Church & Dwight Stock

Okay. So next up this afternoon, we are pleased to welcome back Church & Dwight. We're fortunate to have the company's Chief Executive Officer, Rick Dierker; Chief Financial Officer, Lee McChesney, and Executive Vice President and U.S. Domestic President, Chuck Raup, with us.

Rick, I know you have a lot of slides to get through, so no long introduction, and I will step away. Thanks so much.

All right. Thanks, Lauren. She's right. We have a lot of slides to get through. It's always good to set a new record each and every time we come to Boston.

All right. So first and foremost, here is our safe harbor statement. Please take the time to read this. We do have forward-looking statements on our website.

Okay. Who we are?

Look, our evergreen model is alive and well. And I'm especially pleased that in 2026, despite the volatile world that we live in, we've been able to have an outlook that encompasses the organic sales growth, evergreen model and adjusted EPS growth. So fantastic.

Now remember, this is the output. Like there's so many things that go into this that make this work, and it's our productivity program, it's our innovation program, it's the way our sales and marketing teams go to market. So we will go through this a bit more, but just really, really pleased with how we've hit our evergreen model this year.

We have strong performance over a long period of time, whether it's 10 years, 5 years, 3 years, 1 year for TSR. We're typically industry leading. Last year, we took a step back, like many in the industry did. This year, we are taking a big step forward.

But how do we do that? We've talked about this briefly before, but what made Church & Dwight unique and different? Well, one of the things is we do our organic growth fantastically well, right? And we have the ability to identify, acquire, integrate and grow acquisitions. We can do both.

And so if you look at net sales up into the right over the last 20 years. Same thing with earnings, same thing with free cash flow up into the right. Organic growth that entire time has been about a 4% CAGR. So we can do both of those well and it creates value.

We're a $6.2 billion company, about 3/4 in the U.S., 18% international and 5% for SPD. We have 7 power brands, and those 7 make up 75% of our sales and profit. That's why we talk about those more than any others.

We have a winning formula, a balanced and diversified portfolio. We typically do well in any economic environment, low private label exposure. It was low previously. Now it's even lower. Online success, strong, consistent category-leading innovation and we're an acquisitive company. So about half of our business is household, half of it is personal care, about 1/3 of its value, 2/3 of its premium. So again, we do well in most economic environments.

Low private label exposure. I think now really, if you take a big step back, one of the threats to consumer goods and really food, different industries, is the rise of -- I don't even call it private label, I call it store brands. And the good news for us, we were industry leading with our weighted average exposure being around 11% or 12% for many, many years. After we sold our vitamin business, that dropped all the way down to 5%. So we are positioned well versus the rest of the industry against private label.

Number three, online success. We've gone from laggard to leader. 2% of sales back in 2016 now 25% of our consumer sales are sold online.

Strong, consistent category-leading innovation across categories. THERABREATH toothpaste, Hero cleansers, ARM & HAMMER laundry, cat litter, stain fighters, Trojan. So just a really broad base of category-leading innovation. And that is why we tend to get great distribution points. This year, we were #2 across the entire industry on distribution points gained. A big reason for that was our innovation pipeline.

We're an acquisitive company. We really do. We have an ability and a competency of identifying, acquiring, integrating and growing brands. And many companies want that strategy, but we have decades of experience doing it. We want primarily #1 or #2 share brands. We want high-growth, high-margin brands that are fast-moving consumables, asset light. We want to leverage our internal Church & Dwight manufacturing, logistics and procurement capabilities. And we also want to deliver sustainable competitive advantage.

And we've gone from about a $1.5 billion company back in 2004 to a $6.2 billion, $6.3 billion company today.

And I wanted to provide a brief update today on our most recent acquisition, which is Miss Mouth's. So this is a broad spectrum of brands, right? We have a portfolio for Miss Mouth's. We have sprays, we have refills, we have pens, wipes, shoe cleaner and laundry detergent as a small business. So we just think this is such a fantastic brand.

Look at household penetration. Miss Mouth's is 2.5% household penetrated, 50% is the category. 25% is OXICLEAN. So we just have a lot of room to run. Distribution points, a similar story. It was really only distributed online a year ago. Now it's in 2 other bricks-and-mortar retailers, but we really believe we can use our distribution muscle to help expand this to other classes of trade.

And it has a great category story, not just for retailers, but for consumers. I mean it's growing the stain fighter category. Category is up 10%. It's because Miss Mouth's is up around 50%. And here's the point about bricks and mortar. It's been largely incremental as we've expanded this business, right? A year ago, it was only in 1 online retailer. Today, it's in 3. It's actually a 13 share at 1 retailer already.

And look, this is a real problem solution brand. When we were doing diligence on this business, we came across this video that they shared with us, and over 25 million views. And I just want to share this magic moment on Miss Mouth's. So please roll the video.

[Presentation]

Some of the best advertising you ever see is unintentional, and that is unintentional. And there's a bride, still wine stain on her wedding dress, before they're going to take pictures and that wedding photographer fixes it in a minute.

And not only is a problem solution, it actually is a magic moment, you can see it before its eyes. And so we just think that's fit for purpose.

Okay. Back in January at CAGNY, I walked through some of the growth initiatives. And I said, look, U.S. category growth was slowing in general, like our categories have grown around 3% for many, many years. And partly because we've got to choose what categories we entered as we did M&A. But if categories were slowing to be 2% or 2.5%, we said, look, consumer confidence is also weak. Those 2 things put together, we want to make sure we're owning our future. And so even if categories slow, we want to be able to make sure that we're growing and hitting or beating our evergreen model.

And so we put these 3 initiatives in place. The first one was to grow our ARM & HAMMER business. Our aspiration is to go from $2 billion to $3 billion. We want to drive our oral care expansion from $1 billion to $1.5 billion. We want to scale our international business from $1 billion to $2 billion. And so here's a quick check-in on those initiatives and just to discuss it again, but we're going to provide a more detailed update in January at our Analyst Day.

So over a long period of time, I usually use this slide to talk about M&A. We had one power brand in the year 2000, that was ARM & HAMMER. And then all the green bars were all those businesses that we bought and brands we bought over the past 20 years or so. What's unique, though, is the orange bar. The orange bar is ARM & HAMMER. So it's gone from $1 billion to $2 billion -- a little over $2 billion plus over the last 20 years or so. And so now the journey is about going from $2 billion to $3 billion. And we're going to do that a few different ways, but we have a lot of reasons to believe.

It's proven that ARM & HAMMER equity can go across categories. We've launched into these big categories, and we've been very successful. We have a master brand that is so well known. It has brand equity that's right up there with these other common brands that you see in your everyday life.

And then finally, we have some ARM & HAMMER halo effect for advertising. When we advertise, laundry, it helps toothpaste. When we help -- when we advertise toothpaste it helps our litter business. So ARM & HAMMER advertising is so synergistic. And many companies want a mega brand that can go across these different categories, and that's the strategy. I would say we already have one. We have a brand that goes across categories. It's known for cleaning, known for deodorizing, it's premium in some categories, it's value in others, it's personal care in some categories, it's household in others. So it's really a collective brand that can do many, many things.

And so I said, hey, here are the 4 areas we're focused on. One is we're going to grow the core. And we're going to keep doing what we've been doing for many years on laundry and litter. We're going to invest in innovation, invest in distribution. We're going to continue to grow that business.

Number two, we're going to round out the portfolio on Good, Better, Best. In certain areas, we need to make sure we're playing at different price tiers.

And then number three is really the work we've been focused on the last year or so is all the new category work. And then 4 is when it makes sense, what brands get launched by a third-party partner, a licensee and then they get to such a scale that then we take back and grow exponentially from there.

Remember, the most common uses of baking soda, there's over 100, right? It's not us trying to put our -- and drive consumer behavior. Consumers are already using baking soda for all of these needs, whether it's cleaning, deodorizing, in the kitchen, the bathtub, and the toilet, removing stains and the list goes on, deodorizing.

And so the kind of the brief update is we took 3 different groups of people. One group was our NPD team. And they spent a lot of time doing the drill sites of the category where we have the right to play and win. The second group is kind of a high-potential mid-level management group within Church & Dwight. And again, they spent months and months on this problem statement and came back with some recommendations. And then third, we had a third-party external consulting firm come in and do the same thing.

And the good news is with all that work they kind of coalesce around a similar handful of ideas. And I think what I would leave you with today is we're going to launch into one new category in 2027, and we'll go through a lot of the detail on that in January. But we're super excited about all the work that's gone into this, and I can't wait to share more.

We're driving oral care expansion through THERABREATH. That's the second growth initiative. And look at this, mouthwash is a 12%, household penetration for THERABREATH these days, and it's 65% for the category. So again, a lot of room to run. Even as the #2 mouthwash, we still have upside on distribution as well.

We want to be in large categories, toothpaste and mouthwash, $2.4 billion for mouthwash, $4.8 billion for toothpaste. We want to -- we care a lot about getting a share point in these types of categories. And we're off to a good start. And our target for 2026 was to get a one share in THERABREATH toothpaste, and we've done that. And Chuck will talk through some of the success we're having.

And then finally, international growth through M&A. Everyone knows our story on international growth, really consistent, high single-digit growth organically for a long time. We've been able to scale some of these brands like Hero and THERABREATH. We're working on scaling Touchland. It takes a little bit longer because of regulatory requirements, and we think we can also scale Miss Mouth's, globally, not just here in the U.S. And I'm probably -- I alluded to it on the last earnings call, what's different? And one of the things that's different is the way we do M&A internationally.

2 years ago, we put some M&A folks in Europe and Asia. And for the first 12 months, we didn't make much progress. What changed? We changed the accountability and responsibility of M&A to the country leaders. And when we did that, and then the M&A folks support that. But when we did that, all of a sudden, the paradigm shifted. And we've gone through almost 100 different deals through the filter in Europe and Asia now. We have a good cadence of going through the pipeline. So I'm really optimistic about international M&A. It's not a matter of if, just when.

Okay. Let me turn it over to Chuck to walk you through the categories and the brands.

Thanks, Rick. As we look at the U.S. portion of Church & Dwight's business for our evergreen model, we're targeting 3% organic sales growth. And where this growth is going to come from is the 7 power brands that Rick just talked about. Now what's really fantastic about these power brands is the fact that they play in very strong categories that have shown historical growth. And in fact, through the front half of 2026, the average growth rate across these categories has been about 3%.

Now not only are we playing in advantaged categories, but we're also able to grow volume, which is very difficult to do in an environment where the consumer is pressured and there's heightened competition. In addition to that, we're leading our peer set in distribution growth. And so as we look at our TDP growth year-to-date, we see that our TDP percent change through the front half of the year is second amongst our peer set. And not surprisingly, but very encouragingly, this performance has led us to great success with our customers. So in 19 out of 20 of our top accounts, we are growing sales.

So let's take a look at some of the categories that are driving this performance. First, in laundry. Through the front part of the year, we've been able to grow share slightly and outpace the category at 2.5%. Now we are able to do this in an environment where promotional activity went up for the category, but we actually went down for Church & Dwight. And this strong performance has led us to historical share levels of 14.5% which has enabled us to retain our position as #1 in washloads. Now that's exceptionally important because if you think about that, that really underscores the strong role that we have in the everyday lives of our consumers.

And as we move forward to delight our consumers and deliver superior value, we're going to leverage our Good, Better, Best strategy. And so at that base Good tier, we'll continue to deliver that great fundamental ARM & HAMMER clean. In the Better tier, what we're doing is we're adding value through things like OXICLEAN addition to the formula. And then we're offering premium products like Deep Clean in that Best tier.

Moving on to litter. We're having a great year on litter, and we're strongly outpacing the category. And what that's really behind is twofold. One, we are doing well in our Good, Better, Best strategy in litter as well. And in our Better tier, we introduced a product called Dual Defense, which offers superior odor management. Additionally, in our lightweight segment, we have our Hardball product, which is a superior product versus competition. The Hardball product has a 49% repeat rate, which is 15 points above the competition. And so as we look to continue to drive Hardball, Hardball is at about an 8.5% share of lightweight litter. Just moving up to 27.5%, which would be our fair share of lightweight litter represent a $75 million opportunity.

Moving on to THERABREATH. As Rick said, THERABREATH is a shining star in our portfolio. And through the front half of the year, we've grown about 21%. And so we are the ones that are driving category growth. This performance has led us to historically high share of just under 25%. And as Rick talked about, we have significant upside in driving brand awareness, capturing additional shelf space and driving THERABREATH penetration up to category levels.

And for our paste launch, we're very happy with the results that we're seeing in paste. A few key statistics. First, 65% of our sales are incremental to the category. And so what that shows is consumers are willing to trade up and pay more for a premium oral care product like THERABREATH. Additionally, we're a #10 toothpaste brand already. And then for our online stores, we're at 4.6 out of 5 stars, which is very strong. So it's great to see that instant positive consumer feedback.

Moving on to Hero. For the acne category, the acne category showed strong growth through the front half of the year, growing about 5%. And that's about where HERO was, just a little bit below. Now what we have seen is that there's growth -- strong growth in products outside of acne patches. And that underscores why our strategy to meet consumer needs across the acne life cycle is very important.

And so what are we doing with that? Well, we just launched our cleansers. We have products like our Micropoint that's for that initial red bump before you fully get the pimple. We have our Mighty Patch original for when you actually do have the pimple. And then we have products to address the discoloration once the pimple has gone. And so what we're going to continue to do is to drive these products and also innovate and find new ways to meet consumer needs across that acne life cycle.

In addition, we still have upside to drive that Mighty Patch original and continue accelerated growth. And so as we look at from a share perspective, we're right at about 10%, where the acne category is about 30%. So a ton of headroom. Additionally, given Hero's performance, we want more shelf space than we have right now. So much like THERABREATH, there's upside in capturing shelf space that's more representative of what our brand delivers.

Moving on to Touchland. So for Touchland, we're a bit behind where we thought we want to be. But the fact is we're very excited about this brand, and there's a lot of reasons to be enthusiastic about Touchland. First, it's #1 in hand sanitizer. Second, it's at a 6% penetration. The category is at nearly a 46%. So there's tremendous headroom to drive penetration. And as we've gone through this presentation, you can see that when we get a hold of a brand where there's significant upside and penetration and to really drive brand forward, we do quite well.

Additionally, aided brand awareness at 23%, but there's other brands within this hand sanitizer category that's more up in the 70 and 80 level. So there's more room to drive our aided awareness for Touchland.

And then finally, we're continuing to grow our TDP base which shows that customers are interested in driving the category with THERABREATH.

And then as we move outside of the U.S. we're going to see accelerated international growth. And you're going to see some more of that international expansion as we push forward into early 2027, and then we'll continue to do that in future years as well.

Moving on to innovation. Innovation is a significant part of our growth algorithm. And really what we've done to make sure that we're delivering strong innovation is to revamp our innovation model. And so we used to be -- we used to use a single source innovation model. But what we've done over the past couple of years is we've gone to a multiple source model. That includes things like third-party innovation, classic NPD, white space and open innovation. And what this enables us to do is to, one, identify new consumer occasions that we can meet to drive accelerated growth and also lets us find new ways to meet those new consumer occasions. And this approach has really worked because over 50% of our current innovation now has been identified and it's developed through these other sources of innovative thought.

And then as we look in market, our new approach to innovation, our operated approach to innovation is really working. So we used to average about 1 point, 1.5 points of incremental net sales contributing to our top line growth. It's now around 2%. So in market, we're seeing those stronger results and we're seeing the incrementality of our innovation.

And we're very excited about the products that we have in market. So we talked about THERABREATH toothpaste, new products in litter, and also what we're doing for Hero. But we also have innovation that's supporting initiatives like our Good, Better, Best strategy in stain fighting and laundry. And what that looks like is things like Baking Soda Fresh in laundry and also Power Sheets with OXICLEAN that give the consumer a heightened experience.

Additionally, we're pushing -- we're developing and really marketing our Max Force item on OXICLEAN. And what that does is that takes our stain fighting power to a whole new level. So across our portfolio, our innovation algorithm and our way of working is really delivering, and we'll continue to leverage our innovation model to drive new innovation across all of these categories moving forward, ensuring that we have a strong innovation pipeline as part of our evergreen model.

So with that, I'm going to turn things back over to Rick to talk about our international business.

All right. Thanks, Chuck. So same algorithm for this division, 8% is what we target. And remember, our international business is about $1.1 billion, right? Our aspiration is to get to $2 billion over the next few years. But today, about 1/3 of that is our Global Markets Group, which goes to distributor. The largest sub is Canada.

International has a long track record of just success from a high single-digit perspective. And we're still under-indexed. I think we're early -- still in the early innings of international growth. About 18% of our sales, many other companies are a lot higher than that. As we take these brands across the world, they're starting to scale. We're at scale in many of these countries.

So WATERPIK, ARM & HAMMER, OXICLEAN, we're leveraging from the U.S., BATISTE, Stérimar, Femfresh are brands that are really in our international business and do really well. And then THERABREATH, Hero, Touchland are ones that we are rapidly scaling.

Hero, for example, we've already distributed out into 75 different countries. We're the #1 patch in many countries already.

Touchland is next in line. You heard Chuck kind of go through that detail. We have a lot of demand pulling for Touchland globally. And as we've evolved international, we're starting to get to the point where we can really do not just local manufacturing, but local insights. And we have great use cases in China as an example that we're doing, BATISTE, dry shampoo for that market, specifically in Japan. We're doing liquid OXICLEAN, made for that market.

And then as we move on, SPD is a 5% evergreen model for growth. And that business is about 2/3 animal nutrition and about 1/3 specialty chemicals, $300 million business. And just a reminder, a couple of years ago, this was a very cyclical business, and it was up 1 year down the next. But we shut down about 2 years ago a business that was a lot of revenue but not much profit. And once we did that, you can really see the core of SPD is not just consistent, but just the definition of consistent, 10 quarters of growth through all this turmoil and volatility over the last few years.

Okay. How we operate? I've gone through this slide many times, how we leverage brands. And Chuck talked about our categories and our brands, how we're a friend of the environment. We've walked through how we were one of the original sponsors of Earth Day, how we leverage people, we're a lean company. One of the benefits of being lean is fast decision-making, it enables execution. How we leverage assets, we're an asset-light model typically. And then how we leverage acquisitions and good returns become great returns over many, many years as we have the ability to acquire businesses.

But all of these things are also being enabled today with AI. First and foremost, we're training the entire organization. We have 101, 201, 301 classes. We've gotten each and every salaried employee access to the latest LLM models. And we're letting individuals really do their work in a more effective way.

And then next, we're also doing massive projects across the enterprise. We're doing one on revenue growth management. We're doing one on content creation. We're doing one in R&D to help with formulation. We're doing some stuff in supply chain. So I'm glad to say that we're off the starting blocks. And how we really attacked our e-com sales years ago. We went from 2% to 25%. I really feel like now that we're off the starting blocks. We're going to make this a big advantage for the company.

And with that, I'll turn it over to Lee to walk through the financials.

Thank you. All right. Okay. So I'll bring us home with a financial story of Church & Dwight. And for us, just like Rick talked about, this starts with the evergreen model. And this is the foundation of really -- as Rick talked about all the inputs that go into this wonderful output. For those who are new to our story, it's really about balance. We're pursuing 4% organic growth and 8% EPS growth. So we're looking for that growth and the leverage to come through as well.

So that's what the evergreen model calls for. At these sessions, we really like to talk about just the scorecard of how we're doing against this. So I'm going to start, and I'm going to do it not just from a 1-year, 2-year look, I'm going to look back an entire decade here of how we're doing. So organic growth, again, 4% goal. We've delivered 4.1% on average over the past decade and all the things that happened.

And in our July 31 outlook, we shared an update for the outlook for the year, for '26, and we're actually at 4% to 5%, so actually slightly higher than our evergreen model.

When you click into what drives all the things you just saw from Rick and Chuck, this also shows through when you take that organic down to just a volume perspective here. So you look at this consistent volume-driven growth to organic growth. It's really about making sure you have the right categories, the right innovation, the right way of going to market. This is how you drive steady volume-based organic growth.

Then we go to adjusted gross margin. So the evergreen model calls for 25 to 50 basis points of improvement. If you think about what happened kind of post-COVID, you see the momentum we've had with gross margin come to life. It's all the different tools in the toolkit. And then this year, as you think about 100 to 120 basis points in our July 31 outlook, it's also the benefit of our strategic portfolio actions last year. So the combination of those are driving is a really good story of the gross margin.

Now as I said, on a -- within the evergreen model, every year, we're looking for 25 to 50 basis points. And we have an entire toolkit that we bring to life every day to drive that performance. So whether it's classic productivity, it's NPD, it's the acquisitions and what they do from an execution perspective, RGM and then it's built into our incentive plans. Across the organization, improving gross margin isn't -- for a portion of organization, it's for the entire organization rallying around that. And that's why you've seen the progress you've seen over the last several years.

With that background on sales, on gross margin, we make a steady, consistent investment in marketing of approximately 11%. And you think about the opportunity we have here, we have 7 brands, again, driving 75% of our sales. We can make really smart investments in these brands and really drive wonderful returns out of them. And again, it's in categories -- Chuck, talked about this. These are categories that are growing. So there's a really strong returns on this investment in marketing. We're always looking to do at this level and if there's opportunities between sales and gross margin, we'll even do more.

Now SG&A. The evergreen model typically calls for kind of flat to 25 basis points of improvement in our outlook for the year from July, it's an outlook of being higher, and that's really driven by 2 things. We have the strategic portfolio actions, which, again, is about $400 million of sales coming out of the portfolio. So you have little bit of that effect. And then you had Touchland. Touchland's amortization and SG&A. And then as part of our July outlook, we also have Miss Mouth's in the SG&A for the year.

Now if you think about this, again, the evergreen model, and this is a decade scorecard on EPS. Evergreen targets 8%, and that's what we've done for the past decade despite all the macro events that go in the world, the formula that we have here, all those inputs we kicked us off with that's driving a consistent 8% growth over the last decade.

So specifically for '26, I've mentioned this a few times, we updated our outlook in July. Our organic growth went up to 4% to 5% before it was 3% to 4%, and our EPS improvement improved to 6% to 8% versus 5% to 8% before.

So we had -- based on the first half of the year, we had 2 quarters with 5% organic growth. That momentum going into the back half, we also had the Miss Mouth's acquisition, all those elements driving to this improved outlook for the full year.

So if we move from there to just what that performance of the evergreen model does, we have a wonderful cash flow. So for the past decade, we have 119% multiple. Most people target below 100%. This is an incredible strength for us. It gives us so much more opportunities to invest in our business.

And that also shows through the debt to EBITDA. So today, we're sitting in this 1.5, 1.6 level. That's after doing Touchland, that's after doing Miss Mouth's, that's after doing $900 million of share buyback last year. Just really speaks to the cash flow generation of Church & Dwight.

So today, we have over $5 billion of capacity after all those actions, all that progress over the last several years. And where do -- where are we going to focus that? Well, our prioritized use of cash flow, it's pretty consistent. I'd like to say 1A, 1B, 1C, is really investing in TSR-accretive M&A. From there, we certainly invest in organic growth and productivity, new product development, when there's opportunities to pay down debt, we do debt reduction. Today, we just have fixed rate debt and then ultimately returning cash to shareholders.

The strength of that cash flow and really the prioritization here also shows through when you think about it from a dividend perspective, 125 years of consecutive dividend and 30 years of consecutive increases. So as we think about where we are and this outlook we gave in July, we have confidence in that outlook, and we have confidence as we look forward here, whether it's the categories we're in, the innovation you heard from us, what we're doing with our acquisitions, the growth opportunities that gives us all confidence as we look forward in our Church & Dwight portfolio.

With that, we'll take -- more minutes for question.

If you want to do one question, I can, but if not, that's fine, too. Up to you.

[indiscernible]

Yes. So the question is really about higher freight costs that people are seeing.

I would say one of the things about our company is we're super transparent. And I feel like we had that conversation in July, and we kind of pointed to transportation costs even in the second quarter being a little bit of a headwind. And as, so I feel like we've kind of contemplated that. And as costs go up, we're going to do our best to offset that with productivity like we said we're going to do 2 quarters ago, and we're doing.

So state of the consumer, really quick in 10 seconds or less, I would say, look, consumer confidence is low, but the consumer is resilient. So consumer spending has actually held up pretty well. And it depends what categories you're in. And for our categories, they've been relatively healthy, still between 2% and 3%. So we're -- we continue to execute well.

Great. We'll end there and go to breakout. So just please join me in thanking Church & Dwight for being here.

Hello, everyone. Thank you for joining us, and welcome to the Church & Dwight Second Quarter 2026 Earnings Conference Call. [Operator Instructions]

I will now hand the conference over to Mr. Rick Dierker, President and Chief Executive Officer of Church & Dwight. Please go ahead, sir.

Thank you. Good morning, everyone. Thanks for joining the call. We had a strong second quarter and first half, and I want to start by thanking all of our Church & Dwight employees all around the world for executing so well in a challenging environment. I'll begin with some thoughts on the broader environment and then a review of our Q2 results. And then I'll turn the call over to Lee McChesney, our CFO, and when Lee is done, we'll open it up for questions.

Starting with the broader environment. Conditions remain dynamic. However, our categories are growing ahead of our original expectations, and Church & Dwight is growing even faster. Consumer spending remains resilient. Our teams are executing with excellence, and we remain focused on offering high-quality solution-oriented products to consumers the right value. Our brands continue to perform exceptionally well, driving a second straight quarter of industry-leading organic sales growth.

Turning to the quarter. Net sales increased 1.6%, which was ahead of our outlook. And organic sales grew 5.8%, almost 6 well above our 3% outlook. This growth was broad-based across all 3 divisions and was primarily driven by volume growth of 4.3% and positive price/mix of 1.5%. Adjusted gross margin was 45.4%, up 40 basis points, and adjusted EPS was $0.89, above our $0.88 outlook. Overall, this is a great result. And with the first half of the year behind us, it gives us great confidence to raise our sales, EPS and cash flow outlook for the full year.

In Q2, we also completed the acquisition of the fast-growing Missmouth brand the #1 stain remover brand on Amazon. We're encouraged by the strong initial sales results from the brand since the June acquisition. And I'm especially excited about the growth opportunities for Mismouth over the next 12 to 18 months. In the second quarter, Westmound consumption grew over 50% and gained almost 3.5 share points. And we think this is just the beginning as household penetration for the brand is currently just 2.5%.

And compared to the category, which is 50%. Additionally, ACV for [indiscernible] is only 35% compared to 80% for the category, which again indicates plenty of room to run on distribution. Innovation and distribution gains remain a significant competitive advantage for Church & Dwight. They were a major contributor to our industry-leading growth. We're confident that our relentless focus on innovation will continue to drive strong growth distribution gains at shelf and market share expansion.

New product launches this year are expected to account for about half of our organic growth as we innovate in key categories across the portfolio. Consumption across our largest categories grew at 2.7% in the second quarter, which exceeded our category growth expectations of around 2%.

Now I'm going to turn my comments to each of the 3 divisions. First up is the U.S. business. Domestic organic sales increased 5.1% with sustained growth in both of our household and personal care portfolios. Growth was driven by volume and favorable price mix with strong performance from THERABREATH mouthwash and toothpaste, Hero, ARM & HAMMER Catletter and Zicam. The [indiscernible] brand had another quarter of growth with laundry maintaining record shares across total laundry. ARM & HAMMER laundry detergent consumption and category consumption grew about 1% in the quarter despite a step-up in competitive promotions and a lower level for ARM & HAMMER. The value segment of laundry continues to grow.

Next step is [indiscernible]. Continued fantastic results as ARM & HAMMER cat litter consumption grew a robust 7.5% and share increased 0.8 points to reach 2.5. While category promotional levels declined slightly, they remain at historically high levels. ARM & HAMMER Cat Litter launched dual defense Microban clubbing letter earlier this year, and that launch continues to do very well. Hero and Therabras continue to contribute considerably to overall performance. Their breadth achieved another quarter of record share gains, jumping 4.5 points to a 25.3% share and further solidified our #2 position in total mouthwash.

Even with that growth, household penetration remains relatively low at only 14% compared to the mouthwash category of 65%. Our Thera breath toothpaste launch continues to perform well and it's still early in the launch. It's off to a great start with a 1 point share in total toothpaste despite only just fully entering brick-and-mortar in the last several months. Pro consumption outpaced the patch category and with the cleanser launched just starting now, we're confident in hero continuing to gain share in total acne. Facial cleansers represent a $650 million category and accounts for approximately 30% of the total acne category. Lots of runway as Hero has, again, relatively low household penetration at 10% compared to the category of 30%, which gives us confidence in the continued growth of this brand.

For Touch lens, sales grew in the second quarter and with back half weighted innovation, new collaborations and activations, we expect continued sales growth in the second half of the year. Looking forward further, our international expansion, our innovation categories and future distribution opportunities continue to give us confidence in this brand as we look to 2027. Global e-comm was once again a strong contributor Global e-commerce grew 22.7% in the second quarter, and global online sales now represent 25.5% of total consumer. Turning to international. Q2 is another great success with our international business delivering organic sales growth 9.1%, driven by higher volume and favorable price mix. Our great international brands are leading to share gains and growth that outpaced local countries GDP.

In addition, our recent U.S. acquisitions are paying dividends across the world in a big way. where brands like Hero and their breadth are driving outsized growth. Our ability to scale brands to so many countries so quickly is getting better and better. Overall, our international team is executing very well. Our Specialty Products division also performed well. We're getting sales growth of 2.8% due to a combination of higher volume and higher price and product mix.

I'll close by saying that we were very pleased with the great first half. The benefits of our strategic actions in 2025 are enabling greater focus on our growth initiatives. I am especially pleased with the time the entire organization is spending focused here on the future. Momentum is building. The category works surrounding ARM & HAMMER, our acceleration plans for oral care behind there breadth and the pipeline for M&A within the international business are just a few examples. I'll provide a detailed update in early 2027.

But I'll say more, but I will say I'm more optimistic about the future than I've ever been. I'm also very proud of our Church & Dwight as we continue to execute well in a volatile environment.

And with that, I'll turn the call over to Lee for more detail in the quarter.

Thank you, Rick, and good day, everyone. We appreciate you joining the call. As we now enter the second half of the year, we are encouraged with the results fueled by innovation and share growth, which provides us the momentum to deliver strong Church & Dwight Evergreen model results. The second quarter demonstrates the strength of our portfolio of categories, our leading levels of innovation and the execution capabilities of our teams around the globe. Similar to Rick, I also want to recognize our teams across the globe for their focus and execution this past quarter. Very well done.

Let's get into the details. We'll start with EPS. Second quarter EPS -- adjusted EPS was $0.89 and exceeding our outlook of $0.88, stronger-than-expected sales and continued gross margin improvement fueled our results and enabled increased investments in our brands. Organic sales in the second quarter grew 5.8% and well above our outlook of approximately 3%. And growth was broad-based across the business and primarily volume driven, with volume growth of 4.3% and positive pricing and mix of 1.5%. Our Power Brands once again gained share fueled by well-received innovation and a robust distribution wins with our commercial partners. Strong organic growth and the contributions from our acquisitions more than offset the impact of our 2025 business exits and led to reported net sales growth of a positive 1.6% in the quarter, ahead of our expectations. Let's now turn to gross margin.

Our second quarter adjusted gross margin was 45.4%, an increase of 40 basis points versus last year. Our results were driven by 150 basis points from productivity programs, 110 basis points from our higher-margin acquisitions, combined with the impact of our successful portfolio actions and 180 basis points from the combination of volume, price and mix. These factors offset the headwinds from inflation, tariffs and transportation of 400 basis points. We continue to invest in our brands in the second quarter as the marketing expense was $165 million, up $8.2 million or 40 basis points versus last year.

And similar to our strategy in past quarters, when our sales and gross margin results exceed our original expectations, we will utilize those opportunities to invest in our brands. Adjusted SG&A was $241.4 million or 15.8% of net sales, a 220 basis point increase versus the prior year. As we've noted in our 2026 outlook, SG&A in the first half of the year is primarily growing to the inclusion of Touch lands SG&A and amortization expense. Adjusted other expense increased by $9.2 million due to the lower interest income compared to last year.

Let's now turn to cash flow. Cash flow remains a significant strength of the company. And for this first 6 months of 2026 and Cash from operations was $462 million, an increase of 10.8% versus the prior year as we delivered improved cash earnings and executed disciplined working capital results. Capital expenditures were $61.8 million in the first half, and we continue to expect full year capital expenditures of approximately $130 million or roughly 2% of sales.

