Yeah, that's a good number. Obviously, we always say never overreact to one quarter. The first quarter is just slightly negative. Our mindset is to drive volume growth, and we do drive positive mix. This year, we do have the benefit of the portfolio, and that will be a benefit all year.

Yeah, and I'd probably say in the quarter, when we don't spend as much on promotion on laundry, that helps year over year a little bit on the price side of it, too.

Great. Thank you.

Your next question comes from the line of Bonnie Herzog with Goldman Sachs. Your line is open. Please go ahead.

All right. And good morning, everyone. I just had a question on your improved outlook for the year. You took up your top line growth guidance by a point and now expect higher gross margins. And while you did raise the lower end of your EPS growth guidance, you kept the high end of the range. So I wanted to understand the drivers of that. and maybe how much further you plan to step up reinvestments to drive sustainable top-line growth ahead. Also, if you could provide some examples of these investments and any changes you might be making to your strategy, given the pressured macro environment would be helpful. Thanks.

Yeah, thanks, Bonnie. It's a good question. I would say, look back at our track record over the last 1, 3, 5, 10 years. What do we do when we feel like we're over delivering and performing well against our expectations and against the industry as we tend to spend back? Like we could in theory beat earnings and EPS in any one year, but we choose to spend more on marketing or we spend more on investments. And so we want to make sure that fly the wheel is going, that virtual cycle happens and we keep gaining share and shelf space and support the innovations that we're launching um we all so beyond marketing we're also going to spend we've also started to spend money behind ai and there's some initiatives we have in place we're uh we're going to pull some of those forward as an example uh so that we can scale faster you know one of our core competencies and i think competitive competitive advantages is really our speed and agility and so we're going to go try to adopt and adapt faster than most people.

All right. Thank you for that. I'll pass it on.

Your next question comes from the line of Peter Grom with UBS. Your line is open. Please go ahead.

Great. Thank you. Good morning, everyone. So you mentioned that consumption in your largest category that I think grew 2.7% in the quarter above your expectation for 2%. So, you know, obviously a lot of moving pieces within the quarter itself.

So kind of curious if you could speak to what you saw throughout the quarter maybe more specifically the exit rate and just kind of as you think about the back half of the year what are you embedding in terms of yeah i mean the short answer is uh we're still um still assuming around two percent for category growth we we continue to do better than that uh as you saw in the last couple quarters i think that's a good in general walking around number for a while. Monthly consumption numbers in Q2 were just fantastic. June was also good with the exception of laundry as we didn't repeat some promotions in laundry. Sometimes we choose to do that. We also had a club promotion that we didn't do at the uh in in the quarter as well so i would say we did that fantastic growth without really uh with flattish um impact from from one of our larger larger businesses so i'm i'm just again um consumption is going really well uh shares are doing really well it's broad-based to my first answer to kind of repress this question early on uh so there there are a lot of things that are going right. So this is the right time for us as a company, especially because we're not distracted with some of those businesses that we've sold, Peter. We have the time to focus on the future. And so we're laying the groundwork for those three growth initiatives that we've talked about again and again and again. So a lot of internal time is being spent on the future right now.

That makes sense. And then, you know, Rick, you mentioned we're going to get some more color at a later date, but you did say that you were more optimistic than ever. And I guess just looking at the guidance and the 4Q implied exit rate would suggest a pretty nice momentum heading into next year. So maybe putting that all together, can you maybe just discuss why you are as optimistic as you've ever been and maybe what that means as it pertains to top and bottom line growth?

Yeah, I don't know if I'll go to top and bottom line growth yet, but I'll tell you, we're doing all this category work at Arm and hammer. We're getting real consumer feedback. We're getting real good buy-in from some retailers on the ideas. We're making great progress on how and why they have a reason for being and have a right to win in a certain category. It's obvious why we're happy about TheraBreath and its success. And meanwhile, internationally, that brand, along with Hero, is really developing a business of tens of millions of dollars. So there's good global expansion going on. And the third growth initiative was really international growth. And a piece of that is international M&A. And we've been talking a lot over the past few years about, hey, we have people here now, we have a process here now, but it's starting to go from theoretical to practical. And we've filtered through 100 deals over the last, you know, six to 12 months now internationally. And so we're being as picky and as fussy as we always would be with any deal. But now we're starting to see the deal flow, which is great. So those are some examples.

