Colgate Palmolive Co (CL) June 3, 2026 Conference Transcript

Okay. Welcome back, everybody. Thanks for joining. For our next session, I'm very happy to welcome back Colgate-Palmolive Company to the conference with a new face, new face to at least within the Colgate family. Shane Grant, Chief Operating Officer of the Americas is with us. Some of you may know Shane from his time at Danone or prior to that Coca-Cola, but welcome, Shane. And also John Fauche, who is Executive Vice President of M&A and Special Projects.

Good to see you, Steve.

We're going to use the entirety of our time for Q&A. And Shane, I'm just going to start with you. As I said, first appearance at the conference with Colgate. You've been with Colgate, I think, almost exactly a year as we stand here today. and I guess what you know reflecting on those first 12 months what are your not so first first impressions and I guess what stood out most positively as you've joined and and also where do you see the biggest opportunities for Colgate as you look ahead yeah thank you Steve and good to be here with you in this relatively new capacity to have this exchange look maybe maybe firstly in my first year you You know, I've been head down, unsurprisingly, head down really focused on learning the business from every dimension horizontally, but obviously with a deep, deep focus on North America and

Latin America. Maybe a few impressions, and to sort of start from the top, I mean, the purpose of the company grounded in health, you know, if you think about where the consumer is today and where the consumer is going, the sort of notion of health at scale, which the company stands for, I think is hugely compelling for our teams and certainly for me personally. So that would be the first thing I would say. The second thing, you know, coming into the company is just how impressed I have been at the progress and the journey the company has been on in executing its 2025 strategy, which obviously concluded at the end of last year. And under the leadership of Noel and the leadership team of the company, just what I would describe just a massive transformation of the business model of the company. you know, a business model which is about top-line growth, about margin expansion and reinvesting into the business and the brands, and I think that's been an incredible transformation of the business. Maybe the third thing I would say is, you know, what's really impressive is I think the capabilities that have been built, you know, and you've, I know, exchanged with the team on some of them in the past, but you look at the AI and data journey, the RGM journey, the science journey, and I think it's just really, really impressive the progress that the company has made and then lastly the other the last piece that's just incredibly striking is culture and you know this is a company which is blessed with long tenured people that deeply care about the company. To the second part of your question in terms of opportunities look I would say that Steve is really guided by the 2030 strategy you know if you look at so the evolution of the strategy it's categories and brands at the centre and increasingly the way we're thinking about that mission is through the lens of top category country combinations and driving those with high conviction but absolutely brands at the center. The second thing I would say in terms of opportunity is the journey we're on on Omni demand generation which you know is a hugely compelling space to build a next generation of demand model for the company. The third piece I would sort of point out and is under the capabilities which is innovation which you know a high high conviction to step up the intensity of the innovation and in a period where we think probably macro we're gonna need to find ways to make volume and in the pressing and so that innovation quotient of the company we think is going to be really really important and then probably on the same theme you know it's going to be a pretty volatile environment it's already a pretty volatile environment and I think the international footprint of the company is going to be to the fore and in that environment because we have people that are used to dealing with this kind of agility and that kind of experience in a company. So look, a terrific first 12 months, much more to go and learn about the company, of course, but maybe some first impressions.

Yeah. Yeah. And I mean, I think the, from the outside, the capabilities journey, I mean, all of those things resonate, but the capabilities journey up to 2025, and then extended now out to 2030 has been pretty compelling. How does that translate into operating priorities for the Americas region? We'll get into differences between North and Latin America in a bit, but just overall, how do you frame the key priorities for the region?

