PRGO - Earnings call transcript Q1 2024

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Operator

Good morning, ladies and gentlemen, and welcome to Perrigo First Quarter 2024 Financial Results Conference Call. [Operator Instructions] This call is being recorded on Tueday, May 7, 2024. I would now like to turn the conference over to Brad Joseph, VP Global Investor Relations. Please go ahead.

Bradley Joseph

Good morning and good afternoon, everyone. Quarter Conference First Perrigo's to XXXX Call. Earnings Welcome a review our hope you releases to had all morning. I press chance issued this of presentation and within of the discussion perrigo.com copy the available section the for website. are Investors A today's releases

language information Patrick and forward-looking are I'd these Eduardo earlier to statements. regarding remind that Please CEO, to safe participants call, important and during CFO, refer Joining today's this our and for will in Lockwood-Taylor; investors releases call everyone President today. harbor shareholders Bezerra. and like make statements the certain issued

A few items before we start.

after all which discussed business, its quarter operations Diseases operations quarter was not does First, business financial unless contributions end a for prior discontinued the to on include presented which continuing was stated, the and Continuing the the operations divested any results Rx sale include accounted and classified Rare are from sale. as as HRA for basis. for held

And pleased results, to financial and both and turn excludes growth impact acquisitions, organic the rates See in I'm prior third, will year's removed to on translation all currency to of discussion comparable non-GAAP Second, All year product non-GAAP of reconciliations statements. prior currency appendix the for solely And presented. the the except that, with focus in noted. versus otherwise details as Patrick's measurement divestitures, lines comments used the applying exchange constant the additional financial the related currency comparable by exited in Patrick. periods. measures call

Patrick Lockwood-Taylor

One trusted accessible and by emphasizing better made strides Brad. to on begin like good call Thank to Perrigo to today health to through our deliver we've Good lives purpose everyone. I'd solutions important strategy, make morning, wellness all. you, further our afternoon, the our

expectations start recapping results earnings quarter fourth quarter XXXX by the we call. against our in that discussed our X Let's

did. augment our and infant quarter EPS actions the formula they on impact strengthen and first would have First, an we our plan to business

actions year, our formula to an was necessary. were $X.XX the of of prior ahead infant of in Actions due customers. While formula infant shipments projection infant versus timing EPS quarter $X.XX drove impactful, but first to headwind taken EPS approximately formula

achieve The sets reliable compliance long have much significant our believe be and though taken done. controlled, well we environment, manufacturing more in to progress over have that is quality the the there strengthen work us investments a industry the up actions made to we will competitive position I and term. quality

SKU in X on as prioritization net actions weighed CSCA quarter EPS and organic Also, growth. expected, sales

including X, branded basis benefits, expansion enterprise provides points and in capacity portfolio XX and business. out build production areas more our the blended of multiple had margin gross actions our of additional these we across quarter However, greater as focus profitable

X. as average were quarter earnings OTC Next, call, inventories entering retail our above highlighted U.S. in last

quarter of to inventory As ending U.S. expected, remained retailer Perrigo's plus retail trends, that consumption lower to believe weeks inventory shipments current XX. healthy XX compared during customers destocking business OTC to Encouragingly, should we X. product X.X% prior year. led the levels last on across normalize over Based March at consumption

remain our against good the in continues XX.X%. to ] last goals achieve X%, the CSCI and sales net fire delivered operating track quarter Finally, Collectively, and we all commitments, XXXX. [ first expanded our versus year basis on in year quarter to was Organic points to cylinders. to XXX on margin a the as we grew start

quarter first financial our to Turning highlights.

prioritization SKU in organic of impact and Organic of strong components. more growth declined as of net to enhance impact sales were net of from points points SKU by margins net An prioritization infant business, minus first part minus As performance addition X%, program. infant heavily in an percentage sales supply from rest in driven just from discussed, formula formula, comprised net chain point quarter reinvention X%. our than decline our of caused CSCI plus reported actions impacted of X and launch a the major actions These by to the X.X which factors sales X.X Opill. sales X percentage of

points benefit Quarter basis which X Care. gross benefit expansion margin comprised U.S. infant margin of prioritization by OTC gross from business points SKU rest and a Oral from XXX declined XXX the and basis XX unfavorable formula, to basis basis XX.X% impact XX led the an points actions in point from

