Ireland | Not Applicable | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
Treasury Building, Lower Grand Canal Street, Dublin 2, Ireland | - | |
(Address of principal executive offices) | (Zip Code) |
• | Amortization expense related primarily to acquired intangible assets |
• | Change in financial assets |
• | Losses on investment securities |
• | Acquisition-related charges and contingent consideration adjustments |
• | Impairment charges |
• | Restructuring charges and other termination benefits |
• | Foreign currency translation movement |
• | Non-GAAP tax adjustments |
• | Amortization expense primarily related to acquired intangible assets |
• | Change in financial assets |
• | Acquisition-related charges and contingent consideration adjustments |
• | Impairment charges |
• | Gain on divestitures |
• | Unusual litigation |
• | Loss on hedges related to the extinguishment of debt |
• | Loss on early debt extinguishment |
• | Restructuring charges and other termination benefits |
• | Belgium distribution net sales |
• | Russia business net sales |
• | API net sales |
• | Foreign currency translation movement |
• | Non-GAAP tax adjustments |
• | Amortization expense related primarily to acquired intangible assets |
• | Restructuring charges and other termination benefits |
• | Change in financial assets |
• | Losses on investment securities |
• | Acquisition-related charges and contingent consideration adjustments |
• | Gain on divestitures |
• | Impairment charges |
• | Tax effect of pretax Non-GAAP adjustments |
(d) | Exhibits |
Exhibit Number | Description | |
99.1 |
(Registrant) | ||||
PERRIGO COMPANY PLC | ||||
By: | /s/ Ronald L. Winowiecki | |||
Dated: | August 9, 2018 | Ronald L. Winowiecki | ||
Chief Financial Officer | ||||
• | Realized second quarter 2018 GAAP ("reported") net sales of $1.2 billion, reported net income of $36 million compared to a net loss of $70 million last year and reported diluted earnings per share ("EPS") of $0.26 compared to losses per share of $0.49 last year |
• | Delivered second quarter adjusted net income of $169 million compared to $175 million last year and adjusted diluted EPS of $1.22 consistent with $1.22 last year |
• | Consumer-facing businesses achieved net sales of $978 million, comprising greater than 80% of consolidated net sales in the quarter |
• | CHC Americas segment achieved second quarter net sales of $597 million; a decrease of 1.3%. Net sales were lower by 1.2% on a constant currency basis driven by a decline in the animal health business. Our market-leading OTC and infant nutrition businesses grew approximately 1% combined. |
• | CHC International segment realized second quarter net sales of $381 million, an increase of 1.2% versus last year; net sales decreased 2.2% versus last year on an organic constant currency basis |
• | CHC International segment reported second quarter operating margin of 1.5%; delivered adjusted operating margin of 15.2% |
• | RX segment realized second quarter net sales of $209 million and reported operating margin of 27.3%, while delivering adjusted operating margin of 39.4% |
• | Utilized balance sheet flexibility to repurchase approximately 2.0 million shares for approximately $157 million in the quarter |
• | Primarily due to revised net sales expectations for the RX segment, the Company now expects calendar year 2018 reported diluted EPS to be in the |
