Q3 2025 Kimberly Clark Corp Earnings Call Q&A

Cubic Vice President Investor Relations, Sir the floor is yours.

Thank you and good morning, everyone. This is Chris Jakubik head of Investor Relations at Kimberly Clark and thank you for joining us I would like to remind everyone that during our comments today, we will make some forward looking statements that are based on how we see things today actual results may differ due to risks and uncertainties and these are discussed in our earnings release and our filings with the SEC.

Also discuss some non-GAAP financial measures during the remarks, and these non-GAAP financial measures should not be considered a replacement for and should be read together with GAAP results and you can find the GAAP to non-GAAP reconciliations within our earnings release and the supplemental materials posted at Investor Dot Kimberly Dash Clark Dot com.

Good day, everyone, and welcome to the Kimberly-Clark third quarter 2025 earnings call question and answer session.

Christopher Jakubik: Of course, we have a very significant improvement in the value proposition in our mainstream lineup in Snug & Dry, where we've made great product improvements to improve softness and comfort and have introduced a superior core, generation two core, that will improve protection. That's off to a great start from rating. Our strategy had been to really use promotion to drive trial because we know when people try the product, they're going to love it and come back. What you're seeing is probably an uptick in that promotional activity. I would also point out that our promotional activity in general in diapers is lower than the category. We'd expect that as we get through the trial period, that promo activity to normalize as we get through the fourth quarter and towards the end of the year.

It is not my pleasure to hand the floor over to your host, Chris Jacoby, Vice President of Best Relations. Sir, the floor is yours.

That I will turn it over to Mike for a few opening comments okay. Thank you Chris good morning, everyone.

Our third quarter results underscore the strong progress, we're making to transform Kimberly Clark into an industry, leading personal care company.

Despite a dynamic external environment powering care continues to power our performance.

It's enabling us to deliver solid results and importantly, better care for a better world.

Our inflection to volume plus mix led growth that began last year continued into the third quarter.

Q3, Mark Kimberly Clark seventh consecutive quarter of volume plus mix led growth even as volume growth has been somewhat challenging to achieve across the broader CPG industry.

Christopher Jakubik: That's just a little bit of an explanation behind what you might be seeing there. On the club mix piece, I just wanted to talk for a second about that. You may see coming through as a little bit of a negative mix headwind in U.S. diapers. What's happening there, as everyone knows, is we've been experiencing double-digit growth in the club channel. That really is in response to both the consumer shifting to the club channel as well as some changes in assortment that have positively impacted our business in certain retailers. We are also in parallel driving premiumization, and that's important. Like the HugFit 360 that I mentioned is going to drive continued premiumization and positive mix over time. Hopefully that sheds a little bit more light on the situation.

Thank you and good morning everyone. This is Christy Kuba, Kevin investor relations at Kimberly Clark and thank you for joining us. I would like to remind everyone that during our comments today we will make some forward-looking statements that are based on how we see things today. Actual results May differ due to risks and uncertainties and these are discussed in our earnings released in our filings with the SEC. We will also discuss some non-gaap Financial measures during the remarks. And these non-gaap Financial measures should not be considered a replacement for and should be read together with gap results and you can find the gaap to non-gaap reconciliations within our earnings release and the supplemental materials posted at investor kimberly-clark.com with that. I will turn it over to Mike for a few opening comments. Okay, thank you, Chris. Good morning, everyone.

We're growing volume and mix, because we're meeting consumers, where they need us across the good better best spectrum.

Our third quarter results, underscore the strong progress, we're making to transform Kimberly Clark into an industry-leading, personal care company.

And we are well positioned to post similar growth in the fourth quarter.

Despite a dynamic external environment. Powering care continues to power our performance.

We held global weighted market share despite an uptick in competitive promotion activity in the quarter.

It's enabling us to deliver solid results and importantly, better care for a better world.

We're leveraging our scale to deliver more consistent profitability in a challenging environment.

Our inflection to Volume Plus mix like growth. That began last year continued into the third quarter.

In the third quarter, we delivered consistent operating margin expansion and another quarter of industry, leading productivity, our strongest of the year to support reinvestment in profitable growth.

Q3 Mark Kimberly, Clark 7th consecutive quarter of Volume Plus mixed leg growth. Even as volume growth, has been been somewhat challenging to achieve across the broader cpg industry.

Our re wired organization is fast tracking the best of Kimberly Clark across our markets.

[Analyst 1]: Yes, it does. I have a follow-up.

The promotion of Russ Torres to President and Chief operating officer is accelerating our momentum.

We're growing volume in mixed because we're meeting consumers where they need us across the good, better, best spectrum, and we're well positioned to post similar growth in the fourth quarter.

Michael Hsu: You'll be proud to know that Chris's team sent me that chart that you drew up three times.

I'm pleased to have Russ with us today for his first earnings call as Chief operating officer.

We held Global weighted market share despite an uptick in competitive promotion, activity in the quarter.

[Analyst 1]: I'm sorry for that. The one thing that I would love to hear is driving positive mix because this has been your focus for a long time, right? From the retailer standpoint, what they're doing with the Chinese diapers is a positive mix, but not necessarily to you. What are you seeing in terms of consumer reaction to the Chinese diapers versus your intro? Is there anything that you have learned so far that gives you encouraging, or does it make it more challenging driving positive mix? Thank you very much for the follow-up.

We're in the fourth quarter and we're playing to win we.

We're leveraging our scale to deliver more consistent profitability in a challenging environment.

We have sustainable momentum and the discipline and ingenuity to effectively execute our innovation lead volume plus mixed driven growth strategy.

We're confident in our ability to unlock our long term potential and deliver more value for our consumers our team our partners and our shareholders. So with that I'd like to open the line for questions.

In the third quarter, we delivered, consistent operating margin expansion, and another quarter of industry-leading productivity. Our strongest of the year to support, reinvestment and profitable growth.

are rewired organization is fast-tracking the best of Kimberly Clark across our markets

Certainly everyone. At this time, we'll be conducting a question and answer session. If you have any questions or comments. Please press star one on your phone at this time.

The promotion of rust Tories to president and Chief Operating Officer is accelerating our momentum.

We do ask that while posing a question. Please pickup your handset if you're listening on speaker phone to provide optimum sound quality.

Michael Hsu: I may start.

We do ask that participants. Please ask one question and one follow up then reenter the queue.

Christopher Jakubik: Yeah, go ahead, Mike.

Michael Hsu: Just the one thing I'll say overall that we're starting to see is I think the brand interaction tends to interact more with private label. There's kind of a swap in and out at the same tier. Russ, you may want to comment further.

Once again, if you have any questions or comments. Please press star one on your phone.

Your first question is coming from Javier Escalante from Evercore ISI. Your line is live.

Hey, Good morning, Hey, how are you guys. Good morning, Congrats on the strong results.

Christopher Jakubik: Yeah, I think we're doing a lot of things to drive positive mix. I think overall, Javier, I would say we're very confident because of our experience around the world, including in China, that we make great products and consumers respond to those. That's what the testing data shows. I believe that's what the market reaction to our current position is showing. While you may feel like retailers understand that they have to balance mix, I think more broadly, what's happening is there's a value-seeking consumer out there, and the retailers are trying to adjust their assortment to help serve those needs, and so are we. I think that's why we're seeing positive volume mix growth. I think we feel comfortable with our levers. We're doing things on pack sizes and other areas. We're still early on in the progression of that, though.

I Wonder whether you could give us an update on the competitive dynamics in U S. Diapers. When you spoke in September you indicated delays in marketing plans.

Certainly everyone at this time will be conducting a question and answer session. If you have any questions or comments, please press star 1 on your phone at this time.

We do ask that while posing your question. Please, pick up your handset if you're listening on speakerphone to provide Optimum sound quality

Because of increased competition from retailers private label on their Chinese imports despite tariff.

Question and 1 follow-up, then re-enter the queue.

Once again, if you have any questions or comments, please press star 1 on your phone.

So you resume marketing plans in Q4, what's the consumer and retailer reaction to it.

Your first question is coming from Javier, Escalante from evercore isi, your line is live.

And in a bigger sense is there is something you can do.

Hey, good morning. How are you guys? Good morning. Congrats on the strong results.

To steer the market away from the price war given that the U S diaper market will likely trend volume flattish given low fertility rates. Thank you.

Christopher Jakubik: We're going to see how that plays out. I would say that given our experience globally and in North America, we're confident in our plan.

I wonder whether you could give us an update on the competitive Dynamics in Us diapers. When you spoke in early September, you indicated delays in marketing plans.

Hey, Javier and a great question.

Michael Hsu: Yeah, the confidence in our plan, Javier, comes from the fact that we're very confident in our technology and our product quality. We're competing with the low-cost diapers that you mentioned in other markets, particularly in Asia. Our products are superior, and we believe our costs are very, very competitive, if not better. We feel good in our plan.

I'd tell you we saw increased competitive activity an uptick in activity earlier in the quarter I would say our teams navigated that pretty well and I would say your point around how.

Because of increased competition from retailers, private label and their Chinese Imports despite tariffs.

Uh, so did you resume marketing plans in Q4, what's the consumer and retailer reaction to it?

How we want to drive the business I think I said in my prepared remarks, our strategy is totally innovation lab and so we're really focused on making our products better at every every tier of the good better best spectrum and I think that strategy as you can see in our results is paying off pretty well, but I'm going to ask Russ to comment because I think you know he's he's kind of closer.

And in a bigger sense, is there is something you can do.

Operator: Thank you. Your next question is coming from Lauren Lieberman from Barclays. Your line is live.

To steer the market away from a price War given that the US diaper Market will likely Trend volumes flattish, given low fertility rates, thank you.

[Analyst 2]: Great. Thanks.

