PRGO - Earnings call transcript Q3 2024

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Operator

Good morning, ladies and gentlemen, and welcome to the Perrigo Third Quarter 2024 Financial Results Conference Call. [Operator Instructions]

I would now like to turn the conference over to Bradley Joseph, VP, Global Investor Relations. Please go ahead.

Bradley Joseph

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

Joining and Eduardo today's Bezerra. Lockwood-Taylor; CFO, call and Patrick President are CEO,

issued make important harbor I would release information in and and safe will for regarding everyone statements. these Please our this call, that shareholders today. like forward-looking during refer language statements to participants remind certain earlier to the investors

A few start. we items before

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

growth Second, versus measurement the both comments used comparable periods. in All excludes exited currency impact in statements. year's exchange and the currency divestitures, constant the in organic by financial product the applying comparable prior remove year of to acquisitions, related rates lines prior currency the translation

and financial See focus third, as of noted. And non-GAAP additional the reconciliations measures non-GAAP details results, appendix will on all presented. otherwise for except Patrick's solely discussion

And call the I'm with Patrick. that, pleased over to to turn

Patrick Lockwood-Taylor

we would Good we fiscal year towards good made progress I with towards Brad. to our like you and the have call. afternoon, Perrigo morning, today's begin advancements you, update for made Thank everyone, and expectations. building joining thank have the an One on

unified built self one will one unified optimized best speed, us focused blocks technology global to an allow operating for these a to decisions. include together pieces and everyone. scalable way structure, provide is one advance operating one rhythm the significantly portfolio. care vision agility, Perrigo Bringing all our of network, working, enterprise model, Main designed on data-driven platform deliver One back, a building to Stepping reliability organizational and operating

quarter, Perrigo Counsel, executive third Chief have building addition General Ball, to a Atkinson. our steps appointment One expanding the our Charles Officer, and team Brand During David of new leadership Dr. strengthen the brand permanent appointing and By to we in culture with significant Digital taken capabilities. a

Both bring experience industry-specific welcome. warm achieving to and amount sustainable David be the the I an both immense growth and Charles of wish Perrigo will over long term. value-accretive, them instrumental

Turning executed Project to Energize well, Team our reinvestments offset savings gross partially $XX of accretive has million $XX achieving year-to-date, extremely million. initiatives. in by

in while across reminder, the million we focused savings As been Project million reinvesting deliver annualized or the repurposing pre-tax to have $XXX organization. key million expect talent a to $XX savings, reinvestments of million XXXX. Early all gross Energize adding $XX end to by $XXX on these of

is management other more than years which addition the In to reinvested David and global consumer of appointment and experience the to in These Charles, XXX growth. leaders of company. quality, new areas, IT, disruptive category we both have added combined

savings outflow and This equating gross Our solid an supply total has $XX outflow gross million million, $XX program $XX delivering is program achieved in savings corresponding to of million chain $XX year-to-date, cash corresponding million. in ROI. of cash of reinvention extremely

U.S. and up increased XX% supply across constrained gained which year the lower in new standard prior U.S. capacity from pursue from production margin quarter. in business, The delivered program in levels, that to costs offset production primarily OTC recently achieved lowered expansion, has Efficiencies XX% Nutrition. most chain volumes areas program gross and our OTC this unlock all partially U.S. customers, service

more formula quarter, versus XX% few the prior progress plus net also augment plus in sequentially, made infant on have moments. We formula demonstrable and strengthen sales grew our When to infant business. year X% a

XX plus sequentially. compared points gross basis third third expansion quarter quarter increase year an XX delivered about to margin points. of basis XX%, and margin plus year-to-date XXX The driving of expansion is points gross we basis the strong of Next, prior

phasing, of Project infant weighted the and second heavily to earnings formula benefits our year recovery to which Energize. towards Now remains the half from of the timing of due

of quarter, third plus And year-over-year range an increase XXXX our the are and we $X.XX, For delivered of XX% adjusted $X.XX. EPS to we sequentially. plus EPS $X.XX of reaffirming XX%

lot In simplify accretive And to recovering. actions more summary, infant and on do. There's XXXX. we've our taken consumerize We're business The made our significant delivering to have is progress in we initiatives. business. formula a work

turn let's to third our earnings quarter Now highlights.

