CL - Earnings call transcript Q2 2019 | Colgate-Palmolive Company

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Operator

Good day and welcome to today’s Colgate-Palmolive Company Second Quarter 2019 Earnings Conference Call. This call is being recorded and is being simulcast live at www.colgate-palmolive.com.

Now, for opening remarks, I’d like to turn the call over to Senior Vice President of Investor Relations, John Faucher. Please go ahead, John.

John Faucher

Thanks Ebony. to quarter welcome call. release and morning our earnings second conference Good is President Vice Faucher, Investor This Senior for John Relations. Today’s statements. conference forward-looking call will include results from Actual materially differ these statements. could filings release refer factors Report Annual that of results Colgate’s XX-K filings actual our Please website earnings SEC Form SEC to press could subsequent from available the most our cause to on these recent differ the all with and XXXX for the including discussion statements. and materially on a

of discussion of a financial include release. also included will call earnings release table corresponding X conference those in including and A the press website. in is and the non-GAAP identified financial to This measures, press measures is GAAP the Colgate’s full available X reconciliation earnings on

Noel Executive full and and thoughts some I'll the turn for morning it for and he'll Financial then President over details Chief Jakobsen, to provide Noel open your this through Officer; QX I Henning our I me will thoughts our off his Chief Officer. some year. up year then progress it outlook. questions. halfway Joining are will start and on with Wallace, on

through satisfied acceleration organic with growth. but pleased in XXXX, the we’re sales Halfway not

delivering year, target for our XXXX. As earlier in number one Noel discussed the organic growth our sales on is priority

availability core, continue focus into our higher growth pushing faster the using adjacent against expanding on to three executing innovation key segments channels. We drive to in growth: areas to accelerate growth and

in few sales with between quarters price volume These balance strategies us broad-based over growth a have helped past the deliver growth. organic to healthy improvement and

Care, growth in Oral across quarters Pet second and categories: delivered and Home all Personal markets. both emerging developed Care product four and and first sales organic Nutrition Care, the both For we've

since Science markets. is Our sequentially driving through Hill's market re-launch like significant increases across of seen first focus key and Colgate pricing re-launches. in share seeing We’ve Colgate Total improved global the we're and the Diet Total's innovation area core

seeing gains U.S. mortar, as we’re as in share Diet in in and well For Science the e-commerce brick

this We’re just the at the retailer initial beginning of has positive. of response international re-launch and rollout the been

pushing Naturals are into we Secondly, higher-growth Therapeutics. segments and adjacent like

pleased and to the new are world to launches Charcoal markets. the elmex continue expand and We progress that with meridol we making are very our around

is Our much of by growth. channels focusing the focus category to are expand third products of which like around the driving availability faster our and the on discounters world e-commerce growth

significant Our U.S. continues e-commerce deliver and toothpaste share of growth business in second year-to-date. gains in driving the well to excess quarter the category market

in second Next gross we're quarters. pleased expansion the to our the time quarter first margin margin was as up share gross for five progress in in

Our in focus through growth growth off are management margin and line, both and on the terms paying far. year a strong of having funding so premiumization delivering is at initiatives gross growth revenue and our organic sales the pricing

brand with about also us of the provide Care few very we skin very transaction about our a acquisition two Laboratoires years Skin We’ve our high We health. excited segment. high-growth weeks past margin, on business on a anti-ageing completion are of announced ago. The Cosmétiques with will the spoken Filorga the the focus over focus

that of Filorga growth approximately ending $XXX margins. is Personal profitable as nicely business Care had for the sales operating XXXX. it June net latest The XX in months also margins overall above million has our are

impact no $X.XX release transaction costs. that from the in press of said announcing transaction, Filorga, to year EPS we excludes this the As we expect

cash and XXXX. We a debt. combination earnings expect in acquisition roughly to accretion $X.XX plan the of finance of with We

additional the the quickly, down pay we our reduce intend to the debt order more of close share after repurchase to transaction. In activity

year's total billion. around from growth last share XXXX by XX% our reduce will this expect $X.XX of We repurchase

some we sustainability. on Finally, leadership made enhancing our on real progress

toothpaste recyclable journey. we a recyclable, to our our This Association XXXX sustainability approval of United step recyclers. tube big from in States make received is The all of packaging part our the in target of for As the first-ever plastic

QX results. Moving to our

in Our foreign more growth offset X.X% X.X%. pricing. second We X% net exchange sales This growth sales X% and negative with than declined quarter. favorable impact by organic the was delivered of unit volume X%

On a gross up points XX our GAAP basis, year-over-year. margin basis was

benefit. Excluding Growth in of impact was strong up the productivity basis Global while points quarter, positive our second XXX XX a gross year-over-year. performance it a Program, basis and drove the margin basis impact XXX Efficiency point was Pricing point to

XXX was raw drag transaction which foreign minus basis was from by points. includes and basis XX offset This point exchange mostly favorable by materials cost a inflation, other

up basis in points was greater of the advertising of an on the on year. half and of was division. On with a increases percent second sales a investment a the every percent sales basis increase an in advertising absolute expect basis spending year-over-year both advertising sales X% year-over-year. in We On basis as XX absolute basis, still up of percent

the advertising in charges year-over-year quarter an spending, of our SG&A basis were Excluding from up and resulting a expenses absolute and Program as and Growth Global on second our percent Efficiency sales.

