Ladies and gentlemen, thank you for your patience in holding. We now have your presenters in conference. Please be aware that each of your lines is in a listen-only mode. At the conclusion of this morning's short remarks, we will open the floor for questions. At that time, instructions will be given as to the procedure to follow if you would like to ask a question. It is now my pleasure to introduce today's first presenter, Brian Ezell. Please go ahead. Thank you, and good morning, everyone. Welcome to Kimberly-Clark's Q3 earnings conference call. With me today are Mike Hsu, our Chairman and Chief Executive Officer, and Nelson Urdaneta, our Chief Financial Officer. This morning, we issued our earnings news release and published prepared management remarks from Mike and Nelson that summarized our Q3 results and 2022 outlook. Both documents are available in the investors section of our website. In just a moment, Mike will share opening comments, and then we'll take your questions. During this call, we may make forward-looking statements. Please see the Risk Factors section of our latest annual report on Form 10-K and our latest Form 10-Q for further discussion of forward-looking statements. We may also refer to adjusted results and outlook, both of which exclude certain items described in this morning's news release. The release has additional information about these adjustments and reconciliations to comparable GAAP financial measures. Now I'll turn it over to Mike. All right. Thank you, Brian. Good morning, everyone. Our teams around the world continue to execute strongly in what remains a dynamic and challenging environment. I'm pleased with our continued organic sales growth momentum with 5% growth in the Q3, reflecting broad gains in all of our segments. Our Q3 results also reflect ongoing volatility in the operating environment, which continue to pressure operating margin and earnings. Throughout the year, we've taken decisive action to offset persistent inflation with pricing and cost savings. We're making progress as those initiatives enable sequential expansion of gross and operating margins in the quarter. As we near the close of 2022, we're maintaining our sales and earnings outlook for the year. We continue to manage our business with discipline and remain confident we'll restore our margins over time. We're executing our growth strategy to elevate our categories and expand our markets by putting the consumers front and center. We'll continue to invest in innovation and our commercial programs to continually sharpen the value proposition of our brands. We're committed to delivering balanced and sustainable growth over the long term as we work to fulfill our purpose of better care for a better world. With that, we're ready to address your questions. Thank you. At this time, we will open the floor for questions. If you would like to ask a question, please press the star key followed by the one key on your touch-tone phone now. Questions will be taken in the order in which they are received. If at any time you would like to remove yourself from the questioning queue, please press star two. Again, to ask a question, please press star one. We'll pause a moment to allow questions to queue. We'll take our first question from Lauren Lieberman with Barclays. Morning, Lauren. Great. Thanks. Good morning. Hi, Lauren. Hey, I was hoping if we could just start out with an update on the input cost outlook. You know, you've held the outlook for the year. There's one quarter to go. Just, you know, what we see it looks like pulp is kinda flattening out in terms of market data, but there are industry participants that have sort of said otherwise. You know, we've gotten a lot of questions in the last few weeks about, you know, European energy prices, how that impacts your business. So any color you can provide would be great. Also, I know it's early, but, you know, looking into 2023 as well. Thanks. Yeah, I'll start maybe, and Nelson will give you his perspective. Overall, I'd say it's stabilizing, but at a high level, and we're still experiencing some volatility. I don't know if, Nelson, you wanna give them a little more texture. Sure. You know, Lauren, I mean, a few things there. I mean, we've held our guidance for the full year in the $1.4 billion-1.6 billion. It's important to note that through the first nine months of the year, we've seen about $1.2 billion of these costs materialize. We did see sequential improvement in terms of the impact as we lap last year's $1 billion out of the 1.5 that impacted us in the H2 of the year. For the quarter, you would have seen a $360 million commodity impact versus $470 million in Q1 and $405 million in Q2. The trend that we had talked about is playing out in Q3. Secondly, you know, overall, we're not calling down because the reality is commodities remain elevated. The, you know, the environment remains quite challenging, and we're maneuvering through it. We've seen, overall a few dynamics, that I'd like to highlight. First, on the pulp and fiber components, prices remain pretty elevated. Eucalyptus is trading today at around $1,600. That's an all-time high. While the market is projecting for some easing at the end of this year, we have yet to see that play out. If we look at distribution costs, those remain challenging as well, especially on the international front. We have seen some giving up of prices on spot transportation in North America, but still, that's not offsetting the overall challenges we're seeing on a global basis. Net-net, we remain at the guidance that we had provided. You know, the messages I would say in terms of next year, right now it's too early for us to provide any guidance on 2023. We still have the full year to play out. A few thoughts that I'd share. One, we remain at historical highs in the whole commodity and cost structure. As a reminder, on a two-year stack, we're at $3 billion at the midpoint of our guidance today. Again, we have not seen any meaningful move versus our assumptions that we gave you back in July. Secondly, Forex markets. We have seen, and you see it in the deconstruction of our numbers, Forex has become more volatile and challenging. As a reminder, we have about a third of our profits coming from overseas. That is something that we are taking into account in our outlook, but we will have to carefully watch as we think about next year. The underlying business environment remains volatile. As