impact share was actions These a from share I growth of ago was ahead As but of additional per unfavorable than the $X.XX more down SKU $X.XX $X.XX headwinds had EPS the to an business. year of projection an per prioritization had rest Infant formula said, quarter from impact. offset and $X.XX per first share. $X.XX EPS

sales Digging net health spots. in skin in care, and bit incorporating was sales. not distributed by deeper in sales We compete a successful our U.S. from delivered of transitions prior driven growth impacted that in and solid into year, share launch market growth gains line robust Compeed the which Mederma performance net in Compeed the of by led extension XX%, achieved of the Opill women's benefited which brands. product

weighed growth sales the discussed. aids also and XX% across most was pain heavily was most cough customers care, in growth, incremental in categories prior in due impacted digestive season cold a just prioritization e-commerce. to actions Sore, grew I added quarter sleep net notable affected SKU sales health. and than to supply Inventory recoveries. industry-wide which destocking brand at driven This retail CSCA, year impact and on lighter Cold as skin the Mederma U.S. in most and global Net in Mederma by which by strong sales

advantage. in drive season. weeks. U.S. replenishment strong take to and XX been good allergy retail incidence levels in the normalize. There over If as allergy season a materialize, past Quick the we're season consumption a strong even note very prolonged the recent has customer and for on A need uptick position inventories does U.S. a could

remain pleased XXXX Looking priorities. operational well we our track. at to say I'm on

business and formula to manufacturing infant augmenting working recover making First, and our strengthening volumes. good are we are progress

few also executed moments. the the launch U.S. Opill in We on those in nationwide details a both More of of

to continue from priorities. accretive also benefit We

to track in million we on synergies deliver complete are we total integration of as a $XX incremental activities. HRA First,

million Second, our drove gross quarter, savings target reinvention $XX XX in gross expansion quarter of pretax prioritization the savings million by on deliver actions. $XX points cost $XXX $XXX of million XXXX. program and SKU third, from remain Energize basis supply margin million annualized to savings to of the in attained chain and in we And Project

infant to Turning formula.

role manufacturer hundreds every of and health As U.S. of the in store of formula, leading the Perrigo of wellness babies critical year. plays a brand thousands

have significant progress augment to This network. production of processes. comprehensive and we protocols in pausing months, and improvements, few infant formula addition enhancements strengthen to for included, our and past in made the manufacturing infrastructure Over instances, manufacturing quality some cleaning

At the progressing further this any phase next level. enhancements. operational resets been at point, large-scale policy of procedural includes planned site to our and quality This and we and plant have phase are completed, next the enhancements

are investments as and In appropriate. people addition, we infrastructure in further making

volumes continue Importantly, shorter followed throughout longer to manufacturing recovery. shutdowns improve expected body expected activities. to volumes of quality by we market this during build stemming campaign continuing the half expect of extended not do this and hold to from year, is second Sales work are beyond faster, recovery share maintenance result times production to The runs. XXXX, style normal in of

with formula in remain the quality of we line is of I'm journey culture. pleased our a core will have compliance original progress Perrigo's business and All outlook. made. Maintaining and is infant Stabilization with this to

across enhancements manufacturing we network. our We and capacity bolster quality-controlled will reliable other continue to as invest in quality,

entirely With the launch taken for of oral OTC U.S. creating for in Opill, a an has historic step contraceptors Perrigo new by health the category women's

retailers. During and history Opill at Perrigo. revolutionary holistic product more can the was XX,XXX locations addition major broad to the team the executed quarter, and U.S. now the be Opill in Launch than retail launch the in across of most found e-commerce

the from response ramps and media to Opill a to plans, really the academics partnerships, health. women's the this highly revolutionizing for program of approach up launch public coming been our XXX-degree launch The high Through began prelaunch to positive This amazing awareness. The coordinated that formal with with Opill campaign consumers. plans, resulted encompasses support and for before drove weeks. This a is health and has increasing even including Opill in partnership landscape WNBA drive private sentiment. awareness over strategic a newly now care announced campaign activation the customers

and conversion Early the Opill guide usage, in our congratulate to supporters first time committed innovate consumption of Perrigo women's Through the vital team demonstrates to encouraging. consumers women promote on in conversion that impressive I'd and to decision conversion look and journey with determine solutions ultimately metrics to and early of been further self-care activation, empower of Opill. points. role a to long-term are success who've charge to place we'll Opill. our has own which success advancing right the accessible health, strategy that will time few take The their consumer team, is repeat has limited their through journey. to played partners of touch opill.com and provide like the weeks

line various and our including will value respective update category blueprint growth, the we These strengths depend shape winning to to potential clarifying right work like identify conducted we categories. portfolio long-term Now would Strategies will I and our objectives, win. our have is cash and One category on to within will share profitability competencies our creation how within top core our leverage generation. each an for The on factors management Perrigo.

