Please standby. Good day, everyone. And welcome to today's Colgate-Palmolive Company First Quarter 2014 Earnings Conference Call. Today's call is being recorded and is being simulcast live at www.colgatepalmolive.com. Just as a reminder, there may be a slight delay before the question-and-answer session begins due to the web simulcast. And at this time, for opening remarks, I would like to turn the call over to the Senior Vice President of Investor Relations, Ms. Bina Thompson. Please go ahead, ma’am.

Thank you, Nancy, and good morning. And welcome to our first quarter 2014 earnings conference call. With me this morning are Ian Cook, President, Chairman and CEO; Dennis Hickey, CFO; Victoria Dolan, Corporate Controller; and Elaine Paik, Treasurer. This conference call will include forward-looking statements and these statements are made on the basis of our views and assumptions as of this time and are not guarantees of future performance. Actual events or results may differ materially from these statements. So for information about certain factors that could cause such differences, investors should consult our most recent annual report on Form 10-K, filed with the Securities and Exchange Commission and available on our website, including the information set forth under the captions Risk Factors and Cautionary Statements on forward-looking statements. And this conference call will also include a discussion of non-GAAP financial measures, which differ from our results compared in accordance with GAAP. We will discuss organic sales growth, which is net sales growth excluding foreign exchange, acquisitions and divestitures. And we will also discuss gross profit, gross profit margin, SG&A as a percent of net sales, operating profit, operating profit margin, net income and earnings per share on a diluted basis, excluding the impact of certain items described in the press release. And a full reconciliation with the corresponding GAAP measures is included in the press release and is posted in the For Investors section of our website at www.colgatepalmolive.com. We are delighted with our results for the first quarter. As we exited 2013, we said we were excited about continuing our momentum and that has indeed happened. Our organic sales growth was at the high end of our target range of 5% to 7%, on top of strong growth of 6% in the prior year and with a good…

Thank you. (Operator Instructions) We’ll go first to Dara Mohsenian with Morgan Stanley.

Good morning.

Hey, Dara.

So, first, just a clarification, Bina mentioned you expected gross margin improvement each quarter this year. Are you still expecting 75 to 125 basis points for the full year and then, the real question is your toothpaste and toothbrush market share momentum looks like it’s slow this quarter. The toothpaste year-over-year share change was the worst we’ve seen recently. So, I was just hoping for more detail on what’s driving that performance, particularly which geographies and your view on if the share losses will continue going forward or if that’s more temporary factors in Q1?

Okay, Dara. Let me -- before I get to the gross margin, let me put the gross margin position in sort of a broader context and underscore a couple of the points that Bina has already made. First, we are very pleased with the first quarter’s topline performance and we would reaffirm our target range of organic growth for the year at between 5% and 7%. We think that is going to be a very strong range, particularly as our categories remain range bound in Europe, growing at between 1% and 2% and similarly so in North America. And in our emerging markets, we see category growth rates slowing slightly from 6% to 8% range previously to now 5% to 7%. And the things we think will continue to drive that organic rate of growth are in innovation and of course the advertising, which was up absolutely and as a percent of sales this quarter and we expect it to be up absolutely and as a percentage to sales for the year. Now very importantly, of course, Dara, as you correctly point out, is the gross margin and what our expectations are for gross margin during the year. We are still comfortable with the gross margin expansion of between 75 and 125 basis points. But obviously given recent foreign exchange volatility, which we have to react to and our, we would say that our margin expansion will be at the lower end of that range more in a 70 to 100 basis points band. Our funding of the growth program remains strong and I think some were little bit questioning our ability to take pricing in Latin America in the fourth quarter. And I think you see in the first quarter what is the usual sequence in these events, which…

(Operator Instructions) We’ll go next to Steve Powers with UBS.

Hi, Ian. Thanks.

Hi, Steve.

