Welcome to Perrigo's 2025 Investor Day.

Good morning, good afternoon and good evening. On behalf of Perrigo's executive leadership team, I'd like to welcome you to Perrigo's 2025 Virtual Investor Day. My name is Brad Joseph, Head of Investor Relations and Communications here at Perrigo. Perrigo's journey over the last few years has been one of transformation into a Consumer Self-Care Company. And today, you're going to hear about how we plan to win in Self-Care by focusing on operational execution, our unique assets and our Three S plan: Stabilize, Streamline and Strengthen, to deliver value to you, our shareholders. But before we do that, I'd like to remind everyone that during this presentation, participants will make certain forward-looking statements. Please refer to the slides for information regarding these statements which are subject to important risks and uncertainties. We will reference adjusted financial measures that are non-GAAP in nature and we'll provide a reconciliation of GAAP to non-GAAP financial measures on the Perrigo Investor Relations website. Please see the audited financial statements included in our SEC filings as well. A few quick items before we start. First, unless stated, all financial results discussed and presented are on a continuing operations basis. Second, organic growth excludes acquisitions, divestitures, exited product lines and currency in both comparable periods. Third, some of the potential changes discussed today may be subject to certain information and consultation processes required by law. And fourth, our 2025 financial guidance and 3-year projections are based on constant currency to fiscal year 2024. Now on to the agenda. Opening today's discussion is Patrick Lockwood-Taylor, President and CEO of Perrigo, who will walk you through a focused and clear plan to deliver stable and dependable results. Following Patrick, Perrigo's CFO, Eduardo Bezerra, will discuss how this plan translates into shareholder value. After which, other members of the management team will walk you through the Three S plan, starting with Stabilize, which Triona Schmelter, President of CSCA, will discuss. Then Streamline will be detailed by Roberto Khoury, President of CSCI; and Ron Janish, Head of Global Supply Chain. Abbie Lennox, Chief Scientific Officer; and David Ball, Chief Marketing and Digital Officer, will walk through the Strengthen section. Patrick will then end the formal presentation with a few closing remarks. After the presentation, we will take a quick 10-minute break, followed by a Q&A session with the Perrigo team. You have the ability throughout the presentation to submit a question under the Ask a Question section on the webcast. Of course, we will do our best to address all questions that have been asked. Before I turn it over to Patrick, just two more quick items. First, a survey will be available throughout the event and for those listening to the replay. We strongly encourage you to fill it out and provide your candid feedback. Second, all of the presentations that you hear today, including the full replay of today's event, will be made available on the Perrigo Investor Relations website within the next 24 hours. And with that, it is my pleasure to turn it over to Patrick Lockwood-Taylor, President and CEO of Perrigo.

Thank you, Brad, and good morning, good afternoon, everyone, and thank you for attending Perrigo's 2025 Virtual Investor Day. Today, we're going to lay out a clear plan to get back to stability and reliability, and lay out a bold, transformative path forward. After 21 months on the job, I'm going to share where we've had challenges, how we've pivoted, what's different and special about this company, our core strengths and the specific sequence steps we are taking to drive this business forward. Stepping back, Self-Care is a $400 billion fast-growing global market. Perrigo holds a unique and broad position in Self-Care. We compete in the most molecules and the most price points with the potential to meet the needs of more consumers. We play across all value tiers in the U.S. and the EU with both national brands and with store brands across 9 categories. We're a branded top 10 player in Europe with number one or number two brands across key subcategories such as blister, insect repellent, emergency contraception, cough/cold and nicotine replacement therapy. We are the leading player in U.S. store brands with a 50% share. We also have the number one brand in scar healing and daily contraception. We're number three in the infant formula business in North America across both brands and store brand tiers with greater than a 20% share. We're a large player in a large growing category with a unique and highly defendable position. Our key challenges when I first arrived were one in the U.S. store brand business, which was losing volume share. We had lost our way on value, service and innovation, ceding share to competitors. Secondly, our international brands were fragmented and undersupported due to insufficient priority investment decisions. And thirdly, infant formula industry dynamics and regulatory changes created a need for a significant intervention. Importantly, my team and I began to address these right away. We've made meaningful progress over the past 21 months to adapt quickly to address these challenges and get back to a solid foundation for the future. We're already seeing positive results. In the U.S., our store brand business is back to 90% plus service levels and we have won net new business in our contracts after many years as we focus on just getting back to the fundamentals. We've integrated HRA and extracted $55 million in operational synergies. We've prioritized the brand portfolio. We're focused on scalable growth platforms and divesting businesses and brands that don't play a role in our future model. We are driving growth and expanding adjusted operating income margin. We've achieved the highest standards of quality now in our infant formula business and got to the highest FDA inspection standard of no action indicated in all three of our sites. Furthermore, volume recovery is underway and our store brand share is on track. Going through these pivots, we've identified what makes Perrigo unique. And it's the complementary nature of our businesses where each part of the business plays a specific and reinforcing role. Store brand and infant formula generate the cash we need to enable investment in key growth brands. Branding and innovation capabilities also enable brand and store brand demand generation, leading to much stronger customer partnerships. Consumer-led innovation can be scaled across brands, store brands and geographies. And our supply chain enables us to compete in more molecules and more price tiers. We've anchored our strategy and initiatives behind three clear imperatives to drive cash and total shareholder return growth and to unlock the company. We need to stabilize our business, returning to growth in U.S. store brand and delivering quality-assured reliable manufacturing and infant formula, enabling volume and share growth. We need to streamline our complexity by simplifying our portfolio, our structure, our operating model, our systems and our supply chain for improved execution and forward ambition. We need to strengthen what is working by prioritizing high-growth brands supported with winning innovation and the right investment to drive significant margin-accretive revenue growth. This will deliver between $100 million to $200 million incrementally by 2027. This is not new to us. We grow world-class brands today, such as Compeed, our largest brand, where net sales grew 30% in 2024. Mederma which is actually our fastest-growing brand, where net sales grew 34% in 2024. Opill daily contraception, this is ramping up after launching in mid-2024 and we are already seeing astonishing repeat rates of greater than 50%. And Bronchostop is another example, this provides cough relief where consumption actually grew by over 8% in 2024. This Three S plan gets us to a solid foundation where we can focus on and exploit our core scalable strengths for growth. A fundamental differentiating asset is that we have 100-plus molecules competing at 100% price point coverage, giving us the opportunity to serve more consumers given what they can afford. Our core relative strengths are the breadth and scale of our innovation, the scale of our customer relationships, the scale of our global regulatory interface and the scale of our manufacturing supply base where we produce an astonishing 64 billion unit doses a year. Now we can leverage these to accelerate for growth. Our plan gives us the ability to achieve strong total shareholder return driven by strict capital allocation across core elements of our portfolio and a sequence series of activities to drive scalable growth and predictable results. With an achievable outlook from 2025 through 2027 of 2.5% to 4.5% organic revenue CAGR, margin expansion which enables high single-digit adjusted operating income growth, high-single to low double-digit adjusted earnings per share CAGR. We're also committed to a growing dividend policy to increasing operating cash flow and improving free cash flow to sales by about 40% and net leverage to below 3x by the end of 2027 with the potential to accelerate that. We have significantly strengthened our leadership with deep industry experience and expertise. I'll introduce the team in the context of what they're going to talk to you about today. Eduardo will talk about how our Three S plan comes together to grow predictable revenue, accelerate profit, EPS and TSR. Triona will show how we have stabilized and grown our Americas store brand business and infant formula. Roberto will show how we are streamlining our portfolio, our organization and the international business. Ron will show how we are streamlining complexity and driving efficiencies in operations in addition to manufacturing network upgrades. Abbie will describe how we're strengthening innovation with platforms that we can scale to drive growth and top-tier return on investment. David will demonstrate our ability to grow brands in more categories and markets by scaling innovation with world-class brand building. When we best execute our model, we've achieved household penetration of over 60% in the U.S. and 80% in the U.K. but our global household penetration is only 5%. This represents an unparalleled growth opportunity and a way we can deliver growth in the long term. We're building a future that's bigger, stronger, more predictable and more profitable than ever. With that, I will hand it over to Eduardo, who will talk a very compelling financial case. But then we know you want to hear the proof points, which the team will then deliver before I come back with my closing remarks.

