August 5 th, Calendar Year Second Quarter Conference Call

Transcription

1 August 5 th, 2015 Calendar Year Second Quarter Conference Call 0

2 Forward - Looking Statements Note: 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 particular, statements about the Company s expectations, beliefs, plans, objectives, assumptions, future events or future performance contained in this presentation, including certain statements contained in Management s Discussion and Analysis of Financial Condition and Results of Operations in the Company s quarterly reports on Form 10-K and Form 10-Q are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as may, will, could, would, should, expect, plan, anticipate, intend, believe, estimate, predict, potential or the negative of those terms or other comparable terminology. Please see the Company's documents filed with the Securities and Exchange Commission, including the Company's annual reports filed on Form 10-K, quarterly reports on Form 10-Q, and any amendments thereto for a discussion of certain important risk factors that relate to forward-looking statements contained in this presentation. 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, including but not limited to, the successful integration of the Omega Pharma Invest NV business and future actions that may be taken by Mylan N.V. in furtherance of its unsolicited proposal to acquire control of the Company. These and other important factors may cause actual results, performance or achievements to differ materially from those expressed or implied by these forwardlooking statements. Any forward-looking statements 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. 1

3 Irish Takeover Rules and Non-GAAP Measures The directors of Perrigo accept responsibility for the information contained in this presentation. To the best of the knowledge and belief of the directors of Perrigo (who have taken all reasonable care to ensure such is the case), the information contained in this presentation is in accordance with the facts and does not omit anything likely to affect the import of such information. A person interested in 1% or more of any class of relevant securities of Perrigo may have disclosure obligations under Rule 8.3 of the Irish Takeover Rules. A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed and can be found on the Irish Takeover Panel's website at "Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities. Terms in quotation marks are defined in the Irish Takeover Rules, which can be found on the Irish Takeover Panel's website. If you are in any doubt as to whether you are required to disclose a "dealing" under Rule 8, please consult the Irish Takeover Panel's website at or contact the Irish Takeover Panel on telephone number ; fax number The EPS guidance for calendar year 2015 provided by Perrigo in this presentation constitutes a profit forecast for the purposes of the Irish Takeover Rules. This profit forecast will be reported on by Perrigo's reporting accountants and financial advisors in accordance with Rule 28.3 of the Irish Takeover Rules at the relevant time. Other than the reference to the aforementioned guidance provided by Perrigo for calendar year 2015, nothing in this presentation is intended to be a profit forecast or asset valuation and no statement in this presentation, other than the aforementioned profit forecast, should be interpreted to mean that the earnings per Perrigo share for the current or future financial periods will necessarily be greater than those for the relevant preceding financial period. This Presentation contains non-gaap measures. The reconciliation of those measures to the most comparable GAAP measures is included at the end of this presentation. A copy of this presentation, including the reconciliations, is available on our website at Non-GAAP guidance for calendar 2015 excludes among other items listed on Table I, restructuring, unusual litigation charges, along with costs associated with an unsolicited offer to acquire the Perrigo Company plc by Mylan N.V. ("Mylan"). At this time, a reconciliation to GAAP for these measures for calendar 2015 is impracticable to provide given the uncertainty and potential variability of these items. The unavailable reconciling items could significantly impact the Company's financial results. Additional Information and Where to Find It The exchange offer for the outstanding shares of Perrigo described herein has not yet commenced. If and when an exchange offer by Mylan is commenced, Perrigo intends to file a solicitation/recommendation statement with respect to such exchange offer with the Securities and Exchange Commission ( SEC ). Security holders are urged to read the solicitation/recommendation statement and other relevant materials if and when they become available because they will contain important information. The solicitation/recommendation statement and other SEC filings made by Perrigo may be obtained (when available) without charge at the SEC s website at and at the investor relations section of the Perrigo website at perrigo.investorroom.com. 2

4 Consolidated Q2CY15 GAAP Financials ($ in millions, except per share amounts) Q2CY15 Q2CY14 % Change Y/Y* Net Sales $1,532 $1, % Cost of Sales % Gross Profit $628 $ % Distribution % R&D % SG&A % Operating Income $227 $ % Net Income $56 $132 (57 %) Diluted Income Per Share $0.38 $0.98 (61 %) *Adjusted Margin changes as a % to sales may not calculate due to rounding 3

