Conference Transcript - KMB 2026-06-04

Stephen, Conference Moderator

all right everybody welcome back thank you um for our next session we have kimberly clark kimberly kimberly clark corporation back to the conference it's a lot of thank you for having us yeah thank you steve with us we have chairman and chief executive officer michael shu he told me right before this this is like number 21. we're getting there we're getting there um and uh chief Financial Officer Nelson, Nelson Erdineta. So thanks, guys, for being back. Thanks for having us. There's a lot going on. So, Mike, I'm going to start with you just to frame what you've talked about as a generational moment for Kimberly Clark, both in terms of business momentum and the Kenview transaction. So maybe we just start there and maybe expound on what you mean by that.

Michael Hsu, CEO

Yeah, well, you know, Stephen, thanks for having us. Hey, we're really excited about our base business performance and, you know, probably even more excited about having the opportunity to build a, what we're saying is, you know, a preeminent health and wellness leader. You know, I think embedded within that, you know, what's driving our base performance and what we think we have is a powerful value creation engine with our powering care strategy, right? And I think that's driving, you know, consistent volume and mixed growth, consistent share growth. And I think you've seen that through the first quarter and probably for the last nine quarters from us. And so we feel great about that. And then, you know, in terms of building a preeminent health and wellness leader, you know, together with these companies combined, we think we can really elevate the standard of care for all consumers. You know, we tend to play in the same life stages. So if you take our portfolio, baby, you know, Ken UF obviously has a portfolio that lines up against baby, women, family, and seniors. And so I think it's a powerful portfolio where we can really serve all these life stages more effectively. So, again, we're really excited about the opportunity.

Stephen, Conference Moderator

And you have, I mean, we focused on the base business for a bit. I mean, you've delivered multiple quarters now of volume-led growth and categories that historically have been volume challenged.

Michael Hsu, CEO

So I think, what do you think has structurally changed the most in the model? whether around innovation or brand investment execution just what's driving that and what gives you confidence that that's durable yeah the steve the the idea is superior product equals superior value and that drives volume mix and and that's kind of how we approach it which is uh we're a company of engineers we invented most of the categories we operate in we believe there are real differences uh in performance that exists and i think that's that's different than maybe what outsiders perceived back when i joined the company i think many viewed these categories as commodities and and i said well gosh you know mom and dad entrust their most important thing in their life to us you know the real things that we can do to take care of baby better right and if you extend that through our portfolio i think we've demonstrated that and so i think you know going back over the years the opportunity that we saw was an opportunity to really elevate the category or premiumize the category by adding better features and benefits that maybe consumers hadn't envisioned that would be valuable but turned out to be very valuable so we've really steve premiumized the business and that's really driven a lot of our growth over the last five years the example i'll give you is when i joined the company back in 2012 maybe 65% of our Huggies business in the U.S. was in the value tier. Today, we're 80% premium, right? So that's a big move. But I think what's also driving our growth in the last couple years is that we said, hey, we're not going to be just a niche premium player. You know, if we want to lead our categories, we need to serve all consumers. And so we've really sharpened our offering particularly with the value consumer and and i think that in china the last two years uh in the u.s last year and this year i think that play is really working hard for us and we really made some significant improvements to our snug and dry line which is the value tier huggies in the u.s and you can see that impact on the volume yeah okay great um let's stay on the years for a second nelson there's been you know um there's been volatility between, you know, consumption trends and your reported shipments.

Stephen, Conference Moderator

So maybe just walk us through some of those disconnects and how that's going to map out. But also just what, and Mike, you can jump in on this as well, but just what you're seeing in the North America consumer in general, how that's impacting your balance of year expectations. Sure.

