Elanco Animal Health Incorporated ($ELAN)

Good morning, Jon Block at Stifel, and welcome to 2026 Jaws & Paws. We've got a great day. We've got 14 total sessions. Overall, we have a solid 2 days plan. We've got 22 companies, 4 physician panels, 1 animal health industry discussion across the next 2 days. So we'll be busy up here. We're going to kick things off with Elanco Animal Health with their CEO, Jeff Simmons -- President and CEO, Jeff Simmons; and CFO, Bob Robert VanHimbergen. Guys, good to have Elanco here again this year. Appreciate it, and I appreciate you guys kicking off the conference.

Jeff, a really good first quarter, and then I think some questions followed after a competitor printed their quarter. I figured that's a good place to just start off. Let's go back in time, walk us through 1Q, the good things and then maybe what's followed shortly thereafter.

Yes. I'll have Bob maybe build on the first quarter. But -- thank you, Jon and Stifel and the opportunity here. We need to get this Jaws, Paws and Hooves. We got to get the farm animal in here too.

We'll figure out a way.

So hey, just at a high level, yes, a great Q1, a lot of momentum coming out of 2025. We've had 3 years of growth. The growth and the quality of the growth continues to improve. I've said pretty openly, and I think the organization believes inside Elanco, this is the best quarter since the IPO since 2018. Just the quality of growth, farm, pet innovation, our base business grew. So back to the algorithm in December that we laid out for the next 3 years, we're more confident than even December on delivering on that algorithm. And Bob and I can build on that here going forward. So a nice strong 10% quarter and growth and a beat and raise on all accounts. And I think the big one that everyone is watching is the innovation, which we will unpack. But we've got some special innovation in major markets that are growing. But I want to come to your point. I think there's 3 questions that came out of earnings season in animal health. And we spent a lot of time since then really trying to -- with data and facts and was on CNBC this morning, et cetera, just really trying to articulate these points. Question one is just stepping back, is animal health the market growing? And the answer is yes, it's growing, and it's growing in a durable way. And the fundamentals underneath this market are strong. The market grew 7% last year, 10% farm, 5% pet. You're seeing it on the retail side growing farm animal and pet and you're seeing it in the international markets, both in farm and pet as well. I think most importantly is I think the January, February cool weather that maybe hampered a little bit of growth in Q1. As we've said, we've seen a really strong rebound. I think that's probably what's been over-indexed to say, oh, is there a problem here? We saw derm grow 10% last year. We saw broad-spectrum para grow 27%, and we see a lot of those trends just continuing. So is the animal health market still growing? The answer is yes. And I think January, February weather, the rebound we've seen in March, April and even into May is showing that, that durability continues. I think the second one that everyone is saying is, there is some consumer worry out there. There's pressure on the consumer. But what we've seen in our market research and seen in our business, especially on the pet side, is the consumer is prioritizing pet care even over priorities like entertainment, eating out for themselves. And I want to emphasize some omnichannel retailers are saying, well, they've seen some pullback. I think that's a lot on durable goods, hard goods, not as much on pet care itself. So on pet care, derm, para, where we're playing, the spend continues to be resilient. The pet consumer continues to be resilient, and we've seen that. And then you add on top the globalization of pets and you add on the increased compliance. And then something Elanco has and nobody else does is from the standpoint of the retail business, 1/3 of pet owners that maybe are a little more price sensitive, we've seen really strong growth with that Bayer portfolio. So that's -- and then the third question is pricing, which has been -- well boy, is pricing being used? Is pricing going to be used? Listen, I've been in animal health 37 years. I said last night in the dinner, show me anything back from the frontline days in the '90s to now where price has been used in pet health to capture share. It is not one of the incentives. It doesn't drive consumer behavior in pet, and I don't see that happening. We started this year with record high pricing as an industry. Those prices have held. We saw that a strong pet pricing in the first half. I can talk, we're guiding the second half for strong pricing. So pricing is not being used as a lever, and we haven't seen it be used as a lever. This is a market that responds to value and differentiation, and that's where we're leaning in. I think the biggest change I've seen in the last 6 months is more spend to get and hold share, but it is not with pricing. So animal health is growing. The pet consumer is as durable as I've seen. I mean it's on animal health. And three is pricing continues to remain constant and strong, and we see pricing being strong throughout the whole year, both in pet and farm for Elanco.

