Summary of Colgate-Palmolive Company (CL) Conference Call - May 13, 2025 Company Overview - **Company**: Colgate-Palmolive Company (CL) - **Key Segment**: Hill's Pet Nutrition Core Industry Insights - **Market Environment**: The operating environment in 2025 has been significantly impacted by macroeconomic volatility, including tariffs and immigration policies, leading to changes in consumer spending behavior [2][6][10] - **Sales Growth**: Hill's Pet Nutrition has experienced significant sales growth, with a 500 basis points margin expansion in Q1 2025, indicating a recovery trajectory [3][10] Key Financial Metrics - **Q1 Performance**: Consumption patterns showed improvement in April compared to February and March, although overall consumption levels remain below historical trends [6][7][10] - **Organic Sales Growth**: The company has revised its annual forecast for organic sales growth downward due to challenging market conditions [7][10] - **Tariff Impact**: An estimated $200 million growth impact from tariffs was included in the guidance, reflecting ongoing uncertainties [12][14] Strategic Focus Areas - **Innovation and Brand Investment**: Colgate is focusing on consumer-centric innovation, particularly in science-led products, to drive market share and pricing growth [16][18][19] - **Advertising and Media**: Increased advertising spend is expected to support brand awareness and penetration, with a new campaign aimed at emotional engagement with pet owners [57][62] - **M&A Strategy**: The recent acquisition of Prime 100, a fresh pet food brand in Australia, aligns with Colgate's strategy of science-backed nutrition and veterinary endorsement [70][84] Growth Opportunities - **Market Penetration**: There is significant upside potential in the pet nutrition market, particularly in the therapeutic nutrition category, where many pets are not currently utilizing these products [100][101] - **International Expansion**: Colgate aims to grow its international business, particularly in underdeveloped markets like China and Brazil, leveraging its strong veterinary endorsement [78][80] Risks and Challenges - **Consumer Behavior**: The company acknowledges the risk of downtrading among consumers due to economic pressures, although the premium pet food segment remains resilient [37][39] - **Private Label Impact**: The exit from private label agreements is expected to create a 200 basis point headwind to segment sales, with lingering effects into FY 2026 [42][49] Conclusion - **Long-term Outlook**: Colgate-Palmolive is committed to driving consistent compounded dollar-based EPS growth through strategic investments in innovation, advertising, and capacity expansion, while navigating a challenging macroeconomic landscape [19][96]

Financial Data and Key Metrics Changes - Colgate-Palmolive achieved record net sales in 2024, surpassing $20 billion for the first time, with a growth of 3.3% following an 8.3% increase in 2023 [32] - Organic sales growth was 7.4% in 2024, continuing a trend of six consecutive years of organic sales growth, aligning with the long-term target range of 3% to 5% [32] - The company reported a double-digit growth in base business earnings per share, building on high single-digit growth in 2023 [34] - Free cash flow increased by 17% in 2024, driven by strong net income and disciplined working capital management [34] Business Line Data and Key Metrics Changes - Organic sales growth was achieved across all six divisions and four categories: oral care, pet nutrition, personal care, and home care [32] - The company increased its advertising spending by 15% in 2024, following a 19% increase in 2023, while also improving the advertising to sales ratio [33] Market Data and Key Metrics Changes - Colgate gained global value share in the toothpaste business for the third consecutive year and also in the manual toothbrush and pet nutrition markets in the US [35] - The Colgate brand is present in nearly 60% of the world's homes, making it the most penetrated brand globally [35] Company Strategy and Development Direction - The company is focused on driving innovation and delivering category-defining solutions to consumers, with significant investments in product development and marketing [31][36] - Colgate is leveraging AI and digital capabilities to enhance marketing, product innovation, and operational efficiency [40][41] - The company aims to maintain flexibility in its leadership structure to adapt to changing market conditions [17] Management's Comments on Operating Environment and Future Outlook - The management acknowledged challenges in 2025 due to market volatility and economic uncertainty but expressed confidence in the company's long-term growth strategy [44] - The company remains committed to investing in brands and capabilities while navigating short-term challenges [44] Other Important Information - The company has increased its quarterly dividend rate for the 62nd consecutive year, with a further increase announced for 2025 [34] - The board recommended against two stockholder proposals regarding an independent board chairman and plastic packaging policies, citing existing governance structures and commitments [17][25] Q&A Session Summary Question: What is Colgate's investment strategy for AI? - Colgate has launched an internal AI hub for over 5,000 employees, focusing on marketing and product innovation to enhance consumer engagement and accelerate product development [46][47] Question: Is democracy good for business? - The company believes predictable environments that encourage long-term strategy and performance are beneficial for business [49] Question: Why does the board need 10 directors? - The board composition is designed to provide a range of skills and experiences, which is essential for guiding the company effectively [50][52] Question: Will in-person stockholder meetings be restarted? - The company finds virtual meetings allow greater participation and efficiency, with no decision made yet on future meeting formats [53][54] Question: Can you provide examples of product innovation? - Examples include the new Colgate Total toothpaste with enhanced preventive properties and EltaMD skin recovery sunscreen that reduces redness while providing UV protection [55][56] Question: How is inflation affecting the business? - Inflation is currently slightly below last year's levels, and the company has built a flexible supply chain to mitigate tariff impacts [57][58] Question: Will dividend increases be larger in the future? - The decision on dividend increases is made by the board based on various factors, with the company's health remaining strong [59]

