Colgate-Palmolive Company (CL) on Q1 2021 Results - Earnings Call Transcript
Operator: Good day and welcome to today's Colgate-Palmolive Company First Quarter 2021 Earnings Conference Call. This call is being recorded and is being simulcast live at www.colgatepalmolive.com. Now for opening remarks, I would like to turn the call over to Chief Investor Relations Officer, John Faucher. Please go ahead, John. John Faucher: Thanks, Sarah. Good morning and welcome to our 2021 first quarter earnings release conference call. This is John Faucher, Chief Investor Relations Officer. Noel Wallace: Thanks, John, and good morning, everyone. I'll keep my commentary brief since we've -- so we have plenty of time for the Q&A. I think the results for the quarter really speak for themselves. Obviously we're really pleased with our performance in the first quarter. Despite the significant volatility in headwinds, we delivered strong results around the world and up and down our P&L. While we've made progress in our strategic areas we've been discussing, we still have a lot to do in the balance of the year. Here are our key priorities for the remainder of 2021: Continue to drive broad-based growth. Our priorities here are the same as we've discussed for the past several years. We need to grow volume and pricing. We need organic sales growth in every category and in every division in both emerging and developed markets. In order to do this, we'll continue to ramp up our breakthrough and transformational premium innovation. We delivered high-single-digit growth in toothpaste in the first quarter, despite lapping solid growth in the year-ago period, which helped us drive high-single-digit growth in our Oral Care business. We're driving growth through innovation like Colgate Renewal in the US, Colgate Enzyme Whitening toothpaste in China and our natural extracts line and Colgate Total Anti-Tartar Line in Latin America. As Pat and I discussed at CAGNY, this is a marathon not a sprint, but we're making good progress, which will continue as we shift our resources, continue to build new skills and even adapt how we motivate our teams. Operator: All right. Thank you so much. Today’s question-and-answer session will be conducted electronically for the telephone audience. Okay. We will take the first question from Dara Mohsenian with Morgan Stanley. Dara Mohsenian: Hey, good morning guys. Noel Wallace: Hi, Dara. Dara Mohsenian: So can you give us an update on category growth rates in some of your key emerging markets as we cycle COVID? Obviously, there's a lot of volatility short-term but I'm thinking more looking out longer-term, just an update here on volume growth and per capita consumption development opportunity going forward as well as any thoughts on pricing mix and trade-up potential? Has anything changed here longer-term more structurally as we think about the consumer? And what are your strategy adjustments? And, obviously, it won't be a monolithic answer. So maybe you can compare and contrast some of the different emerging markets? And how that might be different? Thanks. Noel Wallace: Yeah. Thanks Dara. If you go back, obviously, it depends on the geography. And what we've talked about consistently I think is the volatility that we're seeing all over the world and highly dependent on how countries have treated and dealt with COVID and the rate of incidents in those countries. Obviously if you start with Asia, the categories are coming back, although still not back to where we were pre-COVID due to some of the store closures that we continue to see across Asia, particularly China and Southeast Asia coming back in terms of a category development standpoint. And that's based on the fact that particularly in China, you see the COVID issues being put to rest and consumers returning to some level of normality. Thailand continues to be a challenge. You've heard I think consistently from others that that market highly dependent on tourism, so it's impacted that category. India, we won't talk a lot about India as we haven't announced yet, but suffice it to say that they had easy comps from last year from a category standpoint but you're starting to see those numbers come back quite nicely. Moving on to Latin America. Again surprisingly, we've seen a very resilient Latin America particularly our business there. In terms of where we see the categories playing out, toothpaste is starting to come back although it started off quite slowly but we've seen particularly in the recent readings, the category returning to growth, which is good. Africa continues I think to perform okay. I think Africa is a real uncertain environment right now relative to the rate of vaccinations in that geography. So that will have an impact. But if you take that holistically across emerging markets, I think the important area here is that, obviously, those markets were from a GDP standpoint severely impacted in 2020. As you see oil prices come back those tend to benefit emerging markets and that will play out in higher GDP, some inflation, obviously, allows us to continue to take pricing in those markets. And I think as you see the rate of vaccinations increase, those markets are likely to come back quite nicely particularly in the back half of this year. From a pricing standpoint, consistently across all emerging markets, we've been able to take strong pricing given the strength of our businesses and that really started back in 2020. And you've seen a competitive environment is, obviously, having to offset a lot of the raw material inflation that we've seen taking pricing, which has allowed the emerging markets to take a little bit more value in their categories. And clearly there from a per cap standpoint, we continue to be investing in our per capita programs particularly across Africa, parts of Asia and Latin America and that is consistent and I think that margin growth that we've had has allowed us to continue to invest in areas like per cap, which we think obviously bode well for the long-term. Operator: And we will take the next question from Lauren Lieberman with Barclays. Lauren Lieberman: Great. Thanks. Good morning. I was curious if… Stan Sutula: Hi Lauren. Lauren Lieberman: … I know pricing obviously is a key part of your strategy, Noel. But I was particularly intrigued by the pricing in Europe this quarter. I know it was discussed as in relation to cost inflation and maybe a little bit less on the side of the longer-term strategic revenue growth management initiatives. But I was just curious, because the ability to get pricing through in Europe even from a consumer