Great. Thank you so much. I'll pass it on.

Your next question comes from the line of Olivia Tong with Raymond James.

Great. Thanks. Good morning. Regarding the competitive backdrop, you mentioned, you know, the promotional environment, everyone's obviously talking about their various investments in affordability. I realize this isn't new to you, though. Perhaps there are more tools out there now, whether it's leveraging retail relationships, AI, and other tools. So to the extent that your competitors continue to invest in some of the affordability initiatives that they're pushing, can you provide a little bit more in terms of how you think about combating those particularly if they start to continue to increase?

Yeah, I think it's a fair question, Olivia. I would just tell you, though, like look at our track record over the last not one or five, but decade or two of how we compete in household, right? And we have a great ability to do that. And sometimes it's trade promotion, hopefully, usually it's innovation, hitting the right price pack architecture and sizing. You want to deliver, like I said in my remarks, a great high quality at a value price for the consumer. And it just so happens that our brands are the intersection of that naturally. And so they have to, competitors have to compete a lot harder than we do because we naturally fall in those intersections.

Got it. And then on Ms. Mouth, sort of similar to Hero, TheraBreath, Touchland, I know it's early days, but what do you think Ms. Mouth can bring to you in terms of discussions with new retailers, new categories, geographic opportunities as you sort of assess the ability to grow that business beyond where it sits right now?

Yeah, it has the ability to do all that. When really you have a brand that's driving category growth, driving usage occasions, driving new consumers and young consumers of that into the category, it has a magic moment. It's actually not even the same consumer as OxiClean. know oxyclean's a little bit more broader base but um but miss mouth is it's really uh a higher end and and uh and just a a great see something do something in terms of the stain um it is i don't want to get into too much detail i would just say it is additive for every retail conversation that we have, and we're working hard to not just do current capacity, but also what the future of that brand and where it has the right, where consumers say it has the right to go, because it's going to continue to broaden on forms and maybe even adjacencies.

Understood. Thank you.

Your next question comes from the line of Steve Powers with Deutsche Bank. Your line is open. Please go ahead.

Hey, great. Good morning, guys. To start, you know, I think year-to-date, Rick, the consumption that you've put, I mean, the results you put up around to, you know, 5% volumetric shipments, both for the total company and I think even in the consumer domestic business, I guess. How does that compare to your views on consumption year-to-date, and how does that inform your back-half thinking? And, I guess, juxtaposed against that, you know, it sounds like you made some choices this quarter that, you know, benefited the price mix line that seemed kind of unique to the quarter. So I guess as I think forward, do we see sort of a return to more full promotional stance in the back half as well?

Yeah, I would say consumption and our organic, there is no real disconnect. It's around 5% or so on both. So there's great momentum that we experienced in the first half. In the second half, we expect a lot of that to continue. I think we pulled the data on the two-year stack as an example, and the two-year stack for organic growth is 5% in the first half and 6% in the second half. So, again, just really broad-based, more than just one thing going on as a tailwind for the company. And you're right. I kind of referenced a little bit, maybe a bit of a pullback in promotion that we had. I wouldn't even say a pullback. I'd say we were at a certain level and there was an acceleration by other competitors. uh so i don't know about a year over you know much year-over-year change from a price mix perspective but a little bit from help from laundry um but there are other things happen in the portfolio you know as as we have these higher margin products like a therabreath or like a hero or uh even like a missed mouth as they continue to grow that's going to be a favorable flow on on mix uh lee anything you would add to that yeah i mean i think eric said it well i mean we focus on volume growth if you look at our history you know it's just a little bit slightly

higher in in the second quarter that's some of that's a little bit of year over year so you look forward that's going to be the equation it's going to be volume driven um and you know we'll benefit from the things we talked about you know the way we're positioned we you know we we will do what we do on discounting but we don't have to do as much as the others do perfect perfect and then rick i was hoping you could talk a little bit more about international m&a um as you said you've been talking about it for a while it seems from your from the way you're talking about it now the excitement is is building anticipation is building but i guess as you have you learned anything in terms of um i mean the opportunity has been there on paper for a long time but it's also you know take a little while to manifest in a transaction is it if you learned anything