I guess it was another solid quarter as you say of organic growth, 6.5%, overall and especially, 10%, in the emerging markets. How do you think about that relative to some of the outsized inflation that we are seeing in certain markets, especially in Latin America? If you agree with that characterization, especially in Argentina, Venezuela for example, how do you estimate that is adding to your organic growth, or conversely do you believe it’s really not that additive given the degree of volume and mix trade-offs in those same markets? Thanks.

Yes. I would say if you look at the underpinning volume in Latin America for example, we view that as very healthy. When you talk about outsized inflation in Venezuela, remember that is true from a macro point of view, but bylaw in Venezuela, we are extremely restricted on availability to take pricing across most of our business. So I think we are very pleased with the progress. We view it to be real substantive and we see it continuing.

We’ll move to the next question with Wendy Nicholson with Citi.

Hi, good morning. I don’t want to be a dead horse on this pricing in Latin America thing, but that’s my question too. And the question is, historically when there has been currency question in Latin America, the pricing you could able to take on an annual basis I get that there is a [lie] (ph), but on an annual basis it’s pretty much close to a 1 offset. And my question is, if you look at the 6% pricing you got in the first quarter versus the 16% currency headwind, how much of that is Venezuela, how much of that is just timing? I mean, if we are going to see, let’s call it in mid-teems currency headwind in Latin America, can you take anywhere close to that pricing ex-Venezuela because I think everybody is just nervous that maybe the competitive dynamic is preventive you from taking as much pricing? If you can answer that, that would be great.

Okay. Well, the answer is no, it’s not driven by competitors. As I said, when we posted just over 2% pricing in the fourth quarter, I think that question was raised that you now limited in terms of your ability to take pricing. And the answer is no, we are not. And I think the first quarter demonstrated that in quite a healthy way remembering we are not able in the first quarter given the move of some of the exchanges to take the pricing as quickly as the exchange takes the cost up for transaction reasons. And in Venezuela, you frankly have to take Venezuela out of the equation because for the majority of that business, we are unable bylaw to take pricing. But we have demonstrated in the past and I think with Venezuela to one side, as far as the rest of Latin America is concerned, we have demonstrated an ability to price, to offset the foreign exchange. Indeed, in the more recent term, the Brazilian exchange is turn a we bit positive, but our plan would be as it has been in the past to be able to offset the transaction impact to foreign exchange with the pricing and funding the growth.

We’ll move to the next question from Caroline Levy with CLSA.

Actually again I am sorry to get you around this issue. I'm looking at Asia and Eurasia where the currency impact substantially has been, certainly we were the expecting and I guess there was deterioration towards the end of the quarter. Do you expect to be able to get pricing in those markets as you move through the year?

The answer is yes, the answer is yes. We will be able to take the pricing in those markets. One has to say exactly as you said Caroline that the precipitous make sure of the currency moves in some of those geographies. I come back to everyone’s estimation of the year, I'm not sure I saw anybody planning on the Crimea and the impact of Crimea on the Russian Ruble. So some of those moves were really quite precipitous but we have the capability to take pricing. We had done so in some geographies already and we have plans and indeed are right now taking pricing in some of those markets to address the headwind of transaction. So we continue to have pricing capability. There is just a natural lead lag in terms of how quickly you can practically respond particularly when the foreign exchange has moved so quickly. And I think in the world that we are in, our ability to plan for gross margin expansion are between 75 and 100 basis points a test to that capability.

We'll take the next question from Chris Ferrara with Wells Fargo.

Hi, thanks.

Hi Chris.

Hi Ian. I guess I wanted to ask you about the slowdown you just cited in developing in emerging market and a point I guess is not a huge deal considering what we've seen elsewhere. But can you talk a little bit about, is that isolated to any specific geographies and what do you think is driving that specifically besides maybe the obvious sort of macro situation and maybe just that. And then also why do you think you can gain more share than you have been and sustain the top-line growth rate in the face of the slower market relative to say what your thought couple of quarters ago?