from a competitor standpoint is pretty notable. And I believe, one of your -- a large HPC and food player as we've talked about, an actual a tougher pricing environment in Europe. So I'd love some more color on that if possible. Thanks. Noel Wallace: Sure. Two things, I think the pricing environment in Europe historically has been extremely difficult, as we all know. That being said, if you go back to a lot of the strategies that we've been putting in place around revenue of management which is a discipline that we're really trying to embed across -- broadly across our commercial organizations, we're finding ways to get pricing into the P&L particularly through how we manage gross to net. Also in Europe is the strength of the elmex brand, obviously Meridol and elmex being strong premium brands with a strong brand loyalty allow us to take more aggressive pricing in those markets. And we've been disciplined to do that on a pretty sequential basis, across that continent. So that has obviously played nicely through the P&L. So I'd say, a combination of revenue growth management discipline really taking hold more work to do to be sure. And some of the strength of our toothpaste equities in that region which have allowed us to take more pricing. And to a certain extent, as we saw more lockdowns early on in the year, the promotional environment was probably a little bit more benign. But we've anticipated that will continue to accelerate as store traffic increases in the back half of the year. Operator: All right. We will take the next question from Andrea Teixeira with JPMorgan. Andrea Teixeira: Hi. Good morning. Thank you. I just want to go back to the pricing comment. I think what you said, obviously, you have been able to price to inflation in some of these countries. And in particular, you sounded -- Noel, you sounded very positive about LatAm. Do you think you can still pull those levers there? And to John's comment before like if you, have to take more pricing in some places is that like you're trying to price to inflation so that you can go into the guide, because the two other centers as at the end of the prepared remarks implied, as if you're not tracking to the high end of your guide, you're tracking more at this point in the low end. So what would take you to the high-end of the EPS guide? Noel Wallace: Yeah, two aspects to talk to, there's obviously -- there's two implications on, how we think about pricing. There's the foreign exchange aspect, which obviously moves through transactionally into the margin line. And we tend to try to offset that. And there's obviously then commodity inflation that we see locally in the markets and we obviously look to gauge our price increases based on where the market is and what the consumer will bear. But if you take a step back for a minute, it's the strength of our brands, I think in emerging markets that have really allowed us to do more on the pricing line. You talked about Latin America. If you go back last year in Latin America, we took 9.5% pricing in the third quarter 9.5% pricing in the fourth quarter. And I think -- and even if you look at it across emerging markets, it was getting ahead of some of the pricing environment that we've incurred the raw material pricing environment we've seen this year. So as you build that pricing into your P&L that really sets us up for strong growth on the pricing side in 2021. We've continued to take pricing as we've seen an elevated pricing -- inflation environment around raw and packed. And that's allowed us obviously to deliver the gross margins in the quarter. So again, we continue to look at the marketplace. So as I mentioned earlier, our competitors are facing the same level of inflation that we are. And as a result, that environment versus just foreign exchange creates a healthier environment to take pricing particularly in emerging markets. Operator: Okay. We will take the next question from Jason English with Goldman Sachs. Jason English: Hey. Good morning, guys. Noel Wallace: Hi, Jason. Jason English: Hey. Thank you for slotting me in. So, I guess, I'll come after the gross margin question, since no one's really pushed into it yet. The inflation rate this quarter, 310 bips drag, it's almost 8% year-on-year COGS inflation. Is it safe to assume that that number should escalate as we progress through the year? And assuming that's the case, which I think seems to be a reasonable assumption, what are the offsets that will escalate in kind to try to help you still get gross margin expansion in this environment, which would truly be phenomenal? Are we looking for more productivity than is typical in the year? Price continuing to climb, or are there other offsets we should consider? Noel Wallace: Yes. Thanks, Jason. I think, we would anticipate, as we’ve built into our guidance that costs will continue to remain inflated as we move through the year. And as we start to lap some of the increases that we saw later in the back half of last year, it will become a little bit more benign in that regard. A couple of things. Obviously, continuing to be highly disciplined about taking pricing and taking it quickly and that will continue to be the case. We've got to be courageous and bold in that regard. Obviously, we watch that carefully, based on what's happening in the local marketplace, but straight price increases will continue to be an important element, as we look at the back half of the year. The revenue growth management aspect we've referred to a couple of times that is an important discipline that we really need to embed across our organizations. And I think we've seen some fruits of that, at least, last year and coming into the first quarter this year. So that will continue to happen. The other important aspect to look at is, if you look at the mix of our business, last year we saw significant lifts from some of the lower-margin categories that were driven by COVID, so things like bar soap and liquid hand soap. As oral care begins to normalize and the category returns to historical trends, that will certainly help from a mix standpoint. Likewise, our professional health business, which obviously was significantly impacted by closures, although that business is starting to come back quite nicely, still not back to where it was from a store opening standpoint, as well as travel retail. And as that continues to unfold through the balance of the year, that will likewise help a bit. And obviously, as foreign exchange, we talked a little bit, not seeing the benefit we initially anticipated, but still somewhat of a benefit that will