Financial Data and Key Metrics Changes - In fiscal 2025, the company generated net sales of $1.2 billion in Q4, which was $177 million, or 17% above the prior year [16] - Adjusted operating profit for the quarter was $225 million, up $47 million, or 26% from last year [16] - Adjusted diluted earnings per share increased to $5.20, which was an increase of $0.90, or 21% over the prior year [18] Business Line Data and Key Metrics Changes - Acuity Brands Lighting (ABL) delivered sales of $962 million, an increase of $7 million, or 1% versus the prior year [18] - Adjusted operating profit for ABL increased by $22 million to $194 million, with an adjusted operating profit margin of 20.1%, up 210 basis points compared to the prior year [18] - Acuity Intelligent Spaces (AIS) sales for Q4 were $255 million, an increase of $171 million [19] Market Data and Key Metrics Changes - The independent sales network for ABL grew by $25 million, or 4%, while corporate accounts and direct sales network experienced declines [18] - Atrius and Distech combined grew approximately 13%, while QSC grew approximately 15% year-over-year [19] Company Strategy and Development Direction - The company is focused on organic investments for future growth, particularly in underpenetrated verticals such as healthcare [8] - The strategy includes leveraging technology to create impactful experiences and improve productivity [12] - The company aims to grow with the market, take share, and enter new verticals while expanding margins [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver results despite a tepid economic environment, emphasizing a clear growth algorithm [41] - The company does not expect significant market improvement in the near term but remains focused on maintaining performance [41] - For fiscal 2026, the expectation is net sales will be within the range of $4.7 billion to $4.9 billion, with adjusted diluted EPS between $19 and $20.50 [22] Other Important Information - The company has made significant changes to its supply chain to mitigate tariff impacts, reducing exposure to China significantly [54] - A non-cash charge of approximately $31 million was recognized due to de-risking pension plans [17] - The company increased its dividend by 13% and repurchased approximately 436,000 shares at an average price of around $270 [21] Q&A Session Summary Question: Integration of QSC and M&A pipeline - Management is pleased with the integration of QSC and has a consistent pipeline of potential acquisitions to expand the portfolio [25] Question: ABL's sequential ramp and market conditions - Management indicated that ABL's performance is strong and aligned with expectations despite some softness in corporate accounts [27] Question: Key milestones for AIS integration - Management highlighted ongoing organic development and the combination of products from QSC, Distech, and Atrius as key milestones [32] Question: Pricing strategy in ABL - Management noted that pricing actions have been strategic, with increases in the low to mid-single digits to offset tariff impacts [33] Question: Market demand and economic stability - Management does not expect significant improvement in market conditions and emphasizes the company's ability to perform in a challenging environment [41] Question: QSC margins and future expectations - Management is optimistic about QSC's margin expansion and expects continued growth in AIS [52] Question: Cost actions and sourcing changes - Management detailed significant reductions in sourcing from China and ongoing productivity efforts to manage costs [55] Question: Inventory levels and normalization - Management explained that elevated inventory levels are due to higher costs from tariffs and proactive inventory management [82]

Financial Data and Key Metrics Changes - In fiscal 2025, the company generated net sales of $1.2 billion in Q4, which was $177 million, or 17% above the prior year [16] - Adjusted operating profit for the quarter was $225 million, up $47 million, or 26% from last year [16] - Adjusted diluted earnings per share increased to $5.20, which was an increase of $0.90, or 21% over the prior year [18] Business Line Data and Key Metrics Changes - Acuity Brands Lighting (ABL) delivered sales of $962 million, an increase of $7 million, or 1% versus the prior year [18] - Adjusted operating profit for ABL increased by $22 million to $194 million, with an adjusted operating profit margin of 20.1%, up 210 basis points compared to the prior year [18] - Acuity Intelligent Spaces (AIS) sales for Q4 were $255 million, an increase of $171 million [19] Market Data and Key Metrics Changes - The independent sales network for ABL grew by $25 million, or 4%, while corporate accounts and direct sales network experienced declines [18] - Atrius and Distech combined grew approximately 13%, while QSC grew approximately 15% year over year [19] Company Strategy and Development Direction - The company is focused on organic investments for future growth, particularly in underpenetrated verticals