CL - Earnings call transcript Q1 2020 | Colgate-Palmolive Company

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Operator

Good morning. Welcome to the Colgate-Palmolive's First Quarter 2020 Earnings Conference Call. This call is being recorded and is being broadcast live at www.colgatepalmolive.com.

Now, for opening remarks, I would like to turn this call over to Chief Investor Relations Officer, John Faucher. Please go ahead.

John Faucher

Mary. Thanks, welcome quarter and call. release our to morning, earnings first conference Good is Relations Investor Faucher, This Chief Officer. John

earnings actual Please XX-K these subsequent a factors the discussion filings, conference Today's call report results to differ available most statements. differ with from the will all Actual cause and SEC, materially to the annual recent refer XXXX including filings statements. results include could from materially and on press on our release our statements. of that forward-looking Form SEC Colgate's for could website these

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

that the and the term non-GAAP Please in certain press in using conference Business items call, today measures to note the the ago are periods. refer and to year now exclude Base both release starting that current we both

off the the the and to call of homes his we Noel Officer. their are; this Chief Officer; uncertainty will from the on environment, COVID-XX are Henning morning Chairman Financial Noel start on economy. about Chief thoughts Jakobsen, President Wallace, and current and Board, the operating me Executive adapting with how Joining and

provide and XXXX I it performance for discuss some context around will Q&A. QX our then before opening up

you as we today, to that many the get scheduled limit possible so to as ask calls conference request busy the people one yourselves Given question that question.

questions, welcomed the further re-enter are queue. have you you If to

Noel. to over it turn I'll Now,

Noel Wallace

Thanks, John, and good everyone. morning,

should difficult. Obviously, times and operating during of about your some Colgate-Palmolive the heart when things families stay we people in best But difficult thing these you XX,XXX and a that unprecedented safe at are hope you our are the environment, one and and there's company, I time. at to our know for expect we're difficult well we're times. First,

all enormous the the this the deliver strategies world, difficult brands at We company thank we a scaled best-in-class and of listening business of to whom to we results the Colgate running today. with to around reported obstacles our many I are because want times have to heart, thrive in are local keep who global execution. that people call, and and

operating sheet pets, Our this locally discipline from Colgate to to their crisis emerge company. healthy. on based day single sound and an We rely stronger safe even financial sell and model, and and balance keep to produce that themselves their including helped people every families, products position

our has including consumers We seriousness our with to our utmost and all of our our responsibility employees, shareholders. our to responsibility stakeholders, and for communities our customers, Our greater. do treat never intend best the been this

XXXX. easy annual for said, That withdraw we have This QX strong decision despite and our chosen us. was guidance not for an to results,

However, correct COVID-XX virus, to government the stem the uncertainty the the the choice. is actions given combined and of believe this surrounding future we impact spread to

this second supply consumers of point, difficult to particularly economic retail chain, and order this through at third they're partners crisis and our predict stress The are as intertwined. effects to

As provide we guidance we proves through you it year, to updated the when hope proceed feasible. with

meeting you confidence how in I to some what we also -- this for crisis on are that on. but managing the facing, focus through we In are head we're the to light, we what give how want are context

are how is true crisis future. this topics; with strategies and our to us with our managing an purpose adapting towards helping and how environment, we three and discuss agility eye the through staying how the values I'll executing navigate we're

brands. people as it in vital impacts both values true and our our to the Staying and environment our is purpose current

have to order within Our of and the our enhance their In people policies that, Colgate standards procedures many safety to families. health is the implement and we and company. number safety around priority one health deliver the to world and on

to our to made have screening and protocols partners. work our these and processes to third-party policies safety support advanced possible, social our We adjustments we're distancing. expanding Where

Additionally, wellness members counseling, people, our adapt health and for circumstances. time for care changing schedules off programs flexible to including expanding and our to family we are family to paid

lot this focusing something have marketplace results past trusted to over give preference in brands. purpose on the have responding into. We to talked you years The show brand consumers brands a are about we crisis the buy consumers' by seen for to them and that to

programs marketing have existing adapting Our into purpose. ones teams new lean and created brand to our

a equity the year, confidence began brand. based questions face. is roll Toothpaste we regardless central Toothpaste to on Colgate the for The optimism At to the Colgate people inherent the on idea or smile new they challenges powerful, the the of campaign gives beginning using out of of

We've smiles can't in we with where in adapted this settings digital campaign be highlight how people to world important a most important us. are to the

Google you lets on that FaceTime, Zoom know them. you how that -- Hangouts, know So people feel days, well, feel these you or people smile, whether lets about just

care most soap. distribute proud particularly promote we're and the We XX with know by in handwashing of where We coronavirus, handwashing acute. against defense markets is support to a is the distributing campaign WHO's need first-line initiated million bars free World work very our Children Health the this of of and are Organization to the partnering program Save in emerging with to the #SafeHands product,

We're areas. hygiene care to workers we've product also the worth City, donating $XX hometown, donating first consumers York products of and our to In in over responders New health been hit million hard and all help city. health

time. that executing over greater past as evidenced you is years organic in working this more be world. agility. strategy with that agile two our the simply in by The existing We our reacceleration sales new But even need growth we during topic enough. second executing The strategy plans even know that isn't to is discussed have we with our

and are channels We focused innovation expansion on in brands, markets. still our and in core segments high-growth faster-growth

Delivering brands will the priorities shifts our over do need vital in some make on will to areas core and focus foreseeable future. key we our timings, be While change. not

