Greetings, and welcome to Nutrien's 2025 Second Quarter Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference call over to Jeff Holzman, Senior Vice President of Investor Relations and FP&A.

Thank you, operator. Good morning, and welcome to Nutrien's Second Quarter 2025 Earnings Call. As we conduct this call, various statements that we make about future expectations, plans and prospects contain forward-looking information. Certain assumptions were applied in making these conclusions and forecasts. Therefore, actual results could differ materially from those contained in our forward-looking information. Additional information about these factors and assumptions is contained in our quarterly report to shareholders as well as our most recent annual report, MD&A and annual information form. I'll now turn the call over to Ken Seitz, Nutrien's President and CEO; and Mark Thompson, our CFO, for opening comments.

Good morning. Thank you for joining us today as we review our performance in the first half of 2025, progress on our strategic priorities and the outlook for our business. Our first half results featured record potash sales volumes and nitrogen operating rates, lower expenses, reduced capital expenditures and increased returns of cash to our shareholders. We raised our 2025 full year guidance for potash sales volumes while maintaining all other operational guidance ranges. At our Investor Day in June 2024, we communicated a pathway to structurally improve our earnings and free cash flow through strategic initiatives across the portfolio. We also shared key operational and financial targets to measure our progress. Our results through the first half of 2025 demonstrated significant progress towards achieving these goals. Starting with our upstream operating segments. We increased fertilizer sales volumes by more than 400,000 tonnes compared to the same period last year and realized higher net selling prices. These results highlight the capabilities of our world-class operations, extensive distribution network and strong customer relationships that were built over many decades. We continue to prioritize investments that further strengthen our ability to cost effectively supply the growing needs of our customers. In potash, this includes advancing mine automation projects that enhance efficiency, flexibility and most importantly, safety benefits at our sites. In the first half of 2025, we mined over 40% of our potash ore using automation. This is within our 40% to 50% target range for 2026. Our nitrogen operations performed exceptionally well in the first half, achieving a 98% ammonia utilization rate. The focus on reliability projects at our nitrogen sites have yielded clear and favorable results. Further, brownfield debottlenecking efforts are now complete at our Redwater and Geismar plants that will add 150,000 tonnes of annual production capacity. Within our…

Thanks, Ken. As Ken described, our second quarter and first half results highlight strong pace of progress towards our Investor Day targets. Nutrien delivered adjusted EBITDA of $2.5 billion in the second quarter, up 11% from the prior year, while cash provided by operating activities rose by 40%. In potash, we generated adjusted EBITDA of $630 million in the second quarter, well above the prior year due to record sales volumes and higher offshore net selling prices. Our North American net selling price was down from the same quarter in 2024 but up $36 per tonne from the first quarter of 2025 as we benefited from price increases following our winter fill program. Our first half controllable cash cost of product manufactured was higher than the prior year due to lower planned potash production and increased turnaround costs. However, we continue to track favorably against our goal of maintaining a controllable cash cost that is at or below $60 per tonne. We raised our full year potash sales volume guidance to 13.9 million to 14.5 million tonnes due to the strength of first half sales and increased visibility on the second half order book. Canpotex is fully committed for third quarter sales volumes and has a significant order book in place for the fourth quarter. We had a favorable response to our domestic summer fill program and anticipate a similar split between offshore and domestic sales volumes in the third quarter compared to the prior year. Our nitrogen operating segment generated adjusted EBITDA of $667 million in the second quarter, up from last year due to higher net selling prices and sales volumes. Our nitrogen plants operated very well, achieving a 98% ammonia operating rate in both the quarter and the first half. We have maintenance scheduled at our Redwater…

Thanks, Mark. We have a constructive outlook for our business as global fertilizer market fundamentals have tightened in 2025, supported by strong demand, persistent supply disruptions and project delays. We demonstrated strong operational performance and execution on our strategic priorities in the first half of the year, structurally improving Nutrien's earnings and free cash. We continue to strengthen our highly competitive asset base across the ag value chain and remain committed to disciplined capital allocation to maximize long-term value for our shareholders. We would now be happy to take your questions.

[Operator Instructions] The first question comes from Chris Parkinson from Wolfe Research.