Mike said in his opening remarks, we're managing through it, but it's something that we will take into account again over the next few months as we prep up to give you know, guidance in January when we talk about Q4. All right, Lauren, you may have gotten more than you bargained for on that question. No, it's great. I'll always take it. Thanks. All right. Thank you, Lauren. Thank you. Once again, if you would like to ask a question, please press star one. We'll take our next question from Kevin Grundy of Jefferies. Hey, Kevin. Hey, Kevin. Hey. Good morning. Good morning, guys. Question for me, just kind of zooming out a bit, Mike, just observations on, kind of the elephant in the room, right? Observations on consumer demand and then elasticities. I guess, as we kind of look at the quarter, elasticities are a bit better in tissue and towel, worse in personal care, at least versus our model. So maybe just comment on what you're seeing from a consumer perspective, any signs of consumer weakness that are at all worrisome to you. Then maybe you could just share your own thoughts on how the elasticities in the quarter came in relative to your own expectations and thoughts as we look ahead. Thank you. Okay. Yeah, Kevin, you're gonna have to guide me a little bit. I got a lot of thoughts here, so I'll give you a few things. I mean, one, I did want to emphasize, I feel very good about our strong execution of our strategy in what remains a very challenging and dynamic environment. You know, the continued organic momentum, you know, I feel very good about. Obviously, we were a little soft in North American personal care, which I can come back to, but that was. I think consumption was fine. It was more around some inventory changes, cycling, some supply constraints that we had last year. Overall, I think we had excellent execution of our pricing initiatives globally, and great brand support through our commercial programs. I think it was in the prepared remarks, but, you know, high single digit across all developed markets, high single to double-digit growth across all key D&E markets. North America, as you saw, was down too because of some of the supply changes. On top of that, I'd say we feel very good about our share performance. We're up or even in about half our categories, a little bit more than that in personal care. You know, we were very fast on pricing. We've been very decisive on pricing all year, and so we knew we were gonna give up a little share in the near term, and it does look like our share performance is improving in the latest quarter, and so we like where the trends are going and feel good about that. Then lastly, I'd say on the overall environment, we're navigating some shipment and volatility, particularly in North America because of the Texas storm and everything that happened last year. That's kind of the overall on us. Then with regard to the consumer, I would say overall, I feel like the consumer remains resilient, but we are increasingly seeing some bifurcation in demand. I don't know if I like that word, but it's, you know, I'm just trying to describe that we're seeing two different patterns emerge. You know, it's mostly along, as you would expect, Kevin, socioeconomic lines. I mean, certainly as we do the research in a developed market like in North America, there's a broad swath of consumers that, you know, their savings are still higher than they were three years ago. You know, they're employed, and while they may be curtailing some big ticket purchases, in our categories, which are essentials, we're not seeing a discernible change in behavior there. However, there's about 40% of the population in the U.S. that is more living paycheck to paycheck. I grew up in one of those households, and I know what it's like. You know, we are seeing some changes in consumption patterns, whether that is buying lower count packs or, you know, trading down a bit. I would say, you know, the important thing for us is to recognize that we're trying to serve our consumers and meet them where they need us, and that's both sets of consumers. Our premium business continues to grow and do well. We've got to pay, you know, and we've got to make sure that we're having the right value proposition for the more value-oriented consumers. You know, there is some, you know, I would say bifurcation. You know, we saw that happen about three years ago in a lot of markets in D&E, but we are seeing a little bit more of that in developed markets. I'll pause there. Kevin, anything on- No. I'm sure there's a number of other questions in the queue, Mike. That's really helpful. I'll pass it on. Thank you. Thank you. Thank you. Our next question comes from Chris Carey with Wells Fargo. Hey, Chris. Hi, Chris. Hi, good morning. I just wanted to follow up on that line of questioning around volume, specifically in personal care, but perhaps from a bit different angle. You know, it's harder for us to see, but just taking what you said about commodities and what we know about pricing, it doesn't look like you've experienced much notable volume deleverage to gross margins this quarter from the weaker volumes. You know, certainly the operating margin performance was different. Can you just frame how you think weaker volumes, to the extent this sustains, are expected to impact your P&L as you go forward, specifically between the gross and operating margin line? Just connected to that, how you would envision addressing some of the weaker volume performance that we've seen, whether in demand building, or is it simply that your algorithm will change between pricing and volume such that you're still achieving your overall organic sales growth objectives? Let me start, and maybe Nelson could talk, give you some more of the texture. I'll start with let me unpack the volume performance. Particularly, I think, you know, it's probably everybody's got a question about North America personal care, you know, and I'll say our North America team is doing a great job navigating what I would call excess volatility in demand. And really, I think we put this in the remarks, consumption remains stable. Just for reference, Chris, in the Q3, our all outlet consumption, which I don't think you see, we were up 4% in diapers on consumption, 9% in adult care, and 16% in fem care. The real fact is, and I mentioned before, you know, the storm that occurred in Texas last January, February, you know, shut us down for a few weeks in