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

All right. Good morning, everyone. Thank you all for joining us today. I'm Bonnie Herzog, senior consumer staples analyst at Goldman Sachs. And Leah Jordan, our packaged food analyst and myself are thrilled to welcome you all to our Annual Global Staples Forum. So our expectations for '25 have evolved meaningfully compared to how we were thinking about this year when we look back December of last year. What was expected to be a return to more normalized operating environment after several years of disruption has proven to be anything, but normal so far. So we've been seeing significant macro volatility, especially with tariffs and immigration among other policy changes, which has caused consumers to take a pause and reevaluate their spending behavior. So as we contemplate yet another year of challenging backdrop, we have a great lineup of companies for you today, which should make for robust conversations to understand what companies are doing to navigate these tumultuous times. So with that, we're excited to kick off this year's conference with Colgate, and it is my pleasure to welcome Colgate's President of Hill's Pet Nutrition, John Hazlin; and Chief IR and EVP, M&A, John Faucher to join us on stage. So John Hazlin has close to 3 decades of experience at Colgate, having served in several roles across his illustrious career at the firm. He has been serving as President of Hill's Pet Nutrition since 2022. Hill's remains an important business for the company, which has seen significant sales growth since John took over. And then segment margins are really on track for significant recovery as well with 500 bps expansion in Q1 with more likely to come. So there's a lot to unpack on Hill's path forward and how it fits into Colgate's broader strategy. So thank you both for joining us today.

Nice to be here.

I was laughing, we have 2 John's onstage today, so I'm going to try and direct my questions to the correct John. So actually, speaking of that, as we kick things off, I did -- before we get into Hill's, I did want to start with you, John Faucher, to help us understand the setup for the company and then really your focus areas, especially since you just reported results. And so if I think back, thinking CAGNY when we were in sunny Florida in mid-February, John, you guys really were the first ones, within reason, at CAGNY to really call out consumption weakness and how that's feeding into some of the retailer inventory adjustments. So on your Q1 earnings call, you mentioned seeing encouraging early signs in April. So could you maybe update us on what you're seeing, and if within that, if the end market has evolved since then?

Sure. So thanks for having us. What we said at CAGNY when we were beginning to see category weakness and that was through, obviously, about the first half of February and that was through a combination of scanner data as well as some of the tracking that we do with our individual retail partners. And what we saw over the course of the quarter, and we talked about this on the Q1 call, was in February, all 12 of our categories in the U.S. decelerated from [ growth ], right? So growth in January to growth in February, all categories decelerated and that was driven by volume. Pricing actually held up relatively well in line with our expectations. So what we were seeing and what we thought, and again, this is on a category basis, was less traffic, less consumption, less purchasing of our products. As we looked out to March, what we saw was about half the categories continued to worsen and half the categories got better. So a more usual type of dynamic within the categories. And then what we said on the Q1 call, as you mentioned, is that we -- through the first 2 weeks of April, we had seen improvement broadly across our categories versus where we were in February and March. We have another 2 weeks of data, and I would say what we're seeing is consistent with that viewpoint is that the categories are still tough. We don't think consumption is at where levels have been, but it has improved sequentially versus where we were in February and March, broadly across our categories. And that's in the U.S. On a global basis, I think what we saw was relatively similar and I'm sure John will talk about Hill's consumption later. But on a global basis, we did see weaker results in February, a little bit better in March from that standpoint. So very much in line on a global basis. Again, what we said on the call was we expected Q2 to be another difficult quarter, not in line with historical consumption trends. And that was one of the reasons, along with the first quarter results, that we took down our annual forecast for organic sales growth.

All right. And then I think about framing that, as we headed into this year, I think back to how you set expectations with your outlook going back to Q4, you guys we're a bit more conservative kind of understanding this year was going to be tough before it really got a little bit more challenging from the get-go, right?

Yes. I mean -- I think, yes, I think that's fair. I think if you look at how we -- really how we started talking about 2025 going back, I would say, to our Q2 conference call, we delivered over 9% organic sales growth in the first half of last year. There was a lot of pricing. We still had easier volume comparison, so we're delivering a nice balance between pricing and volume growth. And we knew there was going to be less pricing, both underlying inflationary pricing as well as hyperinflationary pricing. We knew as we began to lap volume growth that our volume comparisons were going to be more difficult. So we talked a lot about having financial flexibility in the P&L. We talked about increased advertising so that we could deliver dollar-based earnings growth in 2025 despite the fact that we knew -- we thought it was going to be in line with our long-term targets of 3% to 5%. But obviously, the growth is not as robust as it had been in the previous years. So I think we were well prepared. But as you mentioned in your opening remarks, things have slowed more than we anticipated.

