Q2 2026 Energizer Holdings Inc Earnings Call

May 5, 2026

Speaker #1: Good morning. My name is Kathleen, and I will be your conference operator today. At this time, I would like to welcome everyone to the Energizer's first fiscal year 2026 conference call.

Kathleen: Good morning. My name is Kathleen, I will be your conference operator today. At this time, I would like to welcome everyone to Energizer's first fiscal year 2006 Conference Call. After the speaker's remarks, there will be a question and answer session. If you wish to ask a question during the question and answer session, please press star one. As a reminder, this call is being recorded. Now I would like to turn the conference over to Paul, Vice President, Treasurer, and Investor Relations. Please go ahead.

Operator: Good morning. My name is Kathleen, I will be your conference operator today. At this time, I would like to welcome everyone to Energizer's first fiscal year 2026 Conference Call. After the speaker's remarks, there will be a question-and-answer session. If you wish to ask a question during the question and answer session, please press star one. As a reminder, this call is being recorded. Now I would like to turn the conference over to Paul, Vice President, Treasurer, and Investor Relations. Please go ahead.

Speaker #1: After the speakers' remarks, there will be a question-and-answer session. If you wish to ask a question during the question-and-answer session, please press star 1.

Speaker #1: As a reminder, this call is being recorded. And now I would like to turn the conference over to Vice President Treasurer and Investor Relations.

Speaker #1: Please go ahead.

Speaker #2: Good morning. And welcome to Energizer's second quarter fiscal 2026 conference call. Joining me today are Mark LaVigne, President and Chief Executive Officer; and John Drabik, Executive Vice President and Chief Financial Officer.

Paul: Good morning. Welcome to Energizer's Q2 fiscal 2026 Conference Call. Joining me today are Mark LaVigne, President and Chief Executive Officer, and John Drabik, Executive Vice President and Chief Financial Officer. In just a moment, Mark will share a few opening comments, and then we'll take your questions. A replay of this call will be available on the investor relations section of our website, energizerholdings.com. In addition, please note that our earnings release, prepared remarks, and the slide deck are also posted on our website. During the call, we will make forward-looking statements about the company's future business and financial performance, among other matters. These statements are based on management's current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from these statements. We do not undertake to update these forward-looking statements.

Jonathan Poldan: Good morning. Welcome to Energizer's Q2 fiscal 2026 Conference Call. Joining me today are Mark LaVigne, President and Chief Executive Officer, and John Drabik, Executive Vice President and Chief Financial Officer. In just a moment, Mark will share a few opening comments, and then we'll take your questions. A replay of this call will be available on the investor relations section of our website, energizerholdings.com. In addition, please note that our earnings release, prepared remarks, and the slide deck are also posted on our website. During the call, we will make forward-looking statements about the company's future business and financial performance, among other matters. These statements are based on management's current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from these statements. We do not undertake to update these forward-looking statements.

Speaker #2: In just a moment, Mark will share a few opening comments, and then we'll take your questions. A replay of this call will be available on the Investor Relations section of our website, energizerholdings.com.

Speaker #2: In addition, please note that our earnings release prepared remarks and the slide deck are also posted on our website. During the call, we will make forward-looking statements about the company's future business and financial performance among other matters.

Speaker #2: These statements are based on management's current expectations and are subject to risks and uncertainties which may cause actual results of different materially from these statements.

Speaker #2: We do not undertake to update these forward-looking statements. Other factors that could cause actual results of different materially from these statements are included in reports we file with the SEC.

Paul: Other factors that could cause actual results to differ materially from these statements are included in reports we file with the SEC. We also refer in our presentation to non-GAAP financial measures. A reconciliation of non-GAAP financial measures to comparable GAAP measures is shown in our press release issued earlier today, which is available on our website. Information concerning our categories and estimated market share discussed in this call relates to the categories where we compete and is based on Energizer's internal data from industry analysis, and estimates we believe to be reasonable. The battery category information includes both brick-and-mortar and e-commerce retail sales. Unless otherwise noted, all comments regarding the quarter and year pertain to Energizer's fiscal year, and all comparisons to prior year relate to the same period in fiscal 2025. With that, I would like to turn the call over to Mark.

Jonathan Poldan: Other factors that could cause actual results to differ materially from these statements are included in reports we file with the SEC. We also refer in our presentation to non-GAAP financial measures. A reconciliation of non-GAAP financial measures to comparable GAAP measures is shown in our press release issued earlier today, which is available on our website. Information concerning our categories and estimated market share discussed in this call relates to the categories where we compete and is based on Energizer's internal data from industry analysis, and estimates we believe to be reasonable. The battery category information includes both brick-and-mortar and e-commerce retail sales. Unless otherwise noted, all comments regarding the quarter and year pertain to Energizer's fiscal year, and all comparisons to prior year relate to the same period in fiscal 2025. With that, I would like to turn the call over to Mark.

Speaker #2: We also refer in our presentation to non-GAAP financial measures. A reconciliation of non-GAAP financial measures to comparable GAAP measures is shown in our press release issued earlier today, which is available on our website.

Speaker #2: Information concerning our categories and estimated market share discussed in this call relates to the categories where we compete and is based on Energizer's internal data; data from industry analysis; and estimates we believe to be reasonable.

Speaker #2: The battery category information includes both brick-and-mortar and e-commerce retail sales. Unless otherwise noted, all comments regarding the quarter and year pertain to Energizer's fiscal year and all comparisons to prior years relate to the same period and fiscal 2025.

Speaker #2: With that, I would like to turn the call over to Mark.

Speaker #3: Good morning. And thanks for joining us today. As in prior quarters, we've posted prepared remarks on our website that provide a detailed review of our second quarter performance and our outlook.

Mark LaVigne: Good morning, and thanks for joining us today. As in prior quarters, we've posted prepared remarks on our website that provide a detailed review of our Q2 performance and our outlook. I wanted to begin with a few brief comments. As we move through fiscal 2026, our strategic priorities remain clear and consistent: restoring growth, rebuilding margins impacted by tariffs, and returning the business to its long-term historical cash flow profile. The Q2 marked an important step forward as disciplined execution across pricing, supply chain optimization, and an improved cost structure produced tangible results. During the quarter, tariff-related developments provided an incremental benefit, further supporting our ability to restore margins while still reinvesting in the business to drive sustainable top and bottom-line growth. The building blocks for a return to growth are in place.

Speaker #3: But I wanted to begin with a few brief comments. As we move through fiscal 2026, our strategic priorities remain clear and consistent. Restoring growth, rebuilding margins impacted by tariffs, and returning the business to its long-term historical cash flow profile.

Speaker #3: The second quarter marked an important step forward. As disciplined execution across pricing, supply chain optimization, and an improved cost structure produced tangible quarter, tariff-related developments provided an incremental benefit, further supporting our ability to restore margins while still reinvesting in the business to drive sustainable top and bottom line growth.

