Kimberly-Clark (KMB) 25 Apr 232023 Q1 Earnings call transcript

Good day, everyone, and welcome to the Kimberly-Clark First Quarter 2023 Earnings Call. At this time, all participants have been placed on a listen-only mode and we will open the floor for your questions and comments after the presentation.

It is now my pleasure to turn the floor over to your host, Christina Cheng. Ma'am, the floor is yours.

Welcome, everyone, to our first quarter 2023 earnings conference call.

note, will please forward-looking begin, we today's include presentation statements. Before

undue from results our and or place for forward-looking a may could SEC actual from factors our to those Please you on refer statements. vary not list statements Our materially filings forward-looking actual materially expressed results expectations. our deviate any our implied should that of reliance cause in to

results, non-GAAP Our news which measures refer remarks adjusted exclude our understand use financial to described press release investors performance. release. items help of for We business a and measures measures. comparable Please financial reconciliations financial our certain to GAAP in ongoing discussion today our non-GAAP to our consult

Investor of We Relations website. have supplemental in section which published our material, can be the found

Michael overview call our the will quarter. performance start and open the Nelson floor today's are and our QX we Officer, Urdaneta. priorities CEO, for our strategic of detailed provide an our results outlook a and Chairman and Mike before Hsu; Nelson in provide Q&A. our discussion will discussion Financial of Chief the Participating for with

With the that, to over I call Mike. turn

Christina. Thank you,

I'm the delivered growth in costs adjusted year. X%, start solid organic in healthy, in growth encouraged Category to the cycling stabilize. was We XX% growth quarter. increase strong, increase and XX% our a in resulting of per continue year-ago to remain by execution a to pricing adjusted margin XX% begun have profit gross These primary us share. factors improving operating and enabled earnings

Margin the progress our X% pleased raising in priority, performance be operating QX assumptions, underlying to recovery XXXX strong we're with a to outlook our I'm increasing top EPS making. confidence to and continues we're our Given and XX% growth. plan

our gross expanded second from the on of momentum margin points we building quarter XXXX. by year half basis ago versus XXX This

well-above progress, operating a While with input to but continue trade encouraged challenging we have XXXX stabilized, in environment, still are we're levels. our costs

productivity basis points eventually customers. secure continue to below cost and action discipline. XXX operate the margins to our We there. levels, financial expanding gross adjusted taking our and returning better to from needs committed into to historic remain we'll to pre-pandemic nearly of With and levels, aggressive harder margins the leaning meet supply We're

our thoughtful strong healthy We've enable continues mitigating realization volume hold critical our offering the the with balancing a of meet and is deployment share and of holistic taken pressures, us This a of QX, Care growth XX% carefully broad-based read. to growth We've gain agile to to to muted. invested growing Category nature focus has inflationary reflects value approach we or our proposition. and in somewhat Personal be has enduring to price capability the and continue share. superior building revenue In market essential goal that on management This been elasticity we impact as price in cohorts. to remained categories our globally. effective on approximately

geographies, lower-income where While U.S., in higher-income our bifurcation within us. We've increasing like we meeting in the and demand. markets. they grow, our observed resilience D&E We're also demand especially for see continue developed need consumer consumers but categories to markets value

category premium. broad to spans we a that As leaders, offering value have

more in we're premium including our budgets product tiers to tighter our through accommodating innovation the portfolio, momentum continuing we're value of our and and While see business, cascading features rapidly offerings.

value. excellent Our brands offer

of up we're diapers a children and our leaks. important get with superior GoodNites through GoodNites XL overnight to better economizing XX% communications that their and products brand superior stepping enable night need breakthrough performance serves the less sleep with parents campaigns our For an usage, like value offering. highlight

highlight elevate the brand an our us that has categories. and concerted exciting pipeline will you'll and resulted propositions to quarter. later past I'll value years over that this key in innovation help see few are few investment a expand technologies product our Advantage in

superior fairly refreshing We're focused in tissue". their care dissatisfied Half and users category behind with America, of -- and provocative with we'll powerful are insight. North Comfort Ultra the a we bath initiative about in & the highlights We're all issues Strong real a Clean launch down that their Cottonelle Ultra existing some on this advertising talking the their that clean and delivering down face. we're "Soft

products of unmet Our needs. suite these will help address

ultra-high the NIGHT Kotex launching users. KC for overnight pads. we're superior best-ever been leaks, enabling it a are roll debuting POLAR productive around China, be ICON one most In waste. panels in hit collection, labor our from fully world. system. new customizable reliability our has offer is more feminine North Internationally, and end-users excited to advanced with the NIGHT, Professional to dispensing of America overnight biggest we and has back protection icon towel our ICON POLAR issues and

to this We Huggies. news on have including more exciting innovations launch later year,

while working markets. our are categories, teams to elevating Our consumers pipeline, confident expanding hard we'll innovation value and on our we're bring our more the

encouraged year our are start to and we closing, remains and for serve line. our by demand brands and our essential healthy. the top the on categories In momentum We strong bottom

ahead We and all a sustainable our value delivering of and long-term have stakeholders. to growth long committed of to balanced for runway us we're create of growth

Nelson. to I turn now, So will it over

Thanks, Mike.