5 Perrigo Consolidated Q2CY15 As Adjusted* ($ in millions, except per share amounts) Q2CY15 Q2CY14 % Change Y/Y** Net Sales $1,532 $1, % Adjusted Cost of Sales % Adjusted Gross Profit $753 $ % Distribution % Adjusted R&D % Adjusted SG&A % Adjusted Operating Income $437 $ % Adjusted Net Income $320 $ % Adjusted Diluted EPS $2.18 $ % Adj. Gr. Margin Q2CY15-Q2CY13 Adj. Op. Margin Q2CY15-Q2CY13 *See attached financial schedule for reconciliation to GAAP numbers **Adjusted Margin changes as a % to sales may not calculate due to rounding 4

6 Net Sales and Operating Income Q2CY15 As Adjusted* ($ in millions) Q2CY15 Q2CY14 % Change Y/Y** % Change Constant Currency Y/Y*** Consolidated Perrigo Net Sales $1,532 $1, % 36 % Adjusted Operating Income % Consumer Healthcare Net Sales (3 %) (2 %) Adjusted Operating Income % Branded Consumer Healthcare Net Sales 401 Adjusted Operating Income 77 Rx Pharmaceuticals Net Sales % 11 % Adjusted Operating Income % Specialty Sciences Net Sales (3 %) 5 % Adjusted Operating Income % *See attached financial schedule for reconciliation to GAAP numbers **Changes may not calculate due to rounding ***Excludes impact of currency translation compared to prior year, including Fx impact on Tysabri royalty stream 5

7 $1 Billion* in Total New Products Over the Next Three Years Consumer Healthcare (Legacy CHC + NUT) ANDA Pipeline >$3.6B in National Brand Sales *Perrigo Long Term Plan 6

8 US All Category Trailing 52 Weeks Store Brand National Brand Category Total OTC Diabetes -6.4% -2.8% 3.4% 1.5% 8.3% 6.6% Gastrointestinal 2.4% 7.9% Smoking Cessation -11.2% 2.9% 5.8% 12.5% Vitamins (*VMS) Infant Formula Cough, Cold, Allergy, Sinus Analgesics -1.9% -1.1% 5.6% 3.4% 2.7% 2.5% 4.0% 9.7% 0.7% 8.6% 5.4% 12.2% SB impacted by expected return of large NB competitor -20% -15% -10% -5% 0% 5% 10% 15% 20% *Vitamins, Minerals, and Supplements Source: IRI MULO through June 28,

9 Consumer Healthcare Segment Q2CY15 As Adjusted* ($ in millions) Q2CY15 Q2CY14 % Change Y/Y** Segment Highlights Net Sales $746 $772 (3 %) Adjusted Gross Profit $269 $253 6 % Adjusted Gross Margin 36.0 % 32.7% 330 bps Adjusted Operating Expenses (7 %) Adjusted Operating Income $160 $ % Adjusted Operating Margin 21.4 % 17.5% 390 bps Adj. Gr. Margin Q2CY15-Q2CY14 Adj. Op. Margin Q2CY15-Q2CY14 Net Sales FX impact of ($12) million or (1%) Adjusted Operating Income increased $24 million primarily due to adjusted gross profit flow through and lower selling expenses New product sales of $77 million *See attached financial schedule for reconciliation to GAAP numbers **Adjusted margin changes as a % to sales may not calculate due to rounding 8

10 Branded Consumer Healthcare Segment Q2CY15 As Adjusted* ($ in millions) Q2CY15 Segment Highlights Net Sales $401 Adjusted Gross Profit $213 Adjusted Gross Margin 53.0 % Adjusted Operating Expenses 136 Adjusted Operating Income $77 Adjusted Operating Margin 19.2 % Top 20 brands grew 11% on a constant currency basis compared to last year New product sales of $33 million Adj. Gr. Margin Q2CY15-Q2CY14 Adj. Op. Margin Q2CY15-Q2CY14 *See attached financial schedule for reconciliation to GAAP numbers 9

