Colgate-Palmolive Company

Operator: Good morning. Welcome to today's Colgate-Palmolive First Quarter 2026 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 Executive Vice President, Investor Relations, Claire Ross. Claire Ross: Thank you, Drew. Good morning, and welcome to our first quarter 2026 earnings release conference call. This is Clay Ross, Executive Vice President, Investor Relations. Today's conference call will include forward-looking statements. Actual results could differ materially from these statements. Forward-looking statements inherently involve risks and uncertainties and are made on the basis of our views and assumptions at this time. Please refer to the earnings press release and our most recent filings with the SEC, including our 2025 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. These remarks also include a discussion of non-GAAP financial measures, which exclude certain items from reported results, including those identified in Tables 3 and 6 of the first quarter earnings press release. A full reconciliation to the corresponding GAAP financial measures and related definitions are included in the earnings press release. Joining me on the call this morning are Noel Wallace, Chairman, President and Executive -- Chief Executive Officer; Stan Sutula, Chief Financial Officer; and John Faucher, EVP, M&A and Special Projects. Noel will provide you with his thoughts on our results and our 2026 outlook. We will then open it up for Q&A. Noel Wallace: Thanks, Claire, and good morning, everyone. We're pleased with how we started the year as we delivered strong top and bottom line growth. Organic sales growth accelerated from the fourth quarter, driven by improved volume performance, particularly in Asia Pacific. Excluding the impact of private label pet food exit, we grew both volume and pricing in all 4 categories and 4 of 5 divisions. Our sales growth was led by emerging markets, the regions where our strong global brands generally have higher market shares and the greatest scale advantages. We believe emerging markets are accretive in terms of growth prospects and are investing in them accordingly. And we use the strong net and organic sales growth to deliver gross profit, operating profit, earnings per share and free cash flow growth while still increasing investment in our brands and capabilities. This encouraging start to the year gives us confidence in our outlook for the balance of the year, though significant increases in raw material and packaging costs, we have built into our guidance to reduce our expectations for gross margin for the year. When I spoke to you on our Q4 2025 call, I talked about the strength of our 2030 strategic plan. It's the choices that we made in building this plan, along with the flexibility that we've built into our P&L that allow us to deliver short-term results in a volatile environment while simultaneously building for the long term. And best-in-class companies need to do both short-term results and long-term strategy. Our global brands are driving broad-based growth by geography, by category and with volume and pricing. Our investments in advertising through our omnichannel demand generation model keep our brands top of mind with consumers in the moments that matter, and we continue to drive higher ROI even as we increase spending. We have built our capabilities in areas like innovation, data, analytics, digital, AI, and we'll continue to invest behind them and scale them across the organization. This leaves us well positioned to delight consumers with perceivable superior products to accelerate category growth and drive market share improvement. We believe our efforts in RGM, Promo AI and funding the growth give us the ability to drive profit and EPS growth even in a period of significant cost inflation. And our strategic growth and productivity program is another great example of how we're working to deliver in the short term while building up for our 2030 strategy. This morning, we announced an update along with annualized savings target of $200 million to $300 million, with the majority of the savings focused in 2027 and 2028. This is not an extension of the program as we still expect the program to be completed by the end of 2028. The savings will enable us to fund investments in capabilities to deliver on the 2030 strategy as well as to drive consistent compounded dollar-based EPS growth. More importantly, the changes we are making to our organizational structure by reducing complexity will help us build a more agile company that can thrive in an omnichannel environment. There is still uncertainty in how the rest of 2026 will play out, where oil will be, what will happen with interest rates, how the consumers will respond. But I can tell you is that we believe we've built a model that can deliver in this environment while setting us up for long-term success. And with that, I'll take your questions. Operator: [Operator Instructions] The first question comes from Dara Mohsenian with Morgan Stanley. Dara Mohsenian: So Noel, I just wanted to focus on volume mix. You clearly had strong results in emerging markets in Q1. Last year, you talked