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

All right. All right. Good afternoon, folks, and I can assure I double checked it, finally it's afternoon. Thank you for joining us. I hope you all enjoyed the lunch [indiscernible] with these conferences. But we're back in now to cleanse after the launch, we've got the well-known toothpaste company. And here representing Colgate is Mr. John Faucher. Now John and I go way back. I think we've known each other for 13, probably going on 14 years now. Back when he was a guy I looked up to and learned a lot from on the sell side at JPMorgan, before he made the big switch a number of years ago, I think 2016 over to Colgate before becoming the Chief Investor Relations Officer in 2019. And now more recently, I don't know exactly when, but somehow he slipped in and grabbed another title to layer on top of that, Head of Strategy and M&A. So he is man with multiple hats, who is deeply embedded in the business, and I'm very fortunate to have him to tell me what's going on with Colgate. John, please welcome to the stage, grab a seat, make yourself at home.

Thanks, Jason. Good to see you.

Pleasure is all mine.

Not all, mostly.

I appreciate that -- is flattering to me. All right.

I want to start high level big picture. And I say some of these questions, I'm generally going to kind of stick to this, but I'm sure you'll see something that sparks my interest and throws me off script at some point in time or another. You joined in 2016, so kind of tail end of Ian Cook's era. You were there with the CEO transition, a new CEO. He decided to keep you around. That's a good sign. As a matter of fact, I think soon after he actually even promoted you to Chief Investor Relations Officer. So congrats on that. Step back, help me understand like what's the difference between the 2? How have you seen this evolve, the transition from Ian or maybe even the tail end, what was happening at the tail end of Ian's career, how it's transitioned since Noel?

Yes. I mean I think the key factor to think about here is -- and we talked a lot about our growth mindset. So what appears to be a strategic shift under Noel, and really is, was something that was put in place heading into Noel's ascension as CEO. And we really had to look at how we were going to grow differently than what we had done in the past. I would -- I think one of the things that happened was sort of post financial crisis, it became more incumbent upon the big players, big brands and big categories to really rethink how they drove growth within their categories through more differentiated innovation, through revenue growth management, through focusing more on digital, et cetera. And so we kind of put that into place sort of 2018 into 2019. And part of that was the fact that our growth had really slow. So if you look back into '15 and '16, we were delivering organic sales growth, but a lot of that was really more FX-driven pricing. And we weren't as the category leader driving as much growth again through innovation, et cetera, as I think we could have, a little too much focus on line extensions. And so what we decided to do, and again, the work on this began, let's say, 2018 into 2019, Noel comes in and really accelerates change within the organization, as you can often do when you get a new CEO. And so created, I think, a greater sense of urgency and created a greater focus behind what we called our growth mindset. And part of that was, I think, a different view of how we were looking at the core businesses that we have. So core is probably about 60% to 70% of our portfolio. And what we're doing there is we're saying, look, we need to get past line extensions, as I mentioned, and really revitalize our core through bigger reinventions. So the Colgate Total relaunch, we basically reframed the price points on Colgate Total. We changed up the formula, switching over to arginine in international markets, moving out of triclosan, big shift in that brand; science Diet relaunch, which you and I have talked a lot about, really refocused Hill's on what was true about the brand, the focus on science leading to better health outcomes, happen kind of as the pendulum was beginning to swing back towards science away from organic and Naturals and pet food. And so these big core relaunches was a big piece of it. Then, we talk about moving into faster growth adjacencies. Some of those segments where we saw greater growth opportunities, whitening which is still a huge opportunity for us. Whitening is underdeveloped around the world. And we have, I think, the best whitening technology with our hydrogen peroxide toothpastes and then other segments like Naturals. And then finally, the third piece of this was faster growth channels and markets. And this was an opportunity for us to really look at areas where we were underdeveloped relative to the category, right? And this is particularly true in Oral Care, but it's also true across the business, pharmacies, right? Some pharmacies didn't want the Colgate brand because they wanted something that was differentiated, okay? Can we bring them elmex in Brazil and China? Can we bring them meridol, which is a great gum health brand, which has had [Audio Gap]

Much every example you gave -- by pretty much, I mean, every example you gave was isolated to Oral Care and Pet. So let's stay on those for a minute, and then I do want to come back to the rest of the portfolio. Let's pick up the cleaner and easier one first, and that's Pet. Science Diet relaunch is behind us, a massive surge in marketing accompany that. With the success there and you're now having to comp that and comp the size will step up in marketing. What's the next chapter to keep that momentum going?