Let's now turn our outlook to the outlook for 2020. And as detailed in our press release this morning, we are increasing our sales, earnings per share and cash flow outlook despite the challenging macro environment. This improvement reflects the strength of our operating fundamentals, which is led by volume-based organic growth, steady market share gains and management's focus on gross margin expansion. Our outlook continues to reflect the impact of transitory cost pressures that developed over the past 100 days. Our latest outlook of approximately $30 million reflects raw materials, transportation costs and various premiums resulting from the conflict in the Middle East. And this outlook assumes a crude oil price of approximately $9 a barrel. Our teams have acted to fully mitigate this headwind this year through increased productivity.

And separately, on a positive note, we expect to receive approximately $15 million of Phase 2 tariff refund benefits during the second half of 2026. We will invest these proceeds in primarily customer consumer-facing business activities. We are raising our full year organic sales outlook to approximately 4% to 5%, up from the prior outlook of 3% to 4%. The improved outlook reflects the strong first half execution and the continued momentum across the portfolio during the second half of 2026. And we now expect to adjust gross margin expansion of approximately 100 to 120 basis points for the year. and marketing investments is now expected to be at or above 11% of sales as we invest behind our brands and continue supporting our growth initiatives. We are raising our adjusted EPS outlook to a growth rate of 6% to 8% and versus our prior expectation of 5% to 8%. And we also now expect cash from operations of approximately $1.175 billion, up from $1.15 billion.

And turning to the third quarter. we expect organic growth -- sales growth of approximately 3% and an adjusted EPS of approximately $0.89 per share, representing approximately 10% growth versus the prior year while we also invested approximately 12% rate of marketing as a percentage of sales. So to conclude, we are very pleased with our first half performance and are confident in our ability to deliver our improved outlook for the balance of 2026. Our portfolio remains strong. Our brands continue to gain share, and our teams are executing well in a dynamic environment.

Operator, we are now ready for questions.

[Operator Instructions] Your first question from the line of Rupesh Parikh with Oppenheimer.

Congrats on a nice quarter. So just going back to the organic sales growth delivery for the quarter. Just curious, at a high level, what are some of the areas that drove the significant upside that we saw on that line item?

Yes. Thanks, Rupesh. The good news is it was pretty broad-based. But as we said in the release, I think air breadth, cat litter, I'd say ARM & HAMMER laundry was kind of flattish. Anything else you would add, Lee?

So I think as Rick said, it's pretty broad-based. Home care, personal care across the globe, really good to see international at 9% as well, and that was pretty broad-based across both Europe and Asia and Latin America as well.

Okay. Great. And then my follow-up question, just on the Miss Mouth acquisition. It sounds like very strong consumption that you guys are seeing right now. But as we look out the next couple of years, is -- I know you guys talked about this business growing double digits. But is there any more granularity you can give in terms of the types of growth rates you expect for the business?

Yes. I think it's a little early to do that. I mean we just bought it in June, early June. I would say a lot of work is going on to integrate and then accelerate this business. And I don't think we've been more excited about an acquisition in a long time. There's 5 individuals that came over. They've talked right into our fabric or business. We know Fabric Care really, really well. And retailers, our internal sales force are clamoring for this brand. So it's already at a 13 share at a major retailer, and it's only been there for a few months as 1 example.

But I'd just go back to household penetration 3, it's 50 for the category. Probably the right time to talk about our North Star on growth ambitions is probably early 2027, but we think there's a lot of enthusiasm around this math.

Your next question comes from the line of Anna Lizzul with Bank of America.

I was wondering if you could comment on the success you're seeing across ARM & HAMMER Landry. I wanted to follow up on the fact that you mentioned in the beginning of this year where you surpassed Tide original and wash load volumes? And where are you seeing now the share gains for ARM & Hammer across the value mid-tier and premium tiers -- and then on the premium side for the brand, you touched on touched earlier in the call and the expansion to toothpaste with the rollout. I wanted to see how you're thinking about this expansion as we move forward this year.

Yes. And on your second one, are you talking about there breath? Or are you talking about touch?

Sorry, breath, you're right.

Well, on laundry, look, laundry in general, -- the good news or really the great news is despite a significant increase in promotion. I'd say we're back to historical levels of promotion and laundry. The category was up 200 basis points Henkel was up 1,100 basis points and Procter was up almost 200 basis points as well. Church & Dwight was down 300 basis points on promotion. And so despite that, the value segment grew, and we maintained our share. So just the world we live in these days, ARM & HAMMER is so well positioned for growth. there's a lot of couponing that happens off of the off channel as well, and our competitors are spending on couponing, of course, as well.

So ARM & HAMMER to hold share in an environment like that is fantastic. Over time, we'll make sure that we're at historical levels of promotion as well. So a lot of optimism on ARM & HAMMER laundry, especially behind our innovations. Like we have a good, better, best strategy, and I'd say each of those tiers within laundry are doing well. Even our sheets as TiVo launches, and take shelf space and money behind it. We're the #2 player in the sheet space. So our sheets are up 30% as well, and we're going along for the ride, which is great. So that's on ARM & HAMMER.

Laundry. On THERABREATH, I would say, again, number 2 mouthwash, lots of runway. Consumption grew at 20% plus. We grew 4.5 share points to 25%. We're less than 1,000 basis points from the market leader who's Listerine. Our household penetration is still relatively low at 14 compared to the category at 65. That is enabling us to go into other parts of oral care like toothpaste, like we never deserved the space that we got for THERABREATH toothpaste, but because of the success of the mouthwash, we got some premium great shelf space. And as a result, we have a great brand with a great value proposition on fresh breadth and cleaning. -- and it's doing extremely well, and it's already at 1 share point. So I couldn't be more optimistic about our oral care franchise behind THERABREATH.

Your next question comes from the line of Chris Carey with Wells Fargo Securities.

Okay, great. Sorry about that. So I wanted to start with the oral care portfolio and specifically the THERABREATH rollout. You said that you're getting more than your fair share out of the gate. I wanted to -- I was wondering how you think you're tracking relative to the ambitions that you outlined at the Investor Day, I think it was an incremental $0.5 billion. Do you feel like you're starting out stronger than expected? And was that shipment for that launch, a bit stronger in the quarter than perhaps what you anticipated. I was surprised you didn't call out some of the key drivers of organic sales. Is that something that we should be mindful for going forward, given the quite robust personal care implied organic sales number this quarter? And I have a follow-up.

Yes. THERABREATH pace is off to a good start is what I would say. And it's meeting or slightly beating our expectations. I think there's a lot of great conversations in the works with additional retailers to get behind it, which is fantastic. Those conversations are easier when you have a their both mouthwash brand and business that's just, again, growing so fantastically well. So yes, I mean for the quarter, THERABREATH Pace was a contributor to net sales for sure. I did it over deliver a little bit, maybe some. What was the other -- the other part of the question, Chris?

I think that was about it. It's starting stronger than you expected. It's early days, and it was a bit of a contributor a bit more than expected in Q2, if I heard all that correctly. Just interrupt me if...

Yes. Yes. And you really had asked in terms of the growth initiatives, it's kind of early to talk about how it's doing for the first the growth initiatives laying the groundwork is what I would say. Not just in oral care, but all the Arm and HAMR stuff, too. But that groundwork and the momentum that we're starting to build is fantastic.

Okay. The second question is I think this is 1 of the highest inflation numbers that we've seen over the past 4 years or so. How quickly did that develop for you was that freight and logistics inflation that happened quicker than you anticipated? And should we be expecting about that kind of number as we go through the rest of the year with that Q2 more of an anomaly. And I'm also struck just by a bit stronger price mix contribution to both top line and gross margin -- is there a bit of a step change in thinking about how you're going to be covering inflation this year with pricing? Or is there a bit of mix dynamic in that number as well?

Yes. So keep in mind, when we talked about the $25 million to $30 million of kind of Middle East derived inflation, our outlook in 2Q said it was going to be higher in 2Q. There is some transportation costs that were going to happen right away, and then you get time to respond to it. Our productivity issues that we we kicked off accelerated to mitigate that. We definitely would be more back half. But -- so it's a combination of 2 things. That number should drop down because there's just some anomalies in the second quarter. And then we have essentially more productivity in the back half.

So we have this outlook of 100 to 120 basis points of gross margin improvement. You can see where we are halfway through the year. That implies that the gross margin will expand over 100 basis points in the back half of the year. On the price volume mix, that's a good number. Obviously, we always say never overreact to 1 quarter. The first quarter was just slightly negative. Our mindset is to drive volume growth, and we do drive positive mix -- that's part of our algorithm. And then remind you, this year, we do have the benefit of the portfolio actions that help as well, and that will be a benefit all year.

Yes. And I'd probably say in the quarter, we don't spend as much on promotion on laundry, that helps. Year-over-year a little bit on the price side of Intel.

Your next question comes from the line of Bonnie Herzog with Goldman Sachs.

All right. I just had a question on your improved outlook for the year. You took up your top line growth guidance by 1 point and now expect higher gross margins -- and while you did raise the lower end of your EPS growth guidance, you did -- you kept the high end of the range. So I wanted to understand the drivers of that -- and maybe how much further you plan to step up reinvestments to drive sustainable top line growth ahead Also, if you could provide some examples of these investments and any changes you might be making to your strategy given the pressured macro environment would be helpful.

Yes. Thanks, Bonnie. It's a good question. I would say, look back at our track record over the last 1, 3, 5, 10 years, what do we do when we feel like we're over delivering and performing well against our expectations and against the industry as we tend to spend back. Like we could, in theory, beat the earnings and EPS in any 1 year, but we choose to spend more on marketing or we spend more on investments.

And so -- we want to make sure that flywheel is going that virtuous cycle happens, and we keep gaining share in shelf space and support the innovations that we're launching. We -- so beyond marketing, we're also going to spend -- we've also started to spend money behind AI. And there's some initiatives we have in place. We're going to pull some of those forward as an example, so that we can scale faster. One of our core competencies, and I think competitive advantages is really our speed and agility. And so we're going to go try to adopt and adapt faster than most people.

Your next question comes from the line of Peter Grom with UBS.

So you mentioned that consumption in your largest category, I think, grew 2.7% in the quarter, above your expectation for 2%. And -- so obviously, a lot of the moving pieces within the quarter itself. So kind of curious if you could speak to what you saw throughout the quarter and maybe more specifically the exit rate? And just kind of as you think about the back half of the year, what are you embedding in terms of cash growth?

Yes. I mean the short answer is we're still assuming around 2% for category growth. We continue to do better than that as you saw in the last couple of quarters. I think that's a good, in general, walking around number for a while. Our our monthly consumption numbers in Q2 were just -- were fantastic. And June, was also good with the exception of Laundry as we didn't repeat some promotions in laundry. Sometimes, we choose to do that. We also had a club promotion that we didn't do at the -- in the quarter as well. So I would say we did that fantastic growth without really with flattish impact from 1 of our larger businesses. So I'm just, again, consumption is going really well. Shares are doing really well.

It's broad-based to my first answer to kind of Rupesh's question early on. So there are a lot of things that are going right. So this is the right time for us as a company, especially because we're not distracted with some of those businesses that we've sold, Peter, we had the time to focus in the future. And so we're laying the groundwork for those 3 growth initiatives that we've talked about again and again and again. So a lot of internal time is being spent in the future right now.

That makes sense. And then Rick, you mentioned we're going to get some more color at a later date. But you did say that you were more optimistic than ever. And I guess just looking at the guidance on the 4Q implied would suggest a pretty nice momentum heading into next year. So maybe Putting that all together, can you maybe just discuss why you are as optimistic as you've ever been? And maybe what that means as it pertains to top and bottom line growth.

Yes. I don't know if I'll go to top and bottom line growth yet. But I'll tell you like we're doing all this category working ARM & HAMMER. We're getting real consumer feedback. We're getting real good buy-in from some retailers on the ideas. We're making great progress on how and why they have a reason for being and have a right to win in a certain category. It's obvious why we're happy about their breadth and its success. And meanwhile, internationally, that brand, along with Hero is really developing a business of tens of millions of dollars. So there's good global expansion going on.

And then the third growth initiative was really international growth. And a piece of that is international M&A, and we've been talking a lot over the past few years about, hey, we -- we have people here now. We have a process here now, but it's starting to go from theoretical to practical. And we filtered through 100 deals over the last to 12 months now internationally. And so we're being as picky and as fussy as we always would be with any deal. But now we're starting to see the deal flow, which is great. So those are some examples.

Your next question comes from the line of Olivia Tong with Raymond James.

Great. Regarding the competitive backdrop, you mentioned the promotional environment. Everyone is obviously talking about their various investments in affordability. I realize this isn't new to you, though perhaps there are more tools out there now, whether it's leveraging retail relationships, AI and other tools. So to the extent that your competitors continue to invest in some of the affordability initiatives that they're pushing. Can you provide a little bit more in terms of how you think about combating those, particularly if they start to continue to increase.

Yes, I think it's a fair question, Olivia. I would just tell you, though, like look at our track record over the last not 1 or 5 a decade or 2 of how we compete in household, right? And we have a great ability to do that. And sometimes, it's trade promotion, hopefully, usually it's innovation, hitting the right price pack architecture and sizing you want to deliver -- like I said in my remarks, a great high quality at a value price for the consumer. And it just so happens that our brands or the intersection of that naturally. And so they have to -- competitors have to compete a lot harder than we do because we naturally fall in those intersections.

Got it. And then on Mismo, sort of similar to Hero with Air breast touch land. I know it's early days, but what do you think this mouth can bring to you in terms of discussions with new retailers, new categories, geographic opportunities as you sort of assess the ability to grow that business beyond where it is right now.

Yes, it has the ability to do all of that. When really you have a brand that's driving category growth, driving usage occasions, it's driving new consumers and young consumers of that into the category. It has a magic moment. It's actually not even the same consumer as OxiClean. OxiClean is a bit more broader base, but miss mouth is really higher end and just a great see something -- do something in terms of the stain. It is I don't want to get into too much detail. I would just say it is additive for every retail conversation that we have and we're working hard at the not just do current capacity, but also what the future of that brand and where it has the right -- where consumers say it has the right to go because it's going to continue to broaden on forms and maybe even adjacent.

Your next question comes from the line of Steve Powers with Deutsche Bank.

To start, I think year-to-date, Rick, the consumption that you put -- I mean, the results you put up around to 5% volumetric shipments, both for the total company, and I think even in the Consumer Domestic business. I guess, how does that compare to your views on consumption year-to-date? And how does that inform your back half thinking -- and I guess, [indiscernible] against that, it sounds like you made some choices this quarter that benefit of the price/mix line that it seems kind of unique for the quarter. So I guess, as I think forward, do we see sort of a return to a more full promotional stance in the back half as well?

Yes. I would say consumption and our organic -- there is no real disconnect. It's around 5% or so on both -- so there's great momentum that we experienced in the first half. In the second half, we expect a lot of that to continue. I think even like I think we pulled the data on a 2-year stack as an example, -- and the 2-year stack for organic growth is 5% in the first half and 6% in the second half. So again, just really broad-based more than just 1 thing going on as a tailwind for the company. And you're right, I kind of referenced a little bit maybe a bit of a pullback in promotion that we had.

I wouldn't say a pullback. I'd say we were at a certain level, and there was an acceleration by other competitors. So I don't know about a year -- much year-over-year change from a price mix perspective, but a little bit from help from laundry. But there are other things happen in the portfolio. As we have these higher-margin products like a therabreath or like a hero or even like in this mouth, as they continue to grow, that's going to be a favorable flow on mix. Lee, anything you would add to that?

Yes. I mean I think Eric said it well. I mean we focus on volume growth. If you look at our history on price mix, it's neutral to positive. It's just a little bit slightly higher in in the second quarter. Some of that's a little bit year-over-year. As you look forward, that's going to be the equation. It's going to be volume driven. And we'll benefit from the er of things we've talked about, the way we're positioned. We we will do what we do on discounting that we don't have to do as much as the others do.

Perfect. Perfect. And then Rick, I was hoping you could talk a little bit more about international M&A. As you said, you've been talking about it for a while. It seems from your -- from the way you're talking about it now, the excitement is is building -- anticipation is building. But I guess as you -- have you learned anything in terms of -- I mean, the opportunity has been there on paper for a long time, but it's also take a little while to be fast in the transaction? Is it -- have you learned anything in terms of where it's harder just or not? Just any perspective on kind of the opportunities you see it today versus when you set out to focus on this initiative?

Yes. I think we are best in our pick on it for a little while, and it was all about people and structure. It wasn't a bad approach, but we -- initially, we added M&A people and a person in Europe, for example. And I would say it was a little bit disconnected from the management teams. And it was almost like a center of excellence on M&A. We changed that approach about 6 to 8 months ago.

And we said the management teams are responsible and the M&A person supports that. And so the -- all of a sudden, the international management teams, the Country Director and his or her staff, Australia had the same thing and Southeast Asia, the same thing. In Latin America, the same thing. You have a right to go and an obligation to go look at not just what you hear from the bankers or for our M&A contact. But where do you want what brands would you like to go and look at. And that has -- when we made it, I guess, their objective and they owned it. I'd say that was the unlock for us. And of course, our M&A team is enabling and helping, but I think we went into like right from first to third year since we did that.

Your next question comes from the line of Lauren Lieberman with Barclays.

So I had two questions. First was at the risk of being redundant. So I got a little bit confused on the way on Chris' question and the answer was just the gross margin this quarter, the youth bridge -- but in total, it did come in below your expectations. And there wasn't a huge change on the inflation guide, as you guys pointed out. So just curious on the slight shortfall in gross margins this quarter. And then my second question was just about how Techland is trending on to slide into organic sales going forward from here. So just wanted to get an update on that brand.

All right. So I'll take the first question. Just to answer the question. We had a just slightly higher transportation costs in the second quarter, even a little bit higher than we thought. But as we talked about for the year, we're still at $30 million -- that has an impact.

And then on [indiscernible], I think my comments were really -- we had sales growth in the second quarter. We have a lot of back half-weighted innovation new collaborations with other brands and some activations up and down the channel or you expect sales growth in the second half of the year. And then we have a lot of work going on in innovation into, as we've said before, another category to and some other distribution opportunities plus international expansion. I think that's a muscle that we've built really well some of these brands now. takes a little bit of regulatory perspective that that's going to start hitting in 2027 as well. So that -- it should be a tailwind.

Your next question comes from the line of Javier Escalante with Evercore ISI.

I guess the punchline in laundry is that ran hammer is holding share without promoting less. And while the others promote -- but I don't know whether I heard this correctly because it sounded like a big number, but do you say that Henkel increased promotional activity by how much -- okay. So that's high. So what does it mean right now, given how the oil is trending? Do you -- have you seen any change given that the category is so low? So if you can clarify that a little bit?

Yes. No, it's a good question, Javier. And look, I think I said last quarter, like when commodities are high, and they stay high for a while, what tends to happen, promotion tends to kind of dial back a bit. That is not what happened this past quarter. My belief is a lot of people got tariff refunds and they're spending it back and trying to drive volume. The good news for us is again, ARM & HAMMER is at that intersection of value and just quality. And we don't need to promote as much in order to hit that kind of price point.

And so we held share, which is fantastic. And -- as we increase promotion a little bit at historical levels, of course, I tend to think that we're going to continue to do what we've done for the last 15, 20 years, gained share in ARM & HAMMER year after year.

And my second one is in cat litter, continue doing really well. You mentioned in Q1 that you got the strongest GDP growth in HPC, and we are seeing it. So any heading into back-to-school, any change in distribution, particularly in this business. If you can comment on that.

Yes. I would say Litter is doing extremely well. To have 7.5% consumption growth and almost a full share point gained is great. And we're doing that the right way. We're doing that the way we've always done it, which is innovation. Armand Hammer cat litter is just known for innovation. Our new 1 this year on dual Defense with Microban is a great example of that. And some competitors are spending a lot. We're within historical levels, and we're doing all the right things. And we've talked before about -- some of the attributes of why ARM & HAMMER does so well. We have the orange box, we have the black box. We have premium value. So just again, Litter's doing great.

Your next question comes from the line of Robert Moscow with TD Cowen.

One of the many positive surprises here is there's no mention of retailers reducing inventory in your categories. So my first question is, -- how do you think you dodged that bullet. Do you think it's because of the categories? Or do you think it's just because you, in particular, have the right inventory levels -- and then I had another question on Touch land. You mentioned that it grew, but there's not a lot of commentary on how much it grew. Is the pace of growth decelerating compared to first quarter? Can you be more specific for us?

Yes. So let's see, the first question is on retail inventory. Look, if you look back at all of our transcripts, probably for the last 10 or 15 years, we've talked about retail inventory maybe 2 or 3 times. And 2 of those times were earlier in 2025. There's always dynamics that are happening with retail inventory, but we never believe they are impactful enough for us to comment on or something that we can't overcome. So there is, I would say, some movement, but overall immaterial.

The second one is on Touchlan. I would say the business, the business is is growing and our outlook for that is probably high single digits these days. But again, we're really comforted by the fact that we have this great innovation lineup. We have this great collab lineup coming. A lot of the the support that we have in the back half with displays from these retailers. So yes, so touched continue to be optimistic about it.

Your next question comes from the line of Filippo Falorni with Citi.

I want to talk about the international business, solid performance there. It's now like continue to deliver on pretty tougher comparisons. Maybe can you give us a sense of what regions are driving the growth there, where are you seeing the strength? And then the second part of the question, as you think about the opportunity for some of the recent acquisitions like Terra, hero touch land. How much more opportunity do you see for expansion of those brands internationally?

Yes. I'll take the brand one, and then I'll let Lee talk about kind of the countries and the regions. But -- we are still in early innings for baseball analogy for their breadth and hero and very early for TOUCHLAND. I think we're hitting #1 share positions in many, many countries all over the world. We have great retailer discussions about how we're growing kind of the acne category with Hero. And of course, the mouthwash rollout is a little bit slower than the acne rollout, but they're both doing extremely well. And once they get in market, these brands because they are a problem solution because consumers can see them working because they're premium brands or retailer driving category growth. Once they're in market, it starts to become kind of a virtuous cycle.

And I'll just pick up from there. Certainly, Hero, THERABREATH, [indiscernible] is a great driver in the quarter for us. And then if you think about that, taking those -- we're taking those across the globe, that's what we do really well. So you ask like which part is doing well, quite frankly, very broadly, Europe, for example, Europe, because economy wants to be slower, we're growing at the levels you see at the total level here. doing really well in Asia and Latin America as well. So you said this in the first quarter. First quarter had a little bit of impact in the Middle East. You take it out. It was growing towards mid- to high single digits. The outlook for the business is to be high single digits. That's what it is in the evergreen model. And it was great to see another strong quarter from them.

Your next question comes from the line of Andrea Teixeira with JPMorgan.

I just wanted to go back to what you mentioned about CDP's rate in 1 of the categories. But I was hoping to see if you can explore a little bit of the TDPs on the laundry side and how we're cycling that. And you just say that you're not engaging your promo levels are below -- just curious and you're still getting share. Just curious to see the volume, if you think about like volume share -- if you can talk about that and as well as like how to think about CDP for Laundry and in general in the U.S. for the remainder of the year. and when you're cycling that. You see that tightening some of the CDP growth into next year? Or you're cycling some of it like in the third quarter?

Yes. So thanks, Andrea. Really, remember, last quarter, we kind of talked about our industry-leading GDP growth, and it was, I want to say, around 11% or 12%, and most of the industry average 5% or 6%. So we were double what most people were getting. And at the time, when we talked about TDV growth, I said it was very broad-based. It was across brands and across channels, and that was entirely true. So I think laundry I don't have it in front of me, but I would guess it was high single digits for Arm & Hammer. So that all was kind of towards the front part of the year. So it takes a while for that to reset. But -- so that's -- into next year is what I would say, all those PDP results help with.

Your next question comes from the line of Edward Lewis with Rothschild.

Just a couple from me, please, Recanto -- but test, I guess, 1 of your power brands is a bit of a tricky 25 view in the U.S. and -- you call out strength in international, but I just wondered how things are going in the U.S. for Bats. Is it a category challenge you're facing there? Or is it more of a brand challenge -- and then I think you went live on the ERP didn't in April. I'm looking back what sort of you talked about or in the Investor Day, you talked about it being an engine of growth in the future, at least rated there who implementing it. And I just wonder, Rick, as you think clear optimism you feel about the outlook for the business. How much does does this new sort of upgraded ERP sort of feed into that optimism?

Yes. Thanks, Ed. So for BATISTE, we've talked about this -- it's really a tale of 2 cities. But is internationally is doing phenomenally well. It's growing double digits. It's 1 of the main drivers of growth behind their breath and Hero behind innovation, the right pricing strategy. Our international Petite business is doing extremely well. BATISTE in the U.S. is growing. We're growing a little short of the category. Category grew 5.5%. We grew closer to 2% from consumption. So we lost a little bit of share, 1.44%. That was closer to 4 or 5 share points in prior quarters.

We are making great headway on BATISTE. I've seen the inflection. I'm not worried about the taste. We have a great set of actions that are already in market or lined up for market in late this year, early next year -- on sizes and offerings and price pack architecture. So we have some great innovation queued up and just a lot of confidence in the BATTISE brand. So that's not something that I really worry about long term. The ERP system, I think it's an underappreciated fact that we have a North American ERP system. And so as we do acquisitions, it is 1 of the things that enables us to do acquisitions so flawlessly and seamlessly -- and just to give you a real life example.

We closed on mismouth, I think, around June 1 or so, and we're going to be fully integrated by end of August. Like that is lightning fast, even for us. And so that capability is, I think, again, just a great advantage for us.

Your last question comes from the line of Kevin Grundy with BNP Paribas.

Two questions for me, Rick, related to the pricing environment. where we certainly seem like the cost environment and cost inflation we're seeing would justify additional pricing. So a lot of discussion about brand strength broadly from Church and from some of your peers, but it doesn't seem like in certain cases that the industry is looking at pricing as a lever to offset the cost inflation where there's a clear justification for that. Like for Procter, it's a more premium portfolio than new Clorox sort of well documented what's going on from a market share perspective.

So I'm just trying to trying to square some of the brand strength discussion and what would certainly appear to be a clear cost justification for additional pricing in this backdrop of a softer consumer environment, particularly in household products, and some of the decisions not to take additional price. And what's different in the current environment versus past where the industry seems more inclined to move on price. So just your thoughts there, Rick, on retailers' openness for additional price in your portfolio, how you're thinking about it for church and what you've included in your outlook?

Yes. Thanks, Kevin. My answer doesn't really changed a lot from what I talked about last quarter. I think in this environment, consumers are pressed. And we see that. Like when you see stuff go on promotion, I would say elasticities are higher than they normally would be. So consumers are pressed. And so our job is to help offset that as best we can. And we said last quarter, we're going to do that with productivity. And we were fighting hard to do that, and we've largely done that, which is great. We said that if we couldn't do that, and this inflationary environment stays higher for longer, then we would look at pricing eventually. And that's still true.

We believe -- we hope that this higher inflation environment isn't permanent. But meanwhile, we're fighting it with productivity we're fighting it with trade and promotional optimization. And so far, we're winning. I mean, look at our gross margin expansion as an example, I think a lot of our peer groups are going backwards on margin. So for a long time typically, what you see is when inflation happens, promotional levels abate as a first step. That's not what's happening right now. Like I said before, I believe that a lot of tariff rebates are happening from retailers to other manufacturers and they're competing that away a bit.

So that has to play out a bit. Kevin, is my short answer to you, but we're in a great position to win either way.

There are no further questions at this time. I will now turn the call back to Mr. Rick Dierker for closing remarks.

Okay. Thanks, everyone. Looking forward to talking again in the third quarter. And meanwhile, have a great rest of the summer. Bye.

This concludes today's call. Thank you for attending. You may now disconnect.

Okay, everybody, welcome back. For the next session, I am thrilled to welcome back Church & Dwight to the conference.

With us today are President and Chief Executive Officer, Rick Dierker; Chief Financial Officer, Lee McChesney; and Executive Vice President of International, Michael Read. Together, Rick, Lee and Mike are going to run us through a presentation for about 30 minutes, and then we'll have the balance of time, about 10 minutes of Q&A.

And with that, I will hand it over to Rick.

All right. Thank you, Steve. Thrilled to be here. We spent about a week with our investors over in Europe and had a great business review yesterday. So before I begin, here's our safe harbor statement. I encourage you to read that on our website as we will likely make forward-looking statements.

Who we are? We always start these presentations with our performance. And so our TSR, total shareholder return has been leading in the industry for a long time, took a bit of a step back as the whole industry did in 2025. But in 2026, we're off to a great start. And a lot of that's because of how we run the company.

And the evergreen model is really important for us. That's kind of our anchor. We want to grow year after year after year, the top line and bottom line. And we're especially proud that in 2026, even despite this crazy macro world that we live in, our outlook kind of brackets the evergreen model. And organic growth is just core to the company. And it's not just 1 year that we've done it, but over 10 years, we've averaged over and around 4% organic growth. But when people ask me, what makes us different?

Like why have we had such strong outperformance? And if you look at this chart, we've had net sales go from the bottom left to the upper right for a long time, over 20 years. Same thing with earnings, same thing with cash flow. And then the upper right-hand corner is, again, our consistent growth organically. So it's really 2 things. One is we have a capability to grow brands, right, through our innovation, through our marketing and advertising, through our trade and promotion. And then we also have the ability to identify, acquire, integrate and grow brands. And when we can do both of those well, then our performance is kind of unique in the industry.

So again, as a backdrop, about a $6.2 billion company, 77% domestic, 18% international and 5% for our SPD business. We have 7 power brands, and these 7 power brands make up 75% of our sales and profits. And we have a winning formula that we like to describe as these 5 things: a balanced and diversified portfolio, low exposure to private label, online success, strong, consistent category-leading innovation and then, of course, our acquisition for an acquisitive company. So a balanced portfolio.

We're about 50-50 household and personal care. And we're also about maybe 2/3, 1/3 value in premium. So we typically do well in any economic environment, and we're doing well right now even as the macro has a lot of volatility in it. Private label exposure. So for a long time, our exposure weighted average to all of our categories was around 11% and that was relatively low in the industry.

After we sold our vitamin business, that dropped down to 5%. So that bodes well for the future. And then online success. We were a laggard, about 2% of our sales back in 2016 were online. Now it's about 1/4 of our sales. And that's interesting, but it also just shows our capability. We're agile, we're lean. We're able to move with speed when we want to. We have a great innovation capability. And I call it a capability now, not just a new product portfolio. So strong, consistent category leading.

About half of our growth is typically through innovation. And then, of course, good returns become great returns because we know how to acquire brands. We want #1, #2 brands. We want high-growth, high-margin consumable brands, not really durables, asset-light. We leverage our manufacturing base, and we want a sustainable competitive advantage. And we'll talk a little bit more about our most recent acquisition in a couple of minutes.

We have a long history of growth through acquisitions. This is a $1.5 billion company going to $6.2 billion. Again, ability and a competitive advantage in my mind of identifying, acquiring, integrating and growing brands. It's easy to say it's hard to do. And the reason we're really good at it is because we've done it again and again and again.

Speaking of acquisitions, here is our latest update. We actually acquired a brand, Miss Mouth, which is a fantastic premium stain fighter brand. It's just right in the middle of an online kind of digitally native brand that's now starting to go into bricks and mortar in the U.S. high brand love and just, again, an exciting one. Here's a video I wanted to share, 22 million views. This went viral.

[Presentation]

[Technical Difficulty]

And then you have kind of a recovery. And so we have the right to play kind of before that with cleansers as well. So we'll be launching that later this year. Touchland is our second most recent acquisition, and it's the #1 premium hand sanitizer. Household penetration, again, extremely low compared to the category. Retail opportunities exist, new category expansion exists.

We're just now really starting to get behind marketing in a bigger way to go drive brand awareness. And the international rollout takes a little bit longer because of regulatory for each and every country. But over the next 12 months or so, you're going to see it appear in many, many more countries, which we're really excited about. Okay. So that is really our acquisition update.

Now there's also -- I announced in January some growth initiatives that we put into place as a company. And the backdrop at the time was our categories have grown 3%, not for 1 year or 2 years, but for over a decade. And in 2025, categories slowed somewhat. So that 3% came closer to 2% or 2.5%, and that was the backdrop. Along with that backdrop, we also had that everyone is aware of consumer sentiment is low. It's at an all-time low, actually, the last reading. And so bad things happened at times.