about reallocating marketing spend to some higher growth areas and opportunities. So I wanted to get a sense of how tangible the payoffs are from those efforts. Is that showing up in the Q1 results? And really, the question is how sustainable the volume strength in emerging markets might be going forward with those efforts, but also if you're seeing any negative impact post-Iran? And maybe while we're on the subject, on the other side, just North America continued to lag in Q1 and volume/mix. You did talk about improvement in Q2 in the published remarks. But just wanted to get more detail on the plans there, the level of improvement that might be realistic in North America. Noel Wallace: Yes. Thanks, Dara. Let me take the volume piece first. Clearly, globally, we're seeing volumes still be rather sluggish in our categories. So in that environment, you can imagine we're particularly pleased with the acceleration of volume growth in the quarter, certainly from the fourth quarter. And we saw that across almost all divisions and all categories, which is particularly pleasing to us. The broad-basedness of that growth, so to speak, is clearly showing up in the fact that emerging markets have accelerated. Asia Pacific was a big driver of that. We continue to see the interventions that we're taking with the Hawley & Hazel business, pay dividends for us moving forward. I wouldn't say we're completely out of the woods yet. The category continues to be pretty sluggish in China, but our business is executing better against the intervention strategies that we put in. The Colgate business continues to perform well. Latin America from a volume standpoint continues to hold its own, driving nice volume shares through the quarter. Africa, Middle East and Europe continued to do better than we expected, quite frankly, given some of the pricing that we've taken in those regions. And I think that's the other point. The strength of our brands is allowing us to drive that volume share. And that -- coming back to the initial part of your question, that the fact that we've continued to sustain high levels of advertising investment, particularly in emerging markets has allowed us to accelerate the growth. That, combined with good RGM, we had a good balance, obviously, of pricing in the quarter as well. So overall, we're very pleased with the volume results. Going on to North America. Listen, I was pretty clear on the fourth quarter call that North America was going to take some time. The interventions are in place. I know John and Shane are working very diligently on a strategy reset for North America. That's going to include some real brand interventions, accelerated innovation, more RGM, better execution, getting our promotion strategy right with some of the key retailers. So there's a whole myriad of different initiatives being taking place. And we started to see some of those come through in the back half of the first quarter. Volume was a little dampened by the fact that some of the shelf resets were later than we expected. The new product that we shipped in the first quarter came later as well. We started to see that accelerate as we exited the quarter. So plans in place to address North America overall, quite pleased with the sequential volume growth across all of our business, particularly in emerging markets. Operator: The next question comes from Filippo Falorni with Citi. Filippo Falorni: I was hoping you can give a little more color on the cost inflation that is currently embedded in guidance. I know you changed your gross margin guidance to down year-over-year versus up prior previously. So how much incremental cost inflation are you assuming? What are your assumptions on kind of like the crude oil underlying? And maybe if you can talk a little bit about a high level of the potential offsets as you get into the back half of the year and as we start thinking about next year as well? Noel Wallace: Yes. Let me just address it from a macro standpoint, I'll let Stan provide some more detail. Clearly, the assumptions that we have embedded into our guidance for the year include the $300 million of additional raw materials. We're assuming oil roughly at around $110. I think importantly, strategically, as we've always gotten ahead of the cost environment, we need to ensure that our operating units are planning for these types of inflationary environments that are coming. Clearly, we'll wait and see. There's a lot of ups and downs moving around the world, so to speak, on oil pricing. But for us, strategically, it's important that the operating units start to build this into their strategies on how they want to execute some of the strong innovation plans that we have for the balance of the year, how we execute funding the growth for the rest of the year. So again, we feel it's very prudent to get those numbers out there, and we built that into our guidance. Clearly, some of the inflationary environment has forced us to take the gross margin down for the year. But overall, we still feel we're well in line with our guidance on earnings per share. Stan? Stanley Sutula: Yes. Let me pick that up. Our assumptions for the year embedded in our