Prepared remarks
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Prepared Management Remarks Third Quarter 2026 October 30, 2026 Please review the following prepared management remarks in conjunction with our third quarter 2026 earnings press release and earnings presentation. These prepared management remarks include forward-looking statements and non-GAAP financial measures. For more information, see “Cautionary Statement on Forward-Looking Statements” and “Non-GAAP Financial Measures” below. We also invite you to listen to our live question and answer webcast with Noel Wallace, Chairman, President and Chief Executive Officer, Stan Sutula, Chief Financial Officer, and Claire Ross, EVP, Investor Relations, which will begin today at 8:30 a.m. Eastern Time. The live audio webcast can be accessed on our website at www.colgatepalmolive.com. For those unable to participate during the live webcast, a recorded version of the webcast will be made available through the Investor Center section of our website at www.colgatepalmolive.com/investors. Management Commentary We are pleased to have delivered another strong quarter of both top- and bottom-line growth. Even with the continued volatile macroeconomic backdrop, our organic sales growth momentum accelerated in the third quarter of 2026 with balanced volume and pricing. The growth was broad-based with net sales and organic sales growing in all four of our categories and four out of five divisions, and we expanded Base Business gross profit margin by 90 basis points. Given our solid performance year to date, we narrowed our guidance for net sales growth to 4% to 5% from 2% to 6% previously; we now expect full-year organic sales growth to be broadly in line with our nine-month performance, versus 1% to 4% previously. We are maintaining our GAAP earnings per share growth guidance and
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raised our Base Business earnings per share growth guidance to 5% to 7%, versus mid-single-digit growth previously. We raised our GAAP and Base Business gross profit margin guidance to be up year over year, versus roughly flat previously. The updated guidance is driven by strength in our year-to-date results and our confidence in our revenue growth management and productivity efforts, including our funding-the-growth initiatives and the Strategic Growth and Productivity Program, which have helped offset the rising expenses from higher oil and other commodity prices, including higher tariff costs year over year. We expect advertising to be up on a dollar basis and as a percentage of net sales for the year as we continue to see opportunities to grow and support our global brands while accelerating category growth. Our 2030 strategy, grounded in perceivable brand superiority, premium innovation, investment in AI-driven omni-channel demand generation capabilities and a winning culture, leaves us well positioned to keep delivering through the macroeconomic volatility. We have built flexibility into our P&L through our funding-the-growth initiatives and the Strategic Growth and Productivity Program, which also supports building the right organizational structure and agility needed to win in the long term. We believe our strategy positions us to deliver on our long-term aspirations of consistent, compounded earnings per share growth and top-tier shareholder return. Third Quarter Overview We delivered strong net and organic sales growth with continued balance between volume and pricing growth. Net sales were $5.4 billion in the third quarter, a 4.6% increase versus Q3 2025. Organic sales growth was 3.6%, including a negative 0.2% impact from our exit from the private label pet food business. We grew organic sales in all four categories. We grew organic sales in every division except North America, which improved sequentially but was impacted by continued softness in the United States. Returning to sales growth in North America remains a key priority. We continue to invest in increased brand support and building a strong premium innovation pipeline to
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compete more effectively in the growing segments of the U.S. market. Organic sales growth in developed markets was up 2.3% in the quarter, driven by strong performance at Hill’s and in Europe. Emerging markets delivered solid 5.4% organic sales growth, with continued strength in Latin America and Asia Pacific. Volume growth was 1.7% and included a negative 0.2% impact from our exit from the private label pet food business. Excluding this impact, underlying volume growth was 1.9%. Pricing growth was 2.0% in the quarter as our revenue growth management strategies, including PromoAI, continue to deliver solid pricing to help offset increased raw and packaging material and logistics costs. Foreign exchange was a 1.0% benefit to net sales in the quarter, driven primarily by Latin America. On a GAAP basis, our gross profit margin was 60.2% and our Base Business gross profit margin in the quarter was 60.3%, a 90 basis point improvement year over year. Versus Q3 2025, pricing was an 80 basis point benefit, while raw materials had a 300 basis point negative impact. Our funding-the-growth initiatives delivered a 290 basis point benefit, and mix was favorable by 20 basis points. SG&A as a percentage of net sales was up 90 basis points year over year on a GAAP basis and up 70 basis points on a Base Business basis. Advertising was up 130 basis points as a percentage of net sales, and we increased investment in every division. Our strong focus on productivity drove 90 basis points of overhead efficiencies, which were partially offset by 30 basis points of higher logistics costs, both as a percentage of net sales. GAAP operating profit was up 3% year over year for the third quarter. On a Base Business basis, operating profit was up 5%. For the third quarter, on a GAAP basis, we delivered earnings per share of $0.94. On a Base Business basis, earnings per share was up 7% to $0.97.
