Good morning, everyone, and welcome to today's Colgate-Palmolive Company's Second Quarter 2016 Earnings Conference Call. This call is being recorded and is being simulcast live at www.colgatepalmolive.com. 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 the most recent 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 eight and nine of the earnings press release. A full reconciliation with the corresponding GAAP measures is included in the earnings press release and is available on Colgate's website. Now for opening remarks, I would like to turn the call over to the Senior Vice President of Investor Relations, Bina Thompson. Please go ahead, Bina.

Thank you, Angela. And good morning, and welcome to our second quarter earnings release conference call. With me this morning are Ian Cook, Chairman, President and CEO; Dennis Hickey, CFO; Victoria Dolan, Corporate Controller; and Elaine Paik, Treasurer. Happily, the momentum we saw in the first quarter continued into the second quarter with good organic sales growth, within our targeted range of four to seven percent, and as compared to the strongest quarter of last year. Gross profit margin accelerated nicely, which allowed us to increase worldwide advertising as a percent to sales. And as you will hear in more detail, our market shares are strong. New products continue to play an important role in our strategy. Innovation across categories has helped fuel growth around the world. And our Global Growth and Efficiency Program is on track. Our balance sheet is strong and so is our cash generation. We continue to be faced with macroeconomic challenges in many parts of the world, coupled with ongoing and sometimes volatile currency headwinds. So in light of this, we are particularly pleased with the results. Just a quick housekeeping note before we get into the divisions. As was mentioned in this morning's 8-K filing, as a result of management changes effective April 1, 2016, the company realigned the geographic structure of its Europe/South Pacific and Asia operating segments. Beginning this quarter, the results of the South Pacific operations are reported in the Asia Pacific operating segment. There is no impact on historical company results overall. For informational purposes, recast historical geographic segment and geographic sales growth information conforming to the new reporting structure has been provided within this morning's 8-K and the For Investors section of Colgate's website at www.colgatepalmolive.com. So now let's turn to the divisions. Starting with North America. We are…

Thank you. Today's questions-and-answer session will be conducted electronically for the telephone audience. And we will take our first question from Wendy Nicholson with Citi Research.

Hi. Good morning. Ian M. Cook - Chairman, President & Chief Executive Officer: Hey, Wendy.

I don't think I heard, Bina, you comment on China, even though in the press release you mentioned volume declines. So could you talk about the magnitude of the volume declines in China, what the pricing environment was like? And maybe a broader question of kind of what's going on, is it to your market share? I know Procter has talked about the need to more premiumize the oral care category. Do you share that view? So sort of a specific on the quarter, how did China fare? And bigger picture, what's your take on China right now? Thanks. Ian M. Cook - Chairman, President & Chief Executive Officer: Thanks for the question, Wendy. I guess overall I would start a little bit further back and say that in balancing all of the geographies and the headwinds we are facing in the world, we were delighted to post an overall 4.5% organic growth. Asia, as you saw, was more muted at 2% although with some highlights, as Bina has already discussed. I don't think based on what you have heard over the last couple of weeks from other companies that operate in China that there are some short-term issues in that geography. So let me explain our analysis of what's going on, which we view as a relatively short-term issue as I will describe, and then I can come back and talk about market shares both overall and respective to China. So first of all, in terms of what's going on in the marketplace, two things. Number one, as we entered the second quarter, the consumer consumption slowed quite sharply. It picked back up and as we look forward, we think that the consumer consumption in China for the balance of the year will continue to be around mid-single digits.…

I know you've commented in the past that you're kind of agnostic, at least in developed markets, about selling to brick and mortar versus online retailers. Does that apply as well to China or is there a margin difference between where you're selling? Thanks. Ian M. Cook - Chairman, President & Chief Executive Officer: We're agnostic.

Okay. Thanks.

