The company announced the exit of Flawless, Spinbrush, and Waterpik showerhead businesses by early 2026, which generated $170.0M in annual net sales in 2024. Additionally, a strategic review of the vitamin business (VITAFUSION®, L'IL CRITTERS®) was initiated due to declining market share and increased competition, signaling a focus on core, higher-margin brands.

Subsequent to the quarter, on July 16, 2025, the company completed the acquisition of Touchland Holding Corp for $700.0M, a developer of hand sanitizer products. This acquisition is expected to contribute to business expansion and demonstrates a continued strategy of growth through M&A.

The Consumer International segment reported a net sales increase of 5.3% for Q2 2025 and 4.0% for the six months ended June 30, 2025, driven by strong performance in HERO® acne treatment products, THERABREATH® mouth wash, and ARM & HAMMER® Liquid Detergent and Cat Litter across various regions.

Management's decision to exit the Flawless, Spinbrush, and Waterpik showerhead businesses, incurring a pre-tax charge of $51.0M in Q2 2025, and to review the vitamin business, demonstrates a proactive approach to portfolio management and a commitment to focusing on more profitable core brands.

Despite significant headwinds from higher manufacturing costs (including tariffs, labor, and commodities), which negatively impacted gross margin by 130 bps in Q2 2025, management's productivity programs contributed a positive 160 bps, partially mitigating the overall margin decline.

Management is actively responding to increased supply chain challenges and tariff impacts by taking strategic actions such as shifting production, relocating manufacturing operations, finding alternative sources of supply, and implementing surgical pricing to reduce the projected $60.0M twelve-month run-rate gross tariff costs.

The company highlights increased exposure to 'rapid changes in U.S. trade policies including recent sweeping tariff increases,' 'persistent inflation,' and 'geopolitical risks' such as the Russia/Ukraine war and Middle East conflict, which are contributing to consumer spending cuts and operational cost increases.

The VMS business experienced a 'decline in market share and a deterioration in financial performance' due to 'significant product competition coming from new category entrants, including private label.' Similarly, the Waterpik business saw consumers switching to 'more value-branded products,' indicating heightened competitive threats.

The recently signed 'One Big Beautiful Bill Act' (OBBBA) includes tax provisions that the company is currently evaluating for its impact on financial position, results of operations, and cash flows. This introduces uncertainty regarding future tax deductions and liabilities.

The company's VMS business, including VITAFUSION® and L'IL CRITTERS®, continued to experience a decline in market share due to significant competition from new category entrants and private label. The Waterpik business also saw reduced demand as consumers shifted to more value-branded products.

The decision to exit Flawless, Spinbrush, and Waterpik showerheads, which collectively generated $170.0M in 2024 net sales, indicates a strategic move to shed less competitive or underperforming assets and reallocate resources towards its seven 'power brands' that represent 70% of net sales and profits.

Unfavorable price/mix contributed 40 basis points to the gross margin decline in Q2 2025 and 20 basis points for the six months. This suggests limited ability to fully pass on higher manufacturing costs and tariffs to consumers, indicating a challenging pricing environment in certain segments.

The company recorded $30.4M in Cost of Sales and $20.6M in SG&A in Q2 2025 as non-cash charges related to impairments and inventory reserves from exiting the Flawless, Spinbrush, and Waterpik showerhead businesses. Additionally, higher manufacturing costs (including tariffs, labor, and commodities) negatively impacted gross margin by 130 bps in Q2.

Despite the significant increase in manufacturing and distribution expenses, productivity programs generated 160 basis points of gross margin benefit in Q2 2025. This indicates ongoing efforts to improve efficiency, which partially mitigated the adverse impact of rising costs.

Management is actively implementing strategies to address supply chain challenges and tariff impacts, including shifting production, relocating manufacturing operations, and finding alternative sources of supply. These actions aim to reduce the projected $60.0M in twelve-month run-rate gross tariff costs.

Research and Development expenses for the six months ended June 30, 2025, increased to $68.6M from $63.1M in the prior year, representing a $5.5M increase. This sustained investment indicates ongoing efforts to innovate and develop new products or improve existing ones.

The acquisition of Touchland Holding Corp, a developer of hand sanitizer products, for $700.0M, highlights the company's strategy to acquire brands that complement existing product lines and expand into new market segments, with the majority of the purchase price expected to be allocated to the trade name.

The company continues to sell its consumer products through a broad distribution platform, including 'websites and other e-commerce channels.' While specific new digital initiatives are not detailed, the reliance on these channels indicates ongoing digital transformation efforts to reach consumers.

In May 2025, the company initiated an Accelerated Share Repurchase (ASR) program, paying $300.0M and receiving an initial delivery of 2.8 million shares. This aggressive repurchase activity, with $658.9M remaining under authorization, reflects management's belief in the company's intrinsic value and commitment to returning capital to shareholders.

The Board declared a 4% increase in the regular quarterly dividend, raising it from $0.28375 to $0.295 per share, equivalent to an annual dividend of $1.18 per share. This increase raises the annual dividend payout from $277.0M to approximately $287.0M, signaling confidence in future cash flow generation.

The company completed the $700.0M Touchland acquisition and plans approximately $130.0M in capital expenditures for 2025, including manufacturing capacity investments for THERABREATH® and Sterimar, and an ERP project. These investments demonstrate a balanced approach to growth and operational improvement.

The provided 10-Q filing primarily focuses on financial performance, operational results, and risk factors, with no explicit sections or detailed discussions dedicated to environmental commitments, social responsibility initiatives, or specific governance practices beyond standard compliance statements.

While not a dedicated ESG initiative, the company's disclosure of 'global compliance, technology support, packaging and sustainability' costs being reported in the Consumer Domestic segment (Note 18, footnote 2) indicates that sustainability considerations are integrated into operational expenses, though specific progress is not detailed.

The filing reviews recently adopted and not yet adopted accounting pronouncements, none of which specifically pertain to new ESG reporting requirements or material impacts on financial statements related to sustainability, suggesting no significant new regulatory drivers for ESG disclosure in this period.

Management notes that 'U.S. consumers are increasingly worried about persistent inflation and looming tariffs, leading them to cut back on discretionary spending.' This macroeconomic headwind is impacting demand for certain products, as seen with the Waterpik business.

The company identifies the 'impact on the global economy of the Russia/Ukraine war or increased conflict in the Middle East, including the impact of export controls and other economic sanctions' as a significant risk factor, indicating potential disruptions to global markets and operations.

The decline in customer demand for Waterpik products is partially attributed to 'a growing number of water flosser consumers switching to more value-branded products.' This trend suggests a broader market shift that could affect other product categories, particularly in a high-inflation environment.