Financial Data and Key Metrics Changes - For Q3 2025, organic net sales declined by 4.4%, impacted by a 1.6% decline from the global OTC business and a 2.8% decline from businesses under review [11][12] - Year-to-date, organic net sales decreased by 1.7%, primarily driven by a 0.8% impact from businesses under review and a 0.5% impact from the absence of last year's Opill launch stocking benefits [12][24] - Q3 EPS was $0.80, down one cent from the prior year, while year-to-date EPS grew 21% to $1.97 [11][21] Business Line Data and Key Metrics Changes - In the US OTC market, Perrigo gained volume share of 90 basis points across nearly every category, particularly in smoking cessation, allergy, and women's health [6][13] - The CSCI segment saw a 5.3% decline in organic net sales for Q3, primarily due to soft OTC category consumption trends, while year-to-date organic net sales grew by 0.7% [19][20] - The infant formula business experienced a 3.8% decline in Q3, with share recovery taking longer than expected [14][20] Market Data and Key Metrics Changes - US OTC volume consumption declined by 3.2%, while European OTC grew by only 0.6%, falling short of original assumptions [13][24] - The overall market consumption trends have been softer than anticipated, impacting Perrigo's net sales outlook by an estimated $150-$170 million [13][24] Company Strategy and Development Direction - The company is focused on its 3S plan: stabilize, streamline, and strengthen, which has guided its actions and priorities [8][16] - A strategic review of the infant formula business is underway, with the aim to optimize its long-term role within the Perrigo portfolio [14][47] - The sale of the dermocosmetics business is on track to close in Q1 2026, with proceeds aimed at reducing leverage [23][47] Management's Comments on Operating Environment and Future Outlook - Management noted that the current consumption trends are dynamic and unpredictable, with expectations for stabilization in 2026 [41][46] - The company remains committed to deleveraging and sustaining dividends while focusing on high-potential OTC portfolio growth [15][47] - Management expressed confidence in Perrigo's ability to capture durable demand for consumer health solutions despite current challenges [17][46] Other Important Information - The company has achieved $163 million in gross annual savings from Project Energize, exceeding initial expectations [9][18] - Operating cash flow for Q3 was $52 million, with year-to-date cash flow at $63 million [22][23] Q&A Session Summary Question: Follow-up on infant formula share and expectations - Management acknowledged that while store brand share is growing, it is at a slower pace than anticipated due to competitive pressures and market dynamics [28][29] Question: Insights on OTC and infant formula consumption changes - Management noted that OTC consumption has been volatile, with a significant decline observed in Q3 compared to previous quarters [33][34] Question: Plans for reinvestment given current market conditions - Management indicated that while priorities remain on deleveraging and maintaining dividends, there may be opportunities to increase spending in high-performing areas [38][39] Question: Current share of infant formula and future growth expectations - Management reported an approximate 16% share in infant formula, with expectations to grow to 18-20% over the next 12 months [40][41] Question: Clarification on gross margin pressure - Management confirmed that the gross margin pressure was primarily due to sales deleverage and product mix, not input costs [42][43]

Core Insights - The company reported a net sales of $1.04 billion for Q3 2025, a decrease of 4.1% year-over-year, primarily due to organic net sales decline and the impact of divestitures and exited products [7][13][20] - Despite challenges in the marketplace, the company achieved year-to-date EPS growth and margin expansion, indicating resilience in its operations [1][9] - A strategic review of the infant formula business has been initiated, alongside ongoing reviews of the oral care business, while the sale of the dermacosmetics business is on track for Q1 2026 [1][9] Year-to-Date Performance - Year-to-date net sales reached $3.14 billion, down 2.8% year-over-year, with organic net sales declining by 1.7% [7][29] - Adjusted EPS for the year is projected to be between $2.70 and $2.80, reflecting a growth of 5% to 9% year-over-year [38] Segment Highlights Consumer Self-Care Americas (CSCA) - CSCA net sales were $646 million, down 3.8%, with organic net sales also declining by 3.1% [21][22] - The segment experienced growth in the U.S. OTC business, driven by share gains in five of seven categories, despite overall soft market consumption [22][23] Consumer Self-Care International (CSCI) - CSCI net sales decreased by 4.5% to $398 million, with organic net sales down 5.3% [27][29] - The decline was attributed to soft total OTC category consumption and challenges in specific product categories, despite some share gains in key brands [29][30] Financial Metrics - Reported operating income for Q3 was $73 million, compared to $80 million in the prior year, with adjusted operating income at $173 million, down 4.9% [7][18] - The company reported a diluted EPS of $0.09, an improvement from a loss of $(0.13) in the prior year [20][24] Strategic Initiatives - The company is implementing Project Energize, aimed at enhancing operational efficiency and is expected to yield annualized pre-tax savings of $140 million to $170 million by the end of 2026 [11] - The strategic reviews and divestitures are part of a broader effort to streamline operations and focus on core business areas [1][9]