Yeah, probably unsurprisingly, Steve, that 2030 agenda, you know, it's a huge influence and trickled down onto the agenda from an operating point of view into Latin America and North America. I mean, I think if you think about the innovation agenda specifically, again, that starts with the brands. And, you know, the way we're thinking about that in both of the geographies but I think across the company is really firstly just core excellence you know the superiority of the core brands investing in those core brands making sure those core brands are vibrant and healthy but then certainly innovation and a stepped-up agenda and if you think about you know Latin America and you think about the innovation agenda through the lens of socio-economic level and the pyramid and shaping the innovation agenda to deliver for all extremes in that pyramid we think that's going to be really really important and increasingly that's true in the US you know the dynamic of a k-shaped economy we see is alive and well in the United States and so thinking about the innovation agenda to serve all parts of that pyramid but for us in particular it's a huge opportunity around premiumization so you know that would be I think the innovation piece I think on you know the omni demand generation this notion of a 21st century demand model of the company I think is relevant for all of our geographies but at the center in North America at the center in Latin America and you know I would describe that as figuring out ways for the company to win today so you think about the channel environments that we need to be competitive in if you think about the US for example it's pretty clear got to win in mass you've got to win in club and you've got to win in digital commerce and so it provides a really clear roadmap but also with an eye on the future and you think about the capabilities that we're building around social commerce agentic. So you know that duality of kind of setting up the ODG model for this two-speed delivery. And then revenue growth management which you know I think if we buy the hypothesis that this next five years we're going to need to find new ways for the industry to grow, our categories to grow, revenue growth management we think is going to be a really important tool, that I would describe as sort of the fundamentals of good pack price architecture but also employing some of the next generation tools we have in the business like Promo AI which is really allowing us to step up the precision and the frequency of price adjustments with our customers to be able to deliver better RGM outcomes.

So NetSteve highly relevant to North America and Latin America as you would expect with maybe some specific application which uh which we're excited about yeah um you're in a unique position because you know latin america represents kind of the economic engine for colgate multi-decade strength dominant market share in in some key categories and and north america by contrast you know kind of the biggest opportunity for incremental improvement um you're drilling it how do you compare and contrast and what are some of the um strengths in latin america that could be leveraged in North America or maybe vice versa yeah I mean clearly Steve those businesses are in different start points I mean it's obvious from the

results they are and we're crystal clear on that I mean maybe to comment on you know Latin America first you know if you just stand back from that business sort of from a fundamentals point of view and I've been spending a lot of time you know with our teams right across Latin the fundamentals of that business are just mightily impressive you know enormous brand strength market leading household penetration incredible loyalty just you know really a powerhouse brand led by the colgate brand underpinning that is just real execution muscle across a diverse set of channels but just huge execution powerhouse in latin america and then thirdly people you know long tenured experienced expert operators of our business in latin america and so just fundamentally that business you know is really sound and it shows in the results you know the current environment we see the categories you know relatively healthy somewhat pricing led but still underlying volume growth positive market shares across most of the geographies total progressively recovering but the team doing a very nice job in terms of premiumization with platforms like optic with good success with innovation like purple so you know fundamentally we feel good about latin america the results are good and we expect that to continue north america obviously a very different start point and you know noel mentioned you know now on a couple of conference calls that it's a real focus for us as a team it's clearly a real focus for me and our north america group and our leadership team you know fundamentally the mission there is to improve the organic sales growth i mean that's the number one mission that we are aiming for to give you a sense of sort of the dynamics you know if you kind of roll back to sort of February 2025 the categories themselves you know I would describe a sort of moderate growth but pretty consistent growth we have seen in the first weeks of May some degradation in the categories we have seen those categories markedly slow so obviously we're watching that and preparing the business to respond to that dynamic and to some extent it's probably unsurprising given the state of the consumer and some of the obvious pressure on the consumer, and then there is a structural underlay of this K-shaped economy which we see only sort of becoming more dynamic. From a market share position, you know, we did see some share on oral care in the first quarter, we've seen that somewhat stabilize. The path back on that is premiumization, premiumization, premiumization, which, and we started that journey, you know, so the relaunch of Optic was a very, very good first step. We see some initial positive response to that. We're also doing what I would describe as some surgical interventions on some pricing action where we see some promotional intensity starting to tick up. The categories have remained largely rational, but we have seen some slight uptick in activity which we're dealing with. And then the other lever we've got in North America, more short term, is our home care business in particular, which has performed very, very well. Brands like Fabuloso, Suavitel, which we think can be big growth engines for the company. So So obviously, a lot of focus on that business, the categories underpin by ODG and some step up we can do in some channels, and then underpin by really rebuilding a much more assertive innovation pipeline, which we've made very, very good progress on.

