Q2 2024 Colgate Palmolive Co Earnings Call

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Unknown Executive: Good morning. Welcome to today's Colgate Palmolive second quarter 2024 earnings conference call. This call is being recorded and is being simulcast live at www.colgatepalmolive.com. Now for opening remarks, I'd like to turn this call over to Chief Investor Relations Officer and Executive Vice President, M&A, John Faucher.

Unknown Executive: Welcome to today's Colgate-Palmolive second quarter 2024 earnings conference call. This call is being recorded and is being simled cast live at www.colgatepalmolive.com.

Speaker Change: Good morning. Welcome to today's Colgate Palmolive second quarter 2024 earnings conference call.

John Faucher: This call is being recorded and is being simulcast live at www.colgatepalmolive.com. Now for opening remarks, I'd like to turn this call over to Chief Investor Relations Officer and Executive Vice President M&A John Faucher.

John Faucher: Now, for opening your marks, I'd like to turn this call over to Chief Investor Relations Officer and Executive Vice President, MNA, John Faucher.

Unknown Executive: Thanks, Drew.

John Faucher: Good morning, and welcome to our second quarter 2024 earnings release conference call. This is John Faucher.

John Faucher: Good morning and welcome to our second quarter 2024 earnings release conference call. This is John Faucher. Today's conference call will include forward-looking statements. Actual results could differ materially from these statements.

John Faucher: Thanks, Drew. Good morning, and welcome to our second quarter 2024 earnings release conference call. This is John Faucher. Today's conference call will include forward-looking statements. Actual results could differ materially from these statements.

John Faucher: Today's conference call will include forward-looking statements, and actual results could differ materially from these statements. Please refer to the second quarter 2024 earnings press release and related prepared materials and our most recent filings with the SEC, including our 2023 annual report on Form 10-K and subsequent SEC filings, all available on Colgate's website, for a discussion of the factors that could cause actual results to differ materially from these statements. This conference call will also include a discussion of non-GAAP financial measures, including those identified in Tables 4, 6, 7, 8, and A full reconciliation to the Corresponding Gap Financial Measures is included in the second quarter 2024 earnings press release and is available on Colgate's website.

John Faucher: Please refer to the second quarter 2024 earnings press release and related prepared materials and our most recent filings with the SEC, including our 2023 annual report on Form 10-K and subsequent SEC filings, all available on Colgate's website for discussion of the factors that could cause actual results to differ materially from these statements. This conference call will also include a discussion of non-GAAP financial measures, including those identified in tables 4, 6, 7, 8, and 9 of the earnings press release. A full reconciliation to the corresponding gap financial measures is included in the second quarter 2024 earnings press release and is available on Colgate's website.

John Faucher: Please refer to the second quarter 2024 earnings press release and related prepared materials.

John Faucher: and our most recent filings with the FEC.

John Faucher: including our 2023 annual report on Form 10-K and subsequent SEC filings, all available on Colgate's website, for a discussion of the factors that could cause actual results to differ materially from these statements.

John Faucher: This conference call will also include a discussion of non-GAAP financial measures, including those identified in Tables 4, 6, 7, 8, and 9 of the Earnings Press Release.

John Faucher: A full reconciliation to the corresponding GAAP financial measures is included in the second quarter 2024 earnings press release and is available on Colgate's website.

John Faucher: Joining me on the call this morning are Noel Wallace, Chairman, President, and Chief Executive Officer, and Stan Satula, Chief Financial Officer. Noel will provide you with some thoughts on our Q2 results and our 2024 outlook.

John Faucher: Joining me on the call this morning are Noel Wallace, Chairman, President, and Chief Executive Officer, and Stan Sutula, Chief Financial Officer. Noel will provide you with some thoughts on our Q2 results and our 2020 Outlook. We will then open it up for Q&A.

Speaker Change: Joining me on the call this morning are Noel Wallace, Chairman, President, and Chief Executive Officer, and Stan Sutula, Chief Financial Officer.

John Faucher: We will then open it up for Q&A.

Speaker Change: Noel will provide you with some thoughts on our Q2 results and our 2024 outlook. We will then open it up for Q&A. Noel? Thanks, John , and thanks for joining us this morning, and I look forward to taking your questions in regards to our strong Q2 results.

Noel Wallace: Noel, thanks John, and thanks for joining us this morning. I look forward to taking your questions in regards to our strong Q2 results. As part of our ambition to deliver consistent compounded earnings growth, we have talked about the importance of driving balanced organic sales growth, all six divisions, all four categories, and with a combination of volume and pricing growth. We have rebranded our innovation model, leveraged our global strength across price tiers, invested in marketing spend, and scaled new exciting capabilities across the organization, all of which is driving brand health and household penetration. This is particularly important given the pricing we have taken over the past few years.

Noel R. Wallace: Noel? Thanks, John, and thanks for joining us this morning, and I look forward to taking your questions in regards to our strong Q2 results. As part of our ambition to deliver consistent compounded earnings growth, we have talked about the importance of driving balanced organic sales growth across all six divisions, all four categories, and with a combination of volume and pricing growth. We have revamped our innovation model, leveraged our global strength across price tiers, invested in marketing spend, and scaled new exciting capabilities across the organization, all of which is driving brand health and household penetration.

Speaker Change: As part of our ambition to deliver consistent, compounded earnings growth, we have talked about the importance of driving balanced organic sales growth, all six divisions, all four categories, and with a combination of volume and pricing growth.

Noel R. Wallace: We have revamped our innovation model, leveraged our global strength across price tiers, invested in marketing spend, and scaled new exciting capabilities across the organization.

Noel R. Wallace: This is particularly important given the pricing we have taken over the past few years. Our return to mid-single-digit volume growth this quarter, including growth at both Hills and Holly and Hazel, highlights some early success with this strategy. And this is well-timed.

Noel R. Wallace: All of which is driving brand health and household penetration.

Noel Wallace: Our return to mid single digit volume growth is quarter, including growth at both Hills and Holly and Hazel highlights some early success from this strategy. And this is well timed. We are returning to strong volume growth as gross margins are expanding, which will drive the incremental gross profit that funds the investment in brands and capabilities while still delivering compelling bottom-line growth. We are also using data and analytics tools, including AI, to track the effectiveness of these activities as we look to further optimize the return on our increased spending. This is a topic we will be discussing more over time.

Noel R. Wallace: This is particularly important given the pricing we have taken over the past few years.

Noel R. Wallace: Our return to mid-single-digit volume growth this quarter, including growth at both Hills and Holly and Hazel, highlights some early success from this strategy.

Noel R. Wallace: We are returning to strong volume growth as gross margins are expanding, which will drive the incremental gross profit that funds the investment in brands and capabilities while still delivering compelling bottom-line growth. We're also using data and analytics tools, including AI, to track the effectiveness of these activities as we look to further optimize the return on our increased spending. This is a topic we'll be discussing more over time. With this combination of increased penetration and the continued success of our revenue growth management strategy, we have the plans in place to drive consistent, balanced top-line growth.

Noel R. Wallace: And this is well-timed. We are returning to strong-volume growth as gross margins are expanding, which will drive the incremental gross profit that funds the investment in brands and capabilities while still delivering compelling bottom-line growth.

Noel R. Wallace: We're also using data and analytics tools, including AI, to track the effectiveness of these activities as we look to further optimize the return on our increased spending.

Noel Wallace: With this combination of increased penetration and the continued success of our revenue growth management strategy, we have the plans in place to drive consistent, balanced top line growth. We combine that with the benefits of operating leverage, productivity, and cost discipline to turn that into consistent compounded earnings for share growth. Along with strong cash flow to fund investment, dividends, and share repurchases, we believe this leaves us well positioned to drive top tier TSR. Our recent results show the strength and effectiveness as we continue to execute against this strategy.

Noel R. Wallace: This is a topic we'll be discussing more over time.

Noel R. Wallace: With this combination of increased penetration and the continued success of our revenue growth management strategy, we have the plans in place to drive consistent, balanced, top-line growth.

Noel R. Wallace: We combine that with the benefits of operating leverage, productivity, and cost discipline to turn that into consistent, compounded earnings for share growth. Along with strong cash flow to fund investment, dividends, and share repurchases, we believe this leaves us well positioned to drive top-tier TSR. Our recent results show the strength and effectiveness as we continue to execute against this strategy.

Noel R. Wallace: We combine that with the benefits of operating leverage, productivity, and cost discipline to turn that into consistent, compounded earnings for share growth.

Noel R. Wallace: along with strong cash flow to fund investment, dividends, and share repurchases.

Noel R. Wallace: We believe this leaves us well positioned to drive top-tier TSR.

Noel R. Wallace: Our recent results show the strength and effectiveness as we continue to execute against this strategy.

John Faucher: And with that, I'll open it up to questions. We will now begin the question and answer session. To ask a question, you may press star, then one on your touch tone phone. To withdraw your question, please press star, then two. Please limit yourself to one question. If you have further questions, you may re-enter the question queue. Once again, if you would like to ask a question, please press star, then two.

Unknown Executive: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. To withdraw your question, please press star then 2. Please limit yourself to one question. If you have further questions, you may re-enter the question queue. Once again, if you would like to ask a question, please press star then 1. The first question comes from Peter Grom with UBS. Please go ahead.

Speaker Change: And with that, I'll open it up to questions.

Speaker Change: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. To withdraw your question, please press star then 2.

Speaker Change: Please limit yourself to one question.

Speaker Change: If you have further questions, you may re-enter the question queue. Once again, if you would like to ask a question, please press star then 1.

Peter Graham: The first question comes from Peter Graham with UBS. Please go ahead.

Speaker Change: The first question comes from Peter Grom with UBS. Please go ahead.

Peter Graham: Thank you, operator, and good morning, everyone. No, I was hoping you could give us a deeper understanding of the levels of investment and what drives the confidence that the changes you've made over the past several years can sustain this improvement we've seen. Obviously, from an outsider's perspective, it seems to be working, given the market shares and the mid single-digit volume growth today.

Peter K. Grom: Thank you, operator. And good morning, everyone.

Noel R. Wallace: Noel, I was hoping you could give us a deeper understanding of the levels of investment and what drives the confidence that the changes you've made over the past several years can sustain this improvement we've seen. Yeah, obviously, from an outsider's perspective, it seems to be working given the market shares and the mid single-digit volume growth today. But just as you look ahead, how do you sustain this momentum and continue to build household penetration from here?

Peter K. Grom: Thank you, operator. And good morning, everyone. Noel, I was hoping you could give us

Peter K. Grom: A deeper understanding of the levels of investment and what drives the confidence that the changes you've made over the past several years.

Speaker Change: can sustain this improvement we've seen. Yeah, obviously from an outsider's perspective, it seems to be working given the market shares and the mid-single-digit volume growth today. But just as you look ahead, how do you sustain this momentum and continue to build household penetration from here? Thanks.

Peter Graham: But just as you look ahead, how do you sustain this momentum and continue to build household penetration from here? Thanks.

Unknown Executive: Yeah, thanks, Peter. And, first of all, happy birthday. Happy birthday, Peter.

Noel Wallace: Yeah, thanks, Peter.

Noel Wallace: And first of all, happy birthday. Happy birthday, Peter. So let's get into the heart of the strategy, which I think we've been pretty consistently communicating over the past few years. And that's really getting the middle of that PNL in a place where we could have a lot more flexibility to invest behind the brands, and that investment certainly is helping to drive the strong volume performance. And so, more importantly, household penetration, which also drives category growth and market shares. So it's keeping that flexibility in the middle of the P&L, allowing us to pinpoint the advertising in areas where we see real growth.

Speaker Change: Yeah, thanks, Peter. And first of all, happy birthday. Happy birthday, Peter. Happy birthday, Peter.

Noel R. Wallace: So let's get into the heart of the strategy, which I think we've been pretty consistently communicating over the past few years. And that's really getting the middle of that P&L in a place where we can have a lot more flexibility to invest behind the brands. And that investment certainly is helping to drive strong volume performance and, more importantly, household penetration, which also drives category growth in market shares. So it's keeping that flexibility in the middle of the P&L, allowing us to pinpoint advertising in areas where we see real growth.

Speaker Change: So let's get into the heart of the strategy, which I think we've been pretty consistently communicating over the past few years.

Speaker Change: and that's really...

Speaker Change: Getting the middle of that P&L

Speaker Change: in a place where we could have a lot more flexibility to invest behind the brands. And that investment certainly is helping to drive

Speaker Change: The Strong Volume Performance, and more importantly, Household Penetration, which also drives category growth in market shares.

Speaker Change: It's keeping that flexibility in the middle of the P&L, allowing us to pinpoint the advertising in areas where we see real growth.

Noel Wallace: The international exposure of our business obviously is giving us opportunities to allocate money in regions and areas where we see great growth opportunities. And that was delivered in the corner in the quarter with category growth across all of our categories and all of our divisions. So keeping that investment levels where they are, continuing to find ways to drive the effectiveness of that investment likewise is very important. As I've mentioned before, and as you saw down at Cagney, we're using AI and other tools to really drive improved ROI. We're getting much better at our innovation. That's certainly helping drive that consistent growth around the world.

Noel R. Wallace: The international exposure of our business is obviously giving us opportunities to allocate money to regions and areas where we see great growth opportunities. And that was delivered in the quarter with category growth across all of our categories and all of our divisions. So keeping investment levels where they are, and continuing to find ways to drive the effectiveness of that investment, likewise, is very important. As I've mentioned before, and as you saw down at Cagney, we're using AI and other tools to really drive improved ROI.

