Good morning, everyone. Joining us today is Kimberly's management team, including Chairman and CEO Mike Hsu, who has been with the company since 2012 and as the CEO since 2019. Mike really has been instrumental in navigating the company through a significantly challenging environment, really that the industry has faced since then. We're also joined by CFO Nelson Urdaneta, who joined the firm in 2022 from Mondel ēz and has decades of experience within CPG. Lastly, we also have their Head of IR, Chris Jakubik, who has been with the firm for well over a year now. Yeah. [crosstalk]. The company really has made significant progress in evolving from its perception of a cult proxy to focus on delivering volume mixed-led growth going forward, including a reorganization that they did last year. Consumer backdrop still does remain quite challenging, and there's, I guess, in the context of that, a lot to unpack on how the company is navigating its way from one challenge to another. It's my pleasure to welcome all of you to our conference this year. Thank you. Okay. Great to be here. Thanks for having us, Bonnie. Mike, I wanted to start with you if I could. We've really seen the company for many years and the industry at large going through significant periods of volatility. Could you talk through how you as a company really have evolved in the context of that and how, if I think back to the reorganization that you announced, is really kind of helping you in today's environment, especially? I did want to ask on Russ Torres' recent appointment as COO. If you could update us on what he will be focusing on and maybe how your role evolves in the context of that. I guess I'm kind of thinking about it in the thinking of succession planning kind of way. Yeah. Okay. Great. Yeah. Thanks for the question. Yes, it's been an evolution, and we've been on a journey with the company. I've been with the company now, I think I'm in year 13 or 14. I'm really proud of how the company has really navigated maybe many more externalities over the last 10 years than I think anybody had done in their prior time in consumer goods. I'd say we've been working hard to build a better, more capable company. If you've followed us for a while, I'd say when I got into this role, which is the COO role, as you mentioned, back in 2019, I saw the company as, I would say, a little growth challenged, some of that due to competitive markets and also some of it due to our own maybe getting in our way sometimes a little bit much, right? I think back then our five-year compound annual organic growth was somewhere between 1% and 2% for the prior five years before I came into this role. I think the company at the time was maybe the organization was a little bit more EPS-focused, right? You know kind of what happens when you become that way, right? What we were really trying to do in that first stage was focus on growth and build growth capability. A couple of different elements. One is the company always had a belief that innovation won the day. I think that still remains true, right? I think the opportunity that I saw for us was an opportunity of both, I use the term internally, elevate and expand the categories, right? I felt like with Kimberly-Clark, there was a lot of all the products were kind of compressed around a narrow range of price points. If you thought about a lot of different other categories, and Nelson and I were talking about, we're big toothpaste users. If you think about the expansion of the category in oral care over the last 30 years, that was a pretty good model for us, right? Really we wanted to prove out the thesis that you could premiumize diapers and back tissue and things like that. The other part of that was expand. That is, hey, taking the leadership role to build out the emerging and developing markets. I think by a large part we've done that. I think over the past, in the first five years of that period, I call stay kind of the first stage, our organic growth shifted from 1%-2% to about 4%. So doubled. I think we felt good about that. Phase two, which was powering care, which we announced last March, I think we just want to take that same approach but dial it up further. Maybe early on, we were spending a lot of time focusing on fundamental technologies. The thing about our categories is they're highly engineered and it requires invention. We tend to specialize in inventing materials. We invented tissue. We invented nonwovens. All the things that kind of comprise tissue or diapers, we kind of invent most of those materials, right? Some of the technologies underlying are either how you invent the materials, but also how you assemble them, we had to work on. We spent five years kind of loading up the technology engine, getting it ready. In this stage, what we really talk about, the planks are really around accelerating pioneering innovation, right? We really want an onslaught of innovation. We want to get better at the marketing because I think we tended to rely a lot on the technology or the product speaking for itself, and the consumer will figure it out. We want to be able to be much better storytellers, right, and shout the benefits and dramatize the benefits of our products. The third area under the other area under powering care was, gosh, as we started bringing in more functional expertise at maybe at the