Q2 2024 Edgewell Personal Care Company Earnings Call

Operator: Good morning, and welcome to Edgewell's second quarter fiscal year 2024 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Chris Gough, Vice President of Investor Relations. Please go ahead.

Good morning, and welcome to the <unk> second quarter fiscal year 2024 earnings call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please.

Please note. This event is being recorded I would now like to turn the conference over to Chris Gough Vice President of Investor Relations. Please go ahead.

Chris Gough: Good morning, everyone, and thank you for joining us this morning for Edgewell's second quarter fiscal year 2024 earnings call. With me this morning are Rod Little, our President and Chief Executive Officer, and Dan Sullivan, our Chief Financial Officer. Rod will kick off the call and hand it over to Dan to discuss our results and full year fiscal 2024 outlook before we transition to Q&A. This call is being recorded and will be available for replay via our website, www.edgewell.com.

Chris Gough: Good morning, everyone and thank you for joining us this morning for Edgewater second quarter fiscal year 2024 earnings call with me. This morning are Rod Little our President and Chief Executive Officer, and Dan Sullivan, Our Chief Financial Officer, Rod will kick off the call then hand, it over to Dan to discuss our results and full year fiscal 2024 hour work before we transition to Q&A.

Chris Gough: During the call, we may make statements about our expectations for future plans and performance. These might include future sales, earnings, advertising and promotional spending, product launches, savings and costs related to restructuring and repositioning actions, acquisitions and integrations, changes to our working capital metrics, currency fluctuations, commodity costs, category value, future plans for return of capital to shareholders, and more. Any such statements are forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995, reflecting our current views with respect to future events, plans, or prospects.

Chris Gough: This call is being recorded and will be available for replay via our website www dot dot.

Chris Gough: Dot com.

Chris Gough: These statements are based on assumptions and are subject to various risks and uncertainties, including those described under the captioned risk factors in our annual report on Form 10-K for the year ended September 30, 2023, as may be amended in our quarterly reports on Form 10-Q, which is on file with the SEC. These risks may cause our actual results to be materially different from those expressed or implied by our forward-looking statements. We do not assume any obligation to update or revise any of these forward-looking statements to reflect new events or circumstances, except as required by law. During this call, we will refer to certain non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles.

Chris Gough: During the call we may make statements about our expectations for future plans and performance. This might include future sales earnings advertising and promotional spending product launches savings and costs related to restructuring and repositioning actions acquisitions and integrations changes to our working capital metrics currency fluctuations commodity cost category value.

Chris Gough: Your future plans for return of capital to shareholders and for any such statements are forward looking statements for the purposes of the Safe Harbor provisions under the private Securities Litigation Reform Act of 1995, which reflect our current views with respect to future events plans or prospects. These statements are based on assumptions and are subject to various risks and uncertainties.

Chris Gough: It was described under the caption risk factors.

Chris Gough: The annual report on Form 10-K for the year ended September 32023 might be amended in our quarterly reports on Form 10-Q, which is on file with the SEC.

Chris Gough: These risks may cause our actual results to be materially different from those expressed or implied by our forward looking statements. We do not assume any obligation to update or revise any of these forward looking statements to reflect new events or circumstances, except as required by law.

Chris Gough: A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is shown in our press release issued earlier today, which is available in the Industrial Relations section of our website. This non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. However, management believes these non-GAAP measures provide investors with valuable information on the underlying trends of our business. With that, I'd like to turn the call over to Rod.

Chris Gough: During this call we refer to certain non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is shown in our press release issued earlier today, which is available at the Investor Relations section of our website.

Chris Gough: This non-GAAP information is provided as a supplement to not as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. However management believes these non-GAAP measures provide investors with valuable information on the underlying trends of our business with that I'd like to turn the call over to Rod.

Rod R. Little: Thank you, Chris. Good morning, everyone, and thanks for joining us on our fiscal 24 second quarter earnings call. We delivered strong financial results in the quarter. Slide sales growth and accelerated gross margin gains of over 300 basis points drove 19% year over year adjusted EBITDA growth and over 50% adjusted earnings per share growth, both of which were above our expectations. Our strong margin results serve as the catalyst for the increase in our profit outlook for the full year while reinforcing our commitment to return to pre-COVID levels of gross margins over time.

Rod R. Little: Thank you Chris Good morning, everyone and thanks for joining us on our fiscal 'twenty four second quarter earnings call.

Rod R. Little: We delivered strong financial results in the quarter.

Rod R. Little: <unk> sales growth and accelerated gross margin gains of over 300 basis points drove 19% year over year adjusted EBITDA growth in <unk>.

Rod R. Little: Over 50% adjusted earnings per share growth, both of which were above our expectations.

Rod R. Little: Our strong margin results serve as a catalyst for the increase in our profit outlook for the full year, while reinforcing our commitment to return to pre COVID-19 level.

Rod R. Little: Well gross margins overtime.

Rod R. Little: I'm particularly pleased with the execution of our teams, as margin expansion delivered in the quarter and embedded in our updated four-year outlook is underpinned by a healthy balance of both accelerated realization of our productivity initiatives and disciplined execution of our strategic revenue management efforts. Combined, these two initiatives drove over 400 basis points of gross benefit in the quarter.

Rod R. Little: I'm, particularly pleased with the execution of our teams is margin expansion delivered in the quarter and embedded in our updated full year outlook is underpinned by a healthy balance of both the accelerated realization of our productivity initiatives and disciplined execution of our strategic revenue management efforts.

Rod R. Little: Combined these two initiatives drove over 400 basis points of gross benefit in the quarter.

Rod R. Little: Organic net sales results in the quarter included a double-digit increase in our right to win portfolio, driven by our market-leading sun care and grooming business and continued growth across our international markets, reflective of both price and volume gains. I continue to be excited about the results we are seeing in our international markets. After posting 6% growth this quarter, these businesses have a two-year staff growth rate of over 9%, driven by better execution, improved commercial capabilities, and importantly, stronger leadership.

Rod R. Little: Organic net sales results in the quarter included a double digit increase in our right to win portfolio.

Rod R. Little: By our market, leading sun care, and grooming businesses and continued growth across our international markets reflective of both price and volume gains.

Rod R. Little: I continue to be excited about the results, we're seeing in our international markets.

Rod R. Little: After posting 6% growth this quarter. These businesses have a two year stacked growth rate of over 9% driven by better execution improved commercial capabilities and importantly stronger leadership.

Rod R. Little: In Japan, our second largest standalone market, we have meaningful organic growth while gaining almost a point and a half of market share in the white shade. In Europe, our momentum continues with growth across both branded wet shave and our custom brands group, as we have begun to execute the relaunch of the Wilkinson SORT brand in March. And in Latin America, growth was driven by higher pricing and volumes, reflective of a strong start to the sun care season. In North America, as category consumption softened, sales and our right to play businesses of wet shave and feminine care declined.

In Japan, our second largest standalone market, we had meaningful organic growth, while gaining almost a point and a half with market share in wet shave.

Rod R. Little: In Europe, our momentum continues with growth across the brand in wet shave and our customer brands group.

Rod R. Little: As we have begun to execute the relaunch of the Wilkinson sword brand in market.

Rod R. Little: And in Latin America growth was driven by higher pricing and volumes reflective of a strong start to the sun care season.

Rod R. Little: In North America as category consumption softened sales in our right to play businesses of wet shave and feminine care declined.

Rod R. Little: While there were certain transitory factors at play, including the cycling of last year's NPD pipeline fill at Costco and Shave, and retailer efforts to further reduce safety stock levels across STEM care, the results in these categories for North America were below our expectations. Importantly, our results in North America across our right to win portfolio were very strong. And in total, we grew over 11% in the quarter, with gains in both volume and price. Solid planogram outcomes and good early season execution drove 13% growth in sun care, and Incremental Distribution and new product rollouts in Cremo. And the Billy launch into the body fuels over 20% organic sales growth in Groovy.

Rod R. Little: While there were certain transitory factors at play, including the cycling of last year's NPD pipeline fill at Costco in shave and retailer efforts to further reduce safety stock levels across them care results in these categories for North America were below our expectations.

Importantly, our results in North America across our right to win portfolio were very strong and in total we grew over 11% in the quarter.

Rod R. Little: With gains in both volume and price.

Rod R. Little: Solid planning Graham outcomes and good early season execution drove 13% growth in Sun care.

Rod R. Little: And incremental distribution and new product rollouts, and criminal and ability launch into body fueled over 20% organic sales growth and grooming.

Rod R. Little: In summary, we operate a broad and diverse portfolio of global brands, and our first half results are further proof that our strategy is working. For half one, we delivered 1.4% organic sales, 190 basis points of gross margin accretion, invested over $111 million in support of our brands, increased operating cash flow by $54 million, and realized over 26% adjusted earnings per share growth. As we turn to the second half of the year, our priorities are clear.

Rod R. Little: In summary, we operate a broad and diverse portfolio of global brands and our first half results are further proof that our strategy is working.

Rod R. Little: For half one we delivered one 4% organic sales growth.

Rod R. Little: 190 basis points of gross margin accretion.

Rod R. Little: And over $111 million in support of our brands and.

Rod R. Little: An increased operating cash flow by $54 million and realized over 26% adjusted earnings per share growth.

Rod R. Little: Let me turn to the second half of the year, our priorities are clear.

Rod R. Little: We will continue to execute with excellence in support of our productivity program, and we will invest in meaningful innovation and NPD across sun, grooming, and body care, as well as our carefree master brand launch. And finally, we will continue to deliver top and bottom line growth across our international market. With this, I'm confident in our organization's ability to be successful. And now, I'd like to ask Dan to take you through our second quarter results and discuss our outlook for Fiscal 24. Dan?

Rod R. Little: We will continue to execute with excellence and support of our productivity program.

