Q1 2025 Colgate Palmolive Co Earnings Call
Good morning, welcome to today's Colgate Palmolive, 2025 first quarter conference call.
This call is being recorded and is being simulcast live at Www Dot Colgate Palmolive Dot com.
Speaker Change: Now for opening remarks, I'd like to turn this call over to Chief Investor Relations Officer, and Executive Vice President M&A John Boucher.
Betsy: Thanks Betsy.
Betsy: Good morning, and welcome to our first quarter 2025 earnings release Conference call. This is John Boucher.
Betsy: Today's conference call will include forward looking statements actual results could differ materially from these statements.
Betsy: Forward looking statements inherently involve risks and uncertainties and are made on the basis of our views and assumptions at this time.
Betsy: Please refer to the earnings press release, and our most recent filings with the SEC, including our 2024 annual report on Form 10-K, and subsequent SEC filings all available on our website for a discussion of the factors that could cause actual results to differ materially from these statements.
Betsy: These remarks also include a discussion of non-GAAP financial measures, which exclude certain items from reported results.
Betsy: Clothing, those identified in table three five and six of the first quarter earnings press release.
Betsy: A full reconciliation of the corresponding GAAP financial measures and related definitions are included in the earnings press release, which is available on our website.
Noel Wallace: Joining me on the call. This morning are Noel Wallace, Chairman, President and Chief Executive Officer and stands at two <unk> Chief Financial Officer.
Noel Wallace: Noel will provide you with his thoughts on our results and our 2025 outlook. We will then open it up for Q&A.
Speaker Change: No. Okay. Thanks, John and good morning, everyone and thanks to all of you for joining US today as we discuss our Q1 results.
Speaker Change: We came into 'twenty five prepared for the volatility and uncertainty.
Speaker Change: As such we built flexibility into our plans knowing that this year would be more difficult than in years that preceded it.
Speaker Change: And while 2025 is shaping up to be even more volatile than expected. We believe the work we have done and the work. We continue to do these just well positioned to deliver solid results in this challenging environment.
Speaker Change: See two key challenges in two key opportunities as I look to the rest of 2025.
Speaker Change: The first challenge is the weaker consumer as you've heard throughout the week, while they slow down in the category pricing was always built into our assumptions for 2025, the macroeconomic and consumer uncertainty. We saw on Q1 not just in the U S. But also in other countries around the world had a negative impact on volume growth and therefore caliber.
Speaker Change: Growth in the quarter.
Speaker Change: Our strategy is focused on selling daily use products, we believe that consumers are still brushing their teeth.
Speaker Change: Taking showers cleaning their floors and feeding their pets, where there may have been some pantry de loading and some modest retailer destocking in the quarter as a result.
Speaker Change: We have seen some signs of category improvement in April and our experience tells us that consumers will return to these categories.
Speaker Change: And we're focused on giving consumers reasons to come back to our brands. We will continue to deliver value added science based core innovation like the relaunch of Colgate total and the relaunch of Hill's science diet with active biome technology to add meaningful value to our products to their consumers to choose our brands.
Speaker Change: The second is tariffs as we said in the prepared commentary commentary, we expect the impact of terrorists that have been announced since our conference call in January and that are currently in effect to have an incremental impact of roughly 200 million in 2025 versus our initial guidance. This is a fluid situation.
Speaker Change: And we will continue to monitor and to respond to it over the course of the year.
Speaker Change: That's why we remain focused on continuing to take advantage of and build on the flexibility we have built into our supply chain over the past several years as I mentioned on the Q4 call. We have changed many of our sourcing strategies and also invested approximately $2 billion in our supply chain in the United States over the past five.
Speaker Change: Years, which leaves us better positioned to adapt to this changing environment.
Speaker Change: We have developed and are continuing to develop plans to deal with the tariffs over the short medium and long term, including alternative sourcing for them the simplification shifting production and revenue growth management well.
Speaker Change: But we also have opportunities in this environment two advantages we have built up in our commitment to executing against our strategy.
Speaker Change: We are taking advantage of the breadth and strength of our global portfolio.
Speaker Change: And the majority of our categories, we offer products across all price tiers, we are fine tuning our promotional strategies. So that consumers can still choose the right Colgate palmolive product, even if they feel less certain about their own financial wellbeing.
Speaker Change: And our geographic breadth gives us more opportunities for growth as we are less exposed to any single market.
Speaker Change: Our focus over the past few years on building brand health means that our brands are stronger now than they ever were before we believe healthier brands will perform better in a difficult market environment.
Speaker Change: The second advantage is the strength and flexibility, we built into our P&L and the balance sheet over the past several years the strength of our P&L enables us to continue to invest in our brands and capabilities. While all companies may experienced pressure on brand investment given the volatility we ended 2025.
Speaker Change: With the advertising spending at an all time high and feel that our focus on driving ROI leads us well positioned to compete effectively.
Speaker Change: We also remain committed to investing in and scaling capabilities like AI data analytics and innovation areas that will take an even greater importance in this more volatile environment.
Speaker Change: We also have the advantage of a strong balance sheet with low levels of net debt and plans to drive significant cash flow to fund growth and productivity.
Speaker Change: We think you can see the results of this focus on the P&L and balance sheet in a in our first quarter results, where we delivered strong profit growth despite the volatility in the quarter.
Speaker Change: So we look to the balance of 'twenty 'twenty five knowing that we are well positioned to deal with the known challenges as well as the ones yet to come our commitment to our strategy and the strength of our execution and team give us the confidence that we will deliver on our 2025 goals, while positioning ourselves to deliver long term growth and strong.
Speaker Change: Shareholder return and with that I'll take your questions.
Speaker Change: Yeah.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.
Speaker Change: So the draw your question. Please press Star then two.
Speaker Change: Please limit yourself to one question.
Speaker Change: If you have further questions you may reenter the question queue.
Speaker Change: Once again, if you would like to ask a question. Please press Star then one.
Speaker Change: The first question today comes from Peter Grom with UBS.
Speaker Change: Please go ahead.
Speaker Change: Thanks, operator, good morning, everyone. So no you you touched on the consumer pressures and weakness that you said had been a big topic of discussion across the group. This week, but I would love to get your perspective on what you've seen from a consumption perspective across your categories. As you move through the quarter and into April and then just as we look ahead, how do you see that.
Speaker Change: Consumption or category growth evolving as we move through the year. Thanks.
Yeah. Good morning, Peter Thank you. So maybe let me just step back and talk about contextually and strategically how we're.
