Perrigo Company plc (PRGO) Earnings Call Transcript & Summary

Good afternoon, everyone. I'm Dara Mohsenian, Morgan Stanley's household products, beverage and food analyst. Before we begin, I have to note, there's important disclosures on Morgan Stanley's Research Disclosure website at www.morganstanley.com. And if you have any questions, please reach out to your Morgan Stanley sales representative. With that, I'm very pleased to welcome Murray Kessler, Perrigo's President and CEO; and Ray Silcock, Executive VP and CFO of Perrigo. It's certainly an interesting time to have them here as they're couple of years into shifting their focus to the consumer self-care on the OTC side. And a lot of you will know, Murray and Ray from their past success in the CPG sector. So many of you are likely familiar with them, and we look forward to hearing more about their strategy. So thanks for being here, gentlemen. And Murray, why don't I turn it over to you for any initial comments.

Thanks, Dara. We appreciate getting the opportunity to speak at a consumer conference because that's exactly what our transformation is about. We launched the initiative in May of 2018. So in another 4 or 5 months will be coming up on 2 years, and we've accomplished a lot. For those of you who don't know Perrigo, Perrigo, for the most part, is a 130-year old company that has been in the CPG business, but on what is traditionally viewed as on the health care side of the business with over-the-counter remedies and drugs and Perrigo's starting point was almost primarily Private Label, and which we like to talk about as store brands because the Private Label business and the business we're in is tends to be quite large and marketed as brand. So when you think of Perrigo, the core business, we make thousands of products, but we make things like the equivalent of Tylenol, acetaminophen, which is something very important during COVID. But we -- we're over half of the U.S. supply. And we sell 2 or 3x more acetaminophen than Tylenol, and we sell more ibuprofen than Advil. And we -- in almost every segment that we compete in, we outsell, by volume, the national brand. And then as the company grew, it added a generic Rx business, which drew us more towards pharma and in an international business, which is more of a branded consumer products. But again, products that are -- we're primarily treating illness in health care. So when I joined the company, I have a formula that I always sort of operate under, which is one to take a company that had been high performing that had -- its growth had slowed and redefine its definition a bit and focus it to reignite that growth. And for Perrigo, that meant evolving from a health care company to a consumer self-care company. And our overall strategy was to reconfigure our portfolio to exit the more traditional pharma businesses. And then on the consumer front, to reignite growth, expand our definition of the business that we're in and in going from health care to self-care, we broadened from just treating illness to one of preventing illness and promoting wellness. And that opens up a lot of categories for us. So as an example, we've done a few divestitures. Animal health didn't fit our portfolio. Our pharmaceutical business in Europe didn't fit our portfolio. But we bought an oral care health self-care business, which has become one of our pillars of growth in a company called Ranir. We are -- we made investments in a CBD company, which we think will be a very large category, and Perrigo brings particular expertise to help get that through and accepted by the Food and Drug Administration. We are launching science-based naturals. We've bought some branded products. We're launching some branded products, doing that around the world. And besides the Oral Care acquisition, we bought another Oral Care company, a branded one with Dr. Fresh earlier this year. And we have done a number of acquisitions in Europe, most recently, one in Europe. So -- and then with that, with this notion of reconfiguring the company, and we still have one big piece to go in -- with our -- we still have the Rx business, which is large and profitable in the U.S. but not part of our core consumer strategy. We've brought in a ton of consumer talent, made massive investments in e-commerce, ahead of the curve on COVID. So we're benefiting by that by now, put in cost savings initiatives. And as a result of all of those initiatives, we have, in fact, reignited growth. So last year, in total, I think we grew about 6% or 7%. Organically, we were just around our target of an organic 3% growth. This year, we will exceed that organic growth. And on a year-to-date basis, our consumer businesses, through 3 quarters, were up, I believe, around 11% on the top line. And we made a number of investments to make that happen. And our goal is consistently over the long-term to meet or exceed the CPG normative peers, which is -- which had been 3%, 5%, 7%. 3% top line growth organically, 5% operating income, 7% EPS. And on our consumer business, our goal was to try to get there next year, but we're about a year ahead of schedule and we're getting that done on our pure consumer businesses this year. Our Rx business does not grow as fast that generics are relatively flat business, but a lot of cash that helps -- that's been help paying for the transformation. So that's kind of who Perrigo is. And ultimately, this strategy, of course, is designed to unlock value because even though we behave like a consumer -- a CPG company, all the people now in the major businesses running at our CPG people. We're selling to the same customers, and we're selling through the same channels and marketing in the same ways. We probably -- our EBITDA -- our EPS multiple is down around 12x when the CPG norm is -- average is up around 21 or 22x. So a lot of value to unlock, and we -- as we attract more consumer, investors, and we consistently perform. The only one other area is part of what's held that back has been some overhangs relative to taxes and some big tax issues that we're working our way through. And so in my perfect world, we continue to perform the way we have. We continue the transformation. We get rid of over the next year or so, those overhangs and we unlock a lot of value for those who choose to go on the ride with us. So that's us.