early Q1 and created a lot of volatility in shipments. I'll give you a sense of the volatility. If I go back to Q4 of 2020 and then give you the quarters, just in diapers, you know, our consumption in December of 2020 was, or the Q4, was +6%, then we were -7% in the Q1, +7%, +8%, +18%, +14%, and then +6% last quarter. You could see there's been a lot of movement. I would say it took us a while to recover from our supply constraints. You would think that, you know, being down for a couple of weeks, there was more that rolled through it because we had material supply issues as well. We were on allocation for most of last year. What happened in this quarter is our consumption was stable, but we were cycling, you know, I would say, elevated shipments in the year ago period as retailers were rebuilding their inventories following, you know, being on allocation. That, you know, overall, I feel very good about our offering across personal care, as you can see by the consumption numbers. I do expect some ongoing volatility in demand as we continue to work through various supply challenges and cycle some of the things that happened last year. In terms of the volume deleverage, certainly, yeah, we're you know, fixed costs are a big component of our P&L, so we're close to that. You know, again, I would say, you know, I'm not expecting in personal care in North America ongoing volume issue. This is, I would say, more of a one-timer. Globally, we feel very good about our volume performance and our elasticities have held up to the model in general. D&E, you know, our volumes were down high single digit. We think most of that was concentrated, understandably, in Eastern Europe, given the conditions that are happening there. Overall, you know, I think we're feeling good about our volume performance. Nelson, you know, you may want to give them some more texture. Sure. No, absolutely. A couple of things there that I would highlight, Chris. I mean, one, the pricing realization that we had in the quarter really accelerated. That's flowing through, and you can see that in the margins, which you rightfully point out. That is something that we were talking about back in July, based on the pricing actions that we had taken midway and the latter part of Q2 and also in Q3. That's more than helping, you know, offset some of the leverage that you would see on the overall business. Secondly, we begin to lap some of the commodity increases from last year, not that commodities are deflating, but they begin to not be as high in terms of the impact quarter-over-quarter. Those two are playing out for us to have for the first time in several quarters, a net pricing, favorable realization net of commodities and Forex. That's one thing. Secondly, if you look at our segments, the only segment where we saw a drop in margins, you know, for the quarter was really personal care. That had to do with, one, the one-offs that Mike's talked about. You know, we factored in some of those as we go into Q4 because some of those we do expect to maintain as we go there. Secondly was the fact that, yes, you know, we had a little bit of a mix as well in there because North America personal care is our most profitable region within the segment in personal care. That factored in into that one, which would have been that. Obviously, we continue to be very watchful of overall cost and fixed costs. The teams are doing all the actions necessary to ensure we address that. Thank you very much for that. If I could just, you know, on just how you would envision addressing some of the volume pressure, appreciating that there were certain dynamics in the quarter which will fade as we go forward because of the base period, but just philosophy on addressing volumes. I know there's been some debate in recent quarters just around what is the right promotional levels and requirements for, you know, demand building. Perhaps you could just contextualize how you would look at, you know, supporting volumes, you know, over a sort of more medium term horizon. Thanks. Yeah, Chris, I again feel very good about our commercial execution around the world. I mean, we had strong innovation this year. I feel great about our lineup for next year, even though we're not talking about next year yet. You know, and I think we feel very good about our advertising. Our digital investments are working very hard for us. And then our sales execution has been very strong around the world. And so overall, I think our commercial programs overall are working as intended. We're gonna keep a close eye on the promotional environment, though. I'll comment in terms of North America, I would say the environment at this point remains Fairly typical. That's kind of it. It's rebounded from being, I would say, more suppressed during the peak years of COVID, and is now, I would say, normalized in terms of promotional frequency, maybe still a little lower on depth. You know, frankly, you know, we're not gonna drive our business by driving depth. That, you know, it doesn't fit with our high road approach to building the brand. We're prepared. One thing I'll add, though, too, is, you know, I think we're being prudent in developing the right kind of action plans in the case of a more recessionary environment. As I mentioned, we're gonna, you know, our strategy is to elevate and premiumize our categories over time. That is exactly the right long-term strategy, and I think that's gonna be, you know, our strategy for a long time to come. That said, we recognize the environment we're operating in, and we've been very good at running, I would say, more value into plays when necessary. You know, our goal is to make those productive and, you know, profitable as well, while addressing the needs that the consumers have. Okay. Much appreciated. Thank you both. Okay. Thanks, Chris. Thanks. Thank you. Our next question comes from Steve Powers of Deutsche Bank. Morning, Steve. Yes. Hey. Hey, good morning. Good morning. Apologies, you may have been talking a little bit about this with Chris. I got called away from the call for a brief second there. Just as you march from Q3 to Q4, it implies, I think, you know, either a lot of SG&A, you know, SG&A leverage or a really big step up in gross margin sequentially and quarter-over-quarter. I guess I'm just, you know, I guess wanna play that back to you and figure out kind of what the main drivers are because I get that, you know, the inflation gets a