Good morning, ladies and gentlemen, and welcome to Perrigo Q1 2026 Financial Results Conference Call. This call is being recorded on Thursday, May 7, 2026. I would now like to turn the conference over to Mr. Eric Jacobson, VP, Global Investor Relations.

Good morning, and good afternoon, everyone. Welcome to Perrigo's First Quarter 2026 Earnings Conference Call. A copy of the release we issued this morning and the accompanying presentation for today's discussion are available within the Investors section of the perrigo.com website. Joining today's call are Perrigo's President and CEO, Patrick Lockwood-Taylor; and CFO, Eduardo Bezerra. As a reminder, beginning this quarter, we are reporting segments aligned with our new commercial operating model. We have recast historical results under the new structure for comparability as provided in our 8-K filing, and this change had no impact on our consolidated financials or cash flows. Along with our new reporting segments, we have changed our main profitability measure to adjusted operating income. 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. See the appendix to the earnings presentation for additional details and reconciliations of all non-GAAP to GAAP financial measures presented. Finally, Patrick's discussion will address only non-GAAP financial measures. Now to the agenda. We have several topics to cover today. First, Patrick will walk through the progress we are making with our Three-S plan and how first quarter results compare to our expectations. He will then provide the market overview and explain how our growth initiatives are expected to drive improved results. After which Eduardo will cover first quarter segment results, balance sheet and capital allocation and close with further details of our 2026 outlook. With that, I'll turn it over to Patrick.