some higher our the benefits offset programs. logistics As productivity costs more cycling year-ago time the period and than one compensation, of in from savings

basis earnings were share per On of diluting down $X.XX QX. in GAAP X% a year-over-year

the were Global charges tax matter to earnings Excluding diluted down XXXX from Program share in X% benefit $X.XX. per and XXXX from resulting a our and Efficiency in and Growth XXXX foreign

up through the which billion versus flow X% first half cash was was year. $X.X prior free Our

divisions. partially at X% quarter X.X% volume foreign the taking Now and exchange. X% the a growth grew by minus were in North growth as quick net X.X% pricing offset America sales look

help positive the Colgate America North relaunch led by was Care Oral business growth significant pricing. toothpaste our drive where Total

Our Elta which strong PCA to deliver businesses, Personal growth. MD Skin continued our led a care growth and skin very by professional was Care

performance its net up posted Home X%. business Fabuloso organic Care and sales ever in market in the continued foreign strong minus sales its share X% reaching the with a On highest Europe exchange X% decline US.

Italy. Spain We’re seeing UK, markets the market Total key in and sequential Colgate following share the implement relaunch like

pharmacy cleansing. Latin were physiological body foreign and sales incremental Care net volume exchange. and X.X% On is X.X% were offset as our negative by America side, pricing trends brings X.X% driving Personal mass down the share line, X.X% channels, which Sanex into

row, we second quarter every saw Mexico and the including in Brazil. For growth sales hub, in organic a

The positive, underlying which in versus America improvement XXXX. modestly growth an is rates category remain Latin

focus relaunch, and Colgate additional through Oral on the innovation Our our Care Total the revenue growth pricing Care premiumizing drove strong premium Personal the portfolio management, division. and growth across

pricing pricing Asia X.X% improvement We Pacific sales a X%, in foreign in in X.X%. and negative better led showed organic of exchange the X%, sales Net growth. were in driven by down decline positive by volume growth of quarter,

organic on all growth. with drag remained results, hubs of China expected, As our showing the other sales

natural our South India and in of from the while business strong benefited relaunch. performance for Thailand, the by Total toothpaste encouraged the Colgate brands Pacific We’re pricing

we negative, remained distribution Our results improved sequentially in optimizing our the continue quarter, on focus to in China network. but as

As year. of last we more improvement we indicated quarter, the the second expect significant half in

Eurasia net the past sales performance spending division investment quarter, X%. improved hub, X.X%, with the underlying growth across X% division. driven exchange up in up across of pricing Africa, delivered years paying robust few by volume delivered minus in X.X%, The growth advertising over the in sales strong plus Significant organic every off The is division and foreign pricing.

Russia, by aided Colgate hub performance, by Eurasia led re-launch. and Our the its solid pricing with Total improved continued volume growth,

allowed share leadership. and pricing and to establish volume market brand Turkey Colgate in performance strong market achieve in highs share Our the all-time

a in pricing delivered quarter. Africa combination business and the nice Sub-Saharan also of growth Our volume

to of with growth growth deliver X%, and Hill's by foreign volume X.X%. were X.X%, net of minus continued QX, pricing offset in sales of negative of X% partially growth exchange

narrative, a shows over of at brand that purpose last combination Hill's turnaround behind years support marketing the X The drive innovation, can growth. and strong a compelling increased

Science led results they delivered and not While are volume encouraging, quarter. Prescription reflect since North outside positive do Europe yet was the North grew growth pricing but behind both Stews every international Diet e-commerce America, our and delivered by growth. of hub the Diet one, and any business every America. The the from new impact in in quarter, growth volume pricing hub, re-launch

Moving of the the transaction. which excludes Florida impact on year full to guidance,

up to to X%. flat organic up net sales to sales continue be X% be single digits expect We to and to low

we year-to-date, the end organic our Given be expect to that of sales X% performance range. would X% to higher towards

gross full our on Growth and still year-over-year to spot Global current for expect up be rates related to on a charges Program. excluding Efficiency basis Based the and GAAP margin both year, we

the costs which first expect material in our and percent foreign pricing include of of full level. fairly half benefits programs with We productivity transaction the We raw consistent overall increase to would the sales cost. year an as exchange offset a to be for advertising expect

and the Global and both matter related our expect between basis and from XX% to now in foreign XXXX and a charge related charges Program XX% in XXXX. on Growth a tax to XXXX be full to U.S. and reform Efficiency the We XXXX rate excluding tax GAAP our tax and benefit year

XX.X%. Our previous to guidance was for XX.X%

current for the spot earnings we digits per expect year. share rates, single to GAAP down on Based low be

to Excluding earnings decline tax Program the on share based to and charge spot Growth related reform and from U.S. Efficiency the charges related in per a year. XXXX XXXX we benefit in tax and mid-single the current and Global the matter foreign rates, expect XXXX digits to for

And turn over to with Noel. it that, I'll

Noel Wallace

morning with Q&A. the I open I'd thoughts a thought before good up and everyone. into John we Thanks jump Great. few

of to around the particularly the we've more organic be emerging focus with level quarter sharply and growth, geographic to in Solid sure. world. accelerating as category for that acceleration on sales pleased continued part We're broad-based and markets

