Good day, and welcome to the Perrigo First Quarter 2022 Financial Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Bradley Joseph, VP of Investor Relations. Please go ahead. Thank you. Good morning, and welcome to Perrigo's First Quarter 2022 Earnings Conference Call. I hope you all had a chance to review the earnings press release we issued this morning. A copy of the earnings release and presentation for today's discussion are available within the investor section of the perrigo.com website. Joining today's call are President and CEO, Murray Kessler, and CFO, Ray Silcock. I would like to remind everyone that during this call, participants will make certain forward-looking statements. Please refer to the important information for shareholders and investors and safe harbor language regarding these statements in our press release issued earlier this morning. A few quick items before we start. First, unless otherwise stated, all financial results discussed and presented are on a continuing operations basis. They do not include any contributions from the divested Rx business, which was accounted for as a discontinued operations prior to its sale. In addition to other non-GAAP adjustments as described in the appendix, adjusted profit measures, including adjusted EPS and adjusted operating income, exclude from the prior year period certain costs incurred to support the operations of the Rx business, which were reported in continuing operations. See the appendix for additional details and reconciliations of all non-GAAP financial measures presented. Second, organic growth excludes acquisitions, divestitures, and currency in both comparable periods. Third, Murray's discussion will focus solely on non-GAAP results. With that, I'm pleased to turn the call over to Murray. Thank you, Brad, and good morning, everyone. With our three-year transformation to a consumer self-care company now complete, Perrigo is moving into a new phase, which we're calling optimizing and accelerating. The Perrigo team is hyper-focused on optimizing and accelerating our self-care platform through, one, supply chain reinvention to improve efficiency, productivity, and customer service. Two, successful integration of our scaled HRA Pharma acquisition. And three, gross margin recovery via pricing and portfolio consolidation. I will also note that this will be accomplished as we also continually strengthen our organization and culture and contribute to the world we live in by making our products and facilities more sustainable. With that in mind, I'd like to share a few words on the organizational announcement we issued this morning. First, I'd like to thank Todd Kingma, our General Counsel for the last 19 years, who just announced his retirement, and Ray Silcock, who I've worked with on and off for the last 30 years, and who previously announced his retirement, for their incredible contributions to the company and our self-care transformation. While they will be missed, I'm very excited to share who will be filling their roles. First, Kyle Hanson has been hired from Wolverine Worldwide and will serve as our EVP General Counsel and Corporate Secretary. Second, Eduardo Bezerra, most recently from Fresh Del Monte Produce, has been hired as EVP and Chief Financial Officer. They represent the next generation of Perrigo leaders who will help drive the newly transformed Perrigo organization. They both have the passion and seasoned relevant experience that embodies the Perrigo advantage, and I'm confident that their diverse perspectives and deep experience will make valuable and immediate contributions to Perrigo's success. Turning to HRA. I'm also pleased to say that we closed the HRA acquisition nearly two months ahead of schedule and are extremely excited to welcome their team in the Perrigo family. The final purchase price was approximately $1.9 billion, nearly $200 million lower than originally anticipated, tracing to the recent strength of the US dollar, a good outcome for shareholders. More importantly, the company we bought is performing beautifully. HRA results for 2021 were stellar. This is a business that is growing rapidly, finishing up 26% in 2021 versus a year ago, and achieves a robust gross margin north of 70%. HRA's strong growth continued in the first quarter of 2022, with net sales up versus a year ago on top of double-digit growth versus the prior year. EBITDA was up an impressive 77% versus a year ago in the first quarter. Strong top-line growth, strong margins, and a number of budgeted expense decreases, including one-time investments included in 2021 operating income that are not expected to repeat in 2022, supports our estimates of HRA achieving approximately EUR 90 million in operating profit in 2022. Since we closed the acquisition early and HRA earnings are historically much stronger in the second half, due mainly to the seasonality of Compeed, Perrigo is expecting operating income accretion of around EUR 55 million-EUR 65 million in 2022. Beyond 2022, HRA business growth is expected to continue through geographic expansion and new product adjacencies. That, along with cost synergies from the deal that are now estimated at EUR 40 million versus our original EUR 30 million estimate, leads us to reiterate our expectations for HRA to add about EUR 150 million in