Good day, everyone, and welcome to the Kimberly-Clark Q2 2023 earnings call. At this time, all participants are placed on a listen-only mode. We will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Christina Cheng, Vice President of Investor Relations. Ma'am, the floor is yours. Welcome, everyone, to our Q2 2023 earnings conference call. Before we begin, please note today's presentation will include forward-looking statements. Our results may vary materially from those expressed or implied in our forward-looking statements, and you should not place undue reliance on any forward-looking statements. Please refer to our SEC filings for a list of factors that could cause our actual results to deviate materially from our expectations. Our remarks today refer to adjusted results, which exclude certain items described in our news release. We use non-GAAP financial measures to help investors understand our ongoing business performance. Please consult our press release for a discussion of our non-GAAP financial measures in a reconciliation to comparable GAAP financial measures. We have published supplemental material, which are found in the Investor Relations section of our website. Participating in today's call are our Chairman and Chief Executive Officer, Mike Hsu, and our Chief Financial Officer, Nelson Urdaneta. Mike will start the discussion with our strategic priorities and provide an overview of our performance for the quarter. Nelson will provide a detailed discussion on our Q2 results and our outlook before we open the floor to Q&A. With that, I turn the call over to Mike. Thank you, Christina. We delivered another solid quarter with 5% organic growth while cycling 9% growth in the year-ago quarter. Organic sales were up across all segments, with personal care and consumer tissue each up 4% and professional up 13%. Our growth strategy is working, and our performance in the quarter reflects strong execution by our teams around the world. We continue to make strong progress in margin recovery. Adjusted gross margin was up 380 basis points and fueled a 17% increase in adjusted operating profit and a 23% increase in adjusted earnings per share. Given the strength of our first half, we're raising our full year 2023 outlook to 3%-5% organic growth and 10%-14% adjusted EPS growth. Our categories remain healthy. In North America, category sales were up 8%. We continue to see robust growth in key developed markets, including the U.K. and South Korea, which delivered double-digit and mid-single-digit increases respectively. While category growth across D&E has been more variable, we continue to see double-digit increases in Latin America. This growth reflects the essential nature of our categories. As category leaders, we've remained focused on serving all our consumers and recognize that many are facing economic challenges. With our broad portfolio, offering value to premium options, we're able to meet consumers where they nee us. We are well-positioned with brands like Scott and Huggies Snug & Dry to serve the value-oriented consumer. Across markets, we're strengthening our price pack offering. That means enhancing large count packs in big box channels and making entry prices more affordable in small format channels. More importantly, we're accelerating innovation and cascading technology through our product offering to ensure we're delivering a superior value proposition to consumers. Growing market share continues to be a top priority. In the quarter, year-over-year market share performance was soft, reflecting the relatively early actions we took to mitigate inflation. In the last 6 months, price gaps have begun to normalize, and we are encouraged to see sequential improvement in market share in key cohorts, including North America, where we've seen improvement in 5 of 8 categories. Volume trends have improved, and we expect that to continue as we cycle inflationary measures and execute our strategy and commercial programs. Our enhanced commercial capabilities are enabling more real-time decision-making to drive sales, optimize brand investment, and balance value and volume. We expect increased brand investment and improved supply fulfillment to strengthen our market share performance over the balance of the year. Our commercial programs and innovation are core to our strategy to elevate and expand our categories. We're pleased with our launches in the first half and enthusiastic about our second-half plans. Here are a few highlights: Huggies debuted its newest Baby Butts campaign this summer, celebrating Huggies' unique curved design, which provides greater comfort and protection for babies on the move. Early results show excellent consumer engagement across our marketing channels. In China, we're raising the bar on skin health through a proprietary design that whisks away the baby's mess. Moving the mess away quickly from baby skin is key to reducing diaper rash. We believe this kind of innovation will further differentiate us from the competition and is the reason Huggies continues to expand its market leadership in China. Lastly, our Kotex Intimus She Can campaign in Latin America continues to resonate. We were recently recognized with a prestigious Cannes Lion Award for this initiative, reducing period stigma as part of menstrual education. In China, Kotex introduced Polar Night, an overnight pad with a proprietary design that prevents leakage with instant absorb technology. Overall, around the world, we are seeing growth driven by the overnight segment. This is a great example of superior product performance, coupled with effective brand strategy and communications, to drive share gains and strong brand equity. Now, I'd like to briefly address the impairment charges to intangible assets we recognized this quarter. We purchased Softex Indonesia to expand our presence in one of the world's fastest-growing personal care markets. Indonesia ranks among the top three markets for new births, and we expect continued economic development will create more demand for our products over time. As the second-largest diaper player in Indonesia, representing over a quarter of the market, Softex has built a strong equity with local consumers. The impairment charges we took this quarter, which Nelson will discuss shortly, reflect our updated projections for the business. We have enhanced the team and taken actions to improve the business processes and our go-to-market