At the beginning of the year, there's a little bit of a debate on potash supply being offline and the market and price appreciation being more of a supply-driven market. And towards the end of the first half, it became more evident that it was more of a demand- driven market. But it seems investors are still on edge, given some belief that half-on-half supply is going to dramatically improve and basically curb upside to prices or even lead to declines. Can you just give us your updated thoughts on those specific dynamics, especially out of the FSU and then kind of how that sets up for the 2026 market?

Yes. Thanks, Chris. Yes, so talking specifically about potash, if we -- looking globally, we're seeing very strong demand. We saw a return to trend level demand last year coming out of '22 and '23. And that's certainly the case this year where we've raised our expectations for the market to 73 million to 75 million tonnes. So that would be the strongest demand that we've seen in the market. And we also have confidence that, that potash is going to ground because we don't see inventories elevated really in any market around the world, and actually, in several cases, we see inventories below average levels. Part of that has to do with the fact that potash is still relatively affordable. It's the most affordable crop nutrient. And as you say, with that strong demand, it is testing the ability of the market to supply both in terms of mine production but also the supply chain as well and so at the intersection of that very strong demand and -- and what we're seeing on the supply side of the equation, which -- and you asked about FSU tonnes. So we don't see any material change in FSU tonnes coming to the potash market. At the intersection of those things, we see the strengthening that we've seen in the potash price. And we think we're in a good spot as it relates to the potash price. In here and now, we've had our summer fill program, which we had strong uptake. We're fully committed in North America through Q3 and are now placing tonnes in Q4 at or up $20. Similarly in offshore markets, fully committed through Canpotex through Q3 and heavily committed now into Q4. So again, a very strong signpost that for 2025, our 73 million to 75 million tonnes and our raised guidance that we have -- we're constructive on those things. It is true that we're looking at North America now for the balance of the year. And obviously, with a very large corn crop that we're seeing in the U.S. and certainly, a large crop in Brazil, we've seen some pressure on ag commodity prices and farmer grower margins. At the same time, here into the third quarter, we have seen strong field activity. We've seen good engagement, strong demand. And again, that's evidenced by our commitment levels in North America on potash and certainly, we're seeing some strength into the fall in nitrogen as well. So -- but your question was on potash. Put it all together, Chris, we were constructive on 2025. And then your question about heading into 2026. Again, given where inventory levels are at, where we don't see elevated inventory levels that -- with potash being affordable, growers are going to be looking to replace the large amount of crop nutrients that are going to be pulled out of the soil with this big crop.

Your next question comes from Andrew Wong from RBC Capital Markets.

Maybe just touching a little bit on what you just touched on at the end of your answer on affordability like what's your sense on farmer sentiment and health today, just given some of the recent softness there? And how does that change in fertilizer affordability impact purchasing? And maybe more specific to just the dynamic between nitrogen, phosphate and potash because prices for all three have moved in different directions, which we haven't really seen for a very, very long time. So how does that impact farmer decisions on what fertilizers to apply?

Yes. Thanks, Andrew. Yes, and certainly, as I mentioned, we are seeing some pressure on ag commodity prices, corn, soybeans, and on grower margins. For the first half of the year, things kind of played out the way we had expected in the Corn Belt in the Western U.S. and Canada and Brazil, was really the Southern U.S. where it was wet and in Australia, where it was dry where we saw some pressure, and we're feeling some of that now into the second quarter. That said, again, we're seeing strong uptake in the third quarter and field activity in -- and in Australia, while it was a slow start given a dry beginning of the planting season for their winter crop, they've gotten some rain in July here, which now we've seen increased activity. But I'll hand it over to Jeff to talk a little bit more about that. And then maybe, Chris, if you want to talk about those dynamics between NP&K that sort of affordability discussion.

Yes. Thanks, Ken. And as you mentioned earlier, I mean, we continue to see very strong engagement from our growers as we go into the third quarter. If I'm looking at the areas that were not affected by weather in the first half of the year, then we would see most of those regions have performed basically in line with what we thought. We mentioned the Corn Belt, our Western U.S. business, Canada and Brazil from that standpoint. You mentioned the Corn Belt specifically, we saw our tonnage up about 9% for the first half of the year. And as I look going into the third quarter, we see -- again, we see growers investing dollars to protect their yields right now. And when you get in a low price environment, growers going to really push for yields in that type of environment. And we see that happening right now from the plant health standpoint and from a nutritional standpoint.

