Perrigo Company - Q2 2023

Transcript

Operator (participant)

Please note this event is being recorded. I would now like to turn the conference over to Bradley Joseph, Vice President, Investor Relations. Please go ahead.

Bradley Joseph (VP of Investor Relations)

Good morning, and welcome to Perrigo's second quarter 2023 earnings conference call. I hope you all had a chance to review our release 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. For the first time, I would like to introduce and welcome Perrigo's newly appointed President and CEO, Patrick Lockwood-Taylor, to the call. Patrick, on behalf of shareholders, we are thrilled to have you at Perrigo. Your consumer self-care experience and expertise will bring a fresh perspective and help inspire the organization to achieve even greater heights. Again, welcome. Also joining the call this morning is Perrigo's CFO, Eduardo Bezerra. 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 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 discontinued operations prior to its sale. Second, organic growth excludes acquisitions, divestitures, exited product lines, and currency in both comparable periods. All comments related to constant currency remove the impact of currency translation versus the prior year by applying the exchange rates used in the comparable measurement in the prior year's financial statements. Third, Patrick's discussion will focus solely on non-GAAP results, except as otherwise expressly noted. See the appendix for additional details and for reconciliations of all non-GAAP financial measures present.

With that, I'd like to turn the call over to Patrick.

Patrick Lockwood-Taylor (President, CEO, and Board Member)

Thank you for the warm welcome, Brad, and thank you, everybody, for joining us this morning. I'm nearly 40 days into my Perrigo tenure, and I greatly appreciate the warm welcome I have received from my Perrigo colleagues. Their pride and excitement for our business comes through in every interaction, and I'm very energized to join them in the next phase of Perrigo's growth. I also want to recognize and thank Murray Kessler, our outgoing CEO, for his leadership in positioning Perrigo as a major player in global self-care. I'd like to start the call today by sharing what excites me most about the opportunities at Perrigo and also provide thoughts on our framework for building long-term sustainable growth. I've actually followed Perrigo for several years now and have always believed this is a truly unique business.

It's well-positioned in the right industry with numerous strengths, and let me highlight a few of those. It has tremendous manufacturing scale in the U.S., with the ability to produce over 50 billion doses every year across a wide range of formats, including tablets, liquid, sprays, lozenges, and creams, to name but a few. This manufacturing capability translates into nearly 1,600 doses produced every second of every day. That's incredible consumer reach. As a global company, Perrigo has strong customer relationships with the top U.S. retailers, in addition to strong pharmacy relationships across Europe, with over 100,000 direct pharmacist partners. Perrigo embodies a solid focus on cash and cash flow mindset, which helps generate an annual cash conversion ratio of approximately 100%, driven by several actions, including prioritization, simplification, standardization, and pricing.

Finally, Perrigo has a strong innovation engine and ability to fast follow across nearly every major OTC category. In fact, Perrigo has more approved OTC ANDAs than any other company. Our fast follow ability is exemplified by the launches of store brand equivalents to Voltaren Pain Relief Gel and Advil Dual Action tablets, both of which were launched the day after the national brand exclusivity expired. This innovation and speed to market enables our retail partners to truly differentiate their brands on the shelf. Another exciting example of our innovation is Opill, which I will discuss further in a few minutes. There's been a lot of work accomplished over the past five years to position Perrigo as a leading company in the consumer self-care space, but there is still an awful lot of work to do to consistently win and to fully capitalize on our assets and our opportunities.

A few thoughts on the building blocks that will drive sustainable growth. First is to continue to refine where we are going to play. Perrigo has made great progress defining where to play within branded self-care. Yes, store brands are indeed branded self-care, but this will continue to evolve. Within consumer self-care, Perrigo participates in attractive segments that are set to benefit from favorable tailwinds. Aging world populations, a heightened focus on self-care treatment, and ever more cost burden shifting to consumers is set to drive attractive category growth. Next is to define how we're gonna win. It is early in my tenure, but I can tell you Perrigo has a lot of tools to differentiate from competition and to win with consumers, including e-commerce leadership and an extensive portfolio with deep category insights and world-class manufacturing, innovation, and scale.