ultimately help through to the P&L. The other aspect, I'd say, Jason, is moving -- getting volume moving through the P&L in the back half. Obviously, taking pricing allows us to support the advertising and innovation, which is critically important. And we've always said, that's part of our strategy, make sure we get the margin to support the advertising and the investment and that will obviously bode well for the pricing that we see in the back half of -- excuse me, in the volume that we anticipate to improve in the back half of the year. Operator: And the next question is going to be from Chris Carey with Wells Fargo Securities. Noel Wallace: Hi, Chris. Chris Carey: Hi. Hey. Good morning. How are you? So if we're not mistaken, this is the best two-year stack in Hill's, I guess in like 20 years. And so, I want to understand, just how you view sustainability of consumption trends in the business today, whether you think there are incremental distribution opportunities, as pet ownership has increased, or if you're just gaining market share. Obviously, this one's a little bit harder for us to track, given the channels in which it fits, but basically the concept here is, there's quite a bit of momentum. And just want to get your thoughts on sustainabilities and what you see as the opportunities going forward. Thanks. Noel Wallace: Yes. Thanks, Chris. And clearly, really, really happy with the progress, because it really underscores and gives us confidence in our strategy, 7% organic on 2020 -- comping 2020 last year is terrific. So a couple of aspects that excite us relative to the category. One, you mentioned that the pet ownership is up. That's an annuity, quite frankly, for the category. As you see pet ownership increase, obviously, those pets need to be fed and that will ultimately play back in the dynamics of the category moving forward. Second is, the aspects associated with our business, low penetrated business for Hill's, low brand awareness business for Hill's. So that, again, underscores and underpins the strategy that we have, continue to increase investment, continue to drive core innovation and continue to drive premium innovation on the prescription diet, particularly as we see consumers returning into the vet space or returning to visit their vets. That will, obviously, bode well for the Prescription Diet business. But again tough comps moving forward to be sure, but the business has real momentum not only in the US, which continues to perform exceptionally well, but emerging markets likewise had a terrific quarter and a lot of head space there for us. But we're being very methodical and thoughtful on how we generate this growth. We're looking for long-term sustainable profitable growth building the brands and markets and doing that the right way. And we have the momentum to do that and the flexibility in the P&L. Obviously, we've seen some rising prices on agricultural commodities and we need to take some pricing as we did. But overall, the health of the business underscored by pet ownership, the low brand awareness and penetration that we have gives us confidence that we can continue to drive this business forward. Operator: All right. And your next question comes from Wendy Nicholson with Citi. Wendy Nicholson: Hi. Good morning. Just on the housekeeping. The plant in India, I think -- correct me, if I'm wrong, but I think that has a fair bit of export business throughout the rest of the region. So, just wondering, if you're worried about that, if you think there could be any disruption there, you should be getting people to the plan. I know, you don't want to comment on the operations. I'm just thinking about your business in the region, whether that plant is still a big deal from an export perspective, and if there could be any pressure from the outbreak right now? But then my other question is, you haven't talked much about the skin care business. And I'm just wondering, sort of big picture how are trends there? Again, apart from COVID, but I know you were going to distribute or expand distribution for example in China, how is that going? How are you feeling about the prestige skin care business, et cetera, et cetera? If you could just give an update there. Thank you. Noel Wallace: Sure. Sure. So obviously, we're concerned about India obviously, given what's going on with the case counts in the country. That being said, you've heard us talk time and time again for the last 15 months that, the health and safety of our employees remains number one. We have taken significant precautions across India to ensure that the health and safety of our employees is there. And with those efforts, we're pleased to say that, we continue to operate all of our plants in India with no disruption. Our most significant plant there, a good percentage of the employees have been vaccinated, which is terrific. And we're seeing obviously, the performance of that plant relative to not only India for the region, continue to deliver against expectations. That being said, we can't control, whatever the government decides to do in terms of further lockdowns. But at this stage, the plant is being run extremely well and the business across the region is benefiting from that capacity. Relative to professional skin obviously, a tough, tough year for professional skin, particularly given the channels that we're focused on whether it’d be spas, dermatologists or travel retail. But all those businesses are slowly coming back. And we saw good performance of the skin health business in the first quarter. In fact, that business was up double digit. We're seeing a return to offices and the foot traffic going back into the professional space, increasing month in and month out, obviously not back to where we were pre-COVID, but the trends are positive, particularly across North America. The one outlier is obviously still the travel retail business in China. While travel retail has moved internal to China, the real travel retail historically which was a good part of the business has not returned. And we expect to start to see that loosen up a bit in the back half. But again, we spent a lot of time in 2020, building capabilities and really learning the business, getting the innovation profile right, to set us up for good growth in 2021. Operator: Okay. And your next question comes from Kevin Grundy with Jefferies. Kevin Grundy: Great. Thanks. Good morning everyone. Noel, my question this morning relates to profitability in your North America business. Sales growth clearly under pressure, cycling some difficult year-over-year comparisons, so you had