Colgate-Palmolive Company (CL) — Q3 2024 Earnings Call Transcript

Thanks, Betsy. Good morning, and welcome to our third quarter 2024 earnings release conference call. This is John Faucher. Today’s conference call will include forward-looking statements. Actual results could differ materially from these statements. Please refer to the third quarter 2024 earnings press release and related prepared materials, and our most recent filings with the SEC, including our 2023 annual report on Form 10-K, and subsequent SEC filings, all available on Colgate’s website, for a discussion of the factors that could cause actual results to differ materially from these statements. This conference call will also include a discussion of non-GAAP financial measures, including those identified in Tables 4, 6, 7, 8, and 9 of the earnings press release. A full reconciliation to the corresponding GAAP financial measures is included in the third quarter 2024 earnings press release and is available on Colgate’s website. Joining me on the call this morning are Noel Wallace, Chairman, President, and Chief Executive Officer; and Stan Sutula, Chief Financial Officer. Noel will provide you with some thoughts on our results and our 2024 outlook. We will then open it up for Q&A. Noel?

Thanks, John, and good morning, everyone, and thanks again for joining us, as we report another strong quarter of top line and bottom line performance. Our strategy of delivering more impactful core and premium innovation, increasing our advertising spending and scaling capabilities to drive improved brand health and higher household penetration is paying off through strong volume-led organic sales growth. You're seeing this best represented in the fact that we have delivered volume growth in all six divisions for the second straight quarter with 3% growth in developed markets and 4.6% growth in emerging markets. It won't be every division every quarter, but we believe our geographic breadth and category mix will enable us to better weather volatility over time, whether that's from economic, geopolitical or other factors, and deliver organic sales growth in line with our long-term targets despite difficult comparisons. This will be well considered in our plans and it's why we've been talking about building our business model to deliver sustained, profitable growth even as category growth decelerates as pricing growth recedes. Our commitment to reestablishing our gross margin is paying off in gross profit dollar growth even as we lap more difficult comparisons. We have used this gross margin expansion to continue funding the investment in advertising and capabilities, enabling us to deliver best-in-class volume growth, which is driving strong organic sales growth. And we believe the flexibility we have built into our P&L gives us the ability to turn that organic sales growth into consistent compounding earnings per share growth to deliver top-tier TSR over the long term. And with that, I'll open it up for questions.

Hey, good morning.

Good morning, Dara.

So I just wanted to drill down into North America. NA pricing was down significantly for the second quarter in a row, you’d warned us about that last quarter. But just take a step back and help us understand the competitive environment you're facing and what your strategy is from a pricing standpoint? And how much volume payback you think you're getting, given a muted result in the quarter, albeit with some timing caveats? And just how that business is set up going forward as we look forward to 2025 and beyond? And hopefully, this isn't cheating, but I wanted to slip in a second question on Pet, which is mostly North America actually. But the Hill's performance is really striking relative to industry trends. Can you just talk about the sustainability of low-single digit Pet pricing going forward, given that difficult industry pricing environment and the market share gains with your volume performance, again, in light of that difficult industry environment? Thanks.

Good morning, Dara. Thank you. In North America, we arrived at expectations, though volumes were slightly softer than anticipated. Category growth is slowing down as we predicted in the second quarter. Although volumes are returning, they're not increasing as quickly as we would like, but there is a trend toward normalization. We anticipate this to gradually improve. Pricing remained consistent with the second quarter, and we expect similar adjustments as we progress through the remainder of the year and into the first quarter. The softer volume we experienced was primarily due to shipment delays on a few orders. We benefited from some promotional strategies in the third quarter, which will carry over into the fourth quarter. Additionally, our skin health business in North America faced challenges from lower volumes, particularly impacted by China and some decreases from e-commerce sales that didn't materialize during the quarter. Overall, we are largely where we expected to be. Our team is focused on positioning ourselves for a strong 2025 with an innovative growth plan in place. We anticipate the volume will continue to recover as the category normalizes. The positive aspect is that we've managed to navigate some of the softness in North America thanks to robust growth across the business. Hill's had an exceptional quarter, with strong performance and volume, particularly in light of reduced private label competition. Despite the impact of private label, we saw mid-single-digit volume growth and strong margins. We remain committed to reinvesting that margin to drive continued category growth. We also observed some pricing adjustments this quarter and believe we can adjust prices as commodity prices fluctuate, benefiting from the brand's strong market position. We are gaining market share and are currently the fastest-growing global brand in pet specialty and neighborhood pet stores. Overall, we are optimistic about the Hill's business and our capacity for sustained growth through effective advertising efforts.