Thanks, Patrick. Good morning and good afternoon, everyone. I'm Eduardo Bezerra, and I'm very excited to provide a 3-year financial view on growth prospects, share our 2024 results and provide financial guidance for our 2025 fiscal year. As a reminder, all numbers and figures presented in our 3-year projection as well as 2025 financial guidance at constant currency to fiscal year 2024. As Patrick has laid out our plans to Stabilize, Streamline and Strengthen Perrigo, I'll provide a financial perspective on how all these components translate into attractive and sustainable total shareholder return over the next 3 years. First, it's important to remember what makes Perrigo a unique and balanced company. As we operate in both brands and store brands, we're better positioned to grow our sales in line with market and delivered solid cash returns through our balanced portfolio of offerings. This is unique as we leverage significant synergies across our platforms through the breadth of our molecules, low-cost production and consumer-led innovation. Also there is a complementary approach where it drives significant cash flow from our store brand business, enabling us to reinvest in our highest return brand opportunities. Our focus on stabilize, streamline and strengthen can provide significant benefits to our investors as follows. First, our efforts on stabilizing CSCA OTC store brand market share and recovering Nutrition store brand share should translate into a higher financial reliability and consistency in delivering on our expectations, reducing volatility and risk associated with our equity. Second, as we streamline our portfolio and organization to drive focused and scalable growth prioritize targeted brands and innovation and optimize our manufacturing network to enable reach and scale, we should drive further operating margin expansion and cash flow. And third, as we strengthen and prioritize R&D and A&P investments towards our highest potential growth brands or what we are calling our High-Grow brands, we expect to improve our long-term growth rates. David Ball will provide further information on the tremendous opportunities we see for our most expandable brands. These three components combined are expected to translate into a higher total shareholder return over time. Regarding Stabilize, here are the key financial drivers. In CSCA OTC store brand, we expect to achieve a balance between category growth and generating cash for reinvestment in other growth opportunities. This translates into an expected top line compounded annual growth rate between 2025 and 2027 of flat to 2% and adjusted gross profit margin is anticipated to expand up to 20 basis points, benefiting total Perrigo. In infant nutrition, as infant formula store brand share recovery continues, we project net sales compounded annual growth rate of 3% to 5% through 2027, more heavily weighted to 2025 and 2026. Furthermore, we expect total Perrigo adjusted gross margin expansion of approximately 120 to 140 basis points over the period. And as we upgrade our infant formula manufacturing network, we expect our Nutrition business to generate consistent free cash flow of $100 million plus after 2028. Triona will provide further color on the proof points that support these estimates. For Streamline, we expect solid growth to continue in our Consumer Self-Care International business with a target net sales compounded annual growth rate of 3.5% to 4.5% through 2027, including approximately 1% impact from sequence brand exits. Also adjusted gross margin is expected to generate 80 to 100 basis points benefit in total Perrigo by the end of the period. Roberto will provide further details into our plans later. As previously communicated, Project Energize is delivering a more efficient operating model, enhanced organization agility and enabling cost and operational savings to be reinvested in advertising promotion and R&D to fuel growth while expanding operating margin. Through 2026, we expect to realize an incremental $30 million to $40 million of savings which translates into 60 to 80 points of adjusted operating margin expansion across global Perrigo. Roberto will also cover this further in his section. Our supply chain reinvention program has been a major success. Over the last 3 years, it has delivered approximately $130 million in benefits, reducing complexity and delivering incremental operational gains with much lower cash costs versus originally expected. Later, Ron will provide further details on our supply chain reinvention program including an incremental $30 million to $40 million in benefits expected through 2027, equating to 60 to 80 basis points of adjusted operating margin contribution to total Perrigo excluding infant formula. As it relates to strengthen, the key financial drivers are as we simplify our portfolio to drive further scale and new innovations, we're now focusing our efforts to High-Grow brands. With investments in A&P and R&D redeployed from our accretive initiatives, named Project Energize and supply chain reinvention, we expect High-Grow brands to deliver incremental net sales of $100 million to $200 million by the end of 2027, contributing 80 to 120 basis points to total Perrigo adjusted gross margin. Now let's shift our focus to delivering against our targets. First, let me walk you through a quick snapshot on our Q4 and year-end 2024 closing results that were shared yesterday. We've delivered $2.57 adjusted earnings per share at the midpoint of our adjusted earnings per share guidance range despite significant top line pressure in CSCA. We delivered adjusted gross margin of around 39%, flat with 2023, but expanded adjusted operating margin by 160 basis points to 13.9% from 12.3% a year ago, mainly driven by our supply chain reinvention and Project Energize programs, partially offset by our infant formula remediation actions and other investments in developing critical capabilities such as brand building. Operating cash flow conversion in 2024 was 102% despite significant one-time costs related to our accretive initiatives, infant formula self-remediation and other one-time events. And after capital investments to maintain and reinforce our infrastructure, we've delivered 5.6% free cash flow over net sales. This is a new key performance indicator we have incorporated into all aspects of our organization to drive the right behaviors and solidify the importance of generating cash over time. And last, we reduced our net leverage in 2024 by 0.5 a turn to 4x adjusted EBITDA as we fully repaid $400 million of notes that came due in the fourth quarter. Now let's shift the focus to 2025. We expect organic net sales growth of 2.5% to 4.5% driven by: one, efforts to stabilize the business with higher volumes anticipated in our CSCA over-the-counter store brand including new business wins; recovery of our infant formula store brands through market share gains partially offset by a slower than originally expected recovery in the infant formula contract business that we shared in the previous quarter and growth in other parts of CSCA; and two, strong continued growth in our CSCI business in addition to approximately 2 percentage points benefit from resolving product supply issues on key CSCI brands that impacted sales in 2024. All in, net sales are projected to grow between 1% and 3% including the impacts from 2024 divestments and exited products. Adjusted gross margin is expected to expand to approximately 40% and driven by our supply chain reinvention program and infant formula recovery. Additionally, our accretive initiatives led by Project Energize are anticipated to translate into an adjusted operating margin of approximately 15% or 100 basis points improvement versus 2024. We have proven that with organizational focus, we can expand margins as evidenced by margin improvement of approximately 300 basis points from 2022 to 2024. We anticipate our stabilize initiatives in CSCA OTC store brand and infant nutrition, our streamline initiatives with strong CSCI based growth and benefits from our accretive initiatives will drive attractive adjusted earnings per share growth in 2025, while at the same time, providing investments required to jump-start benefits from our High-Grow high-margin brands, leading to improved and more predictable results. We also see benefits in 2025 from lower interest expense driven by 2024 debt extinguishment of $400 million and a headwind from the impact of previously divested businesses and a higher expected tax rate leading to our constant currency adjusted earnings per share target of $2.90 to $3.10 per share, equating to a strong double-digit growth. As infant formula recovers store brand share and CSCA store brand new business wins are projected as the year progresses, we expect phasing of earnings in 2025 aligned with our historical trends, approximately 40% in the first half of the year and the remaining 60% in the second half of the year. Also in 2025, we expect operating cash flow as a percentage to adjusted net income of 100%. Capital expenditures for the year are expected to be approximately $150 million with nearly half year market to fortify and upgrade our infant nutrition network. Additionally, we're confirming our commitment to return value to our shareholders through dividends with a 5% year-over-year increase this year, which was recently approved by our Board of Directors. Summing up our consolidated target for 2025, we expect to deliver solid top line and strong bottom line growth along with adjusted gross and operating margin expansion. Also, we anticipate achieving 100% operating cash flow conversion, free cash flow as a percentage to net sales of approximately 6% while reducing net leverage another 0.5 of a turn to approximately 3.5x adjusted EBITDA. Now I would like to share our new targets for 2025 to 2027 and how we expect to drive strong performance and relative shareholder returns. We expect organic net sales CAGR of 2.5% to 4.5%, adjusted gross margin to expand between 200 and 400 basis points while adjusted operating margin is expected to expand between 150 and 250 basis points due to reinvestments to support our high-growth brands. As we continue to delever our balance sheet, we expect net leverage below 3x adjusted EBITDA by 2027, which compounded with our adjusted operating margin growth, translating to high single to low double-digit adjusted earnings per share CAGR over the next 3 years. We're targeting operating cash flow conversion to 100% of adjusted net income in the early years and to expand to greater than 100% at the end of the 3-year horizon, which translates into a 200 basis points increase in our free cash flow over net sales metric. Let me provide further details on each of these components. We target organic net sales CAGR of 2.5% to 4.5% driven by, first, flat to 2% growth in CSCA, stemming from higher OTC volumes and infant formula recovery from share gains, new products and higher distribution. Second, we anticipate growth from our base CSCI business of 3.5% to 4.5% as we further prioritize investments behind important brands, benefit from resolved supply issues on key products, partially offset by further brand streamline. And third, anticipated a strong performance in our High-Grow brands beginning 2026, funded by reinvestments. All these drivers are expected to more than offset previously disclosed divested businesses and products in 2024. Benefits from our supply chain reinvention program, which Ron will further detail, and savings from Project Energize are expected to be partially offset by continued streamlining of CSCI brands portfolio. Both will be further highlighted by Roberto. These actions are expected to generate annualized benefits of $60 million to $80 million, which we plan to use to support investment in our High-Grow brands. Adjusted gross margin is targeted to expand between 200 and 400 basis points as we see improvements from stabilizing CSCA, both store brand OTC and infant formula, favorable mix from High-Grow brands as well as our accretive initiatives. These adjusted gross margin benefits in addition to approximately $30 million in savings from Project Energize are anticipated to more than offset reinvestments to support our high-growth brands with the goal to delivering 150 to 250 basis points expansion of adjusted operating margin, which combined with our deleveraging efforts, leads us to target high single to low double-digit adjusted earnings per share compounded annual growth rate by the end of 2027. Regarding operating cash flow, our goal is to achieve 100% or more conversion to adjusted net income. Main drivers are: first, continued working capital reduction through improved inventory management; second, lapping one-time restructuring costs associated with accretive initiatives; as well as third, the absence of infant formula self-remediation costs from 2024. We have also outlined clear capital allocation priorities. First, we are maintaining our long-standing commitment to a growing dividend policy. Second, reinvesting in our business to drive sustainable long-term growth including capital investments to maintain our assets, reliability and upgrade our infant formula network. Third, reducing our net leverage to below 3x adjusted EBITDA to bolster adjusted earnings per share and derisk our balance sheet. And fourth, using any excess cash to return additional value to shareholders through share repurchase or for highly selective M&A. As I said earlier, we remain committed to our growing dividend policy as confirmed in our recently announced dividend increase. This represents the 22nd consecutive year of dividend increase for Perrigo. We also plan to reinvest our cash to maintain reliability of our assets, continue our supply chain reinvention program and infant formula capacity increase and upgrade our infant formula network. This last one represents a significant investment of approximately $240 million, and the Nutrition business is expected to generate $100 million or more of annual free cash flow beginning in 2028. As we expect cash generation from 2025 to 2027 to offset a piece of the investment, we anticipate recouping our investment within 2 years post project completion. Ron will get into further details during his section. We have a clear plan to reduce our net leverage to below 3x adjusted EBITDA by the end of 2027, as we plan to repay up to $500 million in debt amortizations and fully repay our Term Loan A, which is due in April 2027. I know it's a lot to process regarding our 2025 financial guidance as well as our 3-year plan. So let me close with our key takeaways. Number one, stabilizing CSCA OTC store brand business and Nutrition are critical steps in our journey to generate incremental free cash flow. Number two, streamlining our portfolio and organization will enable us to be more agile and profitable. Number three, reinvestments in High-Grow brands will enable long-term sustainable top line growth in 2027 and beyond. And fourth, we are committed to continue with our dividend policy and expect to delever our balance sheet below 3x adjusted EBITDA by 2027. Perrigo represents a significant opportunity to deliver mid-teens total shareholder return over the next 3 years given the current valuation and consistent dividend growth. And with that, I will now turn it over to Triona to provide further insights on our stabilized journey. Triona?

