌提供 250 多种分子和剂型组合[4] - Perrigo 正在实施“三S计划”以实现有吸引力的可持续股东总回报(TSR)，包括稳定、精简和加强三个阶段[10, 11] - Perrigo 独特地提供跨价值范围的产品[12] Financial Performance & Metrics - 2024 财年，Perrigo 的净销售额中，品牌产品约占 40%，商店品牌约占 60%[13] - Perrigo 预计调整后的每股收益(EPS)同比增长将达到两位数，市盈率(P/E)倍数将达到较高的个位数[27] - Perrigo 的目标是到 2027 财年，自由现金流(FCF)/销售额较 2024 年提高 40% 以上，净杠杆率低于 3 倍[11] Consumer Self-Care International (CSCI) Segment - 消费者自我保健国际部门(CSCI)预计将主要由品牌驱动增长[15] - 2024 财年，CSCI 的有机净销售额增长率为 2.9%，调整后的营业利润率为 21.0%[16] - Perrigo 在欧洲的咳嗽/感冒产品中排名第三[19] Market Trends & Opportunities - 美国非处方药(OTC)商店品牌的销量份额最近有所增长，截至 2025 年 4 月 20 日的 4 周内增长了 110 个基点，截至 2025 年 5 月 18 日的最新 4 周内增长了 50 个基点[23] - Perrigo 在美国商店品牌中占据领先地位，市场份额约为 50%，并且在美国拥有 62% 的家庭渗透率[13]

Summary of Perrigo Company (PRGO) FY Conference - June 10, 2025 Company Overview - Perrigo is a global leader in the self-care market, holding over 50% of the US store brand share and ranking among the top 10 branded companies in Europe [4][5] - The company offers a diverse range of products across various price points, catering to different economic cycles and consumer habits [5][6] Core Business Strategy - Perrigo's strategy is anchored on three imperatives: stabilize, streamline, and strengthen [6][7] - The focus is on returning the US store brand to growth, ensuring reliable quality in infant formula supply, and driving innovation in high-growth brands [7][8] - The company aims for incremental revenue growth of $100 to $200 million by 2027, with a target of reducing net leverage below three times by the end of the year [8][12] Market Position and Performance - Perrigo's portfolio is diversified, with 40% of sales from branded products and 60% from store brand contributions [8][9] - The company is the largest OTC manufacturer by volume in the US and UK, with products present in nearly two-thirds of US households and over 80% of UK households [9][10] - Recent store brand volume share in the US increased by 110 basis points in May, indicating strong market performance [14] Financial Outlook - The company is trading at a significant discount compared to consumer health peers, presenting a value opportunity [11] - Expected double-digit adjusted EPS growth in 2025, with a high single-digit PE multiple [15] - Plans to improve free cash flow to net sales ratio by 200 basis points over three years, focusing on inventory optimization and operational efficiency [55][56] Challenges and Opportunities - The macro environment remains fluid, with pressures on consumer spending affecting OTC categories [13][29] - Trade-down behavior is observed in various categories, but Perrigo's position as a store brand provider offers a defensive advantage [13][29] - The infant formula business is recovering, with plans to launch 60 new SKUs to enhance market share [40][41] Regulatory and Tariff Considerations - The company anticipates a 1% increase in COGS due to tariffs, amounting to approximately $35 million in 2025 [48] - Ongoing strategic reviews of the oral care and derma cosmetic businesses to optimize portfolio focus [51][53] Conclusion - Perrigo is well-positioned to leverage its unique market position and diversified portfolio to drive growth and shareholder value, while navigating challenges in the consumer landscape and regulatory environment [22][54]

