We're gonna get started. Now we have Kimberly-Clark up next to present, and we have CEO Mike Hsu and CFO Nelson Urdaneta with us. They're gonna go through some prepared remarks, and then we'll host a Q&A session. Mike, I'm turning it to you. Okay. Thank you, Lauren. I'll do the next follow-up. It's great to be here. Good morning, everyone. We're really glad to be here today to share how we're executing our strategies for growth and long-term value creation. First, I wanna remind you that standard reminders apply today about any forward-looking statements we make and any reference to non-GAAP financial measures, and I'll refer you to our latest 10-K on our website for further information. Our key messages for today. Our strategy to elevate our categories and expand our markets is working. The strength of our organic sales growth reflects improved commercial execution. We're taking significant actions to offset supply chain headwinds and recover margins, and we're confident in our ability to deliver balanced and sustainable growth and create shareholder value. At Kimberly-Clark, we're led by purpose, to provide better care for a better world, and we strive to provide better care for our stakeholders and our planet. Our purpose drives the social and environmental commitments in our approach to sustainability. By 2030, we aspire to advance the well-being of 1 billion people through social programs, and we plan to reduce our environmental footprint by half through a focus on climate, forests, water, and plastics. We've been focused on sustainability for a very long time, and we're committed to building on our excellent track record. We deliver better care with iconic brands that improve the health and hygiene of people around the world, and this year marks the 150th year of providing better care. We're proud of our history and our track record of innovation, and we're also proud stewards of a portfolio of iconic and trusted brands, including Huggies, Kleenex, Kotex, and Scott. Our brands hold the number 1 or number 2 market share position in about 80 countries, and our categories and markets have significant growth potential. Now, 3 years ago, we introduced K-C Strategy 2022 as our medium-term plan to drive balanced and sustainable growth. Our strategy has 3 pillars, which you can see on this chart, driving growth of our portfolio of iconic brands, leveraging our cost and financial discipline, and allocating capital in value-creating ways. Now, over the first 3 years of this plan, we grew organic sales an average of 3%, delivered over $1.5 billion in cumulative savings through FORCE and restructuring, and we returned $6.3 billion to shareholders through dividends and buybacks. We remain committed to our balanced and sustainable approach to creating shareholder value. Better execution is accelerating our organic growth, and we've also taken decisive action to offset significant headwinds. Our organic growth has accelerated behind improved execution. However, our earnings have been impacted by significant inflation and supply disruption, about $3 billion over the last 2 years, which has been about an 85% drag on our EPS. Now, we've taken decisive action to offset a significant portion of that drag, and we remain committed to offsetting the effects of inflation with price realization and cost savings over time. We'll continue to invest in our brands and capabilities to ensure our ability to deliver balanced and sustainable growth now and for the long term. Our first half organic growth reflects excellent execution of pricing initiatives and continued investment in brand building. In July, we raised our organic sales guidance for the year to reflect better price realization as pricing execution and volume were both better than we initially modeled. Meanwhile, our inflation outlook has increased by $700 million this year to more than $1.50 a share. Despite these significantly higher costs, we've maintained our full-year adjusted earnings per share range. We continue to expect pricing and cost savings to offset a significant amount of inflation. As we said in July, we now expect to be at the lower end of that EPS range. We're accelerating growth by elevating our categories and expanding our markets. Elevating our categories means driving premiumization through innovation and delivering enhanced consumer benefits. Expand our markets is making our products available to more consumers and accelerating development of our categories in developing and emerging markets. Now to enable these strategies, we're consistently applying our growth playbook around the world. We've made significant investment to build and enhance our commercial capability. We're deploying these enhanced capabilities consistently around the world, and this is enabling us to win locally by moving faster, powered by the global scale of Kimberly-Clark. I'll share just a few examples of how we're enhancing our commercial capability. We're scaling our best product technology. 