Good day, thank you for standing by. Welcome to the Brown-Forman Year-to-Date Fiscal Year 2026 Earnings Call. At this time, all participants are in listen only mode. After the speakers' presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star one-one on your telephone. You will hear an automated message advising you on how to withdraw your question. Please press star one-one again to advise that today's conference will be recorded. I'll now hand the conference over to your first speaker today, Sue Perram, Vice President, Director of Investor Relations. Please go ahead. Thank you. Good morning, everyone. I would like to thank each of you for joining us today for Brown-Forman's third quarter and year-to-date fiscal year 2026 earnings call. Joining me today are Lawson Whiting, President and Chief Executive Officer, and Leanne Cunningham, Executive Vice President and Chief Financial Officer. This morning's conference call contains forward-looking statements based on our current expectations. Numerous risks and uncertainties may cause actual results to differ materially from those anticipated or projected in these statements. Many of the factors that will determine future results are beyond the company's ability to control or predict. You should not place undue reliance on any forward-looking statements. Except as required by law, the company undertakes no obligation to update any of these statements, whether due to new information, future events, or otherwise. This morning, we issued a press release containing our results for the third quarter and nine months ended January 31st, 2026, in addition to posting presentation materials that Lawson and Leanne will walk through momentarily. Both the release and the presentation can be found on our website under the section titled Investors, Events & Presentations. In the press release, we have listed a number of the risk factors that you should consider in conjunction with our forward-looking statements. Other significant risk factors are described in our 2025 Form 10-K and from time to time in our Form 10-Q reports filed with the Securities and Exchange Commission. During this call, we will be discussing certain non-GAAP financial measures. These measures, a reconciliation to the most directly comparable GAAP financial measures, and the reasons management believes they provide useful information to investors regarding the company's financial condition and results of operations, are contained in the press release and investor presentation. With that, I would like to turn the call over to Lawson. Thank you, Sue. Good morning, everyone. I'm pleased to share our third quarter and year-to-date fiscal 2026 results with you today. First, I'll share the key drivers and highlights of our top-line results, including our geographic performance and strategic innovation. I'll turn it over to Leanne, who will share additional insights on other financial metrics, including gross margin and operating expenses and our full year fiscal 2026 outlook, which we have reaffirmed. In general, the key themes we'll share today are very consistent with what we shared in our last several earnings calls as market conditions have remained largely unchanged. In the current operating environment, which has been challenging and uncertain for some time now, I consider this to be positive. Our global footprint shows a clear divergence in consumer behavior. While macro uncertainty continues to pressure discretionary spending in the U.S. and many developed markets, we see significantly stronger, more resilient consumer trends in key emerging international markets and the travel retail channel. As we've shared in previous calls, used barrel sales and the trade dispute between the U.S. and Canada are persistent headwinds that continue to have a significant negative impact on our year-to-date organic net sales and organic operating income. While we expect the cyclical headwinds to eventually subside, we recognize the highly dynamic nature of our industry and acknowledge that some of the current pressures could persist. Therefore, our primary focus remains squarely on actively managing the factors within our control. Moving to our year-to-date fiscal 2026 top-line performance. For the first nine months of fiscal 2026, reported net sales declined 2%, with organic net sales flat after adjusting for the unfavorable impact related to the absence of Korbel and Sonoma-Cutrer, as well as the positive effect of foreign exchange. From a geographic perspective, our organic net sales results continued to be led by the emerging international markets and travel retail channel. Both improved sequentially from the first half results, delivering 15% and 7% growth, respectively, in the year-to-date period. In our emerging international markets, Mexico and Brazil continue to lead our performance, delivering strong double-digit growth. In Mexico, organic net sales grew 15%, driven by New Mix, which led the accelerating RTD category in Mexico, gaining market share and benefiting from consumer trends of flavor, convenience, and value, particularly as the economic environment remains under pressure. In Brazil, organic net sales grew more than 20% in the year-to-date period. Our strategic approach to building the Jack Daniel's family of brands through thoughtful geographic expansion, increased distribution, and targeted revenue growth management strategies continues to produce strong results. Jack Daniel's Tennessee Apple, Jack Daniel's Tennessee Whiskey, and Jack Daniel's Tennessee Fire each grew organic net sales at a strong double-digit rate and maintained market share. As we have mentioned previously, we also believe that premiumization is an opportunity in Brazil and are focused on increasing distribution for our super premium whiskey portfolio, which resulted in strong double-digit organic net sales growth for Woodford Reserve and Gentleman Jack. The travel retail channel delivered growth across most of the major regions as we benefited not only from an increase in the number of travelers, but also from the strategic workforce restructuring that we implemented a year ago. The decision to restructure our travel retail team ensured that they are now more closely aligned to our global airport operators and growing transportation channels such as cruise and airlines. The efficiency of our new structure also allows us to allocate additional resources to fast-growing regions in the Middle East and India. To our developed markets, which collectively declined by 6% in a particularly challenging environment. Canada, of all of our markets, continues to have the most significant impact on our organic results, declining nearly 60% as American-made products remain off shelves in the majority of the Canadian provinces. Turning to our developed Europe markets, the operating environment remains challenging due to sustained pressure on consumer sentiment and confidence across most European economies. Despite the environment, we are maintaining or gaining share