Speaker #3: The building blocks for a return to growth are in place. We expect the third quarter to mark an inflection in organic net sales, supported by stable category dynamics, higher quality distribution across our portfolio, continued progress on the APS integration, and strong innovation.

Mark LaVigne: We expect the Q3 to mark an inflection in our organic net sales, supported by stable category dynamics, higher quality distribution across our portfolio, continued progress on the APS integration, and strong innovation. Innovation remains a core pillar of our strategy, as highlighted by the recent launch of Energizer Ultimate Child Shield. In Auto Care, growing distribution of the Armor All Podium Series, together with continued innovation across the portfolio, is enhancing the business's long-term earnings and growth potential. Stepping back, performance in the H1 of fiscal 2026 was largely consistent with our expectations and reflected a transition that will be followed by a H2 with organic sales growth and profitability continuing to benefit from announced and accepted pricing and ongoing supply chain initiatives. As a result, we expect to deliver the high end of our fiscal 2026 earnings outlook.

Speaker #3: Innovation remains a core pillar of our strategy as highlighted by the recent launch of Energizer Ultimate Child Shield, an auto care growing distribution of the Armoral Podium series together with continued innovation across the portfolio is enhancing the business's long-term earnings and growth potential.

Speaker #3: Stepping back, performance in the first half of fiscal 2026 was largely consistent with our expectations. And reflected a transition that will be followed by a second half with organic sales growth and profitability continuing to benefit from announced and accepted pricing and ongoing supply chain initiatives.

Mark LaVigne: Stepping back, performance in the H1 of fiscal 2026 was largely consistent with our expectations and reflected a transition that will be followed by a H2 with organic sales growth and profitability continuing to benefit from announced and accepted pricing and ongoing supply chain initiatives. As a result, we expect to deliver the high end of our fiscal 2026 earnings outlook. Thank you for your continued confidence in Energizer. With that, let's open the call for questions.

Speaker #3: As a result, we expect to deliver the high end of our fiscal 2026 earnings outlook. Thank you for your continued confidence and energizer, and with that, let's open the call for questions.

Mark LaVigne: Thank you for your continued confidence in Energizer. With that, let's open the call for questions.

Kathleen: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. If you have a question, please press star followed by the number 1 on your touchtone phone, and you will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the number 2. Please note to limit yourself with 1 question and 1 follow-up question to allow us to accommodate others. Your first question comes from the line of Peter Grom of UBS. Please go ahead.

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. If you have a question, please press star followed by the number one on your touchtone phone, and you will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the number two. Please note to limit yourself with one question and one follow-up question to allow us to accommodate others. Your first question comes from the line of Peter Grom of UBS. Please go ahead.

Speaker #1: Ladies and gentlemen, we will now begin the question-and-answer session. If you have a question, please press star followed by the number 1 on your touch-tone phone.

Speaker #1: And you will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the number 2.

Speaker #1: Please note to limit yourself with one question and one follow-up question to allow us to accommodate others. And your first question comes from the line of UB.

Speaker #1: Please go ahead.

Peter Grom: Great. Thank you. Good morning, everyone. I was just hoping to get some perspective on the guidance for the year. Can you maybe just give us a sense for how FY 2026 is playing out relative to your expectations? I ask this just more in context of moving to the high end of the range that now incorporates a tailwind related to tariff refunds, which would suggest pressure in other areas. I guess my second question, you know, you had this slide that really showed the multi-year progress of the business despite all the external volatility. You know, how does this inform your view on the path forward? Maybe specifically, where do we go from here as we look out to 2027? Thanks.

Speaker #4: Great. Thank you. Good morning, everyone. I was just hoping to get some perspective on the guidance for the year. Can you maybe just give us a sense for how FY26 is playing out relative to your expectations?

Speaker #4: And I ask this just more in context of moving to the high end of the range that now incorporates a tailwind related to tariff refunds, which would suggest pressure in other areas.

Speaker #4: And then I guess my second question, you had this slide that really showed the multi-year progress of the business despite all the external volatility.

Speaker #4: How does this inform your view on the path forward? And maybe specifically, where do we go from here as we look out to '27?

Speaker #4: Thanks.

Mark LaVigne: Good morning, Peter Grom. I'll kick off, and let's start with 2026 first, and I'll cover a little bit, John Drabik will cover a little bit, and then maybe I can come back on the longer-term view. Look, I would say there's been a lot of moving pieces in fiscal 2026. You know, it is on track to be a successful year for Energizer. Our goals going into the year were to restore growth, rebuild margins, and restore free cash flow. We've had nice success against all three. When you think about it on a top-line perspective, H1 and the H2 are playing out largely as we expected. We knew H1, we're going to have organic declines, and we still expect growth in Q3 and Q4.

Mark LaVigne: Good morning, Peter. I'll kick off, and let's start with 2026 first, and I'll cover a little bit, John will cover a little bit, and then maybe I can come back on the longer-term view. Look, I would say there's been a lot of moving pieces in fiscal 2026. You know, it is on track to be a successful year for Energizer. Our goals going into the year were to restore growth, rebuild margins, and restore free cash flow. We've had nice success against all three. When you think about it on a top-line perspective, H1 and the H2 are playing out largely as we expected. We knew H1, we're going to have organic declines, and we still expect growth in Q3 and Q4.

Speaker #2: Good morning, Peter. I'll kick off, and let's start with the '26 first, and I'll cover a little bit, John will cover a little bit, and then maybe I can come back on the longer-term view.

Speaker #2: Look, I would say there's been a lot of moving pieces in fiscal '26. It is on track to be a successful year for Energizer.

Speaker #2: Our goals coming into the year were to restore growth, rebuild margins, and restore free cash flow. We've had nice success against all three. When you think about it on a top-line perspective, the first half and the back half are playing out largely as we expected.

Speaker #2: We knew the first half we're going to have organic declines, and we still expect growth in Q3 and Q4. The growth in the back half of the year is really driven by the integration of the APS business, some exciting new innovation that we're launching, new distribution that we've been able to achieve as well as a little bit of pricing.

Mark LaVigne: The growth in the back half of the year is really driven by the integration of the APS business, some exciting new innovation that we're launching, new distribution that we've been able to achieve, as well as a little bit of pricing. Those are in place. Those are known decisions, that should drive the organic growth as we get into Q3 and Q4. We are tempering a bit in terms of the macro outlook, we did bring down our overall call for Q3 and Q4 just a touch, because we do see a little bit more of a cautious consumer than maybe what we anticipated going in, into November. On the margins, we've done a lot of work on the network, on our cost structure. We obviously have the benefit from the tariff recovery as well.

