Kimberly-Clark Corporation

2023 Earnings Call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Christina Chang. Ma'am, the floor is yours.

Welcome everyone to our third quarter 2023 Earnings Conference Call. Before we begin, please note today's presentation will include forward-looking statements. Actual results may vary materially from those expressed or implied in our forward-looking statements, and you should not place any undue reliance on our forward-looking statements. Please refer to our SEC filings for a list of factors that could cause our actual results to deviate materially from our expectations. Our remarks today refer to adjusted results, which exclude certain items described in our news release. We use non-GAAP financial measures to help investors understand our ongoing business performance. Please consult our press release for a discussion of our non-GAAP financial measures and reconciliations to comparable GAAP financial measures. We have published supplemental materials which are found in the investor relations section of our website. Participating in today's call are our Chairman and Chief Executive Officer Mike Hsu and our Chief Financial Officer Nelson Ordoneta. Mike will start the discussion with our strategic priorities and provide an overview of our performance for the quarter. Nelson will provide a detailed discussion on our Q3 results and our outlook before we open the floor to Q&A. With that, I will turn the call over to Mike.

Thank you, Christina. We delivered another quarter of strong results. I'm proud of how our teams around the world are executing our growth strategy. Our innovation and commercial programs are contributing to the top line momentum with improving volume and market share trends and strong gross margin expansion. Based on the strength of our year-to-date performance, we are raising our full-year outlook. Third quarter and year-to-date organic sales increased 5% with growth across all segments. Personal care, our largest business, led the way with 7% organic growth and, importantly, 2% volume growth. Further gains in price and mix were enabled by strong revenue growth management capability while volume improved sequentially for a third consecutive quarter. We expect volume trends to continue improving as we cycle prior pricing actions and continue to invest in our brands. We also continue to make excellent progress on margin recovery. Gross margin was up 530 basis points and exceeded 2019 levels, an important milestone in our commitment to restore our gross margin. Operating profit was up 18% and adjusted earnings per share grew 24%. Given the strength of our year-to-date performance, we're raising our 2023 outlook. We now expect organic sales to grow 4% to 5% and adjusted earnings per share to increase 15% to 17%. Global demand in our categories and for our brands remains resilient. In key markets, we're seeing a healthier balance of growth in both price and volume. In North American consumer, organic sales were up 7% with volume up 3%. Dynamics were similar in the MEA. In China, organic sales and volume were both up double digits despite ongoing category softness. While growth across D&E continues to be mixed, consumption increased double digits in Latin America. In our largest markets, our market shares are improving. In North America, we saw sequential improvement in six of eight categories. This was enabled by strong commercial execution, marketing activation, and a significant easing of year-to-date supply constraints in personal care and facial tissue. In the UK, new performance-enhancing designs, price pack offerings, and digital initiatives have resulted in over 200 basis points of year-over-year share gains for Andrex. And in China, we're continuing to see strong market share momentum with Huggy's share up nearly 200 basis points in the quarter. As market leaders, we're raising the bar by elevating and expanding our categories with superior products and advanced technology to address unmet needs. We're also committed to meeting consumers where they need us by offering a comprehensive range of products across the value spectrum. I'll highlight a few examples. In China, we introduced a breakthrough design for Huggies with innovation that whisks away both forms of baby's mess to reduce the frequency of diaper rash. This is a foundational element of our global skin health platform. In North America, we launched new POIS seven-drop ultra-absorbency pads and eight-drop overnights. These higher capacity designs provide better absorbency and protection than daytime pads. Also in North America tissue, Scott 1000 lasts longer and dissolves faster, and this has been core to Scott's powerful proposition among value-oriented consumers, and it's why Scott continues to deliver robust growth in this important daily use segment. We believe our ongoing investment in advantage technology and brand communications will attract more consumers, increase usage occasions, and ultimately grow our categories. I'm proud of the progress we've made to offset the multi-year impact of inflation on our P&L. Restoring margins to pre-pandemic levels was a milestone and not our end goal. We will continue to expand margins by executing our commercial and productivity programs to deliver balanced and sustainable growth for the long term. I'll now turn it over to Nelson to provide more details on our third quarter and outlook for the remainder of the year. Thanks, Mike.