[Analyst 3]: Hey, good morning. In the prepared remarks that you guys published this morning, you opened the door a little bit to 2026 and talked a little bit about momentum into next year. I wanted to know if you could talk a little bit about the shape of the P&L in 2026 and 2027. I know you've spoken about the dilution, assuming that the IFP transaction kind of goes through as planned. I think numbers are a little bit all over the place. Anything you could do to shed some light on the shape of the P&L in 2026 and 2027 would be really helpful. Thanks.

The action in North America, and having just come out of that role and so maybe Russ you want to may want to give them a little bit more detail sure sure absolutely Hey, Javier.

I would say overall as the quarter played out and you're right. We did make the decision to move some promotional activity from the third quarter till late in the third quarter and mainly the fourth quarter and so just the update on that as we are seeing solid performance in diapers in North America, and so I think that has worked out thus far and so we gained 10 10 basis points.

<unk> share in diapers in the third quarter, which frankly was maybe a little better than what we had expected and were up and share 90 basis points.

Michael Hsu: All right. We're still in the throes of working through it, Lauren. I think it's premature for us to share too much. I think Nelson probably can maybe make a few remarks here.

Year to date, but I would maybe unpack a couple of topics just that I think are notable that may give you a little bit more insight to what what you and everyone else might be seeing in the scanner data and that's you know promotion activity and club would be the two things. So let me start with the promotional activity.

Nelson Urdaneta: Sure. Lauren, just to provide some perspective, and again, without getting into specifics on point estimates because we'll be providing a thorough outlook when we report our Q4 and full-year results early next year, it is important to highlight that we continue to target organic growth ahead of our categories, consistent with our long-term algorithm. At operating profit, we are in the midst, as Mike said, of building plans for the next few years that should deliver our long-term constant currency operating profit growth in line with what we committed to and looked at as our long-term algorithm. This includes the mitigation of the stranded costs that will result from the IFP transaction that, again, we expect to close sometime middle of next year.

Just to remind everyone I think we mainly see promotion as a tactic to drive trial for innovation to Mike's point, we're very focused on driving innovation and brand building and cascading that innovation across every tier of the good better best spectrum and we.

Hey, Javier, great question. Uh, you know, I would tell you, you know, we saw increased competitive activity and uptick in activity earlier. In the quarter, I would say our teams navigated it pretty well. And, and, and I would say your, your point around, you know, how we want to drive the business. I I think I said it in my prepared remarks, our, our strategy is totally innovation-led and so we're really focused on, on making our products better at every every tier of the good better best spectrum. And, and I think that's strategy is you can see in our results as as paying off pretty well. But I want to ask Russ to comment because I think you know, he's he's kind of closer to the action in North America and having just come out of that role. And so maybe Russia went may want to give him a little bit more detail. Sure, sure. Absolutely. Hey Javier. Um yeah I I would say overall is the quarter played out. You're right. We did make the decision to move some promotional activity from the third quarter to late in the third quarter, mainly the fourth quarter. And so just the update on that is we are seeing solid performance in in diapers in North America and so

We would say that overall promotion in across all of our categories within North America and that includes diapers is well down versus our 2019 levels.

So you may see the promotional levels pick up as a result of that trial activity I talked about and the reason for that is we've got a great lineup on innovation, we have probably the most active lineup we've had in quite some time across the good better best tiers and just to remind everyone. We launched the blowout blocker earlier this year hug fit $3 60 in our in our little.

I think that has worked out thus far. So we gained 10 point 10 basis points of of Cher and diapers in the third quarter, which frankly was maybe a little better than what we had expected and we're up and share 90 basis points, you know, year to date. But I I would maybe unpack a couple of topics you know just that that I think are notable that may give you a little bit more insight to what what you and everyone else might be seeing in the scanner data and that's, you know, promotion activity and club would be the 2 things. So let me start with the promotional activities.

Nelson Urdaneta: I'd also point out that we continue to be targeting to achieve our milestone on gross margin of at least 40% and an operating profit of at least 18% to 20% before the end of the decade. We're tracking fairly well on that. As you say, as we get into the details of the outlook and how we think about it, first EPS, and then the next couple of years, we need to distinguish between EPS from continuing operations, which exclude discontinued operations, from EPS attributable to total KC, which includes earnings from discontinued operations. That's the first step.

<unk> tier, which is doing quite well and then of course, we have a very significant improvement in the value proposition of our mainstream lineup and snug and dry.

Where we've made great product improvements to improve softness in comfort and have introduced a superior core generation two core that will improve protection and that's off to a great start from ratings. So our strategy had been to really use promotion to drive trial, because we know when people try the product, they're going to love it and come back and so what youre seeing is probably.

An uptick in that promotional activity.

I would also point out that.

Nelson Urdaneta: For constant currency adjusted EPS growth from continuing operations in the next couple of years, all else equal, and assuming that we close the transaction sometime middle of 2026, we should see a step up in growth in EPS from continuing ops, as income from equity companies would increase by approximately 30% year on year, and we'd also benefit from the use of proceeds for share buybacks. The second item is adjusted EPS attributable to total KC, which, again, assuming that we close the transaction mid-2026, then constant currency growth should be somewhat more muted as we'd see about half of the discontinued ops income go away, and as we go into 2027, all of it go away. In the near term, we're going to continue driving underlying growth consistent with the long-term algorithm, and we will see a partial offset because of the dilution that we've been talking about.

Our promotional activity in general in diapers is lower than the category and we would expect that as we get through the trial period that promo activity to normalize as we get through the fourth quarter and towards the end of the year and so.

You know, just to remind everyone. I think we we mainly see promotion as a tactic to drive trial for Innovation to Mike's Point. You know, we're very focused on driving Innovation and brand building and cascading that Innovation across every tier of the, the good better best spectrum. And, um, you know, we, we would say that overall promotion, in across all of our categories within North America and that includes diapers is well, down versus our 2019 levels. Um, but you may see the the promotional levels tick up as a result of that trial activity, I talked about and the reason for that is we've got a great lineup on Innovation. You know, we have probably the most active lineup we've had in quite some time across the good better best tears and just to remind everyone, we launched the blowout blocker earlier. This year, hug fit 360 in our in our Little Movers tier uh which is doing quite well. And then of course we have a very significant uh, Improvement in the value. Proposition in our mainstream lineup in snug and dry uh where we've made

Just a little bit of an explanation behind what you might be seeing there and then on the club mix piece I just wanted to talk for a second about that.

You may see coming through is a little bit of negative mix headwind in U S diapers and what's happening there is as everyone knows is we've been experiencing double digit growth in the club channel.

And that really is.

Great product, improvements to improve softness and comfort, and have introduced a superior core generation to core, that will improve protection, and that's off to great start from from rating. So, our strategy had been to, to Really, you know, use promotion to drive trial because we know when people try the product, they're going to love it and and come back. Um, and so what you're seeing is probably a, an uptick in that promotional activity. Um, but I would, I would also point out that um,

Response to both the consumer shifting to the club channel as well as some changes in assortment that have positively impacted our business in certain in certain retailers and so we are also in parallel driving premium amortization, so thats important and like the hug for 360 that I mentioned is is going to drive continued premium position and positive mix over time.

So hopefully that sheds, a little bit more light on the situation.

Yes. It does yes, it does I have a follow up.

[Analyst 3]: Okay. Great. That's super helpful. Thank you.

It'll be proud to know that Christmas team.

Michael Hsu: Okay, thank you, Lauren.

Sent me that chart that you drew up three times, so [laughter] I'm, sorry for that but the one thing that I would love to just two.

Operator: Thank you. Your next question is coming from Peter Grom from UBS. Your line is live.

[Analyst 4]: Great. Thanks, guys. Good morning. I wanted to ask on North America, just the performance in the quarter relative to what we can see in the track trends, it was a bit stronger. I know in the prepared remarks, you talked about some hurricane shipment dynamics. Can you just talk about what drove the gap in the quarter? As we look ahead, would you anticipate a similar gap as we continue to monitor the data here in the fourth quarter?

So here is.

Driving positive mix because this has been your focus for a long time right and.

From the retailer standpoint, where they are doing with the Chinese diapers is it positive mix, but not necessarily to you. So what are you seeing in the in terms of consumer reaction to the Chinese diapers versus your intro is there anything that you have learned so far.

That's important. Like the hug fit 360 that I mentioned is is going to, you know, Drive continued, premiumization and positive mix over time. So hopefully that sheds a little bit more light on the situation.

Michael Hsu: Hey, Peter, maybe that's a good topic because I would say in our discussions, I think the source of data you look at tends to be very different from our data. I know there's different analysts use different sources. The thing about our business, we skew to a few larger customers that are untracked or not well-tracked. Even if Russ Club is in the system, depending on what source you're using, it may be panel data versus what Russ is getting is live feeds.

That gave you encouraging or is it makes it more challenging.

Arriving in prostate that positive mix and thank you very much for the follow up.

Yes, he does. Yes, he does. Uh, I have a follow-up. You'll be proud to know that Chris's team sends me that chart that you drew Up 3 times. So, you know, I'm sorry, I'm sorry for that. But, uh, the 1 thing that I would love to, to, to hear is

I mean I may start.

The one thing I'll say overall, but we're starting to see is I think the brand interaction tends to interact more with private label and so so theres kind of a swap in and out at the same tier, but Ross you may want to comment further.

Driving positive mix, because this has been your focus for a long time, right?

Yeah, I think we're doing a lot of things to drive positive mix and I think overall Javier I would say, we're very confident because of our experience around the world, including in China that we make great products and consumers respond to those and that's what the testing data shows and I believe that's what the market reaction to our current our current position.