Good morning, everyone. Noel, I wanted to get your thoughts as you begin planning for next year. I understand you won't be providing guidance today, but you expressed confidence in maintaining your long-term growth trajectory over the coming years. As you reflect on overcoming challenging comparisons, which areas of the business do you believe might see acceleration? Are you expecting more from innovation, improved volume in developed markets, or perhaps growth in the pet food sector? Any insights on how you're viewing these comparisons and potential areas for growth would be appreciated. Thank you.

Thank you for the question, Filippo. We've been discussing for nearly three years the significance of investing in long-term capabilities that we believe are crucial for driving sustained growth. I attribute our success in this area to the flexibility we've incorporated into our profit and loss statements. Currently, our focus is on enhancing and speeding up innovation, especially in the second and third halves of the year. We believe we have a very robust new product pipeline heading into 2025 and 2026. Our profit and loss statements include gross margin flexibility that enables us to reinvest in the business, particularly in advertising, which we will continue to pursue. This approach helps improve brand health and fosters long-term sustainable growth in market share. Over the past few years, we've seen a significant increase in market share, particularly in toothpaste and toothbrushes, which reflects our innovation and consistent advertising efforts included in our financial planning. We remain committed to investing back into the business, enhancing household penetration, and using our analytical work to identify growth opportunities. We are focused on increasing per capita consumption in markets where potential exists and promoting our brand through advocacy. All these strategies will continue to unfold in 2025 and into 2026.

Hi. Thank you. I want to know about Europe. It was obviously a very strong quarter, and many of your competitors have also reported strong results in Europe. However, one of your competitors mentioned that we shouldn't expect this level of performance to continue. I'm curious about what is driving this success. How were your market shares in Europe during the quarter, and what are your expectations for the future?

Yeah. Thanks, Robert. Again, a great quarter for Europe. My congratulations to the team out there which is doing an exceptional job really focusing on the fundamentals. We've clearly put significant investment back into Europe, which we're seeing really play out in that sustained top line growth. Volume growth was terrific. We're getting a little bit of pricing. Pricing, we're not immune to the challenges of pricing in Europe. But the good news is, we move into '25 with much stronger market shares, good penetration across our categories, and a very strong level of advertising that's improved brand health. So again, very consistent with the theme that we've been talking about, reinvest behind those growth opportunities. Our Oral Care shares are at record high levels now. We continue to see growth opportunities there, particularly building penetration amongst very specific targets. The advertising levels across the business, not just in Oral Care or coming back in. So we're seeing more broad-based growth across the European business. But we're not immune to some of the softness and challenges that always seem to plague the European market long term. But the good news is the business is in very good shape. Gross margins are at very high levels. Advertising strong and market shares have been reflected very positively.

Thank you. Good morning.

Good morning, Bonnie.

I wanted to ask about your emerging markets business. Organic sales growth has been strong in these markets, but most of it's been driven by pricing to offset FX pressures. And I guess, as a result, this isn't necessarily translating into significant growth on a net basis. So I guess, I'd be curious to better understand how you're thinking about these businesses, and ultimately, how we should think about the contribution of volume mix going forward?

