“We're expecting margins to be down a couple of 100 basis points in Q3 as the quarter includes half the annual impact of tariffs.”

In context

“nvestment in key programs. But will still deliver SG&A leverage on the full year by rigorously managing our G&A line. Taking all of this together, we expect fiscal 2026 adjusted operating profit to grow approximately 5% or 7% excluding tariffs. Our fiscal 2026 operating margin is expected to be roughly flat ex tariffs and down about 50 basis points including the tariffs impact. Now coming to EPS. Second quarter EPS came in $0.05 above the midpoint of our guidance. $0.03 5 of this beat was from reduced tax expense, I mentioned earlier, that we now expect to occur in Q4. We're flowing through the remainder of the Q2 beat and increasing our fiscal 2026 EPS guidance to a new range of $5.62 to $5.66 versus the prior range of $5.60 to $5.66. For Q3, we expect EPS in the range of $1.32 to $1.34. We're expecting margins to be down a couple of 100 basis points in Q3 as the quarter includes half the annual impact of tariffs. In addition, the expected growth acceleration in CAS and diabetes will continue to impact business mix. And Q3 is typically our lowest quarter for generating COGS efficiency savings given the holidays. However, we do expect Q4 margins to increase year over year and show strong sequential improvement. Looking ahead to next year, we continue to expect high single-digit EPS growth in fiscal year 2027 driven by accelerating revenue growth, a lesser impact of business mix from cats and diabetes on the gross margin line, and leverage on SG&A while we continue to drive higher investments in R&Ds and sales and marketing. Look, we remain committed to driving both revenue and earnings growth and believe strongly that our financial algorithm will flow from our current focus on building sustained top”