net year-over-year, to slide. on organic while sales speak which will sales X.X% quarter decreased Third I next the net declined X.X%,

expanded XXX These respectively. EPS margins an and plus and of operating XX.X% operating growth of just plus to plus XXX and $X.XX to prior meaningfully growth basis factors shared. led points, points as XX.X% year, versus Gross basis income

discussion. Now in sales, from quarter which including store net to impact points distribution declined lower-margin products U.S. minus X.X%, organic in of call percentage of an lost line with second X.X earnings our brand

percentage sales of minus impact organic offset driven infant in formula. by health X.X than business categories. of as a points the lifestyle had sales rest sales points lower oral growth healthy category low-margin Organic more the percentage solutions Nutrition net improved from and on X.X women's electrolyte

of Organic Nasonex, Bronchenolo. versus to Overall, continue sales brands brands of well. X.X% grew perform our strong OTC the Bronchostop prior global stemming performance our year, Compeed, from plus and

complete infant all Job in that formula. so recover to infant produce remediation sites was formula. and our self actions reliable, #X infant our to formula Now quality-assured

of have We high and attainment this production achieving and packaging. done quality, now are

across formula on #X focused is all Job and infant levels bringing retailers customers. contract service back in

building to addition shock lessen to In any potential business. stock safety to this

on are our SKUs brand highest in largest approximately across stock we are and customers. shelf, Our back achieving currently XX% volume now store

all to was highest year-end. our the who including SKUs expect store contract have stock ahead, volume with be by That customers customers, we in Looking brand largest inventory.

creation activation. of has of formula data. prior increasing non-WIC and to infant activities. to for in other entails latest demand the XXX period resulting brand store promote basis volume to as share brand consumption ads, recently compared #X Job online through powder This the switching store driving sales formula This promotions work begun points

The Hurricane share to and Milton, the recent week pantry of gains. short-lived store contributed during brand due the consumption loadings to Port October, also and Strike spike first likely from the

and and contract Our optimize support recently the of began products. including launch reintroducing SKUs, their business, leaning we are new in customers several to

these been gains early share the slower However, customers store than gains. for have volume brand share

worth growth While grow users by X partner users from expected placed increasing XX Perrigo million particularly and we medications, a of to for where This lot to is approximately categories of focus retailers XXXX. loss. leverage consumer-preferred million we this strategically driving play. One emerging trend is to to is on formula, innovation. infant positioned year being approximately usage highlighting the also trends market GLP-X are drive in weight today with is

creating GLP-X multiple an be for users our which retail with partners. OTC opportunity managed can experience often products, Perrigo and side effects,

effects, GLP-X related the on need side to seeking focusing cater GLP-X accessible products retailers specific one-stop offerings By can relief. example, For and with to multiple treat OTC may gas. convenient consumers a hub claims to diarrhea, provide and nausea, constipation we that headache, of

and Retail just this innovative program quickly is to one OTC scale trend. solutions of provide program quarter. unique emerging leveraging activation expected Perrigo's for an is of this to begin example agility later This

XX where has in identified past This necessary uncovered and potential landscape growth back, over want the Stepping play the ascertain the long have on organization, value opportunities to to and time initiatives us additional has several accretive competitive rewire set to we Perrigo, considerable impactful work term. assessing we be our attractive a It achieve also growth. to months path sustainable that and to I've spent our how portfolio win.

for one, are: key Three-S model. initiatives our as foundation our two, stabilizing we and These operations; streamlining or business; areas long to will initiatives, refer the our term three, these strengthening of the

during Day next as We a brief but provide year, will our detail overview. these more on early Investor initiatives

stabilization planning international key Store are creation, share production Three, we Brand better and Store markets. and our joint stabilizing the business, service critical these driving our quality formula, namely recognize results, customers areas in of execution infant well and First, formula, business. including a importance Most growth differentiator is increasing for continued and high of good initiatives. levels, for brand levels of Brand core underway attainment in of packaging with efforts U.S. delivering our U.S. our accretive and business infant which achievement demand

markets. for will systems by growth to working. the to operating portfolio will entail This simplified Second, focused more category and global global prioritizing at a position long-term blended sustainable model, manufacturing model further one local way implementing scaled level a of tailored streamlining the strategy brand and operations ourselves we one opportunities and growth with