Nelson Urdaneta: Yeah, absolutely. Let me maybe just unpack a little bit the numbers. I think two things on there. I mean, both scanner and the reported results, we are seeing sustained momentum from all the innovation and activation that we're doing across the markets in the U.S. and the categories. Focusing specifically in North America, I think it's important to highlight that from a year-to-date standpoint, shipments are largely in line with consumption. As we've said, you're always going to see some noise quarter on quarter. Specifically for Q3, as we stated in our prepared remarks, what you're seeing is two things playing out. The first one is lapping last year's hurricane-related impacts on shipments, which drove around 50 basis points year on year.

From the retailer standpoint. What they're doing with the Chinese diapers is a positive mix but not necessarily to you. So what are you seeing in the, in terms of consumer reaction to the Chinese diapers, versus your intro, is there is anything that you have learned so far, uh, that give you encouraging or is it makes it more challenging uh driving process? Uh positive mix and thank you very much for the follow-up.

It's showing so.

While you may feel like I think retailers understand that they have to balanced mix, but I think more broadly what's happening is.

There is a value seeking consumer out there and the retailers are trying to adjust their assortment to Matt to help serve those needs and so are weak and I think that's why we're seeing positive volume mix growth and so I think we feel comfortable with.

I I may I may start. Yeah just just the the 1 thing I'll I'll say overall that you know we're starting to see is I think the brand interaction tends to interact more with private label and so so there's there's kind of a swap in and out at the same tier but you know Russia you may want to comment further. Yeah, yeah I I think we're doing a lot of things to drive positive mix and I think I overall Javier. I would say we're very

Our leverage we're doing things on pack sizes in other in other areas. So we're still early on in the progression of that though so we're going to see how that plays out but.

But I would say that given our experience globally and in North America, where we're.

Nelson Urdaneta: The second item, and we've been talking about it, and Russell Torres mentioned it a little earlier today, is the timing of the promotional expense, particularly year on year. That drove a timing on the realization of those promotional activities. Those are largely the two items that would have had overall shipments or organic growth ahead of what we would have seen in consumption for the quarter. The year-to-date numbers are largely in line.

We're confident in our plants the confidence in our plan Javier comes from.

From the fact that we're very confident in our technology and our product quality.

We're competing with low cost diapers that you mentioned in other markets, particularly in Asia and our products are superior and we believe our costs are very very competitive if not better. So so we feel good in our plan.

Thank you. Your next question is coming from Lauren Lieberman from Barclays. Your line is live.

Christopher Jakubik: Yeah. Nelson, if I could just tag on to that and build on what Mike was saying. I think we're focused on meeting consumers where they need us at every price tier, but also in every channel. What you're seeing is really, as Mike alluded to, a significant migration of consumers to e-commerce and club. If those are not as well-tracked, there can be a disconnect there, and you're certainly missing some of the growth that's happening. To bring that to life with an example, in digital channels in North America, 99% of our growth last year came from digital. This year, it's 100%. We have a 7% share benefit. Our share is higher by 7 points on digital versus brick and mortar. That can have a pretty significant skew. That tracking piece tends to be, the volumes there also tend to be a little bit lumpy and somewhat volatile.

Great. Thanks, Hey, good morning.

In the prepared remarks.

Guys publish this morning, you gave you opened the door a little bit to <unk> 26, and talk a little bit about.

Very confident because of our experience around the world is including in China that we make great products and consumers, you know, respond to those. And, you know, that's what the testing data shows. And I believe that's what the the market reaction to our current. Our current position is showing. So you know, while you may uh feel like I think retailers understand that they have to balance mix, but I think more broadly, what's happening is, uh, there's a value-seeking consumer out there and the retailers are trying to adjust their assortment to, to Matt to, uh, help serve those needs. And so, are we? And I think that's why we're, we're seeing positive volume mixed growth. And so I think we feel comfortable, um, with our levers. You know, we're doing things on pack sizes and, and other and other areas. So we're still early on in the progression of that though. So we're going to see how that plays out. And uh, but I, I would say that given our experience globally and in North America, we're we're, um, we're confident in our plans. Yeah. The confidence in our plan, Javier comes from the stem from the fact that we're, we're very confident in our technology and our product quality.

Momentum into next year so.

Wanted to know if you could talk a little bit about the shape of the P&L in 'twenty six 'twenty seven I know you've spoken about the dilution assuming that the ISP TV kind of goes through as planned.

Um we're competing with the low-cost diapers that you mentioned in other markets, particularly in Asia. And, you know, our products are superior and we believe our costs are very very competitive if not, if not better. So so you know we we feel good in our plan.

But I think numbers are a little bit all over the place. So anything you could do to shed some light on shape of the P&L 'twenty six 'twenty seven.

Thank you. Your next question is coming from Lauren. Lieberman from Barclays. Your line is live.

Great, thanks.

Let me really helpful. Thanks.

All are still in the throes of working through it Lauren So I don't I think it's premature for us to show up too much but I think Nelson probably can maybe make a few remarks here sure.

And just to provide some perspective on again.

Without getting into specifics on point estimates, because we will be providing a thorough outlook. When we when we report our Q4 and full year results early next year.

Christopher Jakubik: That tracking piece, I can understand, maybe creates additional noise in tracking things. It is strong growth, and we're focused on executing our plans and delivering for consumers in all channels.

It is important to highlight that we continue to target organic growth ahead of our categories consistent with our long term.

Nelson Urdaneta: Great. Thank you so much. I'll leave it there.

Michael Hsu: Okay. Thanks, Peter.

Nelson Urdaneta: Thanks, Peter.

I'll do it.

Operator: Thank you. Your next question is coming from Christopher Carey from Wells Fargo. Your line is live.

Operating profit we are in the midst as Mike said of building plants over the next few years that should deliver our long term constant currency operating profit growth in line with we committed to book that as our long term algorithm and this includes the mitigation of the stranded costs that we.

In the prepared remarks, um, that you guys published this morning, you gave you opened the door, a little bit to, to 26 and talked a little bit about um, you know, momentum into next year. So wanted to know, if you could talk a little bit about the shape of the p&l in 26 and 27, I know you've spoken about the delusion assuming that the ifp JV kind of goes through as planned. Um, but I think numbers are a little bit all over the place. So anything you could do to shed some light on shape of the p&l, 26 and 27, um, would be really helpful. Thanks,

Michael Hsu: Hello, Chris.

Nelson Urdaneta: Hey, Chris.

Operator: Good morning, everyone. I wanted to come back to the promotional activity in North America and how you're responding. I specifically wanted to dig a bit deeper on the comment that North America is kind of tracking well quarter to date. It's not really about a quarter-to-date question per se, but you've shifted promotional activity into Q4. I'd love to get a bit more detail on how you think that's doing. How is that improving your competitiveness? Nelson, just any margin implications that we should be thinking about from this increased promotional activity?

Result from the IFC transaction that again, we expect to close sometime middle of next year.

I'd also point out that we continue to be.

Targeting to achieve our milestones on gross margin of at least 40% and an operating profit of at least 8% to 18 to 20.

All right, well, we're still in the throws of working through it Lauren. So I don't, I, I think it's premature for us to share too much trouble. I think Nelson probably can maybe make a few remarks here. Sure, so. So so Lauren just to provide some perspective. And again, um, without getting into specifics on point estimates because we'll be providing a thorough Outlook when we when we report our Q4 and full year results, early next year, you know, it is important to highlight that we can continue to Target organic growth ahead of our categories consistent with our long-term.

Before the end of the decade, and we're tracking fairly well on that terms and as you say, we get into the details of the of the outlook.

Christopher Jakubik: Yeah, I would start maybe with a broader statement there on just what's going on in North America overall. We're growing volume and mix, as you see in our results, because we're focused on meeting consumers where they need us. Clearly, what you see right now is that consumers are really under pressure, and their purchasing power is under pressure. We don't really see, candidly, a catalyst for that to change anytime in the near term. However, our categories are essential categories with low substitution, and they're very important to people's lives. I think that's why you see the demand remain relatively resilient. From a promotional standpoint, that's exactly why we tend to view promotion as a tactic to drive trial. It doesn't really expand our categories. I think our retail partners understand that as well.

How we think about it.

First EPS and then the next couple of years, we need to distinguish between EPS from continuing operations, which exclude discontinued operations.

From EPS attributable to total Casey, which includes earnings from discontinued operations.

Um, at operating profit we are in in the midst as Mike said, of building plans for the next few years that should deliver our long-term constant currency operating profit growth in line with we committed to and, and looked at as our long-term algorithm and, you know, this includes the mitigation of the stranded costs that will result from the ifb transaction. That that again, we expect the clothes, sometime middle of next year.

at also point out that we can continue to be

That's the first step so for constant currency adjusted EPS growth from continuing operations in the next couple of years, all else equal and assuming that we close the transaction sometime middle of 'twenty six.

Targeting to to achieve, you know our Milestone on gross margin of at least 40% and an operating profit of at least 80 18 to 20.

We should see a step up in growth in EPS.

And EPS from continuing ops as income from equity companies would increase by approximately 30% year on year and we would also benefit from the use of proceeds for share buybacks.

In the next couple of years, we need to distinguish between EPS from continuing operations which exclude discontinued operations.

And then the second item is adjusted EPS attributable to total Casey.

Christopher Jakubik: Our focus is really on strengthening our offerings by investing in value propositions and differentiated innovation at every rung of the good, better, best ladder, especially cascading those innovations across the portfolio. That's exactly kind of what we're doing. That shows up in the form of strengthening the value offerings, like I just talked about with Snug & Dry a minute ago for value-seeking consumers, improving the product quality so they're getting more value for money, as well as elevating benefits to drive trade-up and premiumization. We see the premium segment of the category healthy and still growing kind of across our portfolio. One more thing I would note is just the vol-mix growth in North America, I think, is the proof point that that is working. If you look at North America, we're kind of getting vol-mix growth on top of vol-mix growth.