Consumers portfolio base brands products the as our they increased for focus are This economic pressures want and bigger often areas as core mount. have which mainstream retailers aligns at that to know with points, we price and are consumers and effective our provide become unemployment value. the buying to expect good are

core Our news take. innovation big bring segments and strategy will bring period value to a difficult may to intended be price is in increases these to added where

to continue faster-growth innovation also segments. will We on focus in

and XXXX still store XXXX innovation significant premium it innovation is Our drives include plans for that often as will traffic.

was will we experiences took and channels, business which towards As us helped in in in part the efforts from learning faster-growth in we first disruption aggressively to direct-to-consumer. even focused markets. the China from of that our channels This to benefit our more our expand have resources on that our quarter, shift e-commerce

worked We White saw launch Hill's gains Renewal. the traffic. And to behind partners their of lost toothpaste their share order to significant in e-commerce offset US in Optic in e-commerce accelerate quarter brick-and-mortar first the the with store in offerings

business year. Overall, than division e-commerce And more first up prior was in XX% than quarter quarter. the in sales versus our the doubled our e-commerce more North American

spa still Hill's orders revenue. drive by their world. new to Similar Our have distant their direct-to-consumer customers book customers to shipments with what having is socially a helping engage do we Home, to ways them they professional PCA can for Skin learned in teams so

way streamlining environment, our agility we had But quickly better executing strategy requires more it this respond processes decisions we and same planned. the just so and In can current to needs. our our that customers get isn't making consumers'

example than global supply our better of this chain. no There's

established supply strict our China, teams to we mobilized chain to production safe our hit, As allowed factories procedures the safety in a crisis in China in offset elsewhere. lost manner. manufacturing which efficient We us to and reopen increase

these in of helping of in our to countries delivering volume Chinese we open at initially more we helped our expected still than procedures around globe, Anzio, pressure plant the a where March our developing over throughout COVID Now, alleviate the plants, is many are By anticipated. Italy capacity problem. is crisis, XX% stay in operating XXX% which taking

customer and longer which our chain teams the develop partners our increased for offerings of demand. consumer realizing development the to of SKUs capacity for with health worked produce After scale streamlined our meet products, supply retail our allow demand marketing fewer increased hygiene that runs, and to many product to

also materials, designs artwork product prepare give we as and our alternative flexibility We us for packaging identified further to networks. formulas, disruption in

the by networks, digitally We fact XX,XXX Warsaw is memory smoothest to of the of in outside office. remotely. oriented the become in City, Thanks quarterly our to transitioning and despite global more working Mexico all also service XXX% our all centers that people Mumbai, process our have work resilience of one closing shared the

that we conference. you we This in for the all nine just And agility headwinds. foreign impacts presented encounter the deliver and the today. from us exchange continue this results has weeks as proven happened at This work ongoing helped uncertainty will great CAGNY capacity to since reported of crisis, economic I

Our how over. through third we priority crisis, when we is manage to it's balancing ensuring the win can that get

positioned two We deliver momentum to have when growth sustain while a well plans our We normalize. financial for we in past our markets our established years. adapt re-established XXXX, the momentum -- very top over need ourselves have that line leaving and difficult to

value We our long-term the strong which know will compelling We continue organic is maintaining that growth, programs. support marketing sales crucial key behind impactful our to to through for advertising brands brands company. is driver

and analytics. the in driving are capabilities invest e-commerce further to need also digital, that growth: We

not will when building the in comes economy fall for the behind needed We skills back.

additional Productivity COVID work weakening times, of help harder the foreign the And costs to P&L will come mitigation, offset pressure even exchange is from take for we a and priority that to the always of economy. these us. some out

costs Our environment We're eliminate up value discretionary using Funding environment. to not to generating unnecessary programs ramping current we are that initiatives, find and the analytics be Growth identify out given may business the ourselves given promotional consumer in. the take are that

I which strategies you cash up reminding and surrounding flow of unchanged. our remain will finish by liquidity,

cash historically have a continued trend amounts first the flow, free of quarter. in that significant generated We

cash we balance allocate of future uses our the share cash for paying years; for growth; have which investments shareholders, acquisitions for accelerate We our XXX include straight to to priorities consistently growth. repurchase. of flow Our done productivity dividends to and capital and generally

prior moderated Hello debt repurchase as reducing transactions. our we and from activity Filorga with of flow Consistent on we the the comments, share have more our cash focus

rating. And commercial than cash and maturities the we've more long-term over cash to end of times committed on liquidity, We Turning first the as months. we the that our minus XX paper of remain AA have debt hand three quarter, throughout next to equivalents been our are the debt issuing crisis.

We also them. of lines to need credit should have we access

priorities. are those our So

there and to people Colgate most navigate am confident on side. the right stronger of uncertainty amount -- right have tremendous the the right of through is priorities, the now, emerge other people, we the that Although right strategies I all, crisis

John to and provide full our discuss over it XXXX. to And QX turn on now our I'll some context results