gross profit margin guidance includes roughly $110 on average for the remainder of the year and the associated impact that has on raw and packaging materials. Since the fourth quarter call, we've seen an additional raw materials and logistics impact for the year of roughly $300 million. And you should think of that as roughly 2/3 raw materials and 1/3 logistics. The biggest incremental impact, Filippo, is coming from oil byproducts: resins, petrochemicals, fats and oils. And we now expect that spending in those areas to be up more than 20% year-on-year for the full year. So you can see the impact that, that has. Our logistics costs are up nearly 10% impacting both ocean and land freight. So that's what led us to take a look and put that into our guidance. And offsetting that is the work around RGM productivity across the entire P&L, which allows us to maintain our guidance. Unknown Executive: Filippo, just one other point I'd make on that is, yes, remember, the logistics goes into the SG&A not in the gross margin. So there will be an incremental impact in SG&A from that. Operator: The next question comes from Bonnie Herzog with Goldman Sachs. Bonnie Herzog: I guess I had a quick question on your guidance. You maintained your top and bottom line guidance, but you highlighted gross margins will be more pressured. So maybe first, could you just maybe touch a little bit further on some of the key puts and takes on the gross margin headwinds. But ultimately, I'm curious if you see scope for incremental pricing. And then second, you talked about the flexibility you have to potentially pull forward some cost savings or productivity initiatives. So any more color on that would be helpful. I'm thinking about in the context of your ability to deliver on the bottom line. But I guess, ultimately, wondering if we should realistically think about your EPS coming in closer to the midpoint of your range or possibly below. Again, I'm just trying to understand how much flexibility you have there. Noel Wallace: Bonnie, thank you. So our guidance reflects what we believe is the increased volatility that we see today in the current environment. And clearly, we had a strong start to the year. So we've maintained our organic sales growth guidance in the 1% to 4%, and we're waiting to see what -- quite frankly, what impact that has on the consumer moving forward. I would say, currently, we're not seeing a significant impact, but time will tell. From an earnings standpoint, we're watching oil and other commodities, as you can imagine, to see where these prices settle out, but we feel very comfortable with our current range of low to mid-single digits. I would suggest you reflect the lower gross margin in your algorithm. It includes our increased oil and commodity assumptions for the balance of the year. As Stan just mentioned, with oil at a price of $110 for the balance of the year works out to an incremental $300 million across the board, including logistics in that number. So as you think of the rest of the income statement, understand that we remain deeply committed to offsetting as much of that as we possibly can. Clearly, the RGM efforts that we're executing across the world, we will possibly be taking pricing that will come through improved premium innovation as we execute some of the new product launches we have throughout the year. We'll look at price pack architectures as well. We'll look at mix opportunities as we move through the balance of the year. And as Stan rightfully called out, I mean, obviously, our SGPP program will allow us to offset some of that as well. But for right now, the clear indication that we have is margins will likely be down. And so we want to be prudent in getting that number out there ahead of time. Stan, anything to add to that? Stanley Sutula: No, just we have a regular productivity program outside of SGPP and our teams do an exceptionally good job executing that. So we'll be looking to drive that productivity. That is not just in the cost line. That also impacts SG&A. So as we look to drive that productivity, that will be one of the other flexibility points that we execute on. Operator: The next question comes from Peter Galbo with Bank of America. Peter Galbo: Noel, I was actually hoping to pivot back to APAC. You called it out in your prepared remarks as a source of strength. And in the prepared remarks, I think you noted India very briefly, just as kind of the main driver. So hoping to unpack that a little bit more, just India growth in the quarter? And then any help around just whether GST is really aiding that business and what you've seen so far? Noel Wallace: Yes. Thanks, Peter. I can't give a lot of detail on India. They haven't announced officially their numbers, but we did say, obviously, the growth in Asia Pacific were strong, and you can clearly connect that back to the 2 largest markets, which are China and India. So as I look at Asia Pacific in general, I'm really pleased with the acceleration that we saw in the first quarter. As I mentioned on the first question, we're not out of the woods yet on Hawley & Hazel, but they're making some very significant improvements in their