Speaker Change: The international exposure of our business obviously is giving us opportunities to allocate money in regions and areas where we see great growth opportunities. And that was delivered in the quarter with category growth across all of our categories and all of our divisions.

Speaker Change: So, keeping that investment levels where they are, continuing to find ways to drive the effectiveness of that investment, likewise, is very important.

Speaker Change: As I've mentioned before, and as you saw down in Cagney, we're using AI and other tools to really drive improved ROI.

Noel R. Wallace: We're getting much better at our innovation. That's certainly helping drive that consistent growth around the world. And the execution of the strategy, we think, is far better than it had been in previous years. So overall, keeping the flex in the middle of the P&L, strong gross margins, and allocating that in areas around the world where we're seeing real opportunities for growth, we think will drive sustained, consistent compounded growth moving forward.

Noel Wallace: And the execution of the strategy we think is far better than it had been in previous years. So overall, keeping the flex in the middle of the PNL, strong growth margins, and allocating that in areas around the world where we're seeing real opportunities for growth. We think we'll drive sustained, consistent compounded growth moving forward.

Speaker Change: We're getting much better at our innovation. That's certainly helping drive that consistent growth around the world.

Speaker Change: and the execution of the strategy, we think, is far better than it had been in previous years. So, overall, keeping the flex in the middle of the P&L, strong gross margins.

Speaker Change: and allocating that in areas around the world where we're seeing real opportunities for growth we think will drive sustained, consistent compounded growth moving forward.

Daria Mohsenian: The next question comes from Daria Mosinion with Morgan Stanley. Please go ahead.

Unknown Executive: The next question comes from Darya Mohsenian with Morgan Stanley. Please go ahead.

Speaker Change: The next question comes from...

Speaker Change: Darya Mohsenian with Morgan Stanley . Please go ahead.

Daria Mohsenian: Hey guys. You know, so just wanted to focus on the long-term top line growth opportunity and health from here on the volume and pricing side. First, maybe just on volume, you've added a lot of capacity in the last couple of years. You've also got a lot of areas you're still under-penetrated in, in theory, internationally, wet food, small-pause, etc. So just some perspective at this point as we looked out over the next three to five years. Is there incrementality in volume as you pursue these areas more aggressively, and how should we think about that? And then on pricing, obviously that very strong penetration increases market share gains on the health business. In theory, that should support higher pricing over time.

Dara Warren Mohsenian: Just wanted to focus on the long-term top-line growth opportunity in Hills from here on the volume and pricing side. First, maybe just on volume, you've added a lot of capacity in the last couple of years.

Dara Warren Mohsenian: He goes off in there.

Dara Warren Mohsenian: Just wanted to focus on the long-term top-line growth opportunity in Hills from here on the volume and pricing side. First, maybe just on volume, you've added a lot of capacity in the last couple of years. You've also got a lot of areas you're still under penetrated in, in theory.

Noel R. Wallace: You've also got a lot of areas you're still under-penetrated in, in theory, internationally, wet foods, small policy, et cetera. So just some perspective at this point as we look out over the next three to five years. Is there incrementality in volume as you pursue these areas more aggressively, and how should we think about that? And then on pricing, obviously, you've had very strong penetration increases and market share gains on the Hills business.

Speaker Change: Internationally, wet food, smallpox, etc. So just some perspective at this point as we look out over the next three to five years.

Speaker Change: Is there incrementality in volume as you pursue these areas more aggressively and how should we think about that?

Speaker Change: And then on pricing, obviously you've had very strong penetration increases, market share gains on the Hills business.

Noel R. Wallace: In theory, that should support higher pricing over time, but you're also in a category environment with industry trade down in PET and probably a tough CBG environment in general for pricing. So how should we think about pricing going forward? Can you take consistent pricing maybe to recapture some of the margin compression if you strip out the higher marketing in recent years? And just how would you juxtapose that sort of internal momentum versus the external environment in terms of your ability to take pricing longer term looking out over the next few years?

Daria Mohsenian: But you're also in a category environment with industry trade down in pet and probably a tough CBG environment in general for pricing. So how should we think about pricing going forward? Can you take consistent pricing, maybe to recapture some of the margin compression if you strip out the higher marketing in recent years? And just how would you juxtapose that sort of internal momentum versus the external environment in terms of your ability to take pricing longer term looking out over the next few years?

Speaker Change: In theory, that should support higher pricing over time, but you're also in a category environment with industry trade down in PET.

Speaker Change: and probably a tough CPG environment in general for pricing.

Speaker Change: How should we think about pricing going forward? Can you take consistent pricing, maybe to recapture some of the margin compression if you strip out the higher marketing in recent years?

Speaker Change: And just how would you juxtapose that sort of internal momentum versus the external environment in terms of your ability to take pricing longer term looking out over the next few years?

Noel Wallace: Thanks there.

Noel R. Wallace: Thanks, Dara. Clearly, a great quarter for Hills, strong performance across the board, quite frankly, and we're particularly pleased with the strong volume in light of the significant pricing we've taken historically. I'll come back and talk about pricing in a moment, but obviously, ex-private label, to see the strength of the volume and the pricing move through the P&L is extremely encouraging, particularly given the advertising investment that we put into the business, which continues to strengthen the brand.

Noel Wallace: You know, clearly a great quarter for Hills, a strong performance across the board, quite frankly, and we're particularly pleased with the strong volume in light of the significant pricing we've taken historically. I'll come back and talk about pricing in a moment, but obviously ex-private label to see the strength of the volume and the pricing moved through the P&L is extremely encouraging, particularly given the advertising investment that we put into the business, which continues to strengthen the brand. And I think what's important to call out in the quarter is the real inflection on the margin line, a strong gross margin, strong operating margin, and this is a reflection I think of getting more volume running through the business and obviously seeing the leverage move through the P&L.

Speaker Change: Clearly a great quarter for Hills.

Speaker Change: Strong performance across the board, quite frankly, and we're particularly pleased with the strong volume.

Speaker Change: In light of the significant pricing we've taken historically, I'll come back and talk about pricing in a moment, but obviously ex-private label

Speaker Change: to see the strength of the volume and the pricing move through the P&L is extremely encouraging, particularly given the advertising investment that we put into the business which continues to strengthen the brand.

Noel R. Wallace: And I think what's important to call out in the quarter is the real inflection on the margin line, gross margin, and strong operating margin. This is a reflection, I think, of getting more volume running through the business and, obviously, seeing the leverage move through the P&L. But if I take a step back again and characterize the marketplace, clearly, as we've talked about before, low household awareness and low brand penetration overall for the Hills business, clearly supporting the strong advertising investment. And we're seeing that delivered in the corner.

Speaker Change: And I think what's important to call out in the quarter is the real inflection on the margin line, strong gross margin, strong operating margin. And this is a reflection, I think, of getting more volume running through the business.

Noel Wallace: But I take a step back again and characterize the marketplace clearly, as we've talked about before: low household awareness and low brand penetration overall of the Hills business, clearly supporting the strong advertising investment. And we're seeing that delivered in the quarter. Penetration up, market shares up; we were one of the fastest growing global brands in some of the pet specialty stores this quarter. So again, I think a reflection of the upside potential we still have. And when you look at segment opportunities, we've talked about that in the past. Obviously, wet is an area that we're under indexed in, clearly seeing the ramped up capacity we have in wet delivering better penetration, better growth, better execution in store as we're getting more wet skews on the shelf.

Speaker Change: and obviously seeing the leverage move through the P&L.

Speaker Change: But if I take a step back again and characterize the marketplace, clearly, as we've talked about before, low...

Speaker Change: Household awareness and low brand penetration overall of the Hills business clearly supporting the strong advertising investment And we're seeing that delivered in the corner penetration up

Noel R. Wallace: Penetration up, market shares up. We were one of the fastest growing global brands in some of the pet specialty stores this quarter, so again, I think it's a reflection of the upside potential we still have. And when you look at segment opportunities, we've talked about that in the past. Obviously, wet, an area that we're under-indexed in.

Speaker Change: Market shares up, we were one of the fastest growing global brands in some of the pet specialty stores this quarter. So again, I think a reflection of the upside potential we still have. And when you look at segment opportunities, we've talked about that in the past, obviously wet, an area that we're under-indexed in, clearly seeing the ramped up capacity we have in wet.

Noel R. Wallace: Clearly, seeing the ramped-up capacity we have in wet, delivering better penetration, better growth, and better execution in stores as we're getting more wet SKUs on the shelf. That's obviously translating into more upside potential. We see consumers obviously shifting into those categories, so overall, we think the balance of the business is where we want it to be. And we're continuing to invest aggressively to drive that household penetration. And you couple that with a really strong innovation pipeline. We saw that in the first half of this year.

Speaker Change: Delivering better penetration, better growth, better execution in stores as we're getting more wet SKUs on the shelf.

Noel Wallace: That's obviously translated into more upside potentials who see consumers, obviously shifting into those categories. So overall, we think the balance of the business is where we want it, and we're continuing to invest aggressively to drive that household penetration.

Speaker Change: That's obviously translating into more upside potentials. We see consumers obviously shifting into those categories. So overall, we think the balance of the business is where we want it, and we're continuing to invest aggressively to drive that household penetration.

Noel Wallace: You couple that with a really strong innovation pipeline. We see that in the first half of this year, we see that moving into 25 as well. So we think, quite frankly, the flywheel of the business is working very, very effectively. Right now, low penetration, low awareness. We're working on that, getting more effectiveness in our advertising spend, which we're increasing. And importantly, getting the gross margins and operating margins back to where we like them is allowing for the increased gross margin dollars to invest behind the business.

Speaker Change: You couple that with a really strong innovation pipeline. We see that in the first half of this year. We see that moving into 2025 as well.

Noel R. Wallace: We see that moving into 25 as well. So we think, quite frankly, the flywheel of the business is working very effectively for us right now. Low penetration, low awareness.

Speaker Change: So we think, quite frankly, the flywheel of the business is working very effectively for us right now.

Noel R. Wallace: We're working on that, getting more effectiveness in our advertising spend, which we're increasing, and importantly, getting the gross margins and operating margins back to where we'd like them is allowing for increased gross margin dollars to invest behind the business. Internationally, likewise, we've talked about the opportunities that we still see globally in the long term to take this brand around the world. We're very focused on the big core markets right now, but in the long term, we see opportunities to expand into new markets. The last I'd say is obviously the mix between the science diet and the prescription diet.

Speaker Change: Low penetration, low awareness. We're working on that, getting more effectiveness in our advertising spend, which we're increasing. And importantly, getting the gross margins and operating margins back to where we'd like them is allowing for the increased gross margin dollars to invest behind the business.

Noel Wallace: International; likewise, we've talked about the opportunities that we still see globally in the long term to take this brand around the world. We're very focused on the big core markets right now. But long term, we see opportunities to expand into new markets. The last I'd say is obviously the mix between Science Diet and prescription diet. We saw a good inflection on prescription diet this quarter. That's been deliberate. That's been a function of partly due to the capacity expansion that we've had. It's allowed us to get more diets on the shelf, allowed us to provide more sustained, consistent delivery to the vet professionals on the prescription diet business.

Speaker Change: International, likewise, we've talked about the opportunities that we still see globally in the long term to take this brand around the world. We're very focused on the big core markets right now, but long term we see opportunities to expand into new markets.

Noel R. Wallace: We saw a good inflection on prescription diet this quarter, and that's been deliberate. That's partly due to the capacity expansion that we've had that allowed us to get more diets on the shelf, and allowed us to provide more sustained, consistent delivery to the vet professionals in the prescription diet business, and we saw a good mixed benefit of that in the quarter as well. So overall, we're pleased with it. The category is a little soft right now, as you mentioned, as household starts come down.

Speaker Change: The last I'd say is obviously the mix between science diet and prescription diet. We saw a good inflection on prescription diet this quarter.

Speaker Change: That's been deliberate, that's been a function of partly due to the capacity expansion that we've had.

Speaker Change: has allowed us to get more diets on the shelf, allowed us to provide more sustained, consistent delivery to the vet professionals on the prescription diet business, and we saw a good mixed benefit of that in the quarter as well. So overall, we're pleased with it. The category is a little soft right now, as you mentioned.

Noel Wallace: And we saw a good mixed benefit of that in the quarter as well. So, overall, we're pleased with it.

Noel Wallace: The category is a little softer right now, as you mentioned, as household starts come down. But, as we see, hopefully, that the U.S. economy starting to show some vibrancy, or at least for a softer landing. we think that will bode well for us. Pricing is an opportunity given the strength of the brand. We'll continue to take pricing where we have the necessity to do that. The good news is we've seen a little bit of flattening on commodity pricing in the hills of business, which is excellent for us. As we get that price and we've had historically, we've seen the benefit of a more moderate inflation environment on input cost.

Noel R. Wallace: But as we see, hopefully, the U.S. economy starting to show some vibrancy, or at least a softer landing, we think that will bode well for us. Pricing is an opportunity. Given the strength of the brand, we'll continue to take pricing where we have the necessity to do that. The good news is we've seen a little bit of flattening on commodity pricing in the Hills business, which is excellent for us as we get that pricing that we've had historically.

Speaker Change: as household starts come down, but as we see, hopefully, the U.S. economy starting to show some vibrancy, or at least for a softer landing, we think that will bode well for us.

Speaker Change: Pricing is an opportunity. Given the strength of the brand, we'll continue to take pricing where we have the necessity to do that. The good news is we've seen a little bit of flattening on commodity pricing.

