Helen of Troy Limited

Greetings. Welcome to the Helen of Troy Limited's first quarter fiscal 27 earnings call. At this time, all participants will be in listen-only mode. The question and answer session will follow today's formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note this conference is being recorded. At this time, I'll turn the conference over to Anne Rakunas, Director, External Communications. Thank you, Anne. You may now begin.

Thank you, operator. Good morning, everyone. Welcome to Helen of Troy's first quarter fiscal 27 earnings conference call. The agenda for the call this morning is as follows. I will begin with a brief discussion of forward-looking statements. Scott Uzzell, our CEO, will then share his thoughts and areas of focus. And Brian Grass, our CFO, will provide an overview of our financial performance in the first quarter and outline our expectations for the full year fiscal 27. Following our prepared remarks, we'll open up the call for Q&A. This conference call may contain forward-looking statements that are based on management's current expectations with respect to future events or financial performance. Generally, the words anticipates, believes, expects, and other similar words are words identifying forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties that could cause anticipated results to differ materially from the actual results. This conference call may also include information that may be considered non-GAAP financial information. These non-GAAP measures are not an alternative to GAAP financial information and may be calculated differently than the non-GAAP financial information disclosed by other parties. The company cautions listeners not to place undue reliance on forward-looking statements or non-GAAP information. Before I turn the call over to Scott, I would like to inform all interested parties that a copy of today's earnings release can be found on the investor relations section of our website by scrolling to the bottom of the homepage. The earnings release contains tables that reconcile non-GAAP financial measures to their corresponding GAAP-based measures. We've also posted an investor presentation to our website. And with that, I will now turn the conference call over to Scott.