That's a great place to start. And I'll bounce around, Bob, maybe I'll just jump over to you to Jeff's comments of pricing being strong. Maybe talk about that price in 1Q, where it landed and then why the conviction you should sort of have an increasing contribution from price throughout the balance of the year?

Yes. No, that's great. Yes, thanks for the question. Yes. So price in the quarter was 2%. That was right in line with our expectations. And we've been clear that we expect price to be an accelerator in 2026 versus 2025. And why we have conviction around that? We did take the highest pricing out of the vet clinics. It's been the highest in 5 years. And then number two, I would say, because we have pricing now on our launches from last year, Zenrelia and Quattro, we continue to price to value. and we're seeing price come through on some of those products. And listen, the industry right now, Jeff talked a bit about this just now, right, is we're not seeing pricing being a lever right now. What we're seeing is increased spend in DTC and really trying -- competitors trying to maintain share. And we've been using some data to really determine how and where and how much we spend on DTC. We've been using data for quite a long time. It's been extremely successful. That's where we're seeing the competitors respond is really an investment in that area versus price right now.

Okay. Fair enough. I am going to bounce over to U.S. Pet Health, right? That was a focus in the quarter. You guys mentioned improving trends exiting the quarter. March was up 8%. April was even better. And then I think you earlier alluded to May being pretty solid as well. But in that very helpful slide that Elanco had in its earnings deck, you did talk about U.S. Pet Health up high single digits to low double digits in the back part of the year. Jeff, just talk about the conviction there and maybe as best you can detail the drivers that would sort of accelerate the growth to those levels in the back part.

Yes. And I'll let Bob build on this. But I think the big thing here is, again, first is the new products. We continue to see Quattro and Zenrelia and the significance. These are big markets. We've got -- we've said Zenrelia coming out, same trailing 12 months. So we've got blockbuster status. The Quattro differentiation continues to really continue to really resonate with pet owners and veterinarians. So we're going to be lapping really a second half that's much smaller. So that's going to be a key growth driver. Two is the Befrena launch. We're now with the KOLs. We're launching this product by the end of the second quarter. It will be a phased step-up monoclonal antibody launch. So Befrena will play pricing, will also play, and Bob can get into that. Those will be the key drivers. And then the continued retail business, we continue to see being stronger than last year, more share than last year, and that will be another factor.

And, I would maybe add on just our corporate account growth. We saw 12% growth in Q1. That's been an area where we've seen some continued progress here over the last, call it, 3 to 4 quarters, just now as we have a broader portfolio, and we're seeing that certainly that pull Jon come through. So yes, we're very confident in the second half. That is why we provided that clarity, not only from the topics we talked about, but also Elanco Ascend as we've launched that 5, 6 months ago. We're starting to see in early days still, but we're going to start seeing some of the operational improvement come through on that phase as well. And the other thing I would tell you is like, listen, our guide, we've been clear on guide. We're going to be on the right side of it. We're going to give balanced prudent guidance. Our guidance does not assume a recovery in vet clinic volumes, and that's because of our omnichannel approach.

Doesn't assume recovery in vet visit volumes, didn't assume Zenrelia label improvement either. And does assume some competitive -- I don't want to say headwinds, but I guess just to maybe close the loop there, Bob, what it assumes around competition has anything deviated from that of late?

Yes. So nothing has deviated from our expectations in the last several quarters, but we're conscious of different things that could happen. And listen, that's why we give balanced, prudent guidance and we think about the puts and takes, and we said we'd be transparent on that, and I think we have, and we'll continue that going forward.

Okay. Fantastic. Zenrelia, maybe let's go over there. So really good quarter. Jeff, you were very bulled up, I thought on the earnings call, you mentioned again the trailing 12-month blockbuster status. Let's talk about the initiative here in the U.S. You're going to -- you're running the additional trial. You expect to submit by the end of the year and hear back from the agency mid-'27, but I'll throw it to you.