approach. Indonesia remains an exciting growth market for Kimberly-Clark, and we're committed to this business for the long term. Now, as we enter the back half, we expect continued progress in our journey to restore and eventually expand our margins. We're excited about our innovation and commercial plans, and we'll invest more in our brands to improve our market share, performance, and growth trajectory. This is how we will elevate and expand our categories to deliver balanced and sustainable growth. Now I'll turn it over to Nelson for more details on the Q2. Thanks, Mike. Before I get into Q2 results, let me take a moment to discuss the divestiture of our Brazil tissue business and the impairment of intangible assets this quarter. We closed the sale of our Brazil tissue business in June, which enables us to focus even more on growing personal care. As a result of this transaction, we recorded a pre-tax gain of $74 million and $30 million of related expenses, both of which are excluded from our adjusted results this quarter. I want to thank the many KCers who worked hard to complete this transaction. We conducted strategic reviews, forecasting, and integration assessments as part of our business planning cycle. Based on updated financial projections, a pre-tax, non-cash impairment charge of $658 million was recorded, primarily related to the intangible assets linked to the Softex acquisition. The charges reflect revised projections for certain brands due to modified consumer shopping behavior, post-COVID-19, inflationary pressures, and increased competitive activity in the region. We are confident in the prospects of the personal care market in Indonesia, and we are committed to continue investing in this business. Let me now turn to our Q2 results. Net sales were $5.1 billion, up 1% year-over-year. Organic sales increased 5%. On a 2-year basis, organic sales growth was strong across all three segments, with approximately 7% average growth for the company. Effective revenue growth management delivered favorable price realization and mixed benefits, while volume trends continue to improve sequentially. Net sales in the quarter were impacted by approximately 400 basis points of currency headwinds. Turning to our segments, Personal Care, representing approximately half of the company's revenue, grew 4% organically, led by mid-teens growth in feminine care and mid-single-digit growth in adult care. Infant Care delivered broad-based growth in the quarter, with the majority of regions growing mid-single digits. Operating profit for the segment improved 1%. Organic growth in Consumer Tissue was 4%, led by a 7% growth in North America, where volumes have turned positive, up low single digits in the quarter, driven by Viva and Cottonelle. Operating profit for the segment was up 12%. Finally, our Kimberly-Clark Professional business posted a 13% organic growth. All geographies grew, and notably, volumes turned positive in North America after six quarters of decline. Our focus on key commercial sectors, effective digital engagement, and innovations in sustainability are fueling the momentum in Kimberly-Clark Professional. Favorable product mix and cost savings drove significant operating profit improvement in the quarter. Turning to the rest of the P&L, Q2 adjusted gross margin increased 380 basis points to 34%. Revenue growth management, in addition to FORCE savings of approximately $80 million, more than offset cost inflation and currency headwinds. Cost environment remains mixed. Although energy prices have moderated in some markets, they remain elevated in others. Labor costs are structurally higher, now due the cost of living adjustments and a tight job market in certain key geographies. Other manufacturing costs, which cover labor, were $85 million higher this quarter, in line with our expectations. Between the lines, spending on an adjusted basis was 19.8% of net sales, up 190 basis points versus year ago, driven by continued investments behind our brands and our capabilities, as well as the impact from inflation on our cost base. adjusted operating profit for the quarter increased 17%, and operating margin improved by 190 basis points to 14.2%. Foreign currency was a 16 percentage point headwind on operating profit in the quarter, of which 5 points were due to translation of earnings from our non-U.S. operations. The balance was largely from transactional impacts. We have made good progress on our margin recovery over the last few quarters, and we remain committed to restoring them to pre-pandemic levels and expanding them over time. To achieve this, we are increasing our focus on productivity by building a long-term pipeline of opportunities that can generate significant end-to-end efficiencies. Lastly, the adjusted effective tax rate for the quarter was 20.5%, compared to 22% in the year-ago period. Strong overall performance, along with a lower tax rate, resulted in adjusted earnings increasing by 23% to $1.65 per share. Through the h1, we generated $1.4 billion in cash flow from operations. Capital spending was $389 million, compared to $470 million last year. Year to date, we returned $850 million to shareholders through dividends and share repurchases. Now, let me say a few words about our outlook. With our continued momentum this quarter, we are raising our full year guidance for organic growth of 3%-5% and adjusted EPS growth of 10%-14%. As a reminder, our previous guidance was 2%-4% organic growth and 6%-10% adjusted EPS growth. The Brazil divestiture, which was not reflected in our previous outlook, is expected to impact reported sales growth by approximately 100 basis points. We continue to expect currency to impact full-year top line growth by approximately 200 basis points. Based on the latest estimates for the year, we now expect input costs to be a headwind of approximately $100 million, an improvement versus the midpoint of our prior outlook of $100 million-$200 million. In addition, we continue to project approximately $200 million from higher wages and other manufacturing costs. Continued progress in gross margin recovery puts us in a great position to advance our commercial programs. We expect advertising spend to increase by approximately 100 basis points for the full year. This brings us to a projected operating profit growth in the low double-digit range, and an operating margin increase of approximately 150 basis points