execution and the strategic interventions we've taken over the last year are starting to take hold. One, we've accelerated innovation in that market. We're seeing that through the dual tube technology. That's in some of the prepared charts that we shared with everyone earlier. Clearly, that's having a great impact. We're getting our omnichannel execution, much more effectively implemented across the different platforms that exist, including Douyin. And so we feel good about where Hawley & Hazel is going. We've got some good brand work going on in the balance of the year, investment levels continue to be strong. And you couple that with the strength of the Colgate business in that market, which is executing very, very well. The Colgate business delivered mid-single-digit growth in a flat to declining market. So again, very encouraged by what we saw across China. That being said, if you go across the rest of the region, Philippines performed well. Thailand performed well. Malaysia performed well. Australia, a little softer than anticipated. But overall, Asia doing quite well. And clearly, some of the volume drivers that we -- volume acceleration we saw in the quarter was coming out of that region. Operator: The next question comes from Peter Grom with UBS. Peter Grom: So I was hoping to get some perspective on Latin America. Another strong volume quarter. Can you maybe just give us some more context on category growth and market share performance in the region? And Noel, you sounded pretty confident on emerging market growth from here in your response to Dara's question. So curious, just as you look ahead, do you expect this momentum to continue? And maybe specifically, do you expect to see continued balance from a volume and price perspective? Noel Wallace: Peter. Listen, Latin America continues to execute very, very well. We've got really -- I was down in Mexico and Brazil and Argentina in the last month and really pleased to see how some of the strategic capabilities that we're building and driving from the center, Latin America is definitely at the forefront of executing some of those. Clearly, their omni demand generation work is excellent, some of the work they're using AI for is excellent. RGM continues to be best-in-class and their in-store execution and driving numeric and weighted distribution across some of our adjacency categories looks terrific as well. So overall, they're executing terrifically and you saw the obviously mid-single-digit growth coming out of them and particularly the growth being Mexico and Brazil driven. So excellent results from that perspective. The innovation, I'll talk to for just a moment in Latin America, and we're seeing that across emerging markets. I talked a lot about that last year, how we're truly trying to step up innovation across all price points. And I think that bodes well as we set up an environment that will be more challenged from a consumer standpoint. We clearly expect emerging markets to continue to drive the growth for the balance of the year, and that will be driven by some of the changes that we've made on accelerating innovation at the lower price points and mid-price points while continuing to see the biggest strategic growth opportunity to be in the premium side. So you'll see that unveiled. The purple launch that we had in Asia that we've carried through Latin America now is doing very, very well. Our Home Care launch and some of the adjacencies that we've gotten into and the relaunch of our core business on Suavitel is performing quite well. So the good news is we have ample opportunities across the innovation to continue to drive growth. And I think some of the capabilities that we're executing from the center and Lat Am taking on gives us great confidence that they'll continue to perform well in the quarter. Operator: The next question comes from Andrea Teixeira with JPMorgan. Andrea Teixeira: I was just hoping to know if you can elaborate a little bit more on the -- how competitive the U.S. Oral Care businesses now? And I understand there were some setups on the innovation side. And historically, you have had a higher volume share, which sets you well for this type of like more RGM-driven market. So I was hoping to see how you left the quarter, you exited the quarter. And as you said those, if you see sequential improvement in market shares and how you're seeing that setup going to the balance of the year? Noel Wallace: Yes. Thank you, Andrea. Yes, very much the case. We expect sequential improvement in North America moving forward. The innovation came late in the quarter. We're getting that executed and some of the early signs are encouraging. But clearly, a lot more work to do in North America. And I have been through some of the strategic interventions that we're taking. I'm quite pleased with some of the decisions they're taking. The environment, to your point, is quite competitive. We see quite a bit of our competition spending a little bit more money on couponing. Nothing tremendously unusual, but one of our competitors certainly trying to drive more volume in that regard. So we will step up our investments in North America. Clearly, as we look