Christopher Carey • Wells Fargo Securities

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CFO Laurent Mercier emphasized that deleveraging remains the top priority, with fiscal '26 free cash flow expected to increase. He mentioned a new forecasting tool will improve inventory management and cash flow. He confirmed plans to refinance the 2026 debt maturity and reiterated confidence in selling the Wella stake. Regarding Consumer Beauty, he stated that improving its low profitability is a key mandate, which may involve making choices that impact net revenue to prioritize a healthier bottom line.

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CEO Sue Nabi stated that while the goal remains to outperform the beauty market, it is no longer prudent to set specific sales growth targets due to macro uncertainty. She outlined five growth drivers to achieve this outperformance. CFO Laurent Mercier explained the swap is a mechanism to reserve shares for future buybacks and that the recent stock price pullback triggered a true-up cash payment, confirming the intent to eventually operate the share buyback.

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President and CEO Stéphane de La Faverie stated that in Asia, China is showing encouraging signs of stabilization with strong Q4 retail growth across categories, while the rest of APAC is experiencing a slowdown. He described Europe as more concerning due to weakening consumer sentiment, particularly in France and Germany. The strategy there involves expanding consumer coverage, focusing on the strong fragrance category, and accelerating innovation. He expressed confidence that all four new geographic regions would be in positive growth territory by the end of fiscal 2026.

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Hilton Schlosberg, Vice Chairman & CEO, did not comment on pull-forwards but attributed last year's category slowdown to macroeconomic factors like inflation and high gas prices. He expressed confidence in future growth, citing a strong innovation pipeline, the functional nature of energy drinks, increased household penetration, and favorable pricing dynamics compared to other beverage categories like coffee.

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Executive Hilton Schlosberg confirmed that the company is always evaluating pricing opportunities. He noted that Rainstorm and Bang were not included in the last price increase, representing a future possibility. He stated that any decision would depend on the outcome of tariffs and competitor actions, with the goal of increasing shareholder value without harming the brands' competitive position.

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Hilton Schlosberg, Vice Chairman and Co-CEO, clarified that Monster's business model involves fulfilling orders placed by its sophisticated Coca-Cola distributors. He stated that Monster supplies product based on customer requirements and does not experience inventory 'hiccups' in the same way as some competitors, indicating that inventory levels are managed by the distributors themselves.

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CFO Tracey Joubert clarified that the incremental Midwest premium impact of $20-35 million is expected in the second half of the year. CEO Gavin Hattersley defended the cyclical view, linking the recent downturn to a drop in consumer confidence since early 2025. He acknowledged the need to monitor other factors but stressed that the company's strategy, including the Fever Tree acquisition, is designed to address evolving consumption habits.

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CFO Tracey Joubert explained that while underlying COGS per hectoliter is expected to increase for the full year, the Q1 favorability was due to cost savings offsetting moderated inflation, with volume deleverage being the largest negative factor. CEO Gavin Hattersley stated the board is conducting a thoughtful search for his successor, considering both internal and external candidates with a focus on relevant experience and cultural fit, while affirming the board's support for the current long-term strategy.

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CEO Gavin Hattersley advised caution against over-interpreting short-term data, noting that Q4 2024 was the industry's strongest quarter of the year. CFO Tracey Joubert confirmed the company plans to continue its share repurchase program, which has both systematic and opportunistic elements, but noted that the timing could be influenced by capital commitments like the Fever-Tree investment.

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CEO Gavin Hattersley expressed confidence in the long-term growth algorithm. He noted that excluding the Pabst contract, 2024 top-line growth is positive. He highlighted strong share retention for core brands, double-digit growth for Coors Banquet, and robust performance in Canada and EMEA & APAC as reasons for optimism about achieving long-term net sales revenue goals.