Speaker Change: in the Hills business, which is excellent for us as we get that pricing that we've had historically. We've seen the benefit of a more moderate inflation environment on input costs.

Noel R. Wallace: We've seen the benefit of a more moderate inflation environment on input costs, and we get more leverage through the P&Ls. We see volume coming back, so overall, we feel like we're in a good position to sustain that moving forward.

Noel Wallace: And we get more leverage through the P&Ls. We see the volume come back. So, overall, we feel like we're in a good position to sustain that moving force.

Speaker Change: And we get more leverage through the P&L as we see the volume come back. So overall, we feel like we're in a good position to sustain that moving forward.

Filippo Falorni: The next question comes from Filippo Falorni with City. Please go ahead.

Unknown Executive: The next question comes from Filippo Falorni with Citi. Please go ahead.

Speaker Change: The next question comes from Filippo Falorni with Citi. Please go ahead.

Filippo Falorni: Hi, good morning everyone. I wanted to ask about the North America business. Great to see the volume return to solid growth, but you also called out a more promotional environment. So maybe one you can talk about the general promotional environment in your categories from your competitors and private label. And also from a cyclist standpoint, I know last year you were cycling lower promotional levels. Is it fair to think that's going to continue in Q3 and then by Q4, you're going to have a more normal comparison from a promotional level. So any color on the balance between pricing and volume in the back off for North America will be helpful.

Filippo Falorni: Hi, good morning, everyone. I wanted to ask you something about the North America business. Great to see the volume return to solid growth, but you also called out a more promotional environment. So maybe one you can talk about the general promotional environment in your category from your competitors and private label. And also, from a cycling standpoint, I know last year you were cycling at lower promotional levels. Is it fair to think that it's going to continue in Q3? And then by Q4, you're going to have a more normal comparison from a promotional level? So any color on the balance between pricing and volume in the backup plan for North America will be helpful.

Filippo Falorni: Hi, good morning, everyone. I wanted to ask about the North America business. Great to see the volume return to solid growth.

Filippo Falorni: but you also called out a more promotional environment. So maybe...

Filippo Falorni: One, you can talk about the general promotional environment in your categories from your competitors and private label, and also from a cycling standpoint. I know last year you were cycling lower promotional levels.

Speaker Change: Is it fair to think that's going to continue in Q3 and then by Q4 you're going to have a more normal comparison from a promotional level? So any color on the balance between pricing and volume in the back half for North America will be helpful.

Noel R. Wallace: Thank you. Sure. Thank you.

Filippo Falorni: Thank you.

Noel R. Wallace: Sure. Thank you, Filippo. Overall, organic growth in North America was roughly in line with our expectations, albeit more volume, which was really pleasing. I'll come back to that in just a moment. And a little less pricing than expected, although, as you rightfully point out and as we said in the prepared commentary, this was due to comparisons with the year ago. But if you remember, really strong pricing in the second quarter, high single digits. I think it was around 9 percent.

Noel Wallace: Sure. Thank you, Filippo. In overall organic growth in North America is roughly in line with our expectations, albeit more volume, which was really pleasing. I'll come back to that in just a moment. And a little less pricing and expected, although, as you rightfully point out and as we said in the prepared commentary, this was due to comparisons with the year ago. If you remember, really strong pricing in the second quarter, high single digits. I think it was around 9%. We talked about it in the call in the second quarter last year. The fact that we perhaps may have pulled back a bit too far on promotions.

Speaker Change: Sure, thank you, Filippo.

Speaker Change: Overall, organic growth in North America was roughly in line with our expectations, albeit more volume, which was really pleasing. I'll come back to that in just a moment.

Speaker Change: and a little less pricing than expected, although as you rightfully point out and as we said in the prepared commentary, this was due to comparisons with the year ago. If you remember, really strong pricing in the second quarter, high single digits, I think it was around 9%.

Noel R. Wallace: We talked about it in the call in the second quarter last year, the fact that we perhaps may have pulled back a bit too far on promotions. We saw some of those promotions come back in the quarter this year, particularly in one retail environment where we didn't promote at all in the year-ago period. A little bit of a mixed change between some of the higher price retailers and lower price retailers, also impacting prices.

Speaker Change: We talked about it in the call in the second quarter last year, the fact that we perhaps may have pulled back a bit too far on promotions. We saw some of those promotions come back in the quarter this year, particularly one retail environment where we didn't promote at all in the year-ago period.

Noel Wallace: We saw some of those promotions come back in the quarter this year, particularly in one retail environment where we didn't know. We didn't promote at all in the year-ago period. A little bit of mixed change between some of the higher price retailers to lower price retailers, also impacting price. But pleasingly on the volume side, which we think is a very important force in North America right now. We saw great improvement. And that what was particularly encouraging there is we saw household penetration as a result of that. We talked a lot about that over the last four quarters.

Speaker Change: A little bit of mixed change between some of the higher price retailers to lower price retailers also impacting price.

Noel R. Wallace: But pleasingly, on the volume side, which we think is a very important force in North America right now, we saw great improvement. And what was particularly encouraging there is that we saw household penetration as a result of that. We talked a lot about that over the last four quarters, the importance of driving household penetration, and the North American numbers are terrific.

Speaker Change: but pleasingly on the volume side which we think

Speaker Change: is a very important force in North America right now. We saw great improvement.

Speaker Change: And what was particularly encouraging there is we saw household penetration as a result of that. We talked a lot about that over the last four quarters.

Noel Wallace: The importance of driving household penetration. And the North America numbers are terrific. Market shares are more or less flat and in value. But up quite considerably on the volume side, that reflects, I think, a much more targeted approach and a thoughtful approach on how we're utilizing promotional dollars to be very effective and prudent without going too far down the trap of over promoting. But right now, we feel we're in a very good place with that. We did see some of the retailers lean in. There's been a little bit more lift on promotional coupons. It's a little bit higher, but expected as we move through the quarter and we expect that to continue through the balance of the year.

Speaker Change: The Importance of Driving Household Penetration, and the North American numbers are terrific. Market shares are more or less flat in value, but up quite considerably on the volume side. That reflects, I think, a much more targeted approach and a thoughtful approach in how we're utilizing promotional dollars to be very effective and prudent.

Noel R. Wallace: Market shares are more or less flat in value, but up quite considerably on the volume side. That reflects, I think, a much more targeted approach and a thoughtful approach in how we're utilizing promotional dollars to be very effective and prudent without going too far down the trap of overpromoting. But right now, we feel we're in a very good place with that. We did see some of the retailers lean in. There's been a little bit more lift on promotional coupons, a little bit higher, but expected as we move through the quarter, and we expect that to continue through the balance of the year.

Speaker Change: without going too far down the trap of over-promoting. But right now we feel we're in a very good place with that. We did see some of the retailers lean in. There's been a little bit more lift on promotional coupons, a little bit higher.

Noel R. Wallace: And as I continually say, at least if you look outside of scanner data, our non-Nielsen business continued to track at multiples higher than the Nielsen track channel. So again, I'm really, really pleased with the overall context of how the quarter was delivered. We're going to watch the pricing carefully, but encouraged to see the volume coming back quite nicely.

Speaker Change: But expect it as we move through the quarter and we expect that to continue through the balance of the year.

Noel Wallace: And as I continually say, at least if you look outside of scanner data, our non-Nielsen business continued to track at multiples higher than the Nielsen track channel. So again, really, really pleased with the overall context of how the quarter was delivered. We're going to watch the pricing carefully, but encouraged to see the volume coming back quite nicely.

Speaker Change: And as I continually say, at least if you look outside of scanner data, our non-Nielsen business continues to track at multiples higher.

Speaker Change: then the Nielsen Track Channel. So again, I'm really, really pleased with the overall...

Speaker Change: We're going to watch the pricing carefully, but encouraged to see the volume coming back quite nicely.

Andrea Deshera: The next question comes from Andrea Deshera with JP Morgan. Please go ahead.

Unknown Executive: The next question comes from Andrea Teixeira of J.P. Morgan. Please go ahead.

Speaker Change: The next question comes from Andrea Teixeira with J.P. Morgan. Please go ahead.

Andrea Deshera: Thank you.

Andrea Faria Teixeira: Thank you. Good morning to all.

Andrea Deshera: Good morning to all. My question is on Europe. I obviously nothing short of impressive that you kept your your momentum there. But with that, I mean, some of your peers have been calling on broader deceleration, similar to what has been happening in the US. So wanted to see if you were as you exit the quarter. And as you negotiated some of the health spaces and promos in Europe as well. And how you just describe know some of the shifts into the channels in the US into the low income or more affordable channels or discounters. Are you seeing this happening in Europe, or just as you said, your pricing letters and your innovation have been able to sustain momentum there and how we should be thinking to the back end.

Andrea Faria Teixeira: Thank you. Good morning to all. My question is on Europe . Obviously, nothing short of impressive.

Speaker Change: that you kept your comments in there.

Andrea Faria Teixeira: But with that, I mean, some of your peers have been calling a broader deceleration, similar to what has been happening in the U.S., so I wanted to see if you were, as you exit the quarter, and as you negotiated some of the

Noel R. Wallace: My question is about Europe. Obviously, it is nothing short of impressive that you kept your momentum there. But with that, some of your peers have been calling for a broader deceleration, similar to what has been happening in the U.S. So I wanted to see if you were, as you exit the quarter, and as you negotiated some of the soft spaces and promos in Europe as well, and how you just described some of the shifts into the channels in the U.S., into the low-income or more affordable channels or discounters. Are you seeing this happening in Europe, or just, as you said, your pricing ladders and your innovation have been able to sustain momentum there, and how should we be thinking about the back end? Yeah, good.

Andrea Faria Teixeira: Some of the.

Noel R. Wallace: South Spaces and FOMOs in Europe as well, and how you just described, Noel, some of the shifts into the channels in the U.S.

Speaker Change: into the low-income or more affordable channels or discounters. Are you seeing this happening in Europe or just as you said, your pricing letters and your innovation has been able to sustain momentum there and how we should be thinking to the back end? Thank you.

Noel Wallace: Thank you.

Noel R. Wallace: Yeah, good morning, Andrew. Much around the latter, obviously, I think we've seen some shifts in retail environments there, but again, we're through the negotiations, and I think what's particularly pleasing in Europe is the breadth of the innovation across price tiers and the breadth of innovation across various channels, and that's allowed us, in our view, to deliver that sustained, very strong growth. What's particularly pleasing is, obviously, the balance between pricing and volume there.

Noel Wallace: Yeah. Good morning, Andrea. Much around the ladder. Obviously, I think we've seen we have seen some shift in retail environments there. But again, we were through the negotiations. And I think what's particularly pleasing in Europe is the breadth of the innovation across price tiers. The breadth of innovation across various channels. And that's allowed us, in our view, to deliver that sustained, very strong growth, which, particularly pleasing, is obviously the balance between pricing and volume there. We'll see pricing obviously come down as we lapse some of the strong pricing we took last year, but the volume coming back into the PNL at such healthy levels was particularly encouraging for the business.

Noel R. Wallace: Yeah, good morning, Andrew. Much around the latter, obviously. I think we have seen some shift in retail environments there, but again, we're through the negotiations, and I think what's particularly pleasing in Europe is the breadth of innovation across price tiers.

Noel R. Wallace: and the breadth of innovation across various channels.

Noel R. Wallace: And that's allowed us, in our view, to deliver that sustained, very strong growth.

Noel R. Wallace: We'll see pricing, obviously, come down as we elapse some of the strong pricing we took last year, but the volume coming back into the P&L at such healthy levels was particularly encouraging for the business, and that's reflected in market shares and household penetration. As I said, market share is on toothpaste at record high levels. I think the balance and effectiveness we have between the Colgate and the Olmecs and Meridol brands is really taking stride now in the sense of getting that promotional mix right between the three brands, and we're seeing, likewise, on the home care and the personal care brands, some of the innovation coming into the market and driving good, sustained growth.

Noel R. Wallace: What's particularly pleasing is obviously the balance between pricing and volume there. We'll see pricing obviously come down as we lap some of the strong pricing we took last year, but the volume coming back into the P&L

Noel Wallace: And that's reflected in market shares and household penetration, as I said. The market shares on toothpaste are at record high levels. I think the balance and effectiveness we have between the Colgate and the Olmex and Maridol brands is really taking stride now in the sense of getting that promotional mix right between the three brands. And we're seeing likewise on the home care and the personal care brand, some of the innovation coming in the market and drive good sustained growth. So overall, a great performance for Europe. We'll watch it in the back half, but right now we think the sustained market share growth that we've had across all of our categories is going to bode well for the back half.

Noel R. Wallace: at such a healthy levels was particularly encouraging for the business and that's reflected in market shares and household penetration. As I said, the market shares on toothpaste at record high levels.

Noel R. Wallace: I think the balance and effectiveness we have between the Colgate and the Elmex and Meridol brands is really taking stride now in the sense of getting that promotional mix right between the three brands.

Noel R. Wallace: and we're seeing likewise on the home care and the personal care brand some of the innovation coming in the market and drive.

Noel R. Wallace: So, overall, a great performance for Europe. We'll watch it in the back half, but right now, we think the sustained market share growth that we've had across all of our categories is going to bode well for the back half, and the volume coming back in across multiple price tiers is a good indication that we're in a good place to set us up for a strong back half as well. The next question comes from Robert Moskow with T.D. Cowan. Please go ahead. Hi, thanks for the question.

Noel R. Wallace: Good Sustained Growth. So overall...

