Perrigo Company Plc · NYSE:PRGO
Perrigo — Q3 2020 Earnings Presentation
52 slides from Perrigo's earnings presentation, Nov 4, 2020
Slide 1: Third Quarter 2020 Financial Results
Third Quarter 2020 Financial Results November 4, 2020
Slide 2: Bradley Joseph, VP Investor Relations and Corporate Communications
Bradley Joseph, VP Investor Relations and Corporate Communications
Slide 3: Forward Looking Statements
Forward Looking Statements Certain statements in this presentation 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 o
Slide 4: Murray S. Kessler, President & CEO
Murray S. Kessler, President & CEO
Slide 5: Thank You to Our Teammates Around the World
Thank You to Our Teammates Around the World!
Slide 6: Continuing to Make Significant Progress on Our Consumer Self Care Transformation
Continuing to Make Significant Progress on Our Consumer Self Care Transformation • Shared new vision globally • Consistently delivering on financial • Executed 6 acquisitions and 2 divestitures 1 expectations Reconfigure the • Restored strong revenue growth portfolio • ~30% of PRGO now owned by • Im
Slide 7: To Drive Our Long-Term Growth CAGR Algorithm
To Drive Our Long-Term Growth CAGR Algorithm ORGANIC REVENUE +1-2% Base +1-2% Organic +3% Adj. GM +5% Adj. OI Revenue Incremental Expansion Growth Growth Revenue HISTORIC 4-5% UNIT YR2+ ACCRETION FROM GROSS MARGIN GROWTH, LESS BOLT-ON’S LEVERAGE 2-3% PRICE EROSION ACCELERATED NEW COST REDUCTION PROD
Slide 8: Solid Consolidated Performance Despite COVID-19 Related Costs, Divested Businesses & Albuterol Recall
Solid Consolidated Performance Despite COVID-19 Related Costs, Divested Businesses & Albuterol Recall Net Sales YoY Adjusted EPS YoY Q3 Financial Highlights Worldwide Consumer net sales growth +4.2%* or organic growth of 1.6%** $1.2B $0.93 Q3 Rx down 8.9% due to albuterol recall, excluding curre
Slide 9: Worldwide Consumer Net Sales Continue to Grow
Worldwide Consumer Net Sales Continue to Grow Q3 Worldwide Consumer YTD Worldwide Consumer Net Sales Growth YoY* Net Sales Growth YoY* +4.6% +4.2% +1.6% +11.3% organic** organic** Q3 2019 Q3 2020 YTD 2019 YTD 2020 See attached Appendix for details. *Comparisons include the previously disclosed third
Slide 10: Another Strong Performance by Consumer Self-Care Americas in Q3
Another Strong Performance by Consumer Self-Care Americas in Q3 Across All Categories with ~8%* Growth YoY $ millions YOY NET SALES DRIVERS • New Products: +$24M • eCommerce: +140% • Bolt-Ons: +$24M See attached Appendix for details. *Comparisons include the previously disclosed third quarter 2019 n
Slide 11: The 'Great Consumer Shift' in Shopping Behavior Is Adding To CSCA Growth
The ‘Great Consumer Shift’ in Shopping Behavior Is Adding To CSCA Growth Consumer Shift to Store Brand 11 Source: CHPA White Paper: Value of OTC Medicines to the U.S. Healthcare System, March 2019. Source: McKinsey & Company, The great consumer shift: Ten charts that show how US shopping behavior is
Slide 12: The 'Perrigo Advantage' In Omnichannel
As Is The ‘Perrigo Advantage’ In Omnichannel IRI MULO OMNICHANNEL BRICK & MORTAR BRICK & MORTAR ECOMMERCE & & & ONLINE GROCERY PICK-UP ONLINE GROCERY PICK-UP ALL CLUB -4.8% +1.2% Total OTC Category MULO Total OTC Omnichannel Category -6.3% -2.8% Store Brand MULO Store Brand Omnichannel -2.5% +3.5% P
Slide 13: CSC International Net Sales Decreased 2.3% YoY
