Church & Dwight Co., Inc. (CHD) Earnings Call Transcript & Summary

Okay. So we're going to get started. And next up this morning, we have Church & Dwight. We have Matt Farrell, Chairman, President and CEO; alongside Rick Dierker, who is CFO and Head of Business Operations. They're going to take us through a brief presentation, and then I will come up on stage for a brief Q&A.

Okay. Good morning, everybody. There's a safe harbor statement. You can look at that after class. And let me tell you a story about Church & Dwight. So this is our kind of report card over the last year, 2024, '23, 3, 5 and 10 years TSR. And we have an evergreen model. Many of you who are long-term investors are well aware of this. We shoot for 4% organic growth on the top line. And the way we get it is 3% from domestic, 8% International, 5% from Specialty Products. We raised our number at the beginning of this year. Historically, our organic growth, we were aiming for 3%. Now we're going for 4% annually. Our gross margin shoot for 25 to 50 basis points annually. Marketing, our target is 11% of sales. So we keep that percentage constant. As sales goes up, the marketing dollars go up. And we'll try to get leverage on SG&A as a result of our sales growth. And operating margin target is 50% and EPS growth 8%. So if you look back over the last 10 years and say, how has that organic growth worked out for you, you can see that our 10-year average is 4.2%. So seeing that track record, we thought we would raise at the beginning of the year from 3% to 4%. We have seven brands, the seven, we refer to them as power brands. They make up 70% of our revenues and profits. And if you look at how the company splits geographically, we've got $6 billion in sales. We're largely a U.S. company. So you see 78% domestic and 17% international. That's the consumer business. Specialty Products is our original business, I'll talk about that a little bit later. The reason why we're so consistent and so successful are these five reasons. One is we have a balanced portfolio. It's very diversified, I'll show you a couple of charts on that. We have low private label exposure. We've been very successful with the online class of trade. And our new product development process is stellar, and we're a very acquisitive company. As many of you know, we think the highest and best use of our cash flow is to acquire businesses. So here's how we look from a balance perspective, pretty much half household and half personal care. With respect to premium and value, it's 37% value, 63% premium. It's been like that for the last 15 years, around 40% of value and 60% premium. The good news about that is you really operate well in first really any economic environment. And here's some existing stats on a low private label exposure. And it's been true for many, many years. Now e-commerce is a great story for us. So if you went all the way back to 2015, only 1% of our sales was online; now it's 21%. And the thing we always remind ourselves of is that the iPhone was invented in 2007. So if you're 17 years old and you're graduating from high school right now, you started with that iPhone in your crib. So you have new consumers coming out every year out of high school and college, and all they've ever known is the iPhone, Samsung, if you're partial to Samsung. And that's how people order products. So we've decided many years ago, we got to get really good at this. So we're 21% today. We think by the end of the decade, it will easily be 30% of our sales. And I mentioned we have a stellar new product development process. Rick is going to talk about a few of these later on. Just to run your eyes around the page, Deep Clean is a new product in laundry detergent. It's more high end than we've had in the past. HardBall in the middle of the page is a lightweight litter and lightweight is 18% of the litter category and we've really been nowhere in lightweight litter historically, and that's making a big dent for us. The one on the far right is BATISTE. So you see two products there, Touch and Sweat. So the fragrance is activated by touch and sweat. In POWER SHEETS, we have a new form of laundry detergent that we introduced in August of 2023. That's starting to catch on. VITAFUSION, some packaging innovation and THERABREATH, we just entered the antiseptic portion of mouthwash, which represents 30% of the category. Our acquisition criteria are pretty strict. So we're pretty fussy about the businesses we'll buy, need to be #1 or #2 in their categories. They need to be able to grow at or above our evergreen model, which is 4%. And they need to have high margins. And if they don't, we have to be convinced that we can get them to a high margin. Like them to be asset light. We don't like to buy plant -- businesses that have plants, prefer businesses that are manufactured by co-mans. And we'd like to be able to leverage and quantify what kind of synergies we're going to get from the acquisition. And then finally, they need to have a long-term sustainable advantage. That means when I'm in a nursing home, that these brands are still going to be doing well for years to come. All right. Long history of acquisitions. You can see back in 2004, we were a $1.5 billion company. Almost every year, we've had an acquisition. Had bit of a drought. If you look on the far right, bottom of the page, 2023 and 2024, haven't pulled the trigger on anything just yet, but we've been busy for the past 18 months looking at deals. So the seven power brands today and more to come. Now we'll bring Rick up to talk about the financials.