Yes. I think I'll just start with Zenrelia. We've got over half the clinics in the U.S. on. That's higher than our first phase of Credelio. I mean, before we got Quattro. So I mean, this is one of -- we don't have many products we can say we've had over 50% of the clinics on. And then just looking at the momentum of the product relative to just its efficacy profile and the number of users that are moving from second line to first-line treatment, picking up 5 share points, the number of clinics that we're adding. The U.S. has a lot of momentum with Zenrelia. And I would also say we'll get into the global side of this, moving to 24/7 manufacturing gives you an idea that we see future year demand happening now. So -- and then we expect seeing some of the early data that this is going to be a pretty robust derm season given weather trends and things that we've seen. So I mean, that kind of leans in. Relative to the label, as we've said, we had a multipronged approach. First was the PCR data we submitted. We got the change, the fatally induced taken off. Second is we had the booster study that we ran and published more for public awareness of how the product performs. That's turned out really well for us relative to the use of that data. And we submitted that data to the FDA upon response from them with hopes of potentially a change. And then lastly, I think importantly is given their response, we've made a decision to go ahead and run a trial to actually work, and we've got concurrence on that trial to actually would remove the box. That study has started. We expect to have that study completed and data submitted by the end of the year. That would put us into '27 for a decision. So -- but I think relative to how the product is performing globally and in the U.S. and 24/7 manufacturing, we see this as a nice opportunity later, but is not needed now.

Yes. And Jon , the way I think about the time line, too, right, is you figure a mid-2027 approval and a clean label at that time just provides some nice year-over-year growth in '27 versus '26.

And even '28 potentially, you might have color...

Exactly. And in the meantime, we're at 24/7 manufacturing. We're in a good spot.

Okay. And Jeff, to push a little bit, you mentioned a clean label. I was thinking when we thought you were going to hear last around maybe 3 outcomes, status quo, clean label or middle ground. Is this more with the additional data that you're going to submit, more of a binary event where either it's a clean label or status quo? Just your thoughts there.

Yes. I think like pharmaceutical standards, we've got concurrence on a protocol that will create an endpoint. The endpoint will create a change. And that's where we are, and that's what we believe will be the outcome. Again, there's always nuances when you're running studies like this. But yes, that is our belief. Again, I would just say the expectations of where we were even at our Investor Day to now, the Zenrelia success, we're in 44 countries, the international momentum, that high teens, 30% share in Europe, even with a third competitor, the head-to-head study, we're the only one share in a head-to-head study that is playing out in the field. The efficacy of Zenrelia, this is a special product that is taking unusually amount of share. I point to Brazil that just came through the Southern Hemisphere derm season, and we've just taken over the majority of share over Apoquel within a year. So that, I think, demonstrates what kind of product we got here.

So you stole a little bit of my thunder because I was going to go down that road. But I'll follow up. So I actually think there was a precursor that a lot of people missed for Zoetis in 1Q, and it came out in the fourth quarter when you guys really started talking about your share for Zenrelia internationally, the share was too high for just to be new adopters. In other words, you had to be winning switchers to get to that share level, right, because the market is just not growing that quick. So just talk about this, is the head-to-head data that's sort of catapulting those shares OUS? And are you seeing anything from Merck's Numelvi as they've now been over there for a couple of quarters?

Yes. I think, look, if there's one category where there's obvious pet owner and vet, obvious quick observation of differentiation product, it's derm. It's an itching dog. It's the #1 reason they go to the clinic, but it's also probably the #1 way to observe products. And you look at some of these labels, as I've said, some of these labels say, hey, only 65% of dogs respond. That puts you already in the fray. And I do think starting out where we did with Zenrelia put us in some of the worst cases. which then I think gave us a higher bar and that actually gave us a chance to show what kind of efficacy we have. Look, it will -- time will tell with other entries into the marketplace. The early -- I think it's a little early with the new entrant, but what we have seen is the data is playing out. We have taken more share earlier. The European team knows how to execute well. You've seen it with Adtab. Now you're seeing it with Zenrelia and they're getting ready to launch Quattro. So I think we've got a good product. And derm grew 10%. So we're not only taking share, but we're rising with the tide that's rising as well from a market standpoint.

Fair enough. So let's use that sort of as a good segue to Befrena. Anything to share from, I'll call it, the early, early experience launch? And let's start there.

Yes. You share a little bit. You've dug in on this product a little bit extra.

Yes. Listen, so obviously extremely excited for Befrena. We had several hundred vets, probably 300 vets in our office here a couple of weeks ago. And the buzz was around Befrena and Zenrelia. And so I think there's certainly a need. And listen, we've surveyed outside of that survey 400 vets on Befrena showed them a label and over 83% of them expect to bring Befrena into the clinic. So I think there's a lot and a need for a differentiated product. And I think the impact that Zenrelia is having is certainly going to be pulling in certainly Befrena into their clinics. Now Befrena, the launch, I mean, we just issued a press release last week. And if you haven't seen it, I urge you to take a look at it, but there's pictures of a dog pre-Befrena and then post Befrena just 3 weeks, and it's life-changing is what you can see. So I think there's some great commentary in there, but it's another special product we have and just builds out our overall portfolio, which again helps us with clinic penetration and corporate accounts.