Thank you, Eduardo. Hi, everyone. My name is Triona Schmelter, and I lead the Consumer Self-Care Americas business here at Perrigo. I'm excited to share with you today our progress and ongoing plans to stabilize our CSCA businesses, specifically our over-the-counter or OTC store brand business and our infant formula business. As Patrick outlined, the U.S. OTC store brand business was losing volume share and we had lost our way on value, service and innovation. In the infant formula industry, dynamics and regulatory changes created a need for a significant intervention. We needed to get back to winning. With over 100 years of experience, Perrigo had a proven formula for success and our customers have reinforced the strength of this formula in my many conversations with them over the last year. Here it is. First, be a trusted partner. This includes consistently delivering the quality our customers and their consumers can trust along with excellent customer service and deep category and technical expertise. Second, be an efficient and reliable supplier. We have to offer our customers a great value, high utilization of our world-class manufacturing facilities that reliably produce and supply product for our customers is a critical component of how we offer that value. But those are table stakes in this store brand business. What sets Perrigo apart are these next two: be a volume and profit driver and deliver category growth. We use consumer and shopper insights to help our customers drive volume and profit. Customers also rely on Perrigo to help drive category growth with new insights, new claims and new products. It is these capabilities that make us the store brand partner of choice in the U.S. Let's look now at store brand OTC specifically. Stepping back, Perrigo is a sizable and critical provider of core self-care products. Our store brand OTC products are present in over 60% of the homes in America as we serve more consumers than any other self-care company in the U.S. In the OTC categories in which we compete, Perrigo commands approximately a 50% share of the store brand business. In line with our vision, Perrigo, along with our retail partners, save U.S. consumers more than $4 billion annually with their store brands. We have a broad portfolio across 9 OTC categories and deep expertise that provide Perrigo, as Patrick outlined, with a unique opportunity to grow. This year, we have focused on our proven formula and it's working. The strategic pivot along with progress in our supply chain reinvention program that Ron Janish will speak to later, Perrigo has significantly improved forecasting and our rededication to service has resulted in meaningful improvements. Our forecast accuracy is up 19 points from 45% to 64%. Our customer service is at record levels, finishing the year at 93%. This, coupled with our new commercial strategy, has led to us winning more customer bids and gaining net revenue. We are further activating our new commercial strategy in market. When we use deep consumer insights to create demand generation programs for our retailers, we see great results. Here are a couple of examples. In allergy, this category is incredibly confusing for consumers. With so many different products, it is difficult to find the right product to relieve specific symptoms. At one of our retail partners, we provided an in-store guide, allowing consumers to easily find the best product to meet their need. This delivered a 32% uplift in store brand allergy consumption. At another retailer, we increased display frequency to cover the extended allergy season, generating retailer store brand growth of up 14%. Nicotine replacement therapy is a best-in-class example of the full potential of what Perrigo can do. Perrigo consistently generates solid growth for customers. We have a consumer preferred product. We utilize deep consumer insights to bring innovation and effective marketing, all of which drive share gains for store brand and for Perrigo products. Nicotine replacement provides a great road map for us to apply in other OTC categories. Let's now move to infant formula where we have spent the last year focused on producing quality-assured reliable infant formula in accordance with the new U.S. Food and Drug Administration guidelines. We are the number three player by volume with greater than a 20% market share. We produce approximately 820 million feedings a year, and once again, in keeping with our purpose, save the average family $800 a year when they buy store brands. Infant formula is a business requiring significant investment for market entry and has historically had strong cash flow. Perrigo's deep capabilities cut across supply chain, research and development and regulatory. However, as Eduardo discussed, we will need to invest further into these assets to fortify our strong market position. Ron Janish will cover this work in more detail shortly. There have been a lot of disruptions in the infant formula industry over the past few years. So for those of you who may be new to the story, let me provide a quick summary. In 2022 and 2023, there were a series of industry events that caused infant formula supply shortages in the U.S. The Perrigo team worked around the clock to provide as much formula as possible to the market. And in doing so, we had to prioritize our highest demand SKUs. Following the supply shortages, the FDA introduced new guidelines for infant formula manufacturing to comply with those actions, we took uncompromising actions including making significant investments into our facilities, adding personnel and revamping testing and quality procedures. These actions, while having a meaningful financial impact, will result in a business that delivers on our proven formula, a trusted partner with quality-assured products and strong customer service, a reliable supplier and a volume and profit driver. We have made significant progress already. Our strong customer service is back. We achieved a 98% service level in December of last year and are sustaining strong service in 2025. We are working to relaunch the store brand SKUs that were paused during 2022 and 2023 with the majority of them returning to the market this summer. And finally, we have started the work to bring consumers back to store brand. Our early results at one of our largest retailers shows a 27% increase in velocities. To go deeper on that retailer, here you can see how our comprehensive approach. We are connecting with consumers when they search online, when they shop in-store or on the retailer's website and when they scroll on social media, reminding them that they can have the same high-quality product as national brands but at a much better price. These improvements are already resulting in meaningful share recovery across the market. In the back half of 2024, store brand formula regained 330 basis points of share, ending the year at a 17.8% volume share of powder. Through 2026, we expect this recovery to continue over the next 2 years as we sustain service levels, reintroduce SKUs and continue to drive velocities. In addition, we will be back to driving growth with innovation slated in 2026. While we have seen meaningful recovery in our store brand infant formula business, recovery in our contract formula business will be slower than previously expected for 2 reasons. First, in 2022, the government took action to allow foreign manufacturers to market and sell in the U.S. market. This action was aimed to address the short-term supply shortages but created a shift in the competitive landscape for some of our branded contract customers. Second, some of our contract customers have in-sourced portions of their production. While recovery in our contract business is expected to be slower, this allows us to focus more heavily on store brand, creating efficiencies and accelerating the reintroduction of those paused SKUs. We have a clear path to stabilization in store brands, both in OTC and infant formula. These businesses have delivered stable and predictable results in the past and our teams are restoring them to their winning ways. Before turning it over to Roberto, who will cover streamlining activities, I'd like to leave you with a few key takeaways on our stabilization plans. Perrigo is a leader in self-care. We are living our purpose by helping save U.S. consumers over $4 billion a year with the value we bring in-store brands. Efforts to stabilize OTC store brand and infant formula are well underway and most importantly, are working. As Eduardo shared, the future of store brand OTC will be a balance of category level growth and generating cash for investment. This translates into an expected top line CAGR 2025 through 2027 of flat to 2%, and adjusted gross margin in store brand OTC is anticipated to expand, benefiting total Perrigo. Infant formula's long-term role in the portfolio will also be to generate cash investments into higher growth opportunities. As store brand shares continue to recover, we project Nutrition net sales CAGR of 3% to 5% through 2027, more heavily weighted to 2025 and 2026. Furthermore, we expect Perrigo adjusted gross margin expansion of approximately 120 to 140 basis points through 2027. Thank you for your time today and for your interest in our company. With that, I'll turn it over to my colleague, Roberto Khoury.