Core Viewpoint - Perrigo Company plc is initiating a strategic review of its infant formula business to assess various alternatives and align with its 'Three-S' plan, focusing on disciplined capital allocation and improving returns [1][2][4] Business Overview - The infant formula business is projected to generate net sales of approximately $360 million in 2025, representing about 90% of Perrigo's global Nutrition category and less than 10% of the company's total annual net sales [3] - The operations have stabilized, producing quality assured formula, and Perrigo remains the only large-scale U.S. store brand and contract manufacturer with a significant near-term innovation pipeline [3] Strategic Intent - The review aims to accelerate cash flows and reassess a previously announced investment of $240 million in the infant formula business while optimizing portfolio impact [2] - The CEO emphasized the need for discipline in positioning the company's portfolio for sustainable growth and free cash flow generation, noting that the external environment has changed, affecting the strategic fit with consumer health OTC businesses [4]

Core Insights - Perrigo Company plc is scheduled to participate in one-on-one investor meetings at the Jefferies Miami Consumer Conference on November 18, 2025, with President and CEO Patrick Lockwood-Taylor and CFO Eduardo Bezerra attending [1] Company Overview - Perrigo is a leading pure-play consumer health company with over a century of experience in providing high-quality health and wellness solutions primarily in North America and Europe [2] - The company is a pioneer in the over-the-counter (OTC) self-care market, offering trusted self-care solutions that do not require a prescription, ensuring accessibility and choice for consumers [2] Business Model - Perrigo's unique business model leverages complementary businesses, where cash-generative store brand private label offerings fuel investments for leading brands such as Opill, Mederma, Compeed, EllaOne, and Jungle Formula [3]

Core Insights - Perrigo Company plc is identified as one of the 12 cheap healthcare stocks to buy now [1] - The company specializes in over-the-counter and self-care products, generic prescription pharmaceuticals, and active pharmaceutical ingredients, with a strong presence in private-label consumer health products [2] Strategic Developments - Perrigo is advancing its strategic plan to "Stabilize, Streamline, and Strengthen" by divesting non-core businesses, including the sale of its Dermacosmetics branded business to KKR-managed Kairos Bidco AB for up to €327 million, expected to close in Q1 2026 [3] - This divestiture reflects the company's focus on its core self-care and private-label consumer health offerings [3] Leadership and Investor Engagement - Insider purchases by executives, including EVP Charles Atkinson and Chief Scientific Officer Lennox Abigail, totaling $23,200, indicate management's confidence in the company's growth prospects [4] - Senior management, including President and CEO Patrick Lockwood-Taylor, participated in the Barclays Global Consumer Staples Conference, emphasizing ongoing investor engagement and transparency regarding strategic direction and product pipeline [5]

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]

Financial Data and Key Metrics Changes - Perrigo's organic net sales growth in Q2 was flat compared to the prior year, with OTC brand growth of 3.6% [9] - Year-to-date organic growth was also flat, but up nearly 1% excluding prior year benefits and lost distribution [9] - Gross margin declined due to divested businesses and isolated production variability in infant formula, with organic operating income growth at 28.3% year-to-date [11][30] - EPS in Q2 grew 7.5% or 12.5% organically, and year-to-date EPS increased by over 50% organically [12][35] Business Line Data and Key Metrics Changes - The infant formula business net sales grew 9%, driven by store brand formula, while the Good Start brand experienced a significant decline due to lost distribution [6][16] - Pain and sleep aids grew 8%, contributing to total growth, while upper respiratory products added 0.7 points primarily from new distribution [12][13] - OTC brands delivered organic net sales growth of 3.6% year-over-year, with Jungle Formula growing 14% and Compie achieving record share in several European markets [13][14] Market Data and Key Metrics Changes - Declining total category consumption in the U.S. and decelerating consumption in the EU limited top-line growth, but store brands gained share as consumers sought value [10] - Store brand OTC is gaining share, with Perrigo's allergy product sales up almost 19% at a key retailer despite overall category decline [20][64] - The company is seeing an acceleration in consumers trading down to private label products, with store brand OTC gaining volume and unit share [64] Company Strategy and Development Direction - The company is focused on its 3S plan: stabilize, streamline, and strengthen, with significant steps taken to enhance its self-care organization [5][8] - The sale of the derma cosmetics business for up to EUR 327 million is aimed at sharpening strategic focus on core high-growth brands [6][21] - The company is scaling its category-led market activation growth model to unlock portfolio potential and enhance brand building activities [7][23] Management's Comments on Operating Environment and Future Outlook - Management described the market as fluid and volatile, with heavy promotions from competitors impacting share growth expectations [44] - Despite challenges, the company remains confident in achieving its EPS target, needing only a 3% increase in the second half compared to the previous year [48][49] - The company reaffirmed its full-year EPS outlook, expecting strong double-digit growth despite anticipated lower net sales growth [38][90] Other Important Information - The company is on track to achieve its 2025 operating cash flow conversion target of approximately 100% to adjusted net income [36] - Net leverage to adjusted EBITDA is currently at 3.9x, with a target of approximately 3.5x by year-end [36][37] - The company plans to offset tariff impacts through strategic pricing actions and supply chain adjustments [40][63] Q&A Session Summary Question: Insights on the infant formula market and competitor responses - Management noted that the market is fluid with heavy promotions from brands, and while store brand volume continues to grow, share growth has been dampened by new entrants [44][45] Question: Building blocks for achieving guidance in the second half - Management confirmed that the EPS requirement for the second half aligns with guidance, with significant growth expected from new OTC store brand contracts and improved demand generation activities [51][53] Question: Strategic pricing actions and retailer conversations - Management indicated that discussions with retailers are positive, with expectations to offset tariff impacts through pricing actions across both branded and private label OTC [62][63] Question: Changes in expectations for Opill and marketing plans - Management expressed satisfaction with Opill's performance, noting double consumption and plans to continue targeted marketing to specific consumer cohorts [74][75] Question: Confidence in addressing increased product scrap in infant formula - Management reassured that the increased scrap was an isolated incident caught by quality systems, and confidence is high that it will not continue to impact margins [82][84] Question: Long-term guidance implications from updated expectations on infant formula - Management stated that while the ramp-up has been slower than expected, there is no change to long-term outlook, and efforts to rebuild market share continue [86][87]