Great. That's very helpful. That's a great overview. So maybe you could take a step back and at this point, sort of talk about the strategies you've put into place over the last couple of years, the key aspects, where are you standing them? Have you seen most of the benefits already or most of the benefits still to come as you go through the key areas, where do you think you stand as an organization today? And how much work is there left to be done?

I'd say we're ahead of schedule on the growth front there, for sure. I mean we are growing as well as any CPG company or stronger with line of sight. That's been my biggest surprise there coming into the company is how much growth opportunity there is. I mean, you know my background. I came out of tobacco, and you never had acquisitions or bolt-on acquisitions other than the couple of big giant mergers I was involved in. But here, there are always new technologies and smaller companies and spin-off of companies that provide lots of bolt-on opportunities and tons of organic ideas, and we've been able -- one of the key strategies was bolt-ons. I talked about that. A second key strategy was filling our innovation pipeline, and we put $500 million of consumer products in the pipeline, launched over $100 million of new products this year and refilled that pipeline again. And I'd like to see that generating about $150 million a year on the consumer side. We put in our cost savings strategy and are delivering on that right on time, but we needed to make significant investments in infrastructure. So my positive surprise was the growth opportunities. My negative surprise joining the company was that it needed more investment in technology and infrastructure and a few areas that I didn't expect, but not unsurprising for a company that growth had slowed that they were cutting costs and not investing enough. So we've made those investments. We're through that phase. And the next big challenge for the company now, going forward, is we have to not just deliver growth but profitable growth. And that's the next step. And a big part of making that happen, where the remaining heavy lifting is being done is on the gross margin side. Gross margins had deteriorated a little bit partially because of investment, partially because of mix, relative to our store brand business just growing so quickly, which has a great operating margin but not as higher gross margin. And part of it because of pricing pressure in the store brand business and in the generic Rx business. So that's our -- that's the area we're working hard on so that you'll see meaningful increases in gross margins across all of our businesses next year through a combination of cost savings, SKU rationalization, selective pricing and product portfolio prioritization. So that's kind of the next big work to be done. I like the way it's going. I like what I've seen in the first couple of years, and I feel blessed and fortunate to be running a company that was part of the solution of COVID, not shut down because of COVID. We had a little disruption, but for the most part, it's been amazing to see the employees of Perrigo keep 25 -- 30 facilities globally running 24 hours a day, 7 days a week, through 7 months of a pandemic around the world without missing a single shift anywhere in the world.

Great. And Ray, on the gross margin front, maybe can you talk about the key building blocks going forward to drive gross margin expansion? What are the biggest opportunities, both as you look out to next year, sort of Year 3, but also from a longer-term multiyear perspective?

Yes. I think the big opportunity is definitely improving our productivity and efficiencies in the plants. We have the momentum for our operating expenses, but we also have a momentum for cost of goods sold, too, and we are driving towards our targets. Another big opportunity is in how we rationalize our product portfolio, cutting SKUs and doing other things to improve the overall profitability of our product mix. And in addition to that, we have suffered, especially in our CSCI business, we've suffered from pricing -- downward pricing pressure and the opportunity to reverse that and to at least maintain our prices and maybe where appropriate strategically to take some price increases.

Okay. And Murray, can you get a little bit more granular on your ability to take pricing? What drives it? Maybe discuss a bit the competitive environment here. But as you think about realizing greater pricing going forward, what gives you the comfort that you'll be able to do so?

