- Earnings call transcript Q3 2022

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Operator

Good morning and welcome to the Perrigo Third Quarter 2022 Financial Results Conference Call. [Operator instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator instructions] Please note this event is being recorded. I would now like to turn the conference over to Brad Joseph, VP of Investor Relations. Please go ahead.

Brad Joseph

welcome third and conference XXXX everyone call. morning, to quarter Perrigo’s earnings Good all to a press hope had I you chance issued morning. release this review we earnings the discussion release A the section and are website. available presentation of copy perrigo.com within earnings for of Investors the today’s

like and participants to call I’d investors will quick shareholders Harbor forward-looking Please President refer make start. important these our Eduardo are that information statements and everyone today’s before items earlier press CEO, Murray certain remind Joining CFO, language regarding release during the we for few Kessler, this Safe and Bezerra. to this call, in A morning. statements. issued

stated, for continuing divested prior from unless are the sale. financial They as presented to business, its any and on operations was which discontinued contributions First, Rx a operations accounted results do all discussed basis. not include

adjustments certain operations. non-GAAP including exclude in other appendix were period year adjusted to financial continuing to Rx reconciliations reported of business non-GAAP in for and which the the appendix, measures measures from adjusted of EPS addition as and operating income for support the details costs adjusted all prior profit presented. additional operations See described In incurred the the

constant the comparable over that, periods; the acquisitions, translation impact currency in I'd currency divestitures, to organic by solely call turn versus Second, excludes exchange of measurements to to the the in prior growth management’s in and year's both used discussion And like financial rates non-GAAP except prior Murray. statements. with year currency and All as related noted. comments comparable results third, on focus will otherwise expressly

Murray Kessler

fundamentals currency I'll today's our double-digit quarter business versus initiatives that drove some required us third highlight us growth. environment. Brad year line that the and you, update updates continued that that on thank Thank macroeconomic the bottom and Perrigo's our our track macroeconomic joining strategic volatility strong provide everyone and for in with ago first top financial finally Then us the a our exciting growth on EPS this On morning. call, the you basically XXXX guidance on despite I'll and dive to will into factors goals adjusted keep constant

comments, my QX of financials. through you our will details Following walk Eduardo

and date of across strong quarter the Perrigo long-term year grew HRA, quarter excludes Constant net above increase growing that of plus quarter in plus growth during continued the for net to the our target X% results double XX% the which sales grow in and XX% Third year-to-date to time. organic year-to-date. XX% same were periods well sales currency board. and digits growth Organic X% the and

store national brands, acquisition, higher which of factors. worth in driven and global brand, gains compete our EPS in consolidated versus or strong other $X.XX by business currency a inflation impact of year-over-year growth slightly macroeconomic year pricing currency organic gain the adjusted driven Gross through growth share respectively. was positive share basis as income Constant Mexico Third margin gains gains X% XX% once ago, increased the of a X% price, flow a across the pointing continue quarter categories net the European acquired business of share and again, top portfolio. units that and market the all line US in share newly across e-commerce out both It's for of versus included led and increase growth up million and points to year constant was positive led despite the benefit volume driven major ScarAway. and and actions by higher expense HRA interest strategic costs by input from Market less count. the our a XXX was share by Gross of and combination to divestitures $XX operating XX% ago. diluted quarter growth profit brands

spend business. few of minutes the fundamentals Let's a the on

or in top whether line not we for organically, adjusted off. a strong the seeing currency, are growth First, a it's trend. been one consistent total It's

the For both from annual major look COVID across organic and pandemic. growth closer grew while Growth volatility product on growth grew more was sales year quarter, prospective HRA. that despite than compound revenue on X%, strong categories. Taking to addition business both a three net from X% a basis came currency for our by also CSCI growth at our CSEA sales the ex driven in was the and contributions

categories. and the brands, notable to HRA the are highlights US. emergency women's mainly surrounding decision. of the a instances related benefited Two, a of cough cold due demand other product by Mederma was XX% ACO few share national public competitors market increase brand continued to our and major A Wade upper contraception Compeed the brand gains the in XX% Our concerns and higher growth from addition Europe. increased and which Three, of respiratory XXX% in of Roe. addition in skincare brand against store one, health driven spurred of growth Europe by grew v. in