year. report I'm the a solid pleased to start to

growth On billion X% XX% organic with increase. the for segments, up were compared a First basis, average across $X.X consistent Organic X% increased company. quarter to growth sales last all year-over-year. was sales approximately two-year three year's X% net sales

grew the price better-than-expected delivered and growth favorable a price company's underlying consumption. with mix and representing and Strong elasticity business, our growth for on revenue a mix healthy impact revenue contribution half Personal Care Organic volume. from with X% benefits management healthy approximately of

particularly by with new Growth North of by America. contributed the contract exit Personal a major QX private-label was lapping After organic setting strong in last approximately quarterly geographies America sales a percentage impacted negatively year, one North point All a growth. Care record. to

women's population and child X% tremendous on by Korea. care of the health. quarter. and in rates aging Operating focus growth adult and profit for from we first product created in care baby South the gains opportunities impact the Feminine to the healthy rates, In in improved China innovation care, birth innovation the segment and moderated ongoing grew at lower continue and

in We Care unlock unmet needs, are confident growth Personal to of business. address we'll for continue our long a strategy our significant to runway

Tissue Consumer with was in across growth broad-based growth Organic X%, all geographies.

continue for to profit segment Tissue We XX% operating improve quarter. profitability of business our up with the for the the

double-digit growth. Finally, grew, our posted and organic North with geographies business XX% delivering growth. markets, developed KC-Professional America organic All

remains And segment to we our make the growth. investments grew on continuing deliver can in where value volume XX% remain Operating growth. long-term below the we are levels, to in Although drive for Professional the opportunities pre-pandemic of year. focused profit quarter business we and sustainable first

adjusted basis savings this basis of gross basis on increased lines represented in of quarter the in First by our XXX higher offset was input approximately year-ago, an margin basis point to $XXX than impact impact sales, addition more million costs of million, of to XXX Between XX.X%. net up XX FORCE the Pricing, business. approximately which points investments spending quarter. roughly a XX.X% points versus driven $XXX

versus XXX an the margin. margin of operating Adjusted was operating XX.X%, increase for quarter XX% and year's last adjusted points increased basis operating profit

was profit in Foreign XX of costs. our impact headwind on balance the subsidiary points impacting translating due earnings dollars, into and quarter input the to five a percentage currency foreign was point the operating U.S. which of percentage

our quarters. progress last on good have margin recovery We over few the made

XX% margins of approximately below effective and gross time. adjusted basis We expanding effective points was in However, an year period. still committed, our our to remain over are, rate tax tax to ago levels. rate compared XXX pre-pandemic margins restoring The XX.X%, the

of share Better top-line earnings adjusted up and versus than year. expected resulted margin per last $X.XX in results XX%, performance

also and operations increase spending management our approximately generation. was of This operating profit million to resulted million provided $XXX Cash in driven last working was capital. million quarter by $XXX in compared strong year. cash $XXX healthy by Capital

through million dividends quarter, we share the and $XXX During returned repurchases. first shareholders to

a let our outlook. about few me say Now, words

are lap full a X% to raising X% a our for maintained performance year to X% economic of of range We XX% growth outlook actions moderation against a we last of year's X% of guidance from it We've our QX to growth. our as softer earnings growth, and guidance pricing to year reflect headwinds, X% full to commodity increasing backdrop. prior organic the

our are and to brands incremental and drive investing behind people, opportunities we'll near-term committed methodically assess returns. to We

recent to in investments more brand scaled markets second said and up last the our step to we expect and rest As innovations we of advance quarter. the commercial as quarter we capabilities, year, the

will share We household are superior optimistic time. over value propositions about and bringing penetration that increase market

increased and of brand pipeline for innovation have deliver we to in guidance investments, top our half in our from growth. organic the range ability confidence success our the With

million. $XXX year have improved, but assumptions a costs, to the input million headwind $XXX Our for of remain

last stated quarter. the costs higher to wages from addition manufacturing $XXX In other as and headwind million

we Most input dissipate commodities have the levels quarter. levels. hover and of first significantly expect remains the, to continue for mind cost impact realized outlook in throughout year. of XXXX Bear to the been headwinds mixed, that, costs, above in the And

Our assumptions take energy revised from transportation lower benefits account into costs. input and costs

other these, volatile. our prior seen in material However, markets not commodities changes and versus beyond remain have outlook we

oil higher materials. trend with other reversed cuts. For recent have prices the And prices example, the and contributed round downward Global have are raw improving. to logistics restrictions supply of supply

tight. However, the market remains labor

last hope But cannot recover Certainly, three impact of to to future. on the commodity see significant the we the abatement in count it in we inflation years.

products, can focus our which control, continuing to on maintain initiatives, offer innovation, revenue we We superior focus accretive productivity are and going is on growth consumers, what delivery. sustained to

double-digit outlook million, We our profit is points impact $XXX to million to majority expected increase for profit operating XXX which guidance. midpoint are to by low raising our percent Currency growth approximately impact of operating a of basis margin and by at $XXX will the for costs. our range the to operating

outlook our per X% range these assumptions, have to on share we a Based XX%. of earnings to increased for growth

quarterly have currency we and remind lapping guidance, comparisons second me expect that sales are do in the to not tough headwinds While provide we quarter. you let continued

our teams slate a have laser-focused I are growth are create that off. to am the programs a leading to our executing we strong said, execution start will and Mike balanced to excellence. of of coming with year, sustainable on delivering And value. proud shareholder commercial full committed we team's and As

for With open the floor that, questions. we will

Your Chris [Operator Wells question first from Instructions] Certainly. is Carey Fargo. coming from

is line live. Your

Good morning, Chris.