Rod R. Little: We will invest behind meaningful innovation, and NPD across Sun grooming and body care as well as our carefree Master brand launch and finally, we will continue to deliver top and bottom line growth across our international markets.

Rod R. Little: This I'm confident in our organization's ability to be successful.

Rod R. Little: Now I'd like to ask Dan to take you through our second quarter results and discuss our outlook for fiscal 'twenty four Dan.

Daniel Sullivan: Thank you, Rod. Good morning, everyone. Despite what continues to be a challenging macroenvironment, strong operational and commercial execution led to robust adjusted gross margin, EPS, and EBITDA expansion in the quarter. Strong international results, partially offset by the challenging performance of our right-to-play categories in North America, led to slight organic sales growth, which was below our expectations. However, continued excellent productivity performance and realization of our price and revenue management strategies once again unlocked notable gross margin accretion, enabling us to raise our full year adjusted EPS and EBITDA outlook ranges, which I'll discuss shortly.

Daniel Sullivan: Thank you Rob good morning, everyone. Despite what continues to be a challenging macro environment strong operational and commercial execution has led to robust adjusted gross margin EPS and EBITDA expansion in the quarter.

Daniel Sullivan: Strong international results, partially offset by the challenging performance of our right to play categories in North America led to slight organic sales growth, which was below our expectations.

Continued excellent productivity performance and realization of our price and revenue management strategies. Once again unlocked notable gross margin accretion, enabling us to raise our full year, adjusted EPS and EBITDA outlook ranges, which I'll discuss shortly.

Daniel Sullivan: For the quarter, organic net sales growth was largely driven by higher pricing and the Strategic Revenue Management Act, while volumes were lower. International organic growth was just under 6%, underpinned by both price and volume gains. As previously mentioned, the external environment is challenging. The dollar remains stubbornly strong while interest rates remain elevated.

Daniel Sullivan: For the quarter organic net sales growth was largely driven by higher pricing and strategic revenue management actions, while volumes were lower.

Daniel Sullivan: Our national organic growth was just under 6% underpinned by both price and volume games.

Daniel Sullivan: As previously mentioned the external environment is challenging.

Daniel Sullivan: <unk> remained stubbornly strong while interest rates remain elevated and importantly consumption across U S categories has slowed.

Daniel Sullivan: And importantly, consumption across U.S. categories has slowed. Aggregate consumption across our US segments declined 0.4% in the quarter, a meaningful sequential step down from last quarter's 2% 13-week growth and the 5% trailing 52-week trend, as gains from pricing eased compared to a year ago and volumes declined across most categories. The change in trend was most pronounced in wet shave and reflective of the drug channel, where we're seeing lower foot traffic, retailer execution challenges, and a highly competitive environment on the shelf. Operationally, our teams continue to execute at a high level.

Daniel Sullivan: Aggregate consumption across our U S segments declined <unk>, 4% in the quarter, a meaningful sequential step down from last quarter's 2% 13 week growth and 5% trailing 52 week trend as gains from pricing eased compared to a year ago and volumes declined across most categories.

Daniel Sullivan: The change in trend was most pronounced in wet shave and reflective of the drug channel, where we're seeing lower foot traffic retailer execution challenges in a highly competitive environment on shelves.

Daniel Sullivan: The supply chain organization realized better than expected productivity savings, and our commercial teams drove strong gains from both price and revenue management. In total, these efforts combined to provide 430 basis points of gross margin tailwinds in the quarter, which more than offset core inflationary pressures and an unfavorable mix. Notably, we delivered 320 basis points of adjusted gross margin accretion, adjusted EPS of 88 cents per share, and adjusted EBITDA of $99.7 million, all of which were marked improvements over the previous year and above our expectations. Now, let me turn to the detailed results for the quarter.

Daniel Sullivan: Operationally our teams continued to execute at a high level the supply chain organization realized better than expected productivity savings and our commercial teams drove strong gains from both price and revenue management.

Daniel Sullivan: In total these efforts combined to provide 430 basis points of gross margin tailwind in the quarter, which more than offset core inflationary pressures and unfavorable mix.

Daniel Sullivan: Notably, we delivered 320 basis points of adjusted gross margin accretion adjusted EPS of <unk> 88 per share and adjusted EBITDA of $99 $7 million.

Daniel Sullivan: All of which were marked improvements over the previous year and above our expectations now.

Speaker Change: Now, let me turn to the detailed results for the quarter.

Daniel Sullivan: Organic net sales increased 0.1%; a strong performance across international markets and double-digit global growth in sun care and grooming were offset by declines in North America wet shave and feminine care. The strong international performance was driven by price gains of over 3% and volume gains of over 2%, resulting in just under 6% organic growth. Performance in Japan continued to be a highlight as a return to healthy category consumption was met with price execution and supported by incremental brand investment. Mid single-digit growth in Europe and high single-digit growth across LATAM were noteworthy as well.

Speaker Change: Organic net sales increased <unk>, 1%, a strong performance across international markets and double digit global growth and the Sun care and grooming were offset by declines in North America, wet shave and Fem care.

Speaker Change: Strong international performance was driven by price gains of over 3% and volume gains of over 2%, resulting in just under 6% organic growth.

Speaker Change: Performance in Japan continued to be a highlight as it returned to healthy category consumption was met with price execution and supported by incremental brand investment.

Speaker Change: Mid single digit growth in Europe, and high single digit growth across Latam were noteworthy as well.

Daniel Sullivan: Organic sales in North America were down 2.8% as double-digit growth in sun and grooming was offset by declines in wet shave, femme care, and skin. North America volumes were down 5.4% while pricing and revenue management delivered nearly three points of growth; wet shave organic net sales were down 4.5% with declines in men and women systems and preps offset by slight growth in disposal. International wet shave grew in the mid single digits and for both price and volume gains, reflecting improved market conditions, solid distribution outcomes, and strong in-market brand activation.

Speaker Change: Organic sales in North America were down two 8% as double digit growth in Sun and grooming was offset by declines in wet shave and fem care and skin.

Speaker Change: North America volumes were down five 4%, while pricing and revenue management delivered nearly three points of growth.

Speaker Change: Wet shave organic net sales were down four 5% with declines in men's and women's systems, and perhaps offset by slight growth in disposables.

Speaker Change: International wet shave grew mid single digits and for both price and volume gains, reflecting improved market conditions solid distribution outcomes and strong end market brand activation.

Daniel Sullivan: In North America, organic net sales declined double digits and were negatively impacted by the cycling of last year's MPD pipe sale in the club channel. Excluding the impact of the product launch promotion, total wet shave sales would have declined just under 2% in the quarter, which was in line with our expectations. In the US razors and blades category, consumption was down 3% in the quarter, driven mostly by the drug. However, declining traffic, weaker retailer performance, and heightened promotional levels all dampened results.

Speaker Change: In North America organic net sales declined double digits and were negatively impacted by cycling last year's MPD pipe fill in the club channel.

Speaker Change: Excluding the impact of the product launch cycling total wet shave sales would've declined just under 2% in the quarter, which was in line with our expectations.

Speaker Change: In the U S razors and blades category consumption was down 3% in the quarter driven mostly by the drug channel with declining traffic weaker retailer performance and heightened promotional levels all dampened the results.

Daniel Sullivan: While our market share decreased 80 basis points overall, this was entirely driven by the aforementioned drug channel, where we overindexed. Outside of drugs, total category consumption was only marginally down, and we gained market share, including share expansion in mass. The Billy Brandt continued to gain share, delivering 360 basis points of share growth as it continues to scale at retail. In the quarter, the brand reached a 16 share at Walmart and over 10 share at drug stores. Sun and skin care organic nut sales increased approximately 12% as nearly 13% growth in sun care and 18% growth in grooming were partially offset by declines in skin.

Speaker Change: While our market share decreased 80 basis points. Overall this was entirely driven by the aforementioned drug channel, where we over index.

Speaker Change: Outside of drug total category consumption was only marginally down and we gained market share including share expansion in mass.

Speaker Change: Hey, Billy brand continued to gain share delivering 360 basis points of share growth as it continues to scale at retail.

Speaker Change: In the quarter the brand reached a 16 share at Walmart and over 10 share that drug.

Speaker Change: Sun and skin care organic net sales increased approximately 12% as nearly 13% growth in sun care and 18% growth in grooming were partially offset by declines in skin nor.

Daniel Sullivan: North America and international each grew Suncare over 12% with both delivering volume and price gain. In the U.S., challenging early season weather was evident in category performance, which was down approximately 4%, and our share declined 190 basis points, grooming organic net sales increased over 18% led by over 26% growth in Cremo in the US, over 12% growth in Bulldog internationally, and the rollout of Billy's body care launch at retail, rooming organic growth excluding the billy launch was a robust 11% Wet Ones Organic Net Sales declined 11% and our share declined slightly to approximately 73%, stem care organic net sales were down 12% for the quarter and the decline was more than expected.

Speaker Change: North America and international each grew Sun care over 12% with both delivering volume and price gains.

Speaker Change: In the U S challenging early season weather was evident in category performance, which was down approximately 4% and our share declined 190 basis points.

Speaker Change: Grooming organic net sales increased over 18%.

Speaker Change: Led by over 26% growth in chromo in the U S over 12% growth in Bulldog internationally, and the rollout of Billy's body care launch at retail.

Speaker Change: Room in your organic growth, excluding the Billy launch was a robust 11%.

Speaker Change: Wet ones organic net sales declined 11% and our share declined slightly to approximately 73%.

Speaker Change: Fem care organic net sales were down 12% for the quarter and the decline was more than expected.

Daniel Sullivan: Consumption in the category was up 1.9%, though entirely driven by pad, tampon consumption was flat, and liners declined. The category continues to be impacted by retailer destocking and heightened promotional intensity, And we saw some executional delays in the changeover to the new planogram sets, which was a headwind in the quarter as we deploy our new carefree master brand. Playtech Sport continues to be a drag with sluggish consumption and shared performance.