ROI prioritizing innovation strengthen brands, innovation will company of operationalize while the continuing chassis and Brands. we bigger with our including by sheet, more delever and growth concentrating Store the cash free leveraging balance to the initiatives Finally, investments successful across highest flow,

deliver forward path In our EPS I'm we're next forward our against summary, to investor track on on details sharing event Again, the and commitments to early expectations. year. looking XXXX at

progress businesses. stabilizing We have core made significant

and in invested accretive excellence World-Class and against our executing have initiatives. We capability CPG we're leadership,

I share much positioned work advancing consumerize, to simplify for Perrigo. and more revenue reliable believe scale per we and our and earnings better are we're also growth, One

long-term positive yielding work advancing fully in And our we sustainable significantly performance Investment OTC early results, strategic are evidenced realize brand-building growth. are solid brand in to capabilities quarter. by value-accretive the

purpose value solutions we and the a The Perrigo as X,XXX is solutions. and tool. wellness embody committed are The to customers necessary by to and important One trusted Perrigo together, They to remarkable. team better self-care delivering significant life consumers, health our our accessible to provide continues society through ethos, whole, and truly making dedication

our the With call to Bezerra, that, Eduardo CFO, cover will financials. to I Eduardo? turn our

Eduardo Bezerra

and Patrick, everybody. you, hello, Thank

million; summary. of third Chain of unusual product one, to two, million, P&L the our the quarter programs. Looking charges million; our and primarily on million litigation exited Primary $XX amortization restructuring and Reinvention businesses lines; third at starting to related with non-GAAP of non-GAAP fourth, to removal related GAAP the $XX adjustments to Supply financials, quarter gains $XX expenses were: $XX of Project and Energize three,

the From otherwise basis, be to can results tables attached discussed in Full adjusted release. this an on non-GAAP press be reconciliation forward, details point financial will unless noted. all today's found

year-to-date across Since to highlight growth benefits net formula, favorable in operating Energize. the would enterprise third infant year-over-year the income favorable Turning pricing production meaningful and from and to our I the quarter XX.X%, covered recovery QX P&L. driven of Patrick Project like QX efficiencies, by sales, net including

formula the lower X.X%, Store Brands. and allergy across points points of offset percentage than X.X year-to-date the X.X SKU infant distribution and percentage prioritization the Net and Year-to-date, lost half minus percentage sales more including cough, for from impacts growth plus cold points of X.X down and decreased seasonal U.S. first products business. from sales now These in demand minus rest were X.X%. organic

and businesses and net X.X operating accretive benefits impact XX.X from percentage minus a Year-to-date, product offset from percentage from X.X% than and lines. as increased points favorable impact more income exited minus points formula pricing initiatives infant

primarily of EPS due prior $X.XX, Year-to-date a in tax rate. $X.XX inferring increase year the tax declined constant $X.XX benefits to a discrete at

momentum Additionally, impact year-to-date included formula, driven EPS taxes. EPS management infant by a $X.XX from business, partially the underpinning minus highlighting

The accretive on U.S. the than more recovery, X,XXX the in initiatives; team points business margin cost continues and global and three, basis to expansion XXX from portfolio; This margin benefit operating across Brands category; fourth, by, favorable focus and within was of due the expansion of number mix oral to Store portfolio of driven Nutrition our pruning which one, care two, points operating optimization. the drove margin infant expansion formula basis in expansion. achieving

in QX. I operating the team margin CSCI quarterly record in by that note also delivered the quarter. Great a job done should

by performance CSCI. Switching the positive growth quarter is X%, the from to Women's in driven Health line by Upper categories. percentage top plus starting Skin and points Care, X.X organic segment was Organic with Respiratory,

share Compeed and was was growth This for demand categories consumer and supply in driven by these & by EllaOne. across constraints partially VMS Bronchostop, Aids gains categories brands, Pain products. in including Growth Sleep offset lower key

organic from offset X.X minus the in Lower positive points CSCA, X.X Nutrition mentioned by Store of declined the portfolio. lost U.S. sales the across in of percentage points in primarily sales to distribution X.X% In category previous growth points, quarter. the rest net Brands, percentage we due percentage minus X.X of

and Nasonex prior Opill including in year. Sales were significantly to higher the of brands, the compared to addition Prevacid U.S.

third volumes lower lines. Record segments quarterly operating delivered exited income operating impact of Turning favorable accretive expenses more quarter prior to initiatives, income. double-digit and offset growth pricing. the in product lower Both These CSCI versus included and businesses and variable year. from than drivers benefits