It is our job to better leverage these tools to win consistently with consumers in a differentiated and impactful way. Understanding how we can further leverage our existing capabilities, in addition to new capabilities that we might need in order to sharpen our approach to drive further differentiation. Our Supply Chain Reinvention project is a good example of this. This is on track to drive down costs, to increase efficiencies, and to better leverage our manufacturing scale. Going forward, we will look to accelerate additional capabilities, including brand building and more meaningful consumer-driven innovation, that we might differentiate our products at shelf. Finally, to optimize the Perrigo operating model and to perform better as One Perrigo. While there has already been a lot of progress here, for example, our Supply Chain Reinvention program, we have more to do to harmonize our global operating model.

We will sync to one operational drumbeat with common systems, structures, and KPIs, so that we can deliver our products to consumers in the most efficient, value-creating way. Now, a brief update on our accretive initiatives. First is the progress we continue to make on our Supply Chain Reinvention program. The Perrigo work system is being rolled out across our manufacturing footprint. This foundational technology is enabling the work systems that have already been installed in 35% of our line and are generating very meaningful, actionable data. As part of our winning portfolio focus, we optimize production of higher margin SKUs, which drove 40 of the 260 basis point year-over-year gross margin uplift within our Americas business. We also continued to realize synergies from acquisitions, which are tracking slightly ahead of expectation through the second quarter.

The HRA distributor transitions are already providing meaningful cost savings and margin expansion. As you know, the 2023 unfavorable EPS impact of $0.16-$0.18 from the distributor transitions is not expected to repeat in 2024. All these initiatives contributed to another quarter of consistent year-over-year results, with total Perrigo net sales growth of more than 6%, growth margin expansion of 220 basis points, and 18% operating income growth, a 47% EPS growth. Importantly, we ended the quarter with a very solid cash position. Other notable highlights from quarter two include strong organic net sales growth of 7% in our international business, where we continue to hold share in growing markets and categories. This growth was broad-based, which included cough, cold, anti-parasites, insect repellent, and skincare offerings.

In the U.S., more consumers are choosing store brands as compared to national brands, evidenced by store brand volume share growth of 70 basis points over the last 13 weeks. As expected, Perrigo's share of total store brand was lower over the same 13 weeks due to planned SKU prioritization actions during the quarter, which again enhanced gross margin. Excitingly, last month, the FDA approved Opill, the first ever daily oral contraceptive available OTC in the U.S. It was a momentous day for our organization and one that comes at a pivotal time in the women's health space. I'd like to once again congratulate the entire women's health care team, who have worked for nearly a decade to achieve this milestone. This approval highlights Perrigo's strong innovation that I just mentioned, and Opill will be an important part of the building blocks of our long-term sustainable growth.

This switch will define a new category within women's health and break down traditional barriers for the 64 million women that make up the total addressable market in the US. Uptake has the potential to be broad across consumers who are not insured, are new to the category, using less effective methods, or choose to switch from the prescription to the OTC product. I've worked on a number of prescription to OTC switches in my career, and this is the most exciting. Switches can be a very effective pathway to brand building, as they typically garner strong retailer support, drive net new growth, and in the case of Opill, open up an entirely new category in the OTC space. Retailers are also excited about this upcoming product launch. As you may have seen from news reports, two leading drug chain stores have disclosed that they expect to offer Opill.

We have made this decision to fund pre-launch investments for Opill, coinciding with an expected retailer channel fill late this year. We continue to expect Opill on retailer shelves in early 2024. This is a meaningful opportunity for our U.S. OTC business, and we plan to invest judiciously and with intent to smartly maximize reach of the Opill brand. As with any branded launch, we do not expect the product to be accretive to earnings for the first 12-24 months. In addition to Opill, I also want to provide early thoughts on our infant formula business. We recently completed the Gateway facility and Good Start brand acquisition, and that integration remains on track.

In the second quarter, this acquisition contributed $44 million of net sales in our nutrition category, which was partly offset by $5 million from a discontinued product line and $5 million of lower net sales from pediatric drinks. Within the nutrition business, net sales of our legacy infant formula products were up 6 million % despite lapping a strong comparison in the prior year due to a national brand supply issue. More on that in a moment. Second quarter gross margin in nutrition expanded 730 basis points compared to the prior year, and nearly 1,200 basis points sequentially. This is a solid business.