We will now go to Ali Dibadj with Bernstein. Ali Dibadj - Sanford C. Bernstein & Co. LLC: Hey, guys. Ian M. Cook - Chairman, President & Chief Executive Officer: Hey, Ali. Ali Dibadj - Sanford C. Bernstein & Co. LLC: Want to drill a little bit into Latin America. And so, look, it's more than half of your emerging market business right now. So at about kind of 9.5% pricing that you took from that region, that's driving about 80%-ish, three-quarters, 80%-ish of your emerging market, 6.5% growth you mention in the release. And to be clear, you're not unique in that reliance among the companies that we cover. But I want to get a sense of the sustainability you see in that, especially as we saw some of your Brazil volumes get a little bit worse lately sequentially here. We see that Latin America is the only region, at least from the press release, that you increased ad spend on. Mexico is left out of share gaining. Kind of the list of countries, Mexico's left out after Latin America. So I want to get a sense of you about the sustainability of driving so much of your growth from that region. Ian M. Cook - Chairman, President & Chief Executive Officer: Yeah. Well, we're quite optimistic on Latin America, which may be a contrarian thing to say, largely based on the relationship we have with the consumers that buy our products. Now, the Mexican market share is still north of 80%, which is a fairly respectable place to be, and we quoted the Brazilian share at now approaching 74%. I actually wouldn't use the term relying on pricing in Latin America. I would more say that we have the elasticity to take the pricing with our consumer in…

We'll now go to Olivia Tong with Bank of America Merrill Lynch.

Great. Thanks. Just for clarification, is your share online in key markets similar to what we can see in brick and mortars, or are there markets where there are disconnects? And then just in terms of price mix, following up on that, the price versus volume contribution obviously is still on back to price being a bigger contributor versus volume. So first, does mix have any impact in there? And then just sort of your thoughts on the second half in terms of the dynamic. I know volume a bigger piece than price over time, but just a clarification on that second half expectation. Thank you. Ian M. Cook - Chairman, President & Chief Executive Officer: Yeah, the online is interesting because what you see online often is that the share composition is very different. So for example in the U.S., we are the brand share leader online but, for example, our Tom's of Maine business has a disproportionately elevated share online which may trace to the demographics of the consumer. So you see our shares profiling strongly, but sometimes the composition of those shares is very, very different to what you would see in a brick and mortar account. Relative to this pricing notion, I mean, our price was greater than our volume in this, the second quarter for the reasons that I have mentioned. You will remember our volume is a dollar weighted volume, so mix is not a factor in the discussion. And to repeat what we said to Ali, it is our planning that for this year in total, our growth, which will be within the 4% to 7% range we have been guiding will be more driven towards volume than price on a relative basis to last year.

Great. Thanks. If could follow up on developed markets pricing, it's been pretty negative in developed markets, and in the case of the U.S. it's got more negative versus last year. And your main competitor seems to have a bit more of a sense of urgency in other categories. So what are you seeing on the competitive front that's causing you to keep promotional levels heightened like this? Thank you again. Ian M. Cook - Chairman, President & Chief Executive Officer: Well, I'm not sure the pricing situation in Europe is unique to us. If you talk about North America, oftentimes this traces here to the couponing that you use to put behind your new innovations. So we all have our thoughts and plans in terms of innovation flows, which vary by company, but our pricing in North America, we think overall, we get a good organic growth out of it. So it really does trace more to the innovation flow and the couponing that builds trial behind that innovation flow. Hello?

With no other questions from Ms. Tong, we will now go to Bill Chappell with SunTrust.

Good morning. Thanks. Ian M. Cook - Chairman, President & Chief Executive Officer: Hey, Bill.

Hey, Ian, just kind of a simple question. On share repurchase, just looking back, your average share count went down sequentially every quarter from 2006 until 2015, yet it's gone actually up for the first time both in 1Q and 2Q. So is there a change in thought of use of cash or share repurchase, or it's just more of a short-term event? Ian M. Cook - Chairman, President & Chief Executive Officer: No, there is not a change. We simply got behind ourselves. So for the year we are still talking about a gross buyback of $1.2 billion to $1.3 billion. We fell behind, frankly, in the second quarter which is the net result of what you see. Therefore, what you're going to see over the balance of the year is that share repurchase pick up. And on a gross basis, it's going to be between $300 million and $400 million a quarter so that we realize the $1.2 billion, $1.3 billion range for the full year. So we're still holding to the full year and, therefore, there will be an uptick in the second half of the year to compensate.

Okay. And that's reflected I guess in the share count on the outlook. Ian M. Cook - Chairman, President & Chief Executive Officer: Exactly.

Thank you.

We'll now go to Jonathan Feeney with Consumer Edge Research.

Thanks very much for the question. Ian M. Cook - Chairman, President & Chief Executive Officer: Is it John or Jonathan?