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Higher net income, excluding non-cash items in the period, combined with our discipline on working capital, drove strong cash flow performance. Year to date through the third quarter, our free cash flow is up 7%, and we have returned $2.2 billion to shareholders through share repurchases and dividends. Third Quarter Divisional Summaries North America North America improved sequentially with net sales and organic sales declining 1.7% and 1.6%, respectively. Volume decreased 3.7%, consistent with Q2, while pricing increased 2.2% and foreign exchange had a 20 basis point negative impact. In the United States, the Company’s value share of the toothpaste market is 31.9% year to date, and its value share of the manual toothbrush market is 42.4% year to date. The U.S. market backdrop remains challenging; consumer behavior is volatile, and sentiment is weak given increasing fuel prices. Overall, categories remain under pressure. We’ve laid out a detailed plan, which, as previously stated, will take time, but we have seen some early signs of improvement in the U.S. toothpaste market share in the quarter. Looking forward, our North America reset focuses on building a superior brand portfolio with a clear focus on accelerating premium innovation while strengthening our core. We will step up omni-channel demand generation excellence – repowering our marketing model and driving growth in high-priority channels including digital, agentic and social commerce. These priorities are supported by a focus on key growth capabilities: innovation agility, AI and data deployment across multiple verticals, and execution fundamentals.
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Latin America Latin America delivered another strong quarter of net sales, organic sales and operating profit growth. Net sales grew 12.5%, with 6.0% organic sales growth and a 6.5% benefit from foreign exchange. Organic sales growth was driven by strong volume growth of 3.9% and 2.1% pricing growth. Growth was geographically broad-based with organic sales growth in every hub. Market shares increased across the region in toothpaste, manual toothbrushes and mouthwash. Brazil was up double digits in organic sales, delivering both pricing and volume growth. Growth in Mexico, while positive, slowed this quarter, driven by a difficult consumer environment and challenges across some key retailers. By category, we saw strong double-digit growth in oral care, with toothpaste, manual toothbrushes and mouthwash all growing. Home care was strong with growth in cleaners and dish soap. EMEA The EMEA division delivered another strong quarter of net sales, organic sales and operating profit growth. Net sales increased by 1.4%, with organic sales growth of 2.7% and a negative 1.2% impact from foreign exchange. Organic sales growth was driven by strong volume growth of 3.5%, while pricing was down 0.9%, driven predominantly by the Middle East. Organic sales growth remains broad-based with organic sales growing in seven out of the eight hubs. The organic sales growth was driven by oral care, where we saw continued growth in toothpaste and manual toothbrushes, and strong growth in personal care, driven by continued strength in Sanex body wash. By region, Northern Europe showed good strength with the UK delivering broad-based category growth. Southern Europe also performed well with strong organic sales growth and market share gains, both on oral care and personal care. Growth this quarter in Sub-Saharan Africa was driven by double-digit organic sales growth in Nigeria.
