Church & Dwight Aktie

Okay, everybody, welcome back. For the next session, I am thrilled to welcome back Church & Dwight to the conference.

With us today are President and Chief Executive Officer, Rick Dierker; Chief Financial Officer, Lee McChesney; and Executive Vice President of International, Michael Read. Together, Rick, Lee and Mike are going to run us through a presentation for about 30 minutes, and then we'll have the balance of time, about 10 minutes of Q&A.

And with that, I will hand it over to Rick.

All right. Thank you, Steve. Thrilled to be here. We spent about a week with our investors over in Europe and had a great business review yesterday. So before I begin, here's our safe harbor statement. I encourage you to read that on our website as we will likely make forward-looking statements.

Who we are? We always start these presentations with our performance. And so our TSR, total shareholder return has been leading in the industry for a long time, took a bit of a step back as the whole industry did in 2025. But in 2026, we're off to a great start. And a lot of that's because of how we run the company.

And the evergreen model is really important for us. That's kind of our anchor. We want to grow year after year after year, the top line and bottom line. And we're especially proud that in 2026, even despite this crazy macro world that we live in, our outlook kind of brackets the evergreen model. And organic growth is just core to the company. And it's not just 1 year that we've done it, but over 10 years, we've averaged over and around 4% organic growth. But when people ask me, what makes us different?

Like why have we had such strong outperformance? And if you look at this chart, we've had net sales go from the bottom left to the upper right for a long time, over 20 years. Same thing with earnings, same thing with cash flow. And then the upper right-hand corner is, again, our consistent growth organically. So it's really 2 things. One is we have a capability to grow brands, right, through our innovation, through our marketing and advertising, through our trade and promotion. And then we also have the ability to identify, acquire, integrate and grow brands. And when we can do both of those well, then our performance is kind of unique in the industry.

So again, as a backdrop, about a $6.2 billion company, 77% domestic, 18% international and 5% for our SPD business. We have 7 power brands, and these 7 power brands make up 75% of our sales and profits. And we have a winning formula that we like to describe as these 5 things: a balanced and diversified portfolio, low exposure to private label, online success, strong, consistent category-leading innovation and then, of course, our acquisition for an acquisitive company. So a balanced portfolio.

We're about 50-50 household and personal care. And we're also about maybe 2/3, 1/3 value in premium. So we typically do well in any economic environment, and we're doing well right now even as the macro has a lot of volatility in it. Private label exposure. So for a long time, our exposure weighted average to all of our categories was around 11% and that was relatively low in the industry.

After we sold our vitamin business, that dropped down to 5%. So that bodes well for the future. And then online success. We were a laggard, about 2% of our sales back in 2016 were online. Now it's about 1/4 of our sales. And that's interesting, but it also just shows our capability. We're agile, we're lean. We're able to move with speed when we want to. We have a great innovation capability. And I call it a capability now, not just a new product portfolio. So strong, consistent category leading.

About half of our growth is typically through innovation. And then, of course, good returns become great returns because we know how to acquire brands. We want #1, #2 brands. We want high-growth, high-margin consumable brands, not really durables, asset-light. We leverage our manufacturing base, and we want a sustainable competitive advantage. And we'll talk a little bit more about our most recent acquisition in a couple of minutes.

We have a long history of growth through acquisitions. This is a $1.5 billion company going to $6.2 billion. Again, ability and a competitive advantage in my mind of identifying, acquiring, integrating and growing brands. It's easy to say it's hard to do. And the reason we're really good at it is because we've done it again and again and again.

Speaking of acquisitions, here is our latest update. We actually acquired a brand, Miss Mouth, which is a fantastic premium stain fighter brand. It's just right in the middle of an online kind of digitally native brand that's now starting to go into bricks and mortar in the U.S. high brand love and just, again, an exciting one. Here's a video I wanted to share, 22 million views. This went viral.

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And then you have kind of a recovery. And so we have the right to play kind of before that with cleansers as well. So we'll be launching that later this year. Touchland is our second most recent acquisition, and it's the #1 premium hand sanitizer. Household penetration, again, extremely low compared to the category. Retail opportunities exist, new category expansion exists.

We're just now really starting to get behind marketing in a bigger way to go drive brand awareness. And the international rollout takes a little bit longer because of regulatory for each and every country. But over the next 12 months or so, you're going to see it appear in many, many more countries, which we're really excited about. Okay. So that is really our acquisition update.

Now there's also -- I announced in January some growth initiatives that we put into place as a company. And the backdrop at the time was our categories have grown 3%, not for 1 year or 2 years, but for over a decade. And in 2025, categories slowed somewhat. So that 3% came closer to 2% or 2.5%, and that was the backdrop. Along with that backdrop, we also had that everyone is aware of consumer sentiment is low. It's at an all-time low, actually, the last reading. And so bad things happened at times.

And so how do we make sure that we can grow despite what's happening with categories. And if categories grow normal, that means we're going to be growing faster than category growth. So we put in place 3 separate distinct initiatives. One was grow the ARM & HAMMER brand from $2 billion to $3 billion. The second one was grow our oral care business behind THERABREATH from $1 billion to $1.5 billion. And then the last one is grow our international business as we scale it through M&A from $1 billion to $2 billion.

This is one of my favorite slides. I usually talk about it from an acquisition perspective just to show the company going from the $1 billion to $6 billion. And a lot of that green is all acquisitions. So we've had $4 billion of acquisitions over the years from a revenue perspective. What's also true on this slide, though, is you can see the strength of the ARM & HAMMER brand, and it's a $2 billion-plus brand, and it's grown consistently over many, many years. And why is that?

Well, we've gone up into the right on share for laundry and for litter. And so what gives us confidence to make our ARM & HAMMER bet go from $2 billion to $3 billion. Well, first and foremost, right, the U.S. is celebrating 250-year anniversary. Church & Dwight is 180 years. And so we've been in baking soda for 180 years, 1846. And then since then, in the 1970s, 1980s, 1990s, we have jumped into toothpaste and litter and deodorant. And so these big categories, and we've done well.

Brand awareness for ARM & HAMMER rivals almost any other brand that you know. It's in the mid- to high 90s. And then finally, we have this halo effect that happens with ARM & HAMMER. If we advertise our laundry, it helps our litter business. If we advertise our litter business, it helps our toothpaste business. So again and again and again, we have this advantage versus everyone else on how we advertise. And I think the main point of the entire strategy is we are already a brand that goes across categories.

Many companies have a strategy of taking a brand across categories. You hear it again and again and again. Very few are successful, though. And I would say we've already checked the box on that strategy. We are in categories where we're premium. We're in categories where we're value. We're in categories that are household. We're in categories that are personal care, all under the ARM & HAMMER umbrella. And whether it's deodorizing or cooking or baking, that's the hard part. So we've already done that.

Now the next step is to say, what categories should we go into. And so there's 4 pillars of growth. The first pillar is really, again, growing the core, innovation, quality products, efficacious, our great innovation engine and doing what we've done on laundry and litter and the rest of the portfolio. Rounding out good, better, best on a few of our subsegments on ARM & HAMMER. And then number three is the category work. And we are deep into it. I told everyone at CAGNY in January that we'd give an update likely in January of 2027. But all the work, energy and effort that we were spending on our vitamin business or other businesses that we were trying to fix has now gone into all these growth initiatives. And that is where I think a lot of value will be created over a long period of time.

And then the fourth pillar is really retail sales of our licensee products are around $1 billion. And so some of those make sense for us to take back and to scale up over time. They're already tested and loved and accepted by consumers. And so I hope that we take back a few of those. And then conversely, as we do all this category work, I actually hope that we can convince some of our licensee partners to take in a couple of bets on those new categories.

The second initiative was really drive oral care expansion through THERABREATH. And again, the focus here is on 2 categories or 2 big categories, mouthwash and toothpaste. So over $2.5 billion and $4.8 billion. So that's where we're kind of laser-focused. THERABREATH has a unique proposition here. It's not just one thing, but it's many, many things that make THERABREATH successful. But low household penetration, 12% versus a category of 65%.

And again, we're growing by leaps and bounds on distribution and on market share for THERABREATH. That gives us confidence as we go and become a bigger player in toothpaste. We got distribution on toothpaste that we didn't deserve, but we got it because of such a great brand reputation around mouthwash. So we're a small player today at Church & Dwight on toothpaste, but we believe we have an opportunity.

Now we're a small player largely because ARM & HAMMER is a niche of a niche in terms of the taste profile with baking soda. And so THERABREATH doesn't have that same constraint. This is a best-in-class performing toothpaste. It's better for you and has superior product and fresh breath. And then finally, on the growth initiatives, the third one is international growth.

And we've talked about this before, but international has a long, long track record of success. And Mike and his team are doing a phenomenal job, high single-digit organic growth on average. And kind of the new news these past few years is the ability to scale and how quickly we've been able to scale some of these recent acquisitions. HERO and THERABREATH are tens of millions of dollars already internationally. And then we believe Touchland has a great shot of international expansion.

And so -- and we're going to start focusing and we have been on international M&A. Even this week, we had countless meetings on international M&A. So we're not choosing one over the other. We're saying and even as of Friday, we just did the U.S. acquisition, but we believe there's definite upside over the long term to acquire some great brands in the rest of the world. Okay. Speaking of categories and brands. In the U.S., our evergreen model is around 3%, and we have those 7 power brands that are driving the entire engine of the company.

This is a really important slide. So this is our categories over the last 5 years. This is kind of underappreciated. I would say because of our M&A capability, we've got to choose in which categories we compete in. We didn't inherit this. We chose this. And because we've been able to look at and do due diligence on categories and competitors and private label exposure and so on and so forth, we've set up -- the backdrop is set up for success for us.

Many of our categories are growing categories. That's kind of the takeaway here. And on average, even in 2025, they grew around 2.5%. Now not only do we want growing categories, but we want to be able to enable share gains over time. And if you look back at history over the last 5 years, we've gained share about 2/3 of the time for these power brands. That matters in a big way. And that matters that we want to grow in excess of categories, that's how we do it. And what's the check-in.

So the check-in for 2026 is we've had strong volume growth, right? In Q1, we had about 5% volume growth. The previous -- the second half of last year, we had, I think, 2% volume growth. And along with volume growth, along with innovation, along with higher velocities, along with great acquisitions that are performing well come shelf space. And so we gained phenomenal shelf space this last kind of reset. And this is almost double our closest competitor or the average competitor in the industry.

Speaking of innovation, new product innovation is a muscle for the company. And when Carlos Linares came in, our Head of R&D, he saw that we only innovated one way, and we now have 4 or 5 different vectors on how we innovate. And we typically used to grow 1% and 1.5% growth for incremental net sales. That's a high bar, I say it a little time. incremental net sales after cannibalization. And we've transformed to go 1.5 to 2.

So about half of our growth these days is coming from innovation. Here is some of our personal care innovation, they are toothpaste, the invisible patch for HERO. We have cleansers for HERO and then we have TROJAN G.O.A.T., which is our -- the greatest of all TROJAN condoms. And then we have household innovation. And this is -- we have good, better, best innovation for laundry. This year, it was on the good tier, 10x baking soda.

What better time than today where consumers are struggling with gas prices to be able to have a good offering in the value tier. We also have Brexit. We have a better sheet, good, better, best there as well. We have our most powerful OXICLEAN VSR launching, and then we have Dual Defense cat litter. All of these are great innovations, which are helping to drive our shelf space expansion.

And now I'm going to turn it over to Mike.

Thank you. Good afternoon. First of all, Steve, thanks for hosting us again this year. DB always has a great conference. So thanks for hosting us. I'm going to spend a couple of minutes on international SPD. So we're about 18% of the business. Our evergreen is at 8% organic growth per year. We set up the business in kind of 2 different ways.

We have our subsidiary markets, Canada, U.K., France, Mexico, Germany, Australia and most recently, Japan, we acquired our distributor back in 2024. That makes up about 2/3 of our business where we go direct through a subsidiary model. The remainder of our business, we operate in well over 100 countries with almost 400 distributor partners around the globe. We support that with 5 regional offices that are growing now their cross-functional capability, Shanghai, Singapore, Mumbai, Panama and London.

As Rick showed, we've had a long track record of high single-digit growth and we are poised to continue to do that. I think most importantly is relative to a lot of our peers, we're still very young in our journey. We're only 18% of our sales. We've been at it for a shorter period of time. So we have a lot of runway ahead. And I think most importantly is our brands have the opportunity and have proven to be able to really travel.

So we support dozens of brands across the globe, but ultimately, these are the 9 brands that carry the majority of the weight and will be the biggest growth drivers. But it's a combination of leveraging large U.S. power brands like ARM & HAMMER and WATERPIK and OXICLEAN. But we complement that with some of our personal care and OTC brands that are largely internationally based, so kind of headlined by BATISTE Bare and FEMFRESH.

I think as Rick alluded to, probably our biggest muscle in the last few years has been our ability to quickly take U.S. acquisitions and roll them out globally and to scale. And so HERO and THERABREATH have been just all-star brands for us and Touchland is kind of next in line. Just to put an example, HERO, which is not an old acquisition already, as we've launched, we're into over 75 countries.

We will be north of 100 countries by the end of 2026. But I think most importantly, we're already #1 patch position in all our key subsidiaries where we're tracking share. So just -- it goes to show kind of how quickly we're rolling out, but then also the kind of speed and performance that we can generate. And Touchland is kind of next in line. So a lot of pent-up consumer demand for Touchland.

As Rick alluded to, we're already in a couple of countries. There's some registration process. But by this time next year, we'll be in excess of 20 countries, which we're excited about. I think one of the things from international as we continue to mature is we're putting a lot more time and effort into really understanding local consumer insighting and also regionally at innovation as well as regional manufacturing.

And here's just a couple of examples, and there's many more. But as we roll out brands like BATISTE, but when we enter some of our Asian markets where we have different hair types, different habits, different fragrance likes, how do we alter our proposition to make sure it's more relevant for the local consumer. So that's a good example of just how we're innovating and changing our packs to support that.

And then similarly, OXICLEAN, one of our biggest brands in Japan, predominantly a powder business historically, but the Japanese market is 80% liquid. And so we looked at local manufacturing in order to build a locally relevant proposition in liquid launched that a couple of years ago, and it's off to a great start. So just a couple of examples.

And then lastly, from an international perspective, we are focused on M&A. So we've had a great track record of taking U.S. brands, taking them internationally. That will still be a core part of what we do and a big lever of our growth. We're also on the hunt for scaling acquisitions and acquiring in the international arena as well.

Quickly, just on Specialty Products. It's a 5% organic evergreen model. It's about a $300 million business. It's broken up into 3 different parts. We have an animal business, animal nutrition business, which is about 60% of it. We have a specialty chemical business, which is about 1/3, and then our consumer professionals is taking our consumer brands into the B2B space, which is about 5% I think most importantly is this has been a bit more of a volatile segment over the last number of years.

We've made some strategic choices to exit some businesses. We've got on our front foot around innovation. We're being much more strategic about rolling our Animal Nutrition out globally. It's now 30% of our business. Now we've had 9 consecutive quarters of positive growth. So we've really stabilized this business. It's in a great shape and ready for continued growth ahead.

And with that, I'll pass over to Lee.

All right. So I'll try to finish up our prepared remarks here. So thank you to Rick and Mike for walking us through here. So for financials, the first place we really should start would be our evergreen model. Rick mentioned this before. This is the foundation of really how we run the company here. It's a balanced mindset. We're looking for profitable growth, 4% organic growth, 8% EPS improvement.

And what I'm going to do now is just walk you through a little bit of our scorecard. And instead of just showing you a scorecard of what happened in the last year or 2, let's look back over the past decade, probably not a chart you're going to see much this week from a lot of others. So it's a compelling 10-year history, 4.1% organic growth, right in line with the evergreen model.

And it's driven by a lot of what you just saw from Rick and Mike, whether it's the innovation, whether it's the strength of the brand, whether it's the growth we just -- we brought forward in international, all those are coming together and driving this consistency in organic growth. You take it one step further and then look at it from a volume perspective. We're a volume-driven organic growth company. And this shows you that same momentum here as well, driving unit growth in markets across the globe.

Gross margin. So every year, our every model, we're going after 25 to 50 basis points of gross margin improvement. You see a lot of that mindset coming out of COVID. You see this improvement we brought forward in gross margin. And this year, we actually have an outlook of 100 basis points. And that foundation that comes back from May is it's going to be our normal 25 to 50 basis points that comes from our normal gross margin toolkit.

And then we have the strategic portfolio changes, which gives us an extra -- a mix benefit as well. Behind that is a whole bunch of actions. And these are all the things we bring to life each and every day to drive gross margin improvement. So foundationally, it's good to great productivity. It's RGM activities. It's driving positive mix. Now within that May 1 outlook, we also had $25 million to $30 million [Audio Gap]

marketing. And we continue to refine how we do that to even get more impact. On SG&A, the evergreen model really looks at really flat to 25 basis points of improvement. In May, when we refreshed our outlook, we talked about being slightly up in SG&A. That comes from the same 2 drivers we talked about all year. We exited $400 million of business. So we have the normal leverage. We have some stranded costs.

And then we also primarily have -- Touchland has the first half of the year, has amortization and SG&A that's driving it up. And then we're continuing to invest in the growth initiatives in e-commerce and international that's behind our SG&A history. So this might be probably one of the more compelling charts. This is again, a 10-year scorecard of EPS.

And let's think about all the different things we all had to navigate over the last decade, and we've averaged 8% growth in EPS despite all of that. Our May 1 outlook for the year also calls out a 5% to 8% growth, so similar to delivering evergreen again in '26. And just a spectacular track record along with our evergreen model. Now again, specifically for '26, we gave an update on May 1.

We're still going after 3% to 4% organic growth. We have the EPS outlook I just talked about 5% to 8%. And we also talked again about just another strong year in cash flow at $1.15 billion being targeted. That was our outlook in May. We'll give you an update once we get to the second quarter here at the end of July.

Now behind that, as you look at this list, you got tailwinds and you got headwinds. We began the year with the same outlook. We just have far more tailwinds, whether it's the momentum coming out of last year, the strength of the portfolio, the strength of the brands and really a lot of the elements you just talked about. Certainly, we have headwinds we all talked about. But again, we have the driver on the tailwind side, really leading the EPS growth we talked about there.

Behind that, continuing this, we have this free cash flow, which is another compelling part of what really drives the P&L results you just saw there. So we're showing you a decade here, 119% free cash flow multiple history. Many companies target actually less than 1. So substantial cash flow that gives us a tremendous amount of flexibility to really drive effective capital allocation. It also shows up in our total debt to bank to EBITDA.

We're sitting here today at 1.5 after doing Touchland, after doing $900 million of buybacks last year and just -- and continuing to invest in the organic business. So just a lot of opportunity, a lot of flexibility it gives us to drive this business. And you sit here today, even with Miss Mouth just done, $5 billion of dollars available, we can invest in capital allocation effectively. And how do we -- where do we focus that? We're very consistent.

Our #1 use of cash is TSR accretive acquisitions. It can be Miss Mouth, it can be Touchstone, it can be HERO, THERABREATH, that's our #1 use. We obviously continue to invest in the business, whether that's NPD, whether that's driving growth, good productivity. We certainly -- next would be debt. But right now, we actually have no variable debt based on the debt I just showed you there and then returning cash to shareholders.

And just another example of just the significance of this cash flow, I guess coming through ultimately to shareholders, look at the dividend track record, 125 years, 30 years consistently of driving increases. So with that said, we have a good amount of confidence in our future. Yes, there's headwinds out there, but there's a lot more tails we talked about it, whether it's driving the brand, the momentum we have on the acquisitions that we've done over the last several years, the international growth we just talked to you through there. But we look forward here from our May outlook and with optimism.

And with that, we'll turn to questions, Steve.

Okay. Great. So you were kind enough to preview the conference with an acquisition, give us something new to talk about. So let's start there with Miss Mouth. As you mentioned, Rick, #1 position on Amazon, recently launched, I think it was Walmart late last year and Target just a month, 1.5 months ago, which sets you up for a lot of growth.

Is there more distribution opportunities that are high priority? Or is it about -- is the growth really about consolidating the distribution that's been recently won?

Yes. No, it's a good question. I think if you take a big step back, I had in my comments, but 35% ACV, we believe this brand can be fully distributed over time. And we're really good at doing that. We have the channels, the relationships and whatnot to make that happen.

We also have our -- Mike and his team on international to help to help expand there, too. Walmart is off to a great start. Target is off to a great start. And I think Target is already a 9 share as an example, when we've been there a few months. So this is a -- it always goes back to the brand and how it delights consumers.

And this certainly is doing that. It's going to be -- we're going to look back in a few years and say, wow, that was an extremely good acquisition that's grown dramatically and right in Church & Dwight's wheelhouse.

Yes. Are there innovation opportunities either in the pipeline or that you guys have conceptualized? Or is it really about pushing distribution on the core product?

Yes. I think the answer is yes to both. But I think the first priority is going to be how do you really go drive awareness and household penetration, and that's runways of growth. And so we're going to have most of the organization focused on that deliverable.

And then a small subset really focused on the innovation pipeline and where can it go and what makes sense for that brand. But as you saw in the video that we threw up there with 22 million views, it's a product that has that magic moment, that wow, and that is what consumers are -- they're looking for efficacy. They're looking for a brand that they trust. And so it can enable, I think, a great innovation pipeline in and around that area.

Cool. And just to round out the economics on it. So you called out in the announcement that essentially neutral for this year, cash earnings accretive for next year. Does that imply sort of EPS neutral? Or how do we think about the -- obviously, I'm more focused on cash in the long run, but we know the market and EPS matters. So how do we think about that, Lee?

Yes. I would just say, as we kind of put in the release, obviously, day 3 here that we're -- we said we think it can be double-digit grower. Let's get into a little bit more. There's obviously a time line for distribution gains and things like that. And certainly, it will be accretive in due time.

Okay. Yes. Great. One of the -- I think most consistent questions coming -- stemming back to your Investor Day when you talked about those 3 new growth drivers is around on the ARM & HAMMER side and just the balance -- as you go from $2 billion to $3 billion, the balance between core growth behind good, better, best initiatives, behind moving to new categories and then the licensing optimization.

Do you have any further comments in terms of calibrating the size of those buckets? And then maybe, Mike, the role that you see international playing in that escalation of ARM & HAMMER?

Yes. It's a fair question. And I would say the 2 largest contributors of going from $2 billion to $3 billion would probably be, of course, our continued growth of our largest categories of laundry and litter. That's innovation, that's our playbook, great. That's going to be a tailwind. That's kind of what got us from $1 billion to $2 billion, the bulk of it over time.

The second one will be what categories we choose to enter. And we're doing a lot of great research, a lot of great testing, a lot of good discussions with retailers already on what those categories will be in 2027 and 2028. I'm just not ready to talk about that yet. I think it's going to be a good tailwind. It's going to be the second largest, I think, contributor to that.

And then the third one, probably tied for third will be the good, better, best for the subsegments of ARM & HAMMER and what we choose to bring in-house and can those provide tens of millions of dollars of growth over time. What I'm doing really with the management team is we're putting a bunch of kind of drill sites out there that are going to add up to tens of millions of dollars independently that will help kind of be the frontrunner in case you have a headwind of the economy and category growth or category sluggishness. I think our categories are very resilient.

You saw the slide. But in case they slow or in case you want to grow faster, we're going to have all these initiatives at our back. And so that's kind of a little bit more color. I'm going to get a full report out probably in January.

Okay. Mike, anything you want to add on international?

Yes, I'd just say, as the U.S. business is going through some of those category assessments, we'll look at those and doing those apply to international growth, so to be determined as we go through that. But the one that's sort of line of sight is we're quickly expanding our litter business particularly in our Asian markets.

And so we bought ARM & HAMMER, baking soda and litter in markets around the globe. Those would probably be the 2 levers that we'll pull a little bit harder. But litter has a lot of opportunity that we're excited about.

Yes. The second one in international, which you may not be aware of is part of the reason we bought the Japanese distributor and we started off in a great spot was because we had 80% brand awareness for OXICLEAN in Japan. And now we're throwing through THERABREATH and HERO and BATISTE and WATERPIK through that same sales channel.

Well, there's a similar story, not distributor-wise, but like consumer-wise, 80% brand awareness of ARM & HAMMER in South Korea. So as we look for M&A, as we look for different brands to buy, that just sets us up for success as ARM & HAMMER can grow globally.

Yes. Okay. We're running on time, but I did want to ask, you may be one of the few companies that did a presentation and didn't voluntarily mention AI. So this week by the time it's all over. So I'm curious in the context of that slide you put up around ARM & HAMMER being kind of a later adopter of e-commerce and digital. What is the company's position on AI? What approach are you taking? And are you following a similar path? Or are you more leaning into it?

Yes. What a great comment. And I would say that, that is exactly what we're doing, like the capability that we were able to transform the company from e-com of 2 to 24, sometimes you have to really come together and figure out what are the 4 or 5 areas. You could do a lot of things, but a lot of them could be mediocre.

So what are the 4 or 5 things and focus areas in AI that we're doing. We just went through that with our Board in our strategy session. I'd say it's alive and well. I think it's going to transform the company. I'm telling our employees again and again and again that my goal would be to be able to double the size of the company and still have the same number of employees. We can move the speed, agility.

We can do more effective advertising, more effective RGM capabilities, more effective R&D and formulation, more effective supply chain. So that's what we're laser-focused on. I thought you were going to ask me why are we the only company who has dollar share and volume share growth. But obviously, that did not come up. All right.

All right. Thank you, everybody. Thank you, guys, for joining us.

Good morning, ladies and gentlemen, and welcome to the Church & Dwight's First Quarter 2026 Earnings Conference Call.

Before we begin, I have been asked to remind you that on this call, the company's management may make forward-looking statements regarding, among other things, the company's financial objectives and forecasts. These statements are subject to risks and uncertainties and other factors that are described in detail in the company's SEC filings.

I would now like to introduce your host for today's call, Mr. Rick Dierker, President and Chief Executive Officer of Church & Dwight. Please go ahead, sir.

All right. Thank you. Good morning, everyone. Thanks for joining the call. We had a fantastic quarter. I want to start off by thanking all of our Church & Dwight employees around the world on executing so well in a volatile environment. I'll begin with some thoughts on the macro environment and then a review of our Q1 results. Then I'll turn the call over to Lee McChesney, our CFO. And when Lee is done, we'll open it up for questions.

Starting with the broader environment, conditions remain dynamic and the consumer backdrop continues to be mixed. Consumer sentiment remains pressured by inflation, borrowing costs and geopolitical uncertainty related to the Middle East, which, as you know, is also contributing significant inflation in commodities and transportation costs. That said, the consumer remains resilient. Employment remains stable, and our largest categories grew 3% in the quarter. Our portfolio with its balance of value and premium offerings continue to perform well in this type of environment supported by strong brands and innovation.

Turning to the Q1 results. We delivered a strong start to the year and exceeded our outlook across key metrics. Net sales increased 0.2% ahead of our expectation for a decline and organic sales grew 5%, well above our 3% outlook. This growth was driven by volume. Adjusted gross margin expanded 130 basis points to 46.4% and adjusted EPS was $0.95, up 4.4% year-over-year and above our $0.92 outlook. Overall, this was a high-quality beat driven by strong execution across the business.

Now I'm going to turn my comments to each of the 3 divisions. First up is the U.S. consumer business. Organic sales increased 5.4% which was primarily all volume. Across the portfolio, our brands continue to perform exceptionally well. Growth in the quarter was led by THERABREATH, ARM & HAMMER, HERO and OXICLEAN supported by strong innovation and distribution gains across all classes of trade. Global e-comm also remained a key contributor with online sales now representing approximately 24% of total consumer sales.

Innovation and distribution gains continue to be key drivers of our performance and the first quarter of this year is no different. We're confident that our relentless focus on innovation will continue to drive industry-leading growth. Distribution gains in shelf and market share expansion. In fact, we are just finishing tabulating all the distribution gains looking forward, and I'm proud to say Church & Dwight was #1 across all of CPG on total distribution points gained year-over-year. New product launches this year are expected to account for half of our organic growth as we innovate in key categories across our portfolio of industry-leading everyday products.

The ARM & HAMMER brand had another quarter of growth with laundry heading record shares across total water detergent, ARM & HAMMER laundry detergent consumption grew 4.1% in the quarter compared to category growth of 2.7%. The value segment of laundry continues to grow. ARM & HAMMER laundry grew despite a lower level of promotion in the quarter. Our newest innovation in laundry is ARM & HAMMER baking soda fresh with 10x the amount of baking setup and is off to a great start with a 4.9% consumer rating, where most laundry items are around 4.5%.

Our ARM & HAMMER laundry sheets also continued to do well, growing consumption by 30%. We like the category building potential of EVO, and we are well positioned to win in value. Next up is litter. Fantastic results as ARM & HAMMER cat litter consumption grew a robust 6.8% and share increased 0.4 points to reach 24.6%. While category promotional levels remain elevated, they did decline sequentially from Q4.

OXICLEAN share declined in the quarter as we continue to be impacted by distribution loss and lapping that from a large club retailer a year ago. The good news is that the trends on OXICLEAN improved throughout the quarter and sales growth surpassed our expectations. HERO and THERABREATH continue to contribute considerably to overall performance. THERABREATH achieved another quarter of record share gains, 3.5 points to 24.1% and further solidifying our #2 position in total mouthwash. Household penetration remains low relative to the category. In fact, even with these great distribution gains recently, we still have less than 20% of the shelf, so more room to run even in mouthwash. Early days, but the THERABREATH toothpaste launch is off to a great start.

HERO consumption growth also outpaced the category, leading to share gains and remains the share leader 2x larger than the next competitor. HERO's growth was driven by distribution expansion, strong Q1 activations led by brand ambassador, Jordan Chiles on Mighty Patch Original and Mighty Shield innovation. Mighty Shield is already achieving retailer hurdle rates.

Finally, TOUCHLAND. In Q1 consumption continued to grow low double digits, but sales were impacted by a strong Q4 holiday multipack sell-through. Recent consumption has slowed as we lapped year ago launches. Internally, we are hard at work integration and innovation.

Turning to international. Our international business delivered organic sales growth of 3.7%, driven by our GMG and our subs. Growth was led by THERABREATH, HERO and BATISTE brand and partially offset by lower Middle East regional sales. Of note, in April, we went live with our upgraded ERP system, our project leader, Nicole said it best, "Our customers did not notice the transition." Thank you to the entire team.

I'll close by saying that we are very pleased with our start to the year. Our brands remain strong. Our portfolio is well positioned, and our strategic actions continue to support long-term growth. I'm proud of our Church & Dwight team as we performed well in a volatile environment. As we look forward, our TSA agreement with the VMS business is winding down, and that organizational time that has been freed up is being spent on our forward-looking growth initiatives. We're laying the groundwork for ARM & HAMMER expansion, Oral Care growth behind THERABREATH and international M&A.

And with that, I'll turn the call over to Lee for more detail on the quarter.

Thank you, Rick, and good day, everyone. Back in January at our 2026 Investor Day, we've shared an industry-leading outlook for 2026. The highlights of that outlook included organic sales growth of 3% to 4% and EPS growth of 5% to 8% in line with our evergreen model.

As we now share results from the first quarter, we are delighted with the execution of our Church & Dwight team members across the globe. The first quarter highlights once again the many strengths of our portfolio and the team's execution capabilities. Let's jump into the details and provide you an update on our views for the year.

We'll start with EPS. First quarter adjusted EPS is $0.95, up 4.4% from the prior year and $0.95 was better than our $0.92 outlook and was driven by higher volume and gross margin results. Organic sales in 1Q were up 5%, above our outlook of 3% and organic sales are broad-based across the globe, with volume growth of 5.3%, partially offsetting a negative price and mix of 0.3%. Our organic growth was fueled by a steady stream of market-leading innovation and strong distribution wins with our commercial partners. The organic results also drove our reported revenue up to 0.2% versus our original outlook of negative 1 back in January.

I want to put our reported results in perspective. Due to our portfolio actions, our reported sales results would naturally be down 8%. However, organic growth of 5%, our TOUCHLAND acquisition and some FX favorability fully closed the gap. The first quarter fuel by volume growth was certainly a strong start to the year.

Our first quarter adjusted margin was 46.4%, a 130 basis point increase from a year ago. Our results versus last year were driven by 150 basis points from productivity programs, 110 basis points from higher margin acquisitions combined with the impact of the strategic portfolio actions, 50 basis points from the combination of volume, price and mix and 10 basis points from FX. These factors offset 190 basis points of inflation and tariff costs.

Let's jump to our investments in marketing. Our marketing expense as a percentage of sales was 9.5% or 20 basis points higher than the first quarter of last year. Looking forward, we're continuing to target investments at approximately 11% of net sales, in line with our evergreen model. Q1 adjusted SG&A increased 110 basis points year-over-year.

As we noted in our January Investor Day, SG&A in the first half of the year is primarily growing versus last year due to the inclusion of TOUCHLAND's SG&A and amortization expense. Adjusted other expense increased by $5.2 million due to a lower interest income compared to the last year. In Q1, our adjusted tax rate was 20.3% compared to 21.8% in Q1 of 2025, a 150 basis point year-over-year decrease. And our expected adjusted effective tax rate for the year remains at 21.5%.

Let's now turn to cash flow. We delivered strong cash results in the quarter as cash flow from operations was $174.8 million. Our higher year-over-year cash earnings were partially offset by an increase in working capital and supported growth. And capital expenditures for the period were $31.9 million and we continue to expect full year capital expenditures to be approximately 2% of sales.

Let's now turn to our '26 outlook. While the macro environment remains dynamic, we remain encouraged with their path forward, the strength of our brands, our strategic portfolio actions in 2025 and our growth initiatives continue to provide us confidence. As we noted in our press release, the situation in the Middle East is fluid and is creating some incremental volume and inflationary pressure on commodities and transportation. For example, we currently are estimating $25 million to $30 million of incremental inflation pressure. Our teams across the globe are responding to these developments and are taking actions across the P&L.

As a result of our mitigating actions, we are reiterating our full year 2026 outlook. We remain on track to deliver full year organic growth of approximately 3% to 4%, and we continue to expect reported sales growth to decline approximately 1.5% to 0.5% as a result of the strategic portfolio actions taken in 2025. We continue to expect full year gross margin expansion of approximately 100 basis points versus 2025. And this outlook reflects the breadth of actions we discussed in January in the balance of incremental headwinds and actions that we've identified since the Middle East conflict began.

Marketing as a percentage of sales remains at approximately 11%. SG&A as a percentage of sales will be higher than last year, reflecting the impact of the TOUCHLAND acquisition in the first half of the year and our focused growth investments. Our adjusted EPS expectation for '26 remains at 5% to 8% growth. And if we turn to the second quarter, we expect reported sales to decline approximately 1% with organic sales growth of approximately 3%. And we anticipate gross margin expansion of approximately 50 basis points reflecting transportation cost pressures ahead of the mitigation efforts that will take effect later in the year.

And in the quarter, we continue to expect higher marketing and SG&A. And in 2Q, the investment in marketing and higher SG&A will offset -- will more than offset the gross margin expansion, resulting in an adjusted EPS of $0.88 per share for the quarter. Recall, we continue to expect flattish EPS growth in the first half of 2026.

To conclude, remain confident in our 2026 outlook. We began the year with strong execution and are taking the steps to ensure continued success this year. And my final prepared remarks is for the Church & Dwight Associates. Thank you for all of your efforts in the first quarter, and congratulations on the robust execution, well done.

Carly, we are now ready for questions.

[Operator Instructions] Your first question is from the line of Chris Carey with Wells Fargo Securities.

Rick, you mentioned that distribution gains were #1 in CPG, I'm not exactly sure of the timing of those gains. But nevertheless, a very strong number. When you think about your Q1 delivery how important are those gains to what we're seeing today? I'm really speaking to the durability of some of the volume growth that we are seeing relative to perhaps some of the tailwinds that may have been caused by some inventory reductions in the base.

So I just wonder if you could contextualize the quarter as you see it. And what does the Q1 means for kind of go-forward top line, volume-driven results? And then I have a follow-up.

Yes. Sure, Chris. Q1 was for phenomenal organic growth. And I think more than anything, we were -- it was great to see our categories were growing around 3%, and we grew faster than that a little bit. And we talked a year ago about inventory and retail inventory dynamics. And so we had a tailwind of a couple of points from that as well. So that's how we get to kind of 5% for Q1.

Now all these distribution gains, that's really just hitting now. And so it depends how you look at the metric. If you look at it on an average basis over 13 weeks, I think it's like a 7% TDP lift. If you look at it as in more recent time, as these resets are happening in a more recent time, it's closer to 10% or 11%, which is about double what most of the CPG peers are getting.