Nelson Urdaneta, CFO

Let me unpack a little bit what we saw in the first quarter. But, you know, we've seen, Steve, over the last two years, and even in the first quarter of this year, sustain momentum in both our global business and our North America business, with consistent volume plus mixed-led growth from very strong pipelines of innovation and activations across all of our categories and across all of our value tiers. As it pertains to the first quarter of the year, we saw shipments lack consumption by around 200 basis points. In fact, consumption grew by 3.7% in our consumer categories in North America versus shipments, which grew 1.4%. And there were a lot of moving pieces in the quarter, but one to highlight is the fact that we have strong programming in the club channel at the beginning of the quarter, for which shipments actually took place in the latter part of Q4 of 2025. As a reminder, in our April update of Q1 earnings, we highlighted that we still expect the second quarter to see a similar trend. And there's two factors at play in the second quarter. In the case of North America, we're foreseeing headwinds of around 70 to 80 basis points on our shipments related to the recent L.A. distribution center fire. and also for the second quarter we're going to be lapping the strongest comp versus 2025 because as you'd recall last year in this quarter our North America business grew volumes north of 5% from a very strong pipeline of new products that we were putting out particularly in our baby and childcare business for the second half we expect shipments to accelerate firstly because our innovation pipeline remains strong and then secondly we will be lapping a lot of the stronger comps from the first half and then lastly for the full year and i'll let mike chime in on the state of the consumer for the full year we we stated that we still expect to have growth that's at or above our categories our weighted average growth of the categories which trailing 12 months as of the end of March was was right around the 2.5% range yeah and maybe just to tack on on the state of consumer you know my view would be that you know consumer North America particular which I think you're asking about resilient resilient and I and I think maybe my lens is maybe colored Steve by the categories we operate in and as you guys are familiar with our categories like

Michael Hsu, CEO

diapers and bath tissue Kotex like they're they're pretty stable categories daily use categories and and and consumption doesn't change much uh based on pricing right so i think so that's kind of maybe one aspect of it um and it's reflected in our q you know our q1 where i think our volume mix was up about three percent organic overall was up two and a half we grew share in i think 90 plus percent of our our our our business and so you think we feel good about that but you know we're also cognizant you know since the start of the war that um you know the elevated you know fuel and fuel prices you know have an impact especially on the the consumers at you know 100 000 income and below which is 90 of us households and so that you know really kind of plays into the strategy that we've been on which is we've pivoted to strengthening value within the value tiers in addition to premium and i think that's working hard for us. Great.

Stephen, Conference Moderator

So if we pivot overseas, you know, international personal care, IPC, just, you know, standout performance, both in terms of growth and margin expansion. I guess, you know, talk first about your confidence in the sustainability of that, because I think you are confident in that. But then also, you know, any watchouts given the same macro context?

Michael Hsu, CEO

Yeah, great, great momentum. You know, I'll remind everybody that, you know, in our categories, D&E or developing emerging markets are still very early in the stages of development. And however, you know, in the quarter, you may have caught, like, Steve, like, I think double digit growth in Brazil. I think our Indonesia business was up 30%. It's a business that had been challenged for a few years. Vietnam was up 40%. even Korea the diaper category in Korea Steve was up over 20% there's a baby boom because as you know the births have been declining in Korea for like 15 years and last year that burst were up six and a half percent which is driving a bit of a bit of a boom in some of our categories so we feel good about that you know what's driving it I do I would say you know the power and care strategy and the core elements are we kind of mixed made up our minds we have to have product superiority we're really invested to create differentiated product offerings i think we've really improved and you know we think we have some of the best digital and social marketing uh methodologies out there we're excellent at managing data and mining data and then marketing consumers directly through social through social channels um so that's driving it and then the last thing that makes it all work is we said we're going to have best product at the lowest cost you can see the productivity flowing through and that that gets us on this virtuous cycle of growth yeah yeah great you know in in many markets i think this is true in brazil it's true it's true in north america so i'm going to focus the question there um and you mentioned this like with the snug and dry you've been pushing essentially premium features into into value tiers which is enhancing the product offering.