From EPS attributable. The total Casey, which includes earnings from discontinued operation.

Which again, assuming that we close the transaction mid 2026 than constant currency growth should be somewhat more muted.

We'd see about half of the discontinued ops income go away and then as we go into 'twenty seven all of it go away.

So that's the first step. So for constant currency adjusted EPS growth from continuing operations in the next couple of years, all else equal and assuming that we closed the transaction sometime middle of 2016.

In the near term, we're going to continue driving underlying growth consistent with the long term algorithm and we will see a partial offset because of the dilution.

We've been talking to them.

Um, we should see a step up in growth in EPS uh, as in in in EPS, from continuing up. As income from Equity, companies would increase by approximately, 30% a year on year, and we'd also benefit from the use of proceeds for share BuyBacks.

Okay, Great. That's super helpful. Thank you.

Okay. Thank you Lauren.

Then the second item is adjusted. EPS attributable to the total Casey and

Thank you. Your next question is coming from Peter Grom from UBS. Your line is live.

Christopher Jakubik: Year-to-date, our vol-mix growth in North America was about 2.2%. If you looked at that on a two-year stack basis, it would be 2.9%. That really is kind of how things are unfolding. The promotional dynamics, our strategy was really to really focus on executing the play that I just described.

Great. Thanks, guys.

Good morning, guys. So I wanted to ask on North America, just the performance in the quarter relative to what we can see in the tracked trends it was a bit stronger. So I know in the prepared remarks, you talked about some hurricane shipment dynamics, but can you just talk about what drove the gap in the quarter and then maybe as we look ahead would you anticipate.

which again assuming that we close the transaction mid 2026, then constant currency growth should be somewhat more muted um as we see about half of the discontinued Ops income go away and then as we go into 27, all of it, go away.

You know, in the near term, we're going to continue driving underlying growth consistent with the long-term algorithm. And we will see a partial offset because of the dilution.

Michael Hsu: Yeah. Maybe, Chris, I'll add, I think earlier in the quarter, we saw competitively some deeper discount, deeper than we had seen discounting. It probably didn't have as much of an impact as we had originally thought. That's kind of one delta. The other delta then also is our trial driving on our new innovation. As Russ said earlier, we're really only promoting the brand to drive trial on the innovation. I think that is getting traction. Overall, I'd say our brands are very, very durable, especially in this environment.

A similar gap as we continue to monitor monitor the data here in the fourth quarter.

Okay, great. That's super helpful. Thank you.

Okay, thank you, Lauren.

Hey, Peter maybe that's.

Good topic, because I would say in our discussions I think the source of data you look at as very tends to be very different from from our data and so I know there's different analysts use different sources, but the thing about our business, we skew to a few larger customers that are untracked or not well.

Thank you. Your next question is coming from Peter Grom from UBS. Your line is live.

Great thanks guys. Uh, good morning.

So even if Ross.

<unk> club is in the system, depending on what source you using it maybe panel data versus what Russ is getting is why fees.

Nelson Urdaneta: To your question, Chris, related to margins. A few things that we expect to unfold in Q4 as it relates to gross margin. Because of the timing of some of our investments, both on the supply chain and the mitigating actions realization related to the tariffs, we actually would be expecting gross margins to get back to expanding as we head into the fourth quarter. As you think about operating profit margin, we are stepping up investments marketing-wise sequentially in the quarter and not in an immaterial manner because we're supporting all of the initiatives that we have. From an operating profit margin, we'd actually expect to be not too different from what we would have seen last year in the same quarter. Delivering a full-year expansion of gross margin of operating profit margin is kind of our expectation at this point.

Absolutely and then let me, maybe just unpack a little bit the numbers and I think at two.

Two things on there I mean, both scanner and the reported results. We are seeing sustained momentum from all of the innovation and activation that we're doing across the markets and in the U S. In the categories.

<unk>, specifically in North America, I think it's important to highlight that from a year to date standpoint shipments are largely in line with consumption.

Good morning guys. So I I wanted to ask you on North America, just just the performance in the quarter relative to what we can see in the track Trends. It was a bit stronger. So I know in the prepared remarks, you talked about some hurricane shipment Dynamics, but can you just talk about what drove the Gap in the quarter? And then maybe, as we look ahead, would you anticipate a a similar Gap as we continue to monitor monitor the data here in the fourth quarter? Hey Peter, maybe that's a, that's a, you know, good topic because I I would say in our discussions I think the source of data you look at is very, you tend to be very different from from our data. And so I know there's, you know, different analysts, use different sources. Uh, the the thing about our business, we skew to a few larger customers that are untracked or or not. Well tracked. So even if

As we've said Youre always going to see some noise quarter on quarter and specifically for Q3 as we stated in.

Our prepared remarks, what Youre seeing is two things playing out the first one is lapping last year's hurricane related impacts on shipments, which drove around 50 basis points year on year.

Russ Club is in the system depending on what source you're using. It may be panel data versus what Russ is getting is live feeds, right? Absolutely. Yeah. And then, let me maybe just unpack a little bit, the, the numbers and and I think it uh uh 2 things from there. I mean both scanner and the reported results we are seeing sustained momentum uh from all the Innovation and activation that.

And then the second item and we have been talking about it and Russ mentioned it a little earlier today is the timing of the promotional expense, particularly year on year and that drove.

We're doing across the markets and, and in the US and the categories.

Operator: Okay. Thank you. One quick follow-up. I couldn't quite tell, but did your commodity outlook, if you exclude the impact of tariffs, come up a bit today? Maybe I'm misreading that. If so, what's driving that? Maybe just more broadly, how you see the cost outlook evolving here. If you'd like to add a bit of thoughts on how the tariff backdrop is evolving, that may also be helpful. Thanks so much, guys.

A timing on the reallocation of those promotional activity. So those are largely the two items that would have had overall.

Shipments organic growth ahead of what we would've seen in consumption for the quarter, but the year to date numbers are largely in line and.

And also if I could just tag onto that and build on what Mike was saying.

I think where we're focused on meeting consumers, where they need us.

Focusing specifically in North America. I think it's important to highlight that from a year to date standpoint shipments. Uh are largely in line with consumption and as we've said, you're always going to see some noise quarter on quarter and specifically for Q3 as we stated in uh, in our prepared remarks. What what you're seeing is 2 things playing out. The first 1 is lapping last year's hurricane related impacts on shipments which drove around 50 basis points a year on year.

and then the second item and we we, we've been talking about it and and

At every price tier, but also in every channel and what Youre seeing is really as Mike alluded to is a significant migration of consumers.

Nelson Urdaneta: Yeah. Before I get to tariffs, one thing is I think I said versus prior year. Versus prior year, we would see an expansion in operating profit as well. I was referring more to quarter on quarter. It would be not too dissimilar. It would be largely a little bit below because of the investments. In any case, getting to tariffs, two things that I played out on tariffs. One, on the gross element of tariffs, we are down and improved about $70 million. We were about $170 million. We're down to about $100 million gross tariffs. On the mitigating actions, we're still mitigating around $50 million because of the timing of that. We do expect to be able to largely mitigate them all as we get through last year. That should play out.

E Commerce and club and so if those are not as well tracked.

There can be a disconnect there and youre certainly missing missing some of the growth that's happening and so just bring that to life with an example.

Russ mentioned it a little earlier today is the timing of the promotional expense, particularly a year on Year, and that drove, um, you know, a timing on the realization of those promotional activities. So those are largely the 2 items that would have had

overall.

In digital channels in North America, 99% of our growth last year came from came from digital.

And this year, it's 100% and we have a seven point share benefit.

Our share is higher by seven points on digital versus brick and mortar and so that can have a pretty significant SKU and so that tracking piece tends to be.

The volumes there are also tend to be a little.

Lumpy and somewhat volatile and so that tracking piece I can understand maybe creates an additional noise and tracking things, but it is strong growth and we're focused on on executing our plans and delivering for consumers in all channels.

Shipments or organic growth ahead of what we would have seen in consumption for the quarter, but the year to date, numbers are largely in line. Yeah, and Nelson. If I could just tag on to that and build on what Mike was saying, um, you know, I think we're we're focused on meeting consumers where they need us uh and and at every price tier but also in every channel and what's you're seeing is really as Mike alluded to is a significant migration of consumers uh to e-commerce in club. And so if those are are not as well tracked, there there can be a

Nelson Urdaneta: Obviously, on the tariffs front, there's a lot of moving pieces, Chris, and we're staying attuned to what's happening on that front. Overall, the good news is that we are seeing the mitigating actions coming through. We expect that to play through as we go into Q4 and early 2026. Our teams are activating all the elements in the toolkit to offset.

A a disconnect there and and you're certainly missing missing some of the growth that's happening. And so just bring that to life with an example in in digital channels in North America 99% of our growth last year came.

Great. Thank you so much I'll leave it there.

Okay. Thanks, Peter Thanks, Peter.

Thank you. Your next question is coming from Chris Carey from Wells Fargo. Your line is live.

Hello, Chris Hey, Chris Hey.

Hey, good morning, everyone. So I wanted to come back to the.

Operator: Thank you. Your next question is coming from Nik Modi from RBC Capital Markets. Your line is live.

The promotional activity in North America, and how you're responding, but I specifically wanted to dig.

[Analyst 5]: Hey, thanks. Good morning, everyone.

Dig a bit deeper on the comment that North America is kind of tracking well quarter to date, it's not really about a quarter at a question per se, but you've shifted promotional activity into.

Operator: Hey, Mike.