As it how decide through back those innovate and through and informs understanding consumers year really the how so that in differently, differently past that against of the year talk they categories, the about the first to make to retail of really and our and half how we're as with it said are far well. we drive how choices a we’ve begins moving the investments investment shapes of environments our me allocates changing heard we faster of our you've the and understanding clear and our differently growth in changes efforts, trying clear our

to as Happily, our driving are off the us focus John utilization increased better mentioned. to you on through pay investments in core seeing our

the most an that Therapeutic PCA recently acquisition area going the the we that recently soon Naturals Health that have very us; the Filorga We’re adjacent behind of we on as important; we're segments integrate announced. is we Skin after, and focus on and selective for Elta Premium opportunity particularly is

we've half seen the and the and on acceleration and our specifically Lastly discount the significant pharmacy in e-commerce approach as well first in after where go year stores. of we're acceleration as market going to channel

are back be, in to obviously half, get track the Now to start but on the improve while shares the a perspective you're not across our shares where business broad-based we and like -- see top is where need channels the to line we them the step growth first they in first going to accelerating moving.

not obviously share And as generating at. up growth and you're know share in that significant growth is the in well looking non-track which picked organic you channels results

we organization productivity But we well. drive how change need about we need across to growth to profitable as to the know we and do driving that think

traditional Of remain that course, done focused those we efforts so on we've well.

focus second jab accelerated in first an cost the quarter. are a the end Our to great well which we next due the come on is fully which focused on of this off move months of year we half start of in to particular in the but year, year. in of The six finding the as half is the balance through that the the maximizing

Colgate Colgate lens We really maximize the cost-cutting productivity, the realize needs how and the fully efforts. to productivity we beyond of the think to and people capacity really our just all world. move about around And need

And to across to more quicker support and processes change our and decisions of business need effectively. we streamlining do how data enterprise the eliminating getting analytics, technology use through the to we work: that, using to

and global efficiency bit we're a SAP, their to global You and standard us far – on heard in far simplified to to get me quicker, the capabilities a productive little once that faster. now more looking will with S/XHANA to talk us more how build upgrading decisions automated system, again about past and find us and we're allow make single now allow

moving basis up capacity on of people growth changes that free and drive of do a importantly more All to forward. these sustainable Colgate were

we're to but said do. making, excited the about as So work earlier, more progress I

it I'll turn that, you please. Q&A for With over to the

Operator

go we Thank from ahead. Please you. Stanley. first [Operator our of will Instructions] Dara take And question Mohsenian Morgan

Dara Mohsenian

Hi. guys. Good morning,

Noel Wallace

Hey, Dara.

Dara Mohsenian

a now is segment in to is skin last with third judicious deal the here has past. for M&A in priority skin pretty expansion generally in this you quarter. last mentioned that care couple And years care So your the been of company the a

out segment So could over you your the better if of I more us a skin give was as XX look is priority union gaining in to you the just of interest state scale years? hoping, around next a in lot care, the X

the particularly What Colgate strategy us effort lot in established from this that help to larger confidence you already just the Colgate that are competitors gives of And better you in Skin a the and of in spending succeed seemingly a some relative perspective can segment Care? prosper money understand the to Thanks. segment?

Noel Wallace

that significant category. We we do we the a can It's to spaces to - we selected to which growing we Thanks. accretive is start let's off love mean, underscoring us with but times. bringing well. are of cliff know, a a very about to the couple is margin and thoughtfully talked and All know right, X% Obviously, that organization, we're Care the Skin they're I Dara. PCA feel globally. capabilities it's about category participate at highly spaces Elta the of are itself. like X% in We that

value can endorsements drive with there. bring relate think we can and which can the So to that derm on and And the we more they're that that driven significant obviously to. the we that very particularly to we recently Filorga, we bring channel, about we they PCA the and very in continue strong fact pharmacy as capabilities talked recommended are statistician obviously to Elta

moving continue We’re skin kind build very things acquisition stream continue as we to building obviously the to on happen being These a strong will to of so very to we that. very continue we're in out on but how but portfolio, and judicious very, the selective be space into, go care and speak front. forward, mindful be

business when of the at very well the XX% specifically, It's in look we around see look well love the forward. bode really that I world. the anti-ageing trends both world and is demographically, America brand. that demographic positioned If and Filorga you here business extraordinarily around we for its all North in moving certainly

within gross margin to segment Skin Skin highly basis. the It's and the within Care. Care sub-segment is business Antiaging fastest-growing the profitable on a accretive

well-balanced management significant experience they Skin to in real a Importantly, add Care think value really got we that team with will us.

like profile will which and channels, China. around the to lot in in emerging world And of particularly of price as the obviously the they've got we and geographically, but emerging where mentioned we business our growth pharmacy, earlier, premium And strength opportunities Asia, in new and strengthen importantly think channels say pharmacy the I'd Europe, expansion pharmacy particularly add last, value world. I their a within the more

Skin So those Care. like are the reasons, we

we it's going about and to be the here continued really your We’re round Skin nicely. answer out good to question be and to to very judicious Care thoughtful M&A. quite got going We one feel portfolio

Dara Mohsenian

Okay. Thanks.

Operator

We’ll our go Teixeira, JPMorgan. ahead. Please Andrea from next question take

Andrea Teixeira

Thank you. morning. Good

Noel Wallace

morning. Good

Andrea Teixeira

morning. Good

elaborate growth. So funding bit more can you the please for little on a

balance the I level. loaded margin think you year. it's came gross And in the in in usually back of the well

its channels expenses and we I if probably tell on overhead bit that is, be of that ahead anything question that my part you're us, because may stronger, little a if for quarter? of think that in described your can there you So investing in that should been came seeing expectation r slightly one funding in Skin just the Care? heavier SG&A is your you of have these emerging

have I you. And time just be in update the there can if and you if the squeeze on China we could Thank if distribution changes us great? that'll -