On the, you're not the first to observe recent slowing in North America. I guess your perspective on, you know, how much of a concern is that? Do you expect, do you see that more as, you know, is it more, you know, in your base case, a timing blip and that, you know, we kind of resume, you know, still modest levels of category growth? Or do you see, you know, more risk that this is a real inflection to the downside?

Look, it's probably honestly, Steve, too early to tell. You know, we've seen some of this degradation occur really from the start of May, so it's take it for what it is, which is three weeks of data. So we will see where the consumer settles. You know, we're obviously preparing the business with a portfolio lens in mind through the lens of how do we think about the business in terms of the right kind of stratification of the business. We want to be able to serve the lower end of the socioeconomic consumer base exceptionally well, and we have the tools for that with a platform like Cavity Protection, for example. we want to be able to serve equally the premium consumer and you think about the role of the brands like hello or optic you know we have the ability to serve both ends of that consumer spectrum but steve those dynamics would be in the strategy anyway yep and it's just how we adapt those strategies for the moment as opposed to sort of wholesale shift in the business yeah the i guess it and noel has mentioned a strategic reset in the u.s and i'm i think you've just touched upon components of that.

But, you know, some of those components innovation, RGM, you know, aren't not really new. So is it is the is what's new, just the elevated focus that North America is getting within the broader corporation? Is it, you know, we need to be tighter on execution? How would you how would you define what's changing in North America?

Yeah, look, firstly, Steve, I think, you know, on the North America question, we have spent the last number of months, and Noel has referenced this on the calls, doing what I would describe as a deep diagnostic on the business, and you know that is not evaluation of the last quarter, it's really been an evaluation of the last decade, and you know obviously when you take that sort of a view on the business you can see some exceptionally good things, and there are some really really exceptional things in the chassis of the North America business that we think we can accelerate, and then there's clearly some things to fix but we've also looked at it through the lens of where do we think the consumer is going where are the big revenue and profit pools in the market where the channel bets we want to make so it's a pretty comprehensive piece of work we've done I think to answer your question you know the go forward plan has got all the components you would expect it to be to be an end-to-end plan which is you know it makes pretty clear choices across the portfolio of the brands that we think we can really scale and bet on you know I would tell you for example in oral care the opportunity we have for premiumizing the business is just enormous just enormous both in the emerging brand spaces in whitening and then whole new segments that we really have not penetrated today so you know I say we conclude that piece of work on oral care being really optimistic about the potential of the business underpinned what is still today the most powerful brand in the category in terms of consumer relevance same logic on home care where we have you know some businesses that we think have been probably under leveraged with enormous potential on a go-forward basis same on personal care so you know we've done a pretty deep dive in the categories to look at what are the brands that we want to really prioritize and invest in and innovate on on ODG and the channel selection again a pretty clear picture some immediate channels that we need to went in an up weight that we talked about, some channels that we need to prepare for for the future. And then, you know, on the innovation front, the team has done, I think, some excellent work to rebuild a pipeline of innovation at scale over the next three years. Now, obviously, it's going to take us a while to deploy that, and some of them are going to be tactical, and some of them are going to be very big scale in nature. But we've thought about that challenge through multiple dimensions. We've thought about it through the lens of a constant renovation of the core. We've thought about it through the lens of new, wholly new, big-bet innovations we can make. And we've thought about it through the lens of retail environment-specific innovation. All of that underpinned by capabilities that you mentioned that we think we can take from the company level and apply much more assertively into the North America cell. Well, the last thing I would say is that this sort of re-evaluation of the business has given us an enormous opportunity to re-engage our people. And the power we've seen in being able to communicate with much more to come, here's the roadmap for the business, gives our teams a real opportunity to really buy into that roadmap and be part of that turnaround story. And, you know, we've seen that enthusiasm build in spite of the current results. So, look, long way to go, Steve, but we feel really good about the work we've done and a lot of execution ahead.

Great. One last question on North America, which is you spoke to innovation, premiumization, service in the upper end of the K. At the same time, a lot of the center of gravity in Colgate's oral care franchise and definitely in home care and personal care is in the value area. Is there, are there opportunities to lean into some of those brands and lean into value to service the more strained end of the K?