of the whiskey category in six of our eight top European markets. Our organic net sales declined 7% in Germany, where consumers are increasing their savings rates due to the challenging economic conditions and total distilled spirits trends declined at a mid-single-digit rate, fueling heightened competitive promotional activity. We've successfully gained further distribution, especially for our ready-to-drink portfolio within the discounter channel. This channel is key as it appeals to consumers who are looking for ways to stretch their budgets, demonstrating our growth even within the current economic climate. In the U.K., organic net sales declined 10%. Challenging category dynamics remain the most significant headwind as economic conditions, including increasing excise taxes, are negatively impacting consumer spending and TDS trends. Off-premise takeaway trends for total distilled spirits, as well as the whiskey category, remain in low single-digit decline, although trends continue to improve and Jack Daniel's Tennessee Whiskey continued to outperform the category and gain market share. Even amidst this backdrop, both Germany and the U.K. benefited from innovation with the strong launch of Jack Daniel's Tennessee Blackberry. Jack Daniel's has a proven track record of leveraging our global footprint and capabilities to extend the impact of new flavor launches, we will continue executing our strategic phased launch to support scalable and sustainable geographic expansion for the next few years. To date, we have been very pleased with the early stages of the Blackberry launch. In addition to innovation, we're also benefiting from strategic route to consumer decisions we've made with strong growth coming from our most recently launched own distribution markets of Italy and Japan. We've shared in the past that we believe owning our distribution enables us to deepen our collaboration with our trade partners, accelerate growth for our key super premium brands like Diplomático Rum and Gin Mare, and further strengthen the presence of our iconic American whiskey portfolio, led by the Jack Daniel's family of brands. Year to date, Italy delivered very strong double-digit organic net sales growth, driven by Gin Mare, Italy's number one super premium gin by value, and Diplomático, the number three super premium plus rum by value. We also experienced growth across the majority of the remaining brands in our portfolio in Italy, including strong double-digit growth from the Jack Daniel's family of brands. In Japan, our strategic decision to distribute the William Grant & Sons portfolio brands combines our renowned spirits portfolios, scales our business in Japan, reinforces our standing with local customers, and further strengthened our commitment to long-term growth and innovation in the world's third-largest whiskey market. Now to the United States, where total distilled spirits continued to decline at a low single-digit rate. Our organic net sales declined 1% in the year-to-date period and remained ahead of both of our depletion-based results and takeaway trends, driven by the benefit from our U.S. distributor changes and the impact of innovation. With regard to our distributor changes, we're also recognizing the benefits of enhanced dedication and focus, increased distributor investment funds, and an improved margin structure. Innovation has been one of the most impactful growth drivers within total distilled spirits. We have seen continued excitement and outstanding consumer engagement for our newest brand, Jack Daniel's Tennessee Blackberry. The launch of Blackberry continued to exceed expectations and is the second-largest new product by value within total distilled spirits in Nielsen. As anticipated, shipments still exceed depletions, though the gap between the two continued to narrow as we move through the year-to-date period. We remain encouraged by the strong launch in the U.S. and are capitalizing on this excitement to maintain momentum and boost consumer takeaway. In addition to innovation, RTDs are the other growth driver within total distilled spirits. There has been quite a bit of activity within our RTD portfolio. First, launching New Mix, Mexico's original tequila RTD in the U.S., is an opportunity for us to connect with Mexican American consumers through a highly recognizable brand while simultaneously introducing new consumers to the world's first tequila-based RTD. We are currently testing two flavors in a limited number of states with a focus on growing distribution and awareness before expanding more broadly. While still limited, we believe the initial launch is off to a strong start and look forward to providing you with future updates. Earlier this week, we announced a mutual agreement to conclude our partnership with Pabst Brewing Company, who has managed the supply, sales, and distribution of Jack Daniel's Country Cocktails within the United States and domestic military markets since fiscal 2021. The partnership provided us with greater access to production and variety pack capabilities, along with more efficient access to new distribution channels. We would like to thank Pabst for the role they have played in helping successfully drive the growth of Jack Daniel's Country Cocktails and in introducing new innovation over the past five years. Ultimately, as we evolved our U.S. distribution network earlier this year and reviewed our long-term growth strategy, we now believe by centralizing the strategic direction of our flavored malt beverage portfolio, we can more effectively unlock its potential and long-term valuation. We are working closely with Pabst on a comprehensive transition plan to ensure seamless product availability for retailers and distributors through the end of the agreement. In summary, as we navigate the dynamic and challenging operating environment, we remain focused on actively managing the factors within our control. We continue to act swiftly and make key strategic decisions, including innovating and focusing on our premium-plus brands and ready-to-drink offerings to strengthen our brand portfolio and align with current consumer trends, making key route to consumer transitions, including in the U.S., Japan and Italy, and streamlining our workforce structure to increase our agility, leverage synergies and enhance our ways of working with a clear goal to accelerate our growth in an increasingly challenging and competitive environment. Through the nine months of fiscal 2026, our team has demonstrated exceptional resilience and focus and has executed our plans despite the challenging backdrop. As such, our results are largely in line with our expectations, and we believe we remain well positioned to achieve our full year guidance. I would like to thank each Brown-Forman employee for their contributions to these results. I know this is a challenging time, and I deeply appreciate the commitment and dedication each of you continues to demonstrate. Before I conclude my remarks, I also want to provide an