Q4 2021 Church & Dwight Co Inc Earnings Call

Matthew Farrell: In all key categories. Prices are sticking, and elasticities are better than our initial forecasts. And should we move into a recessionary environment, our value brands, which make up 40% of our portfolio, are well-positioned for a consumer who's looking for deeper value. In terms of consumers who are spending more time at home today, and we think will continue to spend increased time at home in the future, and will therefore be even more focused on a clean and healthy home, we see great inroads with 3 million incremental households now using Arm & Hammer and OxiClean each, versus pre-pandemic levels in 2019. We don't see this going backwards, and in fact, see household penetration continuing to build year-over-year.

Barry Bruno: In all key categories. Prices are sticking, and elasticities are better than our initial forecasts. And should we move into a recessionary environment, our value brands, which make up 40% of our portfolio, are well-positioned for a consumer who's looking for deeper value. In terms of consumers who are spending more time at home today, and we think will continue to spend increased time at home in the future, and will therefore be even more focused on a clean and healthy home, we see great inroads with 3 million incremental households now using Arm & Hammer and OxiClean each, versus pre-pandemic levels in 2019. We don't see this going backwards, and in fact, see household penetration continuing to build year-over-year.

Prices are sticking and elasticities are better than our initial forecast and should we move into a recessionary environment, our value brands, which make up 40% of our portfolio are well positioned for a consumer who is looking for deeper value.

In terms of consumers, who are spending more time at home today, and we think we'll continue to spend increased time at home in the future and will therefore be even more focused on a clean and healthy home, we see great inroads with 3 million incremental households, now using arm <unk> hammer and oxiclean each versus pre pandemic levels in 2019.

We don't see this going backwards and in fact see household penetration continuing to build year over year.

Matthew Farrell: In the spirit of consumers looking to stay healthy, both mentally and physically, we see a continuing trend where consumers are looking to vitamins to help out, and not just any vitamins, but the gummy form in particular, which is where consumers are migrating to from pills and capsules, is up 7 points since 2019. Equally important is that we're well-positioned in the category, with offerings that match up nicely to all of the consumer needs states that are growing, including sleep, stress, mood, among the others you can see here. And all of that translates to an incremental 5.7 million households buying VitaFusion in 2021 than we're buying in 2019. Likewise, brand awareness continues to grow, and our aided brand awareness is up an incredible 53 points since 2012.

In the spirit of consumers looking to stay healthy, both mentally and physically, we see a continuing trend where consumers are looking to vitamins to help out, and not just any vitamins, but the gummy form in particular, which is where consumers are migrating to from pills and capsules, is up 7 points since 2019. Equally important is that we're well-positioned in the category, with offerings that match up nicely to all of the consumer needs states that are growing, including sleep, stress, mood, among the others you can see here. And all of that translates to an incremental 5.7 million households buying VitaFusion in 2021 than we're buying in 2019. Likewise, brand awareness continues to grow, and our aided brand awareness is up an incredible 53 points since 2012.

In the spirit of consumers looking to stay healthy both mentally and physically we see a continuing trend where consumers are looking to vitamins to help out and not just any vitamins, but the gummy form in particular, which is where consumers are migrating to from pills and capsules is up seven points. Since 2019 equally important is that we're well positioned in the category with <unk>.

Offerings that match up nicely to all of the consumer need states that are growing including sleep stress mood. Among the others you can see here and all of that translates to an incremental $5 7 million households, buying vital fusion in 2021 than were buying in 2019.

Likewise brand awareness continues to grow and our aided brand awareness is up an incredible 53 points since 2012.

Matthew Farrell: The fourth trend we see as not so much emerging but is already established is the belief that self-care is not just an occasional splurge, but is an increasing part of daily routines. A few statistics that bear this out include that 87% of consumers now claim to actively practice self-care, while 70% have established specific self-care goals, and 59% are practicing self-care more in 2021 than in 2020. A group of some of our most important brands, including Waterpik, Spinbrush, VitaFusion, Viviscal, and TheraBreath, are benefiting from this trend already, and stand to benefit even more in the future. Waterpik, in particular, has a lot of runway ahead since the household penetration for water flossers is 23%, compared to power toothbrushes at approximately 40%.

The fourth trend we see as not so much emerging but is already established is the belief that self-care is not just an occasional splurge, but is an increasing part of daily routines. A few statistics that bear this out include that 87% of consumers now claim to actively practice self-care, while 70% have established specific self-care goals, and 59% are practicing self-care more in 2021 than in 2020. A group of some of our most important brands, including Waterpik, Spinbrush, VitaFusion, Viviscal, and TheraBreath, are benefiting from this trend already, and stand to benefit even more in the future. Waterpik, in particular, has a lot of runway ahead since the household penetration for water flossers is 23%, compared to power toothbrushes at approximately 40%.

The fourth trend, we see as not so much emerging but is already established is the belief that self care is not just an occasional splurge, but is increasing part of daily routines.

A few statistics that bear this out included 87% of consumers now claim to actively practice health care, while 70% have established specific self care goals and 59 of practicing self care more in 2021 than in 2020.

A group of some of our most important brands, including Waterpick spin brush Vita fusion Vivek Gal and thorough breath are benefiting from this trend already and stand to benefit even more in the future.

What a pick in particular has a lot of runway ahead since the household penetration for waterflood yours is 23% compared to power toothbrushes at approximately 40%.

Matthew Farrell: Finally, we're as eager as our consumers and each of you for a return to normal, and we're starting to see a reestablishment of social interaction, which is driving categories like skin and nail care, dry shampoo, hair growth, and depilatories to high single-digit or even double-digit growth. We see that continuing. One interesting statistic to make this runway real is that Batiste, which was one of our fastest growers in 2021, still has years of runway ahead, as U.S. household penetration for dry shampoo is only 4.5%, compared to the U.K., where the brand was born, where household penetration is 8%. Finally, one category that continues to lag is condoms, but we don't believe sex is over with just yet, so we're ready with America's number one condom brand when the category inevitably bounces back.

Finally, we're as eager as our consumers and each of you for a return to normal, and we're starting to see a reestablishment of social interaction, which is driving categories like skin and nail care, dry shampoo, hair growth, and depilatories to high single-digit or even double-digit growth. We see that continuing. One interesting statistic to make this runway real is that Batiste, which was one of our fastest growers in 2021, still has years of runway ahead, as U.S. household penetration for dry shampoo is only 4.5%, compared to the U.K., where the brand was born, where household penetration is 8%. Finally, one category that continues to lag is condoms, but we don't believe sex is over with just yet, so we're ready with America's number one condom brand when the category inevitably bounces back.

Finally, whereas eager as our consumers in each of you for a return to normal and we're starting to see a reestablishment of social interaction, which is driving categories like skin and nail care dry shampoo hair growth and depilatory to high single digit or even double digit growth and we see that continuing one interesting statistic.

To make this one way wheel is that batiste, which is one of our fastest growers in 2021 still has years of runway ahead as U S household penetration for dry shampoo is only four 5% compared to the U K, where the brand was born where household penetration is 8%.

Finally, one category that continues to lag is condoms, but we don't believe sexes over with just yet so we're ready with America's number one condom brand when the category inevitably bounces back.

Matthew Farrell: And if that's not enough, we still have huge runway ahead on our two most recent acquisitions. With regard to Zicam, we haven't had a normal cold and flu season since COVID struck. As we emerge from COVID and consumers are increasingly social, experts predict there's an inevitable return of the flu, and those peak seasons that we see in Q1 and Q4 will provide material growth that we haven't experienced since acquiring the brand. And now that we're launching Zicam in a new gummy form, which I'll talk about more in a bit, there's even more reason to believe. Finally, TheraBreath was a great holiday present when the deal closed on 24 December. And when we combine significant new distribution opportunities with our great Waterpik dental hygienist detailing force, we see significant room for growth ahead.

And if that's not enough, we still have huge runway ahead on our two most recent acquisitions. With regard to Zicam, we haven't had a normal cold and flu season since COVID struck. As we emerge from COVID and consumers are increasingly social, experts predict there's an inevitable return of the flu, and those peak seasons that we see in Q1 and Q4 will provide material growth that we haven't experienced since acquiring the brand. And now that we're launching Zicam in a new gummy form, which I'll talk about more in a bit, there's even more reason to believe. Finally, TheraBreath was a great holiday present when the deal closed on 24 December. And when we combine significant new distribution opportunities with our great Waterpik dental hygienist detailing force, we see significant room for growth ahead.

And if that's not enough we still have huge runway ahead on our two most recent acquisitions with regard to Zicam, we haven't had a normal cold and flu season since COVID-19 struck.

As we emerge from Covid and consumers are increasingly social experts predict there is an inevitable return of the flu and those peak seasons that we see in Q1 and Q4 will provide material growth that we have an experienced since acquiring the brand.

And now that we're launching zicam into new gummy form, which I'll talk about more in a bit there's even more reason to believe.

Finally, Sarah breath was a great holiday president when the deal closed on December 24th and when we combine significant new distribution opportunities with our great water Pik dental hygienist detailing force, we see significant room for growth ahead.

Matthew Farrell: Speaking of TheraBreath, just about everyone suffers from morning breath, and over 2.5 billion people worldwide, or almost 30% of the world's population, suffer from some sort of chronic bad breath. That bad breath starts most of the time in the mouth, throat, and tonsils, driven by sulfur-producing bacteria that lingers there. Dr. Katz, who we bought the brand from, realized this not only as a dentist himself, but as the father of a daughter who was struggling with chronic bad breath. Dr. Katz invented this alcohol-free mouthwash designed to specifically target sulfur-producing bacteria. It was a home run with his daughter, and you can see here that it's been a home run with consumers everywhere, as it has been materially outpacing total mouthwash category growth and the alcohol-free category subset every year since launch. Better yet, there's still huge room to run ahead of us.

Speaking of TheraBreath, just about everyone suffers from morning breath, and over 2.5 billion people worldwide, or almost 30% of the world's population, suffer from some sort of chronic bad breath. That bad breath starts most of the time in the mouth, throat, and tonsils, driven by sulfur-producing bacteria that lingers there. Dr. Katz, who we bought the brand from, realized this not only as a dentist himself, but as the father of a daughter who was struggling with chronic bad breath. Dr. Katz invented this alcohol-free mouthwash designed to specifically target sulfur-producing bacteria. It was a home run with his daughter, and you can see here that it's been a home run with consumers everywhere, as it has been materially outpacing total mouthwash category growth and the alcohol-free category subset every year since launch. Better yet, there's still huge room to run ahead of us.

Speaking of thorough breath, just about everyone suffers from morning breath and over $2 5 billion people worldwide are almost 30% of the world's population suffer from some sort of chronic bad breath.

And that bad breath starts most of the time and the most throat and tonsils driven by sulfur producing bacteria that lingers there Dr. Katz, who we bought the brand from realize this not only as a dentist himself that as the father of a daughter, who was struggling with chronic bad breath.

So Dr catch invented this alcohol free mouthwash designed to specifically target sulfur producing bacteria. It was a homerun with his daughter and you can see here that it's been a homerun with consumers everywhere as it has been materially outpacing total mouthwash category growth and the alcohol free category subset every year since launch.

Better yet there is still huge room to run ahead of US. This slide captures total retail points of distribution for our top competitors and for thorough breadth and what you'll quickly see is that even though third breath is driving category growth as you saw on the last slide we're way behind in total points of distribution with ample room to launch new variance new sizes and expand.

Matthew Farrell: This slide captures total retail points of distribution for our top competitors and for TheraBreath. And what you'll quickly see is that even though TheraBreath is driving category growth, as you saw in the last slide, we're way behind in total points of distribution, with ample room to launch new variants, new sizes, and expand into new channels ahead. So in summary, we participate in great, healthy, growing categories. Multiple key trends are our friend, and our most recent acquisitions have tremendous room to run, all of which give us confidence in our future, and we haven't even talked about new products yet. Okay, now let's move over to new products, where we have a long history of launching new product innovation across our portfolio of power brands, and 2022 will be no exception. So let's dive into a sampling of some of our 2022 new products.

This slide captures total retail points of distribution for our top competitors and for TheraBreath. And what you'll quickly see is that even though TheraBreath is driving category growth, as you saw in the last slide, we're way behind in total points of distribution, with ample room to launch new variants, new sizes, and expand into new channels ahead. So in summary, we participate in great, healthy, growing categories. Multiple key trends are our friend, and our most recent acquisitions have tremendous room to run, all of which give us confidence in our future, and we haven't even talked about new products yet. Okay, now let's move over to new products, where we have a long history of launching new product innovation across our portfolio of power brands, and 2022 will be no exception. So let's dive into a sampling of some of our 2022 new products.

Into new channels ahead.

So in summary, we participate in great healthy growing categories multiple key trends are our friends and our most recent acquisitions have tremendous room to run all of which give us confidence in our future and we haven't even talked about new products yet.

Okay now, let's move over to new products, where we have a long history of launching new product innovation across our portfolio of power brands in 2022 will be no exception, so let's dive into a sampling of some of our 2022 new products.

Matthew Farrell: The new VMS consumer who entered during the pandemic is more likely to purchase gummies, seeks products with multiple benefits, and is a more immune-conscious consumer. And as the category continues to shift to gummies, VitaFusion set out to expand the relevance of gummies in order to continue to win at shelf. Introducing VitaFusion Bilayer Gummies. These two-in-one gummies provide two benefits, two flavors, and two colors to deliver multiple benefits in a fun and visually appealing way. This multi-plus platform clearly articulates product benefits to e-shoppability, and research has told us that the platform is expected to grow the VMS retail market basket, as nearly 30% of respondents said they would take these in addition to their current multivitamin. The Immune SKU is a multivitamin plus zinc and vitamin C.

The new VMS consumer who entered during the pandemic is more likely to purchase gummies, seeks products with multiple benefits, and is a more immune-conscious consumer. And as the category continues to shift to gummies, VitaFusion set out to expand the relevance of gummies in order to continue to win at shelf. Introducing VitaFusion Bilayer Gummies. These two-in-one gummies provide two benefits, two flavors, and two colors to deliver multiple benefits in a fun and visually appealing way. This multi-plus platform clearly articulates product benefits to e-shoppability, and research has told us that the platform is expected to grow the VMS retail market basket, as nearly 30% of respondents said they would take these in addition to their current multivitamin. The Immune SKU is a multivitamin plus zinc and vitamin C.

The new Vms consumer who entered during the pandemic is more likely to purchase gummies seeks products with multiple benefits and as a more immune conscious consumer.

And as the category continues to shift to gummies vital fusion set out to expand the relevance of gummies in order to continue to win at shelf.

Introducing vital fusion bilayer gummies. These two in one gummies provides two benefits to flavors and two colors to deliver multiple benefits in a fun and visually appealing way.

This multi plus platform clearly articulate the product benefits to eshop ability and research has told us that the platform is expected to grow the Vms retail market basket as nearly 30% of respondents said they would take these in addition to their current multi vitamin immune SKU is a multi vitamin plus zinc and vitamin C. The beauty.

Matthew Farrell: The Beauty SKU is a multivitamin plus biotin and retinol, and we're looking forward to both driving great continued growth. Now, moving over to our specialty hair care franchise, you heard me say earlier that over the past several years, there has been a shift in consumer priorities towards self-care, and during COVID, this trend has been magnified as consumers are spending much more time at home. One example of the desire to pamper and treat oneself can be seen in 23% growth in hair treatments, and within that segment, 72% growth specifically in hair masks. Hair masks represent an opportunity to care for the health and condition of hair. However, they typically take around 10 minutes to work and need to be rinsed off in the shower. Introducing Batiste Leave-In Hair Masks, which deliver self-care on her terms.

The Beauty SKU is a multivitamin plus biotin and retinol, and we're looking forward to both driving great continued growth. Now, moving over to our specialty hair care franchise, you heard me say earlier that over the past several years, there has been a shift in consumer priorities towards self-care, and during COVID, this trend has been magnified as consumers are spending much more time at home. One example of the desire to pamper and treat oneself can be seen in 23% growth in hair treatments, and within that segment, 72% growth specifically in hair masks. Hair masks represent an opportunity to care for the health and condition of hair. However, they typically take around 10 minutes to work and need to be rinsed off in the shower. Introducing Batiste Leave-In Hair Masks, which deliver self-care on her terms.

SKU is a multi vitamin plus biogen and retinal and we're looking forward to both driving great continued growth.

Now moving over to our specialty hair care franchise, you heard me say earlier that over the past several years theres been a shift in consumer priorities towards self care and during Covid. This trend has been magnified as consumers are spending much more time at home.

One example of the desire to Pampa and treat one self can be seen in 23% growth in hair treatments and within that segment, 72% growth specifically in hair masks.

Her mask represent an opportunity to care for the health and condition of her however, they typically take around 10 minutes to work and need to be wrenched off in the shower.

Introducing batiste, leaving her masks, which deliver self care on her terms. These lightweight conditioning formulas are infused with plant derived proteins and vitamin D and allow her to nourish hair and seal in moisture between washes with no rinsing required now.

Matthew Farrell: These lightweight conditioning formulas are infused with plant-derived proteins and vitamin E and allow her to nourish hair and seal in moisture between washes with no rinsing required. Now over to health and well-being, where two-thirds of consumers believe that products sold in the cough, cold, and flu aisle are more effective than those sold in the VMS aisle. The Zicam consumer is already buying over $40 worth of competitive immune products sold in the cough, cold, and flu aisle, so we're losing out on potential sales by not having any immune products in that aisle. Now I'm pleased to share that Zicam is launching its first immune supplement gummies. The formula features Zicam Zinc and also has 100% daily value of the top three immune ingredients.

These lightweight conditioning formulas are infused with plant-derived proteins and vitamin E and allow her to nourish hair and seal in moisture between washes with no rinsing required. Now over to health and well-being, where two-thirds of consumers believe that products sold in the cough, cold, and flu aisle are more effective than those sold in the VMS aisle. The Zicam consumer is already buying over $40 worth of competitive immune products sold in the cough, cold, and flu aisle, so we're losing out on potential sales by not having any immune products in that aisle. Now I'm pleased to share that Zicam is launching its first immune supplement gummies. The formula features Zicam Zinc and also has 100% daily value of the top three immune ingredients.

Now over to health and wellbeing, where two thirds of consumers believe that product sold in the cough cold and flu aisle are more effective than those sold in the Vms aisle.

And the Zicam consumer is already buying over $40 worth of competitive immune products sold in the cough cold and flu aisle. So we are losing out on potential sales by not having any immune products in that aisle.

So now I'm pleased to share that Zicam is launching its first immune supplement gummies.

The Formula features Zicam zinc and also has 100% daily value of the top three immune ingredients.

Matthew Farrell: The line includes a regular formula and a nighttime version with melatonin, as Immune Plus Sleep is one of the fastest-growing subsegments in VMS. Both products were also designed to provide a terrific value versus the competition. Now over to fabric care, where the baby detergent segment is currently a $136 million category and is the second fastest-growing segment in liquid laundry detergent. However, Arm & Hammer doesn't have a product here today to meet mom's needs, where we know she's looking for a hardworking product at a reasonable price, so she doesn't have to compromise on what's best for her baby. Introducing our first Arm & Hammer Baby Laundry Detergent, which is designed to help families do what's best for their babies with zero compromises.

The line includes a regular formula and a nighttime version with melatonin, as Immune Plus Sleep is one of the fastest-growing subsegments in VMS. Both products were also designed to provide a terrific value versus the competition. Now over to fabric care, where the baby detergent segment is currently a $136 million category and is the second fastest-growing segment in liquid laundry detergent. However, Arm & Hammer doesn't have a product here today to meet mom's needs, where we know she's looking for a hardworking product at a reasonable price, so she doesn't have to compromise on what's best for her baby. Introducing our first Arm & Hammer Baby Laundry Detergent, which is designed to help families do what's best for their babies with zero compromises.

The line includes a regular formula and a nighttime version with melatonin as immune plus sleep is one of the fastest growing sub segments and Vms.

Both products were also designed to provide a terrific value versus the competition.