John Faucher

a We except around sales and and the share delivered for were globe. earnings four as negatively XXXX -- aggressively we in in COVID-XX of with and India QX the profit, Pacific, flow strong the division Noel. pandemic. growth, We pandemic impacted delivered Thanks, every combination operating per organic and where to all cash volume Asia pricing across growth categories China by responded

loading COVID-XX While and February. the were sales our due January obviously, and through to profit quarter, pantry strong provided benefit trends the to

they reality. Noel As benefit a working, and believe as new strategies to us underlying we will even adapt going our forward are continue mentioned, to growth we

for which profit the points. On XX.X%, business XXX up year-over-year. a gross base GAAP On was basis, margin a basis, XXX basis XX.X%, basis points up gross our quarter was was margin profit our

the Our up gross was in every quarter. margin division in profit

Productivity was first were headwind, margin, basis including in gross basis the quarter, the a basis XXX XXX from the XX points. transactional quarter. point For exchange. Mix basis added to point foreign impact was favorable XX a materials points pricing raw while benefit

a our our as basis, a basis year-over-year. by points increase XX% a in XXX the SG&A ratio our up up On advertising to in basis spending base On was sales. GAAP was ratio an as driven up basis, XX was advertising to quarter SG&A percent business points sales

a meet to on SG&A costs year-over-year slightly driven X% was demand. it logistics our On a an advertising, up was GAAP year-over-year, as profit in up we base basis, Excluding by basis. operating our business heightened was work up while increase X%

and Our a up a EPS base was on GAAP business basis. basis up XX% XX% on

year up net growth, As contribution lower due payments delivered tax Noel year-over-year working mentioned, a the performance, quarter, ago favorable growth lapping cash of voluntary we the the and in to flow income period. capital pension in strong XX%

delivered aided in America soap liquid increased strong by North and soap cleaners. across consumer and demand growth categories, the hand dish all household quarter, particularly

gains for in White Optic particularly which brick-and-mortar. Noel driving is Colgate of White Optic and pleased the both the As performance mentioned, online Renewal we're with share toothpaste, franchise,

were were led mix pricing Care. as All headwinds. Latin the by good quarter and America Brazil growth categories organic three foreign delivered in and growth Mexico strong strong volume pricing by a exchange and sales offset delivered the significant Oral quarter, net of growth. volume sales flat first in Both

to Colgate Total quarter, the delivered drive strong our premium helping growth in portfolio.

Our has million CPG across and digital mentioned reached users marketing Noel well platforms multiple engagement above view-through rates over that campaign XXX with norms.

Europe's market products driven Ajax by inclusion volume across and division, the every while quarter Wash cleaning liquid in the single-digit the Palmolive negative X.X% of categories and X% strong exchange. hub. peak across was volume double-digit soap growth growth high Sanex Filorga, all foreign reached net sales shares. and sales minus driven organic Europe's organic pricing growth was Body drove growth, hand

growth and Colgate White market gains share Ultimate sales for the premium the Total organic Toothpaste Max In our drove Colgate Colgate behind brand. and business U.K.,

one was throughout quarter was Pacific the a in quarter, from We a difficult March. country-wide for first down India impact division. significant while the on the late that Asia COVID-XX a began The impacted shut China saw pandemic by

In up. trends back QX, open And to we have is still that not the but levels. the country back to in caution improving we pre-crisis country China, see begun are

to in e-commerce continue innovation, We at points channel. focus premium on price particularly the

the in helped Miracle selling e-commerce Colgate's acid drive and biggest increase average amino Our is for Repair XX% in more has than of for price concentrated Colgate growth a e-commerce business with our China. toothpaste driver business

and network, an are retail started the with have in ramp up. But plants chain and consistent disruptions to to our heard have Trends In our impact supply India, expect to both second from experiencing other you what quarter. our companies. still from are we improve, crisis we the back still beginning

and volume every sales In growth net growth Africa was across organic strong driven Eurasia, our sales hub. by

in of Our pay discounters terms continues dividends, faster-growth focus and Russia to channels on particularly Turkey. in

continued a saw South African our We in improvement business.

the for anti-bacterial anti-derm the drove in is benefits, significant around Our and positioned uniquely other and world. Protex QX growth and many brand, environment in delivers Africa which South markets current

focus deliver with I'll a and execution And of markets. how excellent remain purpose, in consistent finish innovation strategy around any a results. on quarter. pantry platforms. more than we was led growth by by double-digit business late growth in America, to core Hill, The up off Those Sales of growth continued e-commerce strong the North augmented an loading faster-growth before was brand as consumer can deliver drove where growth pandemic all by example the which was across continues XX% channels

many fastest it’s the in we growth Science sales beginning see sales diet Prescription quarter, growth the relaunch. drove delivered Hill's Europe, net the in In the and organic advance to with are growth impact Plan crisis. in years, the and of the growth from benefit of

to While around factors provide on should work we XXXX. providing as we certain not want models that are some guidance, you context for consider you your

inventories certain emerging and categories, offset into continued retail of weakness from benefited some sales rebuilding April, as demand markets. although increased in momentum organic by continued exchange Our we to the worsen foreign in

to spot the in mentioned current exchange on tax we mid-single-digit to foreign press based XX.X% release, be year. We to we business on XX% rate the of basis, range to in on the GAAP in expect a be of a our range to now XX.X%. base tax our we net impact rates, full the now sales negative rate As a expect XX% have expect while basis, for on

transactions. less the Noel and benefit we year from Also, Filorga the to more of share our from we as the flow focus plan as debt reducing mentioned, on in continue cash for Hello repurchase

And it questions? with up Mary, you open for that, can

Operator

[Operator Instructions]

Stanley. ahead. question from We Mohsenian with can go first Dara Please Morgan take our

Dara Mohsenian

Good all guys. well. Hope you’re morning. Hey,

than in growth countries. a be hoping impact little recession modest, new emerging in your negative Are I ago. a situation just more contrast we Noel, you could and environment. compare or the bit markets looking at expectations key a on potential saw significant you was forward and the can decade last this magnitude that's category more on you your a the we specific of So minds perhaps in more in potential mentioned some

is then recommendations, aspects it’d veterinarians perspective, revenue professional now. of or also dermatologists one be Colgate And whether from of the unique the a dentists,

of can office of ultimately, how us going just much forward and So, have the think revenue? Thanks. impact could help an you understand you on market lack visits share