update on our CFO recruitment process, which is in active discussions now. While we're always incredibly thoughtful in our approach to talent and succession, we've intentionally focused our search on potential candidates who possess both depth and breadth of leadership experience across finance and operations and publicly traded multinational organizations. As we look to accelerate growth in key emerging markets, experience leading business segments outside of the U.S. is also a key consideration. While the process has taken a bit longer than we originally preferred, I feel very good about where we are at this point and appreciate the role that Leanne will continue to play between now and her retirement date at the end of the fiscal year, ensuring a smooth transition. With that, I'll turn the call over to Leanne. Thank you, Lawson, and good morning, everyone. As Lawson mentioned, I will provide additional insights on other financial highlights, including gross margin, operating expenses, and capital allocation, concluding our prepared remarks with comments on our full year fiscal 2026 outlook. First, to our gross margin. In the year-to-date period of fiscal 2026, our reported gross profit decreased 1%, resulting in a reported gross margin of 59.9%. Our gross margin expanded 50 basis points due to a 160 basis points A&D benefit, largely related to the conclusion of our relationship with Korbel and the absence of the prior year transition services agreement for Sonoma-Cutrer and a 30 basis points favorable impact from foreign exchange. These benefits were partially offset by 90 basis points of higher cost, largely due to lower production levels, inflation on our input cost, and timing of cost fluctuations, and 40 basis points of unfavorable price mix due to the strong growth of New Mix and lower used barrel sales. Turning to operating expenses. In the year-to-date period, organic advertising expense decreased 2%, which is largely aligned with our depletion-based top-line results. Our brand investment remains at what we believe to be a healthy level, and we continue to focus on Jack Daniel's Tennessee Whiskey to support the That's What Makes Jack Jack global campaign, as well as the launch of Jack Daniel's Tennessee Blackberry. As expected, the majority of fiscal 2026 brand investment occurred during the key selling months of October, November and December. Our organic SG&A investment decreased 2% as a result of our strategic workforce restructuring initiative that we implemented in January of 2025. In total, reported operating income was flat and organic operating income decreased 3% year-to-date fiscal 2026. Diluted earnings per share decreased 8% to $1.41 per share, which was largely driven by the absence of the prior year gain on the sale of the Duckhorn investment. Turning to capital allocation, I'd like to take the opportunity to provide you with a few comments related to our capital allocation philosophy and recent actions before moving to our outlook. As we have shared, our philosophy balances ongoing investment in the business, including organic investments and acquisitions alongside shareholder returns such as regular dividends, share repurchases and special dividends, with the core objective of sustainable long-term value creation. First, to our free cash flow, which we define as cash provided by operating activities less capital expenditures. We are diligent in ensuring there is a high level of working capital discipline throughout the organization. In the nine months of fiscal 2026, capital expenditures decreased by $36 million compared to the year ago period. While we are continuing to fully invest behind our business, the reduction of our working capital requirements and improved cash generation is a result of a number of projects and expansions now being completed. We grew cash flow from operations by $263 million to $709 million, primarily reflecting this disciplined working capital management. As you can see on Schedule E of our earnings release, free cash flow increased by $299 million to $628 million, reflecting strong operating cash flow generation and lower capital expenditure needs. Secondly, on October 2, 2025, the Brown-Forman Board of Directors authorized the repurchase of up to $400 million of our outstanding shares of Class A and Class B common stock, and this program was concluded in December 2025. Our balance sheet remains strong, and we continue to strengthen our cash position. Now to our full year fiscal 2026 outlook, which as Lawson shared, we are reaffirming. The spirit sector continues to face headwinds. We continue to expect the consumer behavior and the level of trade inventories will not change meaningfully during the remainder of our fiscal year 2026. Our guidance also continues to assume that there will be no change to the current tariff impact, direct and indirect, on our products. Our expectations from a geographic perspective remain the same as well, with continued growth in our emerging markets and the travel retail channel and expected depletion-based trends in the U.S. and developed international markets to remain similar to fiscal 2025, with the exception of Canada. While we remain hopeful for the return of American products to Canadian store shelves, we continue to assume American spirits products will remain off the shelf across most of Canada for our full fiscal year, and that expectation is reflected in our fiscal 2026 guidance. Another significant headwind is the year-over-year impact of our used barrel sales. The challenging and uncertain operating environment faced by the entire spirits industry has reduced the demand for used barrels and consequently also put downward pressure on the pricing. Therefore, we continue to expect used barrel sales to be lower by more than half of the fiscal 2025 level. These two headwinds negatively impacted our organic net sales results by more than 2 points in the year-to-date period. While we continue to execute our long-term pricing strategy and expect to benefit from our revenue growth management activities and strategic innovation, particularly Jack Daniel's Tennessee Blackberry, we anticipate product mix headwinds due to faster growth of our RTD portfolio. Also, as you can see on Schedule B of the earnings release, even as the activities to support our U.S. distributor network moves beyond the phasing impact of the transitions and the launch of Jack Daniel's Tennessee Blackberry concludes, we anticipate that shipments will roughly be in line with depletions in fiscal 2026. For fiscal 2026, based on the year-to-date results and the currently known factors, we reaffirm a low single-digit decline in organic net sales, guiding closer to the stronger end of the range and reported gross margin expansion, as we believe the benefit from A&D will more than offset the headwinds from the negative price mix and higher cost. As we shared, the conclusion of the transition services agreement, which followed the Sonoma-Cutrer divestiture and the absence of