Speaker Change: We're approaching the operating environment in general and pretty consistent with a lot of the discussions we've had cagny.
Speaker Change: Cagny Boston over the last couple of years, which is our focus is on continuing to drive household penetration and improve the brand health, which is ultimately going to deliver that long term sustainable growth force. We've improved the health of our brands and that we believe is a function of the investment in innovation cycles that we have and we're executing against that strategy.
Speaker Change: We think an extraordinarily difficult environment now we highlighted coming into the year that this year would be a little bit slower that was reflected in our guidance was based on the fact that we would have less pricing given some of the hyper inflationary pricing, we had last year and we would be shifting more towards volume growth. What has changed this year is that the volume growth in our <unk>.
Speaker Change: Categories as you rightfully mentioned and you've heard from others is slowed a bit.
Speaker Change: So just to give you some context on that we let me take the U S is a good example, that's where most of our data from.
Speaker Change: We have seen that through February and our categories are all 12 of those CAD 11, or 12 of those categories were actually down sequentially through February.
Speaker Change: I think importantly, we saw some half of those categories down sequentially in March and half of them improved and as you move into April you've seen a better improvement across most of those categories not to where we were historically so we're not out of the woods yet, but the good news is we're starting to see more stability as we move through <unk> through April if.
Speaker Change: Look around globally pretty consistent with that a lot of uncertainty in the marketplace in February we've seen a little bit more improvement in March and we expect over the medium term probably more towards the back half of the year. They will start to see more normalization of the categories consumers will come back they've destock some of their pantries, but.
Speaker Change: These are everyday use categories as I mentioned upfront and we have an expectation as we built into our guidance the categories will come back in the medium term I expect the second quarter continued to be soft.
Speaker Change: Given the uncertainty that continues to exist.
Speaker Change: But the early signs that we're seeing in April at least give us some confidence the categories. We're slowly come back as the consumers settled down and the economic uncertainty that surrounds the markets around the world improves.
Andrea Teixeira: The next question comes from Andrea Teixeira with Jpmorgan. Please go ahead.
Thank you operator, and good morning, everyone No I'm just building into why do you answer to Peter.
Andrea Teixeira: In regards to North America, you you mentioned like the middle of April even in the prepared remarks had been it's slightly better. So is that like from a shipment perspective consumption as well because what we saw obviously in the first quarter was a negative 3% organic sales growth and.
Andrea Teixeira: And so obviously I've just had not out of the woods, yet can you comment a bit with where you stand right now and in terms of the main question that I would say.
Andrea Teixeira: Is is in that.
Andrea Teixeira: I'm thinking about your flat gross margin right and DFAST them inside you rightfully so have been planning for innovation, including what you've called out total end and Hello, how we should be thinking of the competitive environment. As you go into into 'twenty 'twenty five as that continues to be.
Andrea Teixeira: It's relatively healthy in oral care and also in home care and how are you embedding that in the whole context of that improvement in that category and investments behind the brands. Thank you.
Andrea Teixeira: Thank you Sandra and good morning, let me take the obviously the category discretion on North America first and I think were quite consistent with what you've heard from some other CPG throughout the last couple of weeks is that the categories took a real step down in <unk> and in February as a result, the trade started to adjust their inventories.
Andrea Teixeira: As a result of the slower consumption. They saw from the consumer and we highlighted this very early back at Cagny and we saw the slower consumption and the Destocking that you may have heard is really a function of where the consumer is and the consumer was soft in February a little bit better in March and we're saying a little bit better in April.
Andrea Teixeira: And subsequently as you see things getting a little bit better you see you see the inventories typically hold or get a little bit better than you see consumption come back and that would reflect in our shipments as well I wouldn't say anything too material there, but the good news is indicative of where we've seen the categories are shipments seem to be pacing pacing well with that now.
Andrea Teixeira: We have more work to do in North America that.
Andrea Teixeira: That team is very focused on implementing some some sharpness in their strategy, particularly around getting your innovation right getting price pack architecture, right improving productivity through our facilities and in the plant and getting the advertising ROI elevated so a lot of focus in those areas. We feel good about the new team.
Andrea Teixeira: Team that we've put in North America, now and as we go into the back half we would expect to see things are generally start to improve in terms of the competitive environment in general we're seeing it is that I think characterized before quite constructive we don't see promotion numbers going through unused.
Andrea Teixeira: The rates as a result of that promotion volume on promotion is pretty consistent with where it's been and you would hope that the category all the focus from ourselves and our competitors will continue to be on adding value to the category through innovation and that's historically, what's driven our household penetration in our success and will continue to focus on.
Andrea Teixeira: That it won't be a promotion environment that will turn things around it will be the excitement that we bring to the categories through our innovation.
Andrea Teixeira: Yeah.
Tobey Bustling: The next question comes from Tobey bustling with Citi.
Speaker Change: Go ahead.
Speaker Change: Hi, Good morning, everyone I wanted to ask you about your pricing approach are obviously pricing has decelerated.
Speaker Change: In Q1, but you mentioned some incremental pricing in some emerging markets.
Speaker Change: Throughout the quarter. So maybe you can give us a sense of how you think the pricing contribution to organic sales can evolve and then specifically in developed markets.
Speaker Change: How do you think pricing is a way to offset some of those.
Speaker Change: Tariff headwinds that you called out I know you mentioned a lot of different levers, but I wonder how pricing falls within the Iraq. Thank you.
Speaker Change: Yeah. Good morning. So many people think you are pricing was more or less where we expected in the quarter and I think importantly improved sequentially on a two year stack basis.
Speaker Change: And particularly you will remember that the comp was quite difficult Latin America, Lastly, Argentina benefit obviously, we've announced in pricing.
Speaker Change: In Latin America, which is consistent with our strategy and we'll see that execute and in the second quarter and into the third and fourth quarter in Mexico, and Brazil, and we will see obviously that continued to normalize as we move forward well anyone's guess on where Argentina will be with what's inflationary pricing, but right now that market share.
Speaker Change: Quite constructive and importantly, we see ourselves gaining both volume and value share in that market. So were quite pleased with that U S pricing improved sequentially, which is encouraging but as we had indicated back at cagny and on the fourth quarter call.
Speaker Change: When we had made some adjustments in the back half of 'twenty, four and we expected those to flow through the P&L in the first half of 'twenty five and that's exactly what we're seeing and I would expect the second quarter to be quite consistent with that and we're starting to see improvements as we move through the back half.