CSC International Net Sales Decreased 2.3%* YoY $ millions CSCI Net Sales Bridge** NET SALES DRIVERS • New Products: $24M • eCommerce: +69% See attached Appendix for details. *Comparisons include the previously disclosed third quarter 2019 net sales adjustments for the market withdrawal of Ranitidin
Slide 14: CSCI Recovering Faster Than Anticipated To Pre-COVID-19 Levels
CSCI Recovering Faster Than Anticipated To Pre-COVID-19 Levels, New EU Lock-Downs a Potential Headwind Total Market vs. Perrigo Consumer Consumption Index 140 130 127.3 127.8 120 110.5 110 103.2 102.2 106.8 100 97.6 101.1 91.3 91.4 98.1 90.0 90 93.5 90.4 84.9 84.7 80 January 2020 February 2020 March
Slide 15: Rx Net Sales Significantly Impacted By Albuterol Recall Returns Reserve
Rx Net Sales Significantly Impacted By Albuterol Recall Returns Reserve; Rx Base down 1.2%* YoY $ millions Products Launched in 2020 Pilocarpine Tablets (generic version of Salagen®) Sumatriptan Nasal Spray 5mg and 20mg (generic version of Imitrex®) Calcipotriene- Betamethasone Dipropionate Su
Slide 16: Rx Base Business Recovered More Quickly Than Anticipated
Encouragingly, Rx Base Business Recovered More Quickly Than Anticipated To Near Pre-COVID Levels Rx Base Net Sales YoY* $219M, $ millions $197M, -1.2% YoY $240 -14.4% YoY $220 $200 +11.2% QoQ $180 $160 $140 $120 $100 Q2 2020 Q3 2020 16 *Net sales excluding albuterol sales and the estimated albuterol
Slide 17: Perrigo's Consumer Self-Care Transformation Has Us Well Positioned
Perrigo’s Consumer Self-Care Transformation Has Us Well Positioned LEVERAGING OUR CORE COMPETENCIES IN THE ‘NEW NORMAL’ Self-Care Value e-Commerce On average, our Store Brand products save consumers 25-35% 17 vs. the national brand
Slide 18: Ray Silcock, EVP & CFO
Ray Silcock, EVP & CFO
Slide 19: Consolidated Reported to Adjusted Summary – Q3 2020
Consolidated Reported to Adjusted Summary – Q3 2020 Restructuring, Consolidated Impairment Interest, Diluted Operating Other, and Net 3 Months Ending September 26, 2020 Net Gross R&D Expense DSG&A Charges, and Income Change in Income Tax Income Earnings (in millions, except per share amounts) Sales
Slide 20: Consolidated – Q3/YTD 2020
Consolidated– Q3/YTD 2020 % Change Ex. % Change Ex. Q3 YoY $ Divested YTD YoY $ Divested Consolidated Perrigo 2020 Change* Businesses & 2020 Change* Businesses & Currency* Currency* Net Sales $1.2B $15M 1.7% $3.8B $274M 9.7% Adjusted Gross Profit $471M ($14M) (2.5%) $1.5B $29M 4.1% Adjusted Gross Ma
Slide 21: Worldwide Consumer – Q3/YTD 2020
Worldwide Consumer – Q3/YTD 2020 % Change Ex. % Change Ex. Q3 YoY $ Divested YTD YoY $ Divested Worldwide Consumer 2020 Change* Businesses & 2020 Change* Businesses & Currency* Currency* Net Sales $1B $35M 4.2% $3.04B $247M 11.3% Adjusted Gross Profit $393M $2M 1.3% $1.2B $46M 7.0% Adjusted Gross Ma
Slide 22: CSC Americas – Q3/YTD 2020
CSC Americas – Q3/YTD 2020 Q3 Adjusted Operating Income Increased 8.5%, Excluding Divested Businesses and Currency* % Change Ex. % Change Ex. Q3 YoY $ Divested YTD YoY $ Divested CSC Americas 2020 Change* Businesses & 2020 Change* Businesses & Currency* Currency* Net Sales $664M $45M 7.8% $2.0B $232
Slide 23: CSC International – Q3/YTD 2020
CSC International – Q3/YTD 2020 YTD Adjusted Gross Profit decreased 4.3%; Excluding Divested Businesses and Currency* % Change Ex. % Change Ex. Q3 YoY Divested YTD YoY Divested CSC International 2020 Change* Businesses & 2020 Change* Businesses & Currency* Currency* Net Sales $339M ($10M) (2.3%) $1.