All right. Thanks, Matt. I'm going to go through the outlook, talk about our history and track record and also talk about capital allocation, and then I'll wrap up with the U.S. business. So first of all, our outlook, this is as of August 2, just from a full year perspective, is a strong outlook, 3.5% reported growth, 4% organic, 100 to 110 basis points of gross margin expansion, low end of 8% to 9%, which we believe is industry leading. And then cash from operations of over $1 billion. We generate a lot of cash. We expect to have close to $800 million on the balance sheet by year-end. Matt shared this already, but this is our track record of organic growth. So 10-year average is 4%, and our outlook is no different, 4% for 2024. And importantly, as pricing rolls off of many categories, what is our volume trend? And I'd say this is the fourth quarter in a row, Q2, that we have strong volume being the driver of our organic growth. If you rewind the clock back to pre-COVID in 2019 and before that, we had a decade or longer of primarily volume-driven growth because we're in the right categories, we tend to take share over time, and that's our model. We also focus on gross margin, and we gave an update in January of our evergreen model and one iteration or iterative change we made was we moved gross margin expansion from 25 to -- 25 to 50 basis points. Lot of confidence in our productivity program, a lot of confidence and tailwinds from fast-growing acquisitions like THERABREATH and HERO that are margin accretive and a lot of confidence in innovation, which you'll hear about in a few minutes. Marketing spend is consistently 11%. Now this is also the first destination when we over-deliver where we want to spend back because we want to go drive share, apply the consumer, drive awareness of our brands, and 11% we believe, is the right number. The scorecard is how we're doing on share. And in Q1 and Q2, we were 10 of 14 of our power brands grew share on a year-to-date basis in 2024. We're also 10 of 14. So the share scorecard is also working. And for a long time, we have a great track record of low double or high single-digit EPS growth and 2024 at the low end of 8% to 9% is no different. Cash flow, in our opinion, drives value. And our 10-year average for free cash flow conversion, free cash flow divided by net income is 119%. In these past couple of years, we've made incremental investment in capacity. And so our free cash flow conversion is closer to 97% or 103% are inflecting positively from there. We expect that to continue to improve as we're through that CapEx for capacity need that we talked about. We have a really strong balance sheet. We expect to be about 1.6x levered by the end of the year. And that means we have a lot of firepower. And this is the largest number we've ever presented on this slide. We have a lot of financial capacity. We believe we could do up to a $5 billion deal and maintain our investment-grade credit rating. So as Matt said, it's -- not only is it the number one source for capital allocation, it's also where we spend a lot of time looking. So number one is TSR-accretive M&A, number two is CapEx, number three is new product development, number four is debt reduction and number five is return cash to shareholders. And we're not a capital-intensive company. We're around 3% of sales this year as our CapEx projects for capacity wrap up. And then next year, we expect to be around 2%, and that's kind of our run rate as we look forward. Okay. Let me transition to the U.S. story briefly. You heard about the company evergreen model of 4%. That means we need to have 3% or so from the U.S., 8% for international and 5% for SPD. So here's the 3% and why we're confident. So first of all, we've been at 4% or so for the last 10 years for consumer domestic. The first half of this year has averaged 4%. Why? Well, we're leading growing categories, and we'll go through that in a minute. We thrive in difficult environments, almost any environment, given the portfolio that Matt went through on value versus premium, household versus personal care. And then number three, we have acquisitions -- recent acquisitions that have room to run and we'll get into what we think the upside there is. Seven power brands that drive most of our sales and profits. It's ARM & HAMMER, THERABREATH, VITAFUSION, OXICLEAN, BATISTE, HERO and WATERPIK. Those seven power brands are in eight categories. And over a long period of time, those are healthy growing categories. We grow in excess of the category growth rates because we tend to take share over time. That was my 10 of 14 comment. So let's dig into the details. Here's Fabric Care. In the first quarter, liquid water detergent grew 2.8% and in Q2, it grew 1.2%. Our business grew 1% in Q1 and 1.9% in Q2. So we grew share in Q2. Over a long period of time, we've gone from a 5% share in ARM & HAMMER