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

Good morning, everyone, and welcome back to the final day of the 2026 CAGNY conference. We're delighted to have Colgate with us to kick things off. Fresh off a strong finish to the year Colgate continues to navigate a challenging consumer environment with a portfolio of leading brands, global reach, market-leading innovation and a push to embrace new technologies such as AI and predictive analytics to drive superior top and bottom line results. On top of a better-than-expected 4Q nearly across the board, the company embarked on its new 2030 strategy underpinned by its strategic growth and productivity program. With us this morning are Noel Wallace, Chairman, President and CEO; Caroline Chulick, SVP Global Growth and Innovation, Hill's Pet Nutrition and John Faucher, Chief Investment Relations Officer and EVP, M&A. With that, I'll turn it over to Noel. [Presentation]

Well, good morning, everyone. It's great to be back in Florida out of that cold winter in New York. It's great to see everyone at 8:00 on a Friday morning. So I appreciate you getting through the week and spending time with us this morning. A lot of excitement in terms of our strategy. I'm going to talk a lot about what happened through 2025 and then more importantly, get into our 2030 strategy. I should probably have this memorized by now so I won't go through it. As we've done historically, we always like to showcase some of the great talent we have across the organization. Today, Caroline Chulick, our Senior VP of Global Growth and Innovation at Hill's will be joining me. People often ask me why do we often bring people into the presentations? And there's really 3 reasons. One, it's really important for you to understand as we look conceptually at 60,000 feet at our strategy how do we execute and deploy those strategies on the ground. And it's one thing for me to talk about it. There's another thing for our teams to get up and show you exactly how we're executing against the things that are driving the growth for the company. Second, it's a great exposure for our talent. It gives you a chance to see the depth of our talent across the company. And probably most importantly, they're all great presenters. And so I always like to have people who can outshine me up on the stage. So it's great to have Caroline with us today. Quickly on the financial review from 2025, a tough year for CPG. Clearly, headwinds from tariffs, slower category growth and uncertain consumer environment. But despite that, the resilience and flexibility of our model allowed us to drive dollar sales growth, dollar EPS growth, organic growth and record cash flow, and we exited the year with some accelerated momentum, which is terrific to see as we move into 2026. Four key messages today. I'm going to recap our 2025 strategy, as you know, for the last 5 years, we've been executing against our 2025 strategy. We've built a lot of capabilities, and we're starting to scale those as we move into 2030. Our transition into 2030 and some of the new capabilities that we're building and some of the changes that we need to make to accelerate category growth and our own growth moving forward. Our productivity will be a key catalyst for fueling that growth. How we'll use that to drive market shares and penetration around the world as well as drive improved bottom line EPS performance and importantly, talk about our balance sheet and some of our uses of our cash, where we have incredible opportunities to be more flexible with how we think about our cash generation and the uses of that moving forward. So let me talk about 2025 coming to an end. Strong growth over that period. As you remember going into the 2020 strategy when we launched it, our growth had really plateaued and flattened. The 2025 strategy has allowed us to accelerate that growth over the last 5 years well above our long-term target range. Clearly, 2025 was driven down by obviously, the category growth rates I talked about. And as you know, we exited the nonstrategic private label business, which was about a 70-point headwind so you can add that to the 1.4% there in 2025. We have confidence we'll get back to that long-term target range that we've set for ourselves in terms of our 2030 plans. One of the reasons we have that confidence is the diversity of our business around the world. As you know, we have a strong emerging market business where the category seem to be quite robust, strong presence in those markets, combined with the accelerating growth that we see in some of our developed markets around the world. A big asset that we had going into the 2025 strategic plan was that we committed to building our brands around the world. We put in about $1 billion of incremental advertising into that plan period through 2020 through 2025. That has allowed us to accelerate brand penetration and build our brands and make sure that our innovation gets off to a good start. Despite the $1 billion of incremental advertising that we put into P&L, the strong productivity initiatives that we have going through the middle of the P&L and the operating leverage that we've been able to generate from that allow us to accelerate the EPS growth moving through the 2025 period as well. And most pleasingly, for all of you is obviously the TSR performance that we've been able to deliver in that period. This is through year-to-date 2026 where we've way outperformed our