80% of our top innovations are now scaled around the world, and that's up significantly from our past practice. Today, 70% of our investment, global marketing investment is digital. Personalized brand engagement enables us to have an ongoing relationship with our consumers as well as better efficiency and ROI. Our end-market execution work is moving us towards perfect store and e-shelf. Our teams are very focused on expanding distribution of our core SKUs. Finally, our investment in pricing analytics is helping us to make faster, smarter revenue management decisions. We've delivered positive net price and mix in each of the past 3 years. Enhanced commercial capability has been key to accelerating our organic growth. Our growth acceleration is perhaps most clearly illustrated in personal care. K-C Personal Care is a $10 billion business that has accelerated from an average of 1% growth to over 5% organic growth in the past 3 years. Our momentum continued as organic sales increased 11% in the first half. We also grew or held market share in more than 60% of our personal care category country combinations in both 2020 and 2021. We continue to grow share in over half of our cohorts through the first half of this year. Personal care remains a big growth opportunity, and there remains significant opportunity for us to expand penetration, frequency, and premiumization. Our performance in China provides a great illustration of how we're executing on our growth playbook. Our local teams saw that Chinese consumers, which internally we would view as among the most sophisticated in the world in our categories, these consumers were raising the bar for what they expected for comfort for their children in the diaper category. Our team moved fast to develop a winning offering, at first locally, and then by leveraging our global technology platforms. We're now on version 5 of our 5D diaper in China and continue to move fast to make them even better. At the same time, the team has been leading edge in the development and application of data analytics to create a digital relationship with mom through sophisticated partners like Alibaba and JD. In the face of a declining birth rate, our China business has grown at a double-digit pace and took overall market share leadership in the baby care category. In summary, Kimberly-Clark is accelerating growth, and we see a long runway of growth ahead of us. We're growing our top line, strengthening our brands and our company for the long term. While near-term headwinds are significant, we are committed to restoring and eventually expanding our margins over time. I remain confident in our ability to deliver balanced and sustainable growth and create long-term value for shareholders. With that, Lauren, I'll turn it back over to you. Okay, great. Thank you. I'll let you sit down. Okay. Great. I think it's actually interesting ending with the statistic that you shared on China. Yeah. on the double-digit growth, even with the declining growth rate, because I remember at CAGNY in 2021, you were asked about declining growth rate, particularly in the U.S. Yeah. Alison responded, "We can manage through this. You know, we control what we can control." How does that mentality apply kind of in the current consumer landscape as we think about pressures on the consumer wallet when something so core to your strategy has been that premiumization? Yeah. Well, first of all, that's why Alison is a great Chief Growth Officer, 'cause again, I think she's focused on, one, what we can control, but also very focused on what we can do as a company to grow our categories. You know, I think it's an important question, Lauren. I think, yeah, consumer confidence is waning a bit, and you can see that broadly in the marketplace, so value is becoming more important. For us, I would say the long-term strategy still is to elevate the categories and extend our markets, and I see a lot of opportunity there for that over the long term. You know, maybe the point that Alison made at CAGNY was, you know, if you look at China, which is the largest diaper market in the world right now, it's still a developing market. On a dollars per baby basis, their consumption is less than 1/2 of what developed markets are. So I think we have a long road ahead of us in terms of elevating categories in many markets over time, in both developed and developing and emerging markets. But your point, I think, is a correct one, which is in the near term, even though it's our long-term strategy, we do have to pivot at times to make sure that we're meeting the consumer where they need us to be. Certainly, you know, in a market like the U.S., we are seeing increasingly consumers becoming more value conscious. For us, you know, our goal is to lead the category and not be a niche premium player. We have a very good value offering, as well as we climb the full ladder up to premium and super premium. You know, our focus in markets like these or in times like these would be sharpen our offering at the value price point. We bring innovation to the category in the value tiers. We're very cognizant about opening price points, and so we may sharpen that offering as well. This is something that we've been doing actually for a number of years now, as you probably know, in Latin America. The funny story, Lauren, is, you know, we were, you know, very concentrated in value tiers about 5 years ago. We went down, we took a look at that and said, "Holy cow, well, the strategy is to elevate." We made this big shift to drive our mix to the premium tiers. I think after 18 months, we made a multi-thousand basis point shift in mix up to the premium tier. When COVID hit, a lot of our consumers were out of work, right? Because the economies were shut down, and so they were really concerned about value. Our team made, I think, a very wise choice to shift their emphasis back to the value tiers. We brought innovation, a terrific what we call thin core innovation to our value tiers across Latin America. You know, we discounted to have a more reasonable or a lower price opening price point for consumers because the absolute dollar range for them was a struggle. We really improved our business that way. Those are some of the same tactics we'll apply in other markets where I think