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President and CEO Rod Little explained that while cash flow metrics are part of executive incentives, strategic decisions like pre-buying inventory to mitigate tariffs can temporarily override them. CFO Francesca Weissman detailed that two-thirds of the cash flow reduction stemmed from lower earnings, FX headwinds, and tariffs, with the remaining one-third due to working capital changes, including higher sun care inventory and tariff-related pre-builds. COO Daniel Sullivan added that these are transitory issues and expressed confidence in returning to historical cash flow generation levels, citing the business model's fundamental strength.

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CEO Rod Little explained they are 'fixing the plane while flying it' in North America and that the decision to increase spending, rather than cut it, reflects confidence in the new leadership and strategy. COO Daniel Sullivan clarified the disappointment was in the Q2 sales result, not execution, and confirmed the ~$15 million investment is a one-time Q3 event. CFO Francesca Weissman added that the free cash flow reduction reflects lower earnings and higher inventory from tariff mitigation pre-buys.

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President and CEO Rod Little explained that the company will face easier comparisons in the second half of the fiscal year (Q3/Q4), citing the recovery of Wet Ones post-factory fire as an early positive indicator. COO Daniel Sullivan reiterated that 70% of the business is expected to grow at mid-single-digits. Regarding Sun Care, Little attributed the order shift from Q2 to Q3 primarily to the later timing of Easter this year. Sullivan confirmed this was a minor phasing issue and does not change their bullish outlook for the full sun season.

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COO and CFO Daniel Sullivan affirmed confidence in profitability, citing relentless productivity and cost management as levers to protect earnings. He outlined sales growth drivers including mid-single-digit growth in international markets, a recovery in the U.S. Sun Care business, expansion of the Billie and Cremo brands, and lapping prior year supply disruptions. CEO Rod Little added that 70% of the business is already growing at a mid-single-digit rate, and the plan assumes the remaining U.S. Shave and Fem Care portfolio will stabilize to flat, an achievable improvement from the prior year's decline.

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President and CEO Rick Dierker outlined three options for the vitamin business: a clean divestiture, a joint venture, or shrinking the business to enhance profitability and speed. He noted some 'green shoots' in the revitalization efforts. Regarding laundry, Dierker attributed the success to a strong value equation, correct sizing strategies, and effective price points, which are driving share gains.

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Executive Richard Dierker explained that a gross $190 million tariff exposure is being mitigated to approximately $40 million through portfolio actions and supply chain moves, with a net P&L impact of about $30 million in 2025. Regarding the vitamin business, he acknowledged it is not meeting expectations and stated that management will assess the success of its new innovation and marketing plan after Q2 before making further decisions.

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CFO Rick Dierker confirmed there were no significant inventory timing issues influencing the outlook. CEO Matthew Farrell explained that the cautious stance is based on observed category growth deceleration in major categories like laundry and litter throughout the year. Regarding the growth algorithm, management clarified the U.S. target is 3% organic growth (as part of the total 4% company goal), which they are confident in achieving long-term through innovation and market share gains.

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Richard Dierker (CFO and Head of Business Operations) clarified that the 'dry powder' is being held in reserve in case the promotional environment intensifies, particularly in household and vitamin categories. Matthew Farrell (executive) added that the VMS business turnaround is taking longer than anticipated, with challenges in renovating the portfolio and gaining retailer support, stating it's 'more on us' than the external environment.

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Chairman, CEO & President Noel Wallace acknowledged softness in Asia, attributing it to the Hawley & Hazel business in China and performance in India. He contrasted the strong Colgate brand in China, which has an effective go-to-market and digital strategy, with Hawley & Hazel, which requires adjustments in those areas. For India, he cited plans to address urban market sluggishness with stepped-up innovation, core brand relaunches, and price-pack architecture adjustments.

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Noel Wallace, CEO, expressed confidence in Oral Care due to significant brand health investments and innovation like the Colgate Total relaunch. He also expects Hill's to continue performing well by focusing on under-penetrated segments. CFO Stan Sutula added that they expect top-line improvement in the back half from North America and Asia, with countries like South Africa and Turkey also getting better. The positive mix from strong Oral Care and Hill's performance will help offset tariffs.