Yes. Thanks, Jeff. And Andrew, as we think about the domestic market and that balance between NP&K, as Ken mentioned, we -- there is a big crop growing out there that's going to pull a lot of nutrients out of the ground. Our midstream customers are telling us they need to prepare for what they believe is going to be a good fall application season. This crop is developing well. We do believe that subject to weather, there will be an open window there for growers to get out and apply fertilizer in the fall, especially in the Midwest. And as Ken said, potash remains the most affordable nutrient. So what our customers are telling us is they're preparing for a good fall across NP&K. As you've noticed, yes, these nutrients have moved in different directions a little bit in terms of pricing so we'll be watching how that's balanced in the fall. But overall, we're getting ready and our customers are getting ready for a good fall application period.

Your next question comes from Joel Jackson from BMO Capital Markets.

If I could just harp on the retail demand or fall demand question in North America a little bit more. Like I know that's the biggest determinant. I think I know that the biggest determinant in the fall season is just how big -- how good the weather is, the open season comments you said, I know that, okay. So are your comments just really about that, that it looks like the weather is going to be good and that's the largest determinant of a fall season, not necessarily affordability? That's my first question. Okay. And the second question is just as you think about Brazil and Retail, how confident are you that you'll be able to shift next year to getting back to a $50 million, $60 million, $70 million, $80 million EBITDA run rate versus maybe breakeven this year? And what are the drivers to get there?

Thank you, Joel. And I think you've actually articulated that well, that heading into the fall here, given the signposts that we're seeing and that we've talked about as it relates to good engagement so far in Q3 and certainly we saw that in July. And the crop that's coming off, it's going to pull a lot of, again, fertilizer soil nutrients out of the ground. And the discussions that we're having with our customers and where inventory levels are at, that given an open application season, yes, we expect to have a decent fall. But that's dependent on weather exactly as you said -- we're expecting fertilizer volumes to be up 5% from last year. You may recall that we had a compressed application season last year. And so where the crop is at today and some being harvested, as we speak, things are pointing to an open fall, and that's good for seeing volumes go to ground. As it relates to Brazil, what I'll say is our Brazil improvement plan is on track. We've talked about the decisions that we've made as it relates to shuttering of plans. We've reduced headcount there. Our focus on collections, our focus on inventory management and shuttering of blenders, all of those things now contributing for us to get to sort of a breakeven, somewhat even perhaps positive EBITDA level here in 2025. And we expect that trend to continue into 2026, where obviously, the market needs to continue to cooperate, but that we expect that we'll be in the positive next year.

Your next question comes from Ben Isaacson from Scotiabank.

If we move past fall demand and start thinking about 2026, if corn and soy prices hold about $4 and $10 respectively over the next little while, what are the risks to each of your segments if farmer economics stay where they are in the Americas? How much downside do you think we have in which divisions? And the reason I'm asking is you talked about potash being affordable, but on the other hand, some would argue that potash is typically a lower ranked crop input. So I'm just trying to triangulate that.