That's helpful. And maybe for both of you guys, is there an analog to think about of second player to market with a clean label, some level of differentiation when we think about duration, and we'll have to find out about price, but where we can sort of maybe benchmark to when we think -- we know the Cytopoint numbers. We know it for the U.S., we know it globally. Again, an analog on where we might land with share after 12 to 24 months.

I mean there's been data out there showing second to market can be 30%, 40%. I want to be careful here because I think the derm market is growing. I think the good news is, I think, with more efficacy and more options, look for the derm market globally to grow. Second is I do think, yes, there's analogs, but there's also the JAK mAb category that I think is playing out as well. There's also a lot more being scripted online. which I think is going to drive better compliance, which is going to grow the market. So we really like where the derm market is headed. And I think that's important. And then to Bob's point, look, the label has 6 to 8 weeks. The incumbent has 4 to 8. So it's like, hey, we see a little bit of a longer efficacy line there. But the other one, what the buzz was at that day is, hey, we had to have 300 dogs, which was a significantly higher hurdle. That's why we had to wait a year for Befrena because they raised the bar. So we actually had a higher bar going in with dogs, and I think that's made people lean in. So the KOL support is matching the same support we saw with Zenrelia.

Okay. Very helpful. Maybe last one on Befrena monoclonals. It can be tricky from a manufacturing standpoint. How do you feel now, Jeff? And how do we think about where you might be maybe exiting '26 from a capacity standpoint?

Yes. So we're right in line with our launch expectations. Product has been in KOLs here for a little bit now, and we have orders in hand and expect to certainly start shipping here this quarter. Production continues to ramp. There hasn't been any hiccups on that standpoint. But we'll continue to launch and ramp here throughout the rest of the year. And it's going to be, I'd say, a modest impact to 2026, but certainly exiting '26 with some strong growth and '27 will be a nice strong year-over-year impact versus '26.

Okay. Very helpful. Sometimes I have my head down, guys. If you have any questions, please throw up your hand or just shout out and I'll get to you. I'm going to continue to work my way through innovation. I'll go to Credelio, Quattro. Zoetis talked about on their call, their share for Trio being down year-over-year, but actually alluded to it stabilizing Q-over-Q. You guys mentioned share up 3 points since 4Q '25. How do we reconcile those comments if we can? Or should we start thinking about NexGard Plus and maybe they've been a little bit more vulnerable as of late?

Yes, there's multiple players. So I do think that. I do think that look at the data that I think 40% of the clinics and then I think the most material piece of data we shared is inside those clinics, we have 53% share. So that, again, there's multiple products, right, but the 2 other big incumbents. What that is saying is typically, when you go into a clinic, there's going to be maybe we'll carry 2, not 3. And so I think what Quattro has done is placed itself into one of those 2, and now it's taken and moving to first line. With Quattro with the 4 points of differentiation. We're hearing a lot about fast tick kill and that data and tick bites up more than we've seen in Q1 with CDC and two, I think the palatability. So Jon , I think that, yes, I think it's both of the incumbent products. I also say, hey, we grew 27% last year. I still see the January, February was slow, but I think you're going to see a really robust broad-spectrum endecto market growth. And Bobby in the Investor Day said, hey, we need more clinics. We've picked up a bunch now that we're at 40%. We've got to grow share within those clinics and become first line, and we're doing that with the 53%. Puppy starts now for 3 quarters in a row. That is -- we're getting the new puppies faster than anybody else. And now we're globalizing. We're in Australia. We launched last Wednesday in Japan, look for us to globalize with Quattro in a pretty robust way.

So just to maybe put a bow on that, market still has robust growth. The 40% of practices can go higher. The 53% share within practices can go higher. And then you have the CQ International, which is just arguably the first thing.

In a $1.5 billion market. And I just got to put a pin in Befrena, Quattro, Zenrelia, when you look at the aggregate of our pet products, I want everyone to know this. We're at parity to premium on pricing. That's really important that we are pricing to value. We got value, we got differentiation, and we're doing that. So some people out saying, well, there's some discounting. That is not the case. And you'll see that even as we go the rest of this year.