proxy peer group in terms of a TSR, which is the fundamental objective that all of us share in the company. Okay. So that's where we were. A lot of interesting changes through the 2025 period, but we need to continue to evolve the company as we move forward. And I'm going to highlight some of the key aspects of our 2030 strategic plan with you and tell you what it's going to do to continue to accelerate growth for the company. Five key pillars. I've simplified them for the purpose of the presentation. I'll go through each of these in more detail to give you a sense of how we're thinking about these and how we plan to leverage them as we move through the next 5 years of the plan. Starting with the global reach of our business. We're in a very enviable position to have the most penetrated brand in the world. Colgate as a brand is in 60 -- almost 60% of the world's households. It is the #1 most chosen brand in health and beauty and the #1 most -- #2 most valuable brand in the personal care category in the world. It's a wonderful position for us to leverage as we think about the rest of our categories, the rest of our oral care brands around the world to continue to exploit that strong penetration that we have and resonance that we have with consumers. It's not just oral care. We're broad-based across all of our categories. We have the #1 or #2 position in most of the categories in which we compete globally. You can see that depicted on the chart here. And we'll take that and make sure that we're going to put right at the front of this strategy is innovation. We spent a lot of time over the last 5 years building innovation capabilities, but the next 5 years, we're going to exponentially invest more in this area. Refine the processes, bring in more resources, use technology to enhance how we're thinking about developing consumer-centric ideas moving forward. So what I thought I'd do is take you a little bit through our new innovation process, and we won't get into some of the proprietary nature of this, but I'm going to give you a sense for how important it is to Colgate and how much emphasis we are putting to be on our front foot relative to thinking about innovating in the categories in which we compete. There are 4 key aspects to this innovation strategy. One is the strategy and how we think about it, the choices that we make, the discovery aspect of innovation then we move into the incubation, which has changed quite dimensionally in the last 2 years. And then the real asset that we have as a company is how we scale our ideas in 200 countries around the world as quickly as we possibly can. So let me talk -- start with strategy. It all begins with the choices that we make and understanding and mining the insights in the category to make choices. And the example I'm showing you here is going to be in the whitening segment. Admiral impressions is how we define the need states of this segment. What's interesting is the insights that we've gleaned over the markets that we compete in around the world. Big category, big opportunity. 21% of the people want a whitening benefit. But as you can see there, 66% of their needs are not being met today. That allows us to dive in there and truly understand where is the opportunity for us to utilize our technology and our science to unlock those opportunities around the world. You then move from that insight into discovery process. And you can see here that we have a multitude of different ways to think about going after the whitening segment. In the top right-hand side of this chart, you see our toothpaste, the color correction purple product that we've just launched. You see the serum they put in, which is now going into those that are looking for more beauty orientation. We're looking at value propositions for those in the value segment that want to have whitening benefits and then obviously looking at other ingredients that we could bring in from the profession as well as from the beauty segment into our toothpaste products as well. We start to test these ideas with AI, which I'll take you through in just a moment and we refine it down to the bigger ideas that we can launch around the world. Then the fun begins. We get into incubation. And this is where our teams are testing and learning and failing as fast as they possibly can. And I'll show you how AI has allowed us to really exponentially get an understanding of what's going to work and what's not going to work. We do this both online. We do this offline, and we do this with digital twins, which is the AI tool that we're using around the world. And then we get into the scale, and that's where the unique competitive advantage of Colgate comes in, our ability to refine those ideas, incubate them, get the validation and then scale them as quickly as we can all over the world. And in this example is how we've done the Purple product, which I'll show you some output from that in just a moment, but it's exciting to see how quickly we can take an idea that we started in Asia and rolled it across all the geographies that we compete in today. So AI has been a transformation for how we think about innovation. We've talked about this for a couple of years now in this room. We were really at the forefront of investing in this space. You can see we're using the agentic now in the strategy space. We're using AI to develop more concepts and really test those as quickly as we possibly can. We're using digital panels and twins now to validate our market insights, and we're also developing content factories where we can scale content as quickly as we possibly can. Here's a spot on our Purple product, which used AI to develop the spot, and I'll take you through a couple of the insights on this in just a moment. Let's roll that commercial. [Presentation]