Korbel, has positively impacted our reported gross margin on a year-over-year basis. While input cost in fiscal 2026 will continue to benefit from lower agave cost, we project higher costs compared to the prior year period, largely driven by the impact of inflation and lower production volumes. I would like to take a moment to expand on cost pressures. As you are aware, our portfolio is heavily weighted to American whiskey. We plan to liquidate aging barrels in the coming years that were produced during the hyperinflationary years of the early 2020s, where we face significant cost increases for barrels, grain, energy, as well as general inflation. While we have taken strategic steps to optimize our wood supply chain in response to these rising costs due to the aging of most of our products, the impact of these recent actions will take time to come through our results. Therefore, we expect the cost pressures associated with our barreled whiskey to persist. Turning to our outlook for organic operating expenses. While our long-term goal is to align A&P spend with depletion-based top-line growth, our fiscal 2026 A&P investment reflects our focus on managing controllable expenses and compares to the year-to-go period of fiscal 2025. We also continue to expect a reduction in SG&A following our strategic workforce restructuring initiative. Based on the above, we are forecasting organic operating income to decline in the low double-digit range, guiding closer to the lower end of the range. We continue to expect our estimated capital expenditures will be in the range of $110 million-$120 million for the full fiscal year, guiding closer to the lower end of the range. We are updating our effective tax rate outlook from a range of approximately 21%-23% to a range of approximately 19%-21%. Our performance in the nine months of fiscal 2026 is largely in line with our expectation and provides us the confidence to reaffirm our full year 2026 outlook. We will continue to navigate the short-term challenges at pace through the strength of our portfolio, including strategic innovation, the benefits of our route to consumer transition, our evolved workforce structure, and our strong balance sheet. We remain focused on delivering our near-term goals balanced against executing our long-term strategy to ensure the enduring success of Brown-Forman. With this being my final quarterly earnings call, I wanted to take a moment before we open the floor for questions to say thank you. Thank you to my exceptional teammates at Brown-Forman that I have had the honor of working and growing with over the last 30 years. Thank you to the Brown family for entrusting this management team with your investment and your long-term stewardship of this exceptional company. Thank you to all of our investors and analysts for your many questions and hours of dialogue and for your interest in Brown-Forman. I look forward to continuing to be a long-term shareholder, a brand ambassador, and a proud consumer of our highest quality premium plus portfolio in my next chapter. This concludes our prepared remarks. Please open the line for questions. Thank you. At this time, we'll conduct a question and answer session. As a reminder, to ask a question, you'll need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Filippo Falorni of Citi. Your line is now open. Hi, good morning, everyone. I wanted to ask about just the developed market business. Obviously, Lawson, you mentioned the challenges remain in the U.S. and Europe. One of your key global competitor mentioned the potential for price repositioning. I love to hear your thoughts on, like, the pricing environment, the macro pressure that you're seeing in developed markets and whether you would consider similar actions to try to stimulate volumes in those countries. Thank you. Okay. Let me take this sort of overall developed market first, and then I'll speak to the pricing second. Look, in the world of developed markets, we can talk about the U.S. Obviously we break U.S. out separately from that. Our developed markets, as you see in our, you know, in our earnings release, there's a few things, maybe one big one right up front is Canada. That's pulling those numbers down, and we're obviously still not selling in the vast majority of the provinces in Canada. That is weighing on that quite a bit. Places like Europe in aggregate, I mean, it's not changed a lot over the last few quarters. It's weak. Particularly Germany and the U.K. are both tough markets. Those are big markets for us, sort of low single digit down is the market. There's a, the positive of our European performances. I do know our top eight markets, we're gaining share in six out of eight, something like that. It's not really a share story over there, it's just general spirits market weakness. I think if you sort of looked across Europe, it's, as I say, low single digit. Honestly, it's better than the United States. To the U.S. market itself, look, I know everyone analyzes it to death. We've got all the charts in the world to try to figure out and find the green shoots as to when we think the market's gonna, you know, when is it gonna turn around. I mean, I think that's the reality is that's the key for the industry right now is when are you gonna start to see the U.S. market turn around? I know a lot of folks have focused on the result the last basically two months of Nielsen results. I always caution on sort of these shorter term movements because there can be a lot of noise in the shorter term. If you're trying to find a green shoot, that is probably, you know, the best one to go look at right now. Now it's still, it's still not great, and you got to think about it with RTDs and not, and all those kind of things. I don't wanna declare it's bottomed out, but over the last couple of months, the numbers have improved, you know, by a few points. Pricing, I obviously know there's a difference between, by the way, the term price reposition versus just-- good old-fashioned, bad old-fashioned increased discounting. A few things on that. I mean, repositioning brands down is a very different challenge for some companies. I would, you know, use el Jimador for Brown-Forman. We didn't reposition down, we repositioned up, and that can be a trying experience trying to go up, but it is something that we've done much more than the other way around. In fact, I can't really think of an example of repositioning down. If you look at TDS right now in the United States, I think the last number we saw, TDS is down about 1 point from a pricing perspective. I don't know if that's better than we expected or not. It's a little bit worse than it was six months ago or so, but it's still only one point down. You know, tequila is sort of leading that down a little bit. I think everybody's been predicting that for a while. I will say Brown-Forman's less than 0.5 point down. In terms of an outlook for a more aggressive market pricing environment, it hasn't come through yet. I know everybody's looking at it, and