Good morning, ladies and gentlemen, and welcome to the Church & Dwight second quarter 2021 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. Matt Farrell, Chief Executive Officer of Church & Dwight. Please go ahead, sir. Good morning, everyone. Thanks for joining us today. I'll begin with a review of the Q2 results. Then I'll turn the call over to Rick Dierker, our CFO. When Rick is done, we'll open up the call for questions. Before we begin, I'd like to recognize all Church & Dwight employees around the world for their continued dedication to keeping our company going during the pandemic, especially our supply chain and R&D teams, as during this quarter, the company faced the complexities of raw material shortages and labor shortages at our suppliers and third-party manufacturers. Let's talk about the results. Q2 was another solid quarter for the company. Reported sales growth was 6.4%. Organic sales growth grew 4.5% and exceeded our 4% Q2 outlook. The 4.5% organic growth is impressive, considering Q2 2020 organic sales growth was 8.4%. Adjusted EPS was $0.76. That's $0.07 better than our outlook. The EPS beat is attributed to two things. One, a temporary reduction in marketing, and two, our revenue growth handily exceeded our outlook. Another item that is noteworthy is we overcame a tax rate, which was much, much higher than expected in Q2. We grew consumption in 13 of the 16 categories in which we compete, and in some cases, on top of big consumption gains last year. Another way to look at this is to compare our Q2 consumption on those 16 categories to 2019, a pre-COVID year. We have higher consumption in 14 of those 16 categories compared to Q2 2019. Regarding brand performance, nine of our 13 brands saw a double-digit consumption growth, and I'll name them for you. Gummy vitamins, stain fighters, cat litter, condoms, battery-powered toothbrushes, depilatories, dry shampoo, saline spray, and water flossers. Now, although many of our brands delivered double-digit consumption growth, it is not reflected in our 4.5% organic sales growth, as shipments were constrained by supply issues, which we do expect to lessen by Q4. In Q2, online sales as a percentage of total sales was 14.2%. Our online sales increased by 7% year-over-year. Remember, this is on top of the 75% growth in e-commerce that we experienced in Q2 2020 versus 2019. We continue to expect online sales for the full year to be 15% as a percentage of total sales. With 70% of American adults having at least one vaccine shot so far, the U.S. has been opening up, with consumers becoming more mobile. In recent days, however, it appears that trend could slow down due to the Delta variant, combined with many people still being unvaccinated. Outside the U.S., many countries continue to enforce periodic lockdowns, and we expect that to continue. As described in the release, we face shortages of raw and packaging materials. Labor shortages at suppliers and third-party manufacturers have reduced their ability to provide products. Besides shortages, we are dealing with inflation. Significant inflation of material and component costs is affecting our gross margin expectations, which Rick will cover in his remarks. Due to a lower case fill rate, we pulled back on Q2 marketing, especially for household products. We expect the supply issues to begin to abate in Q4. The higher input costs and transportation costs are expected to continue, though, for the rest of the year. On past earnings call we describe how we expect the categories and brand to perform in 2021. Overall our full year is generally consistent. To name a few categories, demand for vitamins, laundry additives, and cat litter is expected to remain elevated in 2021. Condoms, dry shampoo, and water flossers are recovering and experiencing year-over-year growth as society opens up and consumers have greater mobility. B aking soda and oral analgesics are expected to decline from COVID highs. I'm going to talk about the divisions. Consumer domestic business grew organic sales 2.8%. This is on top of 10.7% organic growth in Q2 2020. Looking at market shares in Q2, five out of our 13 power brands met or gained share. Our share results are clearly impacted by our supply issues. I'll comment on a few of the brands right now. Vitafusion gummy vitamins saw great consumption growth in Q2, up 10%. Consumers have made health and wellness a priority. It appears that new consumers are coming into the category, and they're staying. Here's a supporting statistic. In the last year, Vitafusion household penetration is up 17%. That means the brand is now in one out of every 10 households. Next up is Waterpik. Waterpik grew consumption 72% in Q2 as it continues to recover from COVID lows and benefits from the heightened consumer focus on health and wellness. Waterpik is also benefiting from dental offices returning to pre-COVID patient levels. We expect the frequency of our Lunch and Learn program to return to normal levels in the second half of this year. Batiste Dry Shampoo grew consumption 37%. Dry shampoo is recovering as stores have reopened and consumers are becoming more mobile. Similarly, Trojan delivered 11% consumption growth. Society has been opening up. As restaurants, bars, and clubs have reopened, people are hooking up again. Here's a fun fact that might be a contributing factor. In Q2, Trojan launched on TikTok with explosive uptake from consumers, with over 47 million views. Next, I want to discuss international. Despite intermittent lockdowns in our markets, our international business came through with 10.4% organic growth in the quarter, primarily driven by our strong growth in our Global Markets Group. Asia continues to be a strong growth engine for us. Waterpik, Batiste, and Arm & Hammer led the growth for the international division in the quarter. Our specialty products business delivered a positive quarter with 11.8% organic growth. This was driven by higher pricing and volume. Milk prices remain stable, and demand is high for our nutritional supplements. The prior year quarterly organic growth for specialty products was 3%. 