Noel Wallace

Andrea. Thanks,

the obviously result focused bit we’re half the So mentioned that in at think margin up that's of I as moving on more time and of year. you specifically outpacing this lines, growth funding let think take quarter the where generate I we you the a forward through year. where this we first which sharpened point to last And pleased you cost little summary, John heard through. pricing the me the But quickly go one with in a

are see obviously that the of some significant particularly in coming obviously of second offset bodes had. lapping And year, up growth are back half well as we so those had with the and P&L through this the basis material that lower for the year, about last we a hopefully of strong we’re that we were deval pricing points, prices costs transaction the given strong funding XXX

to growth. mentioned on think we'll And the efforts premiumization the growth our the of that the the around around be balance we core John margin particularly up of for well to for the as sharply management our revenue have I very So we gross and that, outlook focused continue is bundles, the expect see and funding bode year. back

weaker as following: to On in know the of cost, versus result and SG&A the seen obviously that the were the quarter this quarter, which nine now the lapping over higher results one-time year through were months, the we've last had P&L. biggest line, compensation a we're six SG&A last we impact into on creeping the P&L the last in benefits year, swinging the where you year logistics some

cost on we programs We're Looking six feel through not line. got of ahead, maximizing an obviously at GGEP year. issue do we of months focused SG&A very the the last the

setting importantly, to of around to move and savings operationally XXXX. we they ensure both significant the as structurally yield up changes More that us made company we've the some into continues for

we systems. world at standardize, of as for change agility element S/XHANA, look we we're generate XX to mentioned other structural and us anticipate systems to that I The the savings where for over what processes find upfront looking next to months, to significant going and do significant that drive the ways is us will as the more around with

SG&A forward. So, good feel think one we place. that in We all, got we moving all more we're think, we was good a growth in in The time. of control

Operator

with our Bank. Steve Powers from question next We'll take Deutsche

Steve Powers

Hey, morning Good all. great. Thanks.

you several past to quarters. take those in as China at feel over And in hold hard it regaining highlighted, half. been second you've greater traction and beginning about like, the the optimistic sounds John still specifically So, efforts Asia

bit year us a you what expectations the you? your detail, of can more of just that the for would Thanks. look success maybe in region like over for in frame terms help in balance But

Noel Wallace

progress in progress seen second. the specifically. we've or quarter Sure. sequentially Obviously, It’s from first

Asia outlook ahead for of we plan, came year. guided change the the back but the slightly not that have in to enough of

were Asia, up the China hubs in outside all And very up Importantly, on the in nicely quarter. was sequentially quarter of China.

see we've this through we're anticipated half we that's before, the And we year. plan that the as that to as executing we'll speak. that so, of back continue And guided improvement

Operator

ahead. Please take Dibadj next Ali with our We’ll from question go Bernstein.

Ali Dibadj

to guess, bottom versus trying right and delivery. I hitting Thanks. understand topline balance you line you're just probably guys. the Hey, I'm think investments whether

it from You granularity, thought -- about SG&A see basis but a said below you certainly A&P year-on-year guys expenses more XX term. could looks much points and we tell like which outside on kind that XXX what of We is thought had of the the was below basis percent points were up certainly just for up only we short sales year.

manual meanwhile, America, China. tracked you loose numbers be to not continues XX basis down out to was release. share Brazil; or share then toothpaste become untracked is And global to And year-on-year, in basis the Russia; share I of. Mexico; toothpaste India; U.S.; our This in was this the the just mentioned guess by points XX clear, points down year-on-year North is

and for you're a by to these Skin in taxes, you're in getting in care. XX% for the year the then, increase better now And lowering A&P by buybacks curtailed acquisitions the seeing EPS

that the long that to the together see right you're the I'm balance investment it's vector I term. - for this guess clear getting suggests of in So struggling put and terms you mosaic

do something back make savings more So, or or you need dramatic actions on or to else. cost spend

pieces the overemphasize in So, sense feel of is comfortable of just right Thank a which that the to should versus you. trying underemphasize to those are get one? balance investments mosaic I I'm

Noel Wallace

Thanks, Ali.

first the sure growth seen, And to with acceleration to accelerated we've be story the is that that which acceleration acceleration is topline do our quarter. P&L. get to we've second the is So in you've externally let's investments quarter that and strategy the investment off paid then back of into been communicating in an start the as and that

acceleration see And an categories all our quarter that you've specifically in to the relative investment. second across of

with that of seen geographies You've investment. all across our ex-Asia acceleration

in a which the throughout to organization, So story accelerated accelerate we're that that focus growth Strategy, the top payoff. building by frankly an seeing certainly pleased through we’re we you're with that line put is Investment

move, we received half the through the haven't see quarter. mentioned investment the the amount started decent and receive you a balance of as through year. first shares the as The some We to the move of of in accelerate back the is seen will investment we total half to continue which

basis. that ensuring part Our are total is we And that relaunch, that big was which us globally. of average increase about through shares are generate executed come up globally on investment behind on XX% a the that the price seeing on help we remember

think on ensure heard growth out. where investment the John, Science P&L that seen areas a launch all So is the Diet of we Strategy business. to you And they across and successful we've Investment had playing the of all we've likewise accelerated as areas from

from again, take investment seeing investment balance an and we’re So we top growth standpoint, was throughout that line the the to world. more basis on story generate a

Operator

English with We'll ahead. go from Jason take question next Goldman Sachs. our Please

Jason English

me morning, sorting We’ve a Good I I'd in deeper already. covered folks. reasonable guess, Thanks obviously America. bit drill like Latin on for Hey. a ground in.