such as healthcare [7] - The acquisition of QSC has expanded the geographic footprint of the AIS business, enhancing multinational expansion [10] - The company aims to grow with the market, take share, and enter new verticals while continuing to expand margins [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver results despite a tepid economic environment, emphasizing a clear growth algorithm [35] - The expectation for fiscal 2026 is net sales within the range of $4.7 billion and $4.9 billion, with adjusted diluted EPS between $19 and $20.50 [21] - Management noted that they are not modeling expectations of improvement in the economic context for the lighting market [35] Other Important Information - The company has made significant changes to its supply chain to mitigate tariff impacts, reducing exposure to China significantly [46] - The company generated $601 million of cash flow from operations during the fiscal year, which was $18 million lower than last year [19] - A dividend increase of 13% was announced, along with a share repurchase of approximately 436,000 shares [20] Q&A Session Summary Question: Integration of QSC and M&A pipeline - Management is pleased with the integration of QSC and has a consistent pipeline of potential acquisitions to expand the Intelligent Spaces portfolio [24] Question: ABL performance and market conditions - ABL's performance is strong, and management believes they have outperformed the industry despite some softness in corporate accounts [26] Question: AIS integration and milestones - Key milestones include organic development of each business and the commingling of products to deliver unique experiences [31] Question: Guidance on ABL pricing and margins - Pricing actions have been strategic, with increases in the low to mid-single digits to offset tariff impacts [32] Question: Market demand and economic stability - Management does not expect significant improvement in market conditions and emphasizes their ability to perform in a challenging environment [35] Question: QSC margins and growth - QSC has shown strong performance and margin improvement, with expectations for continued growth and margin expansion [44] Question: Tariff impacts and sourcing strategies - The company has significantly reduced its sourcing from China and is dynamically managing its supply chain to mitigate tariff impacts [46] Question: Inventory levels and absorption benefits - Elevated inventory levels are due to higher costs from tariffs and proactive inventory management to mitigate future costs [65]

Financial Data and Key Metrics Changes - Conagra's organic net sales for Q1 2026 were $2.6 billion, reflecting a 0.6% decline compared to the prior year [18] - Adjusted gross margin was 24.4% and adjusted operating margin was 11.8%, both down from the previous year but slightly better than initial expectations [18] - Adjusted earnings per share (EPS) were $0.39, down $0.14 from the year-ago period [18] Business Line Data and Key Metrics Changes - Grocery and Snacks segment net sales were $1.1 billion, representing a 1% decline in organic net sales [19] - Refrigerated and Frozen segment also delivered $1.1 billion in net sales, with organic net sales up 0.2% [20] - International segment organic net sales declined 3.5%, while Foodservice segment returned to growth with a 0.2% increase [20] Market Data and Key Metrics Changes - 44% of Conagra's portfolio held or gained volume share in Q1, an improvement from Q4 fiscal 2025 [7] - Frozen portfolio volumes improved by 3.2 points compared to Q4 fiscal 2025, with significant share gains in frozen vegetables, meals, and prepared chicken [8] - Snacks business saw strong volume in protein snacks, but faced declines in specific products due to promotional timing shifts [10] Company Strategy and Development Direction - The company is focused on growing its frozen and snacks segments while investing in supply chain resiliency [16] - Conagra is maintaining a disciplined approach to capital allocation, with $450 million planned for capital expenditures [15] - The company successfully completed divestitures of Chef Boyardee and frozen seafood businesses, using proceeds to reduce net debt by over $400 million [13] Management's Comments on Operating Environment and Future Outlook - Management expects inflationary pressures and weak consumer sentiment to persist, reaffirming full-year guidance for fiscal 2026 [5] - Core inflation expectations have increased to the low 7% range, primarily due to rising costs in animal proteins [14] - The company anticipates organic net sales growth for the second half of the year as supply constraints ease [28] Other Important Information - Conagra reduced net debt by nearly $1.1 billion compared to the year-ago period, ending the quarter with net leverage at 3.55 times [25] - The company is on track to complete its supply chain modernization efforts, including the Baked Chicken project [12] - Adjusted SG&A expenses were unfavorable to the prior year due to higher incentive compensation and advertising spend [22] Q&A Session Summary Question: What are the expectations for organic net sales growth? - The company continues to expect organic net sales growth in the range of negative 1% to positive 1% for fiscal 2026 [26] Question: How is the company managing inflation and tariff costs? - The company has been able to mitigate a large portion of tariff costs in Q1 but expects higher net tariff costs in Q2 due to inventory utilization [28] Question: What is the outlook for the second quarter? - The company expects organic net sales to decline in low single digits in Q2, driven by recent consumption trends and trade expense shifts [28]