Slide 24: Rx – Q3/YTD 2020
Rx – Q3/YTD 2020 Q3 YoY YoY % YTD YoY YoY % Rx Pharmaceuticals 2020 Change Change 2020 Change Change Ex. Currency Ex. Currency Net Sales $211M ($20M) (8.9%) $739M $27M 3.5% Adjusted Gross Profit $78M ($16M) (17.8%) $294M ($18M) (6.4%) Adjusted Gross Margin % 37.1% (380 bps) 39.8% (400 bps) Adjusted
Slide 25: Balance Sheet and Liquidity Remain Strong
Balance Sheet and Liquidity Remain Strong Select Balance Sheet & Liquidity Measures 9/26/2020 6/27/2020 Cash & Cash Equivalents $849M $1.5B Total Debt $3.6B $4.1B Net Debt $2.7B $2.7B Quarterly Cash Conversion Ratio* 49% 206% YTD Cash Conversion Ratio* = 124% 25 *See attached Appendix for reconcilia
Slide 26: Calendar Year 2020 Guidance
Calendar Year 2020 Guidance Calendar Year 2020 Consolidated Guidance Net Sales Growth 6-7% Organic Net Sales Growth At least 3% Adjusted Diluted EPS $3.95 to $4.15 26
Slide 27: Appendix: Reconciliation of Non-GAAP Measures
TABLE I PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES APPENDIX SELECTED CONSOLIDATED INFORMATION (in millions, except per share amounts) (unaudited) Three Months Ended September 26, 2020 Restructuring, Impairment Interest, Charges, and Other, and Diluted Other Operating Change in Income Ne
Slide 28: Table I (Continued) Reconciliation of Non-GAAP Measures
TABLE I (CONTINUED) PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES SELECTED CONSOLIDATED INFORMATION (in millions, except per share amounts) (unaudited) Three Months Ended September 28, 2019 Restructuring , Impairment Interest, Charges, and Other, and Diluted Other Change in Income Earnings
Slide 29: Table I (Continued) Reconciliation of Non-GAAP Measures
TABLE I (CONTINUED) PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES SELECTED CONSOLIDATED INFORMATION (in millions, except per share amounts) (unaudited) Three Months Ended June 27, 2020 Restructuring , Impairment Interest, Charges, and Other, and Diluted Other Change in Income Net Earnings
Slide 30: Table I (Continued) Reconciliation of Non-GAAP Measures
TABLE I (CONTINUED) PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES SELECTED CONSOLIDATED INFORMATION (in millions, except per share amounts) (unaudited) Nine Months Ended September 26, 2020 Restructuring, Interest, Impairment Other, and Diluted Charges, and Change in Income Earnings Net Gro
Slide 31: Table I (Continued) Reconciliation of Non-GAAP Measures
TABLE I (CONTINUED) PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES SELECTED CONSOLIDATED INFORMATION (in millions, except per share amounts) (unaudited) Nine Months Ended September 28, 2019 Restructuring, Interest, Impairment Other, and Diluted Charges, and Change in Income Earnings Net Gro
Slide 32: Table II Reconciliation of Non-GAAP Measures
TABLE II PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES SELECTED SEGMENT INFORMATION (in millions) (unaudited) Three Months Ended Three Months Ended September 26, 2020 September 28, 2019 Net Gross R&D DSG&A Operating Net Gross R&D DSG&A Operating Worldwide Consumer* Sales Profit Expense Exp
Slide 33: Table II (Continued) Reconciliation of Non-GAAP Measures
TABLE II (CONTINUED) PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES SELECTED SEGMENT INFORMATION (in millions) (unaudited) Nine Months Ended Nine Months Ended September 26, 2020 September 28, 2019 Net Gross R&D DSG&A Operating Net Gross R&D DSG&A Operating Worldwide Consumer* Sales Profit E
Slide 34: Table II (Continued) Reconciliation of Non-GAAP Measures
