Okay. All right, great. We're gonna get started. Really happy to have Newell Brands with us at the conference this year. Chris Peterson, the company's President and Chief Executive Officer, and Mark Erceg, Chief Financial Officer. Before we get started with questions, Chris has a little disclaimer he has to read, and then we'll jump in.
Today's remarks will contain forward-looking statements, which involve risks and uncertainties. Actual results may differ materially, and we undertake no obligation to update such statements. I refer you to the risk factors in our SEC filings. Today's remarks may also include non-GAAP measures, for which reconciliations can be found on our IR website.
I'm gonna try not to let that make me nervous. Okay, great. So we'll jump in. So I thought we could start with top line and maybe setting the stage a bit, right? COVID effects on consumer behavior drove a surge in demand across your categories, so you had double-digit core sales growth in 2021, and then that reversed. It's called a hangover, if you will, from, you know, 2022 and 2023, core sales down both years.
Mm-hmm.
Now, where do we stand? You know, what are the key external factors that are impacting demand today? How have they changed, if at all, since 2022, 2023? And how do you think those sort of evolve from here?
Yeah. So there's a couple of factors going on that have affected our business over the last couple of years. As you rightly point out, in 2021, we had a surge in demand from COVID, particularly in the home and outdoor categories. The purchase cycles in many of those categories are three to five years, and so that surge in demand took consumers out of the market, if you will, for a couple of years. The second thing that's happened is, with the cumulative impact of inflation, which has exceeded the cumulative impact of wage growth, consumers have been under pressure with regard to discretionary spending. Then the third factor is, within discretionary spending, consumers have been prioritizing travel and experience over goods.
That has resulted in our categories, and last year, our categories, we estimate, were down high single digits in terms of category growth rate. The good news is, this year, the category growth rate is down low single digits, which is what we expected going into the year and what our plan was based on. It's what we've seen through the first half of the year and what we expect in the back half of the year. The other good news, if you will, is we think that we're coming to the end of the normalization cycle, so we are optimistic relative to next year that the category trends can improve next year versus this year. The other factor that's affected our business is retailer destocking that affected us last year.
We have not seen that this year, so that is, and we felt pretty good about retail inventories headed into this year. So I think we're in good shape on that. And then lastly, and I'm sure we'll talk more about this, our new strategy that we put in place, that's very much focused on improving our front-end capabilities, is really starting to drive positive results. And so the things that we can control are getting stronger in terms of innovation, international growth, new business development, et cetera.
Okay, great. And you know, you mentioned cumulative effects of inflation versus wage growth. So maybe a good opportunity to also just check in on your general view on the health of the consumer, how it's evolved, nuances you might-
Yeah
... call out.
You know, it's interesting. I think the consumer remains under pressure. It's a little different by income cohort. The lower-income consumer is under more pressure than the middle and higher-income consumer, relative to their spending power, given that, again, the cumulative impact of inflation. But what we're seeing in our business is when we come with a compelling product, even if it's at a high price point, we're not seeing any barriers to consumers being willing to spend on it. And so, we launched, as an example, Sharpie Creative Markers earlier this year, which was a new paint marker under the Sharpie brand. It's the first time that Sharpie has entered the paint marker market. We've captured 35% market share, and we've seen no barriers to consumers buying that and being willing to spend on compelling innovation.
We saw the same thing with Paper Mate InkJoy, bright gel pens, and even in Latin America, we launched an Oster Perfect Brew espresso maker for $900. We sold out a year's volume in the first two months, so if you have a compelling product that represents a great value, we're not seeing any barriers to the consumers being willing to spend.
Okay. All right, great. Before we go further, I would love to discuss some of the recent strategy changes.
Yeah.
I'm sure it'll come up as we go through the conversation. But so June of last year, you outlined this new strategy to the street, including both front of house and back of house changes. Before that, you had Ovid. So maybe for those less familiar in the room or on the webcast, can you just give a quick reminder of some of what, like, the key changes are that came with these two-
Sure
... efforts?