Chris. Hi,

morning. Hi, good

sequentially on you from clearly pricing line remains just strong margin continue to gross as the and decline be here wanted If to will deflate. anything, debate like this continue to I start quarter. strong the your commodities So, expectation

sequential I gross of gross pretty have I line more relative what a might perhaps the And cyclical of to be, you just any have a seems item recovery if on here. your in development bit that any margin. investments into So, atypical cadence wonder sequential a thoughts follow-up? margin the that

excellent progress more will start and growth. organization Nelson to investing balanced of restoring encouraged would drive you Okay give I'm the and definitely growth margin sure sustainable I accelerating margins, want the it's just on I'm by texture while and Chris, what team, proud I'll and some still long-term really recovery say, - reference. to for color we're

that's kind what So, is. overall of our play

But about net of XXX remarks, up on operating commensurate we our ramped-up recovery, say margin productivity what said would margin I'd basis execution, deliver. points. pricing excellent yes, in with the gross our price margins has expectations and on and the had our each been cost prepared were the We for

And teams around have there. excellent the really done I so job think world an

stabilized seen. this is the two ability has the and for I costs, Input actually we've most quarters, and pick past about

weeks us the of for, I gives we've back great productivity. was and think I the about done that, the the so as had XX for call a kind to of have in it aim and in think January teams good seen probably job stability, something which same about work is

transportation area. are a shoots current We being some green seeing

environment, $X.X it's going we But costs corner, I our I would a little view the consistent overall add Chris, be the I overall. up mean billion. of what We're to be fairly though to pick favorability we reversion three-point. cost bit current about were definitely it's see going to said to the is that around up think. going now

$X.X three expect to the be last of years, inflation. billion We over

give thus will I don't some history that of we buy little these see generally the see comes year. more - in this a texture? that back you Nelson, maybe of expect to in but But this year, far the really would out. it commodities our moderation categories second want him I half we

Sure.

to what things. Just few Mike build Chris, saying, a on was

significant and have the to in our for would million, So expect the now too million that's the of headwind, to QX. $XXX balance just don't of $XXX hit year. We it us cost the be majority

gains going as we do to to yes. specifically to gross further expect margin year. see margin back to into answer continue In the gain as mean, we as half is begin that gross the expect we go through to fact, the of year. the we subsiding are your the on go year question And progresses, we I

second year. an gross the This expand ago, a versus if time in marks and amount And we step quarters that quarter not you time. insignificant had as reminder, happened a that had the margins, by row last been the prior back in eight

very are encouraged made. the we So progress by

A fact early things in terms keep couple mind in of the to that pricing. were we are of

begin So to in this good second what expect to don't expect delivered level pricing remain. margin margin the to XXXX. some at we've we And year. back quarter we really margin to of of saw some higher us in the half track and XX% as the pre-pandemic quarter our last roughly that gross lap on go gross to of in gross than in that of in do absolutes, we of why will QX. QX that terms the increases we that We exit we Hence, get seen a puts into

margin to there. that to on and addition start all drive a levers managing very healthy through is from the we've to recovery the continue In team to of committed and we the expanding focused have then that, productivity, pipeline

much so perspective. that for you Thank

Just one follow-up. quick

next rate linear investment Your any way desire, just for each gross that of well. or Can or sequential kind during And fashion QX? step just the actually have letting historically be recovered the this times pressure. and there gross through your year context margin reason progression. willingness as should year margin to you to, system back QX opposed flow I this into your more wonder overall line, you into they've in a have as remind if that Is why level than philosophies margin to the down higher your put about quite in of quarter gone in your up of gross going to could bottom spending that year of the being exit same

So much thanks for that. so

Sure.

So couple things. of a

seen have strong. last quarters, in fairly We and an acceleration two the it's been

to pricing we it. lap as second subside go The be that we'll subside expect expect to One, we half, will as gain I progresses. to don't costs into will I the sustain is good two continuing also the So because, because things. do said, year as but news

as change, muted, more and straight will So line, but yes, slope it expected. little be to get the will a a continue it bit will and it's

to you But the year, investment were highlight for and at the that investment. XXX I least we back philosophy, And XX we basis January, about increased to said when investment outlook of the it's this that important year, points going our expecting think quarter, full as we gave brands behind remember, basis we the prior innovation versus in points.

speak. we of You a would last we year this the We we And all put prepared remarks seen that as have in this our really go were have that for in pipeline been run. quarter. we facing we're strong market, is with and very innovation the into and our supporting that's that the don't year has the it been And long for the philosophy, headwinds key. even are prior

