Kimberly-Clark Corporation (KMB) Earnings Call Transcript & Summary

Good morning, and welcome to the Kimberly-Clark Third Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the floor over to Chris Jakubik, Vice President, Investor Relations at Kimberly-Clark. Chris, please go ahead.

Thank you, and good morning, everyone. I would like to remind everyone that during our comments today, we will make some forward-looking statements that are based on how we see things today. Actual results may differ due to risks and uncertainties, and these are discussed in our earnings release and our filings with the SEC. We will also discuss some non-GAAP financial measures during these remarks. These non-GAAP financial measures should not be considered a replacement for and should be read together with GAAP results. And you can find the GAAP to non-GAAP reconciliations within our earnings release and the supplemental materials posted at investor.kinberly-clark.com. With that, I'll turn it over to Mike for a few opening comments.

All right. Thank you, Chris, and thank you, everyone, for joining us. This week marks a new chapter for Kimberly-Clark. We officially completed our acquisition of Kenvue, a defining moment in our 154-year history. We're delighted to welcome the talented Kenvue team. team. The closure of this transaction marks a major milestone in our power and care transformation, a year of rigorous integration planning and the starting point for an exciting future defined by extraordinary care. We have created a portfolio and set of capabilities uniquely positioned at the intersection of fast-moving consumer goods and health care. Our companies share a rich heritage. We pioneered entire categories providing everyday essentials that serve billions of people around the world. Consumers have been loyal to our brands for generations because they trust us to provide better care for them and their loved ones. We formed deep life long bonds with consumers and translate that intimate relationship into significant lifetime value. And now we have a generational opportunity to do even more. Everyday health is becoming more personal, more proactive and more essential. With the addition of the Kenvue brands, we will be there for more people in more places and across more everyday health needs. That is the aspiration that guides our new company, better care in more hands to enable smarter health. From baby care to women's health to active aging, consumers require and deserve a higher standard of care, and we will meet that moment with exceptional science-backed innovation and best-in-class execution that continues to raise the standard. We're energized and more ready. We work to strengthen our base business, enhance our capabilities and build our combined team. And now our team is heads down focused on execution. Near term, we will enhance performance, efficiency and effectiveness by applying our proven operating model. We'll reinvest in our brands to ensure we're delivering superior brand propositions across the value spectrum. Medium term, we will benefit from category and geographic expansion. And longer term, we will capture secular growth tailwinds. Our teams have worked hard to map out our integration, and we've implemented the leadership team and operating model for the new company. Executed critical day 1 priorities and sequenced multiyear systems and process integration road maps. We've got a running start and our priorities are clear. We will execute with excellence deliver against our synergy commitments, strengthen our core brands and businesses and see growth. Now to deliver the value of the combination, we have a clear 3-phase plan, ready, set and grow. Ready covers the first 100 days when we will set the tone for the new company. And in this first phase, will ensure seamless operations and deliver quick wins on synergies. I'm confident that our shared commitment to care and strong execution will enable us to deliver generational value for consumers, customers and shareholders. Now looking at the third quarter, we delivered solid results driven by our durable operating model, which overcame challenging one-off headwinds. The underlying health of our base business remains strong, and we have sustained momentum. North America continued to show strength in tissue and share gains in K-C Professional, and we are driving performance in personal care. We also delivered across our international personal care focused markets, including South Korea, Brazil and Indonesia. And as we move into the fourth quarter, we're focused on applying our playbook across the combined company and our durable powering care growth engine will continue to power and strengthen our performance. We're confident in our ability to drive sustainable growth in 2027 and beyond. I want to thank the teams who have made our transformation possible and executed this acquisition with such dedication and focus. We're excited for this new beginning and the future we're building. Kimberly-Clark is a new kind of health and wellness company and extraordinary starts today. So with that, I'd like to open the line for questions.

[Operator Instructions] And your first question today Dara Mohsenian from Morgan Stanley.

so we've had some press reports that have cropped up more recently, cost pressures, even with oil coming back down on the last couple of days here. You've been dealing with the China issue. Just to maintain fiscal '26 guidance, just wanted to get a sense of what drives confidence there and maybe some of the key assumptions driving the underlying Q4 delivery. And then for '27, the opposite question, which is you've laid out adjusted earnings dilution not expected to be more than mid-single-digit dilutive versus stand-alone K-C but you've got potential synergies. It could be pretty robust. There's a couple of onetime items from '26 like the fire, the China issue that could get better. So 1 could be more optimistic. So it'd just be helpful to hear some of the puts and takes for '27. Now that the deal is officially closed, particularly synergies and reinvestment needs and any of the other key factors you would call out for next year?