Good morning, everyone. Thank you for joining us. When we last spoke, we laid out our ambition to be a better company on the road to being a bigger company. Today, I want to share our progress on being a better Helena Troy. We are focused on getting closer to the consumer, Sharpening how we run our business, we're starting to see early evidence we're making progress. Our quarter one sales results came in ahead of our expectations across both our business segments. Our margin EPS performance reflect deliberate investment in brands, innovation, and people as we focus on building more consistent, durable enterprise, not just a quarter or two of improvement. While we're encouraged by a solid start to the fiscal year, we remain clear-eyed. This is the first year of a multi-year roadmap, one we laid out for you in April at an April earnings call. We're focused on the work to be done to make Helen Troy reach our potential. The long-term lens is particularly important as we continue to navigate a dynamic operating environment. The consumer remains under pressure, and we're managing through a more volatile cost environment. We're taking disciplined actions to balance near-term margin pressures while positioning the business for the long term. As we've said before, we cannot control the macros, but we can control how we execute within it. And while we're executing well, and where we're executing well, we are winning. Our North America POS, these are track channels. We saw consolidated growth year over year, concentrated in Braun, Osprey, OXO, and Olive in June. On a sequential basis, compared to fourth quarter, trends improved in key areas with the biggest improvement in beauty and wellness. Some brand call-outs include Osprey's Daylight and Transporter Expandable Travel Packs that deliver consumer-relevant solutions, seamlessly converting from a personal item to an airline-approved carry-on. This has differentiated innovation over delivering against financial targets and driving meaningful share gains. OXO successfully extends the brand's award-winning performance and intuitive design into the high-growth pet category. with a range of new products spanning feeding bowls, stands, mats, storage solutions, positioning the brand to capture incremental demand and expanding adjacent categories. Bronze blood pressure monitors launched in mass channels last fall. They combine medical grade accuracy with simplicity. They are outperforming planned and stand out as the only products in the category gaining share at the world's largest mass retailer based in the U.S. and Olive and June launched an out-of-this-world collaboration with Star Wars, the Mandalorian Grogu, bringing consumer collectibles, exclusive and culturally resonant products that elevate the brand and drive engagement at scale. These results reflect a simple point. Brands that deliver meaningful innovation and meet real consumer needs can continue to win, even in a more cautious spending environment. But as we said last quarter, fiscal 27 is about restoring momentum, by focusing on editing and amplifying the priorities and actions of the enterprise by directing our time, capital, and attention toward the highest impact opportunities. Our actions are guided by three pillars. First, consumer first innovation. Second, commercial and operational excellence. Third, our people and culture. As we re-energize our organization, we want to ensure that we have the capabilities to win. Our approach is intentional. who are focused first on strengthening operational discipline and improving how the business runs before we lean more fully in the broader brand acceleration. In Q1, we've made meaningful progress against these priorities that form key elements of our three pillars. Making our consumer centered offense reality. Going from the abstract to how do we make this real? And it's about how we organize and what we do every day. First, we're sharpening how we run the business. Fewer priorities. Thank you. Thank you. This can only happen when leaders live in the cultural space and life of the consumer so they can take consumers to new places. Our new Helena Troy offense will enable this to be a cornerstone of our company of the future. Under this model, we've designated five dedicated segment general managers, each with full ownership of the brand portfolio, including strategy, innovation, commercial execution, and business results. These roles are a mix of internal leaders stepping into expanded roles as well as recruiting external talent to broaden the capabilities of the organization. A deliberate combination that gives us both continuity and fresh perspective without materially increasing operating costs. We've also formalized three geographic or geo-general managers roles to stitch and accelerate brand development beyond the North American borders. It's strategic, it's intentional, and it's focused brand building in the right global markets to better leverage our strong international structure that's already in place. The result is dedicated leaders who live and breathe a focused consumer segment or marketplace rather than balancing competing priorities across multiple brands. We expect this will free up our segment presidents to do what they do best, clear the forest for strategic growth by scaling enterprise solutions, advancing cross-portfolio opportunities, and shaping our long-term strategic agenda. We believe this will result in a company closer to the consumer with sharper ownership, faster decision-making, and the leadership firepower to unlock full potential of our brands. This is the natural next step in the operating model evolution we described last quarter. Second, we're strengthening the fundamentals of our commercial and operational execution. We've identified clear priorities to operate with greater discipline, and we are moving quickly to address them. This starts with pricing discipline. Our previous pricing actions now in place across our major brands are largely holding in the market, though we continue to monitor retailer and consumer response in select areas where elasticity has been higher than expected. A related focus is improving the quality of our revenue, being more deliberate about our product and channel mix, reducing exposure to lower margin channels, and shifting towards higher value products and customers. We are also bringing greater consistency to how we price and promote, ensuring we drive demand in ways that protect brand value. At the same time, we are improving alignment across sales, marketing, and product with a sharper focus on higher impact products and our most important customers. At its core, this work is about bringing greater control and consistency to how we operate across channels and with our customers. In parallel, we're strengthening the core capabilities that enable consistent execution. In e-commerce, we are bringing greater discipline to how we show up across channels, starting with pricing alignment and improving marketplace dynamics. including dressing third-party sellers to create a more consistent presence. We're also continuing to improve our digital shelf and retail media effectiveness, areas where we see meaningful opportunity. In demand planning, we're in the early stages of building a more connected approach to forecasting, improving how we link demand signals, promotional plans, and inventory decisions. And while we're doing all these things every day, we're maintaining a disciplined approach to capital allocation and balance sheet management as we strengthen the foundation of the business. Lastly, we're making progress in how decisions get made. We are simplifying processes, reducing unnecessary complexity, and pushing decision-making closer to the consumer and marketplace. As a result, we're already seeing faster decision-making across the organization. Our brand teams are collaborating more closely on incremental distribution opportunities. Our marketing and product teams are actively deploying test and learn models to try new tactics and measure results before scaling. These changes are fostering a more efficient operating model with clear ownership, one that enables us to act with clarity and control. At the same time, we're continuing to invest our time and resources in growth. Our approach is disciplined. We're targeting areas where we have a clear right to win and where the returns are compelling. A really good or great example of this is in our international business. We plan to accelerate growth by evolving how we go to market, leaning into a more agile, and a hybrid model that pairs strong local partners that know the market with direct consumer engagement with our brands. It's a more flexible approach at helping us move a lot faster, execute better and build stronger connection with consumers as we scale in specific global markets. We'll share more about this later this fall. We're being deliberate in these investments, ensuring that we're aligned with the near-term priorities and our ability to execute. So as we look ahead, our focus remains on execution, on giving you visible markers of progress. We'll have more to share in the coming quarters. To bring it all together, we're encouraged by how the year is starting and the progress we're seeing. Our focus now is staying disciplined, building consistency, and continuing to get better at how we operate. Execution will drive the rest of the year, delivering great problem-solving products, moving on key commercial priorities, and managing through cost volatility. We've still got work to do, but we're headed in the right direction and we're building on a strong foundation to unlock full potential of our portfolio and drive more consistent, long-term growth. With that, I'll turn it over to Brian.