[Analyst 5]: Could you give some clarity on the full 2025 guide, just on the top line? Obviously, overdelivery this quarter, but it looks like there's a little bit of a step back in force. I just wanted to understand, is there something you're seeing, or is it just the environment is volatile, so you're just kind of appropriating your guidance accordingly? I'll ask my follow-up now. Procter & Gamble talked about some exclusions on tariffs or some inputs, and I'm just curious if you're seeing that as well. Thanks.

Tracking piece. I can understand maybe you know creates an additional noise and tracking things but it is strong growth and we're focused on on executing our plans and and delivering for consumers in all channels.

Q4.

Great. Thank you so much. I'll leave it there.

I'd love to get a bit more detail on how you think that's doing how is that improving your competitiveness and Nelson just any margin implications that we should be thinking about from this increased promotional activity.

Okay, thanks Peter. Thanks Peter.

Thank you. Your next question is coming from Chris Carey from Wells, Fargo, your line is live.

Yeah, I would start maybe with a broader statement there on just what's going on in North America overall.

We're growing volume and mix as you see in our results because we're focused on meeting consumers, where they need us and clearly what you see right now is that consumers are.

Michael Hsu: Yeah. Maybe I'll comment briefly on the last. Yeah, some, right? It's important, you have to recognize some of our products are daily essentials. There is an exclusion for Brazilian eucalyptus, and that's obviously an important factor for us. That's one big area that I think we're very pleased to have been able to receive. Let's see. Do you want to comment on the?

Are really under pressure and their purchasing power is under pressure, we don't really see candidly a catalyst for that to change anytime in the near term.

However, our categories are essential categories with low substitution and they're very important to People's lives and so that's what I would I think why you see the demand remained relatively resilient and from a promotional standpoint, that's exactly why we we tend to view promotion as a tactic to drive trial and it doesn't really.

Hello Chris. Hey, Chris! Hey, good morning, everyone. Um, so I wanted to come back to the the promotional activity in North America and how you responding. But I specifically wanted to, um, dig a bit deeper on the comment that North America is kind of tracking. Well, according to the date, it's not really about a quarter to date question per se but you've shifted promotional activity uh into Q4. Um, I'd love to get a bit more detail on on how you think that's doing. How is that improving your competitiveness? And, uh, Nelson just, you know, any margin implications that we should be thinking about from this, uh, increase promotional activity.

Nelson Urdaneta: I can go on the guide for the top line, Nik. I think a few things to unpack. On a year-to-date basis, our organic sales are 1.6%. What we're seeing on the categories at this stage is that the categories would grow around 2%. Our expectation right now is to grow largely in line with the categories for the full year. In essence, I mean, we would see an acceleration in Q4, if not at least at the same level of what we saw of growth in Q3 based on all of our programs. Does that clarify?

Expand our categories I think our retail partners understand that as well.

And so our focus is really on strengthening our offerings by investing in value propositions and differentiated.

Innovation at every rung of the good better best ladder, especially cascading those innovations across the portfolio and Thats exactly kind of what we're doing so that shows up in the form of strengthening the value offerings like what I, just talked about with snug and dry a minute ago for value seeking consumers improving the product quality, so they're getting more value for money as well as elevating benefits.

Yeah, I I I would start maybe with a a broader statement there on just what's going on in North America overall, you know, um, you know, we're we're growing volume and mix as you see in our results because we're we're focused on meeting consumers, where they need us. And clearly what you see right now is that consumers, you know, uh, are really under pressure and they're purchasing power is is is under pressure. We don't really see, candidly a catalyst for that to change any time in the near term.

To drive trade up in premium amortization, and we see the premium segment of the category healthy and still growing kind of across our portfolio.

[Analyst 5]: Yes, that does. Thank you so much.

Michael Hsu: Nick, one more thing I'll add is, as you know, we always talk about driving the virtuous cycle in our business. We have seen a little strength, and we started off the year well. Third quarter came in good, so we're going to continue to reinvest in our brands and make sure that we can drive ongoing momentum as we get into next year.

One more thing I would note is just the vol mix growth in North America. I think is the proof point that that that is working you know if you look at.

North America, we're kind of getting volume mix growth on top of all mixed growth. So year to date are all mixed growth in North America was about two 2%.

And if you looked at that on a two year stack basis, it would be $2 nine and so that that really is kind of how things are unfolding. So the promotional dynamics.

[Analyst 5]: Helpful. Thank you, guys.

Michael Hsu: Thanks.

Operator: Thank you. Your next question is coming from Anna Lizzul from Bank of America. Your line is live.

Our strategy was really too.

Really focus on executing the play that I just described.

Michael Hsu: Hello, Anna.

[Analyst 6]: Hi.

Michael Hsu: Hey, Anna.

[Analyst 6]: Hi. Good morning. Thanks so much for the question. I was wondering if we could take a step back on the diaper category. We're seeing the category evolving here with certain ultra-premium players expanding the market on the top end. I was wondering how you see Kimberly-Clark competing in this environment where we're seeing growth, but also increased competition at the mid-tier and value ranges, but more robust growth on the ultra-premium side with some newer brands in the U.S. I was wondering, is this an area in ultra-premium where Kimberly-Clark could compete through innovation or potentially through M&A? How do you see the overall category dynamics developing from here? Thanks.

Maybe Chris I'll add.

Um, you know, however, you know, our categories are essential categories with low substitution and they're very important to people's lives. And so that's what I, what I think why, you see the demand remain relatively resilient and from a promotional standpoint. That's exactly why we uh, we we tend to view promotion as a tactic to drive trial. It doesn't really, you know, expand our categories. I think our Retail Partners understand that as well. Um, and and so our focus is really on strengthening our offerings by investing in value propositions and differentiated um Innovation at every rung of the good better best ladder, especially cascading those Innovations across the portfolio, and that's exactly kind of what we're doing. So, that shows up in the form of, you know, strengthening the value offerings. Like we, I just talked about with snug and dry a minute ago, for Value, seeking consumers, you know, improving the product quality. So they're getting more value for money, as well as elevating benefits to drive, trade up in premiumization and we see the premium segment of the category healthy and still growing.

I think earlier in the quarter, we saw competitively some deeper discount deeper than we had seen discounting it probably didnt have as much of an impact as we had originally thought and so thats kind of one delta.

And then the other Delta then also as our trial driving on the new on our new innovation and as Russ said earlier, we're really only promoting the brand to drive trial on the innovation.

Kind of across our portfolio and 1 more thing, I would notice, just the V mix growth in North America, I think is the, the proof point that, that, that that is working. You know, if you look at uh, North America, we're kind of getting Paul and make grow on top of all that growth. So a year to date are all mixed growth in North America was about 2.2%

And so I think that is getting traction.

So overall I'd say, our brands are very very durable, especially in this environment.

And to your question, Chris related to margins I mean, a few a few things.

Michael Hsu: Yeah. The great thing about the diaper category and also all of our categories is that performance is what really, really matters. Anna, we're very confident that we have the best technologies. We have a great pipeline of technology in our go-forward years. Next year's innovations will be better than this year's. 2027 innovations will be better than 2026's. There's that. I would say our strategy, as we've said, you've probably heard us say it a lot, we want to win at every rung of the good, better, best ladder. That's what's driven our business globally, really expansion, premiumization of the category through better features and products worth paying more for. Just to give you an example, in North America, our shift over the last 10 years or so, our premium mix has gone from 40% of our business in North America to just under 70%.

We expect to unfold in Q4 as it relates to gross margin.

We because of the timing of some of our investments both on the supply chain and the.

Mitigating actions.

Foundation related.

The tariffs, we actually would be expecting gross margins to get back to expanding as we head into the fourth quarter.

And if you looked at that on a 2-year stack basis, it would be 2.9. Um, and so that that really is kind of how things are unfolding. So the promotional Dynamics, you know, our our strategy was really to uh, you know, really focus on on executing the play that I just described. Yeah. And then maybe Chris let you know, I think earlier in the quarter we, we saw competitively, some Deeper Discount deeper than we had seen. Discounting it, probably didn't have as much of an impact as we had originally thought. So that's kind of 1 Delta and then the other Delta then also is our trial driving on the new on our new innovation. And you know, as Russ said earlier you know we're really only promoting the brand to to to drive trial on the Innovation. Um and and so you know I think that is getting traction.

As you think about operating profit margin, though we are stepping up investments marketing wise.

So, you know, overall I'd say Our Brands are very, very durable especially in this environment.

Sequentially in the quarter and not in an immaterial manner, because we're supporting all of the initiatives that we have so from an operating profit margin, we'd actually expect to be not too different from what we would have seen last year in the same quarter delivering a full year expansion of gross margin of operating profit margin.

And and and do your question, Chris related, uh, to margins. I mean, a few, a few things uh that that we expect to unfold in Q4 as it relates to gross margin.

We believe, because of the timing of some of our investments, both on the supply chain and the...

It's kind of our expectation at this point.

Michael Hsu: In China, our premium mix has gone from 6% five years ago to well over 40%, right? That's kind of our underlying strategy. However, in this environment, we also recognize we have to have a great value proposition. In the value tiers, we don't want to be a niche premium brand. This is why Russ has talked about us cascading our best innovation, our best features into the, I would say, the mid-tiers so that we can have a superior offering across the line. Maybe, Russ, you may want to add a few thoughts.

Okay. Thank you one quick follow up I couldn't quite tell but did your commodity outlook. If you exclude the impact of tariffs come up a bit today.

Mitigating actions of realization related to the tariffs. We actually would be expecting gross margins uh to get back to expanding as we head into the fourth quarter.

Maybe I'm misreading that.

So.

What's driving that.

Maybe just more broadly how you see the cost outlook.

Evolving here.

If you'd like to add a bit of thoughts on how the tariff backdrop has evolved.

Also would be helpful. Thanks, so much guys.

