Summary of Conference Call Notes Industry Overview - The focus is on the **Multi-Industry** sector in **North America** with specific attention to the impact of **Trump 2.0 tariffs** on pricing dynamics [1][7][75]. Key Insights - **Price Dynamics**: The year-to-date (YTD) change in Producer Price Index (PPI) by category indicates that certain verticals are better positioned to sustain price increases into Q3 compared to others [2][4]. - **Industrial Sector Performance**: Despite positive Q2 updates, US Industrials experienced a de-rating during earnings season, suggesting challenges in maintaining premium valuations observed earlier in July [4][9]. - **Pricing Power**: The report emphasizes that US Industrial pricing power is an underappreciated factor contributing to operational durability, which is expected to positively influence revisions and valuations in upcoming quarters [18]. - **Profitability from Tariffs**: Companies that capitalized on Trump 1.0 tariffs are now benefiting from excess backlog and improved value addition, which is expected to support pricing power in the second half of the year [9][18]. Notable Verticals - The strongest price increases are seen in sectors such as **Switchgear, Welding, Valves, Electrical Equipment, Pumps + Compressors, HVACR, Non-Residential Lighting, and Industrial Controls**. Companies like **Eaton (ETN), Acuity (AYI), Hubbell (HUBB), Rockwell (ROK), and others** are highlighted as favorable due to their pricing strategies [4][18]. - **Fastener PPI Data**: There is a noted disconnect between the muted Fastener PPI data and the strength observed in Fastenal (FAST), indicating potential market anomalies [4]. Historical Context - The analysis includes a review of pricing changes during the **2021-22 hyperinflation period**, revealing that no verticals have given back price increases in 2023-24 despite commodity deflation and a prolonged manufacturing recession [16][18]. Future Outlook - The expectation is that companies capable of ramping up volumes in the second half of the year will experience multiple expansions, indicating a more durable momentum into 2026 [9]. - The report suggests that the enhanced value addition and reshoring activities in the US will further support pricing power and profitability for the best-positioned companies [18]. Additional Considerations - The report includes a caution regarding the need for positive revisions to drive further upside in stock valuations, emphasizing that companies pushing the most price will likely fare better [4][9]. - The document also contains various disclosures regarding potential conflicts of interest and the investment banking relationships of Morgan Stanley with the companies mentioned [6][28][31]. This summary encapsulates the critical insights and data points from the conference call, providing a comprehensive overview of the current state and future outlook of the Multi-Industry sector in North America.

Tariff Impact & Retail Pricing - Oppenheimer developed a tracker showing retail prices are climbing, though still subdued [3] - Companies' commentary suggests prices will continue to climb [3] - Consumers are aware of tariffs and potential price increases, leading to earlier purchases [6][7] Retailer Positioning & Strategies - Auto parts retailers are well-positioned due to pricing power and limited price transparency, with AutoZone selectively raising prices [4] - Home improvement retailers like Home Depot and Lowe's have pricing power and are expected to selectively raise prices, potentially benefiting their businesses [4] Consumer Behavior - Consumers are buying products sooner than they normally would, anticipating higher prices due to tariffs [7]

