Colgate-Palmolive Company (CL) Earnings Call Transcript & Summary

Okay. Good morning, and welcome to day 4 of this year's CAGNY conference. Our first presenter today will be the Colgate-Palmolive Company. Before we begin, let's just take a moment to thank Colgate for sponsoring breakfast yesterday. Presenting for Colgate today for the first time as CEO will be Noel Wallace; joined by Yvonne Hsu, U.S. Marketing Director for Hill's; and John Faucher, Chief Investor Relations Officer. 12 months ago, when presenting as Chief Operating Officer, Noel outlined Colgate's 2019 plan to address business challenges and reestablish organic growth momentum. That plan was focused on driving the core through innovation, accelerating Colgate's expansion into relevant adjacencies and channels and strengthening key brands through increased funding fueled by the company's GGEP and Funding the Growth opportunities. Based on the momentum we all saw exiting the year, I think it's fair to say the plan has begun to yield results. To give us a better idea of what to expect from here, I'm going to turn things over to Noel. Noel, thanks for being here.

Thank you very much, Steve, and good morning, everyone. I'm delighted to welcome Yvonne with us today. Yvonne is our Marketing Director of our Hill's business in Topeka, Kansas. She's happy to be down in Florida, and she'll take you through some of the exciting work that we're doing on the Hill's business later in the presentation. So let me begin with strategy. As you well know, a focused strategy on 4 core categories: Oral Care, Personal Care, premium Pet Nutrition and Home Care. In 2019, as you heard from Steve, we accelerated net and organic sales pretty consistently across the year. Importantly, we invested back behind our brands and built capabilities that will give us sustainable growth moving forward and, importantly, delivered on our EPS guidance throughout the year. Speaking specifically about growth, which was the primary focus for us in 2019. We had broad-based improvement across geographies and our categories. We grew in both developed and developing parts of the world, which was important to us given our footprint overseas. And we delivered a great composition of pricing and volume growth through the P&L. Specifically, as we look at organic sales growth, we grew in all 4 of our core categories. And importantly, the growth was broad-based in all 6 of our operating divisions around the world. And as you heard Steve just mentioned, we exited the year with strong momentum, with 5 sequential quarters of improved organic sales growth. So the strategy is working. Let's look a little bit at 2020. Market environment continues to be volatile, but importantly and pleasingly, the categories are improving. As you've heard most of the week, coronavirus is an issue for most CPG manufacturers in China specifically. Still early to assess the full year impact, but we expect a modest negative impact on Q1 revenue and EPS. Importantly, our supply chain is doing an extraordinary job getting up and running, with both the manufacturing pieces we have in China and our supply chain integration there back up and running after the extended holiday season from the Chinese New Year and the extended break they had from the coronavirus as well as robust contingency plans already in place in the anticipation, should we have a prolonged impact from the virus. Looking at 2020 very specifically. You heard me talk 3 weeks ago on the 3 key priorities we have for our business: importantly, to launch more premium innovation to drive growth and accelerate our market shares; to become more digital and data-driven in everything we do across the organization; and importantly, building leverage through the P&L through productivity and working very differently in terms of how we go to market and execute our efficiency programs. For today, you'll hear more about those priorities, but I want to focus on the following 4 areas: continue to accelerate and be focused on driving top line sustainable organic sales growth; again, maximizing productivity across the P&L; prudent deployment of our cash, which continues to be very, very strong; and how we're looking at people and our sustainability strategies moving forward. Starting with organic sales growth. 