That's helpful. I want to talk about the next wave of innovation and certainly, Bob going a little bit into the P&L. But on that next wave, look, the air pocket, and I'm saying this to be clear, tripped up one of your primary competitors. I still think there's a lot of incrementals with what you have in your portfolio today. We just alluded to CQ International, Zenrelia traction, maybe the improved Zenrelia label. Befrena is almost all incremental in '27. But it does seem like 2028 could be in need of incremental dollars. So let's go back to your Investor Day. You talked about 5 to 6 potential blockbuster approvals through 2031. How about a little bit more about the cadence of these products? And could we actually see one of these surface in 2028?

Yes. And I'm going to jump over to the farm animal and retail as well. But I think, first of all, these are major markets and Elanco is very under-indexed on share. I mean we were not in derm 18 months ago, and this is a $2 billion market that's growing double digit. Para's, this broad-spectrum injectable market is the fastest growing and now watch it globalize, that's going to surpass $2 billion, and we're very under-indexed there and you're seeing these shares. So I think you can model those 2 alone and say derm and para, the growth overall. So I think that's important. And then watch for this life cycle management. I mean, Ellen is dropping in a vaccine approval every 6 months to a year, and that $10 billion bio market continues to grow naturally, and we continue to have innovation. I jump over and say, Experior continues to have a lot of growth. The portfolio effect of Farm Animal, throw in our NutriQuest acquisition, now AHV, you're going to see really nice -- in the U.S., I highlighted on [indiscernible] this morning, I mean, the protein demand is going to grow. The market is going to grow 5%. First time in 30 years, Farm Animal outgrew pet health 2x, 10% versus 5%. So I think we're going to see as leaders in Farm Animal, we're going to see natural organic growth. And then on pet retail, we're #1 there. Pet retail has, I think, surprised a lot of people with double-digit growth. So I think those are all the things. But Bob can get to it, too. I mean innovation continues to be our priority. We've got the most stable R&D team in animal health, and we're very focused. We've got 15 candidates in our pipeline. We haven't had any fallout since our Investor Day. And look, I mean, we say that word, I think you've taken that for me, that air pocket thing. We will not have air pockets. We want a consistent flow of high-impact innovation. And we've said 5% to 6% in the next 5 years. So you should start to expect some of that in that window as well.

Okay. Very helpful. I will follow up on livestock, and then I will get to gross margins. You alluded to livestock maybe up 5% from a market perspective. You guys have had some really impactful products, but Experior is coming back down to earth and Bovaer might be taking a little bit longer to take flight. When we think about that market growth, can Elanco be a net share gainer within that rate of growth for livestock?

Yes. So absolutely, right? The industry is great. And you think about our -- we know our success, if you think about just Q1, we grew 13% and 15% in the U.S. And obviously, Experior is a major product in that category. We're on 55% of the cattle in the U.S. right now. And that's after -- think about last year, Experior grew 80% in 2025. But we still see opportunity for Experior to continue to grow above the market, really on a couple of levers. One, it's going to be continued, I'd say, adoption. So we've hit the larger farms and now we're moving on to the, I'd say, the next tier of farms. And so it takes a little bit longer to get there. We've added some resources to get there as well. add in geographical expansion. So that's going to be the opportunity to get on more farms. I'd say price is going to be the second lever. And then the third is going to be just days on use. And so we're still in the early stages of what days on use are. It's about 42 days, and we believe you can get up to about 56 days, right? So there's really 3 levers that's going to show growth. And so listen, we're coming down to a more normalized off an 80% last year, but certainly, Experior is going to be one of those products that's going to grow above the market.

Okay. Bovaer still believe in it, just might take a little bit longer to get there.

Bovaer is, I think, a great classic example of the combination of CPG value, productivity, sustainability, how do you package a portfolio over time? How do you put life cycle management behind it? And we're doing that. We did it with Experior, Bovaer look at something very similar. And for the dairy market is probably one that's a little underestimated right now. It is growing. It's probably winning the protein boom, especially in Europe and U.S. And the AHV acquisition will more than double our share of voice on farm and dairy. And we're leaning in, as we said, ruminants and poultry, we see as our 2 big bets on the Farm Animal side where we can win.