Second Quarter Ended | Second Quarter Ended | YoY | Constant Currency | |||||||
6/30/2018 | 7/1/2017 | % change | % Change | |||||||
Reported Net Sales | $1,186 | $1,238 | (4.2 | )% | (5.7 | )% | ||||
Reported Net Income (Loss) | $36 | $(70) | 152.1 | % | ||||||
Reported Diluted Earnings (Loss) per Share | $0.26 | $(0.49) | 153.8 | % | ||||||
Reported Diluted Shares | 138.7 | 143.3 | (3.2 | )% | ||||||
Adjusted Net Income | $169 | $175 | (3.6 | )% | ||||||
Adjusted Diluted Earnings per Share | $1.22 | $1.22 | — | % | ||||||
Adjusted Diluted Shares | N/A | 143.6 | NM |
Second Quarter Ended | Second Quarter Ended | YoY | Constant Currency | ||||||||
6/30/2018 | 7/1/2017 | % change | % Change | ||||||||
Reported Net Sales | $597 | $605 | (1.3 | )% | (1.2 | )% | |||||
Reported Gross Profit | $195 | $204 | (4.1 | )% | |||||||
Reported Gross Margin | 32.7 | % | 33.7 | % | (100) bps | ||||||
Reported Operating Income | $57 | $104 | (44.9 | %) | |||||||
Reported Operating Margin | 9.6 | % | 17.2 | % | (760) bps | ||||||
Adjusted Gross Profit | $206 | $216 | (4.6 | %) | |||||||
Adjusted Gross Margin | 34.5 | % | 35.7 | % | (120) bps | ||||||
Adjusted Operating Income | $122 | $127 | (4.1 | %) | |||||||
Adjusted Operating Margin | 20.4 | % | 21.0 | % | (60) bps |
Second Quarter Ended | Second Quarter Ended | YoY | Constant Currency | |||||||
6/30/2018 | 7/1/2017 | % change | % Change | |||||||
Reported Net Sales | $381 | $377 | 1.2% | (4.1 | )% | |||||
Reported Gross Profit | $181 | $174 | 4.1% | |||||||
Reported Gross Margin | 47.5 | % | 46.2 | % | 130 bps | |||||
Reported Operating Income | $6 | $4 | 41.8% | |||||||
Reported Operating Margin | 1.5 | % | 1.0 | % | 50 bps | |||||
Adjusted Gross Profit | $203 | $195 | 4.3% | |||||||
Adjusted Gross Margin | 53.3 | % | 51.7 | % | 160 bps | |||||
Adjusted Operating Income | $58 | $55 | 5.3% | |||||||
Adjusted Operating Margin | 15.2 | % | 14.6 | % | 60 bps |
Second Quarter Ended | Second Quarter Ended | YoY | Constant Currency | ||||||||
6/30/2018 | 7/1/2017 | % change | % Change | ||||||||
Reported Net Sales | $209 | $240 | (13.2 | )% | (13.2 | )% | |||||
Reported Gross Profit | $95 | $119 | (20.6 | )% | |||||||
Reported Gross Margin | 45.3 | % | 49.6 | % | (430) bps | ||||||
Reported Operating Income | $57 | $69 | (17.9 | )% | |||||||
Reported Operating Margin | 27.3 | % | 28.8 | % | (150) bps | ||||||
Adjusted Gross Profit | $115 | $141 | (18.8 | )% | |||||||
Adjusted Gross Margin | 55.1 | % | 58.8 | % | (370) bps | ||||||
Adjusted Operating Income | $82 | $112 | (26.5 | )% | |||||||
Adjusted Operating Margin | 39.4 | % | 46.5 | % | (710) bps |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2018 | July 1, 2017 | June 30, 2018 | July 1, 2017 | ||||||||||||
Net sales | $ | 1,186.4 | $ | 1,237.9 | $ | 2,403.4 | $ | 2,431.9 | |||||||
Cost of sales | 715.4 | 733.3 | 1,439.7 | 1,463.0 | |||||||||||
Gross profit | 471.0 | 504.6 | 963.7 | 968.9 | |||||||||||
Operating expenses | |||||||||||||||
Distribution | 23.8 | 21.6 | 48.5 | 42.7 | |||||||||||
Research and development | 91.9 | 42.6 | 130.3 | 82.3 | |||||||||||
Selling | 155.2 | 155.6 | 316.5 | 310.6 | |||||||||||
Administration | 96.8 | 98.2 | 204.5 | 203.6 | |||||||||||
Impairment charges | 1.7 | 27.4 | 1.7 | 39.6 | |||||||||||
Restructuring | 3.7 | 12.1 | 5.2 | 50.8 | |||||||||||
Other operating expense (income) | 3.2 | (1.7 | ) | 6.1 | (38.0 | ) | |||||||||
