The paragraph is a transcript from Colgate-Palmolive's 2024 Third Quarter Earnings Conference Call. John Faucher, the Chief Investor Relations Officer, opens the call by introducing the company's approach to forward-looking statements and financial measures. He mentions key reports and filings available for more information. Noel Wallace, the Chairman, President, and CEO, then provides an overview of the company's strong quarterly performance, attributing success to strategies like impactful innovation, increased advertising, and enhanced brand health, which have driven organic sales growth. The call will include a Q&A session.

The paragraph discusses the company's successful volume growth across its six divisions for two consecutive quarters, with 3% growth in developed markets and 4.6% in emerging markets. Despite potential challenges from economic or geopolitical factors, the company is confident in its geographic breadth and category mix to maintain organic sales growth aligned with long-term targets. They focus on sustained, profitable growth even amid slowing category growth and reduced pricing. The expansion in gross margin is funding investments in advertising and capabilities, leading to volume growth and strong organic sales. The company aims to convert this growth into consistent earnings per share growth, delivering top tier total shareholder return over the long term. The paragraph ends by transitioning to a question-and-answer session, with Dara Mohsenian from Morgan Stanley asking about the North American competitive environment and pricing strategy.

In the paragraph, Noel Wallace addresses questions about the company's performance in North America, particularly in terms of volume and pricing. He acknowledges that while the volume has been softer than expected due to shipment timing, there's a return to more normalized volume growth anticipated moving forward. Pricing remained consistent with the second quarter, though adjustments are expected through the rest of the year into the next quarter. In terms of industry trends, particularly for their pet segment, there have been challenges in the pricing environment. There were also impacts on skin health volumes due to reductions in business from China and some e-commerce shortfalls. Overall, Wallace expects gradual improvements in volume as market conditions stabilize.

The paragraph discusses the company's positive performance and future outlook, specifically focusing on the Hill's brand. Despite softness in North America, the company has experienced strong growth across its business, with Hill's showing exceptional performance and volume growth, partly due to lower private label impact. The company is reinvesting its strong margins into driving category growth and is seeing market share gains. They are also expanding into new segments, especially in wet products. Overall, there is confidence in sustaining strong growth and market presence. Additionally, a question from Filippo Falorni is introduced, seeking insight into the company's perspective for the upcoming year, acknowledging no specific guidance is provided yet.

In response to Filippo's question about areas of business that could accelerate growth, Noel Wallace emphasized the importance of long-term investment in business capabilities to sustain growth. He highlighted the flexibility built into the company's profit and loss (P&L) structure, which allows for reinvestment into innovation and advertising. Wallace noted that the company is focusing on accelerating innovation, particularly for future years ('25 and '26), and maintaining strong advertising efforts to improve brand health and market share. He mentioned the growth in global market shares, especially in toothpaste and toothbrushes, as a result of these efforts. The company plans to continue investing in market penetration, leveraging analytical tools for growth opportunities, and driving brand advocacy to sustain growth into 2025 and 2026.

In the paragraph, Robert Moskow inquires about the strong quarterly performance in Europe and its sustainability, mentioning that some peers have indicated this might not be ongoing. Noel Wallace responds by praising the team's focus on fundamentals, significant investments, and top-line growth, despite pricing challenges. He highlights improvements in market shares, strong advertising, and brand health, particularly in Oral Care, contributing to record-high shares. Wallace acknowledges potential long-term challenges in Europe's market but notes that the business is in good shape with high gross margins and positive market share reflections. The paragraph ends with the operator introducing Bonnie Herzog from Goldman Sachs for the next question.

The paragraph discusses the performance of a business in emerging markets, highlighting strong organic sales growth primarily driven by pricing adjustments to counter foreign exchange (FX) pressures. Although growth on a net basis has been modest, the company sees potential, particularly in larger markets like Brazil, India, and Mexico, where there are opportunities for growth and premiumization. Despite post-election volatility in Mexico and general market fluctuations, the company's emerging market strategy is delivering positive results. Strong performances were noted in Asia, especially China, as well as in India, Africa, and Eurasia. The focus on fundamental business strategies, such as increasing household penetration and capitalizing on premiumization opportunities, has provided flexibility in targeting these markets amidst inherent volatility.

The paragraph discusses the company's financial performance, particularly focusing on gross margins. Despite negative exchange rate movements and economic challenges, the company's underlying performance is strong. Kevin Grundy from BNP praises the company's strong quarterly results and inquires about gross margin development over the next year. Stanley Sutula responds by expressing satisfaction with the better-than-expected gross profit margin, which improved by 270 basis points year-on-year. He acknowledges ongoing raw material inflation and tougher year-on-year comparisons in the upcoming fourth quarter but credits the team's efforts in driving productivity and benefiting from volume as positive factors for maintaining margins.

