Procter & Gamble Company (The)

Good morning and welcome to Procter & Gamble's quarter-end conference call. Today's event is being recorded for replay. This discussion will include a number of forward-looking statements. If you will refer to P&G's most recent 10-K, 10-Q, and 8-K reports, you will see a discussion of factors that could cause the company's actual results to differ materially from these projections. As required by Regulation G, Procter & Gamble needs to make you aware that during the discussion, the company will make a number of references to non-GAAP and other financial measures. Procter & Gamble believes these measures provide investors with useful perspective on underlying business trends and has posted on its investor relations website www.pginvestor.com a full reconciliation of non-GAAP financial measures. Now I will turn the call over to P&G's Chairman of the Board, President and Chief Executive Officer, David Taylor.

Good morning, everyone, and thank you for joining us. Last evening, we announced that I will retire as CEO on November 1st, and John Moeller was elected as the incoming CEO. I will remain as Executive Chair of the Board. We also announced that Shailesh Jujurikar has been elected Chief Operating Officer effective October 1st, 2021, transitioning behind John Moeller. These moves have been thoughtfully planned and provide P&G with highly capable and experienced leadership going forward. I truly have full confidence and strongly support these changes. John, you know well, he has a distinguished track record throughout his 33-year career with P&G, including more than 12 years as CFO. More recently, John added responsibility as vice chairman and then chief operating officer with P&L responsibility and ownership for our enterprise markets. In my nearly six years as CEO, I've had the benefit of partnering with John and an outstanding global leadership team to integrate a comprehensive set of strategies to guide our choices and priorities. Now to go back, in 2012, John led the initial work to make productivity an integral part of P&G's business. Our team doubled down on this strategy when we announced our second five-year, $10 billion cost savings program in 2017. Today, productivity is built into our operating model and is an ongoing part of our strategy in every part of our business. We worked together for several years to focus the company's portfolio on faster growing, more profitable daily use categories where products solve problems and performance drives consumer brand choice. The team largely completed this work with the divestiture of several fashion-driven beauty categories in 2016. This strategy continues to guide our disciplined approach to managing our category and brand portfolio. At the Cagney Conference in 2016, we first discussed the test we were doing on a new approach to our organization design. We refined and formalized the plans and announced the new focus market and enterprise market design at our November 2018 analyst day. Our objective was to create a more engaged, agile, and accountable organization, which is exactly what we've done. In April 2017, we first discussed our work to set a much higher bar for measuring the success of our innovation and execution across products, packaging, brand communication, retail execution, and value. If there were any doubts about the importance of consistently delivering irresistible superiority, our results over the last few years should have put those to bed. And finally, in 2018, we first talked about the need to lead constructive disruption in our highly dynamic and competitive industry. We continue to drive disruption in innovation, brand building, digitization, supply chain transformation, and with our citizenship and ESG efforts. Over several years through many challenges, our organization responded brilliantly as we integrated each element of the strategy, building momentum that is evident in our results in the past three fiscal years. The team fully embraced the idea that we must be willing to change anything and everything needed to win. The only things we will not change are purpose, values, and principles, and our commitment to winning. This has been especially evident during the continuing COVID crisis, where the organization has demonstrated tremendous agility to meet the needs of consumers while ensuring the safety of our employees and supporting communities around the world to deal with the impacts of this crisis. Through all of it, delivering results that should delight owners and do it in a way that makes us proud to be P&Gers. Put simply, our strategies are working, our team is outstanding, and I could not be more confident in the next generation of leadership that will take the reins of P&G later this year. Now I'll turn it over to Andre Schulten, Chief Financial Officer, to lead us through the fiscal year 2021 fourth quarter and year-end earnings announcement. Andre.