even without XX% even to contributed Fourth, to line cough part XX% formula made from IQVIA's infant fan us compared pace had allergy for resulting affected a at national with proper in keep demand hard our for do running maintenance. to us driven To been the for allergy, infant the that meet this make back stronger, And situation, an according heightened about of main business been in year Our formula quality data. just shortage. our it equipment We in output share to up rigorous do sales and couple facilities amount gains demand. but as long prior does normal quarter. the the running, that placed US elevated to brand shortfall. the have for launch our XXX% the this is The was of the Vermont QX of a running and standards. our by oral three down this up By in helping the X% were way, abnormal though increase nutrition to care difficult during was the lastly, could Nestle, Unfortunately, of been but hold in resulted an could facility it we top total gateway sales older cold growth for the we the remedy on In NasonexXXHR population one is facility that minutes. formula labor that not facility weeks paused acquired in QX shortages constraint. shipments up reasons I'll have higher from to talk

by business from due inbound the recall back that may with and year, inventory over care substantial impacted happy a You from world few months, supply begin was allowing Perrigo to rise the along in demurrage on we China, of to I'm disruptions this higher impact fees. received a amount shipping -- constraint. freight say of have significant to this delays freight that cost ordered chain earlier China, this last ocean

significant ocean As quarter. freight have the business Also, rates the result, pre-COVID a share returned here levels. is gained in that to good news

oral care on year, track appears this took while substantially profitability to hit in a and recover So XXXX. it expected in to be

gain gained gained we eCommerce. segment almost grew we European gained nutrition share total share we of OTC. eCommerce gain share store and share of We of of in. We of we of every share or category of in OTC. OTC. gain share share Perrigo US US European brand gains, market compete share care US US share We US globally of gain total and and We oral Speaking

experience to included Another this our trend consumers brands is positive national or the similar and quarter US OTC, store a of from recession periods to in in switching Illumining brand inflation. in high previous

share, it the US pre-COVID market total total to worth largest we we rate growth is more gaining OTC the that compete levels. While are back noting slowed category in normal has of

of XX.X% first and half the US Perrigo this in total total OTC grew grew perspective, X.X%. year For US OTC

OTC relatively which see omnichannel a did was bump the again in in the in Perrigo's a a Looking at weeks, pricing despite We XX.X% category coincides dollar remain of this forecasted had X.X% growth with at with slowed, half which previously US total to in at the quarter X.X%. of X% and back to Encouraging quarter, final four growth OTC. flat up increases growth retail was Perrigo the from to quarter did price year. the over not XX significant quarter, increases. X% up Perrigo X% third levels, year, end of happen that estimate. retail a estimate we the the volume supports our total retail quarter at national of that decline approximately fourth also up quarter. our X% and but volume OTC We slowed in first latest category total OTC period brand year price prefers and third outpaced the that X% week OTC US suggesting

translation to major Turning for multinational unfavorable businesses, this headwind XX, has impact a like Slide of been Perrigo. the year all currency

We full by end. expect XXXX results operating $XX more dollar net than by approximately million the by adjusted strengthening $XXX million year income and year impact adversely US to sales

hardest and actions the addition, care expect strategic more inflationary goods the with majority in than the cost nutrition the other year. of impact costs We've hard full hit In and costs costs the quarter. our gross distribution and for we in labor million cost business offset inflation sold, by were of $XXX pricing to US to also, these worked units Oral savings.

need it. to pricing be as will cover additional pressures taking we However, cost we significant

net have sales guidance, to reaffirmed Turning net guidance. organic sales and we our

XXXX estimate. the formula a updated currency adjusted and the $X.XX our EPS reflects impact our negative infant movement a $X.XX outlook from impact Our negative rest prior of to $X further of including business, range versus unfavorable purchase $X.XX from

there. of All in is that

our digits. a me very and HRA initiatives will in in talk we us let acquisition about other that of the and has remains two business performed The closed deliver the growth strategy May, of XXXX. cornerstone integration believe beautifully is help double growing Now HRA and since synergies strong growth strategic

our total to approximately the direct let one-time forecast. cost from up we €XX million the of are our no our related and to previously other original cost end of trends details, cost the HRA to to operating sales the time me and by but ongoing the is facilitate distributors synergy which $X.XX current the This business. through in impact adjusted to Eduardo the EPS expect raising We than at in income from stress HRA be or force. switch from €XX has a for cost, million sales of $XX will strong would cost XXXX, now on benefit. XXXX of go one-time from million up Its This we fundamentals your estimate million included impact deal. €XX not distributors as inventory a an underlying the estimate returns

expect to gross the relatively fourth has continue margin while flat, our gross XX%. expansion to expectations, Perrigo versus quarter the throughout to our line exit flat, increased with above and margin QX, Moving QX plan in year we