Noel R. Wallace: A great performance for Europe . We'll watch it in the back half, but right now we think the sustained market share growth that we've had across all of our categories is going to bode well for the back half.

Noel Wallace: And the volume coming back in across multiple price tiers is a good indication that we're in a good place to set us up for a strong back half as well.

Noel R. Wallace: And the volume coming back in across multiple price tiers is a good indication that we're in a good place to set us up for a strong back half as well.

Robert Moskow: The next question comes from Robert Moskow with TD Cowan. Please go ahead.

Robert Moskow: The next question comes from Robert Moskow with T.D. Cowan. Please go ahead.

Speaker Change: The next question comes from Robert Moscow with T.D. Cowan. Please go ahead.

Robert Moskow: Hi, thanks for the question. Noel, you mentioned sequentially higher commodity costs as the year progresses, and I was wondering if you could help us quantify it or tell us, like, is it material enough that you would have to make any kind of pricing actions? And if so, you know, where would the hotspots be?

Robert Edward Ottenstein: Hi, thanks for the question. Noel, you mentioned sequentially higher commodity costs as the year progresses, and I was wondering if you could help us quantify it or tell us, like, is it material enough that you would have to make any kind of

Speaker Change: Pricing Actions, and if so, you know, where would the hotspots be?

Noel Wallace: Yeah, let me let's stand get into the details, but you know, strategically obviously we think with the pricing that we've taken, and strong productivity moving through the P&L, particularly with the volume starting to inflect much more positively, we think we're set up well for the back half. We will see some inflationary commodity increases, at least in terms of where commodities are in the back half. But nothing that gives us tremendous concern, particularly given the strong margin profile that we have across the business and where we're seeing the growth.

Noel R. Wallace: Yeah, let me let Stan get into the details. But, you know, strategically, obviously, we think with the pricing that we've taken and strong productivity moving through the P&L, particularly with volume starting to inflect much more positively, we think we're set up well for the back half. We will see some inflationary commodity increases, at least in terms of where commodities are in the back half, but nothing that gives us tremendous concern, particularly given the strong margin profile that we have across the business and where we're seeing growth. But let me have Stan give you a little bit more color there.

Speaker Change: Yeah, let me let Stan get into the details, but you know strategically obviously we think with the pricing that we've taken

Stanley J. Sutula: and strong productivity moving through the P&L, particularly with the volume starting to inflect much more positively. We think we're set up well for the back half. We will see some inflationary...

Stanley J. Sutula: commodity increases, at least in terms of where commodities are in the back half.

Stanley J. Sutula: But nothing that gives us tremendous concern, particularly given the strong margin profile that we have across the business and where we're seeing the growth. But let me have Stan give you a little bit more color there.

Stan Satula: But let me have Stan give you a little bit more color there. Yeah, thanks, Noel.

Stanley J. Sutula: Yeah, thanks Noel. So what we saw in the first quarter we talked about coming out was that we had a general easing a bit on commodities, but as we're looking into the back half of the year, we do see some raw material inflation and in commodity costs as well as an impact from transactional effects. So as we think about the components of that, there are some pieces here that are going through, but we do feel confident in our ability to offset those with funding growth and productivity.

Stan Satula: So what we saw in the first quarter we talked about coming out was that we had general easing a bit on commodities. But as we're looking into the back half of the year, we do see some raw material inflation and in commodity costs, as well as an impact from transactional effects. So, as we think about the components of that, there are some pieces here that are going through, but we do feel confident in our ability to offset those with funding the growth and productivity.

Stanley J. Sutula: Thanks, Noel. So what we saw in the first quarter we talked about coming out was that we had general easing a bit on commodities. But as we're looking into the back half of the year, we do see some raw material inflation and commodity costs as well as an impact from transactional effects.

Stanley J. Sutula: So as we think about the components of that, there are some pieces here that are going through, but we do feel confident in our ability to offset those with funding the growth and productivity. I don't see the need, unless they move more dramatically, to take large incremental pricing.

Stanley J. Sutula: I don't see the need, unless they move more dramatically, to take large incremental prices. In addition, on our margin, as we look, you know, even anticipating these, we expect that our second half gross margin should be up year on year, and levels are probably more similar to Q2. So overall, I think the teams keep a good eye on this. We look at it on a forward basis. We've already locked in a significant proportion of Q3, and we'll look at that, obviously, in Q4 as we go ahead.

Stan Satula: I don't see the need unless they move more dramatically to take large incremental pricing. In addition, on our margin as we look, even anticipating these, we expect that our second half growth margin should be up year on year and levels that probably more similar to Q2. So overall, I think the teams keep a good eye on this. We look at it on a forward basis. We've already locked in a significant proportion of Q3, and we'll look at that obviously in Q4s as we go ahead. So, while we're aware of it, we feel pretty well positioned.

Stanley J. Sutula: In addition, on our margin, as we look, you know, even anticipating these, we expect that our second half gross margin should be up year on year and levels up probably more similar to Q2.

Stanley J. Sutula: So overall, I think the teams keep a good eye on this. We look at it on a forward basis. We've already locked in a significant proportion of Q3 and we'll look at that obviously in Q4 as we go ahead. So while we're aware of it, we feel pretty well positioned.

Noel R. Wallace: Yeah, the one unknown there is probably foreign exchange, and you've seen that obviously move a bit against us in the last three weeks, particularly the Latin currencies, so we'll have to watch that carefully, but we're on it.

Noel Wallace: Yeah, the one unknown there is probably for an exchange, and you've seen that obviously move a bit against us in the last three weeks, particularly the Latin currencies. So we'll have to watch that carefully, but we're on it.

Noel R. Wallace: Yeah, the one on...

Speaker Change: Yeah, the one unknown there is probably foreign exchange and you've seen that obviously move a bit against us in the last three weeks, particularly the Latin currency, so we'll have to watch that carefully, but we're on it.

Camille Garjawala: The next question comes from Camille Garjawala with Jefferies. Please go ahead.

Unknown Executive: The next question comes from Kaumil Gajrawala with Jeffreys. Please go ahead. Hey, come here. Excuse me, Mr. Gajrawala, your line is open. Okay, we'll go to the next questioner. The next questioner is Bonnie Herzog with Goldman Sachs. Please go ahead. All right, thank you.

Speaker Change: The next question comes from Kaumil Gajrawala with Jeffreys. Please go ahead.

Camille Garjawala: Hey Camille.

Unknown Executive: Excuse me, Mr. Garjawala; your line is open.

Speaker Change: [inaudible]

Bonnie Herzog: Okay, we'll go to the next questioner. The next questioner is Bonnie Herzog with Goldman Sachs.

Speaker Change: Excuse me, Mr. Gajrawala, your line is open.

Speaker Change: Okay, we'll go to the next questioner. The next questioner is Bonnie Herzog with Goldman Sachs. Please go ahead.

Bonnie Herzog: Please go ahead. All right, thank you.

Bonnie Herzog: Good morning, everyone.

Unknown Executive: Thank you.

Unknown Executive: Good morning.

Noel Wallace: No, I'd be curious to hear if you've seen any noticeable changes in consumer behavior in any of your key markets, especially from the low-income consumer. And then, if so, what initiatives have you guys been implementing to ultimately offer more values for consumers to drive the faster volume growth that we're seeing? Thank you. Yeah, thanks. You know, I think overall, you know, quite constructive around the world, and that's obviously reflected in the strong volume growth and likewise the penetration market share growth, but overall constructive. I think a lot of the strategy that we put in place of the last couple of years, and that's innovating against some of our big core businesses and making sure that we're deliberate about the innovation by retail environment has played out well relative to ensuring that those consumers looking for more value-oriented offerings that we have that disposable opportunity in our portfolio.

Bonnie Herzog: All right. Thank you. Good morning, everyone. Hey, good morning, Bonnie. Good morning. Noel, I'd be curious to hear if you've seen any noticeable changes in consumer behavior in any of your key markets, you know, especially from the low-income consumer.

Bonnie Herzog: And then if so, you know, what initiatives have you guys, you know, been implementing to ultimately offer more values for consumers to drive, you know, this faster volume growth that we're seeing? Thank you.

Unknown Executive: Yeah, thanks. I think overall, it's quite constructive around the world, and that's obviously reflected in the strong volume growth and, likewise, the penetration market share growth, but overall, it's quite constructive. I think a lot of the strategy that we've been putting in place over the last couple years, and that's innovating against some of our big core businesses, and making sure that we're deliberate about the innovation by retail environment has played out well relative to ensuring that those consumers looking for more value-oriented offerings that we have that disposable opportunity in our in our portfolio.

Noel R. Wallace: Yeah, thanks. You know, I think overall, you know, quite constructive around the world, and that's obviously reflected.

Speaker Change: and the strong volume growth and likewise the penetration and market share growth. But overall, constructive. I think a lot of the strategy that we've put in place over the last couple of years

Speaker Change: and that's innovating against some of our big core businesses.

Speaker Change: and making sure that we're deliberate about the innovation by retail environment has played out well relative to ensuring that those consumers looking for more value-oriented offerings that we have that disposable opportunity in our portfolio.

Unknown Executive: And we've seen that, outside of the US, the consumer has been quite constructive; we've seen a little bit more price-value shopping in North America, but nothing too unusual right now. But we'll have to watch that carefully as we move through the back half of the year.

Noel Wallace: And we've seen that. I think outside of the US, the consumer has been quite constructive. We've seen a little bit more price value shopping in North America, but nothing too unusual right now. But we'll have to watch that carefully as we move through the back half of the year. As I mentioned earlier, we've seen a little bit more volume on deal coming through in North America, but nothing that's not in line with historical numbers, quite frankly. So overall, US watchful Europe seems to be okay. Latin America, again, you've seen a really strong volume growth over the last three or four quarters, despite significant pricing.

Speaker Change: And we've seen that. I think outside of the U.S., the consumer has been quite constructive. We've seen a little bit more.

Speaker Change: Price Value Shopping in North America, but nothing too unusual right now.

Speaker Change: But we'll have to watch that carefully as we move through the back half of the year. As I mentioned earlier, we've seen a little bit more

Noel R. Wallace: As I mentioned earlier, we've seen a little bit more volume on deals coming through in North America, but nothing that's not in line with historical numbers, quite frankly. So overall, US watchful Europe seems to be okay. In Latin America, again, you've seen really strong volume growth over the last three or four quarters, despite significant pricing. And so we're seeing a good consumer environment there. Africa, Asia, Eurasia, strong, again, good volume growth, and, pleasingly, starting to see some good volume growth coming back out of Asia and India, specifically, which is encouraged.

Speaker Change: Volume on Deal coming through in North America, but nothing

Speaker Change: that's not in line with historical numbers, quite frankly. So, overall, U.S. watchful, Europe seems to be okay. Latin America, again, you've seen a really strong volume growth.

Noel Wallace: And so we're seeing a good consumer environment there. Africa, Asia, Eurasia, strong, again, good volume growth, and pleasantly starting to see some good volume growth coming back out of Asia and India, specifically, which is encouraged.

Speaker Change: over the last three or four quarters despite significant pricing. And so we're seeing a good consumer environment there. Africa, Asia, Eurasia, strong, again, good volume growth and pleasingly starting to see some good volume growth coming back out of Asia and India specifically, which is encouraging.

Chris Carey: The next question comes from Chris Carey with Wells Fargo Securities.

Unknown Executive: The next question comes from Chris Carey with Wells Fargo Securities. Please go ahead.

Chris Carey: Please go ahead. I Good morning.

Speaker Change: The next question comes from Chris Carey with Wells Fargo Securities. Please go ahead.

Chris Carey: Hi Chris. I just wanted to go back to the North America business, specifically around volume and investment posture. And so just two parts of this, I guess first, the negative pricing in the quarter, is there way to dimensionize how much of that you think is the year-go-compare versus, say, actions that you're taking in the market a bit more offensively. And then just from a volume perspective, what is this volume number, I guess, feels, you know, sustainable going into the back half. I know you have some compared dynamics and fabulous guy Loso and in hand soap.

Christopher Michael Carey: I just wanted to go back to the North America business, specifically around volume and investment posture. And so just two parts of this, I guess, first, the negative pricing in the quarter. Is there a way to dimensionalize how much of that you think is the year ago compared versus, say, actions that you're taking in the market a bit more offensively? And then just from a volume perspective, what volume number do I guess feel, you know, sustainable going into the back half?

Christopher Michael Carey: Hi, good morning.

Christopher Michael Carey: Morning, Chris.

Christopher Michael Carey: I just wanted to go back to the North America business, specifically around volume and investment posture, and so just two parts to this. I guess first,

Christopher Michael Carey: The negative pricing in the quarter, is there a way to dimensionalize how much of that you think is?

Christopher Michael Carey: The Year Ago Compare versus, say, action that you're taking in the market a bit more offensively. And then just from a volume perspective,

Christopher Michael Carey: I know you have some comparison dynamics in Fabulous, Fabuloso, and Enhance Soap. But at the same time, I think in your comparing remarks, you called out double digit volume growth in toothpaste, which is quite a bit ahead of what we can see in the consumption data. So I'm just wondering if there are both timing and also durable dynamics that you see in Q2 as we go into the back half. So thanks for those.

Speaker Change: What in this volume number, I guess, feels sustainable going into the back half? I know you have some.

Noel Wallace: But at the same time, I think in your comparative marks, you called out double-digit growth volume growth and toothpaste, which is quite a bit ahead of what we can see in the consumption data. So I'm just wondering if there are both timing and also durable dynamics that you see in Q2 as we go into the back half. But thanks for those two.

