Financial Data and Key Metrics Changes - Total revenue for the third quarter was $3.8 billion, flat compared to the prior year, with a 1% organic decline driven by a 5% increase in pricing and a 6% decrease in volume [16][18] - Adjusted gross margin rate was 31.6%, up 110 basis points year-over-year, primarily due to pricing strategies and supply chain efficiencies [17][25] - Adjusted EBITDA margin was 12.3%, reflecting a 150 basis point improvement year-over-year [17] - Adjusted earnings per share was $1.43, including a $0.25 tax benefit [18][31] Business Line Data and Key Metrics Changes - Tools and outdoor segment revenue was approximately $3.3 billion, flat year-over-year, with a 2% organic revenue decline due to a 5% pricing benefit offset by a 7% volume decrease [18][20] - DEWALT brand maintained strong momentum with revenue growth across all product lines and regions, reflecting targeted investments in innovation [20] - Engineered fastening segment revenue grew 3% on a reported basis and 5% organically, driven by a 4% volume increase [22][23] Market Data and Key Metrics Changes - North America organic revenue declined 2%, consistent with overall segment performance, while Europe remained flat with growth in the U.K. offset by declines in France and Germany [21][22] - The aerospace business achieved over 25% organic growth, supported by strong demand for fasteners and fittings [23] Company Strategy and Development Direction - The company aims to achieve a 35% adjusted gross margin while executing three strategic imperatives: activating brands with purpose, driving operational excellence, and accelerating innovation [7][15] - A focus on reducing U.S. supply from China to less than 10% by mid-2026 is part of the strategy to improve supply chain resiliency and achieve gross margin objectives [29][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a challenging macroeconomic environment but remains confident in achieving long-term financial goals through disciplined execution and strategic initiatives [16][40] - The company expects continued year-over-year expansion of adjusted gross margin, targeting around 33% for the fourth quarter [34][35] Other Important Information - The company has made substantial progress in its global cost reduction transformation program, achieving approximately $120 million in incremental pre-tax run rate cost savings in the third quarter [28] - A non-cash asset impairment charge of $169 million was recorded in the third quarter, primarily affecting three trade names [31] Q&A Session Summary Question: How did volumes perform relative to expectations? - Management indicated that volumes were in line with expectations, starting strong but tapering towards the end of the quarter due to a non-standard promotional window [44][46] Question: What are the main profit levers for the fourth quarter? - Profit expansion is expected from gross margin improvement and SG&A expense reduction, with a target gross margin around 33% [49][51] Question: What is the impact of tariff inflation on pricing? - The second price increase is expected to be in the low single-digit range, with minimal impact from recent tariff reductions [56][58] Question: How does the company view its position in the housing market? - Management believes the company is well-positioned to benefit from potential future housing market improvements, focusing on building relationships and innovation during the current market retrenchment [80][84] Question: What progress has been made on USMCA compliance? - Significant progress has been made, with no structural roadblocks anticipated, aiming to align with industry averages for compliance [86][88]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $3.8 billion, flat compared to the prior year, with a 1% organic decline driven by a 5% increase in pricing and a 6% decrease in volume [14][15] - Adjusted gross margin rate was 31.6%, up 110 basis points year-over-year, primarily due to pricing strategies and supply chain efficiencies [15][21] - Adjusted EBITDA margin was 12.3%, reflecting a 150 basis point improvement year-over-year, mainly attributed to gross margin expansion [15] Business Line Data and Key Metrics Changes - Tools and Outdoor segment revenue was approximately $3.3 billion, flat year-over-year, with a 2% organic revenue decline due to a 5% pricing benefit offset by a 7% volume decrease [16][18] - DEWALT brand continued to show growth, with revenue expansion across all product lines and regions, reflecting targeted investments in innovation and market activation [17][19] - Engineered Fastening segment revenue grew 3% on a reported basis and 5% organically, driven by a 4% volume increase and a 1% price benefit [19][20] Market Data and Key Metrics Changes - North America organic revenue declined 2%, consistent with overall segment performance, while Europe saw flat organic revenue with growth in the U.K. offset by softness in France and Germany [18][19] - The rest of the world experienced a 1% organic revenue decline, primarily due to market softness in Asia [19] Company Strategy and Development Direction - The company aims to achieve a 35% adjusted gross margin while strengthening its balance sheet, focusing on three strategic imperatives: activating brands with purpose, driving operational excellence, and accelerating innovation [6][10] - The transformation program has generated about $1.9 billion in pre-tax run rate cost savings since mid-2022, with a target of $2 billion by year-end 2025 [23][24] - The company is reducing reliance on Chinese imports, aiming to decrease U.S. supply from China to less than 10% by