Our infant gateway next to third Good chain portfolio driver, is program, to initiative supply we reinvention year. $XX million which in formula also and operating our Start the contribute. brand SKU The strategic will expect million $XX deliver actions is but acquisition and optimization the primary design income incremental

repeat me let myself. So

the to HRA from excludes incremental income impact the initiatives further from lost second This XXXX. expect the excludes currency. of income achieve the We also operating of onetime operating XXXX replace strategic synergies these and half any in the to cost

acquisition to US capacity existing this as for $XXX that strategic the for infant US also the announced by this by the Now combined the to with expected and eight manufacturing the future. part more and working the of expanding harden Canadian million details we or may of ounce an would industry next and brand formula million facilities, of our together. to the operating my investment finally now bolster additional XXXX through grant authorized board at gateway a Good our Parago facility gateway Start cost. an we and $XXX run half highly capacity which the Pergo than within to paid more is infant than project, only important making all equal million solves million recap constraints remember support this $XXX million our not you investments problem can up XXXX, Start for nutrition formula million with been To that The industry years facility accretive invest we branded network current greenfield occur. XXX our part team customers infant from Good but transaction, formula, manufacturing bottle and the a are XX our network. excited in XXX of several months. we formula equivalents $XX contribution from remain businesses. million volume, formula and the These paid profit solve had we capacity not We we're in the did on infant directors purchase £X in capacity expand I our nearly in -- pulling This about

stronger adjusted gross in fundamentals share, be cost foreign With HRA and XXXX remains detail. margin as to to the to profitable XXXX impact to over clear, goal growth are investments Our epo. strategic and turn market expand Eduardo? I'll are bring for unchanged. distribution, solid and that, continue and currency drive except make getting the inhouse the To in translation the financials onetime discuss more EPS our necessary beyond. CFO we win to call

Eduardo Bezerra

and more regarding synergies third costs. to through quarter and I performance would Thank first one-time operation of then details our continuing give good financial morning, everyone. a updated like our details Murray, you, HRA on go the basis,

tax GAAP prior Now million third share. A looking adjustments for a related chain effect loss per was and acquisition pretax quarter. press adjustments acquisition. mainly to loss of and company to million attached reconciliation Full the the adjusted income numbers, per forward, for morning the few per Non-GAAP primarily will Two, in it's table of share up third be non-GAAP $XX on a accounting reported net tax an $X.XX point slightly quarter adjusted year Number million, can the all worth. a otherwise. starting stated $XX of details one, requirements. found driven to our in of quarter reinvention primarily million points the be HRA related tax quarter non-GAAP this at non-GAAP of of dollar basis, adjusted of million. the of $XXX diluted XXXX. million program amortization the this rate was share share unless diluted XX.X%, fact quarter earnings tax totaling summary, of the the the P&L effective On three, $XX release. with $XX an $XX for an expenses and charges and were third supply quarter our million adjusted This adjustments GAAP led From our versus restructuring basis percentages and $XX $X.XX from integration or to financials entering margin non-GAAP related per to $X.XX the basis to by

expansion operating points was profit due to higher Operating This currency inflation million basis and by a quarter. products by on into of on on resulting directly two which a constant costs. XXX constant HRA inflation of basis. the the increased XXX basis expansion in on gross the $XX led current occurred flow These or sales through by gross absence or income addition margin by a constant more a profits, $XX margin the and higher volumes, XX.X% than factors offset adjusted basis. currency QX Moving inclusion points recalled gross driven by that of currency XX.X% of favorable driven expenses driven set operating Growth driven distribution grew higher partially in million of constant basis, increased higher justified offset pricing, HRA. prior was to basis also costs

For CSCA driven segment justified sales first or increased net pricing by X.X% organically X% actions. inflation

Second, in infant strong performance formula.

Third, health which increased launch Nasonex brand and digestive version category. manufacturing demand the the for of the MiraLAX, benefited fourth, of capacity store and

gains quarter and basis Gross pricing gross basis higher flow RX on or to on was by and higher across in year million of a in business operating flat margin higher for profit costs XX divested currency of impact all last a gross XX% driven basis shared the versus quarter two ofra, The care and points. the Murray, profitability these impact year profit expenses expenses, X addition distribution in increased our the points was through constant expanded solds items business was as of divested to good of offset set lower million sales $XX emerge the and XX contract inflation income adjusted the the by achieved prior of Importantly, as Sequential logistics businesses. at Volumes by operating. operating highlighted in we three including increase oral cost sales. businesses. X.X%