So when I was announced as becoming the CEO at the beginning of last year, about 18 months ago, we kicked off a full-scale capability assessment of the capabilities required to win in this industry. Things like consumer understanding, innovation, brand building, supply chain, operational excellence. And from that capability assessment, we developed a integrated strategy that was really focused on five of where to play choices and five how to win choices. The where to play choices, simplistically, were we at the time were operating with a portfolio of 80 brands, but 25 of those brands represented 90% of our sales and profits.
Mm-hmm.
So we decided to focus on the twenty-five largest brands. We've since reduced thirty out of that eighty brand portfolio, and as we sit here today, we're operating with a portfolio of fifty brands. We're still focused on the top twenty-five, but we've actually improved the quality of our portfolio. The second choice was to focus on the top ten countries. We operate on the ground in forty-two countries, but ten countries represent 90% of our sales and profit. So we got very focused on those. We also got focused on what we call the MPP and the HPP part of the categories, which are the middle and upper price points within the categories in which we compete, because we know that that's where the disproportionate profit is made in consumer products, and we shifted our focus to that.
We also shifted our focus from a consumer standpoint to really going after Millennial and Gen Z consumers, because they represent the largest cohort of people buying products in our categories, and finally, we got very focused on the winning retailers and winning with the winning retailers, so those were the, if you will, where to play choices. On the how to win side, this is where the capability improvement really informed our choices. We focused on consumer understanding. We completely rebuilt our consumer insights function. We hired a completely new team, put in a whole new capability set there, which is foundational to drive insights. We put in place a brand management system. We did not have a brand management structure.
We now have a brand management structure for all of our top 25 brands and actually our top 50 brands in place. We've dramatically strengthened our go-to-market, including putting in a scaled U.S. selling organization, putting in a dedicated new business development organization, and changing our operating model to unlock the one new power of international. We scaled our supply chain and back office, so we had a centralized supply chain and back office that was covering about 60% of the company. We now have one that covers 100% of the company, and that is driving significant cost efficiencies, productivity benefits.
And then finally, we put in place a new set of corporate values that was designed to get the company more performance-based in terms of the culture, more innovative and inclusive, at the same time. And I think the combination of those changes in the new strategy have really driven a significant turnaround. We've had four quarters that we've reported since we put the strategy in place. If you look at the top line, the first half of 2023, we were down 15%. The back half of 2023, we were down 9%. First half of this year, we were down 4.5%, and we're guiding to improvement in the back half of this year versus that. So we've seen clear sequential improvement in the top line.
Over the past four quarters, we've taken our gross margin up 400 basis points, on average. We've improved our trailing 12-month EBITDA by 10%, even with the top-line pressure, so EBITDA dollars are up 10%. We've taken over 20 days out of our cash conversion cycle, and we've reduced our net debt to EBITDA leverage ratio by a full turn. So across all of the metrics that we were focused on, we feel like we've made very strong progress, and that's what enabled us, at our last earnings call, to take up our guidance, for the year this year when we reported. The job is not done, and we still have work to do, but we're four quarters in, and we feel like we're on the right path.
That's great. The, you know, and you talked about this half, you know, kind of half year progression, and I'm, but you didn't touch on 2025, and I'm guessing you won't specifically touch on 2025. But you did previously mention in terms of retail inventory levels and things moving back to a better spot in the purchase cycle.
Mm-hmm.
You know, outside of these sort of, let's call them things that aren't in your control, that are just almost math and calendar, let's call it, can we talk a little bit-
Mm-hmm.
About what's in your control?
Mm-hmm.
You know, sort of walking through kind of those internal drivers-
Sure
... that you're looking for twenty-five and beyond.