Now over to fabric care, where the baby detergent segment is currently a $136 million category and as the second fastest growing segment in liquid laundry detergent, However, arm <unk> hammer it doesn't have a product here today to meet mom's needs, where we know she is looking for a hard working product at a reasonable price. So she doesn't have to compromise.

On what's best for her baby.

Introducing our first arm <unk> Hammer baby launch detergent, which is designed to help families do what's best for their babies with zero compromises.

Matthew Farrell: Specially created with our ARM & HAMMER babies in mind, it's gentle enough for baby skin, tested by pediatricians, and offers a hypoallergenic formula that has zero preservatives, no phosphates, and no dyes, and it's even EPA certified as a safer choice. We're very excited about this launch because a baby liquid laundry detergent also helps us down-age the ARM & HAMMER brand, increasing the lifetime value of each consumer. Let's take a look at some videos that bring this new offer from ARM & HAMMER to life.

Specially created with our ARM & HAMMER babies in mind, it's gentle enough for baby skin, tested by pediatricians, and offers a hypoallergenic formula that has zero preservatives, no phosphates, and no dyes, and it's even EPA certified as a safer choice. We're very excited about this launch because a baby liquid laundry detergent also helps us down-age the ARM & HAMMER brand, increasing the lifetime value of each consumer. Let's take a look at some videos that bring this new offer from ARM & HAMMER to life.

Specialty created with our arm <unk> hammer babies in mind.

Its gentle enough for baby skin.

Tested by Pediatricians and offers a hypo allergenic formula that has zero preservatives, no phosphates and no dies and it's even EPA certified as a safer choice.

We're very excited about this launch because of baby liquid laundry detergent also helps us down age you arm <unk> Hammer brand, increasing the lifetime value of each consumer let's take a look at some videos that bring this new offer from arm <unk> hammer to life.

Richard Dierker: Co-sleep or crib?

[Video Narrator]: Co-sleep or crib?

Sleeper crib.

[Company Representative] (Church & Dwight Co.): Usually crib. Sometimes co-sleep. I mean, he's just so adorable.

Usually crib. Sometimes co-sleep. I mean, he's just so adorable.

Usually crib, sometimes cause sleep.

Chris Carey: Make one decision easy. New Arm & Hammer Baby Detergent. Tough on baby stains. Gentle on skin.

Make one decision easy. New Arm & Hammer Baby Detergent. Tough on baby stains. Gentle on skin.

Nope Snake Wonder if there's anything new arm <unk> Hammer, David occasion tough on baby things gentle on skin.

Richard Dierker: Comfort or cry it out?

Comfort or cry it out?

Okay.

Comfort or try it out.

Olivia Tong: Mostly cry it out. But there is some comfort. Comfort cry?

Mostly cry it out. But there is some comfort. Comfort cry?

Most of the crowd out but there is some comfort.

Chris Carey: Make one decision easy. New Arm & Hammer Baby Detergent. Tough on baby stains. Gentle on skin.

Make one decision easy. New Arm & Hammer Baby Detergent. Tough on baby stains. Gentle on skin.

Snake Wonder if there's anything new arm <unk> hammer, they've indicated cap on baby gentle on skin.

Okay.

Richard Dierker: Attachment or free-range parenting?

Attachment or free-range parenting?

Attachment or free range parenting three range.

Olivia Tong: Free-range.

Free-range.

Steve Powers: Maybe a hybrid.

Steve Powers: Maybe a hybrid.

[Company Representative] (Church & Dwight Co.): Attachment.

Attachment.

Maybe a hybrid attachment snake wonder if there's anything new arm <unk> Hammer detergent, Katherine maybe things stand alone scale.

Chris Carey: Make one decision easy. New Arm & Hammer Baby Detergent. Tough on baby stains. Gentle on skin.

Make one decision easy. New Arm & Hammer Baby Detergent. Tough on baby stains. Gentle on skin.

Matthew Farrell: So in closing, these are just a few highlights from another great year of innovation from Church & Dwight. Okay, now let's switch gears and move over to the steps we're taking on our path to a more sustainable future, starting with the reality that climate is more relevant than ever, especially for our younger consumers. Gen Z, in particular, is two times more likely than baby boomers to say they've been personally affected by climate change. And the expectations for businesses and brands are very high. Consumers expect companies to take care of the planet and make progress on societal issues at the same time.

Barry Bruno: So in closing, these are just a few highlights from another great year of innovation from Church & Dwight. Okay, now let's switch gears and move over to the steps we're taking on our path to a more sustainable future, starting with the reality that climate is more relevant than ever, especially for our younger consumers. Gen Z, in particular, is two times more likely than baby boomers to say they've been personally affected by climate change. And the expectations for businesses and brands are very high. Consumers expect companies to take care of the planet and make progress on societal issues at the same time.

Yes.

So in closing these are just a few highlights from another great year of innovation from Church <unk> Dwight.

Okay, now, let's switch gears and move over to the steps, we're taking on our path to a more sustainable future.

Starting with the reality that climate is more relevant than ever, especially for our younger consumers.

Gen Z in particular is two times more likely than baby boomers to say they've been personally affected by climate change.

And the expectations for businesses and brands are very high consumers expect companies to take care of the planet and make progress and societal issues at the same time.

Matthew Farrell: As a company, our recent actions, such as offsetting 100% of our global electricity demand by moving to green energy and in partnering with Arbor Day Foundation to plant millions of trees in the Mississippi River Valley, have helped set the stage for our next move, which is formalizing our climate strategy by submitting our application to the Science Based Targets initiative. We recognize the importance of taking a science-based approach to the environment and ensuring that the targets we set and corresponding actions we take are aligned to industry standards and best practices. Included in our application to SBTi is a commitment to slow the warming of the planet, increase the use of renewables, and report on our progress through our annual sustainability report.

As a company, our recent actions, such as offsetting 100% of our global electricity demand by moving to green energy and in partnering with Arbor Day Foundation to plant millions of trees in the Mississippi River Valley, have helped set the stage for our next move, which is formalizing our climate strategy by submitting our application to the Science Based Targets initiative. We recognize the importance of taking a science-based approach to the environment and ensuring that the targets we set and corresponding actions we take are aligned to industry standards and best practices. Included in our application to SBTi is a commitment to slow the warming of the planet, increase the use of renewables, and report on our progress through our annual sustainability report.

As a company our recent actions such as offsetting 100% of our global electricity demand by moving to Green energy and in partnering with Arbor Day Foundation to plant millions of trees in the Mississippi River Valley have helped set the stage for our next move.

Which is formalizing our climate strategy by submitting our application to the science based targets initiative, we recognize the importance of taking a science based approach to the environment and ensuring that the targets, we set and corresponding actions. We take are aligned to industry standards and best practices, including in our application to <unk> is a commitment to <unk>.

Slow the warming of the planet incur.

Increase the use of renewables and report on our progress through our annual sustainability report.

Matthew Farrell: So you can see that we're taking this problem seriously at a corporate level, but our consumers, who have always been proud problem solvers, want to get involved as well. And our goal is to engage them through the power of our most iconic brand, Arm & Hammer, which is why today we're pleased to announce we're kicking off a new campaign starting with Arm & Hammer Baking Soda to show consumers we're taking responsibility for our impact on the environment brand by brand. To get started, we measured our carbon footprint on baking soda and are working to reduce it to zero, initially through verified carbon offsets. Allow me to share a video with you that illustrates how we plan to bring this to life.

So you can see that we're taking this problem seriously at a corporate level, but our consumers, who have always been proud problem solvers, want to get involved as well. And our goal is to engage them through the power of our most iconic brand, Arm & Hammer, which is why today we're pleased to announce we're kicking off a new campaign starting with Arm & Hammer Baking Soda to show consumers we're taking responsibility for our impact on the environment brand by brand. To get started, we measured our carbon footprint on baking soda and are working to reduce it to zero, initially through verified carbon offsets. Allow me to share a video with you that illustrates how we plan to bring this to life.

So you can see that we're taking this problem seriously at a corporate level, but our consumers who have always been proud problem solvers Wanna get involved as well and our goal is to engage them through the power of our most iconic brand arm <unk> hammer.

Which is why today, we're pleased to announce we're kicking off a new campaign, starting with arm <unk> Hammer baking soda to show consumers, we're taking responsibility for our impact on the environment brand by brand to get started we measured our carbon footprint on baking soda and are working to reduce it to zero initially through verified carbon offsets.

Allow me to share a video with you that illustrates how we plan to bring this to life.

Barry Bruno: In 2022, we're taking a big step toward reducing our future impact on the environment. Yes, our iconic little box that rests in the back of your fridge is moving forward to do our part on climate change. We've measured our baking soda carbon emissions, reducing them to zero through verified carbon offsets. All of us who work on the Arm & Hammer brand are proud to do our part, so we can all keep enjoying the beauty of our collective home for generations to come. And we plan to invite consumers to join us and help us go further because this journey is just getting started. Arm & Hammer, more power to you.

[Video Narrator]: In 2022, we're taking a big step toward reducing our future impact on the environment. Yes, our iconic little box that rests in the back of your fridge is moving forward to do our part on climate change. We've measured our baking soda carbon emissions, reducing them to zero through verified carbon offsets. All of us who work on the Arm & Hammer brand are proud to do our part, so we can all keep enjoying the beauty of our collective home for generations to come. And we plan to invite consumers to join us and help us go further because this journey is just getting started. Arm & Hammer, more power to you.

In 2022, we're taking a big step.

Toward reducing our future impact on the environment.

Yes, our iconic little box that rests on the back of your fridge.

As moving forward to do our part on climate change.

We've measured our bacon set a carbon emission reducing them to zero for verified carbon offset.

All of US who work on the arm <unk> Hammer brand are proud to do our part.

So we can all keep enjoying the beauty of our collective home for generations to come.

And we plan to invite consumers to join us and help US go further.

Because this journey.

Just getting started.

[music].

Arm <unk> hammer.

Our powers senior.

Matthew Farrell: Throughout this journey, our goals are to drive awareness, engage consumers, and inspire action. We'll have more news to share in the space around how we can work in partnership with our consumers to multiply our efforts and invite you to follow our journey as we build new strengths here and do our part to protect the environment. Okay, now over to my friend Mike Read to talk about our growing international business.

Barry Bruno: Throughout this journey, our goals are to drive awareness, engage consumers, and inspire action. We'll have more news to share in the space around how we can work in partnership with our consumers to multiply our efforts and invite you to follow our journey as we build new strengths here and do our part to protect the environment. Okay, now over to my friend Mike Read to talk about our growing international business.

Throughout this journey our goals are to drive awareness engage consumers and inspire action will have more news to share in the space around how we can work in partnership with our consumers to multiply our efforts and invite you to follow our journey as we build new strengths here and do our part to protect the environment.

Okay now over to my friend, Mike read to talk about our growing international business. Thanks, Barry and good morning, everyone over the next few minutes I'd like to run it through the international consumer highlights followed by our specialty products story.

Mike Read: Thanks, Barry, and good morning, everyone. Over the next few minutes, I'd like to run you through the international consumer highlights, followed by our specialty product story. For the international division, our Evergreen Model target is 6% in organic sales growth. In 2021, we posted organic growth of 5%, slightly below our Evergreen Model of 6%, but lapping 8.6% growth in 2020. While we're below our Evergreen Model target, 2021 is a strong delivery in the face of widespread global supply disruptions, impacts from COVID-19, and weather-related events. Q4 finished at 4.7% growth, combining our two international segments. First, our subsidiary markets, which are fully staffed Church & Dwight teams in Canada, Mexico, the UK, France, Germany, and Australia. And secondly, our Global Markets Group that covers more than 130 markets and represented by over 400 distributor partners around the globe.

Michael Read: Thanks, Barry, and good morning, everyone. Over the next few minutes, I'd like to run you through the international consumer highlights, followed by our specialty product story. For the international division, our Evergreen Model target is 6% in organic sales growth. In 2021, we posted organic growth of 5%, slightly below our Evergreen Model of 6%, but lapping 8.6% growth in 2020. While we're below our Evergreen Model target, 2021 is a strong delivery in the face of widespread global supply disruptions, impacts from COVID-19, and weather-related events. Q4 finished at 4.7% growth, combining our two international segments. First, our subsidiary markets, which are fully staffed Church & Dwight teams in Canada, Mexico, the UK, France, Germany, and Australia. And secondly, our Global Markets Group that covers more than 130 markets and represented by over 400 distributor partners around the globe.

For the International Division, our Evergreen model target is 6% and organic sales growth.

2021, we posted organic growth of 5%.

Slightly below our evergreen model of 6%, but lapping 8.6% growth in 2020.

And while we are below our evergreen model target 2021 is a strong delivery in the face of widespread global supply disruptions impacts.

Impacts from Covid, 19, and weather related events.

Q4 finished at four 7% growth combining our two international segments.

Our subsidiary markets, which are fully stocked church <unk> Dwight teams, Canada, Mexico, The U K, France, Germany, and Australia, and secondly, our global markets group that covers more than 130 markets represented by over 400 distributor partners around the globe with our subsidiary <unk>.

Mike Read: Both our subsidiary and GMG segments posted positive growth in 2021 and continue to have strong consumer demand in improving market share positions in key categories. The result is we've built an international consumer business that is now in excess of $900 million in sales and approaching scale in several markets. Let's take a closer look. GMG now represents our largest segment at 35% of total international net sales and has doubled in size over the past 5 years, followed by Canada at 28%, Europe at 22%, and Australia and Mexico at 8% and 7%. Across all our segments, we continue to gain distribution, introduce new brands and innovation, enter new channels, and widen our geographic reach to drive growth. From a growth standpoint, our subsidiary markets grew 3% in 2021, and GMG grew almost 11%.

Both our subsidiary and GMG segments posted positive growth in 2021 and continue to have strong consumer demand in improving market share positions in key categories. The result is we've built an international consumer business that is now in excess of $900 million in sales and approaching scale in several markets. Let's take a closer look. GMG now represents our largest segment at 35% of total international net sales and has doubled in size over the past 5 years, followed by Canada at 28%, Europe at 22%, and Australia and Mexico at 8% and 7%. Across all our segments, we continue to gain distribution, introduce new brands and innovation, enter new channels, and widen our geographic reach to drive growth. From a growth standpoint, our subsidiary markets grew 3% in 2021, and GMG grew almost 11%.

<unk> segments posted positive growth in 2021.

And continue to have strong consumer demand and improving market share positions in key categories. The.

The result is rebuilt and international consumer business that is now in excess of $900 million in sales and approaching scale in several markets.

Let's take a closer look <unk>.

<unk> now represents our largest segment at 35% of total international net sales has doubled in size over the past five years.

Followed by Canada, a 28% Europe , 22 in Australia, and Mexico at 8% and 7%.

Across all our segments, we continue to gain distribution.

Introduce new brands and innovation enter new channels and widened our geographic reach to drive growth.

From a gross standpoint, our subsidiary markets grew 3% 2021.

In Gmg grew almost 11%.

Mike Read: Important to note, international mix is heavily weighted towards personal care and OTC categories versus household, many of which have faced category setbacks due to COVID-19. So what's driving our international growth? We have a portfolio of brands that consumers love, and that's not limited to the US market, and we are early days in many of the world's largest economies. We continue to expand our US power brands into global power brands. Brands like Arm & Hammer, OxiClean, and Trojan continue to gain momentum, all of which have long international runways in our global markets. This includes selectively leveraging innovation source out of our GNPI organization and launching locally relevant new products under our global brands.

Important to note, international mix is heavily weighted towards personal care and OTC categories versus household, many of which have faced category setbacks due to COVID-19. So what's driving our international growth? We have a portfolio of brands that consumers love, and that's not limited to the US market, and we are early days in many of the world's largest economies. We continue to expand our US power brands into global power brands. Brands like Arm & Hammer, OxiClean, and Trojan continue to gain momentum, all of which have long international runways in our global markets. This includes selectively leveraging innovation source out of our GNPI organization and launching locally relevant new products under our global brands.

Important to note international mix is heavily weighted towards personal care and OTC categories versus household many of which have faced category setbacks due to COVID-19.

So what's driving our international growth.

We have a portfolio of brands that consumers love.

And that's not limited to the U S market and we are early days in many of the world's largest economies. We continue to expand our U S power brands to global power brands brands like arm <unk> Hammer Oxiclean and Trojan continue to gain momentum all of which have long international runways in our global markets.

This includes selectively leveraging innovation sourced out of our G NPI organization and launching locally relevant new products under our global brands.

Mike Read: We continue to widen our personal care and OTC portfolio presence in emerging markets like China, Southeast Asia, the Middle East, and Latin America, with particular focus on brands like Batiste, Anusol, Gravol, and Stérimar. Our portfolio has proven over and over it can travel with success. We continue to drive household penetration of more recent acquisitions like Waterpik and Flawless. Acquisition has been a key growth driver for international, and TheraBreath offers our latest installment. Let's turn now to some of the key investments and capabilities we're focused on. First, we continue to widen our support of a booming e-commerce business in China with local resources and expertise to partner closely with our valued distributors. As one example, in 2022, we are investing behind a direct sell model in China, which will enable us to sell new brands directly to consumers online via e-commerce portals.

We continue to widen our personal care and OTC portfolio presence in emerging markets like China, Southeast Asia, the Middle East, and Latin America, with particular focus on brands like Batiste, Anusol, Gravol, and Stérimar. Our portfolio has proven over and over it can travel with success. We continue to drive household penetration of more recent acquisitions like Waterpik and Flawless. Acquisition has been a key growth driver for international, and TheraBreath offers our latest installment. Let's turn now to some of the key investments and capabilities we're focused on. First, we continue to widen our support of a booming e-commerce business in China with local resources and expertise to partner closely with our valued distributors. As one example, in 2022, we are investing behind a direct sell model in China, which will enable us to sell new brands directly to consumers online via e-commerce portals.

We continue to widen our personal care and OTC portfolio presence in emerging markets like China Southeast Asia.

It'll east and Latin America, with particular focus on brands like <unk>, and you saw rebel and Cerro Moro.

Our portfolio has proven over and over it can travel a success.

We continue to drive household penetration.

More recent acquisitions like water Pik and flawless.

Acquisition has been a key growth driver for international Sirba offers our latest installed.

Let's turn now to some of the key investments in capabilities, we're focused on.

First we continue to widen our support of a booming e-commerce business in China with local resources and expertise to partner closely with our valued distributors.

As one example in 2022, we're investing behind the direct sell model in China, which will enable us to sell new brands directly to consumers online.

E Commerce portals.

Mike Read: Second, we continue to evolve our manufacturing footprint and strategy to help service the needs of a fast-growing international business, particularly in Asia. This includes select local manufacturing and the use of co-packers where scale warrants and lower costs can be achieved. We've added people resources on the ground in our newest GMG office in Mumbai, India, to support our local distributors and growth throughout the region. We continue to build e-commerce and digital marketing capability across the globe to connect better with our consumers and drive consumption in e-commerce platforms. We continue to approach pricing with discipline, important in an inflationary environment, and we're adding dedicated resources in revenue growth management to support this capability moving forward. While this isn't an exhaustive list, it provides some examples of the investments we're making internationally to continue to drive profitable growth for years to come.

Second, we continue to evolve our manufacturing footprint and strategy to help service the needs of a fast-growing international business, particularly in Asia. This includes select local manufacturing and the use of co-packers where scale warrants and lower costs can be achieved. We've added people resources on the ground in our newest GMG office in Mumbai, India, to support our local distributors and growth throughout the region. We continue to build e-commerce and digital marketing capability across the globe to connect better with our consumers and drive consumption in e-commerce platforms. We continue to approach pricing with discipline, important in an inflationary environment, and we're adding dedicated resources in revenue growth management to support this capability moving forward. While this isn't an exhaustive list, it provides some examples of the investments we're making internationally to continue to drive profitable growth for years to come.

Second we continue to evolve our manufacturing footprint strategy to help service the needs of our fast growing international business, particularly in Asia.

This includes select local manufacturing and the use of co Packers, where scale warrants and lower cost can be achieved.

We've added people resources on the ground and our newest Gmg office in Mumbai, India to support our local distributors and growth throughout the region.

We continue to build e-commerce , and digital marketing capability across the globe to connect better with our consumers and drive consumption e-commerce platforms.