Okay. Dara, maybe I'll start, and I'll ask Nelson to chime in, but I just kind of want to give you some overall perspective on how we're thinking about the balance of this year and then a little bit into '27. But I will tell you, the overall is we feel great about where we are and what our plans are shaping up to be. In the near term, we're very focused on executing and building sustainable momentum. And part 1 for me, the priority is we're going to focus on executing the integration seamlessly. As I told the organization in multiple town halls and my perspective is I want the integration to be boring for the organization and also for our customers. And then that means is in a pragmatic way, it's exciting that we're coming together, but we want to be able to operate. And our euphemisms internally would say, "Hey, we want to be able to ship product, pay suppliers and pay people." Right? So that's kind of the paradigm that we're operating in. We're very focused on the fundamentals. I will tell you, as of Monday, we implemented the new organization structure and the new operating model, and that's off to a great start. There's definitely lots of work ahead because obviously, as we come to the coming weeks, especially into 2027, we'll be making some staffing changes, system and reporting changes but that's all going to be very, very well sequenced and we feel great about that. And so I mentioned this like 3 stages of how we're thinking of integration ready. That's really about flawless execution through the first 100 days. Set is really about 2027, which is making sure we're set establishing a sound foundation for growth and then grow is unlocked in the full potential of the company, right? So I think that's kind of how we're thinking about the integration. I think part 2 is the second big priority for me and my leadership team is we're focused on improving the momentum of Kenvue and K-C brands, right? I will tell you, self care and essential care performance was solid in the quarter. You guys probably already saw that. It was up 3% organically. We take a look at a detailed by category [ pipe ] time period scorecard of the Kenvue brands every month in our monthly trading updates up until we closed. And I would say for a scorecard that looked 100% red this time last year, Nelson, I think you would agree. I think when we had our view last Thursday, it was 70% green. And so I think the Kenvue business is turning and turning pretty well. But the other areas where we've got to get improvement is some on the K-C brands. And as you're well aware, Dara, that we had the social media crisis that was proving to be false based on false information, but it did impact our business pretty significantly. And so I think it's going to take us time to work it back. We're very confident we'll bring the business back and ultimately regain our market leadership position, but it's going to take a little time to rebuild that. And then the last area is we were looking for improved performance in North America skincare, North American oral care. And then a little bit on the K-C side, the personal care, we'd like to improve our execution in pockets, including in North America. So again, I think that's kind of the overall -- where the first couple of priorities are -- maybe the thing I'll click on underlying all that is we're going to stay very balanced and focused on creating shareholder value over the long term. And that means, as you might expect from us, we're not really going to sacrifice long-term value to manage to a short-term number. We want to make sure we can invest in the brands. The China diapers is a case in point. We're -- the business is has taken a hit, but we're going to continue to invest through the cycle to make sure that we build that business back to a -- and so ultimately, we're a flywheel growth company, and that means we want to be able to invest in our brands to drive growth, and that will create a virtuous cycle of growth. And so that's kind of where our focus is. But I think Nelson, maybe we'll give you maybe some of the additional details.