11.8 is an impressive result. Turning to new products. Innovative new products will continue to attract consumers. In 2021, we have launched many new products, which are described in our press release. In the household products portfolio, we introduced OxiClean Laundry & Home Sanitizer. It's the first and only sanitizing laundry additive that boosts stain fighting and eliminates 99.9% of bacteria and viruses. In the personal care portfolio, Vitafusion launched Elderberry Gummies, Triple Immune Gummies, and Vitafusion Power Zinc Gummies to capitalize on increased consumer interest in immunity. Waterpik launched Waterpik ION, a water flosser which is 30% smaller with a long-lasting lithium-ion battery. It is specifically designed for smaller bathroom spaces. To capitalize on its earlier success, Waterpik Sonic-Fusion, the world's first flossing toothbrush, was upgraded to Waterpik Sonic-Fusion 2.0 with two brush head sizes and two brush speeds. That's doing extremely well. Finally, Flawless is taking advantage of the at-home beauty and self-care trends with at-home manicure and pedicure solutions. Now let's turn to the outlook. Since we last spoke to you in April, unplanned cost inflation has grown by another $35 million. In addition to the price increases on 33% of our portfolio that we announced in April, we have just announced price increases on other categories, which means we have now priced up 50% of our portfolio. Of course, there is a lag on the positive impact of these increases, which impacts our earnings outlook. We now expect to be at the lower end of our range of adjusted EPS growth of 6%-8% as a result of heightened input costs. We expect to be at the low end of the range, it's really important to remember that we are comping 15% EPS growth in 2020. We expect full-year reported sales growth of 5% with 4% full-year organic sales growth. It's also important to call out that we are committed to maintaining the long-term health of our brands by ensuring sustained high levels of marketing investment in the second half. July consumption continues to be strong. We are navigating through significant supply challenges and cost inflation. We believe we are well-positioned for 2022 with the pricing actions we have taken. We expect our portfolio of brands to do well, both in good and bad times and in uncertain economic times, such as now. We have a strong balance sheet. We continue to hunt for TSR accretive businesses. Next up is Rick to give us details on Q2. Thank you, Matt, good morning, everybody. We'll start with EPS. Second quarter adjusted EPS, which excludes the positive earn-out adjustment, was $0.76, down 1.3% to prior year. As we discussed in previous calls, the quarterly earn-out adjustment will continue until Q4, which is the conclusion of the earn-out period. $0.76 was better than our $0.69 outlook, primarily due to continued strong consumer demand for many of our products, as well as a temporary reduction in marketing spend as supply chain shortages were impacting customer fill rates, which we expect to recover in Q4. The $0.76 includes a $0.04 drag from a higher tax rate and a $0.04 drag from the VMS recall cost. Reported revenue was up 6.4%. Organic sales were up 4.5%, driven by a volume increase of 4.3%. Matt covered the top line, and I'll jump right into gross margin. Our second quarter gross margin was 43.4%, a 340-basis-point decrease from a year ago. This was right in line with our outlook for down 350 basis points for the quarter. Gross margin was impacted by 480 basis points of higher manufacturing costs, primarily related to commodities, distribution, and labor costs. Tariff costs negatively impacted gross margin by an additional 50 basis points. These costs were partially offset by a positive 40-basis-point impact from price volume mix and a positive 140-basis-point impact from productivity programs, as well as a 10-basis-point positive impact from currency. Moving to marketing. Marketing was down $5.3 million year-over-year as we lowered spend to reduce demand until fill rates could recover. Marketing expense as a percentage of net sales decreased 100 basis points to 9.2%. We continue to expect full-year marketing expense as a percentage of net sales to be approximately 11.5%, in line with historical averages. SG&A, Q2 adjusted SG&A decreased to 140 basis points year-over-year with lower legal costs and lower incentive comp. Other expense all in was $11.4 million, a $3.3 million decline due to lower interest expense from lower interest rates. For income tax, our effective rate for the quarter was 24% compared to 19.6% in 2020, an increase of 440 basis points, primarily driven by lower stock option exercises. You will hear in a minute, this also impacts your full-year tax rate. Now to cash. For the first six months of 2021, cash from operating activity has decreased 42% to $344 million due to higher cash earnings being offset by an increase in working capital. Accounts payable and accrued expenses decreased due to the timing of payments. As a reminder, in