Financial Data and Key Metrics Changes - Perrigo's organic net sales growth in Q2 2025 was flat compared to the prior year, with OTC brand growth of 3.6% [8][10] - Gross margin declined by 250 basis points, impacted by divested businesses and isolated production variability in infant formula [11][30] - EPS in the quarter grew by 7.5% or 12.5% organically, with year-to-date EPS growth exceeding 50% organically [12][34] Business Line Data and Key Metrics Changes - The infant formula business net sales grew by 9%, driven by store brand formula, while the Good Start brand experienced a significant decline due to lost distribution [6][16] - Pain and sleep aids grew by 8%, contributing positively to overall growth, while the digestive health category faced challenges due to lower consumption of proton pump inhibitors [12][14] - OTC brands delivered organic net sales growth of 3.6%, with Jungle Formula and Compie achieving significant market share gains [13][14] Market Data and Key Metrics Changes - Store brands are gaining share in volume and unit share as consumers seek value amidst economic uncertainty [10][12] - The U.S. market is experiencing declining total category consumption, while the EU is seeing decelerating consumption trends [10][11] - Perrigo's allergy product sales at a key retailer increased by almost 19% year-to-date, contrasting with a category decline of over 2% [19] Company Strategy and Development Direction - The company is focused on its 3S plan: Stabilize, Streamline, and Strengthen, with significant progress made in stabilizing the infant formula business and streamlining operations [5][26] - An agreement to sell the derma cosmetics business for up to EUR 327 million is expected to sharpen strategic focus on core high-growth brands [6][21] - The company aims to enhance its category-led market activation growth model to unlock portfolio potential and improve execution [22][23] Management's Comments on Operating Environment and Future Outlook - Management described the market as fluid and volatile, with heavy promotional activity from competitors impacting share growth expectations [44][45] - Despite challenges, the company remains confident in achieving its EPS target range of $2.9 to $3.1 per share, equating to strong double-digit growth [38][88] - Management acknowledged the slower-than-expected recovery in the infant formula business but emphasized ongoing demand generation efforts [46][84] Other Important Information - Year-to-date organic gross profit increased by 3.8%, primarily due to recovery in the infant formula business [31] - The company is on track to deliver a full-year gross margin of approximately 40% [30] - Operating cash flow for the year to date was $11 million, with cash on the balance sheet at $454 million [35][36] Q&A Session Summary Question: Insights on the infant formula market and competitor responses - Management noted that the market is fluid, with brands heavily promoting to gain share, and acknowledged that their shelf placement is not optimal at certain retailers [44][45] Question: Building blocks for achieving guidance in the second half - Management confirmed that the EPS requirement for the second half aligns with guidance, emphasizing confidence in OTC store brand growth and infant formula recovery [49][52] Question: Strategic pricing actions and retailer conversations - Management indicated that discussions with retailers regarding pricing are positive, with expectations to offset tariff impacts through pricing actions and supply chain adjustments [61][62] Question: Changes in expectations for Opill and marketing plans - Management expressed satisfaction with Opill's performance, noting double consumption growth and plans to continue investing in brand awareness [72][74] Question: Increased product scrap in infant formula and future confidence - Management clarified that the increased product scrap was an isolated issue caught by quality systems, and they are confident it will not continue to impact margins [80][82]