Thank you, Triona. Good morning and good afternoon, everyone. I'm Roberto Khoury, and I'm excited to outline the steps we are taking across the enterprise to streamline our portfolio and drive scalable growth and sustainable total shareholder return, as highlighted by Eduardo. Over the last year, we made significant progress in three key areas across Perrigo. First, we streamlined our enterprise portfolio and prioritize our assets based on their strategic role, focusing on ready-to-scale brands in fewer high-growth categories while positioning other parts of the business to focus on cash, allowing us to reinvest to drive further growth while expanding margin. Second, we're in the late stages of streamlining the organization to one operating model, simplifying our structure for efficiency, agility and scale, unlocking reinvestment into growth. Third, we have made substantial progress optimizing our manufacturing network and addressing underutilized assets. However, there is more improvement to be done going forward, which Ron will cover shortly. I will now walk you through more details on our portfolio strategy and operating model. We recently undertook an extensive enterprise exercise on categories in markets in which we compete. This provides us with a clear perspective on where to narrow our focus and align resources. As a result, we've implemented a balanced enterprise portfolio strategy aimed at driving growth and margin expansion, leveraging the unique complementarity of our business. Specifically, we segmented our global portfolio into high-growth categories based on their potential and the readiness to win of our assets while focusing another set of categories to yield high cash return but lower growth prospects to allow for reinvestment into high-growth brands while expanding margin. Our high-growth categories include skin healing powered by brands such as Mederma, Compeed, the number one blister care brand outside the U.S.; women's health with brands like Opill and ellaOne, the number one emergency contraceptive product outside the U.S.; and select OTC brands with brands like Jungle Formula, the number one European brand in pharmacy focused on insect repellent. We are prioritizing these high-growth categories, which are anticipated to receive more than 60% of advertising and promotion investment or an increase of plus 27% versus prior year. As for our cash-generating categories, primarily infant formula and OTC store brand portfolio, you heard from Triona the strong recovery plans behind these businesses. Finally, we're assessing capital allocation choices for derma cosmetic and oral care businesses to maximize shareholder return. In addition to prioritizing, we have been streamlining our branded portfolio in CSCI since 2022, where we have strategically sequenced the exit of more than 65 smaller local brands. Importantly, these activities have been achieved while continuing to drive both top line and adjusted operating growth of 5.6% and 26.7%, respectively. Looking ahead, we will continue to refine our portfolio and anticipate streamlining an additional 35 to 40 brands through 2027, allowing us to self-fund higher-margin growth initiatives with pricing actions to normalize going forward, we expect CSCI net sales to outpace brand exits, translating into an annual compound growth between 3.5% to 4.5% through 2027, including the impact of divestitures in 2024. In terms of our operating model, as you heard from Eduardo, we made significant progress in 2024 in streamlining towards one operating model through Project Energize, which has enhanced efficiency and decision-making while delivering $139 million in gross savings, allowing us to accelerate strategic investments and help us expand the total Perrigo adjusted operating margin by 160 basis points. These savings came from condensing structure and management layers globally, consolidating our European clusters from seven to three, and centralizing global capabilities like marketing and creating shared business services center. Going forward, we expect to achieve an additional $30 million to $40 million in annualized cost savings from Project Energize through 2026. With fixed costs as a percentage of net sales expected to remain relatively flat through 2027, we will be in a position to further invest into our growth drivers. Recapping the steps we are taking to enable scalable growth and focus our resources on the highest return opportunities. We are streamlining our portfolio and prioritizing investment into high-growth categories and leveraging strong cash flow generation from other parts of the portfolio to fuel investment. We are strategically sequencing brand exits in our CSCI business while continuing to drive net sales growth, targeting a CAGR of 3.5% to 4.5% through 2027. We are implementing a more efficient operating model enabled by Project Energize and we expect to realize an incremental $30 million to $40 million of savings, which translates into approximately 70 basis points of operating margin expansion across global Perrigo. Thank you for your time. I will now turn it over to Ron.

Thanks, Roberto. Good morning, good afternoon, everyone. Thank you again for joining us today. My name is Ron Janish, and I am excited to provide an update on the significant progress we've made on key initiatives to streamline our supply chain as well as our vision for a strategic investment we are looking to make in our infant formula operations network. As you would have already heard from Eduardo, this investment provides a tremendous opportunity to transform our free cash flow performance and as a result, comes with a very attractive payback period. It also helps ensure the long-term sustainability of a key component of our North American business. As Patrick and others have already discussed, we've anchored our strategy around Three S: Stabilize, Streamline and Strengthen. Triona just talked about some of the tremendous progress we've made on stabilizing our supply chain, in particular, our infant formula operations. As we think about streamline in the context of product supply, our goal is to ensure a supply network capable of delivering our vision, both in terms of global reach as well as scale and cost. Most supply chains are at their best when delivering world-class quality, service and cost. At our last Investor Day in 2023, we introduced our global supply chain reinvention program aimed at delivering margin accretion by focusing on improvements across four key areas: winning portfolio, planning, sourcing and manufacturing optimization. Since its initiation, we have made tremendous strides in reducing complexity and driving efficiencies across our network. As you heard from both Roberto and Triona, we have optimized our global portfolio, eliminating over 1,300 SKUs, reducing complexity in our supply chain and enabling us to focus on those SKUs that drive the most value for the business. As Triona previously showed, we've improved forecast accuracy in our North American business by 20 percentage points, enabling us to significantly improve service to our retailers. We are executing a similar body of work in CSCI and are anticipating similar improvements there. We have consolidated a number of external suppliers and have multiple new supplier qualification projects underway, which will contribute to both cost improvement and risk mitigation of the supply chain. And finally, we've improved productivity and efficiency in our plants and have seen a more than 20% increase in capacity on our existing infrastructure through deployment of the Perrigo work system with its focus on continuous improvement and resulting impact on overall equipment effectiveness or OEE. From a financial perspective, our supply chain reinvention program remains on track to deliver significant benefits in ROI. We expect to achieve benefits at the midpoint of our original range provided back in 2023 with cash costs below the original communicated range. By the end of 2025, we anticipate having delivered net ongoing annual benefits of approximately $170 million. These results have enabled us to offer more competitive pricing and improve our cost of goods sold, significantly enhancing our margins. Additionally, although the main body of our supply chain reinvention work comes to an end in 2025, what we've learned through implementation of our Perrigo work system and its focus on continuous improvement is going to enable us to deliver additional productivity and efficiency benefits in the coming years. As you heard from Eduardo earlier, over the next 3 years, we expect this body of work coupled with supply chain reinvention to generate approximately 60 to 80 basis points of adjusted operating margin improvement, which will be reinvested to drive our high-growth categories. And as any good supply chain organization should, we are already exploring the next wave of opportunities to further enhance quality while lowering our fixed costs. Now let's switch gears and talk about the strategic investment in our infant formula network that I mentioned. We are looking to further fortify and upgrade our infant formula network. This involves optimizing our manufacturing footprint, upgrading our packaging capabilities, harmonizing quality processes and enhancing our R&D capabilities. These investments will improve business reliability, increase service flexibility and generate significant long-term free cash flow. As part of our supply chain reinvention program in 2023, we committed $60 million to increase capacity at our Wisconsin infant formula facility. We have already invested $30 million and plan to complete the remaining production expansion this year, enabling higher volume output and greater overhead absorption at this plant. We plan to further invest approximately $240 million into our infant formula production network as a strategic move expected to provide substantial cash returns and secure this business over the long term. This investment enables us to deliver significant cost reductions through economies of scale and improved operational efficiencies, leading to higher margins. Additionally, it will position us well in the current evolving regulatory landscape, promoting compliance and reducing the risk of costly disruptions while facilitating greater access of our essential products to more consumers. The investment will drive further enhancements to our powder production capability, increase service flexibility, optimize our new product innovation capabilities and improve business reliability by allowing us to eliminate aging assets from our network and become fully self-reliant for our packaging and quality needs. We believe this business can generate $100 million or more of annual free cash flow beginning in 2028. As we expect cash generation from 2025 to 2027 to offset a piece of the investment, we anticipate recouping our investment within 2 years post project completion. In summary, our supply chain reinvention program has been successful in reducing complexity and delivering operational and financial benefits, including an incremental 60 to 80 basis points of adjusted operating margin contribution to total Perrigo through 2027. We are already exploring the next wave of opportunities to further enhance quality and drive cost improvements which is essential in our store brand business. And finally, within our infant formula business, we have a significant opportunity for margin accretion and high cash returns on investments that will also ensure the long-term sustainability of this business. Thank you again for your time and attention. And with that, I will now turn it over to Chief Scientific Officer, Abbie Lennox.