So the entire concept of Purple developed with AI, we test it and validate it in Asia. That spot, the humans are obviously real humans, but everything around that spot was developed at AI at a fraction of the cost so much more efficient for us in terms of how we're thinking about utilizing around the world. The concept was tested very quickly around the world through AI and digital twins. So really exciting to see how we're leveraging a lot of those capabilities that we've started to build a couple of years ago and seeing the fruits of that effort in the markets where we compete today. Moving on to some other innovation. We've had great success with the expansion of the Elmex product around the world. But in Europe, this is the fastest-growing toothpaste. We've done an exceptional job in getting into new segments and new need states in order to expand that brand. You can see the success in Europe, not only with Elmex, but with Meridol and Colgate coming on top. We've had record share performance in a very competitive market across that geography. Excuse me. Shipping now a really exciting sensorial innovation for us. We spent a lot of time really thinking about mouthfeel for the younger Gen Y and Gen Z consumers. This is a new whipped product by hello, which is a unique dispensing system, but more importantly, has a very, very unique mouthfeel. It's a velvety feel. So it has a real unique experience. So we're playing into that segment and that insight that we glean from this consumer, which we're very excited about shipping right now. All of you have to love Harry Potter. Harry Potter, given the globality of our business, we were able to negotiate a global license for Harry Potter all over the world. We have both the kids product and a product for all of you as well. So we're excited to see that expand around the world. I haven't talked about Darlie a lot. This is our big joint venture in China. This is a really unique innovation that we're bringing to the market as we speak. It's a dual-chamber technology. And what's interesting about this technology is peroxide is a very unstable ingredient that is not necessarily always compatible with the other ingredients that we put into a toothpaste. They figured out unique ways to separate the 2 ingredients. So the peroxide is the oxygen essence with the whitening agents to activate 18x more whitening. So the 2 ingredients come together when you actually squeeze the tube. So it's a fascinating innovation for us that we're launching as we speak and doing quite well out of the gate. But we'll see how it ultimately unfolds. They also have a blue light toothbrush with it, which is really neat. In fact, it gives a real interesting experience when you're using the blue light toothbrush in your mouth with this product. So we're excited to see Darlie now putting some great innovation in the market. MGF Age Renewal Cream. So just as the concept says micro factor technology penetrates 10x better. We're spending a lot of time making sure that on our premium skin care, we have the right science to go into an extremely competitive category. This is a terrific product and is also formulated very specifically for menopausal skin, which is interesting. There's more irritation when you're in your menopause state. And as a result of that, we've seen some great insights and great consumer feedback from the introduction of this product. Carrying on that insight, likewise, aging consumer in Europe, obviously, over 1 billion menopausal consumers around the world. We've seen real insights we've been able to glean from this consumer base and delivering products through the Sanex line in order to address some of their need state, this product shipping as we speak as well and doing quite well out of the gate. About 1/4 of the fabrics in the U.S. market are synthetic fabrics now. Athleisure is a very dominant form of fabrics that being used. It's not necessarily that compatible with a traditional fabric softener and odors are tough to remove with the traditional detergent. We've designed a very specific product under the Suavitel brand name. That goes after that consumer. So we're quite excited to see that shipping in the market as we speak. Moving on to Palmolive dish liquid convenience at the sink. Simple idea is to bring in a pump into the segment will be the first major brand with a pump in the market. So clearly an opportunity to leverage the Palmolive brand name. We have spent the last 2 years truly dialing up the efficacy of Palmolive brand. We now have an extremely competitive product in terms of efficacy, and we're going to combine that with an easy dispensing system as well. Palmolive also has done exceptionally well around the world, strong sensorial brand with great fragrances. We're going to take those great fragrances into the very large spray clean market sprayers market with a strong fragrance profile as well as the strong efficacy profile associated with this as well. Moving on to Science Diet. Caroline will talk a lot more, but this is a major relaunch for our entire Science Diet core business. So about