at the balance of the year, that's a strategic growth opportunity for us, particularly in toothpaste, the toothbrush business continues to perform very well. And we're starting to see nice growth with some of the other categories as well. We've taken a much more aggressive stance on innovation, both in Home Care and Personal Care and particularly the early signs on Home Care are encouraging. So sequentially, the business should improve as we move through the balance of the year and shares should come right behind that. Operator: The next question comes from Chris Carey with Wells Fargo Securities. Christopher Carey: Just given the inflation is picking up over the course of the year. I just wanted to see if this adjust or alters your plan for pricing perhaps specifically in emerging markets where our pricing can move a bit quicker and whether that's factored in your outlook? And just as a follow-up on North America, the margins were a bit light this quarter. Any context on that and how you see those tracking from here? Noel Wallace: Yes. First on -- we'll watch the consumer very, very carefully. Clearly, there's been some compounded inflation over the last couple of years. We've seen that obviously lead to a little bit more of the sluggishness that we're seeing in the categories, but the categories have not worsened. And in fact, we think emerging markets are picking up a little bit. But we're going to watch that very, very closely. That being said, I mean, the key focus for most companies today is the inflationary environment and your ability to get pricing in the category continues to be critically important to maintain the margin dollars and the spending in the categories. And so I think you'll see pricing still come through as we move through the balance of the year. But that needs to be coupled with strong innovation. If we have the right value proposition, across our different price points. Consumers are willing to pay more. We've seen that coming out of COVID when we saw the inflationary environment then. So the key for us is getting the innovation executed and maximizing the opportunities we see both at the top end of the market in premium as well as making sure that we have a choiceful offerings at the bottom end of the market. So the answer to your question on pricing, we will take pricing where we see the opportunities. More of that will be innovation-led as we move through the balance of the year. But part of the reason why we wanted to get the raw materials into our guidance is to make sure the operations are planning accordingly. And we want to be very thoughtful about them thinking about where the cost environment is going so they can maintain the investment in the P&L moving forward. Stanley Sutula: I'll pick up the gross profit margin piece in North America. So their margins obviously are significantly pressured by tariffs on a year-on-year basis. If you recall, there was minimal tariffs in the prior year, but North America incurs the vast majority of them, and obviously, higher raw material costs. So we are lapping the highest gross profit margin quarter last year with no incremental tariffs and that year-on-year impact, we expect will be less going forward. Within North America as well, the actions that we're taking -- the raw materials is the biggest impact that we have. We will continue to drive the productivity to look to improve that margin and then the tariffs will normalize as we go through the year. Noel Wallace: Yes. The other thing I would add is the cost environment obviously is an industry issue and impacting everyone. So my sense is you will see some pricing move through the categories over time as people try to offset the inflationary environment moving through their P&L. For us, being proactive is very important to ensure that we protect the margin lines in the P&L to ensure we maintain the investment. Operator: The next question comes from Robert Moskow with TD Cowen. Robert Moskow: Noel, I was wondering what made you decide today or just recently to expand the scope of the SGPP program to $350 million to $500 million (sic) [ $550 million ]. What held you back last year from making that your original recommendation to the Board. Does it have anything to do with the higher cost environment that we're in now? Noel Wallace: No. I mean, the latter part of your question, no. I mean, clearly, we've been very proactive on putting that program together. And these programs are complex. I mean they involve a lot of different inputs and a lot of different assumptions, which the team here painstakingly goes through to ensure the assumptions are correct. I think what's so pleasing about the program, the fact that we got ahead of it is that we've seen the execution from our teams on the ground be a lot better than we expected. And a lot more ideas have come to the table as they thought it through in terms of the opportunities they have to simplify the operational structure of our business and drive more accountability across the enterprise. And so we're pleased with the fact that the programs have come in better than we anticipated, and there's been a lot of very interesting ideas that