global level, I think we realized that there is a lot more opportunity for us in cost, right? We put out this big $3 billion plus big hairy audacious goal, right? It does not seem so big and hairy anymore, but we can talk further about that. Why is that? It is because I think we found that because of our degree of decentralization in the past, different markets, even though we run on the same equipment, do things differently. There was a lot of opportunity for us to standardize and get much more efficient. Those were, I think, the two big kind of operating planks. To pull the powering care together is wiring the organization. I think that was the biggest thing for me was that we had always performed because we were very agile in our local markets. We are very market-centric. The negative on that is we did not scale the things that we did really well enough. Really the focus on wiring the organization for growth was creating the power of a matrix, right? We want global experts on functional things like supply chain that I just talked about, R&D technology versus every country doing their own thing. I think that is really where we have made a lot of progress. Russ's elevation to Chief Operating Officer, I think there are two parts of that. One is, hey, he has all the business segments or reporting segments reporting to him. He has all the what I would call the operating functions. That's the growth organization, the supply chain organization, the R&D organization, the DTS, Digital Technology Services, all reporting in them. There is like one team pulling those issues all together. That is kind of his primary role. Certainly, there is an aspect that you talk about, which is, hey, it is also we are long-range planners on executive leadership development. We see great potential in Russ, and he is a great leader. Okay. That's helpful. Thank you for that. For you, Nelson, I was hoping to get your perspective as well because you joined the company just a few years ago and coming over from Mondelēz I'd love to hear from you. What do you think most impressed you and that you thought was working well, as well as maybe areas you might have identified as opportunities, including, again, maybe love your thoughts on the reorganization and how you operate? Sure, Bonnie. Yeah, I joined back early 2022. In fact, our first conference was Goldman's back in May. Mike and I were here in May three years ago. Some of the things and what we call the fundamental cores of what make Kimberly-Clark what it is. I mean, it's a company that's been around for over 150 years, really making a difference in what I would say is three things. One, it's our pioneering innovation and our ability to have category-bending products that are science-based with proprietary technologies through iconic brands. If we think of Huggies, of Depend, of Kotex, of Kleenex, of Poise, these are brands that are daily use. God, they make a difference in people's lives every day. Secondly, Kimberly-Clark has not only created categories but disrupted categories over time with products that are superior and solve unmet consumer needs. That is absolutely fundamental in the sector that we operate in. Last but not least is the team of people that make Kimberly-Clark, K-Cers, as we call ourselves, who are truly committed to bring the purpose of the company to life day in, day out of better care for a better world. When I joined the company, it was in the midst of the 2021, 2022 super inflationary cycle that for many of us has been the biggest inflation we have ever faced in our careers. To give you a perspective, between 2021 and 2022, pretty much split 50/50, we faced head-on around $3.5 billion-$3.7 billion of cost inflation. More than our operating profit. That is right. That is what we were facing. When I joined, it was right at the end of the first quarter, we hit a gross margin of 29.8%. That was 500 basis points lower than our pre-pandemic levels. We had to, that created a situation of the need to drive change in terms of capabilities and harness capabilities that we were already building up as part of Elevate and Expand, which had been launched in 2019, as Mike explained before. That also led to the development of the new strategy that was rolled out, building on Elevate and Expand last year. If you recall, as Mike said, that was our K-C strategy 2022. We were working on that evolution while building capabilities and changing the organization. I'll hone in on a couple of capabilities that I think were critical for us to rebuild our margins and really get us in a different trajectory of margins, which allowed us to go out with our bold ambition of margin change over time between now and the end of the decade beyond the innovation and our ability to change how we market products, which Mike already referred to. These would be the first one was around our approach to risk management. We started transitioning into a much more proactive approach in how we handle overall risks. We have programmatic hedging that we've been driving very differently over the last three years. That's on anything that we can hedge, not to speculate, but to truly give us time and visibility into costs. That's a little different than how we were operating before. That's on things like resins, energy, currencies. We continue to explore and add elements that were not possible