Core Insights - The article compares Procter & Gamble (PG) and Colgate-Palmolive (CL), highlighting their market positions, financial performance, and strategic priorities within the consumer-packaged goods (CPG) industry [1][2]. Procter & Gamble (PG) - PG operates in over 180 countries with a market capitalization close to $400 billion, offering a diverse product lineup including Tide, Pampers, Gillette, and Olay, which provides a competitive advantage [3]. - In Q3 fiscal 2025, PG reported earnings per share (EPS) of $1.54, meeting analyst expectations, while maintaining or growing market share in seven of its ten core categories [4]. - The company focuses on premiumization and innovation, launching high-performance products and investing in advertising rather than discount promotions, which supports long-term brand strength [5]. - PG anticipates approximately $200 million in after-tax headwinds from commodity costs and foreign exchange in fiscal 2025, alongside projected tariff-related costs of $1-$1.5 billion annually [6]. - The company plans to return $16-17 billion to shareholders through dividends and buybacks, demonstrating a commitment to long-term value creation [7]. Colgate-Palmolive (CL) - CL is a leader in oral care with a 41% share of the global toothpaste market and a 32% share in manual toothbrushes, while also expanding into pet nutrition and skincare [9][10]. - In Q1 2025, CL reported sales exceeding $4.91 billion, beating estimates despite a 3% year-over-year decline, with an EPS of 91 cents also surpassing expectations [11]. - The company expects $200 million in incremental tariff impacts in 2025 but is mitigating these through supply-chain flexibility and productivity gains, having invested $2 billion in U.S. supply-chain upgrades over the past five years [12]. - CL maintains a focus on advertising ROI and AI-driven analytics to optimize spending while continuing to innovate and premiumize its offerings [13]. - The company is positioned to deliver sustainable shareholder value through its strong balance sheet and disciplined execution, despite short-term pressures [14][26]. Financial Estimates - For fiscal 2025, PG's sales and EPS are expected to grow by 0.4% and 3%, respectively, with EPS estimates down by 1.2% in the past week [15]. - CL's sales and EPS estimates suggest year-over-year growth of 0.6% and 1.4%, with EPS estimates down by 0.5% recently [18]. - Both companies have experienced downward estimate revisions, but CL's revisions are less severe compared to PG [20]. Price Performance & Valuation - Year-to-date, PG shares have declined by 3.1%, while CL stock has gained 1.4% [21]. - PG is trading at a forward P/E multiple of 23.06X, below its five-year median of 23.65X, indicating a potentially undervalued position [23]. - CL's forward P/E multiple is at 24.47X, above its five-year median of 24.1X, reflecting its solid fundamentals and growth strategy [24]. Conclusion - PG's extensive global presence and diversified brand portfolio provide a foundation for long-term revenue stability, though it faces geopolitical and market-specific challenges [25]. - CL's strong brand equity and adaptability position it as an attractive investment option, particularly with lower tariff risks and solid fundamentals [27].