5 key growth areas, you heard me talk about these last year, you heard us consistently refer to these throughout the calls in 2019. It starts with accelerating the brand-building efforts, the investments we have back behind the business, particularly around our core products; innovating to gain shares and rapidly growing new segments with more agility, particularly in adjacent categories where we weren't competing before; expanding into rapidly growth of new channels and markets around the world; importantly, building our online business not only from a transactional and a revenue standpoint, but obviously, as a way to encourage the brand-building efforts and be more data-driven in our marketing; and lastly, continuing to invest in growing penetration, given the breadth and depth of our distribution around the world particularly in Oral Care, in growing populations. Let me start with our core and brand building. It starts with Colgate, obviously the most important brand in the company. We've been on a long-term journey to build the smile into our equity. But importantly, in any good strategy to build brands, you need to build a purpose behind a brand. You need to give it resonance. You need to connect with consumers in a way that they buy into the brand and what you're offering beyond the functional benefits that we've historically provided. I'm going to talk to you a little bit and show you some examples of how we're building champion optimism into action, which is the key underpinning for the equity of Colgate. I'll share 2 spots with you, one from Latin America and one from India, that will give you a sense of how we're putting more focus behind the equity, not a specific brand but what Colgate should stand for in the minds and hearts of consumers. [Presentation]

And now the spot from India. [Presentation]

So great stuff. They're powerful. They're emotionally engaging. And we're running those consistently across all of our operating divisions around the world, obviously tailored, unique to the local environments, but a way to continue to build our brand. Behind that, we need to continue to innovate behind our core. This is Big Red, what we call emotionally -- at least affectionately inside the company. And this is our Big Red toothpaste, which is our biggest business around the world. Our maximum anti-cavity business in most parts of the world, in this case, is Strong Teeth out of India. Cavities remain a significant issue around the world, and we have a responsibility as the world's largest oral care brand to make sure that we're developing technology to continue to improve the efficacy of our products and deliver improved cavity protection. So in this case, so we have been working quite some time on a relaunched formula to go beyond just fluoride toothpaste. And we just launched in the fourth quarter -- or the back half of 2019 in India our new 4x strengthening power toothpastes, is a combination of fluoride and arginine, which gives you significantly improved efficacy against carries, which, as you saw earlier, continues to be a leading disease around the world. So a real opportunity for us to continue to drive pricing and real value and superiority into our core business, which is the anticavity line. We launched it in the back half in Asia, and we'll roll it out in other markets around the world in the back half, starting in the second quarter and running them into the back half of 2020. Let me show you the advertising for that. [Presentation]

So that's obviously the India spot and testing very, very well for us there. Palmolive, a big business for us in Europe. We haven't talked much about Personal Care. But again, and consistent with our strategy of building our core business, we're relaunching our Palmolive range in Europe and taking on a much, much sharper sustainability and natural strategy, something the equity has been built on. These are all biodegradable formulas and improved natural ingredients that will go along with that and premiumizing it with some line extensions in the liquid hand soap range as well. Hill's. So we talked about some of our core relaunches in 2019. Colgate Total was a major initiative on the Colgate side of the business. On the Hill's side of the business, we relaunched our Science Diet business in the U.S. last year. We'll roll out in Q4 this year in Europe and moving into Asia in 2020. The success of the Hill's business has been quite extraordinary for us. You see consistent quarter-on-quarter growth. Again, you'll see as Yvonne gets up in just a moment to talk to you about the consistent strategies that we're deploying across the Hill's business that continue to drive sustainable growth moving forward. So I'll turn it over to Yvonne.