Um, as you think about operating profit margin though. We are stepping up Investments marketing, wise, uh, sequentially in the quarter and not in an, in material matter because we're supporting all the initiatives that we have. So, from an operating profit margin, we'd actually expect that to be not too different from what we would have seen last year in the same quarter, delivering a full year expansion of gross margin of of operating profit margin.

Yes, so but before I get the tariffs one thing as I think I said.

Is kind of our expectation at this point.

Christopher Jakubik: Yeah. I'd just add something. You mentioned super premium. I think we're excited about that, and that's consistent with what we're seeing just because I think it illustrates that there's plenty of room for us to continue to premiumize the category. You see that demand on the premium and super premium side is out there. Continue to look for us to both drive that, as Mike just talked about, the premiumization success we've had both in the U.S. and other markets, including China. We're going to continue to focus on that in addition to bringing great value at the mainstream and premium tiers.

No.

Versus prior year versus prior year, we would see an expansion in operating profit as well.

Okay, thank you. 1, quick follow-up.

He was referring more to quarter on quarter, it would be not too dissimilar it would be largely a little bit below but because of the investment in any case against the tariffs two things that I played out on <unk>. One on the growth element of tariffs, we are down and improved about $70 million. So we were about 170 million.

We're down to about $100 million.

Those standards on the mitigating actions, we're still mitigating around $50 million because of the timing of that and we do expect to be able to largely mitigate mitigate them all as we get through last year.

A bit today. Uh maybe I'm misreading that and and if so um you know what's what's driving that and uh maybe just more, broadly, how you see the the cost Outlook um evolving here. Um if if you'd like to add a bit of you know thoughts on how the Tariff backdrop is evolving, that that may also be helpful. Thanks so much guys.

[Analyst 6]: Great. Thanks so much. Just one follow-up on the cost side. You did mention in early September your expectation to reduce your volatility to fiber, and that would approach zero following the JV agreement. I was wondering if you could elaborate on that more and the efforts that you're making toward that so far.

So that should play out obviously on on the tariff front.

There's a lot of moving pieces, Chris and we were staying attuned to what's happening on that front, but overall the good news is that we are seeing the mitigating actions coming through we expect that to play through as we go into Q4 and early 2026 and our teams are activating all of the.

Michael Hsu: Yeah. Maybe I'll start in. I'd say one thing. I'd say, yeah, volatility is one of the big things that we've been working on because we recognize that was one of the features of the Kimberly-Clark stock that was different from maybe some other companies. One of the key sources of that volatility was fiber prices, right? Or our cost of fiber was more volatile historically. I'd say this transaction and partnership on our international family and professional business with Suzano really does a couple of things. One, it really kind of stabilizes the source of the fiber costs. Partnering with one of the most efficient producers of fiber in the world has some strong advantages. I'd say that brings an advantage. Obviously, the nature of the joint venture itself, by reducing our stake in that business internationally, inherently reduces our volatility.

Yeah. So, but before I get the tariffs 1 thing is, I think I, I said, um, you know, versus priority. So, versus prior year, we, we would see an expansion or not operating profit as well. Um, I was referring more to quarter on quarter. It would be not too dissimilar. Um, it would be largely a little bit below, but because of the investments, in any case, get get into tariffs 2 things, that, that, that I've played out on tariffs 1 on the growth, uh, element of tariffs, we are down an improved about 70 million dollars. So we were about 170 million. We're down to about

100 million.

Element in the toolkit to offset.

Thank you. Your next question is coming from Nik Modi from RBC capital markets. Your line is live.

Yeah. Thanks, good morning, everyone.

Uh, growth stairs on the mitigating actions. We're still mitigating around 50 million because of the timing of that and we do expect to be able to largely meet the G mitigate them all as we get through last year, so that should play out obviously, uh, on on, on the tariffs front.

Hey, Mike.

Maybe you could just give some clarity on the full 2025 guide just on the top line, obviously over delivery this quarter, but it looks like there's a little bit of a step back.

Unfortunately, I just wanted to just understand is there something youre seeing or is it just a.

The environment is volatile so you just kind of appropriating your guidance accordingly.

There's a lot of moving pieces, Chris, and we are staying attuned to what's happening on that front. But overall, the good news is that we are seeing the mitigating actions coming through. We expect that to play through as we go into Q4 and early 2026, and our teams are activating all the elements in the toolkit to offset.

And then just I'll ask my follow up now.

Procter and Gamble talked about some exclusions on tariffs are some inputs.

And I'm, just curious if youre seeing that as well.

Thank you. Your next question is coming from Nick Modi from RBC Capital Markets. Your line is live.

Michael Hsu: I would also say, by nature of our strong partnership with Suzano, we have, since Nelson's joined us and brought some of our kind of, I would say, risk management mindset that he and I used to have at our prior company here, we have worked hard to smooth out and take out volatility in the input costs that we've had. Hopefully, you can see that in your models.

Yeah, thanks. Good morning, everyone.

Thanks.

Yes, maybe I'll just I'll comment briefly on the last yes, yes, some right and so an important important you have to recognize some of our products are where.

Daily Essentials, and so there is an exclusion for Brazilian eucalyptus and so and that's obviously an important factor for us. So that's one big area that I think.

Nelson Urdaneta: Just to build on what Mike is saying, the transition that we've been doing over the last two and a half, three years to integrated margin management, Anna, has really percolated across the entire organization. The notion of pricing net of cost, at least neutral, in the mid to long term, is gaining hold across the organization. That's really a way of working that has allowed us to have more proactive management of the volatility separate from all the other actions that we're taking. That is a big, big cultural change across the organization, and we're seeing that play out over the last two to two and a half years.

We're very pleased to have been able to.

Steve.

So do you want to comment on the I can go on on the guide for the top line. Nick So I think a few things to unpack on a year to date basis.

Hey Mike. Um, so just maybe you could just give some clarity on on the, the full 2025 guy, just on the top line, obviously, over delivery, this quarter. But it looks like there's a little bit of a step back, um, in in for you. So just wanted to just understand. Is there something you're seeing or is it just a you know, the environment is volatile. So you're just kind of, you know, appropriating your your guidance accordingly. Um and then just I I'll ask my follow-up. Now it Procter. And Gamble talked about some exclusions on tariffs for some inputs. Um, and I'm just curious if you're you're seeing that as well. Thanks.

Our organic sales or one 6%.

And we.

What we're seeing on the categories.

At this stage is that the categories will grow around 2%.

And our expectation right now is to grow largely in line with the categories for the full year.

In essence, we would see an acceleration in Q4.

Yeah, maybe I'll just, I'll come and briefly on the last. Yeah. Yeah, some right. And so an important, you know, important you have to recognize some of our products are where daily Essentials. And and so, you know, there is an exclusion for Brazilian eucalyptus. And so, and that's obviously an important factor for us. So, that's, that's 1, big area that, you know, I think, you know, we're, we're, we're very pleased to have been able to, you know,

If not at least at the same level of what we saw growth in Q3 based on all of our programs.

Does that clarify.

Um you know receive um say do you want to comment on the I can go on on on the guy for the for the Top Line.

Nelson Urdaneta: That's what also gives us the confidence of being able to attain our milestone margin targets before the end of the decade, both on the gross margin and the operating margin as we continue to progress in this power and care transformation journey.

Yes, that's helpful. Thank you so much.

So, I think a few things to unpack.

And Nick one more thing I'll add is just as you know we were always talking about driving the virtuous cycle.

In our business and so.

We have seen a little strengthening we started off the year well.

Well third quarter came in good.

[Analyst 6]: Great. Thanks so much.

So we're going to continue to reinvest in our brands and make sure that we can drive ongoing momentum as we get into next year.

Nelson Urdaneta: Okay, I think we'll end it there for today. For anybody that has any follow-up questions, the IR team will be around all day to take them. I know there are other calls that people need to get to. Thanks, everybody, for joining us and have a great day.

On a year to date basis, our organic sales are 1.6%, um, and we, you know what, we're seeing on the categories. Um, at at this stage is that the categories would grow around 2% and our expectation. Right now is to grow largely in line with the categories for the full year.

Helpful. Thank you guys.

so in essence, I mean, we we, we would see an acceleration in Q4, um,

Thanks.

Thank you. Your next question is coming from Anna <unk> from Bank of America. Your line is live.

If not, at least at the same level of what we saw growth in, Q3 based on all of our programs.

Um, does that clarify?

Operator: Thank you. Everyone, this concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.

Hello Anna.

Yes, that does. Thank you so much.

Hi, good morning, Thanks, so much for the question.

Was wondering if we could take a step back on the diaper category. We're.

We're seeing that category evolving here with certain ultra premium player in expanding the market on the top and I was wondering how you see Kimberly competing in this environment, where we're seeing growth, but also increased competition at the mid tier and value ranges, but more robust growth on the ultra premium side with some newer brands.

And Nick, what? And 1 more thing I'll add is just as you know, we were always talking about driving The Virtuous cycle, you know, in our, in our business and so you know we have seen a little strength and we started off the year. Well third quarter came in, you know, good you know so we we're we're going to continue to reinvest in Our Brands and make sure that we can drive ongoing momentum as we get into next year.

Helpful. Thank you, guys.

Thanks.

Anyway. So it's.

I'm wondering is listen area and ultra premium bar, Kimberly could compete or innovation or potentially through M&A and then how do you see the overall category dynamics developing from here. Thanks.

Thank you. Your next question is coming from Anna Lisle, from Bank of America. Your line is live.

Hello Anna. Hi.

Hi, good morning. Thanks much for the question.

Yes, the great thing about the diaper category and also all of our categories that performance is what really really matters and so we're very confident that we have the best technologies, we have a great pipeline of technology.

Our go forward years next year's innovations will be better than this year's.