Speaker Change: Consumption in the category was up one 9% so entirely driven by pads as tampon consumption was flat and liners declined CAD.

Speaker Change: The category continues to be impacted by retailer destocking and heightened promotional intensity and we saw some execution delays and the changeover to the new plan O Gram sets, which was a headwind in the quarter as we deploy our new carefree master brands.

Speaker Change: Playtex sport continues to be a drag with sluggish consumption and share performance.

Daniel Sullivan: Now moving down the P&L. Gross margin rate on an adjusted basis increased 320 basis points, inclusive of 10 basis points of unfavorable currency. We delivered approximately 240 basis points of productivity savings and realized 190 basis points of price and strategic revenue management gain. This was partially offset by core gross inflationary pressures of about 60 basis points and 40 basis points of negative mix and other items. A&P expenses were 10.5% of net sales and flat compared to last year.

Speaker Change: Now moving down the P&L.

Speaker Change: Gross margin rate on an adjusted basis increased 320 basis points inclusive of 10 basis points of unfavorable currency.

Speaker Change: We delivered approximately 240 basis points of productivity savings and realized a 190 basis points of price and strategic revenue management gains.

Speaker Change: This was partially offset by core gross inflationary pressures of about 60 basis points, and 40 basis points of negative mix and other items.

Speaker Change: A&P expenses were 10, 5% of net sales and flat to last year.

Daniel Sullivan: Adjusted SG&A increased 20 basis points in rate of sale versus last year, as higher people-related costs were only partly offset by savings realized from ongoing operational efficiency programs. Adjusted operating income was $80.7 million, compared to $63.1 million last year, an increase of approximately 28%. Adjusted operating margin increased 300 basis points, reflecting higher gross margin, partially offset by higher IMP and SG&A. Gap diluted net earnings per share were $0.72 compared to $0.37 in the second quarter of fiscal 23.

Speaker Change: Adjusted SG&A increased 20 basis points in rate of sale versus last year.

Speaker Change: Higher people related costs were only partly offset by savings realized from ongoing operational efficiency programs.

Speaker Change: Adjusted operating income was $80 $7 million compared to $63 $1 million last year, an increase of approximately 28%.

Speaker Change: Adjusted operating margin increased 300 basis points, reflecting higher gross margin, partially offset by higher A&P and SG&A expenses.

Speaker Change: GAAP diluted net earnings per share were <unk> 72.

Speaker Change: Compared to 37 in the second quarter of fiscal 'twenty three and.

Daniel Sullivan: And adjusted earnings per share were $0.88 compared to $0.56 in the prior year period. Currency movements had approximately $0.02 per share of an unfavorable impact in the quarter as translational currency benefits within operating profit were more than offset by transactional headwinds in operating profit and lower hedge gains within other income and expense. Adjusted EBITDA was $99.7 million, inclusive of a $1.3 million unfavorable currency impact, compared to $83.6 million in the prior year. Net cash provided by operating activities was $56.1 million for the first half, compared to $1.9 million in the prior year period.

Speaker Change: And adjusted earnings per share were <unk> 88, compared to 56 in the prior year period.

Speaker Change: Currency movements had approximately <unk> <unk> per share an unfavorable impact in the quarter as translational currency benefits within operating profit were more than offset by transactional headwind in operating profit and lower hedge gains within other income and expense.

Speaker Change: Adjusted EBITDA was $99 $7 million inclusive of a $1.3 million unfavorable currency impact.

Speaker Change: Third to $83 $6 million in the prior year.

Speaker Change: Net cash provided by operating activities was $56 $1 million for the first half compared to $1 9 million in the prior year period.

Daniel Sullivan: We ended the quarter with $196 million in cash on hand, access to the $309 million undrawn portion of our credit facility, and a net debt leverage ratio of 3.4 times. In the quarter, share repurchases totaled $15 million, and we continued our quarterly dividend payout and declared another cash dividend of 15 cents per share for the second quarter. In total, we returned $23.5 million to shareholders during the quarter.

Speaker Change: We ended the quarter with $196 million in cash on hand access to the $309 million Undrawn portion of our credit facility and a net debt leverage ratio of three four times.

Speaker Change: In the quarter share repurchases totaled $15 million and we continued our quarterly dividend payout and declared another cash dividend of <unk> 15 per share for the second quarter.

Speaker Change: In total we returned $23 $5 million to shareholders during the quarter.

Daniel Sullivan: Now turning to our outlook for fiscal 2024, our strong half-one financial performance, highlighted by accelerated year-over-year gross margin accretion, provides the catalyst for our raising of the full year outlook for both adjusted EBITDA and EPS. We continue to expect organic net sales growth to be in the range of 2 to 4%. So now we anticipate the full year growth to be at the lower end of our previously provided range. This is largely reflective of 2Q results, as our half to organic growth outlet remains mostly in line with our previous expectation, and with a higher growth profile in Q4 than in Q3.

Speaker Change: Now turning to our outlook for fiscal 2024.

Speaker Change: Our strong half one financial performance highlighted by accelerated year over year gross margin accretion provides the catalyst for a raising of the full year outlook for both adjusted EBITDA and EPS.

Speaker Change: We continue to expect organic net sales growth to be in the range of 2% to 4%. So now anticipate the full year growth to be at the lower end of our previously provided range.

Speaker Change: This is largely refract reflective of <unk> results.

Speaker Change: As our half to organic growth outlook remains mostly in line with our previous expectations and with a higher growth profile in Q4 than in Q3.

Daniel Sullivan: We now expect full-year adjusted gross margin accretion of 120 basis points, inclusive of 10 basis points of FX headwinds. And this represents a 40 basis point improvement over our previous outlook. Our outlook for margin expansion in half two is largely unchanged, as we expect stronger productivity gains and continued easing of inflation and FX to be offset by increased promotional levels and the negative impact of lower sales on capacity utilization. As mentioned, we're also increasing our outlook for adjusted EPS and EBITDA, essentially flowing through the overperformance from 2Q to the full year and holding half to generally consistent with our previous outlook, as modestly improved FX is offset by the impact of slightly lower sales.

Speaker Change: We now expect full year adjusted gross margin accretion of 120 basis points inclusive of 10 basis points of FX headwinds and this represents a 40 basis point improvement over our previous outlook.

Speaker Change: Our outlook for margin expansion in half two is largely unchanged as we expect stronger productivity gains and continued easing of inflation and FX to be offset by increased promotional levels and the negative impact of lower sales on capacity capacity utilization.

Speaker Change: As mentioned, we are also increasing our outlook for adjusted EPS and EBITDA essentially flowing through the over performance from <unk> to the full year and holding half two generally consistent with our previous outlook as modestly improved FX is offset by the impact of slightly lower sales.

Daniel Sullivan: Adjusted EBTA is now expected to be in the range of $348 million to $360 million. Adjusted EPS is now anticipated to be in the range of $2.80 to $3, inclusive of approximately 17 cents per share of currency headwinds. Adjusted earnings per share at the midpoint of the range is now expected to increase approximately 12% or 18% at constant currency. For more information related to our fiscal 24 outlook, I would refer you to the press release that we issued earlier this morning. And now I'd like to turn the call back over to the operator for the Q&A session. We will now begin the question and

Speaker Change: Adjusted EBITDA is now expected to be in the range of $348 million to $360 million. Adjusted EPS is now anticipated to be in the range of $2 80.

Speaker Change: The $3 inclusive of approximately <unk> 17 per share of currency headwinds.

Speaker Change: Adjusted earnings per share at the midpoint of the range is now expected to increase approximately 12% or 18% at constant currency.

Speaker Change: For more information related to our fiscal 'twenty four outlook I would refer you to the press release that we issued earlier this morning.

Speaker Change: And now I'd like to turn the call back over to the operator for the Q&A session.

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Nick Modi with RBC Capital Markets. Please go ahead.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad. If you are using a speakerphone. Please pick up your handset before pressing the keys. If any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Speaker Change: The first question comes from Nik Modi with RBC capital markets. Please go ahead.

Nik Modi: Yeah, thank you. Good morning, everyone.

Nik Modi: Yeah. Thank you good morning, everyone I.

Nik Modi: Just a few questions.

Nik Modi: Well I was hoping you can comment on the shelf resets being delayed because we're hearing it was pretty broadly across a lot of companies across the space I'm just curious if there's a specific dynamic.

Nik Modi: Kind of taking place that's causing that and then the other question I had is just the.

Nik Modi: The drug channel seems like you know it doesn't look like it's kind of recover anytime soon it it seems like a lot of kind of missteps execution issues lack of focus on these categories.

Nik Modi: How do you think about the channels right. I mean is this going to continue to be a drag on your business as we kind of pick out the next several quarters, even maybe even going into next fiscal year.

Rod R. Little: I've got just a few questions. You know, I was hoping you could comment on the shelf resets being delayed, because we're hearing this pretty broadly across a lot of companies across the space. I'm just curious, you know, there's a specific dynamic that's kind of taking place that's causing that. And then the other question I had is just, you know, the drug channel seems like, you know, it doesn't look like it's going to recover anytime soon.

Yes, good morning, Nick Thanks for the questions.

Speaker Change: <unk> are things that we have been focused on on the virtual shelf resets being delayed.

Speaker Change: The broader thing that's happening and where there are delays it is lack of labor.

Speaker Change: At at the floor, that's one of the things we hear come back from the teams I think that could be a macro factor in our case, though the the only thing that really has had any meaningful impact to us in the quarter was specifically in fem care and the timing change in the planet Gram reset, which we expect it to be.

Rod R. Little: It just seems like a lot of kind of missteps, executional issues, and lack of focus on, you know, these categories. How do you think about the channel pivot? Right? I mean, is this going to continue to be a drag on your business as we kind of think out the next several quarters, even maybe go even into next fiscal year?