Thanks, Eric. Good morning, good afternoon, and thank you for joining today's call. We are making steady progress in building a more focused, disciplined and consistent Perrigo. Challenging market environment impacted first quarter results. However, our Three-S plan to stabilize, streamline and strengthen the company is helping us navigate these conditions and positioning the company for long-term growth. The strategy is working as clearly demonstrated by our market share gains even in what we have highlighted as a transition year. Given these factors, we are reaffirming our 2026 outlook. Consistent with our prior commentary, results are expected to be weighted to the second half, supported by clear quantifiable factors, including stabilizing category consumption, the lapping of prior year manufacturing volume headwinds, benefits from cost-saving initiatives and delivery of our growth drivers. With those takeaways as a backdrop, I'll walk through how the Three-S plan is driving positive change. Our stabilization efforts have turned share losses in U.S. store brand OTC into a 100 basis point improvement in volume share during the quarter, six of seven categories gaining share. To further dimensionalize our performance, we have gained 270 basis points of U.S. store brand OTC volume share in the first quarter alone. Key brands in Europe also improved, gaining 20 basis points of value share in a challenging consumption environment. We have also stabilized results in Infant Formula with improved service levels and supply reliability. To streamline our business, we completed the divestiture of the Dermacosmetics business in April, an important milestone in further simplifying our operations and enabling debt reduction. Strategic reviews of our Infant Formula and Oral Care business are ongoing. Efficiencies are an important part of our streamlined pillar and our operational enhancement program generated more than $7 million of cost savings in the quarter and is on track for approximately $60 million to $80 million in savings for the year, with an additional $20 million to $40 million expected in 2027. To strengthen our business, we implemented a new category-led operating model and enhanced our commercial and category leadership, adding experienced talent with the capabilities and perspectives required for the next phase of Perrigo's evolution. These changes reflect a fundamental shift in how we operate. Our new structure aligns our decision-making, investment priorities and performance goals, enabling us to better leverage one of our most important competitive advantages, our scale. With more than 250 molecules, our deep retailer partnerships, a robust supply chain and our extensive regulatory capability, Perrigo is well positioned to be a leader in this category. And our new structure focuses our investments on fewer, bigger brands to target faster-growing categories where we have the greatest right to win. These changes are working as demonstrated by our strong market share performance. However, many of the benefits from these initiatives are not yet fully realized and are being somewhat obscured by the headwinds that we expect to ease in the second half of the year. Among those headwinds are softer cough and cold incidence and retailer inventory destocking. Those impacts, along with a $0.26 EPS headwind related to the carryover of prior year manufacturing volume headwinds weighed on first quarter results. As indicated last quarter, prior year manufacturing volume headwinds are expected to result in an unfavorable All In EPS impact of approximately $0.60 in 2026. Again, we believe those headwinds are largely transitory, resulting in 2026 itself being a transition year. As conditions evolve, consistent with our Three-S plan, we are focused on driving improvement in the areas within our control, streamlining our cost base while strengthening our top line growth. With that in mind, let's turn to the assumptions underlying our view of 2026 as a transition year, which largely played out as expected in the first quarter. Coming into the year, we anticipated market softness to carry over into the first half, followed by sequential improvement in the second half. In the first quarter, reduced cough and cold incidence and the impact of macroeconomic pressures, particularly in Europe, led to lower-than-expected consumption levels. We estimate soft cough and cold incidence was approximately a 3.5% headwind to CORE sales. In response to lower consumption, retailers in the U.S. and Europe reduced inventory levels, hampering sales further, resulting in an additional 3 points of CORE sales headwind. However, we, in line with other industry commentary, continue to expect sequential improvement in demand, led by stabilizing seasonal incidence of cough and cold. We also expect retailer inventory levels to positively adjust over time, in line with improved consumption. Our second assumption was our ability to build off our strong market share gains in 2025. We delivered on that expectation with solid market share performance in both store brand and branded products. Third, we expected to grow net sales through four key revenue building blocks: consumer-centric innovation, targeted geographic expansion, continued distribution gains and amplified demand generation. We've made progress across each of these areas in the first quarter, reaffirming our confidence in second half improvement. Turning to our financial results. The first quarter reflects category softness, partially offset by progress in our execution of the Three-S plan. CORE net sales declined 8.3%, driven primarily by softer category consumption in the Self Care segment due to reduced cough and cold incident and retailer inventory destocking. These impacts accounted for nearly 2/3 of the net sales decline. These impacts were partially offset by share-driven gains in the Specialty Care segment, particularly in the women's health category. All In net sales declined 7.2 points, reflecting similar pressures, partially offset by improved Infant Formula performance. Adjusted CORE