And so how do we make sure that we can grow despite what's happening with categories. And if categories grow normal, that means we're going to be growing faster than category growth. So we put in place 3 separate distinct initiatives. One was grow the ARM & HAMMER brand from $2 billion to $3 billion. The second one was grow our oral care business behind THERABREATH from $1 billion to $1.5 billion. And then the last one is grow our international business as we scale it through M&A from $1 billion to $2 billion.

This is one of my favorite slides. I usually talk about it from an acquisition perspective just to show the company going from the $1 billion to $6 billion. And a lot of that green is all acquisitions. So we've had $4 billion of acquisitions over the years from a revenue perspective. What's also true on this slide, though, is you can see the strength of the ARM & HAMMER brand, and it's a $2 billion-plus brand, and it's grown consistently over many, many years. And why is that?

Well, we've gone up into the right on share for laundry and for litter. And so what gives us confidence to make our ARM & HAMMER bet go from $2 billion to $3 billion. Well, first and foremost, right, the U.S. is celebrating 250-year anniversary. Church & Dwight is 180 years. And so we've been in baking soda for 180 years, 1846. And then since then, in the 1970s, 1980s, 1990s, we have jumped into toothpaste and litter and deodorant. And so these big categories, and we've done well.

Brand awareness for ARM & HAMMER rivals almost any other brand that you know. It's in the mid- to high 90s. And then finally, we have this halo effect that happens with ARM & HAMMER. If we advertise our laundry, it helps our litter business. If we advertise our litter business, it helps our toothpaste business. So again and again and again, we have this advantage versus everyone else on how we advertise. And I think the main point of the entire strategy is we are already a brand that goes across categories.

Many companies have a strategy of taking a brand across categories. You hear it again and again and again. Very few are successful, though. And I would say we've already checked the box on that strategy. We are in categories where we're premium. We're in categories where we're value. We're in categories that are household. We're in categories that are personal care, all under the ARM & HAMMER umbrella. And whether it's deodorizing or cooking or baking, that's the hard part. So we've already done that.

Now the next step is to say, what categories should we go into. And so there's 4 pillars of growth. The first pillar is really, again, growing the core, innovation, quality products, efficacious, our great innovation engine and doing what we've done on laundry and litter and the rest of the portfolio. Rounding out good, better, best on a few of our subsegments on ARM & HAMMER. And then number three is the category work. And we are deep into it. I told everyone at CAGNY in January that we'd give an update likely in January of 2027. But all the work, energy and effort that we were spending on our vitamin business or other businesses that we were trying to fix has now gone into all these growth initiatives. And that is where I think a lot of value will be created over a long period of time.

And then the fourth pillar is really retail sales of our licensee products are around $1 billion. And so some of those make sense for us to take back and to scale up over time. They're already tested and loved and accepted by consumers. And so I hope that we take back a few of those. And then conversely, as we do all this category work, I actually hope that we can convince some of our licensee partners to take in a couple of bets on those new categories.

The second initiative was really drive oral care expansion through THERABREATH. And again, the focus here is on 2 categories or 2 big categories, mouthwash and toothpaste. So over $2.5 billion and $4.8 billion. So that's where we're kind of laser-focused. THERABREATH has a unique proposition here. It's not just one thing, but it's many, many things that make THERABREATH successful. But low household penetration, 12% versus a category of 65%.

And again, we're growing by leaps and bounds on distribution and on market share for THERABREATH. That gives us confidence as we go and become a bigger player in toothpaste. We got distribution on toothpaste that we didn't deserve, but we got it because of such a great brand reputation around mouthwash. So we're a small player today at Church & Dwight on toothpaste, but we believe we have an opportunity.

Now we're a small player largely because ARM & HAMMER is a niche of a niche in terms of the taste profile with baking soda. And so THERABREATH doesn't have that same constraint. This is a best-in-class performing toothpaste. It's better for you and has superior product and fresh breath. And then finally, on the growth initiatives, the third one is international growth.

And we've talked about this before, but international has a long, long track record of success. And Mike and his team are doing a phenomenal job, high single-digit organic growth on average. And kind of the new news these past few years is the ability to scale and how quickly we've been able to scale some of these recent acquisitions. HERO and THERABREATH are tens of millions of dollars already internationally. And then we believe Touchland has a great shot of international expansion.

And so -- and we're going to start focusing and we have been on international M&A. Even this week, we had countless meetings on international M&A. So we're not choosing one over the other. We're saying and even as of Friday, we just did the U.S. acquisition, but we believe there's definite upside over the long term to acquire some great brands in the rest of the world. Okay. Speaking of categories and brands. In the U.S., our evergreen model is around 3%, and we have those 7 power brands that are driving the entire engine of the company.

This is a really important slide. So this is our categories over the last 5 years. This is kind of underappreciated. I would say because of our M&A capability, we've got to choose in which categories we compete in. We didn't inherit this. We chose this. And because we've been able to look at and do due diligence on categories and competitors and private label exposure and so on and so forth, we've set up -- the backdrop is set up for success for us.

Many of our categories are growing categories. That's kind of the takeaway here. And on average, even in 2025, they grew around 2.5%. Now not only do we want growing categories, but we want to be able to enable share gains over time. And if you look back at history over the last 5 years, we've gained share about 2/3 of the time for these power brands. That matters in a big way. And that matters that we want to grow in excess of categories, that's how we do it. And what's the check-in.

So the check-in for 2026 is we've had strong volume growth, right? In Q1, we had about 5% volume growth. The previous -- the second half of last year, we had, I think, 2% volume growth. And along with volume growth, along with innovation, along with higher velocities, along with great acquisitions that are performing well come shelf space. And so we gained phenomenal shelf space this last kind of reset. And this is almost double our closest competitor or the average competitor in the industry.

Speaking of innovation, new product innovation is a muscle for the company. And when Carlos Linares came in, our Head of R&D, he saw that we only innovated one way, and we now have 4 or 5 different vectors on how we innovate. And we typically used to grow 1% and 1.5% growth for incremental net sales. That's a high bar, I say it a little time. incremental net sales after cannibalization. And we've transformed to go 1.5 to 2.

So about half of our growth these days is coming from innovation. Here is some of our personal care innovation, they are toothpaste, the invisible patch for HERO. We have cleansers for HERO and then we have TROJAN G.O.A.T., which is our -- the greatest of all TROJAN condoms. And then we have household innovation. And this is -- we have good, better, best innovation for laundry. This year, it was on the good tier, 10x baking soda.

What better time than today where consumers are struggling with gas prices to be able to have a good offering in the value tier. We also have Brexit. We have a better sheet, good, better, best there as well. We have our most powerful OXICLEAN VSR launching, and then we have Dual Defense cat litter. All of these are great innovations, which are helping to drive our shelf space expansion.

And now I'm going to turn it over to Mike.

Thank you. Good afternoon. First of all, Steve, thanks for hosting us again this year. DB always has a great conference. So thanks for hosting us. I'm going to spend a couple of minutes on international SPD. So we're about 18% of the business. Our evergreen is at 8% organic growth per year. We set up the business in kind of 2 different ways.

We have our subsidiary markets, Canada, U.K., France, Mexico, Germany, Australia and most recently, Japan, we acquired our distributor back in 2024. That makes up about 2/3 of our business where we go direct through a subsidiary model. The remainder of our business, we operate in well over 100 countries with almost 400 distributor partners around the globe. We support that with 5 regional offices that are growing now their cross-functional capability, Shanghai, Singapore, Mumbai, Panama and London.

As Rick showed, we've had a long track record of high single-digit growth and we are poised to continue to do that. I think most importantly is relative to a lot of our peers, we're still very young in our journey. We're only 18% of our sales. We've been at it for a shorter period of time. So we have a lot of runway ahead. And I think most importantly is our brands have the opportunity and have proven to be able to really travel.

So we support dozens of brands across the globe, but ultimately, these are the 9 brands that carry the majority of the weight and will be the biggest growth drivers. But it's a combination of leveraging large U.S. power brands like ARM & HAMMER and WATERPIK and OXICLEAN. But we complement that with some of our personal care and OTC brands that are largely internationally based, so kind of headlined by BATISTE Bare and FEMFRESH.

I think as Rick alluded to, probably our biggest muscle in the last few years has been our ability to quickly take U.S. acquisitions and roll them out globally and to scale. And so HERO and THERABREATH have been just all-star brands for us and Touchland is kind of next in line. Just to put an example, HERO, which is not an old acquisition already, as we've launched, we're into over 75 countries.

We will be north of 100 countries by the end of 2026. But I think most importantly, we're already #1 patch position in all our key subsidiaries where we're tracking share. So just -- it goes to show kind of how quickly we're rolling out, but then also the kind of speed and performance that we can generate. And Touchland is kind of next in line. So a lot of pent-up consumer demand for Touchland.

As Rick alluded to, we're already in a couple of countries. There's some registration process. But by this time next year, we'll be in excess of 20 countries, which we're excited about. I think one of the things from international as we continue to mature is we're putting a lot more time and effort into really understanding local consumer insighting and also regionally at innovation as well as regional manufacturing.

And here's just a couple of examples, and there's many more. But as we roll out brands like BATISTE, but when we enter some of our Asian markets where we have different hair types, different habits, different fragrance likes, how do we alter our proposition to make sure it's more relevant for the local consumer. So that's a good example of just how we're innovating and changing our packs to support that.

And then similarly, OXICLEAN, one of our biggest brands in Japan, predominantly a powder business historically, but the Japanese market is 80% liquid. And so we looked at local manufacturing in order to build a locally relevant proposition in liquid launched that a couple of years ago, and it's off to a great start. So just a couple of examples.

And then lastly, from an international perspective, we are focused on M&A. So we've had a great track record of taking U.S. brands, taking them internationally. That will still be a core part of what we do and a big lever of our growth. We're also on the hunt for scaling acquisitions and acquiring in the international arena as well.

Quickly, just on Specialty Products. It's a 5% organic evergreen model. It's about a $300 million business. It's broken up into 3 different parts. We have an animal business, animal nutrition business, which is about 60% of it. We have a specialty chemical business, which is about 1/3, and then our consumer professionals is taking our consumer brands into the B2B space, which is about 5% I think most importantly is this has been a bit more of a volatile segment over the last number of years.

We've made some strategic choices to exit some businesses. We've got on our front foot around innovation. We're being much more strategic about rolling our Animal Nutrition out globally. It's now 30% of our business. Now we've had 9 consecutive quarters of positive growth. So we've really stabilized this business. It's in a great shape and ready for continued growth ahead.

And with that, I'll pass over to Lee.

All right. So I'll try to finish up our prepared remarks here. So thank you to Rick and Mike for walking us through here. So for financials, the first place we really should start would be our evergreen model. Rick mentioned this before. This is the foundation of really how we run the company here. It's a balanced mindset. We're looking for profitable growth, 4% organic growth, 8% EPS improvement.

And what I'm going to do now is just walk you through a little bit of our scorecard. And instead of just showing you a scorecard of what happened in the last year or 2, let's look back over the past decade, probably not a chart you're going to see much this week from a lot of others. So it's a compelling 10-year history, 4.1% organic growth, right in line with the evergreen model.

And it's driven by a lot of what you just saw from Rick and Mike, whether it's the innovation, whether it's the strength of the brand, whether it's the growth we just -- we brought forward in international, all those are coming together and driving this consistency in organic growth. You take it one step further and then look at it from a volume perspective. We're a volume-driven organic growth company. And this shows you that same momentum here as well, driving unit growth in markets across the globe.

Gross margin. So every year, our every model, we're going after 25 to 50 basis points of gross margin improvement. You see a lot of that mindset coming out of COVID. You see this improvement we brought forward in gross margin. And this year, we actually have an outlook of 100 basis points. And that foundation that comes back from May is it's going to be our normal 25 to 50 basis points that comes from our normal gross margin toolkit.

And then we have the strategic portfolio changes, which gives us an extra -- a mix benefit as well. Behind that is a whole bunch of actions. And these are all the things we bring to life each and every day to drive gross margin improvement. So foundationally, it's good to great productivity. It's RGM activities. It's driving positive mix. Now within that May 1 outlook, we also had $25 million to $30 million [Audio Gap]

marketing. And we continue to refine how we do that to even get more impact. On SG&A, the evergreen model really looks at really flat to 25 basis points of improvement. In May, when we refreshed our outlook, we talked about being slightly up in SG&A. That comes from the same 2 drivers we talked about all year. We exited $400 million of business. So we have the normal leverage. We have some stranded costs.

And then we also primarily have -- Touchland has the first half of the year, has amortization and SG&A that's driving it up. And then we're continuing to invest in the growth initiatives in e-commerce and international that's behind our SG&A history. So this might be probably one of the more compelling charts. This is again, a 10-year scorecard of EPS.

And let's think about all the different things we all had to navigate over the last decade, and we've averaged 8% growth in EPS despite all of that. Our May 1 outlook for the year also calls out a 5% to 8% growth, so similar to delivering evergreen again in '26. And just a spectacular track record along with our evergreen model. Now again, specifically for '26, we gave an update on May 1.

We're still going after 3% to 4% organic growth. We have the EPS outlook I just talked about 5% to 8%. And we also talked again about just another strong year in cash flow at $1.15 billion being targeted. That was our outlook in May. We'll give you an update once we get to the second quarter here at the end of July.

Now behind that, as you look at this list, you got tailwinds and you got headwinds. We began the year with the same outlook. We just have far more tailwinds, whether it's the momentum coming out of last year, the strength of the portfolio, the strength of the brands and really a lot of the elements you just talked about. Certainly, we have headwinds we all talked about. But again, we have the driver on the tailwind side, really leading the EPS growth we talked about there.

Behind that, continuing this, we have this free cash flow, which is another compelling part of what really drives the P&L results you just saw there. So we're showing you a decade here, 119% free cash flow multiple history. Many companies target actually less than 1. So substantial cash flow that gives us a tremendous amount of flexibility to really drive effective capital allocation. It also shows up in our total debt to bank to EBITDA.

We're sitting here today at 1.5 after doing Touchland, after doing $900 million of buybacks last year and just -- and continuing to invest in the organic business. So just a lot of opportunity, a lot of flexibility it gives us to drive this business. And you sit here today, even with Miss Mouth just done, $5 billion of dollars available, we can invest in capital allocation effectively. And how do we -- where do we focus that? We're very consistent.

Our #1 use of cash is TSR accretive acquisitions. It can be Miss Mouth, it can be Touchstone, it can be HERO, THERABREATH, that's our #1 use. We obviously continue to invest in the business, whether that's NPD, whether that's driving growth, good productivity. We certainly -- next would be debt. But right now, we actually have no variable debt based on the debt I just showed you there and then returning cash to shareholders.

And just another example of just the significance of this cash flow, I guess coming through ultimately to shareholders, look at the dividend track record, 125 years, 30 years consistently of driving increases. So with that said, we have a good amount of confidence in our future. Yes, there's headwinds out there, but there's a lot more tails we talked about it, whether it's driving the brand, the momentum we have on the acquisitions that we've done over the last several years, the international growth we just talked to you through there. But we look forward here from our May outlook and with optimism.

And with that, we'll turn to questions, Steve.

Okay. Great. So you were kind enough to preview the conference with an acquisition, give us something new to talk about. So let's start there with Miss Mouth. As you mentioned, Rick, #1 position on Amazon, recently launched, I think it was Walmart late last year and Target just a month, 1.5 months ago, which sets you up for a lot of growth.

Is there more distribution opportunities that are high priority? Or is it about -- is the growth really about consolidating the distribution that's been recently won?

Yes. No, it's a good question. I think if you take a big step back, I had in my comments, but 35% ACV, we believe this brand can be fully distributed over time. And we're really good at doing that. We have the channels, the relationships and whatnot to make that happen.

We also have our -- Mike and his team on international to help to help expand there, too. Walmart is off to a great start. Target is off to a great start. And I think Target is already a 9 share as an example, when we've been there a few months. So this is a -- it always goes back to the brand and how it delights consumers.

And this certainly is doing that. It's going to be -- we're going to look back in a few years and say, wow, that was an extremely good acquisition that's grown dramatically and right in Church & Dwight's wheelhouse.

Yes. Are there innovation opportunities either in the pipeline or that you guys have conceptualized? Or is it really about pushing distribution on the core product?

Yes. I think the answer is yes to both. But I think the first priority is going to be how do you really go drive awareness and household penetration, and that's runways of growth. And so we're going to have most of the organization focused on that deliverable.

And then a small subset really focused on the innovation pipeline and where can it go and what makes sense for that brand. But as you saw in the video that we threw up there with 22 million views, it's a product that has that magic moment, that wow, and that is what consumers are -- they're looking for efficacy. They're looking for a brand that they trust. And so it can enable, I think, a great innovation pipeline in and around that area.

Cool. And just to round out the economics on it. So you called out in the announcement that essentially neutral for this year, cash earnings accretive for next year. Does that imply sort of EPS neutral? Or how do we think about the -- obviously, I'm more focused on cash in the long run, but we know the market and EPS matters. So how do we think about that, Lee?

Yes. I would just say, as we kind of put in the release, obviously, day 3 here that we're -- we said we think it can be double-digit grower. Let's get into a little bit more. There's obviously a time line for distribution gains and things like that. And certainly, it will be accretive in due time.

Okay. Yes. Great. One of the -- I think most consistent questions coming -- stemming back to your Investor Day when you talked about those 3 new growth drivers is around on the ARM & HAMMER side and just the balance -- as you go from $2 billion to $3 billion, the balance between core growth behind good, better, best initiatives, behind moving to new categories and then the licensing optimization.

Do you have any further comments in terms of calibrating the size of those buckets? And then maybe, Mike, the role that you see international playing in that escalation of ARM & HAMMER?

Yes. It's a fair question. And I would say the 2 largest contributors of going from $2 billion to $3 billion would probably be, of course, our continued growth of our largest categories of laundry and litter. That's innovation, that's our playbook, great. That's going to be a tailwind. That's kind of what got us from $1 billion to $2 billion, the bulk of it over time.

The second one will be what categories we choose to enter. And we're doing a lot of great research, a lot of great testing, a lot of good discussions with retailers already on what those categories will be in 2027 and 2028. I'm just not ready to talk about that yet. I think it's going to be a good tailwind. It's going to be the second largest, I think, contributor to that.

And then the third one, probably tied for third will be the good, better, best for the subsegments of ARM & HAMMER and what we choose to bring in-house and can those provide tens of millions of dollars of growth over time. What I'm doing really with the management team is we're putting a bunch of kind of drill sites out there that are going to add up to tens of millions of dollars independently that will help kind of be the frontrunner in case you have a headwind of the economy and category growth or category sluggishness. I think our categories are very resilient.

You saw the slide. But in case they slow or in case you want to grow faster, we're going to have all these initiatives at our back. And so that's kind of a little bit more color. I'm going to get a full report out probably in January.

Okay. Mike, anything you want to add on international?

Yes, I'd just say, as the U.S. business is going through some of those category assessments, we'll look at those and doing those apply to international growth, so to be determined as we go through that. But the one that's sort of line of sight is we're quickly expanding our litter business particularly in our Asian markets.

And so we bought ARM & HAMMER, baking soda and litter in markets around the globe. Those would probably be the 2 levers that we'll pull a little bit harder. But litter has a lot of opportunity that we're excited about.

Yes. The second one in international, which you may not be aware of is part of the reason we bought the Japanese distributor and we started off in a great spot was because we had 80% brand awareness for OXICLEAN in Japan. And now we're throwing through THERABREATH and HERO and BATISTE and WATERPIK through that same sales channel.

Well, there's a similar story, not distributor-wise, but like consumer-wise, 80% brand awareness of ARM & HAMMER in South Korea. So as we look for M&A, as we look for different brands to buy, that just sets us up for success as ARM & HAMMER can grow globally.

Yes. Okay. We're running on time, but I did want to ask, you may be one of the few companies that did a presentation and didn't voluntarily mention AI. So this week by the time it's all over. So I'm curious in the context of that slide you put up around ARM & HAMMER being kind of a later adopter of e-commerce and digital. What is the company's position on AI? What approach are you taking? And are you following a similar path? Or are you more leaning into it?

Yes. What a great comment. And I would say that, that is exactly what we're doing, like the capability that we were able to transform the company from e-com of 2 to 24, sometimes you have to really come together and figure out what are the 4 or 5 areas. You could do a lot of things, but a lot of them could be mediocre.

So what are the 4 or 5 things and focus areas in AI that we're doing. We just went through that with our Board in our strategy session. I'd say it's alive and well. I think it's going to transform the company. I'm telling our employees again and again and again that my goal would be to be able to double the size of the company and still have the same number of employees. We can move the speed, agility.

We can do more effective advertising, more effective RGM capabilities, more effective R&D and formulation, more effective supply chain. So that's what we're laser-focused on. I thought you were going to ask me why are we the only company who has dollar share and volume share growth. But obviously, that did not come up. All right.

All right. Thank you, everybody. Thank you, guys, for joining us.

Good morning, ladies and gentlemen, and welcome to the Church & Dwight's First Quarter 2026 Earnings Conference Call.

Before we begin, I have been asked to remind you that on this call, the company's management may make forward-looking statements regarding, among other things, the company's financial objectives and forecasts. These statements are subject to risks and uncertainties and other factors that are described in detail in the company's SEC filings.

I would now like to introduce your host for today's call, Mr. Rick Dierker, President and Chief Executive Officer of Church & Dwight. Please go ahead, sir.

All right. Thank you. Good morning, everyone. Thanks for joining the call. We had a fantastic quarter. I want to start off by thanking all of our Church & Dwight employees around the world on executing so well in a volatile environment. I'll begin with some thoughts on the macro environment and then a review of our Q1 results. Then I'll turn the call over to Lee McChesney, our CFO. And when Lee is done, we'll open it up for questions.

Starting with the broader environment, conditions remain dynamic and the consumer backdrop continues to be mixed. Consumer sentiment remains pressured by inflation, borrowing costs and geopolitical uncertainty related to the Middle East, which, as you know, is also contributing significant inflation in commodities and transportation costs. That said, the consumer remains resilient. Employment remains stable, and our largest categories grew 3% in the quarter. Our portfolio with its balance of value and premium offerings continue to perform well in this type of environment supported by strong brands and innovation.

Turning to the Q1 results. We delivered a strong start to the year and exceeded our outlook across key metrics. Net sales increased 0.2% ahead of our expectation for a decline and organic sales grew 5%, well above our 3% outlook. This growth was driven by volume. Adjusted gross margin expanded 130 basis points to 46.4% and adjusted EPS was $0.95, up 4.4% year-over-year and above our $0.92 outlook. Overall, this was a high-quality beat driven by strong execution across the business.

Now I'm going to turn my comments to each of the 3 divisions. First up is the U.S. consumer business. Organic sales increased 5.4% which was primarily all volume. Across the portfolio, our brands continue to perform exceptionally well. Growth in the quarter was led by THERABREATH, ARM & HAMMER, HERO and OXICLEAN supported by strong innovation and distribution gains across all classes of trade. Global e-comm also remained a key contributor with online sales now representing approximately 24% of total consumer sales.

Innovation and distribution gains continue to be key drivers of our performance and the first quarter of this year is no different. We're confident that our relentless focus on innovation will continue to drive industry-leading growth. Distribution gains in shelf and market share expansion. In fact, we are just finishing tabulating all the distribution gains looking forward, and I'm proud to say Church & Dwight was #1 across all of CPG on total distribution points gained year-over-year. New product launches this year are expected to account for half of our organic growth as we innovate in key categories across our portfolio of industry-leading everyday products.

The ARM & HAMMER brand had another quarter of growth with laundry heading record shares across total water detergent, ARM & HAMMER laundry detergent consumption grew 4.1% in the quarter compared to category growth of 2.7%. The value segment of laundry continues to grow. ARM & HAMMER laundry grew despite a lower level of promotion in the quarter. Our newest innovation in laundry is ARM & HAMMER baking soda fresh with 10x the amount of baking setup and is off to a great start with a 4.9% consumer rating, where most laundry items are around 4.5%.

Our ARM & HAMMER laundry sheets also continued to do well, growing consumption by 30%. We like the category building potential of EVO, and we are well positioned to win in value. Next up is litter. Fantastic results as ARM & HAMMER cat litter consumption grew a robust 6.8% and share increased 0.4 points to reach 24.6%. While category promotional levels remain elevated, they did decline sequentially from Q4.

OXICLEAN share declined in the quarter as we continue to be impacted by distribution loss and lapping that from a large club retailer a year ago. The good news is that the trends on OXICLEAN improved throughout the quarter and sales growth surpassed our expectations. HERO and THERABREATH continue to contribute considerably to overall performance. THERABREATH achieved another quarter of record share gains, 3.5 points to 24.1% and further solidifying our #2 position in total mouthwash. Household penetration remains low relative to the category. In fact, even with these great distribution gains recently, we still have less than 20% of the shelf, so more room to run even in mouthwash. Early days, but the THERABREATH toothpaste launch is off to a great start.

HERO consumption growth also outpaced the category, leading to share gains and remains the share leader 2x larger than the next competitor. HERO's growth was driven by distribution expansion, strong Q1 activations led by brand ambassador, Jordan Chiles on Mighty Patch Original and Mighty Shield innovation. Mighty Shield is already achieving retailer hurdle rates.

Finally, TOUCHLAND. In Q1 consumption continued to grow low double digits, but sales were impacted by a strong Q4 holiday multipack sell-through. Recent consumption has slowed as we lapped year ago launches. Internally, we are hard at work integration and innovation.

Turning to international. Our international business delivered organic sales growth of 3.7%, driven by our GMG and our subs. Growth was led by THERABREATH, HERO and BATISTE brand and partially offset by lower Middle East regional sales. Of note, in April, we went live with our upgraded ERP system, our project leader, Nicole said it best, "Our customers did not notice the transition." Thank you to the entire team.

I'll close by saying that we are very pleased with our start to the year. Our brands remain strong. Our portfolio is well positioned, and our strategic actions continue to support long-term growth. I'm proud of our Church & Dwight team as we performed well in a volatile environment. As we look forward, our TSA agreement with the VMS business is winding down, and that organizational time that has been freed up is being spent on our forward-looking growth initiatives. We're laying the groundwork for ARM & HAMMER expansion, Oral Care growth behind THERABREATH and international M&A.

And with that, I'll turn the call over to Lee for more detail on the quarter.

Thank you, Rick, and good day, everyone. Back in January at our 2026 Investor Day, we've shared an industry-leading outlook for 2026. The highlights of that outlook included organic sales growth of 3% to 4% and EPS growth of 5% to 8% in line with our evergreen model.

As we now share results from the first quarter, we are delighted with the execution of our Church & Dwight team members across the globe. The first quarter highlights once again the many strengths of our portfolio and the team's execution capabilities. Let's jump into the details and provide you an update on our views for the year.

We'll start with EPS. First quarter adjusted EPS is $0.95, up 4.4% from the prior year and $0.95 was better than our $0.92 outlook and was driven by higher volume and gross margin results. Organic sales in 1Q were up 5%, above our outlook of 3% and organic sales are broad-based across the globe, with volume growth of 5.3%, partially offsetting a negative price and mix of 0.3%. Our organic growth was fueled by a steady stream of market-leading innovation and strong distribution wins with our commercial partners. The organic results also drove our reported revenue up to 0.2% versus our original outlook of negative 1 back in January.

I want to put our reported results in perspective. Due to our portfolio actions, our reported sales results would naturally be down 8%. However, organic growth of 5%, our TOUCHLAND acquisition and some FX favorability fully closed the gap. The first quarter fuel by volume growth was certainly a strong start to the year.

Our first quarter adjusted margin was 46.4%, a 130 basis point increase from a year ago. Our results versus last year were driven by 150 basis points from productivity programs, 110 basis points from higher margin acquisitions combined with the impact of the strategic portfolio actions, 50 basis points from the combination of volume, price and mix and 10 basis points from FX. These factors offset 190 basis points of inflation and tariff costs.

Let's jump to our investments in marketing. Our marketing expense as a percentage of sales was 9.5% or 20 basis points higher than the first quarter of last year. Looking forward, we're continuing to target investments at approximately 11% of net sales, in line with our evergreen model. Q1 adjusted SG&A increased 110 basis points year-over-year.

As we noted in our January Investor Day, SG&A in the first half of the year is primarily growing versus last year due to the inclusion of TOUCHLAND's SG&A and amortization expense. Adjusted other expense increased by $5.2 million due to a lower interest income compared to the last year. In Q1, our adjusted tax rate was 20.3% compared to 21.8% in Q1 of 2025, a 150 basis point year-over-year decrease. And our expected adjusted effective tax rate for the year remains at 21.5%.

Let's now turn to cash flow. We delivered strong cash results in the quarter as cash flow from operations was $174.8 million. Our higher year-over-year cash earnings were partially offset by an increase in working capital and supported growth. And capital expenditures for the period were $31.9 million and we continue to expect full year capital expenditures to be approximately 2% of sales.

Let's now turn to our '26 outlook. While the macro environment remains dynamic, we remain encouraged with their path forward, the strength of our brands, our strategic portfolio actions in 2025 and our growth initiatives continue to provide us confidence. As we noted in our press release, the situation in the Middle East is fluid and is creating some incremental volume and inflationary pressure on commodities and transportation. For example, we currently are estimating $25 million to $30 million of incremental inflation pressure. Our teams across the globe are responding to these developments and are taking actions across the P&L.

As a result of our mitigating actions, we are reiterating our full year 2026 outlook. We remain on track to deliver full year organic growth of approximately 3% to 4%, and we continue to expect reported sales growth to decline approximately 1.5% to 0.5% as a result of the strategic portfolio actions taken in 2025. We continue to expect full year gross margin expansion of approximately 100 basis points versus 2025. And this outlook reflects the breadth of actions we discussed in January in the balance of incremental headwinds and actions that we've identified since the Middle East conflict began.

Marketing as a percentage of sales remains at approximately 11%. SG&A as a percentage of sales will be higher than last year, reflecting the impact of the TOUCHLAND acquisition in the first half of the year and our focused growth investments. Our adjusted EPS expectation for '26 remains at 5% to 8% growth. And if we turn to the second quarter, we expect reported sales to decline approximately 1% with organic sales growth of approximately 3%. And we anticipate gross margin expansion of approximately 50 basis points reflecting transportation cost pressures ahead of the mitigation efforts that will take effect later in the year.

And in the quarter, we continue to expect higher marketing and SG&A. And in 2Q, the investment in marketing and higher SG&A will offset -- will more than offset the gross margin expansion, resulting in an adjusted EPS of $0.88 per share for the quarter. Recall, we continue to expect flattish EPS growth in the first half of 2026.

To conclude, remain confident in our 2026 outlook. We began the year with strong execution and are taking the steps to ensure continued success this year. And my final prepared remarks is for the Church & Dwight Associates. Thank you for all of your efforts in the first quarter, and congratulations on the robust execution, well done.

Carly, we are now ready for questions.

[Operator Instructions] Your first question is from the line of Chris Carey with Wells Fargo Securities.

Rick, you mentioned that distribution gains were #1 in CPG, I'm not exactly sure of the timing of those gains. But nevertheless, a very strong number. When you think about your Q1 delivery how important are those gains to what we're seeing today? I'm really speaking to the durability of some of the volume growth that we are seeing relative to perhaps some of the tailwinds that may have been caused by some inventory reductions in the base.

So I just wonder if you could contextualize the quarter as you see it. And what does the Q1 means for kind of go-forward top line, volume-driven results? And then I have a follow-up.

Yes. Sure, Chris. Q1 was for phenomenal organic growth. And I think more than anything, we were -- it was great to see our categories were growing around 3%, and we grew faster than that a little bit. And we talked a year ago about inventory and retail inventory dynamics. And so we had a tailwind of a couple of points from that as well. So that's how we get to kind of 5% for Q1.

Now all these distribution gains, that's really just hitting now. And so it depends how you look at the metric. If you look at it on an average basis over 13 weeks, I think it's like a 7% TDP lift. If you look at it as in more recent time, as these resets are happening in a more recent time, it's closer to 10% or 11%, which is about double what most of the CPG peers are getting.

And that's not just THERABREATH and HERO. That's across laundry and litter and personal care, sets across the whole portfolio. So we just believe that's a great tailwind to our business. And it's really a payoff of all the innovation that we're doing. So anyway, it's a tailwind as we look forward and it gives us confidence.

Okay. Great. A follow-up on TOUCHLAND. You did note that consumption slowed on year ago activity that was strong in the base period. Can you just give us an update on how you're thinking about growth of the business, the sustainability of growth and whether you think that it has the kind of runway to sustain perhaps double-digit growth into the back half of the year and into next year?