Yes. Thank you for the question, Ben. And yes, it's true. I'm already starting to think about 2026. And growers will get this crop off and they'll be looking to get ready for next year and another big crop, and we'll see where corn and soybean prices are at. But if we go commodity to commodity, again, we see ongoing strength in potash demand. And the way it's been growing, as I said earlier, on trend. Heading into 2026, we believe that to be true as well. And it's just step change in demand in places like China, Southeast Asia with MYR 4,200 palm oil prices and a mandate of palm oil -- clean fuel mandate of 40%, moving from 35%, very strong demand in Southeast Asia. We look at Brazil, where last year they consumed 47 million tonnes of fertilizer. This year, it will be 48 million tonnes of fertilizer. And so we can go market to market. And of course, North America, again, we see a lot of crop nutrients coming out of the soil. On the demand side of the equation, we see strength. And then on the supply side, I won't call it a challenge, but we have seen project delays, and we have seen the ability of the market to meet these demand levels. And at that intersection, we see where prices are at and prices are strong. Prices are in a good place right now because as I said earlier, it's affordable, but at the same time, we like to see volumes moving to our customers at these levels. And so we see that carrying into 2026. On nitrogen, we've seen, again, strong demand and the Indians having difficulty procuring urea, while at the same time, Chinese limiting urea exports and certainly not getting back to sort of historic average levels out of that part of the world, which has meant strength in urea markets combined with some supply disruptions certainly out of the Middle East. And that would be true for ammonia, where we -- again, we see a bit of seasonal weakness at the moment, but given some challenges, supply challenges out of Russia and the Middle East and some of the new project challenges out of Russia and the Gulf Coast, there's been supply issues there as well, and we'll see about European gas pricing as compared to North America, where the delta is still $8 or $9. And again, we head into 2026 and we expect that those dynamics will persist. I think we can talk about phosphate. Yes, phosphate prices are elevated. We're watching for any of the grower reaction to higher prices here into the fall and how that translates into 2026. Again, strong demand over phosphate and supply side issues. So you can go nutrient to nutrient and heading out to 2025 and 2026, we'll see how the international growers feeling. We'll see what happens here in North America. But overall, Ben, we feel constructive.

Your next question comes from Vincent Andrews from Morgan Stanley.

Wondering if you could talk a little bit about your own expectations for your potash production going into next year. It sounds like you're anticipating another year of shipment growth for the industry. And the commentary for a while now has been that you're looking to take your traditional market share. So what incremental capacity would you look to add into next year?

Yes. Thanks, Vincent. And this year, you've seen our guidance range, which we've upped, so just over 14 million tonnes at the midpoint. And we would say that, we look at the way we've built out not just our mine production but now our supply chains and ability to get to customers, that we have 15 million tonnes of installed capacity, although not obviously staffing to those levels because the lead time for staffing is such that we can watch the market and, as it evolves, bring on operators to continue to liberate tonnes. That will be the same philosophy for next year, where you can expect that as the market grows and we've talked about this 2.5% average annual growth rates on trend, which is where we are today, that we will grow with the market and maintain market share. We will bring on those operators and we'll produce those tonnes. Again, we have the flexibility with our 6-mine network. We've made those investments in our supply chain to get to our customers. That gives us the flexibility to expand tonnes into this growing market.

Your next question comes from Steve Hansen from Raymond James.

Just a broader question about the portfolio. How do you feel about the portfolio from an optimization standpoint today? You've gone through a process of divesting a few noncore items here in the South, not just recently. Is there more to do there on that front in terms of like further optimizing or streamlining the core versus noncore? How do you view that as an opportunity or is it even a priority today?

Yes. Thanks for the question, Steve. And I will say we're probably never done looking at the portfolio and understanding how to optimize free cash flow per share and return on those assets. Absolutely true that we have done quite a bit of work on that front already, whether it's the process that we're in, in Profertil right now, divesting of our shares in Sinofert, which we've talked about. We've actually gotten some rid of some smaller immaterial assets, some in Italy. We've sold a blender in Brazil. I just provide those as examples of us just continuing to really be rigorous across the portfolio insisting on performance. And not in a position today to talk about further portfolio changes and how we're going to manage that. But what I can say is, yes, we're absolutely looking at opportunities to continue to upgrade that portfolio in the name of free cash flow per share and a return on those assets.

Your next question comes from Jeff Zekauskas from JPMorgan.

Your gross profits per tonne in North America and crop nutrients is kind of flat, even though the different commodities have performed pretty well. And in general, in your Retail segment, you seem to be doing a good job of cutting SG&A costs but not so much making progress on the gross margin. Is that just weather? Are you satisfied with your general performance? What are the dynamics around gross profits and SG&A levels?

Yes. Thank you for the question, Jeff. And there's a number of moving parts there. We are pleased with our progress certainly on the cost side of the equation, and there's more to do there. We know that, and we expect carrying out through the balance of the year. That will be part of the story is ongoing focus on reductions in cost. But maybe I'll hand it over to Jeff to talk more about just margins on fertilizers and what we're seeing through the balance of the year.