Thank you, Noel. Good morning. I would tell you a little bit about my Colgate journey. I started with the company as an assistant brand manager on our Oral Care business in the U.S. I moved through various marketing rotations and then ultimately joined our global marketing team as Director on our Personal Care business. I then made a big leap to the beautiful Land of Oz, where I led our marketing team for Australia and New Zealand. But then I clicked my heels, came back to the U.S. and landed in Kansas on the Hill's business. So before I share a little bit more about the Hill's business, I wanted to share a very important influencer. This is Max. He's a labrador/retriever/pitbull mix, and he made me a pet parent last year. We adopted him from a Hill's shelter partner. And while I have 3 children, he is easily my fur baby. I'm happy to say that he recommends Hill's Science Diet, adult 1-6. So you should all try it. So a little bit about our origin story. We really have been at the forefront of clinical nutrition. It all started in 1939 with Dr. Mark Morris Sr. He was a veterinarian who had a patient named Buddy. Buddy was a German shepherd seeing-eye dog. Unfortunately, Buddy also had renal failure. And of course, the service that he provided to his pet parent was really critically important. And Dr. Mark Morris believed that some of the cause of his renal failure was due to his poor diet. So with the help of his wife, Louise, in their kitchen, he created the very first Prescription Diet for renal failure. And you see it on the screen here today, and it's called k/d, which is still in the market today. From there, after 70 years of research, hundreds of clinical studies, more Prescription Diets developed and moving into wellness diets as well, we remain the #1 vet-recommended brand in the U.S., something we're very proud of. We have 2 key parts of the business. One is Hill's Science Diet, which is for healthy pets. And then we have Hill's Prescription Diet, which is through a vet recommendation. Both of these brands are $1 billion globally. Now Noel talked about our 5 focus growth drivers. At Hill's, they're the same. And let me just tell you a little bit about how we execute against each one of these, the first being accelerating growth through brand building and core innovation. For us, just like Colgate, it all starts with our brand purpose belief, which is to give every animal the best care humanly possible. And let me share our latest campaign that helps bring this to life. [Presentation]

So we know that this campaign is resonating with pet parents because of our science-based nutrition messaging. And you can see here we've made a step change in our investment posture in 2019, and we continue to do so in 2020. A few years back, we moved to a digital-first approach as well as being more data-driven in our media planning. So not only have we changed our investment posture, but we've gotten more effective and efficient about how we do our media planning so that we can reach every pet parent in America with our messaging. And you can see clearly, it's starting to deliver the results. Where we started to invest more in our media in 2018, we saw the brand turn around in the second half of the year and then, in 2019, building upon that strength. We're most pleased with our results in the fourth quarter as we had some strong comps to compete. We're going to continue this momentum in 2020 with more premium innovation. You could see the breadth of innovation that we are bringing to the market, and this helps us to gain incremental shelf space with our retailers. An area of focus for us is on the wet segment. Wet continues to be an opportunity for us. And this year, we are launching into cat wet pouches. It delivers on pet parents' need for convenience, to have a single-serve offering and to deliver great taste with our chunks and gravy formulation. So onto how we're innovating to gain share in high-growth segments. We have been innovators in the Pet Nutrition space. And here, in therapeutic nutrition, I want to share just a few of those. First, in Metabolic, which is our weight loss product. We could say with our metabolic diet, on which 88% of pets lost weight in 2 months. That's no change to how the pet parent feeds their pets. I wish they had this for humans. I could use it. For my cat pet parents that are out there, you know that urinary issues often reoccur. And with our c/d stress formula, we could reduce that reoccurrence by 89%. These diets are proven and have strong clinicals to back them up. Last year, we launched our successful gastrointestinal biome formulation with active biome technology. And so what makes this a breakthrough? Well, ActivBiome+ is a proprietary blend of active prebiotic fibers. Those prebiotic fibers are feeding the gut bacteria of the pet, and those are unique to every single pet. So you've all heard about prebiotic diets. What makes this one different? Well, most prebiotic diets really treat the symptoms of the GI issue. This formula treats the underlying cause so that the pet experience is better and more holistic digestive health. And clearly, pet parents are seeing the results. On the left, you see some of the online reviews, 5 stars consistently, things ranging from talking about it as a miracle to something that finally works. We also get lots of letters in from