they're looking at industry inventories and saying, "We expect it's gonna come." We feel pretty comfortable with our own inventory situation. We're not in the same place that some others are. You know, it is our intention to, you know, try to hold our ground as much as we can. We're not gonna be ignorant of sort of market trends if we have to. Right now, we don't have to. I don't believe we have to, and I don't think that would be the smart thing to do. We're gonna hold as hard as we can. Thank you. One moment for our next question. Our next question comes from the line of Drew Levine of JPM. Your line is now open. Hey, good morning, and Leanne, congratulations on your upcoming retirement. I did wanna ask on the gross margin commentary that you made at the end of the call. You mentioned some positive wins from higher cost inventory, I guess, coming through over, you know, the next couple of years. You know, and this is in the context of, you know, Lawson, the pricing environment that you just discussed, probably a little bit tougher than the goal of consistent low single-digit pricing. Maybe you could just help us out, any other puts and takes we should consider, looking over the next couple of years on gross margins, you know, as we think about, you know, potential expansion or contraction? I did wanna also ask, on the U.S., underlying sales appear to be down around 5% in the quarter, which was pretty much in line with Nielsen. I guess I'm wondering if you could sort of quantify any tailwinds You saw from the changes in distributor terms or Blackberry depletions, as we think about the trend there. Thank you. Well let me start on the gross margin, and then Leanne can talk a little bit about more sort of more recent trends around underlying and organic. I think the easiest way to explain the gross margin trends is if you turn to slide 7 in the, what do we call these? Supplemental slides. Earnings presentation, okay, the, that we have out there. Take a look at the, it says gross margin expansion of 50 basis points, and it gives you the walk, the year-to-date walk. If you take a look at that, and then you'll see the acquisitions and divestitures, that's the Sonoma-Cutrer and Korbel changes. Take that out because that's not gonna repeat, you know, into next fiscal year, and take out FX, just look across price, mix, and cost. The way, I think the easiest way for you all to sort of grasp directionally where we're going, I mean, this is not intended to be sort of full guidance or anything like that, but we aren't ready to do that. We do want to directionally get everyone an understanding of what we're gonna see in terms of headwinds in the next little or in the next fiscal year. The price mix down 0.4, that's generally mix for the most part. We hope to get some of that offsetting. Where as I just said a second ago, that it's not taking prices down. It is much more driven by brands like New Mix, which are gonna be lower priced, but are, you know, growing at a, you know, at a gigantic rate right now. Costs. We expect costs, as Leanne did say, we got a couple of years of continued challenging costs around our barrels, and we know it, because these are costs we incurred four or five years ago. They are going to roll through, and then that, you know, that will end, and we would see, you know, some improvement from there. But just directionally, that's the kind of year-over-year challenge I think we're facing next year in terms of gross margin. To your second question, which was regarding the U.S., the underlying results for the quarter, how it relates to distributor terms, and also how Blackberry. What we would say is we are definitely seeing the positive impact of our distributor transition terms and the investments that they're making behind our brands. We're continuing to see that benefit come through. As well as, for the transitions, we are seeing some impact with our emerging brands as the distributors focus on transitioning and ramping up our core SKUs. We are seeing some impact in the short term to our emerging brands. We are working closely with our distributor partners on a day-by-day basis, and we expect that to normalize as we continue to go into future quarters. For Blackberry continues to do very well and exceed our expectations in the U.S., and it's going to be a continued source of growth as we look into the future. Lawson, I don't know if there's anything else you wanna add to that. No. Okay. I think we're good. Thank you. One moment for our next question. Our next question comes from the line of Nadine Sarwat of Bernstein. Your line is now open. Yes. Hi. Morning, guys. Two for me. First, I'd like to push a little bit more on gross margin. I know you guys called out two factors, mix headwinds from growing RTDs, and let's assume that stays with RTDs continuing on the trend that they are now as a category. The second, the higher cost of whiskey to be sold through your P&L in the next coming years. Is it fair to assume that all else being equal, you're looking at gross margin contraction on an organic basis over the coming years? Then a second broader strategic question, great to see Blackberry being clearly accretive to your portfolio. I know one challenge that's often discussed with a strong flavor launch is the difficulty to lap that tough comp that comes the following year. Given your concentrated portfolio, and I know you touched on this briefly in the prepared remarks, but how are you thinking about that risk and avoiding that, and how are you looking at growth for Blackberry over the coming years? I mean, let me start out on the gross margin again. I mean, I don't have a lot to add from what I just said a second ago, but yet you, I think you heard it right. We have something in the neighborhood of a two-year headwind around costs, around gross margin. Gross margin, you know, we even build in all the many other assumptions from mix and pricing and all the other things in yet. I said, as it sort of got us as conditions today as we're looking out, yes, there's gonna be somewhere between 100-150 basis points of some compression in there I think that we're gonna fight for. I said 0.4 of that is the mix that I showed on slide 7, the other part is pure costs. Yeah. I think that would go to your comment, Nadine, all other things being equal and all of that work not yet complete, but that could be a cost comment that we would expect contraction. To the other part of your question as it relates to the RTDs impact on gross margin. From a price mix perspective, we've got puts and takes there, as you would expect. In this year, we do have that really strong growth of New Mix that we're seeing, which is a headwind. We also have the really significant impact of the lower sales of the highly profitable used barrels. Again, as we look on a year-over-year basis, as we look out to the future, you wouldn't expect to see that large of an impact as we have in F 2026. Again, we continue to work through what is our pricing strategy, what is our