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CEO Noel Wallace clarified that the heightened competition was isolated to a few markets and often driven by local players chasing volume. He identified India as the most notable example, with increased discounting in urban modern trade, but he expects the market to rationalize. He also mentioned Turkey and South Africa but does not see the activity as a sustained trend, noting that the broader promotional environment in the U.S. and Europe remains constructive.

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Noel Wallace, Chairman, President and CEO, confirmed a strong performance in Latin America against tough comps, with volume increasing sequentially for four quarters on a two-year stack basis. He noted some post-election 'choppiness' in Mexico that requires monitoring but expressed confidence in the team's ability to execute in volatile environments and take necessary pricing to offset FX, supported by strong brands and innovation like the Colgate Total relaunch.

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CEO Linda Rendle acknowledged the short-term noise but stressed the ERP transition is critical for future growth. She reaffirmed confidence in the long-term 3-5% organic sales algorithm, explaining it relies on categories returning to 2-2.5% growth, plus contributions from the International and Professional segments and market share gains driven by new capabilities. She expressed strong belief in the company's margin flywheel to fund this growth.

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CEO Linda Rendle affirmed confidence in managing the estimated $100 million run-rate tariff impact over time by leveraging capabilities built through their technology transformation and holistic margin management program. She confirmed they will continue to put pressure on productivity in FY26. Regarding SG&A, she stated the company will get to its target over time, but the immediate focus is on the ERP implementation, after which SG&A will start to come down.

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CEO Linda Rendle expressed confidence in the long-term 3-5% growth algorithm but noted the current macro environment has temporarily depressed category growth to 0-1%. She highlighted that the Cleaning business is performing 'incredibly well,' with share results now higher than they were two years ago, pre-cyberattack, and strong consumption trends.

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CFO Kevin Jacobsen explained that segment-level price/mix figures were heavily distorted by the 'noise' of lapping the cyber-attack's unique impact on product mix. He clarified that the true underlying drivers were a 1-point negative impact from increased trade spending, which was more than offset by 2 points of favorable SKU-level mix. He noted the negative trade spend impact is a front-half issue tied to lapping the cyber event and is not expected to persist in the back half.

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CEO James Hagedorn expressed high satisfaction with the Lawns business, noting its positive unit growth despite regional weather challenges and highlighting significant progress in making the supply chain a competitive advantage. President & COO Nate Baxter emphasized the large organic growth opportunity from increasing household penetration. EVP & CFO Mark Scheiwer added that product mix was a positive contributor to results this year and that upcoming lawns innovation is expected to be margin accretive.

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Executive James Hagedorn and Executive Nate Baxter explained that while there was some early load-in, they expect a return to a normal sales cadence with consistent low single-digit growth in both halves of the year. They noted strong retailer optimism and inventory positioning for spring. Regarding Hawthorne, Hagedorn confirmed the leadership team is now fully aligned on separating the business to unlock shareholder value and eliminate volatility, stating that logistical challenges are manageable and action is expected within months.

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An executive clarified that EBITDA add-backs for incentive compensation are guided to be similar to last year. Regarding Hawthorne, CEO James Hagedorn expressed high confidence, stating the team is managing more upside than downside risk and that the $20M EBITDA target already includes a $10M reinvestment in the brand. Hawthorne President Chris Hagedorn added that the outlook is 'risk-adjusted' and they have downside contingencies in place if necessary, though he does not expect to use them.

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SVP & CFO Steve Voskuil explained the higher tax rate is driven by creative sourcing strategies and lower returns on tax credits, expecting a 250 bps headwind to persist into 2026. He detailed the 2026 EPS puts and takes, including pricing, productivity, and potential tariff relief as positives, against cocoa inflation and absorption impacts as negatives. Regarding elasticity, he stated the focus is on executing their own plan while remaining agile to what they see in the market.