Noel Wallace

Dara. morning, Good

recessions, back know. as Let taking strengths the me referenced, and crisis of stronger. allowed with XXXX strong that some start to business as well reaffirm a us on, of very you step XXXX, portfolio The that in emerge is our you through

full the price our particularly businesses. core points have across We continuum,

efficacy during for us Playing your around given to nature well played crisis, continue our some in profession, on be visiting period. play and of and particularly well comment I will any endorsements historically for products, people the be during will way altered products, strength the this professional the the scientific will the of that our of brand that very very given us wouldn't and that expect the not

very to to and the The strong, all continue be world professional from brand the continues over our be strong. endorsements very,

any anticipate issues in time. of long-term moving profession our certainly but strength continue we'll don't in through I So the have some prevail brand of will to period that the be impacted short-term, in the this this will business

down. category, a categories, categories. to over Moving are showers uncertainties people we lot of the teeth. seen, are washing some on as we've consistent quite There's pulled still But the of hands. expect in jump couple be lot guidance. and the behavior Hence, brushing a their things you've change one months. still the their reasons next a And to taking In volatility people lot seen we as that the of of rest up listen, assured and

real a expect But pipeline Care March will anticipation the as has you and come as category in and more and seen in And we those will that more soap, those negative our acceleration of soap economies been bar is April. categories. loosen February Oral comes from we've up and coming some start the stores. hand Liquid bar to continue. in cleaners, traffic back, back particularly get out consumption

you've discussed We focus best-in-class. into area for Hill's really As tremendous Obviously, CAGNY, at was seen, us resources learning. business the big That we a e-commerce. space. in We're that of last had the what a big, the lot put is growth months. over we've nine

the We're learnings world. around those transferring

that us So for will that categories e-commerce seeing you're coming weak we're quite term. And in getting in consumption in well brick-and-mortar through play certainly, the now. longer

So a was in phone I and on the six volatility nicely. of weeks will of markets. so. lot back, morning things this pre-crisis, overall, right We're seeing meaningfully but team, our XX% over the last back up that has about they were now they're or emerging categories quite come with Asia stepped come where

getting back, overall, And so overall, looking some categories about we'll store see and solution. the okay. but it's back getting economy of But come traffic

Operator

we now And ahead. go of Andrea can next question JPMorgan. take our from Teixeira Please

Andrea Teixeira

hope is and Thank well. all you. morning, Good

very you question So soap. sounded especially Dara's positive consumption to on trend,

Asia of North can America if probably are and Western was I and you a stockpiling, what's you replenishing working much on in about production So still bit to keep from to Noel, the as I you. did primarily, hoping able you how you little your reaccelerate Thank you would comments shelves? Europe? happening world? capacity Are benefit and Or say, you other trends up consumption in parts And comment the are Or seeing being April. of go?

Noel Wallace

Sure. Thanks, Andrea.

through strong floor areas. categories relative importantly, soap, more significant said. first. And as the in has America of spikes lot soap, in seen that how specific like a April, consumption, growth John some continued earlier Obviously, but trends around to We've North certain liquid cleaners. in I seeing category the articulated bar increase we're panic like buying, hand consumption take March like those let's So of

that is categories. March, very the inventories of momentum levels of that coming those out seeing some Obviously, in in particularly replenishing at low were April we're high-demand

March, load come where specific brushing given you was categories consumption be we down that in categories as in their Care, Oral no like would pantry and loading Conversely, why more. saw teeth consumers reason would the seen we've the expect, pantry in

of consumption down, good would the using both driven expect. the would U.S. what you categories and are them buying in And for more, April. consumers it that negative slowed fact, where that Europe are and has and So were be be panic in by Categories consistent some

Operator

our And take we can Nicholson go Please Citigroup. of from ahead. next now question Wendy

Wendy Nicholson

Hi.

On whole of that of know said Hills' Hill's, remind the Just XX% on one for business, much percentage can sense you quarter, what how can e-comm the I e-comm? the but was you issue. up. us housekeeping business business you us is tell e-comm company up was whole And a

But local in category. challenges fragmented that's crisis real I over question share emerge crisis of structurally, the Care sort Do market more that maybe many has where done a market. is some I'm so a China, competition. then know Thanks. market in you're you had wondering because category, some that that think from local you've on I'm the so know last COVID share years. couple very the There's actually stronger going curious, just you've structural I my to Oral of with just out the anything position? of wash if helped brands

Noel Wallace

Thanks, Wendy. Sure.

really Hill's. marketplace; take great of and to innovation; the around And once winning winning that success, well John organization Obviously, in it and mentioned, business: three, points think an me online. digitally the scientific strength was Hill's play efficacious really quarter core in Let one, again, brands I two, adept the great underlying incredibly that the extraordinary. as

XX% to that, online, total the across of implemented some progress up particularly was unusual, struggles question, company your Hill's with retail some retailers, great the had. was Hill's. overall, But which environment growth, growth given initiatives key their brick-and-mortar good quarter business that on some up of and the in the they in of of which Colgate. excess for was XX% the saw was Specifically XX%, around

some quite success -- in It teens sales. in and some Science obviously, of had notable. percent particularly the Diet a continues terms relaunch, has in It's been we've of retailers of grow, it's the with high the the of to pure-play

significant talked portfolio, in online, repositioning changes playing the is or last to brick-and-mortar so, relative strategies, China, place about to well on that over we've and us. structural that XX moving Moving up moving both from space. for resource We've in particularly that all stepped the the Wendy, really online the innovation, capabilities, our in we to months of put all out

morning the of Repair. number get the good share news You brand heard Miracle did has that I Darlie John market one the some about franchise country. in to talk returned this