Core Insights - Colgate-Palmolive Company's shares have increased by 7.1% over the past three months, outperforming the Zacks Consumer Products - Staples industry's growth of 1% and the broader Consumer Staples sector's increase of 6.6% [1] - The company maintains a strong position in the consumer products market, holding a 40.9% global market share in toothpaste and a 31.9% share in manual toothbrushes year to date [2] Financial Performance - In the first quarter of 2025, Colgate reported earnings that exceeded the Zacks Consensus Estimate, with year-over-year earnings improvement despite a decline in sales [3] - Organic sales grew by 1.4% in the first quarter, driven by a 1.5% increase in pricing, supported by aggressive pricing strategies [6] - Management projects net sales to grow in low single digits, with organic sales expected to increase by 2-4% year over year in 2025 [13] Strategic Initiatives - The company is focused on innovation and premiumization of its product offerings, including the re-launch of Colgate Total and the Hill's Science Diet with ActivBiome technology [8] - Colgate has invested approximately $2 billion in its supply chain in the United States over the last five years to enhance its operational capabilities [9] - Management is confident in its strategic initiatives to address challenges such as tariffs and inflation, aiming for consistent earnings per share growth [12] Market Challenges - The company faces macroeconomic challenges, including inflationary pressures and tariff concerns, which may impact performance [10] - Sales for 2025 are expected to be negatively affected by unfavorable currency exchange rates [11]

Core Insights - Colgate-Palmolive Co reported better-than-expected first-quarter FY25 earnings, with sales of $4.91 billion, a 3% year-over-year decline, surpassing analyst expectations of $4.86 billion [1] - The non-GAAP EPS of $0.91 exceeded the consensus estimate of $0.86 [1] Financial Performance - For FY25, Colgate anticipates net sales growth in the low single digits, factoring in a negative impact from foreign exchange in the low single digits [3] - The company projects organic sales growth to be between 2% to 4% [3] - Following the earnings announcement, Colgate shares fell by 3%, trading at $91.08 [3] Analyst Ratings and Price Targets - JP Morgan analyst Andrea Teixeira maintained an Overweight rating on Colgate-Palmolive and raised the price target from $95 to $103 [7] - Citigroup analyst Filippo Falorni maintained a Buy rating and increased the price target from $103 to $108 [7] Strategic Outlook - The CEO, Noel Wallace, acknowledged challenges due to uncertainty and volatility in global markets, including tariff impacts, but expressed confidence in the company's strategy to meet revised 2025 financial targets [2]

Core Viewpoint - Colgate-Palmolive Company reported first-quarter 2025 results with earnings and sales exceeding expectations, driven by organic sales growth, strong volume and pricing performance, and gross profit margin expansion [1][2][3] Financial Performance - Earnings on a Base Business basis were 91 cents per share, a 6% increase year over year, surpassing the Zacks Consensus Estimate of 86 cents [2] - Net sales totaled $4,911 million, a 3.1% decline from the previous year but above the Zacks Consensus Estimate of $4,855 million; organic sales grew by 1.4% despite a 4.4% negative impact from foreign exchange [3][4] - Gross profit was $2,987 million, down from $3,039 million year over year, but gross profit margin expanded by 80 basis points to 60.8% [6] - Operating profit increased to $1,076 million from $1,047 million year over year, with an operating profit margin expansion of 120 basis points to 21.9% [7] Segment Performance - North America's net sales, accounting for 20% of total sales, decreased by 3.6% year over year; Latin America's net sales fell by 8.7% due to currency impacts, although organic sales rose by 4% [8] - Europe's net sales increased by 2.5% year over year, driven by volume and pricing gains, while the Asia Pacific segment saw a 5% decline in net sales [9] - Africa/Eurasia's net sales dipped by 1.5% year over year, but organic sales advanced by 1.8% [10] - Hill's Pet Nutrition's net sales improved by 1.5% year over year, with a 3.2% rise in pricing [11] Cash Flow and Debt - The company ended the first quarter with cash and cash equivalents of $1,112 million and total debt of $8,269 million; net cash provided by operating activities was $600 million [12] 2025 Outlook - Colgate projects low single-digit growth in net sales, with an anticipated adverse impact from foreign exchange; organic sales growth is now expected to be between 2-4% [13][15] - The company anticipates earnings per share to increase in low single digits, with gross profit margin and advertising investment remaining stable as a percentage of sales [15][16] Stock Performance - Colgate's shares have risen by 2.1% over the past three months, contrasting with a 1.9% decline in the industry [17]