TABLE II (CONTINUED) PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES SELECTED SEGMENT INFORMATION (in millions) (unaudited) Three Months Ended Three Months Ended September 26, 2020 September 28, 2019 Operatin Operatin Net Gross R&D DSG&A g Net Gross R&D DSG&A g Consumer Self-Care Americas Sa
Slide 35: Table II (Continued) Reconciliation of Non-GAAP Measures
TABLE II (CONTINUED) PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES SELECTED SEGMENT INFORMATION (in millions) (unaudited) Three Months Ended Three Months Ended September 26, 2020 September 28, 2019 Net Gross R&D DSG&A Operatin Net Gross R&D DSG&A Operatin Consumer Self-Care International S
Slide 36: Table II (Continued) Reconciliation of Non-GAAP Measures
TABLE II (CONTINUED) PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES SELECTED SEGMENT INFORMATION (in millions) (unaudited) Three Months Ended Three Months Ended September 26, 2020 September 28, 2019 Net Gross R&D DSG&A Operating Net Gross R&D DSG&A Operating Prescription Pharmaceuticals Sal
Slide 37: Table II (Continued) Reconciliation of Non-GAAP Measures
TABLE II (CONTINUED) PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES SELECTED SEGMENT INFORMATION (in millions) (unaudited) Nine Months Ended Nine Months Ended September 26, 2020 September 28, 2019 Net Gross R&D DSG&A Operatin Net Gross R&D DSG&A Operating Consumer Self-Care Americas Sales P
Slide 38: Table II (Continued) Reconciliation of Non-GAAP Measures
TABLE II (CONTINUED) PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES SELECTED SEGMENT INFORMATION (in millions) (unaudited) Nine Months Ended Nine Months Ended September 26, 2020 September 28, 2019 Net Gross R&D DSG&A Operatin Net Gross R&D DSG&A Operatin Consumer Self-Care International Sal
Slide 39: Table II (Continued) Reconciliation of Non-GAAP Measures
TABLE II (CONTINUED) PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES SELECTED SEGMENT INFORMATION (in millions) (unaudited) Nine Months Ended Nine Months Ended September 26, 2020 September 28, 2019 Operatin Net Gross R&D DSG&A g Income Net Gross R&D DSG&A Operating Prescription Pharmaceutica
Slide 40: Table II (Continued) Reconciliation of Non-GAAP Measures
TABLE II (CONTINUED) PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES SELECTED SEGMENT INFORMATION (in millions) (unaudited) Three Months Ended March 28, 2020 Operatin Net Gross R&D DSG&A g Consumer Self-Care Americas Sales Profit Expense Expense Income Reported $ 700.6 $ 215.5 $ 17.6 $ 73.3
Slide 41: Table III Reconciliation of Non-GAAP Measures
TABLE III PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES ADJUSTED NET SALES GROWTH - SELECTED SEGMENTS (in millions) (unaudited) Three Months Ended September 26, September 28, Total FX Constant 2020 2019 Change Change Currency Change Adjusted Net Sales Consolidated net sales as so adjusted
Slide 42: Table III Reconciliation of Non-GAAP Measures
TABLE III PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES ADJUSTED NET SALES GROWTH - SELECTED SEGMENTS (in millions) (unaudited) Three Months Ended September 26, September 28, Total FX Constant 2020 2019 Change Change Currency Change Adjusted Net Sales RX $ 210.7 $ 230.3 (8.5)% (0.4)% (8.9)
Slide 43: Table III (Continued) Reconciliation of Non-GAAP Measures
TABLE III (CONTINUED) PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES ADJUSTED NET SALES GROWTH - SELECTED SEGMENTS (in millions) (unaudited) Nine Months Ended September 26, September 28, Total FX Constant 2020 2019 Change Change Currency Change Adjusted Net Sales RX $ 738.8 $ 711.6 3.8% (0.