Rod R. Little: Good morning, Nick. Thanks for the questions. Both are things that we have been focused on. On the first one, shelf resets being delayed. I think the broader thing that's happening where there are delays is lack of labor on the floor. That's one of the things we hear back from the teams. I think that could be a macro factor.

Speaker Change: <unk>.

Speaker Change: March April may and the reason that impacted us more than others was around the fact that we are launching our carefree master Brad.

Rod R. Little: In our case, though, the only thing that really had any meaningful impact on us in the quarter was specifically in FemCare. And the timing change of the planogram reset, which we expected to be March-April, became May. And the reason that it impacted us more than others was around the fact that we were launching our Carefree master brand with that planogram reset, effectively sunsetting the stay-free brand, which we stopped shipping with the expectation that the planogram reset would happen in March-April.

Speaker Change: And with that plan O Gram reset effectively sunsetting, the stay free brand, which we stopped shipping with the expectation that part of the brain reset what happened in March April and when it got delayed to May we were out of stock because we had run the stock down as we are converting everything into care free.

Rod R. Little: And when it got delayed to May, we were out of stock because we had run the stock down as we were converting everything into Carefree. And now Carefree launches in May across pads and liners. We're super excited about that master brand relaunch. It's coming with the technology innovation, with a better top sheet. So we're excited, actually, about Fem for the second half of the year. The team's doing all the right things

Speaker Change: And now care pretty launches into may across pads and liners. We're super excited about the master brand relaunch, it's coming with the technology innovation with a better top sheet. So we're excited actually about film for the second half of the year. The team is doing all the right things.

Rod R. Little: But it cost us over a point of growth in the quarter alone because of that timing delay. That was the biggest impact or incentive, along with the inventory reduction that others have talked about. And then as it comes to the drug channel, what's interesting is that you look at the U.S. market, you look at our share performance, how we performed against mass, against food, against e-com, on track with plants, across the board, and specifically with shade.

Speaker Change: But it caused us over a point of growth in the quarter alone.

Speaker Change: With that timing delay that was the biggest impactor and SAB along with the inventory reduction that others have talked about and then as it comes to drug channel. What's interesting as you look at the U S market you look at our share performance, how we performed against mass against food against E Com on track with plans.

Speaker Change: Across the board and specifically with shape.

Rod R. Little: We are disproportionately impacted by problems in the drug channel because we're overdeveloped in that channel. We are seeing, in our read-throughs, double-digit foot traffic declines in clubs, in addition to the things that are impacting CVS Walgreens every day. Within drugs, you've got the labor issue, you've got the inflation issue where the value equation there is maybe not quite as sharp as it is in some other retailers. So, yeah, I do think that's something that will be a drag for us.

Speaker Change: We are disproportionately impacted by problems in the drug channel because we're over developed in that channel. We are seeing it I read throughs double digit foot traffic declines in club. In addition to the things that are impacting Cvs Walgreens everyday.

Speaker Change: Within drug you've got the labor issue, you've got the inflation issue, where the value equation. There is maybe not quite as sharp as it is in some other retailers. So yeah I do think that's something that will be a drag for us will face that as we cycle through that and those issues resolve themselves, but the other piece.

Rod R. Little: We'll face that as we cycle through that, and those issues resolve themselves. But the other piece we have within the quarter in drugs is Rite Aid went bankrupt. And we're no longer shipping to a customer that was fairly meaningful in size to us. We, I expect that we'll get picked up elsewhere, but that was also an impact.

Speaker Change: Within the quarter and drug is rite aid went bankrupt and we're no longer shipping to a customer that was fairly meaningful in size to us. We expect that will get picked up other places, but that was also an impact during the quarter.

Rod R. Little: Great. Thanks for the perspective. I'll pass it on and get back in the queue.

Speaker Change: Great.

Speaker Change: Thanks for the perspective, I'll pass it on and get back in the queue.

Operator: Thanks, Nick. Thanks, Nick. Operator, next question, please. Our next question comes from:

Speaker Change: Thanks, Nick Thanks, Nick Operator next question please.

Operator: Our next question comes from Bill Chappell with Truist Securities. Please go ahead.

Speaker Change: Our next question comes from Bill Chappell with curious Securities. Please go ahead.

Bill Chappell: Good morning. Thanks.

Bill Chappell: Good morning, Bill. I guess the first question, maybe, on early indications of the sun.

Bill Chappell: Hey, good morning, Bill Bill.

Bill Chappell: I guess first question maybe.

Rod R. Little: I mean, it seems like it's a fairly good start for first son, especially internationally, but I know the season really doesn't start in earnest until June, so, you know, maybe you can talk about how it's progressed as we moved into the fiscal third quarter and shelf space and kind of how you're set up versus, especially versus last year.

Bill Chappell: Early indications on the.

Bill Chappell: I mean, it seems like it's a fairly good start for her son, especially internationally, but I know the season really doesn't start in earnest until we get to kind of really May June. So maybe you can talk about how it's progressed as we moved into the <unk>.

Bill Chappell: Fiscal third quarter, and shelf space and kind of how you're set up versus especially versus last year.

Rod R. Little: Yeah, Bill, the sun season, if you look at what we did in the quarter, we grew 12% organically, primarily our shipments in ahead of the sun season in North America or in the Northern Hemisphere. Southern Hemisphere, a little different dynamic, but that 12% was equally represented internationally up 12, North America up 12, so that's where we'd sit. We'd start the season domestically here in the U.S. with a slow start. If you look at early season weather patterns across the South, specifically down in the and worse than last year, if you want a direct comparison in terms of where we started. Now that said, it is early, but we're seeing that change now if you look at the Sun Forecast and the Temperature Forecast across the South and Southeast. That looks good.

Speaker Change: Yes Bill.

Speaker Change: The Sun season, if you look at what we've done in the quarter, we grew 12%.

Speaker Change: Organic primarily our shipment said right ahead of Sun season in North America or in the northern Hemisphere, Southern Hemisphere, a little different dynamic.

Speaker Change: But that 12% was equally represented internationally up 12, North America up 12. So that's why we said we started the season domestically here in the U S.

Speaker Change: With a slow start if you look at early season weather patterns across the south specifically down in the lower East coast in Florida start.

Speaker Change: The year very rainy.

Speaker Change: And worse than last year, if you want a direct compare in terms of where we started now that said it is early.

Speaker Change: Seeing that change now if you look at the.

Speaker Change: <unk> forecast and the temperature forecast across the south and southeast that looks good. If you look at expected travel patterns travel is going to be up again as the protection that will be good.

Rod R. Little: If you look at expected travel patterns, travel is going to be up again, the projection is, that will be good, and our teams did an excellent job in the field getting distribution at or better than a year ago across the board. And one of the things that we're encouraged about is not only do we get distribution, but we've got some exciting UNPD on both Banana Boat and Hawaiian Tropic that have led to some incrementality in shelf space and Banana Boat 360, which we've talked about in the past.

Speaker Change: And our teams did an excellent job in the field getting distribution at or better than year ago across the board and one of the one of the things that we're encouraged about is not only do we get the distribution, but we've got some exciting new MPD.

Speaker Change: And he had a boat and Hawaiian Tropic led some to some incrementally and shelf space, but at about 360, we've talked about in the past, it's a new non aerosol delivery format for sprays to revolutionize the category Thats been in <unk> for 20 years.

Rod R. Little: It's a new non-aerosol delivery format for sprays to revolutionize the category that's been in sea sprays for 20 years in a different format. It's very sustainable, recyclable bottles, and a reusable handle. I personally think it's the coolest innovation in the category this year, and so that also helps with the story. So now we wait 80% of the volume in front of us for the sun to hit. We think it will hit, and we're also lapping, I believe, a fairly easy comp as you look, and then a very rainy period through the northeast of the U.S. all the way through to July 4th weekend last year.

Speaker Change: A different format, that's very sustainable recyclable bottles reasonable handle.

Speaker Change: I personally think it's the coolest innovation in the category this year and so that also helps with the story. So now we wait 80% of the volume in front of us for the Sunday here, We think it will hit and we were also lapping I believe a fairly easy comp as you look at the weather patterns last year with fires excessive heat.

Speaker Change: And then a very rainy periods in the northeast of the U S. All the way through to July 4th weekend last year.

Bill Chappell: Got it. No, thanks for the color. And then back to grooming.

Speaker Change: Got it thanks for the color and then back to grooming I guess I understand the <unk>.

Rod R. Little: I guess I understand the weakness in the drug channel, but I guess I'm trying to, you know, are there other things to fully explain why the category declined so much sequentially? Just think about it as the drug channel is weak; the consumers would find it in other channels. And so I'm just, you know, and what you've seen for that category is, as we've moved into the third quarter as well, for a category much bigger than you.

Speaker Change: No.

Speaker Change: The drug channel, but I guess I'm trying to are there other things to fully explain why the category declined so much.

Speaker Change: Sequentially, just because you would think about it is there.

Speaker Change: The drug channel is weak the consumers would fund it at other channels and so I'm just.

Speaker Change: And what you've seen for that category is as we've moved into the third quarter as well for the category and more specifically.

Speaker Change: They're new.

Rod R. Little: Yeah, Bill, I just want to, I want to confirm. Shave was the question you said, Grundy.

Speaker Change: Yes, Bill I, just want to I want to confirm.

Bill Chappell: Shave was the question you said Greg.

Bill Chappell: Yeah, sorry, sheaves, sorry, sheave, wedge sheave. Yeah, I know others use the

Greg: Yes, sorry shoot shoot wet shave.