in terms of where it's harder just um or not just any perspective on kind of the opportunities you see it today versus when you set out to focus on this initiative yeah I know I think we were busting our pick on it for a little while and it was all about people and structure it wasn't a bad approach but we initially we added you know M&A people and a person in Europe for example and and I would say it was a little bit disconnected from the management teams and it was almost like Center of Excellence on M&A. We changed that approach about six to eight months ago. And we said the management teams are responsible, and the M&A person supports that. And so all of a sudden the international management teams, you know, the country director and his or her staff, you know, Australia, the same thing, and Southeast Asia, the same thing, and Latin America, the same thing, you have a right to go and an obligation to go look at not just what you hear from the bankers or for our M&A contact, but where do you want, what brands would you like to go and look at? And that has, when we made it, I guess, their objective and they owned it, I'd say that was the unlock for us.

And of course, our M&A team is enabling and helping, but I think we went into like you know went right from first to third gear since we did that yeah perfect thanks so much pass it on your next question comes from the line of lauren lieberman with barclays your line is open please go ahead great thanks um so i had two questions first was um at the risk of being redundant so i got a little bit confused on the way um on chris's question and the answer was just the gross margin this quarter I know you gave the bridge but in total it did come in below your expectations and there wasn't a huge change on the inflation guide as you guys pointed out so just curious on the slight shortfall on gross margins this quarter and then my second question was just about how tech land is trending we've been sliding into organic sales going forward from here so just wanted to get an update on that brand thanks take the first question And, yeah, just to answer the question, we had just slightly higher transportation costs in the second quarter for the year.

You know, we're still at $30,000.

And then on Touchland, I think my comments were really, we had sales growth in the second quarter. We have a lot of back half-weighted innovation, new collaborations with other brands and some activations up and down the channel. we expect sales growth in the second half of the year and and then we have a lot of work going on an innovation into as we said before another category or two and some other distribution opportunities plus international expansion I think that's also that we've built really well through these brands now takes a little bit regulatory perspective that that's going to start hitting in 2027 as well. So that should be a tailwind. Okay, we'll take the next question.

Your next question comes from the line of Javier Escalante with Evercore ISI. Your line is open. Please go ahead.

Hi, good morning. I guess the punchline in laundry is that Aran Hammer is holding share without promoting or promoting less while the others promote, but I don't know whether I heard this correctly because it sounded like a big number, but did you say that Henkel increased promotional activity by how much? Yeah, I said a lot better basis points. Okay. So that's high. So what does it mean right now, given how the oil is trending? Have you seen any change, given that the category is so slow? So if you can clarify that a little bit.

Yeah, no, it's a good question, Javier. And look, I think I said last quarter, like when commodities are high and they stay high for a while, what tends to happen? Promotion tends to kind of dial back a bit. That is not what happened this past quarter. You know, my belief is a lot of people got tariff refunds and they're spending it back and trying to drive volume. The good news for us is, again, Arm & Hammer is at that intersection of value and just quality. And we don't need to promote as much in order to hit that kind of price point. And so we held share, which is fantastic. And as we increase promotion a little bit at historical levels, of course, I tend to think that we're going to continue to do what we've done for the last 15, 20 years, is gain share and arm and hammer year after year.

Thank you. And my second one is in cat litter. You know, continue doing really well. You mentioned in Q1 that you got the strongest TDP growth in HPC, and we are seeing it. So heading into back to school, any change in distribution, particularly in this business, if you can comment on that, thank you.

Yeah, I would say litter is doing extremely well. To have 7.5% consumption growth and almost a full share point gained is great. And we're doing that the right way. We're doing that the way we've always done it, which is innovation. Arm and hammer cat litter is just known for innovation. Our new one this year on dual defense with microband is a great example of that. And, you know, some competitors are spending a lot. We're within historical levels, and we're doing all the right things. And we've talked before about, you know, some of the attributes of why Armin Hammer does so well. We have, you know, the orange box. We have the black box. We have premium value. So, just, again, litter is doing great.