before. The other element is around strategic supplier relationships. We have been continuing to build those in order for us to have much more visibility into costs and allow us to react. The other element is integrated margin management. It is a totally different approach. It is not new to the world, but it is new to K-C. It is really a discipline that is allowing us to change our culture, one that is end-to-end margin management. That in and of itself is allowing us to look at all of the levers at our disposal, from revenue growth management to how we source commodities, to how we look at productivity, to how we look at overheads. That is on those ends and the things on capabilities. From an organizational standpoint, a couple of things. One, we launched in October of last year our new simplified segment organizational structure that is helping accelerate some of the changes along with a matrixed organization. That is really helping us be more efficient and quick in how we act and really bring the global fight and global might to the local fight. The other bit is the supply chain. Mike said we did not have a global supply chain organization. We stood up that on July 1 of last year. I think you had a chance to go to Beech Island and kind of see that at play. That is coming together. Yeah. It was a good experience. [crosstalk] You are lucky you were not there in August, Bonnie. Oh, yeah. Yeah. It was fun to see how things are made, diapers especially. Yes. That's right. What that's doing is really bringing this global supply chain organization team to help our local teams drive three things: lower costs for all of our platforms globally, drive standardization on product platforms and specs, and also support us in how we serve our customers much better through three elements of our supply chain. Ultimately, we're pretty pleased with the results so far. Productivity delivery at the higher end of 6%, pricing that a cost at least neutral achieved last year, changing the culture, and more to come as we progress in powering care. You just announced further investments, just trying to improve the. Absolutely. That is why you're seeing our confidence in announcing further investments on the supply chain and in our capabilities and in our brands, which we have been doubling down over the last two, three years. Okay. This is all good in terms of controlling what you can, doing your best there. Let's shift to some maybe things that you can't always control, which is the category and the slowdown that we're seeing in the market. Thinking about when we headed into this year and you reported Q4 results, you talked about category growth decelerating to about 2%, and that's below the historic range of 2%-3%. Then just with this most recent Q1 call, you talked about a little bit of further slowing to 1.5%-2% range. In the context of that, you did lower your guidance for the full year. I want to make sure I understand your new lowered guidance. Does that consider or the expectation that the category will continue to grow at 1.5%-2%, or would it consider some further deceleration within that guidance? Yeah. I think we're at this point, I think we would say our range is 1.5%-2%. I think the guidance reduction, the outlook reduction was primarily related to the tariff impact, right? I would say it has ticked down a bit from beginning of the year to the end of the first quarter. I would say, though, Bonnie, when we view it this way, which is we work in essential categories, daily essentials. Because of that, demand tends to be very resilient throughout the economic cycle, right? I know internally, and we kind of say our products are tied to bodily functions that do not use more product when things are on sale, and they do not use less when things are not on sale, right? That is kind of the nature of the category. I would say, depending on what market you're in, there are some compensating behaviors when I think the checkbook is tight, right, for consumers. In developing markets, we do tend to see consumers tend to stretch out frequency. If they were using, let's say, four diapers a day, they may go down to three, right? That largely has happened, and that started happening back in COVID. We have kind of been in that environment in Latin America since COVID, parts of Southeast Asia. In developed markets like the U.S., what you may see is a little more value-seeking behavior. A lot of consumers want to stay in their brand, so they'll want a more competitive opening price point. Let's say something at or below $10 is an important price point for consumers. Even consumers with higher incomes will seek lower price per unit, right? Bigger packs at a lower per unit cost. Those are the two behaviors. I think the thing to point out, though, is there's, and I've said it on multiple conferences and calls, which is in big developed markets, there is strong bifurcation that's occurred, right? There is higher income households, the spending continues, the premium end of the business continues to grow. At the other end, people that are a little more budget constrained, yeah, there is some value-seeking behavior. I think we've said on numerous calls, we want to serve effectively every rung of the good, better, best ladder. Yeah. To that point, thinking about how your price pack architecture has evolved, do you feel like