It's Jonathan. Ian M. Cook - Chairman, President & Chief Executive Officer: Okay.

It's Jonathan. You can call me either, Ian. Ian M. Cook - Chairman, President & Chief Executive Officer: Okay. Fine.

When you think about pricing and volume, particularly in Latin America where you have such strong market shares, has anything – it strikes me as a conundrum companies like yourselves face that just at the time when consumers are feeling some distress in other areas from the currency movement, you're asking them to pay more for the products. Assuming a more neutral currency situation in the future, how much pricing opportunity of the pricing that's happening today is increased value add, increased value you're bringing to the consumer? And how much of it do you think that lasts into a more neutral currency environment, should we ever experience one again? But hopefully at some point in the next year or two. Thanks very much. Ian M. Cook - Chairman, President & Chief Executive Officer: Yeah, thanks, Jonathan. Latin America is an interesting part of the world. The shopping consumer in Latin America is perhaps one of most educated on the planet in terms of the vagaries of foreign exchange and what that means for a shopping basket. And the steps that we take are entirely driven by the currency. And if you talk qualitatively with consumers in Brazil for example, they can almost tell you what the price of the goods that they buy are going to be based on the foreign exchange moves. I guess the good way to think about it is that our kinds of products, yes, you're talking taking pricing but you're talking taking pricing on an everyday product and at relatively modest levels on top of that. So it does not affect their loyalty to the brand over time. They have opportunities in terms of the different sizes we have to buy at different price points and therefore mitigate the cost impact from a cash outlay point of view, which indeed they do do. But interestingly, they don't even trade down within our portfolio. So if they're buying the premium end of the Colgate portfolio, they keep buying that. They don't trade down to perhaps what you might say is a more economical option within our portfolio. So our kinds of products at the time these economies are going through what they are going through become the affordable luxuries that people continue to put in their shopping basket. So that's the way I would answer it, John.

We will now move on to Steve Powers with UBS.

Great. Good morning, Ian. I'm trying to try in sneak two questions on two different tacks. The first one is just to clarify what you said earlier I think in response to Olivia's question. Did you say that mix was not a factor in your reported volume? Because I thought it was. Ian M. Cook - Chairman, President & Chief Executive Officer: Mix is in – we have a dollar-weighted volume.

Okay. Ian M. Cook - Chairman, President & Chief Executive Officer: So it's in the volume.

Yeah. So it's in the volume. Okay. Okay. Ian M. Cook - Chairman, President & Chief Executive Officer: In other words, it's not separate. She was looking for a separate contribution. That was our point.

Okay. Got it. And so just building on that, as you were discussing with Ali, as the volume improves sequentially as pricing subsides, just from a marketplace dynamic, do you expect more of a unit volume recovery or is it more of a resumption of trade-up? Ian M. Cook - Chairman, President & Chief Executive Officer: Well, we'll get both. We'll get both. But the volume will recover and it will not all be trade-up.

We will now move on to Lauren Lieberman with Barclays.

Thanks. Good morning Ian M. Cook - Chairman, President & Chief Executive Officer: Hey, Lauren.

Hey. Could we talk a little bit about gross margins? I think maybe your – I would think maybe you're a little disappointed that no one's asked you about it yet given gross margins were up 190 basis points. So if you could run through the bridge for us. And then also just talk about how that impacts your view of the moving pieces for the balance of the year. I guess I'll have a follow-up once I know what the key drivers were. Ian M. Cook - Chairman, President & Chief Executive Officer: Yeah. I was going to ask you to repeat the question because I like hearing 190 basis points. So if we just do the traditional roll forward, the prior-year gross profit was 58.3%. We got the benefit, 110 basis points of the pricing. We had between funding the growth and restructuring – restructuring modest in gross profit, as you know, 190 basis points favorable. Material prices were a headwind of 110 basis points. Nothing in all other. And that gets you to the 60.2% which is the 190 basis points. Now, as we think about that for the balance of the year, I mean, first pleasingly – although these pleasing moments are quickly behind you, but pleasingly this is the second back-to-back quarter now we've been above 60% in gross margin, which, as you know, was a company goal. Indeed, the second edged slightly up on the first. But if you look at your gross profit for the first half of the year, it's up 150 basis points. 1.5 points. So as we, as you, think about the balance of the year, I guess what we would say is our expectation is that our gross margin increase for the second half of the year will be around the same level as the first half, maybe even a little bit higher. And the primary driver of that of course is transaction headwinds will start to lessen as the foreign exchange comparisons, bar another event in our world, improve year upon year.