Financial Data and Key Metrics Changes - For Q1 fiscal 2026, revenues increased by 1% on a reported basis but decreased by 1% on a currency-neutral basis [21] - Gross margins declined by 320 basis points to 42.2% due to higher wholesale discounts, increased product costs, and channel mix headwinds [22] - Earnings per share were reported at $0.49 [22] - Inventory decreased by 2% compared to the prior year, indicating progress towards a healthier marketplace [23] Business Line Data and Key Metrics Changes - Nike Direct revenue declined by 5%, with Nike Digital down 12% and Nike stores down 1%, while wholesale grew by 5% [22] - In North America, revenue grew by 4%, with running, training, and basketball each delivering double-digit growth [23] - Sportswear showed growth but faced a 30% decline in classic footwear franchises [24] Market Data and Key Metrics Changes - Greater China experienced a revenue decline of 10%, with Nike Direct down 12% and Nike Digital down 27% [26] - EMEA revenue grew by 1%, with Nike Direct down 6% and Nike Digital down 13% [25] - APLA revenue grew by 1%, with Nike Direct down 6% and Nike Digital down 8% [27] Company Strategy and Development Direction - The company is focusing on a "sport offense" strategy to align its brands (Nike, Jordan, Converse) into more nimble teams by sport, enhancing consumer insights and innovation [6][9] - The strategy aims to maximize the portfolio across various sports and retail channels, leveraging distinct brand identities [7][8] - The company is committed to improving its position in Greater China and enhancing the digital marketplace while reducing reliance on classic franchises [18][32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the cautious consumer environment and tariff uncertainties but expressed confidence in the win-now actions to drive recovery [19][30] - The company expects Q2 revenues to decline by low single digits, with gross margins down approximately 300 to 375 basis points due to new tariffs [31] - There is an emphasis on long-term growth potential, particularly in North America, while Greater China is expected to face challenges [32][34] Other Important Information - The company has activated 12 sport takeover moments in the past 10 months, connecting athlete performances to commercial assortments [14] - New partnerships, such as with Skims, are aimed at expanding product offerings and reaching new consumer segments [12][11] - The company is investing in Nike ACG to address outdoor activity opportunities, launching new high-performance products [11] Q&A Session Summary Question: Insights on the spring order book and margin recovery - Management highlighted that the spring order book is positive, reflecting growth in North America and a commitment to returning to double-digit margins over time [40][45] - The focus is on reigniting organic growth and improving the full-price mix to achieve margin recovery [46][47] Question: Update on September trading and consumer demand - Management noted that Q1 performance was not influenced by pull-forwards, and they are closely monitoring consumer signals [50][53] - The company expects significant headwinds in Q2 due to reduced promotional activity and a shift in the Dunk franchise [54] Question: Strategies for Greater China and digital business turnaround - Management emphasized the long-term opportunity in China, focusing on innovative products and local athlete activations to drive growth [69][70] - Investments have been made to clean up inventory, but profitability will depend on improved sell-through rates [72]

Financial Data and Key Metrics Changes - Revenues for the quarter were up 1% on a reported basis and down 1% on a currency-neutral basis [20] - Gross margins declined 320 basis points to 42.2% due to higher wholesale discounts, increased product costs, and channel mix headwinds [21] - Earnings per share was $0.49 [21] - Inventory decreased 2% versus the prior year, indicating progress towards a healthier marketplace [22] Business Line Data and Key Metrics Changes - Nike Direct was down 5%, with Nike Digital declining 12% and Nike stores down 1% [21] - Wholesale grew 5%, indicating a positive trend in that segment [21] - The running business grew over 20% this quarter, showcasing strong performance in that category [9] - Sportswear continued to decline, with a 30% drop in classic footwear franchises [23][15] Market Data and Key Metrics Changes - North America revenue grew 4%, with wholesale up 11% [22] - Greater China revenue declined 10%, with Nike Digital down 27% and Nike stores down 4% [25] - EMEA revenue grew 1%, with Nike Digital down 13% and Nike stores up 1% [24] - APLA revenue grew 1%, with Nike Digital down 8% and Nike stores down 5% [26] Company Strategy and Development Direction - The company is focusing on the "Sport Offense" strategy, which aims to align teams by sport for better consumer insights and innovation [6] - There is a commitment to improving the sportswear segment and addressing challenges in Greater China and Nike Direct [15][17] - The company is investing in innovative products and emotional storytelling to connect with consumers [19] - The goal is to serve consumers across multiple channels, including specialty sporting goods and Nike Direct [63] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a cautious consumer environment and tariff uncertainties impacting business recovery [19] - There is confidence in the Win Now actions and the potential for growth, particularly in North America [19] - The company expects Q2 revenues to be down low single digits, reflecting ongoing challenges [30] - Management remains focused on long-term health and profitability despite short-term pressures [34] Other Important Information - The company is facing a significant cost headwind from new tariffs, estimated at approximately $1.5 billion annually [28] - The strategic decision to reduce reliance on classic franchises and pull back on promotions is aimed at long-term brand health [18] - The company is actively working on refreshing retail environments and improving consumer experiences in Greater China [70] Q&A Session Summary Question: Can you help us think about the spring order book in the context of the holiday book? - Management noted that the spring order book is positive and reflects growth across North America, EMEA, and APLA, offsetting headwinds in Greater China [39][44] Question: How is the current marketplace in September trading? - Management indicated that the environment is dynamic, with good sell-throughs for recent product launches, but they are closely monitoring consumer behavior [49][51] Question: Can you elaborate on the early wins in North America and running? - Management highlighted a 20% growth in running and positive momentum in North America, attributing success to the Win Now actions and the Sport Offense strategy [57][59] Question: How much of the pressure in Nike Digital is due to reduced promotions? - Management confirmed that the organic traffic decline is primarily due to strategic repositioning and reduced promotional activity, with a focus on building momentum with wholesale partners [63][66] Question: What strategies are being used to turn the digital business in China? - Management emphasized leading with sport, innovative products, and local athlete activations to improve the digital marketplace, while also focusing on store refreshes [68][70]

Financial Data and Key Metrics Changes - Revenues for Q1 2026 were up 1% on a reported basis and down 1% on a currency-neutral basis [20] - Gross margins declined 320 basis points to 42.2% due to higher wholesale discounts, increased product costs, and channel mix headwinds [21] - Earnings per share was $0.49 [22] - Inventory decreased 2% versus the prior year, indicating progress towards a healthier marketplace [23] Business Line Data and Key Metrics Changes - Nike Direct was down 5%, with Nike Digital declining 12%, while wholesale grew 5% [21] - The running business grew over 20% this quarter, showcasing strong consumer response to new innovations [10] - Sportswear business continues to decline, with a 30% drop in classic footwear franchises [24][15] Market Data and Key Metrics Changes - North America revenue grew 4%, with wholesale up 11% [23] - Greater China revenue declined 10%, with Nike Digital down 27% [26] - EMEA revenue grew 1%, with Nike Digital down 13% [25] Company Strategy and Development Direction - The company is focusing on a "sport offense" strategy to align its brands (Nike, Jordan, Converse) into more nimble teams by sport [6] - There is a commitment to improving the marketplace through innovative product offerings and emotional storytelling [19] - The company aims to enhance its digital presence while reducing reliance on classic franchises [18] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a cautious consumer environment and tariff uncertainties impacting business recovery [19] - There is confidence in the win-now actions and the potential for growth in North America, despite challenges in Greater China [34] - The company expects Q2 revenues to be down low single digits, with gross margins declining due to new tariffs [32] Other Important Information - The company has activated 12 sport takeover moments in the past 10 months to connect athlete performances with commercial assortments [14] - New partnerships, such as with Skims, are aimed at