the year ago numbers, there was an $80 million benefit in Q2 related to the timing of U.S. federal income tax payments shifting from the second to the third quarter in the prior year. We expect cash from operations to be approximately $950 million for the full year. As of June 30th, cash on hand was $149.8 million. Our full-year CapEx plan is now $140 million as we continue to expand manufacturing and distribution capacity, primarily focused on laundry, litter, and vitamins. The decrease from our previous $180 million is project timing related. For Q3, we expect reported sales growth of approximately 3%, organic sales growth of approximately 1.5%, entirely due to supply chain constraints. We expect gross margin expansion in the quarter led by our price increases. Adjusted EPS is expected to be $0.70 per share, flat from the last year's adjusted EPS, as strong operating performance is offset by a higher tax rate. Now for the full-year outlook. We now expect full-year 2021 reported sales growth to be approximately 5%, organic sales growth to be approximately 4%. Our consumption is strong and outpacing shipments. We expect our customer fill levels to improve by Q4. Turning to gross margin, we now expect full-year gross margin to be down 75 basis points. This represents an incremental impact from our last guidance due to broad-based inflation on raw materials and transportation costs. Our April outlook expected gross margin to be flat for the year and $90 million of inflation from our original guidance. Now we're absorbing $125 million of incremental costs for the full year. This additional $35 million of inflation drives the change in our gross margin outlook. We've taken another round of pricing actions with over 50% of our global brands having announced a price increase. While some of this benefit helps the second half of 2021, most of the benefit is in 2022. As a reminder, we price to protect gross profit dollars, not necessarily margin. The $35 million movement versus our previous outlook is primarily non-commodity related. Transportation, labor, third-party manufacturers, and other raw material price increases make up the majority. Commodities are also up. While we have 80% of our commodities hedged, let me give you a sense of what's going on with major commodities. Over the past few months, second half expectations for resins have moved up considerably. For example, previously in our forecast was based on HDPE being up 30% in the second half of the year. Now it's up 60%. Polypro has moved from being up 40% to now 90%. In addition, transportation costs such as diesel have continued to rise. We previously expected second half diesel to be up 18%, now it's up 27%. Cartons and corrugate previously were single digit, now they're low double digit. That's the latest take on commodities, and now we'll move to tax. Our full-year tax rate expectations are now 23%, higher versus our last expectations due to lower stock option exercises. This is a $0.04 drag versus our previous outlook. We now expect adjusted EPS to be at the lower end of our previous range of 6%-8%. Our brands continue to go from strength to strength as strong consumption and organic sales growth laps almost 10% organic growth a year ago. While inflation is broad-based, we have taken pricing actions to mitigate, which gives us confidence in margin expansion in the back half. With that, Matt and I would be happy to take any questions. Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Kaumil Gajrawala with Credit Suisse. Your line is open. Hi. Thank you. Good afternoon or morning or whatever it is. A couple questions on the supply constraints, which is, are you running into constraints because perhaps demand is better than you thought and you can't keep up? Is it that there are certain pieces within the supply chain that just tightened up, maybe a particular bottleneck that's isolated? Could you maybe just give us a bit of maybe more detail into exactly what's going on there? Yeah. The issue is not that we're capacity constrained. We have capacity. The issue is getting components. That could be raw or packaging materials, chemicals, et cetera. The reason there are shortages is because our suppliers are having trouble getting labor into their plants to actually make the raw packaging materials. That's exacerbated by the fact that sometimes you can't get the product delivered, particularly if you're sourcing components or ingredients from Asia and you're dealing with containers. Not a capacity issue. It's entirely due to the ability to get labor. In some cases, it's because of the freeze. We had force majeure for a half a dozen of our suppliers, chemicals, if you recall earlier in the year, the Texas Freeze. We're not quite out of the woods on that one yet either. Yeah. The only thing I would add to that is the force majeure comment, like we said publicly back in Q1, we had around six of them. We had 10 or 11 this quarter. It's just pure disruptions in the supply chain. Okay. Got it. Maybe just your best guess on, is the labor issue abating at all? Are these comments related to 2Q and maybe you're seeing it abate? Is your view that it's likely to be an ongoing thing? Well, we think it's starting to abate. We're seeing that from some of our suppliers and co-packers. You'd have to say that the weekly unemployment supplement is contributing to the labor shortages, and of course, that's going to roll off in September, so you'd think that things would loosen up a bit come the fourth quarter. We look at demand planning all the way back through the entire