27 innovations will be better than 26 years, and so there's that I would say our strategy as we've said kind of you know you've probably heard us say it a lot and we want to win at every rung of the good better best ladder and so that's what's driven our business globally is really <unk>.

I was wondering if we could take a step back on the diaper category. Um, you know, we're seeing the category of evolving here with certain Ultra Premium players expanding the market on the top. And I was wondering how you see Kimberly competing in this environment where, you know, we're seeing growth but also increase competition at the mid, tier and value ranges. But more robust growth on the Ultra Premium side, with some newer brands in the US.

So I was wondering is this an area an Ultra Premium where Kimberly could compete through Innovation or potentially through m&a and then how do you see the overall category Dynamics? Developing from here? Thanks.

Expansion premium amortization of the category through better features and products worth paying more for it.

Just to give you. An example in North America are shipped over the last 10 years 10 years or so.

Premium mix has gone from 40% of our business in North America to to just under 70%.

In China, our premium mix has gone from 6% five years ago.

Well over 40% right and so that kind of our underlying strategy. However.

In this environment.

We also recognize we have to have a great value proposition.

In the value tiers, we don't want to be a niche premium brand and so this is what <unk> talked about us.

<unk> hitting our best innovation, our best features into into the I would say the mid tiers and so that we can have a superior offering across the line, but maybe Russ you may want to add a few thoughts yeah. I'll just add something you mentioned Super premium I think we're excited about that and that's consistent with what we're seeing just because I think it illustrates that there is plenty of room.

The great thing about the diaper category and also all of our categories that performance is what really, really matters. And so and Anna. We're we're very confident that we have the best Technologies. Uh we have a great pipeline of of Technology, you know, in our go forward years. Next year's Innovations will be better than this year's and the and and 27 Innovations will be better than 26s. And so there's that I I would say our strategy. As we've said kind of you know you've probably heard of it a lot. Hey, we want to win at every rung of the good better best ladder and so and that's what's Driven. Our business globally is really expansion, premiumization of the category through better features and products worth paying more for, you know, just just to give you an example in in North America, our shift to the last 10 years, 10, 10 years or so. You know, our premium mix has gone from 40% of our business in North America to to just under 70%, um, in, in, in China, our, our

Room for us to continue to premium is the category and you see that demand on the premium and Super premium side is is out there and so continue to look for us to both drive that as Mike just talked about the premium amortization success, we've had both in the United States and other markets, including China.

Premium, mix has gone from 6% 5 years ago to well over 40% right. And so that kind of our underlying strategy however,

We're going to continue to focus on that in addition to bringing great value at the at the mainstream and premium tiers.

You know, in this environment, you know, you know, we we also recognize, we have to have a great value proposition. Um, in the value tears, you know, we don't want to be a niche premium brand and so this is what Russ has talked about us. You know, cascading our best Innovation, our best features into into the I would say the mid tiers and and so that we can have a

Great. Thanks, so much and just one follow up on the cost side you did mention in early September your expectation to reduce your volatility to fiber in that way to approach. The BRL. Following the JV agreement. So I was wondering if you could elaborate on that more and the efforts that youre, making towards that so far.

Yes, maybe I'll start and I'd say one thing.

The volatility is one of the big things that we've been working on because we recognize that it was one of the features of <unk> can be stock.

That was different from maybe some other companies and so one of the key sources of that volatility was fiber prices right or our cost of fiber was more volatile historically I'd say this transaction and partnership on our international family and professional business for Susana <unk> really does a couple of things.

Superior offering across the line but maybe Russ. You may want to add a few thoughts. Yeah, I just add something. You you mentioned super premium. I think we're excited about that. And that's consistent with what, what we're seeing just because I think it illustrates that there's plenty of room for us to continue to premiumize the category. And you see uh that Demand on on the premium and super premium side is is out there. And so, you know, continue to look for us to to to both drive that as Mike just talked about the premiumization success. We've had both in the United States and other markets including China. Um, you know, we're going to continue to focus on that in addition to Bringing Great Value at the at the mainstream and and and premium tiers.

One is it really kind of stabilizes the source of the fiber costs.

Great. Thanks so much and just 1 follow up on the cost side. You did mention an early September, your expectation, to reduce your volatility to fiber and that would approach zero following the JV agreement. So I was wondering if you could elaborate on that more and the efforts that you're making toward that so far,

Partnering with one of the most efficient producers of fiber in the world has some strong advantages and so I'd say that that brings an advantage obviously the nature of the joint venture itself by reducing our our stake in that business internationally inherently reduces.

Volatility and then and then I would also say by nature of our strong partnership with Susana we have since Nelson has joined US and brought some of our kind of I would say risk management mindset that he and I used to have at our prior company here, we have worked hard to smooth out and take.

Yeah, maybe I'll start in. I I I'd say 1 thing, you know I I'd say the yeah volatility is 1 of the big things that that we've been working on because we recognize like that was 1 of the features of the you know can be stock. You know, that was different from maybe some other companies. And so and 1 of the key sources of that volatility was Fiber prices, right? Or our cost of fiber was was more volatile, you know, historically I I'd say this transaction and partnership on our International family and professional business, with susanoo

Really does a couple things um 1 it um it really kind of stabilizes the source of the fiber costs.

Volatility in the input input costs that we've had and hopefully you can see that.

In your models.

And just to build on what Mike is saying.

The transition that we've been doing over the last.

253 years to integrated margin management Dan.

Really percolated across the entire organization.

The notion of pricing net of costs at least neutral in the mid to long term.

<unk> is gaining hold across the organization and that's really a way of working.

That has allowed us to have.

More proactive management of the volatility separate from all the other actions that we're taking so that that is a big big cultural change across the organization and we're seeing that play out over the last two to two and a half years and that is what also gives us the confidence.

Um, you know, partnering with 1 of the most efficient producers of fiber in the world, has some strong advantages and and so, you know, I'd say, you know, that that brings in Advantage. Obviously, the nature of the joint venture Itself by reducing our, our stake in that business internationally inherently reduces, uh, of volatility and then. And then I would also say by nature of our strong partnership with susanoo, you know, we have, you know, since Nelson's joined us and brought some of our kind of, I would say risk management mindset that that he and I used to have at our prior company. You know. Here, we we have worked hard to smooth out and take out volatility in the input in input costs that we've had in in and hopefully, you can see that, um, you know, in your models.

And and and just to build on what Mike is saying. The, you know, the transition that we've been doing over the last

Of.

Being able to attain our milestone margin targets before the end of the decade, both on the gross margin and the operating margin as we continue to progress in this power and care transformation journey.

Two and a half to three years to integrated margin management. And as really percolated across the entire organization, the notion of pricing that, of course, at least neutral in the mid to long term.

Is.

Great. Thanks, so much.

Okay, I think we'll end it there for today for anybody that has any follow up questions.

Our team will be around all day to take them I know there are other calls that people need to get to so thanks.

Thanks, everybody for joining us and have a great day.

Yeah.

Thank you everyone. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.

Is gaining hold across the organization. And that's, that's really a way of working that has allowed us to, to have more ProActive Management of the volatility separate from all the other actions that we're taking. So that that is a big, big cultural change across the organization. And we're seeing that play out over the last 2 to 2 and a half years and that's what also gives us the confidence.

Of.

Margin.

uh, as we continue to progress in this power and Care transformation Journey,

Great. Thanks so much.

Okay, I think, uh, we'll, we'll end it there for today, uh, for anybody that has any follow-up questions. Uh, you know, the IRT will be around all day to take them. I know there are other calls that people need to get to. So, um, thanks everybody for joining us and and have a great day.

Thank you, everyone, this concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.

Mhm.

Hm.

Good day, everyone and welcome to the Kimberly Clark, third quarter 2025 earnings call question and answer session.

It is not my pleasure to hand the floor over to your host. Chris Jacoby, vice president and best of relations. Sir, the floor is yours.

Thank you, and good morning, everyone. This is Christy Kuba, Kevin investor relations to Kimberly Clark and thank you for joining us. I would like to remind everyone that during our comments today, we will make some forward-looking statements that are based on how we see things today. Actual results May differ due to risks and uncertainties and these are discussed in our earnings released in our filings, with the SEC. We also discussed some non-gaap Financial measures during the remarks. And these non-gaap Financial measures should not be considered a replacement for and

Should be read together with gap results and you can find the gaap to non-gaap reconciliations within our earnings release and the supplemental materials posted at investor kimberly-clark.com with that. I will turn it over to Mike for a few opening comments. Okay, thank you, Chris. Good morning, everyone.

Our third quarter results, underscore the strong progress, we're making to transform Kimberly Clark into an industry-leading, personal care company.

Despite a dynamic external environment. Powering care continues to power our performance.

It's enabling us to deliver solid results and importantly, better care for a better world.

Our inflection to Volume Plus mix like growth. That began last year continued into the third quarter.

Q3 Mark, Kimberly Clark's seventh consecutive quarter of Volume Plus mix lead growth. Even as volume growth, has been been somewhat challenging to achieve across the broader cpg industry.

We're growing volume in mixed because we're meeting consumers where they need us across the good better. Best spectrum and we're well positioned to post similar growth in the fourth quarter.

We held Global weighted market share despite an uptick in competitive promotion, activity in the quarter.

We're leveraging our scale to deliver more consistent profitability in a challenging environment.

In the third quarter, we deliver consistent operating margin expansion and another quarter of industry-leading productivity, our strongest of the year to support, reinvestment and profitable growth.

Our rewired organization is fast-tracking the best of Kimberly Clark across our markets.

The promotion of rust Tories to president and Chief Operating Officer is accelerating our momentum.

I'm pleased to have Russ with us today for his first earnings call as Chief Operating Officer.

We're in the fourth quarter and we're playing a win.

We have sustainable momentum and the discipline and Ingenuity to effectively execute our innovation-led Volume Plus mix driven growth strategy.