product mix our headwinds and tailwinds. When you think about the Blackberry launch, which is profitable, you know, smaller things like King of Kentucky that we just launched. We've got Jack Daniel's Heritage Barrel. We've got a lot of things that continue to ladder consumers up. From a Blackberry phasing comment, we still have, in the future, we have additional sizes that'll be launched in U.S. We just launched in a few key developed European markets in the fall of this year, so we'll continue to have that benefit. We have largely all of our emerging markets that we have not yet launched in. We know from history, Brazil is a very strong flavors market, so I think we would have really great expectations for that. As well as, you know, flavors outside of the U.S., we have a pretty proven track record that we can grow those to become very sizable brands. I mean, there's a lot of emerging markets that have really where our flavors do very well, as Leanne said. The other little, maybe I don't know if it's smaller, but I mean, another piece of this is, in the U.S., we didn't launch never till August 1. We have that, and then as Leanne just said, in the fall, we launched in four European-- 4-ish European markets. We got the rest of the world to go. Plus, we have six months in some of the bigger markets like the U.K. and Germany and Poland. Excuse me. We plan for this not to be a one-year splash. It's tricky, you know, and the demand, I think, out of the box for the last six months on Blackberry has certainly been higher than what we thought last summer. You know, the bigger you do in year one, the harder year two is. That's all for the, you know, I mean, it's all for good reasons that the brand. I do think it's worth pointing out, one difference between Blackberry and our other flavors that I, you know, that I think is a, particularly for the U.S., is a big benefit is, it is a simple mix with lemonade, and that's where a lot of consumption is happening. It doesn't take anything but you know, a glass of lemonade and the Blackberry, and that has been the drink, I think, that has worked so easy, where some of the other flavors we've launched over the last, heck, it's been 15 years since we did Honey. They never had the easiest matching pairing to make a quick drink with. I do think that's not an important factor in the success and the continued success of these flavors. Thank you. One moment for our next question. Our next question comes to the line of Eric Serotta of Morgan Stanley. Your line is now open. Great. Thanks for the call. Congratulations, Leanne. It's been a pleasure working with you over the years. Best of luck in the next chapter. Thank you so much. Hoping you could delve into the inventory dynamics in a bit more detail in terms of what happened in the fiscal third quarter and the expectations for the fourth quarter. You know, about how much, or can you help us dimensionalize how much of the shipments ahead of depletions were due to Blackberry versus the prior distributor transformation versus Blackberry International? I guess it would be Blackberry U.S., Blackberry International, distributor transformations and other factors. Then, you know, it looks like year to date, your shipments are about 1 point or so ahead of depletions in round numbers. Are you saying that you'd expect that full amount to come out in the fourth quarter? Lawson, you know, maybe a minor point here, but can you just talk a bit about the Middle East exposure? I know it's small on a percentage basis, but I remember you guys calling out some really outsized growth in Middle East and travel retail over the years. Just help us frame that, please. Thanks so much. Okay, great. Eric, I'll start with your third quarter and fourth quarter, kind of net change in distributor inventory question. As you can see on Schedule B, volumetrically, that our shipments are just slightly ahead of depletions. That is related to our launch of Jack Daniel's Blackberry, and it is related to our distributor transitions in the U.S. 2%, in CDI for the U.S. and 5% in our emerging international are our main drivers. With that, I would say what we expect, what's driving that is, I would call it distributor transition order phasing, still continuing to normalize as we go through this fiscal year of transition, and we expect that to balance out through the end of the fourth quarter. We did just launch New Mix in the U.S., which that's a part of that gap. We're continuing in our launch of Blackberry. With Blackberry, we're continuing to see strong shipments in the U.S. Depletions are starting to close that gap as they've been out there and largely from an international perspective because its own distribution, a lot of that, you know, you're not gonna see a lot of impact there from Blackberry launch in our developed markets. What we tried to do was guide you to the higher or stronger end of our range for organic net sales. With that, our expectations for the fourth quarter as we continue to expect to see that normalization of the U.S. distributor ordering patterns, though we do think we will still have some benefit from the Blackberry and New Mix launch in the U.S. Hopefully that is helpful. What I would say to your question on the Middle East, first and foremost, it's always about for us, the safety and security of all of our team members, and we're happy to report everyone is safe. To the business aspect of that, our largest markets and there relative to the enterprise are not some of our largest markets, but the UAE is a, you know, strong market for us, and we have been growing nicely there with strong double-digit growth. In the UAE, we do think that we do have the appropriate level of supply, you know, as we think about our year to go March and April to meet consumer demand. Israel is a much smaller business for us. Again, we think that we've got the resilience and the supply there. GTR could be somewhat impacted, though it's way too early. We're watching and assessing. If the transportation and airports normalize quickly, then we wouldn't expect to see much of an impact. As you would assume, we're continuously assessing, we're doing all the work to understand the logistics of where our goods are in transport, and we're rerouting them where prudent. Again, we feel like with where we are in our fiscal year, it's very early in this conflict. We've got the inventory that we need in market for a year to go. Thank you. One moment for our next question. Our next question comes on line of Andrea Pistacchi of Bank of America. Your line is now open. Yes, good morning, and thank you. I have a question on your SG&A, please. You've just lapped the restructuring initiatives, which you launched last January. Given your commentary on gross margin and some of the pressures there probably likely to persist and the uncertainty, I guess, on the top line still given the environment. How are you thinking of further opportunities for efficiencies at SG&A level as we move towards, say, next fiscal? Thank