DUBLIN - Perrigo Company plc (NYSE: PRGO) ('Perrigo' or the 'Company'), a leading provider of Consumer Self-Care Products, today announced financial results from continuing operations for the third quarter ended September 30, 2023.
All comparisons are against the prior year fiscal third quarter, unless otherwise noted.
President and CEO, Patrick Lockwood-Taylor commented, 'I have immersed myself in all facets of our global business since becoming CEO four months ago and remain excited about our opportunities ahead. We have created a 'One Perrigo' blueprint that will guide us to build an operating model where our portfolio, operating systems and behaviors will be simplified, standardized and scaled. This will position us to win in self-care through the creation of a sustainable and value accretive growth engine that will drive Perrigo for the long-term.'
Lockwood-Taylor concluded, 'The Perrigo team delivered third quarter double-digit gross profit, operating income and EPS growth year-over-year led by strong business fundamentals across the global portfolio, which more than offset continued volatility in infant formula. While we have updated our expectations for infant formula and the adverse impact from currency translation, the strength of our diversified portfolio, greater than originally anticipated margin expansion and a lower expected adjusted tax rate allows us to maintain the mid-to-lower end of our original 2023 EPS guidance range.'
Third Quarter 2023 Highlights
Third quarter net sales of $1.1 billion grew 2.2% versus the prior year quarter. Organic1 net sales decreased 1.2%, including -2.8 percentage points from purposeful SKU prioritization actions to enhance margins as part of the Company's Supply Chain Reinvention Program and the HRA Pharma ('HRA') distributor transitions.
Consumer Self-Care International ('CSCI') net sales increased 11.2% compared to the prior year quarter and organic net sales increased 6.2%, including -1.4 percentage points impact from the HRA distributor transition. Consumer Self-Care Americas ('CSCA') net sales decreased 2.6% compared to the prior year quarter, including -3.6 percentage points from purposeful SKU prioritization actions.
Third quarter GAAP ('reported') gross margin was 36.6%, a 360 basis points improvement compared to the prior year quarter. Non-GAAP ('adjusted') gross margin was 39.5%, a 300 basis points improvement compared to the prior year quarter, and an 80 basis points improvement compared to the second quarter of 2023.
Third quarter reported earnings per share ('EPS') was $0.11, compared to a loss of $(0.39) in the prior year quarter.
Adjusted diluted EPS was $0.64, compared to $0.56 in the prior year quarter, an increase of 14.3%. Adjusted diluted EPS included an unfavorable impact of $0.03 from the HRA distributor transition as part of the integration plan to capture synergies.
Third quarter operating cash flow was $125 million, leading to an operating cash flow conversion2 of 143%, and cash and cash equivalents on the balance sheet closed at $598 million.
Company updates its fiscal 2023 organic net sales and total net sales growth outlook range to 1.0%-3.0% and 4.0%-6.0%, respectively, versus the prior year. The Company also updates its adjusted diluted EPS range outlook to $2.50-$2.60.
Year-to-Date 2023 Highlights
Year-to-date 2023 net sales were $3.5 billion, an increase of 6.1% versus the prior year period. Organic net sales increased 2.4%, including -1.9 percentage points from purposeful SKU prioritization actions and the HRA distributor transitions.
CSCI year-to-date net sales of $1.3 billion grew 12.7% versus the prior year period, with organic growth of 8.6%. CSCA year-to-date net sales of $2.2 billion grew 2.7% compared to the prior year period, while organic net sales decreased 1.0%, including -2.6 percentage points from purposeful SKU prioritization actions.
Year-to-date GAAP ('reported') gross margin was 35.8%, a 330 basis points improvement compared to the prior year period. Non-GAAP ('adjusted') gross margin was 38.5%, a 300 basis points improvement compared to the prior year period.
Year-to-date reported EPS was $0.17, as compared to a loss of $(0.88) in the prior year period.
Year-to-date adjusted diluted EPS was $1.72, as compared to $1.32 in the prior year period, an increase of 30.3%. Adjusted diluted EPS included an unfavorable impact of $0.14 from the HRA distributor transition as part of the integration plan to capture synergies.
About Perrigo
Perrigo Company plc (NYSE: PRGO) is a leading provider of Consumer Self-Care Products and over-the-counter (OTC) health and wellness solutions that enhance individual well-being by empowering consumers to proactively prevent or treat conditions that can be self-managed.
Forward-Looking Statements
Certain statements in this press release are 'forward-looking statements.' These statements relate to future events or the Company's future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the Company or its industry to be materially different from those expressed or implied by any forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as 'may,' 'will,' 'could,' 'would,' 'should,' 'expect,' 'forecast,' 'plan,' 'anticipate,' 'intend,' 'believe,' 'estimate,' 'predict,' 'potential' or the negative of those terms or other comparable terminology. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the Company's control, including: supply chain impacts on the Company's business, including those caused or exacerbated by armed conflict, trade and other economic sanctions and/or disease; general economic, credit, and market conditions; the impact of the war in Ukraine and any escalation thereof, including the effects of economic and political sanctions imposed by the United States, United Kingdom, European Union, and other countries related thereto; the outbreak or escalation of conflict in other regions where we do business; future impairment charges, if we determine that the carrying amount of specific assets may not be recoverable from the expected future cash flows of such assets; customer acceptance of new products; competition from other industry participants, some of whom have greater marketing resources or larger market shares in certain product categories than the Company does; pricing pressures from customers and consumers; resolution of uncertain tax positions and any litigation relating thereto, ongoing or future government investigations and regulatory initiatives; uncertainty regarding the Company's ability to obtain and maintain its regulatory approvals; potential costs and reputational impact of product recalls or sales halts; potential adverse changes to U.S. and foreign tax, healthcare and other government policy; the effect of the coronavirus (COVID-19) pandemic and its variants; the timing, amount and cost of any share repurchases (or the absence thereof); fluctuations in currency exchange rates and interest rates; the Company's ability to achieve the benefits expected from the sale of its Rx business and the risk that potential costs or liabilities incurred or retained in connection with that transaction may exceed the Company's estimates or adversely affect the Company's business or operations; the Company's ability to achieve the benefits expected from the acquisitions of Hera SAS ('HRA Pharma') and Nestle's Gateway infant formula plant along with the U.S. and Canadian rights to the GoodStart infant formula brand and other related formula brands ('Gateway') and/or the risks that the Company's synergy estimates are inaccurate or that the Company faces higher than anticipated integration or other costs in connection with the acquisitions; risks associated with the integration of HRA Pharma and Gateway, including the risk that growth rates are adversely affected by any delay in the integration of sales and distribution networks; the consummation and success of other announced and unannounced acquisitions or dispositions, and the Company's ability to realize the desired benefits thereof and the Company's ability to execute and achieve the desired benefits of announced cost-reduction efforts and other strategic initiatives and investments, including the Company's ability to achieve the expected benefits from its Supply Chain Reinvention Program. Adverse results with respect to pending litigation could have a material adverse impact on the Company's operating results, cash flows and liquidity, and could ultimately require the use of corporate assets to pay damages, reducing assets that would otherwise be available for other corporate purposes. These and other important factors, including those discussed under 'Risk Factors' in the Company's Form 10-K for the year ended December 31, 2022, as well as the Company's subsequent filings with the United States Securities and Exchange Commission, may cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. The forward-looking statements in this press release are made only as of the date hereof, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Contact:
Bradley Joseph
Tel: (269) 686-3373
Email: bradley.joseph@perrigo.com
PERRIGO COMPANY PLC 