EPS of $0.40 was impacted by prior year manufacturing volume headwinds and lower net sales volumes, primarily within our Self Care segment. Adjusted EPS results outperformed our expectations, benefiting from the net recognition of recovery of a portion of previously paid tariffs, a lower effective tax rate and benefits from our operational enhancement program. All In adjusted EPS for the quarter was $0.43. Turning to the market environment. Conditions remain challenging in the first quarter as expected. In the U.S., the OTC market declined 4.1 points in value, 2.1 points in volume, largely consistent with fourth quarter levels. European markets turned more negative, declining 3.7% in value and 4.4% in volume. Trends in both the U.S. and Europe were driven primarily by softer consumption demand in the cough, cold and pain categories within the Self Care segment. That weakness appears transitory, driven largely by challenging year-over-year comparisons and lower-than-normal illness levels as well as macroeconomic pressures, particularly in Europe. We expect the category to stabilize throughout the year as comparisons ease and more typical seasonal incidence patterns return in the second half of 2026. To mitigate category pressures, we are focusing on areas within our control. As I noted earlier, in the U.S., Perrigo grew volume share in six of seven OTC categories, and our store brand portfolio extended its streak to 12 consecutive periods of share improvement. Our priority brands gained value share in Europe, driven by strong performance from ellaOne up 200 basis points, Jungle Formula up 140 basis points and Physiomer up 50 basis points. Other areas of strength include Mederma Cold Sore and Opill, which increased 180 basis points and 40 basis points, respectively. Importantly, as we enter the summer period, momentum is building across our seasonal brands in several key European markets. Compeed is strengthening into peak season with impressive share gains and sellout trends supported by earlier activation and excellent in-store execution. For example, in Italy, Compeed achieved market share growth of 550 basis points to 35%. While in France, it is growing well ahead of the category, with Compeed up 160 basis points and our share approaching 36%. This was led by focused investment, improved activation, stronger retailer execution. And this strong performance gives us confidence in our ability to drive growth as demand builds through the summer. As category demand normalizes, we expect the increasing earnings power enabled by this brand strength to become increasingly visible. As we've discussed, we are driving share gains by scaling our CORE capabilities consistently across the portfolio. Nicotine replacement therapy is an excellent illustration of our approach to 360-degree innovation. Our process now develops claims, formulations and regulatory platforms once at the category level, then deploys them holistically across national brands and store brands across formats, geographies and price points. Importantly, this innovation expands the addressable market beyond traditional quitters to include vapers and dual users, allowing us to scale faster and unlock incremental demand without adding complexity. Store brand demand generation is another scalable differentiator for Perrigo. We are the only large-scale store brand supplier bringing national brand demand generation capabilities to retailers, allowing us to partner with retailers and elevate conversations beyond just the procurement price. Retailers are drawn to this program because it builds awareness for their business, it reinforces the perception of quality and equivalents, it drives household penetration and improved retailer profits. Retailers are asking us to expand these programs across even more OTC categories. Demand generation is highly impactful for Perrigo. When we combine it with strong retail execution, we improve competitive takeaway and share gains. And these gains can be meaningful with a 1 point increase in U.S. store brand household penetration, representing incremental sales of more than $100 million of store brand OTC at retail. Targeted geographic expansion allows us to extend our existing successful initiatives into new areas. By selectively expanding priority brands into new markets, we can drive incremental growth with lower risk, achieve faster payback and higher returns. As a reminder, this is a long growth runway for Perrigo as today, we only serve approximately 5% of global households. Together, these capabilities form a repeatable and scalable growth model. 360-degree innovation expands our opportunity set. Store brand demand generation converts that opportunity into sustained consumption and targeted geographic expansion amplifies the impact, allowing us to scale performance across categories and regions. This is translating into early but significant in-market gains. This really is the outcome of what we have been working towards over the past 3 years: Perrigo's sustainable growth model based upon a more focused portfolio that better leverages our core strengths, better leverages our unique asset base, underpinned by a much more effective commercial operating model. In summary, results in the first quarter reflect a very challenging market, but also demonstrate the effectiveness of our strategy. As we move forward, we are focused on building a more focused, disciplined and consistent business. By executing on our Three-S plan, we expect to mitigate current category challenges and drive long-term growth. We are reaffirming our full year 2026 guidance, which we expect to be weighted to the second half. That phasing is supported by clear quantifiable factors already underway. Our strategy is working. We are seeing market share gains. We've achieved a more focused portfolio. We have a more effective and scalable commercial model. I recognize that quarter 1 revenue and adjusted EPS are being driven by external factors that will need to be carefully managed. I'll now turn it over to Eduardo to walk through the financials in more detail.