our pet parents. This one is from Bertha's pet parent, Linda, who writes, "After 24 hours, the bowel movements were back to normal." And this is from a dog that suffers from chronic diarrhea. So what a relief for both the pet and the pet parent. Now shifting to investing to drive penetration in growing populations. In our case, this growing population happens to be small paws. And small paws are defined as dogs under [ 20 pounds ]. They're almost 50% of the global population today, and they're growing at about a 3% CAGR over the last 3 years, more than other size dogs. Last year, we announced that we're investing to build a new state-of-the-art research facility focused just on small paws, and work has already begun in this space even before the building goes up. We're looking at differences in taste, differences in physiology, seeing how these small paws actually even eat differently. And so you'll see more innovation coming from this space in the next couple of years. But in the meantime, we have innovation that's launching now. We're extending our successful Small Paws range as well as bringing Small Bites into our successful Science Diet range. On the right, you see our Small Paws trays that are here in the U.S., and we'll be expanding geographically to Japan, where the small paws population is over 75%. And finally, maximizing our growth online. Since 2014, we have grown our e-comm sales over 9x, ending in 2019. And e-comm for us is not just about our pure-play customers, nor is it just about our omni-channel customers. It's really making sure that we focus on the vets in the e-comm space as well. So we also participate in vet-sponsored home delivery. And then we launched our own e-comm platform called Hill's to Home at the end of 2018. This allows the vet to have a solution for the pet parent where the vet can have a share of the revenue. So our 2 focus strategies in e-comm are about driving new customers and driving compliance with auto ship or subscriptions. So for new customers, we want to make sure that we are doing our full path to purchase planning. Whether a pet parent is coming in through our Food, Shelter & Love program where they get a new pet parent kit or they're doing a search online for pet food or they see our brand ad on social or they see a display on an online retailer, we want to make sure that we are delivering the right message at the right time to drive conversion to purchase. We also know that search is paramount. And so everybody is competing to be at the top of the page with their keywords. We also wanted to make sure that we were visible. And so last year, we moved into video for the search results so that a pet parent can easily engage with the brand and, again, see our science-based messaging. And then on content. We do a lot of A/B testing here. And what these are, are thumbnails that you would see on a search carousel. We play with the messaging to make sure again that the content we put out there is driving conversion to purchase. And why is auto ship and subscription so important to us? It's about driving compliance. These are diets that are recommended by the veterinarians. And what we know today is the average purchase for a pet parent is 1.2 bags. When that same pet parent moves online and goes on to auto ship or subscriptions, that number jumps up to 8. So while it's delivering more revenue, which is always a good thing, it also drives better patient care. That pet is getting the needed nutrition to make them healthier and to stay healthier, and that is what we are most excited about. That helps us to live our mission to enrich and lengthen the special relationship between people and their pets. So our focused strategies, our increased investment and our simple science-based messaging is helping us to deliver great growth at Hill's. And back to Noel.

Thanks, Yvonne. So a terrific performance on the Hill's business. And again, I -- to echo some of the key elements of that, it's really bringing science and performance back into our brands and ensuring that we invest behind those in a sustainable fashion. So let me move on to innovating to gain share in high-growth segments and important adjacencies that we compete in around the world. I'm going to talk to you a little bit about whitening segment, an important segment both here in North America as well as in Europe and what our formula for growth is to accelerate top line momentum. First, we start with superior technology. Then, we need to have strong and consistent campaign building across the Optic White business and continue to optimize the portfolio, not necessarily through line extensions but through superior value-added innovation. As you remember, years back, we were the first to launch a peroxide-based toothpaste. Peroxide is what the profession uses to whiten your teeth. We found a way to stabilize that ingredient and put it into a toothpaste. And we continue that innovation over the years in order to go from a 1% hydrogen peroxide formula to a 2%, driving, obviously, more revenue growth management and improved pricing in the category. But the opportunity in the market now is at the $7 price point, and we weren't competing there. We didn't have the right technology to go there. And we've now been able to deliver a 3% hydrogen peroxide, which is the highest level of peroxide in the market, and we're