And that's not just THERABREATH and HERO. That's across laundry and litter and personal care, sets across the whole portfolio. So we just believe that's a great tailwind to our business. And it's really a payoff of all the innovation that we're doing. So anyway, it's a tailwind as we look forward and it gives us confidence.

Okay. Great. A follow-up on TOUCHLAND. You did note that consumption slowed on year ago activity that was strong in the base period. Can you just give us an update on how you're thinking about growth of the business, the sustainability of growth and whether you think that it has the kind of runway to sustain perhaps double-digit growth into the back half of the year and into next year?

Yes, sure thing. And when we look at consumption that kind of shows up for you folks. We understand it shows consumption for the quarter is down 20%. When we look at consumption that is all in, including untracked channels, we were up about 12% or 13%. So there is a difference in what you see versus what the entire picture is. But it has slowed and it slowed partly because of all these holiday gift sets that go out and also because of the club class channel.

Overall, we believe that we still are going to have double-digit growth for TOUCHLAND for the full year. The good news is we have great ratings. We have low household penetration, and we're just starting now to advertise. A lot of our activations with either collaborations or just partnerships are happening in the back half. So we feel good about TOUCHLAND.

Our next question is from Anna Lizzul with Bank of America.

Your portfolio actions, I think, from last year helped drive the outperformance here in Q1. Just wondering how you're looking at the portfolio now, given the changes on the VMS business and others that you have exited.

And then just a follow-up on TOUCHLAND, if you can comment on where it's performing best in terms of the channel? And further on M&A, where are you now more focused in this more challenging consumer environment?

Yes. So that's 3 questions. Let me see if I can remember all of them. The first one is how we're -- on M&A, I'm not really going to comment. I would just say that the team is always hard at work. The leadership team spends an inordinate amount of time on looking for great businesses and brands to buy. And we've gone through our criteria again and again and again. And I would say the team is hard at work. And it's just not in the U.S., it's also internationally. It's not an or, it's an and. And that's some of the highest and best use of our time. So I continue to be optimistic there.

On TOUCHLAND, I think you're asking, "Hey, what channels are doing well. I would say the channels that are doing better than most are ones that aren't necessarily tracked. The club class trade did extremely well. Amazon does well. I think some of the beauty classes at trade because of the timing of promotions and also some of the innovation doesn't look as good. But again, some of the other channels that you don't necessarily see are doing better.

And your third question, Anna, just remind me what it was.

Yes. I was just wondering, I guess, in terms of the portfolio, you've exited certain categories and wondering how you're viewing the entire portfolio here based on those changes.

Yes. I love our portfolio is the short answer. I mean to be in a world -- remember, a lot of growth, a lot of categories out there are not growing or they're going backwards. And we've got to choose and select our categories over many, many years as we bought businesses. And the fact that our categories grew 3% this quarter, we grew typically -- like particularly do faster than that, it bodes well. And I think when we did the portfolio decisions last year, it provides nothing but tailwinds for us as we look forward.

Your next question comes from Rupesh Parikh with Oppenheimer.

Just -- I guess just going back to organic sales growth expectations. I know you typically give it by segment. So just curious, updated thoughts for the year by segment, including for international.

Go ahead, Lee.

Yes. So to your point, we're maintaining the outlook of 3% to 4%. Similar to what we talked about back in January, we still have U.S. in kind of approximately a 3% zone. International is probably approximately 7%, so a little bit softer because of the Middle East situation and the SPD is still sitting at about 5%. Again, it's a range. U.S. hits their number. There's others that you end up in the higher end, but we'll see how it goes. It's only 1 quarter so far gone, so.

Great. And then my follow-up question, just as you look at the consumer out there, just curious if you're seeing any changes in consumer behavior? And then as you look at your portfolio historically, when you see these spikes in gas prices, do you see any parts that typically benefit?

Yes. No, it's a good question, Rupesh. I think in my prepared remarks, and this is the second quarter in a row, I've said it, but I'll just emphasize it. Promotional levels are up in laundry as an example, for the category. We're hitting all-time share highs and our promotional levels are down. All 3 competitors besides us are up. The value segment of laundry is growing.

So that is a -- not only do we deliver great cleaning and efficacy, but we do it at a great value, right? And so that is hitting the mark. And right now in this economy, I think the same concepts for litter. Some of our competitors are promoting very heavily. But we are promoting a little bit more, but we're gaining share again and again. So for those 2 areas of household products, which are more responding to promotions and stuff. That is a good sign.

Your next question comes from Javier Escalante with Evercore ISI.

My questions have to do with the commodity backdrop, right? I personally was expecting a more muted kind of like outlook for gross margin given all derivatives going into detergent. So if you can go back and explain us your -- how much order relative goes into your car. And I believe that you mentioned that the impact is like $25 million, $30 million. Is that a full year number. So anything that can help us explain the gross margin expansion going into calendar 2026. And I have a follow-up.

Yes, I'll start and then, Lee, if you want to add a couple of comments. It is a full year number, Javier, for that $25 million or $30 million. And it's primarily, as you would expect, oil-based derivatives like diesel and resin and surfactants. And that's not atypical. Remember, in any given year, we always enter a year about 60% hedged as well. And so all these are kind of net impacts for us. So hopefully, this is transitory and it's not permanent, but we have good coverage for an extended period of time, especially in the foreseeable 2026. The team is laser-focused on productivity, really to offset many of these things.

And yes, there will be some RGM and promotional adjustments, but it's largely productivity. And that's really been the hallmark of the company. We've transformed this place on being able to get gross productivity year after year after year. And in a perfect world, if that doesn't happen, great, then we continue to spend on marketing, even higher and spend that money back that we would have saved and then it drives the top line even faster behind our innovation.

So Lee, any other comments you have?

Yes. I'll just put it in perspective, keep in mind, we had to have about 160 basis points of inflation in the outlook when we -- back in January. We've got this 25 to 30, so that now brings you up to 200 basis points. But to Rick's point, we have these additional offsets we're going after. And this is what you see from us. You saw it last year when we did our work on tariffs. We got that lever down to a similar number, and we worked it down. and that's what we're doing here. So I think we're in a good spot, and that's why we reiterate our outlook for the year.

And a follow-up, this is very, very helpful. It's very positive. I feel that idiosyncratic to you. But in terms of if this externality continues and commodities remain very high. Would you expect then value players, say, the guys in Germany to lead first, calibrating the promotional environment and then potentially the price increases? Is that a good assumption?

Yes. I think it's probably a better question for those competitors, Javier. Like in my kind of comments back to Rupesh for laundry, despite all these other competitors promoting a bit more in laundry, which is still kind of within the range of historical numbers, it's not crazy. But they're up, we're down. We're gaining share. The value segment is growing. So that's a great position to be in because there's a huge macro when consumers are pressed at the gas tank, they want to make sure their dollar goes further.

And one way they can do that is they can buy ARM & HAMMER laundry detergent. It's half the price of the leading detergent. So -- and it's a great efficacy, great value. And that's true not just among laundry, but many of our brands. So that's a great question. I think it's a more pertinent question for kind of the competitors.

Your next question comes from Olivia Tong from Raymond James.

First question, just relative to your expectations, obviously, a very nice beat on the top line. Where did you see the biggest positive surprises in your view? Was it more volume? Was it more price mix? So it seems pretty broad-based? I'm just kind of curious how you're thinking about that. And then I have a follow-up.

Yes. So I mean, as you talked about, it's is a broad-based improvement across the globe. I mean, really, the only pressure point we saw was international was Middle East. And so I got the question earlier just what do we think about for the year. We're generally the same type of view we shared back in January in terms of how we thought growth is going to play out across the globe. That's still where we sit today, Olivia.

Yes. And I said the volume -- there was a volume-driven beat is what I would say.

Got it. And then as more and more business consolidates into club and online, it feels like the move online should be good for you or at least on a hindrance for you, whereas Club typically keeps their income pretty tight. So given those dynamics, how do you think about your ability to grow in these channels whether disproportionately relative to your peer set? And then ability to sort of stand out in both club and online.

Yes. I would say there's no grand new strategy. We're performing really, really well online and in the club class of trade. Remember, we started in 2016 as 2% of sales, we're at 24%. We went from a laggard leader. We moved really quickly. But you got to start even further back than that. We have great brands especially after the portfolio realignment we did.

We have #1, #2 brands. Consumers love them. I gave you the quote in our prepared remarks, even our new launch for ARM & HAMMER liquid laundry with the baking soda, 10x. It has a 4.9% review here in the average portfolio is at 4.5%. That story is playing out across all categories, and many of our brands.

And so that's the starting point. And when we do that, then we have to make sure we can win with the right pack sizes in the dollar class of trade, the right pack and offerings in the club channel, the right pack and offerings online. And we've proven time and time again that we can move faster. That's one of our competitive advantages, move quickly in order to give the customer what they want, where they want, and so we plan on trying to win not just in one class of trade, but all classes of trade.

Your next question is from Lauren Lieberman with Barclays.

So I just want to talk a little bit maybe about your perspective on the consumers' ability to absorb pricing, not necessarily in terms of how you'll deal with mitigating cost inflation. You've been pretty clear on that front. But in general, that a lot of companies are -- there's a mixed bag, let's say, in how companies are factoring in the current state of the world in terms of inflation expectations for the second half. And everyone seems to be treading very lightly on whether they will or whether they won't price. And so I was just curious on your perspective broadly, on the consumer's ability to absorb pricing, should that be where the industry ends up going?

Yes. I think that's a great question, Lauren. And our personal view is the consumer is pressed. And if they were pressed 3 months ago or 6 months ago or 12 months ago, they're pressed even more today because gas costs show immediately. And when that happens, they're going to retrench. And the worst thing to do in an environment like this.

So we have no plans to try to price through this $25 million, $30 million offer. We're going to go offset it with productivity. There's just no appetite there for the consumer to bear something like this. So that's our plan. I think companies who do that will be more successful than companies that don't.

Your next question comes from Steve Powers with Deutsche Bank.

I guess building on that to the extent -- I mean, I guess, 2 questions. Is there any kind of heuristic you could offer as to if we see volatility in the Middle East. We see further rise in the price of oil or more extended duration and higher cost of oil, what would make that $25 million to $30 million grow and at what pace? Like how we can gauge external dynamics and apply it to Church & Dwight is kind of one question.

And the second question, the follow-up from that is that if that $25 million to $30 million grows over time, Rick, and you kind of run dry on the ability to kind of press incremental productivity. Is there a different -- do you approach pricing across different parts of your portfolio with a different onset when I think about value versus premium is there more ability to push price to the premium and less on the value? Or how do you think about pricing in a scenario where you're forced to kind of at least contemplate something beyond productivity?

Yes. No, it's a fair question. We're not going to go through the detail of what does every $5 or $10 of oil translate into an impact on Church & Dwight. I think that's a little bit too nuanced. But I will say my answer to Lauren was based on the question of kind of the current scenario, $25 million to $30 million. We think that's just like many things in life, we can handle something like that. if it becomes a lot more meaningful, call it, $50 million or $100 million or $150 million, who knows where it stops, then you have to solve a different problem with different solutions.

And so the first stop on the train is productivity. The second stop on the train is RGM on promotions, and that's usually through household, that's where a lot of our promotions are. The third step on the train would be pricing. And you're right, many of our premium products are extremely premium and high priced and the consumer loves it, but you got to do that behind innovation.

And so as we're launching our innovations to really look with a fine tooth comb on what the price point really should be is also something that we would look at. But for today, my answer would be if it's in this range, and we all hope that it is, and we hope that it's transitory, then that's how we would solve it through productivity. If it becomes something else and bigger, then we have other tools in the toolkit if we need to.

Yes. Okay. Very fair. And I guess the only follow-up I have is that if it is transitory and as you say, hopefully, it is, is the productivity you're putting in place? Is it structural? Or is it more belt tightening such that if it rolls over, maybe some of it gets reinvested, but some of it just kind of backfill using the belt back up?

Yes. I wouldn't call it belt tightening, I mean I would call it we kind of accelerate project. We have pipeline and productivity projects, just like we have a 3-year pipeline of innovation. And so at any given time, we can choose to fast forward certain projects or slow down other projects, whatever we want to do. And we can influence timing. If the productivity happens, but costs also continue to drop, perhaps we slow some of it back down or we take that money and go reinvest it in marketing and build the virtuous cycle all over again.

Our next question comes from Andrea Teixeira with JPMorgan.

I was just hoping to see if you can comment a little bit, Rick, on what you said like you had some, I wouldn't say pull forward, you had an adjustment you called out for the fact that you outperformed on the organic sales growth. The comparison, I think, from an inventory dynamic from against last year. So hoping to see, and we saw what you guided for the second quarter and more aligned with the consumption you called out. So is that something to think like that 2% extra that you got in the first quarter, was more an adjustment, not a pull forward from the second quarter? That's my first question.

And then just a follow-up. So if I understood it correctly, you're going to take some -- potentially some price actions to mitigate the $20 million to $30 million, I believe you called out to be the impact of the costs or the Middle East or you are just saying potentially you're going to take some pricing?

Yes. So let's take that second one first. I think I was super clear, the $25 million to $30 million headwind that the Middle East conflict has created in terms of higher commodity costs and inflation. We believe we can offset that with productivity, okay? When we do that, that enables us to keep our outlook where it's at.

The question that Steve just asked was, well, what happens if that doubles or triples? Can you still just do that with productivity? And the answer was no. With that amount, we can do with productivity. If it goes a lot higher, then we would look at RGM type actions on promotions. If it goes a lot higher from there, then we would look at potential pricing. So that's kind of the normal sequence of events. And I just said before at those types of levels, the consumer is pressed. And so we don't plan on raising prices at this point, okay? So that's the price point...

And just to find point that, like the midpoint, and I'm sorry if I missed that, the midpoint of that scenario is oil at which price because what is the what you said $100 per barrel? Or is it $110, different companies are using different assumptions on their own?

We're using a reasonable average of what we've seen in the last couple of weeks. Obviously, it changes daily, but it's a good safe bet. So it's $95 to $100 is a good base point.

Okay. And your -- what was your first question, Andrea?

Yes. Sorry, the second part. But the first question was the fact that you came out at 5%, and you did comment the 2 percentage benefit from potentially like inventory dynamics. Just wondering if that's going to come out of the third quarter, second quarter? Or it doesn't look like because you're guiding in line with category growth, but I guess, I mean, with market share gains and distribution gains, all of that.

Yes. So just rewind the clock 12 months. And remember, Q1 of 2025 every CPG manufacturer said what's going on. And there was a retail inventory pullback, right, because of all the ad around tariffs and the consumer and whatnot. And everyone called out a number back then. This earnings cycle, most folks aren't talking about it as much, which is fine. We're just trying to be transparent.

We called that a year ago. And we said, "Hey, that means a year later, then that's worth a 2% health." And so we grew our business around 3%, and we had that 2% health. That's 5% organic and categories are growing well. We continue to take share. We're getting distribution gains, and that's why we gave an outlook, we think, that's really strong for the full year and really solid for Q3, I mean Q2.

Our last question comes from Peter Grom with UBS.

So I was hoping to get some perspective on category growth. I think you mentioned 3%. But some of your peers have touched on growth showing signs of improvement as you move through the quarter. So can you maybe comment on what you've seen from a category standpoint, exited the quarter-to-date.

And Rick related, you've always had a pretty good pulse on what to kind of expect from a category standpoint. So just given the many things the consumer is dealing with right now, curious how you see that evolving from here?

Yes. Good question, Peter. For us in the quarter, and I just talk about our major categories. I think it's just easier to talk about our 7. So we were around 3% for the quarter, 3% in January, 3% in February, closer to 3.5% in March. So that bodes well. It came down a little bit in April, but we're doing extremely well in April. So I would tell you it was better than we expected. When we were starting the year, we were expecting closer to maybe 2% category growth.

Now this is only 90 days, but I am and I am more enthusiastic than I was many days ago despite everything else that's happening in the world. Because again, not every company, you can't paint every company with the same brush, the categories really matter. And many of our categories, it's not just 1 category driving a 3% weighted average. It's almost all the categories are growing at least 2.5% to 3%. So that's just a great thing.

There are no further questions at this time. I'll now turn the call back over to Rick Dierker for any closing remarks.

All right. Well, thank you very much, and we'll talk to everybody in July.

Good morning, everyone. Welcome to the second day of CAGNY. To start us off today, we have Church & Dwight. Let's first thank Church for sponsoring this morning's tasty breakfast and for their long-standing support of CAGNY.

Joining us today from Church & Dwight are Rick Dierker, President and CEO; and Lee McChesney, CFO, who joined Church last year after Rick became CEO.

Church & Dwight has continued to drive consistent growth despite more volatile times by leveraging its balanced portfolio as well as adding recent acquisitions to bring more opportunities for growth. We look forward to hearing today about Church's plans to continue delivering strong shareholder returns. And if there was an Olympic category for fastest company to get through 160-plus slides, Church would get the gold. Thanks, Rick and Lee, over to you.

Wow, I can't top that introduction. Hey, thrilled to be here. We just went through our Analyst Day about 2 weeks ago. And so this is going to be a little bit of a repeat of that. But when you have good news, you want to share it more than once. So this is our forward-looking statement and safe harbor statement, just take the time to read that on our website, and we'll get started.

So I look back at 2025. What a volatile year. I told -- I write a note to the employees every month. And I said, at the end of the year, I actually stayed out for New Year's Eve, and I watched the ball drop because we want a closure to a volatile and -- just a very volatile year. We grew faster than our categories, in all three businesses. 4 of our 8 power brands grew share. Hero and TheraBreath grew double digits globally. We had strong innovation, we had strong marketing support, and we acquired Touchland.

So a lot of accomplishments happened in 2025. And we also made some really big strategic decisions. The first and foremost, tariff response. I said this at Analyst Day, I believe that we had an industry-leading, even more company-leading response to tariffs, $190 million we were faced with and after portfolio actions, after supply chain moves, after a lot of work by a lot of great people that got to $28 million. That's not normal. That is normal for Church & Dwight, but not normal for industry.

The second thing we did is portfolio reshaping. It's easy to have a strategy. It's hard to execute. And so we did both last year on portfolio. We divested Spinbrush, divested our vitamin business. We shut down Flawless and we shut down our Waterpik showerhead business. The company's portfolio has never been stronger. And then we exited the year with a strong balance sheet, 1.5x. That gives us optionality on deploying our cash flow.

And here's the one liner that I want to leave you with on the portfolio reshaping. If you think back, consumption growth for Church & Dwight was 1% in 2025, not the category, it's us, consumption growth. If you exclude the businesses that we did the portfolio reshaping on, then we would have been growing 3.5% in a very volatile and pressed world. And so that's just a great tailwind as we move forward.

The Evergreen model is alive and well. I'm especially proud that our 2026 outlook brackets on the top line and bottom line are Evergreen model. That's overcoming stranded costs from divesting $400 million of sales. Lee will get into that detail. But this is just the output. There's a lot of inputs that go into this model, and it's consumer-leading innovation, it's building brands that consumers love. It's our productivity program. All those things are the inputs, and this is the output.

And we've had a long track record of success on our TSR. If you look at 10 years, 5 years, 3 years, we're typically leading. In 2025, we took a step backwards like many in the industry did. And in 2026, we're off to a good start. And why is that? Like what's the core of it? The core of it is we're unique in this industry. We have a great organic model and we can do M&A.

And so if you look at the chart on the left -- upper left, net sales over the last 20 years has gone up into the right. Earnings has gone up into the right. Cash flow over 20 years has gone up into the right. And then organic sales has been very consistent on average around 4%. So it's not the fact that we can do organic growth. It's not the fact that we can just do M&A. The unique piece about Church & Dwight, the reason we have great returns over a long period of time is because we can do both of those things.

So who are we? We're about a $6.2 billion company, 3/4 of which is in the U.S., 18% international and 5% in our SPD business. We have 7 power brands, TheraBreath, Hero, Touchland, Waterpik, Batiste, OxiClean and ARM & HAMMER. And I'm going to talk specifically about ARM & HAMMER in a bit more detail today. More than 75% of our sales and profits are in those 7 brands. That's why we care about those. That's why we talk about those more than others.

And we have a winning formula, a balanced and diversified portfolio. We tend to do well in any economic environment. We have low private label exposure, and I'm going to share with you today that's even lower going forward. We have online success, strong, consistent category-leading innovation, and we're an acquisitive company.

So we're about 50-50 household personal care. So again, whether or not the economic environment is good or bad, whether or not consumers are pulling back from personal care or higher-end products, we tend to do well. Same concept on premium and value, about 64% premium, 36% value. It's a good eclectic mix.

Low private label exposure. We put this slide together about 8 or 9 years ago when we were in Paris for Deutsche Bank. And the theme -- the thematic back then was rise of private label, rise of AmazonBasics. And we wanted to show people that on a weighted average basis, we had a really low exposure to private label. It was 12%. And that's one of the lowest actually in the entire industry. When we took action on our vitamin business, look what happened. It went from 12% to 5%. That bodes well as we compete against private label.

Number three is online success. And in 2016, we were 2% of sales, and now we're -- about 1/4 of our sales are e-commerce. And that just shows the strength of Church & Dwight to bring in capability, to bring in people. We have a great team. We have great leadership in that area, and we're driving for share gains year after year online.

Innovation matters in a big way, matters even more when categories don't grow as fast. New products fuel the company's organic growth every year, and about half of our growth is actually from innovation. And then we're an acquisitive company. We have a skill set. We have a competitive advantage. We know how to identify, acquire, integrate and grow brands. We do that time and time again.

Do we -- are we batting a thousand? No, we're not. But we're certainly hall of fame material. We do this really well. We primarily want to acquire 1 or 2 share brands, high growth, high margin. Fast-moving consumables. we clarified that a few years ago. Asset-light, we want to leverage our internal manufacturing capabilities, and we want to deliver a sustainable competitive advantage.

And so over the long term, we've gone from a $1.5 billion company to about a $6 billion company. A lot of that has been through M&A. Two weeks ago, I announced a few growth initiatives. And so I just wanted to reiterate that today. As a backdrop, category growth for us has been around 3% for a really long time. Like if you go back 1, 3, 5, 10, even more years, it's been 3%, very consistent. And part of that's because of our acquisition philosophy. We get to decide what categories we play in. We only had one power brand in the year 2000, but since then, we've acquired businesses.

And as we do due diligence, we really spend a lot of time on the competitors, on the competitive set, on the category itself, and so we've got to shape this over time. And so more often than not, our categories have grown 3%.

Well, last year, something happened, right? And everyone knows, consumer was under pressure, and our categories grew 1.8%. Combine that with the consumer sentiment, right, all-time lows, tariffs, inflation, the additive that consumers were feeling. Well, bad things happen to good people.

So what are we going to do about it? And here are the three initiatives I announced two weeks ago. One, we're going to grow the ARM & HAMMER business from $2 billion to $3 billion. Second one is we're going to drive oral care expansion behind TheraBreath from $1 billion to $1.5 billion. And then the third one is scale our international business, focused on M&A from $1 billion to $2 billion.

So those are the 3 things that we're doing as tailwinds for the business so that if categories don't grow as fast as they historically have, we still deliver the Evergreen model. And if they happen to grow like they have with history, we exceed the Evergreen model.

So here is one of my favorite slides. We use this to really show how M&A has transformed the company. And as I said before, only $1 billion of sales that was ARM & HAMMER in 2000. And since then, $1 billion to $2 billion for the ARM & HAMMER brand. And that means $4 billion has really come from acquisitions over that period. The reason I put it here, though, is to show the strength of the ARM & HAMMER brand to go from $1 billion to $2 billion. And that's been behind laundry and litter.

If you look, we've stair stepped up on share for liquid laundry over many, many years and the same thing with litter. So what are the reasons to believe that ARM & HAMMER can go -- continue to grow? Well, number one is we've had success launching into new categories before. We were founded in 1846. So we've been in baking soda for quite some time. The laundry, toothpaste, deodorant, litter, all those we entered in the '70s, '80s and '90s.

We do well in some of these big categories like laundry and litter, and we have niche plays in toothpaste and deodorant. Our brand awareness rivals almost any other brand anywhere, the awareness, the equity. And then we have this competitive advantage that we like to call the advertising halo. If we advertise our litter business, it helps toothpaste. If we advertise baking soda, it helps laundry and vice versa.

ARM & HAMMER is known for cleaning, for deodorizing, it plays in personal care, it plays in household. It's premium in some categories, it's value in others. It's a very ubiquitous brand that can go across all these sets of categories. It's in more aisles of the grocery store than almost any other brand, so well known, over 100 uses of baking soda. So consumers are using this all the time and everywhere in their house.

So the 4 pillars of growing the ARM & HAMMER brand over the next few years are really continue to grow the core. That's behind laundry, litter, innovation, distribution, e-com, all those things that we do well today.

The second one is our good, better, best philosophy. We've done that really well in laundry and litter. We have an offering, orange bottle, ARM & HAMMER. We have ARM & HAMMER plus Oxi. We have ARM & HAMMER Deep Clean. So good, better, best. We'll play with all the different price points. There are other subcategories within ARM & HAMMER that we can do the same thing.

Number three would be new categories. I'm not going to talk about that today. I'll probably talk about that a year from now, but the team is hard at work on where and why and how. And then number four is in-house licensed brands. I view that more as an incubator. We have over or close to $1 billion of ARM & HAMMER sales that go through our licensee partners. And some of those got to a point in which we should take them back and scale like we do for TheraBreath or Hero. These partners can also help us as we enter new categories and be kind of a testing ground for that. So more to come there as well.

The second one is drive oral care expansion through TheraBreath. As we grow, we want to focus our resources on large categories, right? And mouthwash and toothpaste are 2 good examples of that. Mouthwash is a $2.4 billion category. toothpaste is a $4.8 billion category. We would much rather have a share point in toothpaste than a share point in dry shampoo. And so laser-focused on the category side.

And mouthwash and TheraBreath is a great example. We have a 12% household penetration for TheraBreath. The category is 65%. So there's just a ton of runway there. And even though we're gaining distribution in TDPs very, very quickly, plus 34%, we're still under-indexed to where we should be. Toothpaste is the next step for TheraBreath, the regimen and the Church & Dwight is a relatively small player today in toothpaste. And part of that is flavor and part of that is only a certain amount of population really identifies with ARM & HAMMER baking soda toothpaste, right? I think when I first got to the company, the trivia question was, hey, what's the share of ARM & HAMMER toothpaste in the U.S. And the answer is something like 2% or 3%. What is it in the U.K.? It was 2% or 3%. There's a certain subset of population that kind of dials into the ARM & HAMMER baking soda pallet.

TheraBreath is a little bit different. TheraBreath, we spent a couple of years developing multiple clinical trials, best-in-class performance, better for you. And really, TheraBreath is known for fresh breath. And so at the middle of all that is why we're launching TheraBreath toothpaste. Third leg of stool for growth initiatives is international. And as a quick backdrop, our international business has been growing high single digits for a very long time.

And we have the capability to take these acquisitions and grow and scale globally. And we've done that with Hero, we've done that with TheraBreath, and we expect to do that with Touchland as well. And the focus, that's a little bit different this last year or 2 is the focus on M&A. We believe this is the right time to bolt on to our businesses internationally. We have people in Europe now. We have people in Asia. The operating units are responsible and accountable and own kind of the upper funnel for the deals.

Okay. Let me switch to an update on our categories and brands. The U.S. domestic target is around 3% for Evergreen. And we have 7 power brands, same for the company, right, same brands. And this is the categories. Over a long period of time, this is green, right? That's a great place to be. Our categories over a long period of time are growing. And more often than not, we gained share, 4 of 8 brands grew share in 2025.

So how do we do in Fabric Care. Fabric Care, we grew consumption 2.5% faster than the category. And even more importantly, despite all the promotional activity that happens in a household category like laundry, value is growing, right? There is -- the consumer is pressed. And so the price gaps between us and premium variants is extreme. So even when promotional activity happens, the value end of the category is growing.

And that's been true for a very long time. And ARM & HAMMER laundry has been gaining share for an extended period of time. Two weeks ago, we also announced a new fact. ARM & HAMMER is now #1 in wash loads. So this is volume. This is units. This is -- this bodes well for household penetration. But ARM & HAMMER has more wash loads than the Tide original brand. And part of that's because of the good, better, best strategy. We have good with ARM & HAMMER orange bottle. We have the better ARM & HAMMER plus Oxi, and we have ARM & HAMMER Deep Clean in the best care.

And Cat Litter is a similar story. We've -- we're growing faster than the category. We're taking share and really the innovation behind Lightweight HardBall is fantastic. So we have had a 4% share in lightweight litter, it was an 8% share in 2025, and 27% is what our fair share of litter should be. That's what we have in the clumping litter segment. This innovation has a really high repeat rate. We think there's a lot of opportunity on litter.

TheraBreath. TheraBreath is off the charts. It is a double -- strong double-digit grower. When we bought that business, we used to talk about it as an alcohol-free mouthwash. We were the #3 player. We are the #2 mouthwash now, and we're growing by leaps and bounds. We hit an all-time share in 2025, around 22%. And this was the commentary on toothpaste. Toothpaste again, is a $4 billion category. Many consumers say 70% that they would spend on a premium oral care experience. And I think my favorite fact on the page is 89% of TheraBreath buyers of mouthwash are interested in buying the toothpaste, and we'll play the video.

[Presentation]

Yes. So that's a great regimen. Hero. Hero is a double-digit grower as well, taking over the acne space. Remember when we bought this business, acne has been like a $500 million category for decades. And then innovation transformed the category. And the patch business has made that $1.2 billion category now. So we're growing faster than the acne category, hitting all-time shares on acne for Hero.

And the household penetration story is a similar one. 9% of households -- for household penetration for Hero, 29%. And this is a little bit unique, though. Look at the actual category. Household penetration is increasing now. That hardly ever happens for the category. So that's what Hero is doing to that category. TDP growth, same thing, a lot of great growth. We believe we have more room to run there as well. And the unique part about Hero is it's not just a patch business. We believe it's an acne business. And so you'll see us play more in the acne life cycle, start with cleansers, but go through the entire journey for the consumer.

Okay. Moving to new product innovation. We had Carlos Linares, our Head of R&D, present last -- 2 weeks ago and really walk through, we don't just have 1 kind of vector for innovation and ideation, we have 5. And many of those he brought to the company. And I'd say about half of all of our ideas are actually coming from those new vectors. And for a long time, we were growing around 1% to 1.5% incremental net sales.

Our bar is so high. Most companies will talk about maybe gross sales, they'll talk about not cannibalization. Internally and externally, we always talk net sales incremental after cannibalization, okay? So there's 2 or 3 layers into the funnel when we talk about our new products. So about half of our growth now comes from innovation. And here's a flurry of our products. So from a personal care perspective, it's the TheraBreath toothpaste. Hero, it's the invisible liquid patch. It's the Hero cleansers. And then for the first time in over a decade, we're launching a new condom called G.O.A.T., Greatest of All Trojan. And it's a fantastic condom, great reviews, and it happens to be non-latex as well.

And then on the household side, ARM & HAMMER with 10x baking soda. We have rinseless, we have Power Sheets. We improved OxiClean, more powerful and then launching a new cat litter Dual Defense with Microban.

Okay. International and SPD. Our international organic sales Evergreen target is 8%. And if you aren't familiar with the international business, about a $1.1 billion business, about 1/3 of that is our global markets group that goes through distributors all over the world, 400-plus distributors over 100 countries. And then the rest of the business is in 7 core subs. And again, our track record for growth internationally has been stellar, high single-digit growth for a long time.

And the unique part about our international business is we're 20 years behind many of the other multinationals. So 18% of our sales is international. Most other companies is around 59%. And so we have a lot of runway here. And one of them is how do you drive our U.S. brands across the globe, like Waterpik, ARM & HAMMER, OxiClean, how do you take international brands like Batiste and St�rimar and Femfresh to more countries, more people. And then third is how do you leverage TheraBreath, Hero, Touchland and scale rapidly.

Even more impressive, I think, is 6 or 7 of our power brands globally in those countries grew share. And as one example of scaling, Hero is now in 75 countries in 2025. It's the #1 acting patch, not just in the U.S., but in many countries. And this would have taken us maybe 3 or 4 years previously. But because we keep buying businesses and scaling them, we did this in about 12 to 18 months, which is fantastic.

And we expect Touchland to be similar. There's a strong pull, strong demand globally for the Touchland business. Now we're going to be a little bit more telling on what customers, what channels and what countries, but we believe this is a big opportunity. As we move from an export-type business to a more international company, we're also focused on local innovation. So for China and for Japan, we're doing unique offerings for Batiste and reformulated version. For Japan, most of OxiClean, the additive market is actually liquid. So we've launched liquid.

And as we continue to grow, we're going to have local innovation, local manufacturing, likely third party just as we go on that journey. And then last but not least, as I said before, I think the acquisition piece has been the missing puzzle piece for international. And we're at the right time now that we're $1.1 billion, $1.2 billion to scale that effectively.

Specialty Products, about a 5% Evergreen target. And just for a recap, $300 million of sales, 2/3 of that is Animal Nutrition and 1/3 of that is Specialty Chemical. About 2 years ago, we also took portfolio actions on our SPD business. We sold a very volatile cyclical part of the business. And ever since then, we've had solid growth. And we're laser-focused on global expansion, laser-focused on innovation, and I expect great things out of this business.

Okay. How do we operate? We have 5 operating principles. One, we leverage brands; two, we're a friend of the environment; three, we leverage people; four, leverage assets; and number five, leverage acquisitions. And that's where good returns become great returns. So I talked through leveraged brands already. That's how we're doing with the category. That's how we're gaining share over time. You heard us scale internationally as well.

We are friend of the environment. So we were founded in 1846. In the 1800s, we were sponsoring bird cards in the 1970s. We were the first corporate sponsor -- one of the first corporate sponsors of Earth Day. We've had a long track record of being -- having an environmental heritage. And it's not just us saying it, we get accolades from external third parties as well.

Leverage people. So this -- I'll spend a few minutes on this slide. This is, I think, underappreciated. We should not be the leader on this slide. This should be Procter & Gamble. This should be Kimberly. This should be Kenvue, but it's us. And why is that? Yes, we do have a distributor model internationally. We do have third-party manufacturing, but many people have third-party manufacturing. We've purposely kept this number down, the number of employees because it helps with agility. It helps with decision-making. It helps with speed. It helps us be able to pivot when things don't go right.

You know, when Lee joined as CFO, a few weeks later is when all the tariffs set, and it was a Monday staff meeting, and we were talking about what happened and the impact and we were quantifying how it was $190 million and where we go from here. And by that Friday, we had stopped manufacturing in China for 2 businesses. And I would just say I would bet that many other companies could not move that quickly.

So it's about speed and agility. The other nuance here, I would say, is just like all companies, we're focused on content creation with AI. We're focused on RGM. We're focused on supply chain. But in the back of my head, it's how do I keep the number of employees similar when we're a $9 billion company, when we're a $12 billion company so that we can keep that edge of decision-making and speed. We have a simple compensation structure, the same bonus metrics that I have, the guys on the line have at the plant. And it's cash, earnings, it's net revenue and gross margin. Gross margin is easy to say but hard to do. Hardly anybody has gross margin in their incentive metrics.

We leverage assets. So one of the reasons we are so good at free cash flow is because we're light on CapEx. And that's been a very purposeful design over time. Part of our footprint is outside, but we're an asset-light company. That's how we describe ourselves. Now we'll spend CapEx in a fast minute if we think there's a savings advantage, it enables, it's a safety issue, environmental issue, any of those things. But again, we spiked up as we invested in different areas, and now we're back to our 2% run rate.

And then I guess for me, all that's -- everything you've heard is kind of our core operating model organically. And then our good shareholder returns become great because of M&A. And again, our repetition is another understanding. I would say we are a little bit different. We have the ability to identify, integrate, acquire -- acquire, integrate, grow brands. And I think many people think they do, but we actually do. And when you do it again and again and again, it builds a culture. It builds a knowledge base. And so our employees, the 30 or 40 or 50 that are involved in diligence and the integration know the battle stations, and there's no substitute for experience.

So we have confidence in our future. The portfolio changes that I talked about, the growth initiatives, that supports a healthy Evergreen model. We're expanding household penetration, especially for some of those fast-growing businesses that we've acquired. We have a sustainable high growth rate for international. We have consistent innovation. Year after year after year, that muscle has been built.

Our e-com business is on fire. We've transformed it from being a laggard to a leader. And then as always, we're laser-focused on M&A. And I'd say it's not just domestic now, though, it's also international. And so when we look up in a few years, we're going to be -- we're going to look back and say, not only do we continue to do our domestic M&A, but we also did international. So let me turn it over to Lee to walk through the financials and the outlook.