11 Rx Pharmaceuticals Segment Q2CY15 As Adjusted* ($ in millions) Q2CY15 Q2CY14 % Change Y/Y** Segment Highlights Net Sales $278 $ % Adjusted Gross Profit $180 $ % Adjusted Gross Margin 64.8% 60.4 % 440 bps Adjusted Operating Expenses % Adjusted Operating Income $138 $ % Adjusted Operating Margin 49.5% 48.3 % 120 bps Adj. Gr. Margin Q2CY15-Q2CY14 Adj. Op. Margin Q2CY15-Q2CY14 Net Sales FX impact of ($2) million or (1%) Adjusted Gross Margin increase driven by product mix and pricing initiatives Adjusted Operating Income improved 13% and included increased R&D and specialty pharmaceuticals sales force investments *See attached financial schedule for reconciliation to GAAP numbers **Adjusted margin changes as a % to sales may not calculate due to rounding 10

12 Specialty Sciences Segment Q2CY15 As Adjusted* ($ in millions) Q2CY15 Q2CY14 % Change Y/Y** Segment Highlights Net Sales $84 $86 (3 %) Adjusted Gross Profit $84 $86 (3 %) Adjusted Gross Margin 100.0% % 0 bps Adjusted Operating Expenses 4 7 (41)% Adjusted Operating Income $79 $79 1 % Adjusted Operating Margin 94.8% 91.4 % 340 bps Global Tysabri Performance (in millions)*** Net Sales FX impact of ($7) million or (8%) CYQ214 included $10 million of net sales recognized from agreement with Italian Medicines Agency (AIFA) $463 $534 $195 $284 $269 $250 Q2CY15 US ROW Q2CY14 *See attached financial schedule for reconciliation to GAAP numbers **Adjusted margin changes as a % to sales may not calculate due to rounding *** Data according to Biogen Inc. 11

13 CALENDAR YEAR 2015 Segment Guidance Calendar Year 2015 % of Total Net Sales Consumer Healthcare Legacy Consumer Healthcare and Nutritionals (Infant nutrition and VMS) businesses; Legacy Israel Pharmaceuticals and Diagnostics business Branded Consumer Healthcare * Omega business Rx Pharmaceuticals Identical to legacy Rx Pharmaceuticals segment ~50% ~20% (9 months) ~20% Consumer facing businesses comprise ~75% of total net sales on an annual basis *Includes only 9 months for Omega acquisition translated at 1:$

14 CALENDAR YEAR 2015 Consolidated Guidance Net Sales Calendar Year /13/2015 Guidance** Calendar Year* 2014 (Recast) $5.4B - $5.7B (9 months of Omega) $4.17B Adjusted DSG&A as % of Net Sales *** ~17.5% 12.9% Adjusted R&D as % of Net Sales *** ~3.5% 3.9% Adjusted Operating Margin ~27% 27.1% Capital Expenditures $125M - $155M $142M Interest Expense ~$170M $110M Adjusted Effective Tax Rate ~17% 17.3% Adjusted EPS $ $8.00/share $6.27/share Adjusted Diluted Shares Outstanding 144M 135M *See Appendix for reconciliation of CY 2014 Non-GAAP measures to GAAP **Includes only 9 months for Omega acquisition translated at 1:$1.09 ***Percentages are +/- 75 basis points 13

15 Confident in Perrigo s Stand-Alone Strategy Mylan N.V. offer substantially undervalues Perrigo Superior value delivered to shareholders by executing on Perrigo s Base Plus Plus Plus strategy Strong history of Perrigo s responsible corporate governance Mylan N.V. combination poses risks to shareholders Difficult path to completion 14

16 Questions? Arthur J. Shannon Vice President, Investor Relations and Global Communications (269) Bradley Joseph Director, Investor Relations and Global Communications (269)