We delivered another quarter of strong results across the company. Net sales were $5.1 billion, up 2% versus last year. Organic sales increased 5%, led by high single-digit growth in the personal care segment and in North America. Volume improved sequentially for the third quarter in a row to minus 1%, while price realization was 5% and mix contributed one point of growth. Currency negatively impacted net sales by approximately 200 basis points. The exit of our Brazil tissue business had an additional impact of 100 basis points primarily on consumer tissue and our professional business. Let me spend a few minutes on each of our segments. First, personal care organic sales increased 7% this quarter. Price realization drove four points of growth and mix contributed 1%. Volume turned positive for the first time in five quarters with an increase of 2%. North America and developing and emerging markets organic sales grew in the high single digits, with volume increases in North America. Developed markets grew low single digits. Within personal care, each of our subcategories grew high single digits. Operating margin for the segment improved 250 basis points versus a year ago, driven by gross margin improvement, while we continue to increase our investments in our brands. Organic growth in consumer tissue was 2%. Within consumer tissue, North America delivered 4% organic growth, driven by healthy demand in dry bath and towels. Outstanding results from the UK drove 2% growth in the developed markets on top of last year's 11% increase. Operating margin for the segment was up 320 basis points versus a year ago, driven by revenue growth management and improved service levels. Finally, our KC professional business posted 4% organic growth, despite challenging comparisons against last year. On a two-year average, organic sales growth was 7%. Demand for our washroom business remains healthy, and new commercial programs drove share gains in North America. Strong revenue realization was partially offset by lower volumes, which were partly driven by the timing of select planned price adjustments. Operating margin for professional improved by 550 basis points, which was broadly in line with the first half of 2023. Turning to the rest of the VNL. Third quarter gross margin increased 530 basis points to 35.8%. Revenue growth management, input cost tailwinds, and about $90 million in forced savings more than offset other manufacturing costs and currency headwinds. The cost environment remains mixed, with favorability in raw materials offset by higher energy prices, currency headwinds, and higher labor costs. Other manufacturing costs were $30 million higher than last year. Between the lines spending was 20.7% of net sales, up 310 basis points versus a year ago, reflecting year-on-year inflation and investments in our brands, our people, and our capabilities. These results also reflect higher year-on-year incentive compensation accruals. Operating profit for the quarter increased 18%, and operating margin improved by 210 basis points to 15.1%. This includes a currency headwind of $135 million, or a 21 percentage point profit impact, of which four points were due to the translation of earnings from non-U.S. operations, and the balance was largely driven by transactional costs. Lastly, the adjusted effective tax rate for the quarter was 22.5%, in line with last year's 22.3%. Our operating results, coupled with lower net interest expense and gains in equity income, drove a 24% growth in adjusted earnings per share to $1.74 in the third quarter. Turning to balance sheet and cash flow highlights. For the first nine months of the year, we generated $2.3 billion in cash flow from operations. Capital spending was $549 million. compared to $679 million last year. We expect to end the year with capex of approximately $800 million. Year to date, we returned $1.3 billion to shareholders through dividends and share repurchases. Now, let me say a few words about our outlook. Based on our strong results, we are raising our full year guidance. We now expect organic sales growth of 4% to 5% and net sales growth of 1 to 2 percent, reflecting the impact of unfavorable currency and divestitures. We also now expect adjusted earnings per share growth of 15 to 17 percent. Currency headwinds continue to worsen given the recent strengthening of the U.S. dollar against the Argentina peso and other key currencies. Based on recent currency forward curves, we are projecting that currency will have a negative top line impact of approximately 300 basis points and a bottom line headwind of approximately 450 million, up from our previous assumption of 300 to 400 million for the year. On input costs, we now expect headwinds of approximately 50 million versus the previous outlook of 100 million. Other manufacturing costs are now expected to increase by approximately $250 million, compared to $200 million in our prior outlook. With gross margins returning to pre-pandemic levels in the quarter, we remain focused on driving cost discipline and productivity to create more fuel for growth. For the full year, we project fours to deliver $300 to $350 million, reflecting favorable results from ongoing negotiations of our materials purchases. Continued progress in gross margin recovery puts us in a great position to advance our commercial programs, and we continue to expect advertising spend to increase by approximately 100 basis points for the full year. Overall, we now expect operating margin to increase 170 basis points at the midpoint of our guidance. compared to an increase of 150 basis points in our July guidance. Below the line, net interest expense is expected to decline in the high single digits. We have also updated our assumption for adjusted tax rate to 23 to 24%. These improvements result in our full year outlook for adjusted earnings per share growth of 15 to 17%. In closing, While we continue to operate in a volatile environment, we remain focused on executing our growth strategy, including continued investments in our brands and capabilities for long-term value creation. With that, we will open the floor for questions.