expanding product offerings and reaching new consumers [12] Q&A Session Summary Question: Insights on the spring order book and holiday book context - Management noted that the spring order book is positive, reflecting growth in North America and EMEA, offsetting headwinds in Greater China [41][46] Question: Update on September trading and consumer demand - Management confirmed that Q1 performance was not influenced by pull forwards, with wholesale growth contributing to the results [51][54] Question: Early wins in North America and running growth - The company highlighted a 20% growth in running and positive signals from wholesale partners as indicators of success [58][59] Question: Traffic headwinds in Nike Digital - Management acknowledged that the decline in organic traffic is primarily due to strategic reductions in promotions and repositioning efforts [63][64] Question: Strategies for Greater China and store refresh costs - The company is focused on innovative products and local athlete activations to drive growth in China, with ongoing investments in the marketplace [66][69]

Financial Data and Key Metrics Changes - Revenues increased by 1% on a reported basis but decreased by 1% on a currency-neutral basis [20] - Gross margins declined by 320 basis points to 42.2% due to higher wholesale discounts, increased product costs, and channel mix headwinds [21] - Earnings per share was reported at $0.49 [22] - Inventory decreased by 2% compared to the prior year [23] Business Line Data and Key Metrics Changes - Nike Direct declined by 5%, with Nike Digital down 12% and Nike stores down 1% [21] - Wholesale grew by 5% [21] - Running business grew over 20% this quarter, indicating strong consumer response [10] - Sportswear business continues to decline, with a 30% drop in classic footwear franchises [24][15] Market Data and Key Metrics Changes - North America revenue grew by 4%, with wholesale up 11% [23] - Greater China revenue declined by 10%, with Nike Digital down 27% [26][27] - EMEA revenue grew by 1%, with Nike Digital down 13% [25] - APLA revenue grew by 1%, with Nike Digital down 8% [27] Company Strategy and Development Direction - The company is focusing on a "sport offense" strategy to align its brands (Nike, Jordan, Converse) into more nimble teams by sport [6] - The strategy aims to enhance consumer insights and drive innovation in storytelling [6] - The company is committed to improving its position in Greater China despite facing structural challenges [17] - Plans to refresh retail environments and improve seasonal sell-through trends are underway [27] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a cautious consumer environment and tariff uncertainties impacting business recovery [19] - The company is optimistic about the potential for growth in China, emphasizing the importance of sport and innovative products [17] - Future revenue guidance for Q2 indicates a low single-digit decline, with expectations for gross margins to decrease by 300 to 375 basis points [32] Other Important Information - The company is experiencing a significant cost headwind from new tariffs, estimated at approximately $1.5 billion annually [30] - The strategic decision to reduce reliance on classic franchises and pull back on promotions is aimed at long-term brand health [18] Q&A Session Summary Question: Insights on the spring order book and medium-term margin levels - Management highlighted that the spring order book is positive, reflecting growth in North America and a commitment to returning to double-digit margins over time [41][46] Question: Update on September trading and consumer demand - Management noted that the environment is dynamic, with good sell-throughs for new product launches, but emphasized the need to focus on inspiring through sport [51][52] Question: Traffic headwinds in Nike Digital and milestones for profitable growth - Management acknowledged that organic traffic is down due to strategic reductions in promotions, but emphasized the importance of elevating the entire marketplace [63][64] Question: Strategies for turning around the Greater China digital business - Management expressed confidence in the long-term opportunity in China, focusing on innovative products and better storytelling to drive growth [66][67]