self-care sourcing portfolio, our develop. bolster this in deliver with invest consumer to of partners continue work strength differentiation Work position and pipeline we approaching preferred we'll innovation, fully across underway we and to will the from offerings. lead time of growth is must in retail aisle. to to to avenues category take and a our innovation growth Fuel new But are our objective

store blended business. will cornerstone that portfolio furnace brand fuel a the business Our our is U.S. of Perrigo the remains branded

including a analysis Given landscape, of category self-care we business, penetration. network capacity position design, regarding of the the the continuous this are and conducting thorough utilization evolution

our operating with a relentless we implement One leaner, efficient favorable brand our build Our store returning priorities agile business. our Project cash to to core expansion driving key XXXX to infant generation strategy. and in in U.S. parallel, enhancements to stable organization formula profitable more operations, free customers our and model business are include flow continue Energize, will business global outcomes Perrigo delever. delivering enable In milestones margin maximize fiscal through from execution The to

blended model for that is innovation. longer-term to a and Our strategy, value-accretive objective sustainable, realize beyond XXXX our delivers branded

in most returns. articulating our We this have flow investments global look towards strategy accretive will build This a enable and cash consumer and margins, mind year. branded capabilities. this growth will targeted at a opportunities further Day later in our growth to We with highest made potential categories forward good attractive Investor

retire will Perrigo year. CSCI you may later of from already Svend As see, Anderson, President this

improving X development. of his growth confident all that significant Joins more a have and Svend very and of contributions and in in and this for Perrigo played confident brands, During done On lead further brand behalf strategy. One am to Perrigo's of Roberto has I'm integrated a month the making all role August. and Perrigo. accelerating and and products, that years overall the drive later Roberto pan-European Roberto Perrigo Directors, we by years of will digital in portfolio is consumer and over branded ability concentrating success. on experience well Perrigo pivotal success including joining XX complexity innovation portfolio, ChemView continue the CSCI everyone has accuracy. extensions, at performed planning appreciate you've will e-commerce Khoury leading team Perrigo, and given, leadership business, has all Svend handing focusing to and Svend, his to officially that this our is from business than in that capabilities reducing you Board while I of management CSCI

One our our operational our on we'll In good reported a XXXX strategy. We continue Perrigo we quarter, focused highly executing against priorities. first summary, remain and priorities, including

and was to deliver making track initiatives. are great our accretive we're off a to fast infant formula Opill start, network. strengthening progress We our on in and augmenting

Eduardo for simplify returns focusing deleveraging. blueprint the and our to on now We to the cover scale Perrigo this our to over cash, will do turn call while progressing financials. that, I business, all consumerize, CFO, One while our will With and

Eduardo Bezerra

and you, Good Patrick. everyone. Thank morning afternoon, good

and or the reported adjusted million diluted The the share in year. income was at with net per million non-GAAP of quarter the prior net GAAP financials, summary. $X to share. Looking starting GAAP versus income $X.XX per Adjusted earnings company $X.XX was $X.XX first diluted $XX

primarily planned an tax to driven by property; intercompany and charges attached release. million of can $XX of million to sale our to $XX chain two, the details Primary first million; P&L and adjustments found Project non-GAAP expenses benefit be were: programs. related three, the our Full quarter to non-GAAP of first, amortization press reconciliation $XX reinvention in table supply Energize the $XXX removal related benefit, primarily today's restructuring million intellectual of

point otherwise unless results adjusted From discussed noted. forward, all will this basis financial on an be

As access highlighted, of to actions led first an operating to the we quarter This results prioritization by XX%. are were to formula augment income strengthen our impacted heavily SKU and business margins. decline and infant enhance taking

the Excluding formula, adjusted rest infant grew business mid-teens of the impact income from operating percent. of the

additional details. into dig Let's

quarter, by and Looking impacted highlighted was to incidents constraints The to by organic the in transitions absence continues CSCI lower strong across Europe. CSCI at in the that well, the seasonal lower top year. partially by due our plus category line volumes, net was margin performance of and the unfavorably sales impacted supply perform segment performance distributor during cough/cold growth Compeed prior driven gross X% growth.