All right. Thanks, Rick, and good morning. So as Rick said, it was an impactful year in '25. And it was really heartening to see all the actions we took really come to bear and give us optimism here as we're into '26. So just as a reminder, we -- in the back half of the year, organic growth accelerated. Our gross margin rate improved year-over-year. That combination enabled us to invest more into marketing. The operating margin, our EPS expanded, and we drove record cash flow of $1.2 billion.

We also did Touchland, we returned $900 million to our shareholders. And I just think it's a perfect example of Church & Dwight culture coming to life, right? We had the facts come at us. We laid out a plan and we acted. And that gave us really some good momentum here as we pivot into '26. So we talk about our Evergreen model. Rick talks about it, I talk about it. It's the foundation of how we think about -- again, a summary of all the inputs that we need to bring to life to deliver. And this is the foundation.

This is what was behind the basis for our '26 outlook, which we released a few weeks ago. So 3% to 4% organic growth. Total sales are negative 1.5% to negative 0.5%. That's solely the business exits. Gross margin improvement of 100 basis points, continuing to invest in marketing. SG&A will be a little bit up. I'll walk you through that in a minute here, and then adjusted EPS outlook of 5% to 8%. And finally, another year of strong cash flow of $1.15 billion.

And then we said for the first quarter, some similar metrics to this kind of a similar level of growth, gross margin rate improving. We're going to continue to invest in marketing and then EPS will be slightly up. Not up at the 5% to 8% level because in the first half of the year, we have the Touchland stub period in terms of amortization and SG&A and then some timing with our marketing through the year. But again, that was our outlook. That's still our outlook today.

Now underneath that, I think this is a nice recap of really a lot of things that Rick just walked you through. We have a lot of momentum as we come into '26. There's more tailwinds than there are headwinds. So number one, the strength of the brands, what we have, you just saw the innovation road map. We're positioned well just on the top line there. The portfolio realignment. So yes, sure, it's -- we strengthened the portfolio, but it gives us the opportunity to have higher organic growth, higher margin rates, and that certainly comes through in our outlook for '26 and as we look forward here. Touchland is off to a great start. That will become organic in the back half of the year. We just talked about our new growth initiatives, certainly opportunities for those to start adding benefits. And as I mentioned earlier, really every metric accelerated in the back half of '25, and that's a nice entry point we have coming into '26.

So certainly, the category is a little bit softer, as Rick talked about. There's still sticky levels of inflation. And we do have the business exits. It's $400 million of sales coming out with some stranded costs. But again, all the things on the tailwind side drive this outlook, again, 3% to 4% organic growth and 5% to 8% EPS expansion.

So this is our scorecard on organic growth. And this -- not everyone shows 10-year scorecards. We have 4% average organic growth. A lot has happened in the last 10 years. And I think it's another reinforcement, the categories matter and then how you execute within those categories. And that -- this shows through here. Our outlook for '26 is certainly in line with this as well. I mentioned the reported sales, again, negative 1.5% to negative 0.5%. The simple story there, you have the business exits. We obviously have the positives from that. There's a headwind on the sales line here. The good thing is between Touchland and our organic growth, the opportunity to mitigate much of this in '26. And obviously, you saw the earnings growth with that outlook.

I think very important also with the organic growth outlook is, this is volume. This is our scorecard for the last 10 years on volume growth, driving unit growth. Our organic growth is fueled by unit growth, not by price. And our outlook for '26 is just in line with that same history we've demonstrated as well. So our gross adjusted gross margin outlook is 100 basis points for the year. It's definitely higher than the Evergreen model. So let me walk you through that a little bit here.

So foundationally, we're typically pursuing 25 to 50 basis points. That's the operations teams, that's the engineering teams driving good to great productivity. We had a record year in '25. We're set up for a very good year in '26 as well. Supply chain optimization, NPE, driving positive mix from elements like our higher-margin acquisitions. Those are all coming to life. That typically drives 25 to 50 basis points.

The portfolio transformation gives us this additional opportunity in '26, and that's where the path to 100 basis points of improvement comes. And that all fully mitigates what's right now an estimated 160 basis points of inflation pressure, typical manufacturing pressure points, labor inflation and then some of the investments they made in capacity. Again, that's all factored into this outlook, a really nice gross margin outlook for '26.

And as I mentioned earlier, underneath all that, I'm not talking about tariffs. We had $190 million original tariff outlook. Rick just talked about it. We very quickly acted. And now as a result, you see the outlook in terms of our margin outlook for the year. We're going to continue to invest in marketing.

So certainly, this 11% guidelines has been helpful. But what's most important is how the brands are doing. You just saw the brand scorecard. They're doing well. We invest to drive that brand scorecard. And when we have opportunities like we did in the back half of last year, we'll also index even higher here. And so that's the mindset for '26 here.

Now SG&A is going to be slightly up in the year. As I mentioned earlier, there's really 2 drivers. We don't have the normal leverage we have from organic growth because you have a little bit of pullback from the business exit. So that gives you a little bit of headwinds there, and there's obviously some stranded costs. And then Touchland for the first half of the year has an amortization bill and has its SG&A. That's really the driver here. Underneath this, we're still investing in the international business, e-commerce and the growth initiatives that we just laid out for the future here.

Our EPS outlook is 5% to 8%. But again, look at the scorecard for the last 10 years. We've averaged 8% growth in EPS despite all the things that we've all had to navigate over the last years. Again, it speaks to the categories we set off on the top line, speaks to our ability to drive the margin improvement and invest in the business coming to life each and every year.

Now this may be one of my favorite charts, free cash flow conversion, 127% in 2025. That's impressive. The 10-year average of 119%. Typically, most companies are averaging something less than 100%. And this is the difference of Church & Dwight. It goes back to the strength of ARM & HAMMER and everything that, that business does and then really how we run operations here. And this gives us tremendous flexibility.

This shows through, like if you look at this -- again, all of this just happened in '25. Our debt-to-EBITDA ratio is essentially the same. That strong cash flow came through. We bought Touchland. We returned $900 million to our shareholders, and we're still at the same debt-to-EBITDA level. It gives us tremendous capacity as we look forward here as well.

And this shows through over $5 billion of firepower. So between cash and ability to leverage up, we have a lot of opportunities to invest in our business and really drive capital allocation. And where do we want to do that? That's here. So number one, use of cash is TSR-accretive M&A. The Touchland was our latest example, Hero, and Thera behind that. These are unique assets. We take a lot of discipline to find them. Obviously, the message today is we've done that. We have the financial capacity and the organizational capacity to do more, and we're in the marketplace looking.

Next up is CapEx for organic growth and for good to great productivity. Number three is NPD. Number four is debt reduction. Though today, we only have fixed rate debt. We have no variable rate debt -- or variable debt. And then ultimately, a return of cash to shareholders. So this is our focus for all that firepower. It served us well. We just showed you the 10-year scorecard. This has been the foundation of how we've done that. That's our mindset as we look forward here as well. And again, all those actions we took in '25 enable us to be in a pretty good place here.

So as a theme here, we feel confidence in 2026. Yes, there's headwinds. But again, we took actions all through '25 here. We have a great exit rate coming into '26. And we're optimistic that we're going to bring this '26 forecast to life. So with that, we'll conclude our remarks. Thank you.

Dara?

Dara Mohsenian from Morgan Stanley. So Rick, you mentioned the 3 growth areas you're focused on. Those are some big numbers there. We're talking of Bs instead of Ms, right, or $0.5 billion, I guess, on the TheraBreath side. But just as you think about the level of spend you'll need over the next few years in those areas to get to that level of growth, can you give us a little bit of insight there?

And maybe also just short term, what's embedded in '26 already in terms of revenue contribution from those areas and level of spend and sort of taking a step back, I think the bigger question is we've learned in CPG over the last decade that companies move into new areas or white spaces there's opportunity, but there's also fierce competition, right, in areas like toothpaste are very competitive, international acquisitions, inherently more risk. So just holistically, how do you think about managing risk as you go after these growth opportunities from a corporate standpoint?

All right. Dara, that might be a 4-part question, but I'm going to do my best. You can correct me if I get off track. Look, I think it's -- I really do believe the ARM & HAMMER brand is unique. I tried to walk through that in that a few -- maybe a decade ago, we tried to go and make a couple of the brands that go into the mega brands and go into other categories. And you're right, it is hard to do. But the ARM & HAMMER brand is a little bit unique. It's already done that. And I think where I also get confidence is my comment on there's already $1 billion of retail sales in other categories for ARM & HAMMER right now. And so those are going to be some good testing grounds for us.

And I don't think today is the day I'm going to go through what categories we're going to look at. But you're right, every category is competitive, but there are certain attributes of the ARM & HAMMER brand that put us further down the field even from the starting block, and that's what we have confidence in.

For toothpaste like TheraBreath, it's a unique opportunity because of how well TheraBreath mouthwash is doing. As TheraBreath mouthwash resonates with consumers on bad breath and freshness, we think that equity goes right over toothpaste pretty darn well. And you asked about support levels. You're right, there's B, not M in terms of growth over the next, whatever, a number of years. These are moonshots that we're going to take. And we're going to invest as we go.

So there's some benefits in 2026. It's early days, though, is what I would say. And so it's kind of pay as you go in 2026. And as we get into these new categories, you're going to see us say, this is the right level of investment, but this is also the revenue opportunity. I fully expect all these things to actually be tailwinds for revenue and for earnings over the time. Today and yesterday -- and 2 weeks ago, was really just letting people know this is where we're putting our time, energy and effort.

And sometimes the things that you choose not to do are just as important of what you choose to do. And so the fact that we were able to shed some of these brands like vitamins and like Spinbrush and others, the full force and the time, energy and effort of our people who really make the place run are going to be behind these growth initiatives. So I have a lot of confidence we're going to do some really cool things. So I would say stay tuned on some of the output for that. But this is really just the inkling of here's the direction that we're going.

We have about one more minute. So we probably should take the rest of the questions in the breakout, if that's okay. All right. Thank you.

Okay. I think we're ready to get started. So thank you for coming out today, especially in a cold, blustery New York City day. I really appreciate it. I want to walk you through a quick 170 slides and the management team is going to come up and talk as well. But we're just ecstatic to be here, and we finished the year with momentum, in 2026, the future looks bright.

So just as a reminder, we have a safe harbor statement. We're going to make forward-looking statements today. So please check this out on our website. So who's going to be presenting. I'm going to start and end the presentation. Lee is going to come up and talk about our financials and our outlook. And then Chuck will talk about our brands and the categories Andrea is here, Federal Touchland. She's going to talk about that business and how excited we are about it. Carlos is innovation. Surabhi is all things digital, and then Mike Read will talk about international and SPD. I'll also go through some of the growth initiatives today as well.

I'll just walk through the agenda. I already told you welcome. So let's look back at 2025. We grew faster than all of our categories across all 3 divisions. That is quite the accomplishment in a tough and rugged 2025. 4 of our 8 power brands grew share. 4 of 7 if you exclude vitamins. Hero and Therabreath are growing double digits. Strong innovation and marketing spend supports these brands and growth. And then we acquired Touchland this year.

Tariff response and mitigation. These 3 bullets are really important to me. I would say our tariff mitigation and response wasn't just industry-leading, I would say it's just leading I was super impressed with how the company reacted to that portfolio changes were executed. We divested SpinBrush and vitamins. We shut down flawless and showerheads. There is a lot of momentum because of the portfolio changes we were able to make in 2025.

So we also have a strong balance sheet, 1.5x levered. You know this, right? Our long-term investors know this. We have been able to acquire businesses. We have the ability to identify, acquire, integrate and grow brands and the future is bright for that as well.

You just let them know they switched the prompter up here. It doesn't have anything on it anymore. It's fine. But this is one of the most important things to understand about the business portfolio. In 2025, our brands grew about 1% consumption. If you strip out all the businesses and portfolio changes we made, it would have grown 3.5%. What a great resilient portfolio to have the wind at our back for 2026 and beyond.

Lee will talk about the every model in detail. I will tell you that everybody model is alive and well. You saw how we had those brackets in our outlook today for 2026. There's a lot that goes into this, but this is the output. We have to make sure we have innovation and brands consumers love. We have to make sure we have Protiviti programs, the right advertising, all those things are the inputs.

And we have a strong track record of TSR. If you look back at 3, 5, 10 years, we're always near the top. 2025 movement backwards and we're off to a great start in 2026.

What's our winning formula. We have a balanced and diversified portfolio. We have low private label exposure. This is going to be my new favorite slide. You're going to see the updated one in a few minutes. We have online success and strong, consistent category-leading innovation. Half of our growth to fleet customer innovation. And again, we're an acquisitive company. We know how to identify, acquire, integrate and grow brands.

Church & Dwight is about a $6.2 billion company, 77% domestic, 18% international and 5% SPD. 7 brands make up 75% of our sales and profits. And we have a balanced and diverse portfolio. About half of our portfolio is personal care, the other half is held. 64% premium, 36% value. Low private label exposure. So for many years, we've been showing this slide that weighted average exposure to private label across all of our brands across all of our categories is around 12%. And it's been very consistent 12% year after year after year.

And why is that? We don't have private label exposure, for example, in laundry. But look what the portfolio reshaping did to that statistic that's that -- we're down to 5%, right? Vitamins was an extremely large private label business. So we went from 12 to 5 because of portfolio reshaping. Online success, all things digital. We went from laggard to leader 2% to 24%. Serving her team are doing a fantastic job.

Strong and consistent category-leading innovation. About, again, half of our growth is typically tied to new products. We measure this maniacally incremental net sales growth, not grow sales, stand-alone but incremental net sales growth, and this drives our brands, it creates value for the consumer.

Acquisitive company, #1 or #2 share brand is one of the first things that we always want to make sure when we buy a brand or a business. Number two, high growth and high margin, fast moving consumable, fast moving consumable. That's what we're focused on. asset-light, leverage our manufacturing skill set and then deliver a sustainable competitive advantage. And we're as excited today about acquisitions, both in the U.S. and probably also internationally, right? I think that's the nuance. It's always been the U.S. It's an and. Now we're talking about international as well.

And why is that? Like this company has been transformed through acquisition, and I'll show you in a few minutes. We have a slide, $6 billion, $2 billion is really the ARM & HAMMER brand, $4 billion is from the brands we've built and bought over the many years. And that tranche started back in 2004. We go from $1.5 billion to almost $3 billion. And then you go from $3 billion to $5 billion. And now we're about $5.5 million go into what were $6.2 billion this year, and we think that's going to continue to grow through acquisitions.

Okay. So here's the new news. We haven't talked about this before. I think the reality in the world that we live in is category decelerated, right? Our categories have grown for a decade or longer at 3%. And if you look back at 2024, it was closer to 4%. And then in 2025, the first half grew 2%, the second half grew 1.3% and the full year grew 1.8%. That was not just us, that was everybody. Many categories we're doing the same thing.

Bad things happen and you have people to react to it. Consumer sentiment is weak, right, 5-year lows on consumer confidence. So we can be able to control of our future. And so what are we doing about it? We're focused on these 3 aspects of growth internally to help drive results in the future. So that if categories slow, we can still hit our evergreen model. If categories don't slow, we can do even better.

So grow ARM & HAMMER from $2 billion to $3 billion. There's 3 or 4 pillars behind that. Number one is continue to do what we've been doing, grow the core, ARM & HAMMER laundry, ARM & HAMMER litter. Good, better, best. We can round out our portfolio for good, better, best across the ARM & HAMMER sub-brands.

In-house licensing. We're going to consider that more an incubator, and I'll talk through that in a few minutes. And then new categories. So we're going to launch a couple of new categories this year. But over the next few years, you're going to see a handful of other categories. And those are going to be fewer and bigger better. We're not going to go everywhere to every one. That's not the strategy, is to make sure that we're in the right categories where ARM & HAMMER can play and win.

Drive oral care expansion through Therabreath, really behind Therabreath from $1 billion to $1.5 billion. And then to scale our international business. We've been doing a great job doing that for many years, and now it's a little bit double down on M&A. We have the scale. We have the infrastructure to do it. So that would go from $1 billion to $2 billion over time.

Here's the slide that we've shown before. This is the makeup of the $6.2 billion over time, $4 billion is really from acquisitions. But I'm going to talk about it in the inverse for a second. It means that we've gone for ARM & HAMMER from $1 billion, $2 billion over the last 5 years. Our aspiration is to go from $2 billion to $3 billion a heck of a lot faster than that.

And again, this is the core, grow the core. Look at the stair step up over time for liquid laundry and for clumping cat litter. We have a great brand. It's the innovation high laundry, the marketing behind laundry. We're hitting the consumer right where they are. And year after year, we continue to gain share.

What are the reasons to believe in the ARM & HAMMER strategy? Well, number one, we've proven over time that we can go into other categories. And it's not 1846 anymore, but bacon said it was founded in fact with Church & Dwight. Laundry was 1970. Toothpaste was 1980s. Deodorant and cat litter were the 1990s. We know we can do this. We've been in large categories before. Our equity is fantastic. Our brand stacks up with other brands like Nike and McDonald's in terms of awareness.

And then the last one, which I believe is a competitive advantage is the ARM & HAMMER brand has a halo effect on advertising. If we advertise cat litter, bacon soda and laundry benefit. If we advertise laundry, ARM & HAMMER toothpaste benefits. That's a unique position and capability that we have. ARM & HAMMER is known for cleaning, the odorization, cooking, laundry the list goes on. It's a premium in some categories, it's a value in others. It's personal care in some categories, it's household and others. There's very few brands. I can't name one that has the ability to do that.

It's also uniquely extendable. It's in more aisles of the grocery store than almost any other brand through either our owned brands or licensees. There's over 100 uses of baking soda. It's used everywhere. It's in the laundry room, of course, it's in the kitchen. It's in the bathroom. It's everywhere. So there we go. So growth or we talked about good, better, best. Again, there are subsegments within the ARM & HAMMER portfolio that can get rounded out. we've proven time and time again that we're good at ARM & HAMMER doing good, better, best. I'm going to show you those 2 examples.

I'm not going to go through them today, but there are new categories that are ripe for ARM & HAMMER. And then number four is the in-house brand concept to be an incubator to be able to say, here are some categories that we may want to go into. How do we explore that? How do we get a business up to $10 million or $20 million or $30 million. And then when it makes sense, to actually buy that back and be able to scale it like we normally do.

So here are the 2 examples that I would tell you are just textbook for good, better, best. First one is litter. Orange box is good, black box is better and then hard ball is best. And hard ball is known for the best, we're trying to make that the best lightweight litter. We think that might be the best litter period, full stop.

We also have laundry, good, which is the ARM & HAMMER model, better, which is ARM & HAMMER plus Oxi and then the best, which is deep clean. We have almost $1 billion of licensing sales out there with partners. There are many categories in which ARM & HAMMER has already proven that can play in. And once we decide that we think that we can be a better owner at some point in time with the right partner, then we believe we can scale it and take it to the next chapter of growth, like we did for Hero and Therabreath.

Okay. Next pillar of growth is really oral care. Now as we grow, we want to make sure we're focused on the right large categories. And mouthwash and toothpaste are huge categories. On the far right, $2.4 billion and $4.8 billion. We would much rather have a share point in toothpaste and even dry shampoo as an example. So we're laser-focused on mouthwash and toothpaste. And what's uniquely different about us Therabreath gives us a great entry point for oral care now, right? ARM & HAMMER is always to a select subset of the market because of the taste profile for baking soda, but Therabreath can reach and penetrate a lot more households.

Speaking of penetration, Therabreath is 12% household penetration. Mouthwash is 65%. Chuck is going to go through more details, but we have a lot of room to still run. We have aspirations to be the #1 mouthwash.

Number 2 is toothpaste, huge category, almost $4 billion. We have been playing in toothpaste for quite some time. And collectively, we're a small player, if you add up all of our brands. We think their breadth has a unique right to win. We think there's a loyal following for Therabreath. It hits on best-in-class performance. It's better for you. It has superior flavor. So all those things come together to make this a great chance for Therabreath to become a meaningful brand in toothpaste.

Last but not least is international growth. And Mike will walk you through the reasons to believe as well. But we have a long track record of organic growth. This has been a fantastic story for Church & Dwight and for international. And there's a lot of room to run. We're underpenetrated our company versus most other multinationals. And we've done a fantastic job taking businesses even faster than our history, I would say, and applying those distribution gains. So here there Therabreath, Touchland have all expanded rapidly, and a large part of that is because of international.

And so today, I'm just saying we're doubling down M&A within our international business. It doesn't mean we're doubling down less in the U.S. It's just an and, not an or. But we want to acquire brands because we already have a great footprint or we want to shortcut like we did with Grafica in Japan, right? We added our OxiClean distributor, and now we can start to add some of the brands that we have into that infrastructure.

All right. With that, I will ask Lee to come up and talk about the financials.

Thank you. All right. Good afternoon. For those of you who haven't met, I'm Lee McChesney. I have the privilege of being the CFO for Church & Dwight. And with that, we probably to dive into some numbers. So we'll do that quickly.

So obviously, this morning released our 4Q and '25 results. came in at 3.9% total sales, a bit higher than our outlook. Certainly, Touchland was a big driver of that performance. Organic was 0.7%, a little bit lighter than our outlook, but that was really driven by the VMS business, they now exit the VMS business and then just the category itself was a little bit lighter.

Trying to give you also this perspective in the release as well. You take out the VMS business in the fourth quarter Organic sales were 1.8%. So some nice momentum as you started thinking about '26. We had another great quarter with gross margin, 90 basis points higher than last year. higher than our outlook. Really great work from the team across the globe to bring this to life.

First half of the year, gross margin was going back for 50 basis points in the back In the first -- back half, it was up 50 basis points. So some really good momentum there. So that favorability in the sales, favorability in gross margin rate, we put more into marketing. And then really helpful for the brand today, but also as you think about; 26.

Ultimately, that led to an EPS of $0.86 higher than our outlook and up 12% over the prior year. So overall, a really nice quarter. And obviously, if we pivot to the full year, that all flows through. Again, you see the overall total sales of 1.6. And then again, organic for the year was 0.7 but when you adjust out BMS, it was 2% organic growth. So again, that's kind of the entry point as we go into '26. I mentioned, obviously, the progress on gross margin and we continue to invest in SG&A.

The other element is cash flow. We had a great cash flow year. We upped our outlook throughout the year, and we actually exceeded that in final form at $1.2 billion. So really just a ton of strength again, on the sales side, gross margin, EPS and cash flow, all higher than when we put out our outlook on Halloween early in '25.

So that's the numbers. But I also wanted to just reflect a little bit on what we did beyond the numbers. And because it also is a good starting point when you start thinking about '26. So once again, we continue to have the strength of brands to grow 4 of our 8 brands. We changed the portfolio. And hopefully, you saw in the release some of that insight. But moving away from those 4 brands, we now have a portfolio that has the ability to grow at a faster rate has a higher gross margin rate. I mean those are all going to be -- you see those in the outlook -- walk through '26 in a second here.

We had another year of incredible productivity, record levels of good to great productivity. And then we faced into tariffs early on. So liberation Day in early April. And by the end of April, we told you what our plans were. So $190 million of tariff exposure that we've now moved down to $25 million and continuing to decline from there. You see it in the outlook for '26 here, and we get through a second.

And then the cash flow I talked about, we had great cash flow. But this year, we bought Touches, we returned $900 million to our shareholders. And we still have the same debt-to-EBITDA ratio. So we have tons of optionality as we move here into. So I have an observation since March. And I just think this is really our culture coming to life. Things come at us. We quickly assemble the facts, we come up with actions and we execute. And we all did this in '25. And again, all this momentum carries us into 2016. And certainly, I think you'll see that when we go through the outlook.

With that said, let's run to '26. So you know Church & Dwight, you know wherever a green model. This is the foundation. This is what's running through the organization. When we get together, when you think about the plan, people know what's expected of them. So you're going to see this certainly coming to life as we walk through the outlook.

So again, this morning, we put out a release, 3% to 4% organic growth range for the year. Reported sales will be down negative 1.5 to 0.5. That's solely the business exits. I'll walk you through that in more in a second here. Gross margin improvement of about 100 basis points, continue to invest in marketing at 11%. And ultimately, that's an EPS outlook of 5% to 8% for '26. And then again, we expect to have another strong year with cash flow, $1.15 billion.

So I know you're going to ask a lot of questions later, but I'm trying to get some of those out of the way here with some of the tailwinds and then the headwinds as well. So I think you're going to see on display from really everyone presenting today, a lot of the reasons behind this. Again, the brands are still performing well. You're going to see a ton of innovation from us. I mentioned the portfolio change. Again, this is helping us on the organic growth, it's helping on gross margin. We get to reallocate our focus as a leadership team to use faster-growing value brands and premium brands that we have in our portfolio.

I mentioned Touchland. Touchland in this 2 quarters now, really strong results. You're going to hear more about where Touchland's going in the future today. And then as Rick just mentioned, we have the growth initiative. So again, there's an extension of already what we have going on in the portfolio driving us here.

And then I make the comment here that in 2025, if you look at almost every metric it got better year-over-year in the second half than the first half. And that's our entry point as we go into the year here. So sure, the categories are not expecting them to transform. We're still expecting kind of 2% category growth. There's going to be inflation, but also behind that outlook is we do have these exited businesses. It's $400 million of sales that have come out of the portfolio. We've worked through the stranded costs. That's all covered in the outlook for '26.

So let's go from there, just walk through a couple of extra details here. So again, organic growth, the Evergreen model calls for 4%. Our range is 3% to 4%. We have a 10-year history of 4.1%. And I mentioned the reported sales. I just want to give some color here.

So again, $6.2 billion of sales in 2025. Our outlook for -- $6.1 billion to $6.2 billion. You have the $400 million coming out from the exited businesses. And then with Touchland and the core business is growing, we almost fully mitigate that on a reported sales basis. But obviously, underneath that is the organic growth of 3% to 4%.

And I'd also note in our outlook just the importance of volume. So our organic growth is driven on volume growth. It's not driven on price, it's driven on winning a unit level with the brand. That's what we've been doing historically, and that's obviously the foundation also of what we're planning to do here in '26. It's a volume-driven organic growth outlook.

So I mentioned gross margin. I don't think we typically show 100 basis points of improvement in gross margin. The evergreen model is 25 to 50 basis points. And so let me walk you through some of the drivers to that. So on this page here, you really see what we try to bring to life every day. So whether it's good to great productivity, supply chain optimization, whether it's bringing NPD to life, that's obviously good for growth. That's typically also good as a mix element.

And then we buy acquisitions that are higher gross margin levels and then we expand them. It gives us positive mix. Those are usually the elements that drive the 25 to 50 basis points. We're looking for an evergreen. And then as I mentioned, the portfolio change is also enabling us to go from that 25 to 50 up to 100 here in '26.

And hey, there is inflation, I call it 100 basis points. But all those actions I just talked you through are offsetting that. So sure, we have natural gases up, ethylene, things like that. You're going to have a normal batch of labor inflation. We have some capacity improvements. We're covering that. That's what we do with our good to great productivity and all those other amounts we drive normally in the Evergreen model, okay?

Talked about marketing. This has been 11% is called out in the every model. That's what we're looking at again here in '26. And this has been an important formula. We invest in the brands. And when we have opportunities like we just in fourth quarter, we'll even invest more here to support the brands. Just to note, marketing will be based on this outlook, a few basis points lower than it was in '25 because the Vitamin business had a higher marketing rate than the core portfolio SG&A, I mentioned earlier, is going to be a bit higher. Really just a couple of drivers there.

Certainly, we have a half a year of Touchland's SG&A and this amortization. So that will be a pressure in the first half of the year. And then we don't have the same leverage out the portfolio because we have the business exits and then we have a bit of stranded costs. But again, that's all factored into the outlook. We're still continuing to invest in the international business in e-commerce. And then those growth initiatives we just talked about, that's all still going on within SG&A.

So all that, again, brings an outlook of 5% to 8% in EPS. The Evergreen model is 8%. So certainly, that's within the range here. Today, obviously, we're talking to thinking about that as a midpoint perspective, but you obviously have a 10-year history of what we've done there. We'll certainly focus on bringing that to life.

Now we noted also in the release, it's a bit of a first half, second half. So the second half is a little bit higher. But just to give you a color there, I mean, the growth perspective for the year is similar. The gross margin improvement similar to the year. But again, you do have that touch on SG&A and amortization in the first half of the year. And when we look at our marketing programs, the more heavily weighted to the first half and the second half. And that's solely the driver and the difference.

So I think Rick said last time, when I was a CFO, this is his favorite chart. I think as CEO, it's still a savory dart. But we look at the free cash flow conversion, right? I mentioned the, obviously, the cash from operations, but 127% in '25. This gives us so much optionality as we look to invest in the business here.

That obviously shows up in the debt to EBITDA ratio Again, we did touch in. We did the share buybacks and we basically have the same level of debt to EBITDA. So all that firepower we had in the past is still there for us. And that certainly shows up here. It's over $5 billion. I think this is almost the exact same chart as last year despite all those things we did with the portfolio, how we've added to it and how we've returned dollars to the shareholders. This speaks to the cash flow capability of the organization.

So what do we use the cash flow for? This chart hasn't changed. We've seen it in the past, number one, TSR-accretive M&A. So the Touchland, the Therabreath, the Heroes, finding the next version of that domestically or internationally and bringing that to life. That's the #1 goal. That's certainly what we're out in the marketplace to do. And again, we have all that capability financially and organizationally to add to the portfolio today. Next up is certainly CapEx for organic growth and productivity.

Number 3 is NPD. Before it is debt reduction. But at this point, we paid down all our variable debt. So this is just -- we're just sitting out of the fixed that we have today. and then returning cash to shareholders. And on that note, we also announced today that we have a 4.2% dividend increase from the Board in '26, our 125th consecutive year of paying dividends and our 30th year in a row now of increasing our dividend. Again, another great example of the cash flow coming to life.

So what should come through here for '26 and what you're going to hear from the rest of the team today is our confidence in the outlook we put out there. So whether it's the strength of the brands you're going to hear about from a second from Chuck, the innovation from Carlos, from Andre on Touchland. You're going to hear from Surabhi on what we're doing in e-commerce and how that continues to be a great story. You're going to hear from the international business and now even more focus under our growth initiatives there. And then that cash flow give big sign so much ability to invest in acquisitions or organically in the business. So with that said, I'll move away from the numbers and then let the team walk you through some of the stories behind that.

So I'm going to pass you on to Chuck.

So as Rick and Lee have talked about, we have great optimism in our future and our ability to grow and as we look at the U.S. business, we're targeting a strong 3% growth rate, and that's going to put us in a great position to continue to win share in the categories that we compete.

And this growth is going to be driven by our 7 power brands. And the great thing about these power brands is they compete in categories that have been resilient and traditionally deliver growth. And in fact, when we look at 2025, 7 of the 8 that we met in delivered growth, a little bit under 2%. And that's despite a suppressed consumer environment.

And as we take a look at share, we have share in about half of the categories that we compete, so 4 of 8. And the drive going forward, of course, is to accelerate the momentum in categories where we're strong. And in categories where we fell a little bit short, we have powerful plans to return to share growth.

So let's take a look at some of the power categories. First, laundry detergent. We had a great year in laundry detergent, and we outpaced the category by percent growing about 20 bps a share. Now why is that? Well, a big reason is the performance of the value sector. So if we look at the value sector, that's what's winning and that's what's growing share of the category. And importantly, this is where ARM & HAMMER thrives. We delivered that great performance and a great value at accessible price points.

And in fact, when we look at 2025, we won a record share of 14.5%. That is in an environment where competition is increasing and promotional levels are up. And I'm very proud to say that we are now -- that the ARM & HAMMER brand is now #1 in wash loads.

So what are the implications for moving forward? Well, we're going to embrace what's special about ARM & HAMMER. And that really is delivering that great performance at these accessible price points. And the way that we're going to do this is by embracing and driving forward on our Good, Better, Best strategy. So in that good tier offering that good basic ARM & HAMMER clean. And then as we move up price tiers, adding value like things like OxiClean and odor blasters and greater cleaning efficacy with problems with products like Deep Clean in our best tier.

Now moving along to another ARM & HAMMER power brand, cat litter. And we had a strong year in cat litter as well. We grew 20 basis points of share, and we also outpaced the category by about [ 1% ]. And we have room to grow in cat litter, especially in the lightweight segment. So if we look at the light weight segment, we're only at an 8.5% share. But we're a [ 27% ] share in traditional weight. And that's where a product like our hardball SKU comes into play. This is a product that is our best performing. It's in that best tier for us. And it averaged -- and has a 48% repeat rate, which is 14 points higher than the category average. So we have high confidence that this product can drive growth and continue share momentum.

Now as Rick pointed out, we don't just play in laundry detergent and litter. We play across multiple categories that can -- that really cover a number of consumer benefits. And so as we drive forward, we're going to expand on this strength as we move from $2 billion to $3 billion for ARM & HAMMER. And as we do that, what we need to do is we need to evolve the relationship that we have with our consumers, and we're evolving our consumer communication.

So I'm going to share with you guys the update that we're doing to our ARM & HAMMER campaign. And the idea behind this campaign is that we're not just bringing the HAMMER, ARM & HAMMER is bringing the whole darn arm. And what that really means to our consumers is no matter what they're facing during their day, as long as they're with ARM & HAMMER, they've got this. the muscle with the strength of dollars saved and jobs done well. Hemmer, more power to you.

Now a little bit of my background. I came from Hershey. And I can tell you, you can't do all that with the peanut butter cup. It's just this incredible brand, and we have great optimism that we can drive it forward and meet new consumer needs and occasions. And we're very happy with the performance of this campaign. So we saw share gains across the categories that are playing and we saw important movement in consumer metrics. So consideration and purchase interest also went up double digits when we showed this campaign. Now moving on to another brand that has tremendous upside for growth and that's Therabreath.

And Therabreath didn't just outpace the category. It actually drove category growth. And Therabreath is now the #2 mouthwash and we clearly have aspirations to be the #1 mouthwash, and we attained a record share of just a little under 22 %. And there's room to run in our rents business. So as Rick mentioned, we're about 1/5 of what the category penetration is. So there's tremendous headroom there. Additionally, there's upside in building our on-shelf presence. And so if you look at Therabreath's share and then you compare it to what we have on shelf, we want to continue to drive our TDP growth because competitors are having 1.5 to almost 2x what we have on shelf. So a focus on distribution growth is going to be key as we move forward. And then paste. We're very excited about our PACE launch.

Now why is that? Well, it's a $4 billion category, and it's the third largest category in which we play. Additionally, we know that consumers will spend more on premium oral care products even in a suppressed environment. Additionally, we had the great brand momentum that I talked about that double-digit growth. And when we talk to Therabreath consumers, it's pretty amazing, a little under 90% said they're interested in buying this product.

And we have an outstanding proposition. So first, what it really lets us do strategically is expand further into our consumers' oral care routine, which is a big deal. We have 8 clinical studies that confirm the efficacy of this product, and it really delivers on the Therabreath brand. And so what I'm going to do now is I'm going to share a advertising that really captures the essence of their breath, which is great tasting products that deliver epic long-lasting fresh breadth.

[Presentation]

Okay. I think you'd be hard-pressed to find a consumer that's more excited to brush their teeth. Moving on to another brand that really has high growth potential, and that's Hero, our acne brand. In 2025, Therabreath grew at about 3x the rate of the category. Hero is not only the #1 patch brand. It's the #1 acne brand, and we attained a record share in 2025 at 19%.

And much like the Therabreath, Hero has a ton of room to run. So if you look at our penetration, we're about 1/3 of the category. And again, we're the #1 in share. So tremendous headroom. And from a shelf perspective, it's the similar dynamic to Therabreath. When we look at our share in our performance, we see that other competitors have 2x the average weekly TDPs. So we'll continue to focus on realizing that upside for Hero. And what gives us even more confidence in how Hero can grow is we're not just a patch brand, right? What we're going to be about is really owning the acne life cycle, which opens up a tremendous number of occasions.

And so if you take a look at where we play, First, in that pre phase in preventing acne or when it just starts to develop. We've got our cleansers launch, which is going to be a huge launch for us in the back half of this year. Then as we move on, when you start having that first red bump. We have things like our micro point that helps address that phase. When we move on to, as we say, the full on it, we have MyPatch patch original, and that really does a great job in getting it cleared up quick.

And then there's always the aftermath from having the pimple -- and so cleaning up dark spots and things like that. So as you look at it, it really is a tremendous opportunity to meet consumer occasions. Additionally, it open doors for innovation, right? And so there's different ways that we can meet consumer needs across the span and Carlos Linares is going to talk about some of the innovation that we have planned for Hero.