you. I'll let Lawson speak to strategically longer term. I would say here, as we have been in a really dynamic operating environment for some time now, we have been very disciplined in controlling all of the costs that are within our control, as well as all of our operating expenses that are within our control. I think you would continue to see us look at everything that's available to us and optimize and be very disciplined where we can. I mean, look, there's not a lot more to add to that. I mean, the as Leanne said, we're being pretty tight and closely monitoring a lot of our variable operating expenses, including SG&A. We are, you know, I think we're just being prudent in the way that we're managing SG&A, and we'll continue to go that, you know, continue to do that going forward. Thank you. One moment for our next question. Our next question comes on the line of Steve Powers of Deutsche Bank. Your line is now open. Great. Thank you. Good morning, both Lawson and Leanne. Leanne, you thanked a lot of people in your remarks. I just wanted to take the opportunity to thank you as well for your help over these many years. Oh, Steve, you've been a great partner. I was gonna use different. I actually have two, and I think they're relatively straightforward. Let me try. The first one is just following up on the aging barrel cost headwind topic. Lawson, your additional comments were helpful. Leanne, you had mentioned in your opening remarks plans to, I think the word was liquidate aging barrels in the coming years. I just want to pause on that word liquidate. Is that simply a synonym for normal course selling, or are you planning to, you know, accelerate sales or? Yes. No. Liquidate is a term that we would use for, like, literally dumping the contents out of the barrel so that we can process them and bottle them. Yeah. We're not. Got it. Thank you. I just wanted to make sure. Make sure you weren't, you know, discount those high costs. Okay. You know, the other nit is just on the lower tax rate that you foresee on the year. I'm assuming those benefits are cash tax benefits as well. Could you confirm that? Just any implications on the go forward, is, does this, you know, translate into any kind of structural benefits, or should we assume things revert to more of a normal 21%-23% range going forward? Yeah. I think what, with what has changed in our tax rate, it's really favorable year-over-year, tax rate changes, lower state taxes and some discrete items. We are also seeing a lower cash tax than what we would have seen in the year ago period. I would think as you look out, you would expect us to kind of go back to that normal range of the 21%-23%. Thank you. One moment for our next question. Our next question comes from the line of Kevin Grundy of BNP Paribas. Your line is now open. Great. Thanks. Morning, everyone. Leanne, congrats again, of course, wishing you all the best. Two quick ones for me. Maybe, maybe not quick. I guess Lawson, and for Leanne as well, just on the Diageo news and some of the commentary today around gross margin pressure and sustained pressures around the business. Just spend a moment maybe on return of capital and the dividend policy and maybe just sort of express a level of comfort as best you can today within the context of demand pressures, looks like compressed margins, price cuts. I don't know, hard to take that off the table. That's a big worry among the investment community, particularly what we're seeing more broadly in the food space. Your thoughts there. As a follow-up, Lawson, I guess, what do you-- It's. Obviously, the company's not standing still at all, distributor changes, et cetera. What more do you think can be done to stimulate demand and manage the portfolio, particularly in the U.S. and developed international, whether this is going to be more emphasis on ready-to-drink because that's where the consumer is going, and it might be lower margin, but you kinda need to meet the consumer where they're going, more accessible price points because we keep talking about the tough macro and other companies are moving, and, you know, it seems like that seems to be less of a lever. There's a lot here. I know it's probably not a short answer, but I appreciate you indulging me on both of those. Thank you. I can start with the first part of your question. That was really about capital allocation. The Brown-Forman has always had an incredibly strong balance sheet and has always generated really strong cash flow from operations. As we look out, we continue to believe that we will have everything that it takes to meet the needs of the business and continue to meet the needs of the increasing dividend into the future. If you look at our free cash flow that we reported today, it kind of goes back more to that normalized level after, you know, we've been through a lot of volatility. And this is one area where you can continue to see some of the-- we've talked about earlier, the improved terms from our distributor transitions coming through. That'll be built into our base going forward. We're continuing to reduce the working capital intensity on our balance sheet, and we're in a period now where we've made the investments that we need from a capacity perspective. You should expect that capital expenditure number to be lower as we kinda look out over the next three years as well. With that, I'll turn it over to Lawson. Yeah, I don't wanna repeat what Leanne just said, but I do wanna make the point that. I don't know if this is really what you were inferring a little bit, but there have been some of these, I call them the AI-generated reports that have challenged our ability to pay dividends, and I find that to be borderline absurd, quite honestly. I mean, if you look at that Schedule E, you can see how much free cash flow we have. We are so far above any sort of dividend needs that we have the flexibility to make capital decisions, you know, in the ways that we would wanna do. Now, back to the pricing comment that you made. I mean, we already hit this one pretty hard, so I don't have a ton more to give you other than I don't want what Diageo said. I do think, Look, I haven't dissected them, and I didn't go back and listen to how they sort of adjusted their comments the following day, but it was more about individual brands that feel like they're in the wrong place than it is a wholesale, you know, we need to get more aggressive because that's gonna drive volumes. I don't think any of the big, big companies are saying that or in fact, are doing that. It's just not coming up through the data. I know that, you know, some people may say you're wishful thinking or it's coming or, you know, whatever it might be, but we're just not seeing it yet. As I said earlier, we are not planning, and it will not be in our plans for next year to see sort of dramatic differences in pricing that we continue to see. We have ideas from, you know, new products and innovation and things like that, which we think can help margins, and we're gonna