margin However, XX.X%, expanded from part spend and advertising driven to of Energize. by reductions operating points XXX and basis as resulting synergies Project ROI-focused expense promotion

would years. also while I, welcoming for Roberto Svend to over and efforts like Perrigo the leadership his team. thank the tremendous to too,

and CSCA prioritization the Organic of weighed sales business XX.X%. inventory sales due net formula the QX rest X.X% XX.X% on with the destocking retail down from declined performance, actions categories. and CSCA most net With primarily SKU net U.S. sales across to down infant organic

inventories Patrick in As retail normalize we believe QX. noted, should

points points infant meaningful margin formula, by Perrigo rest the The basis minus from margin offset points plus first U.S. XXX basis plus these Perrigo quarter year, Care. Continuing infant XX basis favorable the SKU infant of expansion of this versus driven by gross impact First declined formula. gross including XXX formula impact by of quarter mix excluding impact from and CSCA product XX basis of achieved gross driven XXX partially basis points improvement formula. margin OTC an actions minus margin a business was in infant When basis gross from XXX points declined margins, points. last and points plus including Oral expansion basis XXX from year-over-year prioritization

into margin impact expansion basis here. plus All points, from excluding the takeaways XXX infant of these translated of operating central formula. Two

First, recover the the of and continue overstated. and expand. across formula augmenting of importance infant And cannot business second, be to rest strengthening margin the

an of as the formula, prioritization than SKU an which unfavorable more to year-over-year. a a $X.XX of share additional These per from exited the and products. impact share the $X.XX expected, $X.XX Now benefit business, offset headwinds EPS. had Infant impact reduction impact from actions of $X.XX had per of rest included

XXX to and Before turning component as HRA the This study best flourish of focused proceeds plan. our this self-care divestment portfolio upfront the business consumer debt EUR We part a supports group. plan will proposed of Disease sheet, business, been on our has repayments. for million the of redeploy year later the balance of key divestment comments a to which deleveraging XXXX proposed few further the Rare

XXXX the patients the for I as Importantly, of to proposed would and Diseases at team dedication the of this with on HRA in of sheet Rare included the original million. our thank $XXX lives end like balance focus divestment outlook. was impact the the rare quarter continue first they was improving financial diseases. Cash their

quarter Energize. formula million related cash primarily infant $X due First to and costs restructuring to operating Project was outflow

invested through returned expenditures million dividends. $XX also and we During quarter, million to $XX shareholders the in capital

in that the Sources upcoming and outlook, intact largely uses of company planned actual sales our cash for were long tax from to over related will apart payment property benefit cash XXXX term. the the intercompany initial from

for cash XXX% of year We adjusted the XX% flow income. full of to operating net to continue conversion anticipate

year, operating our we of the Project lowest balance cash costs related be to quarter the QX flow to expect due at to restructuring Looking Energize.

without you that addition, recently or shareholder million In any Perrigo wrongdoing. may lawsuit a liability concession have settled seen for of $XX

this from We pay million. between and the year. XXXX expect cash insurance full for quarter settlement of seeking second $XXX we cash hand balance million the $XXX recovery to using now in estimate a total, In on providers an and are

at Importantly, X.Xx net we ratio a leverage Xx continue to to year-end. approximately of expect

expected phasing EPS for unchanged. the year, and remains at between the second half first Looking our weighting

formula As our quarter Outside the half second updates quarter are there first of in which this, timing in phasing. realized expected previous infant phasing are our shipments to in the first driving a discussed, originally no of change assumptions. were

the from including Our remains XXXX net percentage distributor outlook growth growth expected of than products. to formula for Opill, the to be XXXX infant in exited a to more offset total absence also Perrigo growth offset as SKU is flat X and negative net of to point X% impact unchanged. divested in expected new growth by and impact. sales and X% to business prioritization primarily products, declines by drivers These organic volume and to Organic expected driven actions. All transition be compared HRA is pricing are sales of organic

Excluding to infant formula years, both expect from gross margin expansion XXXX. continue in we

mid-teens are of full $X.XX our on focus their our to year $X.XX priorities. million to for infant advance continued colleagues equating would and their reaffirming percentage Perrigo to excluding XXXX I our EPS thank range for to closing, commitment achieving Perrigo formula. In One like growth, We vision our

to Brad. Now I will the Brad? call turn back

Bradley Joseph

Thanks, open for can please call Eduardo. the Operator, questions? you

Operator

first question line Genuity. Canaccord of from Susan the comes Your Anderson from Instructions] [Operator