Speaker #2: Those are in place. Those are known decisions, so that should drive the organic growth as we get into Q3 and Q4. We are tempering a bit in terms of the macro outlook, so we did bring down our overall call for Q3 and Q4 just a touch.

Speaker #2: Because we do see a little bit more of a cautious consumer than maybe what we anticipated going into November. On the margins, we've done a lot of work on the network, on our cost structure.

Speaker #2: We obviously have the benefit from the tariff recovery as well. So all in all, I think it's been a successful year so far. We're set up for success as we get into the back half of the year, and that's where the delivery at the high end of the earnings range is despite some of the headwinds that I just talked about.

Mark LaVigne: All in all, I think it's been a successful year so far. We're set up for success as we get into the back H2 of the year, and that's where the delivery at the high end of the earnings range is, despite some of the headwinds that I just talked about. John can maybe put a little finer point on some of the puts and takes as it relates to the tariffs.

Speaker #2: And John can maybe put a little finer point on some of the puts and takes as it relates to the tariffs.

Speaker #3: Yeah. Well, I probably would just maybe a couple of numbers on that, Mark. So on the top line, we're calling top line kind of organic flat.

John Drabik: Well, I probably would just maybe a couple of numbers on that, Mark. On the top line, we're, you know, we're calling top line kind of organic flat. That's what you just talked about, you know, reflecting that cautious consumer. I think there's a corresponding gross profit impact, so that's one of the, you know, the items that we're calling out in H2 of the year. We also, you know, we're benefiting from these production credits.

John Drabik: Yeah. Well, I probably would just maybe a couple of numbers on that, Mark. On the top line, we're, you know, we're calling top line kind of organic flat. That's what you just talked about, you know, reflecting that cautious consumer. I think there's a corresponding gross profit impact, so that's one of the, you know, the items that we're calling out in H2 of the year. We also, you know, we're benefiting from these production credits.

Speaker #3: And that's what you just talked about, reflecting that cautious consumer. I think there's a corresponding gross profit impact, so that's one of the items that we're calling out in the back half of the year.

Speaker #3: We also were benefiting from these production credits. We get those credits on product that we make in the US and sell anywhere. We still have some foreign-sourced product in our inventory, and we're going to flush more of that through than we originally planned.

John Drabik: We get those credits on product that we make in the US and sell anywhere. We still have some, you know, foreign source product in our inventory, and we're gonna flush more of that through than we originally planned. Those credits will probably, in 2026, be about 10% to 15% lower than we originally planned. But that doesn't change kind of the run rate of what we expect from those credits over time. But it will be a bit of an impact in the H2 of 2026. To Mark's point, we're gonna continue to reinvest, you know, for future growth, and I'd say that's in some of the innovation, e-com, and, you know, consumer engagement throughout the rest of the year.

Speaker #3: So those credits will probably, in '26, be about 10 to 15 percent lower than we originally planned. But that doesn't change kind of the run rate of what we expect from those credits over time.

Speaker #3: But it will be a bit of an impact in the back half of '26. And then to Mark's point, we're going to continue to that's in some of the innovation e-com and consumer engagement throughout the rest of the year.

Speaker #3: So that's really what you're kind of seeing on the back half, a bit more on the number side.

Mark LaVigne: That's really what, you know, you're kind of seeing on the back half, you know, a bit more on the numbers side. Peter, on your question in terms of the longer term, we did put the slides in the earnings slides that we posted today because we really wanted to zoom out and take a look at how the business has performed over the last three years. You know, I know you all get frustrated at the amount of seismic changes that seems to occur with the different factors that are driving our business with tariffs, production credits, tariff refunds.

Speaker #4: And Peter, in your question in terms of the longer term, we did put the slides in the earnings slides that we posted today. Because we really wanted to zoom out and take a look at how the business has performed over the last three years.

Mark LaVigne: Peter, on your question in terms of the longer term, we did put the slides in the earnings slides that we posted today because we really wanted to zoom out and take a look at how the business has performed over the last three years. You know, I know you all get frustrated at the amount of seismic changes that seems to occur with the different factors that are driving our business with tariffs, production credits, tariff refunds.

Speaker #4: I know you all get frustrated at the amount of seismic changes that seems to occur with the different factors that are driving our business with tariffs, production credits, tariff refunds.

Speaker #4: But when you take a step back and look at how we've operated through the COVID disruption, historic inflation, the tariff pressure, and through all that volatility, we've stayed disciplined on the financial algorithm, which is centered on growth, margin, expansion, and free cash flow.

Mark LaVigne: When you take a step back and look at how we've operated through the, you know, COVID disruption, historic inflation, the tariff pressure, and through all that volatility, we've stayed disciplined on the financial algorithm, which is centered on growth, margin expansion, and free cash flow. When you look at it at the longer term slides, I mean, the results speak to the resilience of what we've been able to do. Over that time period, we've maintained stable net sales while expanding our share. We've improved gross margins by about 360 basis points, and we've delivered consistent growth in both adjusted EBITDA and adjusted earnings per share. That wasn't driven by tailwinds. That was really driven by really solid execution in the organization and structural changes that we've been able to make as all of those events were occurring.

Speaker #4: When you look at it a longer-term slide, I mean, the results speak to the resilience of what we've been able to do. And over that time period, we've maintained stable net sales, while expanding our share.

Speaker #4: We've improved gross margins by about 360 basis points. And we've delivered consistent growth in both adjusted EBITDA and adjusted earnings per share. And that wasn't driven by tailwinds.

Speaker #4: That was really driven by really solid execution in the organization and structural changes that we've been able to make, as all of those events were occurring.

Mark LaVigne: Free cash flow has been a critical proof point over the last 3 years. We've generated $740 million of cumulative free cash flow, which has allowed us to reduce debt and return capital through dividends and share repo. Project Momentum, which you've all heard a lot about, has been central to all of that. It reshaped the cost base, it strengthened the supply chain, and improved working capital efficiency. You know, I think when you take a step back and you look at that longer term horizon, the takeaway is that even in a highly volatile environment, which we're still in, we have the ability to drive this business and deliver solid financial performance and disciplined capital deployment.

Speaker #4: Free cash flow has been a critical proof point over the last three years. We've generated $740 million of cumulative free cash flow, which has allowed us to reduce debt and return capital through dividends and share repo.

Speaker #4: Project momentum, which you've all heard a lot about, has been central to all of that. It reshaped the cost base. It strengthened the supply chain.

Speaker #4: And improved working capital efficiency. So, I think when you take a step back and you look at that longer-term horizon, the takeaway is that even in a highly volatile environment—which we're still in—we have the ability to drive this business and deliver solid financial performance and disciplined capital deployment.

Speaker #4: And so it was that overall track record, which gives us confidence that we're going to build on that as we finish out '26. And we think we're set up to do just that.