Yes, sure thing. And when we look at consumption that kind of shows up for you folks. We understand it shows consumption for the quarter is down 20%. When we look at consumption that is all in, including untracked channels, we were up about 12% or 13%. So there is a difference in what you see versus what the entire picture is. But it has slowed and it slowed partly because of all these holiday gift sets that go out and also because of the club class channel.

Overall, we believe that we still are going to have double-digit growth for TOUCHLAND for the full year. The good news is we have great ratings. We have low household penetration, and we're just starting now to advertise. A lot of our activations with either collaborations or just partnerships are happening in the back half. So we feel good about TOUCHLAND.

Our next question is from Anna Lizzul with Bank of America.

Your portfolio actions, I think, from last year helped drive the outperformance here in Q1. Just wondering how you're looking at the portfolio now, given the changes on the VMS business and others that you have exited.

And then just a follow-up on TOUCHLAND, if you can comment on where it's performing best in terms of the channel? And further on M&A, where are you now more focused in this more challenging consumer environment?

Yes. So that's 3 questions. Let me see if I can remember all of them. The first one is how we're -- on M&A, I'm not really going to comment. I would just say that the team is always hard at work. The leadership team spends an inordinate amount of time on looking for great businesses and brands to buy. And we've gone through our criteria again and again and again. And I would say the team is hard at work. And it's just not in the U.S., it's also internationally. It's not an or, it's an and. And that's some of the highest and best use of our time. So I continue to be optimistic there.

On TOUCHLAND, I think you're asking, "Hey, what channels are doing well. I would say the channels that are doing better than most are ones that aren't necessarily tracked. The club class trade did extremely well. Amazon does well. I think some of the beauty classes at trade because of the timing of promotions and also some of the innovation doesn't look as good. But again, some of the other channels that you don't necessarily see are doing better.

And your third question, Anna, just remind me what it was.

Yes. I was just wondering, I guess, in terms of the portfolio, you've exited certain categories and wondering how you're viewing the entire portfolio here based on those changes.

Yes. I love our portfolio is the short answer. I mean to be in a world -- remember, a lot of growth, a lot of categories out there are not growing or they're going backwards. And we've got to choose and select our categories over many, many years as we bought businesses. And the fact that our categories grew 3% this quarter, we grew typically -- like particularly do faster than that, it bodes well. And I think when we did the portfolio decisions last year, it provides nothing but tailwinds for us as we look forward.

Your next question comes from Rupesh Parikh with Oppenheimer.

Just -- I guess just going back to organic sales growth expectations. I know you typically give it by segment. So just curious, updated thoughts for the year by segment, including for international.

Go ahead, Lee.

Yes. So to your point, we're maintaining the outlook of 3% to 4%. Similar to what we talked about back in January, we still have U.S. in kind of approximately a 3% zone. International is probably approximately 7%, so a little bit softer because of the Middle East situation and the SPD is still sitting at about 5%. Again, it's a range. U.S. hits their number. There's others that you end up in the higher end, but we'll see how it goes. It's only 1 quarter so far gone, so.

Great. And then my follow-up question, just as you look at the consumer out there, just curious if you're seeing any changes in consumer behavior? And then as you look at your portfolio historically, when you see these spikes in gas prices, do you see any parts that typically benefit?

Yes. No, it's a good question, Rupesh. I think in my prepared remarks, and this is the second quarter in a row, I've said it, but I'll just emphasize it. Promotional levels are up in laundry as an example, for the category. We're hitting all-time share highs and our promotional levels are down. All 3 competitors besides us are up. The value segment of laundry is growing.

So that is a -- not only do we deliver great cleaning and efficacy, but we do it at a great value, right? And so that is hitting the mark. And right now in this economy, I think the same concepts for litter. Some of our competitors are promoting very heavily. But we are promoting a little bit more, but we're gaining share again and again. So for those 2 areas of household products, which are more responding to promotions and stuff. That is a good sign.

Your next question comes from Javier Escalante with Evercore ISI.

My questions have to do with the commodity backdrop, right? I personally was expecting a more muted kind of like outlook for gross margin given all derivatives going into detergent. So if you can go back and explain us your -- how much order relative goes into your car. And I believe that you mentioned that the impact is like $25 million, $30 million. Is that a full year number. So anything that can help us explain the gross margin expansion going into calendar 2026. And I have a follow-up.

Yes, I'll start and then, Lee, if you want to add a couple of comments. It is a full year number, Javier, for that $25 million or $30 million. And it's primarily, as you would expect, oil-based derivatives like diesel and resin and surfactants. And that's not atypical. Remember, in any given year, we always enter a year about 60% hedged as well. And so all these are kind of net impacts for us. So hopefully, this is transitory and it's not permanent, but we have good coverage for an extended period of time, especially in the foreseeable 2026. The team is laser-focused on productivity, really to offset many of these things.

And yes, there will be some RGM and promotional adjustments, but it's largely productivity. And that's really been the hallmark of the company. We've transformed this place on being able to get gross productivity year after year after year. And in a perfect world, if that doesn't happen, great, then we continue to spend on marketing, even higher and spend that money back that we would have saved and then it drives the top line even faster behind our innovation.

So Lee, any other comments you have?

Yes. I'll just put it in perspective, keep in mind, we had to have about 160 basis points of inflation in the outlook when we -- back in January. We've got this 25 to 30, so that now brings you up to 200 basis points. But to Rick's point, we have these additional offsets we're going after. And this is what you see from us. You saw it last year when we did our work on tariffs. We got that lever down to a similar number, and we worked it down. and that's what we're doing here. So I think we're in a good spot, and that's why we reiterate our outlook for the year.

And a follow-up, this is very, very helpful. It's very positive. I feel that idiosyncratic to you. But in terms of if this externality continues and commodities remain very high. Would you expect then value players, say, the guys in Germany to lead first, calibrating the promotional environment and then potentially the price increases? Is that a good assumption?

Yes. I think it's probably a better question for those competitors, Javier. Like in my kind of comments back to Rupesh for laundry, despite all these other competitors promoting a bit more in laundry, which is still kind of within the range of historical numbers, it's not crazy. But they're up, we're down. We're gaining share. The value segment is growing. So that's a great position to be in because there's a huge macro when consumers are pressed at the gas tank, they want to make sure their dollar goes further.

And one way they can do that is they can buy ARM & HAMMER laundry detergent. It's half the price of the leading detergent. So -- and it's a great efficacy, great value. And that's true not just among laundry, but many of our brands. So that's a great question. I think it's a more pertinent question for kind of the competitors.

Your next question comes from Olivia Tong from Raymond James.

First question, just relative to your expectations, obviously, a very nice beat on the top line. Where did you see the biggest positive surprises in your view? Was it more volume? Was it more price mix? So it seems pretty broad-based? I'm just kind of curious how you're thinking about that. And then I have a follow-up.

Yes. So I mean, as you talked about, it's is a broad-based improvement across the globe. I mean, really, the only pressure point we saw was international was Middle East. And so I got the question earlier just what do we think about for the year. We're generally the same type of view we shared back in January in terms of how we thought growth is going to play out across the globe. That's still where we sit today, Olivia.

Yes. And I said the volume -- there was a volume-driven beat is what I would say.

Got it. And then as more and more business consolidates into club and online, it feels like the move online should be good for you or at least on a hindrance for you, whereas Club typically keeps their income pretty tight. So given those dynamics, how do you think about your ability to grow in these channels whether disproportionately relative to your peer set? And then ability to sort of stand out in both club and online.

Yes. I would say there's no grand new strategy. We're performing really, really well online and in the club class of trade. Remember, we started in 2016 as 2% of sales, we're at 24%. We went from a laggard leader. We moved really quickly. But you got to start even further back than that. We have great brands especially after the portfolio realignment we did.

We have #1, #2 brands. Consumers love them. I gave you the quote in our prepared remarks, even our new launch for ARM & HAMMER liquid laundry with the baking soda, 10x. It has a 4.9% review here in the average portfolio is at 4.5%. That story is playing out across all categories, and many of our brands.

And so that's the starting point. And when we do that, then we have to make sure we can win with the right pack sizes in the dollar class of trade, the right pack and offerings in the club channel, the right pack and offerings online. And we've proven time and time again that we can move faster. That's one of our competitive advantages, move quickly in order to give the customer what they want, where they want, and so we plan on trying to win not just in one class of trade, but all classes of trade.

Your next question is from Lauren Lieberman with Barclays.

So I just want to talk a little bit maybe about your perspective on the consumers' ability to absorb pricing, not necessarily in terms of how you'll deal with mitigating cost inflation. You've been pretty clear on that front. But in general, that a lot of companies are -- there's a mixed bag, let's say, in how companies are factoring in the current state of the world in terms of inflation expectations for the second half. And everyone seems to be treading very lightly on whether they will or whether they won't price. And so I was just curious on your perspective broadly, on the consumer's ability to absorb pricing, should that be where the industry ends up going?

Yes. I think that's a great question, Lauren. And our personal view is the consumer is pressed. And if they were pressed 3 months ago or 6 months ago or 12 months ago, they're pressed even more today because gas costs show immediately. And when that happens, they're going to retrench. And the worst thing to do in an environment like this.

So we have no plans to try to price through this $25 million, $30 million offer. We're going to go offset it with productivity. There's just no appetite there for the consumer to bear something like this. So that's our plan. I think companies who do that will be more successful than companies that don't.

Your next question comes from Steve Powers with Deutsche Bank.

I guess building on that to the extent -- I mean, I guess, 2 questions. Is there any kind of heuristic you could offer as to if we see volatility in the Middle East. We see further rise in the price of oil or more extended duration and higher cost of oil, what would make that $25 million to $30 million grow and at what pace? Like how we can gauge external dynamics and apply it to Church & Dwight is kind of one question.

And the second question, the follow-up from that is that if that $25 million to $30 million grows over time, Rick, and you kind of run dry on the ability to kind of press incremental productivity. Is there a different -- do you approach pricing across different parts of your portfolio with a different onset when I think about value versus premium is there more ability to push price to the premium and less on the value? Or how do you think about pricing in a scenario where you're forced to kind of at least contemplate something beyond productivity?

Yes. No, it's a fair question. We're not going to go through the detail of what does every $5 or $10 of oil translate into an impact on Church & Dwight. I think that's a little bit too nuanced. But I will say my answer to Lauren was based on the question of kind of the current scenario, $25 million to $30 million. We think that's just like many things in life, we can handle something like that. if it becomes a lot more meaningful, call it, $50 million or $100 million or $150 million, who knows where it stops, then you have to solve a different problem with different solutions.

And so the first stop on the train is productivity. The second stop on the train is RGM on promotions, and that's usually through household, that's where a lot of our promotions are. The third step on the train would be pricing. And you're right, many of our premium products are extremely premium and high priced and the consumer loves it, but you got to do that behind innovation.

And so as we're launching our innovations to really look with a fine tooth comb on what the price point really should be is also something that we would look at. But for today, my answer would be if it's in this range, and we all hope that it is, and we hope that it's transitory, then that's how we would solve it through productivity. If it becomes something else and bigger, then we have other tools in the toolkit if we need to.

Yes. Okay. Very fair. And I guess the only follow-up I have is that if it is transitory and as you say, hopefully, it is, is the productivity you're putting in place? Is it structural? Or is it more belt tightening such that if it rolls over, maybe some of it gets reinvested, but some of it just kind of backfill using the belt back up?

Yes. I wouldn't call it belt tightening, I mean I would call it we kind of accelerate project. We have pipeline and productivity projects, just like we have a 3-year pipeline of innovation. And so at any given time, we can choose to fast forward certain projects or slow down other projects, whatever we want to do. And we can influence timing. If the productivity happens, but costs also continue to drop, perhaps we slow some of it back down or we take that money and go reinvest it in marketing and build the virtuous cycle all over again.

Our next question comes from Andrea Teixeira with JPMorgan.

I was just hoping to see if you can comment a little bit, Rick, on what you said like you had some, I wouldn't say pull forward, you had an adjustment you called out for the fact that you outperformed on the organic sales growth. The comparison, I think, from an inventory dynamic from against last year. So hoping to see, and we saw what you guided for the second quarter and more aligned with the consumption you called out. So is that something to think like that 2% extra that you got in the first quarter, was more an adjustment, not a pull forward from the second quarter? That's my first question.

And then just a follow-up. So if I understood it correctly, you're going to take some -- potentially some price actions to mitigate the $20 million to $30 million, I believe you called out to be the impact of the costs or the Middle East or you are just saying potentially you're going to take some pricing?

Yes. So let's take that second one first. I think I was super clear, the $25 million to $30 million headwind that the Middle East conflict has created in terms of higher commodity costs and inflation. We believe we can offset that with productivity, okay? When we do that, that enables us to keep our outlook where it's at.

The question that Steve just asked was, well, what happens if that doubles or triples? Can you still just do that with productivity? And the answer was no. With that amount, we can do with productivity. If it goes a lot higher, then we would look at RGM type actions on promotions. If it goes a lot higher from there, then we would look at potential pricing. So that's kind of the normal sequence of events. And I just said before at those types of levels, the consumer is pressed. And so we don't plan on raising prices at this point, okay? So that's the price point...

And just to find point that, like the midpoint, and I'm sorry if I missed that, the midpoint of that scenario is oil at which price because what is the what you said $100 per barrel? Or is it $110, different companies are using different assumptions on their own?

We're using a reasonable average of what we've seen in the last couple of weeks. Obviously, it changes daily, but it's a good safe bet. So it's $95 to $100 is a good base point.

Okay. And your -- what was your first question, Andrea?

Yes. Sorry, the second part. But the first question was the fact that you came out at 5%, and you did comment the 2 percentage benefit from potentially like inventory dynamics. Just wondering if that's going to come out of the third quarter, second quarter? Or it doesn't look like because you're guiding in line with category growth, but I guess, I mean, with market share gains and distribution gains, all of that.

Yes. So just rewind the clock 12 months. And remember, Q1 of 2025 every CPG manufacturer said what's going on. And there was a retail inventory pullback, right, because of all the ad around tariffs and the consumer and whatnot. And everyone called out a number back then. This earnings cycle, most folks aren't talking about it as much, which is fine. We're just trying to be transparent.

We called that a year ago. And we said, "Hey, that means a year later, then that's worth a 2% health." And so we grew our business around 3%, and we had that 2% health. That's 5% organic and categories are growing well. We continue to take share. We're getting distribution gains, and that's why we gave an outlook, we think, that's really strong for the full year and really solid for Q3, I mean Q2.

Our last question comes from Peter Grom with UBS.

So I was hoping to get some perspective on category growth. I think you mentioned 3%. But some of your peers have touched on growth showing signs of improvement as you move through the quarter. So can you maybe comment on what you've seen from a category standpoint, exited the quarter-to-date.

And Rick related, you've always had a pretty good pulse on what to kind of expect from a category standpoint. So just given the many things the consumer is dealing with right now, curious how you see that evolving from here?

Yes. Good question, Peter. For us in the quarter, and I just talk about our major categories. I think it's just easier to talk about our 7. So we were around 3% for the quarter, 3% in January, 3% in February, closer to 3.5% in March. So that bodes well. It came down a little bit in April, but we're doing extremely well in April. So I would tell you it was better than we expected. When we were starting the year, we were expecting closer to maybe 2% category growth.

Now this is only 90 days, but I am and I am more enthusiastic than I was many days ago despite everything else that's happening in the world. Because again, not every company, you can't paint every company with the same brush, the categories really matter. And many of our categories, it's not just 1 category driving a 3% weighted average. It's almost all the categories are growing at least 2.5% to 3%. So that's just a great thing.

There are no further questions at this time. I'll now turn the call back over to Rick Dierker for any closing remarks.

All right. Well, thank you very much, and we'll talk to everybody in July.

Good morning, everyone. Welcome to the second day of CAGNY. To start us off today, we have Church & Dwight. Let's first thank Church for sponsoring this morning's tasty breakfast and for their long-standing support of CAGNY.

Joining us today from Church & Dwight are Rick Dierker, President and CEO; and Lee McChesney, CFO, who joined Church last year after Rick became CEO.

Church & Dwight has continued to drive consistent growth despite more volatile times by leveraging its balanced portfolio as well as adding recent acquisitions to bring more opportunities for growth. We look forward to hearing today about Church's plans to continue delivering strong shareholder returns. And if there was an Olympic category for fastest company to get through 160-plus slides, Church would get the gold. Thanks, Rick and Lee, over to you.

Wow, I can't top that introduction. Hey, thrilled to be here. We just went through our Analyst Day about 2 weeks ago. And so this is going to be a little bit of a repeat of that. But when you have good news, you want to share it more than once. So this is our forward-looking statement and safe harbor statement, just take the time to read that on our website, and we'll get started.

So I look back at 2025. What a volatile year. I told -- I write a note to the employees every month. And I said, at the end of the year, I actually stayed out for New Year's Eve, and I watched the ball drop because we want a closure to a volatile and -- just a very volatile year. We grew faster than our categories, in all three businesses. 4 of our 8 power brands grew share. Hero and TheraBreath grew double digits globally. We had strong innovation, we had strong marketing support, and we acquired Touchland.

So a lot of accomplishments happened in 2025. And we also made some really big strategic decisions. The first and foremost, tariff response. I said this at Analyst Day, I believe that we had an industry-leading, even more company-leading response to tariffs, $190 million we were faced with and after portfolio actions, after supply chain moves, after a lot of work by a lot of great people that got to $28 million. That's not normal. That is normal for Church & Dwight, but not normal for industry.

The second thing we did is portfolio reshaping. It's easy to have a strategy. It's hard to execute. And so we did both last year on portfolio. We divested Spinbrush, divested our vitamin business. We shut down Flawless and we shut down our Waterpik showerhead business. The company's portfolio has never been stronger. And then we exited the year with a strong balance sheet, 1.5x. That gives us optionality on deploying our cash flow.

And here's the one liner that I want to leave you with on the portfolio reshaping. If you think back, consumption growth for Church & Dwight was 1% in 2025, not the category, it's us, consumption growth. If you exclude the businesses that we did the portfolio reshaping on, then we would have been growing 3.5% in a very volatile and pressed world. And so that's just a great tailwind as we move forward.

The Evergreen model is alive and well. I'm especially proud that our 2026 outlook brackets on the top line and bottom line are Evergreen model. That's overcoming stranded costs from divesting $400 million of sales. Lee will get into that detail. But this is just the output. There's a lot of inputs that go into this model, and it's consumer-leading innovation, it's building brands that consumers love. It's our productivity program. All those things are the inputs, and this is the output.

And we've had a long track record of success on our TSR. If you look at 10 years, 5 years, 3 years, we're typically leading. In 2025, we took a step backwards like many in the industry did. And in 2026, we're off to a good start. And why is that? Like what's the core of it? The core of it is we're unique in this industry. We have a great organic model and we can do M&A.

And so if you look at the chart on the left -- upper left, net sales over the last 20 years has gone up into the right. Earnings has gone up into the right. Cash flow over 20 years has gone up into the right. And then organic sales has been very consistent on average around 4%. So it's not the fact that we can do organic growth. It's not the fact that we can just do M&A. The unique piece about Church & Dwight, the reason we have great returns over a long period of time is because we can do both of those things.

So who are we? We're about a $6.2 billion company, 3/4 of which is in the U.S., 18% international and 5% in our SPD business. We have 7 power brands, TheraBreath, Hero, Touchland, Waterpik, Batiste, OxiClean and ARM & HAMMER. And I'm going to talk specifically about ARM & HAMMER in a bit more detail today. More than 75% of our sales and profits are in those 7 brands. That's why we care about those. That's why we talk about those more than others.

And we have a winning formula, a balanced and diversified portfolio. We tend to do well in any economic environment. We have low private label exposure, and I'm going to share with you today that's even lower going forward. We have online success, strong, consistent category-leading innovation, and we're an acquisitive company.

So we're about 50-50 household personal care. So again, whether or not the economic environment is good or bad, whether or not consumers are pulling back from personal care or higher-end products, we tend to do well. Same concept on premium and value, about 64% premium, 36% value. It's a good eclectic mix.

Low private label exposure. We put this slide together about 8 or 9 years ago when we were in Paris for Deutsche Bank. And the theme -- the thematic back then was rise of private label, rise of AmazonBasics. And we wanted to show people that on a weighted average basis, we had a really low exposure to private label. It was 12%. And that's one of the lowest actually in the entire industry. When we took action on our vitamin business, look what happened. It went from 12% to 5%. That bodes well as we compete against private label.

Number three is online success. And in 2016, we were 2% of sales, and now we're -- about 1/4 of our sales are e-commerce. And that just shows the strength of Church & Dwight to bring in capability, to bring in people. We have a great team. We have great leadership in that area, and we're driving for share gains year after year online.

Innovation matters in a big way, matters even more when categories don't grow as fast. New products fuel the company's organic growth every year, and about half of our growth is actually from innovation. And then we're an acquisitive company. We have a skill set. We have a competitive advantage. We know how to identify, acquire, integrate and grow brands. We do that time and time again.

Do we -- are we batting a thousand? No, we're not. But we're certainly hall of fame material. We do this really well. We primarily want to acquire 1 or 2 share brands, high growth, high margin. Fast-moving consumables. we clarified that a few years ago. Asset-light, we want to leverage our internal manufacturing capabilities, and we want to deliver a sustainable competitive advantage.

And so over the long term, we've gone from a $1.5 billion company to about a $6 billion company. A lot of that has been through M&A. Two weeks ago, I announced a few growth initiatives. And so I just wanted to reiterate that today. As a backdrop, category growth for us has been around 3% for a really long time. Like if you go back 1, 3, 5, 10, even more years, it's been 3%, very consistent. And part of that's because of our acquisition philosophy. We get to decide what categories we play in. We only had one power brand in the year 2000, but since then, we've acquired businesses.

And as we do due diligence, we really spend a lot of time on the competitors, on the competitive set, on the category itself, and so we've got to shape this over time. And so more often than not, our categories have grown 3%.

Well, last year, something happened, right? And everyone knows, consumer was under pressure, and our categories grew 1.8%. Combine that with the consumer sentiment, right, all-time lows, tariffs, inflation, the additive that consumers were feeling. Well, bad things happen to good people.

So what are we going to do about it? And here are the three initiatives I announced two weeks ago. One, we're going to grow the ARM & HAMMER business from $2 billion to $3 billion. Second one is we're going to drive oral care expansion behind TheraBreath from $1 billion to $1.5 billion. And then the third one is scale our international business, focused on M&A from $1 billion to $2 billion.

So those are the 3 things that we're doing as tailwinds for the business so that if categories don't grow as fast as they historically have, we still deliver the Evergreen model. And if they happen to grow like they have with history, we exceed the Evergreen model.

So here is one of my favorite slides. We use this to really show how M&A has transformed the company. And as I said before, only $1 billion of sales that was ARM & HAMMER in 2000. And since then, $1 billion to $2 billion for the ARM & HAMMER brand. And that means $4 billion has really come from acquisitions over that period. The reason I put it here, though, is to show the strength of the ARM & HAMMER brand to go from $1 billion to $2 billion. And that's been behind laundry and litter.

If you look, we've stair stepped up on share for liquid laundry over many, many years and the same thing with litter. So what are the reasons to believe that ARM & HAMMER can go -- continue to grow? Well, number one is we've had success launching into new categories before. We were founded in 1846. So we've been in baking soda for quite some time. The laundry, toothpaste, deodorant, litter, all those we entered in the '70s, '80s and '90s.

We do well in some of these big categories like laundry and litter, and we have niche plays in toothpaste and deodorant. Our brand awareness rivals almost any other brand anywhere, the awareness, the equity. And then we have this competitive advantage that we like to call the advertising halo. If we advertise our litter business, it helps toothpaste. If we advertise baking soda, it helps laundry and vice versa.

ARM & HAMMER is known for cleaning, for deodorizing, it plays in personal care, it plays in household. It's premium in some categories, it's value in others. It's a very ubiquitous brand that can go across all these sets of categories. It's in more aisles of the grocery store than almost any other brand, so well known, over 100 uses of baking soda. So consumers are using this all the time and everywhere in their house.

So the 4 pillars of growing the ARM & HAMMER brand over the next few years are really continue to grow the core. That's behind laundry, litter, innovation, distribution, e-com, all those things that we do well today.

The second one is our good, better, best philosophy. We've done that really well in laundry and litter. We have an offering, orange bottle, ARM & HAMMER. We have ARM & HAMMER plus Oxi. We have ARM & HAMMER Deep Clean. So good, better, best. We'll play with all the different price points. There are other subcategories within ARM & HAMMER that we can do the same thing.

Number three would be new categories. I'm not going to talk about that today. I'll probably talk about that a year from now, but the team is hard at work on where and why and how. And then number four is in-house licensed brands. I view that more as an incubator. We have over or close to $1 billion of ARM & HAMMER sales that go through our licensee partners. And some of those got to a point in which we should take them back and scale like we do for TheraBreath or Hero. These partners can also help us as we enter new categories and be kind of a testing ground for that. So more to come there as well.

The second one is drive oral care expansion through TheraBreath. As we grow, we want to focus our resources on large categories, right? And mouthwash and toothpaste are 2 good examples of that. Mouthwash is a $2.4 billion category. toothpaste is a $4.8 billion category. We would much rather have a share point in toothpaste than a share point in dry shampoo. And so laser-focused on the category side.

And mouthwash and TheraBreath is a great example. We have a 12% household penetration for TheraBreath. The category is 65%. So there's just a ton of runway there. And even though we're gaining distribution in TDPs very, very quickly, plus 34%, we're still under-indexed to where we should be. Toothpaste is the next step for TheraBreath, the regimen and the Church & Dwight is a relatively small player today in toothpaste. And part of that is flavor and part of that is only a certain amount of population really identifies with ARM & HAMMER baking soda toothpaste, right? I think when I first got to the company, the trivia question was, hey, what's the share of ARM & HAMMER toothpaste in the U.S. And the answer is something like 2% or 3%. What is it in the U.K.? It was 2% or 3%. There's a certain subset of population that kind of dials into the ARM & HAMMER baking soda pallet.

TheraBreath is a little bit different. TheraBreath, we spent a couple of years developing multiple clinical trials, best-in-class performance, better for you. And really, TheraBreath is known for fresh breath. And so at the middle of all that is why we're launching TheraBreath toothpaste. Third leg of stool for growth initiatives is international. And as a quick backdrop, our international business has been growing high single digits for a very long time.

And we have the capability to take these acquisitions and grow and scale globally. And we've done that with Hero, we've done that with TheraBreath, and we expect to do that with Touchland as well. And the focus, that's a little bit different this last year or 2 is the focus on M&A. We believe this is the right time to bolt on to our businesses internationally. We have people in Europe now. We have people in Asia. The operating units are responsible and accountable and own kind of the upper funnel for the deals.

Okay. Let me switch to an update on our categories and brands. The U.S. domestic target is around 3% for Evergreen. And we have 7 power brands, same for the company, right, same brands. And this is the categories. Over a long period of time, this is green, right? That's a great place to be. Our categories over a long period of time are growing. And more often than not, we gained share, 4 of 8 brands grew share in 2025.

So how do we do in Fabric Care. Fabric Care, we grew consumption 2.5% faster than the category. And even more importantly, despite all the promotional activity that happens in a household category like laundry, value is growing, right? There is -- the consumer is pressed. And so the price gaps between us and premium variants is extreme. So even when promotional activity happens, the value end of the category is growing.

And that's been true for a very long time. And ARM & HAMMER laundry has been gaining share for an extended period of time. Two weeks ago, we also announced a new fact. ARM & HAMMER is now #1 in wash loads. So this is volume. This is units. This is -- this bodes well for household penetration. But ARM & HAMMER has more wash loads than the Tide original brand. And part of that's because of the good, better, best strategy. We have good with ARM & HAMMER orange bottle. We have the better ARM & HAMMER plus Oxi, and we have ARM & HAMMER Deep Clean in the best care.

And Cat Litter is a similar story. We've -- we're growing faster than the category. We're taking share and really the innovation behind Lightweight HardBall is fantastic. So we have had a 4% share in lightweight litter, it was an 8% share in 2025, and 27% is what our fair share of litter should be. That's what we have in the clumping litter segment. This innovation has a really high repeat rate. We think there's a lot of opportunity on litter.

TheraBreath. TheraBreath is off the charts. It is a double -- strong double-digit grower. When we bought that business, we used to talk about it as an alcohol-free mouthwash. We were the #3 player. We are the #2 mouthwash now, and we're growing by leaps and bounds. We hit an all-time share in 2025, around 22%. And this was the commentary on toothpaste. Toothpaste again, is a $4 billion category. Many consumers say 70% that they would spend on a premium oral care experience. And I think my favorite fact on the page is 89% of TheraBreath buyers of mouthwash are interested in buying the toothpaste, and we'll play the video.

[Presentation]

Yes. So that's a great regimen. Hero. Hero is a double-digit grower as well, taking over the acne space. Remember when we bought this business, acne has been like a $500 million category for decades. And then innovation transformed the category. And the patch business has made that $1.2 billion category now. So we're growing faster than the acne category, hitting all-time shares on acne for Hero.

And the household penetration story is a similar one. 9% of households -- for household penetration for Hero, 29%. And this is a little bit unique, though. Look at the actual category. Household penetration is increasing now. That hardly ever happens for the category. So that's what Hero is doing to that category. TDP growth, same thing, a lot of great growth. We believe we have more room to run there as well. And the unique part about Hero is it's not just a patch business. We believe it's an acne business. And so you'll see us play more in the acne life cycle, start with cleansers, but go through the entire journey for the consumer.

Okay. Moving to new product innovation. We had Carlos Linares, our Head of R&D, present last -- 2 weeks ago and really walk through, we don't just have 1 kind of vector for innovation and ideation, we have 5. And many of those he brought to the company. And I'd say about half of all of our ideas are actually coming from those new vectors. And for a long time, we were growing around 1% to 1.5% incremental net sales.

Our bar is so high. Most companies will talk about maybe gross sales, they'll talk about not cannibalization. Internally and externally, we always talk net sales incremental after cannibalization, okay? So there's 2 or 3 layers into the funnel when we talk about our new products. So about half of our growth now comes from innovation. And here's a flurry of our products. So from a personal care perspective, it's the TheraBreath toothpaste. Hero, it's the invisible liquid patch. It's the Hero cleansers. And then for the first time in over a decade, we're launching a new condom called G.O.A.T., Greatest of All Trojan. And it's a fantastic condom, great reviews, and it happens to be non-latex as well.

And then on the household side, ARM & HAMMER with 10x baking soda. We have rinseless, we have Power Sheets. We improved OxiClean, more powerful and then launching a new cat litter Dual Defense with Microban.

Okay. International and SPD. Our international organic sales Evergreen target is 8%. And if you aren't familiar with the international business, about a $1.1 billion business, about 1/3 of that is our global markets group that goes through distributors all over the world, 400-plus distributors over 100 countries. And then the rest of the business is in 7 core subs. And again, our track record for growth internationally has been stellar, high single-digit growth for a long time.

And the unique part about our international business is we're 20 years behind many of the other multinationals. So 18% of our sales is international. Most other companies is around 59%. And so we have a lot of runway here. And one of them is how do you drive our U.S. brands across the globe, like Waterpik, ARM & HAMMER, OxiClean, how do you take international brands like Batiste and St�rimar and Femfresh to more countries, more people. And then third is how do you leverage TheraBreath, Hero, Touchland and scale rapidly.

Even more impressive, I think, is 6 or 7 of our power brands globally in those countries grew share. And as one example of scaling, Hero is now in 75 countries in 2025. It's the #1 acting patch, not just in the U.S., but in many countries. And this would have taken us maybe 3 or 4 years previously. But because we keep buying businesses and scaling them, we did this in about 12 to 18 months, which is fantastic.

And we expect Touchland to be similar. There's a strong pull, strong demand globally for the Touchland business. Now we're going to be a little bit more telling on what customers, what channels and what countries, but we believe this is a big opportunity. As we move from an export-type business to a more international company, we're also focused on local innovation. So for China and for Japan, we're doing unique offerings for Batiste and reformulated version. For Japan, most of OxiClean, the additive market is actually liquid. So we've launched liquid.

And as we continue to grow, we're going to have local innovation, local manufacturing, likely third party just as we go on that journey. And then last but not least, as I said before, I think the acquisition piece has been the missing puzzle piece for international. And we're at the right time now that we're $1.1 billion, $1.2 billion to scale that effectively.