Thank you, Scott. Good morning, everyone. We believe our start to fiscal 27 is another step in the right direction, with net sales and adjusted EPS above our expectations, driven by disciplined execution across the organization and improving business fundamentals. I'm encouraged by how we are navigating a dynamic operating environment and addressing margin pressure from heightened geopolitical and supply chain disruption, which I will cover in more detail shortly. Overall, the quarter reinforces the initial progress we are making as we transition to a growth first model while maintaining a prudent, disciplined approach to investing back into our business and mitigating supply chain volatility. Turning to the financial highlights for the first quarter, consolidated sales increased 8.2% favorable to our expectations. Note that our Q1 sales results benefited from approximately four to $5 million of favorable order phasing driven by the earlier timing of Prime Day. For home and outdoor, sales increased 9.5% with broad-based growth across all three brands. Osprey was the strongest performer with growth driven by improvements in our international distribution network and e-commerce momentum. OXO benefited from lapping prior tariff related disruption, strong point of sale trends and expanded brick and mortar distribution. Hydroflask growth reflects expanded retail distribution, inventory optimization and e-commerce momentum. For beauty and wellness, sales increased 7% reflecting growth in both beauty and wellness. our wellness portfolio outperformed expectations driven by growth across Braun, Vicks, Honeywell, and Pure, driven by lapping prior year tariff-related disruption, solid point of sale, and expanded distribution. In beauty, Olive and June led the way with strong growth supported by expanded distribution, continued innovation, and strong consumer engagement. These gains were partially offset by continued softness in some of our core beauty brands, reflecting ongoing point of sale pressure and pricing elasticity impacts. International sales increased 1.1% for the quarter. Growth was driven primarily by Osprey's improved distribution network and broad-based strengths across the wellness portfolio, partially offset by softer consumer demand in kitchenware and hair appliances amid a competitive retail environment. Our margins and profitability were largely in line with our expectations, with adjusted EPS and EBITDA results reflecting the execution of our growth-first model that reinvests the majority of overperformance back into the business. We recognize the pre-tax benefit of $1.8 million for phase one tariff refunds that we estimated to be collectible as of the end of the quarter, which contributed to adjusted EPS ahead of expectations. I'll share more regarding tariff refunds when I cover our outlook for the remainder of the year. consolidated gross profit margin decreased 110 basis points to 46%, reflecting the net unfavorable impact of tariffs, a less favorable inventory obsolescence impact year over year, and a less favorable customer mix within home and outdoor. We expect the first quarter of fiscal 27 to have the most year over year gross margin compression from tariffs due to higher rates still cycling through cost of goods sold and minimal tariff impact in the same period last year. SG&A ratio decreased to 31% compared to 45.1% in the same period last year, primarily driven by a pre-tax gain of $55 million from the sale of a distribution facility that we disclosed in April, partially offset by higher investment in our people year over year. Adjusted operating margin decreased 30 basis points to 4%, reflecting the unfavorable impact of tariffs and higher investment in our organization and go-to-market structure. partially offset by lower outbound freight and favorable operating leverage. Moving on to balance sheet highlights, inventory ended at 467 million, a $17 million decrease from the prior year, despite approximately $15 million of incremental tariff costs in inventory. We reduced our total debt by 716 million as we used the proceeds from the sale at the distribution facility to lower outstanding borrowings. Our net leverage ratio decreased to 3.48 times compared to 3.87 times at the end of the fourth quarter. Free cash flow was slightly negative in the quarter, primarily due to cash used for tariff payments, annual incentive compensation payments, and higher cash taxes, partially offset by an increase in cash earnings. Turning now to our full year fiscal 27 outlook, we are raising our net sales expectations slightly to 1.759 billion to 1.831 billion with home and outdoor net sales of 859 to 884 million and beauty and wellness net sales of 900 to 947 million. We are maintaining adjusted EBITDA of 190 to 197 million, which implies year over year growth of 2.1% to 6.3%. We are maintaining adjusted EPS of $3.25 to $3.75 and we're maintaining free cash flow of 85 to 100 million while increasing our planned capital expenditure range by 2 million. Our full year revenue outlook reflects our first quarter performance partially offset by retailer order pull forward of approximately 4 to 5 million out of the second quarter due to the shift in prime date timing as well as revenue risk from expected supply disruption largely driven by the conflict in the Middle East. Our adjusted EBITDA and EPS outlook now reflects the pre-tax benefit of phase one tariff refunds now estimated to be approximately $9.2 million, but that benefit is more than offset by the expectation of cost inflation for the remainder of the year. The higher costs are being driven by increases in commodity inputs and pressure from unfavorable Chinese yuan fluctuations. increased inbound and outbound freight expense and higher cost to secure goods to avoid supply disruption. Some of this pressure was building before the conflict in the Middle East, but the heightened geopolitical and supply chain disruption has exacerbated the impact we are now expecting. We are not assuming any benefit from future tariff refund phases at this time since we can't reliably predict when those refunds might be received or whether they will ultimately be collected. We are preparing to file claims for the second phase of tariff refunds, which was just announced on June 29th. When we are able to get enough clarity on the timing and collectability, I expect that we will include future phases in our outlook. We have paid $71 million in IEPA tariffs that were not included in the phase one refund process. While we expect that future phase refunds could provide some upside to our current earnings outlook, we're developing plans to reinvest a large portion of the P&L benefit back into our business, as well as increase our capital expenditures on key product development and commercial initiatives with the expected cashflow benefit. In terms of quarterly cadence, we expect first half year over year sales growth in the low to mid single digits with a low single digit decline in the second half of the year. Due to the cadence of people in brand investment, and higher average tariff costs cycling out of inventory and into cost goods sold in the first half of fiscal 27. We now expect roughly 20% of our total annual adjusted EPS outlook in the first half of the year with roughly 15% in the second quarter consistent with our previous outlook. In closing, while the operating environment remains challenging with increasing inflationary pressures, softer and more selective discretionary demand, cautious retailer behavior and elevated promotional intensity. We are taking deliberate actions to position the business for improved performance and deliver reliable results. We continue to prioritize targeted investments in our brands and capabilities to position us for growth, restore operating leverage and build long-term momentum. While we make plans to use additional potential tariff refund benefits to feed the flywheel even further and mitigate expected inflationary pressure on our supply chain. Our continued focus on working capital efficiency and balance sheet productivity supports both strategic investment and operational flexibility. We continue to evaluate opportunities to enhance financial flexibility and concentrate our resources on our core business as we advance in our next phase. And with that, I'll turn it back to the operator for Q&A.

