Jeff Simmons: Yes. Thanks, John, for the question. We had a really great first quarter and second quarter, first half on pet retail, and I think it links to the Seresto question. We’re very happy with the outcome. We, as I mentioned, believe that it’s a science-based decision. It reaffirms the long-term registration of the product and raising the bar on the overall category of collars. As we look at retail, we — you saw the return to growth, high-single digits for Seresto in the quarter. I think as you look forward, here are some of the things that we mentioned on the last quarter that really played out: the increased physical availability; the bringing in innovation with it, so the Advantage brands that we’ve launched inside of those; price; and share of voice.
Just call out a couple of things, and I think just because our retail capability grows, our share has grown. It’s been a very strong market, with really less trade down and actually a strong market. A couple of things. We put a very aggressive and probably most comprehensive campaign we’ve ever done with Seresto. We’ve seen a 50% increase in a kind of click rate on that campaign. And then the total distribution points back to physical availability were up 14% for the first half. So these are the factors. I believe our team is kind of as experienced as anyone in the industry. Our share is growing. So, when I look at Seresto long term, we’re well positioned, but it’s going to be these four factors that matter: price, innovation, physical availability and share of voice.
We’re not giving guidance today, but we see the stability and return to growth is a positive thing long term, not just in the U.S., but globally.
Katy Grissom: Great. We’ll take the next question, please.
Operator: Your next question comes from the line of Nathan Rich from Goldman Sachs. Your line is open.
Nathan Rich: Great. Good morning. Thanks for the questions. Todd, I guess, first, I wanted to go back to the commentary on gross margin and the $20 million impact from reduced throughput in the manufacturing facilities. Can you talk about how that plays through to 2024? And do you see kind of that normalizing next year so that there wouldn’t be the type of gross margin drag? And does it have any implications for your free cash flow expectations next year? And then, I wanted to, as a second question, ask on the IL-31. I think you added the commentary around it’s now kind of a differentiated product versus what’s on the market. Are there any details that you can give us there? And in terms of the timing of approval, can you maybe talk about what additional data requirements you got from the USDA that led to the shift in approval?
Katy Grissom: Yes, Todd?
Todd Young: Thanks, Nate. With respect to your first question, the way the team sees it today, we’ve got a number of different items across our manufacturing footprint that we continue to work on to improve gross margins. You would have seen it here in the second quarter that we had a very strong gross margin quarter, well north of 60% once you add back the impact from the ERP integration. So you get into improved price. That continues to be a big driver of gross margin improvement. We’ve got productivity continuing. Inflation in certain areas is starting to stabilize, especially on the shipping side. Then, with respect to plants, yes, it does have an impact on the second half of this year. It will have an impact into next year. But overall, we continue to feel good about the momentum, especially with U.S. Pet Health doing better as that is our highest margin area of the company.