I'm XXX we when for full do and disciplined So But why the all increase. points we as the been XX done. we investing. for highlighting our And points saw of year, costs. about has basis the investment we've Hence, to we've we about been and progresses it's run, said step expecting the up very around basis key year XXX investments. fact go counting. expect, and been are that for But years disciplined been, the We've our Chris, about long

growth. so that and tack invest to brands further. we're year, proverbial to the drive think on, the little and create more that Chris, a our able balance see in room Certainly, invest us to right? trying to this definitely sustainable gives continuing cycle, good opportunity year. long-term virtuous we just start to And be We're confidence to Yes. I in this

I a of of of excited kind thought we year, look we when additional I think And prepared the XXXX. opportunity great what one, bit so during have our stuff because, for little are even for we innovation. in remarks probably our we highlighted that beyond about would had really the start

poop, I we poop. and what kind think there's can magic coming do of in with

clean I on superior protection the talked Cottonelle diapers. about comfort with

great got we So news.

think retail of really that The that's focused is advertising, earmarked will expanding And be the some I we're on so on categories other investment these thing we're and value, through partners, in driving and and really for. our trial focused categories, right? the penetration what

And so the I a are developed the expand lot bath highly as unsatisfied does. is with consumers which highlighted. in what most think category even in still -- and opportunity there's of tissue, to category the we world, penetration, Because great

So we propositions. feel like we're improving our brand

news. great have We

And excited money the so behind I us, this putting hard year. and more we're work very do for that to will brands, think,

Thanks All so right. Okay. much.

Okay. Thank you.

Thank you, Chris.

you. Thank

question is Jefferies. from coming Your next from Kevin Grundy

live. is line Your

Good start sales Great. on organic Thanks. the pivot everyone. growth to morning, the And guidance. year. we'd your I to thought strong congrats

at a have be of between which and this thoughts does cycling would you year. it, the so Comment view juncture to taken, end start X% the And maybe closer the So about would Mike, you're just imply And of -- follow-up. the maintain at strong And your of reflected to to although what's balance year. mix? the high year, you a you up it The and the how balance pricing how thinking great imply something how of the talked decided on X% in Nelson, to low that in the end. relative some guidance about for your then call deceleration X% for some risk, categories. to the get we've then seen to your updated on breaks down the price cadence I it trade-down outlook?

outlook it the growth Kevin, organic let the of course me how start, we So evolving and with year. in the see

top were So dynamics. and we on than quarters. what growth last was frankly, obviously, was be had has And do muted, initially big we what three elasticities we continued with our category our we projected. and to as we've over Categories in to seen stronger the behind pricing had volume stated, expected, the the more better had that that of quarter, impact projected, what largely particular than driver line the this than performance

So that helped.

growth. that line happen led markets, of we of dating despite pricing the to many -- remember, QX pricing we because took, actions we be XXXX. we actions big were that, But one the back the to cycle continued expect top driver many What of in as to the we pricing

So we of many those we'll we to will be QX. as -- start exit lap

the as the pricing the off and impacts saw QX, expectation year is subside. in drop is go will our the because same to lapped, token, we volume So saw X% progresses we've in as that But impact also pricing X% by the pricing the carryover to we QX, seen, will will that begin all of away. taper we a expect

QX. balanced line yes, then top highlighted of we progress X% the So performance innovation it into guidance in taking And of light for top back the did And account that the that's terms the more half through being we aiming year. that will consumers stronger guidance We to of end growth the into X%. algorithm turn to a the resilience of we're of as had our hold we've our of because given the also, seen, in the that into marketplace. and put we're performance the category in we

just as the So the volume flavor of Mike? how And aiming But pricing year I've I see for stated. you just by. evolution of a goes we the bit end are as top overall, of we that and little of given guidance,

of categories, risk. the you I'll back had Yes. Kevin, on categories we -- consumer and the first remains The And trading strong I'll really QX, through stronger and health. probably anticipated say, down then, the One, healthy the comment year, mentioned I'd category of quarter, at resilient. and than the remain the right, the start the on category

consumption. numbers, digit. in few the X, up so digits. And you overall, was give high America categories, was in was were single market. Western double about Latin a to Europe organic categories American up North KC-Professional up our up Just in teens digits double consumer every

And I so the categories think performing are well. again,

not elasticity six, And numbers, down diaper for been few volume is this has the to two. here's mentioned, just price Nelson muted. it. you up factors, brand was somewhat impact was flavor U.S. In category give category, As volume a the a numbers,

up was In four. U.S., was adult tissue down volume seven in was And one. XX price up volume bath and U.S. was care, and price up

the Kevin category so I that any the see definition guess, - is right? kind clearly, one, can is, recent range. think elasticity least are at these in overall elasticities, of relatively are if - I below brand you notion – So in - And the but And the period, it's inelastic. higher categories of elasticities generally our than relatively that

out tiering not appropriately, necessarily this premium some our I the there, either. I generally use I maintaining less down it's this the can if of but you're going that broad-based. before. essential - But price example And monolithic up And mean operate if doesn't I'd in have bathroom momentum And think less, business. premium we categories tissue, on the in definitely not right? do business, We're goes elasticity. said bath is the use tiers word say it's so, to in There

in that's shifting single-digit, continue - to be tiers, to especially markets. internally, call that's and and and true Especially our our developed up In mix X we Tier China premium X. all high

strong proceeding. side. in so momentum have a Brazil, the And and market our is on at premiumizing, momentum volume. is you look the that market if in U.S., the mix we like Even actually Similarly, premium

and tiering is, There's U.S. than see into is premium actually there There definitely more bit. little is - - and in value that we declining going is down a

market additional prior label I tiering. which in, category, big from like Peru, up Argentina In down of a up which think was think, is seeing were I some quarter. the are four tick shares and markets private the us, for a we