Total operating expenses | 376.3 | 355.8 | 712.8 | 691.6 | |||||||||||
Operating income | 94.7 | 148.8 | 250.9 | 277.3 | |||||||||||
Change in financial assets | (0.6 | ) | 38.7 | 9.0 | 21.6 | ||||||||||
Interest expense, net | 32.1 | 45.1 | 63.5 | 98.4 | |||||||||||
Other expense, net | 7.9 | 6.1 | 12.1 | 2.5 | |||||||||||
Loss on extinguishment of debt | — | 135.2 | 0.5 | 135.2 | |||||||||||
Income (loss) before income taxes | 55.3 | (76.3 | ) | 165.8 | 19.6 | ||||||||||
Income tax expense (benefit) | 19.1 | (6.7 | ) | 48.8 | 17.6 | ||||||||||
Net income (loss) | $ | 36.2 | $ | (69.6 | ) | $ | 117.0 | $ | 2.0 | ||||||
Earnings (loss) per share | |||||||||||||||
Basic | $ | 0.26 | $ | (0.49 | ) | $ | 0.84 | $ | 0.01 | ||||||
Diluted | $ | 0.26 | $ | (0.49 | ) | $ | 0.84 | $ | 0.01 | ||||||
Weighted-average shares outstanding | |||||||||||||||
Basic | 138.1 | 143.3 | 139.5 | 143.3 | |||||||||||
Diluted | 138.7 | 143.3 | 140.0 | 143.6 | |||||||||||
Dividends declared per share | $ | 0.19 | $ | 0.16 | $ | 0.380 | $ | 0.32 |
June 30, 2018 | December 31, 2017 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 526.5 | $ | 678.7 | |||
Accounts receivable, net of allowance for doubtful accounts of $6.5 and $6.2, respectively | 1,129.8 | 1,130.8 | |||||
Inventories | 883.8 | 806.9 | |||||
Prepaid expenses and other current assets | 238.4 | 203.2 | |||||
Total current assets | 2,778.5 | 2,819.6 | |||||
Property, plant and equipment, net | 811.9 | 833.1 | |||||
Goodwill and other indefinite-lived intangible assets | 4,227.1 | 4,265.7 | |||||
Other intangible assets, net | 3,066.0 | 3,290.5 | |||||
Non-current deferred income taxes | 1.0 | 10.4 | |||||
Other non-current assets | 341.1 | 409.5 | |||||
Total non-current assets | 8,447.1 | 8,809.2 | |||||
Total assets | $ | 11,225.6 | $ | 11,628.8 | |||
Liabilities and Shareholders’ Equity | |||||||
Accounts payable | $ | 533.4 | $ | 450.2 | |||
Payroll and related taxes | 103.9 | 148.8 | |||||
Accrued customer programs | 451.9 | 419.7 | |||||
Accrued liabilities | 192.8 | 230.8 | |||||
Accrued income taxes | 57.9 | 116.1 | |||||
Current indebtedness | 197.7 | 70.4 | |||||
Total current liabilities | 1,537.6 | 1,436.0 | |||||
Long-term debt, less current portion | 3,085.3 | 3,270.8 | |||||
Non-current deferred income taxes | 290.8 | 321.9 | |||||
Other non-current liabilities | 414.6 | 429.5 | |||||
Total non-current liabilities | 3,790.7 | 4,022.2 | |||||
Total liabilities | 5,328.3 | 5,458.2 | |||||
Commitments and contingencies - Refer to Note 13 | |||||||
Shareholders’ equity | |||||||
Controlling interest: | |||||||
Preferred shares, $0.0001 par value per share, 10 shares authorized | — | — | |||||
Ordinary shares, €0.001 par value per share, 10,000 shares authorized | 7,594.3 | 7,892.9 | |||||
Accumulated other comprehensive income | 155.0 | 253.1 | |||||
Retained earnings (accumulated deficit) | (1,852.2 | ) | (1,975.5 | ) | |||
Total controlling interest | 5,897.1 | 6,170.5 | |||||
Noncontrolling interest | 0.2 | 0.1 | |||||
Total shareholders’ equity | 5,897.3 | 6,170.6 | |||||
Total liabilities and shareholders' equity | $ | 11,225.6 | $ | 11,628.8 | |||
Supplemental Disclosures of Balance Sheet Information | |||||||
Ordinary shares, issued and outstanding | 137.6 | 140.8 |
Six Months Ended | |||||||
June 30, 2018 | July 1, 2017 | ||||||
Cash Flows From (For) Operating Activities | |||||||