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SVP & CFO Steve Voskuil explained the higher tax rate is driven by sourcing strategies and lower tax credit returns, expecting the ~250 bps headwind to be 'sticky' into 2026. He outlined the puts and takes for 2026 EPS, including pricing, productivity, inflation, and tariffs. He stated Hershey will monitor its own elasticities in the market and remain agile, supported by brand investment.

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SVP & CFO Steve Voskuil explained the higher tax rate is driven by creative sourcing strategies and lower returns on tax credits, expecting the ~250 bps headwind to be 'sticky' into 2026. Regarding margins, he outlined puts and takes including pricing, productivity, cocoa inflation, and absorption, but did not quantify them individually. He stated Hershey will remain agile on elasticities based on its own market data.

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CEO Michele Buck noted that price pack architecture is already in the market and that supply chain agility is a key competitive advantage. She stated that Hershey has always had confidence in its ability to price and is now 'ready to activate even more of the levers' to combat costs, with more details to come.

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President, CEO & Chairman Jon Moeller noted that while uncertain, the trend in China is generally improving and consumers are highly responsive to innovation like Pampers and SK-II. CFO Andre Schulten added that he is encouraged by the fundamental changes the China team has made to its business model, which are showing progress and driving growth.

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Executive Andre Schulten clarified that the 2-3 year timeframe refers to delivering the company's balanced top and bottom-line growth algorithm, not a specific forecast for when category growth will normalize. He stated that the current slowdown makes capturing identified growth opportunities in the U.S. and Europe even more critical, reinforcing the company's commitment to its existing strategy of investing in innovation and superiority.

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Andre Schulten, an executive, attributed the Family Care strength to consumer pantry loading but expects it to be largely sustained. For Oral Care, he pointed to a full rollout of the iO power brush lineup in the second half to drive acceleration. For Baby Care, he explained that investments are strategically tied to recent innovations, like on the Luvs brand, to drive trial and communicate benefits.

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Executive Andre Schulten stated that Family Care's growth is sustainable, driven by a proven, decades-long model of substrate innovation. He confirmed no material impact from port strike stock-ups. For Baby Care, he explained that value creation comes from trading consumers up to premium products, not volume, and noted that the company is actively working on innovation for the mid-tier in North America.

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CEO Tim Cofer explained that growth is broad-based. He highlighted that the core Dr Pepper brand is on track for its ninth consecutive year of market share growth, complemented by rapid expansion in energy, where KDP's portfolio now holds a 7% share. Cofer expects this balanced contribution from both the base business and new partner brands like Electrolit and Ghost to continue driving robust growth for the segment.

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Chief Financial Officer Sudhanshu Priyadarshi stated that strong cash generation is a hallmark of KDP and the company is on a clear path to return to its target conversion levels over the next couple of years. He noted Q1 performance was strong even with a one-time payment for the GHOST transition. For capital allocation, he confirmed that deleveraging is the current priority, but the company remains open to disciplined investments to grow the business.

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Chief Financial Officer Sudhanshu Priyadarshi explained that KDP anticipates a path toward the upper end of its mid-single-digit net sales growth range, driven by momentum in U.S. Refreshment Beverages and International, along with the GHOST acquisition. He noted that Q1 would be softer due to calendar shifts and a lag in coffee pricing benefits, with growth expected to accelerate through the rest of the year. While sales look strong, he cautioned that high-single-digit EPS growth is challenged by significant green coffee inflation.

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CEO Timothy Cofer confirmed late-quarter hurricanes had a negative impact but did not quantify it. On portfolio strategy, he explained that adding a high-growth asset like GHOST provides the 'top line flexibility' to make tough choices on optimizing the portfolio, particularly in U.S. refreshment beverages. This will allow KDP to prune underperforming SKUs to create a faster-growing portfolio with a better cost structure over the long term.

