Colgate-Palmolive Company

Good morning, and welcome to today's Colgate-Palmolive first quarter 2024 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 this call over to Chief Investor Relations Officer and Executive Vice President, M&A, John Fauché.

Thanks, Betsy. Good morning, and welcome to our first quarter 2024 earnings release conference call. This is John Fauché. Today's conference call will include forward-looking statements. Actual results could differ materially from these statements. Please refer to the first quarter 2024 earnings press release and related prepared materials and our most recent filings with the SEC, including our first quarter 2024 quarterly report on Form 10-Q and subsequent SEC filings, all available on Colgate's website for a discussion of the factors that could cause actual results to differ materially from these statements. This conference call will also include a discussion of non-GAAP financial measures, including those identified in Tables 3, 5, and 6 of the earnings press release. A full reconciliation to the corresponding GAAP financial measures is included in the first quarter 2024 earnings press release and is available on Colgate's website. Joining me on the call this morning are Noel Wallace, Chairman, President, and Chief Executive Officer and Stan Satula, Chief Financial Officer. Noel will provide you with some thoughts on our Q&A results and our 2024 outlook, and we will then open it up for Q&A. Noel?

Thanks, John, and hey, good morning, everyone, and thanks for joining us to discuss our strong start to 2024. I would like to make two points today on why we think we are well-positioned to continue to drive shareholder value through delivering consistent, compounded earnings per share growth. The first is the importance of balanced top-line growth. You've heard me speak over the past several years of our focus on delivering balanced organic sales growth, growth in all of our categories, growth in all of our divisions, and growth in both volume and pricing. That's what we did this quarter. We delivered organic sales growth in all four of our categories, all six of our divisions, and volume and pricing growth on a total company basis. The balance allowed us to deliver on a base business 6% net sales growth on top of 6.5% net sales growth in Q1 2023, despite a nearly 4% headwind from foreign exchange. The focus on balance between pricing and volume growth allowed us to deliver solid volume growth this quarter, even with the continued volume softness in China and the expected headwind from lower private label growth as we transferred more Hills volume into our pet nutrition manufacturing network. Oral care, personal care, and home care each grew volume in the quarter, with volume growth of 3% for all three categories combined. Our revamped strategy and increased advertising spending have allowed us to drive growth across a greater percentage of our portfolio, and our focus on core innovation is keeping our biggest brands relevant and vibrant in consumers' minds. We still have work to do, but our balanced strategy continues to yield results, including continued growth in our global oral care shares. Which leads me to my second point, which is flexibility in the P&L. Our focus on revenue growth management and driving our funding the growth initiatives enable us to achieve a 60% gross margin in the quarter, despite significant headwinds from transactional foreign exchange. Our commitment to productivity in the middle of the P&L allowed us to drive 30 basis points of overhead leverage while still continuing to invest in strategic capabilities like digital, data, and analytics, all topics we discussed at Cagney. And prudent balance sheet management allowed us to deliver 18% base business earnings growth despite the year-over-year increase in interest expense and the impact from devaluations around the globe. And most importantly, despite an expected mid single digit negative impact from foreign exchange, we're guiding to mid to high single digit based business earnings per share growth. And we're doing this in the context of meaningful increases in brand investment that will set the stage for growth in the future. This is a testament to the ability of our team to consistently execute our strategy and seize growth opportunities while also preparing to better withstand the inevitable headwinds of running a global business. So with that, I'll take your questions.