Specialty Products, about a 5% Evergreen target. And just for a recap, $300 million of sales, 2/3 of that is Animal Nutrition and 1/3 of that is Specialty Chemical. About 2 years ago, we also took portfolio actions on our SPD business. We sold a very volatile cyclical part of the business. And ever since then, we've had solid growth. And we're laser-focused on global expansion, laser-focused on innovation, and I expect great things out of this business.

Okay. How do we operate? We have 5 operating principles. One, we leverage brands; two, we're a friend of the environment; three, we leverage people; four, leverage assets; and number five, leverage acquisitions. And that's where good returns become great returns. So I talked through leveraged brands already. That's how we're doing with the category. That's how we're gaining share over time. You heard us scale internationally as well.

We are friend of the environment. So we were founded in 1846. In the 1800s, we were sponsoring bird cards in the 1970s. We were the first corporate sponsor -- one of the first corporate sponsors of Earth Day. We've had a long track record of being -- having an environmental heritage. And it's not just us saying it, we get accolades from external third parties as well.

Leverage people. So this -- I'll spend a few minutes on this slide. This is, I think, underappreciated. We should not be the leader on this slide. This should be Procter & Gamble. This should be Kimberly. This should be Kenvue, but it's us. And why is that? Yes, we do have a distributor model internationally. We do have third-party manufacturing, but many people have third-party manufacturing. We've purposely kept this number down, the number of employees because it helps with agility. It helps with decision-making. It helps with speed. It helps us be able to pivot when things don't go right.

You know, when Lee joined as CFO, a few weeks later is when all the tariffs set, and it was a Monday staff meeting, and we were talking about what happened and the impact and we were quantifying how it was $190 million and where we go from here. And by that Friday, we had stopped manufacturing in China for 2 businesses. And I would just say I would bet that many other companies could not move that quickly.

So it's about speed and agility. The other nuance here, I would say, is just like all companies, we're focused on content creation with AI. We're focused on RGM. We're focused on supply chain. But in the back of my head, it's how do I keep the number of employees similar when we're a $9 billion company, when we're a $12 billion company so that we can keep that edge of decision-making and speed. We have a simple compensation structure, the same bonus metrics that I have, the guys on the line have at the plant. And it's cash, earnings, it's net revenue and gross margin. Gross margin is easy to say but hard to do. Hardly anybody has gross margin in their incentive metrics.

We leverage assets. So one of the reasons we are so good at free cash flow is because we're light on CapEx. And that's been a very purposeful design over time. Part of our footprint is outside, but we're an asset-light company. That's how we describe ourselves. Now we'll spend CapEx in a fast minute if we think there's a savings advantage, it enables, it's a safety issue, environmental issue, any of those things. But again, we spiked up as we invested in different areas, and now we're back to our 2% run rate.

And then I guess for me, all that's -- everything you've heard is kind of our core operating model organically. And then our good shareholder returns become great because of M&A. And again, our repetition is another understanding. I would say we are a little bit different. We have the ability to identify, integrate, acquire -- acquire, integrate, grow brands. And I think many people think they do, but we actually do. And when you do it again and again and again, it builds a culture. It builds a knowledge base. And so our employees, the 30 or 40 or 50 that are involved in diligence and the integration know the battle stations, and there's no substitute for experience.

So we have confidence in our future. The portfolio changes that I talked about, the growth initiatives, that supports a healthy Evergreen model. We're expanding household penetration, especially for some of those fast-growing businesses that we've acquired. We have a sustainable high growth rate for international. We have consistent innovation. Year after year after year, that muscle has been built.

Our e-com business is on fire. We've transformed it from being a laggard to a leader. And then as always, we're laser-focused on M&A. And I'd say it's not just domestic now, though, it's also international. And so when we look up in a few years, we're going to be -- we're going to look back and say, not only do we continue to do our domestic M&A, but we also did international. So let me turn it over to Lee to walk through the financials and the outlook.

All right. Thanks, Rick, and good morning. So as Rick said, it was an impactful year in '25. And it was really heartening to see all the actions we took really come to bear and give us optimism here as we're into '26. So just as a reminder, we -- in the back half of the year, organic growth accelerated. Our gross margin rate improved year-over-year. That combination enabled us to invest more into marketing. The operating margin, our EPS expanded, and we drove record cash flow of $1.2 billion.

We also did Touchland, we returned $900 million to our shareholders. And I just think it's a perfect example of Church & Dwight culture coming to life, right? We had the facts come at us. We laid out a plan and we acted. And that gave us really some good momentum here as we pivot into '26. So we talk about our Evergreen model. Rick talks about it, I talk about it. It's the foundation of how we think about -- again, a summary of all the inputs that we need to bring to life to deliver. And this is the foundation.

This is what was behind the basis for our '26 outlook, which we released a few weeks ago. So 3% to 4% organic growth. Total sales are negative 1.5% to negative 0.5%. That's solely the business exits. Gross margin improvement of 100 basis points, continuing to invest in marketing. SG&A will be a little bit up. I'll walk you through that in a minute here, and then adjusted EPS outlook of 5% to 8%. And finally, another year of strong cash flow of $1.15 billion.

And then we said for the first quarter, some similar metrics to this kind of a similar level of growth, gross margin rate improving. We're going to continue to invest in marketing and then EPS will be slightly up. Not up at the 5% to 8% level because in the first half of the year, we have the Touchland stub period in terms of amortization and SG&A and then some timing with our marketing through the year. But again, that was our outlook. That's still our outlook today.

Now underneath that, I think this is a nice recap of really a lot of things that Rick just walked you through. We have a lot of momentum as we come into '26. There's more tailwinds than there are headwinds. So number one, the strength of the brands, what we have, you just saw the innovation road map. We're positioned well just on the top line there. The portfolio realignment. So yes, sure, it's -- we strengthened the portfolio, but it gives us the opportunity to have higher organic growth, higher margin rates, and that certainly comes through in our outlook for '26 and as we look forward here. Touchland is off to a great start. That will become organic in the back half of the year. We just talked about our new growth initiatives, certainly opportunities for those to start adding benefits. And as I mentioned earlier, really every metric accelerated in the back half of '25, and that's a nice entry point we have coming into '26.

So certainly, the category is a little bit softer, as Rick talked about. There's still sticky levels of inflation. And we do have the business exits. It's $400 million of sales coming out with some stranded costs. But again, all the things on the tailwind side drive this outlook, again, 3% to 4% organic growth and 5% to 8% EPS expansion.

So this is our scorecard on organic growth. And this -- not everyone shows 10-year scorecards. We have 4% average organic growth. A lot has happened in the last 10 years. And I think it's another reinforcement, the categories matter and then how you execute within those categories. And that -- this shows through here. Our outlook for '26 is certainly in line with this as well. I mentioned the reported sales, again, negative 1.5% to negative 0.5%. The simple story there, you have the business exits. We obviously have the positives from that. There's a headwind on the sales line here. The good thing is between Touchland and our organic growth, the opportunity to mitigate much of this in '26. And obviously, you saw the earnings growth with that outlook.

I think very important also with the organic growth outlook is, this is volume. This is our scorecard for the last 10 years on volume growth, driving unit growth. Our organic growth is fueled by unit growth, not by price. And our outlook for '26 is just in line with that same history we've demonstrated as well. So our gross adjusted gross margin outlook is 100 basis points for the year. It's definitely higher than the Evergreen model. So let me walk you through that a little bit here.

So foundationally, we're typically pursuing 25 to 50 basis points. That's the operations teams, that's the engineering teams driving good to great productivity. We had a record year in '25. We're set up for a very good year in '26 as well. Supply chain optimization, NPE, driving positive mix from elements like our higher-margin acquisitions. Those are all coming to life. That typically drives 25 to 50 basis points.

The portfolio transformation gives us this additional opportunity in '26, and that's where the path to 100 basis points of improvement comes. And that all fully mitigates what's right now an estimated 160 basis points of inflation pressure, typical manufacturing pressure points, labor inflation and then some of the investments they made in capacity. Again, that's all factored into this outlook, a really nice gross margin outlook for '26.

And as I mentioned earlier, underneath all that, I'm not talking about tariffs. We had $190 million original tariff outlook. Rick just talked about it. We very quickly acted. And now as a result, you see the outlook in terms of our margin outlook for the year. We're going to continue to invest in marketing.

So certainly, this 11% guidelines has been helpful. But what's most important is how the brands are doing. You just saw the brand scorecard. They're doing well. We invest to drive that brand scorecard. And when we have opportunities like we did in the back half of last year, we'll also index even higher here. And so that's the mindset for '26 here.

Now SG&A is going to be slightly up in the year. As I mentioned earlier, there's really 2 drivers. We don't have the normal leverage we have from organic growth because you have a little bit of pullback from the business exit. So that gives you a little bit of headwinds there, and there's obviously some stranded costs. And then Touchland for the first half of the year has an amortization bill and has its SG&A. That's really the driver here. Underneath this, we're still investing in the international business, e-commerce and the growth initiatives that we just laid out for the future here.

Our EPS outlook is 5% to 8%. But again, look at the scorecard for the last 10 years. We've averaged 8% growth in EPS despite all the things that we've all had to navigate over the last years. Again, it speaks to the categories we set off on the top line, speaks to our ability to drive the margin improvement and invest in the business coming to life each and every year.

Now this may be one of my favorite charts, free cash flow conversion, 127% in 2025. That's impressive. The 10-year average of 119%. Typically, most companies are averaging something less than 100%. And this is the difference of Church & Dwight. It goes back to the strength of ARM & HAMMER and everything that, that business does and then really how we run operations here. And this gives us tremendous flexibility.

This shows through, like if you look at this -- again, all of this just happened in '25. Our debt-to-EBITDA ratio is essentially the same. That strong cash flow came through. We bought Touchland. We returned $900 million to our shareholders, and we're still at the same debt-to-EBITDA level. It gives us tremendous capacity as we look forward here as well.

And this shows through over $5 billion of firepower. So between cash and ability to leverage up, we have a lot of opportunities to invest in our business and really drive capital allocation. And where do we want to do that? That's here. So number one, use of cash is TSR-accretive M&A. The Touchland was our latest example, Hero, and Thera behind that. These are unique assets. We take a lot of discipline to find them. Obviously, the message today is we've done that. We have the financial capacity and the organizational capacity to do more, and we're in the marketplace looking.

Next up is CapEx for organic growth and for good to great productivity. Number three is NPD. Number four is debt reduction. Though today, we only have fixed rate debt. We have no variable rate debt -- or variable debt. And then ultimately, a return of cash to shareholders. So this is our focus for all that firepower. It served us well. We just showed you the 10-year scorecard. This has been the foundation of how we've done that. That's our mindset as we look forward here as well. And again, all those actions we took in '25 enable us to be in a pretty good place here.

So as a theme here, we feel confidence in 2026. Yes, there's headwinds. But again, we took actions all through '25 here. We have a great exit rate coming into '26. And we're optimistic that we're going to bring this '26 forecast to life. So with that, we'll conclude our remarks. Thank you.

Dara?

Dara Mohsenian from Morgan Stanley. So Rick, you mentioned the 3 growth areas you're focused on. Those are some big numbers there. We're talking of Bs instead of Ms, right, or $0.5 billion, I guess, on the TheraBreath side. But just as you think about the level of spend you'll need over the next few years in those areas to get to that level of growth, can you give us a little bit of insight there?

And maybe also just short term, what's embedded in '26 already in terms of revenue contribution from those areas and level of spend and sort of taking a step back, I think the bigger question is we've learned in CPG over the last decade that companies move into new areas or white spaces there's opportunity, but there's also fierce competition, right, in areas like toothpaste are very competitive, international acquisitions, inherently more risk. So just holistically, how do you think about managing risk as you go after these growth opportunities from a corporate standpoint?

All right. Dara, that might be a 4-part question, but I'm going to do my best. You can correct me if I get off track. Look, I think it's -- I really do believe the ARM & HAMMER brand is unique. I tried to walk through that in that a few -- maybe a decade ago, we tried to go and make a couple of the brands that go into the mega brands and go into other categories. And you're right, it is hard to do. But the ARM & HAMMER brand is a little bit unique. It's already done that. And I think where I also get confidence is my comment on there's already $1 billion of retail sales in other categories for ARM & HAMMER right now. And so those are going to be some good testing grounds for us.

And I don't think today is the day I'm going to go through what categories we're going to look at. But you're right, every category is competitive, but there are certain attributes of the ARM & HAMMER brand that put us further down the field even from the starting block, and that's what we have confidence in.

For toothpaste like TheraBreath, it's a unique opportunity because of how well TheraBreath mouthwash is doing. As TheraBreath mouthwash resonates with consumers on bad breath and freshness, we think that equity goes right over toothpaste pretty darn well. And you asked about support levels. You're right, there's B, not M in terms of growth over the next, whatever, a number of years. These are moonshots that we're going to take. And we're going to invest as we go.

So there's some benefits in 2026. It's early days, though, is what I would say. And so it's kind of pay as you go in 2026. And as we get into these new categories, you're going to see us say, this is the right level of investment, but this is also the revenue opportunity. I fully expect all these things to actually be tailwinds for revenue and for earnings over the time. Today and yesterday -- and 2 weeks ago, was really just letting people know this is where we're putting our time, energy and effort.

And sometimes the things that you choose not to do are just as important of what you choose to do. And so the fact that we were able to shed some of these brands like vitamins and like Spinbrush and others, the full force and the time, energy and effort of our people who really make the place run are going to be behind these growth initiatives. So I have a lot of confidence we're going to do some really cool things. So I would say stay tuned on some of the output for that. But this is really just the inkling of here's the direction that we're going.

We have about one more minute. So we probably should take the rest of the questions in the breakout, if that's okay. All right. Thank you.

Okay. I think we're ready to get started. So thank you for coming out today, especially in a cold, blustery New York City day. I really appreciate it. I want to walk you through a quick 170 slides and the management team is going to come up and talk as well. But we're just ecstatic to be here, and we finished the year with momentum, in 2026, the future looks bright.

So just as a reminder, we have a safe harbor statement. We're going to make forward-looking statements today. So please check this out on our website. So who's going to be presenting. I'm going to start and end the presentation. Lee is going to come up and talk about our financials and our outlook. And then Chuck will talk about our brands and the categories Andrea is here, Federal Touchland. She's going to talk about that business and how excited we are about it. Carlos is innovation. Surabhi is all things digital, and then Mike Read will talk about international and SPD. I'll also go through some of the growth initiatives today as well.

I'll just walk through the agenda. I already told you welcome. So let's look back at 2025. We grew faster than all of our categories across all 3 divisions. That is quite the accomplishment in a tough and rugged 2025. 4 of our 8 power brands grew share. 4 of 7 if you exclude vitamins. Hero and Therabreath are growing double digits. Strong innovation and marketing spend supports these brands and growth. And then we acquired Touchland this year.

Tariff response and mitigation. These 3 bullets are really important to me. I would say our tariff mitigation and response wasn't just industry-leading, I would say it's just leading I was super impressed with how the company reacted to that portfolio changes were executed. We divested SpinBrush and vitamins. We shut down flawless and showerheads. There is a lot of momentum because of the portfolio changes we were able to make in 2025.

So we also have a strong balance sheet, 1.5x levered. You know this, right? Our long-term investors know this. We have been able to acquire businesses. We have the ability to identify, acquire, integrate and grow brands and the future is bright for that as well.

You just let them know they switched the prompter up here. It doesn't have anything on it anymore. It's fine. But this is one of the most important things to understand about the business portfolio. In 2025, our brands grew about 1% consumption. If you strip out all the businesses and portfolio changes we made, it would have grown 3.5%. What a great resilient portfolio to have the wind at our back for 2026 and beyond.

Lee will talk about the every model in detail. I will tell you that everybody model is alive and well. You saw how we had those brackets in our outlook today for 2026. There's a lot that goes into this, but this is the output. We have to make sure we have innovation and brands consumers love. We have to make sure we have Protiviti programs, the right advertising, all those things are the inputs.

And we have a strong track record of TSR. If you look back at 3, 5, 10 years, we're always near the top. 2025 movement backwards and we're off to a great start in 2026.

What's our winning formula. We have a balanced and diversified portfolio. We have low private label exposure. This is going to be my new favorite slide. You're going to see the updated one in a few minutes. We have online success and strong, consistent category-leading innovation. Half of our growth to fleet customer innovation. And again, we're an acquisitive company. We know how to identify, acquire, integrate and grow brands.

Church & Dwight is about a $6.2 billion company, 77% domestic, 18% international and 5% SPD. 7 brands make up 75% of our sales and profits. And we have a balanced and diverse portfolio. About half of our portfolio is personal care, the other half is held. 64% premium, 36% value. Low private label exposure. So for many years, we've been showing this slide that weighted average exposure to private label across all of our brands across all of our categories is around 12%. And it's been very consistent 12% year after year after year.

And why is that? We don't have private label exposure, for example, in laundry. But look what the portfolio reshaping did to that statistic that's that -- we're down to 5%, right? Vitamins was an extremely large private label business. So we went from 12 to 5 because of portfolio reshaping. Online success, all things digital. We went from laggard to leader 2% to 24%. Serving her team are doing a fantastic job.

Strong and consistent category-leading innovation. About, again, half of our growth is typically tied to new products. We measure this maniacally incremental net sales growth, not grow sales, stand-alone but incremental net sales growth, and this drives our brands, it creates value for the consumer.

Acquisitive company, #1 or #2 share brand is one of the first things that we always want to make sure when we buy a brand or a business. Number two, high growth and high margin, fast moving consumable, fast moving consumable. That's what we're focused on. asset-light, leverage our manufacturing skill set and then deliver a sustainable competitive advantage. And we're as excited today about acquisitions, both in the U.S. and probably also internationally, right? I think that's the nuance. It's always been the U.S. It's an and. Now we're talking about international as well.

And why is that? Like this company has been transformed through acquisition, and I'll show you in a few minutes. We have a slide, $6 billion, $2 billion is really the ARM & HAMMER brand, $4 billion is from the brands we've built and bought over the many years. And that tranche started back in 2004. We go from $1.5 billion to almost $3 billion. And then you go from $3 billion to $5 billion. And now we're about $5.5 million go into what were $6.2 billion this year, and we think that's going to continue to grow through acquisitions.

Okay. So here's the new news. We haven't talked about this before. I think the reality in the world that we live in is category decelerated, right? Our categories have grown for a decade or longer at 3%. And if you look back at 2024, it was closer to 4%. And then in 2025, the first half grew 2%, the second half grew 1.3% and the full year grew 1.8%. That was not just us, that was everybody. Many categories we're doing the same thing.

Bad things happen and you have people to react to it. Consumer sentiment is weak, right, 5-year lows on consumer confidence. So we can be able to control of our future. And so what are we doing about it? We're focused on these 3 aspects of growth internally to help drive results in the future. So that if categories slow, we can still hit our evergreen model. If categories don't slow, we can do even better.

So grow ARM & HAMMER from $2 billion to $3 billion. There's 3 or 4 pillars behind that. Number one is continue to do what we've been doing, grow the core, ARM & HAMMER laundry, ARM & HAMMER litter. Good, better, best. We can round out our portfolio for good, better, best across the ARM & HAMMER sub-brands.

In-house licensing. We're going to consider that more an incubator, and I'll talk through that in a few minutes. And then new categories. So we're going to launch a couple of new categories this year. But over the next few years, you're going to see a handful of other categories. And those are going to be fewer and bigger better. We're not going to go everywhere to every one. That's not the strategy, is to make sure that we're in the right categories where ARM & HAMMER can play and win.

Drive oral care expansion through Therabreath, really behind Therabreath from $1 billion to $1.5 billion. And then to scale our international business. We've been doing a great job doing that for many years, and now it's a little bit double down on M&A. We have the scale. We have the infrastructure to do it. So that would go from $1 billion to $2 billion over time.

Here's the slide that we've shown before. This is the makeup of the $6.2 billion over time, $4 billion is really from acquisitions. But I'm going to talk about it in the inverse for a second. It means that we've gone for ARM & HAMMER from $1 billion, $2 billion over the last 5 years. Our aspiration is to go from $2 billion to $3 billion a heck of a lot faster than that.

And again, this is the core, grow the core. Look at the stair step up over time for liquid laundry and for clumping cat litter. We have a great brand. It's the innovation high laundry, the marketing behind laundry. We're hitting the consumer right where they are. And year after year, we continue to gain share.

What are the reasons to believe in the ARM & HAMMER strategy? Well, number one, we've proven over time that we can go into other categories. And it's not 1846 anymore, but bacon said it was founded in fact with Church & Dwight. Laundry was 1970. Toothpaste was 1980s. Deodorant and cat litter were the 1990s. We know we can do this. We've been in large categories before. Our equity is fantastic. Our brand stacks up with other brands like Nike and McDonald's in terms of awareness.

And then the last one, which I believe is a competitive advantage is the ARM & HAMMER brand has a halo effect on advertising. If we advertise cat litter, bacon soda and laundry benefit. If we advertise laundry, ARM & HAMMER toothpaste benefits. That's a unique position and capability that we have. ARM & HAMMER is known for cleaning, the odorization, cooking, laundry the list goes on. It's a premium in some categories, it's a value in others. It's personal care in some categories, it's household and others. There's very few brands. I can't name one that has the ability to do that.

It's also uniquely extendable. It's in more aisles of the grocery store than almost any other brand through either our owned brands or licensees. There's over 100 uses of baking soda. It's used everywhere. It's in the laundry room, of course, it's in the kitchen. It's in the bathroom. It's everywhere. So there we go. So growth or we talked about good, better, best. Again, there are subsegments within the ARM & HAMMER portfolio that can get rounded out. we've proven time and time again that we're good at ARM & HAMMER doing good, better, best. I'm going to show you those 2 examples.

I'm not going to go through them today, but there are new categories that are ripe for ARM & HAMMER. And then number four is the in-house brand concept to be an incubator to be able to say, here are some categories that we may want to go into. How do we explore that? How do we get a business up to $10 million or $20 million or $30 million. And then when it makes sense, to actually buy that back and be able to scale it like we normally do.

So here are the 2 examples that I would tell you are just textbook for good, better, best. First one is litter. Orange box is good, black box is better and then hard ball is best. And hard ball is known for the best, we're trying to make that the best lightweight litter. We think that might be the best litter period, full stop.

We also have laundry, good, which is the ARM & HAMMER model, better, which is ARM & HAMMER plus Oxi and then the best, which is deep clean. We have almost $1 billion of licensing sales out there with partners. There are many categories in which ARM & HAMMER has already proven that can play in. And once we decide that we think that we can be a better owner at some point in time with the right partner, then we believe we can scale it and take it to the next chapter of growth, like we did for Hero and Therabreath.

Okay. Next pillar of growth is really oral care. Now as we grow, we want to make sure we're focused on the right large categories. And mouthwash and toothpaste are huge categories. On the far right, $2.4 billion and $4.8 billion. We would much rather have a share point in toothpaste and even dry shampoo as an example. So we're laser-focused on mouthwash and toothpaste. And what's uniquely different about us Therabreath gives us a great entry point for oral care now, right? ARM & HAMMER is always to a select subset of the market because of the taste profile for baking soda, but Therabreath can reach and penetrate a lot more households.

Speaking of penetration, Therabreath is 12% household penetration. Mouthwash is 65%. Chuck is going to go through more details, but we have a lot of room to still run. We have aspirations to be the #1 mouthwash.

Number 2 is toothpaste, huge category, almost $4 billion. We have been playing in toothpaste for quite some time. And collectively, we're a small player, if you add up all of our brands. We think their breadth has a unique right to win. We think there's a loyal following for Therabreath. It hits on best-in-class performance. It's better for you. It has superior flavor. So all those things come together to make this a great chance for Therabreath to become a meaningful brand in toothpaste.

Last but not least is international growth. And Mike will walk you through the reasons to believe as well. But we have a long track record of organic growth. This has been a fantastic story for Church & Dwight and for international. And there's a lot of room to run. We're underpenetrated our company versus most other multinationals. And we've done a fantastic job taking businesses even faster than our history, I would say, and applying those distribution gains. So here there Therabreath, Touchland have all expanded rapidly, and a large part of that is because of international.

And so today, I'm just saying we're doubling down M&A within our international business. It doesn't mean we're doubling down less in the U.S. It's just an and, not an or. But we want to acquire brands because we already have a great footprint or we want to shortcut like we did with Grafica in Japan, right? We added our OxiClean distributor, and now we can start to add some of the brands that we have into that infrastructure.

All right. With that, I will ask Lee to come up and talk about the financials.

Thank you. All right. Good afternoon. For those of you who haven't met, I'm Lee McChesney. I have the privilege of being the CFO for Church & Dwight. And with that, we probably to dive into some numbers. So we'll do that quickly.

So obviously, this morning released our 4Q and '25 results. came in at 3.9% total sales, a bit higher than our outlook. Certainly, Touchland was a big driver of that performance. Organic was 0.7%, a little bit lighter than our outlook, but that was really driven by the VMS business, they now exit the VMS business and then just the category itself was a little bit lighter.

Trying to give you also this perspective in the release as well. You take out the VMS business in the fourth quarter Organic sales were 1.8%. So some nice momentum as you started thinking about '26. We had another great quarter with gross margin, 90 basis points higher than last year. higher than our outlook. Really great work from the team across the globe to bring this to life.

First half of the year, gross margin was going back for 50 basis points in the back In the first -- back half, it was up 50 basis points. So some really good momentum there. So that favorability in the sales, favorability in gross margin rate, we put more into marketing. And then really helpful for the brand today, but also as you think about; 26.

Ultimately, that led to an EPS of $0.86 higher than our outlook and up 12% over the prior year. So overall, a really nice quarter. And obviously, if we pivot to the full year, that all flows through. Again, you see the overall total sales of 1.6. And then again, organic for the year was 0.7 but when you adjust out BMS, it was 2% organic growth. So again, that's kind of the entry point as we go into '26. I mentioned, obviously, the progress on gross margin and we continue to invest in SG&A.

The other element is cash flow. We had a great cash flow year. We upped our outlook throughout the year, and we actually exceeded that in final form at $1.2 billion. So really just a ton of strength again, on the sales side, gross margin, EPS and cash flow, all higher than when we put out our outlook on Halloween early in '25.

So that's the numbers. But I also wanted to just reflect a little bit on what we did beyond the numbers. And because it also is a good starting point when you start thinking about '26. So once again, we continue to have the strength of brands to grow 4 of our 8 brands. We changed the portfolio. And hopefully, you saw in the release some of that insight. But moving away from those 4 brands, we now have a portfolio that has the ability to grow at a faster rate has a higher gross margin rate. I mean those are all going to be -- you see those in the outlook -- walk through '26 in a second here.

We had another year of incredible productivity, record levels of good to great productivity. And then we faced into tariffs early on. So liberation Day in early April. And by the end of April, we told you what our plans were. So $190 million of tariff exposure that we've now moved down to $25 million and continuing to decline from there. You see it in the outlook for '26 here, and we get through a second.

And then the cash flow I talked about, we had great cash flow. But this year, we bought Touches, we returned $900 million to our shareholders. And we still have the same debt-to-EBITDA ratio. So we have tons of optionality as we move here into. So I have an observation since March. And I just think this is really our culture coming to life. Things come at us. We quickly assemble the facts, we come up with actions and we execute. And we all did this in '25. And again, all this momentum carries us into 2016. And certainly, I think you'll see that when we go through the outlook.

With that said, let's run to '26. So you know Church & Dwight, you know wherever a green model. This is the foundation. This is what's running through the organization. When we get together, when you think about the plan, people know what's expected of them. So you're going to see this certainly coming to life as we walk through the outlook.

So again, this morning, we put out a release, 3% to 4% organic growth range for the year. Reported sales will be down negative 1.5 to 0.5. That's solely the business exits. I'll walk you through that in more in a second here. Gross margin improvement of about 100 basis points, continue to invest in marketing at 11%. And ultimately, that's an EPS outlook of 5% to 8% for '26. And then again, we expect to have another strong year with cash flow, $1.15 billion.

So I know you're going to ask a lot of questions later, but I'm trying to get some of those out of the way here with some of the tailwinds and then the headwinds as well. So I think you're going to see on display from really everyone presenting today, a lot of the reasons behind this. Again, the brands are still performing well. You're going to see a ton of innovation from us. I mentioned the portfolio change. Again, this is helping us on the organic growth, it's helping on gross margin. We get to reallocate our focus as a leadership team to use faster-growing value brands and premium brands that we have in our portfolio.

I mentioned Touchland. Touchland in this 2 quarters now, really strong results. You're going to hear more about where Touchland's going in the future today. And then as Rick just mentioned, we have the growth initiative. So again, there's an extension of already what we have going on in the portfolio driving us here.

And then I make the comment here that in 2025, if you look at almost every metric it got better year-over-year in the second half than the first half. And that's our entry point as we go into the year here. So sure, the categories are not expecting them to transform. We're still expecting kind of 2% category growth. There's going to be inflation, but also behind that outlook is we do have these exited businesses. It's $400 million of sales that have come out of the portfolio. We've worked through the stranded costs. That's all covered in the outlook for '26.

So let's go from there, just walk through a couple of extra details here. So again, organic growth, the Evergreen model calls for 4%. Our range is 3% to 4%. We have a 10-year history of 4.1%. And I mentioned the reported sales. I just want to give some color here.

So again, $6.2 billion of sales in 2025. Our outlook for -- $6.1 billion to $6.2 billion. You have the $400 million coming out from the exited businesses. And then with Touchland and the core business is growing, we almost fully mitigate that on a reported sales basis. But obviously, underneath that is the organic growth of 3% to 4%.

And I'd also note in our outlook just the importance of volume. So our organic growth is driven on volume growth. It's not driven on price, it's driven on winning a unit level with the brand. That's what we've been doing historically, and that's obviously the foundation also of what we're planning to do here in '26. It's a volume-driven organic growth outlook.

So I mentioned gross margin. I don't think we typically show 100 basis points of improvement in gross margin. The evergreen model is 25 to 50 basis points. And so let me walk you through some of the drivers to that. So on this page here, you really see what we try to bring to life every day. So whether it's good to great productivity, supply chain optimization, whether it's bringing NPD to life, that's obviously good for growth. That's typically also good as a mix element.

And then we buy acquisitions that are higher gross margin levels and then we expand them. It gives us positive mix. Those are usually the elements that drive the 25 to 50 basis points. We're looking for an evergreen. And then as I mentioned, the portfolio change is also enabling us to go from that 25 to 50 up to 100 here in '26.

And hey, there is inflation, I call it 100 basis points. But all those actions I just talked you through are offsetting that. So sure, we have natural gases up, ethylene, things like that. You're going to have a normal batch of labor inflation. We have some capacity improvements. We're covering that. That's what we do with our good to great productivity and all those other amounts we drive normally in the Evergreen model, okay?

Talked about marketing. This has been 11% is called out in the every model. That's what we're looking at again here in '26. And this has been an important formula. We invest in the brands. And when we have opportunities like we just in fourth quarter, we'll even invest more here to support the brands. Just to note, marketing will be based on this outlook, a few basis points lower than it was in '25 because the Vitamin business had a higher marketing rate than the core portfolio SG&A, I mentioned earlier, is going to be a bit higher. Really just a couple of drivers there.

Certainly, we have a half a year of Touchland's SG&A and this amortization. So that will be a pressure in the first half of the year. And then we don't have the same leverage out the portfolio because we have the business exits and then we have a bit of stranded costs. But again, that's all factored into the outlook. We're still continuing to invest in the international business in e-commerce. And then those growth initiatives we just talked about, that's all still going on within SG&A.

So all that, again, brings an outlook of 5% to 8% in EPS. The Evergreen model is 8%. So certainly, that's within the range here. Today, obviously, we're talking to thinking about that as a midpoint perspective, but you obviously have a 10-year history of what we've done there. We'll certainly focus on bringing that to life.

Now we noted also in the release, it's a bit of a first half, second half. So the second half is a little bit higher. But just to give you a color there, I mean, the growth perspective for the year is similar. The gross margin improvement similar to the year. But again, you do have that touch on SG&A and amortization in the first half of the year. And when we look at our marketing programs, the more heavily weighted to the first half and the second half. And that's solely the driver and the difference.

So I think Rick said last time, when I was a CFO, this is his favorite chart. I think as CEO, it's still a savory dart. But we look at the free cash flow conversion, right? I mentioned the, obviously, the cash from operations, but 127% in '25. This gives us so much optionality as we look to invest in the business here.

That obviously shows up in the debt to EBITDA ratio Again, we did touch in. We did the share buybacks and we basically have the same level of debt to EBITDA. So all that firepower we had in the past is still there for us. And that certainly shows up here. It's over $5 billion. I think this is almost the exact same chart as last year despite all those things we did with the portfolio, how we've added to it and how we've returned dollars to the shareholders. This speaks to the cash flow capability of the organization.