Absolutely, yes. You know, and we think about really the full revenue growth management playbook. As you said, you know, we've got brand platforms that serve that bottom end consumer exceptionally well today, and also for us perform a very clear role in the business. You know, if you take a platform like Cavity Protection, for example really important business for us serves a mid to lower socioeconomic consumer plays an important volume role for us and we will absolutely keep providing energy behind that if you think about brands like fabuloso and suavitel they sit slightly below the category average price point really important platforms and we can premiumize those brands so for us it's very much and and as opposed to an or you know we want to be able to service the full market, particularly in the context of this case shaped economy, which is something I think you've done well in Latin America.

So pivoting, kind of back to Latin America, you mentioned, you know, relatively resilient and broad based for, you know, performance, thus far this year, and for a while, I guess, as you as you your attention focuses increasingly on North America, how do you, you know, maintain that consistency and that growth in Latin America, especially, you know, should macro conditions soften?

Yeah, I think that I think continuing to extend the strength of that business that we talked about earlier, I mean, I you know, if you think about the foundation of that business, because the brands are strong, because we have this execution and go to market capability, the foundations for continued performance we think are just absolutely there. I do think that there will be continued efforts in that business and we've seen very very good progress already around the premiumization opportunity even in Latin America. You know if you think about what the team has done on Luminous for example we've seen enormous pivot to more premium opportunities to continue to develop and grow the category. I also think that there is and this is a longer term item where if you think about the structure of that business in Latin America in some of our markets we have a true multi-category play and in some of our markets we are much more of an oral care centric play and so obviously we are thinking about what is the category shape look like across Latin America over the long term and but doing that very very deliberately you know doing it with an eye on making sure the core businesses today are healthy but over time we see certainly more expansion opportunity in Latin America. The last thing I would say in terms of you know any change in the market context in Latin America or if there is you know deterioration in the consumer context, one of the real strengths of our Latin America business and again back to the team, they have proven remarkable and began to manage through different cycles. You know you talk to our team in Venezuela or you talk to our team in Argentina and they have largely seen it all. And so, you know, the ability of our teams to be able to manage through different market contexts, we have a lot of confidence in, and to some extent, you know, we think that business can be somewhat all weather. So, you know, I think continuing to drive the strengths of the business and a team that can adapt, we think, along the way.

Okay, maybe John, you want to weigh in on this too, but I'm curious, Shane, if you think about leveraging best practices across across the company um you know first off within within your regions even even within sub regions across across categories um how how does that work today how evolved is that is that an opportunity and then how do you engage with panos's organization and how do we how do we share best practices and evolve the broader corporation across regions yeah for sure i mean firstly you You know, if you think about the capability journey of the company, you know, the company's been on a capability journey where it has successfully scaled a number of big capabilities

and done that globally. And that capability build has been led from the centre and driven right across the company. So if you think about the journey on AI and data, if you think about the journey on revenue growth management, if you think about the innovation process that I know we've talked to you about before, those are globally scaled capabilities led from the center and truly global in nature. It's also true that we have some centers of expertise that have naturally emerged in the business. So if you think about the Hills business for example, I mean highly developed capability on the use of data, on the use of the profession and what I think we could describe as a precision marketing model if you think about Latin America I mean the execution power and the customer expertise is clear if you even take North America for example total was born in North America optic was born in North America so we have proven in that geography that we can build big global franchises and then if you think about Asia for example I would say from our perspective probably the leader in omni-demand generation and thinking about advocacy at scale and social first marketing then the question on scale is you know some of it is structural you know our global teams are clearly charged with driving best-in-class execution across the company taking good ideas and scaling them fast you know purple is a probably good example of that born in china and now in every geography in the world and driving very impressive growth it also happens organically and it happens organically in my experience because of the culture we have which is Colgate is a highly networked company and I say that in the best possible way which is we have team members that have been at the company a long time have deep relationships and want each other to be successful and therefore good news travels fast and therefore we get more scale maybe one last piece on that one of the I think really interesting dynamics we're seeing in the business today which is the one application of ai in the company it's giving us an ability to lift and shift good programming faster particularly in marketing communications because it's giving us some common backbones that we can iterate and scale geographically much much faster so look i think a combination of some structural items some center lead items and then a bit in the culture steve which is allowing us scale I think good ideas quickly if I can just add one example to that so