Susan Anderson

formula business. just I guess out the to maybe start on infant

away I of up should we was in back shipments. due I those then for running, think, than the early now sequential with think we that half then your then sales expectations? back going formula of just a and little second there? And noted infant the And Or you return. -- will business, think from volumes on still still just the volumes? see with So kind that is cost wouldn't some that it plants is curious, recovery also take a kind expect bit to maybe in I'm quarter? I line improvement wouldn't I better a original expected, I'm guess, sequential curious the why to

Eduardo Bezerra

Thank here. for question. you Eduardo Susan, your

So is as other to release side, right? So we some your I'm those place cover going I'm going I quality of were the the then Patrick planned and our take second piece, products, of the quarter. first to to sure more on products on we expecting the first is, in guess answer thing

quarter products continue we as we our were that's release progress so So those needed. customers to first on much to processes, get make quality the to in able and

timing production plans change a issue. between doesn't QX. our just and QX It overall that's So

Patrick Lockwood-Taylor

expectation, Susan, Thank are early the start-ups a and we're a quality nutshell, reacting be ahead to volumes your slightly and we this have in at reliability is question. Patrick. guess, in interventions executing really take set would good. you plants. But compliance the for very far, and ramp-up premature the well throughputs I learning Probably so importantly, as of get of but to financial the GMPs. and mode. across of new all outlook to frankly, X up the It given in gone still stages are

Susan Anderson

I'm particularly it's how that if into And correct? now. in and season. in as helpful. said That's cough sounds good Is ended Great. And kind U.S. on I all across look It we the then, mainly guess, in like like shape it inventories guess you just they're of destocking really, sounds complete the cold like and then Okay. cold cough. in the fall I so categories, and curious but then

Eduardo Bezerra

Susan. Yes,

we're as importantly, CSCA But the call, you're with way that. and cough So cold believe light that right? of that beginning well and reduction destocking, to that that most we we're we that's talked the majority season, the about is right? shared impacted something across business, of tied that aware, very that's in categories. So we Yes. as multiple the looking the a the seeing X.X% As at really what of

Bradley Joseph

the top, is down. retailers from sell were Susan, while you I consumption on nearly may so the shipments from points, which team X into the is think have heard here us, up the

of So a point of that's a think ] X essentially way those kind [ about. X.X you to kind swing have good and between

Susan Anderson

season, the have just to And already wasn't Great. Okay. late strong the because to to and it of the retailers really enough restock. start so were that's just stocked

Eduardo Bezerra

Exactly. Correct.

Susan Anderson

Okay. looks was Great. drove that hygiene. with I more And international food care was It curious And season? also respiratory the on weaker the then issues the what due the skin Was weaker. and like just then upper personal performance. internationally to business. growth that one the strongest was similar in

Eduardo Bezerra

Yes.

overall was is first a and the happening U.S. on saw skin extension -- that on spots], So care right? strong the lapping same which increase we're playing very cough the season of Compeed, -- in had with in right, [ the from we Europe with is that growth this Compeed cold, as the strong distribution also lighter the category good So is very of we on. the the a the quarter, it But the that and well. aside transition, very in

in that's respiratory, and you cough saw there. volume why upper let's say, cold, So including reduction a

Susan Anderson

then drivers but on in from same I at the it there. And international. seeing both the Great. X after strong was more wellness weak COVID Okay. away if post-COVID? VMS pretty and focus on just don't was health you like all and are consumers looks know a then it add if Between the also, their BMS It I during regions, move Americas category. one and

Patrick Lockwood-Taylor

Yes.

as go VMS. SARS we other and major Just at at Susan, picture, the and look back that bigger disrupted looking events

during immediate or an in XX% indeed during typically the consumption to increase saw SARS COVID. You XX%

still You to at true X was been And XX% about years the for XX, last then but level regression that's events X a sort XX saw X% last the X over a to of in the pre higher that the category years. slight stabilizing post than that, for pandemic.

outlook as strong those of There sort but and they would consumption also sort normalization, continue I of that So X near-term see markedly impacted bigger trends, say, are than was some strong years is phasing on businesses. I ago us activity categories well. very some as promotional these well. But impact were just underlying phasing to think we you're still activity what seeing some to but consumption