Thank you. your next question comes from the line of robert moscow with td cowen your line is open please go ahead okay thank you um one of the many uh positive surprises here is there's no mention of retailers reducing inventory in your categories uh so my first question is uh how do you think you you dodged that bullet do you think it's because of the categories or do you think it's just because you in particular have the right inventory levels. And then I had another question on Touchland. You mentioned that it grew, but there's not a lot of commentary on how much it grew. Is the pace of growth decelerating compared to first order? Can you be more specific for us? Thanks.

Yeah. Let's see. The first question is on retail inventory. Look, if you look back at of all of our transcripts probably for the last 10 or 15 years we've talked about retail inventory maybe two or three times and two of those times were earlier in 2025 there's all these dynamics that are happening with retail inventory but we never believe they are impactful enough for us to comment on or something that we can't overcome so there's there's I would say some movement, but overall immaterial. The second one is on Touchland. I would say the business is growing. Our outlook for that is probably high single digits these days, but again, we're really comforted by the fact that we have this great innovation lineup we have this great um collab lineup coming a lot of the the support that we have in the back half with displays from these retailers so um yeah so touchlin uh continue to be optimistic about it okay thanks your next question comes from the line of filipo filorne with city your line is open please go ahead hi good morning everyone um i

I want to talk about the international business, solid performance there. It's now, like, continuing to deliver on pretty tougher comparisons. Maybe can you give us a sense of what regions are driving the growth there, where you're seeing the strength?

And then the second part of the question, as you think about the opportunity for some of the recent acquisitions like Terra Bread, Hero, Touchland, how much more opportunity do you see for expansion of those brands internationally? thank you yeah i'll take the brand one and then i'll let lee talk about kind of the countries and the regions but um we are still in early innings uh for a baseball analogy for therabreath and hero and very early for touchland i think we're hitting we're hitting number one share positions in many many countries all over the world we have great retail retailer discussions about how we're growing kind of the acne category with Hero. Of course, the mouthwash rollout is a little bit slower than the acne rollout, but they're both doing extremely well. And once they get in market, these brands, because they're a problem solution, because consumers can see them working, because they're premium brands for retail, they're driving category growth. Once they're in market, it starts to become kind of a virtuous cycle.

Certainly, you know, Hero, Therabreth, Batiste was a great driver in the quarter for us. And then, you know, if you think about that, you know, taking those, we're taking those across the globe. That's what we do really well. So, you know, you ask, like, you know, which part's doing well? Quite frankly, very broadly, you know, Europe, for example. Europe, as an economy wants to be slower, you know, we're growing at the levels you see at the total level here. Doing really well in Asia and Latin America as well. So you said this in the first quarter. First quarter had a little bit of impact in the Middle East. You take it out, it was growing towards mid to high single digits. The outlook for the business is to be high single digits. That's what it is in the evergreen model. And it was great to see another strong quarter from that.

Great. Thank you, guys.

Your next question comes from the line of Andrea Texera with J.P. Morgan. Your line is open. Please go ahead.

Thank you, operator. Hi, everyone. I just wanted to go back to what you mentioned about CDPs, Rick, in one of the categories, but I was hoping to see if you can explore a little bit of the CDPs on the laundry side and how we're cycling that. And you just say that you're not engaging, your promo levels are below, just curious and you're still getting share, just curious to see the volume, if you think about like volume share, if you can talk about that, and as well as like how to think about CDPs for laundry and in general in the U.S. for the remainder of the year. And when you're cycling that, you see that cycling some of the CDP growths into next year, or you're cycling some of it like in the third quarter. Thank you.

Yeah, so thanks, Andrea. You know, really remember last quarter we kind of talked about our industry-leading TDP growth and it was I want to say around 11 or 12 percent and most the industry average was at five or six percent so we were double what most people were getting and at the time when we talked about TDP growth I said it was very broad based it was across brands and across channels and that was entirely true so I think laundry I don't have it in front of me but I would guess it was high single digits for for arming hammer. So that all was kind of towards the front part of the year. So it takes a while for that to reset. But so that's, you know, into next year is what I would say all those TDP results help with.

Go to the next question.

Your next question comes from the line of Edward Lewis with Brookshire. Your line is open. Please go ahead.