Financial Data and Key Metrics Changes - First quarter net sales increased by $5 million, including a $24 million favorable impact from foreign currency translation, but declined 1% on a constant currency basis [15] - Volume increased by 6%, driven by customer wins and retention, primarily in North America and Asia [15] - Adjusted EBITDA was essentially flat at $302 million, with the favorable impact from currency translation offset by higher local currency expenses [21] Business Line Data and Key Metrics Changes - North America net sales declined 2% compared to the prior year, primarily due to lower net selling prices, with price/mix declining 7% and volume increasing 5% [17] - International segment net sales increased 4%, including a favorable $24 million impact from foreign currency translation, with volume growing 6% and price/mix declining 6% [17] - Adjusted EBITDA in North America declined 6% to $260 million, while international segment adjusted EBITDA increased by $6 million to $57 million [22] Market Data and Key Metrics Changes - Restaurant traffic in the U.S. was flat, with QSR hamburger traffic down low single digits, while QSR chicken traffic was up [16][78] - Internationally, traffic was mixed, with the U.K. down 4% but other markets like France and Germany showing slight increases [78] Company Strategy and Development Direction - The company is executing its new strategic plan, "Focus to Win," aiming for profitable growth through category-leading innovation and customer-centric actions [4][5] - The company is prioritizing specific markets and products where it has a sustainable competitive advantage [7] - New innovative products are set to launch in the fall, including flavor-forward offerings and artisanal fries [11] Management's Comments on Operating Environment and Future Outlook - Management noted positive customer momentum and strong volume growth, with expectations for continued growth in both segments [4][26] - The company anticipates challenges in price/mix due to strong crop yields and competitive actions, particularly in Latin America [18][26] - Management reaffirmed its fiscal 2026 outlook, expecting revenue in the range of $6.35 billion to $6.55 billion [25][26] Other Important Information - The company ended the quarter with approximately $1.4 billion of liquidity and generated $352 million of cash from operations [23] - Capital expenditures for the quarter declined to $79 million, with expectations of approximately $500 million for fiscal 2026 [24] Q&A Session Summary Question: Restarting a curtailed production line and industry capacity - Management indicated the restart was necessary to meet demand signals and maintain customer fill rates, noting that some announced industry capacity may be delayed or canceled [36][37] Question: Price/mix expectations for the first half of the fiscal year - Management expects a mid to high single-digit decrease in price/mix for the first half, moderating in the back half of the year [39] Question: Gross margin commentary and seasonal increases - Management confirmed that the North America segment will see a seasonal increase, but input cost inflation will also impact margins [45] Question: Tariff exposure and guidance - Most tariff exposure relates to imports of palm oil, with an expected annualized impact of about $25 million [47] Question: Customer wins and profitability - Management refrained from discussing specific profitability on new customers but emphasized that pricing aligns with expectations [100] Question: Capital expenditures outlook - Management indicated that the $500 million capital expenditure plan is in line with expectations for maintenance and environmental projects [101]

Financial Data and Key Metrics Changes - First quarter net sales increased by $5 million, including a $24 million favorable impact from foreign currency translation, but declined 1% on a constant currency basis [15] - Volume increased by 6%, driven by customer wins and retention, primarily in North America and Asia [15] - Adjusted EBITDA was essentially flat at $302 million, with the favorable impact from currency translation offset by higher local currency expenses [21] Business Line Data and Key Metrics Changes - North America net sales declined 2% compared to the prior year, primarily due to lower net selling prices, with price/mix declining 7% and volume increasing 5% [17] - International segment net sales increased 4%, including a favorable $24 million impact from foreign currency translation, with volume growing 6% and price/mix declining 6% [17] Market Data and Key Metrics Changes - Restaurant traffic in the U.S. was flat, with QSR hamburger traffic down low single digits, while QSR chicken traffic was up [16][78] - Internationally, traffic was mixed, with the U.K. down 4% but other markets like France and Germany showing slight increases [78] Company Strategy and Development Direction - The company is executing its new strategic plan, "Focus to Win," aiming for profitable growth through category-leading innovation and customer-centric actions [4][5] - The company is prioritizing specific markets and products where it has a sustainable competitive advantage [7] Management's Comments on Operating Environment and Future Outlook - Management noted that the industry is rational regarding capacity, with some announced capacity not moving forward as planned [36] - The company expects continued pressure on price/mix due to a strong crop and competitive actions, particularly in Latin America [18] Other Important Information - The company is on track to achieve at least $250 million of annual run-rate savings by fiscal year-end 2028 [5] - Capital expenditures for the quarter declined to $79 million, with expectations of approximately $500 million for fiscal 2026 [24] Q&A Session Summary Question: Restarting a curtailed production line and supply-demand imbalance - Management indicated the restart was necessary to meet demand signals and maintain customer fill rates, noting that not all new capacity announcements will proceed as planned [36][37] Question: Price/mix expectations for the first fiscal half - Management expects a mid to high single-digit decrease in price/mix for the first half, moderating to low to mid in the back half of the year [39] Question: Gross margin commentary for North America - Management confirmed a seasonal increase in North America, with input cost inflation expected to rise in Q2 but benefits from lower potato prices also anticipated [45] Question: Tariff exposure - Most tariff exposure relates to imports of palm oil and other ingredients, with an annualized expectation of about $25 million [47] Question: New customer wins and profitability - Management refrained from discussing specific profitability on new customers but emphasized that pricing aligns with the P&L moving forward [100] Question: Capital expenditures outlook - Management indicated that the $500 million capital expenditure for the year is in line with expectations for maintenance and environmental projects [101]

Financial Data and Key Metrics Changes - Operating free cash flow grew by 16% in the first half of the year, significantly outpacing the top line growth of 6% [10] - Net revenue reached R$98.2 million, a 6.5% increase compared to the first half of 2024 [11] - Adjusted EBITDA for the first half was $21 million, representing a 20% decline compared to the same period last year [11] - Revenue recurrence reached 92.2%, with churn decreasing to 2.4% a year, reflecting improved customer engagement [11] Business Line Data and Key Metrics Changes - Cost savings of R$5.2 million were unlocked through automation and AI initiatives, equating to 50% of all free cash flow generated in 2024 [5] - The company established a foundation for an additional R$12 million in savings over the next 12 months [5] - The implementation of AI has led to a 40% increase in productivity for engineers working with Claude Code [5] Market Data and Key Metrics Changes - The average EBITDA multiple for acquisitions has decreased to around 3.5 times, down from 10 to 13 times two years ago, benefiting the company in capital raising [17] - The Brazilian interest rate is currently at 15%, the highest since 2002, which has positively impacted acquisition multiples [17] Company Strategy and Development Direction - The company is focused on increasing cash flow generation and operational efficiency through AI-driven initiatives and preparing for scaling through new acquisitions [2] - A binding term sheet was signed to acquire MCA Solutions, expected to contribute approximately R$40 million in pro forma annual revenue and R$20 million in pro forma EBITDA [9] - The company aims to complete another two acquisitions by year-end as part of its broader plan to scale its platform and enhance value delivery [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in generating more cash than ever and expects to continue improving cash generation margins [15] - The company does not foresee any adjustments needed on projections for the business moving forward despite high interest rates [17] - Management highlighted the importance of AI implementation in various operational aspects to enhance digital transformation and free cash flow [22] Other Important Information - The company has doubled its total volume of deal flow and is finding better accretive targets with an average EBITDA of 46% [9] - The Nvni AI Index was created to track AI adoption across portfolio companies and M&A targets, aligning leadership around a clear AI strategy [6] Q&A Session Summary Question: How do you plan to fund future acquisitions? - The company plans to raise straight debt to fund future acquisitions, leveraging improved cash generation margins [15] Question: Do you plan to divest any other companies? - The company does not plan to divest any businesses currently in its portfolio, focusing instead on cash flow generation [16] Question: What impact does the historically high interest rate have on Nvni companies? - The high interest rate has led to lower acquisition multiples, which is beneficial for the company in raising capital [17] Question: Which company did you divest? - The company divested SmartNX [18] Question: Discuss how you are implementing AI and its impact on the company. - AI is being implemented in customer support, sales, software development, and financial workflows to enhance digital transformation and free cash flow [22] Question: When can we expect the new companies to be acquired? - The company is in due diligence with four companies and aims to close all acquisitions within the year [23] Question: Discuss cross-selling synergies between your operating companies. - The company is applying Salesforce across its portfolio to leverage existing customer networks for increased sales [25]