Susan Anderson

it. Got

in you're squeeze you U.S. one I private seeing a but branded just more. dip, bit what business? internationally to little is then impacting Okay. at the curious I'm in label the trade anything And all Great. the know on that's seeing If I maybe down international could are

Patrick Lockwood-Taylor

certainly, In point business. one which focused XX-plus from about so, volume brand gain brand points. XXX is store on week the a store more Yes, seen basis share our gain the we've or percent is about last U.S., XX of actually basis

So understanding definitely better these a the that seeing are, bioequivalent value. molecule tremendously we are of a better propositions what but what is,

consumers think seeing sort continue I pinch increase is, as fill good which of good to our the of course, So in in very the are for U.S., we business, brand business. store

Operator

question next Korinne Your the line Sandler. from of Piper comes from Wolfmeyer

Sarah Morin

This has Opill now? baking term? on over this longer your then can on on less EPS total expanded the this revenue guys is with you And are On there's then Sarah to touch could potential how view coverage, this year And potential currently into from Opill? for the dilutive be you guidance that shaped Korinne. and if

Patrick Lockwood-Taylor

about insurance near-term you're coverage level that. you This the the then very high give more to far I'll on the Eduardo pick and you've news largest some of and heard was sort Caremark, CVS obviously by there. for insurance good financial Thank impacts. from right on that coverage on up

that's the We're not complete. cetera. the of will modeling that, that a consumers It's modeling, are still and how modeling of et impact convert announced. quickly that, recently fairly of awareness sophisticated piece still We through only of degree through

revenue significant can't be the will tell what but and I accretive. undoubtedly impact be, you will So

provide starting well. coverage as seeing to also are We states

would have Wisconsin. You of heard

state We has which improving only very, expect and follow by this encouraged very others we the moved, to accessibility just were for really both CVS category.

near-term the think ... I more of in effects terms

Eduardo Bezerra

Yes.

XXXX. see are as as going mention we category -- of not continue we women's guess, putting about to the think we're brand also how we're the be we to all the Opill I accretive future. evolve, behind because feel is, for in will So that the to brand the want health, whole with carry this to important margin but investments only But

the strong. sure to want awareness make pretty that is we So

continue we our Opill plans dilutive, so an see the on XX to And next to effect be over EPS months. XX the of

Okay?

Operator

the line from Chris comes question Schott next JPMorgan. from Your of

Christopher Schott

to another have it business? issues you the guess have are? representing to the the trying shutdowns, that to few with we're sure Can just most get months work can segments? make come I going the level my hands plant of back stay now the is the kind solved these compliance, of I and into just level that of infant confidence a of hurdle like just these nutritional process, piece forward we challenging your around, -- remediations what's the sense I'm where biggest confidence just Or in were of process? of we're showing

remediation, And I then you have portion follow-up maybe the one out you that. as comment impact of look think after as just to just part to or going do XXXX, just regain what be at on could of all ] from $X.XX so that, you're if the we of to [ patient

Patrick Lockwood-Taylor

hear well through critical, take Chris. you blocks they're went from Yes. you part outlook. sequential. very the and are equally and Good the Each but you, I'll that Thank of those first on X again. Eduardo to characterized

third of translation the in done, one that terms of actions the second intervention across without analysis, can't new GMPs, the okay, protocol, is the cause sites. the first, staffing root largely You big The corrective X cetera, obviously. without the preventative levels, do into second et and

commentary, and application that back okay? So facilities putting the and facilities start-up as executed times to in suggested in of -- really accelerate all slightly at production or my mode, of other we able Wisconsin, know-how throughputs to our in were expectations. I ahead As the and X we

GMPs permanent all-time encouraged and have monitoring, cleanliness, keep watch, that very to we're by is So compliance. sure that. we and To quality back the might you flip make our environmental us point at a

any and not. therefore, hits we're We're not stop positive getting and So to production. having we're not

needs But and did be what So interruption okay? factors stay to maximize to encouraging, to true is those having true of that the that historically. to and production we that we disruptive learn such extremely production seeing we're continue not very

we entering say we not a So model, terms but I could are have of is we happier It in be where early. to that. to good, soon closer are. reliable very XXX% too

Eduardo Bezerra

to And question, your right. Chris,

to about million $XXX So an contribute the should get $XX on about we're formula talking remember, about the that's business basis right? So expectation million, infant quarter. our annual