Speaker Change: Compare Dynamics in Fabulous, Fabuloso, and Enhanced Soap.

Speaker Change: But at the same time, I think in your prepared remarks, you called out double-digit volume growth in toothpaste, which is quite a bit ahead of what we can see in the consumption data. So I'm just wondering if there are both timing and also durable dynamics that you see in Q2 as we go into the back half.

Noel Wallace: Yeah, let me start with, I guess the volume numbers overall. And we feel, you know, obviously, the good strong growth in the quarter, largely toothpaste driven, but we saw it across all categories, which is terrific. And we expect that to continue as the comparisons in North America will be favorable for us in the third quarter and in the fourth quarter. So volume should continue to track well. Let me get into a little bit of dimensionizing the pricing. I mean, as you said, most of it was a cop. As you recall, we had 10% price in Q1, 9% pricing in Q2 last year.

Noel R. Wallace: Yeah, let me start with, I guess the volume numbers overall. We feel, you know, obviously, good, strong growth in the quarter, largely toothpaste driven, but we saw it across all categories, which is terrific. And we expect that to continue as the comparisons in North America will be favorable for us in the third quarter and the fourth quarter. So volume should continue to track well. Now, let me get into a little bit of dimensionalizing the pricing. I mean, as you said, most of it was a cop.

Speaker Change: Yeah let me let me start with I guess the volume numbers overall and we feel you know obviously the good strong growth in the quarter largely toothpaste driven but we saw it across all categories which is

Speaker Change: is terrific.

Speaker Change: And we expect that to continue as the comparisons in North America will be favorable for us in the third quarter and in the fourth quarter, so volume should continue to track well.

Noel R. Wallace: As you recall, we had 10% prices in Q1, 9% prices in Q2 last year. And we talked specifically, as I mentioned earlier, that we may have pulled back a little bit too much on promotions in the second quarter. So the comparison was obviously very, very favorable.

Speaker Change: Let me get into a little bit of dimensionalizing the pricing. I mean, as you said, most of it was a cop. As you recall, we had 10% price in Q1, 9% price in Q2 last year.

Noel Wallace: And we talked specifically, as I mentioned earlier, that we may have pulled back a little bit too much on promotions in the second quarter. So the comparison was obviously very, very favorable. And we needed to get the promotion cadence back to where we need to. We had one particular retailer, as I mentioned, that we had pulled out of last year. They came back online this year, which was encouraging help drive some of the strong volume growth. But again, I think that promotional cadence that we'll see will be, or the pricing will be somewhat consistent with where we were in the second quarter.

Speaker Change: And we talked specifically, as I mentioned earlier, that we may have pulled back a little bit too much on promotions in the second quarter.

Noel R. Wallace: And we needed to get the promotion cadence back to where we needed it. We had one particular retailer, as I mentioned, that we had pulled out of last year that came back online this year, which was encouraging to help drive some of the strong volume growth. But again, I think that the promotional cadence that we'll see will be, or the pricing will be somewhat consistent with where we were in the second quarter, as we move through the back half of the year, off a very strong year in 2023.

Speaker Change: So the comparison was obviously very, very favorable.

Speaker Change: And we needed to get the promotion cadence back to where we need to. We had one particular retailer, as I mentioned, that we had pulled out of last year that came back online this year, which was encouraging to help drive some of the strong volume growth.

Speaker Change: But again, I think that the promotional cadence that we'll see will be, or the pricing will be somewhat consistent with where we were in the second quarter as we move through the back half of the year, you know, off a very strong year in 2023.

Noel Wallace: As we move through the back half of the year, you know, off of a very strong year in 2023. And overall, what's most encouraging is to see the elasticity there as we put a little bit more pricing in the market relative to coupon promotion. We're obviously seeing a great return on that relative to volume. Encouraging likewise, gross profit, percent, and gross margin dollars were up in North America, which is allowing us to continue to invest strongly behind the business. And we are encouraged by that, particularly as we move in the back half of the year.

Noel R. Wallace: And overall, what's most encouraging is to see the elasticity there as we put a little bit more pricing in the market. Relative to couponing promotion, we're obviously seeing a great return on that relative to volume. Likewise, gross profit percent and gross margin dollars were up in North America, which is allowing us to continue to invest strongly behind the business. And we are encouraged by that, particularly as we move into the back half of the year.

Speaker Change: And overall, what's most encouraging is to see the elasticity there. As we put a little bit more pricing in the market relative to couponing promotion, we're obviously seeing a great return on that relative to volume.

Speaker Change: Encouraging, likewise, gross profit percent and gross margin dollars were up in North America, which is allowing us to continue to invest strongly behind the business, and we are encouraged by that, particularly as we move in the back half of the year.

Olivia Tongue: The next question comes from Olivia Tongue with Raymond James. Please go ahead.

Unknown Executive: The next question comes from Olivia Tong with Raymond James.

Speaker Change: The next question comes from Olivia Tong with Raymond James. Please go ahead.

Olivia Tongue: Thanks.

Olivia Tong Cheang: Thanks. Good morning.

Olivia Tongue: Good morning. I want to go back to Latin America, given that it continues to be a very strong driver of your total company growth. Obviously, very strong volume, very strong price. But you call that Brazil in Mexico. So can you talk about what you're seeing, any incremental concerns given the macros there, your sense of how the consumer is behaving in those key markets, as well as some of the other countries given the overall resonating of the growth in Latin America. Thank you. Yeah, great.

Olivia Tong Cheang: Thanks. Good morning. I want to go back to Latin America, given that it continues to be a very strong driver of your total company growth, obviously very strong volume, very strong price.

Noel R. Wallace: I want to go back to Latin America, given that it continues to be a very strong driver of your total company growth. Obviously, very high volume, very high price. But you call that Brazil and Mexico. So can you talk about what you're seeing, any incremental concerns, given the macros there, your sense of how the consumer is behaving in those key markets, as well as some of the other countries, given the overall response to growth in Latin America? Thank you. Yeah

Olivia Tong Cheang: But you call that Brazil and Mexico, so can you talk about what you're seeing, any incremental concerns given the macros there, your sense of how the consumer is behaving in those key markets as well as some of the other countries given the overall resonating of the growth in Latin America?

Noel R. Wallace: Yeah, great. Thank you, Olivia. And yeah, we're encouraging our two largest businesses, LATAM and Hills, both delivering really strong quarters, particularly on the EBIT line. LATAM up 15% on EBIT, and Hills up 20%. So getting the big businesses growing at that level is encouraging for us, and LATAM obviously continues to be such a consistently strong performer for us.

Noel Wallace: Thank you, Olivia. And yeah, we're encouraging our two largest businesses, Latin and Hills, both delivering really strong quarters, particularly at the EBITL line. Latin, up 15% on EBITL; Hills up 20%. So getting the big businesses growing at that level is encouraging for us. And Latin, obviously, continues to be such a consistently strong performer for us. Organic sales growth was strong. We saw good volume growth across all of our businesses. Every country was positive and volume, with the exception of Argentina. This was led by Brazil, which was high single digits, which is really, really strong. And four quarters of mid-single digit volume growth in Latin.

Speaker Change: Yeah, great. Thank you, Olivia. And yeah, we're encouraged. You know, our two largest businesses, Latham and Hills.

Speaker Change: Both delivering really strong quarters, particularly at the EBIT line, Lackham up 15% on EBIT, Hills up 20%.

Speaker Change: Getting the big businesses growing at that level is encouraging for us. And LATAM obviously continues to be such a consistently strong performer for us.

Noel R. Wallace: Organic sales growth was strong. We saw good volume growth across all of our businesses. Every country was positive in volume, with the exception of Argentina.

Noel R. Wallace: This was led by Brazil, which had high single digits, which is really, really strong, and four quarters of mid-single digit volume growth in LATAM. So overall, a pretty good consumer environment. You know, I would say Brazil seems to be quite strong. Mexico slowed a little bit in the quarter.

Speaker Change: Organic sales growth was strong. We saw good volume growth across all of our businesses. Every country was positive in volume, with exception of Argentina. This was led by Brazil, which was high single digits, which was

Noel Wallace: So overall, a pretty good consumer environment. I would say Brazil seems to be quite strong. Mexico slowed a little bit in the quarter. We'll have to watch that carefully, but the rest of the region performed quite strongly. Oral cares, you mentioned, really strong performance. Our market shares are up 90 basis points across the division. Volume shares are up likewise across the division. So we encourage by that the strong marketing innovation that we put in the first half seems to be taking hold. So we think we're well set up for continued consistent growth as we move through the back half.

Speaker Change: really, really strong, and four quarters of mid-single-digit volume growth in LATAM. So, overall...

Speaker Change: a pretty good consumer environment. You know, I would say Brazil seems to be quite strong.

Noel R. Wallace: We'll have to watch that carefully, but the rest of the region performed quite strongly. Oral Care, as you mentioned, really strong performance. Our market shares are up 90 basis points across the division, and volume shares are up likewise across the division. So we're encouraged by that. The strong marketing innovation that we put in during the first half seems to be taking hold. So we think we're well set up for continued consistent growth as we move through the back half.

Speaker Change: Mexico slowed a little bit in the quarter.

Speaker Change: We'll have to watch that carefully, but the rest of the region performed quite strongly.

Speaker Change: Oral care, as you mentioned, really strong performance. Our market shares are up 90 basis points across the division.

Speaker Change: Volume shares are up likewise across the division, so we're encouraged by that.

Speaker Change: The strong marketing innovation that we put in the first half seems to be taking hold. So we think we're well set up for continued consistent growth as we move through the back half. So I would characterize the consumer environment as pretty good. And the innovation that we have, particularly at the premium side, seems to be taking hold on whitening.

Noel R. Wallace: So I would characterize the consumer environment as pretty good. And the innovation that we have, particularly on the premium side, seems to be taking hold on whitening. And some of the core relaunches seem to be driving some good success in terms of household penetration. So overall, we're encouraged by LATAM and continue to believe it'll be a great growth driver for us moving forward.

Noel Wallace: So I would characterize the consumer environment as pretty good. And the innovation that we have, particularly at the premium side, seems to be taking hold on whitening. And some of the core relaunches seem to be driving some good success in terms of household penetration. So overall, we're encouraged by Latin and continue to believe it'll be a great growth harbor for us moving forward.

Speaker Change: And some of the core relaunches seem to be driving some good success in terms of household penetration. So overall, we're encouraged by LATAM and continue to believe it will be a great growth driver for us moving forward.

Steve Powers: The next question comes from Steve Powers with Twitch Bank. Please go ahead.

Unknown Executive: The next question comes from Steve Powers with Deutsche Bank. Please go ahead.

Speaker Change: The next question comes from Steve Powers with Deutsche Bank. Please go ahead.

Steve Powers: Good morning. Thank you.

Stephen Robert R. Powers: Hey guys, good morning, thank you. Noel, I was hoping we could talk about pricing more broadly as it's been a topic already, but it's the number one focus, as I've heard from investors today. And really, not just for Colgate, not just in North America, but for the industry at large, given what we've seen and heard from others. We're arguably seeing pricing coming down faster than might've previously been expected, at least in significant pockets. It's not hurting your performance today,

Steve Powers: No, we could talk about pricing more broadly. It's been a topic already, but it's been the number one focus, as I've heard team investors today, and really not just for Colgate, not just in North America, but for the industry at large, given what we've seen from I heard from others. We're arguably pricing's coming down faster than might have previously been expected, at least in significant pockets. It's not hurting your performance today. You know, volumes of gross margins are great. Strong reinvestment, middle of PNL is discussed.

Stephen Robert R. Powers: Hey, guys. Good morning. Thank you. Noel, I was hoping we could talk about pricing more broadly, as it's been a topic already, but it's been the number one focus, as I've heard from investors today. And really not just for Colgate, not just for North America, but for the industry at large, given what we've seen and heard from others.

Speaker Change: We're arguably pricing's coming down faster than might have previously been expected, at least in significant pockets. It's not hurting your performance today, you know, volumes of gross margins are great, strong reinvestment middle of P&L as we discussed.

Noel R. Wallace: Volumes and gross margins are great, and strong reinvestment in the middle of the P&L, as we discussed. But I guess the question is, if the direction of travel is lower on pricing, again, not just for Colgate but for the competitive set, is that volume and full P&L performance sustainable? And how do you think about that?

Noel Wallace: But I guess, you know, the question is, is the direction of travel lower on pricing? Again, not just for Colgate, but for the competitive set. Is that volume and full PNL performance sustainable? And how do you think about that?

Speaker Change: But I guess the question is, if the direction of travel is lower on pricing, again, not just for Colgate, but for the competitive set, is that volume and full P&L performance sustainable, and how do you think about that?

Noel Wallace: Yeah, well, listen, we know that the market's been focused on getting back to volume growth, but we've consistently talked about, and I talked about it certainly at Deutsche Bank in Paris, on the importance of that growth being balanced. That we were going to continue to focus on the strong revenue growth management principles we have in place, the price back architecture work that we're doing, and the necessity to continue to get pricing in the P&L. Now, as the inflationary environment becomes more benign, obviously we'll see some foreign exchange transactional pricing that needs to go into the P&L, but we're going to continue to be very focused on finding ways to drive some balanced pricing through the P&L, and we think we'll continue to see that, obviously in the back half of the year, for across most of our divisions.