Yes. I mean I think that the issue with Science Diet -- not issue, but the opportunity is we have very little market shares, right? So we basically have a mid-single-digit market share in the U.S., which is the best market for Hill's from that standpoint. So on Science Diet, we have a real opportunity to continue to increase the household penetration. You talked about the increase in advertising. We have significantly increased the advertising, but that's really allowed us to do is to generate scale on the business for the first time, creating a much bigger sort of retail entity. There's a lot of market share opportunity in -- even within Pet specialty, also within e-commerce. But then one of the next steps for us is going to be moving into what we call Small Paws. So we recently launched a new innovation center as part of our Pet Nutrition center in Topeka, Kansas, which is focused on smaller pets, which is the fastest-growing segment of the category and one where we are under-indexed. And then also wet food. We under-index on wet food. So we do really well, big bags of cable. We've got an opportunity on wet. We recently purchased a facility in Europe that will increase our wet food capacity. So there's a number of opportunities there on Hill's. And then I know you asked about Science Diet, but one of the things we're excited about this year is the relaunch -- so again another core relaunch of Prescription Diet. And basically, the issue there is Prescription Diet within the therapeutic food segment, we do have high market share, but not enough dogs or cats are getting therapeutic food when they need it. And so if you have a pet with an obesity problem, you have a pet with arthritis, like my 13-year-old Labradoodle has, we have products that will enable them to lead healthier lives. And so we're very focused on delivering that. And we think these types of therapeutic foods are under-prescribed. And so what we are doing is changing the packaging, changing the formulas, changing the marketing, changing the messaging with the vets. So the vets have a better knowledge base in terms of using food as therapy with pets.

Now if I move that, and I go out and recommend this and maybe I even get the initial sale on my veterinarian clinic. How do I participate in the repeat, particularly if that consumer doesn't really want to go back to the veterinarian store to repeat and they want to say order online, is there an opportunity for them to do that?

Yes. So a few years ago, we launched a program called Hill's to Home. And let's be fair, the vets are most concerned about the health outcomes for the pets. And yes, the revenue is an opportunity. But as we talk with vets, what they really want to make sure is they're providing the best care possible. So historically, the business model has been buy a couple of bags in the vet's office, maybe you go back, maybe you don't. And what we would see is generally that vet would prescribe the food and the pet parent would buy it maybe 1, 2 times. Obviously, with e-commerce and subscription models, what you can see is that 1 to 2x can go up to 6x to 7x, which is obviously, again, a better health outcome. So that can happen through e-commerce. We have also built an app called Hill's to Home, where we have built basically a direct-to-consumer model. And so when the pet parent goes to the vet's office, the vet will prescribe, let's say, JD for arthritis. And you can sign up with the app in the vet's office, they will confirm the prescription and then we will actually ship that product directly to the pet parents home. So that enables the vet not only to participate, like you were talking about from an economic standpoint, but they also get to see what's going on from a treatment standpoint. So they can see, okay, is the pet parent following up and making sure that the pet gets the appropriate food for the appropriate bags to help with their condition.

Yes. Yes, that makes sense to me. Your Hill's business is interesting enough that we could talk about it for an hour, but we'll run out of time. The Oral Care business, you gave a lot of examples of how you've had a lot of investment and a lot of initiatives behind it. All of that, I believe, has translated into a moderation of share losses, approaching share stability last year, but not yet a return to share growth. And that's obvious -- that's very obvious when we stare at the Nielsen data every month or every 2 weeks, and we see good toothpaste results -- or good toothbrush results, but not good toothpaste results. How long is it going to take? Is there a path back to market share growth? And what's the cadence or the pathway to get there?

Yes. So our global market share on a currency-neutral basis, which we think is the right way to look at it, is flat over the last 3 years. So to your point, we've made some progress, but not enough progress from that standpoint. U.S. has turned positive in the past couple of months. We're optimistic that, that trend will continue. Look, my deal of this is that share is an outcome of running your business the right way, and you and I have had this discussion before. We have been growing e-commerce market share, which is the vast majority of which is not included in the scanner data. We have been growing market share in club and pharmacies, a lot of which is not in the scanner data. So in the U.S. alone, we estimate that Nielsen covers 80% of the volume or 80% of the takeaway, but only 50% of the growth. So there is a lot of growth outside measured channels. Now the real answer is you have to deliver growth in both. You have to deliver share growth in both measured channels and unmeasured channels. And I think now as we are looking at some of the supply chain issues that we've dealt with over the past 6 months or so, in terms of tightness in logistics capacity, et cetera, you're starting to see that roll off. And I think you'll start to see that combined with, I think, sort of some favorable on-shelf dynamics within accounts turn into better share performance in the U.S. On the global share number, currency obviously has been a headwind. That's why I talked about the currency-neutral basis. With Latin American currencies looking a little more favorable, that may help the global share number. But again, that's sort of FX-driven math as opposed to fundamentals.