Yes. Just to unpack a little bit, Dara, I mean a few things. As Mike said, we feel pretty good about where we stand today. And more importantly, we're taking a very disciplined approach to the first year of the combined company to ensure that we have sustainable profitable growth in the mid to long term. . As a starting point, I mean we're on track or ahead across the key deal metrics that we laid out a year ago, including closing of the transaction, the synergy pacing, the cost of capital and the operating momentum across our legacy stand-alone Kenvue card business, Kenvue our new categories, and Arbex, which went live July 1 of this year with our joint venture partner, Suzano. I think in perspective, as we head into the balance of the year and 2027, our first full year as a combined company. For a transformation of this magnitude, I mean, we remain on track on both earnings accretion and importantly, approximately getting to about a 2x leverage by the end of the second year of the transaction. Now going into your question on 2026 and then next year. First, our outlook, and that's, again, stand-alone Kimberly-Clark, reflects stronger underlying business momentum that the headline third quarter results suggest, along with a strong global commercial agenda for the fourth quarter, that's underway. We also expect to benefit from incremental cost mitigating actions that were taken in the third quarter. This includes all the elements within our integrated margin management, [ toolkit ] revenue growth management, productivity and other measures that the team has already activated. And the other bit to take into account is that we have an easier comp in the fourth quarter, particularly for our North America business, which, as you might remember, had a lower growth in the fourth quarter of last year. And then the other bit, as Mike mentioned, is we will remain pretty disciplined in the balance of the year, that is in the next 2 months. and we're reserving the flexibility to pursue value-creating investments that can accelerate our longer-term agenda, if attractive opportunities emerge between now and the end of the year. Now looking into next year, 3 things that we're focused on: first, delivering the deal synergies; second, strengthening the core of the 2 businesses; and then third, seeding future growth. As it relates to deal synergies, we are on track with our synergy plans and the actions that Kenvue took at the beginning of this year actually position us well to have a strong start as we get the 2 companies operating on a combined basis now. The other bit on -- is on strengthening the core of the businesses. We continue to expect a gradual return towards a category level growth, particularly in the new categories that have come into the business. And this will be supported by increased investments in marketing, innovation and R&D. At the same time, we'll be sharpening the portfolio and improving execution. And this will include SKU rationalization, increased service levels improvements, all of which can create some near-term impacts as we position the business for healthier, mid- and long-term growth. And then lastly, on seeding our future growth. We are also making targeted upfront investments behind our biggest categories and the opportunities we see, recognizing that the financial contribution will build over time. So overall, Dara, we feel pretty good about where we stand today, and we remain on track against the assumptions we established a year ago, and will preserve flexibility to invest appropriately behind the business over the next few months and in 2027.

I feel like we hit you with the fire hose.

Your next question is coming from Peter Grom from UBS.

So I wanted to just ask about North America I know there are a lot of moving pieces here, but would love to get your perspective just on the health of the business, given weaker share performance in the last couple of quarters and the pricing lower. So just any perspective there and how you see that evolving as we move forward?

Yes. Thanks, Peter. I will tell you, I'm confident in the underlying health of the North America business on the K-C side. Well, actually both sides, I think -- but I think that question was more directed on the K-C side. The underlying health of the K-C side of the business is solid. It was a soft quarter. Definitely, Peter impacted by a few key discrete impacts, the largest, I think, which is again, retailer inventory changes, which for us in the quarter was about 130 basis point headwind. We did postpone a major new product launch. And again, that's maybe an executional issue within the house. We had a new manufacturing asset to produce the new product out, and it wasn't putting out the quality that we wanted. And so we pulled it back and we'll be launching it likely next -- early next year. And so that was probably the second big one. And then there is some share softness, primarily due to club distribution changes in baby care, which I think you guys are all well aware of. And so those are a few of the big impacts. I do expect overall in North America, our execution to improve. I'm really confident in the innovation pipeline I think the brand investments that we have and the commercial capabilities, as you guys are well aware, we have a great customer organization. Our e-commerce business is growing double digits, I think, north of 20%. And then the other area, Peter, is tissue is performing very strongly, both on the consumer side and on the professional side, and we feel great about the performance there. So overall, for the year, I know you probably want to talk a little bit about promotions, but I think we expect our pricing overall for the year to be about relatively flat. And so again, while I think it's maybe 2 quarters are a little softer than what we're used to. We do expect to improve our performance in North America.

And just to add a couple of numbers, Peter, for you. I mean, one, keep in mind that the club distribution and diapers and training pants, it's about 1 point of headwind in the quarter for North America. And then also to reiterate what Mike was saying, in tissue, we gained overall 20 basis points share on a weighted basis in the quarter. And that's on the heels of 2 straight quarters of continued strong performance [indiscernible] underlying health of the business in North America is strong. And again, as we've got strong activations and innovations in the pipeline, which will continue into next year.

Just to add 1 point there. I think as you're tracking, Peter, I think you mentioned the patterns on pricing. As you look at it, year-to-date, total company pricing is down about 70 basis points, 80 basis points in North America, and that's having lapped our least intense quarter of programming last year. If you recall, we shifted some programming from Q3 to Q4 last year. So Q3 least intense period and we're about to lap our most intense prior year period of programming in Q4. So as Mike said, when you think about the year, we'll probably land pricing relatively flat. So you kind of get on a sequential basis, a little bit of a pickup in terms of what that pricing profile looks like.