We've got maybe about 4 minutes left. Let's dig a little bit into the P&L. And Bob, if I look at the 1Q '26 gross margin and the 2Q '26 guidance for GM, it implies a solid year-over-year lift into the back part of the year, call it, 2H26 lift for gross margins. Talk to, please, the drivers of that. I think you've alluded to it a bit. And then maybe as importantly or more importantly, does that momentum or run rate continue as we think about into '27?

Yes. Great. So great question. Yes. So I think about the first quarter, margins were right in line with our expectations, and we did reiterate 40 basis points of gross margin improvement in '26 versus 2025. And a couple of levers, Jon . One, we are flushing through some higher cost inventory. You saw some of that come in Q4, some in Q1 as expected, there's going to be some of that in Q2, all right? But then that's going to be flushed through. We're going to start seeing gross margin improvement in the second half. We've got some of the other contributors is going to be the basket innovation continuing to grow. The margins on that basket are higher than the corporate average. And so as that momentum continues, we'll see that natural pull-through. We'll see some fixed cost leverage as well. And so we've got some great operational performance in the 4 walls. So we're seeing the normal continuous improvement benefit. We're also leveraging the existing cost base. We'll get some absorption there. And then the last thing, still early days, but as I think about the second half of '26 and even beyond and more importantly beyond, Elanco Ascend. And Elanco Ascend is going to provide $200 million to $250 million of net EBITDA improvement through 2030. That's net of inflation, net of investment. But 75% of that value is going to come through the gross margin line, 25% through OpEx. Now I think about 2026, we're a little bit more weighted towards the G&A save because of the restructuring charge we took in December, and the team has done a great job of executing that. But overall, it's going to be 75%, 25% gross margin to G&A, and we'll see that over the next several years.

Okay. So that sort of answers the question around gross margin trajectory into 2027. Can you get OpEx leverage as well when we think going forward? Or do we have to take into consideration, look, as you mentioned earlier, the response from competitors has not been to cut price, but it's been maybe to spend a little bit more behind their products such as DTC. So just curious, if we move down to the OpEx leverage, if you see that surfacing as well.

Yes. We do, Jon . And listen, we're going to give balanced guidance, but our balanced guide assumes we're going to have some of the levers we talked about as well as Elanco Ascend. And that Elanco Ascend is going to fund the need for DTC and I'd say more importantly, fund continued R&D investment and continuing that basket of that next wave and next, next wave. And we see nice improvement there as we continue to move those products in the pipeline. But absolutely, our algorithm is going to be to deliver what we did in Investor Day, but also continue to think through the investments needed to fund the business near term as well as long term.

I'll end with one last question. Jeff, it's funny. In the past years, I'd have you up here, and it was like capital allocation, pay down debt, pay down debt, pay down debt. But it's still largely that. You're doing a great job of delevering, but you do have more flexibility, right? And so you've executed some tuck-ins. Maybe just talk about your appetite for ongoing tuck-ins. What's the optimal leverage for the company? Is it 2, 2.5? And how you sort of balance that going forward now that you are in a better position there?

Yes. I think still the top priority is at 2, 2.5. We've said that's where we're headed to, and we're well on track, a little bit ahead maybe at this point in time. So I think then as you start to look, we're going to look at shareholder value. What is the optimal thing? And I think without question, we're committed to that algorithm. And I think, Jon I end there. I mean we want to be a consistent deliver on the right side of expectations. We've got a 3-year algorithm out there right now that we're very committed to, a mid-single digit. We're ahead right now in that on the revenue side, high single-digit EBITDA. We can do that confidently. We've got a lot of levers. Ascend gives us some extra levers, low double digit on the EPS side and creating $1 billion of cash. And yes, look for us to do some tuck-ins, starting probably with Ellen, if there's molecules that we think that we can continue to grow her capacity and bring more molecules in that are differentiated. And then secondly is looking at things like AHV that makes sense. But they will have to be accretive to our algorithm. They will have to be strategic, and they won't be that sizable. They won't take us off our debt track. So I think that's -- and again, I'd just emphasize our priorities still remain growth, innovation, cash. We're a very disciplined company. We're not going to get ahead of ourselves. We're keeping our feet on the ground. We definitely know it's a dynamic marketplace, but I really want to emphasize this market is growing. Prices are strong. The pet owner for animal health products is strong and durable, and we're set up really well here for not just 2026, but the next 3 years.

Fantastic. Guys, we got to conclude there, but really appreciate your time.