Certainly. Everyone at this time will be conducting a question and answer session. If you have any questions or comments, please press star 1 on your phone at this time. We do ask that while posing your question, please pick up your handset, if you're listening on speakerphone, to provide optimum sound quality. Once again, if you have any questions or comments, please press star 1 on your phone. Please hold while we poll for questions. Your first question is coming from Chris Carey from Wells Fargo. Your line is live.

Hi, good morning. Hey, Chris. Hey, Chris. So one question just around commodities, so clearly continuing to see favorability, but we have seen some firming of late, and I just wonder how you see things over kind of a near to medium-term horizon from specifically the commodity basket. So basically trying to balance the fact that you're seeing favorability this year you have hedges and there's timing impacts that aren't really going to impact this year. But just how you're watching this overall commodity environment, I'm really asking in the context of the potential need to take pricing against volumes and how that balance is going to work over the medium term.

Yeah, I'll start with a quick comment and then I'll ask Nelson to kind of give you a lot more additional context and detail. But one, Chris, I'd say, hey, we finally saw inflection in the cost environment for us. As you know, we've taken on a lot of inflation over the past couple of years. And even this year, you know, the plan was additional, you know, between currency and commodities, about $500 million of impact. And so, in the quarter, it's our first quarter where the costs actually were favorable. And so, that's a significant inflection point for us. I do expect input costs to be a modest tailwind, you know, going forward, but don't expect necessarily that there's going to be a lot, you know, a lot that's come behind that. The one thing is, though, we do believe You know, and I mentioned this in the prepared remarks, that it's our job to expand margins over time. And we believe we have a lot of opportunity to do that on an ongoing basis between what we're doing on the revenue side and also on the cost side. But Nelson, maybe.

Yeah, just to elaborate a little, Chris, on what Mike was walking you through. So at this stage, what we've seen in the quarter, and it's playing out the way we had forecast back in July, In general, the savings that we're seeing are driven by pulp, distribution, and other commodities. And we've actually seen some increases, especially as we look forward, on resin-based materials and energy costs. We had our first quarter of a benefit, so $75 million. And as you remember, for the first half of the year, we were negative around $190 million. Based on where we stand today, we still project that we will be favorable in the fourth quarter of the year by an amount that's not that dissimilar from what we had in the fourth quarter of the year. And for the full year, we would be around $50 million in terms of commodities negatively impacted. One thing to keep in mind is, you know, we've also been driving a lot of benefits, Chris, through our force program. Remember, we engage in negotiations in some of the materials where there's no clear market for us to engage in hedging. And we've been actively pursuing this over the last few quarters. So that's also been a contributor for force, which includes our net negotiated material prices, and that's flowed through. As Mike said, we don't expect tremendous tailwinds going forward, but we're pleased with where the overall costs are at this stage.

That's very helpful. And then one follow-up just on personal care, and specifically the North America, you know, part of the personal care division. The volume growth there, can you just talk to, you know, the durability, what year ago comps had to do with that event within the North America business? I wonder if you can talk about what categories are driving this.

Yeah, great question, Chris. I'll give you the thing, maybe a view on a couple different components. You know, one, I'd say overall North America consumption of remains robust, and I think that really does reflect the essential nature of our category. Our consumption in North America for KC was up mid-single digit with solid growth across all categories. And then I think the one thing I did mention in the prepared remarks is we are coming off some fairly significant supply constraints that affected most of our personal care businesses and our Kleenex business. mostly throughout the year. And so, you know, we did have shipments that were a little higher than consumption. I'll give you an example in baby care. Organic shipments were up in the teens, low teens. Well, consumption was up about between 3% and 4%. So that really reflects, I think, retailers getting their inventories back in position. You know, we had been allocating shipments on Huggies since the beginning of the year. And, you know, we had a pretty significant supply situation with a supplier outage that it constrained our volume. It actually kind of constrained our share throughout the course of the year on a number of brands. And so we came out of that. We came off allocation across all brands at some point in mid-September. And so that's kind of why shipments probably ended up in the quarter a little bit higher.