at the midpoint of our guidance range. We remain optimistic about the future and our ability to create long-term value for our stakeholders. We are also very proud of how our teams continue to execute our exciting growth agenda across the globe. With that, we will open the floor to questions. Certainly. Everyone at this time, we'll be conducting a question-and-answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone, to provide optimum sound quality. We do ask that participants, please ask one question and one follow-up, then reenter the queue. Once again, if you have any questions or comments, please press star one on your phone. Your first question is coming from Lauren Lieberman from Barclays. Your line is live. Morning, Lauren. Hi, Lauren. Good morning. Hey, wanted to just ask a bit about divisional margins. One thing that jumped out to me in the quarter was actually that margins in consumer tissue decelerated sequentially. They were down sequentially, and then also were up less on a year-over-year basis. Was just curious, kind of what's driving that, right? As you mentioned, there was some better volume performance in North America. The pricing's coming through, costs are easing. Just some conversation around consumer tissue margins and the path to recovery would be really helpful. Thanks. Yeah, no, absolutely. A few things. I mean, we don't speak about gross margin, but, just to give you a context, Lauren, year-over-year, we did have a meaningful gain in gross margins, you know, on the segment, you know, over 200 basis points. You know, on a quarter-over-quarter, you're always going to see a few puts and takes, depending on mix and elements that flow through. Net-net, I mean, we are seeing an upward trend, so I wouldn't get too hung up on the overall movement quarter-to-quarter for the segment, because, you know, overall, we are seeing an upward trend and recovery on the margins. Okay. Okay, 'cause still. Yeah, okay, fine. Can I read into that, though, when you think about reinvestment in the business? I know there are particular areas, I know you've talked a lot about innovation and potential for Elevate and expand to apply in tissue as well. Is some of that seeding these investments, or is it really just a matter of timing and mix? It's a few things. I mean, one, obviously, we in North America have been doing the transition to the new artwork and some of the upgrades that we're doing in Cottonelle. Part of the thing has been, you know, our transition on shelf is taking a little bit longer than what we had planned. That's, you know, that's playing a little bit in the mix, but overall, I mean, that's progressing. In terms of the Elevate, we're also having initiatives in the UK, in Andrex, where we're doing some upgrades on the product line, and that's coming through. That's progressing on that end. Mike, I don't know if you want to add anything else on that end. Yeah, Lauren, yeah, I mean, I think when we talk about elevating, that holds for all our businesses around the world. Certainly, you know, consumer tissue, personal care, professional, we're happy to invest in all those, it's paying out. As Nelson just mentioned, in the U.K., you know, organic growth was up double digits. Share continues to be strong and robust on Andrex. And part of that is because along with some pricing, we have upgraded the quality over the last couple of years, we feel good about that, where we stand there. Really proud, you know, if you look at year-over-year, I think our between the lines investment we mentioned was up about 190 basis points over the prior year. That reflects our commitment to the brands and our belief that we've got great commercial programming to invest behind it. Okay, great. 'Cause the genesis of, I guess, of the question also is, I feel like one topic that we've been getting a lot of questions of on late is around pricing pressure in consumer tissue. Some of the discussion, particularly in Europe and U.K., from retailers pushing back on pricing or looking to roll back in consumer tissue. We field a lot of questions about, A, if that would be an issue for Kimberly-Clark, and B, in specific to Europe, and B, the risk of that dynamic materializing in the U.S. Just maybe you can add perspective there as well. I think you've said a lot in terms of reinvestment in share momentum, but any perspective on pressure to, quote, "give back pricing" in that category in U.S. and Europe would be helpful. Yeah, I'd say overall, Lauren, you know, pricing initiatives, you know, our net revenue management initiatives are on track, generally across our business, personal care, professional, and consumer tissue. You know, we're cognizant of the same discussions and the similar pressure. You know, we will see, you know, maybe a little bit more promotional activity than we've seen in the past, you know, maybe in the prior six months. You know, I think thus far, it's not showing up in the results or dramatically impacting our results. You know, for the quarter, we had a very solid quarter across Western Europe. Demand was up about double digits, or our organic was up about double digits. Volume hanging in there pretty well. We feel, you know, good about where we are, but also recognize that it's going to be a competitive environment, and we have to be prepared for that. The great thing is, you know, as you've heard us talk about, you know, we've invested in enhancing our revenue growth management analytic capability, we feel like we'll be able to make the right investments at the right time that will be wise and not just overreact to things. Okay, great. Thanks. I'll pass it on. Okay. Thanks, Lauren. Thank you. Your next question is coming from Javier Escalante, from Evercore ISI. Your line is live. Hi, good morning. Hey, good morning, guys. I do would like to understand a little bit better the I think that you call it between the lines expanding the SG&A line, which you do not break out. If you can explain to us, how much is this labor inflation versus more kind of like proactively investing in enhancing the products and the capabilities? Related to that, and a follow-up to Lauren's question, you just did a strategic review and essentially exited Brazil, wrote down Indonesia. What is, if you step back, the main difference between Kimberly-Clark and Procter is that this international tissue business. Could you explain the role of the international tissue business