Yes. And I know it's fluid, but just with the most recent changes regarding tariffs and the pause, anything you want to update us on today? Or can you? Or no?

So we figured we'd get a question on that given yesterday's announcement. So what we included in our guidance was $200 million of incremental gross impact from tariffs. And that was based on tariffs that were, the language we used, announced, implemented and in effect as of April 24, okay? So lots of moving parts now. We don't know where everything is going to be. So we're going to hold off commenting on that until we get some more certainty.

Fair enough. All right. And then just one final question for you, John. It's just from a longer-term perspective and as we think about the next 3 to 5 years, what are going to be the key focus areas for Colgate as I think about your path back to like the 3% to 5% long-term growth algo. There are certain parts of your portfolio that you're going to double down on versus others. And then how big of a role will M&A play?

Got it. So I will start off and then, John, why don't you add on top of that because Hill's, obviously, is one of the areas where we've been doubling down on it, and I think we will continue to do so. I think the key for us as we look at what's happened over the last 5 or 6 years is we've reaccelerated growth and gotten back to what we hope to be consistent, compounded dollar-based EPS growth. It starts with consumer-centric innovation, particularly science-led innovation, innovating across our core businesses, right? We've got these big brands that we need to keep fresh in the consumer's eyes to drive market share, to drive pricing growth through our RGM opportunities. I think you'll see a focus on the profession going forward, and John can talk about that in terms of working with dentists, working with derms, working with vets to drive the business going forward. I think you'll continue to see, we've talked a lot about building and scaling capabilities over the last couple of years. We started off with digital and innovation, and we've talked a lot about data and analytics as we've gone through all of this. AI is a tremendous focus for the company right now. We're investing a lot of time and capital in our AI strategies and we think it's paying off. So I think the key for us, again, is consistent compounded dollar-based EPS growth to drive peer-leading TSR, but that's going to start with investment behind the brand, scaling capabilities and I think we're off to a good start from that standpoint. And Hill's will be a key focus. John, do you want to?

Yes. I would just say that Hill's in some ways epitomizes what John just described. We are fundamentally a science-backed nutrition brand. We have strong veterinary or professional endorsement. And innovation and media are 2 of the key growth drivers that help amplify the overall flywheel. And we've been transforming our capabilities, especially in data and digital, in a very meaningful way. We've been building up the data foundation. We've been using data actively in things like clean rooms, which I know we've talked about at other forums in terms of how we enhance our media targeting. And we have a very significant proportion of our business that goes through e-commerce. And therefore, you have to have digital and data capabilities in order to keep that going. So those same scaled capabilities are what we are also delivering across the whole Colgate enterprise.

Okay. No, that's helpful. And as I think about joining, for you, I think it was back in 2022, so a few years now, what are the areas that you think have really worked well and that you're continuing to push on and then maybe areas of opportunities and improvement?

Sure. So media is one of the big changes that we brought into the business. And that's media spend, but also the communication that goes behind that. We've significantly dialed up the way we communicate to pet parents and to veterinarians. Nutrition is a complicated category. People don't always understand human nutrition. They definitely don't understand pet nutrition. And so communication, education, getting people to really understand is a fundamental skill set that we've been focused on. Innovation is another one. We've delivered some very, very powerful innovation into the market. In fact, one of the strongest pieces of innovation was launched in 2019. It's still growing 28% year-to-date. So really powerful innovation protocol. Vet endorsement, as I mentioned just a moment ago, very important to our brand. The heart of our brand, Hill's Prescription Diet starts with a visit to the veterinarian. The veterinarian diagnoses the pet, provides a nutritional solution. That is word of mouth that you just can't -- I mean it's just so powerful as a flywheel. And then, of course, fixing our supply chain. You'll know a couple of years back, supply chain was a real pain point. It was a capacity challenge, which was impacting service, but not only that, it was impacting our margins and our ability to deliver. And so building out the right capacity and changing -- using that to help change the margin profile were really powerful tools that have helped drive that growth. Where do we have growth to go? We still are a relatively low awareness and penetration brand. We're a big brand, but we operate in a very big category. If you think about household penetration of pets in the U.S., you're talking about mid-60% of households have a pet, we have single-digit penetration. So you can just see the amount of upside opportunity that sits there. Communication, we talked about, it's been a strength, but we have more opportunity as a science brand to tap into the emotion that is latent in this category. People love their pets. Science is a terrific place to start because we know we're delivering the best nutrition, but how do you marry that with love? We think we're going to crack the code with our new communication campaign, and that's really important. We still have some underdeveloped segments. There are some segments that are growing in the market where we have opportunity to grow faster and build market share. And also, that includes geographies where we are subscale and we have still an opportunity to grow.