So what do we use the cash flow for? This chart hasn't changed. We've seen it in the past, number one, TSR-accretive M&A. So the Touchland, the Therabreath, the Heroes, finding the next version of that domestically or internationally and bringing that to life. That's the #1 goal. That's certainly what we're out in the marketplace to do. And again, we have all that capability financially and organizationally to add to the portfolio today. Next up is certainly CapEx for organic growth and productivity.

Number 3 is NPD. Before it is debt reduction. But at this point, we paid down all our variable debt. So this is just -- we're just sitting out of the fixed that we have today. and then returning cash to shareholders. And on that note, we also announced today that we have a 4.2% dividend increase from the Board in '26, our 125th consecutive year of paying dividends and our 30th year in a row now of increasing our dividend. Again, another great example of the cash flow coming to life.

So what should come through here for '26 and what you're going to hear from the rest of the team today is our confidence in the outlook we put out there. So whether it's the strength of the brands you're going to hear about from a second from Chuck, the innovation from Carlos, from Andre on Touchland. You're going to hear from Surabhi on what we're doing in e-commerce and how that continues to be a great story. You're going to hear from the international business and now even more focus under our growth initiatives there. And then that cash flow give big sign so much ability to invest in acquisitions or organically in the business. So with that said, I'll move away from the numbers and then let the team walk you through some of the stories behind that.

So I'm going to pass you on to Chuck.

So as Rick and Lee have talked about, we have great optimism in our future and our ability to grow and as we look at the U.S. business, we're targeting a strong 3% growth rate, and that's going to put us in a great position to continue to win share in the categories that we compete.

And this growth is going to be driven by our 7 power brands. And the great thing about these power brands is they compete in categories that have been resilient and traditionally deliver growth. And in fact, when we look at 2025, 7 of the 8 that we met in delivered growth, a little bit under 2%. And that's despite a suppressed consumer environment.

And as we take a look at share, we have share in about half of the categories that we compete, so 4 of 8. And the drive going forward, of course, is to accelerate the momentum in categories where we're strong. And in categories where we fell a little bit short, we have powerful plans to return to share growth.

So let's take a look at some of the power categories. First, laundry detergent. We had a great year in laundry detergent, and we outpaced the category by percent growing about 20 bps a share. Now why is that? Well, a big reason is the performance of the value sector. So if we look at the value sector, that's what's winning and that's what's growing share of the category. And importantly, this is where ARM & HAMMER thrives. We delivered that great performance and a great value at accessible price points.

And in fact, when we look at 2025, we won a record share of 14.5%. That is in an environment where competition is increasing and promotional levels are up. And I'm very proud to say that we are now -- that the ARM & HAMMER brand is now #1 in wash loads.

So what are the implications for moving forward? Well, we're going to embrace what's special about ARM & HAMMER. And that really is delivering that great performance at these accessible price points. And the way that we're going to do this is by embracing and driving forward on our Good, Better, Best strategy. So in that good tier offering that good basic ARM & HAMMER clean. And then as we move up price tiers, adding value like things like OxiClean and odor blasters and greater cleaning efficacy with problems with products like Deep Clean in our best tier.

Now moving along to another ARM & HAMMER power brand, cat litter. And we had a strong year in cat litter as well. We grew 20 basis points of share, and we also outpaced the category by about [ 1% ]. And we have room to grow in cat litter, especially in the lightweight segment. So if we look at the light weight segment, we're only at an 8.5% share. But we're a [ 27% ] share in traditional weight. And that's where a product like our hardball SKU comes into play. This is a product that is our best performing. It's in that best tier for us. And it averaged -- and has a 48% repeat rate, which is 14 points higher than the category average. So we have high confidence that this product can drive growth and continue share momentum.

Now as Rick pointed out, we don't just play in laundry detergent and litter. We play across multiple categories that can -- that really cover a number of consumer benefits. And so as we drive forward, we're going to expand on this strength as we move from $2 billion to $3 billion for ARM & HAMMER. And as we do that, what we need to do is we need to evolve the relationship that we have with our consumers, and we're evolving our consumer communication.

So I'm going to share with you guys the update that we're doing to our ARM & HAMMER campaign. And the idea behind this campaign is that we're not just bringing the HAMMER, ARM & HAMMER is bringing the whole darn arm. And what that really means to our consumers is no matter what they're facing during their day, as long as they're with ARM & HAMMER, they've got this. the muscle with the strength of dollars saved and jobs done well. Hemmer, more power to you.

Now a little bit of my background. I came from Hershey. And I can tell you, you can't do all that with the peanut butter cup. It's just this incredible brand, and we have great optimism that we can drive it forward and meet new consumer needs and occasions. And we're very happy with the performance of this campaign. So we saw share gains across the categories that are playing and we saw important movement in consumer metrics. So consideration and purchase interest also went up double digits when we showed this campaign. Now moving on to another brand that has tremendous upside for growth and that's Therabreath.

And Therabreath didn't just outpace the category. It actually drove category growth. And Therabreath is now the #2 mouthwash and we clearly have aspirations to be the #1 mouthwash, and we attained a record share of just a little under 22 %. And there's room to run in our rents business. So as Rick mentioned, we're about 1/5 of what the category penetration is. So there's tremendous headroom there. Additionally, there's upside in building our on-shelf presence. And so if you look at Therabreath's share and then you compare it to what we have on shelf, we want to continue to drive our TDP growth because competitors are having 1.5 to almost 2x what we have on shelf. So a focus on distribution growth is going to be key as we move forward. And then paste. We're very excited about our PACE launch.

Now why is that? Well, it's a $4 billion category, and it's the third largest category in which we play. Additionally, we know that consumers will spend more on premium oral care products even in a suppressed environment. Additionally, we had the great brand momentum that I talked about that double-digit growth. And when we talk to Therabreath consumers, it's pretty amazing, a little under 90% said they're interested in buying this product.

And we have an outstanding proposition. So first, what it really lets us do strategically is expand further into our consumers' oral care routine, which is a big deal. We have 8 clinical studies that confirm the efficacy of this product, and it really delivers on the Therabreath brand. And so what I'm going to do now is I'm going to share a advertising that really captures the essence of their breath, which is great tasting products that deliver epic long-lasting fresh breadth.

[Presentation]

Okay. I think you'd be hard-pressed to find a consumer that's more excited to brush their teeth. Moving on to another brand that really has high growth potential, and that's Hero, our acne brand. In 2025, Therabreath grew at about 3x the rate of the category. Hero is not only the #1 patch brand. It's the #1 acne brand, and we attained a record share in 2025 at 19%.

And much like the Therabreath, Hero has a ton of room to run. So if you look at our penetration, we're about 1/3 of the category. And again, we're the #1 in share. So tremendous headroom. And from a shelf perspective, it's the similar dynamic to Therabreath. When we look at our share in our performance, we see that other competitors have 2x the average weekly TDPs. So we'll continue to focus on realizing that upside for Hero. And what gives us even more confidence in how Hero can grow is we're not just a patch brand, right? What we're going to be about is really owning the acne life cycle, which opens up a tremendous number of occasions.

And so if you take a look at where we play, First, in that pre phase in preventing acne or when it just starts to develop. We've got our cleansers launch, which is going to be a huge launch for us in the back half of this year. Then as we move on, when you start having that first red bump. We have things like our micro point that helps address that phase. When we move on to, as we say, the full on it, we have MyPatch patch original, and that really does a great job in getting it cleared up quick.

And then there's always the aftermath from having the pimple -- and so cleaning up dark spots and things like that. So as you look at it, it really is a tremendous opportunity to meet consumer occasions. Additionally, it open doors for innovation, right? And so there's different ways that we can meet consumer needs across the span and Carlos Linares is going to talk about some of the innovation that we have planned for Hero.

Moving to BATISTE. So BATISTE, to be clear, didn't have the year that we wanted in 2025, declined about 2.5 share points. But what I want to emphasize is it's still a leading brand. It's #1 in category share, and it's #1 in loyalty. And as we added some support to BATISTE in the back half, we did see some results and some return of some momentum. And so dollars flattened out from more steep declines in the front half, and we started to grow share, which is very important. And as we take a look at what we intend to do and to support and accelerate this momentum, there's really 3 areas that we're focused on in 2026. First, stronger, more consumer-relevant innovation. And so products like powders that fulfill a category need for non-aerosol products -- fragrance free, which we know there is a segment that's very interested in these products. a renovation of our colors line for better performance. And then we'll also be delivering custom items that drive interest among our key retailers. Additionally, we're going to be leveraging our price pack architecture to deliver against new occasions, right? And so we have things like our mini travel size, which moves us into a more of an on-the-go occasion.

And then there's also a jumbo SKU that will be coming out meet a more heavy user need. All of this will be encompassed with the brand recharge, right? And so we're going to be looking at really revitalizing the brand. And you'll see this in consumer communications, and you'll see it in store and you'll see it on pack.

Now as Rick has talked about, we really have evolved our portfolio, and we are seeing that we're playing more and more on this intersection of personal care and beauty. And as we evolve our portfolio, we also have to evolve the way we're structured and the way we're working. So I'll share an example of this. And so what we've created to accelerate brands like Hero and BATISTE and Touchland is we've created what we call the specialty hearing skin pod. And what this does is this creates an environment for focus and acceleration.

And so as you think about it, what we do is we've dedicated all of our consumer and customer-facing resources just to these categories, okay? So think marketing, sales, innovation. What that enables us to do is to mine insights faster and to get better insights quicker. That then results in our ability to deliver relevant and on-trend consumer communications with agility. Additionally, we're significantly cutting our innovation time line to develop new products. So we can deliver on emerging trends and be right there where our consumers are at. Additionally, as we've established this pod, it's enabled us to attract talent from the beauty and personal care space who can come in and complement our Church & Dwight talent.

And then finally, I want to just talk a minute about growing share. obviously, that's key, whether you're winning or losing, that's the ball game. And we have seen intense competition. And we have seen the rise of value brands. Something is getting to $1 billion, which is big. So we're maniacally focused on 5 areas that really give us confidence that we can continue to grow share.

The first 2 are about driving consumer equity and differentiation. And so media plans that focus on driving awareness and engagement and penetration. And then equity campaigns that are involved to not just talk about the efficacy of our brands, which is very important, but also build that emotional connection. As we like to think our advertising needs to clarify and it needs to inspire.

And then, of course, insight-driven innovation. That's just such a lifeblood of our company. And so consumer relevant information and always being a step ahead is a critical area of focus. Using price pack architecture, we are committed to delivering the right item at the right price, at the right channel at the right time to the right consumer. And so that will play a big role as we move forward.

And then finally, an omnichannel mindset, omni in everything that we do, and we'll talk a bit more about this later. But we are going to be with our consumer from discovery all the way to purchase. So when you take the focus on these areas and we look at the incredible brands that we have, when we look at the incredible team and heritage that we have in Church & Dwight, we're really confident in our future and very optimistic.

And so with that, I'm going to turn things over to Andrea, who is going to talk about our exciting and newest brand, Touchland.

Good morning, everyone. My name is Andrea Lisbon, and I'm the Founder and CEO of Touchland. I'm here today to talk a little bit more about the brand. I'm sure some of you already have used our products. amazing. Here are some stats about the brand. The brand has been distributing for 5 years in sanitizer and we recently launched our second category, which is the body in hair mist. Last week, it was published that our power mist, which I have here was #2 in sales in Sefo.com. We recently made it to the 2025 Time 100 most influential companies. The brand has a lot of success in social media. So today, we have over 1.2 million followers between TikTok and Instagram.

We have been distributing in the U.S. for most of our life and we've recently launched in Canada and Middle East this past year in 2025. We're being distributed in 4,800 doors. And we currently have a premium distribution outlook with partners like Sephora, Sephora calls and Ulta Beauty. And also, we've received over 15-plus awards in the industry. We have today 5 Alora Best of Beauty, just as a fun fact, Alora didn't have Best of Beauty Award for hands in tier they inaugurated for us because of our approach to being in beauty into personal care.

Our vision for the brand is to lead the future of on-the-go sensorial essentials and really elevate those staples of modern life. We're building the next global lifestyle brand by blending design, fragrance innovation. And our goal is to really deliver this movement of micro rejoice because we are aligned and always living under stress and having the capability to disconnect and find micro joys in the every day is our purpose.

And one of the things that excites us is that it's a company and it's a brand and a movement that is embraced across generations. We intentionally decided to start our journey with hand sanitizer. And you would ask why. And we thought that if we could transform the most commoditized utilitarian category of them all into something that everyone is excited about, we would have the customer permission and the strongest validation to elevate the ordinary into the extraordinary.

And this is, again, how we've been able to get to where we are today, and it's our innovation framework. We've been extremely disciplined when it comes to our 4 core pillars of innovation. And it helps us know where do we innovate and how do we innovate. These principles ensure us that we create best-in-class products every time that bring excitement and the light to be every day.

The first pillar when we think about innovation is it has to be on the go, and it really helps us to define our innovation pipeline. The second element is it's not just about design, it's also about form factor. If you know how the integrity was used before, it used to be a gel that you would have to squeeze. We truly not just transform how it looks. We transformed how it applies. We created this micro spray, micro joint that really deliver a different application.

The third element is that we believe that you can get the best of both worlds, right? We never thought we could get a hand sanitizer actually takes care of your skin. We really believe in blending skin care into everything that we do. Our recent category, we launched a body and hair mist. It's usually a fragrance. We decided to bring skin care into fragrances to bring these 2 in 1 experience.

And the fourth element, which we spend a lot of time on is since to reality at the core of everything that we do. from how it builds in your hand, this down, the smell, the -- how it feels in your skin. We deploy many, many months and years and to make sure that it's a full-on 360 experience when you try our products.

And this is a clear example of how we did it, right? We have been the only brand that has been able to premiumize at a scale hand sanitizer category. As you will see here, these are the 4 pillars how we've transformed them from how it's -- mouse. We don't know how it's male before Touchland to the design and how sleek and modern it is compared to how it was before. the formula, again, being able to create a skin care forward experience that at the same time, it's non-sticky, which was very important at the core of sensorially and then the application, right? This micrometer that you can ensure you can apply the right amount every time.

This slide is really showing our current portfolio and how we've been able not only to innovate the category. But inside the category, how we've been able to expand ourselves we started with the Power Mist, which is the one that I have here. It's our core line, it's a high trading line. And then we decided because we need the customers of Touchland had appetite for premium formulas to launch 2 formulas that are the advanced formulations. We have the Gentle Mist on the Glow Mist. They are revitalizing and Ultrasun formulas.

We then launched 2 years ago, these programs of seasonals. -- they come back every year. they sell out always. They are very successful. This year, we launched this. We had salted caramel, spicy martini and gingerbread -- cinnamon gingerbread, which were really, really talked to by every generation. And then we also brought in something that really enables us to have fine, which is collaboration, and we will talk more in detail later and accessories. In February 2025, we introduced our second category, the body and hair mist. And we really brought the same core pillars of innovation to everything that we do. So we also brought the power essence and the accessories because you may have seen people not only want to have touch line in their packs, they want to outside showing as a term.

So when it comes to collaborations, we really think collaborations, bring a playful to -- into the every day we have been able to partner with legacy brands, best-in-class brands like -- so with Hello Kitty, Disney Mickey, Crocs case, which launched July this year. And you may have tried to get it in stores. It's always sold out. It has been an amazing experience to take the DNA of these brands and joining with Touchland create products that bring the light and joy to our consumers.

And then the last piece is accessories. You may have seen it with the phones. Like people have cases or the funds and so on. We really wanted to create accessories that really enable people a tool of self-expression. You see a lot of trends in TikTok of matching my touch lend to my office, matching my touch land to my makeup, this has become really successful for us, and it has become a way to really enable that self-expression through the brand.

And then, image speaks more than a thousand words. This is a little bit of some of the faces that have organically talk about the brand in their social media platforms, in interviews for what's in my bag in bulk and so on. And it is incredible to see of generations and celebrities and these makers that have supported organically the plan. It always makes me very happy that sometimes it bought randomly, -- the latest one was Celine Dion, which was an incredible surprise.

And these are our current distribution partners. They are brand building partners for us for coal-wise at Travel Retail recently, Amazon and TikTok. And then here are some -- where you can see, for example, here is our beautiful Encavinsephora, it's colorful, clean, and minimalistic, and it really shows all of our products in a credible way. It's across different points in stores, so you cannot miss to get out of the for with a buying Touchland.

This is Crocs, and it is a very exciting partnership because it's not just, again, to create a product together, but you can actually find Touchland in some Crocs stores and Crocs.com, really enables us to really maximize these partnerships. This was in Times Square. This is me very excited because we got the time -- the Time Square, the top part of the store of Sephora to display our products for a month. I think that was one of my most iconic moments in Touchland. I couldn't even speak, but that was an incredible day.

And then the last is this is in Middle East did Sephora truck activation. It was very fun. I was there -- with our customers. And it really shows like the tagline of the brand is move your mood is that capability of a brand of really redriving that segment and moving your mood.

When it comes to growth drivers for us, the first growth driver is invest in marketing to increase the brand awareness and household penetration. -- we all have the feeling that we're just getting started, and there's so much to do still when it comes to brand awareness and household penetration. Second is select distribution opportunities in the U.S. The third is international expansion. We're very happy to be partnering with -- and the team to really bring the brand everywhere. We've received and you will see a lot of letters from all over the world asking us to bring Touchland to their countries. So we're very excited about it.

And then the last piece, innovation and continue to bring unexpected delight every moment of care, like we know that our agreement with our customers to deliver those micro choice and really fuel that innovation. And I'd like to close my slides with my favorite part of my job. Every week would receive dozens of letters from customers from all over the world, from all as sharing their experience with Touchland. In digital area where everyone is texting and using their phones to receive hundred letters is a destine of how much the brand is loved and how much it's changed people's lives. So this is my favorite part of what I do.

And now I'll pass it over to Carlos.

Thank you. Good afternoon. I'm got to be happy back with you guys again. Last year, I presented a little bit of how we innovate and talked about the transformation that we've been going on through today to just recap that a little bit, and then spend most of the time on a very exciting 2026 lineup.

Two takeaways of how we innovate differently I would say it's unique and is sustainable. So those are the 2 takeaways. 2 words to take away from this thing. So this is your need model. It's really our 5, 6 different sources of innovation. But what's unique about it is that they're really interdependent, they're connected the behavior in the company is really about teamwork. They're not competing, which is very different than other places that may have 1 or 2 dominated sorts of innovation.

And as you can see from the bottom, as we transform this, most of our innovation, one of it is coming from some of these new sources that we put in, in the last several years. The sustainable part comes in -- when we put the program together, we were at the 1% to 1.5%. And this again, as Rick mentioned, this incremental net sales. So we had a target of going up to the 1.5% to 2%.

So the good news is over the last 3 years, we've been at this yellow bar very, very consistently. 2026 is no exception. We're at the high end to deliver, again, half of the evergreen model in growth. So I'm going to kind of take you through this. And one of the challenges of doing it within a few minutes is selecting which ones we have, because we have such a pretty strong pipeline for the year. But let me kind of go through that.

The first one will start -- we'll start with the personal care portfolio. You've heard a little bit of little bit maybe a lot of the things launch -- we're very excited about this launch. It's very important to us. It ties to Rick's strategy around Therabreath and oral care and how do you drive that. We had a lot of interest from the customer, from the consumer internally to go do this really, really quickly.

And we actually kind of held back a little bit as now, we want to get this right. We want to do the Church & Dwight from an innovation perspective. And what does that mean? So one was I want to understand what does this Therabreath user really want? Chuck mentioned 89% are interested in buying the toothpaste, but we wanted to define what that is. Reality, they want efficacy, they want a natural taste and they want a great experience.

We also then put all of our science together. Some of the -- we can do toothpaste, we've been doing toothpaste for a while. But we had some upstream future works as we call it, technologies that we wanted to deploy in this particular toothpaste. So we did that clinical studies. We actually have 12 hours of fighting bad breadth, which is, I think, pretty unique in the category, if not seen anybody else make that claim before. So it's really performing.

And then the consumer experience, the taste, the flavor, the texture, and you see that 4.7 agent obviously it's pretty good. You'll see that number again later in the presentation. We're hitting it pretty high marks on some of our consumer experience in our NPD.

Then let's talk about Hero, our other more recent acquisition. We have 2 innovative launches in the year. The first half, we're doing Mighty Shield, who's a liquid patch. Chuck talked about the pimples cycle. We obviously want to -- you want to -- you have people, you want to tap it. But it's also a little bit of protecting the temple, right? So if you think about it in the morning, there's dirt, there's debris. You want to protect that because the perception is that may make it worse. So this is a liquid product that turns into a patch. But in the morning, you're protecting the pimples from debris dirt and even make up. You make up on top, again, the perception is maybe may make the pimple even worse. So you protect it and it goes on top of it. So at the end of the day, it's become a patch. So you applied in the morning, it's a liquid because just a patch. Obviously, the exciting part is it's another occasion in the pimple journey that we are offering a product for.

The second half, introducing the cleanser line that was mentioned previously. It is designed specifically acne-prone skin. So you got the efficacy of OTC formulas, but it's gentle enough for skin that may be irritated. We typically don't present second half products here. We hold them back because of the confidentiality. But we're really excited about this one. As Chuck mentioned, this gets us into another part of the skin care routine. for the ance-prone consumer. So you're adding to the routine and adding to the red, which is incremental growth for us.

And I would not to forget about our other personal care brands that are a little bit older in our portfolio. On Trojan. So Trojan, we've had a long history of innovation in Trojan, but this is actually our best condom ever. We actually -- it's our newer world material. We haven't done this type of innovation in 20 years in Trojan. So very excited about what this is. It is a patented non-latex material Trojan basically -- condoms, they're about protection and brought intimacy. This takes the intimacy to the next level. This is clear odorless, the ratings are incredible of the unique things is even feeling your partner's body heat. So we're feeling really, really good about the innovation. I mentioned the 4.7 stars that you see it again. We're very proud of this one. This is a brand innovation that I think is going to take Trojan to the next level.

So let me kind of jump then to the household part of the portfolio. You've heard a little about ARM & HAMMER, the good, better, best strategy. This is our portfolio. I'm going to kind of take you through a couple of launches in each of these segments here. On the good side, we're introducing a baking soda of fresh detergent, 10x of baking soda we had before, our highest level of vacant to order any of our liquid detergent portfolio.

On the better portfolio or our segment, we're actually having a lot of success in sheets. We're the #1 brand in sheets. We're actually twice as big as the next competitor now in sheets. So we've taken that convenient form and now putting it into the better segment with the ARM & HAMMER plus OxiClean. So you're going to get the same convenient, very consumer desirable form of sheets with premium cleansing premium freshness and a premium design. If you look at that sheet, it looks very different, very unique, and I think it's going to take the -- our sheet business even further than it is today.

And another better innovation that we're introducing, we're expanding this year is the ARM & HAMMER Odor Blasters. You're probably aware, your order is a big unmet need in laundry. And you're also probably very aware that rinses have become a new category in laundry category. So we reduce this last year in select stores in the stores that we're in, we're actually #2 brands. There's 3 others that are competitors, we're actually #2. So we're taking this nationally in 2026.

Our other main laundry brand is OxiClean. And OxiClean has been a leader in additives for a long time. We want to make sure we maintain that leadership and kind of keep our advantage against both competitor entries and private label. So Max Force is our subline within Max, within OxiClean. It is the most powerful, highest-performing line that we have on the brands. So we're actually taking that brand and I would say revamping it. We've got a better powder, more concentrated, more powerful. We've got a new liquid with a new bottle that differentiates it from the rest of the segment. This comes very clear that this is an additive for OxiClean. And as you can see, the product at the Max Force is spread across all of our forms, powder, liquid sprays. So we think both the ARM & HAMMER obviously claim is going to give us some momentum into the laundry category in '26.

And then last but not least is litter. Chuck talked about ARM & HAMMER, the hardball is not here, but we feel really, really good about hardball. We got a lot of momentum, and that's in our best category. But this year, we're also introducing innovation into our better, which is dual defense. So again, there's another one of those categories, it's all about odor control. So this product gives you order control in 2 different ways. One is our ARM & HAMMER odor control technology that kind of clumps and sells in the order, but now introducing band, which is antimicrobial technology that prevents the order of growing bacteria from developing orders over time. So you actually have both a dual short-term and a long-term order control performance.

So before I let me hand it over to Surabhi. I think generally, I've gone maybe 9 innovations in less than 9 minutes here. I've gone very quickly. But I'd say overall, very proud of the team, very proud of the innovation we've got category-leading innovation. We've gone into new segments with this portfolio, and we've upgraded some of the core to give us a competitive advantage.

So with that, I hand it over to Surabhi.

Good afternoon, everyone. Good to see you all again. I'm Surabhi Pokhriyal. I do all things digital, e-commerce, media and a bit of AI. So as you have from -- as Rick any introduced, e-commerce has been a fantastic growth driver for us as a company for several years now. I feel really proud to say that we went from 2% to 24% in under a decade. And for those of you who track a lot of other of our CPG peers, I'm sure that pops out as a head, shoulder, torso, all things e-commerce and digital in the cute sector. I also want to -- that we are not in the business of telling the consumer to buy from, right? Our job is just to make sure, like Chuck was saying, we clarify the intent of our product, and we impress them and inspire them to buy, and that's what we do on the online channel.

Sometimes it can be perceived that e-commerce is just Amazon channels. We have seen it, and I'm sure you see that as you do retailer earnings. There are retailers like Walmart, Target, Kroger, Sam's Club, a retailer, everybody is doubling down on the power of digital, and that's what we call omnichannel. We saw above 14% growth for all of our brands, not just the flagship brand of ARM & HAMMER, but also our newer acquisitions like Hero and Therabreath.

International, as Mike will speak shortly, is a huge growth driver and parity for us as a company, especially as we compare to our peers, that's one area we want to double down super intentionally.

In international, I always say, right, any market that has a cell phone and Internet penetration, that's right for e-commerce. And as you see by the flag on this chart, markets like Canada and China have always done well with respect to digital, but newer markets like Mexico, which traditionally have been nascent in terms of digital have done really, really well for us, and that's speaks our double-digit growth there.

Finally in emerging, right? For those of us who cannot keep our cell phone more than a foot away from our hands, and the next generation also, TikTok Shop is emerging as a major growth driver in terms of impressing the consumers where they spend a lot of their time. You might have heard of the trend TikTok made me buy it a couple of years back where people inspired in their discovery journey on tick top and then go and buy in store.

Now the platform is compressing that journey can see it wanted, click it, have it right on with the platform. And we are leaning into that in a very meaningful way with several of our brands. fun fact for you, TikTok Shop is actually bigger in the U.S. in terms of GMV ahead of a couple of large beauty retailers already. So that just tells you how consumer buying behavior is shifting online.

This is our growth fine set, right? This is what I call as the how of what we do things that Church & Dwight, specifically in terms of digital. They always engage, right? Like I was saying, we want to be there engaging with the consumer at the 0 moment of truth being available, mentally available to the consumer. Then We always optimize in terms of test and learns, right, in the age of AI. We want to dip into how we drive our content and creative and continually -- has to see what works well. And because we are a lean company, we do not have much headcount. We are very intentional about scaling things really fast and scrapping things that do not work.

And finally, that's what I call our secret -- virtuous cycle of innovation and the gift that keeps giving. These are a couple of examples. We are leaning into AI in a meaningful way. The good news is because there's no earth of tools to be used there, be it on retailer platforms or from the large media platforms, you can make all things from cute cat videos, which are really thumb stopping, making sure our product lifestyle shots show up very, very well. I call this the age of disposable content, right? As you know, from your own behavior, you will never have a day where you said, I finished my Instagram today, right? Because the doomscroll just keeps goiing. What that means is we as brands have to make sure there is disposable bite-size snacky content that engages the consumer in a meaningful way and inspires them to us.

And the next leg of that is we want to make sure there is productivity by making sure that content can translate and go across markets, and that's what we are leaning into doing now. built for AI discovery. Some of you who shop on Walmart and Amazon might be familiar with are as the agent or roofers.

All things said, right, that is one area we are leaning into we already do a good job on making sure our product detail pages show well. Our content there shows well. The consumer loves us and we see that in terms of the reviews that Carlos was speaking to.

All of that makes sure that our products pop up on Sparky and Rufus. So technically, we have to do nothing special than what we are doing, just make sure the product content is clean and our reviews are clean and the products show up where they need to show up.

In terms of media buying and AI, we also want to make sure that we are adjusted and speak to our consumers who are our high-value consumers and the technology helps us placing those advertisements to the right consumers at the right day part in the right times of the day.

Finally, I'm sure in the analyst world, you're familiar with the tax of retail media. I'm proud to say that we do not consider that as a tax because we are steadfast in making sure that the retail media we invest in really works, it's worth, and we get great ROIs out of that, much ahead of industry-leading benchmarks.

As Carlos was speaking, we are super intentional about how we do our innovation. Online and digital, in particular, has been a great platform for us to launch products, create category creators/category disruptors. And once we have made it right on online, gathered the feedback from the consumer, tweak the product as needed. That's when we call and we go, make it big.

Based on the products that you see on the screen, we launched laundry sheets online first and gained great momentum in a handful of months. We launched the premium bank soda that became #1 in just 3 months. And very recently, we launched the much loved Therabreath toothpaste that's already topping all our category benchmarks, expected from our an any earlier toothpaste launches.

In terms of capabilities, I already spoke about the social content, and this doesn't have audio, but you'll get at end of -- how the bite-sized snacky content works in the social realm. And you'll notice something at the bottom called the engagement rate, right? Brands typically have a different variety of metrics in the marketing world. everything is measurable these days, which is fantastic. But engagement is what tells you how are the consumers talking back to you. They're not just following you. They're engaging with you, liking you, commenting you resharing your post, and that's the metric we use. And some of our power brands do really, really well. The typical engagement rates are 2%, we do double-digit engagement rates for some of our larger brands.

On the right, you see something interesting. We have a lot of experience making sure we follow consumer search trends. What are they searching on Google and Amazon and other online sites. Recently, we are trying to lean into what is the consumer speaking about us and the category on red which is a great source for following organic charter, which is unpaid. Similarly, because these things give us the leading surfacing of emotions and their intent, and that helps us define not just how to talk to them in a marketing world but also tells us how to innovate and build products that they are searching for.

On the right, you'll notice with the help of AI, we are leaning in to find where are the emerging brands across the world. given in M&A, we are building tools internally to figure out what could be acquisition targets that are ripe for us globally and not just in the U.S. sometimes it may not be an acquisition, it may be a brand doing really well in a category or an adjacent category, and we learn from that to innovate differently.

With that, I feel really proud to say we are at the cusp of saying we are future-proofing our growth. digital or non-digital. I call it the air off. We are just in the business of doing commerce, the E and e-commerce has become silent. And we are super proud to say we are always in the race of going towards where the puck is going to be and where it is not.

On that Canadian reference, I'll pass it on to my international partner, Mike Read.

Good afternoon. I have the privilege of representing our international and specialty products and employees all over the globe. Let me just start with international. So international is about $1 billion in size business. We kind of operate in 2 different ways. 2/3 of our business is through our subsidiary. We have 7 subsidiaries now, Canada, U.K., France, Germany, Mexico and Australia. And middle of the way through 2024, we acquired our long-standing partner graphical in Japan to form our 7 subsidiary.

The other 1/3 of our business is done through value distributor partners all across the globe. We have 5 regional offices to support that Shanghai, Singapore, Panama, London and Mumbai. And we operate through almost 400 distributor partners and have commercial operations in about 100-plus countries.

We've had a long track record of growth in organic. This year, no exception, 5.5% organic growth. If you look over the last 3 years, we're averaging 8% CAGR, which is right on our evergreen model. So really proud of the team's efforts and a long track record of growth with lots of opportunity ahead of us.

We have -- our brands travel extremely well. We support dozens of brands across the globe. But similar to our U.S. domestic business, we're laser focused on a core set of brands. And this is kind of how we think about our business and our core priorities. One is we have kind of U.S. scale brands, ARM & HAMMER, Water Pick, OxiClean where we leverage assets and NPD pipelines to commercialize across the globe. We will modify as it makes sense. But generally, we're boring off scale brands and taking them globally. That's complemented with a fairly internationally based portfolio. There's largely personal care and OTC headlined by BATISTE, Sterimar, Femfresh and others.