supply chain, all of our independent forecasts say that the raw material input costs and whatnot were at recovery late Q3 or early Q4. Okay, great. Thank you. All right. Thank you. Our next question comes from Rupesh Parikh with Oppenheimer. Your line is open. Good morning, and thanks for taking my question. I also have a few questions on the supply chain disruptions. Any more color you can provide in terms of what categories are impacted? As you think about the adjustment to your organic sales growth guidance for the year, is it fair to say that maybe you could have even raised it if you didn't have these supply chain disruptions? Yeah, that's a fair question, Rupesh. I think, coulda, woulda, shoulda, but consumption is really strong. Matt said it in his prepared comments, and I did as well. If you look at consumption, it's really high single digits in the quarter, and we were closer to 2.8% organic. Definitely, we are constrained, and if you roll that forward to the full year, then we likely would've been at the top end of the range on revenue, if not for supply chain disruptions. Yeah, Rupesh, to answer the other half of your question, if you pick up the release and you look at the schedules in the back, and I'm sure you have, you'll see that household products is down year-over-year. That's where it's most acute. Fabric care shipments are constrained by supply shortages. We have plenty of demand out there, but the shortages are affecting the household side of the business, which would include both laundry detergent, stain fighters, and litter. We do expect they'll be out of the woods by the end of the third quarter. Okay, great. I guess just from a retail perspective, I know you look at your leading retailers, Walmart, and some of the other players, are they starting to be out of stocks out there, or do you expect to see out of stocks, I guess, sometime this quarter within some of those categories? No, I think we kind of live in hand-to-mouth right now. If it were to get worse than what we have today, I think we would have out of stocks. I think our most acute area for out of stocks would be on OxiClean sprays right now, the triggers. Okay. That's really helpful. Thank you very much. Okay. Thank you. Our next question comes from Kevin Grundy with Jefferies. Your line is open. Hey, good morning, guys. Hey, Kevin. A question for both of you on pricing. Matt, I think the comment was that you now will price over 50% of the portfolio. A couple questions related to that, because it would certainly seem like there's a cost justification across the board. Have you led where you can lead at this point? Is there an expectation then that the competition will ultimately move, and that's not in the guidance? Maybe just some parameters a little bit around what has not been priced and why not at this point. Then Rick, maybe just layer on there, what portion of the commodity cost exposure over the next 12 months do you think you have captured here with current pricing? Yeah. Well, you hit the nail on the head, Kevin. Price increases do need cost justification. They're greater in some categories than others, but you also have to keep an eye on the competitive set. We are looking at the rest of the portfolio now to see whether it makes sense to have a 2022 price increase. The other thing we're going to do is we're going to review the price increases that we've already taken on the first 50% and ask ourselves if those need to be revisited. As far as the price increases go, we announced in April for laundry. Those are taking effect now in July. We know at least one other competitor has said publicly that their prices are going up in Q4. We may have some temporary price gaps in Q3. On the litter side, we raised price there. That pricing hits shelf mid-October, and we know that one major competitor has already raised price as well, so we've seen that. I think Rick mentioned on the earlier call in April that when we were planning this, we were not assuming that competitors would follow. The fact that since then, in the laundry and litter, we've heard and seen that from a couple of competitors, that's a good indication for us. Rick, anything to add? The only thing I'd add is on your first question, Kevin, you just asked for kind of a roll forward for 2022. The simple way to think about it is, when we gave our April outlook, inflation was a -300 basis points, and that was what was included in our flat guidance. Now our inflation number is closer to -375. That's kind of the entire change from going flat to -75. That -375 for the full year is kind of an indication of the inflation that we've seen for the whole year, inclusive of the first 90, inclusive of the new $35 million that we're talking about. As we exit the year, we think price volume mix will be a tailwind of 285 basis points. That's probably a good way to gauge it is, we're not quite recovering all of our inflation yet, but we've only priced half the portfolio. Got it. Thanks. If I could just squeeze in one more, guys. Maybe just on M&A, the pipeline. If any of the volatility, which certainly, I think we would say would be transitory over the next, call it, two - four quarters here, supply chain, working through some of the COVID volatility, et cetera. At least certainly that would be the hope. Does any of that give you pause with transacting, from an M&A perspective, until things kind of settle a bit? Then I'll pass it on. Thank you. Yeah. Is your question, Kevin, would we be reluctant to buy a business that had a COVID bump? Just in general, Matt, just in terms of even