The paragraph discusses how increasing volumes allow for better overhead absorption, benefiting variance management. While pricing contributions are expected to decrease over time, the company plans to balance its P&L through growth funding and revenue management. The strategy focuses on driving profitable growth by investing in innovation and advertising, aiming for both top and bottom-line improvements. During a Q&A, Lauren Lieberman from Barclays inquires about the company's philosophy on advertising and reinvestment spending, questioning the potential for diminishing returns. Noel Wallace emphasizes the importance of maintaining flexibility for brand investment to drive long-term growth by enhancing brand equity and consumer engagement.

The paragraph discusses the company's strategy for assessing the effectiveness of its advertising investments. The primary focus is on driving volume growth and global penetration as benchmarks for success. The company is evaluating ROI on a geographic basis, reallocating funds between divisions to optimize returns, with Europe showing exceptional results, especially in Oral Care. There is an emphasis on improving understanding and efficiency via analytics and AI, aiming for better digital impact and advertising investment efficiency in the coming years. The company is pleased with the current advertising strategies, which support brand growth, penetration, and premiumization opportunities, and plans to continue investing as long as positive trends persist.

In the paragraph, Kaumil Gajrawala from Jefferies asks about the strategic changes that have led to the company's positive results, especially given the challenges faced by competitors in the CPG industry. Noel Wallace responds by explaining that over the past few years, the company has focused on a more strategic allocation of resources, prioritizing areas with the best growth opportunities and return on investment. The division presidents are flexible in reallocating funds to ensure optimum returns. This strategic focus has resulted in significant volume growth across all divisions, particularly in Oral Care, Pet Health, Skin Health, and Personal Care, with notable success in Bodywash in Europe due to strong relaunches and advertising.

The company is experiencing strong opportunities in Home Care across Latin America, particularly highlighted in the recent quarter's results. Strategically, they are being thoughtful about geographic investments and are selective in navigating complex media environments to enhance brand reach and frequency effectively. The digital team's efforts, especially from New York, in optimizing ROI across various media have been beneficial. In response to a question about Latin America, Noel Wallace acknowledges the strong performance in the region despite facing challenging volume comparisons. Even with an anticipated slowdown in organic sales growth, the performance aligns with their expectations, particularly regarding Mexico and Brazil, and they are considering currency volatility and market stability in their pricing strategy over the next year.

The business experienced strong growth in Latin America, with volume increases over four consecutive quarters despite volatility and recent pricing increases. Post-election choppiness in Mexico needs careful monitoring and spending adjustments. The relaunch of Colgate Total offers opportunities for premiumization across the region. Despite challenges like foreign exchange fluctuations, particularly excluding Argentina, the business plans to leverage strong brand strength and support to maintain pricing strategies. Overall, the performance in Mexico is strong, although some category sluggishness is noted, requiring close observation and execution.

The paragraph discusses a company's performance in Brazil, highlighting strong results despite some market uncertainty. The team is adept at navigating volatile environments, driving market penetration and premiumization. Although aggressive pricing is avoided due to inflationary pressures, foreign exchange pricing is expected in future quarters. In response to Olivia Tong's question about affordability and consumer spending, particularly in North America, Noel Wallace emphasizes their strategy of accelerating innovation, especially in the premium segment, while providing value-added benefits to core businesses globally. They support this with advertising to grow brand penetration and market share, noting good performance in both volume and value shares, particularly in toothpaste.

The paragraph discusses the challenges and strategies for consumer engagement, particularly in North America, highlighting the need for innovative approaches and effective promotional strategies. The speaker emphasizes the importance of using analytics and AI to optimize promotions and drive growth, noting that while consumer behavior has normalized post-COVID, coupon redemption rates are slightly higher. There's an emphasis on spending wisely for the best return on investment. The conversation then shifts to a question from Robert Ottenstein about the reasons behind the company's strong performance, suggesting that strategic spending and data-driven decision-making contribute to their success.

The paragraph discusses the company's focus on long-term sustainable growth in the Oral Care sector, emphasizing the importance of building capabilities beyond just increased marketing spend. Key strategies include leveraging technology, whitening initiatives, and innovation, as well as utilizing digital advertising and data-driven decision-making. The company aims to maintain consistency in core categories globally while adapting to new market behaviors. Additionally, significant pricing adjustments over the past three years have been intentionally implemented to align categories with desired growth objectives.

The paragraph highlights the company's strategy to consistently invest in strengthening its brands and maintaining brand health despite market volatility. It emphasizes a cautious and deliberate approach to business expansion, focusing on building capabilities and targeting growth opportunities in specific geographies. The strategy includes prioritizing premiumization and innovation, particularly in Oral Care, with product rollouts like Colgate Total in Latin America and Max Fresh in India and Southeast Asia. The company's performance in China, benefiting from favorable comparisons, remains strong, with specific mentions of Colgate and the Hawley & Hazel business.