Financial Data and Key Metrics Changes - The company reported third quarter revenues of $635 million, reflecting a 16% growth in constant currency, within the annual guidance range of 15% to 17% [19] - Reported revenue growth was 12%, with B2B growth outpacing D2C, up 18% in constant currency [19][20] - Gross margin increased by 100 basis points to 60.5%, while adjusted EBITDA margin rose by 140 basis points to 34.4%, marking the best third quarter margin ever [8][22] - Adjusted net profit reached €116 million, a 26% increase year over year, with adjusted EPS rising to €0.62 from €0.49, a 27% increase [23] Business Line Data and Key Metrics Changes - In the Americas, revenue grew by 16% in constant currency, with both B2B and DTC channels showing double-digit growth [14] - EMEA experienced a 13% revenue increase, with B2B outpacing DTC, driven by strong sell-through at retail partners [15] - The APAC region saw a 24% increase in constant currency, with expectations for accelerated growth in the fourth quarter [16] Market Data and Key Metrics Changes - Retail revenue at the top 10 wholesale partners in the U.S. increased by 25%, while in EMEA, it was up 20% [10][11] - The company noted a shift towards in-person shopping, favoring the B2B channel over DTC, with over 90% of B2B growth coming from existing doors [9][20] Company Strategy and Development Direction - The company aims to maintain relative scarcity and manage distribution growth tightly, with plans to reach around 100 stores by the end of the fiscal year [12] - The strategy includes investing in automation, IT, and infrastructure to enhance production capacity and efficiency [32][70] - The company is focused on both B2B and DTC channels, with a commitment to high-quality distribution and full-price realization [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting growth and profitability objectives despite currency headwinds and tariff impacts [25][27] - The company anticipates that B2B growth will continue to outpace DTC for the fourth quarter and the full year [20][42] - Management highlighted strong demand across all product categories, particularly in emerging youth markets [13] Other Important Information - The company ended the quarter with cash and cash equivalents of €262 million after a share repurchase of €176 million [23][24] - Capital allocation priorities include investing in the business, reducing debt, and opportunistic share buybacks [25] Q&A Session Summary Question: Current demand trends and visibility for fourth quarter acceleration - Management noted exceptional demand in Q3, with capacity constraints being the main issue, and aims for continuous margin improvement as the business scales [31][32] Question: Market response to price increases implemented on July 1 - Management reported no negative impact on demand post-price adjustments, with strong sell-through during the back-to-school season [36][38] Question: Impact of increased EU tariffs on revenue and margins - Management indicated that the effective tariff rate is manageable, with pricing flexibility and other levers to offset impacts [42][44] Question: EMEA growth performance and future expectations - Management acknowledged challenges in capturing full demand due to production capacity but expects a return to mid-high teens growth in EMEA [51][53] Question: Insights on closed toe product growth - Management confirmed a 400 basis point increase in closed toe revenue share, with strong performance across various styles [60][62] Question: Factory expansion plans and supply evolution - Management is on track with factory expansion plans, expecting full absorption by 2026, and is investing in capacity to meet growing demand [70][71] Question: Confidence among wholesale partners - Management noted strong demand from wholesale partners, reflecting consumer behavior and a desire for more product breadth [73][74] Question: DTC business performance and customer trends - Management highlighted strong performance in DTC, with new stores delivering higher ASP and increased transaction values [102][105]

Core Insights - Procter & Gamble (PG) has relied on price increases to mitigate inflationary pressures but faces challenges in sustaining this strategy as consumer behavior shifts towards seeking value [1][2][3] - The company aims to achieve $1.5 billion in annual savings while managing $1 billion in tariffs and $200 million in commodity costs expected in 2026 [3][8] - PG's brand superiority and innovation are crucial for maintaining pricing power, with successful examples in products like Pampers and Swiffer [2][8] Pricing Strategy and Market Dynamics - PG's pricing strategy has been effective in balancing volume and pricing gains, but category growth has slowed in key markets, particularly in North America and Europe [1][8] - Competitors like Colgate-Palmolive and Church & Dwight are also using price increases and premium innovations to offset rising input costs, but face limitations in pricing power [4][5][6] Financial Performance and Projections - PG's shares have declined approximately 7.5% year-to-date, underperforming the industry average decline of 4.3% [7] - The forward price-to-earnings ratio for PG is 22.01X, compared to the industry average of 19.79X, indicating a premium valuation [9] - The Zacks Consensus Estimate projects year-over-year EPS growth of 2.3% for fiscal 2025 and 6.3% for fiscal 2026, although estimates have been revised downward recently [10][11]