Moving to BATISTE. So BATISTE, to be clear, didn't have the year that we wanted in 2025, declined about 2.5 share points. But what I want to emphasize is it's still a leading brand. It's #1 in category share, and it's #1 in loyalty. And as we added some support to BATISTE in the back half, we did see some results and some return of some momentum. And so dollars flattened out from more steep declines in the front half, and we started to grow share, which is very important. And as we take a look at what we intend to do and to support and accelerate this momentum, there's really 3 areas that we're focused on in 2026. First, stronger, more consumer-relevant innovation. And so products like powders that fulfill a category need for non-aerosol products -- fragrance free, which we know there is a segment that's very interested in these products. a renovation of our colors line for better performance. And then we'll also be delivering custom items that drive interest among our key retailers. Additionally, we're going to be leveraging our price pack architecture to deliver against new occasions, right? And so we have things like our mini travel size, which moves us into a more of an on-the-go occasion.

And then there's also a jumbo SKU that will be coming out meet a more heavy user need. All of this will be encompassed with the brand recharge, right? And so we're going to be looking at really revitalizing the brand. And you'll see this in consumer communications, and you'll see it in store and you'll see it on pack.

Now as Rick has talked about, we really have evolved our portfolio, and we are seeing that we're playing more and more on this intersection of personal care and beauty. And as we evolve our portfolio, we also have to evolve the way we're structured and the way we're working. So I'll share an example of this. And so what we've created to accelerate brands like Hero and BATISTE and Touchland is we've created what we call the specialty hearing skin pod. And what this does is this creates an environment for focus and acceleration.

And so as you think about it, what we do is we've dedicated all of our consumer and customer-facing resources just to these categories, okay? So think marketing, sales, innovation. What that enables us to do is to mine insights faster and to get better insights quicker. That then results in our ability to deliver relevant and on-trend consumer communications with agility. Additionally, we're significantly cutting our innovation time line to develop new products. So we can deliver on emerging trends and be right there where our consumers are at. Additionally, as we've established this pod, it's enabled us to attract talent from the beauty and personal care space who can come in and complement our Church & Dwight talent.

And then finally, I want to just talk a minute about growing share. obviously, that's key, whether you're winning or losing, that's the ball game. And we have seen intense competition. And we have seen the rise of value brands. Something is getting to $1 billion, which is big. So we're maniacally focused on 5 areas that really give us confidence that we can continue to grow share.

The first 2 are about driving consumer equity and differentiation. And so media plans that focus on driving awareness and engagement and penetration. And then equity campaigns that are involved to not just talk about the efficacy of our brands, which is very important, but also build that emotional connection. As we like to think our advertising needs to clarify and it needs to inspire.

And then, of course, insight-driven innovation. That's just such a lifeblood of our company. And so consumer relevant information and always being a step ahead is a critical area of focus. Using price pack architecture, we are committed to delivering the right item at the right price, at the right channel at the right time to the right consumer. And so that will play a big role as we move forward.

And then finally, an omnichannel mindset, omni in everything that we do, and we'll talk a bit more about this later. But we are going to be with our consumer from discovery all the way to purchase. So when you take the focus on these areas and we look at the incredible brands that we have, when we look at the incredible team and heritage that we have in Church & Dwight, we're really confident in our future and very optimistic.

And so with that, I'm going to turn things over to Andrea, who is going to talk about our exciting and newest brand, Touchland.

Good morning, everyone. My name is Andrea Lisbon, and I'm the Founder and CEO of Touchland. I'm here today to talk a little bit more about the brand. I'm sure some of you already have used our products. amazing. Here are some stats about the brand. The brand has been distributing for 5 years in sanitizer and we recently launched our second category, which is the body in hair mist. Last week, it was published that our power mist, which I have here was #2 in sales in Sefo.com. We recently made it to the 2025 Time 100 most influential companies. The brand has a lot of success in social media. So today, we have over 1.2 million followers between TikTok and Instagram.

We have been distributing in the U.S. for most of our life and we've recently launched in Canada and Middle East this past year in 2025. We're being distributed in 4,800 doors. And we currently have a premium distribution outlook with partners like Sephora, Sephora calls and Ulta Beauty. And also, we've received over 15-plus awards in the industry. We have today 5 Alora Best of Beauty, just as a fun fact, Alora didn't have Best of Beauty Award for hands in tier they inaugurated for us because of our approach to being in beauty into personal care.

Our vision for the brand is to lead the future of on-the-go sensorial essentials and really elevate those staples of modern life. We're building the next global lifestyle brand by blending design, fragrance innovation. And our goal is to really deliver this movement of micro rejoice because we are aligned and always living under stress and having the capability to disconnect and find micro joys in the every day is our purpose.

And one of the things that excites us is that it's a company and it's a brand and a movement that is embraced across generations. We intentionally decided to start our journey with hand sanitizer. And you would ask why. And we thought that if we could transform the most commoditized utilitarian category of them all into something that everyone is excited about, we would have the customer permission and the strongest validation to elevate the ordinary into the extraordinary.

And this is, again, how we've been able to get to where we are today, and it's our innovation framework. We've been extremely disciplined when it comes to our 4 core pillars of innovation. And it helps us know where do we innovate and how do we innovate. These principles ensure us that we create best-in-class products every time that bring excitement and the light to be every day.

The first pillar when we think about innovation is it has to be on the go, and it really helps us to define our innovation pipeline. The second element is it's not just about design, it's also about form factor. If you know how the integrity was used before, it used to be a gel that you would have to squeeze. We truly not just transform how it looks. We transformed how it applies. We created this micro spray, micro joint that really deliver a different application.

The third element is that we believe that you can get the best of both worlds, right? We never thought we could get a hand sanitizer actually takes care of your skin. We really believe in blending skin care into everything that we do. Our recent category, we launched a body and hair mist. It's usually a fragrance. We decided to bring skin care into fragrances to bring these 2 in 1 experience.

And the fourth element, which we spend a lot of time on is since to reality at the core of everything that we do. from how it builds in your hand, this down, the smell, the -- how it feels in your skin. We deploy many, many months and years and to make sure that it's a full-on 360 experience when you try our products.

And this is a clear example of how we did it, right? We have been the only brand that has been able to premiumize at a scale hand sanitizer category. As you will see here, these are the 4 pillars how we've transformed them from how it's -- mouse. We don't know how it's male before Touchland to the design and how sleek and modern it is compared to how it was before. the formula, again, being able to create a skin care forward experience that at the same time, it's non-sticky, which was very important at the core of sensorially and then the application, right? This micrometer that you can ensure you can apply the right amount every time.

This slide is really showing our current portfolio and how we've been able not only to innovate the category. But inside the category, how we've been able to expand ourselves we started with the Power Mist, which is the one that I have here. It's our core line, it's a high trading line. And then we decided because we need the customers of Touchland had appetite for premium formulas to launch 2 formulas that are the advanced formulations. We have the Gentle Mist on the Glow Mist. They are revitalizing and Ultrasun formulas.

We then launched 2 years ago, these programs of seasonals. -- they come back every year. they sell out always. They are very successful. This year, we launched this. We had salted caramel, spicy martini and gingerbread -- cinnamon gingerbread, which were really, really talked to by every generation. And then we also brought in something that really enables us to have fine, which is collaboration, and we will talk more in detail later and accessories. In February 2025, we introduced our second category, the body and hair mist. And we really brought the same core pillars of innovation to everything that we do. So we also brought the power essence and the accessories because you may have seen people not only want to have touch line in their packs, they want to outside showing as a term.

So when it comes to collaborations, we really think collaborations, bring a playful to -- into the every day we have been able to partner with legacy brands, best-in-class brands like -- so with Hello Kitty, Disney Mickey, Crocs case, which launched July this year. And you may have tried to get it in stores. It's always sold out. It has been an amazing experience to take the DNA of these brands and joining with Touchland create products that bring the light and joy to our consumers.

And then the last piece is accessories. You may have seen it with the phones. Like people have cases or the funds and so on. We really wanted to create accessories that really enable people a tool of self-expression. You see a lot of trends in TikTok of matching my touch lend to my office, matching my touch land to my makeup, this has become really successful for us, and it has become a way to really enable that self-expression through the brand.

And then, image speaks more than a thousand words. This is a little bit of some of the faces that have organically talk about the brand in their social media platforms, in interviews for what's in my bag in bulk and so on. And it is incredible to see of generations and celebrities and these makers that have supported organically the plan. It always makes me very happy that sometimes it bought randomly, -- the latest one was Celine Dion, which was an incredible surprise.

And these are our current distribution partners. They are brand building partners for us for coal-wise at Travel Retail recently, Amazon and TikTok. And then here are some -- where you can see, for example, here is our beautiful Encavinsephora, it's colorful, clean, and minimalistic, and it really shows all of our products in a credible way. It's across different points in stores, so you cannot miss to get out of the for with a buying Touchland.

This is Crocs, and it is a very exciting partnership because it's not just, again, to create a product together, but you can actually find Touchland in some Crocs stores and Crocs.com, really enables us to really maximize these partnerships. This was in Times Square. This is me very excited because we got the time -- the Time Square, the top part of the store of Sephora to display our products for a month. I think that was one of my most iconic moments in Touchland. I couldn't even speak, but that was an incredible day.

And then the last is this is in Middle East did Sephora truck activation. It was very fun. I was there -- with our customers. And it really shows like the tagline of the brand is move your mood is that capability of a brand of really redriving that segment and moving your mood.

When it comes to growth drivers for us, the first growth driver is invest in marketing to increase the brand awareness and household penetration. -- we all have the feeling that we're just getting started, and there's so much to do still when it comes to brand awareness and household penetration. Second is select distribution opportunities in the U.S. The third is international expansion. We're very happy to be partnering with -- and the team to really bring the brand everywhere. We've received and you will see a lot of letters from all over the world asking us to bring Touchland to their countries. So we're very excited about it.

And then the last piece, innovation and continue to bring unexpected delight every moment of care, like we know that our agreement with our customers to deliver those micro choice and really fuel that innovation. And I'd like to close my slides with my favorite part of my job. Every week would receive dozens of letters from customers from all over the world, from all as sharing their experience with Touchland. In digital area where everyone is texting and using their phones to receive hundred letters is a destine of how much the brand is loved and how much it's changed people's lives. So this is my favorite part of what I do.

And now I'll pass it over to Carlos.

Thank you. Good afternoon. I'm got to be happy back with you guys again. Last year, I presented a little bit of how we innovate and talked about the transformation that we've been going on through today to just recap that a little bit, and then spend most of the time on a very exciting 2026 lineup.

Two takeaways of how we innovate differently I would say it's unique and is sustainable. So those are the 2 takeaways. 2 words to take away from this thing. So this is your need model. It's really our 5, 6 different sources of innovation. But what's unique about it is that they're really interdependent, they're connected the behavior in the company is really about teamwork. They're not competing, which is very different than other places that may have 1 or 2 dominated sorts of innovation.

And as you can see from the bottom, as we transform this, most of our innovation, one of it is coming from some of these new sources that we put in, in the last several years. The sustainable part comes in -- when we put the program together, we were at the 1% to 1.5%. And this again, as Rick mentioned, this incremental net sales. So we had a target of going up to the 1.5% to 2%.

So the good news is over the last 3 years, we've been at this yellow bar very, very consistently. 2026 is no exception. We're at the high end to deliver, again, half of the evergreen model in growth. So I'm going to kind of take you through this. And one of the challenges of doing it within a few minutes is selecting which ones we have, because we have such a pretty strong pipeline for the year. But let me kind of go through that.

The first one will start -- we'll start with the personal care portfolio. You've heard a little bit of little bit maybe a lot of the things launch -- we're very excited about this launch. It's very important to us. It ties to Rick's strategy around Therabreath and oral care and how do you drive that. We had a lot of interest from the customer, from the consumer internally to go do this really, really quickly.

And we actually kind of held back a little bit as now, we want to get this right. We want to do the Church & Dwight from an innovation perspective. And what does that mean? So one was I want to understand what does this Therabreath user really want? Chuck mentioned 89% are interested in buying the toothpaste, but we wanted to define what that is. Reality, they want efficacy, they want a natural taste and they want a great experience.

We also then put all of our science together. Some of the -- we can do toothpaste, we've been doing toothpaste for a while. But we had some upstream future works as we call it, technologies that we wanted to deploy in this particular toothpaste. So we did that clinical studies. We actually have 12 hours of fighting bad breadth, which is, I think, pretty unique in the category, if not seen anybody else make that claim before. So it's really performing.

And then the consumer experience, the taste, the flavor, the texture, and you see that 4.7 agent obviously it's pretty good. You'll see that number again later in the presentation. We're hitting it pretty high marks on some of our consumer experience in our NPD.

Then let's talk about Hero, our other more recent acquisition. We have 2 innovative launches in the year. The first half, we're doing Mighty Shield, who's a liquid patch. Chuck talked about the pimples cycle. We obviously want to -- you want to -- you have people, you want to tap it. But it's also a little bit of protecting the temple, right? So if you think about it in the morning, there's dirt, there's debris. You want to protect that because the perception is that may make it worse. So this is a liquid product that turns into a patch. But in the morning, you're protecting the pimples from debris dirt and even make up. You make up on top, again, the perception is maybe may make the pimple even worse. So you protect it and it goes on top of it. So at the end of the day, it's become a patch. So you applied in the morning, it's a liquid because just a patch. Obviously, the exciting part is it's another occasion in the pimple journey that we are offering a product for.

The second half, introducing the cleanser line that was mentioned previously. It is designed specifically acne-prone skin. So you got the efficacy of OTC formulas, but it's gentle enough for skin that may be irritated. We typically don't present second half products here. We hold them back because of the confidentiality. But we're really excited about this one. As Chuck mentioned, this gets us into another part of the skin care routine. for the ance-prone consumer. So you're adding to the routine and adding to the red, which is incremental growth for us.

And I would not to forget about our other personal care brands that are a little bit older in our portfolio. On Trojan. So Trojan, we've had a long history of innovation in Trojan, but this is actually our best condom ever. We actually -- it's our newer world material. We haven't done this type of innovation in 20 years in Trojan. So very excited about what this is. It is a patented non-latex material Trojan basically -- condoms, they're about protection and brought intimacy. This takes the intimacy to the next level. This is clear odorless, the ratings are incredible of the unique things is even feeling your partner's body heat. So we're feeling really, really good about the innovation. I mentioned the 4.7 stars that you see it again. We're very proud of this one. This is a brand innovation that I think is going to take Trojan to the next level.

So let me kind of jump then to the household part of the portfolio. You've heard a little about ARM & HAMMER, the good, better, best strategy. This is our portfolio. I'm going to kind of take you through a couple of launches in each of these segments here. On the good side, we're introducing a baking soda of fresh detergent, 10x of baking soda we had before, our highest level of vacant to order any of our liquid detergent portfolio.

On the better portfolio or our segment, we're actually having a lot of success in sheets. We're the #1 brand in sheets. We're actually twice as big as the next competitor now in sheets. So we've taken that convenient form and now putting it into the better segment with the ARM & HAMMER plus OxiClean. So you're going to get the same convenient, very consumer desirable form of sheets with premium cleansing premium freshness and a premium design. If you look at that sheet, it looks very different, very unique, and I think it's going to take the -- our sheet business even further than it is today.

And another better innovation that we're introducing, we're expanding this year is the ARM & HAMMER Odor Blasters. You're probably aware, your order is a big unmet need in laundry. And you're also probably very aware that rinses have become a new category in laundry category. So we reduce this last year in select stores in the stores that we're in, we're actually #2 brands. There's 3 others that are competitors, we're actually #2. So we're taking this nationally in 2026.

Our other main laundry brand is OxiClean. And OxiClean has been a leader in additives for a long time. We want to make sure we maintain that leadership and kind of keep our advantage against both competitor entries and private label. So Max Force is our subline within Max, within OxiClean. It is the most powerful, highest-performing line that we have on the brands. So we're actually taking that brand and I would say revamping it. We've got a better powder, more concentrated, more powerful. We've got a new liquid with a new bottle that differentiates it from the rest of the segment. This comes very clear that this is an additive for OxiClean. And as you can see, the product at the Max Force is spread across all of our forms, powder, liquid sprays. So we think both the ARM & HAMMER obviously claim is going to give us some momentum into the laundry category in '26.

And then last but not least is litter. Chuck talked about ARM & HAMMER, the hardball is not here, but we feel really, really good about hardball. We got a lot of momentum, and that's in our best category. But this year, we're also introducing innovation into our better, which is dual defense. So again, there's another one of those categories, it's all about odor control. So this product gives you order control in 2 different ways. One is our ARM & HAMMER odor control technology that kind of clumps and sells in the order, but now introducing band, which is antimicrobial technology that prevents the order of growing bacteria from developing orders over time. So you actually have both a dual short-term and a long-term order control performance.

So before I let me hand it over to Surabhi. I think generally, I've gone maybe 9 innovations in less than 9 minutes here. I've gone very quickly. But I'd say overall, very proud of the team, very proud of the innovation we've got category-leading innovation. We've gone into new segments with this portfolio, and we've upgraded some of the core to give us a competitive advantage.

So with that, I hand it over to Surabhi.

Good afternoon, everyone. Good to see you all again. I'm Surabhi Pokhriyal. I do all things digital, e-commerce, media and a bit of AI. So as you have from -- as Rick any introduced, e-commerce has been a fantastic growth driver for us as a company for several years now. I feel really proud to say that we went from 2% to 24% in under a decade. And for those of you who track a lot of other of our CPG peers, I'm sure that pops out as a head, shoulder, torso, all things e-commerce and digital in the cute sector. I also want to -- that we are not in the business of telling the consumer to buy from, right? Our job is just to make sure, like Chuck was saying, we clarify the intent of our product, and we impress them and inspire them to buy, and that's what we do on the online channel.

Sometimes it can be perceived that e-commerce is just Amazon channels. We have seen it, and I'm sure you see that as you do retailer earnings. There are retailers like Walmart, Target, Kroger, Sam's Club, a retailer, everybody is doubling down on the power of digital, and that's what we call omnichannel. We saw above 14% growth for all of our brands, not just the flagship brand of ARM & HAMMER, but also our newer acquisitions like Hero and Therabreath.

International, as Mike will speak shortly, is a huge growth driver and parity for us as a company, especially as we compare to our peers, that's one area we want to double down super intentionally.

In international, I always say, right, any market that has a cell phone and Internet penetration, that's right for e-commerce. And as you see by the flag on this chart, markets like Canada and China have always done well with respect to digital, but newer markets like Mexico, which traditionally have been nascent in terms of digital have done really, really well for us, and that's speaks our double-digit growth there.

Finally in emerging, right? For those of us who cannot keep our cell phone more than a foot away from our hands, and the next generation also, TikTok Shop is emerging as a major growth driver in terms of impressing the consumers where they spend a lot of their time. You might have heard of the trend TikTok made me buy it a couple of years back where people inspired in their discovery journey on tick top and then go and buy in store.

Now the platform is compressing that journey can see it wanted, click it, have it right on with the platform. And we are leaning into that in a very meaningful way with several of our brands. fun fact for you, TikTok Shop is actually bigger in the U.S. in terms of GMV ahead of a couple of large beauty retailers already. So that just tells you how consumer buying behavior is shifting online.

This is our growth fine set, right? This is what I call as the how of what we do things that Church & Dwight, specifically in terms of digital. They always engage, right? Like I was saying, we want to be there engaging with the consumer at the 0 moment of truth being available, mentally available to the consumer. Then We always optimize in terms of test and learns, right, in the age of AI. We want to dip into how we drive our content and creative and continually -- has to see what works well. And because we are a lean company, we do not have much headcount. We are very intentional about scaling things really fast and scrapping things that do not work.

And finally, that's what I call our secret -- virtuous cycle of innovation and the gift that keeps giving. These are a couple of examples. We are leaning into AI in a meaningful way. The good news is because there's no earth of tools to be used there, be it on retailer platforms or from the large media platforms, you can make all things from cute cat videos, which are really thumb stopping, making sure our product lifestyle shots show up very, very well. I call this the age of disposable content, right? As you know, from your own behavior, you will never have a day where you said, I finished my Instagram today, right? Because the doomscroll just keeps goiing. What that means is we as brands have to make sure there is disposable bite-size snacky content that engages the consumer in a meaningful way and inspires them to us.

And the next leg of that is we want to make sure there is productivity by making sure that content can translate and go across markets, and that's what we are leaning into doing now. built for AI discovery. Some of you who shop on Walmart and Amazon might be familiar with are as the agent or roofers.

All things said, right, that is one area we are leaning into we already do a good job on making sure our product detail pages show well. Our content there shows well. The consumer loves us and we see that in terms of the reviews that Carlos was speaking to.

All of that makes sure that our products pop up on Sparky and Rufus. So technically, we have to do nothing special than what we are doing, just make sure the product content is clean and our reviews are clean and the products show up where they need to show up.

In terms of media buying and AI, we also want to make sure that we are adjusted and speak to our consumers who are our high-value consumers and the technology helps us placing those advertisements to the right consumers at the right day part in the right times of the day.

Finally, I'm sure in the analyst world, you're familiar with the tax of retail media. I'm proud to say that we do not consider that as a tax because we are steadfast in making sure that the retail media we invest in really works, it's worth, and we get great ROIs out of that, much ahead of industry-leading benchmarks.

As Carlos was speaking, we are super intentional about how we do our innovation. Online and digital, in particular, has been a great platform for us to launch products, create category creators/category disruptors. And once we have made it right on online, gathered the feedback from the consumer, tweak the product as needed. That's when we call and we go, make it big.

Based on the products that you see on the screen, we launched laundry sheets online first and gained great momentum in a handful of months. We launched the premium bank soda that became #1 in just 3 months. And very recently, we launched the much loved Therabreath toothpaste that's already topping all our category benchmarks, expected from our an any earlier toothpaste launches.

In terms of capabilities, I already spoke about the social content, and this doesn't have audio, but you'll get at end of -- how the bite-sized snacky content works in the social realm. And you'll notice something at the bottom called the engagement rate, right? Brands typically have a different variety of metrics in the marketing world. everything is measurable these days, which is fantastic. But engagement is what tells you how are the consumers talking back to you. They're not just following you. They're engaging with you, liking you, commenting you resharing your post, and that's the metric we use. And some of our power brands do really, really well. The typical engagement rates are 2%, we do double-digit engagement rates for some of our larger brands.

On the right, you see something interesting. We have a lot of experience making sure we follow consumer search trends. What are they searching on Google and Amazon and other online sites. Recently, we are trying to lean into what is the consumer speaking about us and the category on red which is a great source for following organic charter, which is unpaid. Similarly, because these things give us the leading surfacing of emotions and their intent, and that helps us define not just how to talk to them in a marketing world but also tells us how to innovate and build products that they are searching for.

On the right, you'll notice with the help of AI, we are leaning in to find where are the emerging brands across the world. given in M&A, we are building tools internally to figure out what could be acquisition targets that are ripe for us globally and not just in the U.S. sometimes it may not be an acquisition, it may be a brand doing really well in a category or an adjacent category, and we learn from that to innovate differently.

With that, I feel really proud to say we are at the cusp of saying we are future-proofing our growth. digital or non-digital. I call it the air off. We are just in the business of doing commerce, the E and e-commerce has become silent. And we are super proud to say we are always in the race of going towards where the puck is going to be and where it is not.

On that Canadian reference, I'll pass it on to my international partner, Mike Read.

Good afternoon. I have the privilege of representing our international and specialty products and employees all over the globe. Let me just start with international. So international is about $1 billion in size business. We kind of operate in 2 different ways. 2/3 of our business is through our subsidiary. We have 7 subsidiaries now, Canada, U.K., France, Germany, Mexico and Australia. And middle of the way through 2024, we acquired our long-standing partner graphical in Japan to form our 7 subsidiary.

The other 1/3 of our business is done through value distributor partners all across the globe. We have 5 regional offices to support that Shanghai, Singapore, Panama, London and Mumbai. And we operate through almost 400 distributor partners and have commercial operations in about 100-plus countries.

We've had a long track record of growth in organic. This year, no exception, 5.5% organic growth. If you look over the last 3 years, we're averaging 8% CAGR, which is right on our evergreen model. So really proud of the team's efforts and a long track record of growth with lots of opportunity ahead of us.

We have -- our brands travel extremely well. We support dozens of brands across the globe. But similar to our U.S. domestic business, we're laser focused on a core set of brands. And this is kind of how we think about our business and our core priorities. One is we have kind of U.S. scale brands, ARM & HAMMER, Water Pick, OxiClean where we leverage assets and NPD pipelines to commercialize across the globe. We will modify as it makes sense. But generally, we're boring off scale brands and taking them globally. That's complemented with a fairly internationally based portfolio. There's largely personal care and OTC headlined by BATISTE, Sterimar, Femfresh and others.

And then thirdly and probably most importantly, kind of more in recent times is we've really started to accelerate our acquisitions. So we've had a long history of taking brands internationally. I think Hero, Therabreath and now Touchland give us such a great opportunity to scale and enter markets with real purpose, and I'll give you a couple of headlines on that in a second.

As I say, our brands travel extremely well. I'm proud to say 6 of our 7 track power brands have grown share in 2025. It's a really strong result. We don't track market share across all our brands. So in addition to that, our ARM & HAMMER business has grown almost 6% and Femfresh also grew positively in 2025. So really strong results across the portfolio and market share growth across the board.

Just to double-click on some of our acquisitions. We launched her a couple of years ago. We're now in more than 75 countries we'll be on our way to over 100 by the end of 2026 with the #1 share position in acne patches across all our truck subsidiaries. And very similar to the U.S., we have -- we're #1 in Actian a couple of those were still lots of room to grow.

Similarly, on fair breath, we're now in over 50 countries. It's one of the fastest-growing mouthwash retail in Canada, Mexico, U.K. and Australia. We have a #1 online position in several countries that we launched in. So we're really proud of these 2 acquisitions. And the next in line is Touchland. So you heard from Andrea, really strong results, obviously, in the U.S. We've launched in Canada and the Middle East. There's a ton of pent-up demand for this brand all around the world. So we're really excited about how we take the learnings from here on Therabreath and apply it to the Touch land playbook. So this will be our third big one in a short period of time that we're pretty excited about.

One of the things that we're really focused on as we continue to mature as a global business is just to get much, much deeper into our local consumer insights and regional led innovation where appropriate. We try to borrow assets and leverage them across the world where appropriate, we do make nuances and changes. Here's a couple of examples. Just recently launched a harmonized line of BATISTE into China and Japan. Again, using some of the properties and core equities of BATISTE, but softer fragrances, smaller sizes, less intense spray, less white residue are fit for purpose for the consumer and to compete more effectively in that market.

Another example is we've had a long-standing business of powders and OxiClean. Our Japanese market where we're the #1 position in powders. The largest segment is liquid. So we've done some regional innovation and launched a strong liquid lineup that we launched last year, and it's performing extremely well. So again, where it makes sense, we will kind of make local adaptations and innovation.

Just to keep going on the Japan theme. We bought that business in Q3 of 2024. Talk a little bit about our #1 position in powders and OxiClean and moving it into liquid. That was the primary brand that we had in Japan. I think most notably is now that gives us a platform to introduce the rest of our portfolio. So we've already launched BATISTE and the breath co, Hero is soon to come and others to follow. So we've got a strong team there. We're starting to make more progress on the OxiClean brand and also widen the portfolio.

And as Rick said, just to close on international is while we've had a really strong track record of taking U.S. brands and mobilizing them across the globe. We're also looking at international M&A to add to that. So that's either scaling up in current subs and/or entering into new geographies of interest.

So with that, I'll switch to the Specialty Products. Specialty Products is about a $300 million business. The lion's shares are in our Animal Nutrition, which is a long-standing part of the business, about 1/3 is in our what we call specialty chemicals. The remainder in our commercial and professional products.

From an animal nutrition point of view, we've been traditionally probiotics nutritional supplements for the dairy cow segment. We've expanded into poultry and also into swine. I think when we've talked about the kind of the business growth we focused in a few areas. Number one is taking what has been largely a U.S.-centric proposition growing it globally. We're now at 30% sales internationally. We've built a team and have been really focused on driving innovation in the space. We've had some really strong innovation, particularly in the poultry sector that's now starting to drive some major growth there. And we're investing in tools to make sure that we're interfacing with our customers and just selling better and improving our service. This is one example of the CRM that we've applied here and then also the other parts of the division.

The other 2 sectors is what we call performance products. So we're taking solutions into the bakery, water treatment, kidney dialysis, a whole section of different opportunities there. the loss in the smallest segment is taking our consumer brands into things like hospitality, food service and Jansen. So those 3 segments together make up about $300 million worth of growth.

In 2025, we had another positive year growth, 2.6% organic growth off the back of 7.1%. We've had 8 consecutive quarters of positive growth. But most importantly, I think we're really set up well for growth to the future. We've got a strong team and a really core portfolio that's working well in the marketplace.

And with that, I will pass over to Rick Dierker for closing comments.

Thanks, Mike. All right. So we'll wrap up with how we operate, and then we'll go through Q&A. We have 5 operating principles, leverage brands, front of the environment, leverage people, leverage assets, leverage acquisitions. So leverage brands, you heard Mike just talk about it. You heard Chuck talk about it. You heard Carlos talked about innovation. You heard Surabhi talk about how we do digital. So all those things come together, and we do a great job with their brands.

Front of the environment, we have a long track record of being a friend of the environment, from the 1800s all the way through present day. And it's not just us saying it. It's many other third-party agencies recognizing that effort.

Leveraging people, highest sales per employee in the industry. And I think this has missed so many times by so many people when people evaluate the company. This isn't about the stat. It's not about trying to make that number go up. It's all about having the agility, speed of decision-making being able to be nimble in a complex world. And so because of that, we believe that's one of our competitive advantages versus the industry.

We have a simple compensation structure as well. 5 metrics for 20%. Everybody is tied into that, but gross margin is 20% of everyone's bonus. It's easy to say but hard to do. But we believe it adds growth and margin expansion are 2 very important metrics. They lead to cash flow generation, just like Lee presented, right? That's how you get free cash flow conversion. That's how you get optionality to go buy businesses and do that virtuous cycle in the model again and again and again.

Leverage assets. We're not a capital-intensive company. Again, that ties back to free cash flow conversion. That's due to our footprint, right? We have third-party manufacturing in many ways. We have distributors that are our partners internationally. And then we leverage acquisitions. We made good shareholder returns, great shareholder returns because time after time, we can have a great core business and then add-on acquisitions. So to close, we have confidence in our future. You heard it from the management team. There's a lot of things going right. There are more tailwinds and headwinds even in an environment like we're sitting in today.

We have portfolio changes. We have growth initiatives that support a healthy evergreen model. We expand household penetration, especially for businesses that we've recently bought. We have a great high and sustainable growth rate for international. We have great innovation, consistent and really industry-leading digitally savvy and then we focus on domestic and international M&A. And with that, I'll invite the ELT, our executive leadership team, to come up, and we'll answer a few questions. And Jill has the microphones.

Why don't we go, Nik? Nik Modi.

Great. I really don't this thing. But so just 2 questions, Rick, on the ARM & HAMMER kind of from $2 billion to $3 billion. Low much of that is international, and it's not, why not, given the value positioning and the credibility, the credentials that the brand has? And then just the second question was you had this initiative of smaller teams kind of working on a sub of brands, I think that you were going to focus on. I didn't hear about that today. So I was just curious what's going on with that, if you could just give us an update.

Yes. So 2 questions, and then I'll let Mike kind of add on to the ARM & HAMMER. So the bulk of the ARM & HAMMER growth is domestic. But ARM & HAMMER is a great brand living well globally. I think it's just -- it's a longer curve as you grow a brand globally because you go to Europe and baking soda and ARM & HAMMER's really recognize a much to plant the seed in China to some degree for fruit washing and other clean and cleansing and freshness attributes. But I'd say the bulk of it is in the U.S., although there is a great is a sizable business internationally, and we expect growth there as well. And nothing but the initiatives we do in the U.S. is going to help with international.

Just to add, it's actually a single large brand for international. So it's just broken up into a few different pieces. But we have a strong litter business in as an example, we're making sort of that's growing quite rapidly across the globe. And we do think that while laundry probably doesn't play much of a role globally. Most of the other segments well. So we're pretty excited about ARM & HAMMER can do and it's absolutely part of the growth story.

Yes. Litter in particular, this might surprise you, but the litter business internationally is larger than you would think and definitely in China as well, right? So we're looking at how do we make that business even if it's a growth business.

The second question we had is really a group that we call tag internally. I just -- it's not ready for -- we've created it. It's called the Accelerator group. It reports up through, Surabhi. And there's a couple of brands that we believe have every right and obligation to be hundreds of millions of dollars. And we're going to manage those differently, let it be a little bit of a Encube in itself. And we'll probably report back once we see progress. In my mind, they're going into the incubator. We're going to -- no, some will do better. Some will accelerate, some won't. And then they'll graduate back into the company and be managed more of a traditional brand. But this is our chance to really take a flyer on a few key brands. Surabhi, do you want to add anything to that?

No, I think you got it.

Okay. Javier?

A quick one for me on vitamins.

Javier, here, we sold the vitamins business.

I know.

I'm just kidding. Go ahead.

I know. But a lot of it has been done in terms of what it means to growth. I wanted to see whether you can speak of what it meant for the cost side. It was against Nestle, the drug stores, all the effort that you made to stabilize. So what does it mean to leave that behind and focus those resources against all the innovation that you have?

Yes. I think it's one of the single biggest -- we're going to look back in a few years. And I think one of the biggest strategic pivot points in our company history is when we acknowledged that we couldn't the vitamin business around. And free -- the amount of mind share that management had on vitamins which talk about private label exposure? I mean, think about that. I mean going from 12% to 5%. That is a private label heavy industry.

And brands have a very tough time in that industry. Competitive advantages that we thought were sustainable, we're not -- so there is nothing but a -- win from a growth perspective for the company now, margin -- we were over investing in marketing, but more than anything, it was amount of time, effort and energy that we had to divert to doing all the right things, we were. We did all the right marketing, we do late research, all the innovation. But every minute we spent on vitamins was a minute we weren't spending on ARM & HAMMER, growing from $2 billion to $3 billion and for the rest of our business to grow. So I think that's going to serve us very well you look back.

So 2 questions on Touchland. So first, on the international expansion, so far in Canada and Middle East, how is that going? And then as you could touch on like, how do you think about the phasing of international expansion? And do you think you can get it to 100-plus countries somewhere here over time?

Yes. I'll make a couple of comments and then either Brian or Andrea, and then Mike can make a comment. We're really happy with the Touchland business. We talked about just a double-digit grower. But more than anything, you saw from Andrea today, it's not just a hand sanitizer business. Over the long term, it's a brand and she's built a great brand.

International has done well. I would say it's hitting or beating all of our expectations. We believe there's a path forward. Mike and our regulatory team with Carlos is working hard on, given the 20, 30, 40 countries, just so that we have the optionality to go when it makes sense.

The unique piece with Touchland is we're going to be more picky on what partners we go with, right? We're being very purposeful on what channels we participate in, in the U.S. will be very purposeful outside the U.S. as well. Brian or Andre, anything you want to add?

No, that was pretty good. Yes, we're trying to launch as fast as we can. It's alcohol-based. So there's some regulatory challenges to get it out in some markets in the world. But full steam ahead. We're going to have a handful of markets here this year. We started with Sephora in Canada and in the Middle East. That was part of the reason why we ended up in those 2 markets.

And when you asked the question about being 100 over a longer period of time, potentially -- but like Rick said, we're going to be purposeful which retailers and who we partner with in each of these countries.

Just a couple of questions on the guidance. So maybe first, the 3% to 4% organic sales growth. Can you maybe outline what you're expecting in terms of U.S. international. And then you're in a couple of weeks here, you're going to start -- this inventory destocking component. That was a big drag on sales last year. I think it was 300 basis points in the first quarter. So can you maybe just help us understand what's embedded in the guidance as you lap that this year?

Yes. Surely, you want to take that?

Yes, sure. So just within the outlook, 3% to 4%, you have the U.S. business is 3% growth for the year. International is 8% and then SPD 5%. And as you talked about in the first quarter, we definitely had inventory destocking last year. This year, just simply, we have the OxiClean Costco. That's really a headwind we have in the first quarter.

But as I said a little bit earlier, our outlook for all those businesses are relatively consistent throughout the year for growth. We just got to get through that last piece of that comp.

Thank you. I have a question on promotions. They've really been elevated in a lot of the HPC categories, and we're seeing a fair amount of negativity on price/mix. So love to hear sort of your thoughts on the environment right now. And essentially, what is factored into your guidance? Where do you expect this promotional environment to land this year and if you do expect it to remain elevated. How should we think about that in the context of your price mix?