The Colgate business is experiencing strong growth, primarily due to premiumization and innovation, resulting in a good balance of volume and pricing despite challenging comparisons. The Hawley & Hazel brand is improving after several quarters of slow growth, but there's still room for growth and a need to reassess their market strategy to remain competitive and sustain growth. Although pleased with the performance in China, Colgate acknowledges the impact of the broader economic slowdown. In response to a question from Andrea Teixeira of JPMorgan, Noel Wallace declined to provide specific quarterly guidance figures, but mentioned they target continued global growth around 6% and are considering expanding Hill's brand internationally by 2025.

The paragraph provides an overview of the company's positive performance and growth outlook, emphasizing its solid quarter results and strategic positioning for consistent growth. Despite not being immune to common industry challenges like foreign exchange fluctuations, these are accounted for in its guidance. The focus on Hill's business and its capacity improvements has allowed optimization of the supply chain, expansion into high-growth segments like the wet business, and increased flexibility. The company is carefully managing volume allocation globally and pursuing international growth opportunities, commending the supply chain team's integration of new facilities. Bryan Spillane from Bank of America then requests clarification regarding gross profit and growth.

The paragraph discusses a company's strategic approach to balancing gross margin percentages and gross profit dollar growth. Noel Wallace emphasizes there is no intentional message regarding a focus shift, explaining that both gross margin percentages and dollars are crucial for the company's investment in growth opportunities. Stanley Sutula adds that while there has been margin improvement in certain areas, the method of achieving this growth will change. Pricing will play a smaller role, while volume and productivity will become more important. Ultimately, the company aims to integrate both margin percentages and dollars to support investment, and overall top and bottom-line growth.

In the paragraph, John Faucher emphasizes the importance of dollar-based EPS growth to achieve top-tier TSR within their peer group. While discussing a focus on both organic sales and gross profit growth, he notes the need for thoughtful strategies to drive bottom-line growth. Korinne Wolfmeyer from Piper Sandler then asks about certain dynamics affecting North America's quarterly performance, specifically regarding shipment timing and a pullback in eCommerce. Noel Wallace responds, clarifying that shipment delays from Q3 to Q4 were due to network disruptions but are not expected to recur. He attributes eCommerce pullbacks in the U.S. to inventory adjustments by major online retailers, particularly in the skin health sector, influenced somewhat by softness in the Chinese market.

The paragraph involves a discussion about economic and promotional trends in North America, indicating a stabilization and normalization in the market, although not fully back to pre-COVID levels in terms of promotional sales. It then transitions to Steve Powers from Deutsche Bank asking Noel Wallace about the impact of the restatement on growth in the Skin Care segment and the general trends observed in different key markets. Noel responds by stating that North America showed near-flat growth for the quarter excluding the skin segment and acknowledges sluggishness in the skin care sector in Asia, Europe, and the U.S., which aligns with industry trends.

The paragraph discusses a company's strategic shifts in its business operations, emphasizing a re-evaluation of competition and investment strategies. They've hired an experienced outsider from L'Oreal to help centralize U.S.-based global decisions and refine market expansion opportunities to ensure sustainability and long-term growth. Despite some short-term challenges in Asia and Europe, they remain optimistic about their long-term strategy. Following this, Mark Astrachan from Stifel questions the company, specifically about the U.S. Oral Care market. He highlights a period of growth between 2022 and 2023 but notes a general trend of deceleration and market share loss over a longer period. He asks what drove the past growth, why it reverted to share loss, what competitors are doing well, and how Colgate could improve its market position.

In the paragraph, Noel Wallace discusses the current status and future plans of their business, noting that while toothpaste shares are slightly down and toothbrush shares are up, the overall business is performing well but needs improvement in premiumization strategies. The focus is on enhancing innovation and addressing core business areas, especially in moving consumers towards higher-tier products. Despite some challenges in retail environments like the drug class trade, they remain optimistic about growth opportunities and are planning significant relaunches for 2025 to drive further success.

In the paragraph, Noel Wallace discusses the company's strategy for channel expansion, focusing on eCommerce and innovative discount formats globally. He highlights the growth of club stores in Asia and emphasizes the importance of strategic investment in retailers that will drive long-term growth. Wallace mentions success in North America with Dollar Stores and stresses working with retailers to drive category growth across all channels. The key is being attuned to market trends and thoughtfully adopting new retail environments to benefit retailers, categories, and the overall market.

The paragraph discusses the innovative changes occurring in the retail sector, particularly among big box retailers adapting to the shift towards eCommerce. The speaker emphasizes collaboration with these retailers to provide necessary products and configurations to enhance in-store experiences. Noel Wallace then summarizes the company's successful quarter, highlighting a 4.5% increase in net sales, an 8.5% rise in organic sales, balanced growth in volume and pricing, and double-digit EPS growth. He credits the global Colgate team for their effective execution of the company's growth strategy and thanks everyone for their efforts. The conference call then concludes.

This summary was generated with AI and may contain some inaccuracies.