Financial Data and Key Metrics Changes - Organic net sales declined by 0.4%, but excluding lost distribution and prior year effects, organic net sales grew by 1.8% year over year [16][25] - Gross margin expanded by 440 basis points year over year to 41%, driven by business recovery in infant formula [16][25] - First quarter EPS increased by 107% year over year to $0.60 per share [16][28] Business Line Data and Key Metrics Changes - Infant formula net sales increased by 19% compared to the same quarter last year, contributing to overall recovery [7][19] - OTC brands achieved solid organic growth of 5.9% year over year, driven by strong sales of key products [10] - Operating income in the CSCI segment grew by 10% organically, while CSEA operating income grew by 90% due to infant formula recovery [27] Market Data and Key Metrics Changes - Dollar sales across self-care categories turned negative compared to the prior year, reflecting cautious consumer behavior due to inflation and reduced consumer confidence [11][12] - Total US OTC store brand volume gained 50 basis points over the last four weeks, indicating a shift in consumer buying patterns towards value-oriented products [15] Company Strategy and Development Direction - The company is focused on its 3S plan: stabilize, streamline, and strengthen, with positive results from stabilizing key parts of the business [6][21] - The synergistic relationship between store brand and OTC brands is being leveraged to drive growth, with substantial cash flow generated from store brands [10] - The company is enhancing its new product development process to create a more efficient pipeline [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertain macroeconomic environment but expressed confidence in the company's positioning to navigate these challenges [12][22] - The company is widening its 2025 net sales projections due to macroeconomic uncertainties while reaffirming its adjusted EPS range [12][30] - Management expects a significant ramp-up in infant formula sales in the second half of the year due to new product introductions [39] Other Important Information - The company plans to offset tariff-related cost increases through strategic pricing actions and sourcing more manufacturing to US facilities [14][30] - The gross increase in global cost of goods sold from tariffs is expected to be approximately 5.5% for the full year [32] Q&A Session Summary Question: Impact of tariffs on EPS for 2026 - Management expects that actions taken to mitigate tariff impacts will offset any major changes in EPS projections for 2025 and beyond [36][37] Question: Sales ramp for infant formula - Management anticipates a similar sales trajectory in Q2, with significant growth expected in the second half due to new SKU introductions [38][39] Question: Contract manufacturing activity - There is an increase in activity for contract manufacturing as competitors seek domestic supply routes [44] Question: Organic sales performance - Organic sales were broadly in line with expectations, with upper respiratory products performing well despite some regional variances [48][49] Question: Gross margin expectations - Management maintains a full-year gross margin expectation of around 40%, despite better-than-expected Q1 performance [52][53] Question: Widening net sales range - The widening range reflects dynamic shifts in consumer behavior and ongoing opportunities in the market [60][62] Question: Pharma-specific tariffs impact - Management anticipates a potential $100 million impact from pharma-specific tariffs, with plans to mitigate through pricing and sourcing strategies [84][85]

Financial Data and Key Metrics Changes - Organic net sales declined by 0.4%, but excluding lost distribution and prior year effects, organic net sales grew by 1.8% year over year [16][17] - Gross margin expanded by 440 basis points year over year to 41%, driven by business recovery in infant formula [16][26] - Operating margin expanded by 550 basis points, supported by gross margin flow through and benefits from Project Energize [17][26] - First quarter EPS increased by 107% year over year to $0.60 per share [17][29] Business Line Data and Key Metrics Changes - In the Americas business, store brand OTC saw new business awards that largely offset previous losses, with infant formula net sales increasing by 19% year over year [5][20] - OTC brands achieved solid organic growth of 5.9% year over year, driven by strong sales of key products [8] - CSCI segment reported organic net sales growth of 4.5%, while CSCA segment net sales declined by 3.6% due to lost distribution [27] Market Data and Key Metrics Changes - Dollar sales across self-care categories turned negative compared to the prior year, reflecting cautious consumer behavior due to inflation and reduced consumer confidence [10][14] - Total US OTC store brand volume gained 50 basis points over the last four weeks, indicating a shift in consumer buying patterns towards value-oriented products [15] Company Strategy and Development Direction - The company is focused on its 3S plan to stabilize, streamline, and strengthen operations, with significant progress reported in the Americas business [5][22] - The synergistic relationship between store brand and OTC brands is being leveraged to drive growth, with investments in high-growth brands expected to yield benefits in the second half of the year [8][9] - The company is navigating macroeconomic uncertainties while reaffirming its adjusted EPS range and net leverage targets [11][33] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertain macroeconomic environment but expressed confidence in the company's unique business model to capitalize on growth opportunities [14][23] - The company expects to mitigate tariff-related cost increases through strategic pricing actions and sourcing adjustments [13][31] - Future sales growth projections have been widened to account for macroeconomic risks, with expectations of 3% to 4.5% organic growth [31][32] Other Important Information - The company reported a cash balance of $410 million at the end of the first quarter, with typical cash outflow patterns observed [29] - The international business showed strong performance, with mid-single-digit sales growth and double-digit profit growth [88][90] Q&A Session Summary Question: Impact of tariffs on EPS for 2026 - Management expects actions taken to mitigate tariff impacts will offset any significant changes in EPS projections for 2025 and 2026 [36][37] Question: Sales ramp for infant formula - Management anticipates a similar sales trajectory in Q2, with significant growth expected in the second half due to new SKU introductions [38][39] Question: Contract manufacturing activity - There is an increase in activity for contract manufacturing, with competitors seeking domestic supply routes [42][43] Question: Organic sales performance - Organic sales were broadly in line with expectations, with upper respiratory products performing well despite some regional variances [46][48] Question: Gross margin expectations - Management maintains a full-year gross margin expectation of around 40%, despite better-than-expected Q1 performance [51][52] Question: Widening net sales range - The widening range reflects dynamic consumer patterns and ongoing work to capture market opportunities [56][62] Question: Pricing actions and brand divestitures - Pricing adjustments are being discussed with retailers, and progress on brand divestitures is ongoing, with a focus on international opportunities [70][73] Question: Impact of pharma-specific tariffs - Management anticipates potential impacts from pharma tariffs but has a mitigation plan in place [84][85]