volume deleverage, higher commodities logistics and supply chain issues. But nevertheless it was a low watermark for segment margins in a very long time. So there have been a lot of discussion on pricing, but I wanted to at a more granular level talk about, what percentage of your portfolio in North America specifically in the US really, do you think that you can cover through pricing? What has already been announced to retailers? The environment here certainly seems a lot more amenable currently than it had been even just a few months ago for obvious reasons here in terms of retailer receptivity. And then just sort of rounding it out what should the market expect in terms of margin recovery here in the segment for the balance of the year? So, thanks for that. Noel Wallace: Sure. So, we kind of experienced a perfect storm in the US in the first quarter. Obviously, the category expectations that we had declined more than we anticipated faster and deeper quite frankly. On top of that, we obviously saw a significant increase in raw materials more than expected. Third and this was the biggest piece versus our expectations was logistics. Two issues there. Obviously, the capacity and cost of logistics broadly across the US have gone up quite significantly and that was exacerbated by a specific event that we had in a warehouse that we were opening up and had some transition issues associated with that that compounded our problems. So, with that those -- the warehouse issues are quickly moving behind us. Our service levels are quickly returning to where they were but it certainly had a short-term impact both from a sales standpoint a market share standpoint and importantly, from an operating margin standpoint. That being said, if I characterize a little bit about what's going on in the US, I mean the categories were quite concerning obviously moving through the March period where we saw significant declines more than we anticipated. But the silver lining here I think on North America is we've seen categories in the last two weeks come back nicely. In fact, particularly, around the toothpaste category, which is rebounding up double digits in the last two weeks, particularly as we see store traffic and foot traffic return to stores. We've got a good innovation pipeline planned and as you saw we've maintained our support which we think is extremely important to continue to obviously drive volume and share in the back half and we're laser-focused on logistics and raw material costs. Relative to pricing again revenue growth management we're not going to talk to our plans on price increases at this time, but it's a market where everyone is certainly looking at that aspect very, very closely. And I anticipate that you'll see more price increases across the sector given the headwinds that everyone has faced in this space. But again, we're focused on this. I think the team's got a good handle of what's going on get the service issue behind us which it is and we'll move forward. Q2 will continue to be a very difficult comp for the US. As you saw last year, we had significant growth in Q2 as well. And so that will be a difficult comp but it'll be dependent highly on where the categories end up as we move forward. Operator: All right. And we'll take the next question from Steve Powers with Deutsche Bank. Steve Powers: Hey thanks. So, we've talked a lot about pricing. You just mentioned again there Noel, I guess, I'm thinking about in the context of your underlying strategy the mix shift towards premium innovation. So, in light of the uncertainties that you called out on emerging markets and some of the volatility we've seen in developed market category trends and just the notion that there's inflationary pressure building on the consumer shopping basket not only in your categories, but more broadly, does that impact at all what you anticipate in terms of consumer appetite for that premium innovation that you're bringing to market, especially if the prices associated with it are going higher? Just curious how you're thinking about that? Whether those considerations vary at all by region or across categories and whether it's impacted at all how you're choosing to prioritize investments over the balance of the year. Thank you. Noel Wallace: Yes. Thanks Steve. No, it has not distracted us from our strategy. Premiumization continues to be a very important element. We've talked a lot with you regarding our refocused orientation on innovation between H1, H2, and H3 very much focused on the aspects of H1 and H2, which are premium brands. And if you look at the growth of Oral Care in the first quarter, particularly, toothpaste a good percentage of that came from our premiumization strategy. I'll give you a good example. Good shares in Brazil holding shares despite a pretty competitive environment. Our premium business in Brazil alone was 27% of our business roughly I think in 2018. It's up to 30% of our business year-to-date and it's up 120 basis points versus last year. So, a good indication that the launch of the Colgate Tartar Control some of the natural extracts bundles, the launch of elmex in the market there, those are important initiatives to continue to close our index and we still have a ways to go to close the index that we've talked about. So premiumization will continue to play. And I don't think quite frankly, even though some of these markets will be under pressure economically, the fact that we have innovation across all of our price points and historically, we play very aggressively both in the opening as well as the mid-price, we think we have the ability to leverage our portfolio effectively as we see the economic circumstances change. But again premiumization will continue to be a focus. You saw it in Asia, particularly where we're launching and leading with premium innovation in our online business in Asia. Our online business continues to grow. I think it was up over 200 basis points year-to-date. So again, supporting the fact that the premiumization strategy is working and will be agile relative to how we see the market evolve; and need be we will play more in the mid and opening should that be necessary. I think what's importantly is we get more and more consumers back into stores, historically, that is where we have performed so well and our ability to generate more volume and pricing opportunities as consumers track back into the shopping environment bodes well. But that being said, I'll also say our e-commerce business continues to perform exceptionally well. That was a big growth driver for us and it's comping a difficult