and whether the margin profile is materially lower to the consumer tissue in the U.S.? Thank you very much. Yeah, maybe, Nelson, do you want to start with between the lines? Javier, just so you know, between the lines is a big bucket for us, so it includes both the advertising and, as you point out, some of our general administrative costs. Maybe Nelson can comment. Sure. Yeah, Javier, I mean, of the increase that we're seeing in between the lines, about half of that would be on support behind the brands, the advertising and promotional activities, and it's largely advertising because of all the products that we've been not just launching but upgrading and some of the campaigns that are underway. The other half really relates to a couple of things. One, we've been increasing investments behind certain capabilities, and that continues. Revenue growth management, our digital agenda, which includes, you know, upgrades that we're doing to some of our systems, including, you know, the migration to S/4HANA and some of the other capabilities that we're laying on a multi-year basis across the enterprise. Last but not least, is labor inflation, which again, hits on the overheads and some of the compensation increases, but really impact us in April, starting in the Q2. That, because of the timing of our merit increase. Yeah. Okay, on the consumer tissue, or maybe it's a portfolio question, Javier, I'd say, hey, we, you know, we love all our businesses, and the segments that we operate in. Certainly, you know, and, you know, as we talk about elevate and expand, we're elevating and expanding all those categories, we remain committed to that. You know, that said, you know, we are cognizant that the performance of some businesses, you know, especially in consumer tissue, is a little bit more variable. You know, I think we've been on the record in the past our consumer tissue in the North American North America is a little bit more profitable than some of our international businesses, but we have very strong, profitable international business as well. The decision around exiting Brazil tissue, I think, is specific to the conditions in Brazil. What I've said in the past around portfolio is, hey, we're going to look to add businesses, more with a greater focus on personal care, I would say, internationally, where there's a lot of growth opportunity. Indonesia is one great example where, you know, while, you know, we just reduced our, you know, medium-term expectations for that business with the impairment, you know, we still see a very long and bright future in that country for us, and we remain committed to Indonesia for the long term. You know, at some point, it's going to be, you know, in the top three of the largest diaper markets in the world, and it's probably around the corner for us. We remain excited about that. That said, there are other markets that are more structurally challenged. Brazil tissue was one of those. That was driven by, we would say, some, you know, policies that encouraged capital investment into tissue making. There was a lot of capacity coming in, and we felt like the Neve business and brand would have been in better hands with Suzano than with us. We made that transaction. You know, I think our... We're looking at, you know, we love all the sectors that we're in, but we're going to make decisions based on local market conditions and make sure our brands can be competitive for the long term. As a follow-up, this is very interesting, but as a follow-up, shall we think that in countries where you have very large personal care businesses and some sort of ancillary tissue businesses, like Brazil, for example, that you may continue divesting things like that, say, in China or whatever, where you do have enough critical mass to run that business independently and do not need to have attached a low-margin tissue business? Yeah, I guess it's always possible, Javier. You know, I wouldn't overread into it. I mean, you know, we're comfortable with our businesses and how they're performing, where they are. That said, I think if... You know, I would probably say, you know, we're going to stay close to local marketing conditions and make sure, you know, and this is something I've talked about internally with our management, which is, you know, businesses need to perform for us. While we love all our businesses, they do need to perform, and performance is part of the game for us. That's probably the bigger barometer for us. Well, thank you very much, okay? Very helpful. Okay. Thank you, Javier. Thank you. Bye. Thank you. Your next question is coming from Chris Carey with Wells Fargo. Your line is live. Hey, morning, Chris. Hi, Chris. Hey, good morning, everyone. Can you perhaps just frame your expectations for price mix versus, you know, volumes for the full year or, you know, specifically for the back half of the year? And perhaps just, you know, related to that, you know, how you might be thinking about the spending to reaccelerate volumes. You know, Mike, I heard you say promotions might tick up a little bit. I don't know if that was a comment on any specific region, but, you know, some context on how you see volumes trending from here and the types of actions that you might be taking to, you know, drive a little bit better volume performance would be helpful. Okay. Chris, let me start, and then Nelson may give you some more specifics around the volume versus price. You know, we're pleased with our volume trends. You know, certainly, you know, as just to refresh your memory, Chris, you know, we moved relatively early on pricing. We moved pretty quickly, and so a lot of our pricing went in last year, you know, maybe in the front half of the year. You know, we should start to cycle the price element of the P&L, you know, as we approach the back half. What we would expect to see our volume trends improve, and we are encouraged because we have seen sequential volume improvement overall in the business, and then specifically by sector, kind of as we've gone through the year. We expect to continue to see that. That said, you know, as I said on the call, our market share is a little soft. We were up, or even, and just below 40% of our cohorts, our market category combinations, which is a little less than we would prefer, right? We want to be over 50%. What are the big drivers behind that, Chris? I'd say, you know, a couple of things. You know, one is, we