We're confident in our ability to unlock our long-term potential and deliver more value for our consumers, our team, our partners, and our shareholders. So with that, I'd like to open the line for questions.

Certainly everyone at this time will be conducting a question and answer session. If you have any questions or comments, please press star 1 on your phone at this time.

We do ask that while posing your question. Please, pick up your handset if you're listening on speakerphone to provide Optimum sound quality

We do ask that participants please ask 1 question and 1 follow-up then re-enter the queue.

Once again, if you have any questions or comments, please press star 1 on your phone.

Your first question is coming from Javier, Escalante from evercore isi, your line is live.

Hey, good morning. Hey, how are you guys? Good morning. Congrats on the strong results.

I wonder whether you could give us an update on the competitive dynamics in U.S. diapers. When you spoke in early September, you indicated delays in marketing plans.

Because of increased competition from retailers, private label and their Chinese Imports despite tariff.

And retailer reaction to it.

And in a bigger sense, is there is something you can do.

To steer the market away from a price War given that the US diaper Market will likely Trend, volume flattish, given low fertility rates. Thank you.

Hey, Javier, great question. Uh, you know, I would tell you, you know, we saw increased competitive activity and uptick in activity earlier. In the quarter, I would say our teams navigated it pretty well. And, and, and I would say your your point around, you know, how we want to drive the business. I I think I said it in my prepared remarks, our our strategies, totally Innovation lead and so we're really focused on, on making our products better at every every tier of the good better best spectrum. And, and I think that's strategy is you can see in our results as as paying off pretty well. But I'm going to ask Russ to comment because I think you know, he's he's kind of closer to the action in North America and having just come out of that role and so maybe Russ, you may want to give him a little bit more detail. Sure, sure. Absolutely. Hey Javier. Um, yeah, I I would say overall is the quarter played out, you're right. We did make the decision to move some promotional activity from the third quarter to late in the third quarter, mainly the fourth quarter. And so just the update on that is we are seeing solid performance in in diapers in North America and so

I think that has worked out thus far. So we gained 10 10 basis points of of Cher and diapers in the third quarter, which frankly was maybe a little better than what we had expected and we're up and share 90 basis points, you know, year to date. But I I would maybe unpack a couple of topics you know just that that I think are notable that may give you a little bit more insight to what what you and everyone else might be seeing in the scanner data and that's, you know, promotion activity and club would be the 2 things. So let me start with the promotional activity.

You know, just a reminder everyone. I think we we mainly see promotion as a tactic to drive trial for Innovation to Mike's Point. You know, we're very focused on driving Innovation and brand building and cascading that Innovation across every tier of the, the good better best spectrum. And, um, you know, we, we would say that overall promotion, in across all of our categories within North America and that includes diapers is well, down versus our 2019 levels. Um, but you may see the the promotional levels pick up as a result of that trial activity, I talked about. And the reason for that is we've got a great lineup on Innovation. You know, we have probably the most active lineup we've had in quite some time across the good better, best tears and just to remind everyone, we launched the blowout blocker earlier, this year hug fit 360 and our and our Little Movers tier, uh, which is doing quite well. And then, of course, we have a very significant, uh, Improvement in the value. Proposition our mainstream lineup in snug and dry uh where we've made great products.

Improvements to improve softness and comfort, and have introduced a superior core generation 2 core, that will improve protection and that's off to great start from from ratings. So, our strategy had been to, to Really, you know, use promotion to drive trial because we know when people try the product, they're going to love it and and come back. Um, and so what you're seeing is probably a, an uptick in that promotional activity. Um, but I would, I would also point out that um,

You know, the our, our promotional activity in general in diapers, is lower than the category and and we'd expect that as we get through the trial, period, that promo activity to normalize as we get through the fourth quarter and towards the end of the year. And so, um, you know, that's, that's just a little bit of an explanation behind what you might be seeing there and then on the club, mix piece. I I just wanted to, you know, talk for a second about that, you know, that you may see coming through as a little bit of, uh, negative mix headwind in in the US diapers. And what's happening there is, is everyone knows is we've been experiencing double-digit growth in the club Channel, um, and that really is is, uh, you know, in response to both the consumer shifting to the club Channel, as well as some changes in assortment that have, uh, positively impacted our business uh, in in certain in certain retailers. And so, you know, we are also in parallel driving premiumization. Uh, and so that's important. Like the hug fit 360 that I mentioned is is going to, you know, Drive continued, premiumization and positive mix over time. So hopefully that sheds a little bit more light on the situation.

Yes, he does. Yes, he does. Uh, I have a follow-up. You'll be proud to know that Chris's team. Sends me send sent me that chart that you drew Up 3 times. So, you know, I'm sorry, I'm sorry for that.

but uh, the 1 thing that I would love to to, to hear is

Driving positive mix because this has been your focus for a long time, right? And

Reaction to the Chinese diapers. Versus your intro, is there is anything that you have learned so far, uh, that give you encouraging or is it makes it more challenging uh driving process? Uh positive mix and thank you very much for the follow-up.

Yeah, just just

I think the brand interaction tends to interact more with private label and so so there's there's kind of a swap in and out at the same tier but you know, Russia may want to comment further. Yeah, yeah. I I think we're doing a lot of things to drive positive mix and I think I overall Javier. I would say we're very confident because of our experience around the world is including in China that we make great products and consumers, you know, respond to those. And, you know, that's what the testing data shows. And I believe that's what the the market reaction to our current. Our current position is showing. So, you know, what, why you may feel like? I think retailers understand that they have to balance mix, but I think more broadly, what's happening is, uh, there's a value-seeking consumer out there and the retailers are trying to adjust their assortment to, to Matt to, uh, help serve those needs. And so, are we? And I think that's why we're, we're seeing positive volume mixed growth. And so I think we feel comfortable, um, with our levers. You know, we're doing things on pack sizes and, and other and other areas. So we're still early on

In the progression of that though. So we're going to see how that plays out. And uh, but I, I would say that given our experience globally and in North America, we're we're, um, we're confident in our plans. Yeah. The confidence in our plan, Javier comes from the stem from the fact that we're, we're very confident in our technology and our product quality.

Um we're competing with the low-cost diapers that you mentioned in other markets, particularly in Asia. And, you know, our products are superior and we believe our costs are very very competitive if not, if not better. So so you know we we feel good in our plan.

Thank you. Your next question is coming from Lauren. Lieberman from Barclays. Your line is live.

Great, thanks. Hey, good morning. Um, in the prepared remarks, um, that you guys published this morning, you gave you open the door, a little bit to, to 26, and talked a little bit about, um, you know, momentum into next year. So wanted to know, if you could talk a little bit about the shape of the p&l in 26 and 27, I know you've spoken about the dilution assuming that the ifp JV kind of goes through as planned. Um, but I think numbers are a little bit all over the place. So anything you could do to shed some light on shape of the p&l, 26 and 27, um, would be really helpful. Thanks,

All right, well, we're still in the throws of working through it Lauren. So I don't I I think it's premature for us to share it too much, but I think Nelson probably can maybe make a few remarks here. Sure, so. So, so Lauren just to provide some perspective. And again, um, without getting into specifics on point estimates because we'll be providing a thorough Outlook when we when we report our Q4 and full year results, early next year, you know, it is important to highlight that we can continue to Target organic growth ahead of our categories consistent with our long-term.

At operating profit, we are in in the midst, as Mike, said, of building plans for the next few years, that should deliver our long-term constant currency operating profit growth in line with we committed to or and looked at as our long-term algorithm and, you know, this includes the mitigation of the stranded costs that will result from the ifb transaction. That that again, we expect the clothes, sometime middle of next year.

I'd also point out that we continue to be.

Targeting to to achieve, you know our Milestone on gross margin of at least 40% and an operating profit of at least 80 18 to 20.

You know, before the end of the decade. And, and we're tracking fairly well on that terms and and as you say, and as we get into the details of the, the Outlook and and how we think about it, first Epps, and then the next couple of years, we need to distinguish between EPS from continuing operations which exclude discontinued operations.

From EPS attributable to Total Casey, which includes earnings from discontinued operations.

So that's the first step. So for constant currency adjusted EPS growth from continuing operations in the next couple of years, all else equal and assuming that we closed the transaction sometime middle of the 26th. Um, we should see a step up in growth in EPS, uh, as in, in in EPS, from continuing UPS as income from Equity, companies would increase by approximately, 30%, a year on year, and we'd also benefit from the use of proceeds for share BuyBacks.

The second item is adjusted. EPS attributable to Total. KC

Which again assuming that we closed the transaction mid 2026 then constant currency growth should be somewhat more muted um as we see about half of the discontinued Ops income go away and then as we go into 27, all of it, go away.

You know, in the near term, we're going to continue driving underlying growth consistent with the long-term algorithm. And we will see a partial offset because of the delusion.

That we've been talking about.

Okay, great. That's super helpful. Thank you.

Okay, thank you, Lauren.

Thank you. Your next question is coming from Peter Grom from UBS. Your line is live.

Great great. Thanks guys. Good morning.

Good morning guys. So I I wanted to ask you on North America, just just the performance in the quarter relative to what we can see in the track Transit. It was a bit stronger. So I know in the prepared remarks, you talked about some hurricane shipment Dynamics, but can you just talk about what drove the Gap in the quarter? And then maybe, as we look ahead, would you anticipate a a similar Gap as we continue to monitor monitor the data here in the fourth quarter?

Hey Peter, maybe that's a, that's a, you know, good topic because I I would say in our discussions, I think the source of data you look at is very, you tends to be very different from from our data. And so I know there's, you know, different analysts, use different sources. Uh, the the thing about our business, we skew to a few larger customers that are untracked or or not. Well tracked. So even if