a basis, into CSCA increase additional and million. including $XX $XX income drove These on driven and basis profit cold, on saw by sales we increased of Gross driven currency We three. more a increased higher through gross and favorable from and the skincare was constant sales currency. the volumes. gross primarily Operating inclusion currency HRA of XX.X%, versus X.X% RA continued administrative r points and year. net pricing X.X%, grew strategic report increase and XX.X% flow promise prior than significant driven margin basis in saw by Moving a the Organic a expenses, by content million offset demand increased factors cough, XXX d for as growth and XX.X% expenses. profit operating adjusted higher

flow. on from third was the at the on moving $XX of cash Cash than $XXX of sheet to quarter. flow a million of Now the end was for we operating XX%, lower is Year down which hundred at $XXX million to expected. quarter million, the date, second the end balance conversion cash

$XX XX cash explain and due segments inventories, million primarily CSCI care to business today, impacts flow million me US and restructuring Let from included oral operating increased year of expenses.

XX% projecting operating Given these the adjust full year. conversion impacts, cash for net we're the flow to now income

returned cash nine during In also to dividends the addition in flow movements, first million year. and invested through to $XX shareholders $XXX million operating we these the expenditures our capital of months

million XXX for newest Early this iris. transaction the refinanced after infant the and debt we bit acquisition, the funded how closing borrowed the we plan of HRA the dollars swaps currency took wanted quarter used year, I to when detail a ahead more provide closed, that our formula acquisition. place gateway we Although regarding we

strengthening the to were in which the eight this Given year our cash, these was generated swap a burges. dollar million approximately $XXX positions, recoup the to swaps we on dollars of US gauge for able relative and used

As income benefit by the million stated, for a we have XX end XXXX. cost of increased approximately synergy to operating HRA target euros to of our

achieve target sales internal distributors transitioning external throughout force. We our expect by Europe from CSCI this to roughly half of to HRA

head included approximately half of we will across are of to to million be distributor reminder, captured fixed non-GAAP the a returns with partnerships one is sales remaining drugstore results, time force. the external X.X As a of excluded HRA remainder and marketing the synergy sales and related restructuring from CSCI to €XX be in expected onetime one-time adjusted in approximately costs. costs. we returns colleagues our approximately be business achieve our have are XXX,XXX internal cost and costs, pharmacy the cost sales distributor The of Of with costs historical expected our to part or from while results Europe. expected times synergy of €XX reduction ongoing estimate of million, from treatment our these adjusted CSCI inventory consistent our the integration as To sales benefit. transition The impact these XXXX

a colleagues for We business quarterly I'm of on our our In excited navigating areas, like microeconomic closing, while will basis around costs. and the efforts to provide continued thank dynamic world these through both and updates the a very would one-time synergies their environment. progress of two about

line initiatives, that With our can please make for meaningful strengthening open questions? We in strategic continue towards growth delivering our on and operator, progress business, XXXX. delivering the to you

Operator

the [Operator Raymond come Wilbur begin instructions] from now session. will Our question with first question-and-answer We James. Elliot will

You now go ahead. may

Elliot Wilbur

Several you. questions for

some your But deck, into it. missed acquisition. to may just revenue color about incremental you how the it's the to specs quality or shut the see X you some acquisition lift, respect or with talk I that processes others, couple or or you not whether trying a associated sort Gateway the provide in on that weeks, basis of could I've to the of in And with does enable integrating is? units of triggered as have I First, and that too. any changes down then think what commentary investment the what run mentioned Vermont think major either guess, operations, terms with much like of that for Can then this an about maybe about existing maybe And of of I business in does actually we got level dollars, not a you rate to hit. capture? just And in your existing facility? of Gateway that you capacity the don't terms business plant

Murray Kessler

right three in an in million Okay. and very else But had life build three down slowed make Board million to control in raised and adding lines $XX down, we sanitation Elliot, added I think, of order And in first weren't first on Perrigo, and month incremental We we ago, meeting, XXX because didn't Everything on the is then XX look useful we spent I progression, Listen, this it in constantly the summer. that our facing and go the -- Board per for added was an have it, about years. a it beautifully year. area, million for, that margin we able old build areas had by you're this $XXX somewhere been saw cost Like that what asked We half ongoing quality in end happened the joining We because the there's if -- business took to track. at the sure the years you basis next reason is over quality and an -- XX we you -- struggling. or of equipment We've profitability meeting, didn't of on think, ago. in important at recalls. issues, a I years Vermont its having cetera. it years we four kept three at I did couple around with my gone et two $XXX to. equipment we we gross to you're pass right have been of the environmentals, challenges but -- facility, in people,

the time, just of worked all not we was through. same could key So volume the At being satisfy out -- our I were mean, customers. that we of