Yes. No, good question. I think what you're seeing is when consumers are pressed, and categories start to decline on volume than competitors price promote to gain share. But value the value of the brand matters in a big way. Like in Q4, ARM & HAMMER laundry was the only one who grew share. And we're not outspending the category at all. the value segment is the only segment that's gaining share. So the macro is helping the ARM & HAMMER brand more so than most, I would say.

That's true in cat litter, too. Cat litter competition is spending an awful lot on promotion. We're not. We're well below the industry average, and we're gaining share. The brands matter. You just can't promote yourself your way to growth. And so all the advertising that we're doing, the innovation, remember, the combination value that you're giving to consumer. So we've been very, very happy with that. I do think that professional levels will drift back to normality. Like we're probably the categories under long-term historical levels for promotion, but we're well positioned. We're doing well. Mark, any other comments you'd like to make?

Yes. I totally agree. I think one of the things we do is to build a great promotional plan with retailers, but we do watch it every week, right? And we continue to monitor how we're doing to refine in laundry. We feel really good. And we'll continue to do that. And if the category heats up, we'll make the right moves.

Yes. I wanted to ask on your longer-term gross margin potential. You've historically said that your mix of business is around 40% value, 60% premium. And then with the last 2 acquisitions and the growth premium kind of ticking up here, we are seeing value now around [ 36% ]. So I wanted to ask if that's a driver of longer-term gross margin expansion sorry, behind, I guess, the premium side of the business. And if that should up slightly over time or revert back to that 40%, 60% split between value and premium.

Yes. It's a great observation and question. I would say our acquisitions recently have been higher-margin Personal Care businesses, and that bodes well for that. Give us a year or 2 before I think about changing the Evergreen model. We just got out of tariff control and we have another year of 3% inflation.

But I would say the problem with long term growth guidance as the world changes rapidly. But a lot of confidence in our gross margin expansion. I think to put up a 100 basis points in this year amidst everything that we're going through is phenomenal I think having flat gross margins in 2025 when we were faced complete with $190 million of tariffs is dropping. Lee, anything you want to add?

I think Rick's point. it's things evolve, that outlook, obviously contemplates what we know now. We don't know what's going to come this year, just like what happened in '25.

So just on Touchland. One of the things I hear about a lot is the risk of over distributing the brand going to channels like mass, where you lose the cachet of the brand. I think there was some activity at Costco in calendar Q4 where there was a debate of whether you're kind of blowing out distribution and yet I hear there's a ton of growth runway. Can you just talk about maybe I don't know if careful is the right word, but how do you think about keeping that brand exclusivity. But also having the ability to deliver really strong growth rates, if that makes sense, like staying in the channels that you need to be in, but still delivering strong growth. And if I just could, going to the back half of this year, Lee, I think you said the growth rates should be fairly similar through the year, but Touchland is going to enter the base into the back half? And presumably, it's still growing quite quickly, as a phasing thing? Is there some conservatism in that? But any context on maybe how touch land could be entering into the next 12 to 18 months?

Yes. I think we were pretty public a quarter or 2 ago, even when we announced Touchland, we were going to be very careful and select upon what channels we go to because exactly the point you're making. There's a cash into the brand, and we have great partners. So for an Ulta have been great partners, and Andrea has developed and nurtured that relationship. So we've said there is no plan in the near term to go into mass as an example.

Club, we believe, is a different channel. It's a more premium channel. It's too early to tell now what we're going to do. I don't want to front run that. But I would say it's a little bit more than the traditional mass channel. Andrea or Brian, anything you want to add?

Sure. We did do a quick test at holiday test in Costco. It went very well. That was purposeful to do it as a test to see how it did there. And so we're evaluating channels all the time. We're evaluating the existing channels. The important thing here that is a little different is that Touchland was not a Sephora born brand as a lot are. It was born in Ulta and Target and Amazon and Sephora pulled us in, okay? So it's not just we have more degrees of flexibility in terms of some of those channels. But they're a great partner. They're doing everything that we've asked of them, and we monitor it each quarter, 6 months a year and the day the support doesn't meet our expectations, we won't Touchland to be in everyone's hands in the world.

Yes. I think the other nuances when we did that club test, remember at stores they're selling 100-plus units per store per week. It's very, very high-velocity units. We didn't see that drop off at all even when we were doing the club test. So that was encouraging.

There was another question on the back half growth...

Yes. I mean again, the range is 3% to 4%. So there's obviously some redo freedom. You're right, Touchland does turn into a positive organic in the back half offset that you also have the there and the hero is growing. The rates they were growing this year. Obviously, they're going to keep growing, but I just think there's a balance to that outlook right now.

Thanks. Lee, I hate to keep asking about the guidance for organic growth, but did I get it right that the exit rate for the business, excluding vitamins is 1.8. And therefore, does that assume that the business has to get better like right away. Most companies, you take the exit rate and that's the growth for next year, but this is a little bit different.

And then I had a follow-up on ARM & HAMMER. Did the 25-year CAGR math. And I think the math is like 2.8% growth rate for ARM & HAMMER. But you think you can do better than that going forward. Is it going to do better than that this year? Like is this year kind of like a similar pace of growth for ARM & HAMMER?

Yes. So I'll take the second one first. My belief is ARM & HAMMER growth will be accelerating in 2026, '27, '28 and '29. Like I think the plans are being are in place for 2026. Plans are being laid for '27, '28, '29. And so I do think ARM & HAMMER accelerates from where it's at today.

Your other comment on -- your first question was really on growth, right? And I got to be careful taking just Q4 and rolling it forward because you got to remember how high 2024 Q4 growth was. But I think the overarching comment would be we believe categories are going to grow 2%. We believe that ex the portfolio changes, we would have been growing 3.5% in 2025. We tend to take share over time. And so when you kind of add those 2, 3 things together, the absence of the headwinds like not just vitamins, not just flawless as we wound down those businesses. But we did get delisted from Costco last year for OxiClean, that was a big headwind. We didn't make a big stink about it, but we overcame all that. And so when you layer all that in, that's why we have a lot of confidence in 3% to 4% next year. Andrea then Steve.

Andrea Teixeira, JPMorgan. So I wanted to still stay on the touch and the U.K., I was curious, usually brands go and fly to the U.K. because you have parts there, why the U.K. expansion didn't happen yet. I think if I'm not mistaken, Canada and the Middle East is where you already have the brand. And then in terms of line extension, should we see line extensions within Touchland this year? Or this is something more long term?

Yes. We're not going to comment anything on line extensions yet. I would just say that our plans would say that we believe the brand can be bigger than just hand sanitizer. You saw Andreas slide, and it was about convenience. It was about the sensorial experience. It was about convenience. All those things come together, and there are other categories that, that could apply to.

As to the U.K., remember, this is a theme of for a long time of 12 or 13 people, okay, managing a business that now is almost $200 million. So I know for like -- for the company, for our company, we would be like, yes, we're going to go to U.K. on Thursday, and we're going to go to Portugal on Friday.

For them, they were just trying to keep their head above water, and they're doing a great job. And so we're adding a lot of resources on regulatory, right, to lead the groundwork to do the next 20 next 30 countries. Regulatory is usually the answer. -- product on where you can go and how fast you can go.

Okay. Two questions for me. The first one on the ARM & HAMMER aspect $2 billion to $3 billion. Are you just calling that out to kind of quantify it, make it a priority or be more intentional about it? Or I guess to what extent are you doing something different going forward versus how you've been managing that brand, the center of your portfolio for a while.

And then the second question is on just the Therabreath of moving into paste. Maybe size of the prize, as you think about the incremental growth of the overall franchise, how much is oral rents versus how much is paced. And just how you're thinking about bringing that to market? Are those going to be marketed and promoted separately together? Are you going to bundle the products? Is the -- are they individual initiatives? Or are they -- are you marketing pace to the rinse consumer? Or is it independent, I guess, the question?

Yes. So I'm going to -- on your first one, it was really about what are we doing different on ARM & HAMMER. And I would say that slide that had 4 pillars. The first pillar is what we're doing today. And what we're doing today is doing a great job on innovation, on marketing, on promotional, on pricing, on sizing all those things, and that's what's been driving our share on laundry and litter for many, many years. I expect that to continue. That's a core competency of the company.

The good, better, best. We've done that really well in laundry and litter. I'm saying to you today that there's a few subsegments that we haven't been doing that. We haven't had the focus there. We're going to put a little bit more focus there. And so I think that's an incremental opportunity.

The third one was incremental categories. That's incremental. Like where does ARM & HAMMER have the right to play and win. And we want to make sure we're very picky about that, but you're going to start seeing that over the next couple of years. I would say. I don't want to front run any comments on where we would go or what not.

And the fourth one was, again, there are certain brands that we license today. that when they get to critical mass, we should take them back and we can scale a lot faster. So that's really like an incubator, a test ground for us. There's also probably categories that we may want to get into, and that's a great test environment to do so. So those are what's new about it. I would say the numbers, $2 billion to $3 billion, I want to make meaningful progress over the next 4 years is what I would tell you.

Chuck, do you want to take the Therabreath discussion on how we're marketing it together?

Yes. We see tremendous upside. And so it's a balance of there's room to run rents, as I showed before in penetration in pace. So there will be some individual efforts. But as we look at this, what we're really thinking about this is penetration of the consumers oral care regimen. So where we can, certainly between online promotions, those type of things, looking to pull it together. And in our early results, what we are seeing is we are having a high conversion rate of rent users going over to the pace. So it is going across that -- the oral care needs.

So value is obviously still a very big driver. So can you talk about your confidence in ability to capitalize on that value seeking consumer while also thinking about the impact on margins, that's number one. And then your full year organic sales growth targets clearly are ahead of a lot of your peers but you have the highest exposure to the -- right now, the lowest growth market. So as you think about the opportunity in front of you to catalyze in international markets, how can -- what's the pace to be able to do that to kind of offset to capitalize on some of that international opportunity while also being mindful of the fact that the U.S. consumer is pretty challenged?

Yes. I'll take the second one first. So I would just say, you're right. The U.S. market is a slower growing market these days than in many of the international markets. We're doing really well internationally. We're growing. But none of the international markets are fantastic. We're growing above market rates internationally as well. Even though categories for us in grew 1.8% last year, like I said before, ex our portfolio changes our brands consumption was 3.5%. So in a tough environment, our brands and consumers bought those brands, and that's pretty strong growth. So that gives me a lot of confidence.

Your first question was, remind me, Olivia, I lost it margin and value. Well, it's kind of my answer to what I said to Bonnie. Despite the promotional environment, the brand matters, right? And what's unique about ARM & HAMMER. We talked about it a little bit, but we have the halo effect for advertising. So even though we're a value detergent we're advertising everywhere. And most competitors in value and anywhere else can't advertise at the same rate we can that this doesn't work. So that's number one.

Number two, is we kind of gloss over it quickly. But Carlos Ruiz and his supply chain team and Carlos Linares, who supports it with R&D our productivity numbers are just astronomical. And we have a muscle there. Carlos Linares walk you through our innovation muscle on NPD and it had 5 different vectors. And that's why we, over time, can innovate and do 2% of sales or half of our organic growth rate we had that same -- and maybe we should tell that story next year. We have that same story on productivity. To be able to have productivity year after year after year, because where most of that productivity comes from high moving throughput on widgets, which is fabric care and home care. It helps everywhere, but really over indexes on household. So that helps offset any inflation we have or pressure we have on gross margin typically.

Filippo Falorni, Citi. I wanted to ask on the laundry category. Rick, you showed us the chart that shows the value part of laundry outperforming the premium. Like it's been going on for a couple of quarters. What is your expectations heading into 2026. And as you think about innovation, you bet on the laundry sheet an alternative way of laundry. -- one of your competitors coming in with a different format. How are you thinking the competitive dynamic will evolve in '26 on that part of the category.

Yes. So yes, you're right. Procter's coming out with Tide EVO. That does nothing but bring more awareness to a different form in the laundry category, fantastic. We are going to be a value to TiVo in a big way. Our efficacy actually is really good, especially with the better sheet that Carlos just went through. So we're the #1 brand right now in that smaller subsegment, which is probably around $100 million plus if you include kind of off-channel sales. So I feel really good, continued about that. It's still a small part of the category, okay? So just a good perspective out there.

And then what was your first question? How long do we think the value piece. Look, I think there's a -- that's more of a macro. And more than anything, it's more a macro environment question. And I think the consumer continues to get pressed Consumer confidence continues to be shaky. And yes, the club class of trade and the high-end consumers feel good because of the stock market -- but the everyday consumer the share of wallet going to purchases is still high. You might not have the same year-over-year inflation, but that share of wallet is still impactful.

And so I believe that they're going to continue to make choices on value period to end. And so I would expect that to continue is what I would say.

Yes. So gross margins performed quite well in 2025 and in the year stronger than you had anticipated and have a strong guide for 2026. But we didn't get the gross margin bridge like we normally get. So I'm wondering if we can hear what the drivers were of that but also maybe how gross margins are performing when you exclude Touch land kind of in the base business. And then second, I saw quite a few mentions of an ERP transition. I think a lot of people tend to get nervous around ERP transitions. I'm wondering if there's maybe a sell-in that we need to be contemplating as we work through the model.

Yes. So I'll let Lee walk you through the gross margin bridge. We wouldn't go through details on margin, excluding Touchland, but he'll give you some color on that. And then maybe Ray can give you some color on our SAP go lot. I would tell you that we are not -- I know a competitor had a massive sell-in, we are not contemplating something like that.

So for '25, just give you a perspective again margin plan the commodity pressures, things like that, plus the tariffs are actually close to 200 basis points of pressure. The productivity offset a large portion of that. And then you have the benefit of the mix of the acquisitions kind of closing that gap to keeping it flat year-over-year. as you said, for '26 here, we kind of have the normal -- all those elements coming to be in that kind of 25 to 50 basis points. And then it's really the portfolio change that drives the rest up to 100 basis points.

Yes. And then we have gone -- Kevin Gokey is here too, our CIO, and raise our new CTAO. And we've gone through SAP go-live. My first job of the company was the Director of Operations Finance and I was on the project of going live with the SAP reinstalled -- we have a great supply chain and finance team and IT team that are just full-time dedicated to that project. We have a lot of confidence in it. But I'll let Ray talk about his thoughts.

So the larger strategy out here is we are digitizing our core so that we can do faster M&A and we can grow organically. Our S4 transformation is on track, we have a great team and we are getting up for go live in our SAP transformation. And you will see, like our business processes improve as we build this robust platform, and it's going to be the engine of growth in the future.

Yes. The only other comment I would add on that is, a lot of times when you see ERP transitions that really, really struggle is they're going from something -- nothing to something. We are doing our upgrade. We've been an SAP shop for a long, long time, not to say there's not risk, but we have a lot of confidence in it.

Okay. Well, again, I just want to thank everyone for coming out on the cold, blister day in New York City. As you can tell, the management team has a lot of confidence. I have a lot of confidence. The company's portfolio has never been stronger as we look forward, and we're looking forward to executing well in 2026. So thank you.

Good morning, ladies and gentlemen, and welcome to Church & Dwight's Third Quarter 2025 Earnings Conference Call. Before we begin, I have been asked to remind you that on this call, the company's management may make forward-looking statements regarding, among other things, the company's financial objectives and forecasts.

These statements are subject to risks and uncertainties and other factors that are described in detail in the company's SEC filings. I would now like to introduce your host for today's call, Mr. Rick Dierker, President and Chief Executive Officer of Church & Dwight. Please go ahead, sir.

All right. Thank you. Good morning, everyone. Thanks for joining the call. I'll begin with some thoughts on the macro environment and then a review of our great Q3 results. Then I'll turn the call over to Lee McChesney, our CFO. And then when Lee is done, we'll open it up for questions. Starting with the broader environment, conditions remain volatile and the consumer backdrop remains mixed. Commercial -- is elevated in some categories and household finances are stretched as high borrowing cost and delinquencies weigh on discretionary spending, including big-ticket items like cars and housing.

However, there is relatively low unemployment and higher priced personal care categories continue to do well. Against that mixed backdrop, our categories are growing at around 2%, which was pretty consistent with what happened in Q2 as well. We're performing better than that because of our great brands. Our portfolio with its balance of value and premium offerings continue to gain both dollar and volume share. Our innovation is performing well and all in all, our brands are made for environments like this.

On to the Q3 results, we had a fantastic quarter in a tough environment. Organic sales grew 3.4%, exceeding our outlook of 1% to 2%. Adjusted gross margin was up 10 basis points, also exceeding our outlook. Adjusted EPS was $0.01, which was $0.09 higher than our $0.72 outlook. Lee will take you through the rest of the numbers shortly. But first, some highlights about our brands. In July, we closed our recent acquisition, Touchland.

Touchland is the fastest-growing brand in the hand sanitizer category in the U.S. It's the #2 hand sanitizer in the category with household penetration just under 7% and the category at 42%, indicating a lot of runway for growth. Teslin experienced strong growth in Q3, with consumption growing double digits and results exceeded our initial expectations. I'm even more optimistic about Touch land today than even a few months ago, a small but mighty team doing great things. Now I'm going to turn my comments to each of the 3 divisions. First up is the U.S. consumer business.

Organic sales increased 2.3% with volume growth of 3.7% being partially offset by 1.4% of price mix. Growth was led by their breadth mouthwash products, ARM & HAMMER Cat Litter and Trojan condoms, partially offset by declines in the vitamin business and water flossers. We grew share in 4 of our 8 power brands, specifically ARM & HAMMER, Fair breath Hero and Touchland let me provide a bit of color for a few of our important categories. I'd like to start off with the ARM & HAMMER brand in general. Consumers today want stability and brands they can trust. Our new campaign give it the whole darn arm reinforces the brand strength and reliability.

This is driving growth across the portfolio. 5 of the 6 categories we compete in with ARM & HAMMER are growing share on a year-to-date basis. Turning to laundry detergent, ARM & HAMMER liquid laundry detergent consumption grew 1.9% in contrast to a flat category. ARM & HAMMER share in the quarter reached 15%. Beyond share and more importantly, household penetration for the long term continues to matter. And in the quarter, ARM & HAMMER laundry expanded household penetration 0.7 points to an all-time high of 30%.

In fact, the only tier of laundry detergent that was positive consumption in the quarter was the value tier. This is a sign of the times as value was flat to declining in the previous 8 quarters, this is especially impressive as our actual promotional spending for laundry was lower year-over-year. Moving to Litter, ARM & HAMMER litter consumption grew 5.3%, while the category was up 5%. We saw heightened competitive promotions, especially in the lightweight segment by 1 competitor. Over to mouthwash, air breadth continues to perform extremely well, while the mouthwash category was down in Q3, their breath consumption grew 17%, and continues to be the #2 mouthwash with a 21.8% share.

Remember, we believe there's a lot of runway here. Our household penetration for THERABREATH currently sits at 11% versus the category of 65%. I Hero once again outpaced the category with consumption growth of 5.2% compared to a flat acne category and remains the #1 brand in acne care with a 23.6% share. And like the THERABREATH story, we believe household penetration growth is key for this brand. It sits at 9% versus the category of 28%.

Looking ahead, we're excited about our pipeline of new products. We even announced a few today. They're a key driver of our success. Their breadth is introducing a new line of toothpaste. We launched online with 3 variants in August, and they target key consumer needs of healthy gums, deep cleaning and whitening all combined with long-lasting fresh breadth. The brand's loyal users value its effective cleaning is distinctive fresh but not overpowering taste and we have a retail launch set for January 2026. We're very encouraged with the high-quality consumer reviews were seen. Meanwhile, Trojan, the #1 condom brand in the U.S. launched Trojan Goat, greatest of all Trojan, which is a non-latex condom featuring patent-pending Ultra Flex material that's soft, flexible, ores and colorless designed to enhance body heat transfer to deliver next-level intimacy.

Turning to international. Our national business delivered sales growth of 8.4% in the quarter. Organic increased 7.7% due to a combination of higher volume price and mix. Growth was led by the Hero THERABREATH and BATISTE brands and was broad-based across many of our international markets. I was just in Argentina 2 weeks ago with our Global Markets Group and distributor partners, and there is a lot of excitement for the future.

Finally, SBD organic sales increased 4.2% due to a combination of higher price and product mix and volume. We continue to be excited about the growth opportunities in this business. As noted previously, we're undertaking a strategic review of our vitamin business, including streamlining our supply chain to strengthen the core business, new JV partnership opportunities and divestiture options. We're seeing -- we're seeing improved velocities in the core and line reviews are receiving positive retailer feedback on new products and long-term brand strategy. We continue to expect to reach a conclusion from this review by the end of 2025. Looking ahead, our full year organic growth outlook is 1%, the midpoint of our prior range. We expect full year adjusted EPS growth for 2025 to now $3.49 or $0.02 higher than our previous outlook to the higher sales and improved margins, including higher marketing spend.

As in past years, when we have stronger-than-expected business performance, we invest for the future. So we now expect marketing as a percentage of sales to exceed 11%, and these investments will continue our momentum into 2026. I'll close by saying that category consumption remains stable and our brands remain in a position of strength. We're gaining dollar and volume share across key segments of the portfolio, supported by a balanced mix of value and premium offerings. We're well positioned to navigate the current environment. The strategic actions we're executing will set us up for sustained success.

Our go-forward portfolio has never been stronger. At the same time, we remain active in evaluating the right acquisition opportunities to further build our business. I'm excited to speak at Investor Day in January about some of the growth initiatives we have in development. With that, I'd like to close by thanking all of the Church & Dwight employees for executing well in a volatile environment. And now I'll hand the call over to Lee for more detail on the quarter.

Thank you, Rick, and good day to everyone on this Halloween for Friday. Our Church & Dwight team members across the globe delivered a quarter to be proud of that highlights once against the many strengths of our portfolio and our team's capabilities. Let's jump into the third quarter and our outlook. We'll start with EPS. Third quarter adjusted EPS was $0.81, up 2.5% from the prior year. The $0.81 was better than our $0.72 outlook, driven by higher volume and gross margin results favorable to our outlook. Reported revenue was up 5% and organic sales were up 3.4%.

The organic sales was broad-based across the globe with volume growth of 4%, partially offset by negative pricing and mix of 0.6% and beyond organic results, we were delighted with the encouraging start of Touch land as sales exceeded our initial projections. Our third quarter adjusted gross margin was 45.1%, a 10 basis point increase from a year ago and 110 basis points better than our outlook. Our results versus last year were driven by 170 basis points from productivity programs, 20 basis points from higher margin acquisitions 10 basis points from FX and 10 basis points from the combination of volume, price and mix. These factors offset 200 basis points of inflation and tariff costs. Moving to marketing.

Our marketing expense as a percentage of sales was 12.8% in or 50 basis points higher than the third quarter of last year. And for the year, we are now targeting to exceed 11% of net sales as we leverage our improved sales growth to invest for the future. Q3 adjusted SG&A increased 20 basis points year-over-year. Adjusted other expense increased by $3.9 million due to the lower interest income compared to last year. And we continue to expect other expense for the full year to be approximately $65 million on an adjusted basis, reflecting the lower interest income following the Touch land acquisition.

In 3Q, our adjusted tax rate was 21.6% compared to 23.3% in Q3 of '24, a 170 basis point year-over-year decrease. And the expected adjusted effective tax rate for the year is now 22.5%. And now to cash. We delivered strong cash results in the quarter as cash flow from operations increased 19.6% versus last year to $435.5 million. Capital expenditures for the first 9 months were $67.2 million, a $58 million decrease from the prior year due to return to normalized capital spending in 2025.

And finally, in the third quarter, the company repurchased an additional $300 million of shares, which brings our year-to-date share repurchases up to $600 million for our shareholders, certainly a third quarter full of accomplishments.

Let's now turn to our outlook. Broadly, we continue to navigate well in an environment of economic uncertainty and as a result, have improved our outlook in several areas. For the year, we now expect reported sales growth of approximately 1.5% versus a prior year midpoint view of 1.0 as we expect Touchland's momentum to continue in the fourth quarter. We also remain on track to deliver 2025 organic growth of approximately 1%, the midpoint of our previous outlook, and we now expect full year gross mention to contract only 40 basis points versus 2024 based on the progress our teams are delivering from productivity programs to counter inflation and tariff headwinds.

And as I noted earlier, the combination of a stronger sales and gross margin outlook allows us to increase our marketing investments beyond our prior outlook in 2025. For the year, we now expect an adjusted EPS of $3.49, which exceeds the midpoint of our prior outlook. And specifically for 4Q, we now expect reported sales growth of approximately 3.5% and an organic sales growth of approximately 1.5%. In 4Q, I note that our reported sales outlook include larger decline in sales from our discontinued businesses as these product lines run out of inventory.

And for some context, we expect $30 million of lower sales or 200 basis points of drag in the fourth quarter versus last year from these discontinued businesses. And also note that our organic growth for 4Q was impacted by the prior year port strike and the negative consumption trends in our VMS business. In 4Q, our adjusted gross margin will contract approximately 50 basis points primarily from inflation and tariff costs. Marketing will be lower compared to last year. We expect an adjusted EPS of $0.83 per share, which is an increase of 8% versus last year's adjusted EPS.

In my final '25 comment the outlook really covers cash flow from operations. As noted in our press release, we've increased our outlook from $1.1 billion to $1.2 billion in consideration of our progress on several fronts. As our teams look forward, we are optimistic our teams across the globe have delivered significant accomplishments. We continue to fuel share gains. We've made strategic choices to exit brands in our portfolio.

We've acquired Touchland, which is off to a great start, and we've returned $600 million to our shareholders through share repurchases. A big thank you to our employees across the globe for leaning forward and executing through the first 3 quarters of the year. Very well done. Eric, let's move to Q&A.

[Operator Instructions] Your first question comes from the line of Chris Carey with Wells Fargo Securities.

Hi, good morning, everyone. Chris -- so Touchland is coming through better than expected, which is great to see. Can you talk about how you might view the benefits Touchland going into 2026. And specifically, how might the positive contribution from Touchland help offset any of the potential profit outcomes you could envision from actions you may take on the vitamin business? And I have a follow-up.

Yes. I mean we're going to -- I guess the first thing is you're right. Touchland is doing fantastic, even better than we expected, better than our double-digit comment last quarter. Consumption is strong units per store per week, a really strong innovation is strong. Collaborations are strong. I'm not going to really talk too much about 2026 at this point. And I would just say 2025 is doing better than we expected. It means that there's going to be a stronger baseline and as we grow that, of course, will help offset anything from the discontinued businesses or potentially anything with vitamins as well.

And Chris, one thing I would note just do keep in mind, we had a good amount of cash on our books, we are earning interest on. And obviously, that will be a little bit of a headwind versus touch lend next year as well.

Okay. The follow-up is just on the competitive environment picking up a bit. I think you mentioned that your laundry promotional activity was actually down a bit relative to last year, just to confirm that. And in general, how would you view the competitive backdrop right now and your potential need to respond any activity that you're seeing? And maybe just a level of confidence that the really strong volume share performance that you've been delivering is sustainable and what might be needed to sustain that level of execution. Obviously, you have -- you kind of teased innovation plans for next year, but also just the potential level of brand support.

Yes. Thanks, Chris. Yes, for laundry, in my prepared comments, I said it, and I think it's such an impactful statement. For the first time in 8 quarters, the value tier of laundry grew and that was -- if you look year-over-year on amounts sold on deal, which again, remember that's depth and frequency. That is we were down 400 basis points year-over-year. Our competition was up between 300 and 600 basis points depending on what brand. So I believe that is a trend that's starting to happen in the category as consumers are pressed. They're kind of solely moving to value, which is great. That is one piece of it.

Another indication is even the pods category, which is around 23% of the category, it's the most expensive form of water detergent, right, 2x liquid that's been flat the category for the last 6 quarters. So those are just indications that the value matters. And so if promotional intensity does pick up, I think, overall, we're in a great spot. Value is doing well. And even some of our higher-priced competitors, they're twice the cost of our laundry detergent. So they would have to do massive discounts to move any elasticity.

So again, I think we're well positioned. I think this is starting to be a little bit of a trend in the category for consumers seeking value.

Your next question comes from the line of Peter Grom with UBS.

[indiscernible]

You're breaking up a little bit.

You try to reconnect and we make sure you get back in.

Your next question comes from the line of Rupesh Parikh with Oppenheimer.

So I guess just going to international, another strong quarter even on a difficult comparison. So just curious, are you guys seeing any changes there, macro consumer-wise? And how do you feel about sustaining momentum in the International segment for the balance of the year?

Yes. As I said, I was just in Argentina a couple of weeks ago with 300-plus people, and there's a ton of excitement about our brands and the growth profile of some of our -- even our new brands like THERABREATH and Hero and Touch. So even as the macro GDP starts to slow in some of these countries, the tailwind of these brands, which bring problem solution brands, innovation, new categories, lot of excitement to continue to deliver against our really our evergreen model for international. So a lot of momentum in our international business. PAUSE.

Great. And then maybe just 1 quick follow-up. Share buybacks, again, another quarter of significant buybacks. Your stock has obviously pulled back. So does anything change in terms of your priorities share buybacks versus M&A? Or should we just expect you continue to be opportunistic based on what your stock does?

Yes. So good question. So to your point, we definitely took advantage of the value opportunity there. We typically try to just -- you know what our priorities are. We want to focus on M&A. This is our #1 focus of our cash. And we're out in the market accordingly. But if any opportunities come up to maybe accelerate a little bit of our share buybacks, we'll do that. As we sit here today, we've done everything we've done with the $600 million. We bought Touchland. We got great cash flow, balance sheet is in a good place as we look forward. Reese's still focused on M&A.

There's still opportunities out there. And we obviously have an opportunity to do M&A. I mean -- and we've just gone through a review, you just recently saw our shares or treasury -- our balance sheet get upgraded as well. So I mean I just think on many fronts, we got a quality balance sheet, strong cash flow gives us a lot of optionality. So frankly, the potential to do both things.

Your next question comes from the line of Bonnie Herzog with Goldman Sachs. Please go ahead.

All right. I had a question on the promotional environment. hoping just for some more color on that. And then your volume growth was quite strong in the quarter, but price/mix was slightly negative. So I guess just could you kind of drill down on what sort of drove that? Was it the higher promotions and the need for spending behind some of your brands? And if so, should we expect that to continue in Q4 and possibly next year?

Yes. Thanks, Bonnie. I would kind of characterize it as really when we talk about our promotions, we talked about laundry and litter. I already went through the laundry category. Litter. Litter is a little unique right now as well. The category over a long period of time has bumped around between 16%, 18% sold on deal. It hit where we think is almost an all-time high at 24%. One competitor significantly discounted their lightweight litter business, and that's driving a couple of thousand points of promotion. We actually were pretty much consistent year-over-year. We were up slightly 60 basis points and still managed to grow 5%, which was -- which is fantastic. So our brand, our ARM & HAMMER brand, kind of what I said in my comments, we think the advertising and the halo effect, the seeking value is leading to ARM & HAMMER doing incredibly well in this environment and for the future.

Then you look at negative price mix, part of that is some of our other businesses, right? We're doing, whether it's a rollback or price adjustments on BATISTE as we fix value for the consumer, or vitamin business to make sure that we have the right velocities. So not as much in the laundry and litter business.

And if I may, I just wanted to ask a quick follow-up question on Touchland. Could you give us a sense of maybe how the brand has been performing in the different channels, DTC and then certainly at Sephora and then maybe talk a little bit more about your strategy to expand the brand in additional channels, and I don't know, possibly other specialty retail channels. Maybe how has that evolved since the transaction is closed.

Sure thing. Touchland, again, doing fantastically well. That business is really at 3 retailers, right? Sephora, Ultra and Amazon make up about 90% plus of that business. we don't really have much plans in.

The short or medium term to change that strategy. We believe that there's prestige in being in that category. There's examples of brands that have been able to grow by hundreds of millions of dollars in that channel and expand to slightly adjacent categories over time. We think that's a good model. There will be some niche plays at other retailers. We're not ready to go through that yet. Maybe that's a good question for January. Internationally, we're really excited about growth behind Touchland. We believe that it can -- we're already seeing how fast it's growing in Canada as an example of just 1 retailer. So we're going to probably duplicate that approach across many more countries and make sure we hit the right channel, the right partner and to make sure that we keep that kind of cache of the brand.

Your next question comes from the line of Peter Grom with UBS.

Any better now?

Great.

All right. Let's run this back a little bit. So I guess I wanted -- 2 questions for me. So first, just on the implied step down in 4Q, and I appreciate the commentary around the port strikes and weaker VMS. But I would imagine some of that was contemplated as you were thinking about the back half of the year, which you mentioned is unchanged after a strong 2Q. So can you maybe just speak to why it steps down and would come in below the 2% category growth you mentioned?

Yes. I'll give you a couple of comments and then maybe Lee has something to add as well. I think the port strike is a reality, right? There was 1 week that was -- the categories were up 11%. So when you do that math, all of a sudden, October will be negative as an example for categories and for the brand. Vitamins, Q4 is a larger business seasonality for vitamins. So as consumptions going backwards there, even though we have some green shoots.

That's just a little bit more of an impact. And then finally, I think we were probably a little conservative on our Q3 outlook, and we were very confident in the 2.5% for the back. We're very confident that over time, we're going to grow faster than categories. But we feel like Q4 and Q3 and Q4 together is a good number.

Yes. And again, I think just to Rick's point, we go back to what we said on August 1. We comfort the 2.5% organic outlook. That's what we're still seeing today despite the macro doing what it's doing. That speaks to the categories, how we're performing. There's always pluses and minuses, but we're still sitting at that 2.5% organic and if you do think about 3Q to 4Q, just on a total sales perspective, I mentioned in my prepared remarks, we are running out these discontinued businesses, we're getting to the point now where that will be a bigger pressure point in the fourth quarter.

So I noted that, that was kind of the $30 million or 200 basis points of drag. And then I think Rick covered very elegantly the organic piece. You adjust for that, we're right on track and certainly gives us this confidence for the fourth quarter, but certainly, as we look beyond that as well.

Yes. And that is partially the port strength. So we don't feel like that's a kind of roll forward as you look into 2026, well.

Okay. That's super helpful. And then Rick, you've had some good perspectives on category growth for some time here. I wanted to get your views on kind of how you see category growth and your portfolio performing as we look out over the next 12 months or so? And then just maybe specifically on the top line, and I get we'll get official guidance in January. But do you need category growth to accelerate from 2% in order to hit your evergreen target?

Yes. So look, I think for a long time, we've been very clear on how categories are doing and how our brands are doing. And categories we heard some of the competition say 1.5% to 2%. For us, it's around 2%. And that's because, in my mind, we've been very picky about what categories we go into. Our categories are doing a little bit better than most, which is great. And our long-term track record over many, many years is around 3%, and we hope to get back there for categories for sure, at some point in time.

Meanwhile, we're kind of planning that it's going to be around 2%. And so as you saw this quarter, we -- despite 2%, we grew faster than that. And it's because all the great work we're doing on innovation, on marketing, on driving share gains. So I'm not going to talk about 2026, I'll do that in January. But I would just say we've been growing faster than category growth.

Your next question comes from the line of Andrea Teixeira with JPMorgan.

I was just hoping if you can kind of decompose a bit of the price mix. And then you mentioned you have obviously a good position in the value segment. So thinking as the consumer continues to see particularly in laundry, that value segment, how to think about the mix effect?

And then just as a clarification on the FX going forward, I mean, this is something that is benefiting some of the companies like that moving in the other direction how to think about international finally getting those tailwinds as you go into 2026.

Yes, sure. I'll take the price mix and then Lee can take the currency question. So I said, I think it was to bone. We do have a negative drag on price mix from our pricing and promotional actions on vitamins. We have a negative drag as we're fixing some value equations on BATISTE. Our share gaps are closing. We're making improvements, which is great. What is value. It's also innovations the cross-section of innovation and price. And so we're making adjustments as needed for BATISTE.

And then it's also the consumer is value-seeking behavior, and that means larger sizes. And when you have larger sizes, that's also typically a little bit of a drag on price mix, whether that's in laundry or litter. So those kind of 3 things really impact the price/mix line.

And I'll go from there. I mean -- and to Rick's point, also, I mean, it's a pretty nominal amount for us. I mean, I think the big call an organic is also just this continued momentum with volume growth really driving there. On FX, in terms of international, I mean, I'd say this, the international team is doing a really nice job of growing. They're very much focused on margins.

So yes, FX can be a pressure point, tariff inflation fee, and then we combat it. We combat it with productivity, with good -- with RGM practices. So yes, if FX turns out to be a little bit of favorable, that could be helpful. But if you look at that business, they've been growing and they've been doing a good job of also bringing gross margin forward as well. So if that happens, we'll take that as a positive.