Okay. That's great. And as we think about the categories, what is your expectation for global premium dog, and I guess, cat food over the next several years? And then in the context of that, how do you see the mix evolving for growth between dry dog and I think on dry dog versus wet?

Right, right. So the long-term trends of this category are solid. If you look at anybody that interacts with this category, you see the change in human behavior in relation to their pets. I mean, I'm not original in making this quote, but you see that pets used to live in the backyard, now they sleep in your bed. This is just a fundamental change in how people interact with the category. And so, we do believe that the underlying trends will remain strong. Some of the underlying trends are also places where growth can be accretive as well. So for example, we see cats as a population growing faster. We see small dogs as a population growing faster. Those will drive growth over the long run. Both of those pets happen to live longer. In terms of the mix between the forms, dry is a fundamental part of the category and it's here to stay. It delivers great nutrition for -- especially the Hill's dry. It delivers great nutrition. But there's also a convenience and cost factor. So it makes sense as part of the nutritional building-the-bowl strategy. Wet provides variety and texture. Some pets like variety, some pets actually don't care. But people like variety. So therefore, it becomes an important part of how people are treating their pets. And then fresh, a very interesting humanized form, sort of an extension of wet, if you think about it that way. It's another way of feeding variety and texture and it makes the pet parents feel very good that they're doing that.

I'm smiling just thinking about this and especially in this backdrop with some strains on the consumer. So I'd be curious to hear how consumption patterns or purchasing patterns have changed as they think about being pet parents? Are they scaling back given the tough environment? Or are you seeing down trading? And then how do you navigate within that?

So we do see the category volume softer than we would like. That is true. As John said, we've seen that in all the categories and that's true here as well. That doesn't mean that the premium pet food segment is fundamentally at risk. In fact, a brand like Hill's, you're talking about feeding pets through their life. So we attract puppies and kittens all the way to adults, senior adults. As I mentioned before, a lot of pets are living longer. Cats and small dogs are living longer. They tend to get sick then. Hill's Prescription Diet is designed for pets that are sick. So we have a very long life span of the pet that we're able to interact with, with our brand. And we see that the premium category is important because if your pet has a health problem, you're going to try to solve that problem. If it's a chronic problem like kidney disease, if it's an acute problem like diarrhea or constipation, you want to solve the problem and you're not trading down to walk away from that problem.

Yes. All good points. And then from the Q1 call and the commentary, it appears that private label exit will be about a 200 bps headwind to segment sales this year and maybe a little bit of a lingering impact in FY '26. So thinking about Q1 volumes being down marginally, help us understand the growth for this segment for the rest of the year? And I think about it in the context of what John mentioned, too, on pricing, it's going to become a smaller part of the equation. I mean, can we see volume growth for the full year?

Yes. In fact, let me just talk about the private label point. Private label, that was simply a service agreement that we created as part of the acquisition of the dry facility. So it's not a business that we drive. We drive the underlying Hill's brand. That business is healthy. It's growing volume and value. It's growing across all the segments that we compete in. So that business is still quite robust. In terms of going forward through the year, we're going to continue to execute the strategy that we've been deploying. And within that strategy, what we see is our stronger margin segments continue to grow, Prescription Diet, cat, small dogs, wet. We are driving that growth through innovation. We have terrific innovation that's coming, including the relaunch of our Science Diet life stage brand. So we think innovation will continue to play a role. We think advertising and media will continue to play a role. We've just launched a brand-new campaign, which I can talk about in a moment, but that campaign, we think, has a very powerful insight and we think that, that will continue to drive consumer attraction to the brand. And even things like expanding the shelf set in our pet specialty retailers. We're bringing -- now with the capacity we're able to bring more products into the market and build out our shelf set. So we've had pretty meaningful increases in shelf set, especially on cat wet in some of the major pet specialty retailers.