And on the comp, Chris also remembered the last year in Q3 in September, we had a bit of a destock. So that's also kind of weighing in. But very pleased with where we ended up. And more importantly, the underlying consumption in North America.

Okay. Thanks so much.

Okay.

Thanks, Chris.

Thank you. Your next question is coming from Anna Lizul from Bank of America. Your line is live.

Morning. Good morning. Thank you for the question. I also had a question on the better gross margins, which clearly benefited from the lower input costs. You know, I was wondering, you know, are you seeing a reversal of that recently with the input costs, like the higher oil prices? Just to follow up on Chris's question. And also, if you can elaborate on what drove the better cost savings in force this quarter. Thank you.

Sure. So, a few things. You know, as we go through the second half of the year, we still, as I indicated to Chris, we still expect to have, based on current assumptions, favorability on commodities heading into Q4 on a net basis. Because remember, through the first Half of the year, we were around 190 million negative. We were 75 favorable in the third quarter, and we're calling for the full year an estimate of 50 million of the headwind in net. So we still expect to be favorable in the fourth quarter. Having said that, we're, of course, watchful of what's happening with the oil markets and the implications for resins. They don't. immediately impact resins, but we have seen resins begin to plateau at the level of prices. And in fact, I mean, curves are starting to move a little bit upwards, and we're watching that. But overall, we still expect commodities to be down over the next quarter or so, at least. The other bid in gross margin, as you said, was force. We had a strong delivery of force savings for the quarter on a year-to-date basis. We're at $275 million, and we've actually taken up our call for the year to $300 to $350 million. So, you know, net, net, I mean, we are encouraged by the overall cost savings and our program in force. And in terms of gross margin... Keep in mind, it's not linear. We don't expect gross margins to grow linearly quarter after quarter because there are always puts and takes quarter to quarter. But having hit the 35.8% mark is an important milestone for us as we look forward to then expand margins down the road.

And then, Anna, maybe just like additional comment. And I think maybe underlying your question and Chris's before was, hey, there appears to be some underlying volatility in costs. input costs, and there likely is. We've dealt with that significantly over the past several years. I would say longer term, we believe it's our job to continue to enhance margins so we would remain disciplined in terms of our revenue management program and capability and also our cost management capability.

And again, another item to add, Anna, as you think about the next few quarters is currency. Currency has gotten more volatile. I mean, we've seen the strengthening of the U.S. dollar. And as you would have seen in our outlook, we did take up our expected headwinds from currency on our operating profit. And again, we're watching that carefully as we think about 2024. Great.

That's very helpful. And just as a follow-up, you did have the benefit from better-than-expected pricing in the quarter while volumes were soft. So you did see a nice sequential improvement in the change of volume from Q2 to Q3. I was wondering how we should think about the sequential improvement potentially from Q3 to Q4 in volumes.

Well, we've had, I would say, four quarters of successive volume improvement. So I think we were down seven, down five, down three, whatever, down one. And importantly, personal care, you know, volumes were up this quarter. So I'd say, you know, we're making solid progress. We're seeing solid volume momentum. And I think I said in the prepared remarks that, you know, we would expect, you know, continued improvement. You know, we're not ready to call 24 yet, but, you know, I think volume, you know, we've cycled most of our big pricing actions from last year. And so we would expect volume trends to continue to improve as we drive, you know, our commercial programs and invest behind our brands.

Great. Thank you very much.

Thank you. Your next question is coming from Xavier Escalante from Evercore ISI. Your line is live.

Javier, good morning. Hi, Javier. Hey, guys. Good morning, everyone. My question has to do with the pricing side, particularly in North America, which is 80% of your profits and is where we have more visibility on. uh the pricing seems to be constructive right for private label uh promotional levels are below 2019 uh but we did see a little bit of a pickup on your end um at least in track channel so if you can talk about whether what what are these promotional is it is it is it what categories What's the point? Is it because some of your categories are coming out of allocation? If you can comment on that, and then I have a more strategic question after that.