Shane talked about China and social right if you think about as social spreads across the rest of the globe you know historically big CPG companies would be behind in something like that as you think about the rise of social commerce but if we can send our marketing teams which we have in the entire senior team over to Shanghai to see how our China team puts out hundreds if not thousands of pieces of content to adjust to this new social model, understands how you build brands versus simply selling products in this social commerce model. You know, we have great examples internally that our teams around the globe, whether it's in Europe or the US or Latin America or Africa, they can take those examples and actually come out ahead of the curve as we see that social commerce business expand around the world so that we're not operating behind behind some of these insurgent brands, which has historically been where CPG companies have found themselves. Okay, great.

All right, John. Now that we got you talking, let's get you talking about the rest of the world outside of... So in the context of the here and now, talked about some pressure we're working through in North America, relative resiliency in Latin America. As we look around the other regions of the world here in Europe, Asia-Pac, et cetera, What are you seeing and how concerned are we about direct and indirect impact of energy shortages?

Yes, so I think, you know, if we had all sat here on March 1st and talked about where we thought the consumer would be on June 1st with the continuation of everything that's happened in the Middle East, I think we would have come up with a sort of more negative situation than where we're seeing right now, where we would say that the consumer is generally held up very well around the world. You know, I think we have seen less of the type of weakness, even in the U.S., I think we've seen less of the type of weakness potentially than we could have. And so I think that's encouraging. There have been a lot of concerns about the European consumer, about the Southeast Asian consumer. And in general, we have seen less of that indirect impact. I think consumer sentiment is still a little bit soft where we'd like it to be, but better than it potentially could have been. In terms of direct impact from the conflict, very modest. We have, I would say, a smaller than average Middle East business, partially because we just have such a geographically diverse portfolio. So I think we're seeing less direct impact. But the consumer is generally, I think, holding in pretty well. if you look across our businesses you know Shane talked about North American Latin America Europe I think we've been pleasantly surprised by how the consumer is held in you know whether that's Western Europe Southern Europe Northern Europe you know still Europe for us is a little bit of volume a little bit of price and that's been sort of our consistent focus Africa Eurasia which is now merged into the EMEA division you know we're still getting some FX related pricing and which is encouragement we've had a nice volume bounce back and then asia where we had been struggling a little bit from a performance standpoint we've seen generally the consumer hold in pretty well you know we've got big markets like the philippines where there had been some concern from investors about you know how is the consumer going to hold in we think that business has done very well china and india which had been more difficult for us india bounce back, had a great first quarter. We've seen the H&H business improve sequentially. We're getting more of the fundamentals right there. Some easy comparisons, still some work to do going forward. But in general, we've seen that part of the portfolio hold up well.

Have you seen any smaller competitors, you know, get impacted by supply shortages? Is there a market share opportunity out of this?

Or is it more category resiliency? you know we have not directly seen that happen um i think you know there is an advantage to being a scale player in the world when uncertainty comes in you know your ability to go out make the right decisions quickly your ability to secure supply um your ability to look out six nine months and and get the supply you need in order to in order to keep your supply chain running but we have not been hearing of major supply shortages for smaller competitors um you know we think if we're gaining share. It's because we've got great innovation, increased marketing support, we're moving to this omni channel demand generation that Shane talked about, you know, winning on the ground in a difficult environment, as Shane talked about with Venezuela and Argentina. And that's what we do best as an organization.

Okay, okay, good. Hills, pet food, there's been mixed signals, mixed commentary on the relative health and resilience of the category? Maybe a bit on what you've seen categorically and then how the Hills business is positioned against that or aside from that?