We had lost share player. market the Yunnan to Baiyao, local

We up have returned to is and progression in Shares Colgate leadership March. space. terrific. the to are which seeing in for there, online in More work both March, particularly We're Darlie good Colgate. do on

repositioning happen significant portfolio this of back the half However, the will year. in of the

made this to are But And structurally, we've Asia I in the win we big environment, I in going as changes whether to are it's all think that necessary earlier, win. brands around think core that or proven we businesses, bode communicate well particularly in we positioning have anywhere how world, that purpose, our moving efficacy the knowledge forward. will the scientific and our around brand the mentioned

Operator

Bank. And go ahead. we Powers Steve question Deutsche can from our of now take Please next

Steve Powers

just maybe that. on to Noel, Thanks. build Great.

can Europe get seeing versus today to what But versus what spoken you're you emerging there expect India and about how we said comparing generally the You've Eastern little you're you on just more ground over go time in Brazil what forward? Just America. the Latin thinking into a about in markets. about China insight

transaction Thanks. And quarters? the of pressures cost to and the couple share ability probably guess, your market going in shape most are terms Latin of outlook. acute whether And next in I demand, to competition those confidence America, FX your the over to be consumer realize pricing specific where of

Noel Wallace

markets, we have. given pricing power handle crisis these we quite Historically, in Sure. is well emerging that the

been in a of some talk business. recessionary premium as with which will pressures or that I bit mentioned. how for our months will right slightly so, think to we us we strategy discussing a of now, opportunity the the you come. let's So, premium the happen side have we Obviously, XX of modify little innovation. last see That continue lot We've upside about much for the on as

of But India. many have emerging Brazil points dial size tend whether big points those up And that we innovation, will opening particularly the price to given core Mexico, our more markets, in the or those price businesses the in it's be and we markets. of

of seen, coming hygiene around in behavior doing changes more the with very, you'll importance of that lot very to adapt particularly some see So and a plays consumer of how innovation some things and we're quickly our the we've of space, to health that products. out and

through last antibacterial Total couple our gone weeks. on benefit We've the us on we've product last as long-lasting of the of U.K., Mexico, has positioning our focus working. premium particularly seen whether greatly some and months, relaunch, it big the six antibacterial the in Brazil, be Interesting, markets, that provides seen Total we've innovation benefited the

So moving core, we little emerging to forward a bit focus well but side, premium continue on the markets. positioned for more on we're think

how from we're how the there. see we'll trends anticipate be well we we'll it, be can't least unemployment the of obviously, at potential Now emerging much some will positioned we'll that portfolio, coming positioning see COVID, or for but in these markets lockdowns that

same perhaps be as changing executed the Europe, that around be consistently don't the strategy Likewise, will But adapted we in see Eastern will based no there and the given change. exception, India the of the and of the locally any the in back The world, that necessary. specific needs strategies portfolio of adopting that we'll market. China be would be markets. some half on

Your pricing, has the second it's -- question significant. devaluation obviously, again, around LatAm been

Obviously, taken So we're a we've looking got that couple pricing. things we've at. of

You the first saw in that quarter.

will We take the current pricing, environment. in it get difficult, will continue but a particularly little more bit to

in on obviously, traffic down. we markets those some had promotions see, as to back We've store dial of opportunities

now On architecture, we been environment. particularly quite we've lot as prudent. move of growth spend, about we're and into So price a thinking promotional how pack work management recessionary a on revenue

And pricing material allow pricing that happening. the a out us P&L more environment to forward, think combination the see investment, stronger maintain of the and to of that the will LatAm continue of we'll of this. still to environment So, emerge -- me, which bit for benign coming all of excuse moving maintain we little us is integrity more important

Operator

of question take now can we of ahead. Bank next Tong go from And Olivia America. our Please

Olivia Tong

morning. Good you. Thank Hi.

in Marketing just And shifts your innovation a rollout, coming. view already, marketing about strong stock talk to want obviously, around quarter. terms up that. lot particularly recession of given, there's then Just this of in was

But So rest about of marketing? is where as innovation think -- of think the and about still just you you. support wondering pretty consumer Thank you how consumer positions pantries, high. the year pantries the and

Noel Wallace

Olivia. Thanks, Sure.

So of environment. a at into -- months as the team, interesting obviously specifically it's down doubling the innovation for management mentioned, innovation I we've just current we've on as part for been as And we've been better right gone looking this, now. we're is XX what

be moving things some We necessary. around will as

dialing that We've around orchestrated hygiene specifically teams we into some of particularly our work accelerate spaces: seeing, adopt we're up and some a how two, health the truth areas. common this. to of one, how the innovation and portfolio; moving in We're series internally we

is in just we and behind that we long health history into interesting formulations a we out current of What's products will and great claims play science and can this think hygiene. studies clinical pull and of claims great have great and science use our the jaws that with environment,

doing as focus this here for really, for appropriate and at very look to And it and us our necessary moving us forward. innovation think we quickly. So modify is key really agility the

there in that market necessarily the the of of to wasn't you'll come innovation half So year start some that this already back see to before.

stay. Some bigger innovations, mentioned, as premium will of the I

normalization, to right quite we particularly the We see in traffic down will of it's so now. store alter versus some where key quarter, the markets third to out considerably our later of spacing, speak, those whether moving some allow based on some in earlier

So that will happen.