operating income in 2023. That excludes any potential short-term impacts associated with capturing the synergies. Turning to Slide 11. First quarter results for Perrigo were generally in line with our expectations, despite another wave of cost headwinds resulting from the war in Ukraine. Net sales increased 6% versus a year ago, with organic net sales up a very strong 10%. We attribute this strength to a global rebound in cough, cold, and U.S. nutrition infant formula sales. Price also had a positive impact. Gross profit margin was down 140 basis points sequentially versus Q4 due to one-time items we don't expect to repeat. Note additional cost pressure was offset by price increases and higher volume in the quarter, resulting in our EPS finishing at $0.33 per diluted share, in line with our expectations. Currency neutral EPS for the quarter was $0.37, including a $0.02 per share negative impact from the war in Ukraine. While Perrigo's top line continued to accelerate sequentially, what is more important is that our net sales in Q1 2022 are substantially higher than they were back in 2019 before the ups and downs of COVID. On a three-year basis, our first quarter net sales compound annual growth rate is +5.6%, and our organic growth rate, on a compounded basis, is 2.9%. There can be no doubt that the transformation has returned Perrigo to revenue growth. Looking at our categories in more detail, strong total net sales growth was driven by strong performance across both CSCA and CSCI, with cough, cold, and contract pack sales leading the way. Infant formula was also a big driver in the USA. Strong shipments are aligned with robust global consumer demand for self-care products. After two years of disconnects between shipments and consumption, the system appears to be back in balance. I think it's worth spending a minute on infant formula. This business has turned around nicely. Top line growth in our nutrition business was up 38% in the quarter, driven by infant formula. Importantly, Perrigo gained more than five share points compared to a year ago. These gains came from the launch of new hypoallergenic formula offerings, continued growth in our organic products, and the roll-off of COVID-enhanced benefit programs for formula. Our business also benefited slightly at quarter end from the recall of a competitor's infant formula. While this didn't benefit us in the quarter much, we are now seeing higher demand. Perrigo is doing everything it can to run as much infant formula as possible to help fill the shortages created by the recall. Also, during the quarter, I'm proud to say the Perrigo team received U.S. Food and Drug Administration approval for over-the-counter Nasonex, the company's first-ever branded Rx-to-OTC switch. The NDA was at first cycle approval, and we expect the brand to be on shelves at leading retailers in the U.S. this fall, a big win for the Perrigo regulatory team. Turning back to gross margin for the quarter. We are laser-focused on recapturing the margin loss due to supply chain disruptions and cost and freight inflation. We still see a clear path to gross margin expansion in the second half of the year, consistent with the phasing discussed on our last earnings call. Manufacturing productivity, elimination of one-time costs, price increases, and note 90% of expected benefits from price this year are still to come. The sale of the Latin American businesses and now the addition of 70% gross margin HRA products should allow us to recover 400-500 basis points of gross margin by year end. Now on to guidance. We are increasing our organic net sales growth guidance to 8%-9% compared to prior year, up from 7%-8%, driven by expected strong performance for the rest of the year, partially offset by half a percentage point from expected lost business in Ukraine and Russia. We are also increasing our all-in net sales guidance to growth of 8.5%-9.5%, up from 3.5%-4.5% versus the prior year. The primary driver is the addition of HRA, which is expected to contribute approximately 5.5 percentage points of growth for this year. This will be partially offset by the impact of unfavorable foreign exchange. We are also increasing our full-year adjusted diluted EPS guidance to $2.30-$2.40 per share. This range includes approximately $0.35 accretion from HRA and a $0.20 headwind stemming from Russia, Ukraine-related macro volatility, which led to unfavorable foreign exchange and higher than anticipated refinancing costs. Putting the year together, we are now expecting outsized growth on both the top and bottom line, with near double-digit top line growth and approximately 14% diluted EPS growth. In closing, our focus going forward is to optimize and accelerate the business through supply chain reinvention, through successful integration of HRA, and through gross margin enhancement, and by continually improving our organization and culture. We are focused on controlling what we can in what remains a very dynamic environment. We have inflation-related pricing actions in place to cover rising costs and expect them to fully take hold in the second half of this year. We are also uniquely positioned in the U.S. consumer self-care market to benefit from an inflationary cycle, as evidenced by store brand share gains during the last recession. With that, I will