Core Viewpoint - The article discusses the recent trends and developments in the wine industry, highlighting the impact of changing consumer preferences and market dynamics on sales and production [1] Group 1: Industry Trends - The wine industry is experiencing a shift towards premiumization, with consumers increasingly favoring higher-quality wines over mass-produced options [1] - There is a notable increase in the demand for organic and sustainable wines, reflecting a broader trend towards health-conscious and environmentally friendly products [1] - The global wine market is projected to grow, with an estimated value reaching $423 billion by 2025, driven by rising consumption in emerging markets [1] Group 2: Company Insights - Major wine producers are adapting their strategies to align with consumer preferences, focusing on innovation and product differentiation [1] - Companies are investing in marketing efforts to promote their premium and organic offerings, aiming to capture a larger share of the growing market segment [1] - The competitive landscape is intensifying, with both established brands and new entrants vying for consumer attention in a rapidly evolving market [1]

Core Insights - Altria Group, Inc. is focusing on pricing strength to manage ongoing declines in cigarette volumes, with a 10.2% year-over-year drop in domestic cigarette shipment volumes in Q2 2025, while adjusted operating income for smokeable products increased by 4.2% due to a 10% rise in net price realization [1][8] Pricing Strategy - The ability to raise prices despite volume declines is a key feature of Altria's business model, with Marlboro expanding its premium segment share to 59.5%, which supports above-inflation price increases and enhances the company's pricing power [2] Market Dynamics - The cigarette industry is facing sustained pressure, with the discount retail share rising to 31.2%, indicating financial strain among adult tobacco consumers. Altria is responding by selectively expanding its Basic discount brand into approximately 30,000 targeted stores to retain value-oriented smokers [3] Earnings Outlook - Altria's management has raised its adjusted earnings per share guidance for 2025 to a range of $5.35 to $5.45, reflecting confidence in its premium pricing strategy to offset industry volume declines [4][8] Competitor Analysis - Philip Morris International Inc. reported a 6.8% organic net revenue growth in Q2 2025, with pricing contributing significantly to this growth, while Turning Point Brands focuses on brand strength and market positioning rather than aggressive pricing [5][6] Stock Performance - Altria's shares have increased by 5.7% over the past month, contrasting with a 1% decline in the industry [7] Valuation Metrics - Altria is trading at a forward price-to-earnings ratio of 11.26X, which is lower than the industry average of 14.66X [9] Earnings Estimates - The Zacks Consensus Estimate indicates year-over-year earnings growth of 4.9% for 2025 and 3.1% for 2026, with current estimates for Q3 2025 at $1.43 and for the full year at $5.37 [10][11]

Core Viewpoint - Spotify's quarterly results led to a reevaluation by Wall Street analysts, with the stock experiencing a gain despite missing earnings and revenue expectations [1][15]. Financial Performance - Spotify reported a loss of 48 cents per share for Q2, significantly missing the analyst consensus estimate of a $2.11 profit [1]. - Quarterly sales reached $4.75 billion (4.19 billion euros), a 10% year-over-year increase, but fell short of the analyst projection of $4.84 billion [1]. - The company's Q3 2025 revenue outlook is projected at $4.95 billion (4.2 billion euros), below the analyst consensus of $5.15 billion [2]. User Metrics - Spotify added 8 million Premium Subscribers, bringing the total to 276 million, and 18 million Monthly Active Users, reaching 696 million, both exceeding expectations [4]. - The average revenue per user (ARPU) growth was softer than anticipated and is expected to remain flat in Q3 due to a shift towards lower-priced markets [5]. Analyst Reactions - Analysts from Rosenblatt, Keybanc, Benchmark, and Bank of America Securities provided mixed ratings, with price targets adjusted downward due to weaker ad trends and foreign exchange impacts [9][10]. - Rosenblatt maintained a Neutral rating with a price target reduction from $703 to $679, while Keybanc maintained an Overweight rating with a target cut from $860 to $830 [9]. - Bank of America Securities maintained a Buy rating with a price target of $900, highlighting strong engagement and pricing power despite current challenges [14]. Revenue and Profit Outlook - Operating income for Q2 was 406 million euros, below the forecast of 539 million euros [5]. - Analysts have trimmed revenue and profit estimates for 2025-2027 due to weaker ad trends and foreign exchange impacts [8][13]. - Free cash flow projections are expected to double by 2027, indicating a favorable long-term outlook [10]. Advertising Performance - Ad revenue grew 4.6% year-over-year in constant currency but missed estimates; management noted that growth could have reached 10% without cuts to unprofitable podcast deals [6]. - Ad-supported revenue declined 0.7% year-over-year, but adjusting for foreign exchange and shifts away from exclusive podcasts, growth was closer to 10% [12]. Market Position and Future Prospects - Despite current challenges, analysts remain optimistic about Spotify's long-term potential, citing a large addressable market, expanding content portfolio, and multiple monetization levers [10][14]. - The company is expected to see a reacceleration in ad revenue by 2026 as product upgrades gain traction [10].

