Financial Data and Key Metrics Changes - Reported net sales for Q2 were $4.9 billion, down 7%, with a 6-point headwind from divestitures and acquisitions; organic net sales were down 1% [24] - Adjusted operating profit was $848 million, down 20% in constant currency, primarily due to lower volume and higher input costs [25] - Adjusted diluted earnings per share totaled $1.10, down 21% in constant currency [25] Business Line Data and Key Metrics Changes - North America Retail organic net sales were down 3%, driven by unfavorable price mix, but organic volume growth modestly outpaced Nielsen measured retail volume growth [26] - North America Pet segment net sales were up 11%, with organic net sales up 1%, driven by favorable price mix [27] - North America Foodservice organic net sales were flat, with growth in frozen baked goods and cereal offset by a decline in bakery flour [28] - International segment organic net sales were up 4%, driven by growth in Brazil, China, India, and North Asia [29] Market Data and Key Metrics Changes - In North America Retail, the company held or grew pound share in eight of its top 10 U.S. categories, with Nielsen measured pounds up 1% in Q2 [8][26] - The North America Pet segment saw mid-single-digit growth in cat feeding, while dog feeding results were mixed [16][27] - Internationally, dollar share was held or grown in 54% of priority businesses, led by Häagen-Dazs and Nature Valley [29] Company Strategy and Development Direction - The company is focused on strengthening brand remarkability to restore organic sales growth, with investments in product innovation and brand building [3][4] - Key priorities include returning North America retail to volume growth, accelerating North America pet growth, and driving efficiencies to fund these investments [5][6] - The Remarkable Experience Framework guides brand investment decisions, focusing on product, packaging, brand communications, omnichannel execution, and value [6][10] Management's Comments on Operating Environment and Future Outlook - Management noted a change in consumer behavior, with lower and middle-income consumers increasingly making food purchases on promotion due to economic pressures [9] - The company expects to drive further improvement in organic sales growth in the second half of fiscal 2026, reaffirming its fiscal guidance [4][33] - Management anticipates Q3 operating profit to be down more than previously expected, but expects strong profit growth in Q4 [33] Other Important Information - The adjusted gross margin was 34.8% of net sales, down 150 basis points year-over-year, primarily due to higher input costs [30] - The company plans to launch several new products in the second half of fiscal 2026, focusing on consumer trends such as better-for-you benefits and bold flavors [13][15] Q&A Session Summary Question: What are the expectations for organic net sales in the second half of fiscal 2026? - The company expects improved organic net sales driven by the expanded impact of remarkability investments and trade timing benefits in Q4 [33] Question: How is the company addressing the challenges in the North America retail segment? - The company is focused on delivering more value to consumers and amplifying elements of the remarkability framework to improve competitiveness [10] Question: What are the growth prospects for the North America pet segment? - The company is confident in its plans for the North America pet segment, expecting further acceleration in organic sales growth in the second half of fiscal 2026 [18]

Financial Data and Key Metrics Changes - Reported net sales for Q2 were $4.9 billion, down 7%, with a 6-point headwind from divestitures and acquisitions [23] - Organic net sales decreased by 1%, while organic volume was flat, showing sequential improvement from Q1 [25] - Adjusted operating profit was $848 million, down 20% in constant currency, primarily due to lower volume and higher input costs [24][30] - Adjusted diluted earnings per share totaled $1.10, down 21% in constant currency [24] Business Line Data and Key Metrics Changes - North America Retail organic net sales were down 3%, driven by unfavorable price mix, but organic volume growth modestly outpaced Nielsen measured retail volume growth [25] - North America Pet segment saw a net sales increase of 11%, with organic net sales up 1%, driven by favorable price mix [26] - North America Foodservice organic net sales were flat, with growth in frozen baked goods and cereal offset by a decline in bakery flour [27] - International segment organic net sales increased by 4%, led by growth in Brazil, China, India, and North Asia [28] Market Data and Key Metrics Changes - In North America Retail, the company held or grew pound share in eight of its top 10 U.S. categories [8][25] - The North America Pet segment experienced mid-single-digit growth in cat feeding, while dog feeding results were mixed [16] - The international segment held or grew dollar share in 54% of priority businesses, with strong performance from Häagen-Dazs and Nature Valley [28] Company Strategy and Development Direction - The company is focused on enhancing the "Remarkability" of its brands to restore organic sales growth [3] - Key priorities include returning North America retail to volume growth, accelerating North America pet growth, and driving efficiencies to fund investments [5][6] - The Remarkable Experience Framework guides brand investment decisions, focusing on product, packaging, brand communications, omnichannel execution, and value [6][10] Management's Comments on Operating Environment and Future Outlook - Management noted a change in consumer behavior, with lower and middle-income consumers increasingly making food purchases on promotion [9] - The company remains confident in its strategy to deliver more value to consumers amid economic pressures [10] - Fiscal 2026 guidance was reaffirmed, with expectations for improved organic net sales in the second half [32][33] Other Important Information - The adjusted gross margin was 34.8% of net sales, down 150 basis points due to higher input costs [29] - Capital investments in the first half totaled $253 million, with $659 million paid in dividends [31] Q&A Session Summary Question: What are the expectations for organic net sales in the second half of fiscal 2026? - The company expects improved organic net sales driven by the expanded impact of remarkability investments and favorable trade timing benefits in Q4 [32] Question: How is the company addressing the challenges in the North America Pet segment? - The company is focusing on strengthening the core Blue Buffalo business and driving growth through new product launches like Love Made Fresh [18] Question: What are the anticipated impacts of divestitures on future performance? - The divestitures are expected to continue to pose headwinds, but the company is managing these impacts through strategic investments and operational efficiencies [24][30]

Financial Data and Key Metrics Changes - The company is experiencing significant changes in the food category and within its business, including the Yoplait divestiture and the Whitebridge acquisition [3][4] - Profit results in Q1 were expected to be pressured by increased investment and the impact from the yogurt divestiture [5][6] - The company reaffirmed its fiscal 2026 guidance, indicating confidence in its strategy despite current pressures [6] Business Line Data and Key Metrics Changes - The company has strengthened its pound share in eight of its top ten categories and is holding pound share in pet [5][6] - New product volumes are up 25%, with strong initiatives planned for Q2, particularly in fresh pet food and other categories [6][7] - The cereal business showed improvement with second consecutive quarter of pound share growth, particularly for Cheerios Protein and granola [20] Market Data and Key Metrics Changes - The North America Retail category is experiencing flat volume growth, which is about 50 basis points below historical averages [11][12] - The company noted a shipment timing headwind in the Pet segment, impacting total company pounds in the quarter [22] Company Strategy and Development Direction - The company is focused on returning to profitable organic growth as the best way to create shareholder value [3] - Significant investments are being made in innovation, new product news, and brand campaigns across all top categories [5] - The company is adjusting its pricing strategy to address consumer value perceptions and is confident in the effectiveness of these adjustments [35] Management's Comments on Operating Environment and Future Outlook - Management believes that the current volume environment is largely within the company's control, despite external pressures [11][12] - The company is optimistic about the early signs of improvement and plans to continue its positive momentum in food service and international markets [6][7] - Management acknowledged the impact of GLP-1 medications on consumer behavior but sees opportunities in meeting changing consumer demands [68][69] Other Important Information - The company is actively working on reformulating products to eliminate artificial dyes and is navigating regulatory challenges effectively [58][60] - The company is increasing its focus on new product innovation, with new products now accounting for approximately 5% of net sales, up from 3.5% [62] Q&A Session Summary Question: Insights on the volume environment and structural challenges - Management believes the volume environment is largely within their control, with current trends being slightly better than expected [11][12] Question: Path back to volume growth and reported volume decline - Management explained that while volume improved in top categories, declines in flour and desserts impacted overall volume [20] Question: Trends in dog food and pet treats - The core pet business held pound share, with positive growth in Blue Life Protection Formula and Tiki Cat, but challenges remain in the Wilderness brand [26][28] Question: Balance between scale and complexity in the portfolio - Management emphasized the importance of focusing on consumer needs and leveraging scale for better execution across categories [30][31] Question: Impact of price promotions and category performance - Management noted that price adjustments have been effective, with improvements seen in bars, fruit snacks, and salty snacks [35] Question: Household penetration gains and driving factors - Household penetration grew for the first time since fiscal 2022, driven by effective pricing and innovation in key categories [50][51] Question: Demand planning improvements and technology use - The company is leveraging AI for better forecasting, allowing marketing teams to focus on demand generation [52][53] Question: Efforts on reformulation and consumer concerns - The company is actively working to remove artificial dyes and is prepared to navigate state-level regulations [58][60] Question: Innovation contribution to sales - New products now account for about 5% of sales, with a focus on impactful innovations across all segments [62] Question: Clarification on operating profit expectations - Management confirmed expectations for operating profit to be down in Q2, similar to Q4 of the previous year [76][77] Question: Competition in the away-from-home channel - Management noted stable traffic in the away-from-home channel and emphasized the company's strong position in the non-commercial food service sector [80]

Financial Data and Key Metrics Changes - The company reported a profit performance in Q1 that was better than expected, with operating profit and EPS showing positive results due to lighter inflation phasing and trade expense timing benefits [43][44][46] - The overall volume reported was down by 1%, despite holding or gaining share in eight out of ten categories, primarily due to declines in flour and desserts [17][20] Business Line Data and Key Metrics Changes - The company saw improvements in volume for its top ten categories, with notable growth in refrigerated dough, fruit snacks, and salty snacks, while the cereal business showed second consecutive quarter of pound share growth [20][50] - New product volumes increased by 25%, with successful launches such as Cheerios Protein and Mott bars contributing to this growth [6][62] Market Data and Key Metrics Changes - The North America Retail segment's volume remained flat, with a slight decline in overall volume reported, attributed to specific categories like flour and desserts [11][17] - The pet food segment held its pound share, with positive growth in the Blue Buffalo Life Protection Formula and cat feeding business, although the Wilderness brand faced challenges [26][27] Company Strategy and Development Direction - The company is focused on returning to profitable organic growth as a primary strategy, emphasizing significant investments in innovation, new product launches, and brand campaigns [3][5] - The company plans to complete price adjustments across two-thirds of its portfolio to enhance competitiveness and drive value for consumers [36][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and noted that early signs of improvement are encouraging, with expectations for better performance in the second half of the fiscal year [6][7] - The impact of GLP-1 medications on consumer behavior was acknowledged, with management noting opportunities to cater to changing consumer needs for higher protein products [10][70] Other Important Information - The company is transitioning to a focus on digital technology and AI for better demand forecasting, which is expected to enhance marketing effectiveness and operational efficiency [52][53] - The company is actively working on reformulating products to meet consumer demands for cleaner ingredient lists, with a commitment to eliminate artificial dyes by next summer [58][59] Q&A Session Summary Question: Insights on the volume environment and structural challenges - Management believes the volume environment is largely within their control, with recent pricing adjustments expected to improve volume share [10][11] Question: Path back to volume growth and category performance - Management expects volume growth to return by Q4, with current performance slightly below expectations due to specific category challenges [17][18] Question: Trends in the pet food segment - The pet food segment showed mixed results, with some brands performing well while others, like Wilderness, require improvement [25][26] Question: Impact of pricing adjustments on household penetration - The company saw household penetration grow for the first time since fiscal 2022, driven by effective pricing strategies and product innovation [49][50] Question: Innovation and product reformulation efforts - The company is increasing its focus on innovation, with new products now accounting for approximately 5% of sales, up from 3.5% [62][63] Question: Competitive landscape and away-from-home eating trends - Management noted that while competition in the away-from-home channel is increasing, the company is well-positioned to capture growth in non-commercial channels [80][81]