Rod R. Little: Yeah, I know others use the grooming term or category, so I understand that. Look, we definitely have an impact on drugs that impacts the full strategy. Offsetting that you have a fast growing e-commerce channel, right? It's growing, I think it's similar rates versus the past. However, we are seeing sequential slowing, you can go to a 52 week basis. Our total aggregate, I think we said in the script was 5% growth. That was 2% in the prior quarter; it was about flat up 0.4% in this quarter.

Speaker Change: Yes, I know others use the grooming term.

Speaker Change: Category, So I understand that.

Speaker Change: Look we we definitely have an impact happening in drugs that impacts before academy.

Speaker Change: Offsetting that you have fast growing E Commerce channel right. That's growing I think at similar rates versus the past. However, we are seeing sequential slowing you can go to 52 week basis.

Rod R. Little: So we are seeing sequential slowing that is within SHAVE as well, like SHAVE follows that same trend line effectively for us. And there's a couple of things going on. There's an increased promotional intensity in the category, particularly in women's. It's very competitive as we roll Billie out national.

Speaker Change: Total aggregate I think we said in the script was 5% growth that was 2% in the prior quarter. It was about flat 0.4% in this quarter. So we are seeing sequential slowing that is with any shade as well like shape follows that same trend line effectively for us.

Speaker Change: And there is a couple of things going on there.

Speaker Change: And increased promotional intensity in the category, particularly in women's it's very competitive as we roll out national you have a.

Rod R. Little: You have a brand like Athena Club launching, and you've got the leading competitor being very promotional with their spend rates. We'll match that in the back half of the year and adjust our plans.

Speaker Change: A brand like Athena club launch in yen.

Speaker Change: And you've got the leading competitor being very promotional with their spend rates will match that in the back half of the year adjust our plans.

Rod R. Little: But that's having a negative impact on the women's category. There's also, I think we're seeing a return to more normal historical elasticity conditions around price and volume, where if the price-value equation is off a little bit, volume gets hit.

Speaker Change: But thats, having a negative impact on the women's category Theres also.

Speaker Change: I think we're seeing a return to more normal historical elasticity conditions around price and volume, whereas the price value equation is off a little bit volume gets hit and so some of that promotional intensity is adjusting value.

Rod R. Little: And so some of that promotional intensity is adjusting value. We think we've seen a little bit of trade down to more value-oriented price points with consumers. And I think we're seeing it in some of the data. It's early. But there's also an early indication that consumers are using the product a little longer.

Speaker Change: I think we've seen a lot.

Speaker Change: A little bit.

Speaker Change: Trading down to more value oriented price points with consumers.

Speaker Change: And I think we're seeing it in some of the data is early but there's also.

Speaker Change: Early indication that consumers are using product a little longer.

Rod R. Little: Right, as you look at how you get the most out of what you have in your house if you're trying to manage your cash flow using a razor blade cartridge, an extra shave or two, giving a logical consumer reaction when the consumer starts to get tight. And we're seeing a little bit of that in some traffic patterns. It's not something that's a driver of our result, but I think that's playing into one of the drivers of the category slowdown. Again, I don't know if you'd add anything.

Speaker Change: As we look to how do you how do you get the most out of what you have in your house. If you try to manage your cash flow using a razor blade cartridge and extra shade more to do.

Speaker Change: As a logical consumer.

Speaker Change: Reaction when the consumer starts to get tight.

Speaker Change: And we're seeing a little bit of that in some traffic patterns. It's not something that's a driver of our results, but I think thats playing into one of the drivers of the category slowdown and Dan I don't know if you'd add anything no I think those are all the right points I would add maybe two thoughts I think one the total shave performance in the quarter.

Daniel Sullivan: Yeah, no, I think those are all the right points. I would add maybe two thoughts. I think one, the total shade performance in the quarter, Bill, was largely as we had profiled it. We actually weren't.

Daniel Sullivan: Your Bill was largely as we profile that we actually won.

Daniel Sullivan: Price, so to say, by the minus four. , and John C.. .. .. .. .. .. .. ....

Daniel Sullivan: Surprise, so to say by the minus four minus four and a half remember we were cycling and.

Daniel Sullivan: In MPD last year.

Daniel Sullivan: You may now in club, which.

Daniel Sullivan: Which we knew would be a headwind as we entered the quarter. So I want to say one we werent, we werent surprised by the profile in the quarter I think two of the only piece that I would add is there.

Daniel Sullivan: , there were we struggled in North America with shave and faced some headwinds and channels, as Rod articulated, we were equally accelerating internationally. And again, we don't talk a lot about it, but the international represents over 50% of our shave portfolio. And we've now grown that double digits for the first half of the year, up 6%, 5% in the quarter in 2Q. So I think putting it all in perspective, yes, some challenging environmental and price-related items in the US, for sure. But heightened growth internationally, as I mentioned, and then, yeah, cycling an item from last year that profiled the quarter largely as we'd expect.

Daniel Sullivan: There, where we struggled in North America, shave and faced some headwinds in channels as rod articulated.

Daniel Sullivan: We're equally accelerating internationally.

Daniel Sullivan: And again, we don't talk a lot about it but the international represents over 50% of our shale portfolio and we've now grown that double digits for the first half of the year.

Daniel Sullivan: 6%, 5% in the quarter into Q, So I think putting it all in perspective, yes.

Daniel Sullivan: Yes, some challenging environmental.

Daniel Sullivan: And price related items in the U S for sure.

Daniel Sullivan: But heightened growth internationally.

Daniel Sullivan: As I mentioned and then yes cycling an item from last year that the profile of the quarter largely as we had expected it.

Speaker Change: Great. Thanks again.

Operator: Great, thanks again. Thanks, Bill. Operator, next question, please. When the next question comes in,

Speaker Change: Thanks, Bill Operator next question. Please our next question comes from Chris Carey with Wells Fargo Securities. Please go ahead.

Operator: Our next question comes from Chris Carey with Wells Fargo Securities. Please go ahead.

Christopher Michael Carey: Hi, good morning, everyone. [inaudible]

Christopher Michael Carey: Hi, good morning, everyone.

Christopher Michael Carey: Hi Chris. Good morning Chris.

Christopher Michael Carey: Thanks, Chris.

Speaker Change:

Speaker Change: So.

Christopher Michael Carey: What's your outlook for the North America business? Relative to international in the back half of the year and, if you could frame wet shave as well? And then, secondly, can you talk about your ability to deliver on your higher profit outlook today, even if sales come in below your current expectations? It does seem like there's a little bit of a visibility dynamic that happened in q2 that could continue into the back half. I'm trying to understand how that might impact the profit model if, indeed, some of these things turn out to be a bit worse than you expected in the back half of the year.

Christopher Michael Carey: What's your outlook for the North America business relative to international.

Speaker Change: In the back half of the year, and if you could frame wet shave as well.

Speaker Change: And then secondly can you talk about your ability to deliver on your higher profit outlook today, even if sales come in below your current expectation.

Speaker Change: It does seem like there's a little bit of visibility dynamic that happened in Q2 that could continue into the back half.

Speaker Change: I'm trying to understand.

Speaker Change: How that might impact the profit model. If indeed, some of these things turn out to be a bit worse than you expected.

Speaker Change: Into the back half of the year.

Daniel Sullivan: Yeah, hey, Chris, it's Dan. I'll take them in reverse order.

Speaker Change: Yeah, Hey, Chris It's Dan I'll take them in reverse order so.

Daniel Sullivan: We obviously have a.

Daniel Sullivan: A very strong line of sight to the profit profile based on the margin performance that we've seen to date and we're driving significant structural outperformance here on on productivity and pricing revenue management. So we certainly feel good about that and as we said in the remarks that save or the <unk>.

Daniel Sullivan: Over performance through Q flows through.

Daniel Sullivan: We're going to continue to push hard on that I think you've seen that from us certainly on the productivity line and we see now opportunities to over deliver.

Daniel Sullivan: For the full year, what we are anticipating in the back half of the year is a bit more promotional intensity rod mentioned that earlier in shave.

Daniel Sullivan: Also in Fem and and we have factored in some capacity utilization headwinds in.

Daniel Sullivan: In the back half of the year, just due to the lower sales that we've seen so we think we've been we've captured the right puts and takes.

Speaker Change: We do think pointing to the lower end of the range is the right place to be but we have high confidence in our in our ability to deliver now the improved margin performance in terms of your first question on back half of the year, but let me sort of put it in perspective I'll start at the at the total company level, because I think looking at what we.

Daniel Sullivan: So, we obviously have a very strong line of sight to the profit profile based on the margin performance that we've seen to date, and we're driving significant structural outperformance here on productivity, price, and revenue management. So, we certainly feel good about that.

Speaker Change: We're cycling.

Speaker Change: Is very important for the first half of the year. We grew about one of that one 5% and we cycled 8% growth from a year ago, our back half profile calls for about two 5% growth while recycling just over a point a year ago. So we start from a place that we think is constructive and thoughtful factoring in all of the things you've heard us.

Daniel Sullivan: And as we said in the remarks, the overperformance through 2Q flows through. We're going to continue to push hard on that. I think you've seen that from us, certainly on the productivity line. And we see opportunities now to over deliver for the full year. What we are anticipating in the back half of the year is a bit more promotional intensity. Rod mentioned that earlier in Shave and also in FEM.

Speaker Change: Talk about both within our portfolio and the broader markets specific to shave.

Speaker Change: We're seeing now a category and therefore, our performance within that category that largely levels back to the algorithm that we put in place.

Speaker Change: Few years back when we launched the strategy, we're seeing now for organics, a flat to slightly declining.

Speaker Change: Ganic.

Speaker Change: Largely what we've seen so far for the first half of the year, we were up about a point, we're profiling half two to be down about a point and that would put us for the full year plus or minus flat that's kind of how we're thinking about it.