Speaker Change: I think just go around the world a bit we're really encouraged by Europe and the pricing that we're getting there I think a real focus on premium innovation and an improving mix in Europe has played out and it has certainly delivered another very strong quarter for the European business and that's a function I think of the strategy that we're deploying there.
Speaker Change: And if you look at the rest of the world good pricing in Africa some challenging.
Speaker Change: Issues in Asia are more on the volume side quite frankly than on the pricing side as we saw the China market slow a bit but overall I think all the work we put into our G. M. Over the last couple of years and the sophistication that we're using now with AI to help us get better diagnosis and better predictability of how our promotions.
Speaker Change: Our pricing will take effect in marketplaces is allowing us to get more in there, but most importantly, I think is the innovation that we're putting in the market you saw an improvement in mix. This quarter, which is just terrific to see the pricing environment will continue to be challenging I think in terms of where things go now as tariffs take hold there's a I think everyone will be look.
Speaker Change: King for ways to create value in the category that.
Speaker Change: That will be principally driven in my view through innovation, but there will be some pricing that will have to take place in certain markets around the world and we'll take that on our marketing and category.
Speaker Change: As we move forward.
Speaker Change: Okay.
Speaker Change: The next question comes from Darren Loves Finian with Morgan Stanley. Please go ahead.
Hey, good morning.
Speaker Change: So just to follow up on a couple of those questions I was hoping to get a little more granular in emerging markets specifically.
Speaker Change: A just can you give us a bit more detail on what you're seeing at the consumer level given some of the broader macro concerns in general.
Speaker Change: India softened a bit.
Speaker Change: But just curious for your perspective on any change dynamics and what you're seeing there and then B just your market share performance in the quarter in emerging markets. Latin America is obviously, a key area, but also just touch on China, and what you're seeing there that'd be helpful. Thanks.
Speaker Change: Yeah, Great Dara good morning.
Speaker Change: So overall.
Speaker Change: You know again, if I take a step back volume was positive for the quarter ex private label.
Speaker Change: And I think our exposure to emerging markets continues to play favorably for us given that we're seeing certainly an impact from the economic uncertainty and the volatility that we've seen particularly here in North America, but that has certainly spread across the world. We saw that in February.
Speaker Change: But as a result, we've seen things come back a little faster than some of our emerging markets as we move through the end of the quarter and into April and we expect that we'll see some improvements moving forward. If we look at specifically on Latin America market shares in your comment there our market shares are very very strong our volume share continues to perform exception.
Speaker Change: Well in Latin America, we are up value share holding in the quarter and that you obviously had a very high number.
Market shares in Africa, Middle East continued to be very strong and growing in those markets. So we're encouraged by that despite some of the softness that we saw in Turkey on the volume side as well as South Africa.
Speaker Change: And then if I take a specifically on Asia, China continues to be a challenge in that market continues to be quite soft.
Speaker Change: Particularly on our holiday and Haynesville business and I've talked about that quite extensively I was just in China with the team and we are are in the midst of executing a revised go to market strategy and doing some things around the innovation side, particularly on our joint venture with with Holly and Hazel Colgate business happily continues to perform very well.
Speaker Change: Well the Colgate side of the business delivered mid single digit organic growth both on a.
Speaker Change: Both pricing and volume growth in the quarter. So we're encouraged by that but China continues to be a challenging environment on India are not.
Speaker Change: Not much I can say is they will announce in the next couple of weeks, but we did see the continued softness in the urban markets as we've highlighted before.
Bonnie Herzog: The next question comes from Bonnie Herzog with Goldman Sachs. Please go ahead.
Thank you good morning.
Bonnie Herzog: Right.
Bonnie Herzog: On your advertising spend you updated the guide for flat sales.
Bonnie Herzog: Sales for the year versus flat to up slightly previously. So just wondering is that a function of any change in your innovation plans and timing of launches for the rest of the year, possibly to reflect reduced appetite you know given end market you know.
Bonnie Herzog: Softness and then specifically on innovation I'm curious to hear your plans have changed or evolved you know given end markets sound, perhaps more towards the value end of the spectrum getting consumer pressures.
Speaker Change: Yeah, Thanks, Brian and good morning, So no change at all relative to our innovation quite frankly, if I get into specifics on innovation in this environment, we're having lots of discussions about accelerating our innovation in the back half to stimulate consumption more at it at a very degree of price points. So if anything <unk>.
Bonnie Herzog: Asia will continue to accelerate.
Bonnie Herzog: The revision is a function of a couple of things one as I mentioned I think at Cagny and in previous discussions we're very focused on ROI, we're seeing opportunities to continue to drive our reach at our frequency through optimized spending and that will continue to be a sharpened focus second, particularly given some of the softness in categories.
Bonnie Herzog: It's only prudent and appropriate at this point to balance the flexibility that we built into the P&L and that's exactly what we're doing we don't see it hindering at all our strategy in terms of what we're doing through our accelerated core innovation and Adjacencies. We don't see you tend to read on a premium position strategy, which we think continues to be a real growth.
Bonnie Herzog: Attunity for the business and we're focused on that spending in markets, where we're seeing the best growth opportunities for the company and that will continue to be the case. So and then the other point I would make is if you take that on a local currency are.
Bonnie Herzog: Local currency advertising will still be quite strong.
Bonnie Herzog: And likely up on the year end and that's really what we need to look at in terms of the effectiveness of the spend and we're in the absolute dollar spending that we have going through the P&L.
Robert Moskow: The next question comes from Robert Moskow with T D talent.
Speaker Change: I had.
Bonnie Herzog: Okay.
Speaker Change: Hi, Oh, no I was hoping you could dive a little deeper into our Hill's.
Speaker Change: Thank you you talked about some signs of consumers trading down during first quarter.
Speaker Change: Are you still seeing that or is the Hill's brand.
Speaker Change: Okay.
Speaker Change: In this kind of dynamic and secondly.
Speaker Change: A lot of growth in wet you you've added capacity to expand and wet.
Speaker Change: Consumers view wet in the hills portfolio, that's more expensive.
Speaker Change: And is there any kind of trading down within formats like that.
Robert Moskow: Great. Thanks, Robert.
Speaker Change: A clarification some of the trade down that we've talked about was specifically.
Speaker Change: In the Super premium to the mid tier in North America on toothpaste and that's.