Thank you, David. Good morning, everyone. Joining David and me on the call today are John Moeller, Vice Chairman, Chief Operating Officer, and John Chevalier, Senior Vice President, Investor Relations. I'll start with an overview of company results for fiscal 21 and fourth quarter. David will add perspective on our immediate priorities and strategic focus areas. We'll close with guidance for fiscal 22 and then take your questions. Fiscal 2021 was another very strong year. Our focus on superiority and strong investment in the business funded with strong productivity improvements and cost savings drove market growth and, in turn, strong sales, share, earnings, and cash results, leading to balanced growth and value creation. Organic sales for the fiscal year grew more than 6%, up more than 12% on a two-year stack. Growth was broad-based across business units, with each of our 10 product categories growing or holding organic sales. Home care up high teens, oral care up double-digits, Skin and personal care up high single digits. Grooming, fabric care, feminine care, hair care, and personal health care organic sales each up mid-single digits. Family care grew low singles. Baby care was in line with prior year. We delivered strong results in our two largest and most profitable markets, annualizing strong base periods. Organic sales were up 8% in the U.S. and 12% in Greater China for the fiscal year. Focus markets grew 7% for the year. Enterprise markets were up 5% despite significant market growth impacts from the pandemic. E-commerce sales were up 35% for the year at over $10 billion in sales, representing 14% of company total. Global aggregate market share increased 50 basis points. 33 of our top 50 category country combinations held or grew share for the fiscal year. All outlet value share in the US improved through the year, growing from 33% over the past 12 months to 33.5% for the past six months to 34% over the past quarter, one of the highest absolute value shares in the last 20 years. Consumers are increasingly choosing P&G brands. We translated this strong top line growth into strong earnings and cash results. Core earnings per share grew 11% for the year, Currency-neutral core EPS was also up 11%. Within this, core growth margin expanded 20 basis points up 60 basis points, excluding currency impacts. Core operating margin grew 80 basis points up 130 points, excluding currency impacts. Productivity improvements helped operating margin by 250 basis points, enabling strong reinvestment in marketing programs, Advertising was at 10.8% of sales, an increase of more than 40 basis points. Adjusted free cash flow productivity was 107%. We increased our dividend by 10% and returned $19 billion of value to share owners, $8 billion in dividends, and $11 billion in share repurchase. Moving on to the April-June quarter, organic sales grew 4%. Volume, pricing, and mix each contributed more than one point to top-line growth. Growth rates by market reflected the volatility in shipments in the base period. Organic sales were down 1% in the US. However, this is still 18% growth on a two-year stack. Recall that in the April-June quarter last year, organic sales were up 19% in the US, 13 points above track channel sales as we worked to restock depleted trade inventories. Organic sales in Greater China were up 5%, also comping a strong base period. On a two-year stack, Greater China up 19%. Focus markets were up 2%. Enterprise markets were up 14% in the quarter. Strong market share trends with aggregate global value share up 70 basis points. All-out share in the U.S. increased 260 basis points for the quarter to 34.1%. On the bottom line, core earnings per share were $1.13, down 3% versus prior year, down 4% on a currency-neutral basis, mainly due to gross margin pressure from higher input costs, as we had anticipated. Core gross margin decreased 260 basis points, currency-neutral core gross margin also down 260 points. This includes 220 basis points impact from higher commodity and trade costs, nearly $400 million in just this quarter. We also saw a sharp headwind from mix of 210 basis points, mainly geographic mix impacts. Recall that in our fourth quarter last year, the US and China accounted for more than 100% of organic sales growth. In this year's fourth quarter, enterprise markets lead the growth. Cooperating margin decreased 230 basis points. Currency neutral cooperating margin declined 210 basis points. Productivity improvements were a 320 basis point help to the quarter. Adjusted fee cash flow on the quarter was 117%. In summary, we exceeded each of our going-in targets for the year, organic sales growth, core EPS growth, fee cash flow productivity, and cash return to shareholders. Our team has operated with excellent discipline in a challenging and volatile environment. And with that, I'll pass it back to David.