Yeah, well, I'd say part one, Javier, you know, I think I said this in the past, and philosophically, you know, I think we view trade promotion as a path to drive trial, especially of new items, and so that's kind of where it fits in our you know, marketing mix, and so I'm not a fan of using promotion to rent or borrow share for a period of time. And so I think any data that you might say, you know, I'd say we are promoting, you know, still below, as you point out, 2019 levels, but, you know, but I think we have participated in some promotions. I did see your note, and I would say one thing that kind of skews the analysis a little bit is this whole metric, the denominator is EQ. right, or equivalent units. And for all the tissue categories, the equivalent unit is 10,000 sheets, and for diapers, it's 1,000 diapers. And so when you do it on that basis or on a per-piece basis, you know, what happens, especially in our consumer tissue businesses, you know, Scott 1000, by definition, has 1,000 sheets. And so that's about, you know, let's say between four and six times more than any other brands. And so that tends to skew kind of the the measures a little bit and makes us look a little bit underpriced when you do it on an EQ basis. But overall, you know, I think we're, you know, we've taken pricing, we've probably moved faster on pricing than other brands. And so I'd say, you know, to me, our normal price gaps have begun to normalize.

Very helpful on the note. The other is, given the setup, right, do you think that there is the possibility that of gross margins going forward to be higher than 2019, given the mix, given the, if you add volume plus mix, you are already running flat. Do you think that that is possible, that, you know, going forward, we're going to be operating at gross margins above 2019 levels? If there is something structural that cannot happen?

I'll start and then I'll let Nelson correct me, but I would say it's our job. From my chair, I would say we have to do it. The back story, and I know you came on last year or so, Javier, but when I came into this role, the three things that we set out to do was, one, accelerate organic growth, second, reduce our earnings volatility. And the third thing, importantly, is enhance our margins. And so that was a fundamental goal, you know, when I came into this role. The kind of a curveball that came in, in between that was COVID, the demand shocks, supply shocks, and everything else, and the inflation shocks. And so, you know, over the last couple of years, we said, hey, we've got an interim goal. One, we've got to restore our margins, which You know, I think this quarter kind of marks, you know, a pretty significant point for us that, hey, we are back to, you know, pre-COVID or 2019 levels. You know, but still, you know, as we talk internally, it's our job to enhance margins from here. And that's what I was saying is we have to continue to be disciplined around our commercial programming, our innovation. our revenue management and also just as discipline on the cost program. And I still see further opportunity for us to expand our margins. But maybe I'll give you, I'll ask Nelson to kind of give you some more specifics around the near term.

Yeah. So, Javier, just to build on what Mike said, I mean, and we've been talking about this, you know, since we hit our lowest point in gross margin at, you know, 29.8% about five quarters ago. And our whole point was that we were going to get back to the 35%, which was a milestone and not an end state. And really what's happened is we've made and we've been making, and you can see it, significant investments behind building capabilities in the organization. So we've been building a lot of muscle around revenue growth management, and this includes price pack architecture and the ability to have also the right packs and sizes and formats for the different organizations customers that we deal with across the globe. Secondly is around productivity. We've made sure that we strengthen and buttress our overall gross margin productivity pipeline, and that remains strong today, and you can see how we've been delivering that over time, and we intend to deliver ongoing productivity, gross productivity as an element to drive that. And then the other bit is around our innovation. We've increased Our focus around innovation last year drove 60% of our revenue growth. And it's a creative innovation. And if you combine these three, that's really the way we're staring at expanding margins over time, gross margins. And that's truly what's going to drive, you know, balance and sustainable growth for years to come for us.

Thank you very, very much. Okay. Congratulations.

Thank you, Javier.

Thanks, Javier.

Thank you. Your next question is coming from Steve Powers from Deutsche Bank. Your line is live.

Thank you, and good morning, guys. Hey, so two questions. The first one, just, Nelson, maybe you could expand a bit on the other manufacturing cost inflation and the higher call for the year that you've you've made today. Just maybe a little bit of further detail as to the drivers there and where we are in that cycle as we look forward.

Sure. So as you indicate, we took our call from $200 million to $250 million through the first three quarters of the year. We're close to $200 million, just a tad below. And what's really driving this is a few things. One, Keep in mind that a lot of the service inflation and lease inflation, et cetera, and some cost inflation flow through this number. And it's being weighed in by some of the hyperinflationary economies that we deal with. So we're being impacted on that end because we've seen some costs accelerate outside of the U.S., Steve. So that's part of what's driving that 250 based on where we're at at this stage. Okay.