Speaker Change: They're certainly saying, what we're seeing I would characterize that we see no trade down into private label in fact quite the opposite private label is either flat to down in the U S as well as Europe. So the trade down is not necessarily there we've seen some trade down from super premium into mid tier but nothing.
Speaker Change: That is terribly concerning but something that we will obviously address as we move through the back half of this year, specifically on hills, no trade down and in the Hill story quite frankly is really really exciting so ex private label that business was up 5% and organic growth on a fundamentally a flat category. So we're off.
Speaker Change: Or is she doing exceptionally well from a topline standpoint, and that's really across all price tiers that we operate in which are very focused on obviously in the super premium.
Speaker Change: But you know a couple of data points that I think are interesting. We grew organic sales in every combination that we measure so wet dry treats cat dog prescription diet and science diet. So the strength of the business in the first quarter was broad based and we saw that in market share we saw.
Speaker Change: That in and penetration and we saw that consistently across all retail environments are here in the U S. So typically.
Speaker Change: We don't have that broad based of success. We're very pleased to that why is that a couple of things. One we continue to keep strong investment in the category. Two we've had a terrific innovation that's shielded itself in the market and in the first quarter and we'll see that play out through the rest of the year three we've talked very.
Speaker Change: Extensively about the fact that even though the category has has flattened a bit we still have significant growth opportunities in areas like where does you rightfully point out Robert we see significant growth opportunities in cat and that's exactly the way we are executing our strategy to go after those low index.
Speaker Change: <unk> that we operate in today and get the incremental growth versus the category, that's bringing value to our retailers, which they love that's bringing penetration to our brand and that's ultimately growing the market share for our business I think the other pleasing aspect was the incredible strong margin performance of the Hill's business in.
Speaker Change: The quarter so.
Speaker Change: But you know roughly 450 basis points part of that private label going out, but the other half was again very focused on driving a much more efficiency and productivity through our manufacturing facilities, which are operating much more effectively getting pricing a little bit of pricing in the category and the strength of our innovation.
Speaker Change: On the premium side as well as the mixed benefit we're seeing through improved prescription diet. So you know overall, our combination of innovation funding the growth productivity is playing out to a very healthy P&L, that's allowing us to accelerate advertising in an area, where we see significant growth opportunities, particularly in.
Speaker Change: Those under next segments.
Speaker Change: The next question comes from 10 o'clock Chihuahua with Jefferies. Please go ahead.
Speaker Change: Hey, everybody.
Speaker Change: Not to keep the two macro but do you feel like you have a sense of the.
Speaker Change: Why behind the slowdown in February and you kind of.
Speaker Change: You know dug into it and I recognize things are evolving or getting better in April but do you have.
Speaker Change: Good sense of what exactly was going on with the consumer at that time, and then around the world, but in particular you know we're looking at $60 oil. Many of your markets are very much linked to commodity cycles and such so I'm just curious if you're.
Speaker Change: Reassessing, how you are approaching your forecast on inflation and pricing and those sorts of things and some of those markets. Thanks.
Speaker Change: Yeah, Let me take the first part of that.
Speaker Change: And I'll hand, the second part off the stand.
Speaker Change: So listen the in an RV.
Speaker Change: Our view, what what happens globally, and that's pretty consistent that uncertainty creates a pensive and anxious consumer and when you have uncertainty in terms of macroeconomics.
Speaker Change: And everything's surrounding that consumers tend to hunker down and Theyre very cautious about the outlook you see that obviously in the travel industry.
Speaker Change: Which people.
Speaker Change: Having no questions on how they're going to spend their money you see that obviously very forthrightly.
Speaker Change: Forthrightly and discretionary products and even in our categories that are non discretionary you'll see consumers destock their pantries and not necessarily by that extra two or that that extra body wash as they see a obviously a very volatile external environment. So historically as we've gone through.
Speaker Change: These these shifts we've seen the category soften a bit in terms of of consumption, but ultimately their everyday use categories. They will come back, but they will come back at a pace that is consistent with the consumer confidence levels that exist in the marketplace and as you see consumer confidence continue to return, which we expect.
Speaker Change: It will in the medium term I would say you know over the balance of the back half of this year moving hopefully into 26, you'll see the consumption improve we will continue to accelerate our pace of innovation, which will bring excitement into the categories and give consumers a reason to come back into the categories will continue to maintain our advertising.
Speaker Change: As a way to drive.
Speaker Change: To drive excitement into the category as well so as a result of that we expect over the medium and longer term the categories will come back, but it's really driven by the shock to the system in February based on all the rhetoric existing around the world and the concerns with where.
Speaker Change: The economies were headed and as a result of that consumers were very cautious so with that let me turn it over to Stan for the inflation question. So on the inflation related to commodities, specifically overall, excluding tariffs we continue to expect modest raw material inflation and while there's been some volatility in their oils come down but opposite.
Speaker Change: That we've seen palm and tallow actually go up so in total we expect that right now still modest raw material inflation, we tackle that the same way, we always do which is going after driving productivity to help us offset those increases and then constantly looking at formulations formulations supply chain efficiency.
Speaker Change: Fees and optimizing that so we will continue to leverage funding the growth to drive that gross margin to help offset those commodities as you would expect we watch them very closely and looking to see if we'll see some changes in trajectory, particularly in second half, but as of now.
Speaker Change: We still see modest inflation.
Speaker Change: Yeah.
Robert Moskow: The next question comes from Robert <unk> with Evercore ISI. Please go ahead.
Robert Moskow: Great. Thank you very much and at first I just wanted to give a quick shout out to the team at Hill's we we moved our dog over to Hill's science diet small bites.
Robert Moskow: It's the only dry food she'll eat in her or mood. Her health has dramatically improved as has my family's happiness to thank you for that.
Robert Moskow: Terrific.
Speaker Change: Oh I'm going to talk about Europe can you talk maybe just a little bit about you know why you're doing so well there the role of L. Max in the strategy, what you've learned from that and then maybe even more importantly can you shift that strategy.
Speaker Change: Two other major markets to get the same kind of amazing results that you're getting in Europe now thanks.
Speaker Change: Rob and I'm, nothing but pleased to hear that your dog is on science diet.
Speaker Change: And I'm pleased that the owner of that dog has recognized the value of our incredible brand in the nutritional are complementary we bring to our two that a relationship you hopefully you've seen our new campaign, we have launched a new campaign on hills and in the new brand positioning which has been extremely well received in the mark.