Nestle. looked in to So with we at our discussions had alternatives, had and that with other we mind, gotten on

As you packing contract some a quotes, and their price have hit margins looking we're had our and that, at but in entire been came to sort with saw on at They our and them. big infant as well. We done those exiting. some The it challenged of solves of supplied they purchase businesses, opportunity the problem. formula

this came or in is that Now not been long the last year, month We've a on working up so. before something formula this for shortage. over well infant the

the So I give if looking -- you you that can, on for try total to infant give to formula details you're that business.

Good We did not have WIC purchase the We Start business. the brands, right?

bump bigger for them, pack their they had be -- will WIC year an because annual rely business was of how but completely a be This it's our on investment margin It in the shortage, will XX about part see about had basis. we'll brands. of business less the it the facility. part of that half that on us, it's the million to for important. We that I spoke And nice the business. a this of a volume. -- but justify those to will And contributes It just

comes they put of for The cost half at of from millions that us us. already can margin And their comes we were more poundage to pounds. other instead the now back packing

that already allow which than there. facility, will We X invest into million products the make to will more us also make we XX that about

half get demand less our technical transfers. or we than can also that. now -- and customers, We to satisfying X want, start our they I about any have don't us can can can putting can do they down. of want slow or I what the some of we're meet they We line biggest Vermont their that. half start We what So That brand we because more poundage. SKUs. national only allows feeding of can in premium Vermont are do

some it's We then for are will slow make but we been maintenance don't driver. decisions, so say $XX but able for to the line in this years -- be million for you additional though, have And breaks, an that. when to additional just I We've usually we quality operating recover these issues, million for XXX big next relatively -- so of year, is and And the -- cost. pretty additional it this back in numbers I'm similar a And we'll listen, add conservative income on you to that doing this that had we the the half XX you don't slow that, don't deal. then XX band-aids. to slow you have can But is of to that's to plus. just down, more challenges order time have have in in million-plus putting the year.

So here HRA numbers. half. that in offsets onetime currency same And more right -- I for the that back the now, to told charge, shortfall the last which and but at -- you about fall, we're

Elliot Wilbur

in business to as Okay. a the quarter around question HRA well. And then ask I the want

underlying was. perhaps little but Could a remind much in and an HRA your and to I'm this other double-digit businesses. so of changes, and targets overall more of the thought what relative bit I us of that's velocity last mentioned can movement gross just XXXX any a of in gross disclosure to just there's Murray, internal then incremental you the the I provide about margins, might impact the And I guess, FX of growth. how there's were? you if it sort versus lift margin just function then, in expectations? been versus the performed wondering terms quarter of You And what have thinking that business guess plan period, your business. color that

Murray Kessler

Brad difference from HRA. forecasting we're for the basis deal in It's the is year, me right was model. but in over now increases massive can It's and bit, help of HRA XXX% you -- quarter little Eduardo, on or XXX a exactly probably our gross the it. points margin,

Eduardo Bezerra

Yes.

Murray Kessler

correct. is point your So

were Let to the because me that's CSCI was be by... just I up margin affected chase. cut going of up were We everywhere. HRA. -- have We gross to CSCI don't [indiscernible]

Eduardo Bezerra

XX.X.

Murray Kessler

XX.X? up It's

Eduardo Bezerra

the quarter. in Yes,

Murray Kessler

it's up excluding And that's -- HRA.

up. was everything So

-- XXX over our So biggest XX%. up basis up basis, operating a in currency and the XXX constant business was income over on points U.S., was almost the OTC

issue the for was just that was it's all, go We which facility all The and you to it is It down through where that Oral Nutrition. product a I weeks. Nutrition. bad. shut So Care necessarily product. very have I throwaway about X issue? test means talked have slow. it mean and quality hold doesn't That

basis Oral of a Nutrition, we It mean, same could year or margin, driver on inbound it big the were freight. make. I of versus shipped the gross and way down that's that could that's was have everything was we and Care then so down that you right? we ago because volume X,XXX. the get -- in could points shipped. like But planning and over didn't And So all shipped ship that, -- XXX basically with thing was all on all getting

it's we total -- Care, in in are mind issues. recovery. keep good the costs what's So ago so significant news back were basis up all let's expecting isolated. freight issues, despite very year a down. two a the Oral XXX two those the way on points And versus well, Good We're those

and a in year points little basis there a of increase. we were significant facility And fourth quarter. it excuse in mid-XXs under Care I quarter little be as We the should brand's -- down we'll a have quarter, on think bit a Nutrition, XX% of a ago least at Gateway well, year. was on because in versus Nutrition the Nutrition gross but the margin little Start this is me, in XXX complicated and Good the on the Oral the have

that at comes bottom profit So solved, you to that fourth income just operating cost, lower $XX be in -- that -- in supplements told on is going I how probably we We're volume product and we've back have running a line operating to of sales $XX making additional were million they from plus margin the Nutrition us of business. million the quarter right?