Daniel Sullivan: And we have factored in some capacity utilization headwinds in the back half of the year due to the lower sales that we've seen. So, we think we've been, you know, we've captured the right puts and takes. We do think pointing to the lower end of the range is the right place to be, but we have high confidence in our ability to deliver the improved margin performance. In terms of your first question about the back half of the year, let me sort of put it in perspective. I'll start at the total company level because I think looking at what we are cycling is very important.

Speaker Change: We will see North America continue to let's say be at a lower growth rate than international we didn't get a international continue to grow in the mid single digit range.

Speaker Change: And outpace North America, so hopefully that answers your question.

Speaker Change: It does it does thank you one quick follow up.

Speaker Change: Sun care business started the year really strong, but you're also talking about unfavorable weather in much of the season ahead.

Speaker Change: Can you talk about inventory levels in the Sun care business and what you would expect going into the back half of the year and do we need the weather to start turning here in consumption to pick up to be working down their inventory levels.

Speaker Change: Any perspective, there would be helpful. Thanks.

Daniel Sullivan: For the first half of the year, we grew about 1.5%, and we cycled 8% growth from a year ago. Our back half profile calls for about 2.5% growth, while we're cycling just over a point from a year ago. So we start from a place that we think is constructive and thoughtful, factoring in all the things you've heard us talk about, both within our portfolio and the broader market. Specific to Shave, you know, we're now seeing a category, and therefore our performance within that category, that largely levels back to the algorithm that we put in place.

Speaker Change: Yes, Chris. So this is a domestic primarily a domestic U S.

Daniel Sullivan: Unknown Speaker We're seeing now for organics, a flat to slightly declining organic. That's, you know, largely what we've seen so far for the first half of the year. We were up about a point, and we're forecasting half to be down about a point. And that puts us for the full year plus or minus flat, like that's kind of how we are thinking about it. We will see North America continue to, let's say, be at a lower growth rate than international. We think international tourism will continue to grow in the mid-single-digit range and outpace North America.

Speaker Change: This is really a definite yes. This is really what I'm asking question, yes. Thanks.

Christopher Michael Carey: So hopefully, that answers your question.

Chris: Yeah, Yeah, so from a seasonality perspective.

Christopher Michael Carey: It does. It does.

Chris: Way that timeline lays out for the category.

Chris: As we begin to ship into retailers are largely in our quarter. Two so that 12% growth that we've put up here in <unk>.

Chris: Quarter two.

Chris: Reflects growth over the prior year around effectively distribution and stocks that retailers are holding largely ahead of the season seasonal start in Jan down in Florida, and then work its way out.

Christopher Michael Carey: Thank you. One quick follow-up. The sun care business started the year really strong, but you're also talking about unfavorable weather and much of the season ahead. Can you talk about inventory levels in the sun care business and what you would expect going into the back half of the year? And do we need the weather to start turning here and consumption to pick up to work down these inventory levels?

Rod R. Little: Yeah, Chris, so this is a domestic, primarily a domestic U.S. question. This is a, this is a, this is really, yeah, this is really just a domestic question, yes.

Chris: It out.

Rod R. Little: Yeah, yeah, but from a seasonality perspective, the way the timeline lays out for the category, is we begin to ship into retailers largely in our quarter two, so that 12% growth that we put up here in quarter two reflects growth over the prior year around effectively distribution and stocks that retailers are holding largely ahead of the season, right? The season will start in Jan-Feb down in Florida and then work its way up and out, and so we sit today in a place with retailers feeling good about the season, committed to the season, and effectively 12% more product out there than we had at this point a year ago, despite what was a slow start to the season in the southeast and out on the west coast throughout the January, February, and March period.

Chris: And so.

Chris: We sit today in a place.

Chris: Retailers feeling good about the season committed to the season.

Chris: And effectively 12% more product out there that we had at this point year ago. Despite what was a slow start to the season in the southeast and out on the West Coast.

Chris: The January February March period, what will now see though is that inventory pull through that's there as we get into April may and June and replenishment orders began as we get into our Q3. So if we have a good summer season year to date.

Rod R. Little: What we'll now see, though, is that inventory pull-through that's there as we get into April, May, and June, and replenishment orders begin as we get into our Q3. So if we have a good sun season here at the start, which really gets into, is Memorial Day good?

Chris: <unk>, which really gets into his memorial day good.

Rod R. Little: And leading into that period, we'll see all that inventory move and replenishment go, which will drive Q3 and Q4 orders. The other dynamic we're seeing that's different than the past is Q4 is becoming a bigger proportion of the overall total on average because the season's gotten longer, on average, just around consumer behavior and habits of being outside more. But we're at a point now where what we are expecting, which we don't think is unrealistic, is simply a normalized replenishment cadence for the season.

Chris: Leading into that period.

Chris: You'll see all of that inventory move in replenishment Gotta, which will drive Q3, and Q4 orders deliver dynamic we're seeing that's different in the past is Q4.

Chris: <unk> is becoming a bigger proportion of the overall total on average because the seasons cotton longer.

Chris: On average just around consumer behavior and habits of being outside more.

Speaker Change: During that period. So those are the dynamics I think we feel really good about where we are I don't feel like anything is over inventory, but ultimately the sunshine and temperature will tell us if we're right or not on that Christy the only thing I would add we always need good weather, we're sitting here today in our board room, and you can barely see outside it's it's dark and <unk>.

Speaker Change: And that's not good.

Christy: But we're at a point now where what we are expecting which we don't think is unrealistic as simply normalized replenishment cadence for the season that we didn't get that last year. Because you remember may consumption was down 10% June was down five and the season.

Rod R. Little: Now, we didn't get that last year because, you remember, May consumption was down 10%, June was down 5%, and the season, you know, was changed forever from that point on. There's no reason to believe that that will be the case this year for all the reasons Raj described, weather, fires, smoke, you name it.

Christy: Changed forever from that point on there is no reason to believe that.

Christy: That will be the case this year for all the reasons Roger described whether fire's smoke.

Daniel Sullivan: We are, our outlook contemplates simply the normal replenishment of the season, and we're in a quarter now, that's over 50% of the season. So, yes, we do want to seek some sunshine. And then to your question, we feel really good about inventory levels, and I think, more importantly, retailers remain extremely committed to the category. They understand that the press for the category starts now, and there's a lot of opportunity here between now and the 4th of July. Okay, thanks, guys. Thanks, Chris. Operator, next question, please. Our next question.

Christy: You name. It we are our outlook contemplates simply normal replenishment of the season and we're in a quarter now thats over 50% of the season. So yes, we do want to seek some sunshine and then to your question, we feel really good about inventory levels and I think more importantly retailers remain extremely committed to the category.

Christy: They understand that the depressed of the category starts now and Theres a lot of opportunity here between now and fourth of July.

Speaker Change: Okay. Thanks, guys.

Speaker Change: Thanks, Chris Operator next question. Please our next question comes from Dara <unk> with Morgan Stanley. Please go ahead.

Operator: Our next question comes from Dara Mohsenian with Morgan Stanley. Please go ahead.

Speaker Change: Yeah.

Dara Warren Mohsenian: Hey guys, I just wanted to touch on A&P spending levels. It's been in the 10 to 11% range as a percent of sales the last few quarters and the last couple years. If you go back a few years, pre-COVID, it was generally more in the 13 to 14% range. As we've talked about previously, you guys are driving greater efficiency there. So that's why it's come down over time, but we are seeing your peers in the industry really ramp up A&P spend as a percent of sales looking to drive up A&P spend as a percent of sales.

Dara: Hey, guys I just wanted to touch on A&P spending levels, it's been in the 10% to 11% range as a percent of sales. The last few quarters. The last couple of years you go back a few years pre COVID-19 there was generally more in the 13% to 14% range.

Dara: We've talked about previously you guys are driving greater efficiency. There. So that's why it's come down over time, but we are seeing your peers in the industry really ramp up in <unk> spend as a percent of sales looking to drive the volume recovery, we don't see it happening as much on year end. Despite some of the growth opportunities you're focused on in.

Dara: The gross margin recovery your solid productivity. So just wanted to understand conceptually.

Dara: Why strategically we're not seeing more reinvestment in ad spend.

Dara: Do you think youre at the right levels in terms of share of voice relative to peers, and then and to support the volume recovery going forward and then see just whats the right level as a percent of sales maybe looking out longer term.

Dara Warren Mohsenian: And then to support the volume recovery going forward, and then C, just what's the right level as a percent of sales, maybe looking out longer term? Or are you pretty comfortable with where you are today? Thanks.

Speaker Change: Or are you pretty comfortable with where you are today. Thanks.

Daniel Sullivan: And I'll hand it to Rod. And look, I think we're going to continue to stay extremely disciplined here about where dollars drive ROI. That's the primary focus. We don't get too caught up in percent of sales metrics year over year. And so we did expect to spend a bit more in the quarter, about a half point more in revenue. And as we saw things getting delayed, Rod talked about that, as we saw NPD being delayed, as we saw the sun season starting out a bit soft.

Daniel Sullivan: Yeah, thanks, Dara. I'll start.

Speaker Change: Yes, Thanks, Dara I'll start and then I'll hand, it to rod.

Speaker Change: Look I think we're going to continue to stay extremely disciplined here about where dollars drive ROI. That's the primary focus we don't we don't get too caught up in percent of sales metrics year over year, and so we did expect to spend a bit more in the quarter about a half a point more on revenue and as we saw things getting done.

Rod: <unk>, Rob talked about that as we saw NPD being delayed as we saw the sun season, starting out a bit soft. We said look this isn't good spend and we're going to continue to follow that.

Daniel Sullivan: We said, look, this isn't good spending. And we're going to continue to follow that. We will step it up in the third quarter, about a point of sales more than last year in support of the things that Rod talked about around innovation and NPD and just good seasonal execution. But before I hand it around, I would make two comments that I think are important to understand just as you try to balance the level of spend. I think, one, we did, as we exited the quarter, start to move dollars out of A&P and into, you know, sort of shelf execution, retail execution, and promotional dollars. We did do that.