Mark LaVigne: It was that overall track record which gives us confidence that we're gonna build on that as we finish out 2026. We think we're set up to do just that, and that's reflected in the outlook that we provided today by taking the earnings to the high end of the range. Anything else, Peter?

Speaker #4: And that's reflected in the outlook that we provided today by taking the earnings to the high end of the range. Anything else, Peter?

Speaker #2: No, that was super helpful. Thank you. I'll pass it on.

Peter Grom: No, that was, that was super helpful. Thank you. I'll pass it on.

Mark LaVigne: Thanks, Peter.

Speaker #4: Thanks, Peter.

Speaker #5: And your next comment. Please go ahead.

Kathleen: Your next question comes on the line of Dara Mohsenian of Morgan Stanley. Please go ahead.

Operator: Your next question comes on the line of Dara Mohsenian of Morgan Stanley. Please go ahead.

Speaker #6: Hey, guys.

Dara Mohsenian: Hey, guys.

Speaker #4: Hey, there.

Mark LaVigne: Hey there.

Speaker #6: Maybe just to build on that, the weaker consumer you touched on and pulling down the full-year top-line guidance to account for that. Can you give us a bit more detail there?

Dara Mohsenian: Maybe just to build on that, the weaker consumer you touched on and pulling down the full year top-line guidance to account for that, can you give us a bit more detail there? A, Auto Care, you mentioned a weaker start to the peak season. You know, what's driving that? Is that just the consumer volatility around macros we see here? Are there other factors there? Do you expect that to linger? How do you think your own business is positioned just from a market share and innovation standpoint, you know, heading into the full peak season? Then, B, just on the battery side, are you seeing anything in the US or Europe from a consumer standpoint in terms of demand impacts?

Speaker #6: A auto care, you mentioned the weaker start to the peak season. What's driving that? Is that just the consumer volatility around macros we see here, or are there other factors there?

Speaker #6: Do you expect that to linger? And how do you think your own business is positioned just from a market share and innovation standpoint? Heading into the full peak season.

Speaker #6: And then just be on the battery side. Are you seeing consumer standpoint in terms of demand impacts? And also just help us understand any impact from the Middle East and how you guys are thinking about that going forward.

Dara Mohsenian: Also just help us understand any impacts in the Middle East and how you guys are thinking about that, going forward. Thanks.

Speaker #6: Thanks.

Speaker #4: Thanks, sir. Let me get started. A lot of questions in there. So let me answer them and then maybe as a follow-up, you can tell me where we fell short in terms of answering some.

Mark LaVigne: Thanks, Dara. Let me get started. A lot of questions in there, so let me answer them, and then maybe as a follow-up, you can tell me where we fell short in terms of answering some. Let's start with just the consumer generally. We've said it before, you've heard it from a number of our peers, they are certainly in a cautious position. They're seeking value. They are willing to switch channels, retailers, brands, pack sizes to get what they want. We are committed to meeting consumers where they are. We're best positioned in both of our categories, in batteries and Auto Care, better than any of our competitors because of our broad portfolio of brands and offerings that we have. We're confident we can win regardless of the environment. We have a broad distribution footprint.

Speaker #4: Let's start with just the consumer generally. We've said it before. You've heard it from a number of our peers. They are certainly in a cautious position.

Speaker #4: They're seeking value. They are willing to switch channels, retailers, brands, pack sizes to get what they want. We are committed to meeting consumers where they are.

Speaker #4: And we're best positioned in both of our categories in batteries and auto care, better than any of our competitors because of our broad portfolio of brands and offerings that we have.

Speaker #4: We're confident we can win regardless of the environment. We have a broad distribution footprint. We have multiple brands, including value brands, which we've been able to leverage to meet consumers, as well as the best innovation in our categories.

Mark LaVigne: We have multiple brands, including value brands, which we've been able to leverage to meet consumers, as well as the best innovations in our categories. In terms of controlling what we can on that front, I think we're doing an excellent job. Now let's turn to some of the category specifics. On Auto Care, for example, we're just entering peak season now. There's a, you know, a slightly colder start to the peak season. I don't think it's anything to be unduly worried about. We continue to see the high-end consumer engage in the category. Our Podium Series launch was very timely. We've expanded that offering this year. We've expanded from 15,000 retail locations to 25,000, able to capture the growth there. I think we're on solid footing.

Speaker #4: So in terms of controlling what we can on that front, I think we're doing an excellent job. Now it's turned to some of this category-specifics on auto care, for example.

Speaker #4: We're just entering peak season now. A slightly colder start to the peak season. I don't think it's anything to be unduly worried about. We continue to see the high-end consumer engage in the category.

Speaker #4: Our podium series launch was very timely. We've expanded that offering this year. We've expanded from 15,000 retail locations to 25,000. So from being able to capture the growth there, I think we're on solid footing.

Speaker #4: Some mainstream consumers, again, this is where the caution probably is a little more heightened than it is at the higher end. They're starting to opt out, starting to delay, starting to engage in some other habits.

Mark LaVigne: Some mainstream consumers, again, this is where the caution probably is a little more heightened than it is at the higher end. They're starting to opt out, starting to delay, starting to engage in some other habits. Some of them are switching from do it for me to do it yourself, which is a natural offset to that. We have the portfolio to win in Auto Care. I think, you know, we're calling for the Auto Care business to be roughly flat for the year instead of maybe some mild growth, which we thought it was gonna be before. It's not a big call-down. I think we're just reflecting the overall cautious consumer environment. Let me switch to batteries, which is obviously the biggest business we have. The category in the last 13 weeks in the US has been strong. You've seen volume growth, you've seen value growth.

Speaker #4: Some of them are switching from do-it-for-me to do-it-yourself, which is a natural offset to that. We have the portfolio to win in auto care.

Speaker #4: I think we're calling for the auto care business to be roughly flat for the year, instead of maybe some mild growth, which we thought it was going to be before.

Speaker #4: It's not a big call down. I think we're just reflecting the overall cautious consumer environment. Let me switch to batteries, which is obviously the biggest business we have.

Speaker #4: The category in the last 13 weeks in the US has been strong. You've seen volume growth. You've seen value growth. That was driven in part by some of the winter storm that you saw.

Mark LaVigne: That was driven in part by some of the winter storm that you saw. That was offset in terms of our sales by a little bit of tighter retailer inventory management. We didn't see as much of a flow through from re-replenishment as we typically would in storms, but still a net very positive benefit to the category. Globally, you're seeing similar dynamics. You're seeing volume and value growth. What I would say in that is in some of the international modern markets, they're trailing a little bit of the dynamic of what you saw in the US by maybe a quarter or two. You're seeing a little bit of softness there that you saw in the US maybe 6 months ago. All in all, I think it is a healthy category.