And we continue to approach pricing with discipline importantly, in an inflationary environment and we're adding dedicated resources and revenue growth management to support this capability moving forward.

While this isn't an exhaustive list. It provides some examples of the investments, we're making internationally to continue to drive profitable growth for years to come.

Mike Read: As we continue to build scale, leverage pricing, and improve brand mix towards personal care and OTC, we continue to deliver on our evergreen target to expand operating margin in the international division by at least 50 basis points per year. We did better than expected in 2020, where we grew 120 basis points, and 2021 is more of the same, growing operating margin another 120 basis points. In closing on international, we've had a stellar track record of growth since 2014. At more than $900 million in net sales, we are pacing ahead of the long-term evergreen model target by leveraging our portfolio brands that consumers love, including our newly acquired acquisitions and innovation, continuing to expand our global market footprint, and by investing in key capabilities. International remains committed to delivering our evergreen target of 6% organic sales growth and expanding operating margin by 50 basis points.

As we continue to build scale, leverage pricing, and improve brand mix towards personal care and OTC, we continue to deliver on our evergreen target to expand operating margin in the international division by at least 50 basis points per year. We did better than expected in 2020, where we grew 120 basis points, and 2021 is more of the same, growing operating margin another 120 basis points. In closing on international, we've had a stellar track record of growth since 2014. At more than $900 million in net sales, we are pacing ahead of the long-term evergreen model target by leveraging our portfolio brands that consumers love, including our newly acquired acquisitions and innovation, continuing to expand our global market footprint, and by investing in key capabilities. International remains committed to delivering our evergreen target of 6% organic sales growth and expanding operating margin by 50 basis points.

As we continue to build scale leverage pricing and improved brand mix towards personal care and OTC. We continued to deliver on our evergreen target to expand operating margin in the international division by at least 50 basis points per year.

We did better than expected in 2020, where we grew 120 basis points. In 2021 is more of the same growing operating margin another 120 basis points.

In closing on international we've had a stellar track record of growth since 2014.

And more than $900 million in net sales. We are pacing ahead of the long term evergreen model targets.

By leveraging our portfolio of brands that consumers love, including our newly acquired acquisitions and innovation continuing.

Continuing to expand our global market footprint and by investing in key capabilities International remains committed to delivering our evergreen target of 6% organic sales growth and expanding operating margin by 50 basis points.

Mike Read: Okay, let's switch gears to our animal productivity story. Our Specialty Products Division, from an Evergreen Model perspective, aims to deliver 5% organic sales growth. Our Specialty Products Division is now more than $330 million in sales and posted strong growth above plan in 2021 at 12%. 70% of the business is animal productivity, while the remaining 30% is supported by specialty chemical sales. As you can see, animal productivity is split into two main segments: dairy and non-dairy. We produce three types of products: prebiotics, probiotics, and nutritional supplements. This is important as today's consumer continues to move away from foods produced with antibiotics, and our portfolio is geared directly to support this growing trend. The dairy business is a cyclical market and represents the biggest part of the animal productivity business.

Okay, let's switch gears to our animal productivity story. Our Specialty Products Division, from an Evergreen Model perspective, aims to deliver 5% organic sales growth. Our Specialty Products Division is now more than $330 million in sales and posted strong growth above plan in 2021 at 12%. 70% of the business is animal productivity, while the remaining 30% is supported by specialty chemical sales. As you can see, animal productivity is split into two main segments: dairy and non-dairy. We produce three types of products: prebiotics, probiotics, and nutritional supplements. This is important as today's consumer continues to move away from foods produced with antibiotics, and our portfolio is geared directly to support this growing trend. The dairy business is a cyclical market and represents the biggest part of the animal productivity business.

Okay, let's switch gears to our animal productivity story.

Our specialty products division from an evergreen model perspective aims to deliver 5% organic sales growth.

Our specialty products Division is now more than $330 million in sales and posted strong growth above plan in 2021 at 12%.

70% of the business is animal productivity, while the remaining 30% is supported by specialty chemical sales.

As you can see animal productivity is split into two main segments dairy and nondairy.

We produced three types of products prebiotics, probiotics and nutritional supplements.

This is important as today's consumer continues to move away from foods produced with antibiotics and our portfolio is geared directly to support this growing trend.

The dairy business is a cyclical market and represents the biggest part of the animal productivity business. Typically every few years, we see an up year as evidenced by 2011 2014 and again in 2017.

Mike Read: Typically, every few years, we see an up year as evidenced by 2011, 2014, then again in 2017. Due to COVID-19, we did experience a delay in the up cycle in 2020, and we did anticipate a strong recovery in 2021. But with healthy milk prices forecasted and strong demand for dairy products, we do expect back-to-back years of organic growth in 2022, breaking the animal productivity cycle. Back in 2015, non-dairy sales were largely nonexistent. Today, non-dairy sales represent approximately 26% and have balanced out our portfolio. We expect our non-dairy sales to grow double digits in 2022. Similarly, we're adding resources and growing our animal nutrition business globally. In 2021, our international business has grown to represent 16% of total sales, again offering further balance and revenue growth streams in our portfolio. In summary, specialty products has delivered an impressive 12% growth in 2021.

Typically, every few years, we see an up year as evidenced by 2011, 2014, then again in 2017. Due to COVID-19, we did experience a delay in the up cycle in 2020, and we did anticipate a strong recovery in 2021. But with healthy milk prices forecasted and strong demand for dairy products, we do expect back-to-back years of organic growth in 2022, breaking the animal productivity cycle. Back in 2015, non-dairy sales were largely nonexistent. Today, non-dairy sales represent approximately 26% and have balanced out our portfolio. We expect our non-dairy sales to grow double digits in 2022. Similarly, we're adding resources and growing our animal nutrition business globally. In 2021, our international business has grown to represent 16% of total sales, again offering further balance and revenue growth streams in our portfolio. In summary, specialty products has delivered an impressive 12% growth in 2021.

Due to COVID-19, we did experience a delay in the up cycle 2020, and we did anticipate a strong recovery in 2021.

But with healthy milk prices forecast had been strong demand for dairy products. We do expect back to back years of organic growth in 2020 to breaking the animal productivity cycle.

Back in 2015, non dairy sales were largely nonexistent today nondairy sales represent approximately 26% and has balanced out our portfolio.

We expect our non dairy sales to grow double digits in 2022.

Similarly, we're adding resources and growing our animal nutrition business globally in 2021, our international business has grown to represent 16% of total sales.

<unk> offering further balance in revenue growth streams in our portfolio.

In summary, specialty products has delivered an impressive 12% growth in 2021.

Mike Read: We're backed by a trusted brand in ARM & HAMMER. We're aligned to growing consumer trends towards prebiotics and probiotics. We continue to widen our species footprint to include cattle, swine, and poultry, and we're adding resources to grow our international business. Thanks for listening. Now over to Rick Spahn to talk about supply chain.

We're backed by a trusted brand in ARM & HAMMER. We're aligned to growing consumer trends towards prebiotics and probiotics. We continue to widen our species footprint to include cattle, swine, and poultry, and we're adding resources to grow our international business. Thanks for listening. Now over to Rick Spahn to talk about supply chain.

We're backed by a trusted brand and arm <unk> hammer.

We're aligned to growing consumer trends towards prebiotics and probiotics, we continue to widen our species footprint to include cattle swine and poultry and we're adding resources to grow our international business.

Thanks for listening now over to respond to talk about supply chain.

Rick Spahn: I'm going to take a few moments to talk about our efforts to secure the performance of our supply chain. Like many manufacturers, we have stepped up our focus on resiliency over the last two years. Here's how we articulate our strategy. Church & Dwight has a short, resilient, and tariff-proof supply chain serving Western and APAC markets with local manufacturing. We have implemented several initiatives to reduce the length of our supply chain over the last two years. One example is how we are supplying our growing business in the APAC region. In 2020, 0% of our business sold in APAC was manufactured there. By the end of next year, 40% will be sourced from within the region.

Rick Spann: I'm going to take a few moments to talk about our efforts to secure the performance of our supply chain. Like many manufacturers, we have stepped up our focus on resiliency over the last two years. Here's how we articulate our strategy. Church & Dwight has a short, resilient, and tariff-proof supply chain serving Western and APAC markets with local manufacturing. We have implemented several initiatives to reduce the length of our supply chain over the last two years. One example is how we are supplying our growing business in the APAC region. In 2020, 0% of our business sold in APAC was manufactured there. By the end of next year, 40% will be sourced from within the region.

I am going to take a few moments to talk about our efforts to secure the performance of our supply chain.

Like many manufacturers, we have stepped up our focus on resiliency over the last two years, here's how we articulate our strategy.

And Dwight has a short resilient and tariff proved supply chain, serving western and APAC market with local manufacturing.

We have implemented several initiatives to reduce the length of our supply chain over the last two years one.

One example is how we are supplying our growing business in the APAC region in 2020 zero percent of our business sold in APAC was manufactured there by the end of next year, 40% will be sourced from within the region.

Rick Spahn: Closer to home, we have added two 3PLs to our distribution network, which has enabled us to position buffer inventory closer to our customers' DCs in the Southeast and South Central regions. In order to reduce tariffs and our overall dependency on China, we have started to move Waterpik manufacturing to other Southeast Asia locations. By the end of 2023, 50% of our volume will be produced ex-China. We do a good job of managing a complex base of suppliers and co-packers. In order to add additional sourcing options, we have increased our co-manufacturing base by 19% since the start of the pandemic and our supplier base by 22%. We now have many more options when we face upstream disruptions.

Closer to home, we have added two 3PLs to our distribution network, which has enabled us to position buffer inventory closer to our customers' DCs in the Southeast and South Central regions. In order to reduce tariffs and our overall dependency on China, we have started to move Waterpik manufacturing to other Southeast Asia locations. By the end of 2023, 50% of our volume will be produced ex-China. We do a good job of managing a complex base of suppliers and co-packers. In order to add additional sourcing options, we have increased our co-manufacturing base by 19% since the start of the pandemic and our supplier base by 22%. We now have many more options when we face upstream disruptions.

Closer to home, we have added two to three pls to our distribution network, which has enabled us to position buffer inventory closer to our customers' Dcs in the southeast and south central regions.

In order to reduce tariffs and our overall dependency on China. We have started to move water Pik manufacturing to other southeast Asia locations by the end of 2023, 50% of our volume will be produced ex China.

We do a good job of managing a complex base of suppliers and co Packers in order to add additional sourcing options. We have increased our co manufacturing base by 19% since the start of the pandemic and our supplier base by 22%.

We now have many more options when we face upstream disruptions.

Rick Spahn: Of course, in addition to a large base of contract manufacturers, we have impressive in-house manufacturing capabilities with an ability to produce a wide array of products in multiple formats across our 15 plants. We have done a lot of work over the last two years to increase throughput out of our plants and to be the best employer in the areas where we operate so that we can retain and attract talented employees. We are making significant capacity investments in-house in order to stay ahead of our growing categories. We have either completed or have active capacity projects underway for scent boosters, liquid laundry, unit dose laundry, trigger products, VMS, and cat litter. We have a dedicated and talented supply chain team. The vision that they march to is to maintain operational excellence while creating the supply chain of the future.

Of course, in addition to a large base of contract manufacturers, we have impressive in-house manufacturing capabilities with an ability to produce a wide array of products in multiple formats across our 15 plants. We have done a lot of work over the last two years to increase throughput out of our plants and to be the best employer in the areas where we operate so that we can retain and attract talented employees. We are making significant capacity investments in-house in order to stay ahead of our growing categories. We have either completed or have active capacity projects underway for scent boosters, liquid laundry, unit dose laundry, trigger products, VMS, and cat litter. We have a dedicated and talented supply chain team. The vision that they march to is to maintain operational excellence while creating the supply chain of the future.

Of course in addition to our large base of contract manufacturers. We are impressive in house manufacturing capabilities with an ability to produce a wider array of products in multiple formats across our 15 plants we.

We've done a lot of work over the last few years to increase throughput out of our plants and to be the best employer in the areas, where we operate so that we can retain and attract talented employees.

And we are making significant capacity investment in house in order to stay ahead of our growing categories were either completed or have active capacity projects underway for <unk> liquid laundry unit dose laundry trigger products Vms and cat litter.

We have a dedicated and talented supply chain team division that they March too is to maintain operational excellence, while creating the supply chain of the future.

Rick Spahn: Our talented team has done a great job of dealing with the many urgent issues that the pandemic has put in front of them while building more resiliency for the future. And now, back to Matt.

Our talented team has done a great job of dealing with the many urgent issues that the pandemic has put in front of them while building more resiliency for the future. And now, back to Matt.

Our talented team has done a great job of dealing with the many urgent issues that depend demick is putting in front of them while building more resiliency for the future.

And now back to Matt.

Rupesh Parikh: Thanks, Rick. Let's spend a few minutes on how we run the company. We have five operating principles. Number one, we leverage our brands. Number two, we are a friend of the environment. Number three, we have highly productive people. Number four, we strive to be asset-light. And finally, number five, we leverage acquisitions. If you do the first four well, you will have good shareholder returns. If you can add solid acquisitions, you can generate great returns. Number one, we are fortunate to have brands that consumers love, and we have dozens of brands around the world. Number two, we have a long history of being a friend of the environment. You can see some of the milestones on this slide. We are very proud of our heritage, and you heard Barry take us through our most recent commitment to science-based targets.

Matthew Farrell: Thanks, Rick. Let's spend a few minutes on how we run the company. We have five operating principles. Number one, we leverage our brands. Number two, we are a friend of the environment. Number three, we have highly productive people. Number four, we strive to be asset-light. And finally, number five, we leverage acquisitions. If you do the first four well, you will have good shareholder returns. If you can add solid acquisitions, you can generate great returns. Number one, we are fortunate to have brands that consumers love, and we have dozens of brands around the world. Number two, we have a long history of being a friend of the environment. You can see some of the milestones on this slide. We are very proud of our heritage, and you heard Barry take us through our most recent commitment to science-based targets.

Thanks, Rick let's spend a few minutes on how we run the company.

We have five operating principles.

Number one we leverage our brands number two we are a friend of the environment.

Three we have highly productive people.

And before we strive to be asset light and finally number five we leverage acquisitions.

If you do the first four well you will have good shareholder returns. If you can add solid acquisitions, you can generate great returns.

Number one we are fortunate to have brands that consumers love and we have dozens of brands around the world.

Number two we have a long history of being a friend of the environment you can see some of the milestones on this slide we are very proud of our heritage and you heard Barry take us through our most recent commitment to science based targets.

Rupesh Parikh: In addition to our goal of being carbon neutral by 2025 through science-based targets, we have a goal of reducing our water usage by 10% annually and maintaining a solid waste recycling rate of 75%. We have received plenty of recognition for our ESG efforts. A few of them are displayed here. Number three, we have the most productive people in the CPG space. We have approximately 5,000 employees with $1 million in sales per employee. We believe this is an underappreciated performance measure. Our people are motivated by a simple compensation structure with four metrics: sales, gross margin, EPS, and cash from operations. Our long-term incentives are stock options, so we are aligned with shareholders to drive our valuation. We have a focus on gross margin. This is an uncommon incentive compensation metric. While we missed our gross margin target in 2021, that hasn't shaken our confidence.

In addition to our goal of being carbon neutral by 2025 through science-based targets, we have a goal of reducing our water usage by 10% annually and maintaining a solid waste recycling rate of 75%. We have received plenty of recognition for our ESG efforts. A few of them are displayed here. Number three, we have the most productive people in the CPG space. We have approximately 5,000 employees with $1 million in sales per employee. We believe this is an underappreciated performance measure. Our people are motivated by a simple compensation structure with four metrics: sales, gross margin, EPS, and cash from operations. Our long-term incentives are stock options, so we are aligned with shareholders to drive our valuation. We have a focus on gross margin. This is an uncommon incentive compensation metric. While we missed our gross margin target in 2021, that hasn't shaken our confidence.

In addition to our goal of being carbon neutral by 2025 through science based targets, we have a goal of reducing our water usage by 10% annually and maintaining a solid waste recycling rate of 75% and we have received plenty of recognition for our ESG efforts a few of them are displayed here.

Three we have the most productive people in the CPG space, we have approximately 5000 employees with $1 million in sales per employee.

We believe this is an underappreciated performance measure.

Our people are motivated by a simple compensation structure with four metrics sales gross margin EPS and cash from operations. Our long term incentives are stock options. So we are aligned with shareholders to drive our valuation.

We have a focus on gross margin. This is an uncommon incentive compensation metric, while we missed our gross margin target in 2021 that hasnt shaken our confidence.

Rupesh Parikh: We are still focused on the four drivers of gross margin expansion: good to great, which is our continuous improvement program, supply chain optimization, new products, and acquisition synergies. Number four is leverage assets. We are an asset-light company. Historically, CAPEX averages about 2% of sales. That will be higher in 2022 and 2023 as we expand our capacity in our growing businesses, namely vitamins, laundry, and litter. Number five is leverage acquisitions. As I said earlier, we have a long history of growth through acquisitions. We have clear acquisition criteria and the discipline to apply that criteria, which is to buy number one or number two brands, the need to grow at or above our Evergreen Model, and have gross margins in excess of corporate gross margins. We are attracted to businesses that are asset-light.

We are still focused on the four drivers of gross margin expansion: good to great, which is our continuous improvement program, supply chain optimization, new products, and acquisition synergies. Number four is leverage assets. We are an asset-light company. Historically, CAPEX averages about 2% of sales. That will be higher in 2022 and 2023 as we expand our capacity in our growing businesses, namely vitamins, laundry, and litter. Number five is leverage acquisitions. As I said earlier, we have a long history of growth through acquisitions. We have clear acquisition criteria and the discipline to apply that criteria, which is to buy number one or number two brands, the need to grow at or above our Evergreen Model, and have gross margins in excess of corporate gross margins. We are attracted to businesses that are asset-light.

We're still focused on the four drivers of gross margin expansion.

Good to great, which is our continuous improvement program supply chain optimization, new products and acquisition synergies number four is leverage assets. We are an asset light company historically capex averages about 2% of sales that will be higher in 2022, and 2023 as we expand our capacity.

In our growing businesses, namely vitamins laundry and litter.

Number five is leverage acquisitions.

As I said earlier, we have a long history of growth through acquisitions, we have clear acquisition criteria and the discipline to apply that criteria, which is to buy number one or number two brands they need to grow at or above our evergreen model and have gross margins in excess of corporate gross margins.

We are attracted to businesses that are asset light.

Rupesh Parikh: Oftentimes, we can leverage our scale to generate synergies, and finally, they need to have a sustainable competitive advantage. Our long-term view is this: we have 14 power brands today, 20 tomorrow. Next up is Rick to take us through the financials.

Oftentimes, we can leverage our scale to generate synergies, and finally, they need to have a sustainable competitive advantage. Our long-term view is this: we have 14 power brands today, 20 tomorrow. Next up is Rick to take us through the financials.

Oftentimes, we can leverage our scale to generate synergies and finally, they need to have a sustainable competitive advantage.

Our long term view is this we have 14 power brands today 20 tomorrow.

Next up is Rick to take us through the financials.

Andrea Teixeira: Thank you, Matt, and good morning, everybody. We have some great results to share. Across the board, we finished 2021 better than expected, led by strong consumer demand for our products, and we're entering 2022 with momentum. Today, we'll walk through four areas. First, the Evergreen Model. Second, on 2021 results. Third, our 2022 outlook. And then finally, I'll wrap up with capital allocation. Here's our Evergreen business model. We've had this for a very long time, and our long-term investors know this: 3% organic sales growth, 8% EPS growth. And the details would be +3% organic sales growth, 25 basis points of gross margin expansion. Marketing is typically flat. SG&A is leveraged, and we get 50 basis points of operating margin expansion, which leads to 8% EPS growth. We have a lot of different levers to pull in order to get 3% and 8%.