Yes. If I just walk through the segments from a margin rate perspective, our crop protection margins actually were surprisingly a bit better than we anticipated coming into this year through the first half. And we think we see an opportunity to expand that a bit more in the second half. If I look at our margins on fertilizer, if you look at it from a global basis, we are flat year-over-year. And that takes -- you got to take into effect that we strategically made decisions in Brazil to lower our tonnage there and go to a different marketing -- direct marketing concept versus going through those blenders that we've mentioned several times that we idled. And that brings a lower margin profile on those tonnes. I think we're down -- we strategically plan to be down about 200,000 tonnes through the half, and that's basically what we're off from that standpoint. And we are in a -- as we talked about several times today, we're in a competitive environment. So I'm pleased with where we are today from a margin perspective. I think as we get an opportunity to get more of our nutritionals into our mix, which, again, we've seen a very strong start in July, I think we'll see that margin per tonne pick up a bit. And then on the seed side, our margin rates on seed are in line with our expectations as well. That was more of a volume story. But we're continuously working to try to get our margins up. We talk about the second half of the year and we talk about controlling our controllables. And one aspect of that is working to continue to expand our margins across all of our crop input segments.

Your next question comes from Kristen Owen from Oppenheimer.

Somewhat of a double-click or follow-up on that prior one, thinking specifically to this EBITDA bridge for the first half of the year. You've noted the more favorable environment in July. I'm just wondering if there's anything here in this bridge, whether it's crop protection products or maybe even on the expenses, that shifts around in the back half of the year. Anything that turns from a bad guy to a good guy. Just how to think about that bridge for the back half.

Yes, certainly, at the higher level, it's the things we've talked about but I'll hand it over to Jeff for that double-click.

Yes, for the second half of the year and I think I mentioned it just a minute ago, controlling our controllables will be at the top of our list. We also think, again, that we have an opportunity to convert more acres on our full year nutritionals, which we really like a lot. We like our portfolio as it relates to that. A heavy, heavy focus on the expense side of things. I think through the first half, we were able to take 6% out. We expect to continue with that effort in the second half of the year. And again, Ken mentioned Australia. We've got some -- we had a very tough half from a weather perspective there. We see improvements there. We think that's going to bring us some opportunities on the proprietary side of the business as well as we go into second half of the year.

Your next question comes from Edlain Rodriguez of Mizuho Securities.

Just a quick question on potash, Ken. So I mean, I think a comment I've heard somebody say, like what is wrong with potash? As you note, it's surprisingly like the most affordable nutrient, now lagging behind both phosphate and nitrogen. But seriously, do you prefer being in that position? Or do you want to close the price gap between potash and the other nutrients? And related to that, I think like last week, we saw a small decline in potash prices in Brazil. I mean, that's like the first drop in almost a year. Does that mean anything to you or you just think it's just a blip?

Yes. Edlain, thank you for the question. So we -- again, we're constructive on the potash market and we like when potash is affordable for growers. And when it is, we see record potash demand and consumption. That's what's playing out today. And again, that meeting the supply side of the equation, that intersection clears the market and what has been kind of 10-year average historic level potash prices, those are healthy prices for us. And again, we're constructive on that. So heading into the fall here, and we've talked about North America, but globally, whether it's Southeast Asia and palm plantations or whether it's step change in China, what we're seeing in -- on the macro level in Brazil, and yes, North American fall -- an open fall application season in North America, like our volumes are moving, our mines are producing, our unit cost of production is going to be below $60. And again, that's where we like to be. In Brazil, they're getting ready to plant soybeans here in September. There's been a bit of a seasonal lull in Brazil, that's true. We've seen a bit of softening in the price, but we expect there's going to be a lot of volume moving again and going to ground as they plant soybeans in that part of the world. So overall, Edlain, I certainly appreciate the question. But no, we are constructive on where the potash market is today.

Your next question comes from Ariana Milin of CIBC Capital Markets.

With relatively better pricing for ammonia over upgraded nitrogen products in North America, do you see the potential for a shift to greater ammonia use as a source of nitrogen in the fall?

Yes. Thanks for the question, Ariana. That's just no, but Chris, do you want to just explain that a bit?