Daniel Sullivan: We'll step it up in the third quarter about a point of sales more than last year in support of the things that rod talked around innovation and NPD and just good seasonal execution.

Speaker Change: But before I hand to Rob I would make two comments that I think are important to understand just as you try to balance level of spend I think one we did as we exited the quarter start to move dollars out of A&P into sort of shelf execution retail execution promotional dollars we did.

Daniel Sullivan: We expect we will continue to do that in the back half of the year. So I think, you know, we've got to recognize that dollars are shifting now based on competitive moves and category dynamics. It doesn't mean we're not spending; it just means we're spending differently. And I think, secondly, just purely rate of sale driven. As international growth grows at an accelerated rate relative to North America, it carries with it a lower A&P dollar.

Daniel Sullivan: Do that we expect we will continue to do that in the back half of the year. So I think we've got a recognized that dollars are shifting now based on competitive moves and category dynamics. It doesn't mean, we're not spending it means we're spending differently and I think secondly.

Daniel Sullivan: Just purely rate of sale driven as.

Daniel Sullivan: As international grows at an accelerated rate relative to North America. It carries with it a lower A&P dollar and so youre going to actually get a mixed benefit here, where the growth is coming from markets, where we don't spend at the level. We do in North America. So I think that's an important point, Rob what would you add to that.

Daniel Sullivan: And so you're going to actually get a mixed benefit here, where the growth is coming from markets where we don't spend at the level we do in North America. So I think that's an important point. Rob, what would you add? Yeah, two things on top of that, Daryl.

Rob: That on top of that Derek one is as we return our gross margins back to that 45, plus range, which we're committed to doing.

Rod R. Little: One is, as we return our gross margins to that 45 plus range, which we're committed to doing, Part of what we will do with that margin pickup over time is invest more in AMC. That's part of our strategy. That's part of our plan for how we think about delivering our growth algorithm for the future, which we're very confident we should do. It's going to come with some incremental support and spin on that A and P line over time. Okay.

Rod R. Little: Part of what we will do with that margin pick up over time is invest more in A&P.

Rod R. Little: As part of our model as part of our plan on how we think about delivering our growth algorithm for the future, which we're very confident we can do it.

Rod R. Little: Going to come with some incremental support and spin on that A&P line overtime, Okay and.

Rod R. Little: The thing that point two that encourages me that we can do this in a way that's value-creating is that we have developed some internal data and analytics capability that is really, really impressive around where to spend the next dollar. We're effectively doing in-house market mix modeling, big data, and analytics to drive through to Dan's point on where is the ROI and where do you spend the next dollar? Which brand, which category, which cost?

Rod R. Little: The thing that points to that.

Rod R. Little: Courage is mean that we can do this in a way that is value creating.

Rod R. Little: We have developed some internal data and analytics capability.

Rod R. Little: Is really really impressive around awareness spend next dollar we're effectively doing in house market mix modeling.

Rod R. Little: Big data and analytics.

Rod R. Little: To drive through to Dan's point on where is ROI and where do you spend the next dollar, which brand which category which customer.

Rod R. Little: Do you potentially go after much, much better analytics? And so as we create better branding, and better messaging, we now have the analytics to point us where to spend. With that, I think we're more willing to lean in and drive an increase in the rate because we know we'll get a return. I could not have said that to you two or three years ago, so we've been on a journey there. And yeah, we want to spend more. But we'll do it in a way that when we increase margin, we'll drop some on the bottom line, and we'll reinvest in the business over time. That's what you should expect.

Rod R. Little: Do you potentially go after much much better analytics and so as we create better branding better messaging. We now have the analytics to point is where to spend with that I think we're more willing to lean in and drive an increase in the rate because we know we will get the return.

Rod R. Little: I could not have said that two or three years ago. So we've been on a journey there and yes, we want to spend more we will do it in a way that when we increased margin will drop some to the bottom line and we will reinvest in the business over time, that's what you should expect us to come out.

Rod R. Little: Great. Thanks, guys. Thank you.

Speaker Change: Great. Thanks, guys. Thank you.

Operator: Operator, next question please.

Rod R. Little: Okay.

Rod R. Little: Operator next question. Please our next question comes from Susan Anderson with Canaccord Genuity Genuity. Please go ahead.

Operator: Our next question comes from Susan Anderson with Canaccord Genuity. Please go ahead.

Susan Kay Anderson: Hi, good morning. Thanks for taking my questions.

Susan Kay Anderson: Hi, good morning, Thanks for taking my questions.

Susan Kay Anderson: I guess, maybe just going back to the Fem care business I guess I'm curious, how you're thinking about sales now for the year.

Rod R. Little: I guess maybe just going back to the FemCare business, I guess I'm curious how you're thinking about sales now for the year. You know, it looks like down low teens in the first half. I guess we should think about getting most of that back to the flat for the year now, or how should we think about that? And then I was curious too about the new launch if you're getting any shelf gains. Thanks.

Rod R. Little: It looks like down low teens in the first half I guess should we think about getting most of that back to flat for the year now or how should we think about that and then I was curious to just on the new launch if you're getting any shelf gains. Thanks.

Rod R. Little: You laid it out well, Susan, that's exactly how you think about it down in the front half, up in the back half, kind of flattish for the plus or minus, right? We'll, we'll, we'll see where we landed. A lot of it's gonna depend on offtake here from the new initiative and what we put against it. But it's, it's definitely. [inaudible]

Speaker Change: You've laid it out well Susan that's exactly how you should think about it down in the front half up in the back half kind of flattish for the year plus or minus right.

Rod R. Little: We'll see where we landed a lot of it is going to depend on offtake here from from new initiatives, we put against it.

Rod R. Little: But it's definitely.

Rod R. Little: A different profile in the second half we don't have we don't think the inventory.

Rod R. Little: Reduction piece retailers are hitting us with we got the full planning ground in place.

Susan: Yes, we did gain shelf space as of effectively this month going forward with the new carefully rollout and I don't know if you know I think you said it well.

Susan Kay Anderson: Okay, great. That sounds good.

Speaker Change: Okay, great that sounds good.

Susan Kay Anderson: And then I was just curious any early reads on the lunch at Lilly into women's grooming I guess, how many stores does that and now and what are you doing just to market that new launch and get consumers interested in the product.

Rod R. Little: And then I was just curious, any early reads on the launch of Billy and the woman's grooming? I guess how many stores is that in now? And what are you doing just to market that new launch and get consumers interested in the product?

Susan Kay Anderson: And so it's exclusive at Walmart.

Rod R. Little: This quarter, we just shipped in.

Rod R. Little: And so it's exclusive at Walmart. As of this quarter, we just shipped in the New Billy Body Execution. It's antiperspirant, deodorant, washes with moisturizer to follow, not in yet.

Rod R. Little: And then 1 billion body in execution, it's antiperspirant deodorant.

Rod R. Little: Washington is with moisturizer can follow up not in yet.

Rod R. Little: We are on track to be ahead of initial assumptions that we have made around how big that could be. We feel good about it. Walmart, I believe, if you ask them, will tell you they feel good about it.

Rod R. Little: We are on track to ahead of initial assumptions that we have made around how big that could be.

Rod R. Little: We feel good about at Walmart.

Rod R. Little: I believe if you asked definitely tell you they feel good about it.

Daniel Sullivan: And we're excited about the momentum of the Billy brand, not only in grooming as we put the new body care SKUs in, but also what's happening in shave. We now have a shave business that's north of 10 share points and will continue to grow every single period. And so, as we invest incrementally in awareness, which we are doing behind the body launch, we think we're going to be in a period where we can really start to get some halo effect and some efficiency and multi-category exposure for the investment we make. Dan? Yeah. All the right points.

Rod R. Little: And we're excited about the momentum of the ability brand not only in grooming as we put the new body care Skus in but also what's happening on shape. We now have a shake business, it's north of 10 share points and continuing to grow every single period and so.

Daniel Sullivan: As we invest incrementally awareness, which we are doing behind the body launch.

Daniel Sullivan: We think we're going to be in a period, where we can really start to get some halo and some efficiency in our multi category.

Dan: <unk> exposure for the investment we make and all.

Dan: All the right points, Susan you're a big fan of the brand so I'll add one comment.

Susan Kay Anderson: Susan, you're a big fan of the brand, so I'll add one comment. At Walmart in March, we executed a four-way mixed brand displacement promotion for the first time we've been able to do it in over 3000 doors and saw 20% sequential growth. And so to Rod's point, you've got a very strong shade brand now that is essentially 17 percent share at Walmart with a growing presence in body and a really supportive retailer who's willing to do incremental things on the floor, which is super helpful.

Susan Kay Anderson: At Walmart in March we executed a four way mixed brand display is the first time, we've been able to do it.

Susan Kay Anderson: Over 3000 doors and saw a 20% sequential growth and so to <unk> point, you've got a very strong share.

Susan Kay Anderson: <unk> brand now that that is essentially 17 share at Walmart.

Susan Kay Anderson: A growing presence in in body and a really supportive retailer who's willing to do incremental things on the floor, which is super helpful.

Rod R. Little: Great. That sounds good. Thanks so much, you guys. Good luck the rest of the year.

Speaker Change: Great that sounds good. Thanks, so much you guys. Good luck the rest of the year.

Operator: Thanks, Susan. I'll bring our next question, please.

Rod R. Little: Thanks <unk>.

Operator: Operator next question. Please our next question comes from Olivia Tong with Raymond James. Please go ahead.

Operator: Our next question comes from Olivia Tong with Raymond James. Please go ahead.