Thank you, Patrick. Appreciate everyone joining us today. Before turning to the details of our first quarter financial performance, I want to provide an update on the goodwill impairment. As we discussed last quarter, the reallocation of goodwill following our move to the new reporting units was expected to result in an additional noncash impairment in the first quarter of 2026. And as expected, we recorded a noncash goodwill impairment charge of $331 million based on our goodwill impairment test as of January 1, 2026, which utilized the same underlying aggregate fair value of the business as the 2025 year-end goodwill test. This charge does not impact cash flows, liquidity or the ability to execute our strategy. From this point on, my comments will focus on adjusted non-GAAP results unless otherwise noted. As Eric said, beginning this quarter, we're reporting segments aligned with our new commercial operating model, and our new reporting segments include Self Care, Specialty Care and Infant Formula. Turning to our results, starting with the top line. CORE net sales declined 8.3% year-over-year, driven by softer consumption, primarily in cough and cold and retailer inventory destocking in the Self Care segment. Higher Specialty Care net sales partially offset that weakness driven by performance in our women's health category. On an organic basis, CORE net sales declined 11%. All In net sales declined 7.2%, reflecting the same factors impacting CORE results in addition to modest contributions from Infant Formula and Dermacosmetics business. Currency translation benefited both CORE and All In net sales in the quarter. Looking at adjusted operating income by segment, Self Care was the largest driver of decline due to lower net sales volumes, the carryover impact of prior year manufacturing volume headwinds and unfavorable mix. These factors were partially offset by the net recognition of recovery of a portion of previously paid tariffs and favorable currency translation. Specialty Care benefited from the lapping prior year Opill investments as well as favorable foreign currency, which more than offset the carryover impact of prior year manufacturing volume headwinds. All In adjusted operating income was primarily driven by the same factors as CORE, along with an $18 million impact from Infant Formula due to the carryover of prior year manufacturing volume headwind. These impacts were partially offset by operating income growth in all other segments. Turning to margins. Drivers of both CORE and All In margin changes were consistent with the segment results just discussed. CORE adjusted gross margin declined 160 basis points to 39.2%, primarily due to lower sales volumes, manufacturing volume headwinds and mix. These pressures were partially offset by the net recognition of tariff recovery and favorable foreign exchange. All In adjusted gross margin declined 340 basis points to 37.6% due to the same factors impacting CORE gross margin in addition to the manufacturing volume headwinds in Infant Formula we just mentioned. CORE adjusted operating margin decreased 110 basis points to 12.8%, reflecting gross margin flow-through, partially mitigated by lower advertising promotion spend, benefits from the operational enhancement program we announced in Q4 and favorable currency. All In adjusted operating margin decreased 240 basis points to 11.6% due to the same factors as CORE operating margin in addition to the impact from Infant Formula. First quarter CORE adjusted earnings per share was $0.40, coming in above our expectations primarily to the net recognition of recovery of a portion of previously paid tariffs and a lower effective tax rate. All In adjusted diluted earnings per share declined $0.17 to $0.43 due to the impact of lower sales volumes and the carryover impact of prior year manufacturing volumes in U.S. OTC and Infant Formula. Turning to cash flow. First quarter 2026 cash from operating activities decreased $49 million to an outflow of $114 million due to lower earnings and higher working capital in line with our previous expectations. As a reminder, the first quarter is typically our highest cash usage period amongst the year. Capital expenditures totaled $14 million, and we returned $40 million to shareholders through dividends. Turning to the balance sheet. Cash and cash equivalents were $357 million and total debt was $3.6 billion. During the quarter, we amended our $1 billion revolving credit facility, extending the maturity to 2031. Borrowings under the revolver were used to repay our $421 million Term Loan A, extending our maturity profile with no significant maturities until 2029. We expect to continue to actively manage and optimize our maturity debt profile going forward. After quarter end, we completed the sale of our Dermacosmetics business for upfront cash proceeds of approximately EUR 306 million, which we expect to use to support debt reduction. We remain focused on our disciplined capital allocation, balancing growth investments, deleveraging and shareholder returns. Looking ahead, although category dynamics were softer than expected in the first quarter, our guidance incorporates a wide range of outcomes and gives us comfort in reaffirming our 2026 outlook. We're closely monitoring retailer inventory changes, particularly the destocking activity observed in the first quarter, which we believe is largely related to the current consumption environment. As consumption levels improve, we expect inventory trends to stabilize. We're also actively managing the inflationary pressures related to the geopolitical developments in the Middle East and their impact on consumers and our cost base. To mitigate the estimated incremental in-year impact of $10 million on our cost base, we have implemented sourcing and cost management initiatives, and we will also evaluate pricing actions. As Patrick noted, we continue to expect results to be weighted to the second half of the year with approximately 30% to 35% of CORE adjusted earnings per share in the first half and 65% to 70% in the second half of 2026. This phasing is supported by clear quantifiable drivers, the majority of which are concentrated in the back half. The single largest sales growth contributor in 2026 is expected to be consumer-centric innovation. Approximately 60% of the benefit from innovation is expected in the second half, including the expansion of our Compeed portfolio and the introduction of new Infant Formula offerings. Several of our other 2026 drivers, including distribution gains amplified by demand generation activity with top retailers, targeted geographic expansion and benefits from our operational enhancement program are all expected to be back half weighted. In addition, we anticipate lower interest expense in the second half as we apply the Dermacosmetics proceeds towards debt reduction. In conjunction with those drivers, two of the most meaningful first half headwinds, the carryover impact of prior year manufacturing volume headwinds and a softer cough and cold season are transitory and expected to lap in the second half. As indicated last quarter, prior year manufacturing volume headwinds are expected to result in an unfavorable all-in earnings per share impact of approximately $0.60 EPS in 2026. We experienced roughly $0.26 of that impact in the first quarter. In summary, our outlook is based on clear drivers supporting our second half expectations, many of which are already underway while acknowledging the dynamic macro environment. As Patrick outlined, the Three-S plan is driving tangible improvements, and we're confident that we are positioning Perrigo to generate sustained growth of shareholder value over time. With that, I will turn the call back to Eric.