it's in a good place right now to maybe prevent potential downtrading and you have those right price points? Yes. This year, we have made some slight adjustments just to make sure that we are competitive. Because we were recognizing what was happening with the economy, we want to make sure that our pricing and our different categories was appropriate. We have made some adjustments. I think you noted in the first quarter, prices come down a little bit, just a touch, just 1.5 points. It's also making sure that we've got the right price points and the right pack sizes across channels and making sure that as consumers migrate to different channels, we've got the right, as Mike said, absolute price points on certain pack sizes and then price per each in certain channels. Investments there won't necessarily tick up through the year. It might depend on the consumer. You feel like you've made the adjustments you need? Yeah. I'll just go back to, again, when I came into this role, we were trying to prove out for the category the Elevate thesis that you could premiumize these categories. I'll just give you an interesting factoid. When I joined the company, our North American diaper business was majority value tier. Just under 60% of our business was in the value tier, right? 60/40 value premium, 55/45 value premium. This year, we're 85% premium, right? It's been a big shift. That's where the growth in the business has come from. However, again, our desire is to serve everyone on the good, better, best continuum. We're going to make sure we're offering a competitive offering at the value tier as well. Okay. That's helpful. Then question for you, Nelson, thinking about guidance. We talked about that the guidance change or revision was primarily a function of increased tariff-related costs, even though you called out the slowing end market growth. If the end market growth does weaken further, does that present further risk to your bottom line, or do you think there's enough flex within your P&L to manage through some further demand pressure? Yeah. I think first, looking at 2024, which I think is a year that would serve as an example of managing through a volatile environment and the abilities that we have, in 2024, we shifted to a volume plus mixed-type growth. Our market shares started to improve sequentially throughout the year. In fact, we gained 10 basis points on weighted average market share globally last year with strong innovation and continued investments behind our platforms. We drove significant margin gains the second year in a row, with our gross margins reaching 36.5% or 200 basis points year on year, again, way ahead now of our pre-pandemic levels. Our operating profit margins gaining 160 basis points on the year, putting us well on our way to our stated ambition of exiting the decade, at least at 40% in gross margin and at least in the 18%-20% operating profit margin. We did face, as I stated, a few discrete one-time items or ongoing items. Despite all of this, we grew ahead of our long-term algorithm, and we did not cut any investments. In fact, we doubled down on investments, both on capital expenses and continuing to support the brands and everything we have. Our outlook and our algorithm is that we will grow ahead of the categories. That is what's for certain. That is what we're going to do. As Mike stated, the categories have slowed down. Our observation is now 1.5%-2%. Could that change? It could change. It is our latest observation or we are seeing that is vis-à-vis the 2% we were seeing before. The one thing I do want to acknowledge is this. One, our categories have continued to grow volume and mix-wise. That has not changed. Secondly, we have important innovation hitting the market as we speak, as well as activations happening. We have made investments behind price value offerings that Mike just alluded to, which should help us continue to be able to address our consumers and meet them where they need us. All right. Definitely want to get into the innovation. Before I pivot to that, can we stick with tariffs? Tariffs. Sorry. Why would you want us to talk about that? The subject is yours. What we're going to talk about next year. I mean, wow. It's just so much going on. Just thinking about in the context of your guidance change, your adjusted EBITDA growth guidance revision from the high single digits to flat to positive. That does assume, I believe, the $300 million gross impact from tariffs for the year. Any update that you want to provide for us today, given what was just announced yesterday? Can I just make a clearing kind of how we think about it, which is, hey, we're impacted by the tariffs. We gave you the number. I'd say we view it as largely a result of production choices we made, right? At the end of last year, we're getting ready to plan this year. We decided to produce some products for the U.S. out of China. That was by choice because it was lowest cost, most efficient path to get to the U.S. for us, right? Similarly, we produced in some other countries to flow to other markets, right? With the tariff environment, all those costs of the nodes changed. Our approach is we can mitigate this by reflowing the network, right? Versus we'll use price. Also, we'll use the full basket of tools to kind of offset tariffs over time. Generally, we think it's solvable through