Sure. So, I mean, I think we've been remarkably consistent from a category standpoint with pet food over the last 18 months or so, which is we think the category is generally flattish. and what we are expecting as a company is to outperform by several hundred basis points versus the category given the strategic decisions that we've made over the last several years really the last five or six years i know there was another pet nutrition company that talked about you know small dogs cats what have you we have made significant investments over the last five or six years to focus on those under tapped segments where we under index we've always had a strength in dry dog food and you know bigger dogs and so we built our pet nutrition center we built a small pause facility to focus on the nutritional needs of small dogs we opened that about four years ago and that drives a lot of the innovation that we're seeing in the small dog piece which is the fastest growing segment of the of the dog category we've also made a commensurate investment in CAT, where we were undershared in CAT. And really what helps both of those actually is the increased focus on the wet side of the category. We opened our Tongan Oxy facility about three years ago. We needed more innovation, more capacity coming in wet, both in terms of different forms, in terms of stews and mousses and things like that, as well as different packaging, tins, pouches, etc. And so that's given us tremendous power to innovate. So it's the strategic focus on those under-tap segments, small paws and cat, and then the capabilities really scaling the benefits of those capacity additions on the wet side as well.

Yeah. And Hills is generally servicing the less stressed consumer in the US.

Yes. I mean, there's no question that the, you know, where we're seeing that stress is, you know, big bags of dog food, big bags of dry food have gone up in price over the time. So we're seeing a little bit of an impact there on the business. What we've also done is as part of this strategic shift over the last couple of years, we've really increased the focus on the therapeutic side. That's prescription diet, where we have a real opportunity to build the category. That's a lot like what's worked for us so well on the, you know, on the therapeutic side in oral care in Europe, for example, where we've gone into the vets and we've said to them, you know, when a pet parent comes in and their dog has, to speak politely, gastrointestinal problems. you know a better option than antibiotics would be hill's gastrointestinal biome right which is a product that can help stop those problems within 24 hours and so you know we have seen really nice growth on growth on the therapeutic side which again is really you know where the hardcore science comes to play for hills so we feel good about both sides of the business but prescription diet even higher price points attractive margins that's really been going strongly for us Okay, great.

We talked about, let's talk about the environment in terms of its impact on the cost side of things, raw materials, logistics, et cetera. Obviously, those pressures are going up. You have spent a long time trying to build flex in the P&L. So now you have that flex in the P&L. So I guess the question is, how much flex in the P&L is there? And how does the strategic growth and productivity program fit into that mitigation strategy?

Sure. So I'll start off on that. And then Shane, I think, can probably give you some ideas in terms of how that really all plays out in the in the businesses. You know, if you're building flexibility in the P&L the right way, you're not using it all up in one shot. And that's been a real focus for us. And what it really starts with is our aspiration to deliver consistent, compounded dollar based earnings per share growth. How stocks work, you sustain the PE multiple, you expand the PE multiple through organic sales growth, you deliver very competitive dollar-based EPS growth, hopefully you can deliver TSR that compares favorably versus your peers, and that's what we're focused on. And so we have really focused on building that flexibility in the P&L over the last six, seven years as we executed 25 and transitioned to 30 so that even in a tough year like 2025, we can go out and deliver dollar-based EPS growth. so we had negative effects we had category slowdown we had increased raw material costs we had additional tariffs and you know we were able to get through that in a way and deliver dollar-based dps growth that you know 10 years ago we might not have had the flexibility to do that but we continue to build up that flexibility in the p l you know the key for us in a situation like this with the higher costs is to get them out into the businesses right and we want to say here's what we think price of oil is going to be here's what the impact on our business and that way you all can model it but more importantly Shane can work with his divisions to model all those costs and you know that's what we did in 2022 which is where we were really the first company in the space to come out and say look this is going to be worse than you think it is and it creates a situation where yes you're providing the news earlier but you get visibility in the numbers faster which we think plays out well over the medium to longer term so do you want to talk about yeah I think Steve to sort of extend John's point we obviously got out quite early we think publicly but we got out as importantly quite early inside the business and there's enormous power from an

operational point of view of getting those cost realities in the P&L and in the system fast which we did and then it allowed our teams on the ground be it in Europe be it Latin America be it in the US to respond and prepare and the way the teams are responding obviously is is different by market you know obviously the commonality is productivity productivity productivity is the first port of call and really maximizing everything in the productivity pipeline is the first action and then the pricing action is much more segmented based on geography you know obviously in Europe it's much more of a hand-to-hand combat situation and you know it's much more careful in the US we're probably going to be you know much much more considered in terms of any further pricing action we think much more it's a it's a mixed play and revenue growth management tool play as opposed to headline pricing given the state of the consumer but in markets across Latin America we may have some opportunities where we can drive some more premiumization and pricing so I think sort of the mechanics inside the business as John set up a very very positive for us to really respond at the right kind of pace and with with good visibility and if I can just follow up on the SGPP piece.