were quick on pricing, and so, you know, in the parlance of one of our general managers, you know, we're seeing competition, quote, unquote, scrape us a little bit, and that means kind of lagging the price to take advantage perhaps on the share momentum side. That's one aspect. The other aspect is, you know, we are cycling a host of one-offs and supply challenges. This is also relevant to Lauren's question when she asked about tissue margin. There's a lot of noise in our numbers just because we're now lacking the third order effects of the Texas storm. There's still supply challenges, et cetera. With that said, there's a bunch of one-off things related to both supply and the cycling that affect the business. Then, we, you know, to be true, you know, we definitely have some competitive issues that are, I would say, normal across our business, and, you know, so we'd like to see performance improve in a few markets, and that's why we want to continue to invest, and we're committed to investing more behind our brands. We feel great about the innovation that we have coming, generally, globally, and we feel great about our commercial programs and recognize that there's better opportunities for us to beef up that our investment to support the brands. You know, Chris, I'd say I'm not really focused on driving promotion to kind of earn back that share. You know, maybe we would respond, you know, you know, certainly to competitive conditions. You know, I'm much more focused on earning share for the long term, and that means kind of, you know, driving consumers or encouraging consumers to try our products, and then having them stay there because they like the quality of our products. That's really our focus. Nelson, you want... To add some flavor, Chris, on the outlook and what we've seen in terms of volume. I mean, at some perspective, I mean, we've seen continued improvement in our volume trends. If you step back, Q4 of last year, volumes were down 7%. Q1 of this year, volumes were down 5%. Q2, the quarter we just closed, volumes were down 3%. Many of the actions that we have to take to deal with the inflation, you know, go back to the first half of last year, the majority of them. As we step into the Q3 of the year and the Q4, we will begin lapping, you know, some of them. What we would expect at this point, or we're projecting, is the volumes to continue to improve on a sequential basis as the year progresses, and the overall revenue growth management actions should decrease in terms of the impact they're having on the top-line growth. We've already seen that from a sequential quarter, Q1 to Q2, that came down. Then mix, we've been doing about a point. I would expect that to be the same as we progress. That's really helpful perspective. Just one follow-up, from a input inflation perspective, can you talk about what specifically improved relative to your prior expectations? If you have any comments on phasing, you know, clearly we're getting into, it seems a bit deflationary into the back half. Is that Q3 and Q4? Does it all hit in Q4? Any context on the phasing would also be helpful. Thanks so much. Just to give you a context, I mean, the latest guidance that we have on costs, on input cost inflation, is that it would be at around $100 million, so that's about $50 million better than what we were forecasting back in April when we last talked. Through the first half, we are at about $190 million negative, it's an impact. Evidently, what's going to happen is we're seeing about a $90 million, give or take, benefit as we go into the balance of the year. We will see some of that coming in in Q3, the balance, obviously, in Q4. What we're seeing is, versus our prior outlook, the overall fiber complex has gotten a little bit better, distribution costs have gotten a little bit better. I will, however, just highlight that on a year-over-year basis, we're still seeing pulp and the overall fiber complex inflationary for us. Even though, if you take it as a whole, the latest outlooks have fiber being year-on-year, down in the mid-teens, if you aggregate everything. Net-net, that's come down. Distribution is about flat now, year-over-year for us. The only big cost bucket that's down significantly continues to be the resin complex, which again, that's down overall for the quarter, 50%. We're projecting about 40% down. Yeah, I mean, Chris, the headline for me is, you know, the cost environment for us has stabilized, that's really, really good news for us. You know, after cycling, I think, 2021 and 2022, where we had record inflation for us. While it's still, you know, modestly inflationary, you know, we can operate very well in a stable cost environment, we're seeing both input costs stabilize and also the supply environment. You know, while we still have some sporadic outages in supply, you know, it's much improved, we're bullish on the road ahead for us on the cost environment. Okay, thanks so much. Thank you. Your next question is coming from Dara Mohsenian from Morgan Stanley. Your line is live. Hi, Dara. Hey, Dara. Hey, good morning. I just wanted to return to share for a bit. I mean, your comments seemed more glass half full here in terms of sequential improvement in share. If we look specifically at U.S. scanner data, some fairly pronounced year-over-year share losses in Q2 in consumer tissue and diapers. was just hoping you could put the U.S. scanner data in context. Second, you know, plans to drive improved share trends going forward. Sounds like perhaps there might be a bit more promotion, but not necessarily a big focus. Innovation ramps up. Is that sort of the plan to drive improved share from here, or how do you think about the share trends in the back half of the years, specifically in the U.S.? Hey. Dara. Definitely, I believe the shares will improve. You know, we feel very confident in our programming and our innovation that's coming. You know, year to date, you know, we feel really good about what that's done in the marketplace. I would say the recent softness, as I mentioned earlier, Dara, you know, primarily related to the relatively faster pace of our price advantages last year, you know, advances last year. That, that kind of really is the primary effect. I would also say in North America, specifically, you know, we are facing a fairly tough comp. Just to refresh your memory, I think personal care, in personal care, we were up 14%, in the year-ago