Colgate Palmolive Company CL CEO Noel Wallace on Q1 2020 Results

First, I hope that you and your families are safe and well during these unprecedented times. Obviously, we're operating in a difficult environment and we expect things to stay difficult for some time. But there's one thing you should know about Colgate Palmolive and the 34,000 people at the heart of our company: we're at our best when times are difficult. I want to thank all the Colgate people around the world, many who are listening to this call, who have scaled enormous obstacles to keep our business running and to deliver the results that we reported today. We thrive in difficult times because we are at heart a local company with global brands and strategies and best-in-class execution. Our locally based operating model, financial discipline, and sound balance sheet help to position Colgate to emerge from this crisis an even stronger company. We produce and sell products that people rely on every single day to keep themselves and their families, including their pets, safe and healthy. Our responsibility to our employees, our customers, our consumers, and our communities has never been greater. We treat this responsibility with the utmost seriousness and intend to do our best for all of our stakeholders, including our shareholders. That said, and despite strong Q1 results, we have chosen to withdraw our annual guidance for 2020. This was not an easy decision for us. However, given the combined uncertainty surrounding the future impact of COVID-19 and government actions to stem the threat of the virus, we believe this is the correct choice. The second and third order effects of this crisis – economic stress starts to affect our retail partners and consumers – are difficult to predict at this point, particularly as they're intertwined. As we proceed through the year, we hope to provide you with updated guidance when it proves feasible. In that light, I want to focus on what we are, how we are managing through the crisis, to give you the context for what we're facing but also some confidence in how we are meeting this head-on. I'll discuss three topics: while staying true to our values and purpose is helping us navigate this environment, how we're adapting our strategies and executing with agility, and how we're managing through the crisis with an eye towards the future.

Staying true to our values and purpose is vital in the current environment as it impacts both our people and our brands. Our number one priority around the world is the health and safety of our Colgate people and their families. In order to deliver on that, we have to implement many policies and procedures to enhance health and safety standards within the company. We have advanced our safety and screening protocols and made adjustments to our work processes for social distancing where possible. We're expanding these policies through our third-party partners. Additionally, we are expanding our health and wellness programs for our people, including counseling, paid time off to care for family members, and flexible schedules to adapt to changing family circumstances. We have talked to you a lot over the past years about brand purpose and consumers' preference for brands that give them something to buy into. The results we have seen in the marketplace show that consumers are responding to this crisis by focusing on trusted brands. Our marketing teams have created new programs and adapted existing ones to lean into our brand purpose. At the beginning of the year, we began to roll out a new equity campaign for Colgate toothpaste based on the inherent optimism of the brand. The central idea is powerful: using Colgate toothpaste gives people the confidence to smile on, regardless of the challenges or questions they face. We've adapted this campaign in digital settings to highlight how important smiles are in a world where we can't be with the people most important to us. So these days, your smile – whether on Google Hangouts, Zoom, or FaceTime – that lets people know that you feel well, that lets people know how you feel about them. We know hand-washing is a first line of defense against the coronavirus, and we're very proud of our work with the World Health Organization to promote hand-washing by distributing 25 million free bars of soap. We initiated this program to support WHO's #SafeHands campaign and are partnering with Save the Children and CARE to distribute the product, particularly in emerging markets where the need is most acute. We're also donating $20 million worth of health and hygiene products to help consumers in hard-hit areas. In New York City, our hometown, we've been donating product to healthcare workers and first responders all over the city.