Okay. Thank you for that. And then, Mike, maybe bigger picture, you talked about the higher AMP and marketing spending this year. And just in general, there's been a lot of strategic growth initiatives and commercial investments that you've been making. I guess as you think about the aggregate investment that you've made over the last couple of years in that regard, Where do you think you are versus your long-term strategic priorities? And do you see opportunity or need to kind of continue to invest at an accelerated pace? As we think about next year, is it an investment year? Is it a year where you're growing investments more in line with sales? Or are you at a point where you can actually start to leverage and lever from a margin expansion standpoint some of the investments that you've been making over the past couple of years? Thank you.

Yeah, thanks. Thanks, Steve. You know, one, you know, I'm really, you know, pleased with, you know, with with the team, you know, what we are delivering, you know, what we set out to do, which is balanced and sustainable growth. You know, as you could see, you know, the organic momentum remains very strong, the margins are coming along, we've, as we mentioned, you know, restored them the pre COVID levels. And, and so we feel good about that, I would say, you know, we've made a lot of progress in the investment, we've made a lot of progress in building improved capability. We've made a lot of progress in improving our innovation capability and the innovation pipeline. And so I think over the last five years, we're probably up a couple hundred basis points in advertising investment. And I think from there, we really need to make that investment. At this point, we're approaching 6% overall sales. And so I would say that's competitive in our business. It's perhaps not as much as our primary global competitor, But our plan is not to outspend them. And our plan would be to drive great innovation, great commercial programming, and have a competitive spend. And so I don't expect, Steve, I don't think I'll go and say, hey, we need to continue to increase advertising investment in a straight line infinitely. Do I think there's some opportunity for us to continue to invest? Yes. But, you know, do I think we also have to leverage the investments we've already made better? Yes.

Okay. Yeah, no, so I play it back. It sounds like the catch-up that you might have identified four or five years ago, you feel like you've done, and now it's more opportunistic spend where there's a clear ROI, but you don't feel a huge need to, you know, catch up because you're underspending.

Yeah, because five years ago, we were spending in the threes. And so that was, I think, I felt like too low for a company, you know, of the categories that we operate in. You know, I feel competitive at this point. But, you know, we also have great opportunities to spend on and ROIs are great. And so, especially, you know, as we seem to migrate more and more to digital. And so there's going to be plenty of things that we're going to want to invest in. Very good. Thanks so much.

Thank you. Once again, everyone, if you have any questions or comments, please press star then one on your phone. Your next question is coming from Andrea Tiharia from J.P. Morgan. Your line is live.

Hey, Andrea.

Hi. Hey, Andrea. Hi. This is Shavonna on for Andrea.

Hi, Shavonna.

Hi. Thank you for the question. I just wanted to ask you, can you please add color on your views regarding carryover pricing into 2024 and how to think about the possibly the need to roll back some of this pricing into 2024, especially with retailers seeing some commodities coming in better? I mean, I understand you just elaborated that pulp is lower, but resin may potentially go up, especially with oil coming in higher. If you could just, like, in aggregate, give us a little bit more picture. Thank you.

Yeah, maybe I'll start. I would say, you know, we've Most of our pricing went in last year, and so we did have some pricing this year, so there will be a little carryover. I wouldn't say it's a huge driver of, you know, will be a huge driver of the plan next year. Given what we just discussed on the cost environment, you can see costs this year are still up, you know, after being up significantly in 21 and 22. And so, you know, we're not seeing a ton of deflation. You know, while, you know, there might be, you know, we're starting to see some modest tailwinds, you know, that may continue for a few quarters. But I'm not seeing, you know, at least on, you know, in the near term, you know, huge inflation. We have rolled back some pricing because it notably in professional in Europe, you know, we had energy costs that, you know, really shot up and then came back down. And so we have adjusted some pricing in some markets. And we'll do that, you know, where it makes sense. But, you know, in general, you know, I think we've priced appropriately you know, for the cost environment that we anticipated and that environment is playing out as thus far as we expected.

Great. Thank you. I'll pass it on.

Okay. Thank you.

Thank you. That concludes our Q&A session. I'll now hand the conference back to Chief Executive Officer Mike Hsu for closing remarks. Please go ahead.

Okay. Well, as I said, I'm proud of the team. We are successfully delivering balance and sustainable growth. Thank you for your interest in Kimberly Clark, and we will see you next quarter.

Thank you, everyone. This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.