As for the prior year, national brand supply issue that I just mentioned, Perrigo stepped up to supply as much infant formula to parents as possible by running our facilities 24/7 and prioritizing our highest volume SKUs to reduce production complexity, therefore, achieving more than 115% infant formula output. A truly heroic effort by the team. Looking at the current landscape for infant formula, the market is normalizing as the impacted national brand has returned with many of its SKUs. Additionally, recent changes to FDA guidelines are impacting the entire industry, resulting in lower manufacturing volumes, higher production costs and higher risk of scrap. Reassuringly, there is more demand for our store brand formula than we can supply. We have not lost any distribution, and we've used pricing actions to offset higher costs.

We're now working to reintroduce SKUs that were deprioritized last year and to restock all customer shelves. Given the impact of the new regulations, this will take time. The healthy growth of our youngest consumer is our utmost priority, and our team is working relentlessly to ensure families have the nutritionally equivalent store brand formula that they need at the lowest price on shelf. I'd like to conclude by reinforcing a few essential points to achieving Perrigo's full potential. Perrigo is well positioned in the self-care industry and has a number of tools to differentiate against competition. I know how hard my colleagues have worked to make that happen. Our job now is to put these pieces together and to continuously innovate in everything we do to better serve consumers. People at Perrigo are very talented and very driven.

They're focused on the right priorities, including cash flow generation and deleveraging. Our 2025 growth algorithm, shared in February, remains on track, and I'm focused on plans to optimize and unlock our full potential and accelerate and sustain top performance. As you may expect, I'm working with our global businesses to assess our market positioning and our long-term plans, and work is already underway on winning initiatives. I look forward to sharpening my thinking as I continue getting to know the organization and team, and then sharing more details in due course. With that, I'd like to thank you all, and we'll now turn it over to our CFO, Eduardo.

Eduardo Bezerra (EVP and CFO)

Thank you, Patrick. Good morning, everyone. Before diving to the quarter, on behalf of our entire operating committee, I would like to welcome Patrick to the Perrigo team. Since joining, he has brought a tremendous amount of energy and knowledge to our business, we look forward to working with him as we continue to execute on our self-care strategy. Of course, it's music to my ears when I hear Patrick talk about our intense focus on cash. Starting with our GAAP to non-GAAP summary, the company reported GAAP income of $9 million for the second quarter, or GAAP earnings of $0.06 per diluted share. Adjusted net income was $87 million, adjusted diluted earnings per share was $0.63 per share versus $0.43 per share in the prior year quarter.

Adjustments to the quarterly pretax non-GAAP PNL include a net total of approximately $70 million, driven primarily by amortization expenses of $70 million, restructuring charges of $6 million, and the removal of $10 million of legacy royalty income received in the second quarter. Full details can be found in the non-GAAP reconciliation table attached to this morning's press release. From this point forward, all dollar numbers, basis points and margin percentages will be on an adjusted basis unless stated otherwise. Total Perrigo reported net sales grew 6.4%. Organic growth was 80 basis points, including an unfavorable 2.7 percentage points impact from proposal SKU prioritization actions to enhance margin. For CSCA, organic sales declined 2.7%, including an unfavorable 4.1 percentage points impact from the SKU prioritization I just mentioned.

A light allergy season in the U.S. also impacted organic growth by negative 1.8 percentage points. Within CSCI, organic growth remained robust, up 7.1% compared to the prior year, as our brands continue to resonate with consumers. Gross profit increased $52 million or 13%, driven by strategic pricing, acquisitions, and favorable mix. These were partially offset by inflation, primarily in CSCI, lower manufacturing productivity in CSCA nutrition, stemming from the infant formula regulations Patrick discussed, and the HRA distribution transition sales returns. Operating income increased $21 million or 18%, driven by gross profit flow through, partially offset by operating expenses from acquisitions. Before we discuss margins, a bit on the second quarter effective tax rate, which was 7.3% versus 23.9% last year.

The difference was due primarily to the release of reserves and other tax attributes associated with the settlement of various tax matters, including a discrete benefit of $0.08 per share in the second quarter. In total, these factors led to an impressive 46.5% EPS growth versus the prior year. Total Perrigo gross and operating margins expanded to 120 and 110 basis points year-over-year, respectively. In CSCA, gross margin expanded to 160 basis points, driven by the same factors that drove gross profit, in addition to the benefits from SKU prioritization. Operating margin expanded 80 basis points due to favorable gross margin flow-through, partially offset by higher operating expenses due to the addition of Gateway and increased promotional investments.