came through. You don't necessarily always know those. You know the big ones from the start. But the more important ones are how the operations are thinking about structuring themselves in a more efficient manner and those seem to be coming through. Let me turn it over to Stan, who has been driving this from the top and doing a wonderful job in making sure the teams are really proactive in thinking about the opportunities that we can go after. Stanley Sutula: Thanks, Noel. So first of all, the strong execution from the teams, when they -- when we first went in this program is a little bit different than some of our previous ones that it was addressed a little bit more methodically on addressing structure through spans and layers and items like that. The strong execution has gotten us to the high end of the initial targets. And then as Noel mentioned, we've identified additional opportunities since that launch of the program as teams look to simplify the operations, enhance the efficiency of how we operate day-to-day. Importantly, we're not extending the program. So this is going to still end by December 31, 2028. But as a result of these actions, we now expect that we'll be able to generate $200 million to $300 million of savings over the term of the program. And the majority of those savings we expect will flow through in '27 and '28. I think also an important note, as we said when we launched this program, we'll utilize these savings in 2 primary areas: to fund incremental investments, accelerating growth as part of our 2030 strategy, and that, of course, bottom line contribution. And we'll balance those based on the opportunities that we see and the overall market conditions. Operator: The next question comes from Olivia Tong with Raymond James. Olivia Tong Cheang: You flagged that even with the cost inflation headwinds, your plan to stay disciplined on brand spend. Clearly, a lot of your peers feel the same. But I'm wondering how your strategy and management of brand spend potentially pivots given the cost environment, looking for additional efficiencies, for example? And what's your view also on how this could impact the promotional environment? Noel Wallace: Yes. Listen, I think most of us in the industry understand that innovation is a clear driver of sustainable long-term growth. And the exciting aspect for us is the flexibility that we have in the P&L to ensure that we're supporting our innovation in a meaningful way. And that will continue to be the strategy that we adopt. That's been successful for us over the last couple of years, and we'll continue to execute that. And the combination of our strong funding-the-growth, our RGM and the productivity initiatives that Stan just took you through, give us confidence that we can continue to invest at healthy levels behind our brands, and that will help drive category growth in the long term. So clearly, we see an opportunity to elevate top line investment. I talked a lot about omni demand generation, and we're putting a significant amount of time within the company to truly understand the pressure points in omni demand generation and making sure that we have the appropriate understanding insights to drive persuasion and excitement behind our brands. And that might include different platform advertising, that might include increased focus on social commerce or agentic commerce. So we clearly, are understanding where the profit pools are, the revenue pools are, so to speak, and using our money wisely, and we're spending significantly more time understanding ROI as more of our money moves into digital advertising. So overall, we feel the increased advertising is something that will benefit us, benefit our brands. We're not necessarily suggesting that's going into promotion at all. Quite frankly, on the contrary, we expect our advertising, our thematic brand building work to be much more effective as we move forward as we accelerate advertising, particularly in some of the key geographies where we need more aggressive intervention relative to the success we're having. We also have brands where the advertising is driving real momentum across the world. Hill's is a great example of that, and we'll continue to accelerate growth in that part of the business where we're seeing great returns on that investment. Operator: The next question comes from Robert Ottenstein with Evercore ISI. Robert Ottenstein: Great. So I was wondering if you can talk a little bit more about Hill's, which has largely gone unnoticed so far in this call, except for your last mention. Can you -- first off, how is the category doing? Is there any signs of improvement? And then second, following on that competitive activity, how your innovations are going, how household penetration is. And then taking out the private label side, would you expect the core business to accelerate as the year goes? Noel Wallace: Yes. Robert, thanks. And thanks for bringing up a wonderful business that continues to perform exceptionally well. They had an impressive quarter in arguably what's a tough market. We delivered solid organic, I would say, both volume and price ex private label at 4.8%. The U.S. grew at 