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Colgate-Palmolive (CL) Ian M. Cook on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Earnings Call

April 28, 2016 11:00 am ET


Bina H. Thompson - Senior Vice President, Investor Relations

Ian M. Cook - Chairman, President & Chief Executive Officer


Jason English - Goldman Sachs & Co.

Wendy C. Nicholson - Citigroup Global Markets, Inc. (Broker)

Stephen R. Powers - UBS Securities LLC

Olivia Tong - Bank of America Merrill Lynch

Ali Dibadj - Sanford C. Bernstein & Co. LLC

William B. Chappell - SunTrust Robinson Humphrey, Inc.

Dara W. Mohsenian - Morgan Stanley & Co. LLC

Javier Escalante - Consumer Edge Research LLC

William Schmitz - Deutsche Bank Securities, Inc.

John A. Faucher - JPMorgan Securities LLC

Caroline Levy - CLSA Americas LLC

Erin Lash - Morningstar, Inc. (Research)

Lauren Rae Lieberman - Barclays Capital, Inc.

Mark S. Astrachan - Stifel, Nicolaus & Co., Inc.


Good day, everyone, and welcome to today's Colgate-Palmolive Company's First Quarter 2016 Earnings Conference Call. This call is being recorded and is being simulcast live 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 include a discussion of non-GAAP financial measures, including those identified in Table 6 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'd like to turn the call over to Senior Vice President of Investor Relations, Bina Thompson. Please go ahead, Bina.

Bina H. Thompson - Senior Vice President, Investor Relations

Thank you, Jessica, and good morning. And welcome to our first quarter 2016 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.

We're delighted with our strong start to the year. Organic sales growth is well within our targeted range of 4% to 7%. Our gross profit margin reached a long-standing goal of 60%. Advertising as a percent of sales was at a solid 10.6%, even with the year-ago quarter, but up 230 basis points from the fourth quarter of 2015, behind strong new product activity.

Currency headwinds continued in the quarter, and we were able to take pricing to partially offset those headwinds and still deliver volume growth. And, as you will hear as I go through the divisions, our market shares are strong and growing.

We are well into our Global Growth and Efficiency Program. Savings are projected to be within our announced ranges. And our funding-the-growth initiatives have delivered another solid 130 basis points benefit on the gross margin line in the quarter. Current estimates show the benefits from these funding-the-growth initiatives increasing as we go through the year.

Our balance sheet is solid. Working capital is down from the prior year. We announced a dividend increase effective this quarter, and our share buyback program continues.

So then, let's turn to the divisions, starting with North America. This division reported solid results. Innovation helped to fuel growth, and our market shares were up or stable in eight of 11 categories. Our new products were well-supported with impactful integrated marketing campaigns, with activation in-store, as well as in traditional media and digital.

In toothpaste, as mentioned, we've achieved market leadership on the year-to-date basis, up 50 basis points to almost 36% of the market. And you may recall that we launched Colgate Total Daily Repair toothpaste in the third quarter of 2015. This quarter, we launched a companion mouthwash, which allowed us to offer a regimen approach and was supported by shelf displays in-store. As a result, Colgate Total toothpaste achieved its highest first quarter share since 2013.