Yeah. Thanks, Bonnie. Listen, the emerging market numbers were terrific. Even ex-Argentina, very positive volume and positive pricing ex-Argentina. So we're encouraged very much so. Some of our larger markets, particularly Brazil, India and Mexico continue to perform very, very strongly. And if you look long-term strategically, this is where the growth is going to come from. I mean, there continues to be per capita opportunities, premiumization opportunities in those markets, which we think we're executing very well. I'm sure we'll get into some discussions on Latin America, but they continue to perform exceptionally well despite some of the choppiness that we've seen in some of those markets, particularly Mexico in post-elections. But overall, the emerging market strategy that we have in place continues to deliver. So you go across the board, Asia, strong performance this quarter, particularly China. Our Colgate China business performed exceptionally well. India strong. Africa, Eurasia, despite some of the volatility of that division is going through, again, quite strong. So we think the refocus on some of the real basic fundamentals that we had to put back into the business on driving household penetration, making sure we’re looking at the premiumization opportunities, getting gross margin back into the P&L has allowed us to get a lot more flexibility in targeting some of those markets. Now as you well know, there’s significant volatility in emerging markets. We’ve seen some of the exchange rates move negatively over the recent periods, and we’ll have to adjust accordingly to that moving forward. But overall, we feel very good about it, but we’re not immune to some of the economic and political issues that I outlined earlier that impact those markets. But overall, the underlying performance is kind of right where we’d like to see it.

Great. Thanks. Good morning, everyone and congratulations on the really strong quarter and results year-to-date. Stan, I was hoping maybe we could pivot to gross margin. Again, strong in the quarter. We're seeing the pricing contribution start to step down here commensurately with lower level of cost inflation. Funding the growth continues to be quite good, has been for a very long time at the company. Without giving guidance for next year, can you maybe just help us think about the building blocks and how you're thinking about gross margin development over the next 12 months or so? And then relatedly, what that may mean as you're thinking about reinvestment further down the P&L? Thank you for that.

Hey. Good morning, Kevin. Thanks for the question. So gross profit, we're very pleased with the gross profit margin here in third quarter. And candidly, it was better than our expectations, up 270 basis points year-on-year and improved sequentially. As we've disclosed before, we continue to see raw material inflation, and you saw that in our gross margin roll forward. Also, we're going to wrap around on even tougher compares here on a year-on-year basis in Q4. So as we think about the components, I think the teams have done a really nice job of looking and driving funding the growth to drive productivity, which will help us on the margin. And then openly, we also get benefit from volume. So as the volumes have been increasing, we get the ability to get more overhead absorption, and that's always a benefit when we think about the variances. Now as Noel talked about earlier, we expect that the pricing contribution will mitigate over time. So we're not going to give '25 guidance here. But I think if you look at our history, you would see that we drive funding the growth. We have a great program here to drive that productivity over time. And that funding the growth, combined with revenue growth management, will help us balance out that P&L. The model we continue to expect, which would be gross margin dollars will drive that profitable growth. We'll invest that back in the business through innovation, through advertising to deliver both top and bottom line.

Great. Thanks. Good morning. I was just curious, if you could talk a little bit about the philosophy on advertising and reinvestment spending. Like, how high can you go? Is there a point at which there's sort of a diminishing rate of return? So whether it's not about '25, but let's call it '25 and beyond, as you've created this flexibility, Stan just spoke to ongoing productivity programs, funding the growth continues. So how do you think about that spending and making sure it's still coming back with that same ROI and it's not diminishing? Thanks.

Good morning, Lauren. Thank you. We've discussed this for some time, and the core strategy of the company is to create flexibility for reinvesting in our brands. We have significant opportunities for market penetration as well as brand equity and health. Ultimately, driving sustained growth in the long term relies on ensuring that consumers understand the benefits of our products and are eager to use them. As seen through volume trends, we have internal metrics to evaluate the return on investment. Simply put, maintaining volume growth and broad-based penetration globally is our primary benchmark to assess the effectiveness of our advertising. We continuously evaluate this by geography, checking whether we are achieving desired returns and if we need to reallocate funds between divisions based on performance. I mentioned Europe earlier, where we are experiencing outstanding returns on our advertising spend, especially in Oral Care. We now have the flexibility to allocate additional resources to the North America market, which I believe will be beneficial. Overall, we are improving our understanding of what works, especially with our advancements in analytics and the use of AI to enhance our digital impact, which should lead to better ROI in the future. I am keen to identify greater efficiency in our advertising expenses, which will be a significant focus for us as we approach 2025 and 2026. We aim to strengthen our analytical capabilities concerning our media investments and ensure we can quickly make informed decisions based on real-time insights. Overall, we are satisfied with our advertising investment, as it has enabled us to support a wider range of brands across the business, contributing to our overall health. Importantly, we are observing strong penetration numbers and premiumization opportunities through our innovations. Therefore, we remain positive about our strategy and will continue investing as long as we see upward movement in revenue and market penetration.