Mark LaVigne: That was driven in part by some of the winter storm that you saw. That was offset in terms of our sales by a little bit of tighter retailer inventory management. We didn't see as much of a flow through from re-replenishment as we typically would in storms, but still a net very positive benefit to the category. Globally, you're seeing similar dynamics. You're seeing volume and value growth. What I would say in that is in some of the international modern markets, they're trailing a little bit of the dynamic of what you saw in the US by maybe a quarter or two. You're seeing a little bit of softness there that you saw in the US maybe six months ago. All in all, I think it is a healthy category.

Speaker #4: That was offset in terms of our sales by a little bit of tighter retailer inventory management. So we didn't see as much of a flow-through from a replenishment as we typically would in storms.

Speaker #4: But still a net very positive benefit to the category. Globally, you're seeing similar dynamics. You're seeing volume and value growth. What I would say in that is in some of the international modern markets, they're trailing a little bit of the dynamic of what you saw in the US by maybe a quarter or two.

Speaker #4: So you're seeing a little bit of softness there that you saw in the US maybe six months ago. But all in all, I think it is a healthy category.

Speaker #4: I do think as we look ahead and we see higher gas prices and we continue to see the impact on the consumer, that we thought it was prudent to inject some caution in our forward look in terms of what we thought out of the consumer going forward.

Mark LaVigne: I do think we're, you know, as we look ahead and we see higher gas prices and we continue to see the impact on the consumer, that we thought it was prudent to inject some caution in our forward look in terms of what we thought out of the consumer going forward. Both of our categories are stable. We expect to continue to drive growth. It's just not gonna be as high as we thought it would be maybe six months ago. Let me stop there and see if where you wanna take that, Dara.

Speaker #4: But both of our categories are stable. We expect it's just not going to be as high as we thought it would be, maybe six months ago.

Speaker #4: Let me stop there and see if where you want to take that, there.

Speaker #6: That's very helpful. And I guess it sounds like auto care—a bit of a softer start—reflecting this consumer environment. Just given the Middle East situation, any changes in April versus March, or is it more sort of the environment you're seeing generally externally and that softer start in auto in fiscal Q2?

Dara Mohsenian: That's very helpful. I guess it sounds like Auto Care, a bit of a softer start reflecting this consumer environment. Just given the Middle East situation, any changes in April versus March, or it's more sort of the environment you're seeing generally externally and that softer start in Auto Care in fiscal Q2?

Mark LaVigne: Auto Care is going to be very weather dependent. You did see a pickup as you got further along into April. You saw, you know, some momentum in a positive direction with Auto Care. I still think, you know, you want to make sure that you play that season out. I also think on the Middle East, there was a question of how big of an impact that is, John?

Speaker #4: Auto is going to be very weather-dependent, so you did see a pickup as you got further along into April. So you saw some momentum in a positive direction with auto care.

Speaker #4: I still think you want to make sure that you play that season out. I also think on the Middle East, there was a question of how big of an impact that is, John.

John Drabik: Yeah, Dara. Middle East for us is about 1% of our revenue. In the quarter, we had some shipments of, you know, finished goods on both battery and auto side that were held up. It was about a 50 basis point drag to our top line. We've got a team working on alternative routes. We think we're still gonna get the majority of that back into those markets, but it's more of a timing issue at this point. Obviously, we'll continue to watch that area closely.

Speaker #5: Yeah. So Middle East for us is about 1% of our revenue. In the quarter, we had some shipments of finished goods on both battery and auto side that were held up.

Speaker #5: It was about a 50 basis point drag to our top line. So we've got a team working on alternative routes. We think we're still going to get the majority of that back into those markets, but it's more of a timing issue at this point.

Speaker #5: But obviously, we'll continue to watch that area closely.

Speaker #1: And your next question comes from the line of Rob Ottenstein of Evercore Partners. Please go ahead.

Kathleen: Your next question comes from the line of Robert Ottenstein of Evercore Partners. Please go ahead.

Operator: Your next question comes from the line of Rob Ottenstein of Evercore Partners. Please go ahead.

Speaker #7: Great. Thank you very much. I was wondering if you could comment a little bit more on the battery side. In terms of your share trends, and in particular, by channel, if they're different trends by channel.

Robert Ottenstein: Great. Thank you very much. I was wondering if you could comment a little bit more on the battery side in terms of your share trends, and in particular by channel, if there are different trends by channel. You know, given, you know, some of your concerns on the consumer, do you think that the industry is going to start getting a bit more promotional as the year goes? How do you plan on combating that? Thank you.

Rob Ottenstein: Great. Thank you very much. I was wondering if you could comment a little bit more on the battery side in terms of your share trends, and in particular by channel, if there are different trends by channel. You know, given, you know, some of your concerns on the consumer, do you think that the industry is going to start getting a bit more promotional as the year goes? How do you plan on combating that? Thank you.

Speaker #7: And then given some of your concerns on the consumer, do you think that the industry is going to get start getting a bit more promotional as the year goes?

Speaker #7: And how do you plan on combating that? Thank you.

Mark LaVigne: Sure, Robert. I think on the share side, I wanna speak at a macro level and not get into individual retail share or even channel share. What I would say is we grew share globally. We grew share in the US. Our share position continues to be strong. In terms of what I would expect from a category standpoint, I do think when you're dealing with cautious consumers, there is a tendency to have slightly more promotion. I think you're seeing that play out in the category. I think the frequency is increasing, but the depth is staying about the same. You're gonna see slightly more promotion than what maybe you would typically see. All that is for us is the sign of investing to stay consumers connected with the category.

Speaker #4: Sure, Robert. I think on the share side, I want to speak at a macro level and not get into individual retail share or even channel share.

Speaker #4: But what I would say is we grew share globally. We grew share in the US. So our share position continues to be strong. In terms of what I would expect from a category standpoint, I do think when you're dealing with cautious consumers, there is a tendency to have slightly more promotion.

Speaker #4: I think you're seeing that play out in the category. I think the frequency is increasing, but the depth is staying about the same. So you're going to see slightly more promotions than what maybe you would typically see.

Speaker #4: But all that is, for us, is the sign of investing to keep consumers connected with the category, because as long as we can do that in a way that still drives the gross margin improvement, that's really the calibrating factor here.

Mark LaVigne: As long as we can do that in a way that still drives the gross margin improvement, that's the really the calibrating factor here. I think it's a, I think it's a wise investment in this environment to promote a little bit, to stay connected to those consumers, and still continue to engage with them in a way that creates long-term benefit to your business. We're doing it in a way that still allows us to improve gross margin in the way we've talked about throughout the year.

Speaker #4: I think it's a wise investment in this environment to promote a little bit to stay connected to those consumers. And still continue to engage with them in a way that creates long-term benefits to your business.