Financial Performance - Q1 2025 - Net sales were $1044 million, a decrease of 3.5% year-over-year (YoY), with organic net sales decreasing by 0.4%[30] - Adjusted gross profit increased by 8.1% YoY to $428 million, with adjusted gross margin at 41.0%, an increase of 440 basis points[30] - Adjusted operating income increased significantly by 57.6% YoY to $147 million, with adjusted operating margin at 14.0%, up by 550 basis points[30] - Adjusted EPS saw substantial growth of 106.9% YoY, reaching $0.60[30] Segment Performance - Q1 2025 - Consumer Self-Care Americas (CSCA) net sales decreased by 3.6% YoY, while organic net sales also decreased by 3.6%[63] - Consumer Self-Care International (CSCI) net sales decreased by 3.4% YoY, but organic growth was positive at 4.5%[63] - CSCA adjusted operating income increased by 90.0% YoY to $100 million[66] - CSCI adjusted operating income increased slightly by 0.2% YoY to $86 million[66] Outlook and Strategy - The company is widening its 2025 reported net sales growth target to 0%-3% and organic net sales growth to 1.5%-4.5%[72] - The company reaffirms all other 2025 financial targets, including an adjusted gross margin of approximately 40%, an adjusted operating margin of approximately 15%, and adjusted diluted EPS between $2.90 and $3.10[72] - The company expects approximately 100% operating cash flow conversion and net leverage of approximately 3.5x adjusted EBITDA at the end of 2025[70] - The company anticipates a roughly 1% gross increase in global COGS in 2025 due to tariffs, with a full-year impact of approximately 5.5%[23]

Core Insights - The company advanced its 'Three-S' Plan to stabilize, streamline, and strengthen its operations, achieving strong first-quarter results driven by infant formula and OTC brands [1][4] - The fiscal year 2025 outlook for reported net sales growth has been widened to 0% to 3% from 1% to 3%, while reaffirming other financial targets including adjusted EPS [2][38] - The company is facing macroeconomic uncertainties, including tariffs, which are expected to impact costs, but it remains confident in its financial targets due to proactive measures [4][34] Financial Performance - First-quarter 2025 net sales were $1.04 billion, a decline of 3.5% year-over-year, primarily due to divested businesses and currency translation [8][11] - Adjusted diluted EPS increased by 106.9% to $0.60, driven by higher adjusted operating income and lower interest expenses [17][10] - Reported gross margin improved to 37.6%, up 450 basis points from the prior year, while adjusted gross margin expanded to 41.0% [14][10] Segment Performance - Consumer Self-Care Americas (CSCA) net sales decreased by 3.6% to $621 million, impacted by lost distribution of lower-margin products and lack of prior year benefits from new product launches [19][21] - Consumer Self-Care International (CSCI) net sales declined by 3.4% to $423 million, although organic net sales grew by 4.5% due to strong performance in specific categories [26][27] Strategic Initiatives - Project Energize aims to deliver annualized pre-tax savings of $140 million to $170 million by the end of 2026, with $40 million to $60 million expected to be reinvested [7][6] - The company has achieved gross annual savings of approximately $159 million since the program's inception, with restructuring charges of $111 million incurred [7][6] Cash Flow and Balance Sheet - First-quarter 2025 cash from operations was a loss of $65 million, primarily due to inventory rebuilding and restructuring costs [32] - As of March 29, 2025, cash and cash equivalents were $410 million, with total debt at $3.63 billion [33][50]