I'd like to follow up on that a little bit. I think it was interesting when you said better at some of the things that are working. Can you maybe just talk about some of the changes that you've made, maybe it's in being tactical on the advertising versus longer-term brand building? If you could just maybe get into some of the tweaks because when we see such a good result, especially, in some markets where CPG peers have struggled. It feels like there's a lot more going on, and if you could just give a little more detail on what's behind that, I think it would be helpful.

Yeah. Sure, Kaumil. Thank you. Listen, over the last three or four years, our team here in New York, working really closely with our operating heads, has spent a significant amount of time in the strategy of the company. And what that really entails is making sure that we are collectively working together on prioritizing where we see the biggest growth opportunities. Historically, I’d say, we were a bit democratic in our spending. We’re now much more strategic and we are able to pinpoint where we’re getting the best ROI, where we see the best growth opportunities. And the division presidents aren’t afraid to move money around within their divisions and across divisions to ensure that we’re putting our money in areas where we’re going to get the best return for that. And that clearly is demonstrated through the volume growth that we’re seeing across all six divisions. I think it really comes down to not only just Oral Care and Pet Health and Skin Health, but now looking at opportunities both in the Personal Care businesses, the classical Personal Care businesses. Bodywash had a great performance in Europe this quarter. They’re supporting some relaunches with great innovation and advertising. Likewise, we’re seeing some great opportunities in Home Care across Latin America, which had a nice Home Care result in the quarter. So it’s broad-based support and it’s making sure strategically that we’re very thoughtful about where we’re putting the money in terms of geographic. The second aspect of that is exactly how we spend our money. The media environments become far more complex. There are various platforms to choose from. We’re being very selective and focused on how we spend that money. It’s easy to get enamored with a lot of shiny objects out there in terms of media opportunities, but we’re focused on where we can build reach and build the frequency accordingly to build brand health. And the digital teams here in New York, helping to share best practices around the world and getting that ROI up, specifically in the digital area across different mediums, has really paid out nicely for us.

Hi, good morning. Can you expand a bit on what you're seeing in Latin America? You made a comment about Mexico and the elections, but in the prepared remarks there was also a comment about stabilizing and still positive. So just what's the direction of travel in Latin America, specifically Mexico and perhaps Brazil? And then just connected to that, you talked about some currency volatility and needing to respond in different ways. How do you think about pricing in this market, specifically, if the macros are stable, but maybe not as strong as they were a year ago? Just any thoughts on how you'd approach strategy in these markets over the 12 months? Thanks.