5%. So excellent growth on a top line basis way outperforming the market, which is roughly flat right now. As you saw in the prepared remarks, private label is a 260 basis point negative. That will continue to taper off. It will probably be on the total company, 20 to 30 basis points of negative impact in the second quarter, and then we should be out of that by the back half of the year. Our volume continues to be impressive on that business, excluding the impact of private label, volume was up 1%, which is terrific. We're seeing Science Diet and Prescription Diet continuously grow, particularly the Prescription Diet business had an exceptional quarter. We had double-digit growth in some of the areas that we wanted to go after, particularly on some of the strong indications that we're focused on. Importantly, as I mentioned on the fourth quarter call, we're seeing broad-based growth across that business across all of the key growing segments. The only part of the category that's suffering more than others is a dry dog. And we've seen that category continue to slip, and our growth was not where we'd like it to be. But across the growing segments, whether it's wet, whether it's cat, whether it's Small Paws, we continue to see nice, nice growth. We're gaining share across almost every single channel across the innovation that we put into the market, which is terrific. We're gaining shelf space based on the strong growth that we're bringing to our retailers. So overall, we feel very good about the business. We feel very good about the innovation cycle coming through the balance of the year. And the supply chain, as we've talked about a couple of times, continues to perform exceptionally well, giving us a lot more flexibility and leverage as we move through -- as we look through the P&L. So overall, the business is in good shape. We'd like to see the category turn a little bit more. I think that's going to take some time. But we feel we've got real growth opportunities in some of those segments I mentioned that we continue to be under-indexed in. Operator: The last question will come from Michael Lavery with Piper Sandler. Michael Lavery: I actually wanted to come back to Hill's, and I know you gave a lot of color just then, but I was wondering if you could unpack that consumer a little bit and just maybe what, if any, risk from higher gas prices on how they think about maybe trading up or getting a pet in the first place or just some of the kind of ways you see where that consumer sits in some of the various markets and if there's ways to think about how sustainable the momentum is from their point of view. Noel Wallace: Yes. Thanks. Recall and remember that we compete at the super premium end of the market on Hill's. And clearly, we'll continue to focus on real value-added innovation particularly on Prescription Diet side, which is an area where when you have a sick pet, you're very -- have to spend more money to address those issues in the Prescription Diet formulations that we have are absolutely outstanding and addressing a lot of the health concerns that pet owners have. And given the vet endorsement that comes behind that brand that allows us to continue to justify the premium price, obviously delivered by the strong efficacy that's delivered through that product. We're not immune, obviously, to the compounding inflation that will likely come in the market over the next 6 to 9 months based on where energy prices are today. But as I mentioned upfront, no different on the Hill's business, we have to continue to drive real value-added innovation into the category. Innovation that means something to the consumer. And the Hill's business clearly is -- at the center of that is the science. The science that we bring to the market is clearly differentiated in a very meaningful way. Hence, we have such strong endorsement from vet professionals to recommend the product. And that's the case across all of our advocacy-driven brands, whether it's oral care, whether it's skin health or others, will continue to drive real science-based innovation to make sure that we're bringing real value. And you balance that with a strong innovation across some of our big core businesses around the world, we find that we'll figure out ways to at least address some of the inflationary concerns to the consumer, but we're not immune to it. We're going to have to watch that very carefully. Okay. Well, thank you. I appreciate everyone, and thanks for listening in on the call today and your interest in the company. I hope you share our confidence that we have, the short-term plans in place, and more importantly, investing in the long-term capabilities of the company to continue to drive superior returns in what is obviously a very volatile operating environment. I want to make sure I thank the 34,000 Colgate people around the world who do just extraordinary work in a very difficult environment to deliver strong results and their tireless effort needs to be recognized and thanks. So we look forward to our next discussion. Thanks, everyone. Operator: The conference has now concluded. Thank you for attending today's call. You may now disconnect.