buying or putting multiples on NTM sort of earnings, and just getting some of the volatility around supply chain. This COVID flare up here a little bit. You guys have done a fantastic job over the years from an M&A perspective, but even that being said, does any of that give you some pause here, given some volatility over the next 12 months? Yeah. Well, look, we are wary of businesses that had a big COVID bump. Remember, we bought one in December. Remember, we bought Zicam. Sure. They were number one in cold shortening, 73% market share. We bought that for the future because we know that's going to be a strong contributor to sales and profits, not only in 2022, but years ahead. Yeah, we will have a degree of skepticism, but I can tell you, there are things for sale right now that we are looking at. It's a question of whether they're going to meet our criteria. Got it. Good luck, guys. Thank you. Okay. Thanks, Kevin. Thank you. Our next question comes from Olivia Tong with Raymond James. Your line is open. Great. Thanks. Good morning. I wanted to ask you a little bit about your view on trade promotion and the levels of trade promotion right now, particularly as you put in the pricing. If you could just talk to the first few weeks of impact of that. I know it's very early days with respect to laundry, but any retail response, consumer response so far that you can see. For the second tranche of pricing, if you could just talk to the magnitude of change that you're looking for there? That would be great. Thank you. Yeah. Thanks, Olivia. Your second question first is, we won't really get into the magnitude of change, right? We'll be very clear next quarter after it's in market, and we'll disclose some of what we did for laundry. Laundry was high single digits. We'll do the same thing for litter and some of the other items in three months. We'll go through that detail. On your first question. Yeah. With respect to what sold on deal, it's a little early to draw any conclusions about what's going on at shelf. I think it's important to just have the backdrop of Q2 for both laundry and litter. Take litter, for example. Year-over-year, sold on deal for litter was actually down 80 basis points. The category's, right now, promotion in the second quarter around 13% sold on deal. Historically, it's around 19%-20%. It's pretty off its normal sold on deal percentages. We do know that one major competitor besides Arm & Hammer has had supply issues as well in the second quarter, which I'm not going to name. That may have contributed to the fact that litter sold on deal was down in Q2 for just about all competitors. For laundry, Q2 was up almost 1,200 basis points to about 32% sold on deal for liquid laundry detergent. Remember, last year, promotions were pulled, so, it's not surprising that there would be a rebound this year. We actually had the lowest increase in sold on deal, up 700 basis points in Q2. Our lower promotions made sense in the context of supply shortages. Obviously going forward, we want the price to stick. The promotions would also be limited as well. As to the price increase, again, it was early July, so it's only been a few weeks, so we're reluctant to comment. I would just tell you that it's as we expected to date. Got it. Thanks. If I could just ask two more questions. First, in terms of your sales guide, the change to the sales guide, obviously, some supply chain and disruptions, but Specialty was actually quite a bit better. I know it's a lot smaller, but just thinking about your view in terms of the mix of contribution to the top line for the full year. A follow-up on the margins, just kind of curious how you're thinking about operating margin expansion long term and the leverage you can pull in order to get back on track with respect to margin expansion. Because obviously pricing is a piece of that, but mix is not as big of a factor for you guys relative to some of your peers. You're already so good at overhead control, so just wondering how much you can push on the G&A or the S&A, as an offset? Thanks so much. Appreciate it. Yeah. Olivia, you squeezed in a multi-part half a dozen questions there as you're walking off the stage. I'll start with the SPD. As far as the SPD business goes, yeah, it had a really good quarter. Last year, the quarter was up 3%, this year up 10%. If you look in the release, you'll see that price was half of that growth. We have been raising prices in SPD. We probably were the earliest of all three divisions of raising price in Specialty Products. That's both on the animal side and also on the bulk sodium bicarbonate side. Bulk sodium bicarbonate is oftentimes a contracted business, but the non-contracted volume, we've been raising price. That's a steady business, a good quarter. It'll have a good 3rd quarter as well. Yeah. The only thing I'd add to that, Olivia, is our outlook for the divisions, we told you last quarter was domestic was 4%, international was 6%, and SPD was 6%. I think if we had to rejigger that today, it would be more like three, six, nine. Domestic at 3%, largely because of the supply constraints. International consistently at 6%. SPD now is at 9%. As far as your gross margin question, look, I think you're right. Pricing, over the long term, recovers the inflation. That is a good guy and a bad guy, and they kind of wash over time. Look, we have a lot of confidence in our Evergreen Model. It's only 25 basis points of expansion. We're going to get that over the long term through productivity, through innovation, and through mix. We're doing a lot of work