every 2 to 3 years, we're really looking to renovate our big core businesses. This is an exciting launch for the core vet business that we have, which is improved ingredient profiles and packaging that hopefully deliver -- we know they deliver improved perceived based which is important to the pet owner as they look to shop and make their choices. Pets are aging as well and pets are living long. As a result of that, you see more comorbidity conditions. This is our prescription diet product. We have a kidney hydrolyzed product as well as the kidney in the derm complete, both offering derm benefits that we find pets that have kidney issues. We have the opportunity to now go after dual morbidity issues and solve that with 1 product, which we're quite excited about. The vets have been asking for this for quite some time. Okay. Let's talk about data analytics and AI. We spent the last 3 or 4 years investing heavily. We've talked about the flexibility that we've had in the P&L, and that flexibility has allowed us to really get ahead in terms of training and developing our people around the world in the space of data and AI, investing in technologies to ensure that we continue to utilize that moving forward, and I want to take you through some of those examples now. So before we are talking about building the capabilities. And as I mentioned, I think, last year, we started to scale these capabilities around the world. So right now, over 80% of our sales coverage is covered through marketing mix modeling so we really scaled that tool around the world. We have 80% net sales coverage of our revenue growth management tools. We're moving those revenue growth management tools into promotion tools as well, where we partnered with various retailers with a proprietary promotion tool to basically redo their entire promotion calendar in our categories to optimize sales growth for them. And for us, we're utilizing clean rooms. You'll hear a little bit more about that from Caroline in just a moment. And importantly, we're really looking at our data architecture across the entire business and making sure we have ways to really tap into that data and utilize that data much more effectively around the world. What is that done? We've seen improvements in ROI through our data analytics consistently from year-end from 2023 when we started to invest in these capabilities through 2025. Our promo AI tool is a terrific proprietary tool that we collaborate with our key retailers on around the world. We generated over $4 million of incremental margin just with that tool alone. And clean rooms is a way to drive hyper personalization by combining our data with our retailers' proprietary data and finding ways to optimize purchase and repeat and velocity of their category. So it's a terrific initiative that I think certainly shows the trust that the retailers have in us and our ability to share our data with them and drive category growth for both parties. Building and scaling AI talked a lot about this in the last couple of meetings with you. And as you remember, last year, I presented this concept to you. This was a fictional concept that I showed you that we developed with AI, which is I'll read it to you, Colgate market list, Caffeinated Power Mint keeps your breath as sharp as your instincts with an energizing caffeine kick and icy mint blast because your breath should be as strong as your portfolio. As you remember, we gleaned all the insights from the people in this room. We developed this concept and I showcased it last year. So what I'm going to do this year to show that we're continuing to progress our use of AI, is show you how we've now used AI based on your insights and your concept to generates content creation. So this is 100% generated through AI, through the insights we gleaned through this fictional idea. And it shows you what the content can look like and what the on-shelf performance can look like. So let me just run that video now. [Presentation]

So again, it's fascinating to see the progress that we're making on it. Obviously, there's a lot of governance behind this that we're being very cautious in making sure we understand how we think about actually deploying this around the markets around the world. You saw the Purple where we've incorporated quite a bit of the efficiency aspects of AI. But we're really excited about what we can do with this and the efficiencies and more important the personalization that we're going to have in terms of generating scaled content around the world. I'm going to talk a little bit about omnichannel, but then I'm going to hand it over to Caroline. This is a really important idea for us. The whole market in terms of how consumers interact with brands today has completely transformed in the last 2 years. How they shop, where they shop and when they want to shop is something that we have to truly understand how to intercept the moments that matter, really understanding how to make our media more effective and targeting our message to the consumer at the right time and in the right place. So I'm going to bring Caroline up, and she's going to talk to you through this whole concept of omni demand generation, which we've been working on for a couple of years. And Hill's has really been at the forefront for making sure that we develop the capabilities that we feel we can scale in small markets, medium-sized markets and big markets around the world. Over to you, Caroline.