These was factors growth formula recovery, favorable offset advertising business by the loss FDA supports distribution investments, mix. store and U.S. benefits from and and initiatives accretive than higher The promotion including volumes, the brand driven growth infant our brands. more of which lower

and both by product increased included translation from minus performance $X.XX QX business or businesses $X.XX year EPS and prior a EPS lines. versus impact $X.XX quarter currency of XX.X% Third and driven net exited accretive also of initiatives.

on our outflows. bit initiatives a their and of major Now cash color projected three

is Chain Supply benefits savings $XXX to were off kicked million the XXXX. achieve these expected annualized $XXX Our cash cost pretax $XXX XXXX and gross achieve end originally program million. in The million to at estimated by of in to

our $XX on every million spent, projected. to Given for achieve now single benefits heavy originally we same the scrutiny dollar less than expect

infant $XX as XXXX news, to $XX We good of this Our assured outflow actions project formula. remediation in our projection following of million. introduced which is last below infant of infant began reliable, self are January $XX again, sites year, manufacturing to million year. in approximately this is now initiatives, formula producing to a this The outflow cash FDA million guidelines of formula by ensure all focus related updated quality initiative these original

are now three of global to previously evolution parts this help allocation, lower long these expect our our drive good initiatives company cash business, and million, cash $XX capabilities approach project streamline our we capital key agility. total benefits. In program million summary, Project projected. of the efficiency to stabilize Through actions the strengthen originally our track stringent next below organization necessary approximately remain these to three by outlay term. we and to for to be the from deliver to estimate than and Finally, a We program and the bit news, outflow of Energize, approximately on organizational our $X another now original investment stated for

Turning now refinancing. our recent to

structure the debt During million issuing XXX $XXX by enhanced in and EUR both due we third million XXXX. our quarter, notes notes,

XXXX. will investors in due XXXX, coupon million of our on in as to the $X.X rates September cash the billion, highly our the notes to the disease the to upfront off sheet inflows of lower B. These Both used approximately Proceeds the interest which debt from million a I $X.X notes in Loan rate March sheet issuance ratings. Cash income billion flow of fixed due outstanding credit initial fourth rare received or million which quarter weighted on derivatives, of in closed were proceeds increase average $XXX quarter refinancing oversubscribed notes having long-term quarter result the $XXX lower including from second balance $XXX included balance of redeem price. from early third impact discussed, million. the redeem million and than an while end from of refinancing resulting well $XXX were supply by proceeds was and and actions our divesting in Term closed Cash in these existing just no business which July, operating came in prepay our third $XX executing after quarter total in million $XXX

prepayment return yield and to approximately the of quarter Cash current included Term X% $XX outflows dividends, a million million on to our translate Loan expenditures, dividend the of for shareholders B. $XX above million capital through $XXX

redeeming end a ended, Deducting third from activities $XXX these refinancing On we million by our at end pro balance amounts in implies $XXX after fully of due completed balance notes the approximately million XXXX. our quarter. October of the third forma third the the X, quarter cash quarter

settled Separately, typically $XX quarter in Next, is phasing. flow be natural generation operating quarter quarter the sizable million paid we expected shareholder as is due to and year, cash cash of largest lawsuit. this the a this fourth to second

least factors million from fourth vigorously operating are continue translate received conversion. this expected flow recover the entitled quarter, meaningful we of remaining fourth We pursue we and insurance segment. settlement This into to the coverage to related we $XX cash during quarter quarter. to recovery to the $XX will believe These are shareholder million at

continue of cash $XXX to parts year-end resulting moving repay recovery Lastly, million, sheet account, we between year setting. all $XXX shareholder on approximately December into the $XXX for intend from at of of remaining assuming end to million due end the to of when the down XXXX, of fully in hand, quarter. Taking the Xx, with million Perrigo notes of net these we on balance third cash leverage X.Xx plan in insurance

Turning quickly to guidance.

remains unchanged. outlook XXXX Our largely

organic and gross towards and adjusted adjusted lower operating outlook end all-in we net respective margin meaningful expansion. While year-over-year sales ranges, the XX% between XX% expect their to of margin

known a effective bolstered to than debt to we has by total full action We unknown And XX% of lower at compared to achieving our offset cost the taken reaffirming We now $X.X to prior and significant In of operating addition, XX%, $X.XX. In year-to-date debt our in cash from benefits expect our to year lower rate closing, tax growth $X.XX year. refinancing than expenses balance EPS deliver originally XXXX. headwinds initiatives lower on before. team adjusted expect we swift outlook are interest slightly track sheet and income finally, of the billion accretive remain outstanding our and to planned. between

we will further for term. for cash to we Looking support free your business Brad. our the our One journey investing Perrigo. With -- I'll continue focus in fulfill you turn you, to vision our to back as further generation ongoing and flow Thank long we on ahead, as that, and