Stephen, Conference Moderator

You've also been promoting to drive trial against those innovations. And that's created some concern from among investors as to, is it trial driving activity only, or is it gonna be a structural pricing stance and does it risk creating a competitive situation that is not productive for the category? How do you think through that?

Michael Hsu, CEO

Well, one, our strategy is consistent, which is we're growing by driving innovation and innovative features. We're advertising to support those features and to grow the category. We're activating in store with great execution, but promotion is really only to support trial of the innovation. And so, and I know like some analysts or other other companies view us as as promoting more but if you look at the math um we haven't even returned to 2019 levels of promotion and we promote less than all the other branded competitors in the category so and and part of that's because i i don't like to promote uh from a trade promotion perspective i think it's it's you know at best dilutive at worst it's unprofitable and i think it gets you into this doom cycle where you invest too much to promote and then you end up cutting the product quality which drives the category in it into a

Stephen, Conference Moderator

downward spiral so I'm I will never go that way and and and so despite the rhetoric I would urge you to look at the facts okay Nelson I think that that dovetails into you know what you've been consistent about for a while in terms of the positive PNOC, price net of commodity costs, and that being a core principle for you. Just given what we're seeing in the cost backdrop, how are you thinking about the balance of pricing, productivity, investment to maintain that PNOC as we go forward?

Nelson Urdaneta, CFO

Sure. So, Steve, the the environment promises to stay quite volatile and we will remain very agile and disciplined throughout it in the past few years we've gained a lot of experience in how to manage through this type of volatility and disruption as shown in the super inflationary cycle that we just went through in 2021 2022 when as you know we faced about 3.4 billion dollars of incremental cost hit wins in the course of two years and because of our discipline our agility and our focus on our playbook we were able to quickly recover our margins to pre-pandemic levels and in the past three years we've been actually been expanding them our teams are very clear that we expect them to manage the pricing net of costs of at least neutral over time and they need to leverage all their tools within our integrated management framework, integrated management framework, margin management framework, to ensure that we recover those costs over time. Right now, we don't have any update versus what we provided back in Q1. Our teams are diligently working through identifying what the exact impacts are going to be, and more importantly, what are the actions that we're going to take, leveraging all the tools at our disposal the one thing that i will reassure you is we're not going to cut back investments behind the innovation and behind the brands we have a very solid pipeline of products we're going to put in the into the marketplace and solutions and we will be balanced in our approach but we will ensure that you know our teams remain fairly disciplined okay um we're talking a little bit about this before we got on stage but you know back at your investor day you targeted you know

Stephen, Conference Moderator

three billion dollars of standalone um kimberly clark cost savings over time which is a big number um and so i guess maybe where are you in that journey uh how much left is left us to go especially in the areas we were talking about in terms of network optimization value stream simplification and some of the manufacturing platforming that you're doing across across facilities sure we're We're actually tracking ahead of plan on the three billion five year productivity program and we have line of sight to continue to deliver strong productivity over the next few years.

Nelson Urdaneta, CFO

Through the first quarter this year, we've actually delivered 56 percent of the target and every segment has contributed its fair share. If we look at our continuing operations made up of North America and our international personal care business, the average delivery program to date has been six percent of gross productivity. Now peeling the onion into the three components of our supply chain strategy, the sources of the productivity, the value stream simplification has delivered roughly 50 percent of that number programmed to date. Whereas the network optimization and the digital scalable automation have each delivered around 25 percent of that target and we expect those to ramp up particularly the network optimization over the next few years as we've stepped up the capital investments in 2026 and that'll remain very near that level for 2027. we're very confident about the size of the productivity pipeline looking forward and one thing to keep in mind is that that you're aware of the $2 billion investment that we're making in the North America network. That productivity, in fact, you were at Beach Island last year visiting the facility. That's one of the places where we're making a very big investment in distribution on top of our greenfield facility.

