Colgate-Palmolive Company

Good morning. Welcome to today's Colgate-Palmolive 2025 Second Quarter Conference Call. This call is being recorded and is being simulcast live at .colgatepalmolive.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 Fochet.

Thanks, Betsy. Good morning and welcome to our Second Quarter 2025 Earnings Release Conference Call. This is John Fochet. Today's conference call will include forward-looking statements. Actual results could differ materially from these statements. Please refer to the earnings press release and related prepared materials and our most recent filings with the SEC, including our 2024 Annual Report on Form 10K and subsequent SEC filings, all available on Colgate's website for discussion of the factors that could cause actual results to differ materially from these statements. As we noted in the prepared commentary, our guidance includes the impact of tariffs that have been announced and finalized as of July 31, 2025. This does not include the tariffs announced by the United States last night. While these tariffs are not yet finalized, based on our preliminary analysis, we do not expect them to have a material impact. Our remarks also include a discussion of non-GAAP financial measures, which exclude certain items from reported results, including those identified in tables 4, 6, 7, 8, and 9 of the earnings press release. A full reconciliation to the corresponding GAAP financial measures is included in the Second Quarter 2025 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 Sotula, Chief Financial Officer. Noel will provide you with some thoughts on our Q2 results and our 2025 plan. We will then open it up for Q&A. Noel?

Thanks, John. Good morning, everyone. Thanks to all of you for joining us today as we discuss our Q2 results. In Q2, we grew net sales, organic sales, and earnings per share despite significant raw material pressure and negative foreign exchange. Excluding the impact of lower private label, organic sales growth accelerated by 60 basis points to 2.4 percent in the Second Quarter with slightly positive volume during by the improvement in North America and Africa Eurasia. We also generated additional pricing through strong revenue growth execution in key markets. We launched significant innovation across categories, geographies, and price tiers, and we closed the acquisition of Prime 100, the number one best recommended fresh pet food brand in Australia. As I said to you on the Q1 conference call, throughout 2024, we had prepared for a more volatile and uncertain operating environment in 2025. This preparation is paying off as the COVID-19 team continues to execute with resilience even as the environment remains difficult with category volatility, geopolitical, macroeconomic and consumer uncertainty, high raw material and packaging costs, including as a result of tariffs, and lower levels of in-market inflation. Through all of this, we remain committed to our strategy, and while we may shift tactics depending on the short-term fluctuations of the operating environment, our strategic focus keeps us on track for long-term performance. So first, I'd like to discuss how we're making short-term adjustments in light of what we're seeing in the world. Because we have a portfolio with broad-based strength across geographies, categories and price tiers, we think we're very well positioned for the current environment. We're sharpening our offerings to appeal to consumers who are looking for value, and the work we have put into core innovation over the last six years means that our big core brands provide consumer recognizable value. We're actively leveraging price pack architecture to deliver consumer perceived value. This can be through larger size multipacks where consumers pay a lower price per usage, or through smaller sizes for consumers who are looking for a lower -of-pocket expense. We can then leverage our global supply chain's breadth, resiliency and agility to respond to these changes in consumer preference. The cost environment is difficult as we're dealing with tariff increases, higher raw and packaging material costs, and less underlying category inflation. This means that our revenue growth management strategies need to drive additional pricing and mix with lower levels of elasticity as we look to improve organic sales growth in the second half of the year. As I talked about at Cagney, AI will be a difference maker for us in our RGM efforts as we work with our retail partners to use data analytics and machine learning to optimize our portfolio and promotional spending to solve for the best combination of sales and profit growth. What is not changing is our commitment to our long-term growth strategy. We are focused on driving household penetration and brand health, which we see as the key building blocks of organic sales growth and consistent compounded earnings per share growth. We're doing this by launching innovation to help drive category growth for Colgate-Palmolive and our retail partners. Even in difficult environments, there are still many consumers that are looking to trade off with innovation, delivers incremental benefits. This is well represented in our investor presentation this morning through premium innovation like Colgate Miracle Repair Serums, ELTA UV Skin Recovery, along with relaunches on core brands like Sanex, Protex, Suaveetel, and of course, Ells. Our commitment to core innovation is vital as we work to bring news and consumer perceived value at every price point. And we remain committed to building our brands to investing in advertising and scaling capabilities in areas like digital, data analytics, and AI. Today we also announced the productivity initiative that is focused on prioritizing incremental investment and accelerating our capabilities to build a more future fit organization as we transition to our 2030 strategic plan. While RGM and our funding the growth initiatives provide strong opportunities for investment and margin expansion, we are moving proactively to deliver incremental savings that can be levered to drive growth and create capabilities or apply to our bottom line. While we are mindful of the challenges in the current market, we are excited by the plans we have in place both for 2025 and beyond. We have the brands, the strategies, the capabilities, and most importantly, the people to deliver on our short and long term goals. And with that, I'll take your questions.