Richard Dierker: Thank you, Matt, and good morning, everybody. We have some great results to share. Across the board, we finished 2021 better than expected, led by strong consumer demand for our products, and we're entering 2022 with momentum. Today, we'll walk through four areas. First, the Evergreen Model. Second, on 2021 results. Third, our 2022 outlook. And then finally, I'll wrap up with capital allocation. Here's our Evergreen business model. We've had this for a very long time, and our long-term investors know this: 3% organic sales growth, 8% EPS growth. And the details would be +3% organic sales growth, 25 basis points of gross margin expansion. Marketing is typically flat. SG&A is leveraged, and we get 50 basis points of operating margin expansion, which leads to 8% EPS growth. We have a lot of different levers to pull in order to get 3% and 8%.

Thank you, Matt and good morning, everybody, we have some great results to share across the board. We finished 2021 better than expected led by strong consumer demand for our products and we are entering 2022 with momentum.

Today, I will walk through four areas first the evergreen model.

On 2021 results third our 2022 outlook and then finally I'll wrap up with capital allocation.

Here's our evergreen business model, we've had this for a very long time and our long term investors know this 3% organic sales growth, 8% EPS growth.

And the details would be plus 3% organic sales growth 25 basis points of gross margin expansion marketing is typically flat SG&A leverage and we get 50 basis points of operating margin expansion, which leads to 8% EPS growth, we have a lot of different levers to pull in order to get 3% and 8%.

Andrea Teixeira: So for 2021, we ended the year in the quarter with 4.3% organic sales growth. Domestic was 3.5%. International was a little bit better than 4.5%, and SPD was 12%. Gross margin declined by 50 basis points, but this was better than we expected. Marketing change was down 90 basis points at 14.7%, a lot higher than 13% our outlook had. This is really because we had a great tax benefit that we were able to spend back in marketing. SG&A was plus 50 basis points, and EPS was $0.64, or $0.06 better than our $0.58 outlook. Our full year 2021, we ended the year with 4.3% organic sales growth, 3.5% for domestic, 5% for international, and 12% for SPD. Gross margin was down 160 basis points as we faced 9% of COGS inflation year over year, or $250 million.

So for 2021, we ended the year in the quarter with 4.3% organic sales growth. Domestic was 3.5%. International was a little bit better than 4.5%, and SPD was 12%. Gross margin declined by 50 basis points, but this was better than we expected. Marketing change was down 90 basis points at 14.7%, a lot higher than 13% our outlook had. This is really because we had a great tax benefit that we were able to spend back in marketing. SG&A was plus 50 basis points, and EPS was $0.64, or $0.06 better than our $0.58 outlook. Our full year 2021, we ended the year with 4.3% organic sales growth, 3.5% for domestic, 5% for international, and 12% for SPD. Gross margin was down 160 basis points as we faced 9% of COGS inflation year over year, or $250 million.

So for 2021, we ended the year in the quarter with four 3% organic sales growth domestic was three and a half international was a little bit better than four and a half and SPD was 12% gross margin declined by 50 basis points, but this was better than we expected marketing change was down 90 basis points at 14, 7% a lot higher than 13%.

Our outlook at this is really because we had a great tax benefit that we were able to spend back in marketing SG&A was plus 50 basis points and EPS was <unk> 64.

<unk> <unk> better than our <unk> and outlook our full year 2021, we ended the year with four 3% organic sales growth three five for domestic five for international and 12 for SPD gross margin was down 150 basis points as we faced 9% of Cogs inflation year over year or $250 million.

Andrea Teixeira: Marketing was down 100 basis points to 11.1%, and adjusted SG&A was down 50 basis points, all to get adjusted EPS at 7%, or $3.02 per share. Cash from operations was $994 million, and free cash flow conversion was 116%. That's free cash flow divided by net income. How much net income have we turned into cash flow? Gross margin contracted in 2021, and in Q4, we were down 50 basis points. But price volume mix was plus 290, which was partially offsetting the inflation, the massive headwind of inflation, commodities, distribution, and labor. Productivity programs added 110 basis points, and then the acquisition was plus 30 basis points. So that's how we get to minus 50. As you can see, when you compare Q4 to 2021 full year, you can see the gap between price volume mix and inflation narrowing, and we expect that to continue in 2022.

Marketing was down 100 basis points to 11.1%, and adjusted SG&A was down 50 basis points, all to get adjusted EPS at 7%, or $3.02 per share. Cash from operations was $994 million, and free cash flow conversion was 116%. That's free cash flow divided by net income. How much net income have we turned into cash flow? Gross margin contracted in 2021, and in Q4, we were down 50 basis points. But price volume mix was plus 290, which was partially offsetting the inflation, the massive headwind of inflation, commodities, distribution, and labor. Productivity programs added 110 basis points, and then the acquisition was plus 30 basis points. So that's how we get to minus 50. As you can see, when you compare Q4 to 2021 full year, you can see the gap between price volume mix and inflation narrowing, and we expect that to continue in 2022.

Marketing was down 100 basis points to 11, 1% and adjusted SG&A was down 50 basis points ought to get adjusted EPS at 7% or $3 <unk> per share cash from operations was $994 million and free cash flow conversion was 116% that's.

Free cash flow divided by net income how much net income we turned into cash flow gross margin contracted in 2021 and in Q4, we were down 50 basis points, but price volume mix was plus $2 90.

Which was partially offsetting the inflation the massive headwind of inflation commodities distribution labor.

Productivity programs added 110 basis points and then the acquisition was plus 30 basis points. So that's how we get to minus 50 as you can see when you compare Q4 to 2021 full year you can see the gap between price volume mix and inflation narrowing and we expect that to continue in 2022.

Andrea Teixeira: Now turning to the outlook, 5% to 8% reported sales growth, 3% to 6% organic sales growth, operating profit margin of +60 to +70 basis points, and adjusted EPS growth of 48%. And here's the detail. The 3.6% organic sales growth is made up of domestic at 3% to 6%, international at 5% to 7%, and SPD at 5%. All these divisions are at or above their Evergreen Model for organic sales growth. Gross margins contract. Marketing, the dollars are higher. We leverage SG&A, and that's how we get to 60 to 70 basis points of operating margin expansion. The effective tax rate's higher year over year by 320 basis points, or 23%. This is a huge headwind to face, but our profit is actually going to be up 10%+ as a result, just showing and demonstrating the strength of our business.

Now turning to the outlook, 5% to 8% reported sales growth, 3% to 6% organic sales growth, operating profit margin of +60 to +70 basis points, and adjusted EPS growth of 48%. And here's the detail. The 3.6% organic sales growth is made up of domestic at 3% to 6%, international at 5% to 7%, and SPD at 5%. All these divisions are at or above their Evergreen Model for organic sales growth. Gross margins contract. Marketing, the dollars are higher. We leverage SG&A, and that's how we get to 60 to 70 basis points of operating margin expansion. The effective tax rate's higher year over year by 320 basis points, or 23%. This is a huge headwind to face, but our profit is actually going to be up 10%+ as a result, just showing and demonstrating the strength of our business.

Now turning to the outlook, 5% to 8% reported sales growth, 3% to 6% organic sales growth operating profit margin of plus $60, plus 70 basis points and.

And adjusted EPS growth of 48%.

And here's the detail the three 6% organic sales growth is made up of domestic at 3% to 6% international and 5% to 7% and SPD at 5%. All these divisions are at or above the evergreen model.

Organic sales growth.

Most margins contracts marketing the dollars are higher.

We leverage SG&A.

And that's how we get to 60 to 70 basis points of operating margin expansion.

The effective tax rate is higher year over year by 320 basis points or 23%.

This is a huge headwind to face, but our profit is actually going to be up 10% plus as a result, just showing and demonstrating the strength of our business adjusts.

Andrea Teixeira: Adjusted EPS growth is 48%, and cash from operations is about $920 million as we build back safety stocks on inventory. Here's organic sales over the 10-year horizon. Our Evergreen Model is 3%. Our 10-year average is closer to 4.1%, and our 2022 outlook is 3% to 6%. We're focused on gross margin, and we have been for a long time. Very few companies have it in their incentive targets. We believe it drives not only cash earnings, but cash flow as well. In 2021, we had a step down, largely due to inflation. We had a 9% increase in COGS. In 2022, we expect a 5% to 6% increase in COGS. All the pricing work that we're doing is offsetting that, but we're going to be continuing to chase that ball downhill. We're committed to offset it dollar for dollar, but margin will be down in 2022.

Adjusted EPS growth is 48%, and cash from operations is about $920 million as we build back safety stocks on inventory. Here's organic sales over the 10-year horizon. Our Evergreen Model is 3%. Our 10-year average is closer to 4.1%, and our 2022 outlook is 3% to 6%. We're focused on gross margin, and we have been for a long time. Very few companies have it in their incentive targets. We believe it drives not only cash earnings, but cash flow as well. In 2021, we had a step down, largely due to inflation. We had a 9% increase in COGS. In 2022, we expect a 5% to 6% increase in COGS. All the pricing work that we're doing is offsetting that, but we're going to be continuing to chase that ball downhill. We're committed to offset it dollar for dollar, but margin will be down in 2022.

Adjusted EPS growth is 48% and cash from operations is about $920 million as we build back safety stocks on inventory.

Here's organic sales over the 10 year horizon.

Our evergreen model is 3% or 10 year average is closer to four 1% and our 2022 outlook is 3% to 6%.

And we're focused on gross margin and we have been for a long time very few companies have an incentive targets, we believe it drives.

Not only cash earnings, but cash flow as well.

In 2021, we had a step down largely due to inflation, we had a 9% increase in Cogs in 2022, we expect a 5% to 6% increase in Cogs all of the pricing work that we're doing is offsetting that but we're going to be continuing to chase that ball downhill. So we're committed to offset dollar for dollar but margin will be down in 2022.

Andrea Teixeira: There's a cadence to the margin. In the first half, we expect it to be down. In the second half, we expect it to be up, largely because of the timing of inflation in 2021. Specifically, in Q1, we expect margin to decline by 250 basis points. On marketing spend, we have a long track record of spending behind our brands. In 2021, we hit 11.1%, and in 2022, we're going to have higher dollars than 2021. The percent will be lower as it's impacted by the top-line price actions that we've taken. SG&A leverage is a hallmark of Church & Dwight. We have the highest revenue per employee in the industry. We expect in 2022 to again leverage SG&A. And we have a long track record of great EPS growth, up high single-digit, low double-digit EPS growth for a long, long time.

There's a cadence to the margin. In the first half, we expect it to be down. In the second half, we expect it to be up, largely because of the timing of inflation in 2021. Specifically, in Q1, we expect margin to decline by 250 basis points. On marketing spend, we have a long track record of spending behind our brands. In 2021, we hit 11.1%, and in 2022, we're going to have higher dollars than 2021. The percent will be lower as it's impacted by the top-line price actions that we've taken. SG&A leverage is a hallmark of Church & Dwight. We have the highest revenue per employee in the industry. We expect in 2022 to again leverage SG&A. And we have a long track record of great EPS growth, up high single-digit, low double-digit EPS growth for a long, long time.

There is a cadence to the margin in the first half we expect to be down in the second half we expect it to be up largely because of the timing of inflation in 2021.

Specifically in Q1, we expect margin to decline by 250 basis points.

Our marketing spend we have a long track record of spending behind our brands in 2021, we had 11, 1% in 2022, we're going to have higher dollars in 2021 the percent will be lower as it is impacted by the topline pricing actions that we've taken SG&A leverage as a hallmark of <unk>, we have the highest revenue per employee in the industry. We expect.

In 2022 to again leverage SG&A and we have a long track record of great EPS growth of high single digit low double digit EPS growth for a long long time and in 2022, we expect 4% to 8% EPS growth $3 14 to $3 26.

Andrea Teixeira: In 2022, we expect 4% to 8% EPS growth, $3.14 to $3.26. The cadence for EPS growth is similar to gross margin, down in the first half, but up in the second half. We expect stronger volumes in the back half as our supply chain improves, and we have normalized promotional levels. Turning to cash flow, this is probably my favorite slide. 10 years of history here, 122% average free cash flow conversion. In 2021, 116%. And how do we do that? We do it through a tight control of working capital. We've moved our cash conversion cycle from 52 days down to the 30s and the 20s, and now 15 days in 2021. In 2022, we expect that to go up a little bit as we build back inventory and safety stock. We have a strong balance sheet. We ended 2021 with 1.9 times debt to EBITDA.

In 2022, we expect 4% to 8% EPS growth, $3.14 to $3.26. The cadence for EPS growth is similar to gross margin, down in the first half, but up in the second half. We expect stronger volumes in the back half as our supply chain improves, and we have normalized promotional levels. Turning to cash flow, this is probably my favorite slide. 10 years of history here, 122% average free cash flow conversion. In 2021, 116%. And how do we do that? We do it through a tight control of working capital. We've moved our cash conversion cycle from 52 days down to the 30s and the 20s, and now 15 days in 2021. In 2022, we expect that to go up a little bit as we build back inventory and safety stock. We have a strong balance sheet. We ended 2021 with 1.9 times debt to EBITDA.

The cadence for EPS growth is similar to gross margin down in the first half, but up in the second half we expect stronger volumes in the back half as our supply chain improves and we have normalized promotional levels.

Turning to cash flow. This is probably my favorite slide 10 years of history here, 122% average free cash flow conversion in 2021, 116%.

And how do we do that we do it through and tight control of working capital. We've moved our cash conversion cycle from 52 days at the end of the 30 and the 20th announced 15 days in 2021 and 2022, we expect that to go up a little bit as we build back inventory and safety stock. We have a strong balance sheet. We ended 2021 with one nine times debt to EBITDA.

Andrea Teixeira: We expect to end 2022 with 1.6x debt to EBITDA. That's despite doing our fourth largest acquisition recently, TheraBreath. This has been our business model for a long period of time. We buy a business, we lever up, and we pay it down. We have significant financial capacity. We could do a $3.8 billion deal and maintain our credit rating. Moving to capital allocation, here are the prioritized uses of cash flow. First, far and away, TSR-creating M&A. Number two, CAPEX for organic growth and G to G. Number three, new product development. Number four, debt reduction. Number five, return cash to shareholders through dividends or buyback. We're not a capital-intensive company. Our Evergreen Model is around 2% of sales for CAPEX. For many years, we've run below that. But you can see back in 2009, we have to add capacity.

We expect to end 2022 with 1.6x debt to EBITDA. That's despite doing our fourth largest acquisition recently, TheraBreath. This has been our business model for a long period of time. We buy a business, we lever up, and we pay it down. We have significant financial capacity. We could do a $3.8 billion deal and maintain our credit rating. Moving to capital allocation, here are the prioritized uses of cash flow. First, far and away, TSR-creating M&A. Number two, CAPEX for organic growth and G to G. Number three, new product development. Number four, debt reduction. Number five, return cash to shareholders through dividends or buyback. We're not a capital-intensive company. Our Evergreen Model is around 2% of sales for CAPEX. For many years, we've run below that. But you can see back in 2009, we have to add capacity.

We expect to end 2022, with one six times debt to EBITDA.

That's despite doing our fourth largest acquisition recently their breath. This has been our business model for a long period of time, we buy a business, we lever up and we paid down.

And we have significant financial capacity, we could do a $3 8 billion deal and maintain our credit rating.

And moving to capital allocation here. The prioritize uses of cash flow first faraway tsi accretive M&A number two capex for organic growth in <unk>.

Number three new product development number for debt reduction and number five returning cash to shareholders through dividends or buyback.

We're not a capital intensive company, our evergreen model is around 2% of sales for Capex and for many years, we run below that but you can see back in 2009, we have to add capacity, we do and it will spike in in 2022 and 2023, it's no different we're going to bump up as we add capacity for laundry litter and vitamins.

Andrea Teixeira: We do, and it will spike. And in 2022 and 2023, it's no different. We're going to bump up as we add capacity for laundry, litter, and vitamins. And then finally, we have a 4% dividend increase in 2022. This is 121 consecutive years of dividends. And in Q3 and Q4, we also spent $500 million on share buybacks. So we always like to return cash to shareholders. This ends the formal presentation, and now we'll turn it over to Matt and myself and the rest of the leadership team for Q&A.

We do, and it will spike. And in 2022 and 2023, it's no different. We're going to bump up as we add capacity for laundry, litter, and vitamins. And then finally, we have a 4% dividend increase in 2022. This is 121 consecutive years of dividends. And in Q3 and Q4, we also spent $500 million on share buybacks. So we always like to return cash to shareholders. This ends the formal presentation, and now we'll turn it over to Matt and myself and the rest of the leadership team for Q&A.

And then finally, we have a 4% dividend increase in 2022. This is a 121 consecutive years of dividends.

And then Q3 and Q4, we also spent $500 million on share buybacks. So we always like to return cash to shareholders.

This ends the formal presentation and now I will turn it over to Matt and myself and the rest of the leadership team for Q&A.

Matthew Farrell: Thank you. And ladies and gentlemen, if you have a question at this time, simply press star one for your questions. Again, that is star one. We have a question from Chris Carey with Wells Fargo Securities. Your line is open.

Operator: Thank you. And ladies and gentlemen, if you have a question at this time, simply press star one for your questions. Again, that is star one. We have a question from Chris Carey with Wells Fargo Securities. Your line is open.

Thank you and ladies and gentlemen, if you have a question at this time simply press star one for your questions.

Okay. Thank you.

And that is star one.

I have a question from Chris Carey with Wells Fargo Securities. Your line is open.

Chris Carey: Hi, good morning, everyone.

Chris Carey: Hi, good morning, everyone.

Hi, good morning, everyone.

Richard Dierker: Good morning.

Matthew Farrell: Good morning.

Good morning.

Chris Carey: Just a question on pricing relative to volumes, kind of a wide range on organic sales as you get through the year. Are you embedding the potential that elasticities start to become a bigger factor as you get through the year? Perhaps the consumer is less able to handle the additional pricing. In the near term, just on Q1, clearly, the organic sales outlook with the pricing and conscious that some is coming later in the quarter still seems relatively low to the momentum that you've been seeing, cognizant of some of the supply chain headwinds and otherwise. Can you just frame the potential flex in that Q1 top-line outlook as well? Thank you.

Chris Carey: Just a question on pricing relative to volumes, kind of a wide range on organic sales as you get through the year. Are you embedding the potential that elasticities start to become a bigger factor as you get through the year? Perhaps the consumer is less able to handle the additional pricing. In the near term, just on Q1, clearly, the organic sales outlook with the pricing and conscious that some is coming later in the quarter still seems relatively low to the momentum that you've been seeing, cognizant of some of the supply chain headwinds and otherwise. Can you just frame the potential flex in that Q1 top-line outlook as well? Thank you.

Just a question on.

Pricing.

Relative to the volumes.

Kind of a wide range on organic sales.

As you get through the year or are you embedding the potential that elasticity is starting to become a bigger factor as you get through the year, perhaps the consumer is less able to handle the additional pricing.

And then.

In the near term just just on Q1 clearly.

The organic sales outlook.

The pricing and conscious that some is coming later in the quarter still.

Still seems relatively low to the momentum that you've been seeing cognizant of some of the supply chain headwinds that otherwise.

Can you just frame.

The potential flex in that Q1 topline outlook as well thank you.

Richard Dierker: Yeah, sure. I'll take the quarter, and some of those answers are going to be explained when we talk about the full year as well. So on Q1, our outlook is 1% to 2%, Chris, and it's largely two reasons, but let me talk about price volume mix first for the year. So if you take the midpoint of our outlook for organic growth, it's about 4.5%, right? 3% to 6%. Midpoint's 4.5%. We would say that price mix is about 5.5%, and then we have a drag of volume of about 1%. All that 1%'s in Q1, though. So that's 4%. And the rationale is three things. One is volume elasticities, right? All the price increases that were effective in 2021, we're really in the second half of the year. Number two, we discontinued some club programs for Waterpik.

Matthew Farrell: Yeah, sure. I'll take the quarter, and some of those answers are going to be explained when we talk about the full year as well. So on Q1, our outlook is 1% to 2%, Chris, and it's largely two reasons, but let me talk about price volume mix first for the year. So if you take the midpoint of our outlook for organic growth, it's about 4.5%, right? 3% to 6%. Midpoint's 4.5%. We would say that price mix is about 5.5%, and then we have a drag of volume of about 1%. All that 1%'s in Q1, though. So that's 4%. And the rationale is three things. One is volume elasticities, right? All the price increases that were effective in 2021, we're really in the second half of the year. Number two, we discontinued some club programs for Waterpik.