hits you of We message already giving and direction. slowly. going the go will I'm both two a units, But business solved. in was lot they numbers. is everything So hard are it had big the right in Brad with two

Brad Joseph

No, on The correction. it's was just a gross margin. number CSCI XX.X%

so... .XX think I at extreme,

Murray Kessler

did. You

Brad Joseph

did. I

Murray Kessler

Yes.

Elliot Wilbur

terms exposure of annualizing we new acquisition forward? period? queue had expense full of the the I'll expectations a sort HRA quarter last for than shouldn't this will were rate here, year and about a accounting you because quite be and to baseline this Eduardo. of and what have and quickly, operating the the were Total and on or any fixed rising can some a of that going this just Okay. we there less Maybe Or question, the And the think what in have a external operating investment debt, just in good lot expenses is what there the is XXX% in for occur effective bit on issues may what seeing terms cost like. remind expected other of rates? didn't real Total in then run be is the debt? you not rate to back and -- you whether Is thinking had are about of just number you is line, essentially just us of one be anticipated. the jump you top Or

Eduardo Bezerra

So in a of first quarter, operating about the there couple things so there. expenses, all, of were talking the

bit advertising to way the in And happening a was that is a third quarter we QX So quarter, look and promotion little So right? tied we into of also, and QX. lower we given the some incentives, one well. the as saw in our QX saw softening the timing between there

operating third Given the need that we on the to is fourth that quarter invest because we the compared increase usually of expenses we expect what should an quarter, QX cough/cold, et more, in okay? area to in cetera, an saw as

Elliot Wilbur

Got it.

Eduardo Bezerra

so we are to the regarding interest fixed rates. swapped And floating -- from majority would to I that the say Yes. debt,

X.X% have X.X%. between our now and we rates So

are well with the coveraged we there. even increasing nominally sulfur pretty there So

that expect in compared So increase we do as now. seeing our an as to what we're for XXXX expense interest

third a that's proxy is there the other think good interest important what some quarter you our But I income that expense, third of related to run exclude for our the of see businesses. in quarter when other rate reference happened XXXX. as an we

Operator

will next JPMorgan. from Our Schott question come Chris with

now go may You ahead.

Chris Schott

headwinds first freight just in should the progression Maybe greater you running these little sounds starting we a here. It questions ease. gross target, like of I into gross bit relative think margin about margins. XQ few about some just how maybe talk XXXX? to you a guess than starting Just on through can to are were XX%

just as of like that change XX% going to supply had about representative XQ trying think magnitude see to obviously initiatives. is be how I'm to next increase You've some what or in we try year?

Murray Kessler

hit. Well, forecasted again, what to you, progression the kind exactly of the right was now, but we -- Nutrition we for

XX,XXX well in freight CSCI OTC that. you besides business gave back of over that it supply the on reinvention quarter. first roughly but I because don't CSCI. very tie million stay. exactly, up longer-term quote we back cost it's -- is when Nutrition Care, go and think little up had the range, which in $XX the the in that up million. the as me now the to you, you on was back, impact I container into million from that to made and plans big we're business, adding the CSCA, piece X,XXX told believe I as the to is entire biggest in a just a now up have the us the change progression now chain I And were -- in Oral on forecasting will went right container, on and a I of massive the we XX.X% just know -- bit But XX% something when I portion over third to at around $XX $XX XX.X%, need a of that that fourth been So dramatic on business to are again going second it quarter quarter the the close

came that X,XXX all down As of exiting the to number way back the quarter, again. the

to going it that, that couple after was the again, going. and where that -- it also million heavily, will couldn't they free the now. product had and start the -- pretty product we're demurrage anymore. well. still in of to the -- the we a Unfortunately, is off little not that's we're we're least in -- And a But lot and product needs fourth where line this you we But that's go had It's away. It's because into paying sight -- at charging third go in carry costs. the and well, shipped that quarter, a of will we're you already get It's days amount quarter, you be year, the in recovery, right, mean, When as product freight the of quarter is the have which there's the through get not the see cost. recover centers, as in So bit to good. it recover selling docks most higher distribution as about a we it a down. heavy probably $XX at we'll the a that in higher comes the it I starting towards cost. cost,