Good day, everyone. My name is Abbie Lennox. In our Three S strategy, looking at Strengthen, we are focusing on prioritizing our brand portfolio to create growth through impactful consumer-led innovation by scaling our technology chassis across brand, store brand and geography. Patrick earlier explained the complementary nature of our business model. Perrigo is the company who can scale consumer-led innovation across store brands, brands and geographies giving us the highest return on investment potential for our innovation. Now we know there are five key attributes that it takes for a Perrigo innovation to win. First, we fuel the funnel with concepts that both understand and address the functional, social and emotional needs of our consumers wherever they shop. Then we prioritize benefits and technologies that are ownable and can be scaled for improved return on investment. Now Perrigo has an unparalleled retail partnership and we use and leverage this early and often, driving further insights and minimizing late-stage project attrition. By understanding our internal technical strengths of more than 100 molecules across 100% of price point coverage and building on these with our external customer partnerships, we have an ability to innovate and still give room for new capability builds as or when the landscape changes. We also do this through our new approach to balancing both resource and innovation across claims, packaging and formula upgrades as well as full new product development. Now previously, R&D investments were spread across a large fragmented portfolio of small brands with limited ability to scale. And by utilizing similar products, formulation, packs or product claims, we have to look at how we can improve the return on our R&D investment. So focusing and strategically building scale using technology chassis across multiple brands, geographies and price points will ensure that we meet consumers where they are while driving a higher return on investment. This Perrigo chassis can be better understood with a few examples. So we moved from building a formula innovation that's country or brand specific to building a chassis formula that uses base technology, for example, in cough/cold that we then scale across six countries already with a plan to continue this momentum further in 2025. We move from creating different product pipelines for similar consumer benefit spaces to taking new technologies and claims and entering adjacencies across multiple brands at the same time. We've seen this in practice through our launches in the cold sore category for brands like Compeed and Mederma where we have successfully scaled across 23 countries in both international and U.S. customers. We also see this showcased in through our innovation that delivers on key consumer insights and needs across both store brand and branded products. A great example of this is nicotine replacement therapy, where we have taken key consumer-led innovation and product development and delivered it to the consumer in a way that works for them to help them stop smoking. Triona earlier showcased how we've built NRT across store brands in America, and David Ball will share some examples of how this innovation along with brand building has successfully delivered in this space across both branded and store brand. To further support this approach on focusing our innovation pipeline on scalable consumer-led innovation, we have already made significant progress in simplifying and prioritizing our R&D investment with 70% focused on our high-growth brands plus key strategic stabilizing efforts in the U.S. store brand and infant formula. We've worked to realign our innovation program, moving from an overall pipeline that had high risk and attrition to a prioritized program with fewer bigger scaled innovations, resulting in canceling more than 40% of our pipeline projects that were of low value, but maintaining our overall pipeline value. We have more than doubled the average 3-year project value in the last year and our new streamlined approach ensures a healthy balance across the out years of our pipeline, focusing on our high-growth areas, setting us a good foundation for long-term sustainable growth with the potential to double incremental revenue generated from innovation. So to summarize. We know what it takes for Perrigo innovation to win. Our innovation program has been realigned and prioritized, driving 70% of investment against the most impactful areas of our portfolio. We can and we will drive consumer-led innovation and maximize value by scaling technologies across brands, geographies and price points, driving growth and the higher ROI. And we now possess a pipeline with the potential to deliver two times our previous revenue performance from innovation. Thank you for your attention. And I now would like to hand over to David Ball, who will elaborate further on how these initiatives fit within our categories and brand strategies.

Thanks, Abbie. Hello, everyone. My name is David Ball. And today, it gives me great pleasure to talk about our Three S strategy for strengthening our business and demonstrate our ability to grow brands by scaling innovation with world-class brand building whilst prioritizing our advertising and promotional spend to our high-margin, High-Grow brands. We'll do this by prioritizing our highest growth potential margin-accretive brands, which have the potential to drive significant value. I'll give some examples of how we are already driving this value through, firstly, leveraging the Perrigo chassis across portfolios, identifying compelling new claims and scaling innovation, all wrapped in world-class brand building. All this will be built on a foundation of bolstering and scaling our capabilities across the company to win more households. As you've previously heard from Roberto, prioritizing our High-Grow, high-margin brands is a key strategy for strengthening our business. Here at Perrigo, we have strong brands, both in Europe and the U.S. including Compeed, ellaOne, Jungle Formula, Mederma and Bronchostop. We are often the number one share brand in fast-growing categories. And in 2024, we launched the game-changing Rx-to-OTC switch of Opill into the U.S., which created a whole new category, OTC contraception. We are now disproportionately funding our High-Grow brands with A&P and R&D, sourcing funds from the remainder of our portfolio that generate cash. Let's look at a video highlighting some of the current end market creative driving these top growth brands and their key results. Over the next few slides, I'll dig a little deeper into some of our brands to showcase several successful examples where we are already scaling innovation and how we plan to continue driving growth through world-class brand building. Broncho, our European cough umbrella brand, grew consumption nearly 8% in 2024, outpacing the broader category by 3 percentage points. A big part of this excellent growth was driven by our most recent cough innovation, Broncho Max which delivers on the promise of soothing any cough behind new, unique claims. This single innovation has already gained a 2% market share where launched, becoming the number one innovation in cough across both Spain and the U.K. under the Broncho umbrella brand. Following this success, I'm excited that we will further drive geo-expansion of these assets behind our tested and repeatable launch model. In fact, we've already started scaling our cough and cold OTC innovations across multiple local carrier brands in Europe with seven brands, including Broncho, Coldrex and Tussirex across 18 countries, making us the number three player in the cough and cold categories in the countries where we play. Furthermore, we project to expand our Broncho footprint into five new markets in the near future. Essentially, we are leveraging our global innovation engine and utilizing our strong local brand assets in countries and regions allowing us to scale innovation across multiple executions. Another great example of brand building is in the highly attractive nicotine replacement therapy category where we hold the number one market share in the U.S. with Perrigo store brands, which Triona touched on in her section, and the number three share in the U.K. and Europe in the nicotine brand. As Abbie mentioned, we are in the process of developing and scaling innovation pipelines agnostic to brand, all region, allowing us to launch simultaneously in Europe on the nicotine and in the U.S. under store brand architecture. We are pairing this with novel claims and indications that meet consumer unmet needs. Our most recent example of this in the U.K. is off to a great start with the new campaign and claims targeting wider nicotine usage has resulted in 9% sales growth since launch, driving strong end market share growth of 50 basis points, really fantastic results. As we look at our skin healing category, we have already begun scaling innovation across both Compeed, the number one blister care brand in Europe; and Mederma, the number one scar brand in the U.S. to great success. Most recently, we expanded a cold sore line extension across both brands, enabling each brand to successfully reach new consumer groups. Behind this innovation, we have increased marketing spend and teams have updated creative and claims activating holistic marketing campaigns across digital and traditional media. The results have been fabulous, driving tremendous growth for both brands, with total Compeed growing 30% and Mederma growing 34% in 2024. We are also immensely proud that we are a leader in the newly forming women's health category with market-leading brands including ellaOne, which is the number one emergency contraceptive brand in the EU and 62 markets in total; and of course, Opill, the first and only OTC oral contraceptive in the U.S. We see a lot of opportunity in this space. We continue to drive Opill, which has tremendous early repeat rate at over 50%. And interestingly, despite ellaOne's in-market strength, the emergency contraceptive category in lead countries has a total addressable market of 70%, but actual in category usage is closer to 30%. This highlights the tremendous opportunity to Perrigo as we look to grow the overall category and the importance of strong brand building and messaging as we strive to bridge the usage gap. We continue to scale future innovation across this category and aspire to be a leading provider for women's needs across the globe. That was just a quick example of some of the great in-market performance from our brands. We expect these high-growth opportunities to continue delivering incremental revenue as we disproportionately fund them. In total, we expect these higher margin high growth brands to deliver incremental net sales of $100 million to $200 million by the end of 2027. We have more ways to expand and scale our brand-building capabilities across store brand, brands and geographies than other companies, giving us the highest ROI potential, and we continue to scale and bolster our marketing and innovation capabilities across the board, ensuring that we have the right tools and expertise to support our growth. We are doing this by ensuring that we are standardizing and training the entire organization on a common brand-building framework model, enhancing our digital and social media capabilities and leveraging best practices from our top brand and market combinations to other markets, enhancing our roster with new agencies that bring world-class capabilities in digital and social media and finally, moving from a local market organization structure to a centralized model that delivers training, best practices and global category strategies and innovations to regional and local markets. To summarize, we are utilizing deep consumer understanding and insights paired with digital tools and platforms to identify and deliver against consumer unmet needs. We are scaling our unmatched innovation portfolio of 100-plus molecules at any price point to more brands in more countries through a sequence plan to deliver profitable growth. We have and are scaling proven brand building, innovation, marketing and execution capabilities across both brands and store brands. Our strengthening plan is simply to scale what works, both existing businesses and new innovations to as many brands and geographies as possible, directing resources to the highest return projects to improve ROI and growth rates ongoing, creating long-term value for our shareholders. With that, we expect High-Grow brands to deliver incremental net sales of $100 million to $200 million by the end of 2027, contributing 80 to 120 basis points to adjusted gross margin for total Perrigo. Thank you for your attention. Now I would like to hand it back to Patrick for closing remarks.