to been channels. reach on, yet speed are sort expanded area Latin you've of process. market your fastest in Brazil share already figures, perhaps growth market to to the your going a It's America as are you innovation As Mexico the two money market areas has got where held excluded share by been from and your lot country up referenced

on and that overhead more of winded, a And little on in update in really is where it us still share that sticking us also going Thank the color building And Can how’s give in where bridges going you pricing FX you segment Can is still long is the you. market markets? this also more America, in expenses you're maybe of Latin the increase there. maybe the seeing progress is pressure money context increases market? your sequential that? area a sequentially to these sorry

Noel Wallace

Okay. A lot there.

is America. core up Latin around quarters we strong step sequentially the quarter. in out And think Again, and and volume. again, me adjacencies quarter, balanced on two playing really that on and first very growth focus now at So the growth to they've relative pricing the segments back seen strategy let of

Good our by quarter reacting of pricing some back the changes obviously is as driven that we well, as the made of Colgate as pressures inflationary we to some coming on in coming the through which the half in Total, through well saw XXXX. that P&L

specifically quite the Looking Mexico but On we seeing were and Brazil, categories and what down we're last at half think Brazil, I pleased okay, slightly where there. look obviously, quarter, up on we're versus the in still the year. second

promotional pricing to the second seen starting the lower the continued We've see that the bigger in in quarter. talked Sorriso we franchise the brand, of some end come a in on That quarter first on but February slowly particularly dip around shares, back. obviously about which

X.X flat. at about to seeing is half on likewise shares was launch of markets clear the overall Mexico, month Total very the both real high and record the Colgate a for some in time about Colgate gates point Colgate are over a But on a readings points getting well, Total more on I'm of of out in Total, where from pleasingly those what $XX.X. it share up in And has share we're quite up at very, just least done Brazil

that previously, are of pharmacy new they that on expansion launch pharmacy strategy aggressively with the So into I the pushing I place particularly elmex think in and as is driving driving core we Oral I paying in the Care as speak. putting think mentioned incremental in share channel off, we're

What to excited about which grow operating particularly into what adjacencies And as is we're the every end in and month the well. see doing Latin the some America. is new single month well and launching across across continues to out. was group happy division was elmex doing I quarter And hub

that quite least some We consistently. haven't time at see for

the well. we're that think Strategy our Investment quarter, around will in. go segments with in And playing and deploying pricing play obviously half. the second in seeing the the adjacencies core investment more So Good which and strategies I again, there out back are more we're

our Coming again those certain plants Latin question, some in to to of in as extent a see accelerated its back media cost businesses the Latin the good that back company accelerate, P&L. has we that and to investment in Ali's advertising the lower America way overall through given But sales of half obviously with region. moved America

Operator

our go next question Lieberman Barclays. We’ll ahead. with from Lauren take Please

Lauren Lieberman

much. so Thanks Great.

Noel Wallace

Hi, Lauren.

Lauren Lieberman

first to actually just market comparisons, because notwithstanding follow-up efforts just we know trucking bit a Brazil. Brazil a last focused on little wanted had that to more share on strike was I I the question. I that is volume year

just Thanks. But pricing of do there impact And slower Brazil. trajectory any build a question. there was If in was curious taken on about volumes second some I volume I bigger-picture the from specifically? terms you've back in have of the then

Noel Wallace

Okay. Sure.

you may most truckers and So had we last I'll as we hit in recall pretty take yes, pricing did of the the us in of pricing the significant the the cadence volume year impact strike quarter. quarter. that And remind out everyone that third that

that the through to third it hit while easier did saw didn't we have it the - We quarter, in get the comparisons much is for us came most we extent the impact quarter in year, the forward. the second which where small P&L. last So wasn't going a have of

inflationary In down, this price of quarter, that based of pressures our that but largely the half changes back year. we in some made faced of some the we slightly volume was the on was the driven pricing And by strong.

and to in support Categories that. pipeline of mentioned the innovation okay year continue investment I and the strong balance a earlier got to as we be

feel in go. to acceleration, we position the good in So to we year continued particularly are see get easier a given comparisons the

Operator

from our question Please ahead. take next Wells go And Herzog Bonnie with we'll Fargo.

Bonnie Herzog

the the wanted the but of from to top you've to line. the I touch into I have to for Good give your I and you could I'm re-launches put to to your you. head market. this year you understand know XXXX, into especially the Actually, improvements on as innovation going ability thank let morning. innovation guidance you your not year? that of Hi, ability comments your you lap back some to sustain on guess, trying circle seen, next to And you're

pipeline how will full as see innovation or line? potential Also Thanks. to should for then, some these sort start improve upside And continue next about your levels your continue is we things maybe year? a did spending increase that think you year the to we of bottom long-term of reinvest in business to

Noel Wallace

Thanks.

than value on innovation driving continue on topline to the next of year we that which of in category that on extremely we sense incremental to we're won the market focused the important. that different be no Specifically right ensuring continue in the have year value level is drive is focused to any

John success little a and across having drives revenue us back the to topline thinking very we're heard that world customers. our about You the behind better the ultimately bit that to management deploying drive which into and category differently discipline teams we're how about growth trade ensure value growth are talk the for

as opportunities then after year And how deliberate expansion we likewise those. have go being of we look geographic some the about adjacencies we at each very

ensure to to we we're business we're top. getting forward and moving significant is next the indeed that strategy as and expansion adjacencies going putting at a new core opportunities to looking behind be expansion core looking be we'll into we have channel mentioned to to category new investment months, agencies, so which some into innovation XX that on be we'll And every important looking part growth we'll behind of comes our businesses XX ensure markets, year be new support incremental

of our function that - taken terms there, I That up gross and we're really quarter. of we're think sharpened I day happy revenue we've with growth, focus getting terms of more growth acceleration and have on think the focus fact that in business. are starting how this the manage coming but seen the aspects pricing the the again is we out on importantly, that we finding margin gross In in margins a the day management more

sustainable bode that need margin look around to as the we for the expect we basis. we to As benign of gross the investment inflation that we growth a to more foreign at business exchange, well to half that which line topline in back particularly continue all environment, accelerate continue see will on the

Operator

Nicholson take from our question Please next We’ll with Citi. go Wendy ahead.