Thank you. We'll now be conducting the question and answer session. If you'd like to ask a question at this time, please press star 1 from your telephone keypad and a confirmation tone to indicate your line is in the question queue. You may press star 2 if you'd like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Thank you, and our first question comes from the line of Bob Labick with CJS Securities. Please proceed with your questions.

Good morning. Congratulations on a good start to the year.

Thank you.

Yeah. So just kind of starting off with what Brian, he just finished up with a little bit of, you know, kind of cadence and guidance there. Can you just maybe expand a little bit upon when the tariff refunds may hit the P&L, if you think about that, and just, you know, and the drivers of the, you know, kind of, I guess, low single digit declines in the second half revenue that you've talked about, which is consistent with what you said last time as well.

Yeah, and just to clarify the second point, Bob, when I referred to low single-digit decline for the second half, that refers to the midpoint of our range. I failed to say that when speaking, but that is the intent. Then to kind of go back and get to your question about tariff refunds and cadence, we don't totally know because the process, while it's defined in terms of what to do to submit refund claims, and there's a general rule that within 90 days you should get claims approved. It doesn't totally follow, it doesn't appear to us that there's a pattern that we can reliably depend on. But what I would say is this, is the first phase, which is about $7 million remaining yet to be collected, I would expect that the bulk of that would be collected within our second quarter. then that leaves future phases and and really we haven't even submitted our phase two claims yet and then we know we're going to have some claims that fall out of phase two and we'll fall into you know potentially a phase three or a phase four so I do see that the tariff refund benefit getting spread out over a period of quarters I do think that potentially we could have some even fall into fiscal 28. Probably won't be hugely meaningful, but I do think that that is possible at this point in time. And I actually like the fact that the cadence is being spread out a little bit. It's not concentrated in one quarter because that gives us the ability to better execute the reinvestment back into the business. If it's all in one quarter, it's very hard to match up the spending with the benefit if it's spread out over a

recovery and good sales growth in the quarter. Part of what you've been talking about, particularly last quarter and I think even a little before, is reinvest in the business to get growth versus cut to get higher earnings. Maybe talk a little bit about where are you seeing, now that you've had a little more time to look into it or explore it or whatever you want to call it, where are you seeing the best opportunities for reinvestment to get near-term growth? What brands and what areas, you know, offer the best opportunities for reinvestment.