I would say a couple of things. I feel very good about the international business. International represents 40% of the company's revenue. International is back to core sales growth already. The first six months of this year, we grew core sales in international, and we think we've got the opportunity for that to become a growth driver for the company and actually accelerate growth even in the back half of this year and headed into next year. We've also turned the Learning & Development, which is our most profitable segment, positive in core sales growth in the first half of the year, and we think we are well-positioned with our innovation pipeline to continue strong results in that segment.
On the Home & Commercial segment, that segment, we had work to do to improve the structural economics. This year, that segment is driving outsized gross margin improvement, but we believe that the capability investments we're making on the front end are going to start showing up in the top-line results. And so we think that segment is going to improve on a sequential basis in the back half of this year and going into next year as the innovation ramps up and the new business development team is getting wins in the market. And then the Outdoor & Rec business that we've talked about as our third segment, which is our smallest segment, both in terms of revenue and profit.
is the one that needs the most amount of work, and that's the one where we've made the biggest change, so we've effectively changed the entire leadership team. We've moved the business from Chicago to Atlanta to be with the corporate headquarters. The good news is we've restaffed the business. We have some exciting news on that business. While we're repopulating the innovation pipeline, which is going to take a little bit of time to get through to the market, the innovation pipeline is strong, but a lot of the innovation isn't launching until early 2026. We're not standing still, so we just announced we signed a partnership with Ally Love on Contigo. She's going to be our Chief Hydration Officer.
So there are things we're working on in the short term, to begin to get the business moving in a positive direction.
Very cool. So I think, you know, in some of these categories, you've talked on calls about, you know, the addressing the total addressable market question, expanding Coleman beyond camping, as an example, redefining the value proposition of brands and the emphasis on mid and higher tier price points.
Mm-hmm.
I guess, maybe a little esoteric, but, like, what does the process look like for redefining a brand? You know, to what degree do you decide. How do you decide that you have the right or the ability to take Coleman beyond camping-
Sure
... you know, as, as an example?
Sure. So maybe I'll start with Coleman. So, Coleman's an interesting brand because, Coleman, consumers ... So first of all, we look at brand equity scores, and the brand equity scores for our top twenty-five brands are very strong. When we put the strategy in place, I mentioned we started with eighty brands. We decided not to go after all eighty because the bottom thirty did not have brand equity scores that were strong, and so those brands, we've now exited, effectively. But the top twenty-five have, are starting with good brand equity scores. In the case of Coleman, if you go down and look at that, consumers are using Coleman for many more occasions than we were marketing to.
So we were marketing Coleman as a camping brand, but you see Coleman coolers on the beach, at the sideline, in the backyard, all over the place, and so the consumer has already moved there. It's just we hadn't moved there. And as you say, the total addressable market for outdoor activity for Coleman is triple if you focus on outdoor activity versus singularly on camping. And so that was one of the strategic changes we made as we thought about the opportunity for that business. By the way, the other thing that's exciting about the outdoor focus area is not only is the total addressable markets bigger, but the price permission is much higher if you're focused on the outdoor than if you're focused exclusively on camping. So, so we're excited about it.
We think we've got that opportunity with a number of our brands, where there's a turnaround required, and we're being selective and not trying to do it with everything. We're only doing it where we've got strong brand equity scores, and we've done the consumer testing work, where the consumer has given us permission to go there.
Okay, and I guess taking Sharpie into paint pens is another-
Example, right.
Okay. Revenue growth management, right, is something that comes up often in the CPG space. So I found it really interesting that you've been starting to talk about it more for Newell, and kind of really a twenty twenty-six initiative, of where you expect it will be. So what does it look like in your categories? How should we think about implications to-
Yeah
... top line and margins?
Yeah, revenue growth management's critical. The reason you hadn't really heard us talk about it up until this point in time was because it was impractical for us to actually affect it and market the right way. It wasn't that long ago we had one hundred thousand SKUs, right? And it was typical that we were launching ten plus thousand new SKUs a year. As Chris mentioned, we had eighty brands in the portfolio and no real brand management capability to speak of, and we didn't have a trade fund management system in place. So in the old world, a revenue growth management model really wasn't practical or possible. As we sit here today, we have twenty thousand SKUs.