Yes. Thanks for the question. As we look at that fall, it will be dependent on how growers are thinking about what they're going to plant next year. And if they're going to put ammonia down in the fall, that would mean a commitment to planting corn. So we'll wait and see. I mean, sometimes these growers make this decision on combine and what they're thinking about for next year. But we don't see a material shift in terms of the nitrogen product going down this fall. We think that will be at about average levels. I would say that we are seeing low inventory levels of UAN right now. And we are thinking that there's going to be some strength in that price as we look towards the fall season.

Your next question comes from Matthew DeYoe of Bank of America.

I apologize if I missed this earlier, but seed sales obviously pretty weak through 1H in Retail and maybe that's just cotton in the South or whatever. But as you think about -- or can you provide a little clarity on price volumes there? And then as we set up for next year, assuming more -- if it is the South, right, if weather is more cooperative, do we get a -- you expect to get that volume back pretty well, I guess? I'll leave it there.

Yes. No, Matt, thanks for the question. I think you said it. We did see some crop mix shifts in that part of the world. But Jeff, do you want to just dive into that a little bit?

Yes. Thanks, Ken. Yes, the seed revenue is 100% around two factors. First, we saw a significant prevent plant in our Southern region. Our Southern region is our largest share of seed in North America. And so when you have something like prevent plant, it can have a dramatic effect on seed revenue. So those acres actually did not get planted. I would expect 100% of that to return next year. That forecasting that we would have a spring not unlike what we had this last year, which was in that area was one of the wettest springs in the last 150 years. We also saw crop mix changes and that's primarily around cotton. And due to some of the economics around cotton and across the South, we saw a lot of cotton acres. If you're in Texas, a lot of cotton acres converted to sorghum or milo and -- which is a much less significant from a revenue perspective. We'll have to see year-over-year what cotton commodity pricing does. I would anticipate in Texas, we would see some of those acres return, but it's way too early to predict that right now.

Your next question comes from David Symonds of BNP Paribas.

Yes, if I could just come back on Jeff's question. If I look at the average selling price in the crop nutrient segment of Retail, it's up 2% year-on-year, whilst into the third quarter, the potash NOLA benchmark, for example, is up 20%-plus year-on-year. So is there a catch-up pricing benefit in the second half for Retail?

Jeff, if you want to take that?

Yes. And some of that's reflected from a standpoint of -- and I've said this many times with as many tonnes as we move through these markets, we have to layer in our purchasing. And so we would have -- for the tail end of the season, we would have been buying into a market that was much higher priced from that standpoint. And that affects margins as well from that standpoint. We feel like we're well positioned going into the fall. We don't think we're overly aggressive from that standpoint. And I'm going to allude back to many of the things that were said here today, we talked a lot about having a really large corn crop. We also have a really large soybean crop, and -- which removes a lot of nutrients as well. And so we do see some opportunities in the back half of the year. We talked about it. If we get an open fall, then we see an opportunity to move about 5% more volume into that market, and we hope we can do it as well by expanding some margins.

Your next question comes from Lucas Beaumont of UBS Financial.

Just going back to potash, I mean, you've mentioned that you see -- have seen sort of some challenges in the market meeting the demand level this year from a supply perspective. So I think just looking to 2026, if we get another year of normal demand growth, where do you kind of see the supply coming from? And if you think the market is going to struggle to meet that and you want to kind of maybe flex up and take more than your 20% share, when would you kind of need to push the button on those staffing decisions you mentioned?

Yes. Thanks for the question, Lucas. And yes, it continues to be the case that we've seen those FSU tonnes come back into the market. We've seen some new tons coming out of Laos. Although the rate of growth out of those -- that part of the world has slowed. And we've seen, as we mentioned earlier, project delays that certainly are going to impact next year and beyond. And so strong demand meeting supply, we kind of call the market in balance at the moment or close to being in balance and heading into next year. We have a few other producers that can probably, on the margins, expand production a bit. And certainly, we would be one of those as well, Lucas. And so I would say with what we're intending for next year, which, as I mentioned earlier, is the strategy to maintain market share, grow with the market as it grows, meet the needs of our customers who are growing at that rate as well and bringing on people to produce accordingly. That's our plan. And again, we expect to be in a strong market next year, given the demand fundamentals and the fact that supply is right around that demand level, we'll be right around that demand level and certainly, as project delays continue to persist.