Bob, this is Scott. I'll take the first part and then Brian can finish it off. You know, thanks, Bob. I'd say this just to be consistent with what we talked about last quarter is that we know a healthy Helena Troy to make us a better Helena Troy is built on healthy brands. And so we're focused really in five areas maniacally. An agile operating model, which is really investing in talent and how we stand up getting our folks closer to the consumer. I'll talk more about that. Investing in strategic innovation against many of our brands that are ready to connect with the consumer. Investing in omnichannel acceleration, making sure we've got the right capabilities to work brick and mortar online as well as in between. We've been standing up working our supply chain, how we make and move product around the world. And then I just recently was over in Asia spending time with our international team on What's the right markets going forward to be fewer markets that are more sharper with the right business model to execute investment in other parts of the world? So it's really around brands, innovation, and people. That's what we're focused on as we go to a more growth-forward approach in 2027. Brian, any ads?

Yeah, the only thing I would add is the intent is also to mitigate any cost inflation that's above and beyond what we've assumed in our outlook currently. We have made an attempt to capture our current view of what that is, and that's already baked into the outlook that you have. To the extent that it's worse than what we've currently estimated, we would use part of the tariff refund benefit to mitigate those extra costs. That's not our preference in our base plan. Our base plan is to use it for reinvestment, but it is there as a buffer as well.

Thank you. The next questions are from the line of Peter Grom with UBS. Please receive your questions.

Great. Thank you. Good morning, everybody. So I guess I just wanted to get some perspective on the revenue outlook. I think, Brian, you kind of gave some commentary around the pull forward around Prime Day, which makes sense. But I think you also made a comment around revenue risk from expected supply disruption. Maybe just unpack that a bit. Is that just conservatism given the current environment, or is that something you have a reasonable mind of sight into?

I'll take the first part. Brian, let me take the first part, and you can pay it off. I think, you know, as we look at our enterprise, we're focused on the things 80% that we believe we can control, which is investing in brands, people in new product innovation, and getting back to growth. but as we think about the external factors that are out there, whether it be continued inflationary pressure, softness in discretionary categories, retailers in the marketplace in general being just much more conservative as they wait to buy, these are things that are not just for us. This is everybody in the category. We're just, you know, we live in an uncertain world. But Brian, I don't know if you want to talk more about the way we've cadenced the revenue throughout the year, but we're confident in the work that we're doing inside the building to make sure we're a better heli but we have a lot of concerns, concerns in the long term. We just are cautious around what's happening around the world that we deal in. Brian, any adds?

No, I agree with all of that. And just to do the math on kind of, if you say we beat expectations by 25 million in the first quarter, there's $5 million approximately that was pulled forward out of Q2. So I think, you know, factor that in to the equation. we flowed through 10 so that leaves about 15 in terms of potential supply risk that to your point we do have line of sight to and up until yesterday I would say things are moderating and starting to look better and maybe that's a conservative estimate but now you have the things that happened last night where you know there's probably going to be more disruption so I think it was intended to be a conservative estimate of the potential supply chain. And it's look, it's two or three pinch points where we may have scarcity of supply and will we be able to get access to that supply? It's not like it's a massive amount in the system. So it's really two or three pinch points. We're being we're trying to be conservative and hopefully appreciate that it's volatile. I mean, one day, two days ago, I would have said things were moderating, but up until last night, things seem to be going in the other direction. And so I'm glad that we embedded a conservative point of view into our outlook.