Bradley Joseph

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

Operator

Susan Anderson [Operator Instructions] Your question from is Canaccord. first from

Susan Anderson

fourth points, that of -- sales as margins, that at guess, improvement in just guess? level, kind of expect And continue that should basis the guess, the I we expect should back getting quarter? about then to on see How I for business, And the that we run rate Nutrition just also track. kind the we the on then X,XXX forward XXXX, Infant good normal I the to think ramp maybe look of of there? is in terms in should we

Eduardo Bezerra

Okay.

the half impacted, look So quarter, in we So recovery year, formula of So first going right? expect, right? the there. would be the shared continue and we a a to again, as fourth so we infant see would as then in beginning on and ramp-up into we

the track. well store really So pretty brand going is on

our in the recovering distributors. focus really Third share was quarter,

And full of the retailer. we in our quarter, to so reposition our were product to expand then, expect we five able in last largest customers. to And that

saw that's share what points. as question basis we key contract right? while note, so points, plan we XX And store our our growth continue have our our business, really brand to there. The you XXX mark So is in by basis see grew to total, in on

on, our mainly the that's going we're happen So aspect. going So what business, right? contract there's still with an side, branded important -- given on the watching to is dynamics closely

Related forward progress to see to right, going as the business. pretty on closely business -- so is Right? you brand store So market So happened a recovery and then XXXX, continue taking there segment. we contract strong share. throughout year, continue the our looking to branded that be to continue we're and of to what to well, expect and Right? player watch to we the new significant that with in share is that know a

to watching dynamic we're right? year, we how the margin were So in but saw side, you so not last the asking improvement And right. as about closely remember, in XXXX, least, the margin branded on is share. Last the play going significant low

XXXX. most continue the XXXX as progress, So that's we level margin business we to that the to this but in in addressed how found again, contract out, evolve, to of issues operating in going first continue getting expect we dependent half of of gross margin we're highly both to that to margins we expect of that and and in margin terms play significant gross the continue year on the

Susan Anderson

your around talk maybe acquisition guess, thoughts Okay. Obviously, you one any about. new then Opill it's more the But next on there. if growth going the is for just I could around Great. versus just Opill, nice and how marketing customer And for expectations And trending if some product. expectations, the could how then, add I maybe year?

Patrick Lockwood-Taylor

Patrick. this Yes. is Susan,

XX% seeing, you all So well growth. over we X is say Opill, the and well contraceptives is momentum. rightly benchmark. over and actually of last this gain it sequential to It's very good a week-on-week almost continues Trial has quarter. grown repeat Awareness rates, weeks. are, share three now And as over

with pleased it. we're with not So it. delighted We're

need generate are think still how the on to there's key new We'd be more to optimization. have lot improve with learn three continuing a of who we're that user that It's to key in-store We to they to also to doing focus category upside it. groups, so to really to use, visibility. there faster, our how understand awareness. share groups. significant groups. We and lot marketing OTC, and can three We is of learning why user to a research convert those display We're them done, see our in like user growing a seem

to So make to good work we going into growth to 'XX. continued And bigger. be yes, see expect, even done it

Eduardo Bezerra

Opill seeing Susan, And to Patrick expect accretive we our to just do be on what to to 'XX, in add it both margin, why and said, not EPS, gross being 'XX. we accretive the in continue we're

Susan Anderson

Yes.

And Okay. you EPS expect do Great. it accretive to in to be 'XX?

Eduardo Bezerra

the remember, So end So in it first didn't year, of the to that the months since more said, the accretive. expect beginning we XX we right? be as said we towards

we our period in remember, consumers. to So you drive to the the because really the Opill given of get that exclusivity A&P as hands very margin the brand X-year to it's rationalize us, important continue

we're so that maximizing And opportunity.

we're to most capture the going back come the able brand category. product, we store value to when be with that So that in

Operator

Keith question from is from next Devas Your Jefferies.