We've put an initiative tiering system in place, a very rigorous one, that focuses on tier one, tier two innovations, so we can have fewer, bigger, longer innovations in marketplace with better structural economics. We have taken the brand count from 80 to 50, as Chris just indicated, and within that, 25 brands really is our true focus area, and we're about ready to go live on a, you know, trade fund management system, an integrated, unified trade fund management system for the first time. So that's going to give us a number of real inherent benefits going forward. First, it's going to give us logical price pack architecture, which we've never had in the market before, and that really allows us to do active mix management, which is another area that has been sub-optimized at Newell historically.
It's also one of the areas that, frankly, allowed us to take the 7/1 pricing action last year, where we took high single digit, low double digit pricing across, like, 30% of our U.S. business, principally in the home and commercial businesses, which has had a very positive effect on our structural economics since that point in time. The other thing it's going to allow us to do is do joint business planning the right way.
You know, we've populated really strong customer teams, but now they have the tools to use a checkbook-type, live accrual mentality, and really drive performance against, you know, $1 billion plus dollars of trade fund monies, which prior to this, was really kind of just a giveaway, an entitlement, as opposed to something that we could really drive the business behind in a joint business fashion. So we feel really very good about it. We're convinced that pricing and revenue growth management can add one to two points of top line growth for each year going forward. And so it's a big unlock for us at this point in time.
Putting some of these pieces together, you've had the 37%-38% gross margin target since at least 2019, but then you had 100,000 SKUs, right? I mean, the, the list of things that you've both been kind of going through and the, the changes that have been, you know, MPP and HPP innovation, all these things. Why is the target still 37%-38%? I mean, shouldn't it be higher?
Yeah.
Because I think a lot of these opportunities have been identified post 2019.
Yep, yep. Well, I'll say a few things. So in 2023, that was the first time since the Jarden acquisition, we actually held our gross margin flat year over year. Prior to that, we had been going the wrong way consistently all the way back to 2016. Last year, we held our normalized gross margin at 30.2%, which was the first step in our recovery process, so to speak. If you look at the first half of this year, our gross margin has expanded by 460 basis points, and in the second quarter this year, we are actually at 34.8%. Okay? That was the highest gross margin we had recorded quarterly since the third quarter of 2019. Okay? So we are well on our way.
The Fuel productivity program, that Chris initiated a number of years ago, is only picking up speed. From 2019 to 2022, it took out about 3% of COGS each year. In 2023 and this year, it's gonna be double that, around 6%. Now, the reason we're doing so much better is because the Phoenix organizational redesign basically fully scaled the supply chain. It took the kitchen business, it took the outdoor and rec business, which previously were kind of on their own, and made that part of the integrated network that has been put in place with real supply chain professionals, and that's allowed us to access a whole bunch of additional savings. The Ovid Network streamlined and scaled our distribution network as well. So we feel that those two things were critical enablers to really start getting that COGS takeout even higher.
Now, we feel really good about the runway we still have in all those areas because we are going to have less plants running at higher capacity utilization with more automation in the years ahead. We're also gonna continue to drive scale through our distribution network. We're gonna have less facilities with higher throughput, more trucks going out fully loaded with even better fill rates, although our fill rates have been exceptional this past six quarters. We've been feeling really very good about where we are with respect to that. The procurement team is continuing to use vendor scorecards and best practices, qualifying multiple vendors, so all that is in place. And then in addition to all of that, we're now starting to bring other things online that really should help gross margin more from the front end of the house, right?
So we talked about revenue growth management, right? That's a great way to expand gross margins. We talked about active mix management, right? Where we are now understanding the structural economics of every SKU we have in market, and then helping the sales folks understand which ones that they should push and which ones they should kind of pull back on a little bit. And right, as part of our active SKU management programs, we're now making much more informed decisions about what programs and what items we want to really get behind, and those we wanna step back a little bit further on. As our planning processes continue to improve, our excess and obsolete numbers are coming down dramatically, and that impacts gross margin in a very big way.