turn the call over to Ray one last time to discuss the financials in more detail. Ray. Thank you, Murray. Good morning, everyone. Yes, this is my last Perrigo earnings call as I'm going to be retiring from the company. It has been a privilege to work with the talented Perrigo team over the past three-plus years, and I'm excited about the path ahead for the company. Currently, I'm working diligently to ensure a timely and smooth transition to Eduardo, who, with his deep experience, will be a great new CFO for Perrigo. Now let's review our first quarter financials. On a consolidated basis, the company reported a GAAP loss from continuing operations of $1 million for the first quarter of 2022, a loss of $0.01 per diluted share. On an adjusted basis, consolidated net income from continuing operations was $45 million, and adjusted diluted EPS from continuing operations was 33 cents per share versus 50 cents per share in Q1 last year. The decline in adjusted EPS as compared to prior year was primarily due to one-time headwinds in CSCA. These included higher customer service claims related to unfulfilled customer orders and lower profitability on contract manufactured products for the now divested Rx business. We also have had higher planned advertising and promotion expenses in CSCI in support of our strong top-line growth there. As Murray noted, the inflation impacts in cost of goods sold and transportation costs were offset by increased sales volumes and higher prices. Also, unfavorable foreign currency movements hurt adjusted EPS by $0.04, and we experienced an additional two cents in EPS impact, half from lost business in Ukraine and Russia, and half from product donations we made in Ukraine in line with Perrigo's corporate charitable philosophy. Moving on to non-GAAP adjustments. In the first quarter, pre-tax non-GAAP adjustments totaled $71 million. Major components included amortization of $49 million, HRA acquisition and integration fees of $11.4 million, plus $3.5 million from HRA purchase price hedge costs and impairment charges, writing off a $5 million fixed asset. Full details of these and other adjustments can be found in the non-GAAP reconciliation table attached to this morning's press release. The non-GAAP tax adjustments are primarily due to a $13.6 million tax expense related to a pre-tax non-GAAP adjustment and the removal of the following reported items. One, a $17.2 million tax benefit on dispositions of entities offset by two, $6 million tax expense for non-recurring legal entity restructuring. These led to an adjusted effective tax rate for the quarter of 22.5%, slightly up from the first quarter of 2021 adjusted effective tax rate of 22.2%. From this point forward in this presentation, all dollar numbers, basis points, and margin percentages will be on an adjusted continuing operations basis unless stated otherwise. Since Murray already covered net sales for the quarter, let's move on to gross profit. Consolidated gross profit in Q1 was 8.3% lower than prior year, primarily due to the one-time headwinds I just mentioned, including unfavorable foreign currency movements. Gross margin declines 540 basis points versus the prior year, due primarily to these one-time headwinds, which account for nearly half of the decline. Unfavorable product mix from higher proportion of sales coming from store brand compared to branded and the timing of pricing actions relative to inflation as well as unfavorable foreign currency. Consolidated operating income for the quarter was $87 million, $32 million below Q1 last year, primarily from unfavorable gross profit flow-through, but also from higher distribution costs and increased advertising and promotion expense, which helped us deliver our strong top-line growth. Turning now to the first quarter segment results. Let's start with Consumer Self-Care Americas. CSCA gross profit in the quarter was $178 million, $24 million below last year. Higher sales volumes and positive pricing in the quarter were more than offset by inflation in the cost of goods sold and transportation. In addition, in Q1, other cost headwinds, including lower profitability of contract sales to the now divested Rx business, customer service claims, and some other headwinds, had a total adverse impact of approximately $24 million. In combination, these factors led to a year-over-year gross margin decline of 640 basis points in Q1. Operating income for Q1 was $87 million, $23 million down from Q1 last year, primarily unfavorable gross profit flow-through and increased distribution expenses, partially offset by lower R&D and admin costs. These factors led to a 500 basis point year-over-year decline in adjusted operating margin. Moving on to Consumer Self-Care International. CSCI gross profit was $182 million, down $9 million or 4.8% from the same quarter last year, largely due to unfavorable currency movements. Gross margin for the quarter decreased 180 basis points, primarily the impact of product mix, as we had higher growth in both store brand and contract manufactured products as compared to our higher margin branded offerings. In addition, we felt the adverse effect of having carried in high cost inventory made in Q4 last year, but expensed in Q1. Adjusted operating income of $53 million was $7 million below same quarter prior