And if I can, this is super helpful, if I can just go back to Rick's comment on -- and take on the FX. But Rick's comment on the pricing and promo back when you're saying promo has been technically benign for you and you're gaining share in particular in laundry, continue to gain share and your competitor has been increasing more promo. I understand that they also are kind of going into a more value proposition. Are you seeing any pressure on that most recent launch in liquid as you exit the quarter?

I wouldn't change any of my comments. I'd say in general, the value tier continues to do really well, like that's almost like a macro trend, more so than what any 1 competitor is or could do. And so that's why I believe that despite us going lower on promotions to have the value piece of the category expand is just a really good indication of that. And so that's the trend we're seeing. I expect it to continue.

Your next question comes from the line of Steve Powers with Deutsche Bank.

Great. 2 questions, which, I guess, as I look at my notes, is kind of 3. So there with me. Rick, on the first one, laundry, not to beat a dead horse, but just can you just help us square help me square the circle just a little bit more. There's definitely a narrative about the Church & Dwight has been more promotional through the third quarter. We've certainly seen price/mix dip negative, kind of accelerate negative in the quarter. So is it -- what explains that is the mix within your portfolio where you've been directing the promotion? Just any more color there and how that's likely to trend going forward, number one.

And then on vitamins, you mentioned some green shoots. Could you just elaborate a bit more on what those are? And then just update us if you think you'll have kind of a more comprehensive outlook and business strategy around that segment come January?

Sure. Yes. The first one, price mix negative on laundry, there is no better metric to look at, the amount sold on deal. That's what we've been using for many, many years. And the reason we say that is that is the intersection again on depth and frequency, like it's really shows what's going on in market. So, all I can do is point you to the actual numbers that come out of whether you have Nielsen or [ Scana ] and we are down year-over-year in promotion, our competition is up anywhere between 300 and 600 basis points. When there's negative price mix in laundry, that can be a whole host of things. It could also be, again, as I said before, as consumers trade up to larger sizes, that mix impact can be a negative in that line. So that's kind of what I would -- I would say consistently.

Number two, on vitamins, the green shoots. Two examples, I think one would be, it's kind of hard to say, but sometimes when you have consumption go backwards at a retailer, 20%, 25%, you think the world is ending. But some of that is discontinuations that have happened. So we have to lap some of that. But when you go look at the core SKUs, the ones that are remaining, they're declining at a much lower rate, which is always encouraging.

The second one probably is a couple of food retailers are actually doing really well, and we've heard distribution gains there as well. So those are a couple of great shoots. On the strategy, it was the right thing to do to publicly announce this about a quarter ago. We've had even more interest externally as we look at different options. And then meanwhile, internally, we're focused on how we kind of have a plan B on our cost structure and rightsize that business. So I would say, by the end of the year, consistently, again, that we'll have more to say, and I'm optimistic.

Your next question comes from the line of Anna Lizzul with Bank of America.

Thank you so much for the question. I have 2 parts to a question. First, I wanted to ask on retailer presence and pack size we're continuing to hear from peers in your space about the movement of sales to club and online, which have seen better growth versus food, drug and mass. So I was curious if you could talk about this dynamic within your categories?

And then secondly, on the M&A front, while you're still digesting Touchland, it has performed better than expected. And it's an interesting acquisition, given Touchland is in some of the specialty beauty stores like Sephora. You've done well in acquisitions the last few years in Personal Care. And I'm sure you'd like to get back to your more regular cadence of 1 tuck-in acquisition annually. So I was wondering if we should expect to continue to focus on personal care or maybe if you'd be willing to explore more in the adjacent duty space.

Yes, Anna, good questions. I think actually very similar questions to -- again, when I was in Argentina that our distributors were asking. I would say we're, again, very encouraged with Touchland, and you're right, a little bit more of a niche in terms of distribution and kind of go to market. From an M&A perspective, we're typically agnostic on what categories we go into. It could be household, it could be personal care has to be more like functional beauty, like we are not a beauty company.

We can't perform. We don't have -- there's a lot of dead bodies on the road to trying to be a beauty company. We don't want to do that. We want to be right in the middle where there's a personal care beauty component. We think there's a lot of goodness there. problem solution, yet a mode of advertising and connection. So we're laser-focused on that.

Our new President, Chuck is laser focused on that as well. Retailer pack size, not surprisingly, different channels are performing at different levels, right? The club class of trade is doing extremely well. We continue to have offerings in club. Our strategy internally is how do we make sure that that's always a proactive strategy and not a reactive strategy. They have to be on the forefront of pack sizes and innovation. But you also have to meet the consumer where they're at in different channels, like the drug channel or the dollar channel and have the right pack sizes and right price points.

So it's not either/or, it's both, and we have to be good at both. And we've historically done that really well.

Your next question comes from the line of Filippo Falorni with Citi.

Good morning, everyone. Two questions for me. One on the retailer inventory levels. Obviously, you had some destocking in the first half of the year. Did you see any impact in Q3 and you're assuming no impact in Q4? And then as you think about 26, should we think about the first half of the year having a particularly easy component retailer inventory, so maybe faster growth in the first half? I know you haven't given guidance, but just a high level how to think about it.

And then the second question on the margins. Can you review the drivers of the lower tariff guidance? And maybe if you can give some color also on the broader commodity outlook?

All right. Okay. Let's try a couple of questions in there. So on the retailer inventory side, to your point, beginning of the year, we had some pressure points there about 300 basis points in the first quarter, maybe 100 basis points of pressure in not really seeing that we're seeing kind of stable levels here in the back half. That's what we experienced in the third quarter, and that's what we're kind of expecting as we go forward here.

All I'll say a balanced place. We'll watch it closely. In terms of moving on to tariffs and commodities and things like that, let's go back. We've made a lot of progress on tariffs. So if we go back to April, we're looking at a bill, it could have been as high as $190 million. We quickly rallied the organization around that. We made some tough strategic decisions, but we've also really focused on what can we do about it?

And additional productivity, the targeted pricing actions. We've now moved that down to what essentially is a $25 million 12-month number. And we released back on August 1, that number was about 60 in it's moved really threefold. This move because we've driven more actions around the globe in terms of whether it's negotiations, movements, anything in the supply chain side. There's been -- there has been some targeted pricing and then, frankly, the rates change. But that puts us in a really good place as we noted in the release, as we kind of look forward to 2026, we should be able to just have an environment of, I'll say, normal commodity inflation and tariffs should not be a drag. It could actually turn out to be an opportunity.

Commodities have still been sticky. You would stay here today with what our commodity view was for the year. It's still slightly up from what it was in the beginning of the year. I think as we look forward, we're kind of expecting more of the same, but we'll leave the rest of the 26 commentary until later.

Your next question comes from the line of Olivia Tong with Raymond James.

First, just a clarification. I assume there wasn't any pull forward from Q3 to Q4 or any other change in timing that helped contribute to the top line upside this quarter?

No.

Perfect. Very easy. And then just thinking about it a different way in terms of laundry. Given the strength there and obviously, consumer desire for value, how do you think about the options that are in front of you. Clearly, you've done very well in the category. You've driven greater profitability in the category. Is there -- as you think about the options in front of you, is there a thought around potentially being more aggressive on price or things for those consumers who are struggling potentially looking at it from a share perspective, given the opportunity that you have in front of you and the fact that gross margins have actually shown some pretty nice upside.

Yes. I mean for laundry, I think -- look, the promotional levels, plus or minus, are going to be what they are and will always be competitive. I think overall, the medium to long term, we love where we are in the intersection of value. That's fantastic. Innovation is always the reason why we perform well over a long period of time, right? We're at a 15 or so share these days. We're in 30% of households lead in wash loads.

Look, there's a reason for that. We're right there at value and innovation. So our deep clean innovation, while our most expensive form of ARM & HAMMER is still 70% the price of premium motor detergent. And so innovation matters. We're going to have some more laundry innovation next year. And so that's why, over a long period of time, we've been able to.

Your next question comes from the line of Javier Escalante with Evercore ISI.

High-level question from me. Why do you think that the broader personal care sector is premiumizing in an environment like this? Here continue doing great, compounding. There is no for strike impact for them. Why is that? Is it differences in channel? Are these different consumer sets is because there is legacy brands from which you can gain market share. Anything that you can tell us to explain what's happening and what does it mean for your future growth into 2026..

Yes, it's a good question, Javier. It's never 1 thing, right? It's always -- it's a few different things, in my opinion. I believe it's -- these are great problem solution brands, right? Their breadth really works for bad breath. However, it's also appeals to the young and old consumer, great packaging, great story, great social media presence, hero. It's a problem solution brand. It really works. It's the best performing acne patch out there and Touchland, it really works and premiumizes kind of a tired old category with fragrance and sent on-the-go convenience.

So I would say there's a problem solution aspect to it. There's a great branding aspect to it. There's some of the competition in those categories isn't -- it's been around for a really long time, isn't as new and fresh, I would say. So it's not just one thing. It's multiple things. That's why we believe at the end of the day that there's a lot of opportunity in those 3 businesses, right? And I said in my prepared remarks, household penetration for HERO9 Category 28 for their breath 11 category 65, Teslin 7 category 42, and that's why we keep getting TDP growth as well. So again, it's a mix of all those things.

Your next question comes from the line of Lauren Lieberman with Barclays.

Just 1 thing I want to talk about was couponing and just how much couponing is currently part of your strategy, how much activity there's been? Because this is something that kind of shows up differently, right? It's in market. You can't necessarily see it in the Nielsen data. So I was curious if you could talk about couponing. And then also just looking specifically at laundry in the data, it does show price per is down low single digits. So even though, like you said, the percentage that's on promotion is low, just curious broadly about pricing in the market and if the depth is worth talking about.

Yes. I'll take the second 1 first. When you look at EQ, that really means wash loads and so as you have consumers trade up to larger sizes, as you have channels like club that are growing faster than that means the larger sizes are doing more sales, which then translates into a lower price per EQ, and that's part of it. And then if you go to a few of the different retailers you see, not just us, but also others having some rollbacks at mass. But in general, I think the biggest thing is the trend on larger sizes, which is channel-specific in part, but also pretty broad-based.

The second one on couponing. We've been very consistent on couponing like year-over-year, we're flat on couponing. I think in general, we believe that our competitors link to couponing a heck of a lot more than we do. And you're right, that's not shown in Nielsen, the way you kind of look at that is maybe through numerator or what receipts are actually being scanned really maybe the best way to look at that. But usually, our competitors rely more heavily on couponing than we do.

And that's the case in laundry as well?

Yes.

Okay.

We obviously, a lot of questions here on discounting couponing. We've shared what we're doing here is measures depth, breadth, all of that -- and I guess I'll bring you back to gross margins. Gross margins are doing what they're doing, which speaks to, obviously, all these elements here. So I think there's a good story. We've got -- we're doing things the right way here.

Your next question comes from the line of Robert Moskow with TD Cowen.

Thanks for the question. I think the messaging here is that despite a lot of challenges for the consumer, your categories have been pretty stable in the aggregate, running around 2%. And adjusting for some things, you're gaining share. But when I look at your retail tracking data, at least in my metrics, things do get weaker in October, -- can I assume that, that's a comparison to last year's port strike? And maybe just refresh me on why that influenced consumer spending in your categories rather than just timing of shipments?

Yes, Robert. Yes, in my prepared remarks, I kind of talked a little bit about October. But remember, we looked it up last night. We believe that for the category and for Church & Dwight will be a little bit negative in October. A year ago, the port strike had 11% growth in 1 week for the categories. That meant a month was around 5%. And that wasn't really real. That was pantry loading, probably massive pantry loading that was happening probably more so in other categories as well. So we think that's pretty clear.

Sure. I understand. But by November and December, I would imagine the pantry loading would be kind of over. So I guess I'm just unclear like how that would affect your overall results in a quarter and then when I look at your quarterly results last year, it was very stable. Third quarter, fourth quarter were exactly the same. So it -- is it that much of a tough comparison to a year ago despite that?

Yes. It's -- we can get into a little bit more detail. It's 3 things, okay? So the port strike that happened in October, if you recall, there was a threatened port strike, I believe, in early January that also had an impact. So -- and then you got to go figure out how much -- happened. Was it 1 unit? Was it 2 units? Was it 3 units and then you got to go figure out for the category, how long that normal usage goes through. But I would tell you, October was extremely elevated a year ago. Like when categories are up 5% a year ago. That's not normal. So that's one. The second thing we said in the release was vitamin business for us in Q4 when it's down in consumption in the low 20s. Then Q4 is a seasonal business for vitamins and so it just has a little bit more of an impact. And then the third thing that I think Lee mentioned was just our international business in Q4 a year ago had a bit higher of a comp.

So all those things are true, I guess, but the biggest thing for us and what I said earlier was we think the order of magnitude is really more in the port strike and some of the timing on vitamins and we don't believe there's a roll forward issue into 2026. So that's kind of how we'd button it up.

Your last question comes from the line of Kevin Grundy with BNP Paribas.

Great. Congrats on the good result this quarter. Two for me, if you don't mind. The first one to kind of revisit the portfolio and trade down risk and then the second one is going to be on -- so the first one, Rick, how do you assess the portfolio today relative to, say, like the global financial crisis. And I think the view would be that Church was a big beneficiary. I would agree with that of trade-down risk. ARM & HAMMER did well. value laundry detergent did well. But it is a more premium portfolio today than it was and the brands that you've had success with like BATISTE and THERABREATH and Hero and Touchland are more premium price points.

So how do you assess trade-down risk, particularly in those parts of your portfolio today, how do you sort of square that with some of the trade down that we're seeing and granted it's in household product categories, which you do tend to see a little bit more trade down -- but I'd just be kind of curious to get your thoughts on that, Rick. Granted it skews higher to higher income consumers. It does offer unique benefits can you kind of have it both ways where the consumer is weak, but then the higher end of the portfolio are going to continue to sustain. And then I have a follow-up.

Yes. And it's a good question. Maybe we were 40-60 around the financial crisis. Now we're 60-40 and I do believe that we will do well in most any economic environment, and that's what we've kind of shown over time. Household for sure, as folks trade down. And what's been unique a little bit, Kevin, is like these premium personal care categories I would say, in some cases, are accelerating during this time. And it kind of goes back to what I was thinking about earlier, it's just have air. There's just 2 or 3 or 4 reasons why -- but the problem solution, but even the macro behind that is the high-end consumer is still doing well. And maybe it's a barbell. That's why the club class of trade continues to do well.

That's why if anything, the trade down is happening a little bit in the mass and those trends look pretty good. So I would -- I kind of view it as the company is positioned to do well and good times or bad times. Yes, the portfolio shifted a little bit, but what brands you have matter more than anything. More so than the category itself on mouthwash as an example. So that's kind of my short answer. I think that there's more than 1 reason those brands are doing well, and it's a bigger tailwind than the category headwind potentially.

Got it. Then quick follow-up is just around artificial intelligence. -- and what that evolution is going to mean for the CPG industry. Matt, like to -- to refer to these as the crystal ball kind of questions. But particularly on the heels of the Walmart announcement and its collaboration with OpenAI. I'd be curious to kind of get your thoughts, Rick, in a world where AI is actually going to see much, much greater levels of adoption. Do you see this evolution as a favorable development for big brands in your portfolio specifically? And relatedly, on the heels of this Walmart announcement, how do you assess the risk here that this potentially leads to a balance of power shift to retailers as they exert greater control over the virtual shelf?

Yes. I think my crystal ball would probably say our company is laser-focused on our brands. Like how do we make sure that we have brands that consumers love and through our advertising, through our marketing, through our innovation -- if we do those things well, then that is an enabler for how we show up online. And at the end of the day, recommendations in the future are going to be based on how well we're selling, how well consumers love our products, what the reviews say what new news we have. And same way that advertising has shifted over a long period of time.

We have to make sure we're nimble enough and fast enough to adjust with speed to the new way of playing the game. And we've shown that we can do that. When Matt and I talked back in 2016, we were of sales for e-com, now we're 23%. We have adjusted and changed the way we play the game. And so that is a competitive advantage for us versus our larger peer set, in my opinion. And so we have to make sure that we're on the forefront of that. And I have no doubt that we will.

There are no further questions at this time. I'd now like to turn the call over to Mr. Rick Dierker for closing remarks. Please go ahead.

Okay. Thanks, Eric. Well, thank you for all the questions, and look forward to getting together next year if we talk about our go-forward strategy on Investor Day. And thank you and see you in January.

Ladies and gentlemen, this concludes today's call. Thank you all for joining, and you may now disconnect.

Okay. So next up this afternoon, we're pleased to welcome Church & Dwight. Here today in his first presentation at our conference as CEO, not his first presentation, but his first presentation as CEO of the company is Rick Dierker. And we're also pleased to have CFO, Lee McChesney, who's joined us -- joined Church & Dwight in March; and also Chuck Raup, who runs the Consumer Domestic business. So the team is going to give a presentation. If there's some time for Q&A, we will do that. But generally speaking, the floor is yours.

All right. Thanks, Lauren. It's always good to be back in Boston. So here's our safe harbor statement. Please, if you have any questions, read that on our website. So we -- the message today is we remain really confident in our future. We're living and everyone is in a volatile environment. We have a balanced portfolio. We're driving share gains on many of our brands. Our latest acquisition brings additional opportunities for growth. Online channel is experiencing steady growth, a long track record of success there. Innovation remains a key growth driver, and we're seeing strong international performance. So we're confident about the strength of our Evergreen model as we look forward.

For those of you who may not follow Church & Dwight every day, we're about a $6.1 billion company. 77% of our sales are in the U.S., 18% international and the rest is our SPD division. We have eight power brands. Those eight power brands represent 75% of our sales and profits. And we have a balanced portfolio. About half of our business is household, about half of it is personal care. And about 36% is value and about 64% is premium. So really resilient in most any economic condition.

But it all started back in 1846 with ARM & HAMMER. And this was Dr. Church and Mr. John Dwight and they started Church & Dwight, and it all started with the yellow box. And if you fast forward time, ARM & HAMMER is such a unique brand. It plays across so many different categories. It's premium in some categories, it's value in other categories. It's known for cleaning, personal care, laundry, deodorizing, cooking. And this is where the brand is today. It's a $2 billion brand globally out of our $6 billion. So long track record of success.

If you rewind the clock and look back in 2020, we only had one power brand. It was -- sorry, in 2000, we only had one power brand, it was ARM & HAMMER. And since then, we've acquired many different brands and businesses, but one constant remains, it's the growth and the strength of ARM & HAMMER over a long period of time.

Let me talk for a few minutes about categories. So we're driving share gains across most of our categories. Here is a look at just the categories. We are eight power brands in nine categories. And more often than not, if you look back at the track record for categories, they've grown around 3% a year. And here's a little bit more detail. So in 2024, category growth, this isn't our growth, this is category, this is the macro. First half of 2024, categories were growing 4.5%. Back half, they were growing 2.5%. The world seem to be in a lot of turmoil early in 2025 and categories were only growing 1.5%. In Q2, they grew closer to 2.5%. And I would say kind of year-to-date, quarter-to-date, they're growing around 2%, 2.5% as well. So they're better than they were when we spoke in April, and they're still not back to historical averages.

Now that's just one piece of the story. Our category growth is important, but how we gain share determines how fast our brands are growing. And in general, we're very successful. Six of our eight power brands are gaining share on a year-to-date basis.

And now let me turn it over to Chuck, who leads our U.S. business. He's going to talk about each of the categories and give you some confidence in those businesses.

Thanks, Rick. We'll kick things off by taking a look at our fabric care business. As we take a look at the liquid laundry category, we see that in Q1, things were about flat. And then Q2, we rebounded a bit and got to about a 1.4% growth rate, which is about what we expected. Now ARM & HAMMER was able to outpace the category and grow at a solid rate and consequently grow share. And this share is -- this share gain is really part of a longer track record that ARM & HAMMER has. And we have this history of bringing consumers into our portfolio and also retaining those consumers in our portfolio. So if you look at where we were in 2006, we were at a 5% share, and we've nearly tripled that by 2025.

Now why are we able to do this? Well, we believe it's because we deliver a superior value to our consumers, and we're always delivering meaningful innovation. And a great example of this approach is our good, better, best strategy. So if we look at our slide, the good is the yellow and white bottles, and then we add value as we move up the tiers. And so we add things like OXICLEAN in our better tier, and then our newest innovation, DEEP CLEAN in our best tier, adds greater stainfighting efficacy. And what we've seen from DEEP CLEAN is that it really is able to attract new users into our business.

Moving on to cat litter. Cat litter, the performance of the category has been strong throughout the year. It started off at about 2% and then accelerated to 4%. And we were right there with the category just a little bit under through the front half, and we're down just a shade in share. But the good news is in Q3, things have picked up, and we're back to year-to-date share growth. Now cat litter is also a great share story. And so if we look over the last 5 years, we have increased our share about 150 basis points. And why is that? Well, the reasoning is similar to what we talked about in liquid laundry detergent. We deliver a great value to consumers, and we deliver meaningful innovation.

And so for example, this year, key drivers of our growth are performance in our black box, which is in our medium tier or our better tier. And we've also had solid performance in our Hardball innovation, which is our entry into the light litter segment, which is a $400 million segment. And we've grown our share from about 4% to 8%.

Now as Rick discussed, ARM & HAMMER is this tremendous mega brand that spans many categories. And it offers us the ability to connect with consumers across many occasions throughout their day. And so what I'm going to share is an update to our advertising, which really shows the empowerment that ARM & HAMMER brings to consumers, enables them to get the job done during their day and realize a great value.

[Presentation]

So we're very excited about this campaign, and we think it really captures the essence of ARM & HAMMER, and it will be a cornerstone as we look to drive our $2 billion mega brand forward.

Now moving on to another area of momentum, and that's our HERO acne category. Okay. So as we look at the acne category, it was down in Q1 and rebounded a bit in Q2 and grew about 1.7%. HERO was able to maintain double-digit growth and outpace the category. And HERO is a great share story. So as we look at HERO, it was about 1% in 2020, and we've grown that share to about 22%. And what's significant about that is not only is HERO the #1 acne patch brand, but it's also the #1 brand in acne.

Now the reason behind this is HERO delivers a great value to consumers. And so when we look at the HERO consumer, this is a younger consumer that wants to bring out that inner hero in themselves and feel confident. And they really can feel this way about themselves when they're in control of their acne. And so what I'll share is a video that's from some of our influencers and also people who really use the product, and it really demonstrates the power of the HERO patch.

[Presentation]

So as we like to say, it really does get the gunk. Now the great news on HERO is that there's tremendous runway for growth. So when we look at the penetration of HERO and the penetration of acne category, we're well below. So we're at a 9% penetration, and the acne category is at 28%. So a tremendous opportunity to bring new users into the category.

Additionally, we have significant upside in our share of shelf. So we've been doing a good job growing our distribution, and we've increased our average weekly TDPs about 35% over the last year. But if we look at where we are relative to the second leading competitor, they have about 2x the average weekly TDPs. So as we drive penetration of the brand and as we innovate across the acne journey, so from pre, during and post, we feel that there's a lot of opportunity to connect with consumers and grow our shelf space.

Another area of momentum is our THERABREATH business. So as we look at the mouthwash category, it was down in the front half, largely driven by alcohol-based mouthwash. Now THERABREATH was able to still put up tremendous double-digit growth and outgrow the category. And what's significant on this growth is, one, we're at an all-time share, and we've grown to about a 21% share from about a 4% over just 5 years. Additionally, this growth has made us the #2 mouthwash in the category, and we're the #1 non-alcohol mouthwash. And that's significant because the nonalcohol mouthwash is about 54% of the category, and it's growing at a better rate than the alcohol mouthwash.

And we take a look at how we're going to grow THERABREATH, the story is similar to where we were at with HERO. There's tremendous upside in growing penetration. So when we look at THERABREATH, we're at 11.5% penetration versus a category penetration of over 68%. That's a ton of runway. Additionally, we have the same opportunities in shelf space that would really match our performance. And so if we look at our growth in our average TDPs, we're growing at about 25% over last year. But when we look at our competitors, Crest has about 1.5% more average TDPs versus THERABREATH and Listerine is at 2%. So this is going to be a definite area of focus as we move forward and we grow our brand.

Moving on to BATISTE and our dry shampoo. Now admittedly, BATISTE is an area where we want to be completely open. We have work to do. So as we look at the front half, the category was growing and BATISTE was down. And that's from competitive pressures from smaller players and also significant distribution gains for our competitors. But here's the thing with BATISTE. We're the leader in dry shampoo with a 42% share. And our job and our task moving forward is to act like a leader in this category. And so what you'll see from us is emphasizing the core benefits of BATISTE. We know we have the best performing dry shampoo in the category. We are going to ensure that we have the right price pack architecture to deliver the right value. And we need to innovate against new consumer occasions and deliver more delighters to our category. And so that's what you'll see from us moving forward in Q4 and to begin next year.

Now let's talk about a couple of growth vectors that can really accelerate our growth. First is our acquisitions. And we have a very aggressive M&A model, and we're really excited about our latest M&A, and that's Touchland. And what is Touchland? Well, it's this really cool hand sanitizer, and there's also a body mist. And what's different about Touchland? Well, it kind of spans between personal care and beauty. And so it's got this great innovative packaging, it's a nonalcohol smell and these great fragrances. It's not sticky. It hydrates your hands and it goes on evenly. So really a breakthrough in hand sanitizers. I'm going to share a video with you that I think really captures the Touchland experience.

[Presentation]

Pretty cool, huh? What else is cool about Touchland is it's the fastest-growing brand in the hand sanitizer category, and it's #2 in its core distribution channels. Additionally, it's a great online brand. So about 30% of the sales are online and has significant social media followings with over 1 million consumers following the brand on Instagram and TikTok. And as Rick said, we're really focused on making this our eighth power brand.

And the really exciting thing about Touchland is we know how to grow a brand like this. So if you look at what we did with HERO, we tripled the business, and we're still going. If you look at what we're doing with THERABREATH, we're tripling the business and we're still going. And that's the goal with Touchland is to do at least that. And we think this brand has just tons of upside potential.

Moving on to another area for accelerated growth, and that's our e-commerce business. And clearly, we have to be focused on this growth because this is where our consumers are shopping more and more. And we've made tremendous progress in our e-commerce business. So if you take us back to just 2016, we were at a 2% -- 2% of our sales was in e-commerce. We've now grown that 10x, and it's at 23% of our business. And we're not done yet, and we'll continue to grow.

Additionally, five of our eight power brands are growing online share. And as far as ARM & HAMMER laundry, THERABREATH, NAIR and ZICAM, they had record online sales. So we're going to continue to drive that momentum forward. Additionally, as we've been growing online, we've been increasing our global footprint. And so if you look at THERABREATH, it is the #1 mouthwash and key retailers in China, South Korea, Canada and Mexico. And then we've had top product launches in our categories for THERABREATH, Mighty Patch and Power Sheets across Canada, Mexico and some other regions as well, too. So really strong progress in our e-commerce business in the U.S. and also expanding our footprint globally.

And then to close things out, let's talk about innovation. As Rick talked about, innovation is a significant part of our growth algorithm. And in fact, half of our 4% growth in 2024 came from innovation. And so as we look at some of our new product launches, they're always grounded in a very meaningful consumer insight. So if we look at our laundry business, Free & Clear detergent for our DEEP CLEAN and our Power Sheets Fragrance Free, because we know that there's a group of consumers who want that really great clean but without any fragrances or perfumes.

For BATISTE, BATISTE Light is about reducing the residue that is a dissatisfier for many consumers who participate in a dry shampoo category. And then for VITAFUSION, our MultiVites, PowerPlus. What that offers is 100% of the daily value of 10 nutrients. And we have specific formulas for both men and women. So a strong lineup of innovation.

And I'm going to close with pretty fun in our biggest innovation that's going out the door right now, and that's TROJAN GOAT, the greatest of all Trojan. And what's really great about this launch is it's our best entry into the non-latex category, which is a big deal. That's about 28% of the category, and it's a segment that's growing. It is the first in about 10 years, which is also significant. And we really believe that versus the competition, it delivers a superior experience, a more intimate connection through heat transfer. So as we look at this brand -- excuse me, this new product launch, we really have high hopes for what it's going to do for the category and what it's going to do for Trojan.

And now I'll share a commercial. This is our launch commercial that shares how excited we believe consumers will be for this launch.

[Presentation]

So I think this is an excellent point for me to turn things back over to Rick. Good luck topping that.

All right. Thanks, Chuck. I don't think the goods are in the package, but maybe next year. Okay. Consumer International, I just want to give you a flavor on why that business is growing so well and then the confidence we have in it. Remember, international in our Evergreen model is about 8% algorithm from a net sales perspective. And just for a backdrop, it's about a $1.1 billion business these days, pretty broad-based. Global Markets Group is where we go through distributor, and then we have subs all over the world.

And organically, we've had great performance, great track record of performance. Mike Reid and his team have been very consistent over a long period of time. Even in the first half of this year, 5.8% and 4.8% growth in the kind of macro world we're living in is just -- it's fantastic. And remember, 18% of our sales are outside the U.S., but many of our peers are in the high 50s. And so there's just a lot of room to run there.

And we can do that through a few different levers. Number one, we have some U.S. brands that can continue to go global like ARM & HAMMER, like OXICLEAN, like WATERPIK. We have brands out there like BATISTE, STERIMAR and FEMFRESH that are global international brands already that can continue with distribution opportunities. And then we have THERABREATH and HERO in recent acquisitions. And the good news is we're already in 50 countries by the end of 2025. That is lightning speed for us in terms of all the regulatory hurdles that you have to overcome and partners and distributors. So that's just a fantastic tailwind for international.

We're investing while we grow. We acquired Graphico in Japan. They were a OXICLEAN distributor. There's 90% brand awareness of OXICLEAN in Japan. Implemented a global ERP system for our GMG business, right? As we scale, how do we become more efficient and work through that complexity of countries and brands. We've widened our regulatory and IT infrastructure globally. We have new offices and expanded offices in Panama, China and Singapore. And then, of course, we talked about HERO and THERABREATH. And probably even more important for the future is we've added an M&A presence in Europe and Asia. We are in the deal flow in the U.S. Almost every deal that happens, we know what's going on. That's not as true in Europe and Asia. So we're really focused on doing the next -- one of the next acquisitions outside the U.S.

And then moving to Specialty. Again, this is our third division, about a 5% evergreen organic growth rate is the expectations. This business is made up of about 2/3 Animal Nutrition and 1/3 Specialty Chemicals. And then the small sliver is Commercial & Professional, and that's really the B2B business of our CPG business.

And just to give you a little bit more color, there's a bunch of verticals that, that business can play in hospitality, food service, laundry, office. And we're laser focused on adding some resources for packaging and for R&D and from a sales perspective because many of our peers have businesses that are multiples the size that we are here. So have a lot of faith in the team to drive that.

And then you may be aware that SPD was typically a cyclical business over a long period of time. We did some portfolio choices. We divested and shut down a couple of businesses. And so that curve that goes up and down over time, we think is not going to do so anymore. It's going to be pretty consistent because of the global expansion opportunities and because of the marketing and innovation we have behind that business.

And now I'm going to turn it over to Lee to wrap up with the Evergreen model.

Okay. So thank you, Rick and Chuck, and a big thank you to Lauren and the Barclays team for hosting us. So I'll start off with. As I noted in our August earnings call, our teams across the globe have been very productive despite the many challenges and distractions in the macro environment. And really, over the past decade, our business has seen many macro challenges. But for us at Church & Dwight, we remain focused on what we can control and executing our plan with urgency.

So the foundation for our actions is our Evergreen model. Each day, we make decisions with these objectives in mind. Our associates across the globe know this model, where we want to grow, our focus on margin rates, and providing the right solutions to the customers and earning their loyalty. So let's spend a few minutes with our results over the past decade, and then I'll give you an update on how we're tracking this year.

So goal #1 from our Evergreen model is a clear alignment on delivering a steady stream of 4% organic volume growth, 3% for U.S. domestic, 8% for international business and 5% for the SPD business. And how have we done over the past decade? Quite well. We've averaged over 4%, a broadly consistent performance. And on top of that, we've added a steady stream of high-quality acquisitions that further fuel results in the short and long term.

Linked to our growth goals is our mindset around gross margin. Each year, we bring forward actions that have the potential to expand our margins 25 basis points to 50 basis points. We believe that clear gross margin objectives ensure our teams make the right business decisions. Margin rates are integrated into incentive plans. And as a result, our employees across the globe focus here as well. And the clarity around growth and margin rates ensures we drive dollar growth and ultimately drives cash flow, which is what really creates valuation expansion.

We also discretely call it our marketing in our Evergreen model, and we invest approximately 11% of sales. We do this because it ensures our brands remain top of mind in the marketplace, and it fuels market share growth. It's a short- and long-term investment mindset, and our history demonstrates our commitment no matter the macro environment. For SG&A, we continue to increase our invested dollars in growth areas like international and e-commerce, but we also target leverage each and every year. Inter actions enabled 8% EPS growth. When we look back to 2017, we've delivered above that objective despite all that has happened in the world. It's a strong track record of execution.

So let's turn to 2025. Yes, the year has brought some challenges to everyone. The tariff news uncertainty drove consumer sentiment to decline, and there's been an assortment of challenges for our retailers. However, as Rick, Chuck and I have noted and our historical results demonstrate, we remain focused again on what we can control. After the first quarter, we communicated our action plans for the second quarter and the second half of the year. We knew our categories would eventually improve as they are resilient categories, and we have a growing share position across our balanced portfolio.

Our international SPD business continue to grow, and we run our business and do not get distracted by the macro. Our job is to win share and execute in all markets. This year, we're delivering incremental productivity. We've jumped into managing tariffs, and we remain focused on additional innovation and investing in marketing to drive share growth.

So what does that all mean? For 2025, we're still on track to deliver reported organic sales growth of 0% to 2% and to grow our adjusted EPS 0% to 2% as well. The EPS growth outlook includes the Touchland acquisition, the cost of the ZICAM ORAJEL Swab recall, and the wind down of the three exited businesses. And on our August earnings call, we reiterated that we are confident we would grow 2.5% organically in the second half of the year to drive this outlook. Today, we remain confident in that outlook and are encouraged with our sales results through the third quarter. We look forward to closing out the quarter strongly and sharing our final results in late October.

I also want to remind everyone of our portfolio actions to drive shareholder value. We regularly review our brands. Often that leads to making increased investments in many of our brands and sometimes leads to targeted actions to drive value creation. Earlier this year, we shared that we were discontinuing or divesting the SPINBRUSH, FLAWLESS and WATERPIK showerhead business. Those processes remain on track. In August, we also provided an update on our vitamin business. We're focused on a series of revitalization actions to improve the performance of the business. Those efforts have now expanded to include a strategic review of the business, that includes streamlining our supply chain to further strengthen our core business, and we're also exploring JV and partnership opportunities as long as divestiture options as well. We expect to reach a conclusion from this review by the end of the year.

And as I mentioned earlier, we've moved quickly in 2025 to manage tariffs. While gross margin tariff pressure was as high as $190 million, our action plans to-date have reduced this exposure to $50 million today. And as we look forward, we believe we can reduce this exposure significantly over the next 12 months through a balanced mix of all the mitigation approaches noted here.

So let's now look and think about free cash flow for a second. On a 10-year average of 119% free cash flow conversion, it really speaks to the strength of our portfolio and the execution capabilities of our team. Our investment-grade balance sheet continues to progress forward. And as a result, it provides us tremendous flexibility. We stand today with the financial capacity to invest in our business with over $5 billion of dry powder. And at Church & Dwight, we've been very consistent with how we're going to utilize this cash flow.

Number one, consistent disciplined investments in accretive TSR-enhancing M&A. HERO, THERABREATH and Touchland are our most recent examples. Number two and three, it really speaks to our investments in our core business in line with our Evergreen model. Number four is debt reduction. Number five is finally about returning cash to shareholders. Our top quartile dividend track record and our recent $300 million share repurchase reflects the sustained commitment here as well.

So let's wrap up our presentation. We remain confident in 2025 and beyond. We have a balanced portfolio, strong brands, and we're earning share gains in the majority of our categories and a team consistently delivers our Evergreen model, credibility, consistency no matter the environment. Thank you for taking the time to learn about Church & Dwight. And Lauren, we can -- maybe we have a few minutes for Q&A.

We can also pass the mic around. So if people have questions, definitely feel free to raise your hand.