In CSCI, gross margin expanded 30 basis points due to the same factors that drove gross profit, while operating margin increased to 110 basis points, driven by favorable operating leverage. Cash on hand at the end of the quarter was $555 million, reflecting an increase of $70 million from second quarter last year. Operating cash flow for the quarter was $53 million, an operating cash conversion of 61% to adjust the net income in line with our assumptions. We're still projecting approximately a 100% cash conversion for the full year, driven by anticipated phasing of cash generation and improvements in working capital. Also, in the quarter, we invested $20 million in capital expenditures and returned $37 million to shareholders through dividends.

We continue to make steady progress in reducing our net leverage as we ended the quarter at 5.1x net debt to adjusted EBITDA versus 5.5x at the end of 2022. Turning now to guidance. We are affirming our 2023 reported and organic net sales growth guidance and EPS range, which is comprised of several factors, including: an expected adjusted tax rate for the second half of 2023 of approximately 19.5%, leading to a full year adjusted tax rate of approximately 17%, including the second quarter adjusted earnings per share, discrete tax benefit of $0.08 per share. Investments in Opill pre-launch activities, including building large quantities and marketing and advertising plans to support a late fourth quarter retail channel fill ahead of product getting to shelves in early 2024.

The current dynamics in the infant formula industry that Patrick discussed and an assumed normal 2023 cough and cold season. In total, our guidance reflects the strength of our business and the balancing of opportunities and risks that we're currently managing. Given these assumptions and our typical earnings phasing, we anticipate second half earnings per share will be more heavily weighted towards the fourth quarter, approximately 60% of our second half earnings. In closing, I would like to thank our colleagues around the world for their efforts. We continue to progress our strategic initiatives while meeting the needs of consumers around the world. With that, I will now turn the call back to Brad. Brad?

Bradley Joseph (VP of Investor Relations)

Thank you, Eduardo. Vaishnavi, can we now please open the line for questions?

Operator (participant)

Thank you. We will now begin the question and answer session. To ask a question, you may "press star, then one" on your touchtone phone. If you're using the 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. Our first question comes from Chris Schott with J.P. Morgan. Please go ahead.

Chris Schott (Analyst)

Great. Thanks so much for the questions, and, and Patrick, great to, to have you on the call. Maybe the first question is, you mentioned several areas of focus in, in the framework for sustained growth. Can you maybe just help us a little bit understand, in terms of your top priorities moving into this seat, you know, which of these are kind of the biggest opportunities you see for, for Perrigo as we think about, you know, is this about, is some of the performance issues the company's had, is it about portfolio? Is it about the focus? Is it consistency in manufacturing? Just maybe help us think a little bit about how you're prioritizing those, those initiatives.

Patrick Lockwood-Taylor (President, CEO, and Board Member)

Yeah, good morning, Chris. Thank you for the question. I've worked through in detail the strategic plan for the company. Job number one is we had to deliver those priorities. They're gonna have the most impact on cost and cash and our OI growth. They include the Supply Chain Reinvention, the integration, and that's both HRA and the new production facility that we have, we bought from Nestlé in Wisconsin. Call that landing the big strategic initiatives, all right? Those are foundational to the 2025 growth algorithm that we've committed, and I see no reason to challenge that. Second part of focus for us is really just getting to operating, a greater level of operating discipline, and I'm starting to see that, and that's particularly needed in the U.S. business.

The second tranche of my focus is in, primarily in the U.S., and that does involve really looking at our portfolio and where we need to double down, where we have the, the greatest right to win, and it's the most attractive financially. That work's happening now. We need to look longer term, and it's continuous work of, of, sustainable growth. As we then look to the future, starting to look at the, within our categories, which are the most attractive within our brands, within our country brand combinations, and where do we see the greatest opportunities for growth? What is the investment and the capability that's needed to support that? That block of work will, will probably start later on in the fall, and that will really guide where we focus in the future.

Land the initiatives, drive what I call the One Perrigo operating system and discipline, and then really make sure we're focused on what it takes for sustainable growth.

Chris Schott (Analyst)

Perfect. Just as part of that answer, it sounds like, I guess my second question was just on the 2025 targets that the company provided earlier this year. It sounds like you're, you're comfortable with those, those ranges that were provided?