Speaker Change: Place and it talks about the love that pet owners have for their dogs and the guilt they feel when they leave them at home and we feel like we really anchored in an incredible unique consumer insight that will leverage the the wonderful product that we provide to our to our pet owners on Europe, specifically, obviously, another very strong quarter for you.
Speaker Change: Europe with organic.
Speaker Change: Growth across all hubs and I think what was important is to see.
Speaker Change: The volume growth, we talked about a little bit earlier, you know, obviously, some volume growth sluggishness in emerging but we see that coming back but the volume growth in Europe was terrific remember we were comping up for for volume growth in the first quarter of last year, and we put a three on top of that so I think it continues to reflect a couple of things one is you're right.
Speaker Change: Really point out we've seen terrific.
Speaker Change: Market share point market share growth in the region, particularly in our oral care business and that's both on the Colgate franchise as well as the Amex and Merit all franchises and that has obviously helped drive the incremental margin in the P&L, that's allowed us to sustain and actually increased our advertising levels in Europe.
Speaker Change: [noise] across more categories and so that has certainly played out in the overall health of the business.
Speaker Change: Specific question on Hornell, Max that continues to operate very very strongly as we strategically invest in those markets.
Speaker Change: Where we have strong pharmacy shares and where we have democratized the brand in certain countries and the the good news is that mark that strategy of innovation strong advertising strong professional advocacy and endorsement is playing out to record share growth.
Speaker Change: For the business.
Speaker Change: I've talked about it in various public forums on we are being very selective on how we take al mix into other markets around the world.
Speaker Change: There is very specific criteria that we look for it's not a one or two year investment. It's a five to 10 year play out in terms of how we see.
Speaker Change: The decision to make the strategic shift and we're excited about what we've seen in Brazil that business continues to operate very well in Brazil, we've seen it expand into a couple of other markets, particularly in the middle East where were encouraged we'll be selective but that remains a growth opportunity for the business as we move into the balance.
Speaker Change: 25, and 26, but it will be very selective and a long term strategy not a short term gain in terms of you know generating incremental margin and volume.
Speaker Change: For a quarter, we're going to look at it over a three year horizon.
Speaker Change: Okay.
Speaker Change: The next question comes from Kevin Grundy with BNP. Please go ahead.
Kevin Grundy: Great. Thanks, good morning, everyone.
Kevin Grundy: My question on the on tariffs and I appreciate in the situations, where it continues to evolve two questions. Please one if you could just speak broadly to the sources of the tariff exposure, China imports as physical tariffs retaliatory tariffs just kind of broad brush strokes it'd be useful for folks and then to please speak to your ability to offset that.
Kevin Grundy: 200 million you called out if I'm not mistaken it was not offset in there per se or at least you spoke to the $200 million gross.
Kevin Grundy: Maybe just talk about productivity revenue growth management and sourcing it doesn't seem like pricing is the preferred path from companies. We've heard from them is myriad moving parts competitively, how you position, where you're sourcing versus the competition et cetera, but it doesn't seem like pricing is the preferred path for you or for others. Maybe just confirm that that is your your stance as we sit.
Kevin Grundy: Here today, so thanks for all that.
Kevin Grundy: But Kevin why don't I start and old can add on some color for tariffs. Our revised guidance includes $200 million of gross incremental impact from tariffs that have been announced since our Q4 earnings release and are in effect. It does not include tariffs that have been announced and either delayed or postponed so the incremental impact.
Kevin Grundy: It is fairly equally split from Q2 through Q4, and the incremental impacts are primarily tariffs and raw materials and finished goods coming from China into the U S and from the U S into China. That's a predominant makeup strategically.
Kevin Grundy: Strategically we aim to have local manufacturing as the cost of shipping many of our products long distances can be very high.
Kevin Grundy: Over the last several years, we've lowered our supply chain exposure to China as part of our overall supply chain strategy and we spent the past few years building more flexibility into our global supply chain, it's not necessarily about building more capacity, it's about making better use of that existing capacity and alternative sourcing.
Kevin Grundy: We've also invested meaningfully in the U S. We mentioned this in the prepared remarks in our U S supply chain almost $2 billion over the past five years between investment in our oral care personal care and home care businesses, along with the purchase of pet food capacity and the opening of our target oxy wet pet food facility, we've increased our number.
Kevin Grundy: A U S based manufacturing facilities by more than 40% over this time, so we're working hard to mitigate the incremental costs from tariffs, but we're going to do that through a combination of approaches a productivity revenue growth management formulation sourcing and optimizing our supply chain. So the impact of those tariffs are included.
Kevin Grundy: Our revised guidance, where we said that gross profit margin will be roughly flat.
Kevin Grundy: Oh, yeah. So it's as I mentioned, it's a country category combination and you can't look at this holistically you have to look at it on a category basis, where the tariffs are having the.
Speaker Change: The most impact and so we're going to be looking at it at all of our business to be able to offset these tariffs moving forward and I can assure you. We are extremely focused on this as you heard from stand where we've made a lot of changes over the last couple of years relative to mitigating our reliance on single source come.
Speaker Change: Trees, we have reduced our reliance on raw materials and finished product coming out of China and as a result, we have a lot more flexibility in the supply chain that we've had before but the sheer size of some of these tariffs requires to balance our strategy moving forward in terms of how we think we can we can offset that.
Speaker Change: Litigation will come across not just the impact of categories, but all of the categories, where we feel we can we can offset with productivity, which will be our main focus continuing to accelerate our funding the growth opportunities innovation as I mentioned upfront, we will step up our innovation to particularly drive more premium position in the category more absolute dollar margin moving through the P&L.
Speaker Change: And of course, our revenue growth management, we will certainly look at that as an ongoing strategy that we've always looked at as ways to drive value in the category and drive more margin growth for the business. So it'll be a combination of all those elements are I can assure you that the teams are deeply focused on this across the board we will watch the market very care.
Speaker Change: Felipe, but theres no question that we wanted to get out ahead of this as fast as we possibly can and not wait for the what if to see if it happens we need to take steps to make sure. We protect the margin and importantly, the advertising and the innovation plans we have in the P&L.
Speaker Change: The next question comes from Chris Carey with Wells Fargo. Please go ahead.
Chris Carey: Hi, good morning, everyone.
Speaker Change: Good morning, Chris on it Chris.
Chris Carey: I wanted to.
Chris Carey: Asking about the back half of.
Chris Carey: The year again in a slightly different way, but.
Chris Carey: When you look at the improvement in category growth rates in what would your computer to be slightly embedded into the back half of the year.