We will now move on to Iain Simpson with Société Générale. Iain E. Simpson - Société Générale SA (Broker): Thank you very much. One of your competitors recently commented that oral care was a category that would potentially lend itself to an online subscription model, the advantage being that it would increase rates of toothbrush replacement. Just wondered if that was something you felt able to make any comment on or I guess any thoughts around direct to consumer e-commerce more generally. Thank you. Ian M. Cook - Chairman, President & Chief Executive Officer: Yeah. We think it's a great idea.

All right. And we will now move on to Mark Astrachan with Stifel. Mark Astrachan - Stifel, Nicolaus & Co., Inc.: Thanks, and morning, everybody. Ian M. Cook - Chairman, President & Chief Executive Officer: Hey, Mark. Mark Astrachan - Stifel, Nicolaus & Co., Inc.: I wanted to ask about Hill's. So in the press release, innovation is called out, seems to be largely driven by prescription Science Diet. I didn't see any mention in there of the natural or Ideal Balance categories, brands. So I guess curious if you could comment on why the focus seems to be on the nutrition science, not naturals which I guess it has been more so in recent years and if there's anything we should read into it from a consumer preference standpoint in terms of changing tastes out there. Ian M. Cook - Chairman, President & Chief Executive Officer: I don't think so. I think whatever we do on Hill's, whatever we have done on Hill's, we are always extremely focused as a matter of strategy on the nutrition the diets provide; doesn't matter whether it is a prescription product, a Science product, or even our Ideal Balance product. I think the thing you might want to read into it is that after we introduced Ideal Balance, we have been through an extensive process of changing the formula composition of our Science Diet product – at least the one not recommended or prescribed by a vet – to change the composition of the ingredients in those products to lead with protein and other ingredients that buyers of natural products value thereby no longer providing them with a reason to walk away from the nutrition of Science Diet because Science Diet doesn't offer them a formula composition that they're looking for. And that was a significant change that we made to make that piece of the business less vulnerable to a naturals pure play. So Ideal Balance is doing okay but I would say our major shift has been to make sure from a dietary composition point of view that our core Science Diet business is competitive. And, of course, in making that change have validated the fact that the nutritional benefit that the pet is provided is completely unchanged in making that formula adjustment. So I guess that's the way I would think about it. And all of the innovation that Bina talked about on the prescription diet side, as you've seen with the weight products, we translate that science, if you will, across Science Diet and even bring it to Ideal Balance, although we would market it in different ways given the different positionings of each of those three segments of the business.

We will take our final question from Steve Powers with UBS.

Thanks for the follow-up. So, sorry in advance for the technical question, but just as I'm asking you about how you define things in your reporting, if I think about Europe where you see pricing down again 3% this quarter, which I understand is a well-documented trend, if I go back to 2009 and just index your portfolio to 100 and multiply it through the reported pricing, it implies that you're pricing – your portfolio is down almost 20% in aggregate since that time. And obviously there's been a big continuous mix component, I'm assuming, as you roll in new premium innovation that's help offset that in the volume line. But as I think about how that flows through to margins, I'm assuming that that premiumization has been beneficial to margins, but if I look at how you define the buckets of margin drivers, especially by segment, you typically call out funding the growth and then all-in kind of raw and packaging costs and then pricing. I just want to understand, maybe using Europe as an example, when there's a significant mix benefit or impact on margins, where does that fall? Is that netting against pricing that mix benefit or is it somehow contributing to funding the growth as it relates to your margin drivers? Thanks. Ian M. Cook - Chairman, President & Chief Executive Officer: Well, thank you for the simple question. I think the mix benefit clearly is picked up in gross margin. And I would say it would be between pricing and cost in the gross margin calculation, base cost.

And we don't have any other questions at this time. Ian M. Cook - Chairman, President & Chief Executive Officer: Well, thank you. Thank you ever so much. Thank you for your interest in the company in these turbulent times, and we look forward to updating you all as the year unfolds. And we take the opportunity to thank all of the Colgate folk that work so hard to make this happen. Thank you very much.

Ladies and gentlemen, this does conclude today's conference. We thank you for your participation.