reflowing our network. That's right. Obviously, new news last 24 hours, Bonnie, and we. He had a full head of hair yesterday [crosstalk]. It is all gone, so. Yeah, a lot of news. Obviously, with what has been announced on both China and the U.S., we would expect, as we work through all of the details, that if that stays in place, there would be a lower impact than that $300 million gross. We will have to work through all the impacts of the mitigating actions because our plans might change. We are now arguably working through what that is going to look like. We will be ready to provide a full update when we report our Q2 earnings. The one thing that I do want to highlight, though, is we have been paying for the last six weeks all of those incremental tariffs. Okay. So you have been. Oh, we have been. Yeah, because they've been in place since they were announced. We have been bringing in whatever raw materials or finished goods we were bringing into the U.S. with the new tariffs for six weeks. We have been selling into the marketplace already with higher costs. We have inventory with that. Same goes for other locations. We will see margin detriment, as I stated in the earnings call in the second quarter. We have yet to quantify exactly how much that will be. We will see for the full year an impact because there is no way that we can offset what is going to happen in the second quarter and how that inventory works through. By the way, the tariffs that remain in place are still higher than what we had in January when we did our first outlook. As Mike said, there are a lot of actions that the team is taking to maneuver through it. That is what we are revisiting because, again, this is hot off the press. No, exactly. And then clarifying, so that was the worst-case scenario when you issued or discussed the $300 million gross. Have you stated what% is coming in from China for your business? A few things. What we said is that around two-thirds of the impact was coming out of China, out of that $300 million gross, give or take. All right. So that's already paid some, but then if there's a pause. Right. We've already paid elements, and that's what the teams are looking at. What's our inventory? What's been sold into the marketplace, etc.? Depending on how this evolves, there's, I assume, a consideration as to what you might do with your guidance, whether you update that to reflect if the pause stays, or would you consider reinvesting? How are you thinking about that from a guidance perspective? Yeah. So a few things. I mean, one, we were clear that we were not going to cut investments. That was one of the reasons why we said that we would now be flat to positive and probably more flat than anything else because we have very strong innovation and activation coming into the marketplace, and it would not be the right thing to do. That is going to stay in place. The one thing that, again, we will need to work through are the mitigating actions. We might not take some of the actions that we were going to do based on the new news. Okay. Let's switch gears to something more fun. Innovation, all right? It seems to be much more focused on value-oriented offerings. I'm thinking about the recent launches, whether it's the Huggies Snug & Dry after having launched Huggies Skin Essentials last year at the premium end. Could you maybe talk about the traction you've been seeing with Skin Essentials at the premium end and then what you're seeing at the value end with Snug & Dry? Yeah. How you're balancing those? Yeah, Bonnie, our overall philosophy, and I think I was saying earlier, we've been spending the prior five years loading up our technology on bigger bet innovation, I would say more. In our categories, we really believe all paths of growth lead through great products, right, and differentiating our products. We believe we have the best technology in our categories, and our technologists and scientists have been busy kind of creating new ones, right? Our approach therefore is we want to launch better innovations, but we want to cascade throughout all the value tiers, right? What we've done is, and I think most logically, one of the reasons why we've made such a mixed shift from value to premium over the years is we've launched, we always launch first our best innovations at the top, right? In China, which we have in the room today, our most premium diaper sells at a 350 index to the tier four diaper. It sells quite well, right? Over time, one of the reasons you are seeing the growth in China is this year, it is all coming through tier four, the value tier. Why? We have cascaded that same core technology into the tier four. That is kind of our plan. Why? We have another innovation coming at the premium tier coming out. That five years of development, it took that time to get that stuff ready. That is the overall approach. You asked about Skin Essentials, similar thing. It was kind of a joint effort between the U.S., Brazil, China, applied a lot of our learnings from China on the core technologies and the materials. It is our best product, really protects baby skin, super comfortable to wear, all that. We launched that last year. It is going very well, and we are excited about that, okay? This year on Snug & Dry, we took some of the backbone of that technology, also architected off of the diaper, the tier