That's helpful. And I guess I wanted to go there next. I mean, I guess going back to April, I think, and I know some of this was not included in the guidance, but there was some thought around the benefit from tariffs would kind of largely offset input costs. And I know phase one of refunds is coming through. And I hear you, yeah, the last couple of days are starting to move the other way, but it would appear from our perspective that relative to where we were in April, that costs are lower. So can you maybe just provide some context around what's embedded from the outlook from a cost standpoint and just

you know given how volatile it is how we should be monitoring that as we think about the balance of the year yeah uh not to give you specific amounts Peter but but what we said was so there was a tariff refund benefit that we are now capturing in our outlook and that's about nine million dollars we said that the cost that we're estimating is more than that more than offsets that and so not to give you a specific amount what we've assumed is you know something greater than the nine or ten million dollars of tariff refund benefit we've kind of found a way to offset the the amount that's more than the tariff refund so that's our current view and and look you got to understand it takes time for some of that to bleed through the the total cost of of this inflationary pressure will be higher than that greater than 10 million dollar number but it takes time for that to cycle through cost of goods sold. And so that's why, you know, it may be smaller.

Okay, just.

Please go ahead. I'm sorry.

No, I was just going to say, Brian, just to clarify, like, If I were to include the other phases of the tariffs, would that be more than enough to offset the inflation? I think that's how I originally interpreted the comment back to April, rather not just the phase one.

Yes. In terms of impact, this fiscal, in terms of impact of fiscal 27, I would expect if we're able to collect all of the tariff refunds that we are due that the tariff refund benefit would be greater than the inflationary cost pressure. Yes, that's a reasonable assumption.

Okay. Thank you so much. Apologies for the additional questions. I'll pass it on.

Thank you. As a reminder, we ask that you please limit yourself to one question and one follow-up. You may then recue for any additional questions. The next question is from the line of Olivia Tong with Raymond James. Pleased to see with your questions.

Great, thanks. Good morning. I wanted to talk a little bit about that price makes impact on the quarter and then your assumption for the year. Clearly, a tough consumer backdrop and given the level of promotion in your categories, what's your level of confidence that you can hold the current levels of pricing? that you've pushed through what you're embedding in terms of the promotional backdrop for the rest of the year and how you think about the phasing of margins over the course of the year as a result of that. Thank you.

Olivia, I'll take the first part. You know, the thing about it is from a pricing standpoint, you know, as we shared in prior quarters, it varies by brand and category, but for the most part, we feel like 80% of what we wanted to get pricing is we were able to pass it through and we're competing in those markets. We'll always continue to monitor that, make sure that if whether it's competition, what's going on in the marketplace or what's going on for our retailers, we have the right to adjust. But at this point, you know, we had to flow that through to offset the work of the negative impact of tariffs a year ago. Brian, do you have anything you want to add?

Yeah, I would just add that we do have Our overall point of sale dollar growth, we do have overall point of sale dollar growth across the portfolio. And in certain areas where we took price, there's a divergence between dollar share growth and POS growth. which I would say is in line with our expectations. We built elasticity assumptions into our outlook and assumed that there would be a high level of elasticity. And I would say that the dollars are doing better than what we originally assumed in terms of performance in light of the price increases. But as Scott said, it's something that we're gonna continue to monitor and we may adjust over time. currently we feel good about our pricing situation but like you know in areas where units are down we want to continue to stay on top of that and say do we have the right price mix and so it'll be something that we continue to to evolve or stay on top of but currently we think we're in a good position.

Got it thanks and then just following up The updated sales lines appreciate the color that you gave, the quantification you gave to Peter's question, but it does assume pretty flattish sales for the next three quarters after a nice bump in Q1, realizing, of course, a piece of that is a pull forward. But that being said, can you talk about your confidence in the recovery path from here? Clearly, I assume you want to do better than flattish, but could you maybe talk also about you know, what underlying category growth expectations you have embedded in your outlook and the path forward in terms of any new product introductions that could potentially improve the sales cadence from this point forward.

Sure, I can take that. So it's important to think about the comparison when you think about the sales trajectory for the remainder of the year and why Q1 would be the highest sales performance in our expectations because the compare is so low and there was so much tariff revenue disruption in the first quarter and the first half of the year. so that kind of moderated in the second half of last year and so there's less disruption to recapture and so that's why the growth rate decelerates in the remaining three quarters and you know you asked about level of confidence we you know we've not stretched in terms of any assumptions like you mentioned category expansion or anything like that we've kind of kept current state with respect to that and and are really using current POS trends to project the remainder of the year which I think is the right thing to do so that's how we're thinking about that. And then we'd layer in, as you mentioned, new innovation, new distribution, things like that that are known and that we have line of sight to. And so we feel like it's a very sustained, supportable forecast that we think we can deliver on. Does that answer all the parts of your question? I think you had a couple of different things in there. I wanna make sure I got everything.