Sure. Okay. Two pieces to go a little bit deeper on that. First, the supply chain logistics issues as an impediment to your market performance. How big, how meaningful?

It's not that meaningful. So I mean I would say there's 2 aspects to this. So I get a lot of questions because everyone is talking about supply chain, and so it's kind of like, well, how is this impacting you? So the first thing we saw, and we talked about this on the Q3 call was we -- and the way -- let me take a step back, we have certain aspects of our supply chain that are global and certain aspects of our supply chain that I would argue are more local or regional from that standpoint. By regional, I mean, we produce a lot of personal care products and toothpaste in Mexico that we ship to the U.S., for example. We have a lot of U.S. manufacturing, but we do, let's say, Optic White, for example, goes from Mexico to the U.S. So on the global side, we did see some shutdowns related to COVID in Q3, Q4. That had an impact on some of our product lines really into the first quarter, but that seems to be dealt with. We're not really seeing any impacts on our manufacturing footprint right now due to COVID-related restrictions. And then -- so we think that's mostly dealt with for now. On the sort of local regional side, which is really more of a U.S. issue, along with other companies, we did see an impact from Omicron in terms of heightened absenteeism, some sort of congestion within plants as well as in logistics networks. And so that did have an impact on on-shelf availability, as Noel talked about on the Q1 call. And so we have -- we've dealt with those. We feel like those are generally behind us, and we think that is reflected in the improvement in the scanner data. And that also was one of the reasons, as we said on the Q1 call, January was our lowest pricing month of the quarter -- of the first quarter as we ramped more pricing up in February, March and into April, but also the lowest volume month in the quarter and volumes improved from what we saw in January to what we saw in February and March. And that, to me, is symptomatic of the fact that we're seeing this pressure from a supply chain standpoint abate.

Okay. And you said you expect better on-shelf availability or better on-shelf placement to drive measurable improvement and what we see at least in the U.S. data later this year...

So I mean, I think what I would say is that's not necessarily supply chain related. I think our innovation, et cetera, is driving better shelf. Those are 2 different things.

Those are 2 different things. One is a resolution of an issue that had been wane on your business. The other is something new and different, new innovations, you've secured new shelf space, you secured new merchandising, something like that.

Correct.

Yes. Yes. That's the nature of my question. And when does that take effect?

That basically has been taking effect in Q1.

Okay. Ramping now or has been ramping? And more evident, I had a chance to look at Nielsen data today but recently...

Yes. Got some other stuff...

Yes, a couple of things going on.

Okay. Preparing for this interview?

Exactly, nonstop. I barely slept last night. I was so nervous. You really intimidate me. Let's switch gears from Pet to Oral and come at the Home and Personal Care side of the business, where the results have looked bad for the last year, but I think it's in large part because we're comparing against a lot of COVID-induced strength.

I would say on personal care, yes, particularly liquid hand soap and to some extent, bar soap, we've seen some impact from that. Home Care, a very strong year in 2020 with -- driven by COVID, decent year last year, especially considering the comps. On a compound basis, Home Care continues to deliver organic sales growth within our 3% to 5% range. So we're very pleased with the performance of the Home Care portfolio. To your point on Personal Care, definitely a little bit choppier. I think we feel good about that business. We're getting good pricing out there. Liquid hand soap is a category that still seems to be sort of finding its level from that standpoint. So we have seen, obviously, big increases in that category in 2020, a falloff in 2021. There's still been some weakness in the category year-to-date in 2022. I think we found sort of the right level of sales. It's still ahead of where we were in 2019 before COVID. But from that standpoint, I think that's kind of a drag. The one thing I will say is Personal Care tends to skew a little bit more towards Europe, categories like shower gels and things like that, which tends to be just naturally a lower growth market. But other than that, there's still a lot of opportunity in Personal Care. Great businesses in Latin America, particularly in Mexico and Brazil. We have less Personal Care exposure over in Asia. But we have, to your point, on core launches, we have had core relaunches on brands like Sanex and Protex. We've had some great innovation on Protex, which is primarily in emerging markets, antibacterial soap brand, where we launched a new flaxseed-based natural antibacterial formula, which has great efficacy and really nice natural position.

