Perrigo Company (PRGO) FY Conference Transcript

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]