number last year. We continue to show strong growth and our shares are pretty consistently up across the board in the online environment. Operator: And we will take our next question from Bill Chappell with Truist Securities. Bill Chappell : Thanks. Good morning. Noel Wallace: Good morning. Bill Chappell : Just a question around kind of capital allocation and any thoughts there? For years, the company had a pretty steady share repurchase program that's kind of faded over the past two, three years. M&A activity seems to be really picking up within the industry as everybody is kind of looking for a new home as we get into 2021. Any kind of changes to the thought process over the next year? Noel Wallace: Actually, no. I mean our strategy continues to be very consistent with what we've articulated in the past, reinvesting in the business with the high ROIC that we have. We continue to see real opportunities to invest in capacity and cost-saving projects around the world and that is indeed exactly what we're doing. So that will continue to be our priority. Obviously, as M&A comes available we've been conservative in that regard. We'll be selective as we see some strategic gaps in our portfolio, we may look to bring those in. But right now, we're very focused on what we have in the current portfolio. We think we've got significant opportunities still to expand and really build our skin health business out the way we want to. We've got the Hello acquisition coming in. And obviously, some of the challenges that the Natural segment experienced particularly in North America getting those behind us and moving forward with the expansion of that brand around the world. So we're focused on what we have. And then obviously we'll continue to pay the dividend and we've increased share buybacks this year as we had outlined in our guidance coming out of 2020 when we were paying down the debt. So that comes back to historical numbers. So no real change there. We continue to be very flexible as we see opportunities and maintaining a strong balance sheet continues to be of paramount importance to us. Operator: And the next question is from Mark Astrachan with Stifel. Mark Astrachan: Yes. Thanks. And good morning, everyone. I wanted to ask about ad spend and market share. So ad spend has grown ahead of sales since at least 2018. How long does that continue? And where does it normalize as a percentage of sales? And I guess related to that does market share factor into that thinking -- especially given the numbers that you disclosed in the release is around what has been sustained share loss in Oral Care especially now that FX is favorable as well as the commentary earlier in the call about the importance of the category to gross margin? So maybe if you could tie that into together that'd be helpful. Noel Wallace: Yes. We don't have a specific target in mind for advertising. There's so many inputs that go into thinking about how and where we spend money. We're being more strategic on where we spend our money. That is underscored by the innovation strategy that we've outlined relative -- particularly premiumization, which in our view requires the right level of advertising to seed it. And so as a result of that, there's not a specific number that we're looking at. I think the most important aspect for us is continued sustainable profitable growth. And you've seen that now quite consistently over the previous couple of years. And that's the barometer we're holding ourselves to is to continue to drive that top line. We obviously now have the ability as we shift more and more money into digital to really assess the performance of that spend and that makes the economics and efficiency of our advertising that much better as we think about how we want to spend and where we want to spend. And so we -- as we see the opportunities unfold as we see the plethora of brands and innovation that we have to support we'll continue to put money in advertising as we're seeing a return on that investment. And I think you've seen that. It's all kind of obviously linked. We've got premium innovation driving gross margin That puts more dollar margin into the P&L and ultimately transfers into better advertising more advertising support more capabilities and more EPS. And so it's a balance across all of it. There's not one specific goal we're looking to achieve. And I think we're getting better at putting our advertising where we see the right returns and being selective both from a category and a geography standpoint on how we do that. Hill's is a great example of that. We've obviously deliberately and strategically put more money into that business and you've seen the payback on that quite clearly. Operator: And your next question is from Kamil Jagrulla with Credit Suisse. Kamil Jagrulla: Noel you just mentioned there's a lot of inputs that go into where you spend your money. As you're kind of thinking about coming out of COVID and you think about your -- the various divisions the various pieces of your portfolio has anything changed in terms of where you want to deploy capital? And maybe specifically to talk about are you thinking about the cleaning side any differently? Maybe there's other parts of the business you might be thinking about differently like doubling down on Hill's for example. Can you maybe just talk about what has evolved a little bit now that we're on the other side of this or likely on the other side of this? Noel Wallace: Yes. Without getting into too much detail we've spent a significant amount of time looking at our 2025 strategic plan. And in that strategic plan I think what's very notable and different for us is making tough choices on where we're going to invest our money. And rather than being somewhat democratic in that process and as a result of that coming out of COVID we're going to continue to be laser-focused on executing against our strategy. And that involves us taking money and putting it where we think we're going to get the best return through the P&L on that. And it's building businesses and geographies that we believe will deliver long-term sustainable profitable growth. It's building businesses that have the right demographics and category opportunity in terms of growth potential for them. And obviously making sure that the mix of our spending and the mix of our innovation continues to be premiumized which requires investment. And you couple that with obviously the need to continue to support a lot of that organic stuff that we do on the market. We talked about per capita consumption programs as a result of our focus on education