Thank you, operator. We're now ready for questions.

And I see our first question is from Chris Schott with JPMorgan.

This is Ethan on for Chris Schott. Just to start off, and you touched on this during the call, but as we think about the operating margin recovery for the CORE kind of non-Infant Formula business in the back half of this year and into 2027, can you help level set how much of this is driven by working through higher cost inventory in the near term versus how much will require OTC volumes to rebound and normalize? And then my second question is just any updates you can offer on the Infant Formula strategic review and kind of latest thoughts on the timing more broadly?

This is Eduardo here. Thank you for your question. As we highlighted, our operating margin in the first quarter, then as we provided our guidance in the first half of the year would be significantly impacted by the carryover volume variance that's impacting this first half. But also in the second half, we expect to see significant uptake on the market in terms of the recovery of consumption that we're watching very closely, given some of the dynamics going on. And so we expect margin improvement because of the different activities we have: innovation, continued distribution gains, amplified demand generation as well as opportunistic geographic expansion, and also the ramp-up of the operational enhancement program that will benefit our OpEx and operating margin. So overall, as we look into how we're going to see between the first half and the second half, we're going to see a very meaningful improvement on operating margin expansion because of these different factors. To your second question on the Infant Formula: just giving a little bit of perspective, the business, as we saw today, had a relatively good performance in the quarter with net sales growing about 2%, driven by higher contract manufacturing, and the store brand and branded formula were a little bit impacted by prior year comparisons. From a market standpoint, we're seeing consumption in store brands slightly improving versus what we had before. The business review continues. We're working with our advisers to assess all available options that we talked about before between optimizing our network. To that purpose, we've recently announced a rationalization of our capacity in one of our facilities that will help streamline the business and reduce our costs. But also, we're looking at other options in terms of partnerships and divestments. There's nothing more to share at this stage, and we continue with that review and expect to provide further updates as we progress through the year.

We have our next question from Susan Anderson with Canaccord Genuity.

It's nice to see the volume share gains in the store brand in the U.S. I guess maybe if you could give some color on what's driving that share gain? What are you doing differently with retailers than you were doing before? And then also, I think maybe you said it was across most categories, but if you could talk about which categories you're seeing those gains across the portfolio?

Susan, what's driving those share gains? We're winning more contracts. In 2025, approximately $100 million of net contract wins were secured and some of those are rolling out now. So we're taking a greater share of store brand contract volume. That's number one. Number two is we want not only a greater share of store brand contracts but also to grow store brand share of the overall category. We apply brand-building marketing capabilities from our national brands to store brands, which grows consumer awareness and household penetration of store brand. There are two critical things: you want a greater share of store brand and you want store brand to have greater share of the marketplace. That provides a double win for us. Regarding which categories are growing: we compete in seven OTC categories. We're growing share in all of them with the exception of skin where there was some temporary supply disruption; it's a very small business for us. The rest, which are the major categories, we're growing our share of store brands. Allergy is up 180 basis points, pain 110 basis points, digestive health is up 30 basis points, and the standout performance is in nicotine replacement therapy where we've seen a 540-point volume share growth year-to-date. So it's broad-based and substantial.

Okay. Great. That sounds good. And then maybe if you could talk about how you're planning for cold/cough in the back half of the year. Should we expect that to finally return to growth, particularly as we lap some easier compares from last year? Or are you thinking about it being more flattish? And then final question, are you thinking about any pricing for the back half of the year, particularly given inflationary pressures now?

On cough and cold, I've been trying to predict cough and cold season for a quarter of a century and it can be unpredictable. This was an abnormally weak cough and cold season in the U.S. and many countries in Europe. The rational forecast is to take an average season. If we take an average season for 2026–2027, that will be materially stronger than the season we've just been through. That is a logical outlook. Also, we are soon lapping the beginning of last year's category contraction, so by the math that should stabilize. Regarding pricing: the inflationary pressures from the Middle East have been moderate for us and we'll manage those through normal operations. We are evaluating pricing depending on how commodity prices evolve. We're in active consideration of pricing actions both in the international branded business and our store brand business across regions.