The second topic is executing our strategy with even greater agility. The strategy that we have discussed with you over the past two years is working, as evidenced by the acceleration in organic sales growth during that time. But we know that simply executing our existing plans isn't enough; we need to be even more agile in this new world. We are still focused on our core brands, innovation in faster growth segments, and expansion in high growth channels and markets, but we will make some shifts in priorities and timings. Our key focus areas do not need to change. Delivering on our core brands will be vital over the foreseeable future. Consumers want to know that the products they are buying are effective and provide good value. This aligns with our portfolio, as our core brands are often at base and mainstream price points, which we expect to become bigger focus areas for retailers and consumers as the economic pressures of increased unemployment mount. Our core innovation strategy brings news to these big segments and is intended to bring added value in a period where price increases may be difficult to take. We will also continue to focus on innovation in faster growth segments. Our plans for 2020 and 2021 will still include significant premium innovation, as it is often innovation that drives store traffic. As part of our efforts to expand our business in faster growth channels, we have focused even more aggressively on e-commerce and direct-to-consumer. This was the learning that we took from our experiences in China in the first quarter, which helped us to shift resources towards channels that will benefit from disruption in our markets. We saw significant e-commerce share gains in toothpaste in the U.S. in the first quarter behind the launch of Optic White Renewal, and Hill's worked with their brick-and-mortar partners to accelerate their e-commerce offerings in order to offset lost store traffic. Overall, our e-commerce business was up more than 50% in the first quarter, and our North American division e-commerce sales more than doubled in the quarter versus prior year. Our professional teams have learned new ways to engage their customers in a socially distant world. Similar to what we do with Hill's, the Home Pet Care scheme is helping their spa customers by having them book orders for direct-to-consumer shipments so they can still drive revenue. But the agility isn't just executing our strategy the same way we had planned. In this current environment, it requires streamlining our processes and making decisions more quickly so that we can better respond to our customers' and consumers' needs. There's no better example of this than our global supply chain. As the crisis hit, we mobilized our supply chain teams to offset lost production in China and increase manufacturing elsewhere. We established strict safety procedures in China, which allowed us to reopen our factories in a safe and efficient manner. Now we are operating at over 100% of our expected capacity in many of our Chinese plants, which is helping to ease pressure in countries where COVID is still a developing problem. By taking these procedures around the globe, we helped our NGO Italy plant stay open throughout the crisis, delivering 40% more volume in March than initially anticipated. After realizing the scale of the increased demand for many of our health and hygiene products, our marketing and customer development teams worked with our retail partners to develop streamlined product offerings that allow our supply chain to produce fewer SKUs or longer runs, which increased capacity to meet consumer demand. We also identified alternative formulas, materials, packaging designs, and product artwork to give us flexibility as we prepare for further disruption in our networks. We have also become more digitally oriented by transitioning 10,000 people to work outside the office, thanks to the resilience of our global networks. Our closing process is one of the smoothest in memory, despite the fact that all of our shared service centers in Mexico City, Warsaw, and Mumbai are all working 100% remotely. And all of this happened in just nine weeks since I presented to you at the CAGNY conference. This great work has helped us deliver the results that we reported today. This proven capacity for agility will continue as we encounter ongoing impacts from the crisis, economic uncertainty, and foreign exchange headwinds.

Our third priority is balancing how we manage to get through the crisis while ensuring that we can win when it's over. We have reestablished our top-line momentum over the past two years. We need to sustain that momentum and adapt our financial plans to deliver in a very difficult 2020 while leaving ourselves well-positioned for growth when markets normalize. We will continue to support our brands with impactful marketing programs. We know that compelling advertising behind strong brands is crucial to maintain long-term organic sales growth, which is the key value driver for our company. We also need to further invest in the capabilities that are driving growth: digital, e-commerce, and analytics. We will not fall behind in building the skills needed for when the economy comes back. Productivity is always a priority for us, and in these times we work even harder to take cost out of the P&L to help offset some of the additional pressure that will come from COVID mitigation, foreign exchange, and the weakening economy. Our funding the growth initiatives are wrapping up to take out discretionary costs that may be unnecessary given the current business environment. We're using analytics to identify and eliminate promotional programs that are not generating value given the consumer environment we find ourselves in. I will finish up by reminding you of our strategy surrounding cash flow and liquidity, which remain unchanged. We have historically generated significant amounts of free cash flow, a trend that continued in the first quarter. Our priorities for uses of cash include capital investments for productivity and future growth, paying dividends to our shareholders – which we have done consistently for 124 straight years – and acquisitions to accelerate growth. We generally allocate the balance of our cash flow to share repurchase. Consistent with prior comments, we have moderated our share repurchase activity as we focus more of our cash flow on reducing the debt from the Florid and Hello transactions. Turning to liquidity, we've been issuing commercial paper throughout the crisis. We remain committed to our double-A minus debt rating, and as at the end of the first quarter, we have cash and cash equivalents on hand that are more than three times our long-term debt maturities over the next 12 months. We also have access to lines of credit should we need them. So those are our priorities. Although there is a tremendous amount of uncertainty right now, I am confident that we have the right priorities, the right strategies, and most of all the right people – Colgate people – to navigate through the crisis and emerge stronger on the other side. And now I'll turn it over to John to discuss our Q1 results and provide some context on our full year 2020.