at on have which a we've business, out and more the quite a done in. in e-commerce stronger. competition to that we've brands result. us lot see emerged times, and bit, for spending more Continuing during the support of a movement putting We stronger come digital media the side, least it as a lot we're tough always The space, money

e-commerce And see you quarter. the spending shift I first generated think in resources results the that paid Certainly, that in is can we for. out and of

best deliver. moving we'll and want will support thoughtful So be of believe which in to long-term marketing But the we to to we forward brands, spending growth continue that prudent is our interest generating the sure. be

Operator

question Kevin from Jefferies. next Grundy our Please And ahead. of we can now go take

Kevin Grundy

specifically, question hope the versus Thanks. well. Good lasting, doing behavior. see morning, in everyone. consumer that you are as in in that consumption on environment more more consumption and you transitory given increases Noel, And changes those are those current trends I

towards from move a home. greater seeing already working we're So

net expectation every portfolio positive on discuss emphasis Care name term Oral your to accelerated you a change across Thank and I think heightened do persist, longer consumption and whether are as you. But e-commerce, portfolio? wellness, your you more shift Care, Home think health about that's you this Pet, so, to there's as going Personal just Care, to a If for in lasting? see you see a that can trends few.

Noel Wallace

business, North globally, of liquid soap Sure, and Kevin. America. is growing don't hand quickly large we really in Home have have particularly bigger in Home a our one a categories. about We obvious very well the business talk strong a and as business large our soap obviously And -- U.S. very Europe business, We in a in America Europe have the lot Care Care we but Latin as

those hands changes I consumers we're think behavior stick more. home All people mean, will floors their more, cleaning moving we will wash that businesses, staying forward. will be seeing at their

people washing clothing Obviously, more. their are

benefit from fabric that. So will softener our business

see changes change, brushing to teeth. a we for where Obviously, see growth few to aren't categories So that continue but there. any them. we opportunity will people don't a in of quite be moving obviously compete behavior their we us, forward stop going And sizable

of see terms and loading you in frequently. are Care see buying Oral of I people coming because pantry products more probably in in more space, out the less We'll volatility category the think, how

we have to quite we'll on prudent as that. innovation be carefully and that about quite innovation, obviously, time think So

well. our quite categories positioned overall, are So

their where it of the health our area bit working is a an teams, quite very And can as travel we've in customers seen we're well whether those closely some as on or business of our the particularly in, disruption be to with here serve pharmacy communities in working Obviously, derm business product those online. U.S. to engage with in so Europe area skin retail opportunities telehealth, they continue of

Hill's. the health order stimulate derms. driving as we've over to that very well into We that for skin done which demand to business well model talked at Home Hill's the institutions as spas in has year, our We're about very, expanding both been and last

to for good. are really still a nine less term months profitable The six basic or we'll fundamentals highly go next we come more so. It's XX it months, or XXXX, months overall, But category category. months a took go back. you if over that through and XXXX category to the So, see skin really, think, that long couple bumpy know, back for health you road, to

we're the with but changes health. make necessary we the very are, long-term, comfortable in skin short-term So in we'll where

Operator

next question now And Please ahead. we Chappell Bill from of go take SunTrust. can our

Bill Chappell

your Thanks. again, hope well. Good you morning. and And are family

Noel Wallace

Thanks Bill.

Bill Chappell

remarkable, and can the takes and of peers sure Just of on mean, XX%, XX% supply have kind a on you plants I all the capacity pretty limited sudden, the a of you're a have stocks. out regular surge kind at aware, really certainly of your manufacturing as chain. running of question business I'm basis, that

I'm business going you're term, do Or to longer And you that more that even you as costs trying XX% go already you ease incremental just what so have handle were much does at near And to then that faster? supply margin-accretive XX% is will understand to tell what term, as about that thought you that chain utilization? they when you can forward? capacity your have

Noel Wallace

Bill. Thanks, Yes.

that how that year discussions these deal during prevailed the been as times. this. I internally chain mitigation. And all in really world with crisis to have management some again, the of So watch commentary, difficult meetings my our prepared of the have we risk we contingency And mentioned supply it's inspiring planning around to and with deal throughout important

globally supply local, global have while very, the it, we to still is chain how standardization and we It's very and able shift the we're that very quickly. resources operate

gate, I as when Europe mentioned, China right of the struggle, resources into out shifted So started to immediately. we

everywhere be back or to Asia. China were to able America challenged, Likewise, or was out started of to started to shift as US Latin we're supplying supply And challenged Europe we be Europe. to that able

and there's So be credit the of a lot goes sure. chain of the flexibility lot to team. work in that, our A to into supply

partners trade on to where we allow can capacity simplify will that bring Some portfolios, of these that. back simplification instance, the moving opportunities of lower through working us reduce producing obviously, But standardization our on key that we've for as the seen, of I based contractors, of the we to forward, work and incremental mentioned, some our efforts the come some SKUs we're with that comes that that out some to margin. volumes of production in-house, that we pushed elevate that

we're ongoing. as we investing categories capacity of also looking can some Obviously, we at these to the forward in strategically, to required moving that expand meet ensure demand that see

longer that to with anticipate some we deliver that have or contract accretive COVID, some with the of associated continue short-term, we implications back to and or in-house that to we'll bring it's So, margin whether logistics the business. costs margin there's find the that's the term ways

Operator

And we can our Steve next UBS. Strycula take of ahead. go question now Please from

Steve Strycula

Hi, morning, good Noel and John.