To add to that, in times of inflation we will watch for potential pickup in store brands as consumers seek value. Historically, lower-income households correlate more with store brand purchases. If that trade down accelerates, it's an opportunity and we're ready to take advantage of it.

And we have our next question from Keith Devas with Jefferies.

Maybe just zooming out a little bit and returning back to the macro picture as it pertains to consumer health. I know you called out some expectations for the second half to be better. Could you add more context on exactly what's driving that? Consumption has been softer for longer than expected. What's embedded in your expectations for the second half to be better? Is it better visibility into contract wins, destocking easing? Can you unpack that a little bit?

Thanks, Keith. Our guidance incorporates a wide range of outcomes. There are four key areas driving consumption opportunities: innovation, such as the Compeed portfolio expansion and new Infant Formula offerings; continued distribution gains and competitive take rate; demand generation, where retailers are increasingly asking us to amplify programs across categories; and targeted geographic expansion of priority brands. We acknowledge retailer destocking in the first quarter, which we believe was mainly related to soft cough and cold demand as retailers managed cash and adjusted inventory. We are also monitoring geopolitical developments and potential inflationary impacts. We still believe there will be a recovery because last year's comparison was a significant decline, but we are watching these variables closely.

Fundamentally, there hasn't been a big shift in incidence across categories and household penetration is quite stable for us, aside from some small format shifts in pain. As I said, the effects last year started to be seen in Q2, so we're soon lapping that contraction, which should help stabilize the category. We constructed guidance with a broad range of outcomes and much of our demand generation and cost-saving activity is weighted toward the second half, which supports the outlook. We're confidently reaffirming our 2026 guidance.

We have our next question from Daniel Biolsi with Hedgeye.

I was wondering if you could speak to consumers' purchasing behavior in-store versus online for branded versus store label products in Self Care categories. Is there a notable difference with your largest customers? Are they doing a good job of highlighting store label alternatives in their searches? When I look at the largest retailers, there's a big difference between searching for Advil versus ibuprofen, for example.

Good question. Some of our higher shares in store brand do tend to be online. Collectively, we can do a better job on store brand representation in e-commerce with some big traditional retailers—landing pages and advertising could be stronger. Traditional e-commerce players that do this well enjoy higher shares and we're seeing competitive takeaway within that channel as well.

An important example is women's health and Opill, where e-commerce grew almost 30% in Q1 and sales on Opill were double-digit, plus 12%. So e-commerce is playing a very important role in growth.

And then can you share what the Board's thoughts are on the dividend currently?

As we discussed last quarter, we continue with our capital allocation plans—investing in the base business while focusing on debt reduction and shareholder returns. The Board will continue to assess the dividend on a quarterly basis to optimize capital allocation and make decisions for the remainder of the year.

There are no further questions at this time. I will now turn the call over to Patrick Lockwood-Taylor for closing remarks.

Thank you very much. And again, thank you, everyone, for joining us. To close, I want to put this quarter into clear perspective. The work we've done over the past several years is driving meaningful change at Perrigo. We are a more focused, disciplined and consistent business, and that stronger foundation is enabling us to manage through a challenging environment more effectively than we could have done in the past. We are delivering on our promises. We completed the Dermacosmetics divestiture and are applying those proceeds towards debt reduction. We are executing our cost-saving program in line with to slightly ahead of expectations. We are simplifying our portfolio. We're strengthening our operations, including continued progress in Infant Formula. At the same time, we are delivering material share gains, reinforcing that our commercial strategy is working. But this was not a perfect quarter. Softer cough and cold demand, inventory destocking and European consumption pressures weighed on results. Importantly, our improved operating capabilities enabled us to mitigate those pressures and capitalize on opportunities where they emerged, as demonstrated by the fact that both EPS and our share gains were ahead of our expectation. As we have moved into the second quarter, we're also encouraged by the continued momentum in market share and in-market execution that we are seeing across the portfolio. That progress gives us growing confidence as we move through the year and reinforces our conviction in our 2026 outlook and long-term trajectory. We remain focused on disciplined execution, controlling what we can and building enduring value over time. Thank you very much for your continued interest and support.

Thank you, ladies and gentlemen. This concludes today's conference. We thank you for your participation. You may now disconnect.