Good morning, Dara. Let me start with taking a step back. You referenced 2008-2009 and reaffirm some of the strengths that allowed us to emerge through that crisis stronger. The portfolio of our business is very strong in recessions, as you well know. We have price points across the full continuum, particularly our core businesses. Playing on your comment around the professional endorsement, that historically has played very well for us and will continue to play very well for us during this crisis, particularly given the scientific nature of our products and the efficacy of our products. I wouldn't expect, given that some people will not be visiting the profession, that the strength of the brand will be altered in any way during that period. The brand continues to be very, very strong, and our endorsements from the profession all over the world continue to be strong. So I don't anticipate that we'll have any issues. Certainly some of our business moving through the profession will be impacted in the short term, but long term the brand strengths will continue to prevail in this period of time. Moving on to the categories, listen, we've seen a lot of volatility in the categories, hence one of the reasons that we pulled guidance. There's a lot of uncertainty; things jump up and down. But rest assured, people are still brushing their teeth, and as you've seen, people are still taking a lot of showers and washing their hands. In some categories, we expect the behavior change to be quite consistent over the next couple of months. Liquid hand soap, bar soap, floor cleaners – we've seen a real acceleration in consumption in those categories, and our anticipation is that those will continue. Oral care has been negative as some of the pipeline comes out from February in March and April, but we expect that category will come back, particularly as economies start to loosen up and you get more and more traffic coming back into stores. As you've seen, we've had tremendous growth in e-commerce. That was, as we discussed at CAGNY, a big, big focus area for us over the last nine months. We put a lot of resources into that space. We're really learning. Obviously the Hill's business is best-in-class for transferring those learnings around the world. So we're getting consumption in the categories that you're seeing quite weak in brick-and-mortar coming through in e-commerce now, and certainly that will play well for the longer term. So overall, categories will come back. There's volatility right now. In emerging markets, I was on the phone this morning with our Asia team, and they're seeing things come back quite nicely. We're about 75% of where they were pre-crisis, but that has stepped up meaningfully over the last six weeks or so. So overall, those categories come back, but it's about getting store traffic back and getting some of the economies to loosen up. But overall, looking okay.

Sure, thanks Andrew. So let's take North America first. Obviously significant spikes in March in relative consumption, a lot of the panic buying, but more importantly some of the trends I articulated earlier around how we're seeing consumption increased in certain categories like bar soap, liquid hand soap, floor cleaners, and that has continued through April. As John said, we've seen strong category growth in those specific areas. Obviously some of the momentum that we're seeing in April is replenishing inventories that were at very low levels coming out of March, particularly in those high demand categories. Conversely, in categories where we saw pantry loading like oral care, we've seen the categories come down in consumption as you would expect, given the pantry load that was in March. There's no specific reason why consumers would be brushing their teeth more, so it would be what you expect. Categories where consumers are using them more, good consumption, and categories that were driven by some of the panic buying have slowed down, in fact are negative in April. And that would be consistent for both Europe and the US.

Thanks Wendy. Let me take Hill's first. Obviously, as John mentioned, Hill's success once again in the quarter was extraordinary, and I think it really points to the underlying strength of that business: one, great core innovation; two, great efficacious scientific brands that play really well in the marketplace; and three, an incredibly adept organization around winning digitally and winning online. Specifically online to your question, their business was up in excess of the company growth, which was around 54% to 55% for total Colgate. Hill's was up 57% in the quarter and saw good progress across particularly some of the key initiatives they implemented with some of the brick-and-mortar retailers, which was unusual given some of the struggles in that retail environment.

Had but overall great growth on Hills. It's in the teens in terms of percent of sales. It continues to grow obviously, and the success we've had with some of the science dive relaunch, particularly in some of the brick-and-mortar pure play retailers, has been quite notable. Moving on to China, all the strategies, Wendy, that we put in place that we've talked about over the last 18 months or so – repositioning the portfolio, converting to online, significant structural changes relative to moving from brick-and-mortar to online, both in resource and capabilities – all of that is playing out really well for us. We've stepped up our innovation, particularly in the online space. You heard John talk about Miracle repair. I did get some good news this morning that the Darlie franchise has returned to the number one share market brand in the country. We had lost market share to Union by the local player; we have returned to leadership in March, which is terrific. Shares are up for both Colgate and Darlie in March. We're seeing good progression there, particularly in the online space. More work to do on Colgate, however. The significant repositioning of the portfolio will happen in the back half of this year, but structurally we've made all the changes that we think are necessary to win. And I mentioned earlier, I think big brands are going to win in this environment, whether it's in Asia or anywhere around the world. The proven efficacy of positioning, the scientific knowledge that we have, and how we communicate that in our brand purpose, particularly around our core businesses, will bode well moving forward.

Sure. You noticed historically we've handled these crises quite well in emerging markets given the pricing power that we have. Let's talk a little bit about our strategy right now, which we think will modify slightly as we see some of the recessionary pressures come. Obviously, a lot of opportunity for us in the premium side of the business. We've been discussing that with you for the last 18 months or so, how much upside we have on premium innovation. That will continue to happen as I mentioned, but we will dial up more of our core innovation, particularly given the price points that we have and the size of those businesses in emerging markets, and those tend to be the opening price points in many big markets, whether it's Mexico, Brazil, or India. So you'll see more innovation coming in that space, and we're doing a lot of things very quickly to adapt to some of the consumer behavior changes we've seen, particularly around the importance of health and hygiene and how that plays out with some of our products. Interesting as we've gone through the last couple months, our focus on the total relaunch, particularly the antibacterial positioning and long-lasting antibacterial benefit that that product provides, has benefited us greatly. In the last six weeks, we've seen some of our big markets, whether it be Brazil, Mexico, UK, we've seen the premium innovation on total working. So moving forward, a little more encore, continue to focus on the premium side, but we think we're positioned well for the emerging markets. Now obviously we can't anticipate how much unemployment will be in some of these markets or potential lockdowns that we'll see coming from COVID, but the portfolio, at least how we're positioning it, will be well positioned for the emerging trends that we'll see there. Likewise, the same in India and Eastern Europe. There will be no change; the strategy will be consistently executed around the world, locally adapted as necessary, but we don't see that changing based on any of the markets. China would be the exception perhaps, given some of the portfolio strategies that will be adopted in the back half and the specific needs of that market. Your second question around Latin America pricing: again, currency devaluation has been significant, and we've got a couple things that we're looking at. Obviously we've taken pricing, you saw that in the first quarter. We will continue to take pricing, but it'll get a little bit more difficult, particularly in the current environment. We've had opportunities to dial back on promotions in some of those markets as we see store traffic down. We've been quite prudent on how we're thinking about promotional spend, a lot of work on revenue growth management and price pack architecture, particularly now as we move into a recessionary environment. We'll see more of that happening and a little bit more benign pricing environment, excuse me, material pricing environment moving forward. We think the combination of all of that will allow us to continue to maintain the integrity of the left-hand P&L and maintain the investment which is so important for us to emerge stronger coming out of this.

Sure. Thanks, Olivia. So as I just mentioned, we've been doubling down on innovation for the better part of 18 months now. And it's interesting as a management team, as we've gone into this, we've obviously been looking specifically at what innovation is right for the current environment. We will be moving some things around as necessary. We're dialing up some areas. We've orchestrated a series of teams internally to work specifically around some of the common truths that we're seeing, particularly in the health and hygiene spaces: one, how we adapt our portfolio, how we accelerate innovation moving into this. What's interesting is we have a long history of great clinical studies and claims and science behind our products that we think we can pull out of the drawers and use in this current environment. Great formulations with great science and claims that will play into health and hygiene. So we think very appropriate for us to look at our innovation and modify it as necessary moving forward, and the key focus here is agility in doing this really quickly. You'll start to see some of that innovation come to the market in the back half of this year already that wasn't necessarily there before. Some of the bigger premium innovations as I mentioned will stay; we will alter those based on some of the space, whether it's moving out later in the third quarter so to speak versus earlier, to allow some normalization, particularly in some of our key markets where we see store traffic down quite considerably right now. So that will happen. Continuing to support the business, we've always done that during tough times, and we've come out of it stronger as a result. The brands have emerged stronger. We see competition spending quite a bit, at least on the media side. A lot more movement for us in the digital and e-commerce space, which we're putting a lot more money into, and I think you can see the results that we generated in the first quarter. Certainly that shift of resources and spending into e-commerce has paid off. So marketing spending will be prudent and thoughtful moving forward, to be sure, but we'll continue to support our brands, which we believe is in the best interest of generating the long-term growth that we want to deliver.

Sure, Kevin. Listen, the obvious is we have a very large scope business globally. One of our bigger categories, we obviously have a large liquid hand soap business, particularly in Europe and the US. We don't talk a lot about our home care business, but we have a very strong home care business in Latin America as well as in Europe, and growing really quickly in North America. All those businesses, we're seeing behavior changes that we think will stick moving forward. I mean, consumers will wash their hands more. People staying at home will be cleaning their floors more. Obviously people washing their clothing more, our fabric softener business will benefit from that. So categories where we see behavior change, we compete in quite a few of them. Obviously people aren't going to stop brushing their teeth, and that will continue to be a growth opportunity moving forward for us, but we don't see any sizeable changes there. We'll see more volatility in the oral care space, I think, because you probably see more pantry loading in terms of how people are buying products coming in and out of the category less frequently. So obviously as we think about innovation, we'll have to time that innovation quite carefully and be quite prudent on that. So overall, our categories are positioned quite well. Obviously skin health is an area where we've seen quite a bit of disruption, whether it be travel retail or some of our pharmacy business in Europe as well as our derm business here in the US. And we're working very closely with those teams, particularly in the area of telehealth, working on opportunities to continue to engage those communities so they can serve their customers with product online. We talked about the Hills to home model that we've been driving over the last year, which has done very well for Hills. We're expanding that into our skin health business in order to stimulate demand for both the estheticians and spas as well as derms. So overall, we'll see that category go through a bumpy road we think over the next couple months, six months or so. But if you go back to 2008 and 2009, it took more or less 9 to 12 months for that category to come back. The basic fundamentals for skin health long-term are still really good. It's a highly profitable category. So long-term, we're very comfortable with where we are, but we'll make the necessary changes in the short term in skin health.

Yeah, thanks Bill. So again, as I mentioned in my prepared commentary, it's been inspiring to watch our supply chain around the world deal with this. And we remark, we have discussions internally how important some of the crisis management meetings that we have throughout the year to deal with contingency planning and risk mitigation, all of that really prevailed during these difficult times. It's the global supply chain and the standardization that we have and how we operate it, while globally is very still very local, we're able to shift resources very quickly. So as I mentioned, right out of the gate when China started to struggle, we shifted resources into Europe immediately and were able to supply everywhere that China was supplying out of Europe. Likewise, as Europe started to be challenged or Latin America or US started to be challenged, we were able to shift back to Asia. So there's a lot of flexibility in our supply chain, and credit to the team, a lot of work goes into that to be sure. Some of the incremental volumes that we've seen obviously we push to contractors, that comes out of the lower margin. But moving forward, as we work on some of these standardization opportunities that I mentioned, for instance working with some of our key trade partners to simplify our portfolios, that will allow us to reduce the SKUs that we're producing and bring some of that production back in-house where we can elevate capacity based on the simplification efforts that come through. That obviously strategically we're also looking at investing in some of these categories to expand capacity as required moving forward to ensure that we can meet the demand that we see ongoing. So short-term, we anticipate there's some margin implications with the costs associated with COVID, whether it's logistics or some of the contract that we have. Longer-term, we'll bring that back in-house and find ways to continue to deliver the margin that's accretive to the business.

So Steve, as I mentioned, we've been around for a long time, Colgate. We've dealt with a lot of crises and depressions and even pandemics at one point in time. So this is obviously very unusual and there's a lot of unpredictability, which is obviously you heard in the print throughout the last two weeks, but we continue to focus on the fundamentals which we've been building for the last few years to strengthen our business. So it's building brands with purpose, and that's the reason why we will continue to invest behind our brands. We've always found that our ability to innovate and invest during difficult times allows us to emerge with strong brands and strong income statements as we come out of this, and we'll continue to do that. We've stepped up our productivity measures as you've heard me talk about quite often. We're using digital very differently across the company. The collaboration tools that we put in place going into this based on the Google suite of tools has been just quite frankly extraordinary to get 10,000 people working day one virtually was I think a testament to our IT organization and what we've been able to do there. Likewise, using technology to drive more productivity in our closings. So all of that will continue to dial up as we go through this. Relative to the incentive structure, we'll continue to be focused on organic sales and obviously bottom line profitability. That continues to be the focus for the company. We've seen acceleration of our business over the last six quarters even with some of the pantry, we accelerated our organic sales in the quarter both from a Hill standpoint and from a Colgate standpoint. So the underlying fundamentals for the business we believe are quite strong and continue to invest in them. Continuing to build capabilities as I mentioned earlier in spaces like digital, e-commerce, and analytics, we believe will position us extremely well coming out of this.

Yeah, I think so. It really depends on the category. I mean, obviously some of the ones I mentioned earlier like liquid hand soap and bar soap, we will expect in emerging markets, for instance, liquid hand soap penetration to grow. Those are fundamentally bar soap markets, but the efficiency and hygiene nature of liquid hand soap may lend itself to increased penetration. Products like spray cleaners and wipes, we'll see more penetration and grow, and we're expanding those as well. So there are certain categories where we'll see certainly the opportunity to grow penetration, particularly ones that are providing efficiency or an added value, and that will be our focus. Consumption in those categories likewise will probably offset some of the pricing pressures that you'll see in some of those markets. We've typically found not significant trade down in recessions, but you do get some for sure, and we've been able to deal with that with revenue growth management, obviously a focus on innovating behind the core which is usually at opening price points that allows us to take pricing in those categories. Price pack architecture in recessions has always worked quite effectively for us. So it really depends on the category and the market. Overall, we'll probably see a little slowness or a reduction in terms of value growth, but volumes as I mentioned, people don't stop brushing their teeth and in categories like oral care which we mentioned, we think we'll see an increase in consumption moving through this.

On the pricing front, obviously in some of the emerging markets, we're going to be quite cautious on how we're looking at pricing, although historically we have been quite aggressive in taking pricing. We took pricing in the first quarter that will obviously translate through the balance of the year. We have plans to continue to look at pricing, and we'll do that creatively, either through managing our gross to net much more efficiently, particularly given store traffic being down, we'll do that for some of our channel focus as well, we'll do that through some of our innovation in terms of price points that innovation at different price points. So we have different mechanisms that we'll be using. We obviously will gauge what competitors are doing, but given some of our leadership positions in most of the emerging markets, our intent will be to lead pricing, and we've always done that, but we'll be mindful of how we do that particularly given the sensitivity in the current environment. On the cost side, we see obviously costs being a little less of a headwind than they were a year ago period. We've seen resins come down, but on the flip side, oil prices have gone up, AG prices have gone up. But net net, we'll see less headwinds than we saw in the back half of last year. And we'll watch all very carefully. As you've heard most others talk about, there's typically a six to nine month lag between the drop of oil prices and where we see the benefit moving through the P&L. But by and large, we'll see a better environment in the back half of the year. And as I mentioned earlier, we'll start to see some of those costs from COVID subside, particularly as we bring some of that production in-house and some of the panic buying becomes a little bit more predictable. Difficult at this stage to say that, but we expect it to become a little bit more predictable, which will allow us to get a better line of sight on how we want to handle capacity planning for our facilities and our contractors. One other point is obviously some of the logistics costs associated with this, we're doing everything we can to deliver the customer service that our partners our customers are looking for, and there will be some added logistics costs that will come in the year ago period as well associated with this.

So I'll listen straight to what we said in the commentary. The unpredictability of what we're seeing across the world is at a level that we've never seen before. Obviously, you know, India we didn't anticipate which shut down like it shut down. We had plants and distribution channels shut down for almost two weeks. There's obviously coming back online as we speak, but that had a significant impact to the back end of the quarter and has had a significant impact in April. And we can't predict exactly where it's going to happen. Obviously we've seen things creep up in terms of the number of incidences in Brazil, so what happens there? So again, it's the unpredictability of what we're seeing all around the world. And you combine that with the continued strengthening of the dollar around the world and the foreign exchange headwinds that it gives us pause. And we've seen obviously a lot of volatility likewise in some of the consumption numbers that we've been talking about throughout the call. They're jumping all over the place right now, and so it's very difficult to get a line of sight on how things are going to ultimately unfold. Yes, the fundamentals of our categories are good long-term, but the uncertainty with government regulations and destruction moving forward, we think it's the prudent thing to hold our guidance at this stage. We'll come back to you as soon as we can when we have a little bit more confidence on where things are headed.

Yeah, Jason, listen. If you look at the weekly and monthly scan data on the categories all around the world, I've got them here in front of me. They're all over the place. On categories like oral care, obviously you've seen more consistency. On categories like liquid hand soap and bar soap and cleaners, you know, the biggest unknown force in our view is the degree of the recession that we're going to see all around the world. And you combine that with the foreign exchange headwinds that we're faced with right now and the ability to take pricing, which has always been a challenge in an environment like this, although we've had great success there. This is unique and a bit different. So it's really the uncertainty that we're seeing and the disruptions that we're seeing. So again, if big markets start to have more lockdowns, that creates a significant headwind for the category. If we see unemployment jump 10, 15% in certain markets, we haven't dealt with that in the past. That will have some impact on the value orientation of our categories as well. So all in all, there's uncertainty moving forward. We're trying to position ourselves as well as we can. We've got good experience on this, but there is significant unpredictability based on what I've outlined earlier.

Well, thanks everyone. Obviously unusual and unprecedented times. I want to once again thank all the Colgate people. It's inspiring to work with such an incredibly talented organization. We are greatly benefited by having a management team that has dealt with this level of uncertainty, but obviously working hard to continue to deliver the results. And we look forward to having more discussions with everyone moving forward. Thanks everyone, be safe.