Net income | $ | 117.0 | $ | 2.0 | |||
Adjustments to derive cash flows | |||||||
Depreciation and amortization | 217.8 | 220.8 | |||||
Share-based compensation | 22.3 | 14.8 | |||||
Impairment charges | 1.7 | 39.6 | |||||
Change in financial assets | 9.0 | 21.6 | |||||
Loss on extinguishment of debt | 0.5 | 135.2 | |||||
Restructuring charges | 5.2 | 50.8 | |||||
Deferred income taxes | (14.2 | ) | (8.1 | ) | |||
Amortization of debt premium | (3.7 | ) | (11.8 | ) | |||
Other non-cash adjustments, net | 5.1 | (20.6 | ) | ||||
Subtotal | 360.7 | 444.3 | |||||
Increase (decrease) in cash due to: | |||||||
Accounts receivable | (24.3 | ) | 51.8 | ||||
Inventories | (99.3 | ) | (4.6 | ) | |||
Accounts payable | 89.2 | (6.0 | ) | ||||
Payroll and related taxes | (48.4 | ) | (37.9 | ) | |||
Accrued customer programs | 33.9 | (13.8 | ) | ||||
Accrued liabilities | (30.4 | ) | (49.4 | ) | |||
Accrued income taxes | (20.8 | ) | (85.8 | ) | |||
Other, net | (5.9 | ) | (13.3 | ) | |||
Subtotal | (106.0 | ) | (159.0 | ) | |||
Net cash from operating activities | 254.7 | 285.3 | |||||
Cash Flows From (For) Investing Activities | |||||||
Proceeds from royalty rights | 10.3 | 85.7 | |||||
Purchase of investment securities | (7.5 | ) | — | ||||
Proceeds from sale of securities | — | — | |||||
Additions to property, plant and equipment | (33.3 | ) | (37.2 | ) | |||
Net proceeds from sale of business and other assets | 1.3 | 37.2 | |||||
Proceeds from sale of the Tysabri® financial asset | — | 2,200.0 | |||||
Other investing, net | — | (3.7 | ) | ||||
Net cash from (for) investing activities | (29.2 | ) | 2,282.0 | ||||
Cash Flows From (For) Financing Activities | |||||||
Issuances of long-term debt | 431.0 | — | |||||
Payments on long-term debt | (457.3 | ) | (2,229.1 | ) | |||
Borrowings (repayments) of revolving credit agreements and other financing, net | (8.2 | ) | — | ||||
Deferred financing fees | (2.4 | ) | (4.0 | ) | |||
Premium on early debt retirement | — | (116.1 | ) | ||||
Issuance of ordinary shares | — | 0.2 | |||||
Repurchase of ordinary shares | (265.0 | ) | (58.2 | ) | |||
Cash dividends | (52.8 | ) | (46.0 | ) | |||
Other financing, net | (7.5 | ) | 4.7 | ||||
Net cash (for) financing activities | (362.2 | ) | (2,448.5 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (15.5 | ) | 19.7 | ||||
Net increase (decrease) in cash and cash equivalents | (152.2 | ) | 138.5 | ||||
Cash and cash equivalents, beginning of period | 678.7 | 622.3 | |||||
Cash and cash equivalents, end of period | $ | 526.5 | $ | 760.8 |
TABLE I | |||||||||
PERRIGO COMPANY PLC | |||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||
SELECTED CONSOLIDATED INFORMATION | |||||||||
(in millions, except per share amounts) | |||||||||
(unaudited) | |||||||||
Three Months Ended June 30, 2018 | |||||||||
Consolidated | Net Sales | Net Income | Diluted Earnings per Share | ||||||
Reported | $ | 1,186.4 | $ | 36.2 | $ | 0.26 | |||
Adjustments: | |||||||||
Amortization expense related primarily to acquired intangible assets | $ | 86.5 | $ | 0.62 | |||||
Acquisition-related charges and contingent consideration adjustments | 53.2 | 0.38 | |||||||
Losses on investment securities | 6.3 | 0.05 | |||||||
Restructuring charges and other termination benefits | 3.7 | 0.03 | |||||||
Impairment charges | 1.7 | 0.01 | |||||||
Change in financial assets | (0.6 | ) | — | ||||||