consumers are under pressure on their wallets. Okay. Are you able to adapt that quickly in the U.S., just given the retail landscape here? Well, of course, there's always those lead times around getting the right products to shelf. Certainly, I think the consumer and trade promotion tactics can move quickly. We can, you know, usually innovation has its own time. The product development probably for us is not the lead time. It's really around getting packaging and getting the commitments correct with the retailers. Okay. Okay, great. Now, in the U.S., you have actually started to win back market share that was lost following the Texas freeze event. Yeah the supply chain challenges that followed. I guess outside of on-shelf availability, you know, what have been the core drivers of that, and do you think that getting back to that prior high watermark on market share is something on the near-term horizon? Yes, we're getting back. We're gonna get back. That Texas freeze feels like so long ago. For those of you who aren't aware, well, actually the point being, Lauren, that, for the 2 years before the freeze happened, which was last February, we were actually growing share in baby and childcare for the prior 2 years. You know, I think our team was on a very good roll. What happened is, when the storm hit Texas, you know, we have one of our largest diaper plants in Texas and one of our largest tissue plants in Oklahoma, and so those were shut down for a few weeks. That put us in a very difficult supply situation. Here's how bad it was, which is we had conversations with customers recommending that they take Huggies out and put a competitive brand in. You can imagine how painful it was for us to initiate those discussions. It really was a supply side problem. I gotta tell you, our team did a fantastic job getting us back to our service levels, which now are very good. In fact, even last year, we were rated, I think in one publication, voted by retailers the number 2 on service overall for the industry. I think we feel very good about our recovery. I think the point around market share and where we expect to go, I mean, we wanna lead our categories around the world. I think what really changed in our conversations with customers, this was probably back around 2017, 2018, and you may recall, there was a period where there was some price discounting in our category. There was always a question of was it retailer-led, is it manufacturer-led. Everybody blamed everybody, but the reality was, I think when pricing came down in our category, it's around June of 2017, so it's the first year I was the chief operating officer. Some of our big retailers called us in and said, "Hey, what are you guys doing? Like, why are you guys, you know, destroying the category?" All right. You know, "We wanna see your plans for how you're gonna grow the category the right way." We really shifted our conversations and shared kind of our vision for what category growth looked like. This is at the same time we were developing our Elevate strategy. We painted our vision for what the future was, which included our long-term innovation plans and how we engage with consumers. I think, you know, our customers really bought into that. That's been, I think, the secret of, you know, success on Huggies and childcare overall for the last several years, is they really buy into the vision and the innovation and our plans for the category, and so we've gotten a lot of support. I think we've recovered, and you saw in last quarter, I think we were up a couple share points in diapers here in the U.S. We've done a nice job recovering from the supply challenges. I think the strategy has been well supported by customers and consumers. I would highlight, you know, there's a little share softness more recently, and we probably saw that toward the end of the second quarter. I'd say we've been very. I think we've advanced pricing fast and at a significant level, and because we've prioritized margin recovery. Because of that, not all brands have moved at the pace or the levels that we have. We'll keep a close eye on that. I mean, we have to have a great value proposition. We're gonna have a great value proposition. Again, we're walking the balance between the right margin recovery but also growing for the long term. Our teams know our goal is to grow market share and be the leaders for the long term. Okay. You've talked actually on the last call or 2, this balance, right? You have to walk between pricing, volume, and market share. I know we can't do, like, the full walk around the world. Yeah. You've given us a little bit of a thought process just now on US personal care. Mm-hmm. How does that balance differ maybe when we think about the tissue business in the U.S., consumer tissue business in the U.S. and then any other key markets outside the U.S. that are worth calling out on either business? Yeah. What I think. You know, our focus on balanced and sustainable growth is for everyone. You know, right now I think we have an emphasis on margin recovery, just as you point out where our margins are, and so we know there's work for us to do. I'll tell you a funny story, though. After our. Most of our employees listen to the earnings call every quarter. The first question that came up after the first quarter, like, "Mike, you know, what do you want from us this year? Do you want share or do you want margin?" I said, "Yes." You know. That's a typical question. People don't ask that question as much anymore. You know, I explained. I said, "Yes, because we want the balance." We're always gonna hold you accountable in the same way