little bit less impactful as you go Q3 to Q4, FORCE picks up. It just seems like you need some other variables to really move the needle as much as I think is implied in the guidance. Just wanted to play that back to you. Sure. Steve, I mean, a couple of things I would highlight. I think first I'd start by reiterating what happened in Q3, and you would have seen an acceleration in overall pricing realization. As you mentioned, our expectation, which played out in Q3, of the quarter-over-quarter impact of commodities beginning to subside even though they remain elevated. As we look into Q4, our outlook in which there's an implied step-up like what we saw in Q3, the drivers behind it would be, first, is around pricing realization. As a reminder, we've implemented additional pricing actions in the Q3, and those will be fully realized as we go into the Q4. We do expect in the Q4 another, you know, step-up in terms of pricing realization as we look at our overall outlook. That should be playing out in the quarter. Secondly, would be on our FORCE productivity savings. In the Q3, we delivered $80 million of FORCE savings, which is an acceleration of around $30 million versus the average we were delivering in Q1 and in Q2. We expect this trend to continue going into Q4. Then last but not least is stabilized input cost inflation. Again, this does not mean that we expect overall cost to come down. It's more the quarter-over-quarter impact. As of today, we have a year-to-date impact of around $1.2 billion in commodities. At the midpoint of our guidance of $1.4 billion-1.6 billion for the full year, this would imply that for Q4, we should see another quarter of a reduction sequentially in terms of overall input cost inflation. When you combine those three, that's what gives us the building blocks for the continued step-up sequentially quarter-over-quarter on EPS for the Q4. I think it's also important to note that for the full year of the midpoint of our cost guidance, we are at around $1.5 billion of input cost inflation. As we exit the year, we expect to more than fully offset not just the commodity impact, but also the Forex based on our current assumptions and what we've modeled out. That is something that'll be playing out in Q4. Okay. Yeah. That makes sense. That's helpful. I guess the other thing that I wanted to ask about, and I appreciate that 2023 is a long way away. You're not really talking about it. You know, consensus estimates have the company delivering above algorithm EPS growth next year, which I think implies, you know, that the price realization that you just spoke to continues to hold even as you get some hopeful relief on costs. I wanted to get your perspective on just your comfort level with that level of assumption as you look at it, and especially in the context of, you know, I appreciate what you said earlier about sort of the timing impacts in North America and how that impacted shipments. you know, we are watching those private label shares in personal care, specifically diapers, pick up. Hopefully, that gets better. As you push through more price and the consumer potentially degrades, you know, from a confidence perspective, concerns about that, those share trends, you know, not rebounding. It just speaks to if the deflationary backdrop does play out next year, do you have to roll back some of this price. A lot in there, but just, you know, really thinking about the consumer demand trends, your pricing trends net of commodities and just some perspective on Your comfort level with consensus being above algo next year? Yeah, Steve, maybe, you know, maybe my comfort level is probably not comfortable addressing what 2023 looks like yet. I hate to do that, but I think the underlying is because of what we're seeing right now in the marketplace, which is, one, the volatility in the marketplace, which we experienced in Q3 and it's gonna continue. The other part is, we're still rolling over our plans. You know, I really feel, you know, would love to comment, but I don't feel like in a place where it'd be reasonable for us to comment at this point. I don't know, Nelson, if you have a different Yeah, no, I fully agree, Mike. As I said, you know, to Lauren, in terms of, you know, her ask, one of the variables that again, we're looking into today as we build the plans and everything is where we stand today. The reality is commodities have not subsided. They remain pretty elevated, and Forex is becoming and has become a bit of a challenge as we look forward. We've got three months to go for the year, but it is a variable that we're gonna have to take into account, Steve, as we look forward too. Again, too early for us to comment, but those would be kind of my thoughts in terms of where we stand today. Yeah. The thing I'll add, Steve, though, is, you know, we are continuing to manage our business with discipline, and we remain confident we'll restore our margins over time. I mean, as Nelson pointed out, we've taken on over the last two years, $3 billion of inflation. That's 1,500 basis points of gross margin, which is a lot, and we've taken decisive action. The good news is, you know, we've, you know, for the Q3, our pricing fully offset inflation plus FX in the quarter. We do continue to expect sequential improvement. You know, commodities also, as people who have been following us for a long time, commodities will eventually revert. We're not counting on that for our margin recovery, but when that does happen, that will likely accelerate our recovery. We're taking a thoughtful, holistic approach to mitigating inflation and running our business and hopefully you all appreciate that. Okay. I appreciate it. Thanks so much. Thank you, Steve. Thanks, Steve. Thank you. Our next question comes from Jason English of Goldman Sachs. Morning, Jason. Hey. Morning. Hey, Jason. Hey, folks. Hey, y'all. Thanks for slotting me in. A couple real quick housekeeping questions here. For guidance, I appreciate you reiterating EPS, but you didn't provide an update on your EBIT outlook. Can you provide that now? Has it changed at all? No. In general, it remains where we're at. Excellent. Thank you. Productivity. You have a nice uptick in the Q4, implied by the full year guide here on FORCE savings. What's driving the uptick? Would it be unreasonable for us to look at that and assume that that run rate continues through next year, therefore implying that what was under delivery this year is