Non-GAAP tax adjustments* | (18.1 | ) | (0.13 | ) | |||||
Adjusted | $ | 168.9 | $ | 1.22 | |||||
Diluted weighted average shares outstanding | |||||||||
Reported | 138.7 | ||||||||
*The non-GAAP tax adjustments are due primarily to $(18.1) million of tax effects of pretax non-GAAP adjustments that are calculated based upon the specific rate of the applicable jurisdiction of the pretax items. |
TABLE I (CONTINUED) | |||||||||
PERRIGO COMPANY PLC | |||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||
SELECTED CONSOLIDATED INFORMATION | |||||||||
(in millions, except per share amounts) | |||||||||
(unaudited) | |||||||||
Three Months Ended July 1, 2017 | |||||||||
Consolidated | Net Sales | Net Income (Loss) | Diluted Earnings (Loss) per Share | ||||||
Reported | $ | 1,237.9 | $ | (69.6 | ) | $ | (0.49 | ) | |
Adjustments: | |||||||||
Loss on early debt extinguishment | $ | 135.2 | $ | 0.94 | |||||
Amortization expense primarily related to acquired intangible assets | 88.7 | 0.63 | |||||||
Change in financial assets | 38.7 | 0.27 | |||||||
Impairment charges | 27.4 | 0.19 | |||||||
Restructuring charges and other termination benefits | 12.1 | 0.08 | |||||||
Loss on hedges related to the extinguishment of debt | 5.9 | 0.04 | |||||||
Acquisition-related charges and contingent consideration adjustments | (0.6 | ) | — | ||||||
Gain on divestitures | (0.9 | ) | (0.01 | ) | |||||
Unusual litigation | (8.8 | ) | (0.06 | ) | |||||
Non-GAAP tax adjustments* | (52.9 | ) | (0.37 | ) | |||||
Adjusted | $ | 175.2 | $ | 1.22 | |||||
Diluted weighted average shares outstanding | |||||||||
Reported | 143.3 | ||||||||
Effect of dilution as reported amount was a loss, while adjusted amount was income** | 0.3 | ||||||||
Adjusted | 143.6 | ||||||||
*The non-GAAP tax adjustments include the following: (1) a $(44.3) million effect on non-GAAP income taxes related to the interim tax accounting requirements within ASC 740, Income Taxes; (2) $(41.1) million of tax effects of pretax non-GAAP adjustments that are calculated based upon the specific rate of the applicable jurisdiction of the pretax item; (3) $(5.6) million of tax adjustments related to the divestiture of the Tysabri® royalty stream; and (4) $38.1 net impact related to valuation allowances on deferred tax assets commensurate with non-GAAP pre-tax measures. | |||||||||
**In the period of a reported net loss, diluted shares outstanding equal basic shares outstanding. |
TABLE II | |||||||||||||||||||
PERRIGO COMPANY PLC | |||||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||||||
SELECTED SEGMENT INFORMATION | |||||||||||||||||||
(in millions) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||||
June 30, 2018 | July 1, 2017 | ||||||||||||||||||
Consumer Healthcare Americas | Net Sales | Gross Profit | Operating Income | Net Sales | Gross Profit | Operating Income | |||||||||||||
Reported | $ | 596.8 | $ | 195.3 | $ | 57.4 | $ | 604.9 | $ | 203.8 | $ | 104.2 | |||||||
Adjustments: | |||||||||||||||||||
Amortization expense related primarily to acquired intangible assets | $ | 10.6 | $ | 15.3 | $ | 12.1 | $ | 17.0 | |||||||||||
Impairment charges | — | 0.6 | — | 4.1 | |||||||||||||||
Restructuring charges and other termination benefits | — | — | — | 4.3 | |||||||||||||||
Acquisition-related charges and contingent consideration adjustments | — | 48.5 | — | (2.6 | ) | ||||||||||||||