and doing things of that nature. So all these aspects are critically important to driving the investment strategy so to speak. So again it's just built on I think a well thought through strategic plan. It's anchored against making good choices of where we want to spend. And certainly as we see the categories unfold in the back half of the year, we'll continue to allocate accordingly based on where we see the best growth opportunity. Operator: The next question is from Rob Ottenstein with Evercore. Rob Ottenstein: Great. Thank you very much. Just -- first just a kind of a detailed question. I'm sorry I missed it. Your corporate expenses were a good bit higher than, I think most people modeled. Was -- did that have to do with the warehousing issues that you referenced? And if so, how much of it was related to that, or what other sorts of investments are you doing there? And then second, you mentioned that in general you're gaining share in e-commerce. Can you just kind of give us a little bit more detail in terms of the percentage of the business that's in e-commerce maybe detail on the growth rates in the US, China Europe? Just a little bit more granularity would be terrific? Thank you. Noel Wallace: Sure. Thanks Rob. On the corporate side, actually when you look at the SG&A line that was driven by logistics and advertising. So if you strip out just our corporate fixed costs, our corporate fixed costs pleasingly were actually down in that equation. So I think a lot of the productivity initiatives that we're focused on across the P&L and managing cost actually delivered a fixed cost reduction in the quarter, which was terrific to see. Moving on to specifically e-commerce, I mean, obviously the growth numbers are terrific across the board relative to our focus there. And as you look at market share increases we've seen those in North America. We've seen those in Hill's. We're seeing those in Asia quite nicely. We're seeing those in Latin America. In fact, I got some India numbers that look outstanding. So again, where we're focusing time, and effort, and certainly putting the investment there we're seeing a good return on that. I think that bodes well as we continue to see the growth of e-commerce. We exited the year at double digit on e-commerce and that number has accelerated in the first quarter. So I think the focus and strategies we have in place continue to be well received in the marketplace. I'll give you one data point. We're up 260 basis points versus the first quarter last year on a percent of sales on our e-commerce business. So, again, I think it's growing quite nicely, and importantly driving market share of new users into the franchise. Operator: Thank you. Mr. Wallace, it appears there are no further questions at this time. Noel Wallace: Okay. Well, thanks everyone. So that obviously concludes our call. And again, we're really pleased on how we started the year. And we've got a lot to do. We're excited about what's ahead of us, but there's no question a lot of volatility and challenges. But we've got an incredible culture at Colgate and our entire team of 3,000, 4,000 people are deeply focused on delivering strong results, while ensuring that we continue to adapt to a rapidly changing environment and wining the future. So I just want to thank everyone for their continued support on our business, and look forward to talking to everyone very soon. Thank you. Operator: This concludes today's call. Thank you for your participation. You may now disconnect.
Colgate-Palmolive's (NYSE:CL) Impressive Quarterly Earnings Report
Colgate-Palmolive (NYSE:CL) is a well-known consumer products company, primarily recognized for its oral care, personal care, home care, and pet nutrition products. The company competes with other giants like Procter & Gamble and Unilever in the consumer goods sector. On April 25, 2025, CL reported impressive quarterly earnings, showcasing its strong market position.
CL reported earnings per share (EPS) of $0.91, surpassing the Zacks Consensus Estimate of $0.86. This marks an improvement from the $0.86 EPS reported in the same quarter last year. The company's revenue reached approximately $4.91 billion, exceeding the estimated $4.87 billion, highlighting its robust sales performance.
The company's price-to-earnings (P/E) ratio is around 26.13, indicating that investors are willing to pay $26.13 for every dollar of earnings. This suggests a positive market sentiment towards CL's future earnings potential. The price-to-sales ratio of 3.73 reflects the market's valuation of its revenue, while the enterprise value to sales ratio of 4.10 shows how the market values the company's total worth relative to its sales.
Colgate-Palmolive's enterprise value to operating cash flow ratio is approximately 20.04, providing insight into its valuation concerning cash generation. The earnings yield of about 3.83% offers a perspective on the return investors can expect. The company's debt-to-equity ratio of 40.15 indicates a balanced approach to financing its assets, while a current ratio of 0.92 suggests its ability to cover short-term liabilities with short-term assets.
Colgate-Palmolive Company (NYSE:CL) Financial Overview and Analyst Insights
- The consensus price target for Colgate-Palmolive Company (NYSE:CL) has been adjusted downwards, from $102.25 a year ago to $89 a month ago, reflecting a more conservative outlook from analysts.
- Despite inflationary pressures, Colgate-Palmolive reported a healthy profit margin of 14.4% and surpassed $20 billion in revenue in 2024.
- With a robust gross profit margin exceeding 60% and a return on total capital of 27.9%, Colgate-Palmolive is considered a strong defensive stock amidst recession concerns.
Colgate-Palmolive Company (NYSE:CL) is a global leader in consumer products, known for its strong brand presence in Oral, Personal, and Home Care, as well as Pet Nutrition. Despite its diverse product offerings, the consensus price target for CL has seen a downward adjustment over the past year, reflecting a more conservative outlook from analysts. A year ago, the average price target was $102.25, but it has since decreased to $89 a month ago.
The company's financial performance in 2024 was impressive, with revenue surpassing $20 billion, as highlighted by Benzinga. This success is attributed to Colgate-Palmolive's strong brand identity and operational discipline. Despite inflationary pressures, the company maintained a healthy profit margin of 14.4% and continued to invest in marketing and research and development, enhancing brand differentiation and price stability.