Bonnie, if I can just -- just a little clarification on this. So what we said on the Q1 call, just because we get a lot of questions on this, is that there was a 40 basis point negative impact to total company organic volumes, 200 basis points roughly for Hill's from lower private label volumes as we look to exit that agreement, as John talked about. We said it would be a slightly greater impact again on a total company basis as we look out through the next couple of quarters as it goes down to 0 in the back half and then we'll still be lapping a little bit of residual volume as we go through the first half of the year. As John said, that's a business that is part of what we did in terms of getting the capacity. We think the real measure of how the business is doing, both Hill's and the total company is ex that impact. So for us, it's -- I don't want to say cosmetic, it's a little more than cosmetic. It's in the organic numbers. But we think the Hill's business looks much stronger with growth across all the segments, including dry, if you exclude that private label impact.

Right. No, that's a good point. I want to verify, too, because of the exit, part of it is converting the lines, I imagine, and I think you touched on it. So that has already started to happen and will continue.

Absolutely. So -- the -- if I just go back to the thesis behind the acquisition, we did not have sufficient capacity to serve our business at that time. We were delivering customer service levels in the 50s and 60s, it really should be in the high 90s. So we were constrained. We had to cut back on diets, so we weren't able to serve the market. If you think about a product like Prescription Diet, if the veterinarian is making a recommendation to a pet parent, they need to know that, that product is going to be available when the pet parent comes to shop and we couldn't always deliver that. So it was a fundamental imperative that we needed to fix the capacity, but it was always a thesis for Hill's volume. Now some of those factories, in fact, most manufacturing cannot produce our formulas. Our formulas are very sophisticated. So they require us to make investments in the factories to convert the lines, but that was a really important point because we were putting overflow volume into contract manufacturing. They're not able to deliver the same standards without lots of help. So it was really important to get the product in-house. Obviously, helps the margins as well.

Right. And so that's another key driver here and we're going to start to see margin lift as we continue to exit. You touched on this also with the new campaign, so I definitely want to hear a little bit more about that. But I think about the investments or stepped-up investments you've made in the form of innovation and advertising. I think advertising has been tracking above company levels. So talk about maybe the gains you've seen in awareness, and they touched on household penetration and the runway and then also the target levels on household penetration?

Okay. Terrific. So we've made meaningful investments in the Hill's business. So we talked about the capacity investments. We've also made meaningful investments in media. That media is delivering very strong ROIs for the company. We've just launched a brand-new advertising campaign. It's based on a very powerful insight that I sometimes feel that I can't love my pet as much as they love me. It is. I tell you, when we show the video of -- on the street interviews, we get tears, we get tears. And people say, yes, that resonates with me. So we are telling stories about the pets' unwavering love for their pet parent and the pet parents' inability to always live up to that love. And of course, the solution is because you're only human, there's Hill. Science does more. And so we're taking the stress out of the situation because if you use Hill's, we've created a complete and balanced nutrition that's designed for the life stage of your pet or the health or sickness of your pet. So really, really important advertising campaign that we think is going to really drive a lot of additional awareness, additional penetration. We don't talk about the targets, of course, but we do expect it to continue to attract new people to the brand. We've only been on air for a short period. We've already seen some very interesting uplifts in measures. The advertising that we've been spending against the brand over the last 5 years, has delivered awareness growth, penetration growth, top line growth, penetration growth and brand equity measure growth. So we know that it's working and we intend to continue to spend behind the brand.

So obviously, you've seen the growth and the opportunity. And I think in the context of total company on, correct me if I'm wrong, but roughly flat ad spend as a percentage of sales for total Colgate. But then as I think about Hill's, will you step it up more than that -- more than the company average for the year? Is that correct?

So I will say, correct on Colgate. And John, you want to...

Yes. So just from the start -- 2019, we embarked on this new business strategy to spend media behind the brand. Since that time, we've doubled the advertising ratio to sales. So it is a brand that, as a company, we believe in. We think there is a long-term growth trajectory. We think media is part of that unlock and we continue to intend to spend behind, especially what we think is a really powerful new campaign.

Okay. Want to switch gears a little bit to innovation because that's a huge opportunity and I know another lever of your reinvestment. So maybe talk about your current product portfolio. And then if I think about the growth in the contribution you're expecting from innovation over the next few years, I don't know if you've ever quantified that, how much of the growth has been coming or driven from innovation and how much it can in the next few years?