Your next question is coming from Michael Lavery from Piper Sandler.

I just want to come back to Kenvue, your excitement over the deal is clear. And I just want to see if you can help us understand a little bit better how to think about some of the brand's health momentum. They've obviously been a little quieter since the deal was announced but you guys have been working with them closely. Can you just maybe give us a sense of -- maybe first of all, some of if or how their brand-building framework that they used, how it compares to yours, what similarities or differences there might be? And just how to think about the opportunity for the organic growth because I think some of the cost savings potential is -- it feels a bit more straightforward. But I know there's also a real focus on just building that top line momentum. Can you help us understand how you see those building blocks there? And maybe some kind of your take on the recent color from their side.

Yes. Okay. Michael, great question. I will tell you -- I will give you a little color just recognize it's day 3 for me, officially. So I want to try to give you a little more context for how the brands are doing. I will tell you, your overall question, and I think I said this a little bit earlier, A lot of the challenges that they've had over the past few years have been, in my mind, 100% executional, and I don't think I've found any that I perceive as being structural yet, right? And so -- and so -- but I do -- what I will say is, I think, Kirk and the leadership team at Kenvue did a phenomenal job pivoting when Kirk gotten that chair. And I think this goes back to it and this is where Kirk and I bonded because we were kind of trained by the same people. And so we have a similar philosophy on how you support brands. And so I think Kirk made a lot of big moves to strengthen the execution. One of the most important was, at the beginning of January, he flipped the operating model, which matches almost exactly with ours, which is why we've been able to so seamlessly move to the new org structure on Monday first thing, and we're operating in a new model. I will tell you, I'm encouraged with Kenvue's Q3 performance, as you guys probably saw organic was up about 3%, and we're seeing some positive momentum. I think there is plenty moving in the right direction. And maybe I'll note a few things, Michael. OTC overall, I think, is performing well in my book. [ TENA ] for the year, I think up somewhere between low to mid-single digit, I think, which is a great rebound. I think in the quarter, it was up about 70 bps of share. Also in OTC, Nick -- it is up about 7% year-to-date, [indiscernible] up 5% year-to-date. Love the advertising they're doing to drive kind of category expansion with Sanjay Patia. And then I would say, overall, hair, very good. Row gain. Surprisingly, I didn't know this, Michael, but it may be driven by some GLP adoption, GLP-1 adoption. So [indiscernible] is up 30% year-to-date. OGX, the shampoo is also performing very well. And then in Essential Care, the baby brands are up about 5% year-to-date. Band-Aid which is a great Halloween giveaway is up 4% year-to-date. And so I think there is plenty of moving in the right direction. Again, what's driving it, and this kind of reflects maybe a personnel choice I made more recently, North America, it's clear -- Carlos and I also have a very similar training and he's very focused on the core aspects of execution, which DPSM is the shorthand, which is distribution, pricing, shelving and merchandising and focusing on execution, which I think, Michael, have been a little bit off of the focus area for Kenvue in the past. And I think we are seeing -- really that kind of performance is really driven by better fundamental execution across all those levers. I think we're not out of the woods yet. And so the areas that we got to improve, I would say they're stabilizing, but there's plenty of work left to be done. Skin care was down just a little bit under 1 point year-to-date, and that's versus a category that's up about 4 or -- and again, I think the team has taken steps to improve execution there. I think medium term, and this is my perspective and it still needs to be worked through the team. I think it's about resetting the assortment. I do think there's some extensions that we've done with some of the brands that will require a reset over time. And the other area for me and [ John Halverson ] knows this, and he's going to -- he's totally up to the task, and I was just with him and the agencies a couple. We've got to improve the creative execution. And I'm looking -- while -- in skin care, the marketing investment is fine and it's competitive with the category, I think there's room to increase our investment there. And then the other area is oral care, Listerine year-to-date, down about 2 points. For me, this is in my opinion, which is I think we need to simplify and clarify the offering and the key benefits for the consumer. Given the leadership share position that we have, I mean, a very, very strong leadership position in the category. For me, it should be similar to what we've been doing with Kleenex and the Penn and Poise, which is focus advertising on expanding penetration and frequency of the category. And so that's kind of the focus area for us. Beyond that, Michael, I would say longer term, there's a lot more headroom in these categories than I originally thought when we made the initial announcement. It's going to take some time to get there. We're not going to take shortcuts. We will build through the fundamentals. And so what you'll probably see in '27 is A little bit of a conservative approach that we reflected in our 2027, '28 outlook. We want to create the room to accelerate investments and get the brands in a better position to grow. And Chris tells me to tell you that we're going to share more at CAGNY.