Adjusted | $ | 205.9 | $ | 121.8 | $ | 215.9 | $ | 127.0 | |||||||||||
As a % of reported net sales | 34.5 | % | 20.4 | % | 35.7 | % | 21.0 | % | |||||||||||
TABLE II (CONTINUED) | |||||||||||||||||||
PERRIGO COMPANY PLC | |||||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||||||
SELECTED SEGMENT INFORMATION | |||||||||||||||||||
(in millions) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||||
June 30, 2018 | July 1, 2017 | ||||||||||||||||||
Consumer Healthcare International | Net Sales | Gross Profit | Operating Income | Net Sales | Gross Profit | Operating Income | |||||||||||||
Reported | $ | 381.0 | $ | 181.2 | $ | 5.6 | $ | 376.5 | $ | 174.0 | $ | 3.9 | |||||||
Adjustments: | |||||||||||||||||||
Amortization expense related primarily to acquired intangible assets | $ | 22.0 | $ | 50.7 | $ | 20.8 | $ | 48.9 | |||||||||||
Impairment charges | — | 1.0 | — | 3.7 | |||||||||||||||
Unusual litigation | — | — | — | (8.8 | ) | ||||||||||||||
Restructuring charges and other termination benefits | — | 0.5 | — | 6.6 | |||||||||||||||
Acquisition-related charges and contingent consideration adjustments | — | — | — | 0.6 | |||||||||||||||
Adjusted | $ | 203.2 | $ | 57.8 | $ | 194.8 | $ | 54.9 | |||||||||||
As a % of reported net sales | 53.3 | % | 15.2 | % | 51.7 | % | 14.6 | % | |||||||||||
TABLE II (CONTINUED) | |||||||||||||||||||
PERRIGO COMPANY PLC | |||||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||||||
SELECTED SEGMENT INFORMATION | |||||||||||||||||||
(in millions) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||||
June 30, 2018 | July 1, 2017 | ||||||||||||||||||
Prescription Pharmaceuticals | Net Sales | Gross Profit | Operating Income | Net Sales | Gross Profit | Operating Income | |||||||||||||
Reported | $ | 208.6 | $ | 94.5 | $ | 56.9 | $ | 240.4 | $ | 119.1 | $ | 69.3 | |||||||
Adjustments: | |||||||||||||||||||
Amortization expense related primarily to acquired intangible assets | $ | 20.3 | $ | 20.6 | $ | 22.3 | $ | 22.4 | |||||||||||
Gain on divestitures | — | — | — | (1.1 | ) | ||||||||||||||
Restructuring charges and other termination benefits | — | — | — | 0.2 | |||||||||||||||
Impairment charges | — | — | — | 19.6 | |||||||||||||||
Acquisition-related charges and contingent consideration adjustments | — | 4.7 | — | 1.4 | |||||||||||||||
Adjusted | $ | 114.8 | $ | 82.2 | $ | 141.4 | $ | 111.8 | |||||||||||
As a % of reported net sales | 55.1 | % | 39.4 | % | 58.8 | % | 46.5 | % |
TABLE II (CONTINUED) | |||||||||||||||||||
PERRIGO COMPANY PLC | |||||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||||||
SELECTED SEGMENT INFORMATION | |||||||||||||||||||
(in millions) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
Six Months Ended | Six Months Ended | ||||||||||||||||||
June 30, 2018 | July 1, 2017 | ||||||||||||||||||
Consumer Healthcare International | Net Sales | Gross Profit | Operating Income | Net Sales | Gross Profit | Operating Income | |||||||||||||
Reported | $ | 782.4 | $ | 375.7 | $ | 20.4 | $ | 751.5 | $ | 343.5 | $ | 4.2 | |||||||
Adjustments: | |||||||||||||||||||
Amortization expense primarily related to acquired intangible assets | $ | 44.8 | $ | 103.4 | $ | 41.0 | $ | 95.8 | |||||||||||
Impairment charges | — | 1.1 | — | 4.8 | |||||||||||||||
Restructuring charges and other termination benefits | — | 1.1 | — | 9.5 | |||||||||||||||
Unusual litigation | — | — | — | (8.8 | ) | ||||||||||||||