Your next question comes from Ben Theurer of Barclays.

I wanted to follow-up real quick on capital allocation as we look into it. So you had a significant improvement in terms of free cash flow generation versus a year ago, but at the same time, it feels like there's a little bit of a slowdown on the share repurchase program. So I just want to understand like how you think about these purchases in regards to like just dividend versus investments and share repurchases.

Yes, and thank you for the question, Ben. No, no slowdown on share repurchases. We've been buying at about a sort of $45 million per month level. And I think for the balance of the year, that's a good way to think about it as we -- as the year has unfolded for us and certainly as we continue to be quite constructive on how it's unfolding. With respect to sort of the broader philosophy around capital allocation, dividends and share repurchases, I'll hand it over to Mark to provide more detail.

Yes. Thanks, Ken. Maybe just stepping back a bit and reiterate a couple of comments that both Ken and I have made this morning. I think first and foremost, continue to focus on generating increasing structural sources of cash for the business. So we continue to see strong operational performance, and that was evident here in the first half for us. So growing underlying earnings across the entire business in line with our Investor Day targets, and we feel like we're making good progress on that. As Ken has also mentioned and I have as well, continuing to look at a really rigorous approach to working capital optimization and shedding assets in the portfolio that don't generate the types of returns that we want. And so over time, we think all of those things will grow cash. More specifically to your question on capital allocation, our priorities are consistent and they haven't really changed. So again, if you look at our CapEx profile of the year, $2 billion to $2.1 billion with $400 million to $500 million of that focused on a very narrow set of growth priorities that we continue to execute against. And more specifically with respect to return of capital, as Ken said, as the philosophy around share repurchase really over the past year has been ratable buybacks over time, and we want that to be something that is a staple in our capital allocation framework over time and through cycles. And as Ken mentioned, that roughly $45 million per month run rate is something that we see as being sustainable and balanced through the remainder of the year. You mentioned the dividend. With respect to the dividend, the philosophy has also not changed there. We like the absolute level of the dividend from a cash outlay standpoint, and we believe that as we continue to repurchase the stock of the company, we'll be able to grow dividends per share over time just as we have this year. And amongst all of that, we believe we can continue to strengthen the balance sheet. So it continues to be just a disciplined, focused and balanced approach on capital allocation.

Your next question comes from Richard Garchitorena of Wells Fargo.

Maybe just wanted to touch on the cost progress you've made, roughly almost $200 million in cost savings expected this year. Should we expect additional buckets? Do you see further upside potential in that target? And how are you thinking about additional cost savings in '26?

Thank you for the question, Richard. Yes, we had set ourselves a $200 million cost reduction target by 2026 and it's really targeting SG&A. And thus far, we would say we're going to certainly achieve that in 2025, so ahead of the schedule. And about half of that coming out of our Retail business and about half of it coming out of our corporate SG&A. Is there more to be done? The answer to that is also yes, and maybe I'll hand it over to Mark just to provide a little more color.

Sure. Thanks, Ken. So as Ken said, we're beginning to see those expense rationalization activities really show through in our results. As we showed in our earnings presentation, if you look first half over first half, you can see over $100 million or just over $100 million in expense down versus last year in the first half. And so I think there's tangible evidence that the efforts that we've made are showing through. And as Ken said, that's really been focused, about 50% in the Retail business across the rationalization activities we've undertaken in Brazil. Closures of underperforming locations in North America, regional consolidation of storefronts and optimization in Australia, and in our corporate functions, just continuing to be disciplined about simplifying and focusing the organization and that's resulted in SG&A opportunities. So as we continue to move forward, as Ken said, we're quite bullish. There's going to be more opportunities for us as we continue to explore opportunities, and we'll have more to say on that in the future.

There are no further questions at this time. I will now turn the call back to Jeff Holzman for closing remarks. Please go ahead.

Thank you for joining us today. The Investor Relations team is available if you have any follow-up questions. Have a great day.