Well, that -- well, first off, it's upside because built into our model, a little bit of downward pricing pressure on the U.S. private label business has always been there. We actually grow our volume ahead of our revenues every year. We're in a business that we've been growing revenues in the U.S. prior to all of this transformation work at about 1%. But with that, volume was growing about 3.5% or 4%. Now volumes growing closer to 5%. We still have the 1.5% basically downward pricing pressure, but the difference to be able to do it goes back to the investments. When you -- if you service at a higher level, if you have better technology than your competitors, if you were innovating at a faster pace than everyone else is doing, understanding the consumer better then that's where the dialogue goes with your customer. When you let your products commoditized to some extent, then the leverage shifts to the customer. And we don't want it to be a leverage discussion. Our win-win is when we are innovating at a higher level. So in our language, which may be new for first -- it's not pharma versus CPG. It's store brand versus national brand. In the old days, Perrigo and most private label companies were national brand equivalent or basically, we just copy what they do, right. Do it really faster and better than -- and quicker than competition, be the first one out there, that was the business model. In my mind, that leads itself to a constant negotiation on price. When you are a national brand better or a national brand different, when you are doing the traditional consumer work, uncovering the insights, coming up with new forms and new packaging and we can still do that even in the -- on our over-the-counter products that have to go through the FDA, I can have a nicotine product. I can't change the nicotine level because Nicorette holds the API on or holds the NDA on that particular product, the authorization from the FDA. But that doesn't stop me from putting it into a product with a liquid center, put it into a new flavor, put it in a unique packaging format and on and on. And that's where we've been shifting our energy. In tablets, I can do different forms, rapid release, and I can do all kinds of things that are not restricted and do them quickly in similar timetables to any CPG company that I've worked out. And then with broadening to self-care, get into categories like science-based naturals that don't even need to go through the FDA or Oral care that doesn't need to go through the FDA and other segments as well.

That's helpful. And then on the innovation front, can you talk a little bit about how the process has changed since you've come on board? Is it level of investment? Is it people? Is it how you execute? What's changed from an innovation standpoint to drive greater yield and even higher levels going forward in terms of top line contribution?

I think 2 or 3 things are dramatically different. One, it was decentralized. So each of our innovation centers were completely isolated from each other. I brought in a guy named Jim Dillard, who worked with Ray and I, all the way back at UST. He was the Head of Innovation at Altria. He came out of the FDA, and he is -- and we put everything under him. It's matrix. I mean, the general managers in the division still have their R&D folks, but Jim is a very hard driver from an innovation front. He's brought the processes that have worked for us in our past CPG lives, including stage and gate innovation models, putting in the market research, concept testing, quantitative testing, basic laboratory test markets, advertising, testing all design to screen out and identify the big winners, also an emphasis on fewer, bigger, better so that not as many tiny items, but now things like Prevacid, which we bought and we relaunched or we are doing the OTC switch on Nasonex, which we believe will be a big brand. We're at customers right now. I haven't announced the name of it, but licensing opportunities on branded products, a push on insurgent brands, which is a trend with -- for both national brand and with private label brands, but our big customers, the Target's of the world, the Walmart's of the world, they compete with each other. And they no longer just view their competition as the national brand. They want to be better than -- Walmart wants to be better than Target and Amazon and likewise. So there's been a -- this development of what I'll call insurgent brands, which are actual brands, not the store brand, developed specifically for a customer. So when you see Procter & Gamble, they have formed a division that they have put off to the side of traditional Procter & Gamble to develop these insurgent brands. We think at Perrigo, with the consumer expertise we have plus our ability to handle complexity, right? Because that's what a private label company does, we can do these insurgent brands and compete head-to-head with the biggest CPG companies and do it better because that's what we do all day, every day. So that helps build the innovation pipeline. Another area was sharing. We were not sharing ideas and technology and research around the world. So naturals, as an example, growing dramatically in the U.S., but we had no entries in it, yet we have a $400 million naturals business -- clinical trial naturals business in Europe that was natural solutions to reducing your cholesterol as an example, natural solutions to weight loss as another example, natural solutions to sleep as opposed to a pharmaceutical solution to a sleeping pill, a melatonin or others. And those are just a few examples, and we're bringing those to the U.S. as we speak. So sharing, bringing more sophisticated process and systems, investment, the dollars to do it and bringing in the talent to do it.

That's helpful. So we talked a lot about the detail behind the strategies to drive you to the long-term targets of 3%, 5% and 7%. What's the time frame for when you think you can consistently get there, sort of across those metrics? How do you think about that? How much visibility do you have around that?