Thanks, David, and to the entire management team for outlining our Three S plan that has the potential to generate significant shareholder value. Self-care is a $400 billion business. It's global and it's growing with demographic and health care costs as tailwinds where we have an unparalleled opportunity for driving cash flow and total shareholder return growth because of our differentiating asset base of 100-plus molecules completing a 100% price point coverage, giving us the opportunity to serve more consumers given what they can afford. Also, our unique portfolio combining store brand and infant formula with key growth-ready differentiated brands. Our core relative strengths with the breadth and scale of our innovation, the scale of our customer relationships, the scale of our global regulatory interface and the scale of our manufacturing. What makes Perrigo unique is a complementary nature of our businesses. Store brand and infant formula generate the cash to enable the investment in key growth brands. Branding and innovation capabilities enable brand and store brand demand generation. Consumer-led innovation can be scaled across brands, store brand and different geographies. And we have a scalable supply chain that enables differentiation that we need to compete in store brands and in national brands. And now we're well underway with our Three S plan to take full advantage of our unique opportunity. Stabilizing key aspects of our business, including store brand and infant formula, ensuring consistency and reliability and ultimately, lower volatility of earnings. We're going to streamline, simplifying our portfolio, prioritizing targeted brands and innovation and are aligning our structure, all of which results in higher margins and cash flow. We're strengthening. We're prioritizing high-growth brands. We're amplifying R&D in A&P. And we're directing resources to the highest return projects, which drives ROI and future growth rates. We're reigniting our business by leveraging our strengths by executing with precision and focusing on quality, service, innovation and cost efficiencies. We will continue to drive meaningful customer partnerships, always putting the consumer first. We're building a future that's bigger, stronger, more predictable and more profitable than ever. With that, we will now take a break for 10 minutes. After which, the team and I will join you for Q&A. Thank you very much.

Welcome to the Q&A portion of Perrigo's 2025 Investor Day. Lastly, in addition to the aforementioned company speakers, Charles Atkinson, Perrigo General Counsel, will also be available during the Q&A session. Thank you. To start, we would like to take our first question from Keith Devas at Jefferies.

Operator, we are not hearing Keith if he is on.

Keith, I can see that you've dialed in.

I was unable to unmute myself. Maybe just starting with the North America OTC. It'd be great to just hear a little more context on the categories and products where you're trimming your exposure, what common characteristics they have, where you are in the process of your exits? Maybe said in another way, how much more could that business contractor get smaller? And then specifically, how you're redeploying some of that manufacturing capacity and where it's going? And then I have a follow-up.

Yes. Keith, thank you for joining us today. This has been a business that we've had to get fairly surgical. We exited a large number of very dilutive SKUs. We even exited a couple of businesses with customers that were also highly diluted. However, I think that masked that we had some competitive issues that we had to address in terms of our service, cost competitiveness whilst expanding and then maintaining margin. We think we're just in a much better place to win, rebuild and drive the free cash flow yield from that business. But to get to a couple of the specifics you've touched on, what I'll do is invite Triona to make the comment.

Yes, that sounds good. I'll ask Ron to finish up with comments on supply chain reinvention. As Patrick said, over the last year or couple of years we've trimmed back SKUs that were unprofitable and improved capacity within our manufacturing facilities. Much of that work is done, and it has allowed us to improve things like service and customer reliability, which, as I mentioned, are key tenets of our strategy. We're quite focused on demand generation as we move forward. There will always be some nips and tucks available, but Ron, I'll let you comment on supply chain reinvention.

Thanks, Triona. Thanks for the question, Keith. So as we embarked on supply chain reinvention going back a couple of years ago we have contributed significant financial benefit to the gross margin line over the last couple of years. But what it's also done is it's enabled us to operate our assets much more efficiently because of the focus on continuous improvement, and that's enabled us to manage the capacity that's been freed up much more efficiently while we wait for the volume that's going to come back now with all of the recent wins that the CSCA OTC business has seen in the recent months.

Great. And then just quickly on the infant formula and the incremental investment announced today. I'd love to just hear a little bit more about what gave you confidence to make that decision, what the retailers are telling you, how you feel about the level of investment that's needed to get the share gains and velocity that you're talking about for the next couple of years? Just really an update on, I guess, the category and your position within it and kind of what's driving you to double down here and invest a little bit more ahead of the projections you've laid out for the next couple of years.

Yes, Keith. I mean you're familiar with our journey on infant formula. So I'm going to give just a setup as I see it, probably invite Eduardo and Triona and possibly even Ron because this is a corporate imperative for us. But firstly, standing back, it's a very attractive business. We supply hundreds of millions of feeding occasions. We play a unique role saving the consumer almost $1,000 a year versus the brand equivalent. So we play an important role. As the significant barriers to entry, you know that this is a very capital-intensive business, okay? And there's only a small number of domestic providers. We like that position. We have been very effective in remediating that business, and a lot of credit to the team on addressing a significant remediation extremely quickly. And we are highly quality assured and we're achieving, I think it was about 98% service levels there. So outstanding work over the last few months, okay? I say it because I'm very proud of it. A lot was achieved quickly. Next thing I'd say is we're building back that business fully in line with the commitments we gave last year on the store brand in terms of share, in terms of service, filling out the shelves. We see significant innovation opportunity to increase velocities and distribution going forward and the share of store brand of the total category. And we have, I think it's about a 98% share of that business. So that is a strong win. To your point around capital expenditure. This is a high-margin business but of a capital-intensive business, okay? We have three plants. We can consolidate that plant configuration, which will allow us to get to even better margins, but it will step change our free cash flow generation from that business by between about 800 and 1,000 basis points. I mean it's very, very significant, and we moved from it being a dilutive free cash flow business to actually becoming accretive. We do that relatively quickly. And because of that step change in free cash, we pay out that initiative figures within a couple of years. So this is the right thing to fortify our network. It's absolutely the right thing to do in order to step change the economics and financials of that business, which is very good for shareholders on a go-forward basis. But just to add a bit more color, I'll invite Eduardo.

Yes. Thank you, Patrick. So Keith, a couple of comments. We've gone through an extensive evaluation of multiple alternatives of what is the best for the infant formula business, right? So you're aware that we have some aging assets. And also we did most recently the acquisition of the former Nestlé site. So as you look into the overall network and evaluated these multiple options, the one that we're proposing and that we have approval from the Board is to pursue forward that we believe is not only going to give us the reliability that we need but also will help us to reduce the cost on a per unit basis once the full investment is completed, right? And as Ron mentioned, given some of the cash flow that we're going to see the benefit over the next couple of years, we expect that the full return of that investment two years post completion, around mid-2029. And so that way, we're going to generate starting 2028, $100 million of free cash flow there. But I don't know, Ron, any other color that you want to give there?

Yes, Eduardo. The only thing I would add to that, Keith, is that not only does this investment allow us to significantly improve our cost position. But as you would have seen today, we actually rely on some external third parties for some of our packaging and quality testing needs. And this investment is not only going to optimize our cost, but it's going to allow us to be 100% reliant on our internal packaging and quality capabilities, which will significantly de-risk the supply chain for this key business unit for us as well.

Our next question comes from Susan Anderson at Canaccord.

I had a question on the EBIT margin goal by fiscal '27. I think it looks like you're expecting it to leverage 150 to 200 basis points. I guess, first, it looks like maybe it's all coming from gross margin. So I'm assuming some of these investments are weighing on the OpEx side of it. If you can maybe expand on that. And then second, I think that would get you about to the upper 15% range. How confident do you feel in achieving this? And do you think it could end up being conservative? I think some of your peers are in the low 20% range? Or is that really just more opportunity over time?

Thank you, Susan. Nice to see you. Thank you for this question. Unsurprisingly, I'm going to put this one to the CFO.

Thank you, Susan. Again, so let me address the first piece of your question, right? So as you saw, we are considering an improvement on our gross profit margin between 200 and 400 basis points over the next years, right? And so we expect to reinvest a portion of that to make sure that we're going to secure the growth required on A&P and R&D to support our High-Grow brands that David Ball alluded to that. So I think those are important investments that we need to do that. And of course, we're leveraging some of the benefits of the accretive initiatives, both the supply chain reinvention as well as the Project Energize that will help fund some of these investments there. To your second question regarding 15% operating margin in 2025. So a couple of comments there. You saw that I mentioned, 100 basis points on gross profit margin. The key driver for that is really the recovery on our infant nutrition business this year, right? And also, as I made a comment that we expect the wins that we're gaining on the store brand business will have a more impactful, a more positive impact to our results in the second half of the year. So at this stage, we're very confident that we can deliver that 15% operating margin by the end of the year.

