FORWARD LOOKING STATEMENTS CAGNY February 19, 2026 Certain statements in this release other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 ...

Financial Data and Key Metrics Changes - The company reported a decline in adjusted EBITDA of 15% year-over-year, totaling $330 million, which was at the lower end of the guidance range [39] - Adjusted gross margin was 64.2%, reflecting a 260 basis point decline from the prior year, primarily due to an intensified promotional environment during the holiday period [37] - Free cash flow in the first half was $524 million, exceeding guidance and last year's first half free cash flow of $411 million [40] Business Line Data and Key Metrics Changes - In the Prestige segment, like-for-like sales declined by 2%, an improvement from a 6% decline in the previous quarter, driven by reduced retailer destocking and stronger innovation contributions [31][32] - Consumer beauty saw like-for-like sales decline of 6%, improving from an 11% decline in Q1, with a focus on reallocating investments towards core brands [33][34] - The company plans to streamline the innovation pipeline to focus on high-potential launches, particularly in color cosmetics [35] Market Data and Key Metrics Changes - The prestige beauty market grew approximately 5% in Q2, showing a slowdown from 6% growth in Q1, with the prestige fragrance market moderating from 5% to 3% growth [29][30] - Emerging regions like Asia Pacific, Middle East, and Latin America showed strong sell-out performance, balancing weaker sales in key markets like the U.S., Germany, and the U.K. [30] - The U.S. market experienced significant pressure, with the prestige fragrance market slowing and aggressive promotional activity impacting overall growth [16][28] Company Strategy and Development Direction - The company is implementing a new strategic framework called "Coty Curated," focusing on making big brands bigger, scaling successful initiatives, and stopping projects that dilute resources [8][9] - A performance improvement plan named "Color the Future" is being activated to return the consumer cosmetics business to growth and profit expansion [26][33] - The company is committed to operational discipline and prioritizing investments in core brands to drive sustainable growth [10][51] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that financial results over the past 18 months have been disappointing, with a need for improved operational discipline and focus [7][8] - The leadership transition is seen as an opportunity to refine strategic priorities and align with the board for future growth [41][50] - The company expects mid-single-digit declines in like-for-like revenue trends for Q3, primarily driven by consumer beauty [42][45] Other Important Information - The company ended its license with the Aveda skincare brand to focus on scale and profitability [27] - The divestiture of Wella generated $750 million in upfront proceeds, aligning with the company's commitment to divest its financial stake [41] - The company is leveraging AI to enhance operational efficiency and reduce costs in content creation [24] Q&A Session Summary Question: What are the expectations for the upcoming quarters? - The company expects like-for-like sales to decline mid-single digits in Q3, driven by consumer beauty challenges and a highly promotional environment [42][45] Question: How is the company addressing underperformance in the U.S. market? - Management is focusing on reallocating investments towards core brands and improving execution in key markets to close market share gaps [18][33] Question: What is the outlook for gross margins? - The company anticipates gross margins to decline by 200-300 basis points in Q3, influenced by lower sales and a highly promotional environment [46][47]

Core Viewpoint - The Procter & Gamble Company (NYSE:PG) is considered a long-term low volatility investment, but recent analyses indicate a slower recovery in sales growth and challenges in market dynamics [1][2][7]. Financial Performance - For fiscal Q2 2026, Procter & Gamble reported net sales of $22.2 billion, reflecting a 1% increase year-over-year. However, organic sales remained unchanged, indicating stagnation in core business performance [3]. - Diluted net earnings per share were $1.78, down 5% from the previous year, primarily due to restructuring charges [3]. Market Analysis - Berenberg Bank reaffirmed a Hold rating with a price target of $156, while TD Cowen downgraded the stock to Hold from Buy, raising the price target from $150 to $156 [1]. - TD Cowen anticipates that Procter & Gamble's growth will remain subdued at 2% over the next two years, influenced by pressures on the Hispanic consumer and limited pricing power [2]. Company Overview - Procter & Gamble operates in various segments, including Fabric & Home Care, Grooming, Beauty, Health Care, Feminine & Family Care, and Baby, with a strong portfolio of well-known brands such as Tide, Crest, and Olay [4].