Well, I think we're there now. I think my biggest challenge, and I'll talk about that in a second, but we got the 3% last year. We'll get better, better this year, like I said, on the consumer businesses, which is the ultimate company we're trying to create. We will deliver the 5% operating profit growth on the consumer businesses this year. So -- and we have line of sight to years to come on growth on those businesses. What drives down the average is the Rx generics business, which is a lower growth, flattish kind of business, throws off a lot of cash. My original plan that I was to execute, it was the Board's original plan when I came in, was to sell the Rx business a year ago. We didn't like the values that were offered, which were tagged mostly to problems our Rx business doesn't have specifically some overhangs around opioids, which we're not in and some other state Agis which we're in, in a small way compared to the others. But those drove Rx generic multiples down lower and as a result of that, we still have the Rx division because it's a good business. It throws off couple of hundred million or more in EBITDA each year, and I'm not going to give it away and destroy shareholder value in the process. So line of sight to the consumer business, it's there now. We're growing above 3% organically. Inorganically, we're well above that. And we have plenty of line of sight to go. The focus is on profit rate, talk to you about some of the programs we're doing on the gross margin front and the cost savings front, line of sight there as well. And it's just going to -- the Rx separation will happen when it can be done in a shareholder-friendly way. But as that eventually becomes smaller and moves out then we'll get the total company to the 3%, 5%,7%.

Great. And then, Ray, maybe we can dive into a bit more productivity opportunities. What are the key buckets within your cost savings program? How much visibility do you have around, has COVID impacted the potential to deliver savings at all? And are there any sort of post-COVID areas where there might be room for more efficiencies that have opened up in this environment that you wouldn't have anticipated a year or so ago?

Yes, it's interesting. I think, first of all, with respect to the last part of your question, certainly, we've seen big savings on travel and those kinds of budgets as a result of the fact that people obviously are not traveling at this point in time. One of the big things, though, is that despite the COVID spike, working from home, we have been successful at continuing our ERP development, our CFP, centralized finance program, which we started just before the lockdown and which the team has done a fantastic job on keeping it on track, on time and we will start delivering the cost savings from that beginning in January of '21. So on our operating expense savings program, which we call Momentum, we've certainly achieved the savings we had anticipated for 2020, around $35 million in savings. And we're on track to deliver an additional savings for next year on top of that $35 million from this year. So we are really focused on the original momentum savings targets, and we are achieving them. But I do think that the COVID lockdown has, as I say, provided an insight into how much we spend on things like travel and how things that we can do now that we've learned how to use Zoom and other tools to be able to communicate without having to get on a plane and take that. It's a time factor, too, even this where we're attending today. It's so much easier on a time basis to spend when you haven't got to get on a plane. So I think some of those lessons will go forward into the future.

Great. Also -- I think the number was somewhere between $20 million and $25 million of additional costs we had to take on to keep our employees safe because of COVID, but given the strong performance of the business and through cost savings initiatives, we were able to maintain our guidance despite that. So that was a real positive. And it's kind of the opposite of a negative, Dara, that we also have working in our favor next year, only 1 year, but we felt a social responsibility to do what was right for the world and the country. So we deprioritized and stopped making, in fact, some of our more profitable items earlier in the year for about 3 or 4 months because the world needed acetaminophen as a first line of defense for COVID, which is one of our lowest margin items. The world needed famotidine. The world needed at the time we were making albuterol inhalers. The world needed some of those essential products, and we said we are not going to focus on profits during this period of time. If I'm going to ask employees to come in to work, feeling like they're putting their life at risk, well, everybody else is staying at home, we are not going to ask them to make Minoxidil hair growth products. We're going to -- they need to be able to feel proud of what they're doing matters. And that was a campaign we had internally and how we were able to keep our employees working and we did a lot of things to keep them safe, obviously. But now we're back to making the full line. So we'll lap that. You'll also get some benefit next year of just our normal gross margin mix versus one that was -- had a whole lot of acetaminophen in it, in the beginning part of the year.

Right. Okay. And maybe from a consumer standpoint, Murray, what changes on the consumer side or even the Rx side of the business? What are the changes, longer term, you think coming out of COVID as we think about behavioral changes?