17 APPENDIX Table I PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES (in millions, except per share amounts) (unaudited) Three Months Ended Consolidated June 27, 2015 June 28, 2014 % Change GAAP Non-GAAP Adjustments As Adjusted GAAP (2) Non-GAAP Adjustments (2) As Adjusted (2) GAAP As Adjusted Net sales $ 1,531.6 $ $ 1,531.6 $ 1,144.2 $ $ 1, % 34% Cost of sales (a,b) (a) % 23% Gross profit % 48% Operating expenses Distribution % 68% Research and development (c) % 17% Selling (a) (a) % 168% Administration (a,d) (a,g) % 34% Restructuring (0.1) (0.1) (h) -101% NM Total operating expenses % 71% Operating income % 35% Interest expense, net % 75% Other expense, net (e) (i) 2.1 NM 143% Loss on extinguishment of debt NM NM Income before income taxes % 30% Income tax expense (35.4) (f) (j) % 6% Net income $ 56.4 $ $ $ $ $ % 37% Diluted earnings per share $ 0.38 $ 2.18 $ 0.98 $ % 25% Diluted weighted average shares outstanding % 9% Effective tax rate 64.2% 17.0% 20.4% 21.0% Gross margin (1) 41.0% 49.1% 36.3% 44.5% Operating margin (1) 14.8% 28.5% 17.3% 28.4%

18 APPENDIX Table I (continued) PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES (in millions, except per share amounts) (unaudited) Tickmark Description Second Calendar Quarter Tickmark Legend (1) Ratios calculated using exact numbers (2) Amounts may not sum or cross-foot due to rounding NM Calculations not meaningful (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Acquisition-related amortization expense Inventory step-up related to the Omega acquisition ($15.6 million) Initial payment made in connection with an R&D arrangement Primarily legal and consulting fees related to the Mylan N.V. defense ($13.4 million) and acquisition-related expenses ($18.6 million) Goodwill impairment charge ($6.8 million), losses on derivatives ($5.5 million), equity method investment losses ($3.5 million), and investment impairment of ($1.7 million) Tax effect of non-gaap adjustments described above along with the impact of acquisitions on deferred tax balances Loss contingency accrual on unusual litigation ($15.0 million) Restructuring and integration-related charges related primarily to the Elan acquisition Equity method investment losses Tax effect of non-gaap adjustments

19 APPENDIX Table II PERRIGO COMPANY PLC REPORTABLE SEGMENTS RECONCILIATION OF NON-GAAP MEASURES (in millions) (unaudited) Three Months Ended Consumer Healthcare June 27, 2015 June 28, 2014 % Change GAAP Non-GAAP Adjustments As Adjusted GAAP Non-GAAP Adjustments As Adjusted GAAP As Adjusted Net sales $ $ $ $ $ $ % -3% Cost of sales (a) (a) % -8% Gross profit % 6% Operating expenses (a,b) (a,b) % -7% Operating income $ $ 16.3 $ $ $ 17.2 $ % 18% Gross margin (1) 34.6% 36.0% 31.8% 32.7% Operating margin (1) 19.2% 21.4% 15.3% 17.5% (1) Ratios calculated using exact numbers (a) Acquisition-related amortization expense (b) Restructuring charges and other integration-related expenses

20 APPENDIX Table II (continued) PERRIGO COMPANY PLC REPORTABLE SEGMENTS RECONCILIATION OF NON-GAAP MEASURES (in millions) (unaudited) Three Months Ended Branded Consumer Healthcare June 27, 2015 (2) GAAP Non-GAAP Adjustments As Adjusted Net sales $ $ $ Cost of sales (a,b) Gross profit Operating expenses (a,c) Operating income $ 26.6 $ 50.4 $ 77.0 Gross margin (1) 47.4% 53.0% Operating margin (1) 6.6% 19.2% (1) Ratios calculated using exact numbers (2) Only includes activity from March 30, 2015 to June 27, 2015 (a) Acquisition-related amortization expense (b) Inventory step-up of $15.6 million (c) Integration-related expenses

21 APPENDIX Table II (Continued) PERRIGO COMPANY PLC REPORTABLE SEGMENTS RECONCILIATION OF NON-GAAP MEASURES (in millions) (unaudited) Three Months Ended Rx Pharmaceuticals June 27, 2015 June 28, 2014 % Change GAAP Non-GAAP Adjustments As Adjusted GAAP Non-GAAP Adjustments As Adjusted GAAP As Adjusted Net sales $ $ $ $ $ $ % 10% Cost of sales (a) (a) % -2% Gross profit % 18% Operating expenses (a,b,c,d) (a,e) % 38% Operating income $ 99.5 $ 38.2 $ $ 89.3 $ 33.0 $ % 13% Gross margin (1) 58.0% 64.8% 53.5% 60.4% Operating margin (1) 35.7% 49.5% 35.2% 48.3% (1) Ratios calculated using exact numbers (a) Acquisition-related amortization expense (b) Initial payment of $18.0 million made in connection with an R&D arrangement (c) Restructuring and other integration related expenses (d) Write-off of contingent consideration of $1.0 million (e) Loss contingency accrual of $15.0 million