When you asked me to share the stage with you, I didn't realize I was going to have to follow fit to finance guy. Good morning, everyone. I am delighted to be here representing a company that I have been a part of for over 2 decades. I actually started at Colgate-Palmolive as an intern in our home care category. And throughout those years that I have followed, had many different marketing opportunities throughout both our oral care and our personal care categories before joining Hill's 5 years ago. I was incredibly excited to join the Hill's team because I've been a lover of pets for as long as I can remember. This is a photo I share with you of my childhood pet. Her name is Brandy, she was named for her Brandy color. She was a rescue and she was 2 years old when I was born. So that means she was my parents first baby. She was my first friend, and she was the reason that I told my kindergarten teacher that I had a sister even though I was the only child at the time. So why do I stand before you this morning talking and sharing stories about my childhood pets? Well, because the U.S. data tells us that there's a very strong likelihood that about 70% of you in this room have a pet at home and can absolutely relate to how special and important they are to our lives and it's a part of our families. And that is exactly why Hill's exists. We are there to strengthen and lengthen that special bond between people and their pets. We've been doing so for almost 80 years as the inventors of therapeutic pet nutrition and founded by a veterinarian. Now more recently, Hill's has been a vital growth engine for both Colgate as an enterprise as well as our external retail and vet partners. Over the course of the last 5 years strat plan, of course, Colgate has grown all of our categories but Hill's has been the single biggest contributor to that growth. And that organic growth has come from both volume and pricing. Now with the #1 science brand in pet specialty and the #1 vet recommended brand in the U.S., which by the way, is the largest pet population in the world. We've also been a really important growth pillar for our external partners as well. Let me dimensionalize this growth in just a little bit more detail for you. Over the course of the last 5 years, Hill's has grown nearly 60% from just under a $3 billion business in 2020 to just over a $4.5 billion business in 2025. And we've been significantly and continuously outperforming the category whether it be on the wellness side of the business with our Science Diet brands or whether it be on the therapeutic side with our prescription diet sub-brand, we've consistently grown share over the last 5 years. So how have we done this? Well, it's been the results of consistent and strategic investment. You saw the A&P slide that the Noel shared about the enterprise and how we've grown significantly over the last few years. I'm happy to say that Hill's has been a major beneficiary of that increase of investment. At the same time, we've really increased our data-driven marketing capabilities and tools to make sure that we are being as effective and efficient as possible with that investment. Now I thought we had a pretty good 2020 ROI -- ROI in 2020 but we've actually continuously and sequentially grown that return on media investment over the last 5 years. And of course, all of this is in support of our unique and superior product behind consistent breakthrough innovation that delivers meaningful and tangible, visible outcomes that both our pet parents and our pets can enjoy. So a little bit about the past. So we head into 2026 with some really strong momentum, but also with a lot of opportunities for continued growth. Now of course, all pets and pet parents are important to us. And we know that they can all benefit from our nutrition. But the data is clear. The younger generations, the Gen Zs, the millennials, are actually acquiring pets at a much faster rate, and that's really worldwide. And they're a driving force in the category. This is U.S. data, but last year in the U.S., half of the total pet spend was by the zillennial target group. And many of them, in fact, most of them have more than 1 pet in the household. Now I suppose I might have been a little bit ahead of my time in thinking of Brandy as my sister. But that humanization of pets is exactly what's happening with this younger generation. Many of them are delaying or in some cases, even replacing having human babies for fur babies. I have an interesting statistic for you. I was in Seoul, South Korea last week with our team there, and they shared a pretty surprising statistic. 57% of the strollers that are sold in South Korea are for pets and not humans, right? 