Sure, Chris. Thank you. Good morning. As you mentioned, we had a really strong performance in Latin America, especially considering the tougher comparisons in volume. We anticipated a slowdown in organic sales growth, and that's what we are observing, but it aligns with our expectations, so we feel good about that. The underlying health of the business, specifically regarding market shares in Latin America, showed remarkable progress this quarter. Notably, if you examine the business over the past two years, volume has increased sequentially for four quarters in a row. Despite significant volatility, we are witnessing a return of volume in the categories. It’s worth noting that we implemented considerable pricing increases in those regions over the last two years. Thus, the quick and sustained rebound in volume is significant. Post-elections, we've observed some fluctuations in Mexico, particularly in categories that might be normalizing. We need to monitor that situation closely and adjust our spending strategy in that market as necessary. However, we have a solid innovation plan. As highlighted, we've relaunched Colgate Total, which is a major product in Latin America, allowing us a valuable opportunity to drive premiumization. We believe this is the best formula we've ever marketed for Colgate Total, and we are eager to see its impact across the region. Additionally, pricing is up outside Argentina. If the foreign exchange situation continues to challenge us, we believe that the strength of our brands, along with the support we provide, will enable us to implement further pricing increases in those markets to help mitigate the impact. However, we are not insulated from the sluggishness and foreign exchange fluctuations affecting those markets, as noted in my comments about Mexico at Barclays. Overall, I think we are maintaining a strong performance there, but we need to closely monitor the sluggishness in certain categories as the quarter concludes. The team is well positioned to execute based on our observations. Overall, Brazil had an excellent quarter despite ongoing uncertainties in the market, and I am encouraged by what we see in Brazil and the broader region. Our team is adept at navigating volatile conditions and continues to advance penetration and premiumization. I remain confident that, despite the absence of aggressive pricing due to inflationary pressures, we can still apply some foreign exchange pricing strategies in the business in the upcoming quarters.

Good morning. Thank you. I wanted to ask you broadly about affordability given the macro environment, particularly in North America, but I think this is relevant to all markets. And as consumers continue to scrutinize your spending, can you talk about some of the initiatives that you have that help with respect to either promotional plans or at mid-tier price points with product? Just sort of thinking about the broader picture and how consumers are thinking about their total basket spend and actions that you're taking to maintain, if not grow share in that backdrop? Thank you.

Thanks, good morning, Olivia. Let me revisit our strategy. We aim to enhance our innovation, especially in the premium segment, while adding value to our core businesses globally. We support this with advertising to increase brand penetration and market share. Overall, our volume shares performed well during the quarter across the globe, and our value shares also saw positive results, particularly in toothpaste. While consumers may face some challenges in North America, it's essential for us to continue boosting our innovation and providing real value across different price tiers. Additionally, it's crucial to carefully consider our promotional strategies, including digital and paper coupons, various promotions, and price pack structures. All these elements are vital for analyzing what drives category growth for our retailers and ensuring our business performance. Recently, I reviewed some impressive work we're doing with U.S. retailers, leveraging AI and analytics for our promotions, yielding excellent outcomes. The environment is indeed more competitive, with higher coupon redemption rates, and promotions are generally more normalized, though still not back to pre-COVID levels, which is a positive sign. Ultimately, it's about spending our resources wisely to achieve the best return on investment. Across the globe, consumer behavior remains relatively consistent compared to the post-COVID period, with slightly increased promotional redemption rates for coupons.

Thank you very much. Terrific results, Noel. If you take a step back and consider a few of the questions, the underlying inquiry seems to be why you are performing so well in multiple areas. I think part of the answer might be that you have increased your spending and have the data to allocate funds effectively. However, I would like to delve deeper into this and focus on Oral Care. How much of your success can be attributed to technology, whitening initiatives, and specific marketing strategies? I'm looking to understand the factors that contribute to sustainable market share growth beyond simply increasing marketing expenditure. Additionally, if there's time, I would like to discuss your operations in China, where you are outpacing others significantly, and how that approach translates to such a challenging market. Thank you.