Financial Data and Key Metrics Changes - The company anticipates a $200 million incremental impact from tariffs in 2025 compared to initial guidance [11] - Advertising spending is at an all-time high, reflecting a strong focus on driving ROI [16] - The company delivered strong profit growth in Q1 despite market volatility [17] Business Line Data and Key Metrics Changes - The Hill's business saw a 5% organic growth, indicating strong performance across all price tiers [69] - The company is focused on core innovation, including the relaunch of Colgate Total and Hill's Science Diet with ActiveBiome technology [10][62] - The company experienced a negative 3% organic sales growth in Q1 [30] Market Data and Key Metrics Changes - In North America, there was a notable softness in volume due to lower store traffic and consumer uncertainty [129] - Latin America continues to show strong market share performance, with expectations of recovery as the macro environment stabilizes [56][132] - The Chinese market remains challenging, particularly for the Hawley and Hazel business, while Colgate continues to perform well [57] Company Strategy and Development Direction - The company is focused on selling daily use products and enhancing brand health to drive long-term sustainable growth [9][22] - There is a commitment to innovation and premiumization, with plans to accelerate innovation in the second half of the year [62][119] - The company aims to leverage its global portfolio and geographic breadth to mitigate risks associated with market volatility [14][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a weaker consumer environment and expects continued volatility in 2025 [8][17] - There are early signs of category improvement in April, providing some confidence for the future [10][28] - The company anticipates that consumer confidence will return, leading to improved consumption in the medium term [80] Other Important Information - The company has invested approximately $2 billion in its U.S. supply chain over the past five years to enhance flexibility [12][104] - The company is focused on maintaining a strong balance sheet with low levels of net debt [16] Q&A Session Summary Question: Consumer pressures and category growth outlook - Management noted that while there was a slowdown in volume growth, early signs in April indicate potential stabilization and recovery in categories [28][30] Question: North America shipment and consumption trends - Management confirmed that shipments are pacing well with category improvements, although more work is needed in North America [35][36] Question: Pricing approach and tariff impacts - Management indicated that pricing improved sequentially and that they are taking a market-specific approach to offset tariff impacts [41][44] Question: Emerging markets performance - Management reported strong market share in Latin America and ongoing challenges in China, with expectations for gradual improvement [55][57] Question: Advertising spend and innovation plans - Management clarified that advertising spending remains strong and that innovation plans are on track, with a focus on stimulating consumption [60][62] Question: Hill's brand performance amid trading down - Management stated that there has been no trade down in the Hill's brand, which continues to perform well across all price tiers [69][70] Question: Tariff exposure and mitigation strategies - Management outlined strategies to mitigate tariff impacts through productivity, revenue growth management, and alternative sourcing [100][104] Question: Back half of the year expectations - Management expressed confidence in improved category growth rates and market share performance in the back half of the year [121][125]