Okay. Great. That's really helpful. And if I could maybe just add one more. Just looking at those 100-plus molecules that you have, I guess are being used right now, I'm curious, does this give you opportunity to roll out new products or are some of these not being used? Or is it really more just leveraging these molecules, which are already in certain brands, maybe into a private label brand or another brand in another geography? And then also, will you be rolling out more branded products in the Americas?

Thank you, Susan. There's quite a lot to that question. So yes, we have 100 molecules, all of which are utilized today. We have 230 actives and molecules, and we have something like 2,500 different formulation. So we have a big toolkit. Most of that toolkit can be applied to any price tier and any execution in any geography. We can use the same molecule and brand and a store brand in different markets. Our opportunity is to sequence those scale plays across as many different carriers in order to maximize the revenue potential of the molecule and innovation, et cetera. We're agnostic about how we execute, brand, store brand, et cetera. It is about fully utilizing that to meet consumer needs and maximizing revenue potential of that. That's the big unlock for this company. It's that asset base monetized through as many potential carriers in as many geographies as possible. And that's what sort of step change the innovation potential we're now talking about, the opportunity to move it from about 1.5% of our revenue per year to about 3%, and that's what we're working on. So this is a huge unlock in terms of the future performance of the company. But what I'll do, just to add a bit more color to that, I'll probably invite Abbie on the role of innovation and scaling these assets across brand, store brand, geography over time. Abbie, over to you.

Thank you, Patrick, and thank you for the question as well. So as Patrick said, when we talk about the Perrigo chassis, what we're talking about is our ability to take our base technology and formula across those multiple brand carriers. Historically, Perrigo innovation is actually only ever launched in around about two countries if you go back over the years. By using the chassis effectively, whether we're talking store brand, brand or across geography, we've already shown that we do have the capability to be able to take this to multiple markets. You saw some great examples actually earlier in the presentation with cold sore that we took into 23 countries, taking the same technology and positioning it to the consumer where we're meeting them and where they shop. So hopefully, you'll start to see this even more as we bring the innovation to life when we talk and brand agnostic as part of our innovation strategy going forward.

The next question comes from Korinne Wolfmeyer at Piper Sandler.

I'd like to maybe touch a little bit more on the near-term results and what you reported for Q4 gross margin and also the selling expense. I mean the gross margin stepped down pretty meaningfully, but then the selling expense also stepped down pretty easily. Can you give us a little bit of context on what was going on with those two line items? And then any color on the proper run rate you should be thinking about for those lines heading into 2025 and then the cadence of improvement over the course of the year to get to your longer-term target?

Korinne, nice to see you. Thank you for joining for the question and the specificity of the question, as always. And I'll ask Eduardo to address that.

Korinne, a couple of topics. On gross margin in the fourth quarter, we saw a 260 basis point negative impact. First, we had lower over-the-counter volumes. The cough and cold season this year was more in line with 2019 and 2020 and with historical trends, but much later compared with last year, so inventories in the channel didn't move as much at that time. Second, as noted in the press release, we had some disruption in our infant formula equipment that affected service and delivery and caused obsolescence, which hit margins. We also had positive impacts: accretive actions from our supply chain reinvention and pricing, with almost a 100 basis point benefit from pricing in Q4. In addition, important divestitures in 2024 reduced margin by about 60 basis points, including the high-margin HRA rare disease business divested early in Q3 and some CSCI brands. That explains the roughly 260 basis point negative swing in gross margin. On operating margin, we saw the opposite — about a 260 basis point positive impact, and nearly a 500 basis point delta driven by lower expenses. A few points on that: Project Energize, launched in Q1, delivered benefits throughout the year and we ended the year with almost $140 million of total benefits, which contributed meaningfully in Q4. We also had lower variable expenses due to the reduced OTC volumes in CSCA and somewhat in CSCI. We reduced some investment in advertising and promotion and incentives as well. Looking to 2025, we expect margins to start improving in Q1, with a significant improvement versus last year and versus Q4. Two main drivers: first, last year we had a significant impact on the infant formula business when we had to keep one site idle for almost a month, which also caused obsolescence; we do not expect that in Q1 this year, so that will be a meaningful benefit. Second, we will make important OpEx reinvestments in advertising and promotion to support key brands that should start to ramp in 2025, so you should expect a bit more investment in Q1. Overall, we expect operating margin to begin the year below where we ended Q4, partly because of long-term incentive impacts in Q1, but it should pick up as the year progresses as we reduce the large A&P recovery in Q1 and gross margin improves toward a 40% average for the year, helping us reach a 15% operating margin by year end.

That's super helpful. Thank you so much for all the detail. And then more strategically speaking. So I think you guys had called out a few of your businesses, maybe using for shareholder value activities such as the oral business and the derma cosmetics business. Can you expand on what you mean there? Is that something where you might start looking at your portfolio and figuring out what makes sense within the portfolio, what may make sense to divest or sell at some point? Just any clarity on plans for those businesses?

Yes. I'll start there strategically. And then for a bit more detail and color, probably to Eduardo. So we've been through a very extensive portfolio review. And we're fairly clear on those businesses that are very attractive, scalable. We see good growth, good financial return. They're synergistic to the examples that Abbie just talked about. And we're also increasingly clear on those brands that don't sit within that and possibly those categories where it is less obvious. Now those brands and those categories are still very attractive, but not as synergistic in the Perrigo model that we've just been describing over the last hour. So this is just part of a portfolio review. Any healthy company is doing that. The businesses it wants to be in, should be in, possibly the businesses that don't fit with overall company model. So we are still assessing those businesses, all right? We're not making a declaration today. We're just describing that we need to better understand how they can play a meaningful role in strategy and in shareholder return going forward. So anything to add to that?

Not much Korinne. So as Patrick mentioned, we're going through that assessment. And as soon as we get any conclusion of that, we'll keep you updated, okay?

Our next question comes from Chris Schott with JPMorgan.

Thanks so much for the questions and hosting us today. I guess my first question is on 2025 Nutrition growth. It seems like there's some encouraging progress here. But I'm just interested in why not a growth rate above 3% to 5% given the lower 2024 starting point, especially some of these first half results from last year? And maybe as part of that, can you quantify how much of an infant formula contract manufacturing headwind is reflected in that target? And I'll follow up from there.

Chris, nice to see you. Thanks for joining us today. Yes. I mean this is an industry and a business that's in flux. We're trying to get our hands around all the dynamics that are going on. We are trying to appropriately react to some of those dynamics, but not overreact to some of those dynamics because we're a secure supply chain for infant formula. You understand the amount of discussion around tariff, reliance upon onshoring, critical industry manufacturing. So there's a lot of variables at play and what we're trying to give is the best sort of presentation of our outlook based on what we understand today, but there is significant effort to restrengthen U.S.-based contract business. It's just we only understand what we understand today. I think to give a bit more color on the specifics, I'll hand over to Triona.

Yes. Thanks, Patrick, and thanks for the question. Maybe I'll start with the piece around kind of what we're seeing right now and the timing. So as I talked about in the presentation, we are seeing a real return to that trusted partner level of service and quality that our customers absolutely and their consumers expect from us. So we're highly encouraged with that. In order to rebuild the volume, though, there's kind of more to it, right? So there's the reintroduction of those paused SKUs that I talked about. And consumers are looking for matches in a store brand world. So until those SKUs kind of get on shelf, it takes some time to get all of the consumers back. The same is true with just the category dynamics in general, right? So it's people who have a small infant at home. And so we call it a parade category where consumers are consistently coming in and then aging out as their baby just get older. And so we have to kind of get through those cycles, that's where our velocity increases are going to be focused, in driving those consumers back in through some of the activation that I showed you as part of the presentation. So I do feel like we are on the path back and you saw the time frame that we expect that to roll out on. I'm going to pass it over to Eduardo maybe to kind of talk specifically more.

Chris, just to clarify one thing, right? So we're talking about our CAGR of 3% to 5% between 2025 and 2027. But 2025, we expect much higher recovery is going to be on the double-digit level, right? But as Triona mentioned, mainly based on store brand recovery and lower on the contract business, but it's going to be, in 2025, double-digit recovery on the top line.

Great. And just a quick follow-up I just had in the guidance. I know it was constant currency. Can you just give us a framework of with where FX is sitting today? What type of top and bottom line impact should we kind of think about as we look at 2025?

Yes. So for every $0.01 on euro, the difference is about $0.02 on our EPS or about between $15 million and $20 million of potential impact on our top line for every $0.01 on the euro, okay? And we decided to go that way because there is so much volatility and speculation right now that's going to be very hard for anyone to try to really put a mark there. So that's why we decided to do it in constant currency to last year and then be able to explain what specifically are the variances because probably, we're going to see a lot of volatility within 2025.

The final question from Daniel Biolsi at Hedgeye.

I, too, wanted to echo the appreciation for the level of detail today. Previously, management expected the OTC industry to have like an annual price headwind of like 1% to 2% and innovation contribution to the top line of 2% to 4% and similar amount for innovation to contribute to that. Do you still see a similar rate for the industry? And following on that, have the 2020 changes to the U.S. monograph had the intended effect of increasing the innovation in the industry? Has that played out?