that our investors and our board hold me accountable, which is we want the balance of, you know, organic growth, market share, profit growth, and cash flow. Those are the 4 things that we're really, you know, judged on. We've got to find the right balance. Allison's language is, you know, the genius is in the markets. The reason we do it that way and we treat our markets like adults is that they can find ways to deliver that balance that we may not be able to see in Dallas, right? That's why we believe the genius is in the markets. That's kind of the ask of the organization. They know we need market share over the long term, and we need to deliver the financial objectives over the long term. In a year like that, it's absolutely true that we are prioritizing margin recovery because, you know, our margins have taken a big hit. It's why we have driven, you know, significant pricing. You know, we can't recover, you know, our margins through price alone, and so obviously, cost savings play a big part in that, and we have to find another level of that. Our teams are working hard, both in terms of leveraging revenue management and our cost programs, to drive the right balance, market share growth, margin, and cash, you know, around the world. Okay. Now, Nelson, you've been with the company about 4 months, so I'd love to hear a bit about your strategic priorities, where you believe you can have the most impact on the company. Sure. Since I joined around 4 and a half months ago, I've had the opportunity to, you know, spend time with our leaders across business units and functions to understand their business plans, their priorities as we focus, as Mike said, in driving balanced and sustainable growth. I've also had a chance to, you know, visit some of our operations, including North America and more recently, Asia Pacific, where Mike and I spent a week, 2 weeks ago over in India and Indonesia looking at, you know, growth markets and opportunities where we're investing to drive that growth. Overall, I'm very impressed, you know, with how our teams are executing our strategic imperatives, as Mike just shared. Also, how resilient they have been in maneuvering through, you know, the complexities of the business, ensuring that our products are available, being a necessity, of course. More importantly, how focused they are in driving margin recovery through all the levers we've been talking about. In Indonesia, as an example, we had a chance to see firsthand Softex, very exciting opportunity and really how our strategy of expanding our markets is coming to life. As you know, we completed this acquisition in the midst of the pandemic in 2020. Mike and I spent 3 days with the team on the ground doing store checks, reviewing the plans, and really seeing how this is gonna come to life and contribute to the growth that we're going to have. Very exciting. Indonesia as a market, you know, it's over 275 million people. It's growing incomes. It's a growing birth rate market. Overall, it just crossed a threshold that we consider very important for category development, which is per capita GDP over $4,000. Very excited about those prospects. If I think about my priorities, where I'm spending my time, I'll talk about 3. One is really partnering with our leaders across the globe to drive this balance of sustainable growth. Obviously, margin recovery. This is a key priority for us. We've been fully focused in driving all the levers at our disposal to drive that margin recovery and then expand it. Lastly, it's about capital allocation. We need to remain very disciplined in capital allocation, and our priorities remain unchanged. I mean, we've talked clearly about one is about investing in the business. We'll continue to do that to drive our brands, our innovation, and our capabilities. It's also about growing our dividend. We've just crossed the mark of 50 years straight of increasing our dividends, and we remain fully committed. Then it's about M&A and smart M&A. Softex, I just mentioned. Earlier this year, we did Thinx, which is quite an innovation for us in the reusable sector, so very, very exciting opportunity. Then any residual cash, you know, we will deploy to share buybacks. Okay, great. Just sticking with growth margin and recovery. Gross margins this year are probably gonna be close to 20%, the 2008 trough and just slightly below the recent 2011 cycle, which as painful as it has been, suggests, like, dramatic structural improvements given how much more severe the inflation has been than what the business weathered in both of those periods of time. With that as context, like, can you just share a bit about the path to rebuilding margins? Because there's been so much structural progress, how much of this needs to come from deflation coming through, or, you know, are there tremendous opportunities to go after in terms of productivity? Yeah. I can take and Mike can jump in. He He can jump in. Okay. We know that cost reversion in our input costs will happen. Historically, in every cycle we've gone through, that's been the case. Really, it's not a matter of if, it's a matter of when. Having said that, we remain fully committed, Lauren, to recovering our margins, even if our input costs remain elevated. You know, we've been dealing, as Mike shared, with unprecedented cost inflation in the last 2 years. It's about $3 billion between 2022 and 2021. Looking back at any 2 year cycle, this is over 2x what we ever faced. This represents, as Mike indicated, a drag in EPS of over 85%, just around that level. Clearly, we've been pushing hard on the pricing realization lever. That has been one of the key