quarter, and across both personal care and tissue, you know, market shares were a bit elevated. That was an artifact, and I think we talked about it this time a year ago, which was our supply was tight, in the first and Q2 of 2021. We had the kind of restock impact and the kind of reselling impact, in the year-ago quarter, and we're cycling that now. We did see, you know, our shares were higher in the year-ago quarter, higher than they historically were, and I think that was, you know, related to the, I would say, coming back into business in Q2 of 2022. But that said, we're not satisfied with our share performance and definitely, you know, want to be up and up or even in over half. You know, we are committed. We feel very good about our programming, especially in North America. I mentioned our Baby Butts, you know, advertising and our product improvements in North America on Huggies. We feel good about where we are, and we're going to continue to invest in the brands and make sure that, you know, we continue to, you know, touch base with our consumers and encourage them to try our products and return. Okay, great. Then on the innovation front, you sound excited there. Any thoughts on if the contribution to sales growth should pick up significantly on innovation as we look out over the next couple years versus the last couple years? Any conceptual thoughts there would be helpful. Yeah, well, just to point out, you know, Dara, I think, you know, I don't have the numbers for this year yet. Last year, our contribution to sales from innovation was probably among the highest in the industry. You know, we do have a couple, you know, internal metrics around net incrementality and then% of sales related to the new to the innovation, and so we felt very strong last year. We feel good about that, but, you know, that said, you know, some of the things that I just showed on the slides in our presentation this morning, you know, we feel really good about the technology and the, you know, the product innovation on the premium side that we're having in diapers, especially in China. You know, in China, organic was up, you know, nearly double-digit against the backdrop where the category is declining double-digit. We've doubled our super premium mix over the last year or so. As I mentioned on the slides, we've launched two really exciting products, what we're calling a Tier Six Funnel, that features really a two-zone liner, one that handles the urine and one that handles the solid waste, or as you know, I like to say, poop. We have something that we're calling OxygenBar Pro, which is really high breathability diaper, which, you know, moms in China really love. We feel good about that, and we're bringing technologies like those around the world. Great. Thanks. Okay. Thanks, Dara. Thank you. Your next question is coming from Nik Modi, from RBC Capital Markets. Your line is live. Thanks. Good morning, everyone. Hi, how are you? Mike, I wanted to just kind of stick on the innovation topic. I mean, I think the messaging from you guys has been very clear in terms of how active you're going to be, you know, later this year, and probably even going into 2024. One of the common, you know, pieces of feedback I get from the retail community is that everyone is really going to be very, very active about innovation because there was a lot of product that was not launched during the COVID timeframe. I just wanted to kind of get your reaction to that and thoughts on that, and could we potentially see maybe, you know, some unexpected levels of spending just because you're going to have to compete with so many other active innovation pipelines and shelf space is finite? Thanks. I mean, Nik, you know, we feel good about our investment levels. I mean, they have ramped up significantly over the last five years. Again, as I just mentioned, you know, we're up about 190 basis points year to date, between the lines, of which, Nelson, you said about half and half. About half is on the advertising side. Really, you know, the model is, you know, we're investing in the advertising primarily to support the innovation. You know, we feel very good about our programming, and as I've said on prior calls, and Alison, our Chief Growth Officer, has said at CAGNY presentations, you know, we're really focused on kind of big unmet needs or, you know, internally, we'll call those demand spaces, where, you know, we feel like: Hey, there's important things that the consumers are looking for out of the category. You know, in a category like diapers or adult care, that may be around, you know, absorption or protection. You know, I mentioned skin health earlier, which is, you know, something that hasn't been a big part of this category, but we think is a very important part of the category, particularly as it, you know, relates to solid waste. Then, you know, comfort, fit, breathability are all big factors. Those are kind of big areas for us to get better in, where I feel like the categories can do a much better job over time. We shared a lot of our thinking around innovation with our customers over the long term, they remain very excited, we're receiving very strong customer support for innovation. You know, I think your point, yeah. Is there going to be more innovation from other manufacturers and across the category? Yes. With, you know, but our focus is on, you know, driving the big innovations that we have and making sure that we invest materially behind those to make sure that we can drive the conversion and the combines of the consumer. Great. Thank you. Okay. Thanks, Nick. Thank you. Your next question is coming from Anna Lizzul, from Bank of America. Your line is live. Good morning, Anna. Hi, Anna. Good morning, and thank you for the question. Just as a follow-up to Chris' question, I wanted to ask on how you're viewing the health of the consumer. You've mentioned a bit of bifurcation this year between the low and higher income consumers on their ability to absorb price. In the latest scanner data from this morning, it implies some volumes are continuing to decelerate while you're getting on price. As a result, I was wondering if we should expect softer volumes to continue in Q3, offset by better pricing, and just how you're seeing these trends play out for the h2 between Q3 and Q4. Yeah, Anna, you know, I would say consumer demand remains resilient. You know, our categories, thus far, remain healthy, you