Noel R. Wallace: Yeah, well, listen, we know that the market's been focused on getting back to volume growth, but we've consistently talked about, and I talked about it certainly at Deutsche Bank in Paris, the importance of that growth being balanced, that we were going to continue to focus on the strong revenue growth management principles we have in place, the price pack architecture work that we're doing, and the necessity to continue to get pricing in the P&L. Now, as the inflationary environment becomes more benign, obviously, we'll see some foreign exchange transactional pricing that needs to go into the P&L, but we're going to continue to be very focused on finding ways to drive some balanced pricing through the P&L, and we think we'll continue to see that, obviously, in the back half of the year across most of our divisions.

Speaker Change: Yeah, well, listen, we know that the market's been focused on getting back to volume growth, but we've consistently talked about, and I talked about it certainly at Deutsche Bank.

Speaker Change: in Paris on the importance of that growth being balanced, that we were going to continue to focus on

Speaker Change: The Strong Revenue Growth Management Principles we have in place, the price pack architecture work that we're doing, and the necessity to continue to get pricing in the P&L. Now as the inflationary environment becomes more benign, obviously we'll see some foreign exchange transactional pricing that needs to go into the P&L, but we're going to continue to be very focused on finding ways.

Speaker Change: to drive some balance pricing through the P&L. And we think we'll continue to see that, obviously, in the back half of the year across most of our divisions.

Noel Wallace: As I mentioned earlier, our revenue growth management capabilities are very, very strong right now, and that's encouraging for us to find ways where we're seeing less inflationary pricing, to find ways to optimize category growth from a dollar standpoint. But we talked about it consistently that we would see particularly this year infect more towards volume than pricing. But that being said, the 4.2 percent pricing that we generated in the second quarter continues to be very, very strong in the context of where the marketplace. And I think that talks to the strength of our brands, and our need to continue to offset some of the inflationary pressures that we saw in the business.

Noel R. Wallace: As I mentioned earlier, our revenue growth management capabilities are very, very strong right now, and that's encouraging for us to find ways where we're seeing less inflationary pricing to find ways to optimize category growth from a dollar standpoint, but we talked about it consistently that we would see, particularly this year, inflect more towards volume than pricing. But that being said, the 4.2 percent pricing that we generated in the second quarter continues to be very, very strong in the context So, overall, we'll see pricing in the second half be a little bit lower than where we were in the second quarter, but given the levels of raw material inflation and the benefit of FTG, we still feel good about where we are from a gross profit standpoint.

Speaker Change: As I mentioned earlier, our revenue growth management capabilities are very, very strong right now. And that's encouraging for us to find ways where we're seeing less inflationary pricing to find ways to optimize category growth.

Speaker Change: From a dollar standpoint, but we've talked about it consistently that we would see

Speaker Change: Particularly this year, in fact, more towards volume than pricing. But that being said, the 4.2% pricing that we generated in the second quarter continues to be very, very strong in the context of where the market plays. And I think that talks to the strength of our brands.

Noel Wallace: So overall, we'll see pricing in the second half come to be a little bit lower than when we were in the second quarter, but given the levels of raw material inflation and the benefit of FTG, we still feel good about where we are from a growth profit standpoint.

Speaker Change: and our need to continue to offset some of the inflationary pressures that we saw in the business. So overall, we'll see pricing in the second half be a little bit lower than where we were in the second quarter. But given the levels of raw material inflation and the benefit of FTG, we still feel good about where we are from a gross profit standpoint.

Brian Spillane: The next question comes from Brian Spillane with Bank of America. Please go ahead.

Unknown Executive: The next question comes from Bryan Spillane with Bank of America. Please go ahead.

Bryan Douglass Spillane: Hey, thanks, operator, and good morning everyone. Morning Bryan. Morning. First, I just wanted to extend a happy birthday to Peter Grom. We all love Pete.

Speaker Change: The next question comes from Bryan Spillane with Bank of America. Please go ahead. Hey, thanks, operator, and good morning, everyone. Morning, Bryan. Morning. First, I just wanted to extend a happy birthday to Peter Grom. We all love Pete.

Brian Spillane: Hey, thanks, operator, and good morning, everyone. Hi, Brian. Good morning.

Unknown Executive: First, I just wanted to extend a happy birthday to Peter Graham. We all love Pete.

Noel R. Wallace: Second, just a question, I guess, as we go into kind of looking at the first half and going into the balance of the year and thinking about just as we fill in our models, kind of the base that we're using for 24 for next year. I guess, Noel, you've had upside in the first half. And I think last year there was some reinvestment. And I think as you started this year, you also spoke a bit about a bias to balance driving earnings growth but, at the same time, taking the opportunity when you have it, when things are good, and you've got upside to reinvest.

Brian Spillane: Second, just a question, I guess, as we go into kind of looking at the first half and going into the balance of the year, and thinking about just as we fill in our models, kind of the base that we're using for 24 for next year. So, I guess, though, you've had upside in the first half, and I think, you know, last year there was some reinvestment, and I think as you started this year, you also spoke a bit about the bias to balance the driving earnings growth, but at the same time, you know, taking the opportunity when you have it, right, when things are good, and you've got upside to reinvest.

Bryan Douglass Spillane: Second, just a question, I guess, as we go into kind of looking at the first half and going into the balance of the year and thinking about just as we fill in our models, kind of the base that we're using for 24 for next year.

Speaker Change: I guess, Noel, you know, you've had upside in the first half, and I think, you know, last year there was some reinvestment, and I think as you started this year, you also spoke a bit about

Speaker Change: Unknown Speaker You know, the bias, right to balance the driving earnings growth, but at the same time, you know, taking the opportunity when you have it right with when things are good, and you've got upside to reinvest, can you give us a sense of just the

Noel R. Wallace: So can you give us a sense of just the possible scope of reinvestment that's occurred in the first half? And then, as we're thinking about the second half, would that be your bias? Have you identified potential areas to spend some money back that you hadn't planned? And then Finally, as we're thinking about that as a base for 25, you know, is there anything we should consider with regard to the level of investment in 25, whether this would be a good base off of 24? Thanks.

Brian Spillane: So, can you give us a sense of just maybe the scope of reinvestment that occurred in the first half, and then as we're thinking about the second half, you know, would that be your bias? Have you identified potential areas to spend some money back that you hadn't planned? And then finally in that, as we're thinking about that for a base for 25, you know, is there anything we should consider with regard to the level of investment in 25, whether this would be a good base of 24?

Unknown Speaker: Maybe the scope of reinvestment that's occurred in the first half. And then, as we're thinking about the second half, you know, would that be your bias? Have you identified potential areas to spend some money back that you hadn't planned? And then

Unknown Speaker: Finally, in that, as we're thinking about that for a base for 25, you know, is there anything we should consider with regards to the level of investment in 25, whether this would be a good base off of 24? Thanks.

Noel Wallace: Thanks. Yeah, thanks, Brian. You know, again, very consistent with what we've spoke about in the past, and that is, you know, getting the flexibility in the middle of the P&L to give us the opportunities to really direct advertising in areas where we're going to get the best return on that investment. And with the continued growth and gross margin dollars, with the strong top-lying growth, that afford just that flexibility around the world. And at the same time, as I've mentioned, we are all over trying to improve the ROI of that span in terms of getting more bang for the buck, and being very deliberate in terms of how we approach the advertisers, not increased advertising for the sake of increased advertising.

Noel R. Wallace: Yeah, thanks, Bryan. Again, very consistent with what we've spoken about in the past, and that is getting the flexibility in the middle of the P&L to give us the opportunities to really direct advertising in areas where we're going to get the best return on that investment. And with the continued growth in gross margin dollars, with the strong top-line growth, that affords us that flexibility around the world. And at the same time, as I've mentioned, we are all trying to improve the ROI of that span in terms of getting more bang for the buck and being very deliberate in terms of how we approach advertising, not increased advertising for the sake of increased advertising.

Bryan: Yeah, thanks, Bryan. You know, again, very consistent with what we've spoke spoke about in the past and that is, you know, getting the flexibility in the middle of the P&L to give us

Bryan: The opportunities to really direct advertising in areas where we're going to get the best return on that investment.

Bryan: And with the continued growth in gross margin dollars, with the strong top-line growth, that affords us that flexibility around the world. And at the same time, as I've mentioned, we are all over trying to improve the ROI of that span in terms of getting more bang for the buck.

Bryan: and being very deliberate in terms of how we approach the advertising, not increased advertising for the sake of increased advertising, the ROI.

Noel R. Wallace: The ROI culture that we're implementing across the organization is very, very strong. So our intention is to continue to invest where we see a return on investment. And we see real opportunities for continued volume growth opportunities, particularly around household penetration and building brand awareness. And we'll continue to invest opportunistically where we see those opportunities. So I don't think there'll be anything changing in the back half of this year. Our intention is to continue to invest in the business and drive that top line consistently to drive the bottom compounding growth that we've talked about over the last three or four quarters, and Bryan, I think.

Stan Satula: The ROI culture that we're implementing across the organization is very, very strong. So, you know, our intention is to continue to invest where we see a return on investment, and we see rural opportunities for continued volume growth opportunities, particularly around household penetration and build brand awareness, and we'll continue to invest opportunistically where we see those opportunities. So I don't think there'll be anything changing in the back half of this year. Our intention is to continue to invest behind the business and drive that top-line consistently to drive the bottom compound and growth that we talked about over the last three or four quarters.

Bryan: Culture that we're implementing across the organization.

Bryan: is very, very strong. So, you know, our intention is to continue to invest where we see a return on investment.

Bryan: and we see real opportunities for continued volume growth opportunities particularly around household penetration and build brand awareness.

Bryan: And we'll continue to invest opportunistically where we see those opportunities. So I don't think there'll be anything changing in the back half of this year. Our intention is to continue to invest behind the business and drive that top line consistently to drive the bottom compounding growth that we've talked about over the last three or four quarters.

Stanley J. Sutula: And Bryan, I think, you know, just to add on to that, you know, if you look, I think we've demonstrated a good track record here with our ROIC back over 33%. You know, while we're on a mission for consistent, compounded EPS growth, and we'll make those investments where we see the ROI, and I think our track record's pretty good here, and we'll look to continue that going

Stan Satula: Brian, I think you know, just add on to that, you know, if you look, I think we've demonstrated a good track record here with our ROIC back over a 33%. You know, I'll run a mission for consistent, compounded EPS growth, and we'll make those investments where we see the ROI. I think our track record is pretty good here, and we'll look to continue that going forward.

Bryan: And, Bryan, I think, you know, just to add on to that, you know, if you look, I think we've demonstrated a good track record here with our ROIC back over 33%. You know, while we're on a mission for...

Bryan Douglass Spillane: Consistent Compounded EPS Growth, and we'll make those investments where we see the ROI, and I think our track record's pretty good here, and we'll look to continue that going forward.

Robert Ottenstein: The next question comes from Robert Ottenstein with Evercore ISI. Please go ahead.

Unknown Executive: The next question comes from Robert Ottenstein with Evercore ISI. Please go ahead.

Bryan Douglass Spillane: The next question comes from Robert Ottenstein with Evercore ISI.

Robert Ottenstein: Great, thank you. First, a quick follow-up, just on North America, given that you're returning to historical or normal promotional levels, would it be fair to say that you don't expect any kind of particular competitive response? So just love to get caught on that.

Robert Edward Ottenstein: Great, thank you. First, a quick follow-up. Just on North America, given that you're returning to historical or normal promotional levels, would it be fair to say that you don't expect any kind of particular competitive response? I would love to get some color on that.

Robert Moskow: Please go ahead.

Robert Edward Ottenstein: Great, thank you. First, a quick follow-up, just on North America, given that you're returning to historical or normal promotional levels.

Robert Edward Ottenstein: Would it be fair to say that you don't expect any kind of particular competitive response?

Robert Ottenstein: And then my bigger picture question is, it seems to us, and I think we see it in your results. That the consumer, at least certain groups of consumers, are more willing, perhaps, than in the past to pay up for innovation and performance, perhaps more than pre-COVID levels. Is that, in fact, something that is true that you're seeing?

Noel R. Wallace: And then my bigger picture question is, it seems to us, and I think we see it in your results, that the consumer, at least certain groups of consumers, are more willing, perhaps than in the past, to pay up for innovation and performance, perhaps more than pre-COVID levels. Is that, in fact, something that is true that you're seeing? Why would that be the case? And is it perhaps in combination with better communications on your part in terms of making clear exactly how the performance is better, and maybe what's driving that better communication? Thank you, good morning, Ron.

Speaker Change: So, just love to get color on that. And then my bigger picture question is, it seems to us...

Speaker Change: and I think we see it in your results.

Speaker Change: that the consumer, at least certain groups of consumers, are more willing, perhaps, than in the past, to pay up for innovation and performance.

Speaker Change: perhaps more than pre-COVID levels.

Robert Ottenstein: Why would that be the case? Or, and is it perhaps in combination with better communications on your part? In terms of making clear exactly how the performance is better and maybe what's driving that better communications.

Speaker Change: Is that in fact something that is true that you're seeing? Why would that be the case?

Speaker Change: And is it perhaps in combination with better communications on your part in terms of making clear exactly how the performance is better and maybe what's driving that better communications? Thank you.

Noel Wallace: Thank you.

Noel Wallace: Yeah, good morning, Ron. Thank you. Again, I think that the overall promotional environment is constructive. As I mentioned, we may have pulled back a little bit too far last year as we pull promotions out to get some pricing in the categories. And we've simply rebalanced that to, more importantly, probably match promotional pricing than to certainly to lead it. Our intention is not to lead the category on a promotional cadence that can't be sustained. So overall, we feel like it's more or less consistent with where we are. We'll continue to be very prudent and mindful on where we invest, invest those dollars, and making sure that we see the volume and the gross margin where we need it to be to continue to sustain.