levers that we've been driving across the globe, and we are pleased with how the teams are quickly executing, you know, to offset commodity and forex. We've continued to make investments in our analytical capabilities, so we enhance our capacity to drive pricing realization. As you would have seen in our Q2 results, we saw an acceleration in pricing, sequentially versus Q1, and we expect that trend to continue. There is also opportunities on costs. We've always been very, you know, very proactive about managing our cost structure, and that tackles both variable costs and fixed costs. Historically, we've delivered strong savings through our FORCE program. As I shared in July, our pipeline of productivity remains strong, and we expect FORCE savings to accelerate in the second half of the year. We've not been shy about restructuring the business when there's been a need for it, and we will pull this lever as need be, to ensure that we get our costs where they need to be. Having said that, I also wanna stress the fact that we've had to make some investments, as I shared in July, especially in our logistics and distribution network to address some of the supply challenges that we were seeing in the overall distribution network and tackle and address some of the fulfillment rates and service levels. As Mike shared, we're happy to see that our service levels in North America have gotten well into the 90s, and that's something we needed to do as of the end of the second quarter. With that said, we will continue fully focused on driving the levers at our disposal to drive margin. I have the full conviction that we will recover margins to pre-pandemic levels, and we will expand beyond that. I think a good point to stare at is the fact that in the second quarter we expanded gross margins by 40 basis points on a sequential basis versus Q1. Based on our assumptions, we expect that trend to continue in the second half of the year. It's clear, Lauren, he's assimilating quickly and, you know, a couple things. We remain committed to not just recovering margins, but expanding margins over time. As you may recall, you know, when I came into this role, you know, we're very aware that our margins are lower than some of our peers in the industry. So over time, we believe we have to get our margins to an expansion mode. We weren't planning on taking $3 billion of inflation, so we recognize that that's something that we have to manage through, but we're committed to that. I was here for that, you know, for the maybe the expansive part of the recovery from 2008. I think the tactics are similar, which is, you know, what we applied was, you know, very good programs around revenue management, including pricing, but also pack counts and sheet count and things like that. But the other side of it is though, there'll continue to be great opportunities in our cost structure, and we'll continue to go after those. As Nelson pointed out, you know, there's been a lot of supply chain disruption and we've been working really hard to recover service, and so there's a lot of expediting costs. We think over time that there's gonna be maybe an opportunity for us to get better as the supply conditions maybe normalize. Okay. In terms of expediting costs and the investments you mentioned, those are more short term. They've been. Short term. Paid to get through this period. I mean, not last year, but in 2020, I don't know if you recall, but we were shipping tissue around the world to service our customers. You know, we've worked through some of that, but I think it's not as extreme as that, but you know, you can imagine with supply conditions, there's still a lot of excess costs in the system. Okay. I also need to ask a sort of shorter term, well, not shorter term, but just natural gas in Europe. I mean, you have an asset heavy business in Europe, so any perspective you can offer on visibility you have into to costs across Europe? Yeah. I mean, I will not get into specifics of our hedging strategies and our you know, specific risk management strategies. As you're aware, I mean, the energy space, we've seen incremental costs. Again, oil has subsided at least from the peaks that we saw in June. Natural gas is really a matter that we're dealing with in Europe. We, you know, for our tissue business, and we talked about this in July, it is a point that we're you know, managing through. Obviously the whole industry is looking through it. We have risk management strategies deployed in terms of you know, covering some of the risks, but obviously there's a lot that's still in flux. Again, we will be nimble. We will be quick to manage the controllables that we have in front of us, and we will pull all the levers at our disposal to try to offset some of those costs as we look forward. Okay, great. Consumer tissue. I know I hinted at it earlier, but you know, it sounded like as you're thinking about the personal care business, particularly in the US, already trying to work through the playbook for how to deal with you know, the compression of the consumer wallet. But tissue's been a category that, of course, is most susceptible to private label trade down. So I guess what are you seeing currently? Are there things that you might be doing differently to manage the consumer tissue business today versus in prior cycles to weather that storm? Or is it just an absolute, we have to prioritize margin to protect the long-term profitability? No, I think we would say the same playbook applies. We still think there's an opportunity to elevate the categories in tissue, and we're doing that. But also expand the markets as well. Like, there's