Chris Schott

Is like points Or there a Okay. to fair couple going or next on it to of that to about out hundred being is year just not directional think basis significant gross it margin? a commentary? be looking

Murray Kessler

September, I and around to we you Day late lot going going tell on that to thought, I now. will to you, happen own I We had an deal talk question, ask do and signed specifically. it. or We're the was I can't having negotiating were of right it was you I and couldn't. I've October. it Murray, plans a [ph] me this here or closed. and know when whether summer investors -- Investor

be So that weeks a ago. just we few that -- all did has to

was this give I'll onetime right? you to that to it, I ex able to always in that, all was And know right number much going to all that Now -- synergies pretty redoing do all I Come XX spectacular, alluded non-GAAP And be was and to be all that. you we I wasn't the now. of the an versus the of now Investor the one. to Day, EUR charge. -- knew answers is quarter we I have GAAP. HRA how it size we're million to sure million first the have it costs. building on we about and that but waiting one I that building February, plans, give I'll So in that of if I all information, but in, get don't now don't and target of I'm the XX going

So we'll trying to not to you. question. get the avoid I'm

Chris Schott

maybe whatever can Sure, this sure. give. Yes. color just you one topic and on more And

all the this I XXXX all think just really just around trying interesting deal, stuff. guess inflation, clear. so at XXX% we're given I hands to Gateway get point, our so this I'm HRA,

than the you EPS 'XX basically less HRA said charge. FX I of you're targets unchanged think less remain and kind $X.XX

code here, making make all about should think of we we're we're comments. the like set can we're level after rough be I like when give make so number just us trying Just of in those right what you're thinking we those you kind a just sure adjustments? ZIP to of all

Murray Kessler

to But for I given way chart May where haven't going I be goals to the wanted the put back an I target, all to of those refer other -- always right? off we official when by well, that XXXX.

you is it's talking So $X.XX know I to and which I it's that than $X.XX you, adjusted the going for is, I means target for listen, which but you didn't tell -- lower would Brad, know very almost is about. joked Relations And The that not around $X.XX well I Investor I'm the what it's guy, was say that's I with by our target HRA, Street $X. $X.XX what give -- roughly but currency about

a first, guidance, going the with than not So it's $X.XX as $X it's around a not to be our range -- around you're less official it.

Chris Schott

Okay.

inventory is a tight in And we're next this the final cold/cough guess situation like think you there? the That's be question I flu Is fact, had inventories advantage heading of in of the are presentation season and is the strong if, take company then into over gains advantage seems noted a was point still position in able to labor Okay. your And that just take it I of too kind volume I Or very -- potential quarters? season. few low. kind months at of the to see helpful. do of kind a still we and strong situation to

Murray Kessler

latter. the is answer the Unfortunately,

where. depends Now it

take to of So big business as which it able projecting, also that's -- cough/cold in advantage they're right? be and we'll think Europe, fine I well. a

almost relates high-priority, hours liquids, week a product it come high-margin but a shortages we're tell X full XX to are will I this pace that. as has the out. tablets, be the we U.S. the X to making X it's to running able The Labor day, cycle out. been but have think adjusted running in and years keep that's days we'll think flat that. among us that in I I there a here. for beginning, in with you But us, And we hurt way

not -- I sure. than am I'm well, I'm more sure, So

year went plus And inventories keep not our the normal because third products. year, Our the had, prior buy the the followed the on third pace away occurred to further. was in or some way, its know as this but may have got did of they X, was for increase. So COVID. shipped didn't they who in the even why, year shelf long XX% quarter the Retailers it as all when this people the all February normally January you've the was year cough/cold plus we reason life. down and -- wanted didn't business we this got with we huge end of you because for And last consumption just we the of pressured inventory. Chris, story order, had kind way we from X sort near consumer By right? We Then of in the forecast nobody had season when inventory that takeaway that didn't didn't the demand quarter. that

we it fourfold wanted, -- to through prior and throwing through forecast right? the in than right didn't the So from play cough/cold slow higher happen. -- we then catch it down that season actually to threefold, the And summer, -- the customers the we up, came had product we because summer. are And were had didn't away

way than if XX%, or So XX% what sold to and probably that. our and we shipped of of way, the compared manufactured happened customers and forecast in that. at from But you look the year, that more our XXX% what that's actually higher, the what have marketplace for of was plan XXX%

able be advantage sales $XX the in So we estimate of third we'll million on listen, of up, eventually take And fully probably catch will that us cost no, to but that. cough/cold. I not quarter