57%. Now as Noel mentioned, the way that all of us are engaging with brands, shopping, purchasing, it's changing drastically. Sometimes it's changing by the minute. But this is even more so for this younger generation. Their path to purchase is not linear. I like to call this the messy middle, and it's getting more and more complex every day with AI. So there's a lot of strong opportunities for brands like Hill's because we have more touch points and the opportunities to reach these consumers. At the same time, grabbing their attention, keeping that attention and that engagement and pulling them through the funnel can be a challenge. And that's exactly why we built our omni demand generation model. Now I've simplified a little bit for presentation purposes, but let me walk you through it. It all starts with an insight-driven content or message. And as Noel mentioned, that has to be delivered at the right time in place. And all of this is powered by data to help us find that right target, deliver that right message and that right moment that matters. Let me just walk you through a little bit of an example for each piece of this equation. As I mentioned, it all has to start with the right message. That message must answer an unmet need, a pain point. And it must do so in an emotional way that hooks that end user or that consumer. And the ads that I'm about to play for you on our latest campaign, we uncovered a universal human truth that tapped into that unconditional love of our pets. But in a unique way that we don't think has ever been done before. And that's in that guilt that we, as pet parents sometimes feel that we can't love our pets as much as they love us. But don't worry, there's Hill's that can help you in a very unique way that only Hill's can alleviate that guilt in the healthiest way possible. Let's take a look. [Presentation]

Now once we have that big campaign idea and we've developed the core assets, as Noel mentioned, we leverage our proprietary AI-powered end-to-end content supply chain. And we do this very quickly develop thousands of socially native assets, but all the tie back to that core campaign idea. Think about it as a bit of amplification, how we get the volume, the velocity, the variety to get the most personalized and relevant message to our consumers in the right way. And that brings me to delivering that message in the right time and place. There are several moments that matter across the pet parent journey. I'm sure many of you with pets can understand. I've chosen just a couple here for exemplary purposes. One is in that critical acquisition moment, whether it be from a breeder or a shelter, friends or maybe a family member. That moment when you realize your cat or your dog is sick or you get that unwanted diagnosis from a vet professional or in that critical seventh birthday of your cat or your dog, where they move from an adult to a senior and their nutritional needs are changing. These are all really critical moments that matter for our pet parents, and they are absolutely must win moments for our brands. And finally and perhaps even most importantly, powered by our cutting-edge data capabilities? Noel mentioned the data clean rooms. Now when you think about that messy middle, it's getting harder and harder to again find this target audience, bring them in and make sure it's at the right time and place. So how do we do that? The answer is data. This is an example of our U.S. Hill's business, where we've built a data clean room. Let me quickly walk you through it. It's our owned 1P data married with the 3P data of media publishers as well as some of our panel partners and really critically also combined with that 2P transaction or conversion data of our key retailer partners in the U.S., and of course, all done in a very data compliance manner. 70% of our U.S. media spend went through this clean room last year, and we had a lot of learnings, a lot of learnings that are actually very ubiquitous around the world and that can travel. But perhaps the best learning I can share with you is that we doubled our conversion rate for the media that went through this clean room. So bringing this all together, we have personalization at scale throughout the funnel. We are stimulating demand with powerful storytelling. We are building consideration with both pet parents as well as pet professionals, and we are closing that purchase loop with interactive, immersive shopping experiences, both in-store and online. And it's working. Remember the ROIs I shared with you earlier, they were sequentially improved, right? So what does that mean? It means that since we've launched this campaign midway through last year, we've seen the highest ever ROI that we've seen at Hill's with this new campaign. We also know from our partners such as Kantar that we're growing both awareness and saliency as well. So these are all great internal KPIs. But we have some external accolades as well. When I pulled for you here today was at the end of last year, as we published their top 10 ads, they were actually able to garner and keep that Gen Z attention. And Hill's Because You're Only Human campaign was #3 on that list. So in summary, we have the right components to drive growth in 2026 and beyond. We have the right brands that almost 80 years later, is still deeply rooted in the vet recommendation and the vet profession. We have the right message with our Because You're Only Human campaign. We have the right product with consistent science-backed innovation, and we have the right model with omni demand generation that will continue to fuel our growth. And with that, I'll hand it back over to Noel.