Noel R. Wallace: Yeah, good morning, Ron. Thank you. Again, I think that the overall promotional environment is constructive. As I mentioned, we may have pulled back a little bit too far last year as we pulled promotions out to get some pricing in the categories. And we've simply rebalanced that to, more importantly, probably match promotional pricing rather than certainly lead it. Our intention is not to lead the category on a promotional cadence that can't be sustained. So overall, we feel like it's more or less consistent with where we are.

Speaker Change: Yeah, good morning, Ron. Thank you. Again, you know, I think that the overall promotional environment is constructive. As I mentioned, we may have pulled back a little bit too far last year as we pulled promotions out to get some pricing in the categories.

Speaker Change: And we've simply rebalanced that to, more importantly, probably match promotional pricing than to lead, certainly to lead it. Our intention is not to lead.

Speaker Change: the category on a promotional cadence that can't be sustained so overall we feel like it's more or less consistent with where we are will continue to be very prudent and mindful

Noel R. Wallace: We'll continue to be very prudent and mindful of where we invest those dollars and make sure that we see the volume and the gross margin where we need them to be to continue to sustain where we want to focus on, which is strong advertising, building brands, and leveraging the strong innovation pipeline that we have. Now, if I extend the innovation, clearly, we will continue to operate with a real focus on the premium side of the business.

Speaker Change: on where we invest those dollars and making sure that we see the volume and the gross margin where we need it to be to continue to sustain where we want to focus on which is strong advertising, building the brands, and leveraging the strong innovation pipeline that we have.

Noel Wallace: Where we want to focus on, which is strong advertising, building the brands and leveraging the strong innovation pipeline that we have. You know, if I extend on the innovation, clearly we will continue to operate with a real focus on the premium side of the business. And we're seeing great results from that across most of our divisions; were some of our premium innovation, particularly in whitening. Now, with the relaunch of Total going into Latin America, obviously Lmax and Maradol at the premium side were some other innovations we’re seeing great inflection on the premium side of the business.

Speaker Change: You know, if I extend on the innovation, clearly we will continue to operate with a real focus on the premium side of the business.

Speaker Change: And we're seeing great results from that across most of our divisions where some of our premium innovation, particularly in whitening.

Noel R. Wallace: And we're seeing great results from that across most of our divisions where some of our premium innovation, particularly in whitening, now with the relaunch of Total going into Latin America, obviously, Elmex and Meridol on the premium side with some of their innovations, we're seeing great inflection on the premium side of the business. And if you couple that with the strong core business innovation that we've had, Max Fresh in India is a great example of that.

Speaker Change: Now, with the relaunch of Total going into Latin America, obviously, Elmex and Meridol at the premium side with some of their innovations, we're seeing great inflection on the premium side of the business.

Noel Wallace: And if you couple that with the strong core business innovation that we've had, Max Fresh and India, great example of that, we're seeing great core innovation that's driving real value-oriented points of difference versus our competitors. And that's what we'll focus on making sure that consumers are willing to trade up based on a real strong proposition and a big selling idea behind that. We've talked about the science and the superiority of our brands, and we're really trying to incorporate that much more into our messaging. To your point, to get the messaging stronger and the content delivery stronger.

Speaker Change: And if you couple that with the strong core business innovation that we've had, Max Fresh in India, a great example of that. We're seeing great core innovation that's driving real value-oriented points of difference versus our competitors, and that's what we'll focus on, making sure that consumers are willing to trade up.

Noel R. Wallace: We're seeing great core innovation that's driving real value-oriented points of difference versus our competitors. And that's what we'll focus on, making sure that consumers are willing to trade up based on a really strong proposition and a big selling idea behind that. We've talked about the science and the superiority of our brands, and we're really trying to incorporate that much more into our messaging, to your point, to get the messaging stronger and the content delivery stronger. So overall, it's a combination of all of which you discussed, making us be focused on ensuring that we have the innovation pipeline and the pricing in place to continue to sustain that strong top-line growth.

Speaker Change: based on a real strong proposition and a big selling idea behind that. We've talked about the science and the superiority of our brands and we're really trying to incorporate that much more into our messaging.

Noel Wallace: So overall, it's a combination of all of which you've discussed, making us be focused on ensuring that we have the innovation pipeline and the pricing in place to continue to sustain that strong top line growth.

Speaker Change: To your point, to get the messaging stronger and the content delivery stronger. So overall, it's a combination of all of which you discussed, making us be focused on ensuring that we have the innovation pipeline and the pricing in place to continue to sustain that strong top-line growth.

Lauren Lieberman: The next question comes from Lauren Lieberman with Barclays. Please go ahead.

Unknown Executive: The next question comes from Lauren Lieberman with Barclays. Please go ahead.

Speaker Change: The next question comes from Lauren Lieberman with Barclays. Please go ahead.

Noel Wallace: Great thanks, good morning. I know you just mentioned Elmex and Merritt on the last question, but I wanted to ask a bit about that three brand strategy in Europe and get just maybe a bit of an update, you know, and kind of how you're managing channel reach. If you've taken those more premium brands beyond the pharmacy channel in Europe, more countries that have been added maybe in the last few years, it was kind of lost sight of and how applicable that strategy in particular may be to other markets, because I think I recall that you were launching one of the premium brands in Latin America a few years ago, just, you know, curious if that's progressed at all.

Lauren Rae Lieberman: Great. Thanks. Good morning. I know you just mentioned Elmex and Meridol in the last question, but I wanted to ask a bit about that three-brand strategy in Europe and get just maybe a bit of an update, you know, on kind of how you're managing.

Lauren Rae Lieberman: Last question, but I wanted to ask a bit about that three-brand strategy in Europe and get just maybe a bit of an update, you know, on kind of how you're managing channel reach, if you've taken those more premium brands beyond the pharmacy channel in Europe, more countries that have been added maybe in the last few years that we've kind of lost sight of, and how applicable that strategy, in particular, may be to other markets, because I I'm just, you know, curious if that's progressed at all.

Lauren Rae Lieberman: channel reach, if you've taken those more premium brands beyond the pharmacy channel in Europe .

Lauren Rae Lieberman: more countries that have been added maybe in the last few years that we've kind of lost sight of and how applicable that strategy in particular may be to other markets because I think I recall that you were launching one of the premium brands in Latin America a few years ago. I'm just, you know, curious if that's progressed at all. Thanks.

Noel Wallace: Thanks. Yeah, thanks, Lauren, and yeah, you're absolutely right. We launched Elmex in Brazil, and I'll come back to that here at the end of my answer. But overall, there's been a very deliberate strategy for us to really flex our portfolio far more than we have done historically and making sure that we're capturing what are the unique needs and the consumer journey and the marketplace and what are the growing parts of the category, particularly the therapeutic side of the category, which is where we were not seeing the level of growth that we needed. So using Elmex and Meridol, particularly across Europe, to capitalize on that growth has been very successful.

Noel R. Wallace: Yeah, thanks, Lauren. And yeah, you're absolutely right.

Noel R. Wallace: Thanks. Yeah, thanks, Lauren. And yeah,

Noel R. Wallace: We launched Elmex in Brazil, and I'll come back to that here at the end of my answer. You know, but overall, it's been a very deliberate strategy for us to really flex our portfolio far more than we have done historically in making sure that we're capturing what are the unique needs and the consumer journey in the marketplace, and what are the growing parts of the category, and particularly the therapeutic side of the category, which is where we were not seeing the level of growth that we needed.

Speaker Change: Yeah, thanks, Lauren. And yeah, you're absolutely right. We launched Elmex in Brazil. And I'll come back to that here at the end of my my answer. You know, but overall, it's been a very deliberate strategy for us to really flex our portfolio.

Speaker Change: far more than we have done historically in making sure that we're capturing.

Speaker Change: What are the unique needs and the consumer journey in the marketplace and what are the growing parts of the category, particularly the therapeutic side of the category?

Noel R. Wallace: So using Elmex and Meridol, particularly across Europe, to capitalize on that growth has been very successful. You combine that with the strong focus we've had on whitening and multi-benefit in total as well as the optic across the world, that gives us a unique combination of offerings to both the retail environments that we compete in, as well as the consumer. And the retail environments, we've been very disciplined about how we take Elmex and Meridol around the world. First and foremost, we've been very deliberate and selective about what markets we're going to put that into. We're not going to put it in for opportunity's sake alone.

Speaker Change: which is where we were not seeing the level of growth that we needed. So, using Elmex and Meridol, particularly across Europe , to capitalize on that growth has been very successful. You combine that with the strong focus we've had on whitening.

Noel Wallace: You've combined that with the strong focus we've had on whitening and multi-benefit in total, as well as the optic across the world. That gives us a unique combination of offerings to both the retail environments that we compete in as well as the consumer, and the retail environments. We've been very disciplined about how we take Elmex and Meridol around the world. First and foremost, we've been very deliberate and selective on what markets we're going to put that into. We're not going to put it in for opportunity's sake alone. We're going to be strategic about where we do that, particularly where the pharmacy channel is strong and the therapeutic benefits are growing, and we have a unique offering to go against some of our competitors in that space.

Speaker Change: and multi-benefit in total as well as optic across the world.

Speaker Change: That gives us a unique combination of offerings to both the retail environments that we compete in.

Speaker Change: as well as the consumer.

Speaker Change: And the retail environments is we've been very disciplined about how we take Elmex and Meridol around the world. First and foremost, we've been very deliberate.

Noel R. Wallace: We're going to be strategic about where we do that, particularly where the pharmacy channel is strong and the therapeutic benefits are growing, and we have a unique offering to go against some of our competitors in that space. So we're going to be very selective on how we continue to take that around the world, but we will take it to new markets around the world where we see that opportunity. The point is, I think, is getting the balance between Elmex, Meridol, and Colgate right, and Europe's been a great test market for that, where we're seeing very significant incremental growth across the whole entire franchise by being very focused on where we're going to take those brands and how we advertise them. So overall, we feel good about that.

Speaker Change: and selective on what markets we're going to put that into. We're not going to put it in for opportunity's sake alone. We're going to be strategic about where we do that, particularly where the pharmacy channel is strong and the therapeutic benefits are growing and we have a unique offering to go against some of our competitors in that space. So we're going to be very selective on how we continue to take that around the world, but we will take it to new markets around the world where we see that opportunity.

Noel Wallace: So we're going to be very selective on how we continue to take that around the world, but we will take it to new markets around the world where we see that opportunity. The point is I think is getting the balance between Elmex, Meridol, and Colgate right, and Europe's been a great test market for that. We're receiving very significant incremental growth across the whole entire franchise by being very focused on where we're going to take those brands and how we advertise them.

Speaker Change: The point is, I think, is getting the balance between LMEX, Meridol, and Colgate right.

Speaker Change: and Europe's been a great test market for that where we're seeing very significant incremental growth.

Speaker Change: across the whole entire franchise.

Noel R. Wallace: Professional was the other aspect and really focusing on the professional heritage of the Elmex and the Meridol brands. We've been very deliberate about going back to the profession, educating them on the science and the key point of difference behind the Elmex and the Meridol brands, and that's certainly led to stronger endorsement levels from the profession, which obviously improved the premiumness. Oh, and you had a question with regard to LATAM. Let me just come back on LATAM, Lauren, quickly.

Noel Wallace: So overall, we feel good about that. Professional was the other aspect and really focusing on the professional heritage of the Elmex and the Meridol brands. We've been very deliberate about going back to the profession, educating them on the science and the key point of difference behind the Elmex and the Meridol brands. And that certainly led to stronger endorsement levels from the profession, which obviously improved the premiumness of the brand and the loyalty that we have behind those franchises. Oh, and you had a question with regards to Latin. Let me come back on Latin, Lauren, quickly.

Speaker Change: by being very focused on where we're going to take those brands and how we advertise them. So, overall, we feel good about that.

Speaker Change: Professional was the other aspect and really focusing on the professional heritage of the Elmex and the Meridol brands.

Speaker Change: We've been very deliberate about going back to the profession,

Speaker Change: The key point of difference behind the Elmex and the Meridol brands, and that certainly led to stronger endorsement levels from the profession, which obviously improved the premiumness of the brand and the loyalty that we have behind those franchises.

Noel R. Wallace: Brazil was where we decided to take that brand, again, a very strong pharmacy class of trade where we were not seeing the incremental growth that we wanted just with the Colgate franchise. We came in with the Elmex brand in LATAM, launched it in pharmacies in Sao Paulo only, and then decided to expand that based on the success that we had around the country. We've seen that drive a very significant incremental share in the pharmacy class of trade, so a great combination of portfolio offerings to the pharmacists in terms of being high-end therapeutics with the Elmex brand and making sure that we had the core offerings for the pharmacists as well with the Colgate brand.

Speaker Change: Oh, and you had a question with regards to LATAM. Let me come back on LATAM, Lauren, quickly. The Brazil was where we decided to take that brand. Again, a very strong pharmacy class of trade.

Noel Wallace: The Brazil was where we decided to take that brand, again a very strong pharmacy class of trade, where we were not seeing the incremental growth that we wanted just with the Colgate franchise. We came in with the Elmex brand in Latin, launched it in pharmacies in São Paulo only, and then decided to expand that based on the success that we had around the country. And we've seen that drive a very significant incremental share in the pharmacy class of trade. So a great combination of portfolio offerings to the pharmacist in terms of being high-end therapeutic with the Elmex brand and making sure that we had the core offerings for the pharmacist as well with the Colgate brand.