laundry to 14.5% share, which is an all-time high. Now we have a $2 billion ARM & HAMMER mega brand that goes all over the world across many different categories, and that's an advantage we have as we advertise across many categories. So why are we at all-time share highs? Well, part of it is our good, better, best strategy and innovation. So good would be the orange bottle, just ARM & HAMMER liquid laundry detergent, better would be ARM & HAMMER plus OXI and then our new entrant into the mid-tier would be Deep Clean. And it's -- so far, it's off to a great start. It's proven to be very highly incremental to the category and the brand, trading consumers up, delighting consumers with performance, and it's also attracting a younger consumer. Cat Litter. Cat Litter, the litter category has been growing about 5.5% in Q1 and 2% in Q2. We've been growing about 5.5% for the first part of the year. So we're growing share. Actually, it's all-time high in our share, 24.8% in the clumping litter category. Why is it? Innovation. So this is going to be a consistent theme in the next few slides. Lightweight Litter is a $400 million subsegment. Before our launch of HardBall, we were around a 4% share; now we're around an 8% share. So we're attracting new users to the brand, and we're retaining them. THERABREATH. THERABREATH, the category growth is around 20% in Q1, 15% in Q2 for mouthwash. We are driving a lot of that category growth, as you can see, 60% plus in Q1, 40% plus in Q2. We're expanding our #1 share in the alcohol-free segment, and we're at an all-time share high today. But there's a lot -- there's a bright future for THERABREATH. If you look on the right side of the page, 2.5% household penetration back in 2020. Now we're at 8.8% household penetration. That's around 9%, but the category itself is about 65%. So there's a lot of room to drive THERABREATH awareness and adoption. And that's from a consumer perspective. From a points of distribution at retail, there's also a lot of room to run. So our -- the #1 player, #2 player on TDP is more than double what we currently have. So we have a runway here. And part of the reason we're doing so well in THERABREATH is innovation. So we have the #1 new product in the mouthwash category. We're winning share from competition. And again, we're bringing in new buyers. This is THERABREATH Deep Clean. Moving to BATISTE. The dry shampoo category was up 17.8% in Q1, up about 10% in Q2. We're growing faster than the category again, and we're hitting an all-time share high again. And why is that? It's innovation. We have the #1 new dry shampoo launch in 2024. Matt talked about it. It's fueling category growth, and we're getting loyalty. VITAFUSION. So for perspective, before we talk about vitamins, the gummy category from 2019 to 2021 doubled. It went from $1.5 billion to $3 billion. And so since then, it's been plus or minus 2%, right? The category is trying to find its feet as it comes off of this excess demand that happened from COVID. And so on the left side of the page, you can see that the gummy category in the past few quarters has been negative as again, it's coming off this high watermark. We have been decelerating faster than the category. Now we had a whole host of -- again, the category doubled, our demand essentially doubled. The supply chain was not set up to do that. And so when you have a tight supply chain, you can't launch the products you want, you can't have the fill rates that you want. And so we got penalized. That's why we're declining a little bit more rapidly. And so what are we doing about it? We're focused on formulas and reinvigorating those formulas. We're doing new packaging, new displays. Our focus is online. Half the vitamin category is online. And then there's some major new products that are being launched as well. HERO. HERO is a great story. The category is growing at 26% and -- in Q1 and 17% in Q2. We're growing well in excess of that in Q1 and Q2. And so what does that mean? It means we're at an all-time share high. We're not just the #1 patch, we're the #1 acne brand, so just in the broader segment. And again, a lot of room to run. This is a great picture of 5 years ago, HERO had 1% household penetration; in 2024, it had 8% -- it has 8% household penetration. Acne care, in general, has about 25% household penetration. So the consumer awareness still has a lot of room to run. And then TDPs as well. So we've grown TDP 60%, but we still have about 2x, 2.5x of a gap between our -- the #1 player on distribution points. Okay. So to wrap up, the U.S. consumer business is executing with strength in a really volatile, dynamic environment. We're leaders in growing categories. We're growing share, we thrive in difficult environments and the acquisitions are doing well, and they have incremental opportunity ahead of them. So with that, I'll turn it back over to Matt.