Yes. We do quantify it. Innovation has been a very powerful engine of growth. Innovation takes many forms, as you know. Oftentimes, it is big brand renovation. So the Science Diet relaunch that we're embarking upon now is an example of that. We are launching -- relaunching the product with an antioxidant and proprietary prebiotic blend that is designed to help pets live longer -- long, healthier lives. So that's a very powerful, big brand innovation. But we also have special areas. So one of our most important diets in the U.S. is what we call Science Diet Sensitive Skin & Stomach. It's been a great growth driver for adult pets and we've just launched puppy and kitten versions. We're already seeing a terrific uptake. We've been able to innovate, especially in the wet area where we had been -- we still are, in some cases, underdeveloped. An example in our feline side, urinary and hairball control is a very important diet for cat parents. We're going to quadruple the number of proteins that we offer in that line. So there's really some great things that go at the strategic, tactical and different levels. On the Prescription Diet side, we actually ran -- relaunched the entire brand last year. We are following up with big brand relaunches and upgrades of the formulas on some of our core diets to improve efficacy, improve claims. But we're getting into also some very interesting spaces. So as pets live longer, they tend to have cognitive problems and mobility problems. We're launching a Prescription Diet formula this year called Cognitive + Mobility to help pets that are entering that senior stage of life and give them a better quality of life. So innovation up and down the portfolio.

Sounds pretty robust. And so I think about it, is it more first half, second half or pretty evenly?

It's pretty evenly, but the Science Diet relaunch has already gone out and will be supported as part of this new campaign I discussed.

Okay. And then curious about all of the robust innovation. How are you balancing that, thinking about potential M&A opportunities to drive growth ahead?

No, good question. So we, as a company and as a Hill's brand have always used M&A selectively to ensure that we're going after areas that are aligned with our strategic direction. We announced the acquisition of Prime100 recently. In fact, we closed the acquisition on May 1. So we now own the Prime100 brand in Australia. For those of you that are not familiar, Prime100 is the #1 fresh brand in Australia. It is also the #1 brand recommended by veterinary dermatologists and sold in their clinics in Australia. So we think it's a very interesting opportunity. Why did we like it? It's a science-oriented brand, it's a brand that's backed by veterinarians and it's in a fast-growing segment that we think we can learn a lot from and benefit from.

Okay. Before I switch gears to international, I do want to verify something because of the innovation, the growth. I want to make sure you have sufficient capacity. Do you think right now for the next 3 to 5 years, given especially...

We do. We do. We acquired the 3 dry facilities here in the U.S. We built the Tonganoxie wet facility in Kansas. And we acquired a wet facility in Northern Italy, we do have sufficient capacity.

Okay. Switching gears to international, yes, Prime100, that's recent and in addition. But can you talk about your strategy going forward, how we should think about international sales and profits, that mix to maybe evolve over time within your business?

Yes. So we would really like to see our international business grow faster. We think that there is meaningful opportunity out there. We are underdeveloped in many of those markets. The great part is that we see the same growth algorithm applying. So wherever we deploy it, science-backed nutrition, veterinary endorsement, our selective distribution policy amplified by innovation and media and then further supported by data and insights, it's a very powerful model. We run it everywhere, and it works. We are seeing some very nice rates of growth in many of our smaller international markets, and we expect that to continue.

Is that just an opportunity to go deeper in some of those existing markets? And then do you see potential opportunities to enter new markets and how?

Yes to both. We think that there is a significant market share penetration upside in markets that we are already in. There are places where we are not yet the #1 brand recommended by vets in that market, and we're striving to get there. As I said, we can run the same playbook and it works. And there are other markets that we are not in. The #2 and #3 pet markets in the world are China and Brazil, and we don't have a meaningful presence. So we will be looking at that down the road as part of the strategic plan to see if there's an opportunity to enter there.

And that's either potentially organic entering via some distribution or maybe M&A?

Yes. We typically look at organic first. We think we have a very powerful brand. We know that even in markets that we do not have a brand presence or a meaningful brand presence, we have the support of veterinarians. Just as a little bit of a factoid. We -- our founder, Mark Morris, Mark Morris, Sr.; his son, Mark Morris, Jr., wrote the textbook on small animal clinical nutrition. This is a textbook that veterinarians around the world study when they're learning about animal nutrition. So people know the Hill's brand. Veterinarians know the Hill's brand. They know the Hill's nutritional philosophy. There's often a latent demand in many of those markets for our brand, we just haven't taken the steps yet to bring the brand there.