The biggest, by far, to me, is shopping behavior. I mean, the shift from brick-and-mortar to either to pick up or to have home delivery, and I'm not talking about Amazon, which was growing at a good pace. I'm talking about the acceleration of Walmart going into high gear, the acceleration of Target going into high gear. Fortunately, we were well ahead of that curve and had made a significant investment, but we're probably in Year 4 -- we're only in Year 2, but we are hitting the numbers of Year 4 and why Perrigo has performed so well that if you're a traditional investor or a sell-side analyst who is looking at purely IRI, which was -- we did a pretty good job prior to all this. It's not even close in what's really going on in terms of our shipments and what consumers are buying. We've seen a radical shift, like 10% of the business, like overnight shift over to that business. I don't see that going away. I mean, I think that is a large portion of the business and will grow from here, but was a game changer. I'm not sure it's consumer-driven. It's certainly investor-driven. But through COVID, I think there has been another social responsibility on environmental issues and environmentally friendly packaging and carbon emissions and diversity and inclusions and all of the other types of ECR initiatives are, I think, will be an important part of the way we look at things going forward. And I think a lot of our investors are expecting that. And they expect it from Walmart, they expect it from Target, and they expect it from Walgreens and CVS. And since we're -- we tend to be their -- one of their biggest suppliers in each case, we need to keep up and make sure we're doing that as well. So I also think there's a trend towards more natural products. I see that. I have my opinions in other categories, but you can get that from those CEOs. But for me, biggest shift, e-commerce, next biggest shift, and that's where we think the future is, is less of -- I'm going to my doctor's office to treat an illness and a much bigger shift on, I want to live a healthier well life. So I want to be doing the things, focusing on wellness, all the way back to meditating, and riding my bicycle, and getting fitter to, if I can take something supplement wise to some natural types of remedies or treat myself and making a doctor's office or a hospital visit kind of a last resort.

Right. Okay. And you talked about some growth areas in the business through M&A recently or partnerships. Can you touch on Oral Care, the growth opportunity there, the CBD partnership also and your thoughts on how those businesses can progress over time?

Yes. Oral Care is immediate. Oral Care is a business that we bought and our -- we don't buy a business unless it's revenue accretive because we believe from all the research we've done that the single highest correlate between multiple and the company's different drivers is revenue growth first, and not just onetime buy -- I mean, organic revenue growth. So we bought Ranir because it was a company growing high single digits to low double digits for years and continuing to do so in our care. And it is -- but despite that, relative to the rest of -- we tend to be categories that are 30% revenue penetration, 30% share overall of private label, which is high compared to many CPG categories. And then we tend to be about a 70% share within that 30%. So Oral Care, though, is only about half of that. So when I look at the growth opportunity in Oral Care, it's doing the same types of things and getting the same type of distribution and building that out. That's a business over time you want to double. There's lots of acquisition opportunities because Oral Care is a pretty wide. We are very -- toothbrushes, electronic automatic toothbrushes, whitening strips, dental floss. We have a huge brand in Plackers, which is dental floss, but there's more opportunities in whitening and devices and different kinds of mouth rinses. We bought Steripod this year, which is a small company, but it's very relevant today with COVID, where it's a toothbrush cover that kills bacteria. Everybody sort of does everything to keep clean, but they can leave their toothbrush pretty ugly, and that's a nice device. Dr. Fresh is a kids matrix. There's international opportunity. We have about 1/3 of our Ranir business internationally. So lots of running room on Oral Care. CBD is a slower path. CBD, I believe, that is based on everything I've read and how the product works is somewhere between a $2 billion and $5 billion category, and I look for those. It was with -- in tobacco, it was vaping that I jumped on. And originally it was smokeless as an opportunity relative to cigarettes. But in this world with CBD, again, as a science-based natural, there are many benefits that CBD has -- and the full spectrum of cannabinoids that are THC-free. So no psychotropic impact, but for pain relief, for sleep and others. And it's not just CBD. It's CBD. It's CBG. It's CBB. It's the full spectrum, but the FDA is not there yet. This is new. And so when -- with the government legalizing hemp, right now, the FDA is concerned, and rightfully so, is it's a bit of The Wild Wild West. That's where Perrigo comes in on the supply. So our point was there's a million little CBD company, that's not what we want to be. We want to come in as a company with a pharmaceutical expertise and clean up the API supply, put in CGMP's, guarantee that it's THC, make sure that when you go -- THC-free, make sure when one of my employees or your employees or anybody goes in and put CBD cream on their arm for pain that they don't go to work and get tested for marijuana and flunk because the quality standards are there, and they test for THC. We want to make sure there's no contaminants, et cetera. And we -- in the world, it's constantly changing in CBD. We want you to get the full spectrum of all the cannabinoids, not just the CBD, which tends to be many products they have what's called isolate, where they dry the powder out, et cetera, and just that, but don't offer you the full benefit. So job one for Perrigo, we're hard at work on. We made an investment. We're upgrading the facilities. We have the company we invested in and the scientists that are leading that are brilliant. They have expertise in guaranteeing a product that can meet FDA standards. And we have to -- we're doing all that work now, getting all the stainless steel in, getting all the equipment in, getting all the procedures in, then we will work with the FDA, and show them that they can have a reliable supply, which is their first concern. Once that reliable supply is in place, then we have the exclusivity from that investment to be able to take it to the private label world, and to our customers who are interested, but they're nervous about it, because they can't -- they also don't rely on the supply. And they know we're working on it, we believe it will be a big market. So we are developing products, but job one is to establish credibility, clean up the Wild Wild West, and then be the first to go with those products, and get a return from our investment, plus our own launches of products. So those are 2 examples, and there are just many. Nicotine replacement as a percentage of the amount of smokers trying to quit in the world is pitiful. It's a huge opportunity. Science-based naturals is a huge opportunity. Our infant formula business has been woefully constrained in capacity. We're making the investments, huge opportunity. And it's also too narrowly defined in just infant formula. So I mean, like I said, I was surprised by the growth opportunities. There's more than we could go after. We just have to prioritize and go carefully.