Okay. All right. We'll talk a little bit about International now. So that's been the juggernaut for the company for a number of years now at 8% growth annually. It's a $1 billion business. And the way it splits out there is we have six subsidiaries and about 40% of the business is Global Markets Group. The Global Markets Group goes to 80 countries through distributors. There are other countries you see there, we have full-blown subsidiaries in each of them. The interesting thing about our business is that International has been 17% of our sales for a long, long time. You might wonder if you're growing 8% annually, why is that percentage hasn't changed? The short story is that our acquisitions have largely been concentrated in the U.S. So even though the International business is growing a lot faster, the U.S. business benefits from the top line from adding the acquisitions. So we haven't moved the needle on the percentage. What we have done recently is we have hired a couple of ex-bankers, one in London and one in Singapore, so we can get into deal flow outside the U.S., which hasn't really been a great focus of ours in the past. Here's why we're pretty excited about International and have been for quite a while, and that is it's only 17% of our sales. But if you look at the top CPG companies, it's generally 60% of their sales. So we're doing today what a lot of these companies did 20, 30, 40 years ago. Here's our growth rate for International. You see the evergreen target is 8%. So now you can kind of run your eye across the page and say, with the exception of COVID years, we've been hitting the 8%. And what I'm going to talk about is our brands travel well, that 40% of the business that's the Global Markets Group, we've been investing a lot there. And we've had a lot of success with THERABREATH and HERO. So HERO, for example, will be in 40 countries by the end of this year. So just kind of go left to right, just three brands in the U.S. who we think have legs internationally. That's ARM & HAMMER, OXICLEAN and VITAFUSION. There are existing -- in the middle of the page, existing international brands. BATISTE is our most international brand. That started in Europe, we bought that business in 2011 and brought it to the U.S. BATISTE, STERIMAR and FEMFRESH are three of the big horses in the International business that moved really well around the world. And then finally, WATERPIK, THERABREATH and HERO, I mentioned how we're accelerating HERO very quickly this year. But WATERPIK and THERABREATH are also two businesses that we acquired that are going to be part of the 8% plus growth in international. And the dots you see on the page here are where we have our offices now with respect to the Global Markets Group. And if you look at the lower left, you see Japan now in 2024. We recently acquired a subsidiary of a public company in Japan. And about 75% to 80% of their sales was OXICLEAN. They built the OXICLEAN brand in Japan, and it's just a wonderful platform for us to bring our other brands into the Japanese market, which is the third largest economy in the world. Now just a couple of minutes on Specialty Products. It's probably the business that people know the least about. The target there is 5% growth. The reason why it's 5% is the business is largely focused on production animals, which is protein. So rising population growth requires protein. So it's a good business to be in. Here's the split. Last year it was $320 million business. We sold the -- or shut down the MEGALAC business. So think of it as a $300 million business. $100 million of it is essentially a bulk sodium bicarbonate. And the rest -- so the rest of it is, $200 million is animal nutrition. If you wonder how did we get into this business, a short story. So back in 70s, we were selling bulk baking soda to big food companies, bakers, et cetera. They're selling it out the back door to dairy farms. And so it was like [indiscernible]. So we thought we should be in that business. So -- and this is 50 years ago. So over time, the company started getting into nutritional supplements and then bought businesses that had prebiotics and probiotics. And now we find ourselves today with a portfolio of products that are directed towards dairy as well as cattle, swine and poultry. The gross margins aren't as strong as our consumer business, but it doesn't require a lot of marketing. So it's pretty decent operating margins, and it's not capital intensive. It has been somewhat cyclical. If you look at -- even going through COVID, you have a big spike in 2021 and then down in 2023. We think we got the formula figured out right now, the MEGALAC business that we sold contributed a lot to the cyclicality. And the evergreen target is 5%, and we expect to meet or beat that one this year. And this is just a fun slide to show you all the different products that we make. I don't expect you to commit these to memory, but we have people in our business that are veterinarians, grew up in farms and they're absolutely committed to the business. All right, how we run the company? Five things. One, leverage brands; two, friend of the environment; three, leverage people, leverage assets, leverage acquisitions. So just a comment on each one of those. Leverage brands, we've talked about that already. We got seven brands who make up 70% of our revenues and profits. If you add another seven, 14 of them make up 85% of our revenues and profits. We've been a friend of the environment for a long time. It's no surprise to anybody in the room that that's important to consumers. One of the fun slides we like to put up is that back in the 19th century, the company was putting trading cards of not baseball players but birds into the yellow box. And if you read the lower right, the tagline was for the good of all, do not destroy the birds. So this is the family that started -- the two families that started Church & Dwight back in the mid-19th century. We're focused on the environment. So we've got that in our heritage. And the name of this marketing campaign was Useful Birds of America. Not very imaginative. But you can still buy these birds on eBay if anybody has an interest, you could check it out. All right. Here's sort of left the right. 1988 -- or 1888 is the one I just talked about, wall charts and trading cards, started to use recycled paperboard in 1907. We are the first sponsor -- only sponsor of the first Earth Day. 20 years later, in 1990, we're still the only sponsor of Earth Day. And more recently, we've gotten involved with the science-based targets. We do plant a lot of trees in the Mississippi River Valley. As you all know from fifth grade that trees take CO2 out of the atmosphere and create oxygen, called photosynthesis, that is the end of the discovery part, Discovery Channel part of the presentation. Here's the numbers as far as ESG scores. Although they've been downplayed more recently, but we do still keep an eye on this and see how we rack up by the rating agencies. Okay. Leverage people. This is an underappreciated statistic and that is revenue per employee. So we're a pretty lean outfit. The good news about when you're a lean company, you have to prioritize. You can't do everything and then we find that, that is part of the culture of Church & Dwight. And e-commerce, we have a super talented e-commerce team around the world. And I think that's one of the reasons why 21% of our sales are online and growing. We got a pretty simple compensation structure. One thing that's unique about it is gross margin. Not a lot of companies have gross margin as part of their incentive comp. And what we find is that when you have gross margin in your incentive comp and also cash that it creates financial literacy within the company because if it's something that hits your pocketbook, you want to know how it works and how you can improve it no matter where you sit in the company. Everyone it is, it's 20% of your incentive comp annually is tied to those five. And I mentioned this, 20% of all of our bonuses, of employee bonuses is tied to gross margin. Here's how you get it. So we had the Good to Great program. That's the name of our continuous improvement program. We named it after the book that everybody has heard of, but nobody's read. Supply chain optimization, that's what we try to focus on there is obviously improving our plants, new products and try to introduce new products that have a higher gross margin than the ones you're replacing. And finally, acquisition synergies also contribute to gross margin expansion. Leverage assets, Rick commented on that. And we believe that our valuation is somewhat related to the relationship of how much cash we generate to our tangible assets. So we focus on being asset-light. So you can see it's about 2% of sales historically. We spent a lot of dough last few years expanding capacity in laundry and litter, for example, and we're going to be back to around 2% next year. And then finally, acquisitions, I ran through this one with you before, lots of acquisitions over time. It will be more in the future. So last slide. We've got strong organic growth, very consistent. We've got a great new product machine. And gross margin expansion we've recovered from the dip in over the last couple of years in COVID, and we expect to get back to the high watermark in the not-too-distant future. We're investing a lot in International, which could -- you know the reasons why, a lot of opportunity there, and e-commerce. And then we generate lots of cash, as Rick pointed out, and the number one destination is acquisitions. So that's the show. And now Lauren, you're going to come up and play stump the band. Okay.