And then thirdly and probably most importantly, kind of more in recent times is we've really started to accelerate our acquisitions. So we've had a long history of taking brands internationally. I think Hero, Therabreath and now Touchland give us such a great opportunity to scale and enter markets with real purpose, and I'll give you a couple of headlines on that in a second.

As I say, our brands travel extremely well. I'm proud to say 6 of our 7 track power brands have grown share in 2025. It's a really strong result. We don't track market share across all our brands. So in addition to that, our ARM & HAMMER business has grown almost 6% and Femfresh also grew positively in 2025. So really strong results across the portfolio and market share growth across the board.

Just to double-click on some of our acquisitions. We launched her a couple of years ago. We're now in more than 75 countries we'll be on our way to over 100 by the end of 2026 with the #1 share position in acne patches across all our truck subsidiaries. And very similar to the U.S., we have -- we're #1 in Actian a couple of those were still lots of room to grow.

Similarly, on fair breath, we're now in over 50 countries. It's one of the fastest-growing mouthwash retail in Canada, Mexico, U.K. and Australia. We have a #1 online position in several countries that we launched in. So we're really proud of these 2 acquisitions. And the next in line is Touchland. So you heard from Andrea, really strong results, obviously, in the U.S. We've launched in Canada and the Middle East. There's a ton of pent-up demand for this brand all around the world. So we're really excited about how we take the learnings from here on Therabreath and apply it to the Touch land playbook. So this will be our third big one in a short period of time that we're pretty excited about.

One of the things that we're really focused on as we continue to mature as a global business is just to get much, much deeper into our local consumer insights and regional led innovation where appropriate. We try to borrow assets and leverage them across the world where appropriate, we do make nuances and changes. Here's a couple of examples. Just recently launched a harmonized line of BATISTE into China and Japan. Again, using some of the properties and core equities of BATISTE, but softer fragrances, smaller sizes, less intense spray, less white residue are fit for purpose for the consumer and to compete more effectively in that market.

Another example is we've had a long-standing business of powders and OxiClean. Our Japanese market where we're the #1 position in powders. The largest segment is liquid. So we've done some regional innovation and launched a strong liquid lineup that we launched last year, and it's performing extremely well. So again, where it makes sense, we will kind of make local adaptations and innovation.

Just to keep going on the Japan theme. We bought that business in Q3 of 2024. Talk a little bit about our #1 position in powders and OxiClean and moving it into liquid. That was the primary brand that we had in Japan. I think most notably is now that gives us a platform to introduce the rest of our portfolio. So we've already launched BATISTE and the breath co, Hero is soon to come and others to follow. So we've got a strong team there. We're starting to make more progress on the OxiClean brand and also widen the portfolio.

And as Rick said, just to close on international is while we've had a really strong track record of taking U.S. brands and mobilizing them across the globe. We're also looking at international M&A to add to that. So that's either scaling up in current subs and/or entering into new geographies of interest.

So with that, I'll switch to the Specialty Products. Specialty Products is about a $300 million business. The lion's shares are in our Animal Nutrition, which is a long-standing part of the business, about 1/3 is in our what we call specialty chemicals. The remainder in our commercial and professional products.

From an animal nutrition point of view, we've been traditionally probiotics nutritional supplements for the dairy cow segment. We've expanded into poultry and also into swine. I think when we've talked about the kind of the business growth we focused in a few areas. Number one is taking what has been largely a U.S.-centric proposition growing it globally. We're now at 30% sales internationally. We've built a team and have been really focused on driving innovation in the space. We've had some really strong innovation, particularly in the poultry sector that's now starting to drive some major growth there. And we're investing in tools to make sure that we're interfacing with our customers and just selling better and improving our service. This is one example of the CRM that we've applied here and then also the other parts of the division.

The other 2 sectors is what we call performance products. So we're taking solutions into the bakery, water treatment, kidney dialysis, a whole section of different opportunities there. the loss in the smallest segment is taking our consumer brands into things like hospitality, food service and Jansen. So those 3 segments together make up about $300 million worth of growth.

In 2025, we had another positive year growth, 2.6% organic growth off the back of 7.1%. We've had 8 consecutive quarters of positive growth. But most importantly, I think we're really set up well for growth to the future. We've got a strong team and a really core portfolio that's working well in the marketplace.

And with that, I will pass over to Rick Dierker for closing comments.

Thanks, Mike. All right. So we'll wrap up with how we operate, and then we'll go through Q&A. We have 5 operating principles, leverage brands, front of the environment, leverage people, leverage assets, leverage acquisitions. So leverage brands, you heard Mike just talk about it. You heard Chuck talk about it. You heard Carlos talked about innovation. You heard Surabhi talk about how we do digital. So all those things come together, and we do a great job with their brands.

Front of the environment, we have a long track record of being a friend of the environment, from the 1800s all the way through present day. And it's not just us saying it. It's many other third-party agencies recognizing that effort.

Leveraging people, highest sales per employee in the industry. And I think this has missed so many times by so many people when people evaluate the company. This isn't about the stat. It's not about trying to make that number go up. It's all about having the agility, speed of decision-making being able to be nimble in a complex world. And so because of that, we believe that's one of our competitive advantages versus the industry.

We have a simple compensation structure as well. 5 metrics for 20%. Everybody is tied into that, but gross margin is 20% of everyone's bonus. It's easy to say but hard to do. But we believe it adds growth and margin expansion are 2 very important metrics. They lead to cash flow generation, just like Lee presented, right? That's how you get free cash flow conversion. That's how you get optionality to go buy businesses and do that virtuous cycle in the model again and again and again.

Leverage assets. We're not a capital-intensive company. Again, that ties back to free cash flow conversion. That's due to our footprint, right? We have third-party manufacturing in many ways. We have distributors that are our partners internationally. And then we leverage acquisitions. We made good shareholder returns, great shareholder returns because time after time, we can have a great core business and then add-on acquisitions. So to close, we have confidence in our future. You heard it from the management team. There's a lot of things going right. There are more tailwinds and headwinds even in an environment like we're sitting in today.

We have portfolio changes. We have growth initiatives that support a healthy evergreen model. We expand household penetration, especially for businesses that we've recently bought. We have a great high and sustainable growth rate for international. We have great innovation, consistent and really industry-leading digitally savvy and then we focus on domestic and international M&A. And with that, I'll invite the ELT, our executive leadership team, to come up, and we'll answer a few questions. And Jill has the microphones.

Why don't we go, Nik? Nik Modi.

Great. I really don't this thing. But so just 2 questions, Rick, on the ARM & HAMMER kind of from $2 billion to $3 billion. Low much of that is international, and it's not, why not, given the value positioning and the credibility, the credentials that the brand has? And then just the second question was you had this initiative of smaller teams kind of working on a sub of brands, I think that you were going to focus on. I didn't hear about that today. So I was just curious what's going on with that, if you could just give us an update.

Yes. So 2 questions, and then I'll let Mike kind of add on to the ARM & HAMMER. So the bulk of the ARM & HAMMER growth is domestic. But ARM & HAMMER is a great brand living well globally. I think it's just -- it's a longer curve as you grow a brand globally because you go to Europe and baking soda and ARM & HAMMER's really recognize a much to plant the seed in China to some degree for fruit washing and other clean and cleansing and freshness attributes. But I'd say the bulk of it is in the U.S., although there is a great is a sizable business internationally, and we expect growth there as well. And nothing but the initiatives we do in the U.S. is going to help with international.

Just to add, it's actually a single large brand for international. So it's just broken up into a few different pieces. But we have a strong litter business in as an example, we're making sort of that's growing quite rapidly across the globe. And we do think that while laundry probably doesn't play much of a role globally. Most of the other segments well. So we're pretty excited about ARM & HAMMER can do and it's absolutely part of the growth story.

Yes. Litter in particular, this might surprise you, but the litter business internationally is larger than you would think and definitely in China as well, right? So we're looking at how do we make that business even if it's a growth business.

The second question we had is really a group that we call tag internally. I just -- it's not ready for -- we've created it. It's called the Accelerator group. It reports up through, Surabhi. And there's a couple of brands that we believe have every right and obligation to be hundreds of millions of dollars. And we're going to manage those differently, let it be a little bit of a Encube in itself. And we'll probably report back once we see progress. In my mind, they're going into the incubator. We're going to -- no, some will do better. Some will accelerate, some won't. And then they'll graduate back into the company and be managed more of a traditional brand. But this is our chance to really take a flyer on a few key brands. Surabhi, do you want to add anything to that?

No, I think you got it.

Okay. Javier?

A quick one for me on vitamins.

Javier, here, we sold the vitamins business.

I know.

I'm just kidding. Go ahead.

I know. But a lot of it has been done in terms of what it means to growth. I wanted to see whether you can speak of what it meant for the cost side. It was against Nestle, the drug stores, all the effort that you made to stabilize. So what does it mean to leave that behind and focus those resources against all the innovation that you have?

Yes. I think it's one of the single biggest -- we're going to look back in a few years. And I think one of the biggest strategic pivot points in our company history is when we acknowledged that we couldn't the vitamin business around. And free -- the amount of mind share that management had on vitamins which talk about private label exposure? I mean, think about that. I mean going from 12% to 5%. That is a private label heavy industry.

And brands have a very tough time in that industry. Competitive advantages that we thought were sustainable, we're not -- so there is nothing but a -- win from a growth perspective for the company now, margin -- we were over investing in marketing, but more than anything, it was amount of time, effort and energy that we had to divert to doing all the right things, we were. We did all the right marketing, we do late research, all the innovation. But every minute we spent on vitamins was a minute we weren't spending on ARM & HAMMER, growing from $2 billion to $3 billion and for the rest of our business to grow. So I think that's going to serve us very well you look back.

So 2 questions on Touchland. So first, on the international expansion, so far in Canada and Middle East, how is that going? And then as you could touch on like, how do you think about the phasing of international expansion? And do you think you can get it to 100-plus countries somewhere here over time?

Yes. I'll make a couple of comments and then either Brian or Andrea, and then Mike can make a comment. We're really happy with the Touchland business. We talked about just a double-digit grower. But more than anything, you saw from Andrea today, it's not just a hand sanitizer business. Over the long term, it's a brand and she's built a great brand.

International has done well. I would say it's hitting or beating all of our expectations. We believe there's a path forward. Mike and our regulatory team with Carlos is working hard on, given the 20, 30, 40 countries, just so that we have the optionality to go when it makes sense.

The unique piece with Touchland is we're going to be more picky on what partners we go with, right? We're being very purposeful on what channels we participate in, in the U.S. will be very purposeful outside the U.S. as well. Brian or Andre, anything you want to add?

No, that was pretty good. Yes, we're trying to launch as fast as we can. It's alcohol-based. So there's some regulatory challenges to get it out in some markets in the world. But full steam ahead. We're going to have a handful of markets here this year. We started with Sephora in Canada and in the Middle East. That was part of the reason why we ended up in those 2 markets.

And when you asked the question about being 100 over a longer period of time, potentially -- but like Rick said, we're going to be purposeful which retailers and who we partner with in each of these countries.

Just a couple of questions on the guidance. So maybe first, the 3% to 4% organic sales growth. Can you maybe outline what you're expecting in terms of U.S. international. And then you're in a couple of weeks here, you're going to start -- this inventory destocking component. That was a big drag on sales last year. I think it was 300 basis points in the first quarter. So can you maybe just help us understand what's embedded in the guidance as you lap that this year?

Yes. Surely, you want to take that?

Yes, sure. So just within the outlook, 3% to 4%, you have the U.S. business is 3% growth for the year. International is 8% and then SPD 5%. And as you talked about in the first quarter, we definitely had inventory destocking last year. This year, just simply, we have the OxiClean Costco. That's really a headwind we have in the first quarter.

But as I said a little bit earlier, our outlook for all those businesses are relatively consistent throughout the year for growth. We just got to get through that last piece of that comp.

Thank you. I have a question on promotions. They've really been elevated in a lot of the HPC categories, and we're seeing a fair amount of negativity on price/mix. So love to hear sort of your thoughts on the environment right now. And essentially, what is factored into your guidance? Where do you expect this promotional environment to land this year and if you do expect it to remain elevated. How should we think about that in the context of your price mix?

Yes. No, good question. I think what you're seeing is when consumers are pressed, and categories start to decline on volume than competitors price promote to gain share. But value the value of the brand matters in a big way. Like in Q4, ARM & HAMMER laundry was the only one who grew share. And we're not outspending the category at all. the value segment is the only segment that's gaining share. So the macro is helping the ARM & HAMMER brand more so than most, I would say.

That's true in cat litter, too. Cat litter competition is spending an awful lot on promotion. We're not. We're well below the industry average, and we're gaining share. The brands matter. You just can't promote yourself your way to growth. And so all the advertising that we're doing, the innovation, remember, the combination value that you're giving to consumer. So we've been very, very happy with that. I do think that professional levels will drift back to normality. Like we're probably the categories under long-term historical levels for promotion, but we're well positioned. We're doing well. Mark, any other comments you'd like to make?

Yes. I totally agree. I think one of the things we do is to build a great promotional plan with retailers, but we do watch it every week, right? And we continue to monitor how we're doing to refine in laundry. We feel really good. And we'll continue to do that. And if the category heats up, we'll make the right moves.

Yes. I wanted to ask on your longer-term gross margin potential. You've historically said that your mix of business is around 40% value, 60% premium. And then with the last 2 acquisitions and the growth premium kind of ticking up here, we are seeing value now around [ 36% ]. So I wanted to ask if that's a driver of longer-term gross margin expansion sorry, behind, I guess, the premium side of the business. And if that should up slightly over time or revert back to that 40%, 60% split between value and premium.

Yes. It's a great observation and question. I would say our acquisitions recently have been higher-margin Personal Care businesses, and that bodes well for that. Give us a year or 2 before I think about changing the Evergreen model. We just got out of tariff control and we have another year of 3% inflation.

But I would say the problem with long term growth guidance as the world changes rapidly. But a lot of confidence in our gross margin expansion. I think to put up a 100 basis points in this year amidst everything that we're going through is phenomenal I think having flat gross margins in 2025 when we were faced complete with $190 million of tariffs is dropping. Lee, anything you want to add?

I think Rick's point. it's things evolve, that outlook, obviously contemplates what we know now. We don't know what's going to come this year, just like what happened in '25.

So just on Touchland. One of the things I hear about a lot is the risk of over distributing the brand going to channels like mass, where you lose the cachet of the brand. I think there was some activity at Costco in calendar Q4 where there was a debate of whether you're kind of blowing out distribution and yet I hear there's a ton of growth runway. Can you just talk about maybe I don't know if careful is the right word, but how do you think about keeping that brand exclusivity. But also having the ability to deliver really strong growth rates, if that makes sense, like staying in the channels that you need to be in, but still delivering strong growth. And if I just could, going to the back half of this year, Lee, I think you said the growth rates should be fairly similar through the year, but Touchland is going to enter the base into the back half? And presumably, it's still growing quite quickly, as a phasing thing? Is there some conservatism in that? But any context on maybe how touch land could be entering into the next 12 to 18 months?

Yes. I think we were pretty public a quarter or 2 ago, even when we announced Touchland, we were going to be very careful and select upon what channels we go to because exactly the point you're making. There's a cash into the brand, and we have great partners. So for an Ulta have been great partners, and Andrea has developed and nurtured that relationship. So we've said there is no plan in the near term to go into mass as an example.

Club, we believe, is a different channel. It's a more premium channel. It's too early to tell now what we're going to do. I don't want to front run that. But I would say it's a little bit more than the traditional mass channel. Andrea or Brian, anything you want to add?

Sure. We did do a quick test at holiday test in Costco. It went very well. That was purposeful to do it as a test to see how it did there. And so we're evaluating channels all the time. We're evaluating the existing channels. The important thing here that is a little different is that Touchland was not a Sephora born brand as a lot are. It was born in Ulta and Target and Amazon and Sephora pulled us in, okay? So it's not just we have more degrees of flexibility in terms of some of those channels. But they're a great partner. They're doing everything that we've asked of them, and we monitor it each quarter, 6 months a year and the day the support doesn't meet our expectations, we won't Touchland to be in everyone's hands in the world.

Yes. I think the other nuances when we did that club test, remember at stores they're selling 100-plus units per store per week. It's very, very high-velocity units. We didn't see that drop off at all even when we were doing the club test. So that was encouraging.

There was another question on the back half growth...

Yes. I mean again, the range is 3% to 4%. So there's obviously some redo freedom. You're right, Touchland does turn into a positive organic in the back half offset that you also have the there and the hero is growing. The rates they were growing this year. Obviously, they're going to keep growing, but I just think there's a balance to that outlook right now.

Thanks. Lee, I hate to keep asking about the guidance for organic growth, but did I get it right that the exit rate for the business, excluding vitamins is 1.8. And therefore, does that assume that the business has to get better like right away. Most companies, you take the exit rate and that's the growth for next year, but this is a little bit different.

And then I had a follow-up on ARM & HAMMER. Did the 25-year CAGR math. And I think the math is like 2.8% growth rate for ARM & HAMMER. But you think you can do better than that going forward. Is it going to do better than that this year? Like is this year kind of like a similar pace of growth for ARM & HAMMER?

Yes. So I'll take the second one first. My belief is ARM & HAMMER growth will be accelerating in 2026, '27, '28 and '29. Like I think the plans are being are in place for 2026. Plans are being laid for '27, '28, '29. And so I do think ARM & HAMMER accelerates from where it's at today.

Your other comment on -- your first question was really on growth, right? And I got to be careful taking just Q4 and rolling it forward because you got to remember how high 2024 Q4 growth was. But I think the overarching comment would be we believe categories are going to grow 2%. We believe that ex the portfolio changes, we would have been growing 3.5% in 2025. We tend to take share over time. And so when you kind of add those 2, 3 things together, the absence of the headwinds like not just vitamins, not just flawless as we wound down those businesses. But we did get delisted from Costco last year for OxiClean, that was a big headwind. We didn't make a big stink about it, but we overcame all that. And so when you layer all that in, that's why we have a lot of confidence in 3% to 4% next year. Andrea then Steve.

Andrea Teixeira, JPMorgan. So I wanted to still stay on the touch and the U.K., I was curious, usually brands go and fly to the U.K. because you have parts there, why the U.K. expansion didn't happen yet. I think if I'm not mistaken, Canada and the Middle East is where you already have the brand. And then in terms of line extension, should we see line extensions within Touchland this year? Or this is something more long term?

Yes. We're not going to comment anything on line extensions yet. I would just say that our plans would say that we believe the brand can be bigger than just hand sanitizer. You saw Andreas slide, and it was about convenience. It was about the sensorial experience. It was about convenience. All those things come together, and there are other categories that, that could apply to.

As to the U.K., remember, this is a theme of for a long time of 12 or 13 people, okay, managing a business that now is almost $200 million. So I know for like -- for the company, for our company, we would be like, yes, we're going to go to U.K. on Thursday, and we're going to go to Portugal on Friday.

For them, they were just trying to keep their head above water, and they're doing a great job. And so we're adding a lot of resources on regulatory, right, to lead the groundwork to do the next 20 next 30 countries. Regulatory is usually the answer. -- product on where you can go and how fast you can go.

Okay. Two questions for me. The first one on the ARM & HAMMER aspect $2 billion to $3 billion. Are you just calling that out to kind of quantify it, make it a priority or be more intentional about it? Or I guess to what extent are you doing something different going forward versus how you've been managing that brand, the center of your portfolio for a while.

And then the second question is on just the Therabreath of moving into paste. Maybe size of the prize, as you think about the incremental growth of the overall franchise, how much is oral rents versus how much is paced. And just how you're thinking about bringing that to market? Are those going to be marketed and promoted separately together? Are you going to bundle the products? Is the -- are they individual initiatives? Or are they -- are you marketing pace to the rinse consumer? Or is it independent, I guess, the question?

Yes. So I'm going to -- on your first one, it was really about what are we doing different on ARM & HAMMER. And I would say that slide that had 4 pillars. The first pillar is what we're doing today. And what we're doing today is doing a great job on innovation, on marketing, on promotional, on pricing, on sizing all those things, and that's what's been driving our share on laundry and litter for many, many years. I expect that to continue. That's a core competency of the company.

The good, better, best. We've done that really well in laundry and litter. I'm saying to you today that there's a few subsegments that we haven't been doing that. We haven't had the focus there. We're going to put a little bit more focus there. And so I think that's an incremental opportunity.

The third one was incremental categories. That's incremental. Like where does ARM & HAMMER have the right to play and win. And we want to make sure we're very picky about that, but you're going to start seeing that over the next couple of years. I would say. I don't want to front run any comments on where we would go or what not.

And the fourth one was, again, there are certain brands that we license today. that when they get to critical mass, we should take them back and we can scale a lot faster. So that's really like an incubator, a test ground for us. There's also probably categories that we may want to get into, and that's a great test environment to do so. So those are what's new about it. I would say the numbers, $2 billion to $3 billion, I want to make meaningful progress over the next 4 years is what I would tell you.

Chuck, do you want to take the Therabreath discussion on how we're marketing it together?

Yes. We see tremendous upside. And so it's a balance of there's room to run rents, as I showed before in penetration in pace. So there will be some individual efforts. But as we look at this, what we're really thinking about this is penetration of the consumers oral care regimen. So where we can, certainly between online promotions, those type of things, looking to pull it together. And in our early results, what we are seeing is we are having a high conversion rate of rent users going over to the pace. So it is going across that -- the oral care needs.

So value is obviously still a very big driver. So can you talk about your confidence in ability to capitalize on that value seeking consumer while also thinking about the impact on margins, that's number one. And then your full year organic sales growth targets clearly are ahead of a lot of your peers but you have the highest exposure to the -- right now, the lowest growth market. So as you think about the opportunity in front of you to catalyze in international markets, how can -- what's the pace to be able to do that to kind of offset to capitalize on some of that international opportunity while also being mindful of the fact that the U.S. consumer is pretty challenged?

Yes. I'll take the second one first. So I would just say, you're right. The U.S. market is a slower growing market these days than in many of the international markets. We're doing really well internationally. We're growing. But none of the international markets are fantastic. We're growing above market rates internationally as well. Even though categories for us in grew 1.8% last year, like I said before, ex our portfolio changes our brands consumption was 3.5%. So in a tough environment, our brands and consumers bought those brands, and that's pretty strong growth. So that gives me a lot of confidence.

Your first question was, remind me, Olivia, I lost it margin and value. Well, it's kind of my answer to what I said to Bonnie. Despite the promotional environment, the brand matters, right? And what's unique about ARM & HAMMER. We talked about it a little bit, but we have the halo effect for advertising. So even though we're a value detergent we're advertising everywhere. And most competitors in value and anywhere else can't advertise at the same rate we can that this doesn't work. So that's number one.

Number two, is we kind of gloss over it quickly. But Carlos Ruiz and his supply chain team and Carlos Linares, who supports it with R&D our productivity numbers are just astronomical. And we have a muscle there. Carlos Linares walk you through our innovation muscle on NPD and it had 5 different vectors. And that's why we, over time, can innovate and do 2% of sales or half of our organic growth rate we had that same -- and maybe we should tell that story next year. We have that same story on productivity. To be able to have productivity year after year after year, because where most of that productivity comes from high moving throughput on widgets, which is fabric care and home care. It helps everywhere, but really over indexes on household. So that helps offset any inflation we have or pressure we have on gross margin typically.

Filippo Falorni, Citi. I wanted to ask on the laundry category. Rick, you showed us the chart that shows the value part of laundry outperforming the premium. Like it's been going on for a couple of quarters. What is your expectations heading into 2026. And as you think about innovation, you bet on the laundry sheet an alternative way of laundry. -- one of your competitors coming in with a different format. How are you thinking the competitive dynamic will evolve in '26 on that part of the category.

Yes. So yes, you're right. Procter's coming out with Tide EVO. That does nothing but bring more awareness to a different form in the laundry category, fantastic. We are going to be a value to TiVo in a big way. Our efficacy actually is really good, especially with the better sheet that Carlos just went through. So we're the #1 brand right now in that smaller subsegment, which is probably around $100 million plus if you include kind of off-channel sales. So I feel really good, continued about that. It's still a small part of the category, okay? So just a good perspective out there.

And then what was your first question? How long do we think the value piece. Look, I think there's a -- that's more of a macro. And more than anything, it's more a macro environment question. And I think the consumer continues to get pressed Consumer confidence continues to be shaky. And yes, the club class of trade and the high-end consumers feel good because of the stock market -- but the everyday consumer the share of wallet going to purchases is still high. You might not have the same year-over-year inflation, but that share of wallet is still impactful.

And so I believe that they're going to continue to make choices on value period to end. And so I would expect that to continue is what I would say.

Yes. So gross margins performed quite well in 2025 and in the year stronger than you had anticipated and have a strong guide for 2026. But we didn't get the gross margin bridge like we normally get. So I'm wondering if we can hear what the drivers were of that but also maybe how gross margins are performing when you exclude Touch land kind of in the base business. And then second, I saw quite a few mentions of an ERP transition. I think a lot of people tend to get nervous around ERP transitions. I'm wondering if there's maybe a sell-in that we need to be contemplating as we work through the model.

Yes. So I'll let Lee walk you through the gross margin bridge. We wouldn't go through details on margin, excluding Touchland, but he'll give you some color on that. And then maybe Ray can give you some color on our SAP go lot. I would tell you that we are not -- I know a competitor had a massive sell-in, we are not contemplating something like that.

So for '25, just give you a perspective again margin plan the commodity pressures, things like that, plus the tariffs are actually close to 200 basis points of pressure. The productivity offset a large portion of that. And then you have the benefit of the mix of the acquisitions kind of closing that gap to keeping it flat year-over-year. as you said, for '26 here, we kind of have the normal -- all those elements coming to be in that kind of 25 to 50 basis points. And then it's really the portfolio change that drives the rest up to 100 basis points.

Yes. And then we have gone -- Kevin Gokey is here too, our CIO, and raise our new CTAO. And we've gone through SAP go-live. My first job of the company was the Director of Operations Finance and I was on the project of going live with the SAP reinstalled -- we have a great supply chain and finance team and IT team that are just full-time dedicated to that project. We have a lot of confidence in it. But I'll let Ray talk about his thoughts.

So the larger strategy out here is we are digitizing our core so that we can do faster M&A and we can grow organically. Our S4 transformation is on track, we have a great team and we are getting up for go live in our SAP transformation. And you will see, like our business processes improve as we build this robust platform, and it's going to be the engine of growth in the future.

Yes. The only other comment I would add on that is, a lot of times when you see ERP transitions that really, really struggle is they're going from something -- nothing to something. We are doing our upgrade. We've been an SAP shop for a long, long time, not to say there's not risk, but we have a lot of confidence in it.

Okay. Well, again, I just want to thank everyone for coming out on the cold, blister day in New York City. As you can tell, the management team has a lot of confidence. I have a lot of confidence. The company's portfolio has never been stronger as we look forward, and we're looking forward to executing well in 2026. So thank you.

Good morning, ladies and gentlemen, and welcome to Church & Dwight's Third Quarter 2025 Earnings Conference Call. Before we begin, I have been asked to remind you that on this call, the company's management may make forward-looking statements regarding, among other things, the company's financial objectives and forecasts.

These statements are subject to risks and uncertainties and other factors that are described in detail in the company's SEC filings. I would now like to introduce your host for today's call, Mr. Rick Dierker, President and Chief Executive Officer of Church & Dwight. Please go ahead, sir.

All right. Thank you. Good morning, everyone. Thanks for joining the call. I'll begin with some thoughts on the macro environment and then a review of our great Q3 results. Then I'll turn the call over to Lee McChesney, our CFO. And then when Lee is done, we'll open it up for questions. Starting with the broader environment, conditions remain volatile and the consumer backdrop remains mixed. Commercial -- is elevated in some categories and household finances are stretched as high borrowing cost and delinquencies weigh on discretionary spending, including big-ticket items like cars and housing.

However, there is relatively low unemployment and higher priced personal care categories continue to do well. Against that mixed backdrop, our categories are growing at around 2%, which was pretty consistent with what happened in Q2 as well. We're performing better than that because of our great brands. Our portfolio with its balance of value and premium offerings continue to gain both dollar and volume share. Our innovation is performing well and all in all, our brands are made for environments like this.

On to the Q3 results, we had a fantastic quarter in a tough environment. Organic sales grew 3.4%, exceeding our outlook of 1% to 2%. Adjusted gross margin was up 10 basis points, also exceeding our outlook. Adjusted EPS was $0.01, which was $0.09 higher than our $0.72 outlook. Lee will take you through the rest of the numbers shortly. But first, some highlights about our brands. In July, we closed our recent acquisition, Touchland.

Touchland is the fastest-growing brand in the hand sanitizer category in the U.S. It's the #2 hand sanitizer in the category with household penetration just under 7% and the category at 42%, indicating a lot of runway for growth. Teslin experienced strong growth in Q3, with consumption growing double digits and results exceeded our initial expectations. I'm even more optimistic about Touch land today than even a few months ago, a small but mighty team doing great things. Now I'm going to turn my comments to each of the 3 divisions. First up is the U.S. consumer business.

Organic sales increased 2.3% with volume growth of 3.7% being partially offset by 1.4% of price mix. Growth was led by their breadth mouthwash products, ARM & HAMMER Cat Litter and Trojan condoms, partially offset by declines in the vitamin business and water flossers. We grew share in 4 of our 8 power brands, specifically ARM & HAMMER, Fair breath Hero and Touchland let me provide a bit of color for a few of our important categories. I'd like to start off with the ARM & HAMMER brand in general. Consumers today want stability and brands they can trust. Our new campaign give it the whole darn arm reinforces the brand strength and reliability.

This is driving growth across the portfolio. 5 of the 6 categories we compete in with ARM & HAMMER are growing share on a year-to-date basis. Turning to laundry detergent, ARM & HAMMER liquid laundry detergent consumption grew 1.9% in contrast to a flat category. ARM & HAMMER share in the quarter reached 15%. Beyond share and more importantly, household penetration for the long term continues to matter. And in the quarter, ARM & HAMMER laundry expanded household penetration 0.7 points to an all-time high of 30%.

In fact, the only tier of laundry detergent that was positive consumption in the quarter was the value tier. This is a sign of the times as value was flat to declining in the previous 8 quarters, this is especially impressive as our actual promotional spending for laundry was lower year-over-year. Moving to Litter, ARM & HAMMER litter consumption grew 5.3%, while the category was up 5%. We saw heightened competitive promotions, especially in the lightweight segment by 1 competitor. Over to mouthwash, air breadth continues to perform extremely well, while the mouthwash category was down in Q3, their breath consumption grew 17%, and continues to be the #2 mouthwash with a 21.8% share.

Remember, we believe there's a lot of runway here. Our household penetration for THERABREATH currently sits at 11% versus the category of 65%. I Hero once again outpaced the category with consumption growth of 5.2% compared to a flat acne category and remains the #1 brand in acne care with a 23.6% share. And like the THERABREATH story, we believe household penetration growth is key for this brand. It sits at 9% versus the category of 28%.

Looking ahead, we're excited about our pipeline of new products. We even announced a few today. They're a key driver of our success. Their breadth is introducing a new line of toothpaste. We launched online with 3 variants in August, and they target key consumer needs of healthy gums, deep cleaning and whitening all combined with long-lasting fresh breadth. The brand's loyal users value its effective cleaning is distinctive fresh but not overpowering taste and we have a retail launch set for January 2026. We're very encouraged with the high-quality consumer reviews were seen. Meanwhile, Trojan, the #1 condom brand in the U.S. launched Trojan Goat, greatest of all Trojan, which is a non-latex condom featuring patent-pending Ultra Flex material that's soft, flexible, ores and colorless designed to enhance body heat transfer to deliver next-level intimacy.

Turning to international. Our national business delivered sales growth of 8.4% in the quarter. Organic increased 7.7% due to a combination of higher volume price and mix. Growth was led by the Hero THERABREATH and BATISTE brands and was broad-based across many of our international markets. I was just in Argentina 2 weeks ago with our Global Markets Group and distributor partners, and there is a lot of excitement for the future.

Finally, SBD organic sales increased 4.2% due to a combination of higher price and product mix and volume. We continue to be excited about the growth opportunities in this business. As noted previously, we're undertaking a strategic review of our vitamin business, including streamlining our supply chain to strengthen the core business, new JV partnership opportunities and divestiture options. We're seeing -- we're seeing improved velocities in the core and line reviews are receiving positive retailer feedback on new products and long-term brand strategy. We continue to expect to reach a conclusion from this review by the end of 2025. Looking ahead, our full year organic growth outlook is 1%, the midpoint of our prior range. We expect full year adjusted EPS growth for 2025 to now $3.49 or $0.02 higher than our previous outlook to the higher sales and improved margins, including higher marketing spend.