taking that price point up to $7 for the toothpaste here in North America. That product is the best whitening technology that we have ever put into the market. I can assure you that getting 3% to be stable on a formula is a unique result from our R&D folks. It removes up to 10 years of yellow stain, so a terrific claim for the consumers, and we've obviously been able to price that performance and that superiority at a premium price at over 300 index to the category. Likewise, that segment is important in Europe. Europe has some regulations on the level of peroxide you can use, but we needed to ensure that we had a formula that delivered equally strong efficacy in that market. And we are now launching our most improved whitening and more superior whitening formula in that market as well. Let me show you the advertising for that now. [Presentation]

Moving on to the natural space, significant innovation for us in that area as well. We will launch the first-of-its-kind recyclable toothpaste tube across Europe in a product called Smile for Good. That product was approved by the Association of Plastic Recyclers as the first recyclable tube. It has ingredients and functional benefits listed on the front. This plays into the opportunity and the trends that we see across the market around transparency and simplicity in formulas. As you know, we just made a very exciting acquisition here in North America, buying Hello. This is one of the fastest growing oral care franchises in the U.S. right now, plays into that natural-friendly space. Importantly, not only do we have a great growing brand here in North America and opportunities to continue to expand that, but Craig and Lauri, who are -- Craig was the founder and Lauri was running that business, have come over to join the Colgate company, and we are deeply excited about having their expertise and thoughts around how we think about innovation and continuing to disrupt categories as we move forward. So exciting for the business as we speak. The bamboo charcoal toothbrush is rolled out around the world, doing exceptionally well, a sustainably grown handle that you can recycle and obviously free from plastic packaging, which is an increasing concern amongst all of our consumer base around the world. Big innovation in fabric softeners for us. The first plant-based fabric softener in Europe will be launched this year. An exciting opportunity with a packaging that's -- the first post-consumer recycled package in the fabric softener category as well and quite excited about the trends that we're seeing in Europe and our opportunity to get ahead of those in this important and growing category. Likewise, some adjacencies that are doing really well for us. As you know, we made some strategic shifts in terms of acquisitions and got into premium skin health with the Elta and PCA acquisitions back in 2018, at the end of the year. Those businesses continued to perform exceptionally well in 2019, and we continue to build and invest behind those. In 2019, we made the acquisition of Filorga, obviously a science-based business out of France that has a very strong presence in China and doing quite well for us as we speak. Moving on to our third growth driver, which is expanding into new channels and markets. Elmex and meridol, brands from our GABA acquisition years back, these are premium therapeutic brands that really drive growth in the pharmacy channel across Europe. We're now looking at opportunities all around the world, specifically in markets where the pharmacy channel way over-indexes and we under-index with the Colgate brand. And we're providing unique opportunities to the pharmacy class of trade to bring in a highly therapeutic product and list those as a way to differentiate versus other brands in the market. We are very selective on where we're rolling those brands out, specifically in markets with a high pharmacy class of trade. This isn't an opportunistic strategy. This is very strategic for us to build credentials in that class of trade with brands that deliver premium therapeutic benefits. Likewise, the discounter channel, particularly in Europe, one of the faster-growing channels. Europe categories are basically 0% to 1%, if you take the aggregate in most of the categories we compete in. But most of the growth is coming out of the discounter class of trade. You see the 4.4% compounded growth, an area that requires us to be more agile and more flexible as we look at our innovation strategies. And indeed, that's exactly what we're doing. We're bringing the thought programs to the retailers. We're bringing specific opportunities to grow their categories. And you see that our growth has been 2.5x over the last couple of years. Some of the strategies that we're deploying across the discounter class of trade. Here's an example of European business where we've differentiated our core franchises in order to get distribution in that class of trade. We're coming up with specialized packs, price sizing that uniquely fits that consumer in that class of trade as well as unique SKUs that allow us to differentiate versus other retail environments. And the shares -- particularly in this example, which is our Sanex business, which is a premium business interestingly enough in Europe, has done exceptionally well with the price/pack architecture that we put into that retail