a couple things going on, which is, you know, I'd say our bath tissue business, especially Scott, you know, in North America, you know, proceeding very well. For us, there had been a supply issue, but I think we've worked our way through that. You know, we're confident where our bath business is. Kleenex shares a little soft, mostly because of supply constraints. We've had some material availability issues, and so, we're well aware of that and working through that. Overall, you know, we think there's a significant opportunity overall on consumer tissue to elevate the category experience. You know, we internally feel like the category has been marketed on convention, soft and strong, for a long time. You know, we're more focused on giving consumers a, you know, in bath, a better clean, better hygiene. That's an angle that we think, you know, plays out. Obviously, there was an innovation years ago with moist, which I think is a superior experience. You know, we also think there's other things we could do even on the dry side that deliver a better experience for consumers. You know, I think the playbook still applies in both categories, and we're bullish on both categories. That said, I think if you look at the margins, you know, we know costs have you know gone to a different level and, you know, we're gonna be accountable for our business. You know, as Nelson points out, we're gonna turn every rock to make sure that we can recover the margins on that business. Okay, great. In that vein, K-C Professional, right? They have taken the largest hit, you know, versus pre-COVID levels. You mentioned unafraid to restructure. I guess, you know, how are you thinking about the size of that business? I guess, you know, step 1 would be what's the revenue line look like? How are you know, assessing the relative size of K-C Professional longer term as you presumably embark upon a thought process on restructuring? Yeah. We're not embarking on restructuring right now. Thinking about it. Yeah. I want that to, you know, to lay that out. I mean, clearly our Professional business has been the hardest hit because of the pandemic, you know, with the ways we've changed how we work, how we live, and that's been shown in, you know, a reduced demand for our washroom business, you know, significant increases in costs, both operating and fixed costs this year. Not fixed costs, but overall operating costs and volatility and demand for the other sectors, 'cause we have other sectors within it. Our team's been executing a very clear plan to recover, you know, not just demand, but also to grow share. We've been launching innovation, which is margin accretive. You've seen, you know, a new ICON dispenser, which has been performing very well ahead of what we've got. Clearly the number 1 priority for them has been to drive margin recovery. We've been pricing. That's been coming through. We saw that in the second quarter, and all the actions are being taken globally. On top of that, we're also looking at costs. On your question on the demand, washroom, which is roughly a little over 50% of the business, we expect demand to remain muted in the near term. We will need to address some of the costs that are on a fixed basis in the business. I think it's important to note that it's not as significant as you might think, because obviously we have, one, a portfolio, not just one segment within Professional. Secondly, we do source some of our products externally, so it's not all internally manufactured. We also have assets, you know, that are shared across some of our platforms. There are elements and levers that we can pull to maneuver. With that said, I mean, we're obviously taking a look at all the elements in the business. We've seen a good revenue recovery, to your point, to well over 90% now as we're getting, you know, closer to where we were in revenue. We will address the costs, and we're confident that we will get our margins back. I mean, that is the key. The plans are working. We're seeing them come through. The team is on it, and we believe that Professional going forward will remain a source of profitable growth for KC. Okay, great. Just in our final minute, I touched on capital allocation, but I did wanna ask about M&A. Kind of what do you see as the most applicable places to see where you could take the portfolio. Yeah. Well, we love our portfolio, and we love the categories we're in. For reasons that I laid out in the presentation, we think there's a lot of growth left in our categories for long term. That said, we've been working very hard to develop world-class capability commercially, and I think we're making strides on that. We would look for opportunities that might be, you know, accretive to growth, accretive to margin. You know, Softex was an example of a home run, which is in exactly our categories in a market with huge growth potential, right? The forecast is, I think incomes are gonna triple over the next 10-15 years, and so that's an exciting market for us. You know, would we be interested in looking at some adjacencies beyond? Yes. You know, I think the logic for us probably is more consumer-oriented, right? If there's a consumer insight, a consumer logic, a consumer relationship that we can leverage our commercial capability behind, yeah, that might be interesting for us. You know, we're gonna be very disciplined as you know we are, and make sure that we're focused on long-term value creation. Okay, great. I think we've got to wrap it up there, but thank you so much for being here, Nelson. It's great to meet you too. Likewise. Thank you for having us. Great to be here, Lauren.