Keith Devas

programs that priority starting forward? And and expected, the guess of with list so, the restructuring investments in? on cash changes than or some then I your that for being outflows areas kind coming maybe what would be better are pulled of Maybe adding the in how some investing just and organization if context

Eduardo Bezerra

here. Eduardo Keith, Well,

companies. in organization. level So do A&P making that really branded continue and the business, investments we our similar as we and a to expect build have the Right? matching we So strengthen Patrick our highlighted we our as R&D right? investments, some are still that of So prioritize sure to

So that's one as key area we're that looking well. there

in efficiencies part we continue the those of get cetera, our drive to last in unify we our we can term. invest how Project Perrigo that really and benefits Reinvention as continue that operations, long One continue to so to our strategy Supply So et of Chain to Energize, standardize to systems, And right? for

the areas of some continuing that focus key to are these we're to reinvest. So

Keith Devas

it. and helpful. you nature and drug the your really some seasonal around cough/cold just in unique adding just to yours. channel. U.S. secondly pharmacy seeing then with Maybe exposure are of there? guys key I your What the That's the know Got customers some on comments season to there's of pressures

And so you're key some cough/cold any one, from thoughts on potential customers a context your in U.S. And the the from nature impact U.S.? that on in that and trends seasonal and those impact, what how OTC then secondly, hearing might channel the just business? of

Patrick Lockwood-Taylor

Yes. of Patrick. to Cough/cold This business. our about is XX% is XX% business

is relatively benefit we we're insulated if course, are upside. normal a indications from The weak season. any it But So well fairly a season. of

on really We channel channel another, and see from if move their use And channels. question higher dynamics pharmacy neutral impact Typically, all don't one channel. when Good purchase us. shopper of But to moving we shoppers for outside actually that's an switching. a they're anyway. the channels enjoy shoppers effect most shares

for if this So is slight a tailwind anything, us.

Operator

is Sandler. Wolfmeyer question Piper from Korinne next from Your

Korinne Wolfmeyer

volume, being maybe of of differential margin margin little true with bit I the bit bit press margin. want a you the about of exiting bit lower I little the little talk And you customer key then, be customers? in lower -- you're on I release, a bit to little talked headwind. some touch customers and believe guess, the the Can in that may putting about these a the controls little a relationships a a

point flip volume become what would of headwind impact a a tailwind at and So more the you're given this seeing? versus

Eduardo Bezerra

Yes. Thank Korinne. you,

that of with So one that the times right? that's their business the that year RFPs, that away, margin, and third our do on the -- the we portion at multiple impact least of with in or specific they thing of common was very at were see, positive had margin important, a So we U.S., in because So the net we customer, operate customer didn't you those loss as different of business we quarter, retailers years, low margins. because walked the exit a the one very all there. right? and And

of have it's We're watching absorption. an to impact us, those accretive always to So on closely, actions. margin not term that

And we're we so that's closely, watching an the through area as year. very progress that

parts took And starting specific of see will QX that first starting of of the on and that to XXXX. to QX. play now. these But We're question, into Those top first some have your in with we get impact and an actions half, the our business second line, they're further the to may half exited second but the X start businesses okay? last wins that be starting a -- that say, margin we XXXX. had versus just in X higher to over XXXX. to we I that consistently in offsetting expect of would present to those the months, half And the the quarter, what will more in second clear, we lost,

Korinne Wolfmeyer

proper on you selling stepped then what's looks into aware And Really just touch what's run selling to timing the going we that rate expense. -- there QX? the be with head forward? going like spend if little bit a in bit this little down we think the on all should how color. a of, shift that need related to expense as Was any could for about the appreciate And we Great. I quarter. It be then

Eduardo Bezerra

Yes.

benefits you when see Energize So the into in to the look the in were of launched Project half expenses, operating we second right, year. first the significant quarter, as we overall expecting so

we right, we impacts there top that took as a So on quarter, quarter. XXXX, we expect into But of continue. first A&P what very so to down had. in and the look coming is the the we that position In R&D, seeing strong line third you're given some

to to will lines Which, we as XXXX. so our were delivering we what those Project work And in the expect two shared, for way, year-to-date are as we we on versus still, incremental plans deliver million. year. in savings as this XXXX, $XX But XXXX recover compared by Energize

Operator

next Chris is Schott question from Your JPMorgan. from

Ethan Brown

Ethan is This on for Chris.

and Just market you the formula store starting perspective? changes a retailer thinking your a for label And new sell in being produce on able formula the the Or concerns demand what's player point on consumer overall then any in feedback to the off early on your recovery, given industry? brand or from private this been and at infant the product updates position? both in