Chris Carey: How do you think or.
Chris Carey: What regions or product categories, do you have the highest level of confidence or where youre seeing early signs that give you some confidence that that regions or categories are going to be accelerating and then just connected if the category growth rates improve a bit.
Chris Carey: Volatile you know.
Chris Carey: As we've seen what what are the areas of the portfolio, where you feel best about your ability to maybe accelerate outperformance relative to categories that other way to control your own destiny, despite how the macro variables for us.
Chris Carey: Yeah, Let me touch on some of the macro aspects and then Stan be more specific on how we've we phase the balance of the year. One thing that the we do expect the macro to get slightly better. We don't think there will be a material change based.
Chris Carey: Based on the uncertainty that will continue to persist through the balance of this year, but we do expect the macro to improve and is it. Therefore as you said the categories will get will get better.
Chris Carey: Comps get easier as we move through the back half of the year the pricing that we're taking in the first half or obviously roll through some of that into the back half of the year and then as I said, we'll have a little bit more stabilization on things. If I look at you know a lot of the work that we've done over the last couple of years to improve the health of the brands. They are.
Chris Carey: In a better position today to withstand the economic uncertainty that exist and obviously the value that they bring to consumers, particularly in oral care, where I believe we put a significant amount of investment improving the brand equity.
Chris Carey: We put a lot more time into.
Chris Carey: Improving our core innovation, we've got the total relaunch this year, which is a big core business for US we have our anticavity relaunch in some of our big emerging markets. So we've got good news coming to continue to stimulate an exciting category and give consumers a reason to continue to stay within our brands, but the strength of the brand.
Chris Carey: To me it gives me confidence, particularly in oral care that we're in a good place Hill's as I mentioned that goes without saying, we will continue to focus on those those segments, where we have low share or is it in a low brand penetration and we were bringing a lot of innovation both in terms of form and packaging into the market to deal with some of.
Chris Carey: The economic uncertainty that exists, but that business. We believe will continue to perform well in the back half. Despite the fact that I don't anticipate the category necessarily.
Chris Carey: Reversing itself and where we've seen but we're getting good growth out of that business as we speak.
Chris Carey: To pick up a little bit you know, we expect the top line to improve as we go into the back half we expect some improvement in North America and Asia. As you saw the performance here in first quarter, and we think our Africa ratio will also get better.
Chris Carey: You know as we look at countries like South Africa, and Turkey are those will flow through now we have the impact of tariffs that will roll through but all the work we've done on <unk>.
Chris Carey: Looking at pricing that rolled through remember that the private label will also roll off here as we go through the year that will be a tailwind and we have two of our strongest categories with oral care and hills with strong margins as they continue to grow and outperformed the category. If we get a positive mix effect that will help us offer.
Chris Carey: The impact from tariffs and deliver our guidance for kind of flat margin for the year and then low single digits for earnings per share.
Speaker Change: Yeah, I would also probably say I think our expectation we saw a little bit of softness in Mexico in the in the first quarter as well as Brazil, but.
Speaker Change: But we you know given the strength of our business in both those markets I would anticipate that.
Speaker Change: As we move through the back half of the year, we should see some improvements there as things settle down.
Speaker Change: The market shares look terrific and as the categories come back we will will recognize that.
Speaker Change: The next question comes from Olivia Tong with great enthusiasm.
Speaker Change: Go ahead.
Olivia Tong: Great. Thank you to.
Speaker Change: Two questions first in the U S. If you could provide a bit more granularity in terms of where you're seeing more of the pressure you mentioned trade down from Super premium too.
Speaker Change: Two two base, but it doesn't sound like the Midland trading down to the lower end. So why do you think that that wasn't the case lane departure, it seems to be a little bit more heavier on the lower end consumer and then in Latin America.
Speaker Change: We've been able to maintain a certain level of an elasticity in volume when you price, but you've been quite transparent that Latin America has been a bit more challenging of late so what gives you. The confidence that you can continue to get back to historical levels have been elasticity.
Speaker Change: And given the evolving backdrop. Thank you.
Noel Wallace: Yeah. Good morning, Olivia. Thank you so specifically on North America.
Noel Wallace: It's really been more of a volume issue as we've talked about in the <unk> in the first quarter, we saw some weakness in the volume.
Noel Wallace: And that's fundamentally driven by all the things that I characterized upfront and obviously a certain to a certain degree a function of lower store store traffic and lower conversion in store, but overall I think as the market settles down we should see.
Noel Wallace: Or impact in terms of of promotional velocity a lot as I said promotions are increasing but.
Noel Wallace: The velocity almost promotions are were softer in the first quarter given the short traffic was down, but we expect that to come back a bit as we as we move forward and we are certainly not stepping up our innovation as a way to hopefully get some more volume in the category.
Noel Wallace: In the back half of this year in.
Noel Wallace: In terms of Latin America, specifically.
Noel Wallace: You know this is.
Noel Wallace: One of our strongest markets globally. The brands are exceedingly strong we have a big relaunch on Colgate total, which I talked about what she is doing very very well across the region in terms of driving incremental value and market share into the business, a really solid innovation pipeline.
Noel Wallace: <unk>, particularly starting in the second quarter and moving through the back half of this year as I mentioned, we'll get some pricing in those markets, which were taking in and announced that will help as well. So overall, it's just a matter of the market settling down a bit and continuing to execute our strategy of driving brand penetration and ultimately delivering category.
Noel Wallace: Growth in market share. So I don't see any fundamental issues in Latin America that gives me concern, but it will largely depend on the macroeconomic economics, obviously improving globally.
Noel Wallace: And that will certainly help Latin America as we go into the back half so it's not uncharacteristic to see this softness.
Noel Wallace: But we explore they expect as we've seen historically that in the medium to long term those markets will come back nicely.
The next question comes from Bryan Spillane Bank of America. Please go.
Speaker Change: Go ahead.
Noel Wallace: Hey, Thanks, operator, good morning, everyone.
Noel Wallace: I guess he had a question maybe it's a follow up to Chris' Kerry's question is where we're kind of thinking about the puts and takes balance of the year and in the press release and I just want to make sure I understood. This correctly.
Noel Wallace: If I read the IND was within the guidance and related to hills in pet nutrition and private label that the drag from exiting private label actually will become more pronounced after <unk>, So I guess a bigger drag.
Noel Wallace: I don't know if its balance of the year or just over the next quarter or two but I just I guess I want to understand if that component is if that's a headwind we need to consider as we're thinking about re accelerating organic.