And that a to we everything may critical, fully market set the by make to not why that really those against QX, give in between all we taking and so with at to $XXX sure so we will that can we're consistently share, debt can actions now the QX the from And rate working objectives, production achieve that quarter, right that be us it's expect of million confidence make standpoint, that QX but run is fourth okay? reliability, quality that's levels. from we we're sure deliver a

Christopher Schott

we further kind place I the going forward, over the just you can on or of XXXX at plans. as time? kind your some objectives and a And the you focus divestitures like about growth feel think question. guess, in about think these look thinking Do Or Great. beyond company you of right refinements about to have bigger you picture this point? if Perrigo more of of -- portfolio

Patrick Lockwood-Taylor

Yes.

thing, growth, the through the and world. will same our the clearer most much in We're portfolio. brands of scalable narrow execute We innovation more of on attractive the can parts we categories the production i.e., same offer growth which same

thinking will a that than fall. completing And for Perrigo I'm at going will the late are OI. at portfolio and we growth we a see So sure faster that analysis share focused Investor now. more higher Day rates you forward,

Operator

question from And of line -- next Daniel from Hedgeye. comes the Biolsi last your

Daniel Biolsi

loss destocking outside lifestyle, you cough/cold, just spend time on or oral care? space? some shelf like permanent So of base, the in sleep could Is of healthy, that inventory timing

Eduardo Bezerra

destocking of this on as So stage, the focus there that and So is focus down more overall we're more of also to try and retailers understand consumers, cost the seeing what right? believe an consumer that at trading we [indiscernible].

I at their XXXX they're that think how will trying they're carefully increases to saw they manage their be as given And retailers very of capital a stage this and careful. inventories. well more impact, do working going a volume about lot in as year to

that believe brands. if cross we there share those we going categories is to make on watching not be an we're advantage as think and And the when an consumers is so changes store where closely. But has we're really some pretty And quarter. area well that to start I -- Perrigo that cold, is in to along gained coming cough and that so specific seeing

direction, so are consumers consumers continue well as very take to very to affordable categories. and for of their be that we we in those store will so opportunity self continue brand believe And continue positioned to care

Patrick Lockwood-Taylor

quote I is is your your right. -- But hypothesis think and

on working self-care an retailers of increasing with You're more cash, space and in seeing fixed a focus capital. return shelf categories by on amount

you think seen some I so destocking. And have

is they We I floor for Otherwise, can't think that we're there to obvious service natural that. a reasons. believe approaching their customers.

Daniel Biolsi

for gross QX more. if we expect XXX basis QX what impact got margin then going QX? from shipments? shipments, point we're could impact, should minus a expect was one If and in And earlier to I the formula and What lose should ask infant in we those we

Eduardo Bezerra

we had Remember, situation. there, lower do QX. had a those take we be we place impacted also we because in effects in expect Well, is better margins our some to that variances stoppages much had in operations. manufacturing the shipments, onetime in X we We had impacts expect but key the first So not right? QX so

our so versus QX. should significantly And rebound margins

did As look we of but compared last year, at that compared last to into on be are level gross see same improvement year, we the the versus profit into going -- to should on volumes a we second an as margins what year. level last to as not

Patrick Lockwood-Taylor

gross quarter infant that [ XXX the from think formula. a QX. was That basis the included was decline XX%], for impact calculation for I X and margin point the business overall

Eduardo Bezerra

do what compared impact improvement we the saw into we to a QX, expect last year. magnitude as that's not what In saying. But I'm

Operator

will ends to That closing now the Q&A. for hand Mr. I our remarks. call back Lockwood-Taylor Patrick

Patrick Lockwood-Taylor

Thank you very much.

versus we done we what said what do we is out. we're is out in what we've it where happened, going So we what netted said February, to what thought outlooked what net where is would it and

to hit 'XX commitments. track on we're our feel we So

As times is several recovery today, we've talked our infant per critical path. progressing the formula

financial commitments. versus Our start-ups encouraging are and throughputs our

on we Opill, early, we today, about excellence but launch but joining of very executed, focused and have our much we're there. we have should was talked it's Product not our be extremely Additionally, and standard It's new excellence terms very We Energize you learn of Energize we've remain though targets or -- well key ahead much reapply executional encouraged. it heading made. 'XX a in financial commitments for much of for on and and Perrigo laser to from Thank through priorities that. the today. us --

Operator

That participating. our concludes conference you. Thank for Thank today. you for

all disconnect. You may

Perrigo (PRGO) 7 May 242024 Q1 Earnings call transcript