David L. Begleiter

David L. Begleiter asked about the reasons for adjusting the full-year guidance to the lower end of the range compared to July's assumptions, and questioned the timing and effectiveness of pricing actions to address tariff cost increases.

Answer

Frank Sullivan, Chairman and CEO, cited challenging gross profit margin dynamics, tariff uncertainty, and an unexpected $8 million increase in healthcare costs (with $6 million over six months for weight loss drugs, one-third of which is permanent) as reasons for the guidance adjustment. He noted that while earlier price increases would have been ideal, the on-again, off-again tariff regime complicated timing, with about half of the $90-95 million unmitigated tariff impact offset, primarily affecting the Consumer Group's packaging costs. Q1 pricing was 0.5%, with Q2 expected to be around 2%.