Good morning, Rob. Thank you for your question. The focus remains on consistently performing in our targeted categories globally and identifying growth opportunities. We've dedicated significant effort to building capabilities, which may not show immediate results but are essential for establishing long-term health for our business. This involves innovation, digital strategies, advertising return on investment, data utilization for improved decision-making, and ensuring our initiatives in H2 and H3 are aligned with our goals. It's also about addressing new channel behaviors and adhering to the fundamentals we’ve discussed, while making necessary investments. Over the past three years, we strategically adjusted pricing to position our categories effectively, enabling ongoing investment in our brands. We internally measure our brand health and the status of our equities, which are performing well, and we aim to continue enhancing them. While we acknowledge external challenges that may impact performance, our diverse business and global presence give us confidence in managing the volatility. However, we must remain proactive in developing our capabilities and addressing growth opportunities in key regions. Our strategy is deliberate and consistent, focusing on steady growth rather than taking excessive risks, akin to accumulating singles in sports. Specifically regarding Oral Care, we are focusing on premiumization and innovative products, including new whitening options and the rollout of Colgate Total in Latin America with significant innovations. We're also enhancing the Max Fresh product line in India and Southeast Asia. Our increased innovation and resource commitments in these areas are expected to yield results. In China, our business is performing well, benefiting from favorable comparables. The Colgate brand is growing in the high single digits due to premiumization and continuous innovation, positively impacting our brand health. We're achieving a solid mix of volume and pricing despite facing tougher comparisons on the Colgate side. The Hawley & Hazel business, which has experienced previous growth challenges, is starting to recover, although we recognize there is still potential for improvement. We're re-evaluating our market strategy for Hawley & Hazel to position ourselves effectively in this competitive market and drive sustained growth. Overall, we are pleased with our performance in China, but we are aware of the broader slowdown affecting the market. We believe that our ongoing focus on innovation will support sustained growth in the future.

Hi, good morning. My question is what was the exit rate for organic sales growth in the quarter and what is embedded in your guidance for Q4? Because even if the guidance raise is a wide range. And Noel, from your tone on this call, it seems that you're supposed to keep the pace of 6% globally. So in other words, if you current trends continue, is that the way we should be thinking, that the top of the range would be that embedded around 6%? And if I can squeeze a clarification on Hill’s. Can you comment now on the potential for more international expansion with more capacity into 2025? Thank you for both.

Great. Andrea, good morning. Thank you. We don't provide quarterly guidance, so I won't discuss specifics. However, we feel confident about the overall health of our performance this quarter. We believe we are well-positioned for consistent growth. That said, we are not immune to the challenges noted by many consumer packaged goods companies during this earnings season, and that reality is reflected in our guidance. You can see that in our numbers and the outlook for where we expect to be. We've experienced a slight slowdown and some movement in foreign exchange rates, and we will see how categories develop as we conclude the year. Nevertheless, we feel we're in a good position. Regarding Hill's capacity, it continues to bring positive impacts to the Hill's business, providing us with more flexibility in our financials. We are finding ways to optimize our supply chain and create positive variances for our factories. Additionally, it allows us to expand into higher growth segments in the wet category, which has shown nice growth this quarter and is helping us increase our overall market share in that area. There is still work to do, and we will be diligent in our approach to allocating volumes globally and addressing growth opportunities, especially internationally. Overall, we had a strong quarter, and the supply chain team at Hill's is doing an outstanding job integrating the new facilities and optimizing the network.

Thanks, operator. Good morning, everyone. So I have just maybe one point of clarification and then a question. And the clarifying, Noel, I think earlier you talked a little bit about gross profit dollars and gross dollar profit growth. And I think it's maybe created a little bit of a question about whether there's a signal here that the focus maybe more shifting to gross profit dollar growth versus gross margin percentages. And I know you've had a view on that in the past, so if you could just sort of clarify that? Just is there any sort of message that you're trying to send or we still leave gross margin expand?

Sure. Let me pass it to Stan and Bryan. We want to emphasize that we recognize the significance of both gross margin percent and gross margin dollars. It's encouraging to see growth in both areas this quarter, which is crucial for us. As we explore growth opportunities, whether through innovation or in new markets, we are carefully considering how these will affect gross margin. Our goal is to continue increasing gross margin dollars to reinvest in the business. However, we cannot achieve that without a solid gross margin percent. We are not going to pursue volume just for the sake of increasing dollars; it must be a strategic decision. Now, I’ll let Stan share more insights.

Yes, Bryan. First of all, it's clearly a mix of both factors. If we consider the business, we have seen significant margin improvements in several areas, especially in Hill's. What we want to emphasize is that the way we achieve that margin improvement alongside dollar growth will change. While pricing will contribute less, volume has helped us initially, and productivity will remain a key driver as we move forward. Ultimately, when we examine both margin and revenue, it's a blend of the two. This reflects our overall business model on how we reinvest back into the business to achieve growth in both revenue and profit.