year, including a $7 million adverse currency effect. Excluding currency, gross profit was 4.3% higher than in the same period last year, driven by higher sales volume in the quarter, which came about despite the loss of business as a result of the Russian war in Ukraine. At the operating income line, favorable gross profit flow through, excluding currency, was offset by higher advertising and promotion spend in support of CSCI's strong top-line growth. These factors led to a 130 basis point year-over-year decline in adjusted operating margin, excluding currency effects. Moving on now to the balance sheet. Cash on the balance sheet amounted to $2 billion at the end of the first quarter, up from $1.9 billion as at year-end 2021. After the quarter ended, we closed on a $2.6 billion refinancing comprising a $1.6 billion term loan and an undrawn $1 billion revolver. The term loan was used to refinance an existing term loan maturing in August, as well as to refinance two 2023 bonds and to provide approximately $500 million in incremental borrowings over and above what was already available on our balance sheet to fund the $1.9 billion acquisition of HRA together with cash on hand. Operating cash flow for the quarter was $79 million, a strong 176% cash conversion on adjusted net income. As Murray discussed, we continue to operate in a dynamic environment, but remain poised for outsized growth given the contributions from the HRA acquisition and continued strong demand for our consumer products, which is reflected in our updated EPS guidance of $2.30-$2.40 a share. Operator, can you open the line for questions, please? We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Chris Schott with JPMorgan. Please go ahead. Hey, guys. Good morning, Chris. Good morning. Just a couple of questions for me here. I guess first on the gross margin front, and it's maybe a couple different pieces to this. I know you touched on this in the remarks, but I'm still just trying to get my hands around the step down in CSCA gross margins when I look at. Kind of second half 2021 to 1Q 2022. I think they came down about 250 basis points sequentially. Can you just provide a little bit more color on, I guess, how much of this was one-time? What were the one-timers exactly? Then I guess how much of this is just like kind of stickier supply chain inflation type stuff that you're gonna have to work through as the year goes along? Yeah. It's 100% one-timers. Okay. We got hit with about $4 million of one-timers. Part of it is cleanup. There was a number of things. One in the system, as the cold and cough business came roaring back, we had a bunch of customer claims, which we're working through and reversing right now. It may not only be one time. We may actually recover a fair amount of it. There was about $7 million of claims that are automatically kicked out when we agree to fill a certain level of orders and we don't, they take deductions. There are boundaries that guide it, but it automatically happens in their computer systems and ours, and we have to manually go back and challenge those, which we're doing. We went from... I'm gonna give you just an example. If the forecast was for 100, I mean, it's obviously different than that for cold and cough, all of a sudden, about the first week of January, it shot up to 10 times that. We were able to fill 2 or 3 times that, but not the remaining 7 times. There was then automatically kicked into the system these claims. It was like I said, it was worth about $7 million. That number will come down millions if not completely go away versus the past. That's one piece of it. Another piece of it, unfortunately, as part of one-timers, even though we were short of cold cough inventory this year from a year, almost 2 years ago, of inventory that you made for the 2021 season back in 2020, right? For the inventories for that and with no cough cold season, we had a little bit of cleanup of write-offs that needed to take place for that. When Ukraine-Russia came along, we made a number of product donations and charitable donations that were one-offs that we believed was the right thing to do. Those are just. There was, I think, Ray can help me, but I believe it was a $5-$6 million royalty rate catch up, on one of our suppliers that the accruals just needed to be adjusted. None of that fit. That's a couple hundred points. Basically, you know, I am telling you that the gross margin on CSCA, absent those one timers, was exactly what it was in the fourth quarter. I'm actually feeling very optimistic about gross margin this year to our plans. I know you guys had us in at a higher level, but we actually hit our plan despite a couple hundred gross margin points of one timers. We hit our internal despite, you know, currency working against us, despite a new wave of cost increases that we offset with pricing. Most of our remedial actions, like 90% of them are still to come, like pricing and things like that, which we can talk about. It sounds like based on that answer, I know that you laid out the second half margins for a nice step up. Just when I think about just sequentially for 2Q, should we be thinking about kinda 2Q, let's just stick on the America's business, you know, and pre-HRA, kinda more in line with what we're seeing for the second half of 2021, or