four diaper in China. The big difference there is the core. I do not know if you recall at the Investor Day last year, there are two or three generations of core. The original diaper was just cellulose fluff, right, to absorb. Then somebody invented something called super absorbent crystals, right, that go into the fluff. It's a fluff super absorbent core, and that absorbs a little bit better. That's what I'd call Gen 2. Companies have been running on Gen 2 for like 40 years, right? We came out in 2018 with a Gen 3, which is what we call internally a multi-layer core. The analogy would be something, it's not laser printing, but if you thought about you're trying to engineer better placement of the absorbent material and control it so you control leakage, that's what that does, right? We launched that in China. It's what's driven us to market leadership. We became the market leaders in China in 2020. We've extended our lead over the last four years. Snug & Dry, we're bringing that technology to the U.S.. That's kind of what's underlying that. It's off to a flying start, mostly five-star reviews. You can go check. Yeah, I think I, yeah. Right after this meeting. It's surprising how much consumers love it. I know. It makes sense when it works and it's effective. If you think about your innovation pipeline, would you characterize it more front half loaded, back half, or pretty even throughout the year to roll out? I'll tell you, there's two things. There's a multi-year big bet pipeline that I will say, Chris, you can control me. I think we'll get better over time. The thing is, it takes a long—we got to invent stuff, and then we got to figure out how to make it, right? It will get better over time. Within this year, I would say the innovation is more back half loaded. For example, we have some challenges and some product challenges in Latin America that we're trying to address. The launching of the improved products is kind of coming out May, June, right? That's why there's a North America, Snug & Dry just started hitting the shelves at the end of April, mid-April last year. That's right. This year. This year. As I think about this and the spend behind it, thinking about ad spend, again, ahead of some of this innovation, it's been picking up over the last few years in terms of what you've spent behind advertising. How do we think about maybe a reprioritization of promos in this environment, given the consumer, what we just discussed, instead of ad spend in the near term to kind of drive growth? How are you balancing those two? Yeah. As Chris pointed out to me, I think our advertising spend has doubled since 2018 on a percent of NSV base or percent of net sales basis. We are delighted with that because I think we have, as I was saying, Bonnie, we have always made great products, but I think we have to do a better job explaining the benefits to the consumer, right, being better storytellers. That advertising investment reflects that. We have a new Chief Growth Officer, Patricia Corsi, who joined us probably about nine months ago. She has brought in some unbelievable creative talent. I think we are very excited about if you have not seen our Huggies spots on our 360 blowout protection or lamb soft. There is a surprising person that is describing the softness that you would never expect. You will see that we are talking about the brand in a different way. That is something that we want to continue to ramp up over time. If you ask about promotions, I'm not a fan of promotion, and especially in our categories. I think promotion is a tool, trade promotion is a tool to drive trial on innovation or brands that are under-penetrated. In and of itself, I'm not a fan of using promotion to drive share. Why? Because it is at best dilutive and at worst unprofitable. I kind of always have viewed it as a lazy way to try to find growth. The reason dollar for dollar, I'd rather invest in advertising is because what we're trying to do is build brand love, right? Promotions do not do that. I think one thing, as you kind of track promotional levels with us, it'll coincide much more with the new product activations that we're doing. You've seen it pick up in Kleenex where we've had activations and product improvements. You start seeing it in diapers behind the products that we're trying to drive trial on. We might be running out of time, but just then to clarify that as I think about top line this year, how do we think about the mix between volume and price? I mean, should we expect to see price growth this year in the context of the consumer and the backdrop and everything we just talked about? I think our plan this year is more volume mix driven, right? Yeah. Our plan is to build on volume mix versus what we saw last year. We expect to see kind of the price dynamic that you saw in the first quarter continue to play out in the next couple of quarters because of the actions that we purposely took to ensure that we have the right price pack architectures across channels. I think absolute levels on year on year, I think globally, it'd probably be relatively flat. Right. All right. I think that's all we have time for. Thank you so much. There's so much more to talk about, but another time. Thank you for having me. Thank you. Thanks, everyone. Thank you. All right. Thanks, Bonnie. Take care. Thank you. Appreciate it.