Patrick Lockwood-Taylor (President, CEO, and Board Member)

I am comfortable. I've, I've worked through them, as you would hope and expect in detail. I think they're very well considered. I think we have the right action plans and governance in place, but they have to be delivered. I will stay on top of that governance personally to make sure each of them is on track and how we help the teams to stay on track.

Chris Schott (Analyst)

Great. My final question was just a little bit more color on how you're thinking about Opill in terms of both the investment needed to build that market and how large of an opportunity. I guess specifically, I know you mentioned it's not gonna be an earnings contributor in the first 12-24 months, but I think investors have been worried this actually could be a meaningful drag on results in that time frame. Can you just any color there would be appreciated. If you're willing to share a peak sales forecast for that product, would also be of interest. Thanks so much.

Patrick Lockwood-Taylor (President, CEO, and Board Member)

Thank you, Chris. I'll let Eduardo talk more to the financials. We're, we're deep in the commercialization process of that. We, it, it will start to ship later on this fall, on shelves early 2024. The commercial package for that is really what you would expect for any CPG brand launch. As I look at the plans, they're, they're solid. They're solid. It's, it's a complex sell to consumers, given the nature of the category. We're doing a lot of work on what is that awareness to trial conversion process, what investment and consumer touch points are required, and then, and how long that takes.

At this stage, I think until really that work is, is completed to a detail that I'm happy with, I wouldn't want to predict what the sales are, but I certainly will have a much better idea at the next earnings announcement. For the financials, Eduardo?

Eduardo Bezerra (EVP and CFO)

Thanks, Patrick. Just to complement, Chris, what Patrick mentioned. As you heard us saying, in the second half, we're gonna have an important investment, you know, to fund these activities, and we're using the tax benefit that we found, that we realized in the second quarter to fund that. An important thing is we do not expect, at least in the first 12 to 24 months, for the Opill to be accretive as we build the brand nationwide and make sure this is gonna be a successful launch for the long term.

Chris Schott (Analyst)

Thank you so much.

Bradley Joseph (VP of Investor Relations)

Thanks, Chris. Next question, please.

Operator (participant)

Our next question comes from Susan Anderson with Canaccord. Please go ahead.

Alec Legg (Analyst)

Hi, good morning. Alec Legg on for Susan. First, welcome, Patrick, and congratulations on the new role.

Patrick Lockwood-Taylor (President, CEO, and Board Member)

Thank you very much.

Alec Legg (Analyst)

You're welcome. Just a quick question on the U.S. business. What are you seeing with the inventory levels at retail? Do you think you're back to more stabilized levels there, or are there still categories that have some pockets of restocking opportunities left?

Eduardo Bezerra (EVP and CFO)

Yeah. Thank you for the question, Eduardo, here. As we look into the inventory levels at the retail now, we see them pretty normalized, right? After last year that we had a very strong cough and cold season that went up to Q2, and we saw a depletion of the inventory this year, you know, we saw in the first quarter, first quarter, a strong pickup, but a very normalized season in the second quarter. We believe that this is giving time to have more normalization of inventories on, at the retail channel. Of course, we expect that for the 2023, 2024 cough and cold season, in particular, to be a normal season. We do expect that there should be a pickup on, you know, sales in the third and fourth quarter that were built in our guidance that we shared this morning.

Alec Legg (Analyst)

Perfect. Then just to follow up on the units versus pricing dynamic in the US and internationally, it looks like pricing added 4.8 points of sales growth in the quarter. Are you, are you expecting more pricing to flow through the rest of the year? How are you thinking about potential price taking the rest of the year and long term?

Eduardo Bezerra (EVP and CFO)

Yeah. The first half, mainly on the OTC, we had the pick up of the remaining pricing actions that we had last year, and we continued to look into opportunities in the second half in the U.S. Very important, as we mentioned in the first quarter, because of the disruptions on the infant formula business, we had to take stronger price actions, and those were communicated early July. So we remain on track on our price projections for the second half in the nutrition business as well as in the international business. We continue to price to the value proposition of our brands, and we're more than offsetting inflation that we continue to see impacting our, our costs.

Alec Legg (Analyst)

Thank you. Then last question on the European consumer. Looks like they've held up pretty strong, and the consumption habits there have been, you know, trending pretty high. I guess, what else are you seeing over there? Is there any risk of trade down there? It seems like it's the opposite, whereas in the U.S., we're not really seeing as much trade down to the private label, but it's, it's the opposite and benefiting Perrigo over in Europe.