Fascinating, I would have thought. Okay. Let's pivot off of those components of your portfolio for a moment. And let's zoom in on the here and now on the pricing side and the cost side of the equation. You mentioned that price was sequentially building through the quarter. Remind me of your exit rate at the quarter?

So on the call, we mentioned that we were exiting the quarter with a high single-digit pricing rate.

And was that -- did that reflect all the price increases that you put into the market? Or is there more to come?

I mean there's always -- pricing is always flowing in and out, right? So if you take a look at our pricing, so in Q1 on a 2-year stack, we delivered 5% pricing for a 2-year stack of 10%. That 2-year stack has been increasing sequentially over the past several quarters. We're obviously exiting at high single digits, so more pricing going in. But we will be continually lapping up against pricing that we took in the back half of last year, which is predominantly emerging markets pricing. So as we look at it, I would expect pricing to continue to roll through the balance of the year. If you take a look at the guidance we gave, we said that we're going to have an incremental $500 million of raw material inflation versus our expectations in January, right? So the increase in predominantly fats and oils, but also other raw materials from January to the end of March represented a nice incremental increase. And so as you look at that, our guidance did go down, but we're offsetting a lot of that incremental cost impact with presumed additional pricing.

And with that $500 million step-up, I believe embedded within that was not just an assumption that what you see is what you get on cost, but there's some components of that. I think it was really the fats and oil side, we're likely to continue to creep higher.

Yes. So what we have decided, as we looked at this, our procurement team has done a ton of work on this and basically said, okay, let's not just take spot rates here. Let's focus on what we think is going to happen sequentially with these raw materials. And what they saw was they expected lower year-over-year levels of increase, mostly because of the comparisons, as we cycle through the year, but we still expect some sequential increase in commodity prices in that fats and oils buckets, which is soybean oil, palm oil, palm kernel oil, tallow, et cetera, we expect prices to move up sequentially a little bit in the back half of the year.

And have you seen that playing out? Or it's too early to tell?

Too early to tell.

Yes. Now as we look across the overall cost basket, we're seeing signs and some fatigue on the freight markets. We're lapping some weather-related disruptions in Texas on resin. That looks like that's easing as well. Zooming out, it looks like we could be looking at a cost basket that's maybe found its peak, at least from a spot basis, and I appreciate there's contracts and the lags that take time to roll through. But when you look at overall cost basket, do you think there's a reasonable chance that, that holds? We do, in fact, say this is probably as high as it gets.

You hesitate to say that just simply because, again, we have some things moving up. Do I think there are some things that will likely move down? Yes, I think there are. We felt that this was the most prudent way to deal with our guidance. And again, given what we see as a strong demand cycle, which really works from a lot of the biodiesel demand that's out there, we felt that, that was the appropriate way to go. Obviously, if oil comes down, if resins come down more, that will be favorable. But it's all about what's moving here and what's moving there. It's not 1 particular commodity that's really going to make or break that overall inflation number.

Yes. Yes. Okay. We asked one of your multinational competitors earlier, what they're seeing in terms of price sensitivity. Their answer was well in the U.S., still not a lot; in Europe, still not a lot; emerging markets, a little more mix. Latin America, 1 example of where they're seeing some down trading. I love your view on what you're seeing across those and how it impacts your business.

Sure. So as we said on the first quarter call, and I don't think we're seeing anything different so far in the second quarter. It's about what we would expect, maybe a little bit better depending on the categories. Still early I would say, given the fact that we're still seeing, as you mentioned, a lot of pricing continuing to flow through, not just across our categories, but across food, I mean, everything consumer is seeing price increases at this point. So I think we're optimistic so far that nothing at least should be worse than expected and things seem to be better than expected. We did see a little bit of an impact in Brazil from a volume standpoint, which we talked about on the first quarter call. But in general, I think that's the right viewpoint. We are seeing generally elasticity is no worse than expected in some cases, better.

And correct me if I'm wrong, but our perception -- well, it's based on the work we've done so our work suggests that your portfolio generally benefits from down trading, particularly in Latin America. When you cover all the price runs, I think, on average, you actually are sold at a discount and we see the consumer under duress is trading down, not does the category not really slow, but your market share generally steps higher. Is this true? Is this generally held over time?