Speaker #4: And we're doing it in a way that's still allows us to improve gross margin in the way we've talked about throughout the year.

Speaker #7: Thank you.

Robert Ottenstein: Thank you.

Rob Ottenstein: Thank you.

Speaker #4: Thanks, Robert.

Mark LaVigne: Thanks, Robert.

Speaker #1: Your next question comes from the line of Andrea Teixeira, JPMorgan. You may begin.

Kathleen: Your next question comes from the line of Andrea Teixeira, JPMorgan. You may begin.

Operator: Your next question comes from the line of Andrea Teixeira, JPMorgan. You may begin.

Andrea Teixeira: Thank you, everyone. Good morning. I was just hoping to see the 480 basis points that you had as a help for the quarter. It has obviously other quarters in from the tariff refunds. How much it was in this quarter or the Q2 fiscal, just to think about like how the normalized gross margin would be. Related to that also, I know commodities even though you have some important commodities, but they don't represent a lot. Just thinking how we should be thinking, I think transportation is part of your costs, but you have a quite valuable cargo, like for the, you know, for the weight of it.

Speaker #8: Thank you, everyone. Good morning. I was just hoping to see the $480 basis points that you had as a help for the quarter. It has obviously other quarters in from the tariff refund.

Speaker #8: How much was it in this quarter or the second fiscal quarter, just to think about how the normalized gross margin would be? And then related to that, I know commodities—even though you have some important commodities—they don't represent a lot.

Speaker #8: But just thinking how we should be thinking. I think transportation is part of your COGS, but you have a quite valuable cargo for the weight of it.

Speaker #8: So just thinking how to think in your outlook how we incorporated and if you can pinpoint the amount that you incorporated for the headwind in commodities and transportation.

Andrea Teixeira: Just, just thinking how to think in your outlook, how we incorporate it and if you can pinpoint the amount that you're incorporating for the headwind in commodities and transportation. As I'm sure you know, all the other HPC names kind of called out some impact already in the outlook. I know it might be more kind of like a fiscal 2027 conversation. If you can give us like a little bit of a normalized margin going forward, that'd be great. On the battery side, the category, as you said, like it's improving over the last few quarters.

Speaker #8: And then as I'm sure you know, all the other HPC names kind of called out some impact already in the outlook. I know it might be more kind of like a fiscal 27 conversation, but then if you can give us a little bit of a normalized margin going forward, that would be great.

Speaker #8: And then on the battery side, the category, as you said, it's improving over the last few quarters. Just thinking of how Amazon sales have been trending and private label, as you said, consumers maybe a bit more cautious, but by the same token, you had a very good job kind of creating that premiumization factor, the new packaging.

Andrea Teixeira: Just thinking of how like Amazon sales have been trending and private label, as I said, you know, consumers may be a bit more cautious, but by the same token, you had a very good job kind of creating that premiumization factor, the new packaging. How to think about your value share against private label and how they would pass through these cost pressures as you hear what you see in the trade? Thank you.

Speaker #8: So how to think about your value share against private label and how they would pass through this cost pressures as you hear what you've seen in the trade.

Speaker #8: Thank you.

Speaker #4: All right, Andrea, you win for squeezing in the most topics in the question. Let's get started. And I'm sure we're going to have to double back on some of them.

Mark LaVigne: All right, Andrea, you win for squeezing in the most topics in a question. Let's get started, I'm sure we're gonna have to double back on some of them. Let's, let me start with a little bit on 27. Like, it's just too early for us to call anything related to fiscal 27, as you can appreciate. Things are changing in a relatively rapid way. Take a step back. We are seeing what's happening in terms of any volatility related to our business. We're gonna approach it the way we have the last 3 years, which is part of why we included those slides in the deck we did today. We're gonna work to offset any inflationary pressures that we're feeling with cost initiatives.

Speaker #4: But let me start with a little bit on 27. It's just too early for us to call anything related to fiscal 27 as you can appreciate.

Speaker #5: Things are changing in a relatively rapid way. We're going to approach it, but take a step back. So we are seeing what's happening in terms of any volatility related to our business.

Speaker #5: We're going to approach it the way we have the last three years, which is part of why we included those slides in the deck we did today.

Speaker #5: We're going to work to offset any inflationary pressures that we're feeling with cost initiatives. We're going to leverage the flexibility that we've built into our network over the last three years.

Mark LaVigne: We're gonna leverage the flexibility that we've built into our network over the last three years. Obviously, we'll take a look at pricing as it might become required because of those. Too early to call 2027. I think for purposes of 2026, we're largely locked. Any of the margins that we're talking about today have largely reflected any input cost variation that we've experienced over the course of this year. In terms of the battery category question, in terms of private label, private label, again, I think as would be expected in this environment, is gaining a little bit of share. It is isolated at fewer retailers. It's not broad-based.

Speaker #5: And then obviously, we'll take a look at pricing as it might become required because of those too early to call 27. I think for purposes of 26, we're largely locked.

Speaker #5: And so any of the margins that we're talking about today have largely reflected any input cost variation that we've experienced over the course of this year.

Speaker #5: In terms of the battery category, question in terms of private label, private label, again, I think as would be expected in this environment is gaining a little bit of share.

Speaker #5: It is isolated at fewer retailers. It's not broad-based. Our portfolio gives us an advantage and we certainly are having a lot of success leveraging our value brands.

Mark LaVigne: Our portfolio gives us an advantage, and we certainly are having a lot of success leveraging our value brands so that we can meet consumers where they are, including Rayovac and Eveready. We've had some nice distribution wins over the last couple of quarters where we are successfully leveraging the value brands in lieu of private label with certain retailers to be able to capture that demand. I think we're having great success. I think the categories where we are doing that with our retailers are benefiting from that. As a result, you know, we're gonna continue to lean in. Private label will always have a role in the category. It's something that we don't take lightly, and we make sure that we invest to keep consumers invested with brands.

Speaker #5: So that we can meet consumers where they are, including Rehoback and Everetty. And we've had some nice distribution wins over the last couple of quarters where we are successfully leveraging the value brands in lieu of private label in certain retailers to be able to capture that demand.

Speaker #5: And I think we're having great success. And I think the categories where we are doing that with our retailers are benefiting from that. And as a result, we're going to continue to lean in.

Speaker #5: Private label will always have a role in the category. It's something that we don't take lightly and we make sure that we invest to keep consumers invested with brands.

John Drabik: Let me shoehorn a couple of answers into that, Mark. Going back to the tariffs and kind of what a normal run rate is. Andrea, we continue to incur tariffs, you know, at roughly a consistent rate with how we entered the year. That's something like $15 million a quarter based on what we know right now, or $60 million on a yearly basis. Obviously, a lot of moving, you know, ins and outs through the first 3 quarters this year. I think what we would point to is Q4 should be relatively clean. It should be kind of that $15 million tariff hit with no offsets from any sort of, you know, receivables, so any of those credits.