Thanks very much. Yeah, just a couple from me, please. Reckon Lee, just on Batiste, I guess one of your power brands, It's a bit of a tricky 25 for you in the U.S. And you call that strength in the international. But I just wondered how things are going in the U.S. for Batiste. Is it a category challenge you're facing there or is it more of a brand challenge? And then I think you went live on the ERP, didn't you, in April. And looking back at what sort of you talked about or on the Invest today, talked about it being an engine of growth in the future, at least Ray did there, who are implementing it. And I just wonder, Rick, is, you know, the clear optimism you feel about the outlook for the business, how much does this new sort of upgraded ERP sort of feed into that optimism?

Yeah, thanks, Ed. So for Batiste, we've talked about this. It's really a tale of two cities. Batiste internationally is doing phenomenally well. It's growing double digits. It's one of the main drivers of growth behind TheraBreath and Hero, behind innovation, the right pricing strategy. Our international Batiste business is doing extremely well. Batiste in the U.S. is growing. We're growing a little short of the category. Category grew 5.5%. We grew closer to 2% from consumption. So we lost a little bit of share, 1.44%. That was closer to four or five share points in prior quarters. We were making great headway on Batiste. I've seen the inflection. I'm not worried about Batiste. We have a great set of actions that are already in market or lined up for market in late this year, early next year on sizes and offerings and price-packed architecture. So we have some great innovation queued up and just a lot of confidence in the Batiste brand. So that's not something I really worry about long term. The ERP system, you know, I think it's an underappreciated fact that we have a North American ERP system. And so as we do acquisitions, it is one of the things that enables us to do acquisitions so flawlessly and seamlessly. And just to give you a real-life example, we closed on Miss Mouth, I think, around June 1st or so, and we're going to be fully integrated by end of August. Like, that is lightning fast, even for us. And so that capability is, I think, again, just a great advantage for us. Question, please?

Your last question comes from the line of Kevin Grundy with BNP Paribos. Your line is open. Please go ahead.

Great. Thanks, everyone. Two questions for me, Rick, related to the pricing environment, where it would certainly seem like the cost environment and cost inflation we're seeing would justify additional pricing. So a lot of discussion about brand strength broadly from church and from some of your peers, but it doesn't seem like in certain cases that the industry is looking at pricing as a lever to offset the cost of inflation where there's a clear justification for that. Like for Procter, it's a more premium portfolio than you. Clorox, sort of well-documented what's going on from a market share perspective. So I'm just trying to square some of the brand strength discussion and what would certainly appear to be a clear cost justification for additional pricing in this backdrop of a softer consumer environment, particularly in household products, and some of the decisions not to take additional price and what's different in the current environment versus past where the industry seems more inclined to move on price. So just your thoughts there, Rick, on retailers' openness for additional price in your portfolio, how you're thinking about it for church, and what you've included in your outlook.

Yeah. Thanks, Kevin. You know, my answer doesn't really change a lot from what I talked about last quarter. And I think in this environment, consumers are pressed. And we see that. Like, when you see stuff go on promotion, you know, I would say elasticities are higher than they normally would be. So consumers are pressed. And so our job is to help offset that as best we can. And we said last quarter we were going to do that with productivity, and we were fighting hard to do that, and we've largely done that, which is great. We said that if we couldn't do that, and this inflationary environment stays higher for longer, then we would look at pricing eventually. And that's still true. We believe, we hope, that this higher inflation environment isn't permanent. But meanwhile, we're fighting it with productivity. We're fighting it with trade and promotional optimization. And so far, we're winning. I mean, look at our gross margin expansion as an example. I think a lot of our peer groups are going backwards on margin. So for a long time, typically what you see is when inflation happens, promotional levels abate as a first step. That's not what's happening right now. Like I said before, I believe that a lot of tariff rebates are happening, you know, from retailers and to other manufacturers, and they're competing that away a bit. So that has to play out a bit, Kevin, is my short answer to you. But we're in a great position to win either way thank you there are no further questions at this time i will now turn the call back to mr rick durker for closing remarks okay thanks everyone uh looking forward to talking again uh in the third quarter and uh meanwhile have a great rest of the summer bye this concludes today's call thank you for attending you may now disconnect