Core Insights - Colgate-Palmolive reported revenue of $4.91 billion for Q1 2025, a year-over-year decline of 3%, but exceeded Zacks Consensus Estimate by 1.15% [1] - The company's EPS for the quarter was $0.91, up from $0.86 a year ago, representing a surprise of 5.81% over the consensus estimate [1] Revenue Performance by Region - North America: Net sales of $998 million, slightly below the estimated $1 billion, with a year-over-year change of +0.1% [4] - Latin America: Net sales of $1.14 billion, exceeding the $1.09 billion estimate, but down 8.8% year-over-year [4] - Africa/Eurasia: Net sales of $271 million, slightly below the $273.66 million estimate, with a year-over-year decline of 1.8% [4] - Europe: Net sales of $690 million, above the $674.15 million estimate, reflecting a year-over-year decline of 3% [4] - Asia Pacific: Net sales of $690 million, below the $727.36 million estimate, with a year-over-year decline of 5.1% [4] - Pet Nutrition: Net sales of $1.12 billion, exceeding the $1.09 billion estimate, with a year-over-year increase of 1.5% [4] - Total Oral, Personal and Home Care: Net sales of $3.79 billion, slightly above the $3.77 billion estimate, with a year-over-year decline of 4.3% [4] Operating Profit Analysis - Total Oral, Personal and Home Care: Operating profit of $971 million, below the estimated $1.01 billion [4] - Corporate: Operating profit of -$153 million, better than the estimated -$182.49 million [4] - Pet Nutrition: Operating profit of $258 million, exceeding the $239.30 million estimate [4] Stock Performance - Colgate-Palmolive shares returned -0.5% over the past month, compared to the Zacks S&P 500 composite's -4.8% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market [3]

Core Insights - Colgate-Palmolive surpassed earnings expectations in Q1 2025 despite a decline in overall sales, with GAAP revenue of $4.9 billion, down 3.1% from Q1 2024, but exceeding estimates by $45 million [1] Financial Performance - Non-GAAP EPS increased by 5.8% to $0.91, surpassing the estimate of $0.86 [2] - GAAP revenue decreased to $4.91 billion from $5.07 billion in Q1 2024, reflecting a 3.1% year-over-year decline [2] - Gross profit margin improved by 0.8 percentage points to 60.8% [2] - Operating profit margin increased by 1.2 percentage points to 21.9% [2][8] Business Overview - Colgate-Palmolive holds a 40.9% global market share in toothpaste and 31.9% in manual toothbrushes, with products marketed in over 200 countries [3] - The company emphasizes sustainability initiatives, including a commitment to recyclable toothpaste tubes [4] Geographic Performance - Europe saw a 5.4% organic sales increase due to balanced pricing and volume strategies [7] - Hill's Pet Nutrition achieved a 1.5% rise in net sales and a 2.9% boost in organic sales [7] - Latin America faced a 12.7% decline in net sales due to foreign exchange headwinds but managed a positive organic growth of 4% [7][6] Strategic Challenges - The company faces heightened global market competition, particularly from private labels, and ongoing raw material cost volatility [8] Future Outlook - Colgate-Palmolive projects low single-digit net sales growth for FY2025, with organic sales growth anticipated between 2% and 4% [9]

Core Viewpoint - Colgate-Palmolive reported quarterly earnings of $0.91 per share, exceeding the Zacks Consensus Estimate of $0.86 per share, marking a year-over-year increase from $0.86 per share [1] Financial Performance - The company achieved revenues of $4.91 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.15%, although this represents a decline from $5.07 billion in the same quarter last year [2] - Over the last four quarters, Colgate-Palmolive has exceeded consensus EPS estimates four times and topped revenue estimates three times [2] Stock Performance - Colgate-Palmolive shares have increased approximately 2% since the beginning of the year, contrasting with a decline of 6.8% in the S&P 500 [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.94, with projected revenues of $5.01 billion, and for the current fiscal year, the EPS estimate is $3.67 on revenues of $20.03 billion [7] - The trend of earnings estimate revisions is mixed, which could change following the recent earnings report [6] Industry Context - The Consumer Products - Staples industry is currently ranked in the top 37% of over 250 Zacks industries, suggesting that companies in the top half tend to outperform those in the bottom half by more than 2 to 1 [8]