Noel Wallace: Organic sales growth over the balance of the year and maybe.
Noel Wallace: Connected to that if you could just remind us all.
Noel Wallace: The whole drama around the private label I know there was you know you were going to exit more originally than you originally expected.
Noel Wallace: Now what was the last I don't know just kind of where we stand on on just you know exiting.
Noel Wallace: Exiting private label and when that should be.
Noel Wallace: You know behind Us I guess.
Noel Wallace: Yeah. Thanks, Brian So yeah, we've been I, I think extraordinarily transparent and consistent with that we had said that private label.
Noel Wallace: We will exit private label in 2025 that we anticipate to be fully out of that likely by the third quarter.
Noel Wallace: We will you know the pace of that exit obviously, we saw the impact as I mentioned in the quarter for Hill's.
Noel Wallace: Ex private label was up five and if you take the company our volume was a positive extra private label. So that obviously had an impact in the first quarter, we expect more or less the same slightly more.
Speaker Change: In the second quarter, yes, so Brian It was 40 basis points to total company volume in the first quarter.
Speaker Change: Okay, as we ramped down to get to zero in the back half of the year.
Speaker Change: It will be a slightly greater impact on a quarterly basis now what's going to happen is you know we're gonna be out of private label at some point in the back half of the year. So then it's zero for a couple of quarters, and we're still gonna be lapping a little bit.
Speaker Change: In the prior year as we go through the first half of the year. So this will continue to be a little bit of a drag but as we said really starting with the fourth quarter guidance, that's baked into our organic sales growth guidance. It is not an incremental we're providing you with the organic or the volume, we're providing you with the organic <unk>.
Speaker Change: <unk> quarter by quarter for transparency standpoint.
Speaker Change: But yes that will be a little bit of a drag a little bit more than 40 basis points per quarter as we go out through the balance of the year.
Speaker Change: It's providing a nice margin benefit.
Speaker Change: Transparently you should be thinking about the Hill's business from a branded standpoint, what's PD doing with SD doing not with the private label impact is so we think that's going to give you a little bit more transparency and you can see the strength of the underlying business yes.
Speaker Change: And this is going to be you know moving forward to the second part of your question. Brian I mean this was a you know I think long foreshadowed a our core business is what we can control we don't control private label sales. We were as part of the acquisition agreed to do that there's no issue whatsoever with our exit are we're doing this.
Speaker Change: As smoothly and efficiently as <unk>.
Speaker Change: As our retailers require.
Speaker Change: But we don't control their sales what we focus on is what we produce and I think that's the better way to look at the business is how are we performing ex private label in that first quarter is one eight ex private label.
Speaker Change: And we're pleased with that and we'll balance the exit of this as efficiently as possible for the business and continue to focus on the things that we control and we do best.
Speaker Change: The next question comes from Lauren Lieberman with Barclays. Please go ahead.
Lauren Lieberman: Great. Thanks, Good morning I.
Lauren Lieberman: I wanted to talk more pointedly about some of the emerging markets that last quarter, we discussed there being some competitive activity that you are watching and monitoring.
Lauren Lieberman: India, a bit already, but Turkey, and South Africa, and when I look.
Lauren Lieberman: At the dynamic for the APAC region and Africa Eurasia sequentially.
Lauren Lieberman: Last quarter. It was interesting because pricing was negative this quarter pricing in both inflected up pretty solidly but volumes went the other way.
Lauren Lieberman: So just wanted to hone in on those two buckets of emerging markets, particularly in some of that local competition.
Lauren Lieberman: Talking about last quarter kind of status report there. Thanks.
Lauren Lieberman: Yeah, great. Thank you Loren so listen it's really just a couple of markets on the emerging side that really drove.
Lauren Lieberman: Drove some of that obviously, we talked about China earlier in the holiday and Hazel business I mentioned, Turkey, I mentioned, South Africa, and clearly those with it if you take the other markets in Asia outside of China. They had a terrific performance in the quarter, So Philippines doing well, Thailand doing very very well so.
Lauren Lieberman: The board and likewise across Africa, with exception of South Africa, Turkey, and we saw some very balanced growth both on volume and price are moving toward a little bit of the pricing to be more specific we obviously had some pricing challenges on the holiday and Hazel business in the quarter.
Lauren Lieberman: Little bit of adjustment again, you know part of that Holly and Hazel was the Chinese new year shift that you've heard.
Lauren Lieberman: But again the stuff that we can control, we did do a little bit of adjustment on some pricing and promotions in the quarter, but I anticipate that will hopefully hold or get a little bit better moving forward, but its really those three markets and we're not at Liberty to talk about India, but we as I mentioned and you referred to just now that the urban market continues to be soft and win it.
Lauren Lieberman: Had anticipated that would come back a little bit faster this.
Lauren Lieberman: This year.
Speaker Change: The next question comes from Calvin Wong with Piper Sandler. Please go ahead.
Calvin Wong: Hi, Good morning, and thank you for taking the question I'd like to touch a little bit deeper on some of the tariff impacts and kind of the pace of mitigation and how we should be thinking about you know over the next couple of quarters. How we should start to see that that 200 million start to get you know a little bit more offsite and then as it relates to the tariffs that are on.
Calvin Wong: Pies and scale to be in Hackett is there any scenario analysis that you've gotten so far that can help you give us a little bit more context on to the extent that those impacts if they were fully enacted thank you.
Calvin Wong: Sure as we as he said the tariffs that are announced and currently in effect make up the 200 million and the impact of those is roughly linear through the quarters.
Calvin Wong: You'd expect it takes time to try to offset all of these and that's why we've updated our guidance to look at the gross profit margin.
Calvin Wong: Roughly flat for the year, so you'll see more mitigation as we go through the year to help offset those those tariffs now.
Calvin Wong: Scenario planning, we've run a large number of scenarios and Theres really no way to predict exactly which tariffs would go in whether it is hilarious sponsored me while we while we run various scenarios, we can only deal with the ones that we actually know now one part.
Calvin Wong: You know we do look at is we had mentioned in the last quarter call that we do import some toothpaste from Mexico. We have concluded that that toothpaste as compliant with U S. MCA. So is not subject to that some of those raw ingredients could be subject to some tariffs, but that's a big.
Calvin Wong: Improvement for us as we look at tariffs and that is included in our guidance. So we'll continue to do that scenario analysis and we're going to play this day by day as we see different tariffs get implemented and lifted but it's really not possible to predict out through the end of the year.