internally on mix, actually, and using technology to trade optimize and product optimize across retailers. That work is ongoing. Those are three levers that we have. Thank you. Thank you. Our next question comes from Steve Powers with Deutsche Bank. Your line is open. Hey, guys. Thanks. You gave good comments on the supply constraints and the fill rate issues, two questions to follow up. First, you talked about this a bit on litter, is there a way you can frame or clarify the issues relative to competition and are you saying you're disadvantaged in this front? If so, if that's a concern or not really? Number One. Then number two, if these constraints endure longer than you expect, is the playbook to pull back on marketing for longer? At what point would that become a concern? I'm not saying that it is now, just at what point do you get concerned on that front? Thanks. What was the first one? Competition. Yeah, you have a question about litter. No. No, Sorry, Matt, it wasn't really about litter. I think you mentioned that you share the same issues on litter as your competition. Yeah. Just generally, is it you, or is it everybody? I think we have different issues. We don't have the same issues as our competitor. We just happen to know that there are some supply constraints that they're dealing with that are affecting their ability to ship. That's all. I think everybody's got their own set of issues. Yeah, in other categories, again, is it everybody, or is it you, even if the issues differ? Well, the Texas freeze isn't just us. Those chemicals affect lots and lots of companies and lots of competitors. I would say on the chemical side and transportation side, it's very similar between us and competitors. Labor shortages as well. If you have suppliers or co-packers, that's universal. I don't know that there's anything that's unique to Church & Dwight. Okay, great. Maybe Rick, on marketing? On marketing, I think we've been very clear. When we look at all of our forecasts and all of our internal information, we think we're going to be recovered by late Q3 or early Q4. We think the marketing is good, demand-driving activity, and kind of healthy. We have put price increases out there for the back half, so we want to make sure we're supporting our brands in a healthy way. Five of 13 brands gained share, and part of that is lower than normal, and part of that's because there's supply constraints. We want to make sure that once that's not a factor, that we're supporting the brands like we should, and that's the plan. If for some reason supply constraints last longer, then of course, we would adjust as necessary. Okay. Just real quick on the tax rate. Is the expectation that we revert back lower beyond 2021, or is the higher tax rate to be extrapolated? Yeah. The core issue with the tax rate is really it all comes down to stock options exercised. Typically, we've had around two million stock options exercised every year, if you go back and look for many years. In 2020, it was three million, and our forecast this year is a little less than a million now. We think, perhaps due to the run-up in the share price last year, that was really maybe a pull forward of a year worth of stock options, potentially. We think that it'll normalize back to 2019 levels is the quick answer. Okay, great. Thank you. Thank you. Our next question comes from Bill Chappell with Truist Securities. Your line is open. Thanks. Good morning. Hey, Bill. To maybe oversimplify, but I need that because I'm a fairly simple person. Is it safe to say just commodities and input costs were kind of moving higher when you last reported in late April? You were kind of taking a best guess of where they would play out for this year. They kept moving throughout the quarter but did peak at some point in the quarter. Now you have a lot more confidence, kind of where pricing and costs are for the remainder of the year. Is that the right way to look at it? I think that's one aspect of it, Bill. I think that's a good way to say it. Also, we've had more broad-based inflation beyond commodities than we expected. Right? I used the example at our board meeting how we've never talked about pallets in the history of me being here for cost impacts, and our pallets went up by $2 million in the back half. It's just really broad based. All the third-party manufacturers are passing on the 2%-3%-4% issues that we've been talking about. I think we have a great handle on it now. Meanwhile, what are we doing about it? We're qualifying a lot more suppliers just to have backup redundancies and flexibility. On the cost side, do you feel like there's any disadvantage, in terms of your scale? I say that you're a $5 billion business, but really you're 15, $3 million- $500 million businesses. I just didn't know if the suppliers are treating you differently versus maybe a billion-dollar competitor or if it's kind of across the board, fairly similar? Yeah, I think this is across the board. It's pretty broad-based. I think if you look at other peers in the industry right now, even some of our European partners, peers, it's really broad-based and it's across the spectrum. It doesn't really matter if you're a $2 billion, a $5 billion, or a $50 billion company. Got it. Then one last one to kind of follow up. I don't typically ask about the M&A pipeline, but with the sheer number of SPACs and consumer-focused SPACs, with the IPO market being fairly prolific, is it kind of safe to say that some of the traditional $200 million-$500 million revenue businesses that you would target are less likely over the