mid-2026 [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving strong long-term shareholder returns despite a challenging macroeconomic environment [14][35] - The company anticipates continued year-over-year expansion of adjusted gross margin, targeting around 33% for Q4 2025 [30][34] - Adjusted earnings per share for the full year is expected to be approximately $4.55, reflecting higher-than-anticipated production costs [26][29] Other Important Information - The company plans to allocate free cash flow in excess of dividends toward debt reduction and maintaining a strong balance sheet [32][33] - Total pre-tax non-GAAP adjustments for the year are estimated to range between $370-$400 million, primarily related to supply chain transformation and non-cash asset impairment charges [28] Q&A Session Summary Question: How did volumes perform relative to expectations? - Management indicated that volumes were in line with expectations, starting strong but tapering towards the end of Q3 due to a non-standard promotional window [36][37] Question: What are the profit levers for Q4? - Operating profit for Q4 is expected to expand due to gross margin improvements and SG&A reductions, with a targeted gross margin around 33% [39][40] Question: What is the impact of tariff inflation on pricing? - The second price increase is expected to be in the low single-digit range, with minimal impact from recent tariff changes [42][43] Question: How does the company view its position in the housing market? - Management does not see immediate catalysts for housing market growth but believes the company is well-positioned to benefit when the market improves [56] Question: What progress has been made on USMCA compliance? - The company is making significant progress towards USMCA compliance, which is a key part of its mitigation strategy [58]

Financial Data and Key Metrics Changes - The company reported a revenue decline of 0.8% and constant currency revenue growth of 0.7% in the first quarter [28] - Gross margin expanded by 450 basis points year over year to 31.6%, marking the best quarterly results since the company went public [28] - Adjusted EBITDA loss was $3.7 million, an improvement of $9.5 million compared to the same quarter last year [28][32] Business Line Data and Key Metrics Changes - Volume grew by 9.2% in the quarter, with strong performance in Greater China and solid growth in Europe and International [7][29] - North America segment underperformed due to a change in sourcing strategy at the largest customer and SKU rationalization in frozen items [19][32] - The company outperformed both the plant-based milk category and the oat milk category, even with the impact of frozen business decline [20][32] Market Data and Key Metrics Changes - The German business accelerated growth to nearly 8% in the last twelve weeks, while the UK market showed signs of revitalization moving from decline to growth [17][18] - The Greater China segment is still developing, focusing on food service execution and rebuilding retail presence [22][24] Company Strategy and Development Direction - The company aims for disciplined resource allocation to create value and achieve its 2025 priorities, which include igniting positive momentum globally and delivering its first full year of profitable growth as a public company [5][9] - The strategy includes increasing product relevance, attacking barriers to conversion, and expanding availability in the coffee and beverage space [9][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in North America but expressed confidence that investments and action plans will enable acceleration of total company growth later in the year [8][19] - The company expects to continue improving gross margin and adjusted EBITDA, with a target of achieving a gross margin of 35% to 40% in the long term [36][47] Other Important Information - The company reduced its cost of goods sold per liter by 15% year over year and 6% compared to the previous quarter [25] - Free cash flow was a use of $21 million, marking the best quarterly performance as a public company [34] Q&A Session Summary Question: Insights on initiatives in Europe and their impact on category growth - Management noted that while Oatly is outperforming its own performance, category growth for oat milk remains soft, but they are optimistic about future traction as they deploy their strategy in the U.S. [39][41] Question: Expectations for gross margin improvement - Management expects gross margin to improve compared to the previous year, driven by supply chain efficiencies and product mix management, but did not provide a specific number [45][46] Question: Distribution opportunities in North America - Management highlighted ample distribution opportunities across all channels in North America, emphasizing the potential for growth in their new beverage portfolio [53][56] Question: U.S. consumer behavior and category performance - Management indicated that while retail sales momentum has decelerated, they see slight upside in velocities and unit shares, and they are optimistic about igniting new category momentum [60][62] Question: Feedback from foodservice operators on plant-based offerings - Management observed that small to medium foodservice customers are adapting quickly to trends and adopting Oatly's offerings, indicating a shift towards cold beverages [77][81] Question: Reduction in negative media coverage for plant-based products - Management confirmed that they are building alliances and engaging in public education to combat misinformation about plant-based products, which is showing positive results [84][86]