know, and demand has been robust. Just to give you a few numbers, I mean, North American consumer across our categories, it's not us, just the categories, up high single-digit. Western Europe, which is a big developed market for us, up teens, in Latin America, double digits. You know, Kimberly-Clark Professional globally was up double digits. I would say the category, you know, overall, you know, demand remains, you know, pretty robust. Are we aware of concerns, around the corner, you know, regarding related to the economy and economic pressures? For sure, and we talk about that all the time. Thus far, it has not materialized. You know, in the Q2, the elasticity impact has remained muted, somewhat muted. Just to give you an example, on diapers, you know, in the category for the quarter, price was up 6%, and volume was up 1%, so that would probably, you know, say the elasticity impact has not been, you know, as we typically model. So, you know, I'd say on that side, you know, it does reflect the essential nature of our categories. Our, you know, our volume trends, you know, as we kind of cycle our pricing from year ago, you know, we expect our volume trends to continue to improve, and, you know, we think should improve in the back half, in addition, driven by the commercial program innovation that we've been talking about. I think overall, you know, I'd say healthy. Not seeing a whole lot of broad-scale downtiering. You know, we do see it in pockets. You know, there is continued demand for premium in big development markets like the U.S., like China, even in Brazil and Argentina, we're seeing actually the premium tiers start to grow and the value tiers contract a little bit. There are some pockets of downtiering. You know, we're seeing that in Southeast Asia, some markets in Latin America. You know, and to, you know, manage through that, we're going to continue to sharpen our value propositions. I mean, we're very interested in serving, you know, all consumers as category leaders. You know, we feel like we need to serve both, you know, the consumers that are looking for premium products, but also the ones on the value side as well. We have a broad portfolio that spans value to premium, and, you know, we're doing things like adjusting counts to make sure our large packs remain competitive and affordable. We're sharpening our entry price points in small format stores to make sure that consumers can afford to be in the category. Probably most importantly in my mind is, you know, we've talked a lot about innovation. We are doing a better job of accelerating or cascading that innovation through our tiers, you know, from premium to value, that's kind of how we'll manage through it. Thank you. That's very helpful. You also talked a bit about promotion here. I know you're not necessarily, you know, interested in getting back to pre-COVID levels of promotion, you know, investing a little bit more in marketing. You know, with your current levels of marketing spend versus peers, potentially spending more, do you feel that your marketing spend here is efficient versus others in the industry? Well, part one, I'll answer the second part first, Anna. You know, we are. I would say we're highly efficient on the marketing side. I mean, yeah, we've invested quite a bit over the last several years around, you know, revenue management analytics, marketing ROI, our analytics, you know, we maybe to a fault, we're perhaps overly analytical in terms of how we invest, but in general, I feel very good about the returns we're getting, which is why, which is also why it gives us the confidence to invest more. We recognize we're not spending fully at the levels of some of our competitors, you know, but we've made significant progress over the last few years. I think we're up several hundred or a few hundred basis points in advertising spending over the last five years. So we're, I would say, pleased with that progress, but not satisfied. Part of the whole reason why we're very focused on being disciplined about how we drive, you know, both revenue, volume, mix, innovation is that, you know, we feel like it's important to continue and invest behind these brands, because that's the way that, you know, we can, you know, drive category growth and serve our consumers better. Anna, another point on the investment, keep in mind that we have three segments, and we don't invest at the same level in each segment. What we disclose is a total number for the company. If you take as an example, Kimberly-Clark Professional, the level of investment behind Kimberly-Clark Professional is not going to be anywhere near what we're doing on personal care. If you look at consumer tissue, it will vary by market. We look at that very closely, as Mike said, we are very focused on return on investment and being efficient on those dollars that we spend per segment. Great. Thank you very much. Thanks, Anna. Thank you. Your next question is coming from Andrea Teixeira from JP Morgan. Your line is live. Good morning, Andrea. Thank you. Good morning. Good morning, Andrea. Good morning. How are you? Just first on the pricing, I have a question for both you, Mike, and also for clarification for Nelson. On the pricing side, you're getting obviously strong realization, but lapping the pricing that you mentioned, like you were ahead of your competitors. What are you embedding into the second half? Just to be clear, it seems like the guide the new guide, that midpoint implies about 3% organic in the second half. How much you expect? It sounds as if you're expecting an inflection in volumes at some point. I mean, you said sequentially better. Of course, you had negative in the quarter. Just to clarify, we're expecting for the Q3 and potentially the Q4. Nelson, on the gross margin side, the $90 million benefit from prior outlook, my math is like about 45 basis points benefit for the year. Your tax benefit from the impairment is another, I think, $0.05. How should we be thinking of your EPS guidance raise? This 45 basis points benefit would go in flow through EBIT, it seems. I think you're flowing the whole portion. In other words, you're not embedding additional promo pressure or marketing pressure in your outlook. Thank you. Andrea, yeah, thanks for the question. I don't know if I can how well I can answer it all, because I don't think we outlook kind of, you know, the components of price, mix, volume. You know, I