22 APPENDIX Table II (Continued) PERRIGO COMPANY PLC REPORTABLE SEGMENTS RECONCILIATION OF NON-GAAP MEASURES (in millions) (unaudited) Three Months Ended Specialty Sciences June 27, 2015 June 28, 2014 % Change GAAP Non-GAAP Adjustments As Adjusted GAAP Non-GAAP Adjustments As Adjusted GAAP As Adjusted Net sales $ 83.6 $ $ 83.6 $ 85.9 $ $ % -3% Cost of sales (a) (a) 7% NM Gross profit % -3% Operating expenses (a) (b) % -41% Operating income $ 6.4 $ 72.8 $ 79.2 $ 4.9 $ 73.6 $ % 1% Gross margin (1) 13.3% 100.0% 21.1% 100.0% Operating margin (1) 7.7% 94.8% 5.8% 91.4% (1) Ratios calculated using exact numbers NM - Calculations are not meaningful (a) Acquisition-related amortization expense (b) Elan restructuring and other integration-related expenses

23 APPENDIX Table III PERRIGO COMPANY PLC REPORTABLE SEGMENTS (in millions) (unaudited) Consolidated Q2 CY13 Net sales $ Reported gross profit $ Acquisition-related amortization (1) 22.7 Inventory Step-up 1.2 Adjusted gross profit $ Adjusted gross margin 39.3% Reported operating income $ Acquisition-related amortization (1) 29.0 Inventory Step-up 1.2 Write-off of IPRD 9.0 Restructuring 2.9 Acquisition costs 3.0 Adjusted operating income $ Adjusted operating margin 23.3% (1) Amortization of acquired intangible assets related to business combinations and asset acquisitions.

24 APPENDIX Table IV PERRIGO COMPANY PLC (in millions) (unaudited) Three Months Ended June 27, 2015 June 28, 2014 Reported Adjusted Reported Adjusted Net sales 1, , , ,144.2 Less: Q2 CY15 acquisitions (411.7) (411.7) Organic net sales 1, , , ,144.2 Three Months Ended % Change June 27, 2015 June 28, 2014 Reported Adjusted Gross profit % 47.9% 320 bps Less: Q2 CY15 acquisitions (194.1) (218.8) Organic gross profit % 4.9% Three Months Ended June 27, 2015 June 28, 2014 % Change Reported Adjusted Reported Adjusted Reported Adjusted Operating income % 35% Less: Q2 CY15 acquisitions (24.3) (76.8) Organic operating income % 11%

25 APPENDIX Table V PERRIGO COMPANY PLC (in millions) (unaudited) Consumer Healthcare and Branded Consumer Healthcare GAAP Three Months Ended June 27, 2015 (2) Non-GAAP Adjustments As Adjusted Net sales $ 1,147.6 $ $ 1,147.6 Cost of sales (a,b) Gross profit Operating expenses (a,c) Operating income $ $ 66.7 $ Gross margin (1) 39.1% 41.9% Operating margin (1) 14.8% 20.6% (1) Ratios calculated using exact numbers (2) The Branded Consumer Healthcare segment includes activity from March 30, 2015 to June 27, 2015 (a) Acquisition-related amortization expense (b) Inventory step-up of $15.6 million (c) Restructuring charges and other integration-related expenses

26 APPENDIX Table VI PERRIGO COMPANY PLC (in millions) (unaudited) Q2 CY15 Q2 CY15 % Change Consolidated net sales $ 1,531.6 $ 1,144.2 Less: Branded Consumer Healthcare net sales Less: FX impact on consolidated net sales (23.0) Consolidated net sales less Branded Consumer Healthcare and FX $ 1,153.4 $ 1, %