Slide 44: Table III (Continued) Reconciliation of Non-GAAP Measures
TABLE III (CONTINUED) PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES ADJUSTED NET SALES GROWTH - SELECTED SEGMENTS (in millions) (unaudited) Nine Months Ended September 26, September 28, Total FX Constant 2020 2019 Change Change Currency Change Adjusted Net Sales CSCA net sales as so adjust
Slide 45: Table IV Reconciliation of Non-GAAP Measures
TABLE IV PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES (in millions, except per share amounts) (unaudited) Three Months Ended September 26, September 28, Total 2020 2019 Change Consolidated adjusted EPS $ 0.93 $ 1.04 (10.6)% Adjusted gross profit RX $ 78.2 $ 94.1 (16.9)% Adjusted gross mar
Slide 46: Table IV (Continued) Reconciliation of Non-GAAP Measures
TABLE IV (CONTINUED) PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES (in millions, except per share amounts) (unaudited) Nine Months Ended September 26, September 28, Total 2020 2019 Change Consolidated adjusted EPS $ 3.10 $ 2.97 4.4% Adjusted gross profit RX $ 294.0 $ 311.6 (5.6)% Adjusted
Slide 47: Table IV (Continued) Adjusted Profit Measure Growth
TABLE IV (CONTINUED) PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES ADJUSTED PROFIT MEASURE GROWTH - SELECTED SEGMENTS (in millions) (unaudited) Three Months Ended Constant September 26, September 28, Total FX Currency 2020 2019 Change Change Change Adjusted gross profit Consolidated adjust
Slide 48: Table IV (Continued) Adjusted Profit Measure Growth
TABLE IV (CONTINUED) PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES ADJUSTED PROFIT MEASURE GROWTH - SELECTED SEGMENTS (in millions) (unaudited) Three Months Ended Constant September 26, September 28, Total FX Currency 2020 2019 Change Change Change Adjusted operating income Consolidated $
Slide 49: Table IV (Continued) Adjusted Profit Measure Growth
TABLE IV (CONTINUED) PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES ADJUSTED PROFIT MEASURE GROWTH - SELECTED SEGMENTS (in millions) (unaudited) Nine Months Ended Constant September 26, September 28, Total FX Currency 2020 2019 Change Change Change Adjusted gross profit Consolidated $ 1,476
Slide 50: Table IV (Continued) Adjusted Profit Measure Growth
TABLE IV (CONTINUED) PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES ADJUSTED PROFIT MEASURE GROWTH - SELECTED SEGMENTS (in millions) (unaudited) Nine Months Ended Constant September 26, September 28, Total FX Currency 2020 2019 Change Change Change Adjusted operating income Consolidated $ 6
Slide 51: Table V Reconciliation of Non-GAAP Measures
TABLE V PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES (in millions) (unaudited) Three Months Ended Nine Months Ended September 26, September 26, 2020 2020 Operating cash flow $ 63.1 $ 525.8 Adjusted net income $ 127.9 $ 425.7 Cash conversion ratio 49% 124% Three Months Ended June 27, 2020
Slide 52: Reported Net Sales by Product Category
TABLE VI PERRIGO COMPANY PLC REPORTED NET SALES BY PRODUCT CATEGORY (in millions) (unaudited) Three Months Ended Nine Months Ended September September September September 26, 28, 26, 28, 2020 2019 2020 2019 CSCA(1) Upper respiratory $ 114.2 $ 123.4 $ 385.5 $ 377.4 Digestive health 107.1 85.0 326.1 2