Wendy Nicholson

things. much. of very A thanks Hi, couple

expansion as data hasn't you quick for just First the as terms but about to share of how comments actually of market North American to, can good you shipments sales made, channel organic the you PCA expected good contributed Noel, in much Second disclose how pretty growth? and your looked the quarter. Elta distribution the all thing this looks

So, there there as any in is my to with In could of growth American kind the other share excess North have sense your inventory slow the is you do trade? question is or shipments? catch up market have be

left having Justin kind with look CEO, to is question as as company as last other changes settle typical is the my just of structure all planning or management the the sort Thanks. new Chief going there of then Officer? you rolling you of a structure succession at you And be think in Colgate a Are new that kind management there Growth do step through? this is contemplated good

Noel Wallace

Wendy. Thanks. Great,

Let me go one one. by

on the across U.S. Personal of balanced. in our good quarter within PCA and as continue growth Home Elta regard. in was Oral and we out that Care, Care, well the business of context mentioned, Specifically, have as disclose growth Elta obviously core I'd the as in and segments say the all U.S. and Hill's to We had don't the PCA the a quarter obviously John specifically Care, and break

know as the a With roles and that to in deep to happen. have process as you tremendous well responsibilities management making well Justin's continue we’re new departure, organization. people develop our bench anyone to we Relative across the of looking for obviously of the in we're as obviously, leaders structure organization and question,

made and think that We've responsibility across the people the which bodes all about, well specifically execute of trying practically new that the move some new organization into moving excited elevated changes, roles and forward. which for [indiscernible] I I'm recent strategy really we're some to

in to bench that from very people in qualified So good and case regard. that choose all moves of

club, around And I having channels think issues we've Relative had as channels e-commerce to over Ali, indexes untrack good particularly U. S. nice toothpaste and you of growth that Colgate on in some club, know quarter inventory other specifically. business, last as a I is good Total know a your growth the track no and way in time question came up on had in from inventories, well, the there

the rolling to growth toothpaste on the up organic American significant all obviously saw We for business. delivery a business in that so North the share quarter, quarter the stronger in

Operator

Steve will Please question next from ahead. come Strycula with UBS. Our go

Steve Strycula

that a business question premium after appears it My together stitching morning. good recent Hi, skincare global acquisitions, clinical focus. is three you're slowly with the

integrated? how the it the we How is these in primarily U.S. about China structure? leadership being and assets think is do in other So businesses France and the integration leadership and What’s of versus strategy one

sequentially. you. where the business you separately mentioned us some Thank texture on if give any then care China, points? that in repairing terms milestones business, in you improvement some qualitative But we and And are could more of maybe talking oral

Noel Wallace

Sure.

made that acquisitions from in business admire our best very perspective that So ensure this importantly understand in these have and of we independently learned more respect of will independence of approaching acquisitions and and in And been can as as is the skin many across to we've run we’ve the listen successful leverage that practices the and prudent entire the continue we that these way we we some we care organizations. learn portfolio. how to

today businesses done the that the sharing business, three have categories, a our York businesses. holistically synergies Elta, we’re people looking being we as across moving forward. sustain team ensuring growth leveraging accelerated see across that three ensuring importantly here the at opportunity different practices through best but are PCA of more from New So the other run we’ve are independently, we that growth in Filorga and we And that to a

other we the only our of these in businesses transferring we of as on back the each best go that of have. the obviously Not as the side in that the going of much skin acquisitions, terms mind, care very those through put side, we diligence well to practices. but how And on are portfolio help due Colgate

to but of continue And to in ensure what humility respect and there's learning. growth. sense line so and we the of depth the can a learn, that that's they've that well management something really to culturally And drive we when the the done go historically is efficiencies company. to that scale the share to team tremendous across and we've and the top And provide and they them, make listen acquisition accomplished an

anticipated. It executing relative that is And of on based fourth China On is some of was the ahead the and that we’ll of build quarter quarter this to the to year see on the we're the speak. do. momentum continue schedule pickup question, it third in into slightly quarter, as plans exactly to moving as we the but a work lot

Operator

Our Javier question Please next with Escalante will come Evercore go from ISI. ahead.