Nope, that's great. Thank you.

Our next question is from the line of Susan Anderson with Cannacore Genuity. Pleased to see with your questions.

Hi, good morning. Thanks for taking my questions. I guess maybe just a follow up on the sales cadence and then I think you guys had mentioned you guys had some expanded distribution in home and insulated beverages. I guess I was curious where that was at and what channels and then also just in general, the core sales without the pull forward and the increased distribution. I guess, did you see, you know, kind of like growth in existing channels? Thanks.

Brian, I'll kick off.

It's a great question. I'd say this, what you'll see across home and outdoor, that team has been really focused on a couple things. What's the right level of investment against brands so that we make sure we're connecting for our core consumer and this dynamic operating environment? bringing relevant innovation that not only is in the core categories they're in, but enabling them to also go into adjacent spaces. And we're continuing to focus on great storytelling to connect with the consumer. And what we're seeing across home and outdoors, it's not only landing us with distribution in the current channels that we're in with either more SKUs or more different types of products, but it's allowed us to expand in different places without me going into specific partners, but it's allowing us to continue to grow our distribution and other partners. within Home and Outdoor. Brian, I don't know if you have anything to add as well as around the sales cadence for the year.

Yeah, and just on the distribution question, in Home, it's Walmart distribution, that expansion that's driving it. And then we're also seeing good growth on Amazon, part of that due to the prime day shift. And then on Hydroflask, the distribution expansion is with Dick's Sporting Goods. And then we also had a Target, Planet Grant reset. And then we're also seeing good momentum on e-commerce as well, supported by Amazon. So those are kind of the distribution drivers there. Did I get everything on the question? Was there something else?

Yeah, no, that was great. That's helpful. And then I guess maybe just in beauty, I think you talked about Olive and June driving that growth and then some of the wellness products as well. But I guess just in terms of the other core beauty brands, I believe they're still down. But I guess, are you seeing that trend line improve at all, you know, sequentially? Are you seeing, I guess, the decline moderate as you kind of move forward?

I can take that. Go right ahead. Yeah, this is start and Scott can build. um it we're still not where we want to be if you look at the rest of that if you take um beauty carve out Olive and June from beauty we're still not where we want to be but we do see some bright spots in terms of trend line improving with respect to POS so not where we want to be but we do see indicators that say we're doing some of the right things and the POS is starting to move in the right direction

Okay, great. And then maybe if I could add just one last one on the model, just SG&A going forward, I guess, as you guys continue to look to maybe invest more in the brands, like how are you thinking about that investment and then also the SG&A cadence? Thanks.

The, how I would think about it is we kind of have a base plan that just assumes phase one tariff refunds of the $9 million that we have embedded in our outlook. In that base plan, investment is increasing 40 BIPs. That stayed consistent with our original outlook and we're carrying that forward. So we would look to maintain that at a minimum and then any overperformance, not any, but a large portion of any overperformance would then be reinvested in terms of increasing the SG&A based on the overperformance. And then you have the plan that reflects tariff refunds where, as I mentioned, we want to reinvest the bulk of the tariff refund benefit. So it's hard to really tell you what that looks like from a margin perspective and dollar perspective because we kind of don't know yet what the tariff refund cadence will be. But we want to reinvest the high proportion of whatever that tariff refund benefit is. And we know that we have $70 million of IEPA all of those tariffs that we paid that we believe should be subject to tariff refunds at some point in time over the next several quarters. And so we'll be looking to deploy again the bulk of that in our plan B, as I'll call it, when we're able to get visibility on when we'll be able to collect those. So I hope that helps. We're sticking with our 40 basis point increase in the base plan. And then when we get the tariff refunds, we'll be looking to amp that up significantly. Can't tell you exactly what the margins will look like, but hopefully you've got enough direction.

Okay, great. Thanks so much for all the details.

Thank you. At this time, I'll turn the floor back to management for closing comments.

Yeah, I want to say thank you very much for spending time with us this morning. As we talked about, we're off to our races around our three-phase roadmap to growth. This year is about putting markers on the board and getting back to restoring brand momentum, standing up a new operating model, which we'll share more about in detailed comments, and continue to focus on balance key productivity. Thank you for spending time for this morning. Have a great day.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference.