Core Insights - The company has executed a decisive step to focus on key categories and brands by agreeing to sell its North American snacks business to Snackrupters for $115 million, with proceeds aimed at reducing debt and strengthening financial position [1][5][29] - The strategic review aims to simplify the portfolio, enhance financial flexibility, and maximize shareholder value, with a focus on three flagship categories: tea, yogurt, and baby and kids [2][6][13] Financial Performance - North American snacks represented 22% of the company's net sales in fiscal 2025 and 38% of the North America segment's net sales, contributing negligible EBITDA over the last twelve months [5][19] - The adjusted gross margin for the second quarter was 19.5%, a decrease of approximately 340 basis points year over year, driven by cost inflation and lower volume mix [16] - Adjusted EBITDA for the second quarter was $24 million, down from $38 million a year ago, reflecting lower gross margins partially offset by reduced SG&A expenses [19] Operational Improvements - The company has seen improvements in forecast accuracy, inventory management, and service levels, with North America achieving over 96% service levels in the quarter [10][11] - SG&A expenses decreased by 13% year over year to $61 million, representing 15.9% of net sales compared to 17% in the prior year [16][17] - The company is implementing a turnaround strategy centered on five key actions to win, including streamlining the portfolio and enhancing digital capabilities [8][32] Strategic Focus - The divestiture of the snacks business is seen as a pivotal moment, allowing the company to concentrate on higher-margin categories with expected gross margins above 30% and EBITDA margins in the low double digits [6][31] - The company plans to reinvest in remaining categories, leveraging freed-up resources from the divestiture to enhance innovation and marketing efforts [45][46] - The strategic review is expected to yield a multistage plan aimed at improving liquidity and leverage, with the divestiture being a significant first step [29][30] Market Outlook - The company anticipates strong cost management and productivity improvements in the second half of fiscal 2026, with expectations for positive free cash flow [32][33] - Innovations in the tea and yogurt segments are expected to drive growth, with the company focusing on areas where it holds a strong market position [56][63] - The company is committed to enhancing its financial position and operational health, aiming for sustainable, profitable growth and long-term shareholder value [34][35]