Javier Escalante

Back to China again.

versus improvement destocking it So took it as the price you traction you online is elmex if between is after gaining it that the is I question split can last basically have that. [indiscernible] And this if a increases that basically is year acceptance of that more or longer-term

Noel Wallace

all its It's nine platforms Watson go-to-market happen to over rebalance of above. and well. months, to widen distribution as do and that and that different -- in as both Javier. Obviously the underway it last respect. improvements inventory rollout and seen Thanks well in well market the continues shifts China launch across elmex e-commerce we've a needed is The the dramatically across in so specifically we as the the

the XXX really elements, to schedule of well. took it's changes, market that that as I but all on And So to particularly franchise the trying last the the is all in all the all year, go the strategies distributors half as all, pricing it's we right get on holding mentioned. likewise back implemented those right, strategies in portfolio

Operator

next Jefferies. go from with ahead. Kevin question come Our Please Grundy will

Kevin Grundy

Thanks, morning. Noel two-part can. if good question, I

S.. First success Total of one in the Colgate just the the U. gauging rollout

see, is X.X down Some of brand we suggest data about the Neilson point. the

trends talk so think bit there. are date? like of Sensodyne. the little Maybe your take Sensodyne to product seems the about success I the a from far to accelerating with share gauging hope rollout was some market share

do And the then not John throw channels in the is seen where share. results I course you're we've here. another hopes spoke can one gaining to where company And hope, it a channel company superior Care. with skin the I probably you do this need online to of to at that? perspective be And maybe little that in think share and point of Why what to can for bit market Thanks Oral bleeding share you those. address tactically from speak is?

Noel Wallace

Sure.

in again we heavily X.X that have very globally. Total, basis points that Colgate the share we're that on business. considers obviously where So which U.S. X.X is the close look fact weighs on you the into are on globally down point right about a that points And if is up, to basis the we now, XX growth weighted

we're we very where So with are. pleased

on that took on downsizing U.S. Specifically recognized the that a we XX% product.

excuse purchase moving me, the looking - we're - accelerate brand of for share frequency the So recycle the forward. purchase the to

the get the will to the going moving not through to therefore the immediately frequency accelerate. over consumption of You're repurchased we time and acquisition share accelerate that price as get

business is where with the increases a all that a more So pleased seen the on about in are franchise all, of we’re particularly with on that over we've and one decade. XX% that fact pleased increase that we significant which globally we generated

a and under have sustainable of our the America quarter. we that some towards on got of baskets, given rollout Latin back well, particularly just bigger we end continue and bodes the that way And to spending of in that business we the back

the are in we track that pleased despite So the Not growing channels we get really channels need fact all with un-track track in all well, to we again. and pleased. channels are growing

the coupon in coupon some of seeing. saw the first quarter bit business chase to that the some of lot activity play activity which obviously We of we're driven the a erosion So we're but half trying little on going this we're to not of in first a year. share catch-up, base

launch incrementality on more some moving to that the that of which with we of SKUs Total move will the with we're drive towards Colgate, market hopefully the Whitening of launch franchise and end the the ensure putting the continue both the to Naturals premium forward. into want We

but be we where with So sure, pleased more done be over total to work to are re-launch.

Operator

SunTrust. Bill And ahead. question will come Please Chappell our with from next go

Bill Chappell

for went just optimistic morning. ago, the south not then Thanks. everyone. question it and of of months trending. it certainly you kind guess, for kind And XX, sounds I about type just emerging more Noel picture the Hey, is markets on how we big saw similar but optimism XX things are Good

see it's I you to way cautiously horizon? just different in mean, different? are talk about the not far you time kind on kind of a is there if this how what is kind so optimistic of Or of

Noel Wallace

Sure, Bill.

couple I'll place good obviously we more into the the a about in fundamentals a in by remembered the to focused plans ground. China specifics, quite I won't last talked progress lot us a markets execution half that the years, outside on terrific back - over for again extensively, of So to as in haven't me the continue some of on make real I the team let and and growth those about talked headwind get completely you Asia of China Africa the see year. so was a

that likewise real We've acceleration market quite the seen in well Turkey in that in leadership doing we recently a Eurasia, very market. doing category toothpaste moving forward business pleasingly well achieved where quite Russia

So will the fundamentals bode again forward. Africa we doing think well quite and moving well

over the the of political and XX we some Latin changes we'll America, economic and on largely driven months America be saw cautious by forward. that last moving Latin

versus we'll in how slightly Brazil always unfolds. last where first and particularly their that. in But of down was that year. There's earlier new the with half associated leaders their political up seen in the the categories I quarter uncertainty see second year and So on administration they you've as where were change, first Mexico, mentioned

the we we around back the will and work the America us back think think well doing to half. this are again channel of through the we adjacencies continue Latin America I as – core, particularly in and bode that Latin half the favor the fundamentals we have America But the look comparisons year to

Bill Chappell

Thanks. Got it.

Operator

ahead. come question from RBC will with Our Capital Please go Markets. Modi next Nik

Nik Modi

morning, Yes. everyone. Good Thanks.

little ones. So just quick two

Noel Wallace

Nik. Hey,

Nik Modi

your Good you the about Queens first maybe of [ph]? can I'm So that's would talk morning. definition just extend you? can hey, definition outside longer Maybe skin just are - curious, how And your of Noel, health? if question. you term

have created is expected guys as to provided some year And and about was maybe on on havoc companies. I think you group all thoughts I some of they Coca-Cola from be about have you the how hoping the mean, treasury question obviously benign months? are its thoughts for second next on really FX your years multinational FX. tons over in you a the XXXX about XX thinking

Noel Wallace

Sure.

me Let America Eurasia. FX Obviously, that first. we an and Latin question saw in the of acceleration half FX back particularly take

world. slightly a comparisons, benign those a given political on we lot the more environment expecting but we're certain. of can't be obviously obviously instability and of lot around There's And going rhetoric

be So last predict cautious but I and hate we go. to remain back here in half FX sit we tried certainly year. would to exactly where going will think to it experienced of than I'll is better what the

to great understand. like health, skin big Specifically, It's business. Elta different it. skin spaces what we to We cleansing into the care Obviously, it's as relates it and of a category. sun lot there's business is got a a which close

the that which recent antiaging, We like we obviously skin the the in of because the categories compete. and of lot And world PCA expanding for continue those. look you importantly, like that specifically a in the but to positioned premium Filorga on consumer in uniquely it, be space one is everywhere the space as category acquisition of they the will the health. at more nature an aging of economics

are we well-positioned where at how we three compete on looked other management selective but great go in. believe have term We go-to-market skin health, complement the brands longer they being ensure that's great to really we're great the want we've while are each So, and that and well. of kind with teams and obviously, we where