Michael Hsu, CEO

That productivity is going to kick in starting 2027, hence, you know, our confidence and our ability to continue to deliver on strong productivity over the next few years. yeah Steve Steve was commenting before we got on stage that he was reflecting on his visit the Beach Island which is our largest facility in the world and we make almost every product that we offer in in that facility and so it's a big complex operation and so I think you're you're commenting well it may be hard to kind of drive the productivity because there's so much to kind of get your arms around but I think the the thing that I said is you know a couple things happen which is, one, bringing down some very good outside perspectives, starting with Tamara Fenske, our global chief supply officer, you know, joined us after a long career at 3M, just got a different lens on how manufacturing should be done, and then she's brought in some other people from the outside. So I think they could take an objective look, Steve, at, like, how KC did things and really kind of found a lot of good opportunities for us to simplify. So that, I think, is a good starting point. and then the other other side of it is uh we are a company of engineers we're kind of nerdy um and and so because of that people like to get stuff done and they execute really well and so so even though it looked you know very complex i think there is structure in kind of how people are organized yeah the other thing i mean there's there's the the raw cost out efficiencies but it also a lot of what you're doing is going to enable faster speed to market and you know more and more commonality in terms of what you bring to market, which I think we're already seeing the early signs of in this wave of innovation. Yeah, actually, we kind of refreshed some of our manufacturing assets over the last year. We did this restructuring back in 2017, if you recall. And part of that was to update the fleet of assets. And part of what we were doing is, one, commonizing them so that all of our diaper assets are the same around the world now. But the other thing that we were doing was increasing the flexibility of each, right, so that we could run value tier and premium tier on the same asset and make feature adjustments without increasing capital costs. Yes.

Stephen, Conference Moderator

Okay.

Michael Hsu, CEO

Kenview. Yes.

Stephen, Conference Moderator

We want to talk about that. Let's talk about Kenview. So, I mean, you've been clear this is about creating a broader health and wellness platform yeah and look so let's just let's just kind of start there and I guess what you know as you've gotten further into this this process you know you know updated thoughts and why you think this this is this combination is going to be uniquely positioned to win and I guess how you've been viewing recent progress at at Kenview yeah we had a global town hall with the kenview organization two weeks ago up in new jersey and kirk had me out there and so that was kind of their question like you're six months in you know what are your thoughts and

Michael Hsu, CEO

and i said like the headline is the closer you look the better it gets like in our on our side the casey side and i think increasingly on the kenview side um we couldn't be more excited and And so what are some of the things about why is it better? Number one, I would say, and I didn't realize this as closely, even though we do a lot of due diligence, but we've been doing these category deep dives in each of the Kennerview categories. And I will tell you, the state of development of these categories, they're very early in the journey. And even though a lot of these categories have been around, like Connell, I think, launched in 1954. So it's been around for 70-plus years. but I would say the reason I would say the categories are early in the stage of development is I think I think there's a huge gap between incidents of a health issue and treatment and this is in almost every category that can view operates and the example I'll give you is allergy when we're doing our deep dive analogy and you know when we do these deep dives we kind of assess the structure of the category and all the subcategory components we interview consumers and we understand kind of what the big unmet needs are and how they think about the category well analogy alone nelson i think the number is a hundred million allergy sufferers in the u.s alone that don't treat right they're not they're not they're not even aware they have an allergy right and so so i think i i think that for us says oh there's a big opportunity for i would say a company and our approach with a more traditional cpg mindset is to come at these categories and say, how do we systematically develop them? And so I think that's part one, which is we see that, you know, one, these are the biggest categories in CPG among the fastest growing, and they're underdeveloped, right? And so I think that's one big thing. The second area where I say, oh, the closer you look, better it gets. And I think you wouldn't see this in what's available publicly, but since we're doing our monthly trading updates with Kenview and we do the business reviews, I would say there's a lot of good performance in that business that you all cannot see. And why can't you see it? It's because they tend to report by category, Steve, right? And so you just see the overall. But there's a lot of markets and a lot of, particularly in international where I've seen very good performance across many brands and that's reflected in the appointments that we made we announced our senior leadership team for the future company post close back in April and people were surprised that there's a pretty good mix balanced mix between Casey and Kenview yeah well when I was interviewing some of the Kenview executives you know let's say, you know, Carlton Lawson, who runs EMEA, and Leo, who runs Latin America, I said, hey, your performance is as good over the last five years as anything that we've got on our side, right? And so, and I was super encouraged by that, because international has more of the complexity than, you know, North America, right? And the Kenview portfolio overall is a little more complex than ours right and so however they've been managing that pretty well so i i think they're they're um so that's the encouraging thing and then as we get further into it and as we meet with the the kenview management side and and so forth and and do our category dives everything that we're doing empowering care right which is like hey you know make the innovation better differentiate the product through value-added innovation kenview is spectacular on the science front you know the big thing that we did at kc that they still need to go through is when we did our market structure we understood where the biggest consumer unmet needs were going to be and then we just said we're going to pour all of our r d resources into those things and that was a little bit different than how casey used to do it which is kind of like self, you guys self-determine what you want to work on, right? You know, and so when you concentrate your firepower, that's where you get the breakthroughs. So that's one area. The second big area is the marketing, and where we have made a ton of progress, and that's evidenced by our surge to market leadership in China, is I think we're one of the best companies, and our customers would tell us that we're among the best at digital marketing, and social media marketing, and e-commerce marketing and all those things and so we've really invested in a lot of capability in that we're very good at it we tend to index higher on e-commerce I think we're on average 700 basis points higher share on e-commerce than offline can use of the other way yeah right so that's gonna be a great opportunity for us so I think you know there's gonna be a lot of it you know