Speaker Change: where we were not seeing the incremental growth that we wanted just with the Colgate franchise.

Speaker Change: We came in with the Elmex brand in LATAM, launched it in pharmacies in Sao Paolo only, and then decided to expand that based on the success that we had around the country, and we've seen that drive a very significant incremental share in the pharmacy class of trade. So, a great combination of portfolio offerings.

Speaker Change: to the pharmacist in terms of being high-end therapeutic with the Elmex brand.

Noel Wallace: So it's been a great combination for us to leverage that portfolio. And we'll use that as a proxy as we think about new markets around the world. But again, a very consistent and disciplined go-to-market strategy, only launching in pharmacy, building the brand through the profession and then finding ways to potentially democratize that brand as we move forward.

Speaker Change: and making sure that we had the core offerings for the pharmacist as well with the Colgate brand. So it's been a great combination for us to leverage that portfolio.

Noel R. Wallace: It's been a great combination for us to leverage that portfolio. We'll use that as a proxy as we think about new markets around the world, but again, a very consistent and disciplined go-to-market strategy, only launching in pharmacy, building the brand through the profession, and then finding ways to potentially democratize that brand as we move forward, but we're going to be very deliberate and very cautious as we do that to ensure that the brand is well-established and well-seated in the marketplace based on its credentials.

Speaker Change: And we'll use that as a proxy as we think about new markets around the world. But again, a very consistent and disciplined go-to-market strategy, only launching in pharmacy, building the brand through the profession, and then finding ways to potentially democratize that brand as we move forward. But we're going to be very deliberate.

Noel Wallace: But we're going to be very deliberate and very cautious as we do that to ensure that the brand is well established and well seated in the marketplace based on its good end.

Speaker Change: and very cautious as we do that to ensure that the brand is well-established and well-seeded in the marketplace based on its credentials.

Mark Astrachan: The last question will come from Mark Astrachan with Steeple. Please go ahead.

Unknown Executive: The last question will come from Mark Astrachan with Stiefel. Please go ahead.

Speaker Change: The last question will come from Mark Astrachan with Stiefel. Please go ahead.

Mark Stiefel Astrachan: Thanks and good morning everybody. I wanted to ask you a couple of questions, one more for clarification on the North America commentary and the shift to lower price channels. You know, we can see in the scanner data these days, the shift to Costco and Amazon, as an example. The growth is like eight, nine times what it is in the legacy track channels. I guess you are referring to those as lower price channels? If not, I guess I'm curious what's driving the growth. It's been there for at least a number of quarters now.

Mark Astrachan: Yeah, thanks, and morning, everybody. I wanted to ask you a couple of questions. One more clarification on the North America commentary and the shift to lower price channels. We can see in the scanner data these days the shift to Costco, Amazon as an example. The growth is like eight, nine times what it is, and the legacy track channels. Are you referring to those lower price channels? If not, I guess I'm curious what's driving the growth that's been there for at least a number of quarters now.

Mark Stiefel Astrachan: Yeah, thanks, and good morning, everybody.

Mark Stiefel Astrachan: I wanted to ask you a couple of questions, one more for clarification on the North America commentary and the shift to lower price channels. You know we can see in the scanner data these days the shift to Costco, Amazon as an example, the growth is is like eight, nine times what it is.

Speaker Change: The Legacy Track Channels. I guess, are you referring to those as lower price channels? You know, if not, I guess I'm curious what's driving the growth that's been there for, you know, at least

Mark Astrachan: So what's driving the share shift into those channels and then separately, unrelatedly, on prescription diet and your commentary around the supply chain flexibility, increasing shelf space and volume. We started to see some of it in the pet specialty channel, but you still have a sign up there that says you need to have a prescription to buy the product. So I guess I'm curious how that works in terms of get on shelf. You increased brand awareness, and it sort of sells from there. And if you could provide just the mix of the prescription versus the rest of the business that they helped.

Mark Stiefel Astrachan: A number of quarters now. So what's driving the share shift into those channels and then

Noel R. Wallace: So what's driving the share shift into those channels? And then separately, unrelatedly, on the prescription diet and your commentary around supply chain flexibility, increasing shelf space, and volume. We started to see some of it in the pet specialty channel, but you still have a sign up there that says you need to have a prescription to buy the product. So I guess I'm curious how that works in terms of you get on the shelf, you increase brand awareness, and it sort of sells from there. And if you could provide just the mix of the prescription versus the rest of the business, that'd be helpful too. Thank you. Yeah, thanks, Mark.

Speaker Change: Separately, unrelated, beyond.

Speaker Change: Prescription Diet and your commentary around the supply chain flexibility increasing shelf space and volume.

Speaker Change: We started to see some of it in the pet specialty channel, but you still have a sign up there that says you need to have a prescription to buy the product. So I guess I'm curious how that works in terms of, you know, you get on shelf, you increase brand awareness.

Speaker Change: and it sort of sells from there. And if you could provide just the mix of the prescription versus the rest of the business, that'd be helpful too. Thank you.

Noel Wallace: So thank you. Yeah, thanks, Mark. You know, let me take the retail channel. This has been, I think, nothing new here, quite frankly, and I wouldn't say it's been a huge inflection in terms of shift. You've seen the non-tracked Nielsen channels consistently growing faster than the tracked Nielsen channels, and you know there's a value play there. Obviously, was some of the club the club offerings, but overall I think all the channels are looking very, very carefully at their value proposition and the price back architectures and finding ways to ensure that there's a value orientation back to the consumer without losing, obviously, the great pricing that's come through the PNLs or the categories of the last couple of years.

Noel R. Wallace: Yeah, thanks, Mark. You know, let me take the retail channel. This has been, I think, nothing new here, quite frankly, and I wouldn't say it's been a huge inflection in terms of shift. You've seen the non-tracked Nielsen channels consistently growing faster than the tracked Nielsen channels. And, you know, there's a value play there, obviously, with some of the club offerings. But overall, I think all the channels are looking very, very carefully at their value proposition and their price pack architectures and finding ways to ensure that there's a value orientation back to the consumer without losing, obviously, the great pricing that's come through the P&Ls or the categories over the last couple years. And I don't anticipate those shifts will be anything different moving forward.

Speaker Change: Yeah, thanks Mark. You know, let me take the retail channels. This has been, you know, I think nothing new here, quite frankly, and I wouldn't say it's been a huge inflection in terms of shift. You've seen the non-tracked Nielsen channels consistently growing faster.

Speaker Change: then the Track Nielsen channels and you know there's there's a value play there obviously with some of the club

Speaker Change: the club offerings. But overall, I think all the channels

Speaker Change: are looking very very carefully at their value proposition and their price pack architectures and finding ways to ensure

Speaker Change: that there's a value orientation back to the consumer without losing, obviously, the great pricing that's come through the P&Ls or the categories over the last couple years. And I don't anticipate those shifts will be anything different moving forward.

Noel Wallace: And I don't anticipate those shifts will be anything different moving forward. We will continue to see, I think, more consistent with where we've been in the past, and we're well prepared to continue to capitalize on those shifts. But the encouraging aspect is growing the Nielsen Track channels. We've seen, as you've seen, as I mentioned earlier, the strong volume share growth that we've had in the Nielsen track channels. We're encouraged by that to suggest that obviously the innovation and the value proposition. There were offering to our trade customers to grow their categories continues to be quite solid on prescription diet. Again, you know, great opportunity for us to continue to grow the prescription diet business.

Noel R. Wallace: We'll continue to see, I think, more consistent with where we've been in the past, and we're well prepared to continue to capitalize on those shifts. But the encouraging aspect is growing the Nielsen track channels. We've seen, as you've seen, as I mentioned earlier, the strong volume share growth that we've had in the Nielsen track channels.

Speaker Change: We'll continue to see, I think, more consistently where we've been in the past, and we're well prepared to continue to capitalize on those shifts. But the encouraging aspect is growing the Nielsen track channels. We've seen, as you've seen, as I mentioned earlier, the strong volume share growth.

Noel R. Wallace: We're encouraged by that to suggest that, obviously, the innovation and the value propositions that we're offering to our trade customers to grow their categories continue to be quite solid. On prescription diet, again, you know, a great opportunity for us to continue to grow the prescription diet business. You know, we've talked about it in the past where the prescription diet opportunity exists, but only less than 5% of pets are using therapeutic nutrition today.

Speaker Change: that we've had in the Nielsen track channels. We're encouraged by that to suggest that obviously the innovation and the value propositions they were offering to our trade customers to grow their categories.

Speaker Change: continues to be quite solid.

Speaker Change: On prescription diet, again, you know, a great opportunity for us to continue to grow the prescription diet business.

Noel Wallace: You know we've talked about it in the past where the prescription diet opportunity with only less than 5% of pets are using the therapeutic nutrition today, and while our studies show you've heard me saying talk about in the past, at 80% of pets can benefit from the therapeutic nutrition. So we're very focused on making sure pet specialty, our vet partners, etc. have the plethora of offerings that we bring to the market, and the increased capacity that we have with Tongue and Oxy coming online and allowing us to optimize our network and provide more of our offerings to the retail environments on a consistent basis is playing out quite nicely for the brand.

Speaker Change: You know, we've talked about it in the past, where...

Speaker Change: The Prescription Diet Opportunity with only less than 5% of pets are using a therapeutic nutrition today. And while our studies show, as you've heard me talk about in the past, that 80% of pets can benefit from the therapeutic nutrition. So we're very focused on making sure

Noel R. Wallace: And while our study shows, you've heard me saying, and talked about in the past that 80% of pets can benefit from therapeutic nutrition. So we're very focused on making sure pet specialty, our vet partners, et cetera, have the plethora of offerings that we bring to the market, and the increased capacity that we have with Tonganoxy coming online and allowing us to optimize our network and provide more of our offerings to the retail environments on a consistent basis is playing out quite nicely for the brand.

Speaker Change: Pet Specialty, our vet partners, etc. have the plethora of offerings that we bring to the market and the increased capacity.

Speaker Change: that we have with Tonga Noxi coming online and allowing us to optimize our network and provide more of our offerings to the retail environments on a consistent basis is playing out quite nicely for the brand.

Noel R. Wallace: Getting more of those recipes into pet specialty and neighborhood pet stores as well as making sure we have consistent supply to our veterinary professionals, who recommend and provide that recommendation to their pet owners, has been terrific for them. So we will continue to make sure that the offering expands and we continue to look for ways to increase the mix towards prescription diets, which is a real benefit for the pet owner.

Noel Wallace: Getting more of those recipes into pet specialty and neighborhood pet stores, as well as making sure we have consistent supply to our veterinary professions where they recommend and provide that recommendation to their pet owners, has been terrific for it. So we will continue to make sure that offering expands and making sure that we continue to look for ways to increase the mixed towards prescription diet, which is a real benefit for the pet owners.

Speaker Change: Getting more of those recipes into pet specialty and neighborhood pet stores as well as making sure we have consistent supply to our veterinary professions where they recommend and provide that recommendation to their pet owners has been terrific for it. So we will continue to make sure that offering expands.

Speaker Change: and making sure that we continue to look for ways to increase the mix towards prescription diet, which is a real benefit for the pet owner.

Unknown Executive: Governor.

Unknown Executive: This concludes the Q&A portion of our call.

Noel R. Wallace: This concludes the Q&A portion of our call. I will now return the call to Noel Wallace, Colgate Palmolive's Chairman, President, and CEO, for any closing remarks.

Noel Wallace: I will now return the call to Noel Wallace, Colgate-Palmolive's Chairman, President, and CEO for any closing remarks. Well, thank you all for joining us today, and I just want to applaud all the Colgate-Palmolive team around the world for the exceptional efforts to deliver strong top and bottom line growth. Unfortunately, we're doing that while we're building capabilities. We need to stay strong; we'll be forward. So that's a terrific work by all the team. But I remind us, as always, that we're only halfway through the year, and we still have a lot of work to be done.

Speaker Change: This concludes the Q&A portion of our call. I will now return the call to Noel Wallace, Colgate Palmolive's Chairman, President, and CEO for any closing remarks.

Noel R. Wallace: Well, thank you all for joining us today, and I just want to applaud all the Colgate Palmolive team around the world for their exceptional efforts to deliver strong top and bottom line growth. Importantly, we're doing that while we're building capabilities, we need to stay strong moving forward, so that's terrific work by all the team, but I remind us, as always, that we're only halfway through the year and we still have a lot of work to do, so thanks everyone and appreciate the great discussion this morning. The conference has now concluded. Thank you for attending today's call.

Noel R. Wallace: Well, thank you all for joining us today, and I just want to applaud all the Colgate Palmolive team around the world.

Noel R. Wallace: for the exceptional efforts to deliver strong top and bottom line growth.

Noel R. Wallace: Importantly, we're doing that while we're building capabilities we need to stay strong moving forward. So that's a terrific work by all the team. But I remind us as always that we're only halfway through the year and we still have a lot of work to be done. So thanks everyone and appreciate the great discussion this morning.

Noel Wallace: So thanks, everyone, and appreciate the great discussion this morning.

Unknown Executive: The conference has now concluded. Thank you for attending today's call.

Unknown Executive: The conference has now concluded. Thank you for attending today's call. You may now disconnect.

unknown: [inaudible]

Unknown Executive: You may now disconnect.

Speaker Change: The conference has now concluded. Thank you for attending today's call. You may now disconnect.

Speaker Change: ♪♪