Analysts are closely watching Colgate-Palmolive's upcoming earnings report, with Jason English from Goldman Sachs setting a price target of $95 for the stock. Despite the downward adjustment in the consensus price target, the company demonstrates financial robustness with significant revenue and margin growth, generating record free cash flow. This positions Colgate-Palmolive well for the future, with a "Buy" rating and a target share price of $100.08 for 2025.
As concerns about a potential recession grow, investors are shifting towards more defensive stocks, with Colgate-Palmolive emerging as a strong candidate due to its non-cyclical nature. The company boasts a robust gross profit margin exceeding 60% and an impressive return on total capital of 27.9%, as highlighted by Seeking Alpha. Despite the conservative outlook, Colgate-Palmolive's stock is considered fairly valued, featuring a shareholder value yield that surpasses its historical average and a reasonable price-to-earnings ratio of 25.6x.
Colgate-Palmolive’s Price Target Boosted at Argus
Argus analysts increased their price target on Colgate-Palmolive (NYSE:CL) to $107 from $97, while maintaining a Buy rating on the stock. The analysts praised Colgate-Palmolive as a well-established company with leading brands and expressed a positive outlook on the company's products that incorporate natural ingredients, as well as its new lines of pet food designed for younger pets and older pets with kidney issues. The company has consistently met or exceeded its long-term target for organic sales growth of 3%-5% over the past four years. Additionally, it has increased its dividend annually for over 60 years, currently offering a yield of approximately 2.1%.
Looking forward, the analysts expect Colgate-Palmolive to focus on enhancing its offerings of premium products, expanding online sales, leveraging analytics, and improving productivity. From a technical perspective, the stock has shown a bullish pattern of higher highs and higher lows since October 2023. On the valuation front, the stock trades at 25 times the analyst’s 2025 earnings per share (EPS) forecast, which is above the peer average of 23.
Given the company’s broadening product range and solid dividend track record, the analysts reiterate a Buy rating. The revised target price of $107 reflects a valuation multiple of 28 times the 2025 EPS estimate.
Deutsche Bank Ups Colgate-Palmolive Price Target to $98 Amid Market Optimism
Deutsche Bank Raises Price Target for Colgate-Palmolive Company (CL:NYSE)
Deutsche Bank's recent decision to raise its price target for Colgate-Palmolive Company (CL:NYSE) to $98 reflects a positive outlook on the company's financial health and market position. This adjustment, representing an 8.17% increase from its current price of $90.6, signals confidence in Colgate-Palmolive's potential for growth and profitability. The announcement, made on April 29, 2024, and detailed by StreetInsider, suggests that Deutsche Bank sees underlying strengths in Colgate-Palmolive that could drive its stock price higher in the near future.
The timing of Deutsche Bank's revised price target coincides with Colgate-Palmolive reaching a new 52-week high, an event that has undoubtedly captured the attention of the investment community. According to a report by Zacks Investment Research, also published on April 29, 2024, there's a growing interest in evaluating the company's fundamentals to understand whether its stock has the momentum to continue its upward trajectory. This surge to a new high, with the stock price peaking at $92.25 over the past year, underscores the company's robust performance in the market.
Colgate-Palmolive's market capitalization of approximately $74.1 billion, coupled with a trading volume of 1,524,884 shares, highlights its significant presence on the New York Stock Exchange (NYSE). Despite a slight decrease of 1.08% to $90.025 on the day of the announcement, the stock's performance over the year—from a low of $67.62 to its recent high—demonstrates a strong upward trend that has likely contributed to Deutsche Bank's optimistic price target.
The fluctuation in Colgate-Palmolive's stock price, ranging between $89.96 and $91.24 on the day, indicates active trading and investor interest in the company. This level of activity, combined with the company's solid market capitalization, suggests that Colgate-Palmolive is well-regarded in the financial markets, with investors closely monitoring its performance for signs of continued growth.
In summary, Deutsche Bank's updated price target for Colgate-Palmolive, set against the backdrop of the company's recent achievement of a new 52-week high and its strong market fundamentals, paints a picture of a company on the rise. With analysts and investors alike keeping a close eye on its performance indicators, Colgate-Palmolive appears to be in a favorable position to capitalize on its current momentum in the market.
Colgate-Palmolive Q1 2024 Earnings Surpass Expectations
Colgate-Palmolive's Impressive Earnings Report Highlights Financial Strength
On Friday, April 26, 2024, Colgate-Palmolive (CL:NYSE) reported its earnings before the market opened, showcasing a significant performance. The company's revenue reached $5.07 billion, surpassing the estimated $4.96 billion, indicating a strong financial outcome for the period. This achievement was a result of a balanced mix of volume and pricing growth, which played a crucial role in driving the top-line revenue higher than expected. The positive outcome of the earnings report was further supported by the company's optimistic revision of their financial outlook, as highlighted by Zacks Investment Research.
The uptick in Colgate's stock following the announcement can be attributed to the expansions in both gross and operating profit margins, which were instrumental in bolstering the company's bottom line. This indicates that not only did the company manage to increase its revenue, but it also improved its profitability, making it a more attractive investment. The detailed analysis provided by Zacks Investment Research underscores the importance of these financial metrics in evaluating the company's performance over time and against market expectations.