Patrick Lockwood-Taylor

Yes. Chris, some Eduardo I'll this, this further commentary. Patrick. is add will then and take

consumers, store our We with expectations. brand are in recovering largely line with share

We out marketing brand every amount time a category have at to them month certain new activity. exit. to and have that what mothers We how or and the store convert restarted of enter who modeled see know

are sold. non-WIC moved U.S. with the So had because lot we tubs of FDA that in watching some consumption. powder the new store regulations manufacturing efficiencies. the SKU, lot bigger for its to The of of rationalize and because pound units that a line correct industry is I are tubs brand. know measure small from units people a is to Reason

expectation, will introduce So levels. to we will will we historical brand beyond new continue perfectly that next recovery are point almost be actually mapping we share recover XXXX. seeing onto innovation So That And at see store share we point poundage grow and some hope our actually okay? that's as through one. SKUs, year

So has well. extremely gone that remediation

set industry. are extremely the These of high-quality benchmark really plants and

historical above are We at levels. or and production seeing packaging

these couple with historically, efficiently running we line industry consumer store we're accelerate. Yes, years. higher and will recovery been recovery than done you're disrupted brand are store the seeing So plants expectation, past has of right, in and quality have completely because and more we our that

for. of been has established quite new brand whom and players, branded other regulations. into COVID, share There have contract the They've some the They position. the we sizable a new the some from taken foreign some entrants market. of First, manufacture FDA then

we out, So full that will and there in playing get plants. dynamics and to manage monitor of that are our utilization we order to some continue short-term

Okay? their market owners, and for it's them owned But and again, maintain appeal. brands are by to these other competitiveness consumer

So position the that's sort to outlook the really formula. of and add? on infant Anything

Ethan Brown

and the And then ongoing broadly this the other wins along coming are number more at one recovery XXXX just pushes thinking contract of question the formula infant board a on to how point, and working on other is that business? pulls in XXXX are given the through EPS dynamics with about you

Patrick Lockwood-Taylor

some add definitely more detail. and start Yes, will I'll then Eduardo

the sensitized are sensitive We target. and highly $X EPS to

right. us. for middle We tailwinds regulatory, in some which the budget channel are are But cetera, quite anyone common sort for There CPG, of Yes, et detailed you're literally shifts, usual in suspects. of 'XX. et there are headwinds, consumer, planning across are cetera, also our the

have We recovering business. a

have Brand stabilized Store We business. U.S. a

again, of of we molecules. we arena bigger Because growth price a have Why? than any hundreds And across points our compete at competitors. X

And able growth pivot are spikes we're seasonality of accordingly. so the where and sort where read is, to the

are very on through the those. the working $X target. relative opportunities, those again, we we're is focus, do what ROI focused we So growth Eduardo? EPS of But where

Eduardo Bezerra

Yes.

So Just a of we late little to bit in guidance February. to expect right? provide our color, announce in earnings QX our

Right? up. is half Also, starting to infant category store QX the to of mentioned, also in the offsetting of seeing that growth. shift growth. So big that formula in now that continue that see Right? it Brand brand Store in business we're the from volume tailwinds, position continue the continues loss as see brand, So started expect terms a the and Patrick to second new wins the and XXXX. So as we recovery curve stronger we

as we're there. on talking So both about see brand and CSCA to our CSCI continue great strides in we portfolio,

marketplace. to see competitive headwinds, continue Some we

both look the in that So formula expect point progress just And business, XXXX, as impact on a to also level return as that we both made, Store year. R&D business. to in well our our the question for contract we Korinne variable that A&P as the U.S. into how year, U.S. as the could normal as in expenses those the more we regular we throughout highlighted branded to and infant of Brand and

the this competitive is pricing across saw pricing happening that's also but given dynamics brands, tighter. in we The CSCI seeing highlight year, strong the last all very to major being piece we're

so for benefit And year. pricing expect the same we of significant to next level not see on

to moving are on work and again, the you to we update continue and that there February. target, but Patrick as that's pieces, of our give we're a lot further highlighted, on So in still getting going focus still $X

Operator

And Biolsi Hedgeye. the from from last is question Daniel

Daniel Biolsi

up national a or gap be The brands think narrow your sales alternately follow or to that from on sales? would do Eduardo. pricing? to that I brands, price that And should benefit boost answer wanted and to last widen you between store

Eduardo Bezerra

any the the happened with gap national area? or specific price So just and categories is to what brand question across clear, brand the be between all store

Daniel Biolsi

versus products brands? the Your national

Eduardo Bezerra

Okay. Yes.