It is. What I would say is we've talked a lot about the ability -- the opportunity for premiumization, right? And part of that is because our portfolio is currently situated on average around the world at an 88, 89 index versus the category. And it still trades at an index even if you adjust for the price segments that we're in. So that is an opportunity for us longer term in terms of driving premiumization. It's one of the things you've really heard us talk about with our revenue growth management strategies. Whitening is a big opportunity for us, again, in the pharmacy channel, things like that. But yes, we have in almost every market we compete in, we compete across every price tier. And we tend to have a fairly big base business. It's one of the reasons why I talked about core innovation and why it's so important, right? If you don't keep the core strong and that's 60% to 70% of your business, that's where you really run the risk of leaking market share at that lower end. So we have done a good job revitalizing the core, categories like anti-cavity, Max Fresh, Triple Action, Sorriso in Brazil, which is our lower-priced offering there. These are all real strong opportunities, great brands. And honestly, from a margin standpoint, because of the efficiency and how we manufacture and go to market, many of these are actually higher from a margin standpoint than some of our more expensive brands.

And 1 of the markets or 2 of the markets, I think you've had success premiumizing -- actually playing catch-up to competitors that premiumized ahead of you with both China and India. How have they played out? And what's the status of those markets today?

Yes. So China has been fascinating in that what happened was you saw a number of multinationals enter China in the 1990s and go with what would have been considered sort of a popular price point, right? And then what happened was is the category premiumized much more rapidly than anyone would have anticipated, we went from selling at a 90 index category premiumizes. And all of a sudden, we're selling an 80, 70, 60 index, and this is true on the Colgate brand. And so what you realize is just because people are buying premium products and the average price point in the category is going up, that doesn't mean that you can simply price your way to parity within the category. So what you need to do is you need to innovate. Now if you have a product sitting at RMB 8 on the shelf, putting a RMB 40 product on the shelf, there's going to be some disconnect, some discontinuity from a consumer standpoint. So what we did was we focused on what we call a hero halo strategy, which is where we launched super premium innovation in e-commerce. So RMB 40, RMB 50, RMB 60 up to RMB 80, okay? And we built these brands in e-commerce. And you can do that because China is the most penetrated e-commerce market we have from a toothpaste standpoint -- from an oral care standpoint. So that 30% of the category is in e-commerce. So you can establish brands in e-commerce in China. And then what we do is we create brick-and-mortar versions of those at lower price points. So maybe it's a RMB 40, RMB 50 whitening toothpaste where we can launch a RMB 20 brick-and-mortar, and that's a little bit easier for the consumer to fathom why there's a Colgate brand at RMB 20 because, again, they've seen the digital advertising for the RMB 40 e-commerce brand, and then they see this version on shelf. So that's sort of the second part of the strategy that's laying out in brick-and-mortar now, and that's -- it's worked very well in e-commerce. We now significantly over-index on the Colgate branded e-commerce versus brick-and-mortar. We're gaining overall share. So that's done a great job premiumizing the portfolio. And the second leg is then bringing that to brick-and-mortar. India. India has been sort of interesting because a lot of the Ayurvedic innovation that's happened, has happened at the market level or below. So you're competing in Ayurvedic at those prices and then also introducing new segments, et cetera, like whitening. We have a big whitening launch in India this year that we're very excited about. And so you have to work really all ends of the spectrum from that standpoint in India. India, I would argue as a market where the premium innovation, not just us, but the entire category. Again, a lot of that's happened sort of market or below. So I think there's a big opportunity longer term in terms of that premiumization strategy.

Well, let's step back on that because it brings in the question of the longer-term growth opportunity for Oral Care. On one side of the debate is the argument that it's one of the most penetrated categories globally. And we sit here and we talk about diapers earlier and the notion that there's still penetration opportunity and let alone meaningful frequency opportunity, let alone buy, right? We've got triple enablers there. A lot of people look and say, it's a saturated category. Flip side for years, we used to talk about this trade-up ladder and how you could drive the buy rate higher and you could also drive frequency higher. But hearing you talk about where the category is gone, it makes a question of how much more scope is there? Like we've already gravitated beyond tooth powder to not just toothpaste, but we're talking about some of these higher-end products like a whitening launch into India. Are we close to maturation in Oral Care?

No, not at all. So if you think about this, so the average person in the U.S. -- so first off, there's no country in the world where people on average brush their teeth twice a day, okay. So Brazil ...

Even Brazil?

Even Brazil, Brazil is about 1.8. The U.S. is ...

I'm going to round that up and call it 2.

Okay. Well, I mean -- but it's technically not 2.

Okay.