Yes, I guess Chris. We're talking about fine differences here. We wanted to indicate that indeed we have seen a little bit of a slowdown. Other comments I have read from others suggest sharper than we have seen certainly in our businesses. I think it traces to the macros finally. In these cases, there is nothing untoward that we have seen so far in terms of consumer behavior. And I think our 5 to 7 range fits very nicely even with that slowdown. So I don't think it puts any more pressure on our desire, need or ability to build market share.

And we’ll move next to John Faucher with J.P. Morgan.

Thank you. In looking at your sort of how reported top-line growth will track over the course of the year and given the seasonality of the business, it's a little tough given the first quarter performance to get to the low end of the range from a gross margin standpoint. So can you walk us through sort of sequentially how we should think about just progressing through the year and sort of what the big changes are from Q1 to the balance of the year. Are there just efficacy from the additional pricing, what have you? Thanks.

Okay. I can’t resist John. I thought you were one that was questioning whether we could deliver the gross margin expansion. Well, I think -- let me say so you can come back to me at the end. Let me start with the traditional roll forward just that we have that as a starting point and then I will try and answer your question from there. Obviously, it's flat, so the star point was the same 58.6 as it is this year. We picked up half a point from pricing. We picked up 1.4 from our funding the growth and a little bit of restructuring, material prices was a headwind of 2, a large part of that as we have already discussed was transaction. There was a modest 10 bps from other leading us to the 58.6. So I would say the three main buckets of progress for the year quite obviously are pricing where we expect to get more pricing and therefore more contribution to the gross profit, funding the growth along with a little bit from restructuring and you know that our funding the growth tends to build over the year. And that would be the second major aspect of building our gross margin. And by talking about 75 to 100, all I was trying to do was to frame coming off the high-end of the range, we are not suggesting a 75 increase in gross margin.

We'll take the next question from Olivia Tong with Bank of America Merril Lynch.

Thank you, I appreciate it. One quick question on housekeeping. Is it fair to assume the net interest expense will be similar to Q1, the Q1 rate going forward or whether any anomalies caught this quarter? And then on Hill's, I noticed that the margin was up for the first time in the last five quarters. And in the press release, you did state a number of puts and takes but one of them was lower ad spends. So was is just a function of comping against how you spend in a year ago as she prepped for the new line or if there shift in timing of spending or do you think there are just not a need to spend as much behind pet as you did before. And if that’s the case, the change -- does the changing of hands for IMs, change your thought process in any way on that? Thank you.

Changing, of course, I guess who I am. But on your housekeeping question on net interest, the net interest expense we think we'll go up on the year. We'll probably be in the 35 to 40 range for the year largely due to changes in our capital structure as we have taken on some longer term debt at very attractive rates, planning ahead to world where rates are likely to increase. So yes but plan fully as part of readjusting our capital structure. Hill's is timing. Bina talked about some of the innovation on the Hill's business and the spending, we'll readjust. First quarter was strong last year because the timing of the innovation was earlier. So now we're very committed to our Hill's innovation flow which is very strong and frankly doing very well in market.

We'll move next to Ali Dibadj with Bernstein.

Hi guys. So just a quick clarification and then a core question. The clarification is want to give you the opportunity of selling Venezuela to the side. And just if you could tell us what volume and organic growth would have been in Latin America ex-Venezuela? And then the other question, so you say the EPS growth of 4% to 5%. In fact, I think the same has since February at least for the year. Is it still above consensus? And I know you guys and the background of your team does a really good job of taking of our models and looking at it. And I'm trying to understand if you guys have a perspective on where you think consensus is too high, is it just currencies or are there other things that you would like to be pointed to?