Thanks. So as long as we're showing dogs, this is the latest member of the Wallace household, that's Cooper. He's 4 months old. So we're hopefully bringing him great nutrition, he's been loving his Science Diet puppy and we're excited to have him as part of the household. Omni demand you just heard about is going to be really transformational for how we think about driving media effectiveness over the next 3 to 4 years. But most importantly, it's going to really transform our entire commercial organization and how our traditional customer development organization and our marketing organizations come together as one cohesive unit driving messages at the right time, in the right place in the moments that matter. And it's extraordinarily exciting to see how our marketing and sales organization are embracing omni demand and the work that Hill's is doing is going to be a huge catalyst for growth around the world as we spread some of those great successes to markets where we compete. Okay. I've talked about innovation. I talked about capabilities, but I want to spend some time talking about something that's near and dear to my heart, and that's culture. And all of these great things that are happening at the company are really fed by this incredible culture that we have at Colgate but a culture that has to continue to evolve in order to ensure that we're attracting the best talent around the world. We're retaining the best talent and developing the skill sets necessary to compete in a highly complex marketplace. The first bullet point on this chart, I think, says it all. We spend time canvassing all our SNC employees all around the world, and we do what's called a feedback survey, the connect, what we call Colgate Connect. 97% of Colgate people around the world participated in the survey. It just shows you how important it is for them to be involved and have a voice on how the culture of our company evolves, and for us then to take those learnings and put that into applications on the ground to ensure that we continue to develop a highly engaged high-impact organization around the world. We're attracting top-tier talent and retaining some of the best talent around the world. And I continue to believe that the culture at Colgate is a competitive advantage and something that we don't spend a lot of time talking about, but that's how we get great talent like we have around the company to continue to believe in what we're trying to do and feel part of something bigger than themselves. And being part of something bigger than themselves starts with the company purpose. And this purpose has really guided us through our 2025 framework, and it's what people believe in when they come to work every day. And this purpose guides our values and guides how we demonstrate the progress that we make in the marketplace and guides how we take care of our employees to ensure that they can do their best work. Some examples of how that purpose comes to life on the ground with our employees, this is our Bright Smiles, Bright Futures. We eclipsed 2 billion children and their families through our educational programs all around the world. Interestingly, we were just at one of our biggest global vendors around the world and a young man from India got up to give a presentation to us. And he started his presentation by saying how emotionally impacted he was by our Bright Smiles Bright Futures program when he was 9 years old in India living in a rural village, and we came to that village to provide our educational programs so it's a program that we continue to feed. It's a program that we get employees to volunteer in and it gives them a real sense for how big our purpose is and what we can do when we put our mind to help oral health education all over the world. Just signed a global agreement with the World Health Organization to improve oral health as a public policy around the world. We're going to be committed to working with them in markets all over the world to ensure that education around the importance of oral health and Colgate being part of that mission is a partnership that we think we can really benefit from moving forward. And I just celebrated about 3 weeks ago, our 50th anniversary of the Colgate Women's game. This is the longest standing track and field for young women. It's been an incredible program. We've seen Olympians come out of this event in the future, which is wonderful to see, but it really shows how we're committed to the communities that we work in and making sure that everyone grows together. Our Hill's pet adoption, 16 million of pets adopted since we started that program. It's been a fantastic initiative for us. And we will continue to obviously invest behind that. So let me move on to productivity in our 2030 plan. We clearly, as we did in 2025, need to generate the funding upfront to ensure that we're building the capabilities and making sure we're finding ways to drive improved profitability to the bottom line. Some of the key initiatives of this program that we've talked about is a supply chain reorganization as well as looking at our organization, particularly as we think about omni demand, and thinking how we structure more efficiently to create faster decisions, more agile execution on the ground at a lower cost so we'll implement this over the next couple of years. That will be combined with the strong productivity culture that we have within the organization, our Funding the Growth program that you know well, will continue to be a key catalyst for driving margin improvement. We guided towards improved margin, both on a percent on a dollar basis in 2026. This program will be a key facilitator to that. That's driven the strong gross margin performance of the company despite the significant tariff headwinds that we had in 2025, we're still over a 60% gross profit, which is terrific. And as I said, they were looking to continue to see that grow as we move forward. And importantly, our balance sheet, a great year for cash generation. I told you record cash generation in 2025. So we've got great flexibility as we think about our balance sheet and how we distribute those -- that cash around the world. Most importantly is continuing to generate strong cash generation. Our focus on working capital and cost control is clearly have demonstrated our ability to generate record cash flow and low leverage in our balance sheet. That's driven by making sure we get back to our historical normalized rates of about 3% of capital expenditures. Those peak years that we had was a lot of investment in capacity, particularly at Hill's as we integrated some of the new facilities and built increased capacity in some of our other categories. But that 2.8% to 3% is more or less where we've driven the capital expense over the last couple of years. And that strong cash generation allow us to deliver this chart, which is something that all the employees are really proud of 63 consecutive years of dividend increases, 131 consecutive years of dividend payments and roughly $30 billion of cash returned to shareholders. So again, a lot of flexibility in the balance sheet to continue to do things to drive shareholder return and drive the top line of the company. So in summary, we entered '26 with improved momentum. Importantly, we have a strategic plan that's gone from talking about things to truly doing things and executing some of those capabilities in the market and our 2030 plan is really inspiring for the organization to see where we'd like to take it in terms of the opportunities that we have to drive growth. The select choices that we've made within that strategic plan, the capabilities that we're going to continue to build and scale around the world to allow us to deliver consistent top line and bottom line dollar EPS growth. So with that, I'll turn it over to questions.