Operating results attributable to held-for-sale business* | — | — | 0.4 | 0.4 | |||||||||||||||
Acquisition-related charges and contingent consideration adjustments | — | — | — | 0.5 | |||||||||||||||
Adjusted | $ | 420.5 | $ | 126.0 | $ | 384.9 | $ | 106.4 | |||||||||||
As a % of reported net sales | 53.8 | % | 16.1 | % | 51.2 | % | 14.2 | % | |||||||||||
* Held-for-sale business includes the European sports brand. | |||||||||||||||||||
TABLE II (CONTINUED) | |||||||||||||||||||
PERRIGO COMPANY PLC | |||||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||||||
SELECTED SEGMENT INFORMATION | |||||||||||||||||||
(in millions) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
Six Months Ended | Six Months Ended | ||||||||||||||||||
June 30, 2018 | July 1, 2017 | ||||||||||||||||||
Prescription Pharmaceuticals | Net Sales | Gross Profit | Operating Income | Net Sales | Gross Profit | Operating Income | |||||||||||||
Reported | $ | 422.6 | $ | 192.3 | $ | 118.7 | $ | 457.8 | $ | 215.4 | $ | 157.5 | |||||||
Adjustments: | |||||||||||||||||||
Amortization expense primarily related to acquired intangible assets | $ | 40.9 | $ | 41.1 | $ | 44.3 | $ | 44.6 | |||||||||||
Gain on divestitures | — | (1.3 | ) | — | (22.9 | ) | |||||||||||||
Restructuring charges and other termination benefits | — | 0.3 | — | 5.8 | |||||||||||||||
Impairment charges | — | — | — | 30.7 | |||||||||||||||
Acquisition-related charges and contingent consideration adjustments | — | 8.8 | (0.1 | ) | (14.8 | ) | |||||||||||||
Adjusted | $ | 233.2 | $ | 167.6 | $ | 259.6 | $ | 200.9 | |||||||||||
As a % of reported net sales | 55.2 | % | 39.7 | % | 56.7 | % | 43.9 | % | |||||||||||
TABLE III | |||||||||||||
PERRIGO COMPANY PLC | |||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||
CONSTANT CURRENCY | |||||||||||||
(in millions) | |||||||||||||
(unaudited) | |||||||||||||
Three Months Ended | |||||||||||||
June 30, 2018 | July 1, 2017 | Total Change | FX Change | Constant Currency Change | |||||||||
Net sales | |||||||||||||
Consolidated | $ | 1,186.4 | $ | 1,237.9 | (4.2)% | (1.5)% | (5.7)% | ||||||
CHCA | $ | 596.8 | $ | 604.9 | (1.3)% | 0.1% | (1.2)% | ||||||
CHCI | $ | 381.0 | $ | 376.5 | 1.2% | (5.3)% | (4.1)% | ||||||
RX | $ | 208.6 | $ | 240.4 | (13.2)% | —% | (13.2)% | ||||||
CHCI | $ | 381.0 | $ | 376.5 | |||||||||
Less: Belgium distribution and Russian business net sales | — | (7.3 | ) | ||||||||||
$ | 381.0 | $ | 369.2 | 3.2% | (5.4)% | (2.2)% | |||||||
Six Months Ended | |||||||||||||
June 30, 2018 | July 1, 2017 | Total Change | FX Change | Constant Currency Change | |||||||||
CHCI | $ | 782.4 | $ | 751.5 | |||||||||
Less: Belgium distribution and Russian business net sales | — | (29.0 | ) | ||||||||||
$ | 782.4 | $ | 722.5 | 8.3% | (8.8)% | (0.5)% | |||||||
CHCA | $ | 1,198.4 | $ | 1,187.6 | 0.9% | —% | 0.9% |
TABLE IV | |||||||||
PERRIGO COMPANY PLC | |||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||
2018 CONSOLIDATED GUIDANCE(1) | |||||||||
(unaudited) | |||||||||
Full Year | |||||||||
2018 EPS Guidance(2) | |||||||||
Reported | $2.11 - $2.31 | ||||||||
Amortization expense related primarily to acquired intangible assets | 2.48 | ||||||||
Acquisition-related charges and contingent consideration adjustments | 0.41 | ||||||||
Losses on investment securities | 0.08 | ||||||||
Restructuring charges and other termination benefits | 0.07 | ||||||||