Now the show starts. And I have read the book, by the way. Okay. Great. Thank you. That was awesome. So let's maybe start a little bit with the shorter term, the topic that's been coming up through earnings season this summer. And obviously, this week has been the consumer environment, and you guys always have an interesting read. So I'd love to just get a kind of update the latest you're seeing in terms of the consumer environment in the U.S.

Yes. Well, if you follow Church & Dwight, you know that what we said in July was that for the first 5 months of the year at our categories were growing around 4.5%. So that's our categories, but we're in a lot of categories. And then we saw that late May and then June and July, there was a step down that they are, on average, around 2%. So we didn't see anything that would tell us that, that was just a temporary dip, that was going to just turn around in the second half. So -- and August is consistent with July. I think what we said in July was we were probably an outlier. I don't think we're an outlier today based on some of the rhetoric I've heard from other companies. But we do think that the consumer is just weary. And consequently, at some point, people were starting to pull back more than they had been and that will probably be sustained for the remainder of the year. We don't expect it to go, dip any further. As far as the promotional environment, some of the logical next question. When you're talking about the promotional environment, you're generally talking -- for us, you're talking about household products. So household products are promoted far more than personal care products, just as a general rule of thumb. And when we're talking about household products, we're talking about laundry, we're talking about litter. And those are two of our bigger businesses. In laundry, laundry, so far in the third quarter, is comparable to Q3 of last year. So it's about 35%, 36% sold on deal. So that looks consistent. Litter is a little bit different. Litter, we have one of our competitors that unfortunately are hit by a cyber attack. So they need to spend significantly and they are now as far as sold on deal. So if you look at the sold-on deal in Q2, it was 24%. Historically, it's around 15%. And it was driven solely by one brand. And it's -- now it's trending even higher. I think it will be 18% to 19% as a category in Q2 and in Q3. By the way, that the other -- the company I'm talking about was a 24% spend in Q2 and probably would be well over 30% sold on deal in Q3. So that is the sole reason why that category is becoming more promotional, but it was expected.