Yes. Nice to see you again. Thank you for those elements there. I'm going to have Abbie comment on monograph. I think our general thrust there, we would like to see that accelerated more. I'll let Abbie speak to that. I'm going to talk a little bit about deflation, how that compares to other CPG companies and how we're managing that. And then maybe Triona, a little bit more about how important it is for us to get to volume growth ahead of revenue growth as we consider absorbency and throughput margin and driving cash flow. I think 1% to 2% deflation, if I look at store brand over the last 20 years, is a reasonable working assumption. If I look at the branded side, typically for brands as they're moving through their product life cycle as the technology becomes more commoditized, what you also tend to see there is 1% to 2% deflation as well, normally offset the trade spend, increased promotions, et cetera. It's no different on the store brand side. It's just natural product life cycle management, okay? What we would be better at is just recognizing that and building that into our planning through a combination of things, and you touched on a couple of them. Number one, cost-saving projects. We have a master plan of those spreading over the years and there is cost and productivity that we need to achieve. The second one is mix. And all molecules are created equal and some of them are still very margin accretive, and we need to build our share of those. And we're getting more intentional about that. I think the next one for me, and you touched on it, is innovation. Innovation tends to be more premium priced at a better margin. And so basically, it's a combination of activities and deliberate business planning such that you're growing volume, you're increasing absorbency. A point of absorbency for us is circa $20 million, $30 million. It's a significant opportunity for us. And I think we're just getting much more precise in how we strategically manage this business across those fundamentals. So we feel better about this business in terms of the yields we're going to see driven by growing our volume share of it, and that's kind of the big pivot over the last 12 months that I referenced. Triona, maybe a bit more depth?

Yes. Thanks, Patrick. Just a couple of things I'd point to. Patrick is absolutely right as it relates to really managing the mix in a couple of different ways and whether that's the mix of volume and revenue or the mix within more commoditized products versus innovation, all of those things are factored into how we think about managing the business. I would also add, though, and something I talked about a little earlier today, which is our customers are really looking for a full value equation from us, so not purely price. So as it relates, the product is one thing, the kind of the suite of the partnership that we provide with our customers is a bit different than that. Price is a component, but not the only component. They're looking for reliable, consistent service, efficiency, strong production, quality and those demand-generating capabilities. And so I think that's another kind of value that we differentially bring to our customers differently than our competition and it helps us manage some of that pricing environment as well. With that, I'll turn it over to Abbie to answer that final question you have with regard to monograph.

So thank you for the question. And yes, so just to confirm, basically, Perrigo is very much involved in the industry conversations taking place with the FDA and through the trade associations around the changes in the monograph system. I think all of us would be happier if it was moving faster and we would all be much happier if we could get to the simplification and specificity that we think the FDA aim to get to. So we're focusing, but I think there's a lot more work to go with respect to both the agency and the industry working together to actually bring this to life and something that we can see having a fundamental impact on the innovation pipeline as we move forward.

I'll now hand the call back over to Brad to take questions from the online audience. Thank you, Brad.

Great. Thank you, operator. So the first question that came in is, so you've had very strong growth in your CSCI International business. How do you expect to continue that growth? And does M&A fit into that strategy?

Very good. I think it's probably been underappreciated, the kind of consistent growth that we've seen in international, both in revenue but in particular margin expansion. We have a large number of very fast-growing brands enjoying very strong positions in fast-growing categories, and that sets us up well for the future. The international business has been growing well, expanding margin while executing well. And Roberto in a minute will talk about how we maintain that. I think the M&A, I want to be very clear. M&A is not a capital allocation priority for us. We have been through a period of multiple transactions. Those transactions involve a significant effort of integration and then getting back to base reliability. And we don't want to take on that complexity. We feel those assets that we acquired have significant runway for years to come. So we are not looking at large M&A. We are always looking at strategic bolt-on, be it capability, be it entry brand carrier for which we feel we can scale our chassis with. And we will always look at those. They tend to be opportunistic. They're difficult to control and when they become available. But I just want to be clear, we are not looking at large-scale M&A, just strategic financially attractive bolt-on should it become available. But I think to give a bit more color on how we will continue to drive and over perform in international, I'll hand over to Roberto.

Thank you, Patrick, and thank you for the question. So let me give you a couple of reasons as to why and where we see opportunities for us in the future. So one, we're really starting from a focused portfolio that is really building growth on brands that are already delivering really well. So you heard the case of Compeed growing at 30% as of 2024. And our cough and cold brand, Broncho growing at 8% ahead of the category. But as we look forward, we see four growth areas, four key growth areas still ahead of us. One, from a market share perspective, we still have opportunity to grow market share in existing markets through innovation. You're seeing great performance in 2025 already end of 2024, our Broncho 5-in-1 and category expansion, we see in some categories in big markets like emergency contraception in the U.K., an addressable market of 70%, but only 30% of usage. And then scaling really our brands and our chassis across multiple brands across our geography. So really much ahead of us to be able to drive revenue. But as well as you heard between Project Energize and the sequence exits to generate cash allows us to also not just drive revenue, but also drive operating profit.

Great. Thank you, Roberto. Next question that's come in. Can you please share some more details about why you broke out the High-Grow brands and what may be included in those?

Yes. I think by break out why we're focusing on them. So that's where I'm going to orientate the answer. So I think the first thing for all stakeholders to probably better appreciate, 40% of our business is branded today. It plays a disproportionate role in the long term in terms of driving more margin accretive revenue, really from 2027 onwards plays a disproportionate role in sustaining our long-term growth algorithm. We have to get those brands strengthened and ready for scaling. What gives us encouragement is they are highly meaningful brands enjoying highly meaningful positions with consumers today, that's financially attractive, strategic, we can scale them. And so we see those but as playing that disproportionate role, we have to focus on them and enable them now. So I think, David, maybe you can give some more specifics of what we're doing, why we're focused on those and maybe just elucidate a little bit on how we're going to scale?

Absolutely. Thank you, Patrick. I'm really excited about the potential and opportunity of the High-Grow brands that we have. And there's still the three key points of why I'm excited. Firstly, they all play in high-growth categories. Secondly, they're all margin accretive to the broader Perrigo business. And then thirdly, they're often the brands that are number one in the category or in the region that they play. So it gives us tremendous ability to scale and create value creation for broader Perrigo. We've focused on skin healing where we are number one, both for Compeed in Europe and the U.K. and then derma and scar care in the U.S. We've got women's health where we're already number one in emergency contraception with ellaOne and obviously, we're launching Opill into the U.S. And then we're also focused on select OTC brands where, again, we're number one and growing incredibly fast. So a wonderful opportunity to drive incremental revenue for Perrigo as a whole.

Thank you, David. And then there's a final question that's come through, which is more about the phasing of earnings through the FY '25 through FY '27 arc, and can we highlight maybe a little bit of some of the weighting that investors should expect over that time frame.

Eduardo?

Great. Thank you for the question. So as we mentioned, given the guidance we've given to 2025, so 2025, it's a huge recovery year for us, basically on infant nutrition, but also winning back a lot of the lost business that we had in OTC store brand. So we expect that to give us, as we mentioned, significant growth, both in operating income and EPS. EPS also benefits from the reduction in our debt with the $400 million that we paid down at the end of last year. As you look into 2026, 2026 is going to be a transition year, because we start accelerating the investments on our High-Grow brands. Perrigo have already achieved stability or stabilization on our store brand and infant nutrition. And so we expect still to deliver significant growth there and beyond our previous algorithm. But then when we get to 2027, we expect to outpace that on the top line as we accelerate our high-growth initiatives with the investments that we did and the further expansion in the markets that we are today that both David Ball and Roberto mentioned today. And so that also will bring us higher benefits into EPS because we plan to repay $400 million of debt that are due in April 2027. And that also will give us a booster in EPS for that year. So all in all, 2025 is going to be a very strong recovery year, 2026 is going to be a transition, and then we expect to accelerate top line and going through the bottom line in 2027.

Thank you, Eduardo. And with that, operator, should I just turn it back over to Patrick for some closing remarks?

Let's be proactive... I will pass the ball back to Patrick. Okay. Thank you, Brad, and thank you, everyone, for joining today. I want to just give sort of four or five key points here. Firstly, I think what you've heard today is we are now clear on what our strategy is. I hope you're convinced that strategy is built upon our unique capabilities and our unrivaled scale across a number of very important factors. We have a very clear plan to get back to stability and to reliability. We see significant value creation potential for this company driven by growth and our ever-increasing focus on free cash flow. Some of you would have picked up on, but for the next three years, this plan actually outperforms our current growth algorithm of 3/5/7 fairly significantly on those last two metrics. And it will not go unnoticed that with our current valuation and our commitment to our dividend policy, we represent a significant TSR opportunity in the mid-teens, which is very competitive versus our peer set and represents a fantastic return for our shareholders. I sincerely want to thank you for joining us today. I know it was a lot of material. We'll see a number of you face to face over the next couple of weeks, and thank you for that opportunity as well. And thank you for your belief in Perrigo. All the best. Thank you.