Olivia Tong Cheang: Thanks, good morning. First, I want to follow up on Chris's question because the savings and productivity that you've been able to achieve have been impressive as you improve those despite a weaker top line. But the things that you said, you know, more promo in the second half, and a couple of other things seem to suggest, you know, more drags on that. So I was wondering if you could talk about that. And then just, on the top line, it seems like the tougher macros are hitting your categories harder than others.

Olivia Tong Cheang: Thanks, Good morning.

Olivia Tong Cheang: First I wanted to follow up on Chris's question, because the savings and productivity that you've been able to achieve has been impressive as you improve that despite a weaker top line.

Olivia Tong Cheang: But the things that he said more promo in the second half a couple of other things seem to suggest you know more drags on that so I was wondering if you could talk about that and then just.

Olivia Tong Cheang: On the top line it seems like the tougher macros are hitting your categories harder than others.

Olivia Tong Cheang: But you are in a unique position, excuse me, because of your private brands group. So I was wondering if there's anything that you're doing there to help potentially offset some of the weakness with the branded portfolio. Thank you.

Olivia Tong Cheang: But you are in a week.

Olivia Tong Cheang: In a unique position excuse me because of your private brands group. So was wondering if theres anything that youre doing there to help potentially offset some of the weakness with them with the branded portfolio. Thank you.

Daniel Sullivan: Hey, Lindy, it's Dan. I'll take the first question and then I'll hand it to Rod for the second. Yeah, look, you're right. We feel quite confident about the margin profile and the way that we've built it. We do think productivity and revenue management efforts will continue to outperform our initial expectations, especially in the second half of the year.

Olivia Tong Cheang: Hey, Olivia it's Dan I'll take the first question and then I'll hand to Rob for the second Yes look you are right I mean, we're as I've said earlier to Chris's question, we feel quite confident with what the margin profile of the way that we built it we do think productivity and revenue management efforts will continue to outperform our initial.

Rod: Expectation, we do feel that in the second half of the year. Then the team has done an amazing job both in execution of productivity and also and continued focus on unit economics and revenue management, what we are guarding against in trying to be thoughtful about is a couple of dynamics one is reality, which is <unk>.

Daniel Sullivan: I think the team's done an amazing job, both in execution of productivity and also in continued focus on unit economics and revenue management. What we are guarding against and trying to be thoughtful about is a couple of dynamics. One is reality, which is capacity utilization. You sell less, you produce less, and you have less utilization on your manufacturing floor.

Daniel Sullivan: <unk> utilization.

Daniel Sullivan: You sell a last few produce less.

Daniel Sullivan: Less utilization on your manufacturing floor and so we've accounted for that in the back half of the year and then as you mentioned, what we think will be a more promotional environment.

Daniel Sullivan: And so we've accounted for that in the back half of the year. And then, as you mentioned, what we think will be a more promotional environment. Now, if I put all of that together, what it means is our margin outlook for the back half of the year is unchanged from our previous outlook. We have not changed anything.

Daniel Sullivan: If I put all of that together what it means is our margin outlook for the back half of year is unchanged from our previous outlook. We have not changed anything we think there is tailwind in the stuff that we can really control around productivity and price and we think that the environment will continue to be promotional and therefore, we've contemplated that in the outlook.

Daniel Sullivan: We think there's tailwinds in the stuff that we can really control around productivity and price, and we think that the environment will continue to be promotional. Therefore, we've contemplated that in the outlook. But for the half two, our margin outlook has not changed. So I'll hand it over to Rod.

Rod: For the half to our margin outlook has not changed so I'll hand, it over to Rob.

Rod R. Little: Yeah, I'm on the private brands group. We call it Edgewell custom brands. Our vernacular for it is "custom brands." We have a situation that as the consumer gets challenged, if economic conditions get more difficult on a macro basis, our portfolio sets up well to benefit from that. Not only at the value tier, for example, it's really branded now in women, I'm playing in disposables as well, but we also are the leader in that private label area and custom brands work, which is typically more to the value price.

Rod: And on the private brands group, we call it edge, while custom brands as our vernacular for it.

Rod R. Little: We have.

Rod R. Little: Situation that as the consumer gets challenged it.

Rod R. Little: Economic conditions get more difficult on a macro basis, our portfolio sets up well to benefit from that not only is the value tier for example, it's really brand is now in womens.

Rod R. Little: Playing in disposables as well, but we also are the leader in that private label area and customer brands work, which is typically more to value price point.

Rod R. Little: We are seeing better trends in that part of the business versus branded particular strength in Europe, in that business. I will call out our execution in Europe has been outstanding in that part of the business. And it is faster growing. I'm not we're not seeing big share shifts to private label, but we are definitely seeing strength in that part of our business, which we think is, you know, potentially a buffer for us if the consumer does become more challenged from here. Maybe it does put more macro hurt on our categories overall, but there's definite benefit in that part of the business. Thank you, Olivia. Operator, next question, please.

Rod R. Little: We are seeing better trends in that part of the business versus branded.

Rod R. Little: Particular strength in Europe.

Rod R. Little: That business I would call out in our execution in Europe has been outstanding.

Rod R. Little: In that part of the business and it is faster growing I'm not we're not seeing big share shifts to private label, but we are definitely seeing strength in that part of our business, which we think is you know.

Rod R. Little: Essentially a buffer for us if the consumer.

Rod R. Little: Does become more challenged from here, maybe it does put more macro hurt on our categories overall, but there is definite benefit in that part of the portfolio.

Rod R. Little: Thank you Olivia operator next question please.

Speaker Change: Again, if you have a question. Please press Star then one.

Rod R. Little: Again, if you have a question, please press star, then 1. Our next question comes from Peter Grom with UBS. Please go ahead.

Rod R. Little: Our next question comes from Peter Grom with UBS. Please go ahead.

Operator: Thanks, operator. Good morning, everyone. I hope you're doing well.

Peter K. Grom: Thanks, operator, and good morning, everyone hope you're doing well I just wanted to follow up on on the margin question you kind of just touched on productivity promotion already but can you maybe just unpack what you really expect from the different buckets and kind of how that builds to the 40 basis point increase in the guide you mentioned no change in the back half I think FX.

Peter K. Grom: I just wanted to follow up on the margin question. You kind of just touched on productivity promotion already, but can you maybe just unpack what you really expect from the different buckets and kind of how that builds to the 40 basis point increase in the guide? You mentioned no change in the back half. I think FX is a little bit better.

Daniel Sullivan: Is the remainder of the 40 basis point increase really just a function of stronger productivity in the first half? And then, just building on that, can you maybe just comment on what you're seeing from a commodity perspective? You start to see some costs tick higher here sequentially. So just would love to get some color on what you're seeing across your core cost basket. Thanks.

Peter K. Grom: A little bit better is the remainder of the 40 basis point increase really just a function of.

Daniel Sullivan: Stronger productivity in the first half and then just building on that can you maybe just comment on what youre seeing from a commodity perspective, you're starting to see some cost tick higher here sequentially. So just would love to get some color on what you're seeing across your core cost basket. Thanks.

Daniel Sullivan: Yeah, sure. So, yes, we think for the year, productivity efforts will deliver about 40 basis points of upside to what we originally forecast. We think price and revenue management will be right around 30 basis points higher than what we had initially forecast. So there's your full-year tailwinds.

Speaker Change: Yes, sure. So yes, we think for the year productivity efforts.

Daniel Sullivan: Efforts will deliver about 40 basis points.

Daniel Sullivan: Upside to what we had originally forecast.

Speaker Change: Thank price and revenue management will be.

Daniel Sullivan: Right around 30 basis points higher than what we had initially forecast so theres your your full year tailwind.

Daniel Sullivan: We think core inflation will continue to ease a bit helping as well and then we anticipate.

Daniel Sullivan: We think core inflation will continue to ease a bit, helping as well. And then we anticipate, you know, mixing in other items, and that's where I get into the capacity utilization challenges, etc., and promotional items working as headwinds. And so if you put all of that together, you would get to about a 40 basis point increase in our full-year margin versus what we had contemplated. The question on the commodity basket is a good one. It's choppy, right?

Daniel Sullivan: Mix and other items, and that's where I get into the capacity utilization challenges et cetera.

Daniel Sullivan: And promotional items working as headwinds and so you put all of that together you would get to about a 40 basis point increase in our full year margin versus what we had contemplated the question on the commodity basket is a good one and look at it is choppy right.

Daniel Sullivan: I would say overall, nothing has changed here versus our thinking a quarter ago. You're right; there are always going to be movements within the basket. I think you see oil lately is moving to the low end. You see things like paper and pulp moving to the higher end. I think the team's doing an excellent job of balancing that, but we don't sit here today with any change in our risk profile for total commodity baskets for the year.

Daniel Sullivan: And I would say overall nothing has changed here versus are our thinking a quarter ago. You were right. There are always going to be movements within the basket I think you'll see oil lately is moving to the low end you see things like paper and pulp moving to the higher end I think the team is doing an excellent job of balancing that but we.

Daniel Sullivan: We don't sit here today with any change in our in our risk profile to total commodity baskets, our total commodity basket for the year.

Peter K. Grom: Great. Thanks so much. I'll pass it on. Thank you, Peter. Operator, next question, please.

Speaker Change: Great. Thanks, so much I'll pass it on.

Speaker Change: Thank you Peter Operator next question. Please this concludes our question and answer session.

Rod R. Little: This concludes our question and answer session. I would like to turn the conference back over to Rod Little for any closing remarks.

Rod R. Little: I would like to turn the conference back over to Rod little for any closing remarks.

Rod R. Little: Thank you, everybody. We appreciate your continued interest in investment if you are an investor in the company. We'll work hard over the summer, and we'll reconnect with you again in August for an update.

Rod R. Little: Thank you everybody. We appreciate your continued interest in.

Rod R. Little: And the investment if you are an investor in the company.

Rod R. Little: We'll work hard over the summer and we'll recap with you again in August for an update.

Rod R. Little: You.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.