environment. You see the share growth that we're achieving and, again, I think, driven by the flexibility and agility that we're bringing to that class of trade. Maximizing growth online. We talked about the importance of e-commerce obviously in the Hill's business; but likewise, across the rest of our business, playing -- very, very important. And importantly, not just a transaction opportunity for us but a real opportunity to build our brand. Direct to consumer, likewise, an important one. We launched a very significant innovation at CES this year, which we are deeply proud of with the collaboration with an external partner, the first electric toothbrush that actually identifies plaque in your mouth through sensors in the head of the brush that allows you to obviously perform a much better brushing, getting rid of the plaque that you cannot see, which is a significant breakthrough, such that CES awarded us #1 in the health and wellness category as the best innovation of the year. So we're deeply excited about that. That product rolls into Apple stores later this year. Some of the work behind that, making the invisible visible, a wonderful claim. You can't see plaque in your mouth, but we've now identified a technology that allows you to identify the plaque in your mouth and obviously treat that, which is very, very important for overall oral hygiene. I talked a little bit last year about the augmented brush that we were launching in the U.K. We did a lot of work getting that bundle right in the U.K. And it's such that we're now rolling that product online here in the U.S., and it's off to a terrific start. We're extending it into the toothpaste range as well in a line of refills, given some of the success that we're having. The feedback from consumers on it has been just extraordinary. For those of you that have kids, again, if you have trouble getting your kids to brush their teeth, trust me, just give them one of these and you'll see that your life changes pretty quickly. The verbatim that we get on it, that kids don't want to stop brushing their teeth, which is good for us. You see the ratings there, 4.7 on Amazon, and that's very early days. So it's a wonderful product that we think is going to create a real connection with consumers relative to the importance of creating good oral hygiene at early stage in your life. Moving on to China. E-commerce, a big part of that business there. We need to innovate and think very differently on it. Here's a brand launched exclusively online in a China market called Miracle Repair. It's our first amino acid toothpaste that goes into a very important emerging space in China, which is the aging area. And interestingly, in China, aging is for the young consumer. And the young consumers there are taking anti-aging products across whether it's skin health or otherwise and very, very much looking to provide benefits to themselves at an early age. And you can see the fact that we've targeted a very different approach for this launch, using celebrity vloggers, where we generated 100 million views on 11/11. In the stage of 3 minutes, we sold 50,000 packs of this, and we drove over 500,000 visitations to the page. But the most important piece on this chart is that 98% of the shoppers were new to the franchise. And again, this is driven by our ability to target and differentiate our products based on unique needs of consumers and use our media much more effectively. And as I mentioned earlier, 80% of those shoppers were below the age of 30, which is obviously important for the franchise moving forward. Likewise, big strategic partnerships that we're developing with both Alibaba and JD. An example of our work with Tmall, a similar example with our work on JD and some of the exclusive opportunities that we're focused on using their data in order to monetize our creative and our content more effectively. So some good stuff coming out of the China business, as you saw. We were quite pleased with the growth that we had in that business in the second half of 2019. Lastly, investing to drive penetration. As the world's most penetrated brand in the world and leader in oral care, we have a real responsibility to drive per capita consumption around the world and instill good oral hygiene habits no matter where we compete. We have a worldwide health initiative with the Bright Smile, Bright Future program, which, as you know, provides worldwide free health checkups, and more importantly, education and schools programs in order to improve oral hygiene at an early age. We're very, very proud to reach over 1 billion kids -- children to date with the goal to accelerate that program over this year to get to 1.3 billion by the end of the year. I had a trip to Africa 2 weeks ago, a really wonderful opportunity for me to get to see the teams on the ground, but experience some of our Bright Smiles, Bright Future programs. This is our teaching wall in Kenya in a underprivileged area that we've -- that we're providing education to. I met with the teachers, the -- but more importantly, met with the students there. And I thought to give you a flavor for what -- how impactful this program is and how engaging it is, I wanted to share some of the work that we're doing with a specific video from my trip. So let's run that video. [Presentation]