Your next question is coming from Chris Carey from Wells Fargo.

First, Mike, just can you talk about the team's ability to deliver on this integration and synergies while continuing kind of operational excellence on the legacy Kimberly-Clark business with a key leader leaving in restore and at how you're backfilling and making sure that you don't miss a beat. That would be question number one. Just love some context on that. . And then for Nelson. When you say mid-single-digit dilution for 2027, just to be clear about this, are earnings down mid-single digits in 2027 than [indiscernible]. That's my interpretation which I think is what you're saying, but I'd just like to confirm that. And then within that, can you just talk about the treatment around amortization going forward in the non-GAAP numbers and what's reflected in the outlook for 2027 and going into 2028?

Okay. All right. Thanks for the question. Let me start with the team. Look, I feel great about our leadership team, and I think we're really well positioned to deliver generational value. You may know that -- I may have mentioned this before, but we did detail assessments on every leadership team member for both Kenvue and K-C kind of going in as I selected the staff. . I think Nelson told me he spent 7 hours being assessed. And so we took a very detailed approach and we used outside experts to kind of help us do that. So I feel very good about the talent that we have in the room and the selections. Certainly, I guess I will say, first and foremost, I'm excited for us and his new adventure. And I think not knowing that much about that business, but I think they found a good one, right? And so I'm excited for him. I would tell you, his departure probably reflects a change in timing for both of us. It should be clear to all of you that within K-C, we were on a path of transition. And but when we have the opportunity to create this, I would say, combination that would create generational value, I think the timing for me change and the timing for Rus changed. And so -- and you're only going to have this time of your life once, right? And so I'm excited for him. I will tell you, parenthetically, I love being more directly involved in all aspects of the business. I'm not sure the team enjoys that as much, but it's kind of more akin to what I'm used to doing. And so I think, hopefully, that will have a positive impact. Let me tell you the IMO is in great hands with Jeff Melucci, who put a lot of this deal together steering the process and then Nelson, who you would really want tracking and making sure that the teams are ensuring synergy delivery, which lines up with financial delivery anyways. The big note that I should point out is we had transitioned about 60 days ago from an IMO led implementation of the synergy delivery to a, I would say, ELT led, right? So each of the ELT team members or enterprise leadership team members, whether they're a business unit owner or a functional owner are accountable for delivery versus kind of a group in the center. But Nelson is going to oversee that. So again, I feel very good about where we are at the team, and I feel great about the people we have on the team.

Yes. And then Chris, going into your questions around the modeling and the outlook we gave when we announced the transaction. First, all comparisons are against K-C stand-alone. That's the first bid. We will come out with pro formas and all that in more detail as we get into reporting actual results for full year '26. And put that forth so that then we can start comparing that in that way. So when we talk about mid-single-digit dilution and then snapping back, that's exactly it. So for 2027, that's what we would expect, but that is against a stand-alone Kimberly-Clark EPS. And that would, of course, be reflective of the fact that we would have the amortization of the intangible assets and go into that, the treatment around amortization is, as you remember, Kenvue was adjusting out their portion of amortization of these assets, we don't. It's not in our policy. So we actually, we'll keep that within our non-GAAP metrics. So that's the element that's there for modeling purposes. And we have that reflected also in the latest performance that we filed as part of the recent debt issuance. Then as we step into 2028, what's going to happen is we expect to have a year that's on algorithm on a 2-year compounded basis, which would be in the mid- to high single-digit EPS growth on a compounded basis, 2 years versus the baseline of 2026 stand-alone K-C.

Your next question is coming from Javier Escalante from Evercore.