foreseeable future just because they have other options? I imagine most of these companies are getting an offer a day to go public one way or the other. Just, any thoughts there? Yeah, there's a lot of logic in that, Bill. There's no question that there are other destinations like SPACs that companies looking to monetize their investment can take. Based on what we're looking at right now about what's coming to market and what will be at auction, we think we'll have plenty to look at least in the next six months. Keep in mind, similar to private equity, Bill, SPACs are the same. We have an ability to pay more typically because of the synergies that we can generate. That's always, when it's a dilutive acquisition, that's always a great benefit. Got it. Thanks so much for the color. Okay. Thank you. Our next question comes from Andrea Teixeira with JPMorgan. Your line is open. Thanks, guys. First on international, and then a clarification on the cost outlook. On the international side, I know it's a smaller portion, but we dedicated most of the time for U.S. I wanted to just see, like the U.S., the 6% growth that you just reiterated for international, because obviously that's the long-term algorithm. Given that you had a very strong start of the year and how are you seeing, given that you've got this more conservative guidance for top line in the back half, and you're obviously up against mid-teens comp for the balance of the year, are you assuming that it goes negative in the back half? I want to clarify that. Also in the new guidance, Rick, you're expecting commodities. Are you betting that commodities and transportation will ease, or are you assuming that they will stay as we see on spots on your hedges? Yeah. Let's talk about international for starters. Yeah, we had a good second quarter. We are seeing 6% for the full year. We are cognizant of the fact that we see intermittent shutdowns in many of the markets where we have businesses. We have to keep that in mind. We got this Delta variant as well, which could result in even further, more expansive lockdowns and effect on consumer mobility in international markets. That's what tempers our enthusiasm. In terms of comps, Andrea, you do have to be mindful of our growth rates year-ago international, right? In Q2 a year-ago, we were flat. We were 0.6% on organic growth. The 10.4% this year, it's very impressive. It's off a flat prior year. Q3 and Q4 last year, the back half was mid-teens, so 13% growth. If you look at our guidance, it implies, I don't know, 5% or 6% growth in the back half. When you do the stack, it actually looks like the international business is very strong. Your second question was really on the commodity outlook. Well, as of right now, I kind of just went through some of the numbers with the latest expectations on resins, as an example, and paper and diesel. Right now, our outlook implies that the commodities stay where they're at today. We're not banking on a decline or a movement down on commodities for the balance of the year. Okay, that's great. Thank you. I'll pass it on. Okay. Thank you. Our next question comes from Lauren Lieberman with Barclays. Your line is open. Great. Thanks. Good morning. I know we've talked a lot about supply chain, but I had to just follow up, I think in the line of questioning that Bill Chappell embarked upon. My question looking at what happened this quarter and what you're talking about is just if there isn't something to consider in terms of you guys just running too lean, right? That's been a hallmark of the way that you operate the business. When you look at this quarter and the conversation on supply and so on, it feels like you've exposed yourselves to business risk that other companies are frankly finding their way to manage through. Maybe it's too early to talk about, but just thoughts about how looking forward, you might want to set up differently so that you can better weather these sorts of storms? Yeah. Well, I'm surprised that would be your conclusion, considering that we're saying that our full-year organic is going to be up 4%. It's going to be the fourth year in a row that we have organic sales of 4% or better. In spite of the fact that we have $125 million in unplanned incremental costs that our full year range of 6%-8%, we found our way to 6%. I would say that the company has proven that it's resilient, actually, faced with those kind of cost increases. I think it's temporary with respect to the supply issues. That will be behind us at some point. Yeah. Yeah. Oh, go ahead. Well, the only thing I would add is, some of our competition is vertically integrated in some aspects of their supply chain. In some of these examples, we're not vertically integrated. We've chosen not to do that. We don't think it makes much sense. In times like this, it might hurt a little bit. Overall, we're doing the best we can to move our, whatever it is, 300-400 suppliers, and add 90 more. Right? Add the flexibility, add the capacity there. Our flex capacity, as we exit this COVID-type environment, is going to be greater than it's ever been before. Yeah. That's a good point. Lauren, that's not a throwaway comment. Over the past 18 months, we've qualified 90 additional suppliers and co-packers so that as we come out of this, we're going to be far more resilient. That started last year when we saw how COVID exposed some of the weak links in our supply chain. Okay. Thanks. Rick, Matt, that's exactly what I was asking and looking for. Okay. Next question was just on gross margin. I'm actually having a little bit of trouble