“As previously discussed, we anticipate our Webster facility to continue ramping up capacity through the remainder of the year.”

In context

“John Murphy (President & Chief Financial Officer): Thank you, Henrique, and good morning, everyone. Our second quarter and first half results demonstrate the strength and consistency of our business model. Given the uneven external environment, we continue to use the many levers available to us to drive long-term growth. For the quarter, organic revenue grew 6% and unit case volume grew 5%. The quarter benefited from several factors, including favorable weather in certain markets, strong global activation around the FIFA World Cup and cycling an easier prior year comparison. As Henrique mentioned, on a two-year basis, volume growth is 2%, which is consistent with recent trends. Concentrate sales were 1 point behind unit case sales due to the timing of concentrate shipments. Price/mix grew 2%. This was driven by 3 points of pricing actions, partially offset by 1 point of unfavorable mix, primarily driven by investment timing, notably in Asia Pacific. Comparable gross margin increased approximately 120 basis points and comparable operating margin increased approximately 90 basis points. Both were driven by underlying expansion and currency tailwinds. Importantly, we expanded margins while continuing to invest behind our brands and executing revenue growth management strategies that provide consumers with the right package, brand and price point for their occasion. Putting it all together, second quarter comparable earnings per share of $0.97 increased 11%, which included a 2-point benefit from currency tailwinds. Free cash flow was approximately $6.9 billion, an increase versus the prior year. Our balance sheet remains strong with our net debt leverage of 1.4x EBITDA, which is below our target range of 2 to 2.5x. Given the momentum of our business and the strength of our balance sheet, we have increased flexibility and optionality to continue to both reinvest in our business and return capital to shareowners. With respect to our ongoing dispute with the U.S. Internal Revenue Service, we recently presented oral arguments before the 11th Circuit Court of Appeals. We appreciate the opportunity to present our position and now await the court's decision. Ultimately, our stance is unchanged. We will continue to vigorously defend our overall position and remain confident in our chances of prevailing on appeal. Let me now provide a brief update on fairlife. Majority of production operations have resumed at our four facilities in the U.S. and retail availability has been largely unimpacted. There was no impact to our second quarter results nor do we anticipate any material impact to our results in the second half. As previously discussed, we anticipate our Webster facility to continue ramping up capacity through the remainder of the year. I want to recognize our fairlife and Coca-Cola teams for their swift action and dedication. Now let me turn to guidance. While the external environment remains uncertain, our strong first half performance and business flexibility give us confidence in our updated outlook for the year. Based on our year-to-date results and expectations for the balance of the year, including six fewer days in the fourth quarter, we expect to deliver at the high end of our prior revenue guidance with organic revenue growth of approximately 5%. We now expect comparable currency-neutral earnings per share growth, excluding acquisitions and divestitures of 7% to 8%. We continue to monitor commodity volatility. But based on what we know today, we continue to believe the overall impact of our cost basket to be manageable. Divestitures are now expected to be a 2% to 3% headwind to comparable net revenues and an approximate 1% headwind to comparable earnings per share. This assumes the pending sale of Coca-Cola Beverage Africa closes towards the end of the third quarter or during the fourth quarter, subject to regulatory approvals. Based on current rates and our hedge positions, we now expect an approximate 1 point currency tailwind to comparable net revenues and continue to expect an approximate 3-point currency tailwind to comparable earnings per share for the full year 2026. Our underlying effective tax rate for 2026 is still expected to be 19.9%. All in, we now expect comparable earnings per share growth of 9% to 10% versus $3 in 2025. There are some considerations to keep in mind for the remainder of the year. We expect concentrate shipments to lag unit case volume by 1 point during the third quarter and now expect concentrate shipments to slightly trail unit case volume for the full year. We expect fourth quarter gross and operating margin to benefit from the refranchising of CCBA. Finally, as a reminder, due to a calendar shift, the fourth quarter will have six fewer days compared to the fourth quarter of 2025. To summarize, we are pleased with our strong first half performance. Our results demonstrate the effectiveness of our strategy and the advantages of our global system. We are focusing on staying close to our consumers and customers to create durable top line growth and long-term value. As a result, we remain confident in our ability to deliver our updated 2026 guidance and our longer-term financial objectives. And with that, operator, we are ready to take questions.”