Colgate-Palmolive Company (CL) Q3 2022 Earnings Call Transcript

For the period ending September 30, 2022

October 28, 2022 8:30 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good morning. Welcome to today’s Colgate-Palmolive Third Quarter 2022 Earnings Conference Call. This call is being recorded and is being simulcast live at www.colgatepalmolive.com. Now for opening remarks, I’d like to turn this call over to Chief Investor Relations Officer and Senior Vice President, M&A, John Faucher.

John Faucher - Chief IR Officer

Thanks, Allison. Good morning and welcome to our 2022 third quarter earnings release conference call. This is John Faucher.

Today’s conference call will include forward-looking statements. Actual results could differ materially from these statements. Please refer to the earnings press release and related prepared materials and our most recent filings with the SEC, including our 2021 annual report on Form 10-K and subsequent SEC filings, all available on Colgate’s website, for a discussion of the factors that could cause actual results to differ materially from these statements. This conference call will also include a discussion of non-GAAP financial measures, including those identified in Tables 8 and 9 of the earnings press release. A full reconciliation to the corresponding GAAP financial measures is included in the earnings press release and is available on Colgate’s website.

Joining me on the call this morning are Noel Wallace, Chairman, President and Chief Executive Officer; and Stan Sutula, Chief Financial Officer. Noel will provide you with his thoughts on our Q3 results and our 2022 outlook. We will then open it up for Q&A. Noel?

Noel Wallace - Chairman, President and CEO

Thanks, John and thanks to all of you for joining us this morning. We continue to execute our growth strategy as we deal with an operating environment that remains very volatile. In the third quarter, we delivered high single-digit organic sales growth with growth across every division. We also delivered growth in all four of our categories, including high single-digit growth in Oral Care, Pet Nutrition and Personal Care. I know elasticities are a big topic of conversation this quarter. While our volumes were negatively impacted by retailer inventory reductions and Hill’s supply chain constraints in the quarter, underlying elasticity remained in line with our expectations and we would expect volume performance to improve sequentially in the fourth quarter as these headwinds abate.

We delivered strong pricing growth through revenue growth management and healthy productivity through Funding the Growth and the initial benefits of our 2022 Global Productivity Initiative. This helped us drive a sequential improvement in gross margin in the third quarter despite further increases in raw material prices. The headwinds we face, whether from foreign exchange, raw and packaging materials and logistics costs or macroeconomic uncertainty are significant, but we believe we are well positioned to deal with these issues. We have taken the difficult steps necessary to meet these challenges head on through pricing, productivity, capital deployment and other actions. These actions leave us well positioned to benefit when our markets stabilize.