As in past years, when we have stronger-than-expected business performance, we invest for the future. So we now expect marketing as a percentage of sales to exceed 11%, and these investments will continue our momentum into 2026. I'll close by saying that category consumption remains stable and our brands remain in a position of strength. We're gaining dollar and volume share across key segments of the portfolio, supported by a balanced mix of value and premium offerings. We're well positioned to navigate the current environment. The strategic actions we're executing will set us up for sustained success.

Our go-forward portfolio has never been stronger. At the same time, we remain active in evaluating the right acquisition opportunities to further build our business. I'm excited to speak at Investor Day in January about some of the growth initiatives we have in development. With that, I'd like to close by thanking all of the Church & Dwight employees for executing well in a volatile environment. And now I'll hand the call over to Lee for more detail on the quarter.

Thank you, Rick, and good day to everyone on this Halloween for Friday. Our Church & Dwight team members across the globe delivered a quarter to be proud of that highlights once against the many strengths of our portfolio and our team's capabilities. Let's jump into the third quarter and our outlook. We'll start with EPS. Third quarter adjusted EPS was $0.81, up 2.5% from the prior year. The $0.81 was better than our $0.72 outlook, driven by higher volume and gross margin results favorable to our outlook. Reported revenue was up 5% and organic sales were up 3.4%.

The organic sales was broad-based across the globe with volume growth of 4%, partially offset by negative pricing and mix of 0.6% and beyond organic results, we were delighted with the encouraging start of Touch land as sales exceeded our initial projections. Our third quarter adjusted gross margin was 45.1%, a 10 basis point increase from a year ago and 110 basis points better than our outlook. Our results versus last year were driven by 170 basis points from productivity programs, 20 basis points from higher margin acquisitions 10 basis points from FX and 10 basis points from the combination of volume, price and mix. These factors offset 200 basis points of inflation and tariff costs. Moving to marketing.

Our marketing expense as a percentage of sales was 12.8% in or 50 basis points higher than the third quarter of last year. And for the year, we are now targeting to exceed 11% of net sales as we leverage our improved sales growth to invest for the future. Q3 adjusted SG&A increased 20 basis points year-over-year. Adjusted other expense increased by $3.9 million due to the lower interest income compared to last year. And we continue to expect other expense for the full year to be approximately $65 million on an adjusted basis, reflecting the lower interest income following the Touch land acquisition.

In 3Q, our adjusted tax rate was 21.6% compared to 23.3% in Q3 of '24, a 170 basis point year-over-year decrease. And the expected adjusted effective tax rate for the year is now 22.5%. And now to cash. We delivered strong cash results in the quarter as cash flow from operations increased 19.6% versus last year to $435.5 million. Capital expenditures for the first 9 months were $67.2 million, a $58 million decrease from the prior year due to return to normalized capital spending in 2025.

And finally, in the third quarter, the company repurchased an additional $300 million of shares, which brings our year-to-date share repurchases up to $600 million for our shareholders, certainly a third quarter full of accomplishments.

Let's now turn to our outlook. Broadly, we continue to navigate well in an environment of economic uncertainty and as a result, have improved our outlook in several areas. For the year, we now expect reported sales growth of approximately 1.5% versus a prior year midpoint view of 1.0 as we expect Touchland's momentum to continue in the fourth quarter. We also remain on track to deliver 2025 organic growth of approximately 1%, the midpoint of our previous outlook, and we now expect full year gross mention to contract only 40 basis points versus 2024 based on the progress our teams are delivering from productivity programs to counter inflation and tariff headwinds.

And as I noted earlier, the combination of a stronger sales and gross margin outlook allows us to increase our marketing investments beyond our prior outlook in 2025. For the year, we now expect an adjusted EPS of $3.49, which exceeds the midpoint of our prior outlook. And specifically for 4Q, we now expect reported sales growth of approximately 3.5% and an organic sales growth of approximately 1.5%. In 4Q, I note that our reported sales outlook include larger decline in sales from our discontinued businesses as these product lines run out of inventory.

And for some context, we expect $30 million of lower sales or 200 basis points of drag in the fourth quarter versus last year from these discontinued businesses. And also note that our organic growth for 4Q was impacted by the prior year port strike and the negative consumption trends in our VMS business. In 4Q, our adjusted gross margin will contract approximately 50 basis points primarily from inflation and tariff costs. Marketing will be lower compared to last year. We expect an adjusted EPS of $0.83 per share, which is an increase of 8% versus last year's adjusted EPS.

In my final '25 comment the outlook really covers cash flow from operations. As noted in our press release, we've increased our outlook from $1.1 billion to $1.2 billion in consideration of our progress on several fronts. As our teams look forward, we are optimistic our teams across the globe have delivered significant accomplishments. We continue to fuel share gains. We've made strategic choices to exit brands in our portfolio.

We've acquired Touchland, which is off to a great start, and we've returned $600 million to our shareholders through share repurchases. A big thank you to our employees across the globe for leaning forward and executing through the first 3 quarters of the year. Very well done. Eric, let's move to Q&A.

[Operator Instructions] Your first question comes from the line of Chris Carey with Wells Fargo Securities.

Hi, good morning, everyone. Chris -- so Touchland is coming through better than expected, which is great to see. Can you talk about how you might view the benefits Touchland going into 2026. And specifically, how might the positive contribution from Touchland help offset any of the potential profit outcomes you could envision from actions you may take on the vitamin business? And I have a follow-up.

Yes. I mean we're going to -- I guess the first thing is you're right. Touchland is doing fantastic, even better than we expected, better than our double-digit comment last quarter. Consumption is strong units per store per week, a really strong innovation is strong. Collaborations are strong. I'm not going to really talk too much about 2026 at this point. And I would just say 2025 is doing better than we expected. It means that there's going to be a stronger baseline and as we grow that, of course, will help offset anything from the discontinued businesses or potentially anything with vitamins as well.

And Chris, one thing I would note just do keep in mind, we had a good amount of cash on our books, we are earning interest on. And obviously, that will be a little bit of a headwind versus touch lend next year as well.

Okay. The follow-up is just on the competitive environment picking up a bit. I think you mentioned that your laundry promotional activity was actually down a bit relative to last year, just to confirm that. And in general, how would you view the competitive backdrop right now and your potential need to respond any activity that you're seeing? And maybe just a level of confidence that the really strong volume share performance that you've been delivering is sustainable and what might be needed to sustain that level of execution. Obviously, you have -- you kind of teased innovation plans for next year, but also just the potential level of brand support.

Yes. Thanks, Chris. Yes, for laundry, in my prepared comments, I said it, and I think it's such an impactful statement. For the first time in 8 quarters, the value tier of laundry grew and that was -- if you look year-over-year on amounts sold on deal, which again, remember that's depth and frequency. That is we were down 400 basis points year-over-year. Our competition was up between 300 and 600 basis points depending on what brand. So I believe that is a trend that's starting to happen in the category as consumers are pressed. They're kind of solely moving to value, which is great. That is one piece of it.

Another indication is even the pods category, which is around 23% of the category, it's the most expensive form of water detergent, right, 2x liquid that's been flat the category for the last 6 quarters. So those are just indications that the value matters. And so if promotional intensity does pick up, I think, overall, we're in a great spot. Value is doing well. And even some of our higher-priced competitors, they're twice the cost of our laundry detergent. So they would have to do massive discounts to move any elasticity.

So again, I think we're well positioned. I think this is starting to be a little bit of a trend in the category for consumers seeking value.

Your next question comes from the line of Peter Grom with UBS.

[indiscernible]

You're breaking up a little bit.

You try to reconnect and we make sure you get back in.

Your next question comes from the line of Rupesh Parikh with Oppenheimer.

So I guess just going to international, another strong quarter even on a difficult comparison. So just curious, are you guys seeing any changes there, macro consumer-wise? And how do you feel about sustaining momentum in the International segment for the balance of the year?

Yes. As I said, I was just in Argentina a couple of weeks ago with 300-plus people, and there's a ton of excitement about our brands and the growth profile of some of our -- even our new brands like THERABREATH and Hero and Touch. So even as the macro GDP starts to slow in some of these countries, the tailwind of these brands, which bring problem solution brands, innovation, new categories, lot of excitement to continue to deliver against our really our evergreen model for international. So a lot of momentum in our international business. PAUSE.

Great. And then maybe just 1 quick follow-up. Share buybacks, again, another quarter of significant buybacks. Your stock has obviously pulled back. So does anything change in terms of your priorities share buybacks versus M&A? Or should we just expect you continue to be opportunistic based on what your stock does?

Yes. So good question. So to your point, we definitely took advantage of the value opportunity there. We typically try to just -- you know what our priorities are. We want to focus on M&A. This is our #1 focus of our cash. And we're out in the market accordingly. But if any opportunities come up to maybe accelerate a little bit of our share buybacks, we'll do that. As we sit here today, we've done everything we've done with the $600 million. We bought Touchland. We got great cash flow, balance sheet is in a good place as we look forward. Reese's still focused on M&A.

There's still opportunities out there. And we obviously have an opportunity to do M&A. I mean -- and we've just gone through a review, you just recently saw our shares or treasury -- our balance sheet get upgraded as well. So I mean I just think on many fronts, we got a quality balance sheet, strong cash flow gives us a lot of optionality. So frankly, the potential to do both things.

Your next question comes from the line of Bonnie Herzog with Goldman Sachs. Please go ahead.

All right. I had a question on the promotional environment. hoping just for some more color on that. And then your volume growth was quite strong in the quarter, but price/mix was slightly negative. So I guess just could you kind of drill down on what sort of drove that? Was it the higher promotions and the need for spending behind some of your brands? And if so, should we expect that to continue in Q4 and possibly next year?

Yes. Thanks, Bonnie. I would kind of characterize it as really when we talk about our promotions, we talked about laundry and litter. I already went through the laundry category. Litter. Litter is a little unique right now as well. The category over a long period of time has bumped around between 16%, 18% sold on deal. It hit where we think is almost an all-time high at 24%. One competitor significantly discounted their lightweight litter business, and that's driving a couple of thousand points of promotion. We actually were pretty much consistent year-over-year. We were up slightly 60 basis points and still managed to grow 5%, which was -- which is fantastic. So our brand, our ARM & HAMMER brand, kind of what I said in my comments, we think the advertising and the halo effect, the seeking value is leading to ARM & HAMMER doing incredibly well in this environment and for the future.

Then you look at negative price mix, part of that is some of our other businesses, right? We're doing, whether it's a rollback or price adjustments on BATISTE as we fix value for the consumer, or vitamin business to make sure that we have the right velocities. So not as much in the laundry and litter business.

And if I may, I just wanted to ask a quick follow-up question on Touchland. Could you give us a sense of maybe how the brand has been performing in the different channels, DTC and then certainly at Sephora and then maybe talk a little bit more about your strategy to expand the brand in additional channels, and I don't know, possibly other specialty retail channels. Maybe how has that evolved since the transaction is closed.

Sure thing. Touchland, again, doing fantastically well. That business is really at 3 retailers, right? Sephora, Ultra and Amazon make up about 90% plus of that business. we don't really have much plans in.

The short or medium term to change that strategy. We believe that there's prestige in being in that category. There's examples of brands that have been able to grow by hundreds of millions of dollars in that channel and expand to slightly adjacent categories over time. We think that's a good model. There will be some niche plays at other retailers. We're not ready to go through that yet. Maybe that's a good question for January. Internationally, we're really excited about growth behind Touchland. We believe that it can -- we're already seeing how fast it's growing in Canada as an example of just 1 retailer. So we're going to probably duplicate that approach across many more countries and make sure we hit the right channel, the right partner and to make sure that we keep that kind of cache of the brand.

Your next question comes from the line of Peter Grom with UBS.

Any better now?

Great.

All right. Let's run this back a little bit. So I guess I wanted -- 2 questions for me. So first, just on the implied step down in 4Q, and I appreciate the commentary around the port strikes and weaker VMS. But I would imagine some of that was contemplated as you were thinking about the back half of the year, which you mentioned is unchanged after a strong 2Q. So can you maybe just speak to why it steps down and would come in below the 2% category growth you mentioned?

Yes. I'll give you a couple of comments and then maybe Lee has something to add as well. I think the port strike is a reality, right? There was 1 week that was -- the categories were up 11%. So when you do that math, all of a sudden, October will be negative as an example for categories and for the brand. Vitamins, Q4 is a larger business seasonality for vitamins. So as consumptions going backwards there, even though we have some green shoots.

That's just a little bit more of an impact. And then finally, I think we were probably a little conservative on our Q3 outlook, and we were very confident in the 2.5% for the back. We're very confident that over time, we're going to grow faster than categories. But we feel like Q4 and Q3 and Q4 together is a good number.

Yes. And again, I think just to Rick's point, we go back to what we said on August 1. We comfort the 2.5% organic outlook. That's what we're still seeing today despite the macro doing what it's doing. That speaks to the categories, how we're performing. There's always pluses and minuses, but we're still sitting at that 2.5% organic and if you do think about 3Q to 4Q, just on a total sales perspective, I mentioned in my prepared remarks, we are running out these discontinued businesses, we're getting to the point now where that will be a bigger pressure point in the fourth quarter.

So I noted that, that was kind of the $30 million or 200 basis points of drag. And then I think Rick covered very elegantly the organic piece. You adjust for that, we're right on track and certainly gives us this confidence for the fourth quarter, but certainly, as we look beyond that as well.

Yes. And that is partially the port strength. So we don't feel like that's a kind of roll forward as you look into 2026, well.

Okay. That's super helpful. And then Rick, you've had some good perspectives on category growth for some time here. I wanted to get your views on kind of how you see category growth and your portfolio performing as we look out over the next 12 months or so? And then just maybe specifically on the top line, and I get we'll get official guidance in January. But do you need category growth to accelerate from 2% in order to hit your evergreen target?

Yes. So look, I think for a long time, we've been very clear on how categories are doing and how our brands are doing. And categories we heard some of the competition say 1.5% to 2%. For us, it's around 2%. And that's because, in my mind, we've been very picky about what categories we go into. Our categories are doing a little bit better than most, which is great. And our long-term track record over many, many years is around 3%, and we hope to get back there for categories for sure, at some point in time.

Meanwhile, we're kind of planning that it's going to be around 2%. And so as you saw this quarter, we -- despite 2%, we grew faster than that. And it's because all the great work we're doing on innovation, on marketing, on driving share gains. So I'm not going to talk about 2026, I'll do that in January. But I would just say we've been growing faster than category growth.

Your next question comes from the line of Andrea Teixeira with JPMorgan.

I was just hoping if you can kind of decompose a bit of the price mix. And then you mentioned you have obviously a good position in the value segment. So thinking as the consumer continues to see particularly in laundry, that value segment, how to think about the mix effect?

And then just as a clarification on the FX going forward, I mean, this is something that is benefiting some of the companies like that moving in the other direction how to think about international finally getting those tailwinds as you go into 2026.

Yes, sure. I'll take the price mix and then Lee can take the currency question. So I said, I think it was to bone. We do have a negative drag on price mix from our pricing and promotional actions on vitamins. We have a negative drag as we're fixing some value equations on BATISTE. Our share gaps are closing. We're making improvements, which is great. What is value. It's also innovations the cross-section of innovation and price. And so we're making adjustments as needed for BATISTE.

And then it's also the consumer is value-seeking behavior, and that means larger sizes. And when you have larger sizes, that's also typically a little bit of a drag on price mix, whether that's in laundry or litter. So those kind of 3 things really impact the price/mix line.

And I'll go from there. I mean -- and to Rick's point, also, I mean, it's a pretty nominal amount for us. I mean, I think the big call an organic is also just this continued momentum with volume growth really driving there. On FX, in terms of international, I mean, I'd say this, the international team is doing a really nice job of growing. They're very much focused on margins.

So yes, FX can be a pressure point, tariff inflation fee, and then we combat it. We combat it with productivity, with good -- with RGM practices. So yes, if FX turns out to be a little bit of favorable, that could be helpful. But if you look at that business, they've been growing and they've been doing a good job of also bringing gross margin forward as well. So if that happens, we'll take that as a positive.

And if I can, this is super helpful, if I can just go back to Rick's comment on -- and take on the FX. But Rick's comment on the pricing and promo back when you're saying promo has been technically benign for you and you're gaining share in particular in laundry, continue to gain share and your competitor has been increasing more promo. I understand that they also are kind of going into a more value proposition. Are you seeing any pressure on that most recent launch in liquid as you exit the quarter?

I wouldn't change any of my comments. I'd say in general, the value tier continues to do really well, like that's almost like a macro trend, more so than what any 1 competitor is or could do. And so that's why I believe that despite us going lower on promotions to have the value piece of the category expand is just a really good indication of that. And so that's the trend we're seeing. I expect it to continue.

Your next question comes from the line of Steve Powers with Deutsche Bank.

Great. 2 questions, which, I guess, as I look at my notes, is kind of 3. So there with me. Rick, on the first one, laundry, not to beat a dead horse, but just can you just help us square help me square the circle just a little bit more. There's definitely a narrative about the Church & Dwight has been more promotional through the third quarter. We've certainly seen price/mix dip negative, kind of accelerate negative in the quarter. So is it -- what explains that is the mix within your portfolio where you've been directing the promotion? Just any more color there and how that's likely to trend going forward, number one.

And then on vitamins, you mentioned some green shoots. Could you just elaborate a bit more on what those are? And then just update us if you think you'll have kind of a more comprehensive outlook and business strategy around that segment come January?

Sure. Yes. The first one, price mix negative on laundry, there is no better metric to look at, the amount sold on deal. That's what we've been using for many, many years. And the reason we say that is that is the intersection again on depth and frequency, like it's really shows what's going on in market. So, all I can do is point you to the actual numbers that come out of whether you have Nielsen or [ Scana ] and we are down year-over-year in promotion, our competition is up anywhere between 300 and 600 basis points. When there's negative price mix in laundry, that can be a whole host of things. It could also be, again, as I said before, as consumers trade up to larger sizes, that mix impact can be a negative in that line. So that's kind of what I would -- I would say consistently.

Number two, on vitamins, the green shoots. Two examples, I think one would be, it's kind of hard to say, but sometimes when you have consumption go backwards at a retailer, 20%, 25%, you think the world is ending. But some of that is discontinuations that have happened. So we have to lap some of that. But when you go look at the core SKUs, the ones that are remaining, they're declining at a much lower rate, which is always encouraging.

The second one probably is a couple of food retailers are actually doing really well, and we've heard distribution gains there as well. So those are a couple of great shoots. On the strategy, it was the right thing to do to publicly announce this about a quarter ago. We've had even more interest externally as we look at different options. And then meanwhile, internally, we're focused on how we kind of have a plan B on our cost structure and rightsize that business. So I would say, by the end of the year, consistently, again, that we'll have more to say, and I'm optimistic.

Your next question comes from the line of Anna Lizzul with Bank of America.

Thank you so much for the question. I have 2 parts to a question. First, I wanted to ask on retailer presence and pack size we're continuing to hear from peers in your space about the movement of sales to club and online, which have seen better growth versus food, drug and mass. So I was curious if you could talk about this dynamic within your categories?

And then secondly, on the M&A front, while you're still digesting Touchland, it has performed better than expected. And it's an interesting acquisition, given Touchland is in some of the specialty beauty stores like Sephora. You've done well in acquisitions the last few years in Personal Care. And I'm sure you'd like to get back to your more regular cadence of 1 tuck-in acquisition annually. So I was wondering if we should expect to continue to focus on personal care or maybe if you'd be willing to explore more in the adjacent duty space.

Yes, Anna, good questions. I think actually very similar questions to -- again, when I was in Argentina that our distributors were asking. I would say we're, again, very encouraged with Touchland, and you're right, a little bit more of a niche in terms of distribution and kind of go to market. From an M&A perspective, we're typically agnostic on what categories we go into. It could be household, it could be personal care has to be more like functional beauty, like we are not a beauty company.

We can't perform. We don't have -- there's a lot of dead bodies on the road to trying to be a beauty company. We don't want to do that. We want to be right in the middle where there's a personal care beauty component. We think there's a lot of goodness there. problem solution, yet a mode of advertising and connection. So we're laser-focused on that.

Our new President, Chuck is laser focused on that as well. Retailer pack size, not surprisingly, different channels are performing at different levels, right? The club class of trade is doing extremely well. We continue to have offerings in club. Our strategy internally is how do we make sure that that's always a proactive strategy and not a reactive strategy. They have to be on the forefront of pack sizes and innovation. But you also have to meet the consumer where they're at in different channels, like the drug channel or the dollar channel and have the right pack sizes and right price points.

So it's not either/or, it's both, and we have to be good at both. And we've historically done that really well.

Your next question comes from the line of Filippo Falorni with Citi.

Good morning, everyone. Two questions for me. One on the retailer inventory levels. Obviously, you had some destocking in the first half of the year. Did you see any impact in Q3 and you're assuming no impact in Q4? And then as you think about 26, should we think about the first half of the year having a particularly easy component retailer inventory, so maybe faster growth in the first half? I know you haven't given guidance, but just a high level how to think about it.

And then the second question on the margins. Can you review the drivers of the lower tariff guidance? And maybe if you can give some color also on the broader commodity outlook?

All right. Okay. Let's try a couple of questions in there. So on the retailer inventory side, to your point, beginning of the year, we had some pressure points there about 300 basis points in the first quarter, maybe 100 basis points of pressure in not really seeing that we're seeing kind of stable levels here in the back half. That's what we experienced in the third quarter, and that's what we're kind of expecting as we go forward here.

All I'll say a balanced place. We'll watch it closely. In terms of moving on to tariffs and commodities and things like that, let's go back. We've made a lot of progress on tariffs. So if we go back to April, we're looking at a bill, it could have been as high as $190 million. We quickly rallied the organization around that. We made some tough strategic decisions, but we've also really focused on what can we do about it?

And additional productivity, the targeted pricing actions. We've now moved that down to what essentially is a $25 million 12-month number. And we released back on August 1, that number was about 60 in it's moved really threefold. This move because we've driven more actions around the globe in terms of whether it's negotiations, movements, anything in the supply chain side. There's been -- there has been some targeted pricing and then, frankly, the rates change. But that puts us in a really good place as we noted in the release, as we kind of look forward to 2026, we should be able to just have an environment of, I'll say, normal commodity inflation and tariffs should not be a drag. It could actually turn out to be an opportunity.

Commodities have still been sticky. You would stay here today with what our commodity view was for the year. It's still slightly up from what it was in the beginning of the year. I think as we look forward, we're kind of expecting more of the same, but we'll leave the rest of the 26 commentary until later.

Your next question comes from the line of Olivia Tong with Raymond James.

First, just a clarification. I assume there wasn't any pull forward from Q3 to Q4 or any other change in timing that helped contribute to the top line upside this quarter?

No.

Perfect. Very easy. And then just thinking about it a different way in terms of laundry. Given the strength there and obviously, consumer desire for value, how do you think about the options that are in front of you. Clearly, you've done very well in the category. You've driven greater profitability in the category. Is there -- as you think about the options in front of you, is there a thought around potentially being more aggressive on price or things for those consumers who are struggling potentially looking at it from a share perspective, given the opportunity that you have in front of you and the fact that gross margins have actually shown some pretty nice upside.

Yes. I mean for laundry, I think -- look, the promotional levels, plus or minus, are going to be what they are and will always be competitive. I think overall, the medium to long term, we love where we are in the intersection of value. That's fantastic. Innovation is always the reason why we perform well over a long period of time, right? We're at a 15 or so share these days. We're in 30% of households lead in wash loads.

Look, there's a reason for that. We're right there at value and innovation. So our deep clean innovation, while our most expensive form of ARM & HAMMER is still 70% the price of premium motor detergent. And so innovation matters. We're going to have some more laundry innovation next year. And so that's why, over a long period of time, we've been able to.

Your next question comes from the line of Javier Escalante with Evercore ISI.

High-level question from me. Why do you think that the broader personal care sector is premiumizing in an environment like this? Here continue doing great, compounding. There is no for strike impact for them. Why is that? Is it differences in channel? Are these different consumer sets is because there is legacy brands from which you can gain market share. Anything that you can tell us to explain what's happening and what does it mean for your future growth into 2026..

Yes, it's a good question, Javier. It's never 1 thing, right? It's always -- it's a few different things, in my opinion. I believe it's -- these are great problem solution brands, right? Their breadth really works for bad breath. However, it's also appeals to the young and old consumer, great packaging, great story, great social media presence, hero. It's a problem solution brand. It really works. It's the best performing acne patch out there and Touchland, it really works and premiumizes kind of a tired old category with fragrance and sent on-the-go convenience.

So I would say there's a problem solution aspect to it. There's a great branding aspect to it. There's some of the competition in those categories isn't -- it's been around for a really long time, isn't as new and fresh, I would say. So it's not just one thing. It's multiple things. That's why we believe at the end of the day that there's a lot of opportunity in those 3 businesses, right? And I said in my prepared remarks, household penetration for HERO9 Category 28 for their breath 11 category 65, Teslin 7 category 42, and that's why we keep getting TDP growth as well. So again, it's a mix of all those things.

Your next question comes from the line of Lauren Lieberman with Barclays.

Just 1 thing I want to talk about was couponing and just how much couponing is currently part of your strategy, how much activity there's been? Because this is something that kind of shows up differently, right? It's in market. You can't necessarily see it in the Nielsen data. So I was curious if you could talk about couponing. And then also just looking specifically at laundry in the data, it does show price per is down low single digits. So even though, like you said, the percentage that's on promotion is low, just curious broadly about pricing in the market and if the depth is worth talking about.

Yes. I'll take the second 1 first. When you look at EQ, that really means wash loads and so as you have consumers trade up to larger sizes, as you have channels like club that are growing faster than that means the larger sizes are doing more sales, which then translates into a lower price per EQ, and that's part of it. And then if you go to a few of the different retailers you see, not just us, but also others having some rollbacks at mass. But in general, I think the biggest thing is the trend on larger sizes, which is channel-specific in part, but also pretty broad-based.

The second one on couponing. We've been very consistent on couponing like year-over-year, we're flat on couponing. I think in general, we believe that our competitors link to couponing a heck of a lot more than we do. And you're right, that's not shown in Nielsen, the way you kind of look at that is maybe through numerator or what receipts are actually being scanned really maybe the best way to look at that. But usually, our competitors rely more heavily on couponing than we do.

And that's the case in laundry as well?

Yes.

Okay.

We obviously, a lot of questions here on discounting couponing. We've shared what we're doing here is measures depth, breadth, all of that -- and I guess I'll bring you back to gross margins. Gross margins are doing what they're doing, which speaks to, obviously, all these elements here. So I think there's a good story. We've got -- we're doing things the right way here.

Your next question comes from the line of Robert Moskow with TD Cowen.

Thanks for the question. I think the messaging here is that despite a lot of challenges for the consumer, your categories have been pretty stable in the aggregate, running around 2%. And adjusting for some things, you're gaining share. But when I look at your retail tracking data, at least in my metrics, things do get weaker in October, -- can I assume that, that's a comparison to last year's port strike? And maybe just refresh me on why that influenced consumer spending in your categories rather than just timing of shipments?

Yes, Robert. Yes, in my prepared remarks, I kind of talked a little bit about October. But remember, we looked it up last night. We believe that for the category and for Church & Dwight will be a little bit negative in October. A year ago, the port strike had 11% growth in 1 week for the categories. That meant a month was around 5%. And that wasn't really real. That was pantry loading, probably massive pantry loading that was happening probably more so in other categories as well. So we think that's pretty clear.

Sure. I understand. But by November and December, I would imagine the pantry loading would be kind of over. So I guess I'm just unclear like how that would affect your overall results in a quarter and then when I look at your quarterly results last year, it was very stable. Third quarter, fourth quarter were exactly the same. So it -- is it that much of a tough comparison to a year ago despite that?

Yes. It's -- we can get into a little bit more detail. It's 3 things, okay? So the port strike that happened in October, if you recall, there was a threatened port strike, I believe, in early January that also had an impact. So -- and then you got to go figure out how much -- happened. Was it 1 unit? Was it 2 units? Was it 3 units and then you got to go figure out for the category, how long that normal usage goes through. But I would tell you, October was extremely elevated a year ago. Like when categories are up 5% a year ago. That's not normal. So that's one. The second thing we said in the release was vitamin business for us in Q4 when it's down in consumption in the low 20s. Then Q4 is a seasonal business for vitamins and so it just has a little bit more of an impact. And then the third thing that I think Lee mentioned was just our international business in Q4 a year ago had a bit higher of a comp.

So all those things are true, I guess, but the biggest thing for us and what I said earlier was we think the order of magnitude is really more in the port strike and some of the timing on vitamins and we don't believe there's a roll forward issue into 2026. So that's kind of how we'd button it up.

Your last question comes from the line of Kevin Grundy with BNP Paribas.

Great. Congrats on the good result this quarter. Two for me, if you don't mind. The first one to kind of revisit the portfolio and trade down risk and then the second one is going to be on -- so the first one, Rick, how do you assess the portfolio today relative to, say, like the global financial crisis. And I think the view would be that Church was a big beneficiary. I would agree with that of trade-down risk. ARM & HAMMER did well. value laundry detergent did well. But it is a more premium portfolio today than it was and the brands that you've had success with like BATISTE and THERABREATH and Hero and Touchland are more premium price points.

So how do you assess trade-down risk, particularly in those parts of your portfolio today, how do you sort of square that with some of the trade down that we're seeing and granted it's in household product categories, which you do tend to see a little bit more trade down -- but I'd just be kind of curious to get your thoughts on that, Rick. Granted it skews higher to higher income consumers. It does offer unique benefits can you kind of have it both ways where the consumer is weak, but then the higher end of the portfolio are going to continue to sustain. And then I have a follow-up.

Yes. And it's a good question. Maybe we were 40-60 around the financial crisis. Now we're 60-40 and I do believe that we will do well in most any economic environment, and that's what we've kind of shown over time. Household for sure, as folks trade down. And what's been unique a little bit, Kevin, is like these premium personal care categories I would say, in some cases, are accelerating during this time. And it kind of goes back to what I was thinking about earlier, it's just have air. There's just 2 or 3 or 4 reasons why -- but the problem solution, but even the macro behind that is the high-end consumer is still doing well. And maybe it's a barbell. That's why the club class of trade continues to do well.

That's why if anything, the trade down is happening a little bit in the mass and those trends look pretty good. So I would -- I kind of view it as the company is positioned to do well and good times or bad times. Yes, the portfolio shifted a little bit, but what brands you have matter more than anything. More so than the category itself on mouthwash as an example. So that's kind of my short answer. I think that there's more than 1 reason those brands are doing well, and it's a bigger tailwind than the category headwind potentially.

Got it. Then quick follow-up is just around artificial intelligence. -- and what that evolution is going to mean for the CPG industry. Matt, like to -- to refer to these as the crystal ball kind of questions. But particularly on the heels of the Walmart announcement and its collaboration with OpenAI. I'd be curious to kind of get your thoughts, Rick, in a world where AI is actually going to see much, much greater levels of adoption. Do you see this evolution as a favorable development for big brands in your portfolio specifically? And relatedly, on the heels of this Walmart announcement, how do you assess the risk here that this potentially leads to a balance of power shift to retailers as they exert greater control over the virtual shelf?

Yes. I think my crystal ball would probably say our company is laser-focused on our brands. Like how do we make sure that we have brands that consumers love and through our advertising, through our marketing, through our innovation -- if we do those things well, then that is an enabler for how we show up online. And at the end of the day, recommendations in the future are going to be based on how well we're selling, how well consumers love our products, what the reviews say what new news we have. And same way that advertising has shifted over a long period of time.

We have to make sure we're nimble enough and fast enough to adjust with speed to the new way of playing the game. And we've shown that we can do that. When Matt and I talked back in 2016, we were of sales for e-com, now we're 23%. We have adjusted and changed the way we play the game. And so that is a competitive advantage for us versus our larger peer set, in my opinion. And so we have to make sure that we're on the forefront of that. And I have no doubt that we will.

There are no further questions at this time. I'd now like to turn the call over to Mr. Rick Dierker for closing remarks. Please go ahead.

Okay. Thanks, Eric. Well, thank you for all the questions, and look forward to getting together next year if we talk about our go-forward strategy on Investor Day. And thank you and see you in January.

Ladies and gentlemen, this concludes today's call. Thank you all for joining, and you may now disconnect.