continue to use revenue growth management in the way that we've been doing now for a number of years. Quite honestly, I think we've been pretty successful at deriving value growth through the smart use of some of those levers. We're gonna continue to do that too. On the pricing sort of ultimate impact on margins and, you know, that whole question, I just don't see that as a particularly high risk. I don't see it as high of a risk, I think that, you know, some others are saying. Was there another question in there? Did we get it all? Yep. Okay. Thank you. One moment for our next question. Our next question goes to the line of Seamus Cassidy of TD Cowen. Your line is now open. Hi, this is Seamus on for Robert Moskow. Thanks for the question. I wanted to ask a follow-up on the U.S. distributor realignment. You described it as a multi-quarter transition and one of your key initiatives. Now that we're two full quarters into the transition, I was hoping you could give us a candid assessment of how that process has gone. Aside from the improved terms, what benefits you've seen in market, whether that be improved shelf space, or more focus from your partners or otherwise. Thanks. Well, look, I mean, when we say multi-quarter thing, I mean, California and Reyes would have been sort of, I guess, earliest in the process, and that, you know, that started at the very beginning of our fiscal year. The vast majority of them were August 1. That's the sort of timing difference between the two. Look, not all adjusted at the same pace. You know, there are things like the on-premise where we needed to hire a lot of people to catch up in the on-premise pretty quickly, and that they've gotten there, they're there now, and so things are clicking pretty well right now in a lot of states. We still, there's some inventory flows that, you know, we need to tweak, but that's not really a strategic thing. That's just some execution that we're getting, and it all basically happens within the fiscal year anyway. Yeah, no, we feel pretty good. I mean, the focus on our portfolio, the dedicated sales that we're, you know, that we're getting now, I think is, you know, is gonna be a big benefit. There is some margin benefits, but-- Look, I think looking for some positive news out of all of it too, look at Jack Daniel's. It's starting to get a little bit better. In the on-premise, we're starting to see improved performance too. We have our own, we call it the Jack Pack, which is an internal thing that focuses on the sort of the top bars and the top cities across America. The distributors, depending on which state you're in, but I mean, they're very much behind that too. I think we're seeing some of the better, best performance we've seen in the on-premise with Jack, in quite some time. Yeah, look, these things don't solve themselves overnight necessarily, but we've got things rolling in the right direction and feeling pretty good about it. Thank you. One moment for our next question. Our next question comes from the line of Bill Kirk of Roth Capital Partners. Your line is now open. Good morning, everybody. I wanted to ask more about New Mix in the U.S. Our checks in the initial markets show it doing very, very well. First, how are you thinking about how wide the U.S. launch can be? Then why not be more aggressive right now with the rollout, given what likely would be strong demand around the World Cup? Then a very different question. It looks like Diageo is reconsidering whether they want dedicated sales teams and resources at their U.S. wholesalers, or if their products should just go in, like, a general or broad book and then have those dedicated funds diverted into more in-trade spend. I guess if they pursue that, what do you think it would mean for your relationships with wholesalers, and would you also consider removing dedicated wholesaler sales to reallocate dollars to trade? Thank you. I mean, on the latter part of it here, I quite honestly, I have not heard that. I don't really wanna comment on how they may be planning that, but it does seem hard to believe that dedicated resources are a very, what we consider a very important part of what we made, you know, the changes that we made last summer, and, you know, consider that important to, you know, to where we are now. That is, it's an odd comment, quite honestly, no one has said to me. It is probably worth saying we're not generally speaking in the same houses as Diageo in very many places. There's some, but not a lot. It's just sort of directly not really an impact on us. Back to the New Mix question or maybe, you know, with World Cup and all that, I quite honestly hadn't really thought that part of it through. We are in, I don't know how many states, is it seven or eight states, something like that. It's the big states where you're gonna have a lot more Mexican consumers, Mexican-American consumers. You know, we're capturing a pretty good portion of that population, I think, already. Look, we're just trying to sort of figure out which flavors and, you know, price points and how to bring it forward. I think, as you said, it's off to a really good start. It is so big in Mexico now that awareness amongst that population is very high. We feel, you know, pretty good that, you know, that we, you know, we can make this bigger. It's worth also pointing out, too, we've got a line extension that's gonna come out soon with el Jimador Tequila Spritz, which, I don't know, it's kind of similar to New Mix, I guess you would call it. It doesn't look the same, it doesn't taste the same necessarily, but still, it is for those consumers that want sort of the lighter options within the RTD world and which is 99% of the category or something like that. Yeah, we've got a lot in the innovation pipeline and, certainly in RTD. Somebody asked earlier, "Are you gonna continue to do RTDs even though they have lower margins?" Like, there really is only one answer to that. You've gotta go where the consumer is. We'll see how big and important they get. Right now, they're not quite honestly big enough to have a material impact on margins and things like that. Someday they might and, you know, look, we'll take the dollars where we can get them. Thank you. We have run out of time for questions. This concludes the question and answer session. I'll now turn it back to Sue Perram for closing remarks. Thank you. Thank you, Lawson and Leanne, and thank you to everyone for joining us today for Brown-Forman's third quarter and year-to-date fiscal year 2026 earnings call. If you have any additional questions, please contact us. We look forward to participating in the UBS Global Consumer and Retail Conference in New York next week and hope to see many of you. For those of you unable to attend, our fireside chat will be made available as a webcast accessible via the Brown-Forman corporate website under the section titled Investors, Events & Presentations. With that, this concludes today's call. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.