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Chairman and CEO James Quincey, while cautioning against focusing on a single quarter, identified several drivers for the improved North America margin. These included productivity initiatives, a favorable mix shift away from lower-margin vertically integrated businesses, and continued strong investment in brands. He characterized the improvement as a 'normalization' of margins over time, not a result of cutting growth investments.

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President and CFO John Murphy acknowledged that timing benefited the Q1 margin but pointed to the company's long-term goal of expanding margins. He expressed confidence that a combination of marketing spend and productivity gains provides sufficient 'ammunition' to invest in growth and adapt to market needs without sacrificing the margin expansion objective.

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CEO James Quincey clarified that this is predominantly a North American issue and that the company can adapt its packaging strategy to manage relative input cost changes, for example by putting more emphasis on PET bottles if aluminum becomes more expensive. He stated that the impact is manageable within the context of the total U.S. business and does not fundamentally undermine the system's ability to drive volume in 2025, as it's one of many dynamic elements the company can mitigate.

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Chairman and CEO James Quincey reiterated the company's 'all-weather strategy' and noted that 2024's FX headwinds were mainly from emerging markets where inflation pass-through is quicker. President and CFO John Murphy added key lessons: consistently investing in brands, focusing on profit drivers, and embedding productivity into the business model.

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Chairman and CEO Ramon Laguarta explained that the strategy for beverages is consumer-centric, similar to the approach with foods. He confirmed that PepsiCo has a technical roadmap to eliminate artificial colors and flavors from its beverage portfolio and is prepared to execute on it as consumer preferences and regulations evolve.

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Chairman and CEO Ramon Laguarta expressed that he feels very good about the progress in the beverage business, emphasizing that margin improvement is a result of long-term operational excellence across the value chain. He highlighted that consistent investment in the Pepsi and Gatorade brands is leading to share gains. He believes the portfolio has further opportunities for growth through organic innovation, inorganic moves, and partnerships, viewing it as a year-after-year progression.

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CEO Ramon Laguarta affirmed that the strong, margin-accretive international business provides flexibility for the entire company. He attributed Europe's success to a consistent strategy of cost reduction reinvested into growth platforms like zero-sugar drinks and healthier snacks. He expressed confidence that this performance is sustainable, given large opportunities for per-capita consumption growth.

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Chairman and CEO Ramon Laguarta addressed both points. On productivity, he confirmed that PBNA and International are key drivers of margin expansion, providing flexibility for the total company. On consumer trends, he described the slowdown as cyclical but highlighted the long-term structural opportunity in evolving the portfolio towards permissible snacks and 'mini meals' to align with changing eating habits, noting the Siete acquisition as a tool for this strategy.

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EVP & CFO David Marberger clarified that productivity is not doubling but is very strong, with 4% core productivity expected to offset 4% core inflation, plus an additional 1% mitigation of the 3% tariff impact. President & CEO Sean Connolly noted that while they monitor price gaps versus private label closely in key categories like tomatoes and cooking spray, it is too early to determine how the competitive dynamic will unfold.

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CEO Sean Connolly explained that Q4 gross margin will improve relative to Q3 because Q3 absorbed the highest impact from plant shutdown-related costs. Regarding fiscal '26, he emphasized the company's strategic priority has been returning to volume growth, which pressured margins, and the goal for next year is to develop a plan that strongly addresses both growth and margin expansion.

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President & CEO Bill Newlands argued the portfolio has already diversified through innovations like Non-Alk, Oral, and Sunbrew, which attract new consumers. He confirmed Pacifico's strong performance, noting 50% of its growth is now outside California, and stated the company intends to 'put some fuel on the fire' to accelerate its national expansion.

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CEO Bill Newlands countered that the portfolio has already diversified significantly through innovation since the last Investor Day, citing Non-Alk, Oral, and SunBrew. He confirmed Pacifico's strong growth, with half now coming from outside California, and stated the company plans to 'put some fuel on the fire' to accelerate it further.