Yes, sure I'll take the quarter and some of those answers are going to be explained and when you're talking about the full year as well so.

On Q1, our outlook is 1%, 2%, Chris and it's largely.

Two reasons, but let me talk about price volume mix first for the year. So if you take our midpoint of our outlook for organic growth. It's about four 5% right, 3% to 6% mid 0.4, and a half we would say that price mix was about five 5% and then we have a drag of volumes of about 1% all.

That 1% in Q4, and Q1 now so thats, 4% and the rationale is three things. One is volume elasticity is right. All the price increases that were effective in 2021, we're really in the second half of the year.

Number two we discontinued some club programs for water Pik and then as we always do.

Richard Dierker: And then, as we always do, we rationalize low margin volume for laundry. So those are three reasons why we're at 1% to 2% in the quarter. And that's also why price volume mix actually improves throughout the year. Organic improves throughout the year, and gross margin also improves throughout the year.

And then, as we always do, we rationalize low margin volume for laundry. So those are three reasons why we're at 1% to 2% in the quarter. And that's also why price volume mix actually improves throughout the year. Organic improves throughout the year, and gross margin also improves throughout the year.

We rationalized low margin volume for laundry. So those are the three reasons why we're at 1% to 2% in the quarter.

And that's also why price volume mix actually improves throughout the year organic improves throughout the year and gross margin also improved throughout the year.

Matthew Farrell: Chris, does that answer your question?

Operator: Chris, does that answer your question?

Chris does that answer your question.

Chris Carey: Oh, yeah. Thanks so much. And then, just following up on spending levels for this year, marketing back to the lower end or the historical range, can you just talk about how you view that as a flex item in the outlook through the year? You stay committed to that level of spending. Should volume elasticity become more of a dynamic? Would you look to spend more behind, say, bringing back promotional levels? Just the sorts of actions that you'd look to should elasticity become more of a factor as we get through the year. Thanks.

Chris Carey: Oh, yeah. Thanks so much. And then, just following up on spending levels for this year, marketing back to the lower end or the historical range, can you just talk about how you view that as a flex item in the outlook through the year? You stay committed to that level of spending. Should volume elasticity become more of a dynamic? Would you look to spend more behind, say, bringing back promotional levels? Just the sorts of actions that you'd look to should elasticity become more of a factor as we get through the year. Thanks.

Oh, yes, yes.

Thanks, so much.

And then just following up.

On.

Spending levels for this year.

Marketing.

Back to the lower end.

The historical range.

Can you just talk about how you view that as a flex item in the outlook through the year we stayed.

<unk> committed.

To that level of spending should volume elasticity to become more of a dynamic would you would you look to spend more behind say, bringing back promotional levels just the sorts of actions.

You'd look to it should.

Become more of a factor as we get through the year.

Richard Dierker: Yeah, that's exactly what we would do, Chris. Obviously, we have a wide range for both reported and for organic. So as our supply chain issues abate and we get more shipments out the door, got an opportunity to spend more on marketing. And the expectation is anyway for 2022 versus 2021 that our marketing dollars are going to be up year over year. Just that if you look at the percentage, it may not be lower than 2021, but you got to keep in mind you got big price increases that are driving the top line. So the relationship is a little bit different, percentage of sales, but our dollar spend is up in 2022 versus 2021. Good?

Matthew Farrell: Yeah, that's exactly what we would do, Chris. Obviously, we have a wide range for both reported and for organic. So as our supply chain issues abate and we get more shipments out the door, got an opportunity to spend more on marketing. And the expectation is anyway for 2022 versus 2021 that our marketing dollars are going to be up year over year. Just that if you look at the percentage, it may not be lower than 2021, but you got to keep in mind you got big price increases that are driving the top line. So the relationship is a little bit different, percentage of sales, but our dollar spend is up in 2022 versus 2021. Good?

Yes, that's exactly what we would do Chris.

Honestly, we have a wide range for both reported and organic so as our supply chain issues abate and we'll get some more some more shipments out the door kind of opportunity to spend more on marketing and the expectation is anyway for 'twenty two versus 21 that our marketing dollars are going.

B up year over year.

If you look at the percentage.

Could be lower than 'twenty, one but.

Keep in mind, you get big price increases that are driving the top line. So the relationship is a little bit different.

Percentage of sales, but our dollar spend is up in 'twenty two versus 21.

Chris Carey: Okay. Thanks so much.

Chris Carey: Okay. Thanks so much.

Good okay. Thanks, so much.

Matthew Farrell: Thank you.

Operator: Thank you.

Richard Dierker: All right. Thanks, Chris.

Richard Dierker: All right. Thanks, Chris.

Alright, Thanks, Chris.

Matthew Farrell: Our next question comes from Olivia Tong with Raymond James. Your line is open.

Operator: Our next question comes from Olivia Tong with Raymond James. Your line is open.

Our next question comes from Olivia Tong with Raymond James Your line is open.

Olivia Tong: Great. Thank you. Good morning, everybody. I was wondering if you could talk a little bit about the organic sales outlook because this is perhaps for the full year, the widest range we've seen in a while. Obviously, starting at a relatively low point in Q1, but I mean, your comps are only about 120 basis points of a range from low to high end. So that's a really substantial step up as the year progresses. And you just noted that every year you rationalize some low margin sales. So that should be in the comp, presumably, as well. So just a little bit more granularity with respect to your views as you implement the price increases and what seems like a fairly favorable view on the volume elasticity as the year progresses. Thanks.

Olivia Tong: Great. Thank you. Good morning, everybody. I was wondering if you could talk a little bit about the organic sales outlook because this is perhaps for the full year, the widest range we've seen in a while. Obviously, starting at a relatively low point in Q1, but I mean, your comps are only about 120 basis points of a range from low to high end. So that's a really substantial step up as the year progresses. And you just noted that every year you rationalize some low margin sales. So that should be in the comp, presumably, as well. So just a little bit more granularity with respect to your views as you implement the price increases and what seems like a fairly favorable view on the volume elasticity as the year progresses. Thanks.

Great. Thank you and good morning, everybody.

I was wondering if you could talk a little bit about the organic sales outlook because so.

Perhaps for the full year the wireless range, we've seen in a while.

Obviously starting.

At a relatively low point in Q1, but I mean it.

Your comps are only about 120 basis points of a range from low to high and so so that's a really substantial step up as the year progresses and you just noted that every year, you're rationalizing low margin sales so that should be in the comprehensive globally as well so just a little bit more granularity with respect to your views as you implement.

The price increases.

And and and what seems like a fairly favorable view on the volume elasticity as the year progresses.

Richard Dierker: Yeah. You're right about our elasticities. Our elasticities are actually much better than we had expected. So if you took liquid laundry, for example, it's in a 20 to 30 range, and we expected it to be worse, actually. And that'll actually probably improve going forward simply because we know that both Procter and Henkel are now raising prices. As far as the range goes, yeah, it's kind of a wide range. We haven't had a range like that in the past, but it's with good reason. Our fill levels have been low for not just the past 12 months, but it's almost the past 18 months. And we've had difficulty raising them. So to the extent that our labor issues abate, and not only in-house, but also out-house, our suppliers and co-packers are also struggling with labor.

Richard Dierker: Yeah. You're right about our elasticities. Our elasticities are actually much better than we had expected. So if you took liquid laundry, for example, it's in a 20 to 30 range, and we expected it to be worse, actually. And that'll actually probably improve going forward simply because we know that both Procter and Henkel are now raising prices. As far as the range goes, yeah, it's kind of a wide range. We haven't had a range like that in the past, but it's with good reason. Our fill levels have been low for not just the past 12 months, but it's almost the past 18 months. And we've had difficulty raising them. So to the extent that our labor issues abate, and not only in-house, but also out-house, our suppliers and co-packers are also struggling with labor.

Yes.

You're right about our elasticity as rls facilities are actually much better than we had expected.

It took a liquid laundry for example.

20 to 30 range and we expected it to be.

Worse actually and that will actually probably improve going forward simply because we know that.

Both Procter and Henkel are now raising prices or is the range growth.

So kind of a wide range, we haven't had to.

Range like that in the past, but it's so with good reason fill levels have been low for not just the past 12 months, but it's almost the past 18 months and we've had difficulty raising them. So the extent that our labor issues abate and not only in house, but also ounce outhouse.

Suppliers and co Packers are also struggling with labor.

Richard Dierker: We get more product to ship, we're going to have a much higher top line. Now, look, we also know we have a high single-digit price increase. So you think, well, if you got a high single-digit price increase, you would think that you're going to have a pretty robust reported top line and organic top line, which we will if we can ship the product. But we had to leave ourselves some room because we're anticipating things getting better, but it hasn't happened yet. Yeah. The only thing I would add to that, Olivia, to Rick, is 2021 was the most volatile year in many, many years. And so we're used to giving tight ranges, but 2022, we expect to be very volatile as well.

We get more product to ship, we're going to have a much higher top line. Now, look, we also know we have a high single-digit price increase. So you think, well, if you got a high single-digit price increase, you would think that you're going to have a pretty robust reported top line and organic top line, which we will if we can ship the product. But we had to leave ourselves some room because we're anticipating things getting better, but it hasn't happened yet.

We get more and more.

Product to ship, we're going to have much higher top line now look we also know we have a.

Hi.

High single digit price increase.

So we think well if you've got a high single thing of price increase you would think that youre going to have a pretty pretty robust reported topline and organic top line, which we will if we can if we can ship the product, but thats, who we had to leave ourselves some room.

Because we are anticipating things getting better, but hasnt happened yet, yes, the only thing I would add to that Olivia It's Rick is.

Matthew Farrell: Yeah. The only thing I would add to that, Olivia, to Rick, is 2021 was the most volatile year in many, many years. And so we're used to giving tight ranges, but 2022, we expect to be very volatile as well.

2021 was the most volatile year.

In many many years and so we're used to given tight ranges, but 2022, we expect to be very volatile as well and so like a lot of companies where it is can sure we have a range of.

Richard Dierker: And so like a lot of companies, we're just making sure we have a range of possibilities for the revenue line and the earnings line.

And so like a lot of companies, we're just making sure we have a range of possibilities for the revenue line and the earnings line.

Possibilities for the revenue line and the earnings line.

Olivia Tong: Got it. Thanks. And on the margin guide, looking for 60, 70 basis points in operating margin, despite gross margin decline, marketing increasing, perhaps looks like in dollar terms, but maybe not in terms of margin on a year-over-year basis. So that would imply some pretty nice improvement on G&A. So can you talk about some of the key levers there to improve G&A? And then just one last question on vitamins. If you could just talk about the competitive dynamics, given you've obviously continued to add innovative new products. You've got solid demand for the category, but just wondering if you could touch on competition. Thanks so much. Appreciate it.

Olivia Tong: Got it. Thanks. And on the margin guide, looking for 60, 70 basis points in operating margin, despite gross margin decline, marketing increasing, perhaps looks like in dollar terms, but maybe not in terms of margin on a year-over-year basis. So that would imply some pretty nice improvement on G&A. So can you talk about some of the key levers there to improve G&A? And then just one last question on vitamins. If you could just talk about the competitive dynamics, given you've obviously continued to add innovative new products. You've got solid demand for the category, but just wondering if you could touch on competition. Thanks so much. Appreciate it.

Got it thanks.

On the margin guide looking for 60 70 basis points in operating margin. Despite gross margin declined on marketing.

Increasing perhaps it looks like.

In dollar terms, but maybe not in terms of.

Margin on a year over year basis. So.

That would imply pretty nice improvement on G&A. So can you talk about some of the key levers there.

Improved G&A and then just one last question on vitamins. If you could just talk about the competitive dynamics, given you've obviously continuing to add.

Innovative new products, you've got solid demand for the category, but just wondering when you think of competition. Thanks. So much appreciate it.

Richard Dierker: Yeah. Okay. Let's talk about vitamins first. The demand is really high for vitamins right now. And the category was up 8% for the full year, and our share position is very strong. We just heard from Barry earlier; household penetration is up and is sticking. Now, we have tailwinds, of course, two of them. One is the wellness trend, and the other one is the transition from pills and capsules to gummies. And part of our success in the last few years, and we think continuing into the future, is going to be our new product launches. They've done really well this past year. As far as private label, that does come up from time to time. Private label share of gummies has declined in four consecutive quarters, went from 25% four quarters ago down to 21% the most recent quarter.

Richard Dierker: Yeah. Okay. Let's talk about vitamins first. The demand is really high for vitamins right now. And the category was up 8% for the full year, and our share position is very strong. We just heard from Barry earlier; household penetration is up and is sticking. Now, we have tailwinds, of course, two of them. One is the wellness trend, and the other one is the transition from pills and capsules to gummies. And part of our success in the last few years, and we think continuing into the future, is going to be our new product launches. They've done really well this past year. As far as private label, that does come up from time to time. Private label share of gummies has declined in four consecutive quarters, went from 25% four quarters ago down to 21% the most recent quarter.

Okay, Let's talk about vitamins first the demand is really high for vitamins right now and the category was up 8% for the full year and our share position is very strong.

You heard from Barry earlier household penetration is up.

<unk> is sticking and we have <unk> of course two of them. One is the wellness trend and the other one is the transition from pills and capsules.

Gummies.

Part of our success in the last few years, and we think continuing into the future is going to be our new product launches they've done really well.

This past year.

As far as private label it does come up from time to time in private label share of Gummies is declined in four consecutive quarters went from 25%.

Four quarters ago down 21%, the most recent quarter and looking ahead to.

Richard Dierker: Looking ahead to 2022, we have a nice lineup of new products. We can sell everything we make, and we have a couple of co-packers that are going to be coming online mid-year, so that should give us some relief. Yeah. And then in terms of the operating expansion, where that's coming from, you're right, Olivia. We said that gross margin is going to be down, marketing as a percent of sales will be down, dollars will be up, and that means we're going to also leverage SG&A. We've said for many years, when you look at our Evergreen Model for SG&A, we're trying to get 25 basis points from that.

Looking ahead to 2022, we have a nice lineup of new products. We can sell everything we make, and we have a couple of co-packers that are going to be coming online mid-year, so that should give us some relief. Yeah. And then in terms of the operating expansion, where that's coming from, you're right, Olivia. We said that gross margin is going to be down, marketing as a percent of sales will be down, dollars will be up, and that means we're going to also leverage SG&A. We've said for many years, when you look at our Evergreen Model for SG&A, we're trying to get 25 basis points from that.

The 22, we have a nice lineup of new products.

We can we can we can sell everything we make and we have a couple of co Packers theyre going to be coming online mid year, so that should give us some relief.

And then in terms of the operating expansion, where thats coming from you are right. Olivia we said that gross margin is going to be down marketing as a percent of sales will be down dollars will be up and that means we're going to also leverage SG&A. We've said for many years. When you look at our evergreen model for SG&A, we're trying to get 25 basis points from that.

Richard Dierker: And we've done the math, and we've said, "Hey, if we can grow our SG&A dollars at half the rate of sales in the Evergreen Model, right, at 3% of sales, then it's about 15 basis points." And so our revenue is growing anywhere between 5% and 8% next year. So we're going to be able to leverage that because we're still having the same type of dollar increase on SG&A. So we expect that just to, I'm not going to point to any specific details, but we'll have more leverage than normal because our top line's growing faster.

And we've done the math, and we've said, "Hey, if we can grow our SG&A dollars at half the rate of sales in the Evergreen Model, right, at 3% of sales, then it's about 15 basis points." And so our revenue is growing anywhere between 5% and 8% next year. So we're going to be able to leverage that because we're still having the same type of dollar increase on SG&A. So we expect that just to, I'm not going to point to any specific details, but we'll have more leverage than normal because our top line's growing faster.

And we've done the math and we said hey, if we can.

Grow our SG&A dollars at half the rate of sales and that evergreen model right at 3% of sales.

Then it's about 15 basis points and so our revenues growing anywhere between five and 8% next year. So we're going to be able to leverage that because we're still having the same type of dollar increase on SG&A. So we expect that just to I'm not going to point to any specific details, but we will have more leverage than normal because our topline is growing faster.

Olivia Tong: Understood. Thanks. Best of luck.

Olivia Tong: Understood. Thanks. Best of luck.

Understood. Thanks best of luck.

Richard Dierker: Thanks.

Richard Dierker: Thanks.

Matthew Farrell: Our next question comes from Steve Powers with Deutsche Bank. Your line is open.

Operator: Our next question comes from Steve Powers with Deutsche Bank. Your line is open.

Thanks, Brian .

Our next question comes from Steve Powers with Deutsche Bank. Your line is open.

Steve Powers: Yeah. Hey, good morning, guys. Can you elaborate on the improvement in the North American supply and fill rates that you're anticipating just in terms of kind of your latest base case timing, and kind of just do we improve all the way back to normal by the end of the year or second half, or are you still expecting tightness throughout 2022?

Steve Powers: Yeah. Hey, good morning, guys. Can you elaborate on the improvement in the North American supply and fill rates that you're anticipating just in terms of kind of your latest base case timing, and kind of just do we improve all the way back to normal by the end of the year or second half, or are you still expecting tightness throughout 2022?

Yeah, Hey, good morning, guys.

Can you elaborate on the improvement in the North American supply and fill rates that youre anticipating just in terms of the.

But kind of your latest base case timing and kind of just do we improve all the way back to normal by the end of the year or second half or is it.

Still expecting tightness throughout 'twenty two.

Richard Dierker: Yeah. Okay. Thanks, Steve. We think it's going to be sequential improvement throughout the year. We normally have fill rates around 98%, 99%. We're low 80s right now. So we hope to be exiting the year in the mid-90s. But we have Rick Spahn on the phone, who's our head of supply chain. So he's the guy that's going to make it happen. Anything to add, Rick?

Richard Dierker: Yeah. Okay. Thanks, Steve. We think it's going to be sequential improvement throughout the year. We normally have fill rates around 98%, 99%. We're low 80s right now. So we hope to be exiting the year in the mid-90s. But we have Rick Spahn on the phone, who's our head of supply chain. So he's the guy that's going to make it happen. Anything to add, Rick?

Okay.

Okay. Thanks, Steve we think it's going to be sequential improvement throughout the year.

We normally have fill rates around 90, 899% who are low <unk> right now so we hope to be exiting the year in the mid Ninety's, but we have respond on the phone who is our head of supply chain.

It's going to make it happen anything to add Rick.

Barry Bruno: Yeah. Thanks, Matt. So we're doing a lot. As you saw from the presentation, we're investing in incremental capacity. Those projects take time, of course. So where we need to, we're increasing our third-party manufacturing to supplement supply to hold us over until the capacity projects come on stream. But as Matt said, we will progress up through the mid-90s by the end of the year. Omicron gave us a step back with high absenteeism, but we're already starting to see absenteeism improve in our plants, and now we're focusing on upstream supply of materials.

Rick Spann: Yeah. Thanks, Matt. So we're doing a lot. As you saw from the presentation, we're investing in incremental capacity. Those projects take time, of course. So where we need to, we're increasing our third-party manufacturing to supplement supply to hold us over until the capacity projects come on stream. But as Matt said, we will progress up through the mid-90s by the end of the year. Omicron gave us a step back with high absenteeism, but we're already starting to see absenteeism improve in our plants, and now we're focusing on upstream supply of materials.

Yes, Thanks, Matt.

So we're doing a lot where as you saw from the presentation, we're investing an incremental capacity.

Those projects take time of course, so where we.

Where we need to we are increasing our third party manufacturing to supplement supply to hold this over until the capacity projects come on stream.

But as Matt said, we will progress up through the mid Ninety's by the by the end of the year.

<unk>.

Gave us a step back with high with high absenteeism.

We're already starting to see absenteeism improve in our plants and now we're focusing on upstream supply of materials.