Yes. Okay. And then also, I mean one thing we've heard a lot about increasingly is the bifurcated consumer environment, that there's just more pressure on the low income consumer and starting to creep in maybe into the mid-tier or the middle-income consumer. And given your portfolio, right, given that you do have more exposure at the low end of the market, do you think when you go away from the category perspective and more to a Church & Dwight perspective, are you seeing more activity, for example, in lower price point laundry promotion? Because it feels like at the higher tiers, there's less activity. So have you seen some shifts in that way as well?

Yes. Another thing that's sort of surprising is we have ARM & HAMMER, but we also have another brand called XTRA, which is a deep value detergent. And you would think, well, if the low-end consumer was super pressured, that, that would really be taking off and it's not. And if you look within our portfolio, the yellow box is doing just fine. And we find that we're having success with Deep Clean, which is our highest priced laundry detergent. And you might say we introduced it at a bad time, the consumer is pressed, but it's doing well and it's sticking. So we would -- we do agree that the lower end consumer is far more pressured than the mid-to high-end consumer. I think that's sort of common sense just because wage inflation hasn't kept up with the price increases at shelf.

Okay. One follow-up question on Deep Clean because you mentioned the incrementality. I was just curious if it's incremental in terms of unit share or if it's really the dollar share. Because is it the price point? So it's more people trading up than necessarily new people into the franchise.

Yes, our volume is up. I don't know if I could parse it out that tightly. But naturally because it's higher price, it's going to be -- it's almost twice the price of base ARM & HAMMER, but it's a 20% discount to the premium detergents. So I would say there's probably no story there.

Okay. Let me just quickly, I wanted to touch on International, because I thought that was pretty interesting. The slides you've shared, you've shared before, but I think the time spent talking about International has increased, the decision to bring in some M&A personnel internationally. So I guess a couple of things. Sort of capability set that gives you confidence that now is the time you're ready to make an acquisition internationally if the right opportunity showed up. How do you think about the criteria because you're very clear on your M&A criteria, but one thing that's interesting is category doesn't traditionally play a big role in and of itself, right? It's -- that's sort of almost an overlay of what happened. But internationally, I would wonder if a category that's more of a close in adjacency to where you already compete is important or if it's as open as it is in the U.S.

Yes. Well, when you -- the thing you got to keep in mind is we are somewhat agnostic about the categories that we get into. And that's because of our ability to manufacture so many different types of products. So we put liquid in a bottle, put dirt in a box, we make -- we have aerosols. We have things that people ingest, baking soda, vitamins, FDA devices. So we have kind of a wide lens as far as the businesses we would consider acquiring. And because we're in so many different categories, a lot of the things you might look at might be in or adjacent to the existing categories. Now outside the U.S., we don't have much of a household business. So it's generally a personal care business. And you saw some of the personal care businesses that we have today. I would say that we're -- we don't have a different criteria internationally. The same criteria is going to be applied. There's no one category that we would say we'd love to be in. We don't have -- ever have a presentation to our Board of Directors saying, wouldn't it be wonderful to be in this category and buy this business. The reason for that is it's a complete waste of time. They're not for sale. So -- and we haven't focused outside the U.S. historically. We get a deal flow in the U.S., but that hasn't been a priority for us. We have two businesses we acquired internationally, BATISTE in 2011 and the way we heard about that one, the General Manager of our U.K. business said, "Hey, they're down in the tube with this dry shampoo [indiscernible] where they're doing these demos with dry shampoo. There might be something to this." So that's how we heard about that business. And the other one was a small one called Anusol, which is a hemorrhoids business we bought from J&J. It was kind of small for them, but bigger for us. So we bought it. But yes, no, I think it's -- the why now thing, my part of it is we do have a lot of talent in the U.S. -- in the International business, some of our strongest people. And -- so we do think now is the time to get more serious about it.

Okay. Great. We have to continue in breakout.

We will. Okay.

Please join me in thanking the team for being here.

All right. Thanks, Lauren.