Operator

with will Our Securities. Wells Hughes from come Jacob Fargo last question

Jacob Hughes

overall than A level your I mean, pieces. confidence a greater just the question quarter fourth XX%. of on there's obviously lot in margin moving of

the Vermont improved. You then called fourth issue labor the charges, improving talk Care in Oral has issue, quarter, also out the labor about, Murray, you

should color is thinking be floor Maybe about? So kind we XX% there conservatism on could some provide of you that. the just Is some there? if

Murray Kessler

we believe forecast, the in did we When it.

conservative be. as now. Do done has X- you took numbers have come this of up. it's I a pricing it's business that added, fast don't -- -- say here. product going believe that We know as part got the been wouldn't month I at know. have We can't it We've It year. through or adjustments. in helped our I we've conservative. has It's That's implemented lag or is the will take what -- increases of The kind point, it. the in competitors. part not we be. the HRA of price It's Gateway what But probably it. We -- that's to any like our a is pricing X-month we That's was included. it,

been on hasn't all but predict. So pretty want in been or... hit add, to Anything difficult that Oral Care. pieces, it it you predict I plants it Nutrition the of stop costs Despite hasn't were of to having mean, Eduardo to to this and severe lot pieces, -- that the and moving that there's a was difficult demurrage quality the the holds for and

Eduardo Bezerra

that's No, consistent. I think

Murray Kessler

Major there. variance

where that's think are. we I

Jacob Hughes

the Okay. And what the in then was quarter, X%? pricing

Murray Kessler

X% up. Yes,

Jacob Hughes

deal kind of you think -- come you I you to for there make formula if thinking to have investments think Okay. the there? allocation, that are And beyond you about of how going then strategic the me how is down, Murray, are your similar announced? last capital Or additional to 'XX? you're mean, infant is to you the going on about just one kind priorities could levels do

Murray Kessler

and priority, now think So that to #X to the right? said right by is -- we $XXX certainly, are million million, right? we've comes of bond or Well, end reduce $XXX committed -- leverage, I -- at that it's due that 'XX, our that

Jacob Hughes

to is X, the really XXXX. So net of our Xx leverage get end by around objective

that's So that priority we main now. have our

Murray Kessler

And of [indiscernible], was $XXX then show the to Investor we out million I Eduardo continue have in -- our of you first So by supply bigger and which to that leaves Day picture. enough come right? cash investment, I wish could that plus initiatives, invest that able million million didn't But chain to the had $XX to get which from $XXX have cash. this room

it's over above is -- but operating And three maintenance it And so years. levels, have it's normal significant income all returns.

Jacob Hughes

a for then one And me. last

that guys -- be? just thinking you you a Investor confirm, Day? Or guys are potential is So at what's case 'XX about going guiding to for to the

Murray Kessler

we Well, our earnings always the Investor before always on -- February call or happens I guide mean, we guidance February. whether official Day not, our in

Operator

remarks. would session. like closing conference to question-and-answer over our turn any concludes the to for Kessler back This I Murray

Murray Kessler

Sure.

right already had were As heading optimistic as It's base sit on $X.XX quarter. where take I that still short. been. business, business I've we at way gross a we the as It's down But I for about portion here isolated. the I'm I'm the of the look little margins fixed. ever disappointed the

on a just we the But significant track announced long consumer XX-year moves that the I are for keep chain think supply us and term. I'm guy.

despite can't going promises we But Currency, despite can almost consistently that. with despite keep time, the well years years beginning clear growing inflation, it we I about for everything we cover. year, we adjust optimistic. X to gaining over But in the additional hit a way adjust else, had the over in the to volume not COVID, almost we're bottom and growing made initial very time, when under as the compete share of of currency. recovery as in hard I hopefully, push will category literally ago this X despite your itself. it have on And to see something said XX X ago. close and every talking and morning you're market you of pretty path And back to single currency X been -- way, year, in margins like that it track we're I I'm the when all for to So -- years that's XX

excited business, Thanks I'm appreciate the about So in interest support. and Perrigo. your your for I

Operator

you for now today's The attending conference presentation. is concluded. Thank

You disconnect. may now

Perrigo (PRGO) 8 Nov 222022 Q3 Earnings call transcript