Bryan, if I can just add one point to Stan's point. The bottom line growth piece, key, right? We need EPS growth in dollars, right, because that's what creates long-term TSR at the top end of our peer group. So we talk about organic sales growth, but we're focused on driving dollar-based sales growth. We talked about driving gross margin percentage, but we also know we need to drive those gross profit dollars to drive EPS growth in dollars to drive TSR. So it's a very thoughtful way to look at it, but as Stan said, you need both to drive that bottom line growth.

Hey, good morning. Thanks for taking the question. I'd like to get a little bit more clarity on some of the dynamics that were going on in North America in the quarter. I mean it sounds like some shipments were pushed from Q3 to Q4. Can you just clarify what that was due to? And then the pullback in the eCommerce, what that was attributable to? And then how should we be thinking about some of the macro dynamics in Q4, especially in the U.S. as some retailers are talking about pulling back into orders? Thank you.

Yeah, Korinne. Thank you. Again, we talked about three specific things. Obviously, there’s some shipment timing that moved from third to the fourth quarter, that was just due to some disruptions in our network and ultimately getting that order out in time. But ultimately, it will move into the fourth quarter. But nothing systemic there that we feel would be reoccurring. The eCommerce issue was specifically on the skin health business. We’ve seen a little – obviously, there’s some softness coming out of Asia, specifically China. But this one was more specific to the U.S. market, where we saw some of our big online retailers pull back a little bit on orders at the end of the quarter. We think those were inventory adjustments more than anything. But in any case, we need to watch that carefully and see if that’s going to be sustained or not moving forward. And overall, the macro dynamics in North America, I would say, more stabilization. We haven’t seen anything deeply unusual on the promotion side. I think the percent sold on promotion is more or less pretty consistent. Still not back to where it was, as high as it was, pre-COVID. So overall, I would say more normalization, as I did mention, a little higher redemption rates coming through on couponing, and a little bit more broad-based activity in terms of the number of promotions. But overall depth and proportion to what we’ve seen in the past seems pretty normalized right now.

Hey, thanks. Good morning. I wanted to ask Noel on Skin Care. I guess, first, just mechanically and following up to Dara in North America, are you able to quantify how much of a drag the restatement was on growth in that segment this quarter to the extent that it was? But then more generally, I guess, you've talked a little bit about it, but maybe could you expand on what you're seeing in skin care trends across key markets because I'm assuming there's a good deal of variability. And do any of the reporting structure changes that you've made this year carried with them give some strategy with respect to how you approach Skin Care or skin health opportunities longer term? Thank you.

Yeah. Thanks, Steve. So overall, let me just generalize. North America was, with the order changes and the skin, if you take skin out was closer to flat for the quarter. But I'm not going to quantify any more specifics on that. But specifically around the skin sector, I think you've heard from others, there's been some sluggishness, particularly in Asia. Likewise in Europe, and to a certain extent in the U.S. as well. So we're not necessarily immune to that. But what we have been doing very specifically is we are thinking about that business quite differently. We brought in some outside talent, somebody with over 20 years’ experience at L’Oreal. We’re getting very clear and articulate about what we – where we want to compete and how we want to compete in that space. We feel very good about that organization now being much more centralized here in the U.S. in order to drive global decisions from the center and making very deliberate choices on how you invest and where we invest. We had to clean up some of the market expansion opportunities there that we didn’t think were sustainable for the business. But overall, the economics and long-term health aspects of where we see that business growing continue to be very favorable. And we’re encouraged, obviously, by the long-term strategy. We’ve got some short-term issues with, obviously, Asia and some of the softness that we’re seeing in some of the European markets to address. But overall, again, we feel the strategy we’re putting in place will get us back to the sustained growth that we expect.