Speaker #5: Let me shoehorn a couple of answers into that, Mark. So going back to the tariffs and kind of what a normal run rate is.

John Drabik: Let me shoehorn a couple of answers into that, Mark. Going back to the tariffs and kind of what a normal run rate is. Andrea, we continue to incur tariffs, you know, at roughly a consistent rate with how we entered the year. That's something like $15 million a quarter based on what we know right now, or $60 million on a yearly basis. Obviously, a lot of moving, you know, ins and outs through the first three quarters this year. I think what we would point to is Q4 should be relatively clean. It should be kind of that $15 million tariff hit with no offsets from any sort of, you know, receivables, so any of those credits.

Speaker #5: Andrea, we continue to incur tariffs at roughly a consistent rate with how we entered the year. So that's something like 15 million dollars a quarter based on what we know right now or 60 million dollars on a yearly basis.

Speaker #5: Obviously, a lot of moving ins and outs through the first three quarters this year. I think what we would point to is, fourth quarter should be relatively clean.

Speaker #5: It should be kind of that 15 million dollar tariff hit with no offsets from any sort of receivables any of those credits. So as we kind of get to the end of the year, we think it's much more normalized.

John Drabik: As we kinda get to the end of the year, we think it's much more normalized, and we're looking at a gross margin rate kind of in the low 40s at that point. We think we've been able to at least, you know, for this year, feel really good about getting a lot of those inefficiencies out, you know, kinda normalizing the tariffs, pulling the levers that we can, and getting back to a nice gross margin run rate at the end of the year.

Speaker #5: And we're looking at a gross margin rate kind of in the low 40s at that point. So we think we've been able to at least for this year feel really good about getting a lot of those inefficiencies out, kind of normalizing the tariffs, pulling the levers that we can and getting back to a nice gross margin run rate at the end of the year.

Speaker #8: No, I understand. Yeah. No, I just like the just specific the 48 million that you had as a credit. How much it was the second quarter itself.

Andrea Teixeira: No, I understand.

John Drabik: What are we missed?

John Drabik: What have we missed?

Andrea Teixeira: No, like just specific, the $48 million that you had as a credit, how much it was the Q2 itself of the $48?

Andrea Teixeira: No, like just specific, the $48 million that you had as a credit, how much it was the Q2 itself of the $48 million?

Speaker #8: Of the 48.

Speaker #4: Yeah. So we actually booked a receivable for 65 million. We're getting about 75% of that coming into the P&L on the second quarter, which is at 48 or so.

John Drabik: Yeah. We actually booked a receivable for $65 million. We are getting about 75% of that coming into the P&L in Q2, which is that 48 or so. The rest of it will flush through most likely. We have written down inventory, and that will flush through the P&L in Q3.

Speaker #4: And then the rest of it will flush through most likely. We've written down inventory and that will flush through the P&L in Q3.

Speaker #1: And your next question comes from the line of Brian McNamara of Canaccord. Please go ahead.

Kathleen: Your next question comes from the line of Brian McNamara of Canaccord. Please go ahead.

Operator: Your next question comes from the line of Brian McNamara of Canaccord. Please go ahead.

Speaker #9: Hey, good morning, guys. Thanks for taking the question. I think we touched a little bit on part of the question I wanted to ask here, but more broadly, I think you guys are the first company, at least that I cover, that has received tariff refunds. So, would you expect some of the tariff-related pricing you've taken to be subsequently clawed back given this dynamic?

Brian McNamara: Hey, good morning, guys. Thanks for taking the question. I think we touched a little bit on part of the question I wanted to ask here. More broadly, I think you guys are the first company that, at least that I cover, that has received tariff refunds. Would you expect some of the tariff-related pricing you've taken to be subsequently clawed back given this dynamic?

Speaker #4: So let me clarify there, Brian. We have not gotten any refunds yet. We're booking a receivable. It's a long-term receivable. So our view is that our portfolio of IEPA tariffs was relatively clean.

John Drabik: Let me clarify there, Brian. We have not gotten any refunds yet. We're booking a receivable. It's a long-term receivable. Our view is that, you know, our portfolio of IEPA tariffs was relatively clean. You have the Supreme Court ruling. You know, based on everything that we understand around the process, we feel like we are in good shape to go get this money back. Realizability is not in question. It's really just a matter of process and timing. We are booking the receivable. We're not changing our, you know, cash flow outlook for the year. Again, it's a longer-term receivable, so we would expect to get that, you know, sometime out into the future, the actual cash back.

Speaker #4: You had the Supreme Court ruling. Based on everything that we understand around the process, we feel like we are in good shape to go get this money back.

Speaker #4: So realizability is not in question. It's really just a matter of process and timing. So we are booking the receivable. We're not changing our cash flow outlook for the year.

Speaker #4: Again, it's a longer-term receivable. So we would expect to get that sometime out into the future, the actual cash back.

Speaker #5: And Brian, I mean, we'll constantly have pricing discussions with our retailers, but just to level set, when you go back to last year, I mean, the vast majority of the pricing we took last year it was before the IEPA tariffs were put in place.

Mark LaVigne: Brian, I mean, look, we'll constantly have pricing discussions with our retailers, but just to level set, when you go back to last year and the vast majority of the pricing we took last year, it was before the IEPA tariffs were put in place. We didn't then double back and take additional rounds of pricing as IEPA came into place. There wasn't a pricing justification based on IEPA as we went through the pricing discussions last year.

Speaker #5: And so we didn't then double back and take additional rounds of pricing as IEPA came into place. So there wasn't a pricing justification based on IEPA as we went through the pricing discussions last year.

John Drabik: Yeah. I would point that you would see that in our gross margins that we generated in Q4, Q1 this year and, you know, would have been in Q2, that those IEPA tariffs really were not offset by pricing.

Speaker #9: I would point that you would see that in our gross margins that we generate in Q4, Q1 this year. And it would have been in Q2 that those IEPA tariffs really were not offset by pricing.

Speaker #10: Okay. Great. And then secondly, on consumer health, can you opine kind of what you have observed from higher tax refunds obviously in the season and then any notable detriment from higher gas prices?

Brian McNamara: Okay, great. Secondly, on consumer health, can you opine kind of what you have observed from, you know, higher tax refunds, obviously, in the season and then any notable detriment from higher gas prices? Were they on that positive, neutral or negative as you see it?

Speaker #10: Were they a net positive, neutral, or negative as you see it?