So you have large markets like India and China, where -- so China is about 0.6, 0.65. India is below 0.5. Most of Africa is lower than that. So about 65% of our addressable population lives in markets where, on average, people brush their teeth less than 1 time a day, okay? So there is a big opportunity there. And if you took all of those markets, where people brush their teeth less than 1 time a day and just moved it to 1 time a day, you would increase the volume size of the category by 40%. So there is a big, big per capita consumption opportunity there. And what's interesting is when you talk with consumers about why they brush their teeth. The #1 reason is freshness, okay? So freshness is the main benefit that people receive by brushing their teeth. And then what happens is it starts off with freshness, particularly amongst young people. And then over time, you add these higher order benefits, whether that's whitening, whether that's sensitivity, whether that's gums, what have you. So there is still a big opportunity within the base on freshness, which is Max Fresh, Triple Action, these other segments that we're in. So we're just beginning from that standpoint. So I think there's a real opportunity to increase the price paid. I think there is still nice per capita consumption opportunities. Again, in Brazil, in the U.S., probably less so, but significant swaths of the population, we have an opportunity. And by the way, you mentioned teeth powder or tooth powder, that may be something we see come back given sustainability questions. So there is an ability to take something which used to be seen as the low end of the category and whether it's tablets or powders, you can find a more sustainable solution, you might be able to actually monetize that.

Yes. Just looking in the audience, any questions out there, feel free to raise the hand or so. All right. We are running down. We got 3.5 minutes left. So not time for a lot of questions. The 1 initiative you didn't talk about -- so far you talked about pricing is building as the year progresses, we'll see more just given the exit rate [indiscernible]. You've secured more shelf space behind more innovation in the U.S. It's going to become readily apparent or increasingly apparent in the data. We've got a fairly large launch coming in India with whitening product.

That's already happened. That's out in the market. We talked that on the Q1 call.

It's now. It's happening now. And you've got the lot of disruption which you didn't talk about. So it's my way to get into it, the H&H relaunch, and in China, created a lot of turbulence last quarter. You guys sounded really confident, sort of exit rate or what it looks like. Tell me more about that, what do we see?

Yes. So what we're doing is we have lost some share H&H lately. We saw an opportunity for rebranding something we needed to do. So H&H has had some issues over the past couple of quarters more related to some of the community group buying issues that we've seen in China. That seems to be abating. We think that bodes well for the brand. This is about new advertising, increases in advertising, new packaging, new branding. We're very optimistic about how this is going to play out. We think this is a really good opportunity for the brand to refresh the response from retailers. The response in social media has been positive. So we feel good about the progress, and we think this is a real good opportunity to sort of change the narrative around the brand.

Okay. What are the risks? Because I stack all these up, and it sounds like you've got a lot of good initiatives that should drive better performance as the year progresses. Like what are the offsets?

I would say there's a couple of different things. So first off, just highlighting the macro level risks, right, in terms of what happens with pricing and elasticities when you see everyone's market basket going up, right? You look at what's happened with energy prices in Europe and then you look at the value of the euro versus the dollar and you can see pressure on consumers around the globe. So we're very focused on that. Look, there -- and then you still have situations where we're not dealing with any plant shutdowns related to COVID restrictions right now, and that's not in our guidance but that's always a situation there. Look, I think we are trying to balance the right levels of investment while still delivering on our guidance. And I think that's the key thing. We are working and driving productivity and driving revenue growth management in the market to make sure that we can deliver both to our guidance as well as making sure we have the brand support to support this innovation, right? Because that's really the key factor. So I'd say those are sort of the key factors. And then just standard making sure the innovation hits and making sure that it delivers impactful consumer messaging, getting the advertising right, continuing to execute in e-commerce. E-commerce continues to get more and more competitive, making sure we continue to improve the ROI on our digital advertising and really building the capabilities within the organization, right? It kind of goes back to how you started off the question, which is what's been different. And Noel talked about this at CAGNY and then also at our annual meeting, really building these capabilities in the organization and really seeding them through everybody, right? Because what happens is the way things are going with digital and e-commerce and these other factors, it can't just be a couple of people who own it. Everything has to be digital at this point. Same thing with ESG, right? You really have to see these through the entire organization so that everyone is operating on the same framework.

Yes, yes. Okay. That makes sense to me. So I'm going to paraphrase what you said because you said a lot. There's a lot of things outside of your control that could go wrong, and you're going to be spending still right back into the business in terms of capabilities, people, brands, et cetera.

All right. I think that sounds good.

Cool. Awesome. Mr. Faucher, thank you so much for your time today. Really appreciate it.

Appreciate it.