So it. we're to sensitive

especially on meet in the going our And need through really where need changes. value to focused cascading, us, we're the points innovation our consumers that price us. be our so portfolio, improving pack first I at, to the also our by and And hitting mentioned consumers they into prepared tiers. remarks, through we're rapidly us But proposition, for price value that's as more

kind pause there follow-up. that's so, you where we of and And see any I'll are. if have

It try with quick that quickly be out and now was was just sort what's this, of how ramp from a is from support a brief drinking I'll of it's fire color a it and trade It's hose now trade right? follow-up, because down moderate with commodity a the a of Mike, the So to more for lot things about the change. Nelson. And lot can narrative worried and to trade fantastic Yes. on and significantly? costs narrative, remarkable bit. promotion, potential you

as the competitive whether maybe this you. And Thank that significantly commodity then with ramps around I'll not nicely private who is do label? some on? the What's the play that, pass here costs sandbox, players, intensity moderate? of are in potential Europe competitive your for in it What thoughts

see question it, North push ramp in a Kevin. promotion both secondary brands and similarly of or you're Africa, Yes. a Childcare and America. distribution spots that from seeing so and little a for a I up Latin that we other in from we're and in few Great in one. players, Periodically, on seeing is time-to-time. make categories pull-ups parts us there's that in tertiary local America, multinationals, mean we're

ramp we time-to-time. see from promotion little a And up so,

are from thing our Our levels. whole - I pre-pandemic mean margins yet we've not priced is

to need productivity and it. about what know our what going to we net get going both We're expectations disciplined input commensurate to we're we recovery, to so, and prioritizing our costs be. priced to. And is we've And be margin for

great invested few building a got a lot, management over revenue in growth analytic last a We've the lot years capability.

so, this be philosophical, to maybe fan a promotion. of going is, And agile commentary I'll my really I business color to in our or philosophy movie. and is give continue I'm not spending. share you we're that we've through the mean seen and renting But disciplined

what food the pick by including business kind a everything through to it and I've I'd in making business. out up that is base shares. renting earn And over-promoting over-and-over and that seen categories, better. innovation of got else. mean the of in of products brands And of I've share always the advertising through rather lot I

internally, of And is, road what our which our road so sustainable that's we hey, we - high strategy, call kind growth. want high

to we're going proposition, doesn't through earn trade our a brand We're get and to time. category over better promotion. penetration That done share through grow going value well

So it will to Obviously, think our be I I in innovation path. preferred there. going the grow we're out think and for But be category to to want advertising us, competitive. is investing

it. the for good. all Thanks time, luck. very Okay appreciate I Good

right All thank you.

Thank you.

Thank you.

question next Your is Andrea coming from Teixeira JPMorgan. from

line live. Your is

Andrea good morning. Hi

Thank you, everyone. good morning

performance about tough what right wanted they it's of talked the of things. rolling day, happening is back go having speak One back definitely at sure countries afford? utilization to the where, obviously I but number as just stepped in on we two only it, consumers we in So not but the of to now, in choice, I'm and also some diaper end having in that terms you drives both comparison over choices think a pricing, tougher. or cycles, not we what about is getting changes. make to can But also, it's the as

so prices obviously their which And - bunch. which in then when what a sitting local one, premiumization the - as rougher label, And night, hands? So is we also pulp so change. that's sometimes like is declining happens and has see about We you the that on private think diaper second, at China to something have you happens be that competitors to positioning now going into you're times? obviously number to a not go better when only use

to even when now, but now, that saying say, some not guidance of phase. you particular, automatically but much in - diapers happen to would to - how something through how not the about passes that? label a that we for six is the as also think going perhaps is think the it's your happen from to go so, so tissue to what's down, you where When you this I'm through in of think months think of private cycle, way embed And contracts I and in for margins going category,

wondering those? to was I So think how of

Yes.

yes. Okay

- of that think where mean, saw tends mean, with now tighter see four the little say a and I do where years all, I were a we ago are it I'd we - be that markets, yes are people you're incomes COVID, America on that markets see budgets more to I starting the some three that's on the And in First exactly down. out developing extensively and usage. stretching little ago, in usage trade emerging - right occurred occurred Latin you in years front.