When you have these wild whip saws of your supply chain and when you don't have consumer understanding, and so you're putting things out there that don't hit the mark, and effectively they fall flat and you have to bring them back, that's a huge internal expense that's not always quantified. We're having innovation now that's specifically geared towards MPP and HPP, and the mandate within the company is now nothing goes out the door unless it's at least 500 basis points structurally higher margin than the previous things that it was replacing, right? So we're putting all these additional things on top of this great supply chain elements that we had historically. And so I guess what I would say is, look, let us get to 37-38 first-
Yeah.
and then we'll talk about where we go from there. But clearly, we are making big strides and making real gains on the structural economics of this business for the first time in a very, very long time.
Yeah. Okay, so even if you won't tell me the number yet, but do you think you know what the number is?
Chris and I talk about the mid- and long-term state of this business-
Yeah
often. And we're both very excited when we have those conversations together because we see real potential in Newell Brands going forward. We have a capability assessment that informed our strategic choices. We took that strategy, and we didn't leave it at the corporate level of the house. We took it to each of the business segments, we took it to the regions, we took it to the brands, we took it to the functions. So we now have 25,000 people who are all pulling in the same direction against a clear set of how to play, where to win choices. And so we're very optimistic.
Okay. Let me just shift to SG&A. So starting with advertising, right? You've been talking about, increasing spending there this year. Longer term, you've talked about increasing a couple of hundred basis points. So you know, it's kind of been closer to 4% historically. Is like 6%-ish of sales the right number, or does the renewed innovation agenda and the things to come in 2025 and 2026 suggest something should be higher than that?
I think the first thing we have to just recognize is that we have a wide variety of businesses, right?
Yeah.
So our commercial business, as an example, operates with very low levels of A&P, and that's appropriate for that business, and that business is performing very well. We have other businesses, like Writing, that are, you know, far in excess of 5% of A&P as a percent of sales today. And so there are the opportunities simply to spend those monies more efficiently. It is important and notable that in Q2 of this year, when we achieved that 34.8% gross margin, we also had 5.3% A&P. That was only the second time in six years our A&P levels were at that level. So we're clearly putting more money to work as we improve our innovation funnel and we focus on our top brands in our top countries.
That said, you know, where we currently are right now in aggregate is too low, and we do believe that somewhere in the 6%-7% range in the mid to long term is the appropriate place for us to be. We're gonna get there by investing back a portion of the gross margin expansion that we have. We're also gonna be getting there by, again, having the initiatives themselves carry higher innovation loads, right out of the door, because when we go into MPP and HPP, that then allows you to have higher levels of A&P to drive more market resonance, which we're super excited about. And then where we spend our monies, we need to get more upper funnel spending, right?
We have been a little bit late to the party on using social media and influencers the right way, and so you're gonna see us gear up our efforts in that regard, and Chris already mentioned, you know, Ally Love, as an example, is our Chief Hydration Officer. Those are the types of things you're gonna see Newell Brands do a lot more of in the future.
... I think what we're focused on, on SG&A in total, is improving the quality of our SG&A spend. And so if you think about parsing out SG&A, you're gonna see us spend more money on A&P, as Mark mentioned, as our innovation pipeline ramps up more broadly across the top twenty-five brands. You're gonna see us spend more money on R&D behind the development of the innovation pipeline and the consumer understanding, and you're gonna see us spend less money on a lot of the back office and G&A functions, because as we've standardized and centralized that G&A component, we see a big opportunity to continue to drive efficiencies of scale in that part of it. And so, the way I'm thinking about it is, we're gonna drive significant savings on back office functions, invest more in the A&P and the R&D area.
At the same time, we're coming with the new capabilities on the front end, and we think that's a powerful combination.