The earnings conference call, which featured key company executives and saw participation from financial analysts representing prestigious institutions, underscores the financial community's interest in Colgate-Palmolive's performance and strategic direction. This level of engagement from the financial community is a testament to the company's market position and its ability to generate interest among investors and analysts alike.
Furthermore, Colgate-Palmolive's financial ratios provide a deeper insight into the company's valuation and financial health. With a price-to-earnings (P/E) ratio of approximately 28.77, investors are shown to have confidence in the company's future earnings potential. The price-to-sales (P/S) ratio of about 3.79, enterprise value to sales (EV/Sales) ratio of roughly 4.17, and enterprise value to operating cash flow (EV/OCF) ratio of approximately 22.34, all indicate the market's positive valuation of the company's sales and cash flow. Additionally, the debt-to-equity (D/E) ratio of about 37.78 shows a manageable level of debt, and the current ratio of approximately 1.06 indicates the company's ability to cover its short-term liabilities, further affirming its financial stability.
In summary, Colgate-Palmolive's first-quarter earnings report for 2024 not only exceeded expectations in terms of revenue but also demonstrated strong profitability and an optimistic financial outlook. The company's financial ratios and the interest from the financial community during the earnings call further validate its solid market position and attractiveness to investors.
Colgate-Palmolive Reports Better Than Expected Q1 Results, Lifts Guidance
Colgate-Palmolive (NYSE:CL) released its first-quarter earnings, which exceeded analyst forecasts. The company achieved an adjusted EPS of $0.86, beating the anticipated $0.81. Its revenue also exceeded projections, reaching $5.07 billion against the forecast of $4.96 billion.
Colgate-Palmolive saw a 6.2% increase in net sales and a 9.8% rise in organic sales, continuing a strong performance across all divisions and categories. This growth extends the company's streak of double-digit increases in operating profit, net income, and EPS for the third consecutive quarter. The company also maintains a strong global market share in toothpaste and manual toothbrushes at 41.3% and 31.7%, respectively.
CEO Noel Wallace highlighted the successful execution of the company’s strategy and investments in sustaining business health as key to these results. He expressed confidence in the effectiveness of their strategies for meeting the updated 2024 financial targets and sustaining consistent earnings growth.
For the full year of 2024, Colgate-Palmolive revised its net sales growth guidance upward to 2% to 5%, previously 1% to 4%. This includes an expected mid-single-digit negative impact from foreign exchange fluctuations. The forecast for organic sales growth was also adjusted upward to 5% to 7%, from 3% to 5%. The company continues to expect an expansion in gross profit margin and anticipates double-digit growth in GAAP EPS. For adjusted EPS, the company projects a mid to high-single-digit growth.
Investing in Stability: Colgate-Palmolive's Market Resilience
Seeking Stability with Colgate-Palmolive in Your Investment Portfolio
In the context of seeking stability within an investment portfolio, as discussed in the InvestorPlace article, Colgate-Palmolive (CL:NYSE) emerges as a prime example of what might be considered a "Steady Eddie." The company's recent financial performance for the quarter ending in March 2024, as analyzed by Zacks Investment Research, underscores its potential as a solid anchor for investors. This is particularly relevant in times when the market faces turbulence, such as the recent volatility in the cryptocurrency sector. Colgate-Palmolive's ability to maintain steady financial metrics amidst market fluctuations makes it an attractive option for those looking to mitigate risk in their investment portfolios.
The financial report disclosed by Colgate-Palmolive reveals significant insights into the company's stability and growth prospects. With the stock price witnessing a 1.21% rise to close at $90.37, as highlighted by Zacks Investment Research, it's clear that the company enjoys investor confidence. This price increase is not just a random spike; it represents the highest price point for the year at $92.25, indicating a strong market position. Such performance is crucial for investors seeking reliable stocks that can withstand market pressures and still deliver growth.
Moreover, the trading volume of about 3 million shares, coupled with a market capitalization of approximately $74.39 billion, reflects Colgate-Palmolive's substantial presence in the market. These figures are indicative of a company that is both highly valued and actively traded, traits that are often associated with stable investments. The fact that the stock price has been able to reach its yearly high, moving from a low of $67.62 to $92.25, further attests to its resilience and potential for steady growth.
Understanding the financial health and market position of a company like Colgate-Palmolive is essential for investors, especially in the context of seeking stability as advised by the InvestorPlace article. The detailed look at the company's top and bottom line numbers, as provided by Zacks Investment Research, offers a clear picture of how Colgate-Palmolive stands in comparison to Wall Street estimates and its performance in the previous year. This analysis is invaluable for investors aiming to build a portfolio that can weather market volatility while still aiming for growth.
In conclusion, Colgate-Palmolive represents a compelling case for inclusion in an investment portfolio as a "Steady Eddie." Its recent financial performance, market capitalization, and stock price movements provide a solid foundation for investors looking for stability in uncertain times. As the cryptocurrency market and other investment sectors experience fluctuations, the steadiness offered by companies like Colgate-Palmolive becomes increasingly important for those aiming to secure their financial future.