Noel Wallace

Steve. Hey,

Steve Strycula

incentive to market index when, the sales it as organic back greater seems CEO, Noel, a and over took waiting on structure Question share emphasis there's performance. you to when XXXX like

we think over next about two, So there pockets within opportunity that, do of is three visible years? the how

lean John, EPS? And implication clarification in kind be the in how marketplace period EBIT And to dollars quick to should time. stronger the that this with specifically, and sales, current could the multiplier Thank to Colgate about volatility think of we of what during the or FX you. emerge investments use how for can factors,

Noel Wallace

-- for we've even Colgate, I one in a mentioned, pandemics and So, at depressions dealt time. lot Steve, crisis and long been a these point of long, around with we've time. as

there's is, to on obviously years we've heard focus our So, the been two but print is the to a continue the unpredictability, which business. for two in last strengthen the very which building unusual, throughout last you've and lot obviously, weeks, we this of fundamentals,

purpose, it's building we brands our to this. strong We've difficult emerge always statements `brands invest will behind in do reason And income our we strong allows of why innovate come found times that's ability with and continue continue to that that. out brands. to we'll So, with the invest to and as and us

put continue productivity as dial heard do up people to day able stepped digital get talk IT I using through collaboration tools a drive what up one to likewise, about has across measures very in often. more that going using think, to just all XX,XXX tools to on of virtually there, was, extraordinary our so frankly, our testament quite as closings, we will suite you've we've differently of and been this. in quite organization we this place into to been, We've Google working technology productivity me the our go based the company, the We're that

structure, to focus continue focused continues the for line profitability. sales incentive we'll company. be be on Relative organic That bottom the to to the obviously, and

last and from we our reacceleration the in organic the a seen sales quarters. from our Even You've of over business six both with pantry, of standpoint the the accelerated standpoint. a some Hill's quarter, Colgate

believe fundamentals this. of invest earlier, build will as like and well continuing continuing analytics, So, the out to are in And for we the I in e-commerce underlying to we capabilities, coming strong. them, mentioned digital, quite business, believe, position spaces us extremely

Operator

take go from Barclays. of ahead. Please Lauren now question our can we next And Lieberman

Lauren Lieberman

morning. Good Thanks. Great.

Noel Wallace

Lauren. Hey

Lauren Lieberman

wanted channels. a your which a of as been to we've Latin is that premium of the about around part bit. talked degree America you'd the strategies longer-term little we talk I quite -- outlined and pursuing to what have more thinking about bit But innovation plan new some

is plateaued accelerated But but a development factors of been little of usage have this the in about there bit of has the kind an category less. some penetration growth some daily level as household of at the maybe part of those is kind trends if pace or on region opportunity,

on of missing or flow opportunity of the to into the to So, term? rates that I market a the am severe growth, efforts something if penetration is growth bit near the in those or just a -- Or trying effective the there's of regions, healthier. household growth accelerate go recession market you were term more sort less or terms keep leverage we intermediate usage in go in does can that

Noel Wallace

hand of soap bar liquid Yes. emerging in penetration. may soap really mean, It Thanks, hygiene markets, instance, expect mentioned penetration category. efficiency of bar fundamentally soap Lauren. we on obviously, liquid lend hand band grow. the and I some to earlier I But Those depends and increase for itself ones nature like soap are soap, the will markets. hand to the liquid

and penetration Products grow, see those like spray expanding well. cleaners we'll as we're and more wipes,

certain So there an -- penetration, an ones will be and that particularly efficiency see are certainly categories to the grow that provide value, are where we focus. opportunity added or our

but some obviously, of for do Consumption at probably as in opening found a you management, significant the mentioned sure. And we've trade that which with pressures of I pricing growth in that down categories, been those likewise, earlier, those get able usually points. price innovating in is, markets. to focus offset see on recessions, some some We the typically you'll will not behind with core, deal revenue

pricing worked to us allows effectively that take recessions always architecture And has quite those categories. in Price for us. and pack

stop which it brushing we'll in So their see market. as in we'll I Overall, reduction through little really a fact, probably people moving and categories, increase an we the slowness mentioned, the teeth. Volumes, or on of category growth. consumption in this. a depends don't value think in mentioned, terms see we And

Operator

go question can from ahead. Astrachan next now take Please Mark of our we And Stifel.

Mark Astrachan

and Yes, good everybody. morning thanks,

Noel Wallace

Hi, Mark.

Mark Astrachan

follow-up. quick A

on recall terms market, especially are inflation mean, of you more America so maybe I about opposed thoughts just the as pricing historical pricing inflation in Latin one, in So to a thinking where bigger FX, of I countries there. is some to actually some just recent how below levels.

kind costs just of about COVID? things secondly, on then should oil other that some you the we ties how mentioned potentially directionally, input costs reminder that higher doing a to offset manufacturing, and on of around And you're being and by the before think

Noel Wallace

in pricing at obviously, and on be markets, looking how quite cautious we're Nothing the going we're emerging to the on front, pricing. -- of Sure. prudent some

-- Although That quarter. we taking the will historically, aggressive obviously first the balance quite in took in pricing year. we have through translate been the of

look particularly either channel creatively, quite points, innovation well. some of that that gross innovation of focus much that points. We'll store do at our as continue we'll to in price to pricing, do more through terms efficiently, some of We'll We our managing and being our through to down. at through price given net have do plans traffic different

we'll doing. have some our that, the we in given emerging using. our done always But mindful we'll lead in pricing. the what that sensitivity be of positions how different but of will We So, obviously we will be current given mechanisms that, of And be competitors to intent are the we've do most leadership environment. markets, particularly gauge

have of On on the a gone prices than we obviously carefully. being We've ag little half the But up. And up, cost of they last the back year. gone side, have watch less we'll net-net, prices the side, But resins we costs were a in see down. in than see, we'll headwind it obviously, headwinds period. saw come less year-ago all very flip seen

better talk start back there's of a moving and prices a COVID to subside, you've see by earlier, about, we'll P&L. of in panic buying that the as as some bring becomes predictable. from to the particularly of little those some see half where production we large, through we in-house the environment costs we'll year. As others some the the more of oil lag bit I typically But and heard And and see the benefit most drop a six nine through, of month between mentioned

for and better that, to this want little contractors. expect which handle say but line get it to predictable, bit our our we planning more a a to at of allow sight Difficult stage we capacity us to facilities become on how