Right. Great. That's helpful. Well, Ray, we talked a lot about organic sales growth. Maybe we could turn to capital allocation. What are your key focus points there? And how big a role does M&A play as you think out over the next few years? And perhaps you could review some of the key strategic and financial criteria as it relates to M&A?

Yes. We have a set of criteria that we use to make our decisions about M&A. We're focused largely on bolt-on acquisitions. We've done several of them, starting with, I think, this year with a Steripod and then we did Dr. Fresh. So -- and then we did the Sanofi assets in Europe. So we've done a series of bolt-on acquisitions, and we follow a pretty tight criteria. We look for a 20% ROI, but our focus is really more on the -- making sure that the acquisitions meet our more subjective criteria in terms of where they are, and what they produce, and so forth. In terms of other capital allocation, we do have a pretty strong cash flow. We -- because of the level of our amortization, depreciation, we convert close to 100% of our operating income. So we have a strong cash flow. And obviously, if you've looked at our balance sheet, we may not have done. We've got a lot of cash in on our balance sheet right now. As we come out of the pandemic, we took money off of our revolver, which we've since repaid. But we've also recently made a fairly large divestiture, an Rx company in the U.K., which we divested. And as I said, we -- our cash flow is pretty strong. And so we had -- at the end of Q3, we had $850 million on our balance sheet, and we would expect that to be a little less towards the end of the year, but still a strong cash position. And I think that we can continue to make those bolt-on acquisitions going forward as well as to meet the other -- our other potential liabilities.

Okay. And has the environment have more opportunities come up in this environment, less opportunities, and what is the environment look like out there in terms of being able to consummate some M&A? Also, are divestitures an area of focus at this point? Or are you pretty comfortable with what's in the portfolio?

I think we're reasonably comfortable with what's in the portfolio and the -- obviously, our Rx business, we've said that we would like to sell that. We'd like to get the right multiple for it, and Murray sort of addressed that. With respect to M&A in general, it's a reasonable environment. I think we're not seeing significant changes in value from the COVID in most cases. I think we've got a good price on our Sanofi assets. But generally speaking, we're seeing that the assets are available, and sort of in a normal course kind of process at the moment. So whether that will change, I can't tell, but we certainly haven't seen a significant decline in values, that's for sure. If anything, I think we're seeing the values remain about the same as they have for the past couple of years.

Ray, you would say, though, it would be fair to say we saw the level of activity dry up for about 3 months or so during -- like March, April, May. We were fortunate to have a few that we had already done diligence on that we could bring to closure. Maybe you could talk about that a minute. So there has been sort of not changes in value, but there's been changes in flow.

Definitely, changes in process. You're absolutely right, Murray. We were fortunate that we have an opportunity by virtue of having diligence to Dr. Fresh and the Sanofi assets that we acquired, we diligenced ahead of the lockdown. And I think that it took time for people generally to become comfortable with virtual due diligence process, if you like, a remote due diligence process. But I think if we -- right now and we are -- we continue to look at assets for acquisition and we feel comfortable now that we would be able to complete the diligence process remotely. So -- and that would be -- will be a first for us. The next one we do will be a first for us in doing that entirely remotely. But as I say, I think the world -- we talked about that. We're talking about travel and need for it and the reduced need for it in the future is the fact that I think we've all gotten more comfortable with operating in this world.

Right. All right. Well, gentlemen, that was a very helpful conversation. With that, we're out of time and -- but we really appreciate you guys joining us and giving us an update on the story here.

Thanks, Dara. Thank you.

Thank you, Dara.

Thanks.