gonna be followed by over delivery next? Thank you. Sure. Quick one there, Jason. As we've said in the past, FORCE is not necessarily a straight line. We've never seen that in the past, and I don't project that that's going to happen in the future, because it just builds up over the year and we do see ups and downs because remember, it is a net number, so it does build some of the headwinds and costs that we might be facing. As you indicated, there is a step-up in Q4, and to me, the key to look at is what happened in Q3. In Q3, we delivered $80 million versus an average for Q1 and Q2 that was below $50. The acceleration was there and we delivered, you know, year to date, $175 million. We expect to see, you know, further delivery in Q4 based on the strong pipeline of productivity that our teams have across the globe. As we look into next year, yeah, the teams are building up the gross productivity pipeline, and I'll stress that, gross productivity pipeline. Again, we will be, you know, walking through the delivery as we go through next year. I can't and I would not commit to whatever run rate we have exiting this year in Q3 being what we see in the first couple quarters of next year. It's too early to say, Jason. Yeah. Yeah. Understood. The thing I'll emphasize is, yeah, it is a net number, and so our gross productivity has continued to climb, and I think our teams are doing a really fantastic job driving the productivity. The issue we have is the inflation isn't just on our inputs. It happens in all places of the P&L. Some of it unfortunately gets nets out. I, you know, could complain to my teams around their overall net productivity, but that's kind of like complaining about like trucking lane rates or so. You know, I mean, we don't like them, but you know, some of that is not fully in their control, and we have to, you know, navigate that. That's why we have to drive our gross savings higher. Yep. Totally understood. Thanks a lot, guys. I'll pass it on. Thanks, Jason. Thanks. Thank you. Our next question comes from Andrea Teixeira with J.P. Morgan. Hi, Andrea. Good morning. Hey. Hi. Good morning. Thank you. Just a couple of questions, Mike and Nelson. If you can elaborate a little bit more on the price elasticity that you're embedding in your guidance for 4Q. I understand that obviously it implies a huge decline in organic sales. I do understand the comp for personal care. I believe it was 11% last year in the same period. I was wondering if you can comment. It does look like your pricing, at least in the Nielsen data, seems a bit below peers. I was wondering if there is anything embedded there in terms of promotions or. Part of the question also on promo. Is your SG&A anything that you'd call out specific in the quarter, if that's recurring into the Q4? If there is any phasing or timing of it that you pulled from the fourth into the third. Lastly, just a clarification on Suzano's deal. Are you getting any proceeds from the sale of Neve and the sale of the Mogi plant? I was wondering if there is anything that related to that, or the royalties will pay off over time, and you are gonna be puts and takes on those, or it's just immaterial, so none of the companies are provided immaterial for you and for Suzano. Okay. That's all right. That's a great list of questions. We'll try to tackle them between- Yep. Nelson and I will tag team here. First of all, I think on the pricing versus peers, you know, I think probably what you're seeing is the fact that we were out fastest generally in pricing in most markets. If you're seeing a lag there, it may be 'cause we've already started cycling our pricing a year ago. I mean, the reality is, I think in general, we've priced, you know, I would say, very early, we moved very quickly on pricing last year. I would say we also moved at higher levels than a lot of our competitors. The reference for that is, you know, I think we've had a price gap, meaning we've been ahead on price on Huggies all year until, I would say, recently, maybe in the last couple weeks or so. So overall I think our pricing is in line with where we set it. I think, you know, the good news, Andrea, is that, you know, in general, in most markets, we are seeing, you know, the market, rest of market pricing kind of move generally in the direction that we've moved. That's not the case in all areas and, you know, but generally that's kind of my overall take. Mm-hmm. In terms of the elasticity, I'd say in the H1, you know, I think the volume performance really outdrove the elasticity models, and I think that's where, you know, I think the consumers are feeling confident. You remember all the unemployment reports and, you know, stimulus and all those other things that were driving consumer confidence. I have seen a change in that in some markets, and at this point, the elasticities that we're seeing are more, quote and quote, normalized, you know, or what we originally modeled. We are seeing a bit more volume come out in relation to all the pricing. That's notable, from our earlier comments on maybe the bifurcation, it's coming out a little bit more on the value-oriented tiers, let's say Snug & Dry diapers for us, which is our value tier diaper in the U.S., or Scott 1000. Those are some things that we're gonna pay closer attention to and make sure that we're managing the business the appropriate way to serve our consumers where they need us. So again, that's the overall take. And I don't know if that, you know, I know there's a couple other questions. I think Nelson will address some, but did that answer. Mm-hmm. Kinda the first part? Yeah. No. Absolutely. That's super helpful. The SG&A part, the component of that is just understanding as you try to scaffold and be more kind of conscious about that consumer that is stretched, is there anything that we should know of? Like, I think the SG&A, your GM, your gross margin came in, I think, better than anticipated, but your SG&A was a bit higher. Is there anything that we should be aware of in terms of phasing of promo or marketing spend that's. Or it's just inflation in general across all lines? Yes, Andrea, let me address that. First, I think the important thing to look at is spending in absolute dollars for the Q3 for below the line, which includes, you know, our SG&A and our advertising and promotion, was roughly in line with what we saw in Q1 and in Q2. There was really not a big step-up or change sequentially throughout the