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CFO Garth Hankinson confirmed that FY26 guidance includes the impact of tariffs on aluminum cans. On currency, he explained the company uses a multi-year layered hedging approach and was over 70% hedged for FY26, having taken advantage of recent peso weakness to add incremental hedges for current and future years to smooth out year-over-year impacts.

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CEO Jeffrey Harmening responded that pricing actions are targeted and strategic, not across-the-board, designed to get brands 'in the zone' for marketing to be effective. CFO Kofi Bruce added that SG&A is expected to grow slightly faster than sales, driven by increased media spending for the Freshpet launch and an incentive compensation reset.

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Chairman & CEO Jeffrey Harmening clarified that pricing actions are targeted to specific items to regain a competitive value position, not across-the-board cuts, and are paired with strong marketing. CFO Kofi Bruce added that SG&A is expected to grow faster than sales due to increased media spending, particularly for the Freshpet launch, and an incentive compensation reset. VP of IR Jeff Siemon provided a clarification on the Q4 price/mix figures.

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CEO Jeffrey Harmening explained that underperformance is a holistic issue and the recipe for success is getting the value proposition right so that strong marketing and innovation can be effective. CFO Kofi Bruce added that the purpose of the new cost savings is to 'free up resources to reinvest for growth' and that the company's bias would be toward reinvestment.

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CEO Jeffrey Harmening addressed the performance gap, stating the primary job is to improve competitiveness to capture the 1% category growth, starting with volume share. He emphasized a holistic approach of getting value 'in the zone,' improving marketing, and driving innovation. CFO Kofi Bruce added that the savings are meant to 'free up resources to reinvest for growth' and that the company's bias is toward reinvestment.

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CFO Tucker Marshall confirmed that pricing is being taken across the entire coffee portfolio in Q1 and Q2 to cover both commodity inflation and tariffs. He stated that the Sweet Baked Snacks business is expected to improve due to stabilization efforts, improved profitability from actions like a plant closure, and lapping easier comps in the back half of the year.

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CFO Tucker Marshall reiterated that it was too early to call the FY'26 outlook but acknowledged the meaningful headwind from coffee costs. CEO Mark Smucker commented on coffee elasticity, noting at-home coffee remains affordable. He added that pricing aims to recover profit on a dollar-for-dollar basis, while margins are supported by other levers like hedging, formulation, and price pack architecture.

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CFO Tucker Marshall reiterated that it was too early to call the FY26 outlook due to the significant headwind from green coffee costs. CEO Mark Smucker explained that coffee's affordability supports consumption and that the company prices to recover profit dollars, using other levers like hedging and formulation to support margins, which contributed to the strong quarterly performance.

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CFO Tucker Marshall outlined the framework for FY26 growth, including base business momentum, mitigation of stranded overhead, Hostess synergies, and debt paydown benefits, but noted it was too early for a specific outlook. CEO Mark Smucker commented that at-home coffee consumption remains strong and the company is focused on adapting its portfolio to meet evolving consumer preferences for different coffee formats.

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CFO Tucker Marshall stated it was too early to give a specific '26 outlook but framed the key components as base business momentum, removal of stranded overhead, Hostess synergies, productivity programs, and reduced interest expense. CEO Mark Smucker commented that at-home coffee consumption remains strong, with 70% of cups consumed at home, and the company is focused on shifting its portfolio to meet consumer demand across different formats.

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CFO Luca Zaramella confirmed the company was opportunistic in procuring some minor commodities and extended foreign exchange coverage. He described a potential drop in cocoa prices as 'Nirvana,' explaining that the company would prioritize reinvesting savings back into the business to drive long-term growth and protect gross profit dollars per kilo, rather than immediately reducing prices.