Core Viewpoint - Procter & Gamble (P&G) is collaborating with Walmart and Matthew 25: Ministries to provide essential services such as laundry and shower facilities to communities in Mississippi affected by a severe winter storm, emphasizing their commitment to disaster relief efforts [1][3][4]. Group 1: Disaster Relief Efforts - P&G's Disaster Relief Program is activated to support recovery in Oxford and Ripley, MS, offering free laundry services and personal care items to families and first responders [3][4]. - The Tide Loads of Hope Mobile Laundry Unit will provide free laundry services, allowing residents to wash up to two loads of clothing per household [5][10]. - Shower trailers will be available, featuring five private units, including one ADA-compliant, and will provide personal care products from P&G brands [5][9]. Group 2: Community Impact - The severe winter storm has caused significant disruptions in Mississippi, including power outages and hazardous travel conditions, necessitating immediate community support [4][6]. - P&G's partnership with Matthew 25: Ministries aims to distribute personal care kits containing essential hygiene and cleaning products directly to impacted neighborhoods [5][12]. Group 3: Company Background - P&G has a long history of supporting communities affected by natural disasters, with initiatives like Tide Loads of Hope, which has served over 90,000 people since its inception [9][10]. - Walmart, as a partner, plays a crucial role in facilitating these relief efforts, leveraging its extensive network to reach affected individuals [13].

Leadership Changes - Coty is undergoing a leadership change with Markus Strobel, a veteran from Procter & Gamble, set to become the executive chair and interim CEO starting in 2026 [1][7] - Current CEO Sue Nabi will step down after five years, and executive chair Peter Harf will retire after over 30 years of service [2] Company Performance - Coty has experienced a significant decline in its stock value, losing more than 50% since the beginning of the year due to falling sales amid macroeconomic uncertainty and higher tariffs [3][7] - The company reported fiscal first-quarter earnings that missed estimates, indicating ongoing challenges in sales performance [5] Strategic Direction - The appointment of Strobel may signal potential changes in Coty's strategy, particularly as the company launched a strategic review of its consumer beauty business in September [4] - Despite current challenges, Coty anticipates a return to growth by the second half of the fiscal year, although it has noted that retailers are being cautious in their ordering habits [5]

Core Viewpoint - Consumer staple companies may benefit from higher inflation due to their ability to pass on cost increases to customers, but consumer resistance to price hikes is a concern [2]. Group 1: PepsiCo - PepsiCo's second-quarter revenue increased by 2%, driven entirely by higher prices, which contributed 4 percentage points, while lower volume subtracted about 1.5 percentage points [5]. - Adjusted operating income for PepsiCo fell by 3%, indicating that price hikes were insufficient to offset rising costs [5]. - PepsiCo's share price dropped by 16.9% over the past year, contrasting with a 16.8% gain in the S&P 500 index during the same period [6]. - The price-to-earnings (P/E) ratio for PepsiCo increased from 19 to 26, which is still lower than the S&P 500's P/E of 30, suggesting potential for patient investors [7]. Group 2: Procter & Gamble - Procter & Gamble's fiscal third-quarter adjusted sales grew by only 1%, with higher prices accounting for the entire increase and volumes remaining flat [9]. - In the fourth quarter, adjusted sales increased by 2%, with higher prices and mix each contributing 1 percentage point, while volume remained constant [10]. - Procter & Gamble's stock price decreased by 7.9% over the past year, and its P/E multiple contracted from 28 to less than 25 [10].

Core Insights - Procter & Gamble (P&G) plans to cut 7,000 jobs over the next two years, representing about 6% of its workforce, as part of a broader restructuring strategy to navigate an uncertain spending environment influenced by US tariffs [1][4][13] - The company will exit certain product categories and brands in specific markets, which may include divestitures, to streamline operations and focus on core brands like Tide, Pampers, and Old Spice [1][9] - P&G anticipates a before-tax hit of approximately $600 million in fiscal year 2026 due to current tariff rates, which have been volatile [5][9] Job Cuts and Workforce Impact - The job cuts will account for roughly 15% of P&G's non-manufacturing workforce, with expected charges of $1 billion to $1.6 billion before-tax over the two-year period, a quarter of which is anticipated to be non-cash [13] - As of June 2024, P&G had about 108,000 employees [11] Market and Economic Context - The geopolitical environment is described as "unpredictable," with consumers facing "greater uncertainty," largely due to President Trump's tariffs affecting global markets and raising recession concerns in the US [4][6] - The ongoing trade war has resulted in at least $34 billion in lost sales and increased costs for companies [6] Strategic Adjustments - P&G's restructuring aims to simplify its organizational structure by broadening roles and reducing team sizes, which is seen as a way to free up cash for investment in core brands [9] - The company has previously exited markets such as Argentina and restructured operations in Nigeria, indicating a trend towards focusing on more profitable areas [10]