Steve Powers: Okay. Great. And just two quick questions, the follow-ups on pricing, if I could. Just the first one is for the pricing, I guess, to what degree is there pricing you've announced that hasn't yet hit the market, and what's the cadence of that incremental pricing flowing through, number one? And then just on some of the new products, specifically the Zicam VMS products and the baby Arm & Hammer detergent, how are those going to be priced relative to the rest of your VMS and laundry portfolios, respectively? Thank you.

Steve Powers: Okay. Great. And just two quick questions, the follow-ups on pricing, if I could. Just the first one is for the pricing, I guess, to what degree is there pricing you've announced that hasn't yet hit the market, and what's the cadence of that incremental pricing flowing through, number one? And then just on some of the new products, specifically the Zicam VMS products and the baby Arm & Hammer detergent, how are those going to be priced relative to the rest of your VMS and laundry portfolios, respectively? Thank you.

Okay great.

Two quick questions follow ups on pricing if I could just the first one is.

For the pricing I guess to what degree is there pricing you've announced that hasn't yet hit the market and what's the cadence of that incremental pricing flowing through number one and then just on some of the new products specifically the zicam BNS products in the baby arm <unk> Hammer detergent, how are those going to be priced relative to the rest of your <unk>.

On laundry portfolios respectively.

Barry Bruno: Yeah. I'll take the incremental pricing. So we did announce a few months ago that we were going to have incremental pricing hit, that extra 30%. So now we're 80% plus, and that's going to hit in late February. And we wouldn't front-run any other conversations on pricing on this call, but we will report back and let you know when there's incremental pricing above that 80%.

Barry Bruno: Yeah. I'll take the incremental pricing. So we did announce a few months ago that we were going to have incremental pricing hit, that extra 30%. So now we're 80% plus, and that's going to hit in late February. And we wouldn't front-run any other conversations on pricing on this call, but we will report back and let you know when there's incremental pricing above that 80%.

Yes, I'll take the.

The incremental pricing.

So we did announced a few months ago that we're going to have incremental pricing.

Extra 30% to now, we're 80% plus and Thats going to hit in late February .

We haven't and we Wouldnt, we Wouldnt front run any other conversations on pricing on this call, but we will report back and let you know when there is incremental pricing above that 80%.

Richard Dierker: Yeah. And the other question was pricing for the baby product?

Richard Dierker: Yeah. And the other question was pricing for the baby product?

And the other question was pricing for for the baby product.

Steve Powers: Yeah. The Zicam VMS and baby, just relative to the rest of those portfolios.

Steve Powers: Yeah. The Zicam VMS and baby, just relative to the rest of those portfolios.

Yes, Sam Vms and baby you just relative to the rest of those portfolios.

Richard Dierker: Yeah. Okay. Well, maybe Paul or Barry would like to comment.

Richard Dierker: Yeah. Okay. Well, maybe Paul or Barry would like to comment.

Yes.

Maybe paul or very light.

Comment.

Mike Read: Yeah. This is Paul.

Michael Read: Yeah. This is Paul.

Richard Dierker: They must be sipping coffee.

Richard Dierker: They must be sipping coffee.

Yes.

Bob.

Mike Read: This is Paul. I think that probably the easiest way to answer all three of them at once is they're going to be line priced within the set, right? The part of these launches is we want to be complementary to the set or incremental purchases of a part of the family brand. So particularly, you can imagine on Zicam and VMS and others. Baby, obviously, is a different proposition, but still an incremental purchase in that a mom is looking for a separate product for the baby loads. But I would say on that one, I don't want to be too prescriptive or detailed on this call, but I would say we're well priced competitively in the category. It would be how I'd answer that one in particular.

Paul Wood: This is Paul. I think that probably the easiest way to answer all three of them at once is they're going to be line priced within the set, right? The part of these launches is we want to be complementary to the set or incremental purchases of a part of the family brand. So particularly, you can imagine on Zicam and VMS and others. Baby, obviously, is a different proposition, but still an incremental purchase in that a mom is looking for a separate product for the baby loads. But I would say on that one, I don't want to be too prescriptive or detailed on this call, but I would say we're well priced competitively in the category. It would be how I'd answer that one in particular.

This is Paul I think that probably the easiest way to answer all three of them. One is there going to be line price within the set right. The part of these launches as we want to be complementary to the center incremental purchases, but part of the family brand. So, particularly you can imagine one zicam in Vms and others, maybe obviously is a different proposition but still.

Increment incremental purchase in that.

Mom is looking for a separate product for the baby loads, but I would say on that one I don't want to be too prescriptive or detailed on this call, but I would say, we're well priced competitively in the category would be how I'd answer that one in particular.

Steve Powers: Okay. Thank you very much. Appreciate it.

Steve Powers: Okay. Thank you very much. Appreciate it.

Okay. Thank you very much I appreciate it.

Mike Read: Thanks, Steve.

Michael Read: Thanks, Steve.

Matthew Farrell: Thank you. Our next question comes from Kevin Grundy with Jefferies. Your line is open.

Operator: Thank you. Our next question comes from Kevin Grundy with Jefferies. Your line is open.

Thanks, Steve.

Thank you. Our next question comes from Kevin Grundy with Jefferies. Your line is open.

Rick Spahn: Great. Thanks. Good morning, everyone. Question for Matt and Rick on the guidance, and then an unrelated question for Barry, if I could squeeze in a second one. The first one, the long-term guidance of 3%, sort of in the spirit of the analyst day and sort of more longer-term oriented. The company's exceeded it naturally for a number of years. You're guiding above that for this upcoming year, about 4.5%. You have a slide up, which rightly points out the higher category growth alone, sort of setting aside what you hope to do from a market share perspective. You talked a lot about some of the stickiness and consumer behavior around health and wellness, where I think most people on this call would agree.

Kevin Grundy: Great. Thanks. Good morning, everyone. Question for Matt and Rick on the guidance, and then an unrelated question for Barry, if I could squeeze in a second one. The first one, the long-term guidance of 3%, sort of in the spirit of the analyst day and sort of more longer-term oriented. The company's exceeded it naturally for a number of years. You're guiding above that for this upcoming year, about 4.5%. You have a slide up, which rightly points out the higher category growth alone, sort of setting aside what you hope to do from a market share perspective. You talked a lot about some of the stickiness and consumer behavior around health and wellness, where I think most people on this call would agree.

Great. Thanks, good morning, everyone.

Question.

Matt and Rick on the guidance and then.

Related question for Barry if I could squeeze in a second one the first one on the long term guidance of 3% sort of in the spirit of the analyst day and sort of more longer term oriented.

The company has exceeded it naturally for a number of years youre guiding above that for this upcoming year is about four 5% you have a slide up which rightly points out the highest category grow along sort of setting aside which you hope to do from a market share perspective, you talked a lot about some of the stickiness of consumer behavior around health and wellness, where I think most people on this call.

Rick Spahn: Then I suspect for your own internal planning around capacity and around your cost structure, I suspect that's predicated on a growth rate over the next three to five years ahead of that 3%. That's all a big sort of wind-up here. Have you considered revisiting that guidance for investors?

The degree.

Then I suspect for your own internal planning around capacity and around your cost structure, I suspect that's predicated on a growth rate over the next three to five years ahead of that 3%. That's all a big sort of wind-up here. Have you considered revisiting that guidance for investors?

And then I can.

Expect for your own internal planning around capacity at around your cost structure I suspect that's predicated on the growth rate over the next three to five years ahead of that 3%. So that's all a big sort of wind up here, if you considered revisiting that guidance for investors.

Richard Dierker: Kevin, I could have predicted this question was coming. I think you are consistent. I think you ask that question annually.

Matthew Farrell: Kevin, I could have predicted this question was coming. I think you are consistent. I think you ask that question annually.

Yes.

Kevin.

Could have predicted this question was coming I think you are consistent.

That question the annually.

Rick Spahn: I'm glad I didn't disappoint you, Matt.

Kevin Grundy: I'm glad I didn't disappoint you, Matt.

Got it.

Richard Dierker: Well, I thought maybe we'd duck it this year because we have this range of 3 to 6 and 4.5 in the middle. I thought Kevin's going to be happy with that. What you're asking about is, should we change our Evergreen Model?

Matthew Farrell: Well, I thought maybe we'd duck it this year because we have this range of 3 to 6 and 4.5 in the middle. I thought Kevin's going to be happy with that. What you're asking about is, should we change our Evergreen Model?

Hey, Matt.

I thought maybe we'd duck. It this year because we have this range of three to six and $4 <unk> in the middle I think Kevin is going to be happy with that.

You're asking about is it should we change our evergreen model correct.

Rick Spahn: Correct. And even, Matt, if I could, not to cut you off, even consider changing where it's less emphasis on the 50 basis points of margin improvement, which is tough to do year in and year out in the absence of favorable mix from doing deals. So heavier on the top line and even something 25 to 50 on operating margin. So sorry for cutting you off, but go ahead.

Rick Spann: Correct. And even, Matt, if I could, not to cut you off, even consider changing where it's less emphasis on the 50 basis points of margin improvement, which is tough to do year in and year out in the absence of favorable mix from doing deals. So heavier on the top line and even something 25 to 50 on operating margin. So sorry for cutting you off, but go ahead.

If I.

Cut you off even consider changing where it's less.

Less emphasis on the 50 basis points of margin improvement, which is tough to do year in year out.

In the absence of favorable mix from doing deals so heavier on the topline and even something 25 to 50 on operating margin. So sorry for cutting you off but go ahead.

Richard Dierker: No, no, no. I understand the math. But the way we've used the Evergreen Model is we do it for our long-range planning. And yes, we don't ever want to leave ourselves short from a capacity standpoint. So just because we have a 3% Evergreen Model doesn't mean that we would put any governors or caps on capacity expansion because that's the last thing we want to do is to be completely sold out. So I would remind you as well that the Evergreen Model is also something that is very important to financial literacy within the company because it's something we talk about all the time. It's familiar to all of our employees.

Matthew Farrell: No, no, no. I understand the math. But the way we've used the Evergreen Model is we do it for our long-range planning. And yes, we don't ever want to leave ourselves short from a capacity standpoint. So just because we have a 3% Evergreen Model doesn't mean that we would put any governors or caps on capacity expansion because that's the last thing we want to do is to be completely sold out. So I would remind you as well that the Evergreen Model is also something that is very important to financial literacy within the company because it's something we talk about all the time. It's familiar to all of our employees.

No no no.

I understand the math, but the way the way we've used the evergreen model as we do it for a long range planning and yes, we don't ever want to leave ourselves short from a capacity standpoint, so just because we have a 3% evergreen model doesn't mean that we would.

Put any governors are caps on our on capacity expansion. So last one wanted to do is to be <unk>.

<unk>.

The sold out so.

I would remind you as well that the evergreen model is also something that is very important to financial literacy within the company because it's something we talk about all the time.

Richard Dierker: So yeah, there is some merit to your argument where we say we're going to grow at a 4% organic level, take some of the air out of the balloon when it comes to gross margin, but we will still arrive at the 8% EPS number on the bottom. So yeah, it's not something we don't think about, Kevin. Don't think once a year when you ask this question is when we give it some thought. But stay tuned. It's something we've been looking at.

So yeah, there is some merit to your argument where we say we're going to grow at a 4% organic level, take some of the air out of the balloon when it comes to gross margin, but we will still arrive at the 8% EPS number on the bottom. So yeah, it's not something we don't think about, Kevin. Don't think once a year when you ask this question is when we give it some thought. But stay tuned. It's something we've been looking at.

It's familiar to all of our employees. So yes, there is some merit.

Your argument to say, we're going to grow at a 4% organic level.

It takes some of the air out of the balloon when it comes to gross margin, but there's still we will still arrive at the 8% EPS number on the bottom so yes.

It is.

It's not it's not something we don't think about Kevin is that don't think once a year. When you asked this question. So let me.

I'll give it some thought.

Yeah.

Stay tuned it's something we do.

Rick Spahn: Understood. Fair. And then if I could just squeeze in 1 more just for Barry, early observations since moving into the CMO role, biggest areas of opportunity that you see, sort of fresh set of eyes, fresh perspective of the portfolio, and then maybe areas that perhaps need a little bit more of your attention over the next 12 months?

Kevin Grundy: Understood. Fair. And then if I could just squeeze in 1 more just for Barry, early observations since moving into the CMO role, biggest areas of opportunity that you see, sort of fresh set of eyes, fresh perspective of the portfolio, and then maybe areas that perhaps need a little bit more of your attention over the next 12 months?

We've been looking at.

Understood Fair and then if I could just squeeze in one more just for Barry.

Early observations since moving into the CMO overall biggest areas of opportunity that you see sort of a fresh set of eyes fresh perspective of the portfolio and then maybe areas that perhaps need a little bit more of your attention.

Over the next 12 months.

Barry Bruno: Sure. Thanks, Kevin. I think 90 days in or so. I think I've been telling the international story for so long before about how much opportunity is there. I think I see ample opportunity here in the US as well, right? There are so many of those trends that I took you through earlier in the presentation that are so well-suited to our brands and the categories that we're in. So I've been beating up on the US guys when I was in international for a while, but I'd say equally excited here. And whether it's around vitamins or whether it's around laundry, a supply comes back, ample opportunity everywhere. And then in terms of challenges or things I'm looking at, as we spend more in media, which Rick and Matt mentioned, up in absolute dollars next year, what's the best spend of that?

Barry Bruno: Sure. Thanks, Kevin. I think 90 days in or so. I think I've been telling the international story for so long before about how much opportunity is there. I think I see ample opportunity here in the US as well, right? There are so many of those trends that I took you through earlier in the presentation that are so well-suited to our brands and the categories that we're in. So I've been beating up on the US guys when I was in international for a while, but I'd say equally excited here. And whether it's around vitamins or whether it's around laundry, a supply comes back, ample opportunity everywhere. And then in terms of challenges or things I'm looking at, as we spend more in media, which Rick and Matt mentioned, up in absolute dollars next year, what's the best spend of that?

Sure. Thanks, Kevin I think.

90 days in or so I think I have been telling the international story for so long before about how much opportunity is there I think I see.

Ample opportunity here in the U S. As well there are so many of those trends that I took you through earlier in the presentation that are so well suited to our brands and the categories that we're in so.

Being up on the U S guys Madison International for Awhile, but I would say equally excited here and whether it's around vitamins or whether it's about around laundry as supply comes back ample opportunity everywhere and then in terms of challenges are things I'm looking at.

As we spend more in media with trick and Matt mentioned up in absolute dollars next year whats the best spend of that digital gets really really attractive because of its perceived perfect measure ability, but I think linear is still has a role in your television still has a role for its broad reach so really working on that right mix of linear versus digital.

Barry Bruno: Digital gets really, really attractive because of its perceived perfect measurability, but I think linear still has a role. Linear TV still has a role for its broad reach. So really working on that right mix of linear versus digital and kind of upper funnel brand building versus lower funnel by now, by here kind of stuff. So those are early thoughts. Great opportunity. Want to get the marketing mix right as it's a large line item in our P&L.

Digital gets really, really attractive because of its perceived perfect measurability, but I think linear still has a role. Linear TV still has a role for its broad reach. So really working on that right mix of linear versus digital and kind of upper funnel brand building versus lower funnel by now, by here kind of stuff. So those are early thoughts. Great opportunity. Want to get the marketing mix right as it's a large line item in our P&L.

And kind of upper funnel brand building versus lower funnel by now by here kind of stuff. So those are those early thoughts great opportunity and want to get the marketing mix right as its a large line item in our P&L.

Rick Spahn: Got it. Makes sense. Thank you very much for the call. Good luck, everyone.

Kevin Grundy: Got it. Makes sense. Thank you very much for the call. Good luck, everyone.

Got it makes sense. Thank you very much for the color. Good luck everyone sure. Thanks, Thanks, Kevin.

Barry Bruno: Sure. Thanks, Steve.

Barry Bruno: Sure. Thanks, Steve.

Mike Read: Thanks, Kevin.

Michael Read: Thanks, Kevin.

Matthew Farrell: Thank you. Our next question comes from Rupesh Parikh with Oppenheimer. Your line is open.

Operator: Thank you. Our next question comes from Rupesh Parikh with Oppenheimer. Your line is open.

Thank you. Our next question comes from will <unk> with Oppenheimer. Your line is open.

Rupesh Parikh: Good morning. Thanks for taking my question. So the first area I want to touch on is just international. I was just curious what you guys are seeing lately in the international front and whether you're seeing any impact from lockdowns or restrictions.

Rupesh Parikh: Good morning. Thanks for taking my question. So the first area I want to touch on is just international. I was just curious what you guys are seeing lately in the international front and whether you're seeing any impact from lockdowns or restrictions.

Good morning, and thanks for taking my question. So the first area I wanted to touch on International I was just curious what you guys are seeing lately in the international and whether Youre seeing any impact from Lockdowns and restrictions.

Richard Dierker: Yeah. No, we have, I'm going to dish this to Mike Read in a second, but you're absolutely right that we've had intermittent lockdowns in a lot of markets. International is also hampered by transportation issues, containers, and getting product. And if you look at our guide for next year, we said 5% to 7%, and you know our evergreen number is 6%. So we are expecting to be in the sweet spot. But maybe Mike, you could give a little bit of color on what we've been experiencing in international markets.

Matthew Farrell: Yeah. No, we have, I'm going to dish this to Mike Read in a second, but you're absolutely right that we've had intermittent lockdowns in a lot of markets. International is also hampered by transportation issues, containers, and getting product. And if you look at our guide for next year, we said 5% to 7%, and you know our evergreen number is 6%. So we are expecting to be in the sweet spot. But maybe Mike, you could give a little bit of color on what we've been experiencing in international markets.

Yes, no we have.

This is two to.

Mike Reed in the second but Youre, absolutely right that we've had intermittent alive lockdowns and a lot of markets Internationalists also hampered by.

Transportation issues in containers and getting product and if you look at our guide for next year, when we said, 5% to 7% and you know our evergreen number six so we are expecting to be in the sweet spot, but maybe Mike you could give a little bit of color on what we've been experiencing in international markets.

Mike Read: Yeah. Thanks, Matt. And thanks, Rupesh, for the question. Yeah. Look, we're having similar challenges, as Matt said, from a supply chain perspective. But what I'd point to is we have really healthy consumer demand for our portfolio across the board. We are seeing really strong growth across all our subsidiary divisions, but also within kind of how we break out our global markets group into kind of five regions. So we are seeing really positive growth in demand. It's really just about fulfilling it. So I'd point to our ability to kind of access our portfolio in multiple markets is still really strong. It's just a matter of kind of keeping up with demand, but the orders are definitely there.

Michael Read: Yeah. Thanks, Matt. And thanks, Rupesh, for the question. Yeah. Look, we're having similar challenges, as Matt said, from a supply chain perspective. But what I'd point to is we have really healthy consumer demand for our portfolio across the board. We are seeing really strong growth across all our subsidiary divisions, but also within kind of how we break out our global markets group into kind of five regions. So we are seeing really positive growth in demand. It's really just about fulfilling it. So I'd point to our ability to kind of access our portfolio in multiple markets is still really strong. It's just a matter of kind of keeping up with demand, but the orders are definitely there.

Yes, Thanks, Matt.

Thanks for your question for the question yes.

We're having similar challenges as Matt said from a supply chain perspective, but what I'd point to is we have really healthy consumer demand for our portfolio across the board.

We are seeing really strong growth across all of our subsidiary divisions, but also within kind of how we break out our global markets group into five regions. So we are seeing really positive growth in demand is really just about fulfilling it.

So I'd point to our ability to access our portfolio in multiple markets is still really strong.

A matter of kind of keeping up with demand, but the orders are definitely there.

Rick Spahn: Yeah. And then this is Rick. I just want to add one line to that. We had 4.7% organic growth in Q4 for international. So somebody might say, "Oh, well, that's a little below your Evergreen Model for international." But I would tell you, if you look back in Q4 of 2020, we grew 14.9%. So on the two-year stack, the 19.5% growth rate is the strongest quarter, actually, in the whole year.

Rick Spann: Yeah. And then this is Rick. I just want to add one line to that. We had 4.7% organic growth in Q4 for international. So somebody might say, "Oh, well, that's a little below your Evergreen Model for international." But I would tell you, if you look back in Q4 of 2020, we grew 14.9%. So on the two-year stack, the 19.5% growth rate is the strongest quarter, actually, in the whole year.