Stephen, Conference Moderator

we're really excited to apply kind of our value creation model to the can be portfolio is there i don't know if i don't know if you're prepared to do this but is there a way to take us underneath the covers a bit and talk about um how the integration office is being structured in terms of you know just the work streams that you're kind of putting on papers because i think there's a big concern that once the deal gets regulatory approval closes then then the then the complexity really kind of you know hits home so how are you getting ahead of that yeah so so the integration management office is up and running since we announced the deal it's being headed by our chief operating officer Ross and we've got over 40 work streams underway with over 400 people involved

Nelson Urdaneta, CFO

obviously no gun jumping and following all the regulatory requirements but we're not wasting time and getting ready Steve I mean these work streams are allocated to each, or organized to each of the functions, organized within the segments, and with the new segment leaders that have been announced, because we've got to focus on multiple elements of the integration. One is obviously a work stream around people and culture. That's plowing ahead and moving forward, and you've seen that Mike already named the leadership team, and we will keep progressing on that you know on that element of the integration secondly is on the cost side we have very ambitious cost synergies that we feel very confident in our path to deliver them as committed and we have been working very diligently on that i mean we started on this as we were doing the due diligence but obviously we wasted no time in ensuring that everyone within every function is clear on what the plans are and what the cadence is going to be between year one and year three to accomplish the task. And then the most important and exciting aspect of the entire integration is the revenue side, the growth, because this transaction above anything else is about growth, about really leveraging the potential that the categories have and the potential to serve consumers across all life stages. so that's up and running up and going and more to come and it's not gonna be a day one wake up see what you're gonna do good as a follow-up on that so the the cost energy target nearly two billion dollars 1.9 are there areas where you're gaining conviction or seem potential upside and then I guess the other side of that coin is as we've seen can do you make margin progress one of the concerns what questions I've raised I know investors are thinking the same is is is Kenview it's good but it's Kenview kind of getting ahead of the synergies is it change so how do you how do you respond to that yes so a few things first as I mentioned just now we continue to gain clarity and confidence on our path to delivering and or beating the synergy and earnings levels objectives that we have for the transaction the sources of the cost synergies are areas in which we, Kimberly Clark, have been building significant execution capabilities over the last few years. Our results in the last two years and even in Q1 are proof points that we can drive sustainable volume lead mix growth, that we can drive record levels of consistent productivity level, that we can drive overhead efficiency all at the same time. there's three sources of productivity that we shared on November 3rd when we announced the transaction and we continue to gain more confidence in each of the three on the overheads it goes beyond duplications the the approach of plug-and-play as we call it is going to allow us to rapidly leverage capabilities like revenue growth management global shared services areas in which we've been investing over the last few years that will drive over a third of the productivity we're confirming that over the last six months secondly it's on costs Mike talked about transportation just a few minutes ago we're seeing those opportunities it's particularly in a market like North America which will be 18 billion out of the 32 billion in revenue give or take we tend to cube out a truck at about 50% can view tends to weigh out at about 50% and we tend to deliver at almost the same drop-off points so that's a key source of productivity but it goes beyond that if you look at procurement we're gonna be having a much bigger scale and many materials that are shared and on top of that we'll be able to drive efficiencies through standardization leveraging the tools that we've been deploying which by the way has been one of the sources of the productivity we were just talking about a few minutes ago and then lastly it says sales and marketing again beyond duplications we see opportunities on agency consolidations things we've done at kimberly clark two years ago we see opportunities on driving efficiencies on non-working media on trade spend again things we've been doing in terms of the recent actions that kenview announced in their organizational structure you know we're