Mark LaVigne: I would say, the consumer tends to just continue to be in a cautious posture. I think the maybe the increased tax refunds that consumers are seeing is bolstering them a little bit. A lot of that is likely eating away at the price of fuel, that they're having to pay today. I don't think the consumer has moved in a meaningful direction because of tax refunds, or necessarily because of the price of gas. I think they've offset each other. I still think the longer the consumer continues to be in that cautious posture, the more likely it is they're gonna start to engage in different behaviors or change their spending habits. It's a duration issue as well for the consumer.

Speaker #5: I would say the consumer tends to just continue to be in a cautious posture. I think the maybe the increased tax refunds that consumers are seeing is bolstering them a little bit.

Speaker #5: A lot of that is likely eaten away at the price of fuel that they're having to pay today. So, I don't think that the consumer has moved in a meaningful direction because of tax refunds.

Speaker #5: Or necessarily because of the price of gas. I think they've offset each other. But I still think the longer the consumer continues to be in that cautious posture, the more likely it is they're going to start to engage in different behaviors or change their spending habits.

Speaker #5: And so it's a duration issue as well for the consumer. So they're hanging in there, they're resilient, they're still spending money. But they are willing to change behaviors and they're seeking value in order to get what they need.

Mark LaVigne: They're hanging in there, they're resilient, they're still spending money, but they are willing to change behaviors, and they are seeking value in order to get what they need. That's what I mentioned earlier, which is they'll switch channels, retailers, brands, pack sizes in order to meet the needs that they have.

Speaker #5: And that's what I mentioned earlier, which is they'll switch channels, retailers, brands, pack sizes, in order to meet the needs that they have.

Speaker #1: And your next question comes from the line of William of Bank of America. Please go ahead.

Kathleen: Your next question comes from the line of William of Bank of America. Please go ahead.

Operator: Your next question comes from the line of William of Bank of America. Please go ahead.

Speaker #11: Good morning. I just have two. The first one, the guidance, does that now include not only the 48 million credit that you got in the second quarter, but also the remaining I guess it would be 2024 million that you expect will hit the P&L for the remainder of the year of that receivable?

William Reuter: Good morning. I just have two. The first one, the guidance, does that now include not only the $48 million credit that you got in Q2, but also the remaining, I guess it would be $24 million that you expect, will hit the P&L for the remainder of the year of that receivable?

[Analyst] (Bank of America): Good morning. I just have two. The first one, the guidance, does that now include not only the $48 million credit that you got in Q2, but also the remaining, I guess it would be $24 million that you expect, will hit the P&L for the remainder of the year of that receivable?

John Drabik: It does include the entire amount. It should be like $16 or $17. It'd be a $65 total.

Speaker #5: It does include the entire amount. It should be like 16 or 17. It'd be a 65 total.

Speaker #11: Okay. 65 is total, not 72. I must have just heard that incorrectly.

William Reuter: Okay. 65 is total, not 72. I must have just heard that incorrectly.

[Analyst] (Bank of America): Okay. $65 is total, not $72. I must have just heard that incorrectly.

Speaker #5: Yeah. 65.

John Drabik: Yeah. 65.

John Drabik: Yeah. $65.

Speaker #11: Got it. And then have you just my follow-up to that. Have you you mentioned that you guys have an understanding of the process. I have no clue.

William Reuter: Got it. Just my follow-up to that, you know, you mentioned that you guys, you know, have an understanding of the process. I have no clue if there's any dialogue that goes back and forth between those that have filed their refund requests and the governmental entities that will be paying those. Do they provide any color on when you actually may receive funds?

[Analyst] (Bank of America): Got it. Just my follow-up to that, you know, you mentioned that you guys, you know, have an understanding of the process. I have no clue if there's any dialogue that goes back and forth between those that have filed their refund requests and the governmental entities that will be paying those. Do they provide any color on when you actually may receive funds?

Speaker #11: If there's any dialogue, that goes back and forth between those that have filed their refund requests. And the governmental entities that will be paying those.

Speaker #11: Do they provide any color on when you actually may receive funds?

Mark LaVigne: Not at this point. I think right now there's a process that's opened up. There's a tool that they've implemented in North Porter for people to submit their refunds. They're in phase 1. We would be in phase 2 of that refund process. As John mentioned earlier, our refund analysis is pretty clean. We wouldn't expect a lot of back and forth. As soon as the portal opens for us to submit, we'll submit, and we'll start the process. I'm happy to have any dialogue along the way to clarify.

Speaker #5: Not at this point. I think right now the there's a process that's opened up. There's a tool that they've implemented in order for people to submit their refunds.

Mark LaVigne: Not at this point. I think right now there's a process that's opened up. There's a tool that they've implemented in North Porter for people to submit their refunds. They're in phase I. We would be in phase II of that refund process. As John mentioned earlier, our refund analysis is pretty clean. We wouldn't expect a lot of back and forth. As soon as the portal opens for us to submit, we'll submit, and we'll start the process. I'm happy to have any dialogue along the way to clarify.

Speaker #5: They're in phase one. We would be in phase two. Of that refund process. As John mentioned earlier, our refund analysis is pretty clean. So we wouldn't expect a lot of back and forth.

Speaker #5: But as soon as the portal opens for us to submit, we'll submit and we'll start the process. I'm happy to have any dialogue along the way to clarify.

Speaker #5: And then in terms of when the refunds actually get processed and issued, I still think that's an open question. Which is why we've kind of had the position of the right to recovery is not in question, but the process and the timing is a little open.

Mark LaVigne: In terms of when the refunds actually get processed and issued, I still think that's an open question, which is why, you know, we've kinda had the position of the right to recover is not in question, but the process and the timing is a little open, and we're gonna continue to work that process and see if we can receive the funds as soon as possible.

Speaker #5: And we're going to continue to work that process and see if we can receive the funds as soon as possible.

Speaker #11: Got it. Okay. All right. That's all from me. Thank you.

William Reuter: Got it. Okay. All right. That's all for me. Thank you.

[Analyst] (Bank of America): Got it. Okay. All right. That's all for me. Thank you.

Speaker #1: As a reminder, if you wish to ask a question, please press star one to join the queue. And there are no further questions this time.

Kathleen: As a reminder, if you wish to ask a question, please press star one to join the queue. There are no further question at this time. I will now turn the call back over to Mark LaVigne. Continue.

Operator: As a reminder, if you wish to ask a question, please press star one to join the queue. There are no further question at this time. I will now turn the call back over to Mark LaVigne. Continue.

Speaker #1: I will now turn the call back over to Mark LaVigne. Continue.

Speaker #5: Thank you all for joining us today. Hope you all have a great rest of the day.

Mark LaVigne: Thank you all for joining us today. Hope you all have a great rest of the day.

Kathleen: Ladies and gentlemen, this concludes today's call. Thank you everyone for joining. You may now disconnect.

Operator: Ladies and gentlemen, this concludes today's call. Thank you everyone for joining. You may now disconnect.

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