And doing are of with there associated we're with this. year-ago in added will other looking costs we to obviously, associated this, for the customer come bear logistics that Mark, or everything that the be can the will our and in some costs service period some customers logistics deliver partners point is, well mind, as one

Operator

our Bank. Please we can now of from question And take Rob ahead. Ottenstein Evercore next go Investment

Rob Ottenstein

guys you release John, Thank want out bit. press Noel, much, conservative. very I Great. you The guys. very to is little call a

of positive. everything on kind is April hear You're but this call withdrawing strong. is I very guidance,

XX%. advertising raising You're

going to up You're dial marketing.

e-commerce. better. getting in it crushing You're China's

in your what -- significant getting You're cleaning ongoing sanitary as see and increases products. you

the in the you good in pretty pricing getting volume And encouraging. outlook say, You're Brazil. cost very year, your Mexico, in second is of half

the in commentary And considered. environment I'm so caution taking has terms So little of things very and there, confused. all but very, release confused so press away been I'm far the obviously, guidance, tough a out in the positive.

Noel Wallace

across significant the coming that listen, as is and back the Obviously, plants and would but it weeks. April. said back down online we're The unpredictability So had we of They're distribution in had of world level almost a shut impact that before. had seeing at what at two has India, we a end the down. seen for to anticipate straight like never in impact the quarter down commentary. we've it's shut channels what we a significant We speak, obviously shut didn't

of And incidences it's to we we've can't in exactly seen things Obviously, going terms Brazil. in up happen. where of predict the number creep

happens forward. what going So, there

world pause. unpredictability So foreign the the again, we're with continued seeing of of strengthening all exchange around the the gives combine that the around that it's and world. And what you the dollar headwinds -- us

seen, a talking jumping been we've They're of likewise, the volatility, the And about numbers obviously, now. throughout some call. place all the consumption we've of in lot right that over

very to it's are so And a going how to things ultimately of on difficult unfold. sight line get

a And moving to have back on fundamentals we this soon and forward, bit think we thing are the you with little when Yes, stage. disruptions prudent can categories come regulations where things good as long-term, confidence at our government the headed. it's hold of the we more to our we'll as uncertainty are but guidance

Operator

English of Please go now ahead. And Goldman from Sachs. our question take next we can Jason

Jason English

Hey. for firm far. Good question you is great because the well as was to reaction I call to signing of press the I to why responded congrats and want question. well me and you have I as pull release conflicting to thought navigating same so your this a morning, far. about guidance, back Hope last the folks. and to interpretation it. in. you come it and the get Thank for everyone situation had so I mean think But Rob you same the the I part the I

you that, maybe expect economic zoom government markets. say category But actions, to there, read and I as reduce growth to deceleration Maybe simply into. too on much growth exceptional many the read and in the I that quarter. you in line that the consumer the I in unequivocal uncertainty I referring interpret first to just in on in related were behavior one press COVID-XX forward. want to release you

listened But little all in offset takes. and you when Care, bit lots maybe down care, to walk I of Skin cleaning. your category and hear puts through Oral a each of trade expectations I sanitization to little home but by going of softer, a this and market, and personal is be

be and rates, Is as don't choppy is think about but be to while slower underlying of really the that you It's that interpretation? have forward. to category going growth materially a there's going think lot right slower the you reason to a uncertainty, first quarter, going in your

Noel Wallace

like categories Obviously, you on the Care. seen around like if they're all Jason, more Oral weeklies, categories Yes, listen, and look bar them in cleaners. over place the the and here got me, on front of the soap and monthlies categories at you've the consistency world, I've liquid soap all hand in

force, a has that we're unique of faced great bit you always the to with although The our pricing, see an different. like biggest we've world. combine going success foreign in unknown degree this, there, right and And now and exchange ability that challenge is take we're the the view, recession a that all this with headwinds environment is around to which been had the in

the we're seeing. the disruptions and that So that seeing we're uncertainty it's really

big that creates jump category. headwind to -- have the if for significant headwind as value will of that start well. If have a some markets, not again, a XX% on So get markets the significant unemployment That categories creates certain see we've dealt orientation impact more with past. for lockdowns, our XX%, in the in we us. It

as can. experience So good is all outlined in got we unpredictability all, there's to I've on uncertainty on position trying what but ourselves there significant moving We're this, well forward. as based We've earlier.

Operator

now time. the session. back like or speakers your closing further additional have questions this hand would any no we for I'll phone I to conclude at to remarks. over it question-and-answer today's And

Noel Wallace

discussions having of with such everyone. has having the And talented Well, unprecedented We're to again that hard uncertainty, level results. everyone. and obviously, people. to with I once unusual team but a incredibly work Colgate forward. we moving working times, Obviously, by management an want inspiring greatly continue Thanks, deliver to benefited everyone with It's more look thank organization. to this safe. Be dealt all to the forward thanks,

Operator

you This call. your concludes for today's Thank participation.

You disconnect. may now

Colgate-Palmolive (CL) 1 May 202020 Q1 Earnings call transcript