Michael Hsu, CEO

encouraged by that we we feel that that's that's a great move um and frankly if that drives acceleration in earnings and efficiencies sooner than what we planned for all the better great yeah yeah and maybe just uh right well we're focused on ex for both companies i mean what kirk is on his side and we're doing on our side we're trying to expand the earnings capacity of both companies And so the last restructuring, they did reorganization, I would tell you, we were excited because it moves their operating model closer to how we operate. And so, you know, we think, you know, we'll link up at some point as we close and it'll be a very smooth transition.

Stephen, Conference Moderator

What about on the growth side? Because in addition to those cost synergies, there are revenue opportunities too, Mike. Like, just, I guess, your increasing understanding and optimism around that, potentially.

Michael Hsu, CEO

Yeah, I'm a bull on the revenue synergies, but, Steve, I was told that investors don't care about revenue synergies until they make it into the algorithm, so I'll temper, but I'll just tell you why I'm excited, right, which is, hey, you know, there's a lot of stuff near term that's very obvious, And what's obvious is like distribution opportunities where one company has either channel or market strength and the other doesn't, right? And so I talked about e-commerce. So in e-commerce in North America, we're 700 basis points higher share than offline. They're the reverse. They're undershared on e-commerce and below what the category development is for some of their categories. And so we've developed outstanding relationships with the big e-commerce retailers in this market here in the U.S., and we're confident our capability can help accelerate that. So that's kind of one near-term one. If you get into, like, markets where, you know, where Kenview has scale and we do not, right here in Europe, you know, there are over $3 billion in Europe. After our IFP transaction, we'll be about $100 million, right? And we used to have an over-billion-dollar personal care business in Europe, and certainly that may be an opportunity for Carleton and the team to consider going forward. And they have great strengths across retailers in Europe and also health care provider networks and other channels that we wish we had back when we were a standalone company or before this. The other area where they have strength is India, and I think they have about distribution in about 3 million points of distribution in India. We're primarily an online player, and we've struggled with physical distribution, and so we think, you know, Huggies will be a good opportunity for the India market. If you go the flip side, where KC has strength, Mexico, a $3 billion business for KC to Mexico, where Kenview is relatively small in Mexico, or well over a billion in Korea where they have a small business. And so again, I think just through sheer distribution growth, that provides significant near-term opportunity. And then longer term, I think the combination of our engineers and their scientists to put together some of these products, the examples I'll give you that are obvious are, you know, they're great at skin care. You know, our diaper products, whether it's Depend or Huggies, are in contact with skin 24-7. and and so and you know so there's certainly some things that I think both teams can bring together to really improve the condition for consumers you know in that space so so we think there's great opportunity and then and then the probably the biggest one goes back to this under development of categories and again you know it may be an artifact of kind of maybe the pharma approach to which is more product centric I think and and we tend to be more category growth centric. And so the example I'll give you is, you know, with 50 shares in Kleenex across most markets, it's our responsibility to grow the category. And we hadn't done a good job with that for a while, but over the last five years, we've put dedicated effort. And so household penetration has been growing, especially in our biggest market, the U.S., for the past three years, you know, because we put effort into that. It's also why in the U.S., if you're familiar, you'll see deon sanders on the pen and katherine heigl on poise it's because we're trying to help consumers understand that these categories uh these products can help serve needs that they weren't thinking about yep great uh and maybe lastly on this just confidence in the path back to two times net debt to evita leverage post close nelson yep that's a big focus for investors Yeah, sure.