year. The thing that you would have seen is an expansion in terms of percent quarter-over-quarter in terms of the below the line. That was really driven largely because of last year's one-time adjustment to incentive compensation, which we talked about at the Q3 earnings call. That was the lion's share of the change. It was a one-timer we were lapping. Absent that, as we've been saying all year long, we are continuing to invest behind the business. It's the right thing to do. As Mike has said, we are fully committed to sustainable and long-term balanced, profitable growth, and the only way to achieve this is to continue to invest in the business. We are investing behind our brands, we're investing behind innovation, we're investing behind capabilities and our people to ensure that we're there to go forward. Those investments are there, and we've continued to make them, but there was no particular step-up in Q3 versus Q2 or Q1. Okay. That's fair. Thank you. The Suzano deal? Yeah. I'll maybe make a couple comments. Not exactly your question, but I did wanna address a couple things related to the result tissue agreement. Overall, Andrea, hopefully you'll recognize it's consistent with our overall approach that we've been talking about on portfolio management. You know, I really believe we have a long runway of growth ahead of us in our categories and our markets, and we're gonna pursue on the plus side, you know, markets and adjacencies that are gonna be accretive to our growth and margin. I've always said, you know, for a few years now that we'll consider exits in businesses that are not accretive to our growth and/or margin profile that we expect. This transaction specifically enables us to focus on our faster-growing, higher-margin personal care business in Brazil and creates a better future for both the Neve brand and the tissue business, the Brazilian tissue business. The Neve business in combination with Suzano is really gonna be better positioned to adapt to the unique dynamics of the local market. We fully expect our partnership, strong partnership with Suzano to continue well. I'll defer to Nelson. I don't think we're ready to comment on any specifics related to this transaction. Yeah, no, absolutely. Again, the only thing I would say is, you know, overall revenue from this transaction that's being divested is just around the 1% levels, and profits are immaterial. But other than that, we're not gonna be disclosing any terms at this stage. That's helpful. Thank you. Okay, thank you. Thank you. Our next question comes from Anna Lizzul of Bank of America. Morning, Anna Lizzul. Hi, Anna. Hi. good morning, and thanks so much for the question. Just regarding the consumer sensitivity to pricing at this point, I wanted to follow up on your comment on consumer bifurcation. Are you seeing premiumization holding up well in certain categories versus consumers trading down in others? Are you seeing any specific products holding up well, which indicate consumers are willing to continue to pay for premium solutions despite a more challenging inflationary environment? Thanks. Yeah, yeah, I would say, and it's less differences by category. You know, I would say in general, you know, where we're driving premiumization is generally working across markets. And so not specific there. I think it is more typically by sub-brand or sub-line or what we might call internally our tiers, right? Like, the value tiers tend to be a little bit more price sensitive in this environment because, as I was mentioning earlier, there are a significant number of households, let's say in the U.S., that you know, have less to spend now, given all the inflation that's occurred over the last couple years or so. I think it's more on a you know sub-sub-brand basis or a tier basis in our vernacular. That's where I say you know working to continue to drive our premiumization strategy or creating more value you know through our premium products. We feel great about our innovation lineup this year. As I mentioned, we've got a lot more coming next year with great features that I think consumers are really gonna like. That said, you know, we're also making the right adjustments, as we said earlier, that you know to prepare for a recessionary footing if needed, and that means that you know emphasizing the great value that our brands offer. In some cases, we will make some adjustments, whether that's related to pack count or sizing or something along those lines to make sure that consumers have the right, you know, pack and affordability that they need. Great. You know, any specific, you know, product lines you can call out as, you know, seeing resilience in those? Well, Huggies. You know, again, I think we feel great about our diaper lineup, you know, our adult care lineup in North America. But if you go around diapers, you know, China, you know, we continue to have, you know, mid- to high single-digit growth, double-digit growth in feminine care, and so we feel good about that. You know, Latin America, where consumers are very value-oriented because of what's happened in the economy the last few years, you know, our organic performance was up, you know, strong double digits in the quarter. Overall, across our markets, you know, we saw strong organic growth, and that's because we feel that we've continued to improve the products. You know, at the same time, we are recognizing that we are taking price to offset the commodity headwinds. Okay. Thanks very much. Okay. Thank you. Thank you. Thank you. Our next question comes from Javier Escalante of Evercore. Morning, Javier. Hi. Good morning. Hi, Javier. Good morning. Good morning, everyone. I would like to come back to the U.S., and if you can, might comment on how you see retailers approaching pricing, and the profitability of their own private label operations in tissue versus diapers. I have a follow-up. Javier, welcome to our coverage, and we appreciate it. This is something I've talked about over the years. You know, we have a very productive and collaborative relationship with our retail partners, and I've been doing this for 30 years now and been through many cycles. You know, we approach it, and notably, let's say in the U.S., you know, I think the big change that's occurred for us at K-C over the last 10 years is, you know, we recognized we had to clean up our own house. We've been very focused on growing the categories and working with our retail partners to