All right. And then just before I switch gears maybe to margins in general, I want to make sure I understand with the Prime100, just any potential cross-selling opportunities that you see with that acquisition and given your existing...

Well, it's -- I mean, as I said, we've acquired Prime100 because it fit our focus areas of science-backed nutrition, veterinary endorsement. But fresh is obviously an interesting part of the segment. It's a growth area. We believe we'll have a lot to learn. That business continues to perform very well in Australia. And as we take the learnings, we will see where -- what the opportunities bring.

Okay. Switching to margins. I think I mentioned in the opening remarks, I mean, tremendous margin expansion in Q1, 500 bps and really driven by a lot of the gross margin. So how should we think about sequential margin trends for Hill's for the rest of the year? And I'm thinking about the context of your reinvestment plans. How are you going to balance doing everything you mentioned earlier: continue to invest in the business, innovation, advertising with continuing to potentially deliver margin?

Yes. No. So margin has been a real focus. As you noted, we've been able to rebuild the margin, especially after the cost inflation crisis of '22, '23. The pet food industry did take it pretty hard through commodity pricing. Very proud of the team that's built the margin back through a lot of our traditional Colgate levers: revenue growth management, premiumization, looking for ways to increase the mix of some of our strategic faster-growing categories, which also have higher margins. So Prescription Diet, cat, wet, small dogs, it's nice when your strategy aligns to where margin is also coming. We are funding the growth program that we've been running for decades has also been a really important driver. We've quadrupled the number of savings that we've been able to deliver over the last couple of years with that program. We talked a lot about the dry acquisitions and the build-out of wet. Both of those -- the first problem we were solving was capacity, but the underlying opportunity is margin. We were so full with -- or there's such a lack of capacity, we were running over time, there's material losses. We've been able to improve and reduce overtime, material losses, throughput as we bring product in from contract manufacturers that drives important margin improvements. Our new Tonganoxie factory in Kansas is the Colgate-Palmolive state-of-the-art factory. When we move product into that line, we get a variable cost benefit. So there's really important margin opportunity that's still to come either through the pricing initiatives or the cost savings initiatives that we see will continue to play out.

And speaking of the production in-house, can you say what percentage you have currently in-house and what's still going to be brought in? Or are you fully...

We're -- on the dry side, it's almost all in-house. There's certain bag sizes that we still use, but majority is all in-house. There's still some wet products that we don't have making capacity for that are in contract manufacturing.

Okay. So that's over next year.

Yes, we're still -- we're building out capacity to bring as many of our products in-house as we can.

Okay. And so thinking about the margins, they're still well below the high 20 range that we saw historically. So a recovery back to those levels, is that, I assume, part of your strategy over the next several years? Or should we think about just kind of more modest expansion while you continue to reinvest?

Yes, it's a good question. So we -- if you look at the 2008 to 2018 period, Hill's compounded average annual growth was 1% with the very high margins. We took a strategic decision to invest in this business for growth. And I think that, that strategic decision has really paid off. So we are focused on continuing to drive strong top line growth and strong operating dollar growth behind the investments that we've made. And we've talked about investments in capacity, investments in media, investments innovation, all of those things, we think, are delivering a better business proposition than what we've been experiencing before.

And Bonnie, if I could just add, I mean, from a total company basis, right, we've increased the level of investment across the entire business. But for Hill's, it really is a growth driver looking at Colgate-Palmolive as a company and particularly because of its geographical profile in terms of delivering, as John said, dollar-based profit. And so the key is continuing to fund that growth and so that we make sure it continues to be a top line and bottom line growth engine for years to come.

Okay. Just have a little bit time remaining. So maybe we'll end with, as we sit here today and talk about all of the exciting, the initiatives, but what do you think you're most excited about at Hill's? And then maybe where do you see the greatest potential risk? I know we always...

Yes, we do. I'll just try to be quick. We just think that the therapeutic nutrition category has a lot of growth potential. There are so many more pets who should be using therapeutic nutrition than who are. And as the inventor and pioneer of that category, we think it's our duty to continue to grow that category and benefit with that growth. The risks, as I said before, the underlying trends we believe are super strong. The fundamental behaviors have absolutely changed and we see that continuing over the long run. We'd like to see the short-term market pick up a little bit faster.

Yes. All of us do. All right. Well on that note, thank you so much for your time.

Thank you very much, Bonnie.

Thanks for your time. Thanks, everyone.