Perrigo Company plc Q4 FY2025 earnings call

• 2025 was a year of meaningful progress, with wins in the market, delivering EPS in line with revised guidance, and progress on the 3S plan. • Stabilized store brand business, supply and infant formula, streamlined the business including sale of derma cosmetics business, executed efficiency initiatives. • Strengthened portfolio and capabilities with brand share gains, tripled innovation pipeline value, deepened retailer partnerships. • Introducing new reporting segments in Q1 2026: Self-care, specialty care, infant formula; Oral care, dermacosmetics, etc. in other. • 2026 outlook reflects challenging market conditions, expecting OTC market consumption negative in first half, but expect to grow share ahead of market, driven by consumer-centric innovation, etc. • Implementing new two-year operational enhancement program with global workforce reduction and operational cost reductions.

For the full year, All In business grew operating income by 2% and EPS by 7%, finishing at $2.75. Core Perigo operating income was up 7%, with core EPS up 14%. In the fourth quarter, poor organic net sales declined 2% despite strong share gains, and core operating income declined by $4 million or 2%, resulting in core EPS of $0.76. CSEI: Two-year core organic net sales decreased 0.2%, fourth quarter core organic net sales decreased 1.4%, full-year core operating income grew 11.6%, four-quarter core operating income increased 10.3%. CSEA: Full year core organic net sales decreased 3%, core organic net sales for the quarter decreased 2.4%, all-in net sales for the quarter and full year included declines in infant formula net sales, core operating income for the full year and fourth quarter decreased respectively.

• Core perennial organic net sales growth expected to range from negative 3.5% to positive 0.5% in 2026. Core EPS range $2.25 to $2.55. • All-in net sales growth expected minus 5.5% to minus 1.5%, gross margin 36.5 to 37.5%, operating margin 12.5 to 13.5%, EPS range $2 to $2.30. • Expect operating cash flow conversion to remain in the 60 percentage range and net leverage to end 2026 roughly in line with or slightly better than 2025. • 2026 as a transition year working through near-term headwinds.

• Non-cash accounting impact including goodwill impairment charge of $1.3 billion. • Potential additional non-cash goodwill impairment charges of up to $350 million in Q1 2026. • Temporary market softness and plant underabsorption impacting results. • Uncertainties related to strategic review of infant formula and other business units.

Q: About 2026 outlook, pressures in first half and second half improvement.

A: Decline mainly transitory, 90% cause, second half improvement due to growing share, innovation, geographic expansion, distribution gains, demand generation mostly in second half.

Q: Update on liquidity, leverage, restructuring program.

A: Capital allocation priorities unchanged, expect proceeds from derma sale to reduce debt, continue dividend, 2026 transitory with under-absorption impact to recover in 2027.

Q: Margin recovery in OTC.

A: Under-absorption impacting margins in 2026, transitory, should dissipate in second half 2026 and 2027.

Q: Infant formula business, strategic review.

A: Review ongoing, working with advisors on options, too early to comment on progress.

Q: Core sales categories growth.

A: Preventative categories doing better, cough cold, pill dosing in pain poorer, allergy and topical creams in pain performing well.

Q: Capital allocation, dividend, deleveraging.

A: Capital allocation priorities clear, hold dividend, assess, leverage expected in line or slightly better than 2025, long-term goals to be achieved over next 2-3 years.

Q: Infant formula working capital, price investment in CSCI.

A: Infant formula working capital high due to inventory, price investment in CSCI is annual cost of participation, addressed by systemic program to improve productivity, mix, etc.