grow the categories the right way. I think it's reflected. I mean, we're really proud to note that in the Advantage Survey, you know, for the first time, you know, we are rated number one as a customer organization and number one across most disciplines because I think, you know, our customers view that we've been working with them in a partner-like fashion. Funny aside, I will say, you know, in the Q1 of last year, I think our service levels in diapers was far below 50%, and somehow or another, these publications rated us number one on logistics last year. I think that does reflect kind of the way we work with them. You know, when you take that, I would say we generally approach business planning with our customers on a growth basis for both, you know, their sales growth and their profit growth, and we pay attention to their margins as much as we pay attention to ours. For us, we're working for win-wins. I wouldn't say regarding, let's say, your question, whether it's diapers or private label, anything different that we're seeing in terms of the profit play of them trying to change distribution or emphasize different lines. We are very cognizant that, you know, we're trying to deliver an overall category growth plan and own our part of that. Because of that's kinda how we manage the plan. With regard to price sensitivity, yeah, I mean, there's been a lot of price coming at it. We have a fair number of customers that skew more toward value shoppers, and it's their role to, you know, in their minds, you know, serve their shoppers well, and we understand that. We're willing to work with them. You know, we recognize also there has been a lot of price in the marketplace out of necessity. The important thing is, you know, we feel like we have to recover our margins. They recognize that they need to deliver margins and growth the same way that we do, and so we're gonna continually work, you know, for ways, you know, to find the win-win and grow the categories the right way. That's great to know. Then basically, Mike, again, on tissue versus diapers, it feels as if, I mean, from the outside, that Scott is very clearly positioned on the value side. Huggies has been premiumizing, and I appreciate that you mentioned that, I believe, a competitor just follow price increases and that we do not have, you know, an all-channel view. If you can walk again on the drivers of your confidence that Huggies didn't take too much pricing and that you are competitive on the pricing front vis-a-vis your main brand competitor and private label, because in our data we do not see private label following price increases. Thank you very much. Yeah. Yeah, on Huggies, yeah, I would—I wouldn't say, you know, again, I would correct. You know, we've priced, you know, as I said, you know, our goal is to, you know, restore margins, and eventually expand margins over time. We've priced accordingly, you know, with the right discipline. You know, we're very cognizant of our product offering and our lineup and our commercial programming. One of the reasons we've priced this, that, you know, and I think we've talked about this with our customers, is we feel like it's our role to help grow the category and drive category growth, and that requires marketing. I've worked in other categories, you know, when they pull back the category's commoditized and that's not a good place for brands. We've been very disciplined about that. I you know what I did say is that we felt like we had a price gap or we advanced pricing further and faster than some of our other competitors earlier this year, and last year as well. There was a bit of a gap. That gap is now. I think that's basically closed over the last few weeks. You know, we would probably see, you know, anticipate slightly better performance on Huggies. Again, we feel very good about our innovation lineup, the value we're offering to consumers. You know, we are gonna pay a little more attention to Snug & Dry, which, Javier, is our value tier in the US. Make sure that has the right counts and the right price points on shelf that can compete effectively. Thank you very much. Okay. Thank you, Javier. Thank you. Our next question comes from Jonathan Feeney of Consumer Edge. Hi, thank you very much. Hi, how you doing? Just for a quick follow-up. You know, earlier in the call you mentioned that you thought promotional activity was back to something like normal by, let's say, a pre-COVID normal. I look at, you know, the syndicated data providers, Nielsen, IRI, have this measure of merchandising that would seem to indicate, you know, across the company, the U.S. anyway, that merchandising was still several points. It's like mid-thirties, the measure they use, and now it's like high twenties or something like that. Granted, off a low of like 20% when, you know, at the peak of demand. Any comment you can give us about, you know, the likely shape of that and the impact of restored promotional activity, you know, might have on demand? Secondly, that's a follow-up and secondly, related question maybe. Procter & Gamble talked last week about household inventory, and I know different companies have different ways of measuring that. Earlier you mentioned something about all channel consumption. I'm thinking that's still a takeaway data measure. If you have any color about where you think household inventory stand in the US, globally, and what impact that's having on potential future demand in 2023, appreciate it. Thank you. A couple things in there. I mean, and you know, I would say, well, if you go into Nielsen, and I'm no longer, but I used to be the highest user of Nielsen throughout my career, so there's so many variables are related to promotional measuring promotion. What I said earlier, Jonathan, was frequency kind of returned to normal, you know, in tissue probably in 2020, you know, at the Q3 or maybe by the end of last year. Then in personal care, you know, I would say at the beginning of this year, and that's in terms of frequency. The volume, and I would say the other key measure is depth. I would say depth is shallower both in personal care and tissue than it historically had been and remains so, and I think that's an artifact of all the inflation that all the companies are seeing. If you look at, you know, the percent of volume sold on promotion, it's a little bit lower, right? Slightly lower, which I think corresponds to what you were looking at. Overall, that's why I