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Asia Pacific Asia Pacific delivered its fourth consecutive quarter of net sales growth and third consecutive quarter of organic sales growth. Net sales grew 3.5% in the quarter, with organic sales growth of 4.6%. Foreign exchange had a 1.1% negative impact. Organic sales growth was broad-based with growth in all hubs except Russia. Our performance was led by double-digit growth in India with strength in premium toothpaste and manual toothbrushes. Our Greater China business grew organic sales, driven by high-single-digit organic sales growth in Colgate China, which continues to drive premium innovation and leverage our omni-channel demand generation initiatives. We had another quarter of positive growth at our H&H joint venture, driven by stronger online performance. In toothpaste, Colgate Optic White Purple and Darlie Magnificent White, with its dual chamber tube design, continue to have strong momentum. Our recent launch of Colgate Optic White Vitamin C toothpaste across several Asian markets has been extremely successful and has surpassed our initial expectations while also re-energizing sales of the Colgate Optic White line. We are continuing to roll it out across select Asian markets, leveraging social commerce and strong in-store execution. Hill’s Pet Nutrition Hill’s delivered another strong quarter with 5.6% net sales growth and 5.7% organic sales growth, with volume up 1.8% and pricing up 3.9%. Excluding a negative 70 basis point impact from our exit from the private label pet food business, organic growth was 6.4% and volume growth was 2.5%. Foreign exchange had a 10 basis point negative impact to net sales in the quarter. Growth was broad-based across both the Prescription Diet and Science Diet brands with particularly strong performance in cat. On Hill’s Prescription Diet, our therapeutic credentials, supported by a strong professional advocacy approach, helped drive high-single-digit growth. We continue to leverage our omni-channel demand generation strategy and premium therapeutic innovation. We recently
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launched k/d + Derm Complete, designed for dogs with chronic kidney disease alongside food and/or environmental sensitivities, addressing an important unmet need for the veterinary channel. The Prime100 acquisition continues to perform very well with double-digit volume growth and high-single-digit pricing yielding double-digit organic growth. We were able to leverage our learnings from Prime100 and, in July, began the phased rollout of Hill’s Science Diet Single Protein dog food, our new offering in the fresh segment in the United States. Our U.S. rollout continues its phased expansion in both retail and through the vet channel, where it continues to gain traction under the tagline “Science has entered the fridge.” Guidance Given our strong performance year to date, we narrowed our guidance range for 2026 net sales and organic sales and raised our 2026 gross profit margin and our Base Business EPS guidance. Our updated guidance for net sales growth is now 4% to 5% versus 2% to 6% previously, and we now expect organic sales growth to be broadly in line with year-to-date organic sales growth. At current spot rates, foreign exchange is still expected to be a low-single-digit benefit to net sales growth. Our guidance includes the final impact from our exit from the private label pet food business. We expect the full-year impact of this exit to net and organic sales growth to be approximately 30 basis points in 2026. This impact was predominantly in the first half of the year. We now expect gross profit margin to be up year over year, on both a GAAP and Base Business basis, versus roughly flat previously. Raw material, packaging and logistics costs remain elevated, driven by the conflict in the Middle East, which has increased oil prices as well as other commodity costs. We are broadly locked in for the remainder of the year based on our cost projections, which may differ from spot prices. We continue to expect a tariff impact in the remainder of the year given announced tariffs.
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Advertising is still expected to be up on both a dollar basis and as a percentage of net sales. We still expect double-digit earnings per share growth on a GAAP basis. We raised our Base Business EPS growth guidance to 5% to 7%, versus up mid-single digits previously. Given the outlook for interest rates and lower debt levels, we still expect interest expense to be roughly flat in 2026. Our tax rate is still expected to be between 23.0% and 24.0% for the full year, on both a GAAP and Base Business basis. Cautionary Statement on Forward-Looking Statements These prepared remarks include forward-looking statements (as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission (SEC) in its rules, regulations and releases) that set forth anticipated results based on management’s current plans and assumptions. Such statements may relate, for example, to sales or volume growth, net selling price increases, organic sales growth, profit or profit margin levels, earnings per share levels, financial goals, category growth rates, the impact of foreign exchange, the impact of developments in global trade relations and tariffs, the impact of geopolitical events and tensions, wars and military conflicts, such as in Ukraine and the Middle East, cost reduction plans (including the Strategic Growth and Productivity Program), tax rates, interest rates, new product introductions, digital capabilities, commercial investment levels, acquisitions, divestitures, share repurchases or legal or tax proceedings, among other matters. These statements are made on the basis of our views and assumptions as of October 30, 2026. We undertake no obligation to update these statements whether as a result of new information, future events or otherwise, except as required by law or by the rules and regulations of the SEC. Moreover, we do not, nor does any other person, assume responsibility for the accuracy and completeness of these statements. We caution investors that any such forward-looking statements are not guarantees of future performance and that actual events or results may differ materially from those statements. For more information about factors that could impact our business and cause actual results to differ materially from forward-looking statements, investors should refer to our filings with the SEC (including, but not limited to, the information
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set forth under the captions “Risk Factors” and “Cautionary Statement on Forward-Looking Statements” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 and subsequent filings with the SEC). Non-GAAP Financial Measures These remarks also include a discussion of non-GAAP financial measures (which exclude certain items from reported results), including those identified in Tables 4, 6, 7, 8 and 9 of the third quarter earnings press release. A full reconciliation to the corresponding GAAP financial measures and related definitions are included in the earnings press release, which is available on our website.