is this kinda like 25.5, you know, 25 level wherever we are currently kind of like a good proxy for 2Q? I just wanna make sure I'm kind of getting the. If this is such a focus on that number, just the gating as we go through the next few quarters. Yeah. I mean, but HRA is gonna factor in. Go back. What was the period you were trying? Sequentially, it's gonna increase. That's what I was trying to get my hands around. Yeah. I was trying to look at basically, I think we were like 27.5% second half of 2021. Is that like a reasonable level to think about, like 2Q before HRA? Well, you're talking. I'm looking at consolidated. Just give me a second to get there. Sure. No problem. The CSCA. Yeah. I think that's sort of thinking about it the right way. I mean. Yeah. Well, I'm actually, I've got to go. Give me one more second. Yeah, I think that's right. Okay, perfect. Corporation. I'm kinda sticking my neck out here, but I think we're gonna recover almost all of the gross margin loss this year. I'm looking at 400-500 gross margin points of recovery by the fourth quarter. Okay, perfect. The other topic I just wanted to talk a little bit about, HRA looks like it had a very strong 1Q. I know, I think you were planning on talking a bit more about this later this year about the HRA growth targets. If I just go back to, I guess, the 2021 results and kind of bridging out to where you're thinking about for 2023, I think it assumed something like a mid-20s% annual growth rate. Can you just, again, just remind us of the growth drivers that are enabling that type of step up in HRA growth the next few years? I know that's a question that came out quite a bit post the proxy, and would just love just a bit of a reminder of just, you know, kinda how we think about the drivers of HRA these next kinda two years or so. Yeah. You know, I'm in a funny location giving this earnings call to you, Chris. I'm actually in Europe. I've been going back and forth. I'm at HRA integration meetings. I was at HRA headquarters two days ago, going through, you know, each general manager that leads all the hubs around the country, around the world, actually, Europe, export, US, where there's an incredible high level of confidence in them saying this is the best start the company has ever had, that there are people traveling again, et cetera. The first thing you have this year is the numbers that we published out in the 8-K, that those were COVID numbers. Compeed was hurt dramatically by COVID, like our CrossCo business. No one was out traveling, hiking, needing plasters. I mean, they weren't out wearing high heels going to work. You know, those are all the drivers. You have this ramp up besides the normal growth of them adding countries, converting on ellaOne. They are continuing to switch different countries around the world to from Rx to OTC. You know, in future years, you have the entire line. They have their Hana line, which is the everyday pill that is a birth control pill that is. If you've been reading the articles around the controversy of Roe v. Wade, there's also been articles in POLITICO about, you know, one of the best-positioned companies being HRA, who has a solution with an everyday over-the-counter pill that we hope to have in by 2023, will be a growth driver. Applications are going into additional countries around the world for that. They are broadening the usage of the brand. Have already extended tremendously successful from just, you know, wounds and heels to adding right now fever blisters. There is just a whole wave of ways to build that brand, to build out the product portfolio. Expanding into the United States is a big priority and driver of growth. I mean, I was just blown away by both the confidence in that team, the capability, the sophistication of the marketing and, you know, they strongly believe in those numbers. What's that add up to? You know, I think you're talking about, you know, double-digit top line growth continuing without any revenue synergies. You're talking about, you know, going to $150 million in operating income next year or in 2023. Excuse me. You know, if Brad talked to you about operating income, I've gone back and forth, because in the deal model, we were talking EBITDA and the European version of EBITDA, but we're converting it back into our operating income numbers. I mean, right now it feels like the sky's the limit. Again, we raised the synergy number from EUR 30 million to EUR 40 million. This is gonna come back. This will be the best acquisition I've ever done in my career. Excellent. Appreciate the color. I'll jump back in queue. Thanks. The next question comes from Elliot Wilbur with Raymond James. Please go ahead. Thanks. Good morning, Elliot. Hey, Murray, how are you? Good. Thanks. Just maybe a high-level question on macro trends in the U.S. store-brand market seeing relatively strong growth metrics, but wondering what you may be seeing in terms of potential consumer trade-down in the quarter over the last year, just how things have trended from a market share perspective in the categories in which you compete in. More specifically on the nutrition business, strong performance in the quarter. Obviously, a lot of factors behind that, but just wondering if we could sort of maybe tease out the incremental lift from some of the organic