as I play around with numbers in this sequential improvement that you're talking about. Volume, I know you get pricing coming in, but volume will be a little bit challenged on that price/volume mix line, I guess the implied sequential improvement, and then also, I guess the commodity headwind. I don't know if the best way to attack it might be offline, but kind of the big sequential changes in the gross margin bridge that help you get to, I think you said a modest expansion in 3Q. That would just be helpful? Maybe what I'll do for right now is just give you the second half kind of gross margin bridge. Of course, Q3, it'll be positive. It'll be slightly positive, more of the margin benefits in Q4 as we fully lap or fully have the price benefit. The second half gross margin outlook, right? The first half is down 230, the second half is up 80, and price volume mix is a tailwind of what we think is 285 basis points. Inflation is a headwind of around 285 basis points. We have incremental tariffs of the 35 basis points, which is a little bit better than it was in the first half because we had tariffs starting a year ago. We have productivity programs of around plus 85. The acquisition for largely Zicam helps on margin by about 40 basis points, and then currency is a little bit of a drag. That's how we get to +80 in the back half. Okay. That's super helpful. Final thing, which is on the incentive compensation call-out this quarter. I guess I was curious if that was at the outset of the year what you had anticipated, or if that's something that was true of this quarter and how to think about that in terms of SG&A for the balance? No, it's an impact on the quarter. It's an impact on the full year. It's partly why our SG&A is down in both cases for the quarter and the full year. That wasn't expected, but it's a reality now because we're the exception in the industry that has gross margin tied to our incentive comp. Right now, our gross margin's down 75 basis points. That was not the plan. That was not the incentive plan. That has a favorable impact, unfortunately, on the SG&A numbers. Okay. Understood. Thank you so much, both of you. Okay, Lauren. Thank you. Our next question comes from Chris Carey with Wells Fargo Securities. Your line is open. Hi. Thank you. I just wanted to clarify a couple of things around pricing. I think you said your main competitor or large competitor, Litter, has already priced. Clearly, there was some revenue growth management initiatives by competitors in laundry. Those are two categories where presumably, it seems companies have already moved, and then you're moving. Is there a read there that you're comfortable following with pricing, and so you want to just confirm whether I heard that right? Just connected to that, sounds like pricing in laundry is going okay, early days, but you also have supply issues in household. Did it sound like it's mainly in areas where it's components, or could supply chain issues actually have an issue on getting pricing through in laundry if you start to experience some out of stocks? Just some clarification and further perspective on some of those line items would be helpful. Lastly, pricing has been accepted by the trade in laundry. That's sort of behind us right now. Litter's ahead of us. That's going to be taking effect in Q4. We think both for laundry and for litter, by Q4, we'll be out of our supply issues. The other question about raising price, not just in laundry and litter, but in other categories, which we have. For example, Nair, OxiClean Stain Fighters, Baking Soda. We announced one variant of Trojan condoms. Waterpik will be raising price as well. We're announcing price increases in many categories. Keep in mind that we are the number one brand in stain fighters, depilatories, water flossers, baking soda, et cetera. We do have some strength and the ability to lead there. I think your other question, which is, I mentioned earlier in my comments that because of the Texas freeze, there are issues with chemicals, and that affects both liquid laundry detergent and unit dose. We expect that to be abating as well. I don't expect that the shortages to impact our ability to succeed in pushing through price. Again, keep it quick. Promo and coupon has been a relative lever for Church & Dwight, because of the cutting it less than some of your competitors. Have you exhausted that flexibility that you did have in the P&L in the back half? In other way, taking your couponing and promo levels closer to peers, or does that remain a lever at your disposal if things get worse? I mentioned earlier on litter. The litter category sold on deal is around 12%-13%. Whereas historically, it's around 19%-20%. We and competitors all have depressed sold on deal. With our announced price increase and another competitor has-- we've seen price increases as well. We don't expect that to change in the second half. As far as laundry goes, we are up quite a bit year-over-year, 700 basis points. We're not as high as our competitors, nor do we expect to be, at least for the next 90 days, as our price increase has to take hold, and we don't want to detract from that with promotions. Okay. Thanks so much. All right. Thank you. As the last question of the day, I would now like to turn the call back over to Matt Farrell for closing remarks. Okay. Well, thanks everybody for joining us today. We'll talk to everybody again in 90 days, we'll see how the Q3 went. Talk to you end of October. So long. This concludes today's conference call. Thank you for participating. You may now disconnect.