And were using, a say, had day, three two. gone to they down if they diapers let's

in to shift. your some value. up years I And premium maybe from to diaper, trading shift Andrea, think that so America, had capacity a in quality, ago, we've some of think in some seen We would in - point to Latin exactly, higher behavior two we're I three But higher we've prior particular, and cases, that or seen explain, behavior. seen the

occur I think markets little developed before. that As like seeing the I behavior a we're U.S., - usage it some now premium nonetheless. we've observe would from that but but little does we other still less way, shift in the A to mentioned, less change value seen

why the of and value our So our emphasize I remarks. of mean products. really I into performance and and highlighted we're the us, our going the prepared our factored that's of that's it advertising, products in kind from approach, to see you'll

features way, address we're our - also so, cascading that better we'll product really and it line. through And by

your label we're So We're the even we At part. relief. certainly, the expect we the at is working this I private some that's And first - that's on bit down. category, in costs come come a front, peak, to think And have might correct. down still pricing through as think maybe operating that. question I of still little the point, though

at years well forecast. We're some of were but our bit, operating three you have they still and two can the down mean costs still at I highs or above billions ago. a look what costs come the over remain

that. but so, anything plan And will we add? for to Nelson,

No.

all, it I Mike okay. think you've said

helpful. super at an we to or on it's early leveling see we're a where is perspective? next one, might kind quick a things going say When this as off probably take you Just while, looking inflation of Mike, so year and lapping

hope now. that Well I but would in fast, comes call I our not it really mean, right it's

- reversion past, this seen have as the a more category we covered now, for and so, a rapid past. we've while And you the in in

recall, on let's you then say, down XXXX, went low. a If XX-year to I and think then to eucalyptus. XXXX, record we're a by And high maybe we

move And a around so, does it quite bit.

seen yet I anticipate way, significant in right. We haven't action a so would it, that but

Okay.

Andrea. point, last that on build to just And

talking taking For at only this of midpoint commodities another $X.X account into our and guidance, of ForEx year, we're the still billion.

talking not billion. So it's at immaterial amount, an two if look we were the we $X.X years, prior albeit

$X.X for that on and net-net, is this So year the the about when when we've we done, three based all said to have the done. billion outlook of year, manage years over headwinds it's had last

remain they high. So Commodities elevated. remain

in we like Europe. out. things still we're remains energy but We transportation in that and ForEx some of have improve also but the some volatile. seeing extent. have the to disruptions green items items shoots, We still we're that's are maneuvering through, watch seeing Again,

So again, as in quarter to we we at time need in take progress. strides a it a

average, and you that billion but just it's But like it's million $X it's But if $XXX on in average, half it then numbers. an front-loaded, in up the how the it's think half, So that's first the $XXX million let's reversing second say, right? $XXX and plus million Yes. I'm about back. making

smart retailers know contracts. that, to is and own okay, label I'm saying the So private because what their know enough are they they

not - to will they immediately that or through that have impact? benefit have pass So to

to to to But will other going the going pricing you're start you're see the your and that what going inflation lap it saying way. I'm that coincide is

see to but see not starting you're basis, to basis. So deflation, on on a quarterly annualized an going you're

do what talk when next that I the does or of into your fall, of So - sitting in beginning about year? down pricing you're spring the following to the think - with into

what and right, that exactly Obviously, sit Yes. the pricing year. and to take account of as want next don't I think do definitely in on second here I into we plan. we we'll I you're telegraph half plan mean to

much. fair. that's so thank the All right you time. Appreciate Yes,

thank you, Andrea. right All

Sachs. is from Your [Operator from next Goldman you. English question coming Jason Thank Instructions]

Your line is live.

Jason. morning, Good

Jason. Hi

thanks morning folks, good Hi, me in. having for

distractions lots year? are So where totally of perhaps land gross I it, to possible, which for over is margins the missed But here. expecting you

expecting incremental we're margins, bps bps points the XX investments up around remember, in basis the very expand operating we took at gross so the And midpoint XXX the we're prior at outlook. XXX at putting are expanding for of brands. margin least into Yes, points. We on Because Jason, least, to them guidance, versus year-over-year. our of XXX that our by basis

XXX bottom. that the put at gain year-on-year at about gross So would in margins the

Got it.

from you've going So sideways that to here. of - suggests kind go you're that

no then find So another level? like more sequential What level, with take up next plateaued you've you're progression. does this to reached level the here but at it

you that Is You And the your hundred remarks, couple that the of bps baseline happens, back where in a would prepared next you you're to we get started. expectation? leg? still enabler need commodities that below to come - is in? until mentioned Is sideways

That's a Jason. good follow up,

necessarily be would do be to takes commodities year. with and it margin. now wouldn't we wouldn't continued few be exit full puts gross because expect expect will how FORCE above Does a pricing - average don't the help? between that the we it expect as do thing said, we line and call the to have the see in But I and sideways. QX, So year play. Because to mean, straight it and for a linear. I progression I I

delivered the in just exit the full what Yes, XXX first year the quarter. at implies? I or mean you rate that that's

of and more quarter because expectations of I'll deal. strength perspective, our the assumptions. Jason, think you outlook the reflects Well, give I definitely beginning here's we let a year the underlying me the confidence at first updated our to the relative our the Look, - little it in - just growing plan

to start. good off we're think a I

probably all were part is, and very quarter, thinking so I guys Nelson start. so what had you I, unset first and a muted say, our to And of would closer more it expectations for strong we the had hey, we

quarter, I has As P&L would the performance been also underlying I the but category shape been said, healthy. mentioned, that first of cost has other the I has quarter, think, would healthy I in the exceeding volume, performed say cost. the price pretty that - were drivers very expectations I'd own our cost the And a stable. The say But internal primary in and say the environment well. way

are three those quality if So those you take pretty factors, good factors.

could get our little which first quarter, it the - outlook soon But we've up It the to But we we there it. Could felt after the why through continue on of to also called could. of way But we've is as I generally quarter. But on call the lot revise of feels made it it and the year? first guidance a there's should. room There strength call better? our like think the remains, that more call is we be. we a kind volatility go based

And input are and on volatility? in - We're same risk recessionary what's all to reports second exactly so currency. don't the happen costs seeing going about know what the half. to down cost factors the the We

the of factors a on And so, side side. lot there negative plus are and the both

I later. this And is - now. to retain for so will think change a mind And our right we were we I good call like the - we're feel

first with the it makes And and on all on start on. strong Understood I pass I'll quarter. your comments Congrats sense. a agree

Jason. Thanks,

Thanks, Jason.