Yeah, well thanks for the opportunity to separate LatAm growth from Venezuela. But I shall politely decline that. We don't break it out in that way. I would say that we think, if you think about where Venezuela was three, four years ago as you well know it is substantially smaller portion of our corporation than it was then. And the Latin American growth, we think is very, very strong overall. In terms of the second point Ali. Yes, you're right the 4% to 5% as we try to reemphasize at the beginning of the call has been where we have been. And there is nothing in that reiteration of guidance for the year that reflects anything other than foreign exchange and I would clarify and say that is the foreign exchange that analyst reacted to in January of the year with the Venezuela change which by the way I think makes our Venezuelan reporting more conservative than some who has stayed at the 630 rate. And the -- it remains double-digits in terms of the EPS growth in local currency terms and in fact for the year looking forward after Venezuela, we see the currency impact for the year at around 5% which was pretty much where we had it before hand. So there is no incremental currency it nearly reflects actions taken through February of this year. So it is entirely currency related. There is nothing else.

The next question comes from Bill Schmitz with Deutsche Bank.

Hey, good morning.

Hey, how are you?

I'm good. So the cash balance is massive, right. It's also like two equity done historically. Are you guys -- what’s the plan about the cash because certainly you don't need your working capitals getting better. There is super cash generated, I know you talked about, rates going up and locking some fixed rate debt. But is there a use for all that cash. And then second part of the question is well that in the same part of same question but the second question, is there a plan or way to get Venezuela profitable again. I know I lost money this quarter but is there anything you could do either structurally or strategically to get that turn positive again. Thanks.

Yes. The cash balance entirely timing, entirely timing. It’s related to when we took the debt. It will be washed out as we go through the year debt and cash will get back in balance. Net debt will end up in the same place. So nothing strategic, nearly timing. With Venezuela, it is as you say modestly, it was very modest, negative for Venezuela in the first quarter. And obviously, we are in very constructive dialog with the government of this time about the need for relaxation of the pricing laws and for some pricing in order to make business in Venezuela profitable again. And we are hopeful that those discussions will lead to a productive outcome and that outcome of course, which has been our usual model and the rest of Latin America allows one to offset the gross margin pressure and see that translate through on the bottom line. So those are the issues. You know, of course, that the first quarter was hit particularly by the historical one-time hit and that will come out across the balance of the year anyway. So we’ll be in a better position than we were in the first quarter but the step change would be driven by pricing.

The next question comes from Bill Chappell with SunTrust.

Good morning, thanks.

Hey.

How are you? The question on or the comment on the sugar. I always get the name wrong but the cavity protection toothpaste that you are rolling out. The comment that you’re moving more throughout Europe and maybe the Australia, are there plan to meet from the near term to go to U.K., Germany, France, some of the bigger countries, it may in next quarter to. And is it contributing to the overall European growth at this point or is it still really too small?

To answer the last part of the -- actually you don’t have to get the name right Bill, you just have to buy it.

I get you.

Yeah.

That sort of trouble.

In terms o Europe it is too early. We can say that in countries like Brazil, Turkey, Australia as Bina said that it is added to share nicely. We are expanding in Mexico as we’ve said. You will see continued expansion across Europe and some of the other emerging markets, you could expect to cross the balance of the year. So we’ll be moving quite broadly with this product, the reaction seems so far quite positive.

We’ll take the next question from Michael Steib with Credit Suisse.

Good morning. My question relates to raw material cost. I noticed that in most regions there were essentially a headwind to margins in the quarter, except in Europe where there were tailwind. I wonder is that all due to currencies or there other differences for example in the portfolio compensation as well. And then related to that, do you expect a similar headwind from raw material cost for the remainder of the year?

Well, let me react to both. I would say what we saw in the first quarter was indeed largely driven by foreign exchange, which is why we saw such a positive progress in Europe. I think training raw materials overall, we’re expecting for the year, raw and packing materials to increase by between 1% and 2% for the year. That’s raw and packing for the year. And as I have mentioned earlier, our ability to deliver the gross margin expansion that we are planning is going to be driven by pricing, which we have already to a certain extent and we’ll deliver going forward t5o offset that foreign exchange impact on raw and packing material.