Thanks. Good morning, everybody. I wanted to go back to U.S. Oral Care and kind of ask more of a deep dive question there. So as we look at the market trends over a long period of time, there were four or five quarters where it was actually growth '22 to '23 (ph). But largely, it's been in a decelerating or share loss situation going back quite a long time. I guess the question is, what contributes to that period of outperformance? What has contributed to this state of back to share loss? And maybe if you kind of like a deep dive on what you think competitors are doing well, where they're gaining share? Where do you think Colgate could do a better job from a share perspective and how do you broadly kind of think about it? Because I know there's a lot of thought innovation around this total relaunch is to refocus on whitening, and yet, the general trajectory remains kind of where it is? Thanks.

Yeah. Thanks, Mark. Listen, overall, shares are roughly flat, down 20 basis points on toothpaste and up on toothbrushes. And clearly, we’ve seen some impact of our refocus on some of the untracked channels that we’ve had over the last couple of years and seeing good performance in those untracked channels. So overall, business is good. It’s not exactly where we want it right now, and we’re very focused on getting the innovation strategy dialed up. We’ve got to get the premiumization side of that business addressed. We’ve got strong core businesses that we’re seeing benefited as you see the consumer to a certain extent, some of the consumers trading more into the mid-tier. But overall, it’s getting the premiumization side of the business addressed moving forward. And we’re very focused on that in the strategy. Toothbrush business continues to perform very, very well. So again, putting more investment into that market, getting the innovation right, executing the fundamentals around distribution and shelf sets, all the basics that we think are necessary. And the plans that we have in ‘25 were some of the big core relaunches that were not privy to talk about, we think we’re set up for stronger success moving forward. We’ve seen some, again, choppiness with some of the retail environments, particularly the drug class of trade, where we hire shares, has struggled to drive traffic and turn in their retail environment. So we’re having to shift accordingly. But we still feel the channel long term provides a growth opportunity for us, but you’ve seen some sluggishness in that retail environment in the short term.

Yeah. Thanks very much. I guess just looking back when you launched your sort of new strategy a few years ago. You talked about the core product of CPG doing a lot around that. You talked about adjacent categories. And you also talked about adjacent channels, the opportunities there. And just looking at the results today, I mean, we've seen the success for a number of years now on eCommerce in China. But how much of the channel mix changed in regions like, say, Latin America and Asia, ex-China relative to where it was before? And how much is that helping the success you're seeing with the premiumization strategy?

Yeah. Good morning, Ed. Thank you. Interesting question. It's back on the channel expansion. I mean the initial focus on that was predominantly eCommerce, but we identified real unique opportunities in the expansion of very innovative discount formats around the world. The expansion of the club store format in certain parts of the world, you're seeing club stores particularly in Asia, and more specifically, China, grow quite significantly a couple of years. So it's making sure that as we think strategically around where we want to invest, we're investing in those retailers that are going to drive long-term growth for the business. And we've been very quick to adopt to new formats. And that's been one of the successes we've had here in North America when we initially guided to the Dollar Stores decades ago and ultimately, we've got strong leads there. But it's making sure that we are working with our retailers, all of our retailers to bring products to drive innovative growth for their sectors. And that's the key focus for us, category growth across all channels. And making sure that as we see new retail environments come on stream, that we're thinking very thoughtfully on how to do that in a way that drives growth for our retailers for the category and for the whole market. So I think it's just being very attuned to what we're seeing in the markets. You're seeing a lot of very innovative things happening at the retailer level. I think that's to be expected given some of the challenges in the move to eCommerce. So there's big box retailers that are having to change their shopping experience. And we're very much working in tandem with them to ensure that we have the products they need, the price pack architectures and configurations that they need in order to drive excitement at the shelf.

Thanks. Thanks to everyone. Again, a strong quarter. We're having a good year so far through three quarters. Net sales were up 4.5%. Organic, up 8.5%. With again, a very strong balance between volume at 3.3% and pricing at 5.2%, and EPS double-digit on a year-to-date basis. And importantly, getting that flexibility across the income statement and the balance sheet. But this is the hard work of Colgate people all around the world aligned to our growth strategy and executing extraordinarily well. So thanks, everyone, for the questions today, and thanks to all the Colgate people for delivering a strong quarter.