pointed out yesterday, rising beef prices could create another problem down the line. Let's bring in Kate Rogers to discuss. Kate I think Chipotle to the Brian Halo is gone.I don't know if Starbucks I don't know if they got it over at Starbucks, but it's a little bit gone from Chipotle now. >> So it's so interesting. You mentioned those two names Kelly Chipotle and Starbucks.They've long had pricing power. And that's one of the things we're going to be really watching for this quarter. Which brands have it ...

Inflation & Tariffs - Tariffs are contributing to inflation, with import prices (excluding food and energy) rising 04% in May after a 05% increase in April [3] - Companies with pricing power will pass tariff costs to consumers, while those without will absorb costs via margin cuts [4] - Helen of Troy plans to raise consumer prices by 7% to 10% this summer, while ConAgra faces 7% cost increases due to commodity, labor, steel, and aluminum inflation [4][5] - Levi's anticipates only a 2% to 3% price increase, mitigating most tariff impacts, suggesting a separation of winners and losers based on pricing power [6] - Even if Levi's absorbs costs, someone in their supply chain is still bearing the tariff burden [7] Commodity & Industrial Metals - The CRB raw industrials index matched its March level, the highest since January 2023, indicating rising industrial metal prices [10] - Silver reached its highest level since 2011, and platinum is up about 30% in the past few months, reflecting a global rise in industrial metals [10][11] - The rise in metal prices is attributed to preemptive buying ahead of potential tariffs and the strategic importance of critical minerals in a multi-polar world [11] - Higher metal prices will flow through the supply chain, impacting inflation regardless of whether consumers absorb the costs [12] Company Strategies - Some companies can mitigate tariff effects, while others face margin pressure or need to raise prices [6][7] - Companies are trying to get their hands on metals ahead of potential tariffs [11]

Core Insights - Colgate-Palmolive Company (CL) is effectively utilizing its pricing power to drive growth and alleviate external cost pressures through a multifaceted pricing strategy [1][10] Pricing Strategy - The company employs competitive pricing, value-based strategies, and price segmentation to cater to diverse consumer needs while optimizing value [1][2] - Colgate's pricing actions, combined with its funding-the-growth program and productivity initiatives, are enhancing efficiency and expanding margins [2] Financial Performance - In Q1 2025, Colgate's adjusted gross margin increased by 80 basis points (bps) and operating margin expanded by 120 bps year over year, resulting in a 6% growth in adjusted earnings per share (EPS) [3] - The company anticipates pricing gains of 2.5% for 2025, with an expected flat gross margin and low single-digit EPS growth [3][4][10] Competitive Landscape - Major competitors in pricing power include Procter & Gamble (PG), Clorox (CLX), and Church & Dwight (CHD) [5] - Procter & Gamble's pricing strategy focuses on value-based pricing to maintain market share and reduce reliance on promotional discounts [6] - Clorox has achieved a 240 bps expansion in gross margin year over year, driven by strategic pricing and cost-saving measures [7] - Church & Dwight is enhancing its market position through strategic pricing and innovation, gaining market share in nine of its 14 major brands [8] Valuation and Estimates - Colgate's shares have increased by 0.7% year to date, contrasting with a 3.2% decline in the industry [9] - The company trades at a forward price-to-earnings ratio of 24.17X, higher than the industry average of 20.19X [11] - The Zacks Consensus Estimate predicts year-over-year EPS growth of 1.7% for 2025 and 7.3% for 2026, with stable EPS estimates over the past 30 days [12]