We’ll look at next question. It comes from Javier Escalante with Consumer Edge Research.

Hello. Good morning, everyone. I had a couple of questions, one on the restructuring. It seems like it was a big chunk this first quarter about 40% of what you plan for the year. Does it mean that you are taking it faster pace and originally plan in order to navigate this issue of a currency. And the other question has to do with Hill’s. Certainly, very good performance, to what extent that has to do with the changes in planogram that (indiscernible) did or shall we continue seeing that at least for another quarter where we’re going to see a strong growth from Hill’s. Thank you.

Thanks, Javier. No, there’s nothing particular about restructuring in terms of -- it's just timing, our full year, full program ranges remain the same, both at the cost and the benefit, and we don’t manhandle the restructuring to try and address foreign exchange issues. I think the point we made when we announced it was it would simply give us some agility and flexibility knowing that given the volatility of foreign exchanges, and therefore cost quarters might be a little bit lumpy. Indeed, I’m here which you are correct have here in the US. We had some quite meaningful planograms resets, which have been positive, which underpin the increase that Bina talked about a little bit earlier. And we continue to feel good about seeing our Hill’s business go forward mid -single digits organic as we have spoken before. And the reason selling the planogram reset is good, but we’ll get to the planogram reset is the quality of the innovation and trial generation that you can create for that innovation. And as we have said before, we think we have a very rich innovation pipeline now, which is moving to the market.

And we’ll move to Alec Patterson with AGI.

Good morning.

Hey, Alec.

Hi. So just quickly on the 75 and 100 basis points. I think I am crystallizing this into, it’s predominantly moved to lower end because of currency. In other words, the other component, pricing and you have been planning all along. Commodity costs that are basically dollar commodity base were on pack. And then anything from funding the growth productivity haven’t changed.

Correct.

And we’ll take our final question from Jason English with Goldman Sachs.

Hey, good morning, folks.

Hey, Jason.

Thank you for allowing the question. Two quick ones. First, a quick housekeeping question. Can you quantify how much the advanced customer shipments in Japan contribute to that growth this quarter? And then other question is back here to home North America, we’ve been seen solid growth both on the measure data as well as clearly into reporter results today. Well, we sliced and diced the measure data around 70% of gross been coming for mouthwash. Market share up year-on -year but running stagnant to kind of flat line sequentially at 6. Two months from now you’ll start rolling over that 7% share you got on the initial search, trial building. So how should we think about growth on a go forward? What are the initiatives that can maybe get mouthwash and other like higher or that can kick some of the categories into higher growth notes to drive more contribution for them?

Thanks, Jason. On mouthwash as you know, I talked about the toothpaste change in momentum. Obviously the toothbrush business share up over 41 is terrific. That of courses is the second largest category in oral care. Mouthwash, we are pleased where we are. Two things will continue to grow our business in mouthwash. Number one, innovation and the variants that come with that innovation which we have seen, we will continue to see. The second is interesting in the U.S. is always packaging sizes in terms of retail environments. And consumer purchasing habits, you will see more of that as the year unfolds. And most importantly, trial-generating devices, we know the repeat rate of the businesses is high. We know that it takes over two years to build your trial curve and we will continue to be putting money behind that. So we have a great product. We can add to the product and we’ll be focusing on building trial. In terms of Japan -- no, we don’t breakout at the country level. Suffice to say on Japan, I think it was Ali on the last call was questioning the trajectory of that business. We’ve had some folk in Japan only a couple of weeks ago. We’re going through a thorough review of that business and there is confidence I would express that notwithstanding the pull forward, that we have our Japanese business now for Hills on a solid footing and a positive underlying trajectory and we will see that in the coming quarters.

And that does conclude today’s question-and-answer session. I’d like to turn the conference back to the speakers for any additional or closing remarks.

Thanks, Nancy. Well, thanks all of you for your interest in the company and your questions. And thank you to the Colgate world for delivering the results that allow the questions.