initiatives that you talked about over the past couple of quarters versus the benefit from overall supply issues resulting from developments at one of your competitors. Yeah. Well, let me do the second one first because that's pretty finished. The recall only happened in, like, the last week of March, so it had a you know we had a bigger week that one week, whether that was a few million dollars or so. It wasn't massive. It is big in the second quarter, though. It just is. You know, we are. I could run double what we have. We're running flat out, as much as we can. Will that be sticky? We hope parts of it are sticky given the test. You know, we don't know how long that situation is gonna be in place. You know, it could be a while, it could be a long while. We're looking at ways to potentially increase capacity at the request of the FDA. We're doing whatever we can. I will tell you, part of it that will be sticky is in the face of the cost increases and shortages, our customers were more than understanding that we needed to adjust the price of this product. No price gouging or any of that, but it had been hard to do in the past few years, and we were able to do that. That's a positive. Yeah, I mean, first quarter, barely anything. Second quarter, it'll be meaningful. Turning to the first question, we haven't really seen much trade down. I believe that is going to be. I listed it on one of the slides as an upside for Perrigo. The national brands have spent a lot of money in A&P to restart their businesses, to restart their advertising. You know, they clearly had some new products out there ready to go, and they've grown, frankly, a little bit faster than the store brands in exiting the year and the first quarter. The good news is we dug in pretty hard to that and had our partner in on it from a data source, Information Resources, to do all the panel data and switching, and none of it came from store brand. It was just increases in consumption among their existing consumer bases, but not a big trade down. The, you know, the big numbers that you've seen in consumption for us is all been just category growth and all boats rising, not a lot of switching. I will tell you they're taking more pricing than we are. We work hard as we can with our partners. You know, they've been beautiful. They understand what the situation is now. I think we had, Elena, $125 million of pricing in our consolidated P&L for this year. You know, for us, that's a lot. Oh, by the way, you know, I think about 10% or a little more than 10% of that was in the first quarter. You know, there's well over $100 million still to come on agreed-upon pricing raises. That's still only about 3%, 2%-3%, I think it was 2% in the first quarter, where, you know, if you're looking at other consumer benchmark companies, you know, the big guys, they were talking about volume up 10, 11, 5% from pricing, 5% from volume. We were up 8% from volume and two from pricing, and I think that sets us up for even more future growth, you know, as the, you know, the price gaps widen a little bit. We're working hard, but I think we've got all of this inflation, including a second wave because of the war implications on energy prices, other commodities, and all of that is triggering a rise for us of another $45 million of input costs. The input costs we carried in plus that $45 million are all being covered by about $125 million of pricing. Some good strong volumes. I think we finished this year, you know, double digits on, certainly on a constant currency basis, top line, near 20% on a constant currency and neutral basis for the bottom line, margins growing again, beautiful brands coming in with HRA. I think it's gonna feel a whole lot different than in the back half of the year, but I do think this was our low this quarter. Okay. Just following up on that, I think in the text, with respect to CSCA, it's mentioned that roughly $34 million of cost headwinds hit the operating profit line, absorption issues and freight costs and the like, of which, you know, all seem to be more transitory. Just wanted to confirm, in fact, if you believe that pricing actions and procurement actions in and of themselves would be sufficient to offset that drag in the second half of the year? Yeah, I think it'll be enough to offset the drag for the total year. There is a lag. We're not like a national brand where I can go in, take a price increase on Friday and it's up on Monday. We have to negotiate those when the stores are being reset. Many of those price increases are just going into effect now. Many of them, you know, went into effect, you know, late in the quarter or in the beginning of the second quarter. You know, some were in place. You know, call it, if we had roughly $0.15 of material and freight inflation in the first quarter, we probably offset 80% of that, something like that with pricing alone, and then the rest got offset by volume. As we go forward, you're gonna offset all of it or even, you know, possibly a touch more. You know, listen, the big unknown for us, no one said it, but, you know, we had a big currency impact on the business. Okay. I wanted to circle back to the gross margin issue and we've obviously touched on this many times over the past 12-18 months. You know, within your prepared comments this morning, you talk about optimize and accelerate and refer to supply chain reinvention. I mean, that sounds more like a facelift than a Botox injection. I'm just wondering if you can kinda give us maybe some early insight in terms of what you're thinking. I mean, is this an actual alteration of the physical footprint here? Is this more about just having better processes and procedures in place and material planning strategies so that, you know, we don't kinda see these huge swings in, you know, inventory and we've got better line of sight into production? You know, just trying to, you know, understand exactly, you know, what you're kind of thinking, at least at this early stage when you talk about supply chain reinvention. Let me also be very clear. When I am talking about that, I am talking about accelerate. I am not talking anything about the 2023 or the 2022 forecast. I do have some assumption in 2023 as I build it. If you don't mind, may I answer the question. I'd like to answer the question for you this year because I wanna hit it over the head, that it's a very clear path to recovery without that. When you add the absence of the one-timers in the first quarter sequentially, you're adding a couple hundred basis points. When the absorption issues go away that we carried into the year in the second half, you add 120 basis points. When you remove Mexico that was low gross margin and zero operating margin, $100 million in sales, you add a certain amount. When you add a 70% gross margin HRA business that's growing rapidly from a mix, you add 200 basis points, even if you don't get a single benefit of the pricing. Those are the drivers to get you back to 400-600 points and a growing portfolio with the top line growing double digits and the EPS growing double digits, which is a pretty exciting place for us to be. Oh, by the way, without $3 billion worth of tax risk. Okay. Now, optimizing accelerator. I'm starting to tease you with the ideas that I think can be very exciting for Perrigo going forward. We have done 5 divestitures, 8 acquisitions, completely reconfigured this company to be consumer self-care. You had the Omega acquisition that was done a number of years ago, and the entire supply chain has never been optimized. The answer is all of the above to what you said. It will be a 5-year project. We took out $100 million, and people have complimented us on being pretty tough on the operating expense line, but the cost line in this company is dramatically higher. There are three to four phases. There's a short term. Let's call it a short term, a midterm, and a longer term. 12-18 months, 18-36 months, 36 months plus. Anything that would involve, you know, consolidating distribution centers and optimizing for the portfolio of weed products we have going forward, that's further out. I will share with you when we get to our investor day our ideas there. The immediate ones, though, are getting our service levels back up coming out of COVID and all the disruption and supply chain disruption that has given us a number of those one-timers that has resulted, you know, in SSO levels that, you know, over the course of the year in obsolete inventories from making it and missed shipments of, you know, probably $100 million of profit opportunity in that category alone. The carrot that I'm starting to tease, that again, is not in our numbers, is, you know, $100 million-$300 million opportunity. We have a lot of work to do on it. It is gonna be the culmination of three years of putting in, costing down to the SKU level, being able to get demand data for our SKU separate from the entire store brand industry to build better demand models. A lot of things change when you get your service levels up into the nineties, including your ability to sell more distribution and leave less revenue on the table. Demand planning is a super example of that. Scheduling is a super example of that. Product portfolio is a great example of that. Elliot, you know, we did an analysis and, you know, and had some help doing it, that every time the national brand launches a big SKU, we have 500 variations we take to market because of years of history of Perrigo in the U.S. saying, yes to every single variation. The startling part of that is 80% of that is not consumer-facing, and it's just a customer wanting it a little different. Slows down, breaks down our lines. The ability for productivity, increased volumes, almost every single one of our lines is at max capacity running 24 hours a day, which is one of our major service issues. That's a huge opportunity. Eliminating, you know, probably. I think I showed this a year ago, though. But we're working on it, but 30% of the line probably represents 90%-95% of the contribution margin. Upfront demand planning, forecasting, getting those service levels up, and portfolio reconfiguration are our short- to midterm goals. There will be behind that opportunities for consolidation of distribution centers and, you know, plant shop floor metrics, et cetera. Yeah, we're excited. We have turned ourselves into a consumer self-care company. Now it's time to turn ourselves into a great one. I gotta get this darn margin issue, as you point out, behind me, so everybody can get as excited about the business as I am. Yep, absolutely. Two quick additional ones for you. Given