Perrigo Company (PRGO) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales were $1,088M, down 3.2% year-over-year, mainly due to lost distribution of lower margin products, divestitures, and exited lines, partially offset by strategic pricing and new products.

• Adjusted operating income rose 21.3% to $182M, with margin expansion driven by Project Energize and supply chain improvements; reported operating income was $80.4M, up 29.5%.

• Adjusted diluted EPS increased 26.6% to $0.81, while reported diluted EPS was a loss of $0.13 to $(0.15) due to non-recurring items.

• Infant formula business showed strong recovery, with net sales up 3% year-over-year and 58% sequentially, gaining market share.

• Major asset sales, leadership changes, and ongoing restructuring shaped results, with a strategic focus on cost efficiency, innovation, and stabilizing core businesses.

Financial highlights

• Q3 2024 net sales: $1,088M (down 3.2% YoY); nine months: $3,235M (down 7.5% YoY).

• Adjusted gross margin: 41.0% (+160bps YoY); GAAP gross margin: 37.2% (+60bps YoY).

• Adjusted operating margin: 16.8% (+340bps YoY); GAAP operating margin: 7.4% (+190bps YoY).

• Adjusted EPS: $0.81 (up 26.6% YoY); reported EPS: $(0.15).

• Cash and equivalents at quarter-end: $1.5B; working capital: $1.23B.

Outlook and guidance

• FY 2024 adjusted EPS guidance reaffirmed at $2.50–$2.65.

• Organic and reported net sales expected at the lower end of guidance: organic -3% to -1%, reported -5% to -3%.

• Gross and operating margin expansion anticipated; interest expense projected at ~$180M; adjusted tax rate of 19%-20%; operating cash flow conversion of 90%-100%.

• Year-end cash balance projected at $500–$550M, assuming insurance recovery.

• Commitment to repay $400M in senior notes due December 2024.