I think you guys got it. You want to do that with me here? So it's a wonderful program. And you see the impact that we're having on children all around the world. And until you've experienced it firsthand, you really can't appreciate it, so I thought it was a great opportunity to share with the folks here on the connections that we're making around the world with the program. So there you have it, our 5 growth drivers, very focused on our core, building the brands, accelerating very -- with a lot more agility and flexibility in new channels and in new adjacent areas, maximizing our growth online and, obviously, continuing to drive penetration, which ultimately drives good sustainable growth for us in the long term. Second, as we get to top line growth, we need to look at leverage through the P&L and how we're maximizing productivity, 3 key areas. We'll finish -- we finished off in 2019 with our Global Growth and Efficiency Program. Our real focus over the last 5 years is getting the programs into the markets and getting those executed. The focus moving forward now is how do we drive and really maximize the efficiencies of the significant structural changes that we made across the company. As you go through these plans, there's a lot of stuff going on. We're now taking a step back and really focused on getting the efficiencies out of some of the tools and the processes that we put in place. You're well aware of our Funding the Growth program, which continues to be world-class. But every year, we need to think differently on how we implement that program, but more importantly, unlocking the opportunity for Colgate people to think and work differently around the world in order to find opportunities to drive more savings. Here's a great example in Vietnam. We have quite a successful plant that's been there for quite some time. And we were looking for ways to utilize a very, very young and tech-savvy employee base. And in this case, they really want to look at new digital tools, using AI and other opportunities, whether it be robotics, to find ways to drive improved capacity. We didn't want to have to invest in more capital. And in this case, the team put together some extraordinary work in order to free up 10% additional capacity in that plant. And let me tell you, to find 10% capacity in one plant is an impressive accomplishment that allowed us to lower our costs, particularly unplanned downtime, and more importantly, drive a lot more engagement with our employees in terms of their ability to think out of the box and think differently on how they utilize technology, particularly when you get into a workforce that's highly -- that's very young, and in this case, a millennial-based work force who's very tech-savvy and loving digital tools. We're looking to -- for new ways for them to obviously continue to upgrade their own capabilities. Working differently, a big opportunity in terms of our culture change around the company and unlocking the potential and the intellectual capital that we have around the world. I want to take you through an example in Europe, which is our Europe online acceleration center. This is a group of the millennials that we hired, obviously all of them extraordinarily digital savvy. And the intent here was to put a fully functional team that had some parameters, but we allowed them to do whatever they needed to do 24/7. So we had search people. We had content people in-house. We have logistics people in-house. We had data and analytics and data scientists working with them. The whole intent was for them to react to information and obviously work quickly in order to address opportunities in the market. Most importantly was the ability to use data to be far more specific in our targeting, which allows us to drive a much better ROI on our investment and develop [indiscernible] creative. An example from Tesco. So Tesco wanted to really bring some life and energy to their online business in the kids segment. In this example, it's the kids power toothbrush segment. They were looking to find new ways to engage with their consumer. We observed their shoppers online for a couple of days. We then identified the needs to make changes in our packaging; made that content testable online; within 24 hours, did A/B testing; and came back to Tesco within 7 days to bring them a solution that address their needs and allowed us to accomplish the goals that we had set for both of ourselves. So terrific use of agility, and more importantly, the way we're using our teams to work differently. It's changing the way we innovate. Last year, as you remember, we had Maria Paula here from Latin America to talk about how we were accelerating innovation and streamlining our processes. What I'm going to do now is take you through how we're using technology a little bit differently to address our innovation capabilities, and the first one, it's a spotting and emerging trends. So we're developing algorithms to look at all of the searches that we have around the world in unique markets to be able to triangulate how those searchers are identifying new trends in the marketplace, then taking those trends and feeding those into our innovation centers in a way that's far more expedient and far more accurate than we've ever done in the past. The example I'm going to show you now though is an example of how we're taking the years and years of research and science that we have