Eduardo Bezerra (EVP and CFO)

Yeah. We continue to see a very strong pick up there. With our HRA brands as well, we're seeing a very good performance. Now it's starting in the second quarter, it becomes organic growth. We saw also in several different categories, cough and cold, parasites, insect repellent, and skincare, a very strong uptake in the second quarter, and we continue to see that, and we expect that to continue for the second half of the year.

Bradley Joseph (VP of Investor Relations)

Yeah, Alec Legg, this is Brad. I'll just jump in on the US comment that you made. We are starting to see a little bit of that trade down impact. You saw it in the materials, the earnings materials from today, that the volumes within the US, store brand in particular, are starting to gain some share. Of course, there's a little differential on the dollars, as some of the national brands may have taken more sizable dollar price increases. The volume is starting to pick up in store brands, which I think is just an important factor to think about going forward.

Eduardo Bezerra (EVP and CFO)

Yep.

Alec Legg (Analyst)

Very helpful. Thanks. I'll turn it back.

Bradley Joseph (VP of Investor Relations)

Thank you. Next question, please.

Operator (participant)

Again. Thank you. Again, as a reminder, if you have a question, "please press star, then one" to be joined into the queue. Our next question comes from Daniel Biolsi with Hedgeye. Please go ahead.

Daniel Biolsi (Analyst)

Hi, thanks for the question. I was wondering if you could go into a little more detail what the early learnings from the Supply Chain Reinvention program are? It sounds like you've seen some gross margin benefits. Any reactions from customers about, you know, products that you're not going to make?

Eduardo Bezerra (EVP and CFO)

Yeah. Two key things that we're seeing is, as you saw in the second quarter, we had about 40 basis points improvement in gross margin tied to the SKU prioritization. That's really part of our winning portfolio pillar on the Supply Chain Reinvention. And again, remember, our first 1,000 SKUs that we mentioned we're going to focus, those were SKUs that we did not have a major impact on overall on how we handle with the retailers. We're gonna be moving soon to the next phase on how do we continue to simplify our portfolio and continue to drive more value in our OTC category, mainly. The other thing is important to highlight is where on our Perrigo Work System.

Patrick mentioned about the number of lines that we're moving this new Redzone equipment, and so we're seeing a very important improvement in the efficiency on our lines. This is helping not only to expand capacity for certain categories that are so needed, you know, like in cough and cold, but also this will help us manage better our inventories and our working capital towards the end of this year and years to come.

Daniel Biolsi (Analyst)

Okay, thank you. Then can I also ask what you're seeing in the M&A in the consumer healthcare space? It seems like it's picking up, and maybe you can remind us where deleveraging falls in as a focus for the balance sheet.

Eduardo Bezerra (EVP and CFO)

Yeah. Yeah, we're seeing several activities going on in the marketplace, with different companies, you know, trying to streamline their portfolios. As in terms of our guidance and our commitment, right, we expect to be around 3x the EBITDA in terms of net leverage by 2025. Our three main commitments in terms of how we're gonna use our cash that's gonna be generated over the next 3years, it's, you know, making sure we reinvest in our business to make sure our Supply Chain Reinvention is fully successful. Also, look into how we optimize our nutrition production capabilities, as well as returning value to our shareholders and reducing our debt. We have a tranche of $700 million debt that matures at the end of next year.

Bradley Joseph (VP of Investor Relations)

Just. This is Brad again. Just to reinforce Eduardo's comment here, we've basically taken out, you know, through EBITDA growth over the last six months, almost a 0.5 turn.

Eduardo Bezerra (EVP and CFO)

Yeah

Bradley Joseph (VP of Investor Relations)

has come out. The leverage is just sitting a little bit north of five here from 5.5, just about six months ago.

Operator (participant)

This concludes our question and answer session. I would like to turn the conference back over to Bradley Joseph for any closing remarks.

Bradley Joseph (VP of Investor Relations)

Well, great. Thanks, everybody, for joining the call. We look forward to speaking with you soon. Thanks for your interest in Perrigo.

Operator (participant)

The conference has now concluded. Thank you for attending today's presentation. You may all now disconnect.