Congratulations on completing the merger. I would like to double click on diapers, if I may, both in the U.S. and China. How is your diaper business performing outside club? What is the competitive dynamic overall. What we see in [ Serkan ] is these Chinese diapers are leveling off and wonder whether that opens up an opportunity to restart a premiumization cycle after 2 years of promos. . And number two, in China, I know that is [ 11/11 ] social commerce is a big deal there. How are you using this to build trust any early reads on equity, how the messaging is landing. I know that you said that the recovery is going to take time. But anything -- tell us how you're dealing with this, and I have a follow-up, if I may.

Okay. Thanks for the question, Javier. Great to hear from you. Look, I feel great about overall our diaper business. I know it's been a choppy couple of quarters, but when you I think when you take 1 of the best performing businesses we have in the world and chop it by 70%, it's going to affect the business. But I would say the underlying kind of strength of the products, I would say, the performance relative to competition of the product, I think we feel great about and then the innovation pipeline that we have. So we've got a proven strategy to elevate and expand the category to your point, right? And so -- and that's what we're going to continue driving. We know how to win in the most competitive markets in the world, especially China, and so our playbook is to drive that innovation that grows categories deliver superior value propositions across all value tiers. Our strategy internally is really, Javier, best product at the lowest possible cost, right? And then when we do that, that creates the room to invest in building brand love and driving really compelling activation. I'd say -- I'll start with North America. I think I'd say we've seen solid performance in North America over the last few years, gained share 2 years in a row leading up into this year, despite increasingly intense, I would say, promotional environment. I think we feel like we have the best innovation agenda that we've had in a very long time. To your point, I would say premiumization continues to create some tailwinds. Just for reference, I think when I joined the company, I think we were about 30% of our business overall was premium. Today, we're well over 85%. So I think what you articulated around driving premium mix through offerings that offer that better performance for consumers is the core of our strategy. I think we have seen over the past few years, the entry of some lower-priced diapers, a lot of it coming from China. Our attitude is, while we've been -- we compete with 200 diaper brands in China, we've been beating them there. And so we feel confident we can beat them here. And so for us, our approach is, hey, let's make sure that our value propositions are sharp and that we continue to bring the innovation. And so we have things like [ HUD Fit 360 overnight ] we're excited about 1 that will prevent diaper rash more specifically that we'll be launching in the first quarter. So we've got a lot of great news. I would say, as you point out in the U.S. The majority of our share decline in U.S. baby care was driven by distribution changes in club, which we're working through. I would say if you look outside of it, Javier, your overall across BCC or our baby and child care, more broadly, our shares overall slightly up. And so we feel good about where that is. But we're going to stay focused on executing our playbook. I'll pivot to China. Just to kind of give you all the context, the Chinese authorities refuted the false allegations that were -- and they declared that Huggies were safe. And so that was really important Sam or the authority that had jurisdiction there confirm the quality and safety of our products. And I will tell you, they were very complementary of how our teams engage with them through the whole discovery process. At this point, Javier, demand has stabilized, I'd say it's improved slightly. But recovery is going to take time because here's what I've learned, which is like Bad news goes viral, and good news does not right? And what that means is like then we have to build -- put the good news out ourselves, and that's going to take a little time, right? But again, as I told the team in Shanghai, like if there's any team that knows how to do it, it's that team, right? And so again, we're focused on rebuilding consumer trust. We're elevating transparency directly with consumers. I think we have I think a glass box look into our production facilities for consumers to look at. And then a regular update on, they can see kind of the quality coming off the line. And so I think we feel great about that innovation. And so I think we -- it's probably no team. I'm more confident in than our China team. And I think the long-term health of our China business, I'm excited about diaper specifically, but I'm also excited about how the China team, together with the Kenvue team, will build the Kenvue brands in China as well.

This leg will pass, I guess. I interrupted you. Go ahead.

I was just going to say you asked specifically on 11/11. I mean that's a hard -- so the reality, Javier, is that it's going to take some time. And 11/11 is already, if you were pipelining and creating everything that already went through. So I -- it's something that as the news came out, it was right upon us, and we still expect the business to be subdued in the fourth quarter because of where we're at and the timing of when the government came out with the results favorable to us. But again, we will take the time. We will make the right investments in order to make sure that Huggies gets back to its rightful place in China. And as a reminder, right before this, we were right around 20% leadership, number one, gaining share for 5 years straight at about 200 basis points a year in our business in diapers in China. And -- we're absolutely focused in making sure that we regain that.