Perrigo Company (PRGO) Q1 2025 earnings summary

Executive summary

• Delivered strong Q1 2025 results with adjusted EPS up 106.9% to $0.60, robust margin expansion, and 19% year-over-year growth in infant formula net sales, supported by cost initiatives and Project Energize savings.

• Net sales declined 3.5% year-over-year to $1.04 billion, mainly due to divestitures, currency impacts, and lower sales in Digestive and Women's Health, but organic net sales grew 1.8% excluding lost distribution and prior year Opill/Women's Health stocking.

• Advanced the 3S plan (stabilize, streamline, strengthen), with new business awards offsetting prior losses in U.S. store brand OTC and improved service levels to 94%.

• Project Energize and supply chain reinvention delivered $8M and $20M in annual savings, with Energize reaching a $159M annual run rate.

• International business posted mid-single digit sales growth and double-digit profit growth, now accounting for over 40% of global sales.

Financial highlights

• Net sales: $1,043.9 million, down 3.5% year-over-year; organic net sales down 0.4%, but up 1.8% excluding lost distribution and prior year Opill sell-in.

• Adjusted gross margin expanded 440 bps to 41.0%; reported gross margin increased 450 bps to 37.6%.

• Adjusted operating income rose 57.6% to $147M; reported operating income was $47M, up from a $55M loss prior year.

• Adjusted EPS: $0.60 (up 106.9% year-over-year); adjusted net income was $83M, up from $40M.

• Cash and cash equivalents at quarter-end: $410M; Q1 operating cash outflow was $65M, mainly due to inventory rebuild, litigation, and restructuring.

Outlook and guidance

• Fiscal 2025 reported net sales growth target widened to 0%–3%; organic net sales growth target widened to 1.5%–4.5%, reflecting macro uncertainty and tariff impacts.

• Reaffirmed adjusted EPS target of $2.90–$3.10 for 2025 and net leverage target of ~3.5x by year-end.

• Expect 2025 earnings phasing to be 40% in H1 and 60% in H2, with significant ramp in infant formula sales in the second half.

• Project Energize expected to deliver $140–$170M in annualized pre-tax savings by 2026; supply chain and efficiency programs to provide $200–$300M annual run-rate savings by 2028.

• Midterm 2027 targets reaffirmed.