Change in financial assets | 0.06 | ||||||||
Impairment charges | 0.01 | ||||||||
Gain on divestitures | (0.01) | ||||||||
Tax effect of non-GAAP adjustments | (0.46) | ||||||||
Adjusted | $4.75 - $4.95 | ||||||||
Consolidated Operating Income | |||||||||
Reported | Approx. $548 - $578 million | ||||||||
Amortization expense related primarily to acquired intangible assets | 344 | ||||||||
Acquisition-related charges and contingent consideration adjustments | 57 | ||||||||
Restructuring charges and other termination benefits | 10 | ||||||||
Impairment charges | 2 | ||||||||
Gain on divestitures | (1) | ||||||||
Adjusted | Approx. $960 - $990 million | ||||||||
Effective Tax Rate | Tax expense (in millions) | Pre-tax income (in millions) | Effective Tax Rate | ||||||
Reported | $ | 106 | $ | 429 | Approx. 25.0% | ||||
Non-GAAP adjustments | 64 | 431 | |||||||
Adjusted | $ | 170 | $ | 860 | Approx. 20.0% | ||||
(1) Guidance tables include Q1-Q2 actual results for all reconciling line items, plus estimated amortization expense and the corresponding tax effect for Q3-Q4. | |||||||||
(2) Guidance excludes any impact related to the Royalty Pharma contingent milestone payments. |
TABLE V | |||
PERRIGO COMPANY PLC | |||
RECONCILIATION OF NON-GAAP MEASURES | |||
(in millions) | |||
(unaudited) | |||
QTD Consolidated net sales excluding Belgium distribution, Russian business, API net sales and Fx | |||
Q2 2018 consolidated net sales | $ | 1,186.4 | |
Q2 2017 consolidated net sales | $ | 1,237.9 | |
Less: Fx | 19.0 | ||
Less: Belgium distribution and Russian business net sales | (7.3 | ) | |
Less: API net sales | (16.1 | ) | |
QTD Consolidated net sales excluding Belgium distribution, Russian business, API net sales and Fx | $ | 1,233.5 | |
Total organic change on a constant currency basis | (4.0 | )% |
Three Months Ended | |||
June 30, 2018 | |||
Consumer-facing business | $ | 596.8 | |
CHCA net sales | 381.0 | ||
CHCI net sales | $ | 977.8 | |
Consolidated net sales | $ | 1,186.4 | |
82.4 | % |
TABLE VI | |||||||||||
PERRIGO COMPANY PLC | |||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||
SELECTED CONSOLIDATED AND SEGMENT INFORMATION | |||||||||||
(in millions, except per share amounts) | |||||||||||
(unaudited) | |||||||||||
Three Months Ended | |||||||||||
June 30, 2018 | July 1, 2017 | Total Change | |||||||||
Consolidated adjusted net income | $ | 168.9 | $ | 175.2 | (3.6)% | ||||||
Consolidated adjusted EPS | 1.22 | 1.22 | —% | ||||||||
Adjusted operating income | |||||||||||
CHCA | $ | 121.8 | $ | 127.0 | (4.1)% | ||||||
CHCI | 57.8 | 54.9 | 5.3% | ||||||||
RX | 82.2 | 111.8 | (26.5)% | ||||||||
Adjusted operating margin | |||||||||||
CHCA | 20.4 | % | 21.0 | % | (60) bps | ||||||
CHCI | 15.2 | % | 14.6 | % | 60 bps | ||||||
RX | 39.4 | % | 46.5 | % | (710) bps | ||||||
Adjusted gross profit | |||||||||||
CHCA | $ | 205.9 | $ | 215.9 | (4.6)% | ||||||
CHCI | 203.2 | 194.8 | 4.3% | ||||||||
RX | 114.8 | 141.4 | (18.8)% | ||||||||
Adjusted gross margin | |||||||||||
CHCA | 34.5 | % | 35.7 | % | (120) bps | ||||||
CHCI | 53.3 | % | 51.7 | % | 160 bps | ||||||
RX | 55.1 | % | 58.8 | % | (370) bps | ||||||
Six Months Ended | |||||||||||
June 30, 2018 | July 1, 2017 | Total Change | |||||||||
Adjusted operating margin | |||||||||||
CHCA | 20.9 | % | 20.6 | % | 30 | bps | |||||
CHCI | 16.1 | % | 14.2 | % | 190 | bps | |||||
RX | 39.7 | % | 43.9 | % | (420 | ) bps | |||||