Thank you.

coming question Lieberman from Lauren from next Your is Barclays.

is line live. Your

Lauren. Hi

we've innovation. a going about Great detailed on back topic thanks. the Hi, poop touched conversation? how are you? I know I it's tissue wanted to before into that without consumer talk

Yes.

I If first that's talked view innovation about the chunky and guys elevate you're only seems in the right? the you big probably would category and argue like, ability demonstrative intention to move time of the premiumization I or bring player really have innovation that in I direction. long the of that the like - on on category in for there, was curious development, and focusing big the your this kind kind think a But category way? it, about this

between evolve margin How label structurally kind more a are category right? the you, of that test I'm raise views what interesting? category for Is over time, this if on your innovation you branded? you've going research higher on with game see on evolving just there have markets bifurcation things curious everyone, maybe that's them, shown private move how and the to innovation? more yes, and Does profiles - and this done on initial the could

for tissue right since think I and category. And is mean Paper category version years we I a XXX soft invented and do. the know and of of of team reality to ago, and Yes, - then. about the that tissue bath much fundamentally it's bath category XX% thing harder the changed deliver what the mean, I are a is dissatisfied we definitely all roll over it done we the digging, the our every talks the But attributes products as Lauren this consumers Scott that. the has strong mean, hasn't them. invented is

the category It a is out, set and not the the so surprised consumption that you itself just - doesn't may core of And vast female. that, you turns is by issue And majority way. can to we be of but the this, think see better around know of the clean. tissue bath up

lot communication to a perspective we from definitely clean. of and And deliver better think so, product perspective ways a there's to innovate a

advertising. You're in going of to that some see

some excited. shared customers. have We very of with They're our that

I we're lot just different and better clean huge the a think, good - one value there's I of the I stages is to giving on build. the think a I at and the think it's this a creating category. right it's think category, But a one. to beginning ways for But approach. consumers more way of Because added

highs tissue. up this making time with a percentage. right? of a But here. -- back, raising terms environment has just category been for quarter this, the the in margin higher long margins you'll this in KC in story the So that think of lows, are big are for so if profitability consumer standpoint the see But and recognizing cyclicality the step the made And I bar, a right, from right, the cost then

is this prior I XX%, like not you structurally XX%? thinking as mean, business horizon, that crazy, But around here, I a to this but call just forward peak peak means, for this category. a push multiyear year, I think scope maybe there is margins on the XX%. profitability are, what innovation mean obviously, But over mean, me could in for have

lot a cost headwinds. and this came hey, in And margin when anticipating period, And of $X.X rates. me currency offset XXXX, because I XXXX, I let but pushed is job go wasn't back started right? Well, that Yes. back I broader, is with did got that, team role right in think XXXX we said America I XXXX, kind And I additional hit -- of North into excellent think that. expansion off I'd Lauren. goal, saying, I mean But so back I when billion our working -- quarter. of those margins a tissue 'XX to it the around saw an say, doing you this think I

to markets, elevate back our and overall our to so expand that margin get But the goal is that outlined goal right the up with innovation our through the strategy think certainly, categories the strategy I into And with building the categories. now and company, range. remains long-term of just expansion I and

great. Thanks so much. That's Okay.

Lauren. Thanks

you. Thank

Thank you.

from coming from is Evercore. question Javier Escalante next Your

Your line is live.

if Question I estimate have much perhaps pricing like taken, a Nelson, in to guys took guys. any much have one-on-one taken? XX relative how that put months, us cost. is, you have an you Do wonder, basis morning, how $X.X how past you the which on kind have the pricing you good Hello, [indiscernible]. of is cost morning. good much in estimate Hi, billion

Yes.

-- helps, right on and why that's Javier, if me question. we're And we've at Let had a now to that as the recovery a path margins. build it great bridge where

$X.X this management that year this providing, done So pricing in be a place revenue around is what we're will on to be of we've XX would give that or guidance give put of the for -- just growth will based when -- of XX% months you have take, realizing outlook we we billion, sense and year our through. we

provides So there one-to-one initiatives recover initiatives which obviously, our our in some team. that our accretive play with hope place commercial and the come into the get to that I perspective. of that's other in to why is part on a doesn't force to design that And basis you we margins. But in addition innovation, value cost-saving have

going a Yes, And I'm helpful. follow-up. very that's to absolutely, then little have

mix. that down look because competitors within than less are particularly are price pricing? you you basically U.S. real tissue, and label that you your Is data, have Scott seeing pricing Proctor, so portfolio under Or you for at, realizing If your main private for in more see what it's trade competitor, your private business, you of kind just realizing the - and label?