all the external issues that the company has faced on the logistics side and input cost side that have hampered gross margins in the U.S., I guess I find it surprising or, you know, relatively impressive anyway that the CSCI margins have held up substantially better. We've really seen very little margin compression there. How much of that is just supply chain related with respect to that business versus the ability to just take higher and more immediate pricing actions to offset whatever incremental cost you are seeing? As a closer, given that you now own HRA, the company's been working on a potential OTC switch of a daily oral contraceptive in the U.S. market for some time now. Just wondering if there are any action or regulatory updates that are on the clock for the next 6-12 months. Thanks, Murray. Okay. On the second one, and the biggest one, the next step is the official filing, right? You go through all the questions and all those circles, and with the FDA in the U.S., we're with customers, so I'll tell you the name. It's called the Opill. The Opill should be filed here within the next few months. That would be the next big hurdle, and then the clock starts ticking. Again, I'd encourage you to read the POLITICO article from earlier this week. This is something this country needs. I mean, there are 6 million abortions a year in the United States, and 30% of women who can't or have difficulty getting access to birth control and this improves accessibility, which is what our company is all about. By the way, it won't be the only country that we are applying in, and we continue to apply for also for ellaOne in numerous countries. We also have Nasonex that we got done. You know, it's. There's a lot of great things coming. CSCI, you answered your own question. It's primarily pricing. I mean, that's the biggest answer I think. You know, in general, I would say I'll give credit to you know Svend Andersen, who runs that group and team. They've done a lot of the portfolio reconfiguration that I've talked about. Five years ago, there were 15,000 SKUs in our international business. Today, there's about 5,000. Svend would tell me there's still about 1,000 too many, so there's still further opportunity, but that's helped drive gross margins as well. This concludes our question- and- answer session. I would like to turn the conference back over to Murray Kessler for any closing remarks. Yeah, you know, like I said earlier in the call, I'm over here in Europe for the first time in two years, over two years, to sit in front of a room of our sales force. Two days ago, I was in Paris in front of the entire HRA team. I just can't share with you how excited the people in our organization are about our future, et cetera. You know, bottom line, we said we would start growing this company double digits and earnings double digits this year, and this is the year to do it. We spent a few years making it smaller and getting that cash and have reinvested it now, and you'll start to see those numbers show it very soon. It's unfortunate that we got hit with the supply chain and you know, some of the other freight costs and others, but those weren't Perrigo issues. You know that. Those were our gross margin hits are no worse than Conagra's gross margin hits, Procter & Gamble's gross margin hits, Clorox's gross margin hits. I mean, everybody, TreeHouse's gross margin. I mean, it just hit the entire consumer industry. I think if you look, you'll see that Perrigo's probably wasn't as bad because our team's done an incredible job. I think we will get it recovered with less pricing, which will then, in an inflationary environment, hopefully, benefit the company in expedited trade down. Because the last time this happened, we gained about four share points when there was a meaningful inflation in a recessionary period of time. I think, you know, you're gonna start seeing volume for those national brands slow down and not see volumes slow down for us. That's just my prediction. Bottom line, we've kept every single promise we said we would make or we made three years ago in order to reconfigure this company. We are, you know, at the sort of the point where we believe it starts paying off. You take currency out of the situation, we're well above estimates, and that'll turn around too, I mean, in my opinion. We, you know, we'll see over time. Right now, we've plugged in a very aggressive euro exchange rate and that has an impact. Strong organic growth continuing, been growing for three years, lots of effort on margins, lots of great brands and switch potentials, et cetera, going forward. After that, you've got the supply chain reinvention coming behind it. I like where I sit right now, and it's time for us to prove it. We would have been proving it already, but you know the world, we didn't expect a war, but we'll get through that too. I will leave you with one final note. A member of my Ukrainian sales force was at this sales meeting, and she intends, and I almost fell down. I'm like, "What are you doing here?" And she said, "Well, we need all the information. We gotta. You know, we still think we can deliver 70% of the plan. We're not backing off." The people at Perrigo are fighters. Thank you for your interest in Perrigo. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.