Okay, and I guess strategically beyond—well, these are all strategic things, but I'm just thinking about also the visibility that it seems you have today that you didn't historically. And if we think about, you mentioned, you know, raising guidance at, at the 2Q point, particularly when, say, most people expected or feared the opposite would happen because of what was happening from a consumer environment standpoint. I guess from a visibility—like, what has changed that's giving you this enhanced visibility? Is it giving yourself more wiggle room, or is it actually the visibility is different, that you're setting yourself up for, you know, the opposite than what people are expecting?
I think it's a little bit of both. You know, when we entered this year, we built a plan that assumed that the categories were gonna be down low single digits. We didn't put rose-colored glasses on. That's what we've seen through the first half of the year, so our forecast of category growth was pretty accurate as it turned out. And I think we'll continue to try to do that so that we're not getting ahead of ourselves or getting behind what the opportunity is. At the same time, as our front-end capabilities are improving, that's giving us more visibility because we now have much stronger visibility on distribution gains that we're gonna get, when they're coming, where they're coming from.
We've put in place a stronger forecasting system called Anaplan that has our sales organization actually inputting to us at the customer level what the forecast is for the first time, and that is helping also dramatically with our front-end visibility. So it's like, I think it's a combination of being perhaps more realistic on the market, improving the front-end capabilities, and putting in this new forecasting system that's given us a stronger and more accurate view of what's happening. And this is important because, one of the things we measure is weighted forecast accuracy at the SKU level.
Mm.
Weighted forecast accuracy at the SKU level is sort of a hidden thing to measure in this industry, because what it says is, if I'm producing a SKU, and I'm expecting in the next two months to sell 100 units, how much did I actually sell? And did I sell too much or too little? If your weighted forecast accuracy is low, then you have to either compensate with having too much inventory, or your service levels are affected, and problems with your retailers because you can't fill their orders. We've taken our weighted forecast accuracy over the last two years up 20 points, which is dramatic. I've never seen it, and it's from a maniacal focus on us.
What that's allowed us to do is take our inventories down by over $1 billion, and we're operating with the highest fill rates in the history of the company. Our global fill rate year to date is 95%. Newell has never been at 95%, and so it's that WFA, that focus and that forecast system and accuracy focus that's driving it. It's a lot easier to do that with 20,000 SKUs than 100,000 SKUs, so it's another benefit of that. But I think that operational capability that we've built is starting to show through in the results and starting to make us more reliable.
Okay, that's great. Let me talk a little bit about business risks. Tariffs have been a focal point for investors lately as we approach November. Right, last time, twenty nineteen was a key topic. You grew operating margins, but gross margins were under pressure. You've spoken a little bit about some of the efforts you've made to insulate yourself versus potential future China tariffs. Could you maybe talk a little bit about, just share that with everyone, and also the degree to which this is enabled by this new Newell, right?
Sure.
That you're able to do things differently to get ahead of the risk.
Yeah. By putting the supply chain into a centralized organization, both from a procurement standpoint and from a distribution and transportation standpoint, we've created a lot more flexibility in our supply chain. One of the things we got concerned about several years ago was Chinese tariffs on the U.S. business. The U.S. business, for perspective, is about 60% of the company's business today. Three or four years ago, about 35% of our cost of goods sold was China-produced goods that were being sold in the U.S. We've made significant progress by insourcing, by moving production outside of China to other countries, and that has driven that number down from 35% down to 15% as we sit here today. So only 15% of our cost of goods sold is manufactured in China for the U.S. market....
And importantly, we've got plans in place now, 'cause we've looked at all of this. We got on this very aggressively about nine months ago, where by the end of next year, we will be below 10% of our business being sourced from China for sale in the U.S. And of that less than 10%, the vast majority of that remaining bit will be the baby gear business, which is the Graco brand, which previously has been exempted from tariffs altogether. And so it's not on the 301 list. So we feel like we are very well-positioned, and in fact, in a competitive advantage position almost, if Chinese tariffs were to come into the market, because many of our competitors are still sourcing from China, and we are not.