Dara Mohsenian, Morgan Stanley. So Noel, the clean room concept, a limited number of instances so far. You talked about 16 instances. But obviously, the uplift was impressive in Hill's with a 16% sales uplift, double the conversion of marketing, et cetera. How big a concept is this longer term? Can this really be scaled across the organization? Is there hundreds of instances in a couple of years? Just give us a sense for how big this can be for the organization as you share the data and analytics with retailers and work together.

We think it can be really, really big. Clearly, we compete in 200 countries around the world. The key aspect to scaliness for us is getting the data architecture right. So our ability to really consolidate and cleanse the data into an architecture that we can then share with our retailers is paramount to driving the success of that. So as we look at what we've done at Hill's, we're now moving that into the U.S. market. We're going to move it into some of the European markets around the world. And the important thing is building this trust and partnership and collaboration with our retailers for them to say, we're going to share our data with you and you're going to share your data with us, and we're going to make 1 plus 1 equal 3. And that allows us, particularly in businesses that have strong online businesses that allow us to be far more personalize with how we execute it. So we're really kind of at the tip of the iceberg over the next 3 to 5 years, and this will be a key funding initiative that we have within the 2030 plan to build more clean rooms around the world. It's clearly, it's proven out, as you say.

Let's go with Andrea.

Andrea Teixeira, JPMorgan. So I was hoping to see if you can talk about like how a lot of what was discussed in this forum this week was the competitive environment, not so much obviously, very important in the U.S. but outside the world, you have this capacity to diversify probably better than anyone else in this conference, like talk about like the relationships with the retailers in Europe and how also, your strength in Latin America can sustain through the balance of the year.

Yes. Clearly, there's big competitors that we have that you're well aware of, but there's a lot of emerging local competitors that we're competing with, particularly in the online space. You see a long tail of brands coming in these direct-to-consumer brands. So a lot of the strategic thinking that went into the 2030 plan was really contemplating that. We have to think about the big players, but we also have to think about the small direct-to-consumer brands in each in their own aren't significant, but in aggregate, they can be significant. We start to see some of those flowing into discount channels as they move from online into other retail environments. So the strategy is clearly set up for us to compete much more aggressively in that space. So first and foremost, it starts with great innovation making sure that we have the right insights that we're spending more money. We're using technology to get trends quicker than our competition. That allows us to put better innovation in the market, better content in the market. We did have this notion of what we just talked about, which is data, how we're leveraging our data to drive category growth. Yes, the retailers can take in small brands, which they're doing. But at the end of the day, the big brands still justify the vast majority of the category and the categories won't turn without the big brands growing. So we need to be -- have a seat at the table, so to speak, to show our thought leadership in terms of how we're utilizing data bringing much more innovation to the market than we have in the past, and then clearly, we're setting up our infrastructure to do that and to make sure that we have a lot more agility in our manufacturing facilities to compete with some of these local brands. And then it's really pushing this notion of the online environment. So the omni demand generation is really built around don't develop your media just for brick-and-mortar. Don't develop your media just for an e-commerce platform, develop for the moments that matter. It's independent of where people are shopping. And that scale advantage that we have and that know-how that we're building that you've seen Caroline demonstrate today is a real competitive advantage for us to use in whether it's a small market like Peru or a large market like Brazil.

All right. I think we'll end it there and take it over the breakout. Join me in thanking Colgate for -- CAGNY yet again.