Nelson Urdaneta, CFO

So firstly, Steve, we remain committed to having strong cash returns to our shareholders as we manage through the two transactions, forming the JV with IFP middle of this year, as well as closing the Kenview transaction. As we've shared, as we go through it, our commitment is to remain or to keep a strong balance sheet as well as flexibility. And firstly, when we close the transaction, our expectation is to be at around 2.9 times of leverage, 2.9 times of EBITDA. And we expect this to reduce to around two times EBITDA within 24 months through a combination of growing earnings as well as reducing our debt. Importantly, I'd also like to highlight that we made the decision when we announced the transaction that we're going to deploy the cash proceeds from the JV formation to fund part of the cash consideration for the Canview acquisition. beyond that our capital allocation priorities remain unchanged first we have tremendous confidence in our science-based proprietary technologies and we will continue to invest behind our business to drive profitable sustainable growth over time great secondly it's our dividend we are committed to our dividend to growing it over time this year marks the 54th consecutive year of growing our dividend and we intend to continue doing that we will preserve the kimberly

Stephen, Conference Moderator

clark dividend policy as we merge the two uh companies and then lastly we will deploy any excess cash to purchase to reap the cherry purchases on an opportunistic basis perfect perfect um in the couple minutes we have left left mike maybe maybe paint for us a picture of your end state vision for the combined company and maybe highlight maybe the one or two things that investors should be focused on over the next year as we approach as we approach close yeah uh Yeah, I mean, you know, I'll finish where we started, Steve, which is our focus is on building the preeminent health and wellness leader.

Michael Hsu, CEO

And we're really excited about that opportunity. And, you know, first of all, there is a multi-decade demographic tailwind for health and wellness. The aging population isn't just a trend in developed markets. It's a trend in every market. And as the population ages, there's going to be more need for health products, right? and so so we're excited about the built-in tailwind there and then when you click on and understand that these categories still have a huge opportunity to be further developed right through communications and marketing and partnership with with retailers you know we're further excited about that and we feel like we have the capability to kind of accelerate you know the kenview portfolio on that journey. And then the last thing I'd say is, you know, with respect to the synergies or efficiencies, you know, we're very proud that we're able to deliver world-class productivity and a couple years consecutively of 6%, which is probably the highest in the industry right now. And to be able to apply that, you know, to the Kenview portfolio, we're very confident in the synergies. And so I think in the near term, you know, we're focused on improving the base execution of our business. We're watching closely with Kenview, not managing, you know, but we're encouraged by the progress that I think Kirk and the Kenview team are making on parts of their portfolio. And, you know, I think our integration team is working very well together to bring this to, you know, hopefully a very boring close. Right.

Nelson Urdaneta, CFO

And I just add to Mike's point, when we complete the integration and we're through with the process you know we should expect to be in a position to consistently deliver leading organic growth in the industry with top-tier gross margin and EBIT margin all resulting in double-digit returns to shareholders for a combination of earnings growth a healthy dividend as well as share repurchases perfect well We welcome you back here next year to talk about how we're going to realize that vision.

Stephen, Conference Moderator

Thank you so much.