And so, we're now starting to think in some of the categories we have, like writing and coolers and blenders, if there were China tariffs that were put in place in those categories, we would have to scale up capacity-
Hmm.
Because it would be an advantage for us because we have unique U.S. manufacturing capability.
Okay, awesome. Freight is another thing I wanted to touch on. Freight costs are up north of 200% year to date, but it sounds like you're not seeing any pressure from that. So just wanted to confirm and ask why, if not.
Yeah. So that's another benefit of this, of this globalization of our supply chain. So we contract freight with the major carriers for ocean freight. And the contract year for the industry runs May 1st to May 1st. We've contracted 100% of our freight heading into this year. We're seeing actually freight costs better than our plan, because, typically, even though you contract 100% of your freight, some companies don't, but we do, you may not get a 100% adherence to those contracts. We've been seeing close to 100% adherence to those contracts. So we have not seen any meaningful increase in ocean freight. In fact, it's been running a little better than we thought, because of this contract position we're in.
The other thing that we did as part of this Ovid restructuring is we diversified our ports, so we're now taking. We used to take 90% of our freight into Long Beach, and we were very dependent on that Southern California port. We now are taking about half of our freight into the East Coast ports and half into the West Coast, because we've got distribution centers set up in both places, and so we are very nimble at being able to divert freight. If we can't get a container to go to Long Beach, we can ship it to Savannah or Charleston, and take advantage of the contract rates that way.
Okay. And so it sounds like for twenty twenty-five, it's not something we should be worried about in the scheme of-
We're not really worried about it in the scheme. You know, what we're seeing from an inflation standpoint overall is low double digit inflation, which is what we expected. Resin costs are up a little bit more than we thought, coming into the year, slightly, but transportation is actually a little better for us than what we thought. The net of it is, we're right on track with what we thought coming into the year.
Okay, great. Capital allocation. So, you know, an area where we've had a lot of investor attention, actually, is your maturities in 2026. It's $2 billion, I think. So in May, you filed a $2.75 billion mixed shelf, but we haven't seen you come to market. So just hoping you could touch on those 2026 maturities and any thoughts on how and when you'll address it.
Yeah, absolutely. So I think the first thing to say is that cash has been and will continue to be a focus for us. I think you guys realize that from 2022 to 2023, we improved our operating cash flow by $1.2 billion year over year. We also paid down several hundred million dollars worth of debt over the last, you know, 6 quarters, as it were, and as our EBITDA has grown 10%, we've taken a full turn off our leverage ratio, as Chris indicated earlier. If you look at Q1 of this year, our operating cash flow is positive, which for us, is seasonally really difficult to achieve. And in Q2, we took another 20 days out of our cash conversion cycle.
So we are doing really, really well vis-à-vis cash, and I think at the end of Q2, we were down $300 million year over year on inventory as well. Now within that, yes, we have some maturities. We have a $200 million piece coming due this December. We plan to pay that off simply with cash on hand, and then in June of 2025, we have a $500 million piece, and then in April of 2026, we have that $2 billion tower. We are going to be addressing that before too much longer. You know, we did do all of the work. We talked about the fact that in our last earnings call, we took up our interest expense forecast for the balance of the year.
We're just waiting for the right moment to enter into the market. It's good that the Fed is gonna be starting to cut rates, so we have, you know, plenty of time to work with here, before things become a little bit more in the front view window. But we have a very good laddered structure right now, and if you look into it, you'll see that there's a lot of good rungs on the ladder out in the twenty-thirties, twenty-thirty-ones, twenty-thirty-twos, twenty-thirty-threes, even. So when we do come to market, I think it's reasonable to expect that you'll see things being dated out to somewhere in that window.
Okay.
We're very confident we'll have no trouble refinancing, and it's just a matter of getting the right launch window.
All right. Terrific. We're perfectly out of time, so thank you so much for joining us, and we are gonna go to a breakout session after this.
Very good. Thank you.