Speaker Change: The next question comes from Steve Powers with Deutsche Bank. Please go ahead.
Steve Powers: Hi, everybody good morning, Thank you.
Speaker Change: Two follow ups for me if I could the first one goes back to Brian's question on Hill's and private label I'm just curious.
Speaker Change: To what degree you will be carrying idle capacity.
Speaker Change: On Hill's related to that into 'twenty, six and how quickly you can fill that with with Hill's and just to what extent that that could be a.
Speaker Change: Margin tailwind as we go forward number one and then number two is just you talked about a couple of times, but going back to the macro and category assumptions.
Speaker Change: Over the balance of the year.
Speaker Change: Just I just wanted to see.
Speaker Change: I had this question come in during the call.
Speaker Change: Just if the improvement that you're expecting doesn't play out.
Speaker Change: Consumer confidence remains soft.
Speaker Change: The planning assumption that you'd have enough incremental flex in the P&L, though to protect the bottom line in that scenario or.
Speaker Change: Or is there is there a risk associated with that thank you.
Speaker Change: Yeah. Thanks, Steve Good morning, So let me talk about the the hills piece first.
Speaker Change: We've talked about it I think I've been.
Speaker Change: Quite outspoken on.
Speaker Change: Coming out of all of the capacity constraints, we had when we made the acquisition of Red collar, how in time driving those efficiencies throughout the entire network who's going to be a real opportunity for the Hill's business and that allows us to truly optimize all of our facilities in terms of there.
Speaker Change: That utilization and the productivity that comes out of those and that's exactly what that team has done and they're doing an exceptional job.
Speaker Change: Really isolating plants to be more specific and more focused on driving efficiency through the specific skus that we can now run through those plants and the specific diets.
Speaker Change: The widespread strategy that we have which was just trying to meet the demand and now we're being much more thoughtful about that.
Speaker Change: How do we think about the business.
Speaker Change: The private label exit, we've obviously built that into our guidance in terms of the absorption.
Speaker Change: Your point that would move out of the business, but in time as we continue to grow market share and in the business and continue to drive.
Speaker Change: Efficiency and some of the new areas that we're focused on that ive outlined that productivity will be picked up by the rest of our plants. So we feel good about.
Speaker Change: Where that impacts our business and the guidance that we've set relative to Hill's and we don't anticipate that we're going to see significant.
Speaker Change: Variances move through the P&L as a function of this and that's all within our within our numbers.
Speaker Change: In terms of the investment levels that we have in the business and the flex that we have in the P&L. You know this is something that we've talked about now for two years and that we were missing historically was having different levers within the P&L of the poll to offset economic circumstances or more importantly as.
Speaker Change: We look at it to address the opportunities that we see for growth around the world and where we can step up.
Speaker Change: Investments as an example in certain markets and that will continue to be the case, we are very focused on building flex into this P&L.
Speaker Change: I'd say the $200 million of incremental tariffs should be holding gross margins flat is a clear testament to that but we think we have flex to be able to continue to drive productivity in certain facilities around the world to generate the savings that we need now I can't predict exactly where things will go all I can so.
Speaker Change: <unk> now is that we do have flex in the P&L, if things move materially worst we will have to adjust accordingly I.
Speaker Change: I think we've done a terrific job handling an extremely turbulent environment that we're seeing out there now.
Speaker Change: And bringing the quarter in that we did this quarter and we anticipate that things will get.
Speaker Change: Equally challenging through the balance of the year, but we'll continue to deploy the same strategies and continue to look for ways to build flexibility into the P&L I think our geographic footprint.
Speaker Change: The category diversity that we have and the price points that we plan set us up for a hopefully a continued stability throughout the balance of the year.
Speaker Change: The last question today comes from Mark Astrachan with Stifel. Please go ahead.
Mark Astrachan: Thanks and morning, everybody.
Mark Astrachan: Wanted to ask specifically about some of the channel shifts in North America. So.
Mark Astrachan: Whereas the company from a market share perspective in the context like mass and club and E. Commerce continued to outperform and there's weakness in drug and to a lesser extent in just general.
Mark Astrachan: Food and how does the company markets or stack up there and then more specifically I saw that you recently added sales to Walmart online not in store just curious how that decision is.
Mark Astrachan: He's arrived at it.
On online portion works well does that expand into Walmart how does that relate back to my comments on the market share overall for the company. Thank you.
Mark Astrachan: Sure let me take the.
Mark Astrachan: The the Hills question first you know obviously, there's a significant three pillar three P environment out in the marketplace today.
Mark Astrachan: We are we.
Mark Astrachan: Focus very heavily on the integrity of our brand and making sure that our brands are represented the way they need to be represented.
Mark Astrachan: We have now a three P. Three P L distributor selling too.
Mark Astrachan: To Walmart that allows us to clean up a lot of the three pls that weren't authorized sellers for the business.
Mark Astrachan: And as a result that three PL is responsible for dealing with with that and so that's where that where that is on the second part first part of your question on market share as you know obviously, we've seen a transition to a big box retailers, we've seen a migration towards a cloud environment.
And to a certain extent ecommerce not as much but certainly club and mass our market shares continue to be quite strong in those three classes of trade.
Mark Astrachan: We've seen obviously some struggles in the drug class of trade, we have a higher market shares there are but not materially higher than what we have in the rest of the country with.
Mark Astrachan: Food continues to perform okay, and we have decent market shares there.
Mark Astrachan: The dollar stores are a strong market shares for us and we will anticipate as they get.
Mark Astrachan: Some of their operational things are resolved that that business will continue to improve in terms of holding our shares there, but overall the migration to cloud and to mass bodes well for us as we have strong market shares and strong margins in those retail environments.
Mark Astrachan: Okay, well. Thank you everyone I greatly appreciate it let me just close off by again thanking the extraordinary Colgate Palmolive team.
Mark Astrachan: Highly turbulent and uncertain environment with a lot of volatility. This team continues to execute exceptionally well building flexibility into our business delivering brand penetration and market share growth and ultimately delivering what we we intend to do which is great shareholder value. So I appreciate all the work that they do.
Mark Astrachan: And I look forward to talking to everyone soon.
Mark Astrachan: Soon here in the second quarter. Thank you.
Mark Astrachan: Yes.
Mark Astrachan: The conference has now concluded.
Mark Astrachan: Thank you for attending today's call you may now disconnect.
Mark Astrachan: Okay.
Mark Astrachan: [noise].