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CFO Luca Zaramella explained that the company has significant flexibility, with a large portion of 2025 cocoa needs covered through collars that allow participation in price declines while protecting the upside. He also noted flexibility in pricing plans. CEO Dirk Van de Put addressed Latin America, stating the volume slowdown was largely concentrated in Mexico due to pricing adjustments, while Brazil remains strong. His optimism on China stems from strong company performance, government stimulus policies boosting consumer sentiment, and distribution gains.

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Executive Andre Maciel attributed the expected Q2 gross margin pressure to three factors: a step-up in summer promotional activity, significant hedge losses that will roll off in Q3, and peak commodity inflation. This will lead to a double-digit decline in Q2 operating income. CEO Carlos Abrams-Rivera identified bright spots in the year-to-date progress of accelerated businesses and the double-digit growth of their new Mexican food strategy.

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CEO Michael Hsu explained that absorbing the tariff cost is a strategic choice, as the optimal long-term solution is re-optimizing the supply chain, not taking price in a way that would make them uncompetitive against locally-sourced rivals. CFO Nelson Urdaneta added that while the productivity program is running strong, they are not yet raising the multiyear $3 billion target, though they are encouraged by the progress to date.

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CEO Michael Hsu stated that the new organization has been operating informally for months and is already driving benefits. He acknowledged category growth may slow to around 2% but noted underlying drivers remain healthy. CFO Nelson Urdaneta confirmed that Q4 operating profit will be impacted by a planned step-up in advertising and brand support of at least 60 basis points, as well as other discretionary costs, as the company invests for growth.

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CEO Martin Roper and Executive Michael Kirban explained that gross margins are expected to be stronger in the second half of 2025 as elevated ocean freight costs from the prior year flow through in the first half. They expect freight rates to be higher in 2025 than 2024 but anticipate some normalization. Roper confirmed the strong 13-week scan data already includes the Walmart headwinds and that the company's guidance is based on more conservative, long-term trends rather than short-term accelerations.

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CFO Corey Baker and CEO Martin Roper attributed the Q4 gross margin pressure to a spike in ocean freight costs from the summer flowing through the P&L. They noted that while rates are declining from their peak, they remain significantly above historical averages, posing a potential headwind for 2025 if they persist. They expressed confidence in managing this volatility within the raised full-year EBITDA guidance, stating SG&A has limited flexibility this late in the year.

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CEO Christopher Peterson stated that 2025 is likely the end of the significant portfolio cleanup dynamic, having reduced brands from 80 to 55, with a target of around 50. He does not expect the 1-point headwind from exits in 2025 to be a factor in 2026. On category growth, he explained their forecast for 'about flat' growth in 2025 is based on triangulating multiple data sources and that their 2024 forecast proved accurate.

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CEO Christopher Peterson confirmed the end of the COVID pull-forward is a positive factor, along with market share gains. He stated the company is well-positioned for tariff risks, having reduced China sourcing for U.S. sales to under 15% of COGS. He expects profit improvement to continue, driven by strong productivity, though not at the recent 22% EBITDA growth rate. CFO Mark Erceg added that future volume growth would have very attractive marginal economics.

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CFO Jeremy Smeltser confirmed the $10 million GPC sales pull-forward would reverse in Q1 and acknowledged that the segment's premium brands face headwinds in the current economy. For Home & Garden, he explained that major retailers anticipate a cooler start to spring, which could slow initial orders, but a normal weather season should still yield low single-digit growth. Chairman and CEO David Maura added that the company is actively investing in national ad campaigns for brands like Good 'n' Fun to compete with private label and that the Pet segment started fiscal '25 ahead of expectations.

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Steven Cahillane, Chairman, President and CEO, expressed confidence in Europe's second-half growth despite a tough environment, citing strong activation plans and the highly anticipated Cheez-It launch in the UK. Regarding North America, he clarified that the pricing environment is rational and the negative year-over-year price comparison is an anomaly from lapping a period of unusually low promotional activity last year. He expects a healthy balance of price, mix, and volume in the second half.

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