at our R&D facilities and using that science in a predictive way to generate new formulations. So the question we were asking ourselves was how do we leverage historical data to train machine learning models and build a new therapeutic from scratch, so a bold and ambitious task. So we have reams and reams of studies, probably more than any other company in the world in the oral care space, around how we've developed formulas over decades. So we put 80,000 formulas into databases. We then built the predictive models behind those databases in terms of what we had learned over the years. And ultimately, what we did was eliminated all of the bench-top chemistry and science that we were doing in order to address and get to formulations far quicker based on the predictive models from all of that data over time. So to give you a sense for the importance of that. Previously, we would have 896 experimental formulas to develop a range of different therapeutic benefits, which took multiple years to develop. With machine learning, in this example, we got it down from 896 to 23 experimental recipes, and we're able to deliver a new formula in 6 months with the capacity and the benefits of machine learning. So a very, very exciting space for us that we'll continue to invest in. A lot more to do here. But what you can see the opportunities for us moving forward. Okay. Prudent use of our cash. You know us well, we invest behind capital expenditures, particularly around savings projects and growth opportunities around the world. We're very disciplined in the focus behind that area. Obviously, mergers and acquisitions continue to be an opportunity and, importantly, giving money back to our shareholders through dividends and share repurchases. Proud to say that we just finished our 57th consecutive year of paying a -- increasing our dividend. And for those historians in the crowd, that was the 124th year of paying dividends for the Colgate-Palmolive Company, so an area that we're very proud of. Okay. Lastly, moving on to people and sustainability strategies. Sustainability becoming, obviously, an increasing area of importance. I presume you've heard a lot about it this week. And this is an area that we've been very focused on for quite some time, not an area that we talk a lot about as a company. We're quite humble in the accomplishments that we have, but we recognize today that consumers are looking for far more transparency behind the brands that they buy and the products that they use. Here's Zero Waste. It's a big area of opportunity for us given the number of facilities we have around the world. We have achieved TRUE Zero Waste certification in over 30% of our manufacturing facilities thus far, with 50% projected through 2021 And that will make the Colgate-Palmolive Company to have more TRUE Zero Waste projects in more regions than any other company, so a great accomplishment for us in that area, particularly around sustainability and making our products more environmental. We've improved the sustainability profile in 99% of our new products in 2019, and that will continue to be our focus moving forward. Most of you may be aware of the Ellen MacArthur Foundation. We have set new ambitious goals with them and other companies in order to improve our sustainability of the use of plastic. In this case, we will set a goal for 2025. We'll have 100% recyclable plastic, either reusable or compostable, by 2025 across all of our categories, and we'll have at least 25% of recycled plastic content in our plastic bottles by 2025. So great accomplishment there. The circular economy is important. We're committed to that. There's significant innovation that we had with launching the first recyclable tube. We deliberately and strategically decided to allow that technology to go to anyone in the market that would want to use that. We're a big believer if we can improve the circular economy that all people will benefit in the long term from that. So our intention is to focus our science on what's inside the tube, not necessarily what's outside the tube. Hopefully, most of you are familiar with the Dow Jones Sustainability Index, obviously the most respected global sustainability ranking body in terms of creating a comparison across most companies. Colgate was ranked in the -- on the world index for the third year in a row. And most importantly, in 2019, was the first year we were -- the first year within the household products group that we were the industry sector later -- sector leader, excuse me. So again, I think a result and a manifestation of the commitment and the strategies that we're deploying around the world in a very important space. So our discussion today focused on top line growth. We continue to be laser-focused in that area. Maximizing productivity across the P&L , we'll continue to get the leverage through new opportunities, whether it be schools, machine learning or driving efficiencies through our Global Growth and Efficiency Programs. The deployment of cash will continue to be very, very disciplined. And obviously, investing behind the capabilities in our organization across the 35,000 people who work so hard to deliver the results and making sure that we have purpose in everything we do, which will elevate our sustainability strategies across all of our business. So with that, I will turn it back over to Steve.