say I put, you know, promotion, quote-unquote, normalized, but it's probably still a little bit lower than historical at this point. That was, I think, part one. Any follow-up to that, Jonathan? No, that makes a lot of sense to me. I am also accustomed to spending way too much time with syndicated data, so it's nice to have a compatriot. No. I'm proud. I feel like I invented half of these measures, you know? But in any case. You probably did. The other side that you asked about was inventories. I mean, there's a couple points. You know, certainly, you know, I mentioned earlier, you know, we are cycling some retailer inventory build back. At the same time, I think we mentioned in our prepared remarks, there was some retail inventory reductions late in the quarter. That was a topic that came up at the last investment conference that I was at. That remains out there. You know, I would say that it's typically the case, you know, every other year or maybe every year, retail inventory changes, and that's part of what we get paid to manage on. In terms of the household inventories, you know, we think they've reverted back to normal. There was. Where it was really relevant was on consumer tissue. There was quite the buildup. I would say, you know, self-critically, I don't know that we were very good at predicting how the household inventories were gonna evolve. I think over the past year, and there was a lot of volatility in the tissue demand. I think in the Q2 of 2020, I think our tissue demand was up, bath tissue was up 30%, and then, you know, a year later was down 27%. Again, you know, bath tissue historically, you know, is very stable and goes with, you know, certainly volume growth goes with, it's highly correlated to population growth. At this point, we feel like it has reverted back to normalized levels. You know, it might be fair to say that, you know, there's a lot of people carrying more bath tissue than they were three years ago. Okay, thanks very much. Helpful. Thank you. Our next question comes from Lauren Lieberman of Barclays. Lauren, round two. I'm back. Hello again. I'm back. No, it's okay. I can let it go, though. I'll follow- up offline. Oh, we're good. Thank you. Okay. I guess we've come at it a couple different ways through different, you know, series of questions and so on. I guess, how do you think about volume versus pricing versus market share? 'Cause I think one thing that I get asked about quite a bit with regard to your business in particular is sort of, "Hey, but don't you see private label." My read is that, yes, that's a dynamic of your categories. It always is in economic cycles. It's what you'd expect to happen is that private label would gain some share. There's, you know, be some change in consumer behavior. I don't know how you could answer this, but sort of as you look at how to manage through the continued high levels of inflation, as you put in the incremental pricing that you mentioned this quarter, is market share the right gauge for you to judge kind of the health of the business at this point? Is it aggregate organic sales growth? You know, what are the metrics by which you gauge if you've gone too far or not gone, you know, far enough? Lauren, such an awesome question. You know, this is the- Well, I'm glad we waited. No, no. This is the age-old problem of management in the consumer business, you know. That's why it goes back to what we've been saying for years now. You know, we remain committed to delivering balanced and sustainable growth for our shareholders. It's been interesting as we've unpacked this for the organization because they're like, "Well, what do you mean by balanced and sustainable?" Well, you know, the key things we're managing against organic growth, right? Profit growth, market share, and cash, you know. Those are the four things. You know, I would say internally, you know, I think a lot of the organization used to look to this role to decide what we're gonna prioritize, you know? Again, when I say balanced, I want all four of those metrics to go in the right direction. I think you know, we're taking what I would say are high road actions to position the company to grow for the long term sustainably. And right now, you know, given the supply shocks or the input cost shocks that we've taken on the last three years, as I mentioned before, 1,500, the equivalent of 1,500 basis points of gross margin. You know, margin improvement right now, this year, remains my top priority. You know, I'm confident we'll return to pre-pandemic levels, and we're making progress as evidenced in the Q3. At the same time, you know, we're not going to harvest the business to do that. At the same time, we're still watching shares. We recognize that when, you know, we moved decisively on price, both in terms of pace and level, we were out ahead of the rest of market for a period of time. We recognized that we were gonna leak a little share. But you know, in our, you know, in our sense, you know, I think, you know, that was the necessary trade-off to make sure that we can get the margin recovery. That said, you know, at the same time, we continue to invest in innovation. We continue to support our brands with great marketing. I think our marketing has gotten better and our digital execution's gotten better. We're really proud of that. That's what we're trying to walk the fine line. I mean, I'm very encouraged that we're up and even in share in about half our markets. It's a little bit lower than we experienced in 2020 and 2021 when we were up in two-thirds. You know, I would say, you know, we're really proud of that, but we also recognize our competitors are pretty good, too, and so we can't expect that every year. And so if you get the sense, it's a complex trade, but it's something I feel like our organization's really stepped up to and they know what we're trying to do. And, you know, we're doing the margin recovery, but we're paying close attention to shares as well. That was a long reply. I don't know if I answered anything that you asked. It was great. It was a long question, so thanks very much. All right. Thank you. At this time, it appears we have no further questions. I'll turn it back to management for any additional or closing remarks. Okay. Thank you all for joining. We look forward to sharing our Q4 and full year out results with you in January. This concludes today's call. Thank you for your participation. You may now disconnect.