So I wanted to just clarify one quick thing, Lee. You mentioned -- so the way I had phrased my question and planned to ask it was that second quarter consumption was around 2.5% and your expectations, I believe, were for that to come back down to a sort of 1.5% to 2% range for the balance of the year. And we have seen some slowing in Nielsen that would be consistent with that. But I think you just said still around 2.5%. So I just wanted to kind of clarify what the expectation was, if it's a little bit better than expected or if it's trending in line with what the expectation was, which was a little bit of a decel.

Yes. So the 2.5% is obviously the global organic growth. So we got the benefits from SPD and International. As we did say the categories, we thought be in this 1.5% to 2% level back in August. And I'd say to-date, they've been performing at that level, even potentially slightly better. It just depends on the week. It still moves around a bit.

Yes. Our outlook for the back half of the year was 2.5% organic growth really.

Obviously, $5 billion-plus in M&A capacity is a lot. So just wondering how we should think about the types of businesses you're interested in and maybe the return on investment hurdle.

Yes. I think we're a little unique on the way we do M&A. We've been very successful for a very long time. We say no a lot is what I would tell you. We have a team that works on M&A kind of led by Brian Buchert, but the whole executive leadership team spends a lot of their personal time on it. We don't sit around thinking about, oh, we wish we could go into this category or that category. We really believe you can only buy what's for sale. So we typically ramp up very quickly once we're in the deal flow for any acquisition.

And we had no aspiration to go into mouthwash. We had no aspiration to go into Mighty Patch or the hand sanitizer or the ORAJEL or the OXICLEAN, any of those. But the team ramps up really quickly to learn the category to understand the dynamics. And a lot of times you walk away from a deal because of private label exposure or claims or something we don't like when we learn about what they're doing from an R&D perspective or for the consumer. And so I will never sit up here and say, oh, I wish we were in this category or that category. I would just say our competitive advantage, I think, is to learn a category very quickly, understand what the dynamics are and then make a decision whether we want to own a brand that we feel like is going to be around forever, for decades, not for 2 years or 5 years.

In terms of hurdles, there's a whole host of ways you can do that. I would tell you, if I translate it into like an EBITDA multiple perspective, typically, I don't care what we pay for something as long as kind of synergized, we get to around 10x. And that kind of leads itself. And we've done that on every deal that we've kind of pursued.

I think we can go into breakout. So please join me in thanking Church & Dwight for being here again, and we can continue in the breakout.

Good morning, ladies and gentlemen, and welcome to Church & Dwight Second Quarter 2025 Earnings Conference Call. Before we begin, I've been asked to remind you that on this call, the company's management may make forward-looking statements regarding, among other things, the company's financial objectives and forecasts. These statements are subject to risks and uncertainties and other factors that are described in detail in the company's SEC filings.

I would now like to introduce your host for today's call, Mr. Richard Dierker, President and Chief Executive Officer of Church & Dwight. Please go ahead, sir.

All right. Thank you. Good morning, everyone. Thanks for joining the call. I'll begin with a review of Q2 results. I'll speak to the touch on closing, strategic actions and some thoughts on the macro environment. Then I'll turn the call over to Lee McChesney, our CFO. When Lee is done, we'll open the call up for questions.

First, I'll begin with Q2 results. Organic sales grew 0.1%, exceeding our outlook of minus 2% to flat. Adjusted gross margin was down 40 basis points, also exceeding our outlook range. Adjusted EPS was $0.94, which was $0.09 higher than our $0.85 outlook. Lee will take you through the rest of the numbers shortly, but first, some highlights from the quarter. When we gave our outlook back in May, we were seeing category consumption data that was shown a deceleration from strong growth early in the year to turning negative in early April. The good news is that since then, things have begun to improve with categories finishing positive in April and Q2 category consumption for our largest categories, finishing around 2.5%. The macro environment has been volatile and uncertain with tariff policies changing frequently. The consumer uncertainty showed up in early Q2 when consumer confidence hit a 12-year low. Since then, consumer confidence levels have started to recover as tariff policy appeared to stabilize. Not surprisingly, given that backdrop, our second quarter sales finished slightly ahead of our outlook, which gives us confidence in achieving our full year organic outlook of 0% to 2%. Our brands continue to perform well in this dynamic environment. We continue to drive both dollar and volume share gains across most of our brands. Our balanced portfolio of value and premium products and our relentless focus on innovation continues to position us well for the future. International continues to take share across the globe. Further, we continue to grow the online class of trade with online sales as a percentage of global sales now reaching 23%. In July, we closed our most recent acquisition, Touch land is the fastest-growing brand in the hand sanitizer category in the U.S. and is the #2 and sanitizer in the category. Touchland experienced strong growth in Q2, outpacing the category and gaining share. We're excited to add Touchland as our eighth power brand and even more so excited to officially welcome the Touchland team to Church & Dwight.

Now let's discuss the strategic actions we outlined last quarter to drive shareholder value, management team assessed each of our brands on a regular basis. As a result of these reviews, we often accelerate and increased investments in our strongest brands and move the speed to address opportunities for value creation. That review is what led to the strategic decision to exit FLAWLESS, SPINBRUSH and WATERPIK showerhead business.

Today, we'll provide an update on our vitamin business. We remain focused on our revitalization efforts with multiple innovation and branding programs underway in 2025. while it's still too early to fully evaluate results, we can share at this time that we're seeing mixed results. There are some green shoots. We see our multivitamin business improving week over week, and our innovation has [ stained ] strong consumer reviews, and of course, we remain focused on executing our improvement actions. In addition, we are undertaking a strategic review of the business, including streamlining our supply chain to strengthen our core business, potential JV and partnership opportunities and divestiture options. The Gummy vitamin business continues to be a drag on the company's organic growth. The good news is the Gummy vitamin category grew almost 4%. And which is the third consecutive quarter of growth. The bad news is our consumption was down around 25% as our TDPs declined.

Now I'm going to turn my comments to each of the 3 businesses and the improved results from our teams in the second quarter. First up is the U.S. consumer business. Organic sales declined 1% with volume growth being offset by negative price mix. Volume growth was muted by continued retail destocking in Q2. We continue to expect slight impacts moving forward. Consumption was positive in the quarter for the U.S. business with momentum improving and we grew share in 5 of our 7 power brands. Let me provide a bit of color for a few of our important categories. First, with laundry detergent, ARM & HAMMER liquid latter detergent consumption grew 3.2% in contrast to 1.3% category growth. ARM & HAMMER share in the quarter reached 15%.

Moving to Litter, ARM & HAMMER [ Litter ] consumption grew 3.4%, while the category was up 4.1% as we saw heightened competitive promotions. Nextremely is BATISTE, BATISTE continues to be the global leader in dry shampoo. And while consumption was down almost 7% in the quarter, we're confident in BATISTE return to consumption growth in the future. There are a couple of factors contributing to consumption decline, such as competitive price increases, economic pressure driving trade down, and we had some supply issues that are now resolved. This year, we're launching BATISTE Light as a leading brand, our innovations continue to attract new users to the category to increase household penetration.

Over mouthwash, THERABREATH continues to perform extremely well. While the mouthwash category was down in Q2, THERABREATH consumption grew 22.5% and and continues to be the #2 mouthwash with a 21% share. Remember, we believe there's a lot of runway here. Our household penetration for THERABREATH currently sits around 11% versus the category of 65%. HERO once again outpaced the category with consumption growth of 11.4% compared to the acne category growth of 1.5% and remains the #1 brand in acne care with a 22% share. Equally important as HERO continues to gain share in acne patches. And similar to the terabit story, we believe household penetration growth is key for this brand. It sits at 9% versus the category of 28%. HERO continues to launch innovative solutions and patches and is entering the growing body care segment in 2025 with the [ Motipatch body ]. Looking ahead, we're excited about our pipeline of new products, which remain a key driver of our success. In 2025, we expect continued innovation to power our growth and build on momentum, especially in several core categories where we're leading the way.

Now turning to international SPD. Our International business delivered sales growth of 5.3% in the quarter, organic increased 4.8% due to a combination of higher volume, price and mix. Growth was led by HERO, THERABREATH and THIMFRESH and was broad-based with all of our subs delivering growth. We were able to grow share in all of our power brands in the quarter, which is a great achievement.

Finally, SBD Organic sales increased 0.1% due to a combination of higher price and product mix offset by volume. We continue to be excited about the growth opportunities in this business. Looking ahead, our full year organic growth outlook continues to be 0% to 2%, while category consumption has improved. There remains uncertainty around the U.S. consumer and global economy. We expect our Q2 brand share momentum to continue, supported by our new product launches, our distribution gains and sustained full year investment in marketing.

Adjusted EPS, we continue to expect 0% to 2% growth, which includes the Touchland acquisition, the cost of the product recall and the wind down of the 3 exited businesses.

I'll close by saying that category consumption is looking a bit better than 3 months ago, and our brands are strong. They're doing well. We're gaining both dollar and volume share across much of the portfolio. We have a healthy mix of value and premium offerings we're well equipped to navigate the current environment. The strategic actions we're taking will position the company well for the future, and we continue to be on the hunt for the right acquisitions. I'd like to thank all the Church & Dwight employees for executing well in a volatile environment. And now I'll hand it over to Lee for more detail on the quarter.

Thank you, Rick, and good day to everyone. Well, as Rick just mentioned, we've just concluded a very productive quarter from our teams across the globe. As we shared during our first quarter call, we remain focused on what we control in the second quarter, and this positions us well as we look forward to the second half of 2025. Let's dive into the second quarter and our outlook. We'll start with EPS. Second quarter adjusted EPS was $0.94, up 1% from the prior year. The $0.94 was better than our $0.85 outlook, driven by a stronger sales performance and some good resiliency with gross margin. Reported revenue was down 0.3% and organic sales were up 0.1%. The organic sales were on the high side of our May 1 outlook, and it reflects the improvements we saw in category growth and the strength of our brands.

Our second quarter adjusted gross margin was 45.0%, a 40 basis point decrease from a year ago. Productivity and higher-margin acquisition, business mix drove 170 basis points of margin growth and offset a negative 140 basis points from inflation and tariffs, 40 basis points from the combination of volume, price and mix and 30 basis points from the ZICAM Orajel swab recall. I'd also note that a portion of our original tariff estimate about 20 to 30 basis points we expected in the second quarter shifted to the third quarter as the tariff rates and the shipment timing evolved.

Moving to marketing. Our marketing expense as a percentage of sales was 10.4% or 30 basis points higher than 2Q of last year. And for the year, we continue to target 11% of net sales, in line with our evergreen model. We are encouraged with our share results in the first half of the year.

For SG&A, Q2 adjusted SG&A decreased 80 basis points year-over-year. And other expense decreased by $5.2 million due to higher interest income. And we now expect other expense for the full year to be approximately $65 million on an adjusted basis, reflecting the lower investment income following the Touchland acquisition. In 2Q, our effective tax rate was 23.8% compared to 24% in Q2 of 2024, a 20 basis point year-over-year decrease. The expected adjusted effective tax rate for the full year continues to be 23%.

And now to cash. For the first 6 months of 2025, cash from operating activities was $416.5 million, a decrease of $83 million versus last year due to working capital timing and lower cash earnings.

Now capital expenditures for the first 6 months were $39 million, a $37.6 million decrease from the prior year. And we continue to expect CapEx of approximately $130 million as we return to historical levels of 2% of sales in 2025. And in the second quarter, the company executed a $300 million share repurchase and via open market transactions through an accelerated share repurchase program.

Okay. Let's now turn -- spend a few minutes on our outlook. For the full year, we expect reported sales growth of approximately 0% to 2%, and which includes the addition of a Touchland acquisition and the impact of lower sales from the businesses where we're exiting. To quantify that for you, that's about $70 million to $80 million of Touchland coming in and $78 million going out for the businesses being exited. We continue to expect organic revenue growth of approximately 0% to 2%. The sales outlook reflects our brand and category growth momentum and reflects a balanced macro view around the uncertainty in the U.S. and global economies. We continue to expect full year gross margin to contract 60 basis points versus 2024 from elevated input costs and tariffs, the recall expense, unfavorable price and mix to outpace incremental productivity and higher-margin acquisition impacts.

And looking forward, Touchland is margin rate positive, but for this year, the business exits mitigate that benefit. And we're maintaining our adjusted EPS outlook for 2025. We expect full year adjusted EPS to be 0% to 2%, which includes the key elements we highlighted after the first quarter, but also includes a Touchland, which is neutral EPS for 2025, the wind down of the 3 business exits, in the cost of the product recall. For 3Q, we expect reported organic sales growth of approximately 1% to 2%, adjusted gross margin contraction of approximately 100 basis points, primarily from inflation and tariff costs, and the lower margins of the exited businesses. Marketing will be higher sequentially compared to last year. And as a result, we expect adjusted EPS of $0.72 per share, which is a decrease of 9% versus last year adjusted EPS.

Cash flow from operations for the full year remains $1.05 billion. In July, we also expanded our revolver facility from $1.5 billion to $2 billion. In a combination of this cash flow and the expanded credit facilities provides us excellent flexibility. Our M&A team accordingly continues to pursue accretive acquisitions that meet our strict criteria, with an emphasis on fast-moving consumable products, similar to our recent acquisitions.

To conclude, back on May 1, we communicated our proactive set of actions to navigate 2025. And as Rick and I just highlighted, we've made great progress and we're focused on sustained execution for the remainder of the year.

So with that, we're happy to take your questions. So Eric, we'll turn it to you.

[Operator Instructions] Your first question comes from the line of Chris Carey with Wells Fargo.

Can I start on vitamins and the strategic review you're undergoing. Can you just give a bit of context on what might push you 1 way versus the other. That could be feasibility of outcomes? Obviously, you need to partner on the other side of the equation but that could also be the potential dilution of an outright divestiture and perhaps how you think about Touchland given the fast growth and margin accretion. And as a potential offset to such an outright dilutive divestiture. So can you just give us a little bit more insight on where you -- how those different decisions could come out and kind of the netting out impact if we were to look out 12 to 18 months? And I have a follow-up.

Yes. Sure, Chris. Look, we were pretty clear in the release that we've put 3 different options out there, and there's some option in no particular order would be a divestiture. That's probably the cleanest option. The second one would be a joint venture partnership with a partner. We've seen that happen in the industry a few times as well. And the third one is to radically shrink that business and make it even more profitable. And that would have supply chain reorganization that would have kind of the way we manage that business implications to enable speed and even faster decision-making because I think everyone sees it, but it's not just Church & Dwight. It's the vitamin businesses that were put into all these CPG companies. These businesses need to be run and managed a little bit differently. And I think we have the ability to do that. It just has to change the organization around it and the structure we would have. So we need a few months to go through that. I think the good news is some of the activity sets that we have started on are working. I was kind of clear about that in the green shoot comment. For example, we've been putting a lot of focus on multivits, on innovation. And we've been stepping up an improvement. We were probably, on average, down 24%, 25% for April and May. And as we look at June, we're were down in the teens. And then the last couple of weeks, we're down single digits. And for the first time ever, our units were actually positive. So there are things that are working. It's just a speed and urgency type of mindset.

Okay. Fair enough. And then just from a category perspective, we've seen good consumption trends in your Laundry business. Can you just expand on what's going right and some of the strategies that you're implementing to put up some nice market share performance?

No, thanks. There's a great market share performance. 5 of 7 of our brands, power brands gained share in the quarter. We continue to do well. July also looks good. I would say, a lot of confidence in our growth in the back half. I'm incrementally even more positive today than I thought 90 days ago. Category growth is improving, our share gains are working. A lot of confidence in the 2.5% back half number. And even July, I would say, came in above that number. So a lot of good work and efforts across many of our brands with Laundry. It's -- you want to have the right the size and strategy, right? A lot of consumers are trading up to larger sizes, make sure the price points on those sides are correct, so you can promote them correctly at times. And then Laundry and Litter are very similar. They're -- it's a pricing sizing value equation that we're really good at and we can move quickly on. So that's -- we've been successful across many of our brands for that reason. .

Your next question comes from the line of Rupesh Parikh with Oppenheimer.

I guess just going back to retailer destocking comment. Is there a way to quantify the magnitude of that headwind and then whether it was broad-based across retailers and categories. And then I have 1 follow-up question.

Yes. Rakesh, it's Rick. We talked in Q1 that it was around a 300 basis point drag to our net sales versus the consumption numbers. I think we would ballpark it to be around 100 basis points in Q2. And in my comments, I said maybe it's slightly there in Q3 and Q4 as we go forward. But inventory levels are pretty good. The only impact -- and you've heard this from other competitors is as sales grow faster at club or online or at mass, it does have a little bit of a mix component to it that there's just not as much inventory needed in the system. And as you would expect, when category growth is a little bit lower than historical averages. You don't need as much inventory either. And so I think it's just a -- it's kind of a slight impact, but I wouldn't call it a material impact going forward.

Great. And then my follow-up question, just on Touchland. Now that the acquisition is closed, I would be just curious on what you see as, I guess, the bigger priorities for the balance of the year for that business.

Yes, yes. We're super excited about Touchland. I think again, like you can't track that business as well because it's sold largely at [ Sephora ] and Ulta and Amazon. But when we look at our kind of numerator data or even the Amazon data it's driving category growth. Like half of all category growth is coming from Touchland. New users, household penetration is still a great story, a lot of runway there. 6% household penetration for Touchland versus the category at 37%. They have incremental kind of near-term innovation on different fragrances and whatnot for hand sanitizer. The body [indiscernible] is still off to a good start. Going to international is off to a good start, more to come later on, on other categories of innovation, but it is just a pleasant surprise is what I would say. And the team is energized, the connections that we're making within Church & Dwight and Touchland are helping enable the move of speed as they go after new opportunities, whether it's a different class of trade or a different distributor or whatnot. So really happy with that growth rate.

The next question comes from the line of Peter Grom with UBS.

That kind of wanted to follow up on the organic sales outlook. But just in the context of what you're seeing from a category standpoint, you touched on it to Chris' question, the consumption is improved, and we can see that in the data. But I guess the commentary seems to be at odds with a lot of what your HPC peers are kind of discussing here in the last 12 hours or so. So I know everyone is different in some categories and regions. But can you just talk about what you're seeing and maybe why it could be different? And how you see that evolving through the balance of the year?

Yes. And you got to remember, I think we were kind of early like we normally are about calling what was happening last quarter. And I think some of our peers called that kind of this quarter. Back when I talked in May, I was a little bit more cautious. And because we were seeing negative category growth for those first few weeks of April. And so we were calling category growth at like 1% or 1.5% was our kind of our outlook embedded when we were discussing it. And then as we -- time goes by, the category growth for our largest category, is not all of our categories, but the largest categories was closer to 2.5% for the third quarter. And we've talked about this before as well, just the [ edge ] that was happening in the University of Michigan Consumer confidence, all the turmoil in the world on tariffs and that bread uncertainty. Well, some of that -- some of that has been mitigated. There has been a little bit more confidence, I think, and category growth as we think, is going to be closer to 1.5% to 2% as we move forward for the year. It matters what categories you're in. I think that's the most concrete answer I can give you. Some of our competitors are in different categories than we are. They have other risk to private label. They have other pricing risks. But for us, we see that more often than not, our categories are growing 3% over a long period of time. They're growing slower than that this year, but better than what we expected maybe 90 days ago. And meanwhile, our tactics and strategies on innovation and pricing and promotion and all those things are helping in our marketing spend is helping to gain share. .

Peter, all I would add is to your point, to Rick's point, we tried to lay out for the rest of the year back in May 1 and here today, there are steps to our improvement. And the second quarter really hit those marks actually a bit higher and then obviously, for the back half, we got 2.5% organic implied and we have steps to that in 3Q and 4Q. We feel very comfortable with the back half just based on everything we see today.

Makes sense. And I guess just a point of clarification, Rick. I mean on that 2.5%, I think you mentioned before that it's running ahead of that in July. So I just wanted to clarify that's a total company organic comment. And I guess, if that's the case, is there any sort of reason why you would anticipate organic growth kind of decelerating to the 1% to 2% guidance that you framed for the quarter?

Well, there's always a comp. And I would just say that our month of July, it was the easiest comp that we had if you look at the quarter. But it just gives us confidence because you have 1 month behind us and it had a great -- had a great month. So maybe it's conservative, but it's what we think the environment is right now. It's so volatile that there's no reason to take the full year up after another 3 months. So we'll see how the next 90 days ago, and I'm just trying to convey that we're off to a strong start.

Next question comes from the line of Anna Lisle with Bank of America.

Thank you so much for the question. I was wondering if I could follow up on Peter's question here. Just we're hearing from peers in the space to expect an acceleration in the second half. And while you don't have meaningfully different comps in the back half, I was wondering how you're looking at the consumer environment and your expectations for improvement or maybe lack thereof here. And we're also seeing a variety of strategic actions from peers as well, including increased promotional spend and marketing support. I was wondering if you can further comment on your initiatives there.

Sure. So on the consumer, my answer is pretty much same what I gave Peter, just a lot of confidence in our growth. And it's not just a category story for us. It's also a share story, right? And we're driving growth in mouthwash, even when the category is growing slower than that, we're taking share. Same thing with acne and acne patches. Same thing with Touchland many of our brands, not just 1 or 2 of them are gaining share over time. So that's why, again, we have -- if you look back at our long track record, 10 years plus, we tend to gain share and about 2/3 of the time periods we're looking at. So that's on the consumer. In terms of -- I think your other question was just what initiatives we have in strategic initiatives. Look, we are crystal clear that we're going to be spending the marketing that we kind of always spend with our Evergreen model. We think this is the right time, that's the right amount, 11% or so, and we're protecting that. And that's part of the reason that even when we came out in the first quarter and lowered our earnings for the year pretty early. We said that we are going to protect that marketing spend. And in Q3 is actually the highest quarter of the year between 12.5% and 13%. So that's a -- we're investing behind the business. We're investing behind the brands. We're investing behind innovation. There's some innovations launched in the back half that we're really proud of as well that will be supported. We'll talk more about that next quarter. So that's kind of where we're at. We're investing behind marketing. We're investing behind price pack architecture where we need to. And we feel we're in a good spot to continue to gain share over time. .

Your next question comes from the line of Dara Mohsenian with Morgan Stanley.

Maybe extending the last couple of questions a bit as we look beyond '25. Just any thoughts, Rick, on your ability to return to the Evergreen OSG targets out of this year are you looking at this year as more of an aberration, understanding a lot of the weakness earlier in the year, things getting better sequentially, but not being all the way back to Evergreen yet. So just -- I know there's a lot of volatility, there's a lot going on but how do you think about organic sales growth as you look beyond this year, particularly with an easy comp in theory with the inventory cuts this year?

Yes. Thanks for the question, Dara. Look, it's called an Evergreen model for a reason. Our goal is to hit our Everbrimodel each and every year, year after year. And we've been a model of consistency in doing that. I think this year is an aberration. When you have categories like we said before, that all of a sudden, for the last 10 years, have grown around 3%. It started out growing in Q1, 1.5%. And in the first couple of weeks of April negative, that gave us pause. I think with the volatility in the world today and the pressure on the consumer and the [ agita ] around the tariff situation that just moved categories in a bigger way. So I do think it's a bit of an aberration. I have a lot of confidence in the Evergreen model for not just 1 year or 2 years, but that is what we are supposed to do each and every year. And we have some brands that are growing faster than the Evergreen model, and we have made some portfolio decisions on other brands that were growing at a lower rate than the Evergreen model. So I think that does nothing but strengthen the portfolio and the company over the long term.

Great. That's helpful. And then just on BATISTE, it's been a great growth brand in recent years, slowdown in Q2, you sound more optimistic in the back half. You touched on it a bit, but can you just give us a bit more detail on what's happened here in the last few months and sort of the plans for the back half and the optimism you have there?

Yes, sure. Well, it's never one thing. It's always multiple things. That's how life and how business is. So Partly, we had some supply chain challenges that we're back and recovered on. So that's a piece of it. We are introducing some innovation, right? And we have to make sure the advertising and the trial generation activities for that line up appropriately. And so that's still early days. We also had a competitor take a massive price increase and introduce different sizes as well. And so when you have that kind of changes and disrupts the category from a pricing size and perspective, so we're taking a look at that. But meanwhile, we have to make sure we're really clear. BATISTE is the leader in the category. It's brought innovation not for 1 year but for decades. And consumers delight in BATISTE. We have led that category with innovation. We've led it with kind of a value as we traded people up to larger sizes. But we're in a difficult economic environment right now. So we have to make sure we have sizes that appeal to all price points. And so that's what the team is working on. And some of those things will be dealt with immediately and some of them are kind of medium term. But I have a lot of confidence we're going to get back to share gains in BATISTE in the medium-term future. .

Your next question comes from the line of Bonnie Herzog with Goldman Sachs.

I actually wanted to circle back with a question on the promotional environment. We've seen increased couponing activity across broader HPC and then scanner data is suggesting that sales on promotions have been rising. So just curious to hear what you've been seeing in your categories and if you expect the promotional landscape to get even more aggressive in the back half of the year? And I guess in that vein, Rick, how should we think about net price realization going forward, especially within your Consumer Domestic segment?

Yes, good question. I think, look, whenever we talk about promotion, where we focus is really our household business, Laundry and Litter. That's the predominant amount of promotion. I would say kind of a divergent story. Litter, actually, that category has spiked up above historical averages. If you look back at a long time, many, many quarters, it could go anywhere between 15% and 18% over years. It's spiked to 21% in the quarter. We were actually down a little bit. Nestle was up dramatically and as they are promoting their lightweight litter in a big way. So that was Litter. Laundry actually is very consistent with the previous few quarters. Laundry detergent is typically in the low 30s. And for the last 12 months, it continues to be in the low 30s. So we were we were up a little bit, but we're still in the low 30s. I think in general, Laundry has been pretty rational, Litter has been elevated. And then vitamins, to some degree, is always a promotional category, but that's a again, a little bit of a smaller business than the other 2 for us. .

Okay. Helpful. And then maybe just a quick question about your gross margin guidance for the year. With end market trends sequentially getting better and your guidance suggesting top line is going to accelerate in the back half. Could you just maybe touch on the puts and takes, including tariffs on the expected declines on gross margins, especially in Q3? .

Bonnie. Yes. So as we talked about, we say, number one here, our gross margin is still in the 60 basis point zone. But obviously, there's some moving pieces that have happened. As we noted, tariffs have not materially changed for the year, although the 12-month number has gone up a bit, but there has been a bit of a timing piece. So there's a bit more in the back half than we initially estimated that certainly shows up in 3Q, in particular. Still driving productivity. And overall, it still keeps us in that same zone. As Rick just talked about, we did have a little bit of a negative price in the second quarter. Now the majority of that was tied to our recall. There certainly is a little bit of discounting going on like a more normal environment, you have that in there. But that's the balance. Again, biggest piece is just the tariff inflation. Inflation is still staying sticky. We keep driving productivity. And I think probably a good time to reiterate. We've done a really nice job to manage the tariff topic. And really, that number is just a timing change for us. The absolute value for the year hasn't changed. We've been very proactive at managing it. The 12-month number has gone up. But again, if we hadn't done all the actions we had taken, we'd have a much bigger headwind and we're just focused on driving that through productivity and probably some strategic pricing as we look forward.

Yes. I'm actually really pleased with -- we kept 60 basis points of the decline is our outlook, and we absorbed a lower gross margin number from these discontinued businesses as they ramp down, right, as you take inventory reserves for them as you do the proper run out of those businesses. And we had a recall that happened for our ZICAM and Oragel business that impacted us. And despite all that, we were able to maintain margin.

Next question comes from the line of Steve Powers with Deutsche Bank.

Great First, just real quick, circling back on VMS and thinking about different strategic options. Just if you were to separate that business, can you talk a little bit about just how compartmentalized that business is and how easily separatable it is relative to any kind of stranded overhead considerations that you have to work through and that we should be thinking about?

Sure. So that business, is -- has separate manufacturing facilities in Vancouver, Washington, it's embedded in our -- also in our York, Pennsylvania manufacturing facility. But it's within its own 4 walls, it's like a plant within a plant within that facility. And then as you would think, R&D and supply chain and marketing, all those functional supports are tend to be a little bit separate because it's its own largely SBU. There are support structures within the corporation. And so there are some allocated costs. And if we did go down the route of selling, we'd have to go address the stranded costs. And that's normal with any business. We just did that with the SPINBRUSH, FLAWLESS and WATERPIK showerhead rundown. I think the big thing for us is -- at the same time, we're also adding growth, right? We're also adding Touchland, and so that helps offset some of those leverage fixed costs as well.

Yes. Okay. Perfect. And then, Rick, setting aside the work that's being done in HPC on kind of portfolio rethinking across a lot of companies. We're also seeing companies kind of double down on productivity announced new restructuring. And on the back end of that, theoretically, size will be stepping up investments in technology and innovation, go-to-market capabilities, et cetera. So as you think about your business, again, notwithstanding the portfolio work you've done. Just how do you think about your spending levels and your capabilities? How do you benchmark them against peers, both today and where you think kind of the puck may be going? And is there any contemplation of having to do something similar from a restructuring and accelerated reinvestment program?

Yes. Steve, you've been following this company for so long as well. We've never really done a restructuring program. We're more of a pay-as-you-go type mentality. I mean I think the only time we've ever called out anything was when we did a reimplementation of SAP and that was kind of a one-off. But what we tend to do is, in any 1 year, we could extremely -- we could go past our outlook on earnings growth, for example. But we tend not to do that. We tend to make investments for the long term, and we've been doing that for years. And so we make investments in some of the analytics we put a center of excellence in place. We put a pricing group in place. We're looking at we've added infrastructure to our international team in a big way. We have centers of excellence over in Europe for the -- really the export business. We're looking at more local innovation, more local manufacturing. But all those things we tend to embed in our Evergreen model and that we kind of pay as you go. .

Your next question comes from the line of Andrea Teixeira with JPMorgan.

I want to go back, Rick, to your comment about how to think about these categories as you are divesting? And also, in general, as you step back in terms of acquisitions, like keeping innovation for be it BATISTE or be it now HERO. You have the body patch. How are you going to be able to continue to innovate and how you're seeing percentage of sales coming from that innovation accelerating in the second half. I know you might be comping some of the Laundry innovation that you had as you enter 2026. So how we should be thinking of that? And then conversely, I think you always have said about 20% of your revenues come from value. Are you gaining share in that segment of your portfolio? Or you're seeing that stable?

Yes. I think I got 2 of the 3, but I'll -- you can remind me what the third one was. So on innovation, you're right, like innovation for us has been kind of a bedrock. When Carlos came in [indiscernible], who's our Head of R&D, he really changed the way we innovate. And -- we went through this at Analyst Day a little bit, but we have so many different vectors now of innovation. And so for the last few years, about half of our organic growth is coming from innovation, which is just, I think, industry-leading, and it's fantastic. So if innovation last year was closer to 2%, it's probably closer to -- our outlook was probably closer to 1.5% as we started the year. It's probably around 1.2%, 1.3%, just as still phenomenal. But in times like this, when the consumers press sometimes they don't reach for the innovative new product initially. So we're still really happy with a lot of innovation. We're putting our programs in place for sampling and for trial. But across the board, like if you think -- take a step back, deep innovation on Laundry has been driving category growth and category expansion and share gains for us. Lightweight Litter has been growing category growth, our brand to grow and share gains for us. BATISTE, LIGHT, HERO, THERABREATH, incremental sizes and flavors. So innovation is alive and well and really a growth driver.

On value share, I think you're right. Part of our portfolio is premium, part of it is value. More recently, as HERO and THERABREATH have outsized growth, the premium kind of mix of our business has grown faster -- but the value portfolio continues to do really well. Even if you look at Orange Box in litter, I mean, Orange Box and Litter is growing around 4%. There's not this massive trade down or trade up happening, but Orange Box and Litter is doing well. I'd say ARM & HAMMER, the brand in Laundry is doing fantastically well. We have a good, better, best strategy there. It's probably the better and the best tiers are growing faster than the good tiers in ARM & HAMMER laundry, but those good -- I mean, better and best tiers are still a great value to the higher-end premium laundry detergents. So -- that's 2 of your questions, what was the third?

First question categories, right?

Yes. No, the [ catagorically ], I think the categories as you think about the exits that you're making, right? And I think now correct me if I'm wrong, it seems like you're saying, well, perhaps we're going to do JVs and think about being creative on how we're going to look at these divestitures. So just to think perhaps if it's going to be just an exit or perhaps you can still be hopeful to sell them?

Yes, on the Vitamin business, right, it's the cleanest scenario is there's a sale. If you do a JV, it's because your partner doesn't have all the capabilities that they would need to run it. And so there's a transition period over time, most likely, and we've seen that in other categories, other industries. And then the third one is how do you rightsize it and grow more profitable and kind of take it out of its of the CPG framework of operating in a little bit more of the vitamin paradigm in operating the business. So those are the 3 scenarios. And like I said, we need a few months to work through the optimal path and we'll report back by the end of the year.

And if I can squeeze 1 on the margin. Are you implying -- and sorry if I missed that, that you're going to be taking pricing because a lot of your competitors are saying we're taking pricing even in the U.S. Can you comment on any pricing that is not list pricing that is not coming from innovation?

Yes. I think we kind of mentioned it in the release or in the transcript. But really, look, we're going to do our best to offset the tariffs as needed. And where we can't do that and where we believe it's needed, we'll take some targeted pricing. So that's the plan. And it's not going to be across the portfolio, but it will be targeted and specific where we get hit the hardest with tariffs that we -- and we can't -- after we've done all we can do to offset. That's where the next path would be.

Your next question comes from the line of Lauren Lieberman with Barclays.

I know you touched on promotions a little bit earlier, but I wanted to just kind of revisit that a bit. I know on laundry, the hovers around this kind of 30% rate, generally speaking, over time. We've seen some kind of more elevated activity from Church & Dwight from ARM & HAMMER in certain retailers more recently, and I know there was like it just happened what day you're in what store. So it's a matter of luck of the draw. But just wanted to get your perspective on further leveraging promotion in liquid laundry, particularly we've got this time with the consumer under more pressure, the way to kind of bring forward the message on the value of the brand, et cetera. Just kind of [indiscernible] promotion from here.

Yes. I would just reemphasize my comments. Like if you look back a couple of years with history, and I have it right in front of me, we've averaged anywhere between 31%, 33% amounts sold on [indiscernible] for ARM & HAMMER laundry detergent. This is an IRI or Nielsen. And in Q1, we were at 31% in Q2, we were 33%. so I think we're right where is considered as historical. We didn't take -- remember I said last quarter, a couple of other competitors had compacted. A couple of other competitors had taken price, we didn't do that. I mean we had done the compaction maybe 18 months ago. So they were kind of catching up. So I feel like we're right in the realm of normality and I think the category is too.

Okay. And just as a follow-up, just the depth of not just the frequency but just anything on depth of promotion?

Yes. I mean depth of promotion -- it's a good question. I would say our depth of promotion has not changed at all. Like we sometimes we line price certain SKUs in order to make sure that they can all hit the promotion. Price and sizing matters a lot in this type of environment, what your opening price points are and what you're your kind of your pricing curves up to the large sizes, but I would say depth hasn't changed either.

And Lauren, if you look at the second quarter, you see a little bit of negative price. But again, the majority of that was related to our recall. So to your point, it's a nominal amount so far, just right in line with Rick's comments.

Next question comes from the line of Olivia Tong with Raymond James.

Great. I get to start with a bit of a short-term question. question. But you had mentioned that July, you had a particularly easy comp and so the growth off of that. Can you talk about the comps for August and September, if there are any call-outs there? And then across your categories, peers have obviously talked about trade down both within their portfolio and then out of their portfolio. So to what extent does trade down a factor for you both in terms of the negative of trade down from Black to Orange and Litter versus factors that are a tailwind to you like laundry?

Yes. I'll take the second 1 first, Olivia. I think trade down overall is a benefit for us. And I think we've said this a few times, but there needs to be, I think, more recessionary type behavior and discussion before trade down really happens. I mean the consumer still is resilient, even though they faced all this inflation and whatnot over these past few years. But typically, when recessionary behavior and economics are happening, that's when extra starts to grow by leaps and bounds. That's when Orange Box outpaces Black Box a lot. So right now, we're doing well in my mind. I mean you see that with all of our share scorecards. We are our value brands are growing share as consumers are tight. But our premium brands that are problem solution brands continue to gain share as well. And that's the THERABREATH, that's the HERO. NAIR is doing really well. So absent the recall stuff, Orgill's doing well. So again, it's a cross section. .

And then your first question...

The months...

The month, we're not going to make a new practice of talking about months, I'm sorry. Like I just wanted to give a sense that there's a high degree of confidence, 2.5% in the back half. That's my point.

And all I would add is, to your point, that confidence in the 2.5, and we obviously talked about the category growth and the U.S. performance and probably should be noted also just the international team consistently performing again despite some of their macro challenges as well. So that's all embedded into that outlook for the back half.

All right. Got it. And then just thinking about the portfolio overall, Vitamin, strategic alternatives, what have you. What's your view on some of the other underperformers, particularly in personal care, as you think about positioning the company for faster growth and freeing up some resources to drive that?

Yes. I feel like -- look, portfolio decisions aren't done lightly. And I feel like we've been very agnostic on where to go and kind of -- where to play and how to win. Like it's -- we're taking white piece of paper and going through that with the Board on here are the brands that we think have a reason for being for decades. And you saw kind of the output as we fast-forwarded those decisions once tariff implications happened, those were already underway and under discussion. And so that was really the portfolio part 1. Vitamins, that discussion, we've done our best to turn that around some green shoots, but that's why we're talking about strategic alternatives today about vitamins. There's no further plans in the short or medium term to go through any other portfolio. These brands are great brands. They have roles. Some of them might be cash cows versus the primary drivers of the company but they all have a role to play, and we're happy with the brands we have.

Your next question comes from the line of Filippo Falorni with Citi.

I wanted to ask on the tariff first. Within the $30 million that you guided for the year, which is unchanged. What are really the countries that are getting impacted within the $30 million? I thought there was some China leftover impact there. So just curious there.

And then outside of tariffs, in terms of commodities, what is your expectation in terms of your input cost basket and maybe you can walk us through some of the major the major swings there.

Good question. So I'll start off with just the broader inflation. It's interesting. It's still holding in there. So if you think about what we talked about for the normal amounts of inflation we're seeing that as we laid out for this year. It [indiscernible] little bit earlier in the second quarter, it's kind of come back to still, still a slightly elevated level. The tariffs, I'll state this. Number one, very very proactive. So obviously, we've done all the things to manage through China. So after that, you get into Korea, Thailand, Vietnam, Europe, those are kind of our top. They make up about 73% of what's left. Even the change is just overnight, actually even net-net makes that number even a little bit better. So the good thing is we're down to -- whether we look at it by country, look at it by product line, it's kind of 3 or 4, and we get to a large portion of what we're facing here. So again, this proactive nature says, "Hey, we're not talking about a change this quarter, we're just talking about how we're going to manage it going forward here". And again, majority will be through our productivity programs. And then we'll look at some pricing as well in some targeted areas.

Yes. And just to reemphasize, it changes all the time, right? I mean even in the release, we put $50 million for our run rate or for 12 months. And even with the decisions overnight, now it's closer to $50 million. So it's going to keep doing that. We have to -- the good thing about our company is we can move with speed and agility. And that's what we have done. That's what we're going to continue to do. .

Your next question comes from the line of Robert Moskow with TD Cowen.

Just want to know if you could touch on a little more detail on the International business. It continues to outpace the rest of the portfolio. And I remember a key strategy of this was to expand U.S. brands into these markets, either through export markets or where you operate your own businesses. Can you give us an update on how that's doing? Like how is HERO doing? How is THERABREATH doing. And in a slower market, is it getting harder to introduce them and gain attention?

Yes. Great question, Robert. I'm so pleased with how international is doing. International growth, mid-single digits, sometimes high single digits, really largely behind 2 or 3 factors. One is as we have local brands like [indiscernible] and even BATISTE kind of growing all over the world. But as we also have these recent acquisitions like thereto HERO, and we've talked about it before, but HERO was in 50 countries within 12 months. I mean that's fantastic for us to be able to get all the regulatory work done to do that. And we're benefiting from that in a big way. There is a strong demand for HERO and THERABREATH all over the world. Many of these countries that we talk about, they're having the same economic malaise that the U.S. is. And so when categories are 0 to maybe negative in many of these countries, some of our competition, if you look at it, is actually declining in many of these countries, we're growing. And we're growing mid-single digits, more often than not, because of some of the acquisitions and new brands for new retailers are driving growth for categories and story we have here. And so -- we -- I guess the answer is yes. We're doing -- brands just continue to grow existing brands in other countries all over the world. The new acquisitions are doing really well. And I think we have -- we're in early innings there. There's more momentum to come. And then finally, we continue to look at acquisitions independently in Europe and China. I think that team is ready for it. We just need to find the right fit. And and we look at what countries we should become a sub in the future. Like so there's a whole -- there's like 4 or 5 pieces of growth for international, but they're doing a great job.

Your last question comes from the line of Kevin Grundy with BNP Paribas.

Two quick ones. At least I hope they're quick. To follow up on Lauren's question, Rick, you guys sound fairly benign on the promotional environment. I ask this in the context, there's competing narratives. You guys sound fairly benign. Your key competitors are suggesting that things are ramping. The Nielsen data would suggest things are ramping, particularly around ARM & HAMMER. So with that context, what do you have embedded in the back half of the year for promotion levels, particularly for household, which is where you see most of the promotion. And if the answer is like we expect more of the same, which your characterization was relatively flat, how much cushion do you have to respond? Because it seems like your competitor well? And then I have a follow-up.

Yes. I mean, look, you guys can ask all about promotions. I kind of gave you the answer. Q1 and Q2 are within historical norms in laundry. And there's not much more to go there. I mean, some of our competitors were lower on promotion in Q2 2025 but you got to remember, it's all about the net price point, and they took price as well. So sometimes when you look at promotion, you got to make sure you're factoring with the net prices. So I would say promotion for us is consistent with the last 3 or 4 quarters, maybe even 4 or 5 quarters. And in the back half, promotions are already set for the back half. They've been sold in for a while now. So in this environment, we saw -- and maybe it's because we saw it further afield than most. But 6 months ago -- 9 months ago, we were seeing how some of the promotional volumes weren't as effective because everyone category was there. Everyone's promoting across many different categories. And so we made sure we put the plans in place even late last year, early this year for the whole promotional calendar. So I have a lot of confidence in our Laundry business. Our Laundry business in the month of June and July is -- continues to gain share and continues to do well. And I think part of that is promotional, but I think part of that is innovation and deep line continues to do well, hit hurdles and drive category growth. So long answer, but that's the facts that I look at.

Okay. Very good. And 1 quick follow-up on the call is going along here. Just on the Vitamin business to come back to that. Can you talk about how you balance the timeliness to get something done and naturally getting the best value can for it and minimizing the potential risk that there's another leg down in the business? Because I think just intuitively, when these sort of announcements are made, it shows sort of a decommitment to the asset to retailers and the business is struggling. And so from an investor's perspective, if this goes 2, 3, 4 quarters, how do you protect against another leg down. So your comments there would be helpful as well.

Yes. Look, we're running this business like we're going to own it forever. And that means that the amount of time and energy we spend on innovation doesn't change, the amount of time we spend on promotional pricing to programming doesn't change. That's how we have to run it. And then if there is a strategic choice to has been different, and that's what we do. But that's what our communication will be with the retailer. They want Vitafusion [indiscernible] to be successful to. It's a big brand. And so we're going to continue to show them the innovation, continue to show them why we believe it can grow categories after we get through this kind of GDP down cycle. But at the end of the day, it's -- they're good brands. And I think for us, we're spending an inordinate amount of time for what's relatively a small business. And so that weighs into my thinking on how much time the organization spends on supporting the business of that size versus the benefit, and that's part of the kind of strategic decision to.

I would now like to turn the call back over to Rick Dierker for closing remarks. Please go ahead. .

Okay. Well, thank you, everyone. Likely and I said, A lot of confidence as we look forward. The company is doing extremely well in a tough environment. And we'll talk more at the end of October on our next call. Thank you.

Ladies and gentlemen, this concludes today's call. We thank you all for joining, and you may now disconnect.

For our next session, I am thrilled to welcome Church & Dwight back to the conference. As you know, Church & Dwight is a leading household and personal care company, not only in the U.S. but increasingly internationally as well, achieving over $1 billion in non-U.S. consumer sales last year.

With us representing the company is President and Chief Executive Officer, Rick Dierker; newly appointed Chief Financial Officer, Lee McChesney; and our Executive Vice President of International, Mike Read. The guys are going to run us through a presentation for the first 25 minutes or so of the session, and then we'll use the balance of time for Q&A.

And with that, I will turn it over to Rick.

All right. Thanks, Steve. Thanks for the invite. Always good to be in Europe. We've been here for about a week, traveling to Germany and Italy and London. So good use of time. So let's kick it off.

Here's our normal disclosure statement. Please read this and take your time as we make forward-looking statements. We remain confident in our future despite a volatile environment that we're in. We have a balanced portfolio. We'll go through that detail in a second. We're driving share gains. Our latest acquisition brings a lot of growth -- a lot of opportunity for growth. And the last 2 that we've done are also growing in a big way.

Our online business is accelerating. Innovation remains core of what we do. And we're seeing strong international growth, and Mike will talk you through that. And then we're confident about the evergreen model in the future, and Lee will give you some thoughts.

So a $6.1 billion company, about 75% of it is U.S. and the balance is between international and SPD. We have 7 power brands. They make up about 70% of our sales and profits. We're balanced from a household and personal care perspective, so about 50-50. We're also balanced from a value personal -- value and premium perspective as well.

And when you think about our portfolio and take a big step back, it all started with ARM & HAMMER baking soda. We were founded in 1846, and this has been just the core of the company, and it's enabled us to do many, many things over the years. But this ARM & HAMMER brand is in so many different categories. It's in personal care, it's in household. It's in -- plays premium at times, it plays value at times. Cat litter, laundry detergent, toothpaste, it's known for deodorizing, refreshing. It's known for home remedies. It's known for cooking and baking.

And this brand, if you look away back, back in the year 2000, was about $1 billion. So from 1846, all the way to the year 2000, we were around $1 billion of the ARM & HAMMER brand. And then over many, many years, that $1 billion has turned into $2 billion. So a strong brand that goes across many categories has been growing close to a mid-single-digit CAGR for many years. And then that's enabled the company to do acquisitions. And so we bought other brands and businesses. And now when we look up, we have a $2 billion ARM & HAMMER portfolio, and we have a $4 billion of a collection of other brands and businesses.

Let's move to the categories. So categories, we talk about 7 power brands that compete in 8 categories. ARM & HAMMER computes in laundry and litter. And we have a great track record of growth for our categories. If you look back not just 5 years but even longer than that, 10 or 15, our categories tend to grow between 2.5% and 3%.

Now recently, there was a lot of discussion about category growth as the world is in turmoil and volatile these days. But for us, our categories are a good cross-section of the U.S. consumer. And our categories grew about 4.5% in early first half of 2024. They grew 2.5% in the back half -- I mean, sorry, in the front half -- yes, in the back half of 2024.

And then January grew, February was growing, decelerated a bit. And then March was flat. And on the earnings call, I said that April was actually negative for the first couple of weeks. And then what happened? A little bit more certainty arrived, Consumer confidence improved a bit, and we were actually positive for the month of April, and we're positive for the month of May, our categories again. So that's a good early sign.

Now categories are only half the equation. The other half is what we're doing in terms of share. And I'm proud to say that more often than not, when you look back over 10 years, about 2/3 of the time, we tend to gain across our portfolio and 5 of 7 of our power brands were gaining share in 2024.

So let's talk about a few of the categories, FABRICCARE. So the category was largely flat for liquid laundry detergent in Q1 and we grew a little bit above 3%. So we're gaining share there. We actually hit an all-time share high, 14.7%. When you look -- your eyes go across the page, remember, we started at a 5 share. And we have stair-stepped over many, many years to a 14.7% share.

And ARM & HAMMER again, it's one of the core pieces of this company. And the benefit is if we advertise on ARM & HAMMER laundry, it helps liter, it helps toothpaste, it helps across the different categories. The other thing helping ARM & HAMMER laundry these days is our good, better, best strategy. We are -- we have the base ARM & HAMMER SKU, which is good. We have ARM & HAMMER with Oxi, which is better. And then we have deep clean which is our best product yet.

Moving to Cat Litter. Cat litter, the category has been growing around 2%. We're growing a little bit faster than that. So taking a little bit of share. Over a long period of time, we continue to have share gains, and that's largely driven through innovation. Euro, this is a really exciting story. This is acne. For a long time, this category was a $500 million category. And then the new forum was introduced by HERO largely in the U.S., and that category now is closer to $1.5 billion. So it's not just a household penetration story for HERO and for patches. It's also when you find the right brand, it can grow the category in a big way.

So acne in the quarter was actually flat to down slightly, and acne HERO business had double-digit consumption growth. And share gains are following, right? It's growing at a very high clip all the way from 1% to 20% plus from a share perspective. And we believe that there's still a lot of room to run for HERO, not only TDP growth but we have distribution opportunities, we have ability to -- in my mind, double or triple our shelf set because these are such fast-moving SKUs. Sometimes they run out over the weekend. We want multiple points of display. So that's the story that we're talking to with retailers these days. Our household penetration is around 9 and the opportunity for the acne category is closer to 30.

THERABREATH mouthwash, again, flat category growth, but we're growing the category because of THERABREATH, more often than not. So double-digit consumption growth all-time share highs, which is fantastic. And again, we believe we have more room to run here, not just TDPs, but we're not just the #1 or #2 non-alcohol mouthwash anymore, we're the #2 mouthwash in the U.S. And so we're going back to retailers with the story on share of shelf, right, and how much room we deserve. But household penetration is also a fantastic runway. We have about a 10 share on household penetration and the category itself is around 65%, so optimistic. And here's transition over time, again, hitting a 20-plus share as the #2 mouthwash.

Our latest acquisition. So this is new news today. This is our Touchland acquisition that we just announced the signing of a few weeks ago. It's one of the fastest-growing brands. It's actually the hand sanitizer business. We think there's a lot of parallels between the acne category that was maybe an old study category that hadn't grown much over the last decade. We believe we can drive category growth here. It's the #2 hand sanitizer in the distribution channels it's in. Purchase price is $700 million of cash plus $180 million of an earnout. Trailing sales are $130 million to hold that thought. I'll show you some math on HERO and THERABREATH as well, and we expect to close that in the next few weeks. And this brand will become our eighth power brand.

So Touchland is really -- if you think about Touchland and the experience for hand sanitizer, I've been telling a lot of investors, it's really about -- the current products are medicinal, right? You go to the hospital, it has a smell. It's not a good consumer experience. This makes it a great consumer experience. It has fragrance. It has moisturizer. It's in a package that is premium. It's on the go, all the things that attract consumers. Consumers are choosing to use hand sanitizer more often than not.

And Touchland is bringing new users into the category. It's in a couple of different categories right now. It's in hand sanitizer in early days in body mist, it's $640 million category, as I said before. Household penetration is 6 and hand sanitizer is around 37. And then here's my favorite slide that we put together. Just as context, when we bought HERO and THERABREATH, they were around $100 million businesses from a trailing 12 months perspective. After a couple of years, those businesses are 3 to 4x larger than they were and we have some more expectations over time for Touchland.

And then my last slide before I move on a bit is really Sephora. These -- the Touchland brand is only in Canada today. They're now launching in the Middle East. And actually, this past weekend, they were at the #1 store in the world, Sephora in Dubai. And this is just a fantastic display and support. So really excited about this business. In a similar way that Mike and his team on the international side have really blown out distribution. We're in 50 countries for THERABREATH and HERO within 12 months. We believe -- while we're going to be a little bit more purposeful on what partners we go after, we believe we have an advantage here as this business grows.

Online is a core competency for Church & Dwight. We've moved from 2% of sales to 23% of sales. How do we do that? More often than not, we're gaining share. We have record online shares for ARM & HAMMER laundry for THERABREATH and there's ZICAM. It's not just a U.S. competency. It's a global competency.

And then innovation is a big reason why we can grow organically year after year after year. Half of our company's 4% organic growth last year came from new products. That's an exceedingly high number and it gives us a lot of confidence. We've built the muscle. We went through that during the Analyst Day. It's not just a 1- or 2-year initiative. It's really -- we have 4 or 5 different vectors that new products come from now. And in 2025, we launched a few variants on Deep Clean, FREE & CLEAR. We got behind vitamins in a much bigger way, Power Plus, a new body SKU for HERO and a new variant for BATISTE.

All right. Well, with that, I'm going to turn it over to Mike, and he's going to talk to you about how confident we are in the future for international.

Great. Thanks, Rick. And thanks, Steve, and Deutsche Bank for another great conference. All right, I'm going to talk about Consumer International and our Specialty Products division. So as Rick mentioned, about 18% of our sales in total comes from international, and we aim to grow our business 8% organic year-on-year. We're a little over $1 billion in size. And if you think of the -- we're split into 2 ways, we operate through what is now 7 subsidiary markets. We added Japan with the acquisition of a longtime partner GRAPHICO in Japan in 2024. So about 2/3 of our business is direct through subsidiary market. The remaining 1/3 is operated through what we call our Global Markets Group. We partner with about 400 distributor partners across the globe and operate in more than 100 countries.

We've had a long-standing track record of high single-digit growth, and that informs what is our 8% CAGR rate and that will continue as we move forward. When we talk about 18%, that's a far cry from many of our peers in the CPG space. So we're still very early in our global expansion, 18% of revenues. Many of our peers are in the 40%, 50%, 60% range. So we have a lot of global expansion, a lot of white space from a geographic perspective. I think most importantly, as we have brands that travel really, really well. So it's just that intersection between white space geography and brands that will expand into new markets is why we have so much confidence in our growth ahead.

We kind of think about it in a few different ways. One is we've got a good track record of taking large U.S. brands like ARM & HAMMER and OXICLEAN into global markets, we also have a largely personal care and OTC portfolio that is unique to our International division, as well as we've done a much better job of taking recently acquired acquisitions and blowing them out. So as Rick mentioned, we've got into over 50 countries, both HERO and THERABREATH in a really quick period of time. That's not a muscle or capability we had a number of years ago that's kind of newer to our business. And that gives us a lot of excitement, certainly, about the addition of Touchland will have a sort of similar pace. And as Rick said, we'll be selective about where we do that. But our ability to get it out into multiple geographies is encouraging.

So just from an international perspective, the way I kind of summarize this is an exhaustive list, but we're making a lot of investments to continue to grow our business. We made the acquisition in one of the largest geographies in Japan. We've added an ERP system to support our global markets group. We've widened out a lot of our regulatory and IT infrastructure. We've expanded offices that support our Global Markets Group in Panama, in China and Singapore. We're much better, as I mentioned, on rapid expansion of our acquisitions. And we've quite purposely put some M&A resources both in Europe and in Singapore to start getting into the deal loop from an international perspective. Historically, we've been largely taking U.S. brands and taking them globally. We are on the hunt for looking at international opportunities to help build scale in key geographies.

As we move to specialty products. Similarly, we've got our evergreen model. We aim to grow 5% organically from our specialty products division. This is a little bit smaller of the group, $300 million broken up into 3 parts. The main part of our business is almost 60% is animal nutrition. So prebiotics and probiotics, largely for the beef, poultry and swine space. We've got about 1/3 of our business is what we call performance products, which are specialty chemicals, everything from baking to water treatment to kidney dialysis. And then our smallest division is actually our fastest growing one, which is our commercial and professional. So this is where we're taking our consumer brands into the B2B space.

Similar to our consumer portfolio, international expansion is a key focus. This is largely our Animal Nutrition business is now almost 30% of its sales comes from non-U.S. markets. We've made some divestitures within our SPD business, but most importantly, is we've had a bit of a up and down from an organic perspective, but we've now got that as we've repurposed the portfolio, and start to expand globally. We do now have kind of 5 straight quarters of growth and a much more stable growth pattern. So expecting some good consistent growth ahead for our specialty products.

And with that, I'll pass over to Lee.

All right, Steve. Thank you again as well. Good week. As Rick talked about, we got to travel across Europe, and we spent a nice day with Mike and his team yesterday hearing about our Europe plan. So as you just talked, some good momentum there.

So let's start with -- for the financial update, really a view -- just a reminder of our evergreen model. I mean the foundation that really is our approach running Church & Dwight. This model has served us well and it keeps the team focused on the right priorities and certainly aligned across the globe. First up in the model is certainly our focus on delivering 4% organic growth. That's made up a 3% organic growth in the U.S. domestic business, 3% for international and then 5% for SPD. And how have we done? Well, certainly, it looks pretty good there. We've averaged over 4% over a number of years despite a lot of macro events. So it's certainly not something new for us, and it's what we've been doing for year in and year out.

Next up would be gross margin. So just a hallmark for Church & Dwight, we believe that gross margin expansion is one of the most important objectives there is. Gross margin expansion leads to EBITDA growth, which drives free cash flow, which is what we really think valuation is based on. And while new to Church & Dwight, gross to margin is certainly a topic that Rick and I have had a long career of driving in our respective businesses. Each year, we ensure our teams drive a series of actions to drive 25 to 50 basis points of improvement.

So as you can see on the slide, we've ended the last year about 45% after driving programs to really offset the headwinds we've all faced coming out of COVID. We also call out marketing in our evergreen model as it's fundamental to driving our brands in the marketplace. It's a short, medium and long-term investments in our brands. We've really ranged anywhere from between 10% and 12%, but 11% is really a sweet spot as a specialty company as we grow in size.

And then for SG&A, we're focused on driving leverage from sales growth, but also continuing to make incremental investments in areas like international and e-commerce. And those elements, in the end, are what makes up our model growth -- target growth of 8% EPS growth. And when you look back at 2017, a lot has happened in the world. Our evergreen model has delivered above that objective, with a nice mix of high single-digit and low double-digit growth.

So as we pivot to '25 here, it's certainly been a bit volatile. And not only like a couple of those years you just saw and what we walked through. This year, some days felt, frankly, a little bit like the stress points of COVID in the first round of global tariffs. And the tariff news certainly drove consumer sentiment to decline. It was challenges for our retailers and our resilient categories actually slowed and went negative for a few weeks. However, we have remained focused on what we can control.

Our growth across the globe, we're poised to deliver another year of record productivity and our innovation of brand investments continue to drive sales growth and share growth. That combination will still be a positive for 2025 as we communicated on our May 1 earnings call. So on May 1, we talked about 0% to 2% organic growth. We did talk about a gross -- adjusted gross margin was down 60 basis points. That's primarily from the inflation in tariffs and the timing associated with the tariffs. Marketing again, still 11%, still investing in the brands. SG&A is slightly lower and then adjusted EPS growth of 0% to 2%. And then cash from operations just about $1 billion.

Now in May, we also conveyed an update that we were discontinuing or divesting 3 businesses. SPINBRUSH, FLAWLESS and WATERPIK showerheads. This was a culmination of a review that has been conducted with the Board in 2024 and their potential tariff pressure in early '25, just frankly accelerated a decision for us. These businesses represent 2% of our sales, and we're positioned to drive 45% of our company tariff exposure.

Now we also conveyed that our tariff exposure on May 1 was about $190 million. But after you focus on the discontinuation of the 3 businesses, and completing the next phases of the WATERPIK water flusher manufacturing shifts out of China, we shared our net exposure was between $30 million and $40 million, which we will mitigate through supply chain actions over the next 12 months.

Now let's look forward from a cash flow perspective. Our 10-year average has been a best-in-class 119% free cash flow conversion. This enables us to deliver meaningful capital allocation, and cash flow really represents true results as we get there through the focus on the EPS and on working capital management.

Now the sustained cash flow certainly comes through in our investment-grade balance sheet, again, over a period of time when many hurdles came at all businesses we've still delivered and it provides us strong flexibility.

Now back in January, we shared a potential for $6 billion of acquisition firepower. That means the close of the Touchland acquisition in 2Q leaves us plenty of dry powder, over $5.5 billion available to do additional acquisitions, certainly in 2025 and beyond. And that is what our stated top focus of the use of free cash flow is. We think the #1 value-creating opportunity is looking for the next business or brand to bring into Church & Dwight. We certainly will remain disciplined as we go through that process. That's what you've certainly seen us do that over the last couple of years. Beyond that, certainly, we continue to invest in organic, whether it's CapEx or organic growth, our productivity programs and certainly NPD. Number 4 is debt reduction. And then certainly, we have a great track record of paying dividends and buying back shares to return cash to shareholders.

And this chart is certainly one of my favorites a long track record of 124 years over a century of paying dividends. Credibility, consistency no matter the environment is certainly what Church & Dwight is known for.

So I'll end with where Rick started us. We're in a good place despite the volatile environment. We have a balanced portfolio. We're driving share gains. Certainly, the Touchland acquisition is a nice opportunity for us in the back half of the year as we think it will close in the second quarter. The online channel continues to grow in significance for Church & Dwight. Innovation is certainly driving our record NPD, and as we just talked about the international business is a nice growth opportunity. So we're certainly confident about the strength of the evergreen model even when you have some volatile periods that we just went through here, the start 2025.

With that, Steve, over to you for Q&A.

Great. Thanks. Right on time. Just like you said, Rick. Okay. So Rick, I guess, maybe as you said, things have picked up since consumption levels anyway have picked up since early April. As we think about the progress in the second quarter, acknowledging there's still work to do. Any call-outs in terms of consumption versus shipment expectations for Church & Dwight specifically? Any known disconnects that we should be thinking about, whether it's destocking or just timing dynamics?

Yes. I think that's a fair question. Like walked through in the beginning, consumption for our categories is a little bit better than we had seen early on in the quarter. And that's always encouraging. I said on the earnings call that our category, when we flip to negative that it's not normal, it wouldn't be -- we didn't think it would last very long. And I'm glad to say that the volatility of the world today and sometimes that drives consumer confidence in categories.

Shipping to consumption, when you have that volatility in the world, and then that leads to consumers being volatile, it also leads into retailers. And there's agita when that happens. And I think choices are made and people retrench a bit, foot traffic is down in some cases. And that leads to ripple effects on inventory. Some of that happened to us in Q1. I would say -- I would just repeat what I said during the Q1 call is we think there's a little bit of that in Q2, but not nearly to the extent that we saw in Q1. I think maybe back in January, we thought that would bounce back. We're being a little bit more conservative these days and say, you know what, this is kind of a new world we're living in. So we're just -- we're more enthused than ever that April turned positive and May was positive as well.

Okay. Mike, the -- speaking of agita, the tariff trade environment, obviously hugely dynamic. As you think and map out the longer-term opportunities and ambitions for Church & Dwight internationally, how does the evolving trade policy regime globally impact that? In terms of your reliance on export models in a world where a tariff that has ripple effects, so have you rethought at all the path towards international expansion?

Yes, I think there's rethink on specifics, but I'd say we are already on a natural progression to start scaling up in certain regions and moving away from purely and export into establishing infrastructures and local manufacturing where it made sense. We already do that today in some regards. And I think it just helps inform kind of where we have to up that office in certain areas. But yes, I think it validates what we've already started, and it's just we'll continue to pick up the pace. But I think for us to be consumer insightful and competitive in global markets and not just rely on sort of the U.S. export mentality is just the natural stuff that we're taking as a global organization.

Okay. And Lee, the new on the block fitting right I guess, a little bit more of your impressions or your first and half impressions. We've heard from you a little bit on this topic. But just you're welcome into the Church & Dwight organization and kind of what imprint you hope to leave as you go forward?

Yes. Thank you. So I mean, obviously, I joined because I was impressed by Church & Dwight. That's what I would say the view on the outside was in my -- I guess we're now rounding into the third month. I continue to be impressed with the quality of the team at multiple levels throughout the organization is interesting. Probably the most common experience I have is when I meet someone new from Church & Dwight, they want to tell me what they're not doing. And it's always an interesting perspective.

Let's look at what you've already done over the last whether it's 1 year, 3 years, 10 years, which is great. And that speaks to the culture. We're just constantly focused on improving. Now my mindset is, yes, I've got to experience. I've been through, certainly, one organization, went through rapid growth from a couple of billion dollars up to double digits, and there's lessons learned. So hopefully, I can bring some of those to the fold here. But I do have the fortune. I've done many financings, a lot of M&A, a lot of operating roles as well. So just hopefully, we can make a few less mistakes and probably I have learned from the past and pass it on to the team here and just keep us on our journey here. There's a century of success here and certainly the last 20 years has been pretty impressive.

Great. Here on THERABREATH, consistent, your optimism in those brands' ability to continue to grow. When you think about the drivers of growth, maybe there was more than this. But if I think about sort of distribution opportunities on the base business, just marking brand awareness, marketing awareness opportunities and then incremental innovation and adjacency expansion. How do you stack up those drivers? It's probably a little combination of all of the above, but -- where are they in terms of maturity?

Yes. There's -- it's not one. There's 3, 4 or 5, right? And it's household penetration. That's why we showed that in the presentation. It's further distribution opportunities. Innovation is doing fantastic as well, especially on THERABREATH as we widen that lineup. I think international is one that you didn't quite mention but maybe 5 or 10 years ago, if we would have bought THERABREATH or HERO, would have been a $5 million opportunity. It's tens of millions of dollars already. And I just think that it has such potential as it's such a great story for not just Church & Dwight, but for retailers, for the category, for a country's category growth. So I think international is a big one as well.

Yes. Okay. Good. Now you put up the slide in terms of the analogies of HERO and THERABREATH getting the 3x, the original size, alluded to Touchland doing the same or aspiring to do the same, what's the path to 3x on Touchland? Because it seems like the starting point in terms of retail footprint and the path to get there is probably a little bit different. So what does that -- what are the differences? And where is the confidence lie that you -- that that's a fair aspiration?

Yes. There are similarities and there's differences. So the example I gave earlier was for the category, right? HERO, $0.5 billion category, new problem solution brand and form comes in, and it's $1.5 billion today. I do think that will be a driver hand sanitizer. I think it's -- people are choosing new consumers who are coming into the category, that's a big deal. I think it's household penetration, like I said earlier, 6% or 7%, going to 37% for hand sanitizer.

And what we found is the young consumers are loving the brand. But they're bringing their parents into brand. And the research we really did is we spent time on what those consumers are doing. And there's a great loyalty rate and repeat rate for people between the ages of 20 and 55. And so as that brand builds, because remember, they don't really spend marketing today. It's unpaid endorsements over time.

As we build that brand and yes, EBITDA margins will come down from the 40s, but we're going to build the brand for the long term. And over time, as Touchland goes into other categories, and body mist is a good example, already off to a fast start. That will build again just awareness penetration, that cachet and that premium prestige brand will do really well in the U.S. And we think there's a lot of opportunity globally as well, like I mentioned before. So all those things together, I think, are why we believe in that business is growing by leaps and bounds.

Mike, what's the time line in terms of -- I mean, you got to close the deal first. But like in terms of slotting Touchland into your playbook, how far up the ladder does that fall?

Yes, we're going to do similar to what we did with here on the THERABREATH is we're going to first understand kind of the regulatory pathway of getting into different markets. And then it's really just about finding the right markets where we can be selective and find the right retail partner. It's gone to market a little bit differently in the U.S. through a very select set of customers. We're going to try to replicate that playbook into -- in international. But I would say our ability and our reach to do that is far more advanced today than it was a number of years ago. So we're already kind of laying out that thinking in order to kind of accelerate as quickly as we can.

Okay. What's the average price point on the core hand sanitizer like $10?

Yes, $10 for the hand sanitizer, $10 for the body spray.

How has growth powered through the first part of this year with consumers being increasingly value sensitive and a bit skittish overall? Has it proved to be more durable? Or is it proved to be more discretionary at that price point?

No similar to a THERABREATH or a HERO. When you have a great problem solution brand, consumers are choosing to go that direction because it solves a need. And so there's momentum, there's acceleration still.

Okay. Vitamins. Been at the point of struggle, kind of '24 into '25, lots of initiatives in the hopper as the year started and kind of progressing as we go. And yet -- but at the same time, the consumption trends are still lagging. Where is your confidence in the program for '25 relative to the start of '25, and just your overall outlook on vitamins, both the category and -- sorry, Church & Dwight's place within it?

Yes. Sure. So vitamins, we've been very transparent like we always are. I think we're more transparent than most. Look, the category for a long time was a mid- to high single-digit grower. It attracted a lot of competitors. When we entered the business, there are 6, now there's 100 competitors. Vitamins, gummy vitamins back in the day were maybe a little bit nuanced and now they're almost ubiquitous, right? You go and buy vitamin D, you want -- if you don't have this brand, you're going to go to the next brand.

And so we've been really focused on trying to build the brand over the years, but our efforts have been fragmented. And so 2 things that we've really been focused on is fast forwarding really 2 or 3 years of innovation in the last 12 to 18 months. And so -- we've launched a better tasting formula across the whole lineup, Power Plus, which is our most powerful vitamin, and then 80% of the SKUs have a sugar-free alternative.

When you do -- that's how you build brands over time. You got to have a consumer leading innovation. You also have to be talking to the consumer and the right consumer correctly. So we put a lot of time, effort and energy into those 2 things. All those efforts are hitting May, June, July. So we're going to make an assessment of that business post that period, and I'm optimistic that we're going to have some green shoots. Are we going to go from minus 20 consumption to positive? No. But that's not what I'm looking for. I'm looking for incremental improvement because as I said, maybe I said it publicly or not, but there's only a 9% loyalty rate really to the vitamin business these days.

And so we have a great opportunity to go grab some share back, to get those folks, those consumers reengaged and to learn to love the best tasting vitamin again. So I'm going to kind of hold comments until probably August because that's -- I want to see those KPIs. The good news is our new vitamin, the Power Plus variant has phenomenal reviews on Amazon, it's early days.

Okay. Great. In the ARM & HAMMER portfolio, laundry and litter, in laundry, there's been some choppiness both for the category and for the kind of relative brand performance. In litter, we've been talking about monitoring kind of promotional battles, not for, I guess, over a year essentially. When you zero in on both of those categories in you position them, what are you seeing from a category dynamic in terms of just level of competition, rationality, consumer loyalty to brands or not? And just your relative optimism as you go forward?

Yes. The laundry and litter, any brand that falls -- any product that falls under the ARM & HAMMER brand, we always have a lot of confidence in. Like I said before, even the CAGR over the last few years for the whole ARM & HAMMER brand is mid-single digits. So it's fantastic. Laundering litter, when we promote, we're promoting behind innovation. So lightweight litter, a hardball and Deep Clean laundry detergent, that's where our dollars go because we want to go drive trial, drive trade up, drive repeat and loyalty over time. And that's working well. And I just showed you the first quarter we gained share in both of those categories.

When we talk about promotional levels, household is the only real business that we talk about promotion that is laundry and litter. I would say they're still a relatively bounds within historical levels. It helps when the category starts to recover a little bit, which it has done over the past few months. So overall, I would say it's still rational.

Okay. Mike, on your slide, you talked about -- you noted the ERP rollout. I think there's been a lot of investment in the IT infrastructure and sort of quietly transition this ERP. How do you guys think about the technology journey inside Church & Dwight? And I guess, why isn't it a bigger proactive narrative from the company as opposed to something behind the scenes, it's just a quiet enabler?

Yes. I'll have a few comments, if either one of you guys want to add, that's fine. Look, it is a key enabler. And actually, under the hood, it is probably one of the great reasons why we have a competency in integrating and growing brands through acquisition. To have a North American ERP system that I can get daily sales on every single day we've both come from other companies where that is not the case. And so to have information free flowing that quickly is fantastic, to be able to have people in the organization that have been doing integration for not 1 or 2 years, but for a decade or longer. And the same playbook happens because you have a normal and a clear ERP system way to do it is fantastic. It's a repeatable process.

So I think we tend not to highlight our IT spending as the strategic direction of the company, but it certainly is an enabler for us. We have an SAP system in Europe. I think the SAP system we just added for our GMG business is key. We added one for China as well. So I guess the message is we've laid the groundwork. We've laid the investment so that when we scale, we can do so in a modular way that's easier.

Okay. It wouldn't be a Church & Dwight session without talking about M&A. We've got a minute left. So Lee, sort of organization's readiness for M&A above and beyond Touchland. And then Mike, the relative priority international M&A plays, especially in kind of a global volatile market?

Well, certainly, I mentioned we have the balance sheet for capacity. But as you talked about also the organizational capacity. You think about the model we look for when we're finding acquisitions, we're looking for things that enhance the portfolio, but in particular, they're asset-light. We're not bringing in factories. We're not bringing in thousands of employees. So we have experienced people who have been doing this for many cases, decades. So we certainly have the ability if something was to come available in the back half of this year, we could handle it, probably capacity maybe 2 to 3 on maybe every 12 to 18 months. But again, we're going to be disciplined and make sure it hits all the marks on our filter.

I think from an international perspective, the criteria is the same. I think the additional one is we're trying to look for things that allow us to scale up in select countries. So that wouldn't -- we wouldn't sort of throw out the criteria in order to do that. But where those 2 things meet then there's an opportunity to kind of think differently about starting internationally and building scale through acquisition in select markets.

Okay. Right at 0. Thanks, guys. Appreciate it. Thanks, everybody, for joining.