Yes.

Rick.

I just wanted to add one line to that.

We had four 7% organic growth in Q4 for international So somebody might say well that's a little below your evergreen model for international but I would tell you. If you look back in Q4 of 2020, we grew 14, 9%. So on the two year stack that 19, 5% growth rate is the strongest quarter actually.

And the whole year.

Rupesh Parikh: Great. And then maybe just two quick financial questions. So first, on the CapEx side, any specific guidance you can give on CapEx? I think last time you guys said expected to exceed $200 million. And then on gross margins, is there any additional color you can provide just in terms of the drivers for the year?

Rupesh Parikh: Great. And then maybe just two quick financial questions. So first, on the CapEx side, any specific guidance you can give on CapEx? I think last time you guys said expected to exceed $200 million. And then on gross margins, is there any additional color you can provide just in terms of the drivers for the year?

Great and then maybe just two quick financial questions. So first on the Capex side any any any specific guidance you can give on Capex I think last time, you guys said, you expect to exceed $200 million and our gross margins is there any additional color you can provide just in terms of the drivers for the year.

Richard Dierker: Yeah. On the CapEx side, we have a slide in the analyst deck, and we actually put out a number. I think it was 212 off the top of my head, but it was $200 million plus for 2022, and it was $300 million. It was 216 in 2022, and it's plus $300 million in 2023 is what we're putting out there right now just for those capacity projects like laundry, litter, and vitamins. In terms of gross margin, I think the biggest thing on gross margin, and we've talked about how it's going to improve throughout the year, is really just when you take price. Well, let's talk about inflation. We have $150 million of inflation, right? So the simple math is when you do that, you're down like 300 basis points on margin.

Richard Dierker: Yeah. On the CapEx side, we have a slide in the analyst deck, and we actually put out a number. I think it was 212 off the top of my head, but it was $200 million plus for 2022, and it was $300 million. It was 216 in 2022, and it's plus $300 million in 2023 is what we're putting out there right now just for those capacity projects like laundry, litter, and vitamins. In terms of gross margin, I think the biggest thing on gross margin, and we've talked about how it's going to improve throughout the year, is really just when you take price. Well, let's talk about inflation. We have $150 million of inflation, right? So the simple math is when you do that, you're down like 300 basis points on margin.

Yes on the Capex side, we have a slide in the analyst deck, and we actually put out a number.

I think it was $2 12 off top my head, but it was 200 million plus.

For 2022, and it was $300 million it was $2 16 in 2022 and plus.

Plus 300 million in 2023 is what we're putting out there right now just for those.

Capacity projects like laundry litter and vitamins.

In terms of gross margin.

I think the biggest thing on gross margin and we've talked about how it's going to improve throughout the year is really just the.

When you take when you take price.

Well, let's talk about inflation, we have $150 million of inflation right. So the simple math is when you do that youre down like 300 basis points on margin.

Richard Dierker: But when you take price, even if you take price of $150 million to offset it, you only get a margin benefit of about 160 or 170 basis points because it impacts the top line and it impacts COGS. So I think, as I said before, gross margin improves throughout the quarter, and we'll exit the year with positive gross margin in Q4.

But when you take price, even if you take price of $150 million to offset it, you only get a margin benefit of about 160 or 170 basis points because it impacts the top line and it impacts COGS. So I think, as I said before, gross margin improves throughout the quarter, and we'll exit the year with positive gross margin in Q4.

But when you take price, even if you take price of 150 million to offset it you only get a margin benefit of about 160 or 170 basis points because it impacts.

The top line and impacts Cogs, So I think.

As I said before our gross margin improved throughout the quarter and we will exit the year with positive gross margin.

In Q4.

Rupesh Parikh: Thank you.

Rupesh Parikh: Thank you.

Thank you.

Mike Read: Okay. Thanks, Rupesh.

Michael Read: Okay. Thanks, Rupesh.

Okay. Thanks for your question.

Matthew Farrell: Thank you. Our next question comes from Andrea Teixeira with J.P. Morgan. Your line is open.

Operator: Thank you. Our next question comes from Andrea Teixeira with J.P. Morgan. Your line is open.

Our next question comes from Andrea Teixeira with Jpmorgan. Your line is open.

Andrea Teixeira: Thank you. Good morning, everybody. I just wanted to find, obviously, the M&A priority in your cash allocation. What are the areas that you're thinking there's still white spaces for you to go in organically? And then on the fine print on this, I appreciate, Rick, you're giving the margin bridge, but I believe you still have the benefit in the fourth quarter. You have, I believe, 30 basis points and for the full year, 20 basis points benefit from acquisitions. That is an additional, call it, 20 basis points for the year in terms of acquisitions. Thank you.

Andrea Teixeira: Thank you. Good morning, everybody. I just wanted to find, obviously, the M&A priority in your cash allocation. What are the areas that you're thinking there's still white spaces for you to go in organically? And then on the fine print on this, I appreciate, Rick, you're giving the margin bridge, but I believe you still have the benefit in the fourth quarter. You have, I believe, 30 basis points and for the full year, 20 basis points benefit from acquisitions. That is an additional, call it, 20 basis points for the year in terms of acquisitions. Thank you.

Thank you good morning, everybody.

Just one quick too fine.

Obviously, the M&A priority in your cash allocation.

Where are the areas.

Thank you and there is still white space for years to cycle in organic growth and then.

And then on the fine print on this I appreciate giving the.

Margin rates.

I believe you still have the benefit in the fourth quarter Youll have I believe 30 basis points for the full year 20 basis points benefit from acquisition like that is an additional call. It trying.

Any dates for the year will kind of go back to attention. Thank you.

Richard Dierker: Yeah. Thanks, Andrea. I'll do some of the margin discussion, and then Matt will answer the M&A question. I wasn't really given a margin bridge. I was just given an example on how price doesn't have the same margin impact as inflation would. I wasn't really guided to specific numbers there. But we're not going to get into the margin details because it's just more volatile than normal. So the guidance is that we're going to decline on gross margin for 2022.

Richard Dierker: Yeah. Thanks, Andrea. I'll do some of the margin discussion, and then Matt will answer the M&A question. I wasn't really given a margin bridge. I was just given an example on how price doesn't have the same margin impact as inflation would. I wasn't really guided to specific numbers there. But we're not going to get into the margin details because it's just more volatile than normal. So the guidance is that we're going to decline on gross margin for 2022.

Yeah. Thanks, Andrea I'll do some of the margin discussion in the Netherlands to the M&A question.

I wasn't really given a margin bridge I was just giving an example on on on how price it.

It doesn't have the same margin impact as inflation would I wasn't really guiding to specific numbers, there, but we're not going to get into the margin details because there's just more volatile than normal and so the guidance is that we are.

That we're going to decline on gross margin for 2022.

Mike Read: Yeah. And as far as acquisitions go, we've had this question from time to time, but okay, what categories are we interested in? And if you asked us that two years ago, I think we probably would not have come up with going into cold shortening or going into mouthwash. So what we do, because we have a competency in making so many different types of products in our manufacturing facilities, so we can put liquid in a bottle, we can make aerosols, we can put powder in a box, gels, etc. There's lots of things that we know how to make and can manage. So consequently, we throw a very wide net when we're looking at potential acquisitions. And we have a well-worn list of acquisitions that we went through in our pitch this morning, the five criteria, which does weed out a lot of categories.

Matthew Farrell: Yeah. And as far as acquisitions go, we've had this question from time to time, but okay, what categories are we interested in? And if you asked us that two years ago, I think we probably would not have come up with going into cold shortening or going into mouthwash. So what we do, because we have a competency in making so many different types of products in our manufacturing facilities, so we can put liquid in a bottle, we can make aerosols, we can put powder in a box, gels, etc. There's lots of things that we know how to make and can manage. So consequently, we throw a very wide net when we're looking at potential acquisitions. And we have a well-worn list of acquisitions that we went through in our pitch this morning, the five criteria, which does weed out a lot of categories.

Yeah, and as far as acquisitions go we've had this question from time to time, but okay. What categories are we interested in and if you asked us that two years ago.

I think we probably would not have come up with going into the color shortening or going into mouthwash.

So what we do because we have a competency in making so many different types of products in our manufacturing facilities. So we can put liquid in a bottle we can make aerosols we can put.

Powder in a box.

Gels et cetera, Theres, a lots of things that we know how to make and can manage so consequently, we throw a very wide net when we're looking at potential acquisitions and you know we have a well worn list of acquisitions that we went through in our pitch. This morning in the final criteria, which that those without a lot of categories, but we wouldn't.

Mike Read: But we wouldn't be able to call out, "Hey, here's a couple of categories we're looking for acquisitions, Andrea." Just our process doesn't work that way.

But we wouldn't be able to call out, "Hey, here's a couple of categories we're looking for acquisitions, Andrea." Just our process doesn't work that way.

We wouldn't be able to call out hey, here's here's a couple of categories. We're looking for for for acquisitions, Andrea just the process doesn't work that way.

Andrea Teixeira: Great. And that's Rick. I'll pass it on.

Andrea Teixeira: Great. And that's Rick. I'll pass it on.

Great and a quick question on them.

Mike Read: Okay. Thank you.

Matthew Farrell: Okay. Thank you.

Okay. Thank you.

Matthew Farrell: Our next question comes from Peter Grom with UBS. Your line is open.

Operator: Our next question comes from Peter Grom with UBS. Your line is open.

Our next question comes from Peter Grom with UBS. Your line is open.

Rupesh Parikh: Thanks. Good morning, everyone. So I was kind of hoping to drill down or get back to that slide that showed category growth that Kevin alluded to in his question earlier. I think you look back to 2017, 2019; it was kind of hovering around that 4% range, obviously accelerated a lot in 2022, and I think it showed up 6% in 2021. So I'm just curious, how do you see category growth unfolding as we move ahead? I know there's a lot of puts and takes. Some categories may be getting better. Some are probably getting worse. But what is the right category growth rate longer term as we move further away from this COVID environment?

Peter Grom: Thanks. Good morning, everyone. So I was kind of hoping to drill down or get back to that slide that showed category growth that Kevin alluded to in his question earlier. I think you look back to 2017, 2019; it was kind of hovering around that 4% range, obviously accelerated a lot in 2022, and I think it showed up 6% in 2021. So I'm just curious, how do you see category growth unfolding as we move ahead? I know there's a lot of puts and takes. Some categories may be getting better. Some are probably getting worse. But what is the right category growth rate longer term as we move further away from this COVID environment?

Thanks, and good morning, everyone. So I was kind of hoping to drill down or get back to that slide that showed category growth that Kevin alluded to in his question earlier I think you look back in 2017 in 2019, it was kind of hovering around that 4% range, obviously accelerated a lot in 'twenty, two and I think it showed up 6% in 'twenty one so I'm just curious.

But how do you see category growth unfolding as you move ahead, I know theres a lot of puts and takes some categories seem to be getting better or some is probably getting worse, but like what is the right category growth rate longer term as we move further away from this COVID-19 environment.

Mike Read: Yeah. Well, I can take a swing at that, but I'll just say historically, if you're referring to that particular slide, generally, are the categories that we're in. And remember, every company is different. So the organic growth rates are a function of what categories you're in. So we're different than lots of other companies, I'm sure that you follow. But historically, our average, if you took 2017, 2018, 2019, it's around 4%. Now, 2020 was gigantic, 12.5%, 6.5% in 2021. So it's going to float down over time. We expected we'd go back to around 4, 4.5%, but I think the expectation for 2022 would be higher than that. Now, Barry, anything you want to add to that?

Matthew Farrell: Yeah. Well, I can take a swing at that, but I'll just say historically, if you're referring to that particular slide, generally, are the categories that we're in. And remember, every company is different. So the organic growth rates are a function of what categories you're in. So we're different than lots of other companies, I'm sure that you follow. But historically, our average, if you took 2017, 2018, 2019, it's around 4%. Now, 2020 was gigantic, 12.5%, 6.5% in 2021. So it's going to float down over time. We expected we'd go back to around 4, 4.5%, but I think the expectation for 2022 would be higher than that. Now, Barry, anything you want to add to that?

Yeah, well I'm Barry can take a swing at that but I'll, just say historically, if you're referring to that particular slide generally are the categories that we're in I. Remember every company is different so the organic growth rates are a function of what categories. You are and so we're different than a lot of other companies I'm sure that you you follow but historically are.

Average if you took 17 18 19, it's around 4%.

Now 'twenty was gigantic 12, 5% six 5% in 'twenty, one so its going to float down over time, you would expect it would go back to around four 5%, but.

The expectation for 'twenty, two would be higher than that Barry anything you want to add to that.

Barry Bruno: Yeah. No, you got it right. Again, historically, Peter, 3-4% has been kind of the weighted average growth of the categories that we're in, obviously elevated in 2020, still high in 2021. There are a number of them that are going to benefit from some of the trends that I touched on, right? I look at vitamins as a new behavior that's more permanent, and we're in more and more households, and vitamins are overall, of course. So there's a few that'll continue to benefit, but I think there's a reversion to more normal levels as things return back to normal. So is that in the 4% range versus 6%? I think that's a safe assumption.

Barry Bruno: Yeah. No, you got it right. Again, historically, Peter, 3-4% has been kind of the weighted average growth of the categories that we're in, obviously elevated in 2020, still high in 2021. There are a number of them that are going to benefit from some of the trends that I touched on, right? I look at vitamins as a new behavior that's more permanent, and we're in more and more households, and vitamins are overall, of course. So there's a few that'll continue to benefit, but I think there's a reversion to more normal levels as things return back to normal. So is that in the 4% range versus 6%? I think that's a safe assumption.

No you got it right again, historically, Peter three 4% has been kind of a weighted average growth of the category is that rent obviously elevated in 2020 still high in 'twenty. One there are a number of them that are going to benefit from some of the trends that I touched on vitamins.

New behavior, that's more permanent and were in more and more households, and invite them into our overall of course, so theres a few that will continue to benefit but I think there is a reversion to more normal levels as things return back to normal so is that in the 4% range versus 6% I think that's a safe assumption.

Rupesh Parikh: Okay. Got it. That's super helpful. And then I just maybe like a follow-up on Zicam and kind of the underlying assumption around a normal and cold flu season. Is there a way to quantify how much of a benefit just a normal season would be in terms of your total company organic revenue growth? And is that included in your guidance already for 2022, or would that be a source of upside? Thanks.

Peter Grom: Okay. Got it. That's super helpful. And then I just maybe like a follow-up on Zicam and kind of the underlying assumption around a normal and cold flu season. Is there a way to quantify how much of a benefit just a normal season would be in terms of your total company organic revenue growth? And is that included in your guidance already for 2022, or would that be a source of upside? Thanks.

Okay got it that's super helpful. And then I guess, maybe like a follow up on <unk> and kind of the underlying assumption around like a normal and cold and flu season is there a way to.

How much of a benefit just a normal season will be in terms of our total company organic revenue growth is.

Is that included in your guidance already for 22 or would that be like a source of upside.

Mike Read: Yeah. Well, I'll give you a little bit of context on Zicam. It's number one in cold shortening. It's got a 76% share. But the recent trends are certainly encouraging. So if you looked at consumption in Q4 2021 versus 2020, it was up 21%. So it's a brand we bought for the long term and expected to—we do expect it to be a contributor to sales and profits in 2022. We wouldn't necessarily call out what the net sales number is for a particular brand.

Matthew Farrell: Yeah. Well, I'll give you a little bit of context on Zicam. It's number one in cold shortening. It's got a 76% share. But the recent trends are certainly encouraging. So if you looked at consumption in Q4 2021 versus 2020, it was up 21%. So it's a brand we bought for the long term and expected to—we do expect it to be a contributor to sales and profits in 2022. We wouldn't necessarily call out what the net sales number is for a particular brand.

Yes.

I'll give you a little bit of context on <unk> number one in colors shortening its got a 76% share.

But the recent trends are certainly encouraging so if you look at consumption in Q4, 'twenty one versus 'twenty. It was up 21%. So it is the brand. We brought we bought for the long term and expect it to we do expect it to be a contributor to sales and profits in 'twenty, two we wouldn't necessarily call out what the what the.

Net sales number is for a particular brand yes, I mean, we think it's going to get to be more like a normal flu season, but probably not all the way to bright yes, we're not going to get all the way back yeah.

Richard Dierker: Yeah. I mean, we think it's going to get to be more like a normal cold flu season, but probably not all the way to bright.

Richard Dierker: Yeah. I mean, we think it's going to get to be more like a normal cold flu season, but probably not all the way to bright.

Mike Read: Yeah. We're not going to get all the way back yet. I think that'll happen in 2023.

Matthew Farrell: Yeah. We're not going to get all the way back yet. I think that'll happen in 2023.

I think that'll happen in 'twenty three.

Rupesh Parikh: Okay. Awesome. Thank you for that, and best of luck.

Peter Grom: Okay. Awesome. Thank you for that, and best of luck.

Okay awesome. Thank you for that and best of luck.

Mike Read: Okay. Thank you.

Michael Read: Okay. Thank you.

Okay. Thank you.

Matthew Farrell: Thank you. Our next question comes from Bill Chappell with Truist. Your line is open.

Operator: Thank you. Our next question comes from Bill Chappell with Truist. Your line is open.

Thank you. Our next question comes from Bill Chapell with twist. Your line is open.

Richard Dierker: Thanks. Good morning.

Richard Dierker: Thanks. Good morning.

Thanks, Good morning.

Rupesh Parikh: Well.

Rupesh Parikh: Well.

Richard Dierker: Hey, just a few kind of quick ones. One, on pricing the 80% level, why isn't that 100% now? Just because it seems like everybody's pricing everything. And as we look forward over the next few months, will that number go to 100%, or is the next round of pricing more incremental pricing on the first 80%?

Bill Chappell: Hey, just a few kind of quick ones. One, on pricing the 80% level, why isn't that 100% now? Just because it seems like everybody's pricing everything. And as we look forward over the next few months, will that number go to 100%, or is the next round of pricing more incremental pricing on the first 80%?

Bill.

Hey, just a few.

Quick ones one on pricing.

The 80% level why isn't that 100% now just because it seems like everybody's pricing everything.

As we look forward over the next few months will that number go to a 100% or as the next round of pricing more incremental pricing on the first 80%.

Mike Read: Gee, Bill, that's very critical. I'm trying to be.

Matthew Farrell: Gee, Bill, that's very critical. I'm trying to be.

Sure Bill.

That's very critical.

Richard Dierker: I just—it was inquisitive.

Bill Chappell: I just—it was inquisitive.

Yes.

Yes.

Inquisitive.

Mike Read: Yeah. Yeah. Well, look, there are some things that we didn't raise price on in 2021 that we're looking ahead to price in 2022. We're not going to get all the way to 100%, but we expect to get above 80%. There's some categories that we haven't priced on. We just bought into the mouthwash category, right? That'd be one. Zicam is another one. We've owned that for a year, so we haven't taken price on that. But anything that we intend to take price on, we've already baked in. So you shouldn't be thinking that that's going to be all upside.

Matthew Farrell: Yeah. Yeah. Well, look, there are some things that we didn't raise price on in 2021 that we're looking ahead to price in 2022. We're not going to get all the way to 100%, but we expect to get above 80%. There's some categories that we haven't priced on. We just bought into the mouthwash category, right? That'd be one. Zicam is another one. We've owned that for a year, so we haven't taken price on that. But anything that we intend to take price on, we've already baked in. So you shouldn't be thinking that that's going to be all upside.

Yeah, Yeah, well look I know, there's some things that.

We didn't raise price on in.

In 'twenty one that we're looking ahead to price in 'twenty, two we're not going to get all the way to 100%, but we expect to get above above 80. Some categories that we haven't priced on we just bought into the mouthwash category and write that that'd be one. So ICANN is another one and we found that for a year. So we haven't taken price on that.

Anything that we intend to take price and we've already baked in so it's not you shouldn't be thinking that that's going to be all upside and there are some areas, where there hasnt been cost inflation. There are small, but there are scenarios, where that hasn't happened and you don't have a cost story to go back to retailers and a few a few brands like condoms for example, Latexes isn't rocket.