I mean, the way you build that financial flexibility is, you know, you're investing in capabilities. If you can invest ahead of the curve, you do that so you have flexibility year to year on some of the spending. But the other thing is you notice, okay, are we entering a period in the 2030 strategy where we want to build new capabilities like ODG, where, you know, we know that maybe categories aren't going to be growing at the same rate. That's why you announced something like SGPP last year, build up the fundamentals, go through, figure out what the program's going to deliver, and then that gives you the opportunity to say, okay, you know, we're keeping the range of EPS guidance for 2026, you know, despite some fluctuation in the gross margin, right, so that we went from guidance of gross margin up to gross margin down, we kept the range, we did see some numbers come down at the high end of the range, you know, but so the shape of the P&L changes somewhat, but having that flexibility by focusing on the productivity ahead of time, that's what gives you the flexibility. So, you know, Shane doesn't, you know, Shane can go in and say, look, advertising cuts, not on the table. We need to keep that brand support going. You know, investing in AI, not on the table. You know, that's the posture you want to have when you get this level of volatility. Great.

You mentioned investing in AI.

I want to hit on that before we close. it was a big focus it's been a focus for Colgate actually for a couple years and it was a big focus at Cagney mostly through the lens of Hills Shane how is just digital investments in general but the AI specifically changing the way that work is done within your region yeah I mean I think it as we talked about earlier Steve I think the company's made enormous multi-year progress on its data foundation and its AI agenda I think generally the application we have seen across the markets including in North America including in Latin America has been really focused on a few distinct verticals and you know I would describe those verticals first and foremost marketing so efficiency of spin but also speed and cost-effectiveness of content creation we've seen secondly it applied through innovation so everything from trend tracking through the concept development and being able to get through those cycles at a much much faster pace and then thirdly our supply chain with obviously some some obvious examples maybe one that i would point out which i think has had really meaningful impact in north america in particular but also in parts of western europe is a tool that you may have heard about called promo ai which essentially allows us to take shipment data thousands of promotional pieces of data by week by customer by geography and scan data and put them into a large LLM and then work with our customers to optimize the pricing plan and I mentioned that example because it's providing concrete outcomes today and for US customers with an ambition to expand it and we've seen you know real concrete positive outcomes from it with an ambition to scale it further you know a couple of things we've learned about the application of a tool like that which I think has been really powerful for the business as we drive the AI agenda. One is developing these tools, what I would describe market back, which is what's the use case? What's the use case in the market and then how do we develop the tool to serve that use case? The other more practical piece is how are these tools getting integrated into the operating routines of the business? You know, how do they meet the teams in terms of the routines and the ongoing cadence of the business? And then, you know, a tool like that we think has got, you ultimately global application, but obviously because of the trade dynamics it's very focused on developed markets today, but more to come.

We're almost out of time, but maybe in closing, two to three priorities that you'd want folks in the room to judge your progress against over the next year?

Yeah, terrific closing question, Steve, thank you. Look, I think, you know, firstly at the company level, and this is probably obvious, reattaching the business to its long-term growth algorithm of three to five. you know that's certainly a focus for us as a team you know the team's proven we can do that and so reattaching the business to that it's going to be really important geographically you know I think sustaining the outsized growth in Latin America is going to really matter as you referenced earlier sustaining what we think is really solid performance in hills in EMEA and then early recovery of Asia we think is very encouraging and then if we can add on to that recovery of North America over time we think the company will we'll give ourselves a good chance of reattaching into that three to five space and then lastly you know I would just say you know one of the things that's really striking about the company is it's truly it has a global footprint and you know we think in this moment that's a really advantage place for us to be but within that we're obviously very focused on driving household penetration market share and competitiveness right across the geographies to make sure the model remains robust and sound all right right on time with that thank you Shane thank you John thank you Colgate thank you everybody in the room have a great conference thanks Steve thanks Steve