Recapturing the Perrigo Advantage
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Recapturing The Perrigo Advantage Investor Day May 9, 2019 This information is confidential and was prepared by ACME Corp.; it is not to be relied on by any 3rd party without ACME's prior written consent 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 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: the timing, amount and cost of any share repurchases; future impairment charges; the success of management transition; 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, including the Company’s appeal of the Notice of Assessment (the “NoA”) issued by the Irish tax authority and the Notice of Proposed Assessment (“NOPA”) issued by the U.S. Internal Revenue Service and the impact that an adverse result in such proceedings would have on operating results, cash flows, and liquidity; potential third-party claims and litigation, including litigation relating to the Company’s restatement of previously-filed financial information and litigation relating to uncertain tax positions, including the NoA and the NOPA; potential impacts of ongoing or future government investigations and regulatory initiatives; the impact of tax reform legislation and healthcare policy; general economic conditions; fluctuations in currency exchange rates and interest rates; the consummation of announced acquisitions or dispositions and the success of such transactions, 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 strategic and other initiatives. Statements regarding the separation of the RX business, including the expected benefits, anticipated timing, form of any such separation and whether the separation ultimately occurs, are all subject to various risks and uncertainties, including future financial and operating results, our ability to separate the business, the effect of existing interdependencies with our manufacturing and shared service operations, and the tax consequences of the planned separation to the Company or its shareholders. Furthermore, the Company may incur additional tax liabilities in respect of 2016 and prior years or be found to have breached certain provisions of Irish company law in connection with the Company’s restatement of previously-filed financial statements, which may result in additional expenses and penalties. These and other important factors, including those discussed under “Risk Factors” in the Company’s Form 10-K for the year ended December 31, 2018, 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 presentation 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. Non-GAAP Measures: This presentation contains Non-GAAP measures. The reconciliation of those measures to the most comparable GAAP measures are included at the end of this presentation. A copy of this presentation, including the reconciliations, is available on the Company’s website at www.perrigo.com. 2 Perrigo’s History, Current Situation, and Portfolio Reconfiguration Murray Kessler Self-Care Market and What it Means for Perrigo Murray Kessler Lessons Learned to Inform the Future Murray Kessler Recapturing The Perrigo Advantage Achieve Base Plan – International Svend Andersen Achieve Base Plan and Invest in Repeatable Growth Platforms – Agenda Jeff Needham Americas Invest in Repeatable Growth Platforms – Innovation Jim Dillard Drive Organization Effectiveness and Fund Growth Sustainably Ron Janish Capital Allocation and Deliver Consistent and Sustainable Results Ray Silcock Summary Murray Kessler Question and Answer 3 The Perrigo Company today $4.7B $897M Adjusted Revenue Operating Income Note: 2018 financials 4 (1) See attached Appendix for reconciliation of adjusted (non-GAAP) to reported (GAAP) financial measures A company that originated the OTC category Introduction of “private label” Rx-to-OTC business begins Company focus shifts to Rx business with generic ibuprofen healthcare products established approval 1887 1921 1940 1980 1984 1997 2004 2015 Founded by Luther Quifa marks the beginning of Liquid bright-stock Omega Perrigo to package global acquisitions, which manufacturing begins acquisition and distribute continue into the 2000s patented medicines and household goods 5 And capitalized on multiple factors that helped the company grow Aging population Growing category Value-seeking consumers Rx-to-OTC switches Percentage of US population OTC category sales Store brand OTC penetration ~35 market switches over age 65 growth from 1992 - 2017 since 2000 External 1950 2016 1990 2016 8% 15% 3x 10% 33% First to market Superior manufacturing Excellent customer Great talent base with a The Perrigo Formula and scale service high-level of continuity ~30% discount to NB at retail Retailer margin higher than 5-10x SKU count vs. Maintained consistent Commitment to delivering NB ($ and %) Internal National Brands and high service levels quality products and services ~35% adjusted margin to Perrigo(1) Note: Margin to Perrigo reflects FY2018 Adjusted Gross Margin; (1) CSCA specific adjusted margin; See attached Appendix for reconciliation of adjusted (non-GAAP) to reported (GAAP) financial measures 6 Source: IRI Private Label Trends Report Q3 2018; US Census Bureau; UBS Q-Series Global Consumer Report July 11 2017; The Nielsen Company And grow we did for many years $5B $750M 7 Source: Capital IQ The market rewarded our growth 22.5x Perrigo S&P Consumer S&P Pharma ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 Perrigo Forward 23.6x 17.6x 18.2x 20.6x 16.9x 18.8x 20.1x 18.6x 14.5x 18.7x 19.7x 20.1x 19.5x 21.3x 22.0x P / E Note: Forward P/E ratio represents the ratio of share price to analyst consensus on estimated next twelve month EPS at such time and is not based on Perrigo results, either historical or prospective 8 Source: Capital IQ But since 2015, we have not grown Forward P / E 22.0x 12.7x 15.2x 14.8x Note: Revenue, CAGRs reflect constant currency and exclude exited businesses (VMS, API and certain CSCI distribution); 2015 includes annualized impact of Omega and other product acquisitions See attached Appendix for reconciliation of adjusted (non-GAAP) to reported (GAAP) financial measures; Forward P/E ratio represents the ratio of share price to analyst consensus on estimated next twelve month EPS 9 at such time and is not based on Perrigo results, either historical or prospective Source: Forward P/E-Capital IQ (figures before 2017 include Tysabri®); Perrigo Internal Data And the stock has suffered $145 2015 $83 $87 2016 2017 $49 Today Forward P / E 22.0x 12.7x 15.2x 11.5x Note: Share price numbers displayed on graph shown reflect year end close of respective year, figures before 2017 include Tysabri® Forward P/E ratio represents the ratio of share price to analyst consensus on estimated next twelve month EPS at such time and is not based on Perrigo results, either historical or prospective 10 Source: Capital IQ; FactSet While above our internal plan and consensus, our Q1 results continue to reflect a challenged business Consolidated Q1 Results Q1 Business Segment Results CSCA Net Sales $1,174M (-1%*) • Net Sales: $582M (-3%*) Adjusted • Adj OI: $106M (-21%*) Operating $203M (-17%*) Income CSCI • Net Sales: $351M (+2%*) Adjusted Diluted $1.07 • Adj OI: $54M (-8%*) EPS Rx Consensus • Net Sales: $242M (+2%*) EPS $0.93 • Adj OI: $82M (-3%*) 11 Note: Constant Currency Growth Metrics; *Compared to one year ago (Q1 2018); See attached Appendix for reconciliation of adjusted (non-GAAP) to reported (GAAP) financial measures Source: FactSet; Perrigo data; Internal estimates But today we change that and begin the Perrigo Transformation to a consumer self-care company 1 Reconfigure the portfolio 7 2 Deliver consistent and Achieve base plan sustainable results To make lives better by bringing Quality, Affordable 6 Self-Care