Richard Dierker: Right. There are some areas where there hasn't been cost inflation. They're small, but there are some areas where that hasn't happened, and you don't have the cost to go back to retailers on a few brands.

Richard Dierker: Right. There are some areas where there hasn't been cost inflation. They're small, but there are some areas where that hasn't happened, and you don't have the cost to go back to retailers on a few brands.

Mike Read: Yeah. Like condoms, for example. Latex isn't rocketing.

Matthew Farrell: Yeah. Like condoms, for example. Latex isn't rocketing.

Richard Dierker: Right. But I would say overall, we expect that 80% to go a little bit higher, and we also expect to revisit price increases we've already made.

Richard Dierker: Right. But I would say overall, we expect that 80% to go a little bit higher, and we also expect to revisit price increases we've already made.

Right, but I would say overall, we expect the 80% to go a little bit higher and we also expect.

Revisit price increases we've already made.

Mike Read: Yeah. Got it. Well, on the line of inquisitive, not critical, I get this is a normal practice every year of you have tax benefits or other benefits, and you plow it back into marketing in kind of Q3 and Q4. But why does that make sense in this year's Q4 when you're having low fill rates to put more into marketing, which would seem to exacerbate the issue?

Bill Chappell: Yeah. Got it. Well, on the line of inquisitive, not critical, I get this is a normal practice every year of you have tax benefits or other benefits, and you plow it back into marketing in kind of Q3 and Q4. But why does that make sense in this year's Q4 when you're having low fill rates to put more into marketing, which would seem to exacerbate the issue?

Got it on the line of inquisitive not critical.

I get the this is a normal practice every year have you have tax benefits or other benefits and plow it back into marketing and kind of third and fourth quarter, but why does it makes sense in this year's fourth quarter, when you're having low fill rates to put more into marketing, which would seem to exacerbate the issue.

Richard Dierker: Yeah. Well, there were certain brands, particularly personal care, that we decided to put more money behind where our fill rates weren't as bad. They might have been neglected earlier in the year. So Batiste would be one of those. Waterpik would be another. And even TheraBreath, even though we own them just for a week or so, we spent money behind that because we wanted to get that off to a good start. So we plowed some money behind that late December.

Richard Dierker: Yeah. Well, there were certain brands, particularly personal care, that we decided to put more money behind where our fill rates weren't as bad. They might have been neglected earlier in the year. So Batiste would be one of those. Waterpik would be another. And even TheraBreath, even though we own them just for a week or so, we spent money behind that because we wanted to get that off to a good start. So we plowed some money behind that late December.

Yes.

There were certain brands, particularly personal care that we decided to perform money.

Behind where our fill rates were not as bad that might've been neglected earlier in the year. So batiste.

Would be would be one of those water pik would be another uneven Sarah breath, even though we own just for a week or so we spend money behind that because we want to get that off to a good start. So we put some money behind that late December .

Mike Read: Got it. So it was more selective in kind of how you reinvested that money.

Bill Chappell: Got it. So it was more selective in kind of how you reinvested that money.

Got it so it was more selective and kind of how you reinvest that money.

Richard Dierker: Yeah. Right. It wasn't peanut butter. It was very targeted.

Richard Dierker: Yeah. Right. It wasn't peanut butter. It was very targeted.

Yeah right. It wasn't peanut butter was very targeted got it and then lastly, just on the capacity expansions you have talked about I mean, I understand especially on vitamins it takes longer but it would seem that especially for something like cat litter and maybe for detergent.

Mike Read: Got it. And then last, just on the capacity expansions you've talked about, I mean, I understand, especially on vitamins, it takes longer, but it would seem that especially for something like cat litter and maybe for detergent, the York facility could be expanded fairly quickly and that you could have the capacity by mid-year or sometime this year. Is that not the right way? Does it take that much longer?

Bill Chappell: Got it. And then last, just on the capacity expansions you've talked about, I mean, I understand, especially on vitamins, it takes longer, but it would seem that especially for something like cat litter and maybe for detergent, the York facility could be expanded fairly quickly and that you could have the capacity by mid-year or sometime this year. Is that not the right way? Does it take that much longer?

The euro facility could be expanded fairly quickly and that you could have those expect the capacity by mid year or sometime this year is that not the right way as does it take that much longer.

Richard Dierker: Yeah. I would say in general, Bill, it takes about 18 months for a capacity project. You're right. We have available space in the network, not necessarily just York, but in the network. Those capital projects are running into the same things that are happening all over the globe in macroeconomy in terms of labor availability and timing of machinery and stuff like that. Rick Spahn, anything you have to add on that one?

Richard Dierker: Yeah. I would say in general, Bill, it takes about 18 months for a capacity project. You're right. We have available space in the network, not necessarily just York, but in the network. Those capital projects are running into the same things that are happening all over the globe in macroeconomy in terms of labor availability and timing of machinery and stuff like that. Rick Spahn, anything you have to add on that one?

Yes, I would say in general Bill It takes about 18 months for a capacity project.

And Youre right, we have available space in the network not necessarily just York, but in the network, but those capital projects are running into the same things that are happening all over the globe and macro economy in terms of labor availability and timing of.

Machinery and stuff like that Rick respond anything you have to add on that one.

Rupesh Parikh: Yeah. The only thing I would add, thanks, Rick, is that in some cases, we're doing capacity increases on top of capacity increases. I mean, our litter volume growth has been explosive, and so we're pouring more money into capacity increases there. So that's part of the dynamic. And then the other piece of it is just what Rick said. Our lead times on equipment that we're purchasing for these capacity increases have increased pretty dramatically versus what they were pre-COVID because those supply chains are also impacted.

Rick Spann: Yeah. The only thing I would add, thanks, Rick, is that in some cases, we're doing capacity increases on top of capacity increases. I mean, our litter volume growth has been explosive, and so we're pouring more money into capacity increases there. So that's part of the dynamic. And then the other piece of it is just what Rick said. Our lead times on equipment that we're purchasing for these capacity increases have increased pretty dramatically versus what they were pre-COVID because those supply chains are also impacted.

Yes, the only thing I would add thanks, thanks, Rick.

Is that.

Some cases were doing capacity increases on top of capacity increases I mean, our litter volume.

Volume growth has been explosive and and so we're putting more money into the capacity increases there. So.

So that's.

That's part of the dynamic and then the other piece of it is just what Rick said, our lead times on equipment that we're purchasing for these capacity increases have increased pretty dramatically versus what they were pre COVID-19 because.

Those supply chains are also impacted.

Mike Read: Got it. Thanks so much.

Bill Chappell: Got it. Thanks so much.

Got it thanks.

Thanks, so much.

Richard Dierker: Thanks, Bill.

Richard Dierker: Thanks, Bill.

Thanks Bill.

Matthew Farrell: Thank you. Our next question comes from Kaumil Gajrawala with Credit Suisse. Your line is open.

Operator: Thank you. Our next question comes from Kaumil Gajrawala with Credit Suisse. Your line is open.

Thank you. Our next question comes from <unk> <unk> with Credit Suisse. Your line is open.

[Company Representative] (Church & Dwight Co.): Hey, guys. Good afternoon. A little bit more maybe on the impact of supply constraints. Looks like your fill rates were still quite reasonable, and maybe just inventories are low. But was there any impact on your top line from lack of supply anywhere?

Kaumil Gajrawala: Hey, guys. Good afternoon. A little bit more maybe on the impact of supply constraints. Looks like your fill rates were still quite reasonable, and maybe just inventories are low. But was there any impact on your top line from lack of supply anywhere?

Hey, guys.

Good afternoon.

A little bit more maybe.

The impact of supply constraints. It looks like your fill rates were still quite reasonable and maybe just inventories are low.

But was there any impact on your top line from lack of supply anywhere.

Richard Dierker: Yeah. Certainly. I think we've been pretty clear these last few quarters that when you look at shipment to consumption, right, our consumption in Q4 was anywhere between 6% and 7%, and our domestic organic rate was 3.5%. And so that's been a pretty consistent gap these last few quarters. That's also why we think we're going to have a high range in 2022. As the supply chain improves, and Matt and Rick both commented on how that's going to sequentially improve through the year, that's also going to be a tailwind next year.

Michael Read: Yeah. Certainly. I think we've been pretty clear these last few quarters that when you look at shipment to consumption, right, our consumption in Q4 was anywhere between 6% and 7%, and our domestic organic rate was 3.5%. And so that's been a pretty consistent gap these last few quarters. That's also why we think we're going to have a high range in 2022. As the supply chain improves, and Matt and Rick both commented on how that's going to sequentially improve through the year, that's also going to be a tailwind next year.

Yes, certainly I think we've been pretty clear. These last few quarters that when you look at shipping to consumption right are our consumption in Q4 was anywhere between 6% to 7%.

And our domestic organic.

Rate was three 5% and so that's been a pretty pretty consistent GAAP. These last few quarters. That's also why we think we're going to have a high.

High range in 2022, I guess, the supply chain improves and Madden respond both commented on how thats going to sequentially improve through the year. That's also going to be a tailwind next year. Yeah. So it's a short story is that we did leave money on the table because of difficulties with getting supply.

Mike Read: Yeah. So the short story is that we did leave money on the table because of our difficulties with getting supply.

Richard Dierker: Yeah. So the short story is that we did leave money on the table because of our difficulties with getting supply.

[Company Representative] (Church & Dwight Co.): Got it. And then on capacity, are there, I guess, particularly for vitamins, these are your own facilities now, or is it CapEx going into something you might need to contribute to a co-packer or something? And then if you're willing to kind of share, what sort of underlying growth are you expecting for that category within the context of the decision to spend more to increase capacity?

Kaumil Gajrawala: Got it. And then on capacity, are there, I guess, particularly for vitamins, these are your own facilities now, or is it CapEx going into something you might need to contribute to a co-packer or something? And then if you're willing to kind of share, what sort of underlying growth are you expecting for that category within the context of the decision to spend more to increase capacity?

Got it and then on capacity are there I guess, particularly for vitamins is.

These are your own facilities now or is it capex going into something you might need to contribute to a co packer or something.

And then if you're willing to kind of share.

What some sort of what's sort of underlying growth are you expecting for that category within the context of the decision to spend more to increase capacity.

Richard Dierker: Yeah. So the capital that we're contributing is actually internal capacity for gummy manufacturing. We're also working with third-party manufacturers to increase our capacity, but no capital contributions there. The growth rate, if you look back, right, when we bought this business, the percent of gummies for hard pills in the total vitamin category was 3%. Now we're in the 20s. And we have long-term visions that that's going to continue to go to the 30s and 40s over time. So we think that growth rate is high, is what I would tell you.

Richard Dierker: Yeah. So the capital that we're contributing is actually internal capacity for gummy manufacturing. We're also working with third-party manufacturers to increase our capacity, but no capital contributions there. The growth rate, if you look back, right, when we bought this business, the percent of gummies for hard pills in the total vitamin category was 3%. Now we're in the 20s. And we have long-term visions that that's going to continue to go to the 30s and 40s over time. So we think that growth rate is high, is what I would tell you.

Yeah. So the capital that we're contributing is actually internal capacity for gummy manufacturing. We're also working with third party manufacturers to increase our capacity, but no capital contributions there.

The growth rate if you look back right. When we bought this business the percent of gummies.

For hard pills and the total vitamin category was 3% now we are in the Twenty's and we have long term vision to that's going to continue to go to the $30 40 as over time. So we think that growth rate as high as what I would tell you.

Mike Read: Yeah.

Matthew Farrell: Yeah.

Richard Dierker: Got it. Thank you.

Kaumil Gajrawala: Got it. Thank you.

Got it thank you.

Matthew Farrell: Thank you. Our next question comes from Lauren Lieberman with Barclays. Your line is open.

Operator: Thank you. Our next question comes from Lauren Lieberman with Barclays. Your line is open.

Thank you. Our next question comes from Lauren Lieberman with Barclays. Your line is open.

Andrea Teixeira: Thanks. Good morning. I had two questions. One was just in terms of retailer reaction to still some of these supply chain challenges that you've been having. And I think during Q3, you talked about kind of pulling very rationally pulling some of the promotional support because of those lower, not wanting to exacerbate the supply-demand issues. So just curious about kind of retailer reaction because it seems like some of your supply issues maybe at this point are a bit worse than what you're seeing from some competitors in your category. So I was curious about that was one. And then the second thing was, and I apologize if I missed this, the 7% price mix in the quarter for consumer domestic, how much of that was lower promotion versus list? Because if I just think about that, was it 50% pricing?

Lauren Lieberman: Thanks. Good morning. I had two questions. One was just in terms of retailer reaction to still some of these supply chain challenges that you've been having. And I think during Q3, you talked about kind of pulling very rationally pulling some of the promotional support because of those lower, not wanting to exacerbate the supply-demand issues. So just curious about kind of retailer reaction because it seems like some of your supply issues maybe at this point are a bit worse than what you're seeing from some competitors in your category. So I was curious about that was one. And then the second thing was, and I apologize if I missed this, the 7% price mix in the quarter for consumer domestic, how much of that was lower promotion versus list? Because if I just think about that, was it 50% pricing?

Thanks, Good morning, I just had.

Two questions one why is.

In terms of retailer reaction to fill some of these supply chain challenges that <unk> been having and I think during <unk>, you talked about kind of points very rationally pulling some of the promotional support.

Because of those lower not wanting to exacerbate the supply demand issue. So just curious what kind of retailer reaction.

Seems like some of your supply issues, maybe at this point are a bit worse than what youre seeing from some from competitors in your category. So I was curious that that was one.

And then the second thing was and I apologize if I missed this the 7% price mix in the queue.

Quarter for consumer domestic how much of that was lower promotion versus list because if I just think about that was it 50% pricing that we're going to 80 or are we going into double digit pricing in 'twenty. Two when we look at the P&L or again is that with some of that just lower promotion and more a matter of timing.

Andrea Teixeira: So if we're going to 80, are we going into double-digit pricing in 2022 when we look at the P&L? Or again, was some of that just lower promotion and more a matter of timing? Thanks.

So if we're going to 80, are we going into double-digit pricing in 2022 when we look at the P&L? Or again, was some of that just lower promotion and more a matter of timing? Thanks.

Richard Dierker: Yeah. Maybe I'll take that one first. So we'll give the, Paul, you can respond to the question about retailers, but you're up first, Rick. Okay. So the positive price mix in the quarter was, remember, 50% of the pricing activity has happened, but there is also lower trade spending, lower promotional spending in that number as well. In 2022, we tried to dimensionalize it on an earlier question, and I had said that the 4.5% organic was really 5.5% price mix favorability throughout the year. So hopefully, that can give you a sense of what it is. We said in the release also, Lauren, that we do expect to be spending back more on trade in the back half of this year as our supply chain normalizes. But Paul, any retail supply constraint color you want to give?

Richard Dierker: Yeah. Maybe I'll take that one first.

Yes, maybe I'll take that one first so I will give the Paul you can you can respond to the question about retailers, but Europe first Rick Okay.

Matthew Farrell: So we'll give the, Paul, you can respond to the question about retailers, but you're up first, Rick.

Richard Dierker: Okay. So the positive price mix in the quarter was, remember, 50% of the pricing activity has happened, but there is also lower trade spending, lower promotional spending in that number as well. In 2022, we tried to dimensionalize it on an earlier question, and I had said that the 4.5% organic was really 5.5% price mix favorability throughout the year. So hopefully, that can give you a sense of what it is. We said in the release also, Lauren, that we do expect to be spending back more on trade in the back half of this year as our supply chain normalizes. But Paul, any retail supply constraint color you want to give?

So the positive price mix in the quarter was but remember 50% of the pricing activity has happened.

But there is also lower trade spending and lower promotional spending and that number as well.

In 2022, we tried to dimensionalize. It on an earlier question and I had said that the four 5% organic was really five 5% price mix favorability throughout the year.

So hopefully that can give you a sense of what it is.

And we've said in the release also Lauren that we do expect to be spending back more on trade in the back half of this year as our supply chain normalizes, but Paul any retail.

Supply constraint.

Paul Wood: Yeah. Lauren, it's a good question. And I think the difference that we're getting ahead of now is the partnership with Rick Spahn's organization and my sales organization to sit with some of these key retailers and give them a more transparent overview. And in some cases, that meant we couldn't commit to maybe some further out promotions for those retailers that need longer lead times and promotion just because of the uncertainty and that inconsistency. I won't comment on competitiveness and where others are. Candidly, it's a little different across, you can imagine all the categories we play in. But I would say the partnership, the communication, and communication, I mean more weekly and biweekly communication, which normally doesn't happen. So if anything, we've tightened at least the understanding and the trust, if you will, between us and the retailers.

Paul Wood: Yeah. Lauren, it's a good question. And I think the difference that we're getting ahead of now is the partnership with Rick Spahn's organization and my sales organization to sit with some of these key retailers and give them a more transparent overview. And in some cases, that meant we couldn't commit to maybe some further out promotions for those retailers that need longer lead times and promotion just because of the uncertainty and that inconsistency. I won't comment on competitiveness and where others are. Candidly, it's a little different across, you can imagine all the categories we play in. But I would say the partnership, the communication, and communication, I mean more weekly and biweekly communication, which normally doesn't happen. So if anything, we've tightened at least the understanding and the trust, if you will, between us and the retailers.

Color you want to guess.

Yes, Lauren it's good question and I think the difference that we're getting ahead of now is the partnership with Rick's bonds organization and my sales organization to sit with some of these key retailers and give them a more transparent overview.

Some cases that meant we couldnt commit to maybe some further out promotions for those retailers that need longer lead times and promote just because of the uncertainty in that inconsistency.

Comment on competitiveness, and where others are candidly, it's a little different across you can imagine all of the categories. We play in but I would say.

The partnership the communication and communication I mean, more weekly and biweekly communication, which normally doesn't happen. So if anything we've tightened the at least the understanding and the trust. If you will between us and the retailers that could kind of help to the burdens and the fines and fees and those discussions but really.

Paul Wood: That could kind of help the burdens and the fines and fees and those discussions. But really, we want to be upfront and make sure that we're not holding them out to dry with a promotion or an end cap, and just being transparent. So not easy conversations, Lauren. I don't want you to misinterpret. But yeah, I'd say transparency would probably be the word of choice to answer your question simply.

That could kind of help the burdens and the fines and fees and those discussions. But really, we want to be upfront and make sure that we're not holding them out to dry with a promotion or an end cap, and just being transparent. So not easy conversations, Lauren. I don't want you to misinterpret. But yeah, I'd say transparency would probably be the word of choice to answer your question simply.

We want to be upfront and make sure that we're not holding them out to dry with a promotion or an end cap and just being transparent so not easy conversations Loren and I don't want you to misinterpret, but yes.

Yes, I'd say transparency would probably be the word of the choice to answer your question simply.

Andrea Teixeira: Okay. That's great. Thanks so much. I appreciate it.

Lauren Lieberman: Okay. That's great. Thanks so much. I appreciate it.

Okay. That's great. Thanks, so much I appreciate it.

Paul Wood: Thanks, Lauren.

Matthew Farrell: Thanks, Lauren.

Thanks Lauren.

Matthew Farrell: Thank you. Ladies and gentlemen, that concludes the Q&A. I will now turn the call back to Mr. Farrell.

Operator: Thank you. Ladies and gentlemen, that concludes the Q&A. I will now turn the call back to Mr. Farrell.

Thank you and ladies and gentlemen that concludes the Q&A I will now turn the call back to Mr. <unk>.

Mike Read: Hey. Thanks, everybody, for joining us. We had a spectacular 2021 and hope to have another good one in 2022. We'll talk to everybody at the end of April after Q1. So thanks for joining us today.

Matthew Farrell: Hey. Thanks, everybody, for joining us. We had a spectacular 2021 and hope to have another good one in 2022. We'll talk to everybody at the end of April after Q1. So thanks for joining us today.

Hey, thanks to everybody for joining us we had a spectacular in 'twenty, one and hope to have another good one and 'twenty two and we'll talk to everybody at the end of April after Q1, so thanks for joining us today.

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