XX brands we saw over as to the again, promotions national see, widening So last the we starting before, a to make further talked We're that months. starting to recover volumes.

to it's And well more recover if looking to trend. really stronger what brands We're it's it cough of starts are a bit hard going mainly the in be see to and as really going widening, the that watching happens cold becoming to reduction of these narrow to but closely make season so we're seeing to with little the and a this are that marketplace. see as volumes, national competitive that

Daniel Biolsi

And during How sort now from return Did pipeline seeing the if normal the more follow innovation see does pandemic, could that we and the on look we're less I innovation to Okay. you? of emphasis to levels? up. manufacturers

Patrick Lockwood-Taylor

Yes, this is Patrick.

XX-week first is data Store another on your Just the most XXX to point basis recent question. up add share on period. brand points volume

So shifting more better aware more consumers these tremendously become store identical that are are as value. they to at bioequivalents brands

So we've that. seen

are are cycle. investment more in retailers more for support proposition type for brand value share. from to and significantly to that. on store offer grow demand creation investments retailers profitable much our an We These seeing these in the a and better economic requests and That's

innovation innovation. talk lot about a February. We're to on Second, going in more

lot it's we of drive sure and in that on making consumer disproportionately to want brands we that a make us of much more scalable. that that specifically, harder and spend and money we us, innovation, those categories terms work for innovation our is For belief on can focusing innovation, qualifying preferred

brands for is in not frankly, we've Historically, small enough. particular the particular countries. competitive And payout innovations just done

want the We've payout get better focused have innovations, just those about as more much it individual brands, of on doing. countries focus and about for better them being talk we to as So We them the those February, reduced dramatically scale we more we're size and on. across I'll can that better brands in for innovations massively number they're those consumers. are NPVs, tripled well the as of

Obviously, been the growth consumer. of slowdown not know talk not don't I a innovation It's we about will and has a competition, years. in on for we growth say rhythm, be bringing And last I good know innovation I'd the better driver performance will good for but In as key February. rates. innovation. bigger, that's terms few over driver there category us for generally,

Operator

now this back Patrick for to the call Thank will I you. remarks. questions the at further no are There hand closing time.

Patrick Lockwood-Taylor

thank you is demonstrably quarter, you We and strong do better much, and today. Thank reliable company joining Yes. what positioning hope structure for us very have stronger, forward. more for growth going and us the see internal we a you of getting this

and year think formula, and of business, can maintaining a our stabilizing line lower now of blueprint progress clear. manufacturing is and under of on model streamline in growth we the than continuing that growth. made growth including with we the strengthening first excellent and lot had at our is We a a stabilizing parts for was Perrigo key it then term the operating Three-S of four which our challenging structure, cost outlooked. We our We've our becoming to sustained those important infant vectors branded it systems recovery disproportionately categorize fully parts and long our expectations this business, see year,

to back position in a Store our are competitive U.S. We Brand business.

we dollars last in of millions the I'm 'XX now behind This stabilizing to playing through core it's work pleased of these us. second of mentioned tens we see As say winning and will largely that of growth are half. in we businesses, quarter, business,

seeing and cost, positions progress is operational that We We're more is approximately to through upside simplify cash us to There to work. reliability. to do action improve work to halfway this and streamline our cash That excellent that all sustainable continue business sustain well. maintain growth to third growth. This of that business, in the that component branded is to we're international our that really U.S. we're in ensure strengthen the value-accretive to achieving and the getting and

will and cash improve our and February. I operational flow generation. hyper remain we delivering focused flow Cash strategy efficiency XXXX generation top delevering the We in that priority, outline through remains improve significantly cash Three-S to think Eduardo will on with reliability, financial

entire Perrigo very financial the journey come on in XXXX good Again, joining commitments as work base. today. in and a delivering daily We, progress And course, thanks the operational on our team of market but to through competitiveness. they both steering in improved potential challenges and and market, structurally. we continue of full to will you our my our asset us realize We reliability business and competitive address to are and the up significant for operate to dynamic improved

Operator

ended. and Thank Thank has now gentlemen, you. joining. for Ladies all conference the you

disconnect You may all your lines.

Perrigo (PRGO) 6 Nov 242024 Q3 Earnings call transcript