is Well, going I what we think, I Javier, suspect I'm Nelson not -- to also timing mentioned you're other manufacturers. I mean seeing see think also of to relatively earlier, exactly sure, but fast pricing you're relative priced issues. I

you ahead on of at to competition. a in I we in and if least so quarter compare of diapers, quarters the maybe starting start going three a one, And to quarterly our cases, relative are next But some basis, pricing think categories, lot like diminish others. you're see to

XXXX. have way pricing. the it I the of took an over all first at the well, line of it's so including significant -- that it's double-digit through course think really think I not including you think Scott, in up apples-to-apples -- I pricing And comparison. as overall. and way, rounds, XXXX, pricing the quarter taken a if we tough we A round few -- end another well, On And

looked at you extensive. up been follow we has pricing with that one. may the so that to specific think have I issue, on and so back And I haven't

have Professional that back I or the price, pricing so third I said the you that in levels. believe presentation XXXX exactly. saw is one, don't back the to probably that you I -- to business. do business it goes And mind. a is sales if And

optimizing given if that open the business? are And is So much for give significantly very, like basis, us all about a you does XXXX, you estimate have the stuff similarly, if how much. an on and still -- vacancies significantly size do it back of can volume opportunities below very volume issues thank that? And you you these

right? was in of volume still back covering come is it the near hey, XXXX see is is would above the of is work the full. are Yes, expect started you don't say, I in expect But term. think the percentage, now I own don't couple call, the One way pre-pandemic can to prior a our I -- so all with As it all versus that comparison things. you not said A we question. revenue before say, think Great don't I levels, because from I offices I this. 'XXs, home, if below, mostly And this in that workplaces pricing because levels. I a

way, that Do time? Yes, back expect though. a over we in get to different volume

grow our to that pursue from channels it But that other over of not today? volume class back expect even back, Or and back. trade is to do I to get have Yes. build We business where to time?

using of But business of -- structural terms that support the for changes, for thing there external we were may tweaks us we during us. period. a kind In some be lot is our of to capacity

cost And would so is the probably you might say fixed I imagine. overhang than less

much. very you Thank

Javier. Okay. Thank you,

Thanks Javier.

Thank last the Deutsche is question Powers coming Bank. you. from And from Steve

live. is line Your

Steve. morning, Good

Steve. Hi

Morning. hi. Thanks,

I So we're clarify. first, ask to the one I want time. to one might But just on short just because ask

mean implied them. guess, the just in well right contemplates all not promise for All So -- characterization. or, relief back But the only back prudent, commodity as you that just wanted of either raise quarter, sure see guidance I and good that's to the implicitly we outlook. make play that lower that, invest first really in to to evident $XXX think make It the sure the the other wanted your outlook. to it's million a I'm things I are in of really, of boding upside seems guide, talked your against I I that that allowance you and sort cost working in year. about revert provide the the levers sure lot wrong favor but

the Jason, that second reserve back, was and goes the we're have in and as for it Yes, definitely very behind -- we see quarter invest let's about. definitely stuff preference how again. I it so to which especially to this a programs excited strong about commercial right think And mentioning to year, all

Yes.

your real perspective you just about just talked And Okay. quick, on maybe it share, earlier. market

think I it's margin tissue. so especially you're consumer in clear prioritizing probably recovery,

overall. You seem pleased

half, year But Care you we've controversies. softer think a on about country created gaining essentially in holding basis data, Personal the guess, track intra-quarter were in I shares category half mentioned combinations. which has global some seen, I trends or

So bit where being trends softer on just to just to see a a you perspective and bit or being stronger, see? maybe some than the kind out you'd all like round help that of relative data we us

us for definitely You're we're not great performance. pleased a share very start. on margin pleased on. We're mean to right, with focus I'm with pleased with the And exactly overall market our recovery. the I our issue

And a so an if than even overall. up Personal would about was hey, And like in in softer personal half, Care, say, that we were little we then you care.

little For that, the overall, business below a it was bit right?

two-thirds. of we so off XXXX and up were coming we're where And over in XXXX

to get used of kind that. we And so

that half under pleased or not about just So we're with slightly half.

And got so know better. to we we get

lagged I would America mentioning North to move. our -- after on pricing. I pricing. categories price the comes our in happened didn't comes we've say nine is equalize in though, softness for have some fast Javier definitely our share price with was on it been with significantly definitely what's -- We or other first just manufacturers Steve, moving -- And diapers, months price until example.

hotspots. I little not working period a say I'd still mean, few And pick that That's effect of we're a kind within to some up perfectly this competitors one. part that is interim then used think so lag been share. there's that have And company. I working through everything

we've war, business businesses might Europe of so Asia. And still flagged some we building Southeast understand we're Hey, with the the Eastern and ongoing quarter. in effects our back in Certainly, last got you Ukraine.

markets. so in been some has And some there We're it. softness on

market earn it. quarter, we gains, an ongoing But weren't long-term share okay while us. the market and share for goal definitely, with was happy in we game And the for the that's

Thank you much. very Understood.

us today. we to good all taking feel in be second look Thank year, to time to Again, with about seeing quarter. the we start forward and the you Okay. solid our very you for the

Thank concludes you, event. today's everyone. This

have wonderful Thank your at participation. this time, for You and a may day. disconnect you