Operator

Tong Bank next of the Olivia with question from America. take We'll

Olivia Tong

Great. talk wanted about Thanks. the I to U.S.

in track channels, on initiatives bit how to little channels? detail so there You efforts these improve of in help specifically more performance couple a track alluded to

track But non-track, by do driving growth in reason track as expect that you're also relationship to to more focus significantly on so that presumably two? put better there will the continued not you channels, between you is change any in shifting

logistics comp like anything talked comp, things but of it, and Thanks. about, one like systems some sounds thing restoring more like just of of there investments hiring more then out you're in terms and making levels capabilities And that? SG&A. that sort the but of it is higher on quick normalized Obviously, you people building

Noel Wallace

Okay.

untrack on first and think how the that. address to try is me track we and channels let So, there which channels question about

back really take the the I growth ensure to how shopping. mentioned very and and that understanding upfront consumers happen from step we quickly we're that First, changes as the a is those coming in are omnichannel where and environment relative changes

invested that accelerate. for a the and are putting against a to more much are to and that going we’ve think we ensure lot we time innovation spending, standards our we go-to-market continue So, ensure of strategies sharper have that effort around to resources,

and the relates that's getting U.S., the on Particularly e-commerce, Palms both and points, share up the execution channel. it first that right the to one innovation Colgate basis XXX obviously, understanding between great route-to-market our route-to-purchase function of and split as from consumer growth in year a of the in half and and about the

We the place talked about being plans put we faster-growing channels channel both of pharmacy a one that world we to around and globally standpoint. in the see execute that from resource

of I organization channel the from a specifically particularly mean our pharmacy from by share. standpoint market what allocate opportunities terms the And in an select how elmex, innovation likewise and and outpacing geographies we've is sales portfolio where we where growing is and we're to very launched where under-indexed the in that standpoint

we're those in very it little we of play how relates we see thinking to successful. in ensuring opportunities. about I be are growth So moving innovation of a the see on we Olivia, channels it it's growth And when upfront the we're look to looking about to how we're off acceleration, And and go forward. and required as again, that very as we particularly holistically that exclusively based our strategies market, to terms our specifically differently channels where the each channel at are allocated at starting best differently, see non-track talked growth driving bit

growth SG&A, sense and for across look is more to accelerated to in you of in company. productivity but an want one that we think really I the made the it are that the the hit the is at go you as all driving people already, places putting drive it On we last interesting resources point allocating organization, ensuring

resources of making P&L that are areas believe predictive and we their efficiency that analytics growth bode sustainable will take across those analytics well let's in sure because, moving drive forward. putting and digital So and we and the more and

the you was saw it's So, it result acceleration in a resources of not a was I of shifting people, the earlier. that in result a areas of The SG&A line. adding quarter articulated more specific that

Operator

with question final from go Mark will our And Please Stifel. Astrachan ahead. come

Mark Astrachan

and Thanks morning everybody. good

Noel Wallace

Mark. Hi

Mark Astrachan

questions. Two One Filorga. on

strong trailing the have If topline what go-forward accelerated. it I large rates you like can from rates away results on just looked like seems competitor Nutrition, anything similarly months XX performance growth reported to guess growth be category have your on take so expectations morning. basis. comment not may a on a And this Pet

So growth it and the acceleration? I'm driving category what much curious, underling do think I long-term what versus perspective? rate would you How category is reasonable from you a demand guess think priced a be is

Noel Wallace

Thanks, Mark.

not very family. we're is So geographic growth of only the we back rates continued this attracted And will in at for that disclose acquisition can closed under Colgate by the but as the I the all on the forward. Filorga information more rates obviously, Filorga, and that itself, category moving potential growth disclose growth of point, bring hasn't expansion the

especially category continued nice among seeing but business. in growth relates it food acceleration we've bit as premiumization dog and seen of and growth PETCO, mean we’re pet that more pet Specifically, the good somewhat I PetSmart the where to challenged food and still retail a category, in that e-commerce stability the

trial, in U.S. and changes, obviously again seeing packaging I importantly growth included And we some the quite we significant importantly, will to price the investment as signs business which help in around which which more the had done support took think on share we campaigns all the and are new -- significant around drive accelerated increase justify intended reformulations, time. but diet that relaunch,

look in to on the internationally the Diet piece back of we So, Science relaunch fact will plans well that the advertising place half. think got business and as some distribution all channels hills. in expand the bode expanded we've all, for working a in we have we into new we terrific The

Operator

remarks. does to today's session. call question-and-answer Faucher turn like the conclude or John I'd this to any closing for back over additional And

John Faucher

great third people always, in a everyone, quickly So sequential of close, quarter. back let terrific entire that work. done the have job again have me growth thank me we’re such the there out to thanks in weekend. I remind as get Colgate let family the And a quarter, delivering everyone

Operator

Again conclude gentlemen, participation. ladies does Thank and your for you this today's call.

You disconnect. may now

Colgate-Palmolive (CL) 26 Jul 192019 Q2 Earnings call transcript