would say, am I expecting an inflection on volume? For sure, at some point. You know, I don't know when that's going to be, but at some point, I want volumes to be positive. Just to give you a refresher memory, you know, pre-COVID, you know, I think for the three years leading up to our, you know, a lot of our revenue growth was primarily volume driven. You know, I do expect us, and which is why we're investing in innovation and commercial programs, you know, for the business to grow healthy long term, we need the volumes to be up. So yes, for sure, I'm expecting an inflection at a point. I'm not calling it the next quarter. In 2023? I'm sorry to just make sure. Uh-huh. Again, I said our, you know, our volume trends are improving. I can't give you the inflection point, and I'm not going to forecast it or give guidance on an inflection point. However, I would point out, you know, the majority of our pricing initiatives were, you know, more front-end loaded or front-half loaded last year, and so we are starting to cycle those. You know, I would expect our, you know, the contribution of revenue from price to diminish and hopefully, the contribution to revenue from volume and mix to continue to improve. I would point you, Andrea, to the following: We've seen sequentially in the last couple of quarters, an improvement of about 200 basis points in volume. We went from down 7 to down 5, to down 3. As Mike said, we don't forecast or disclose, you know, the next quarter breakdown, et cetera. Clearly, you're seeing that the volumes have been improving sequentially. That has to do, one, with the pricing, but also with, you know, some of the innovation and the products we have been putting out in the marketplace and the increased investments behind the brands. Yes, we are expecting volumes to improve continuously. I mean, that's our expectation. We are expecting revenue growth management realization to be less of a driver. Again, that has played out over the last few quarters, and as I explained earlier. That's kind of the way to think about it as the year progresses. Yes, we will get back to positive volumes. That's the plan on that end. In terms of the operating profit, again, I'll try to Andrex the question. Your point around what are we flowing, how is it going? We've got a few things playing out in terms of operating profit. I mean, one, we have a slightly better performance in the first half, and we're flowing, you know, part of that through, because we've, you know, that's coming through the actuals. Also, we're having a better outlook on costs, and that's also equating into better performance on the outlook for EBIT, which I believe that's a question you had. For EPS, there are a few puts and takes. In the quarter, yes, tax rate was a bit of a driver, but we're still expecting the tax rate for the year to be in the 23%-25%. Think of that more as a timing. We're not moving away from the guidance in terms of tax. Between the lines, there's really not much of a bigger driver apart from that I would highlight at this point. Thank you. I'll pass it on. Okay. Thank you, Andrea. Thank you. Your next question is coming from Jason English from Goldman Sachs. Your line is live. Morning, Jason. Morning, Jason. Hey, good morning, folks. Congrats on a solid h1. A couple of comments so far or answers to the questions that have been posed to you around market share have focused on competitors that are lagging your price increases. As you noted, those price increases have been in place for pretty long now. It's uncommon for competitors to lag pricing by a couple of months, but it is uncommon to have them lag for a couple of quarters that follow. I imagine your assumption and our assumption should be that they're just not going to follow. If that's the case, do you accept these market share losses? Like, you're just going to live with them, or should we expect you to have to close those price gaps to try to regain that market share? Yeah, I. A couple of things, Jason. You know, I think great point. You know, a thing I'll say is, you know, generally, at this point, you know, I would say we've seen list prices move, you know. When I say, you know, quote, unquote, "scraping" or you know, your word lagging, you know, I'd say we have seen a little bit higher promotion in some markets. Particularly in Latin America, in Brazil, for instance, you know, we've seen continued promotional activity. I think that has been, you know, what we've observed more commonly. You know, the list prices had lagged for a period. You know, at this point, I'd say a lot of the brands have moved as well. You know, so overall, I'd say the tactic is around the promotional side. As I've mentioned, Jason, you know, hey, we're going to be smart about it. You know, it's not the way that I, you know, we think is the valuable way to build the business in these categories. You know, but we have invested in our GM capability. We do know the analytics, and we can make wise investments around promotion. The bigger thing is, and I think to your point, I'm not going to live with, you know, we have to grow shares over long term to sustain the business, just like we have to have volumes up. You know, market shares need to grow. That's why our goal is to be upper even in more than, you know, in about half or more. That's the goal. That's also why, you know, you've heard us talk quite a bit about our innovation and commercial programs. It's why we spend a lot of time with consumers talking about them and spend a lot of time with our customers talking about them, and we feel good about where we are. I think you're certainly pointing to, you know, the one area that I feel like we really need to improve, and we're committed to doing that. Okay. Okay, thank you. I'll pass it on. Thanks, Jason. Thanks. Thank you. Your next question is coming from Peter Grom from UBS. Your line is live. Morning, Peter. Thanks, operator. Hey, good morning, guys, you know, hope you're doing well. I guess I kind of wanted to get some more color on what's embedded in the outlook from a gross margin perspective. You know, I think previously the expectation was, you know, 230 basis points. You reiterated your outlook for an increase in ad spend of 100 basis points this morning. Is the expectation for 250 basis points now? You know, the premise of the question is, it just seems that, you know, that would imply that, you know, gross margin improvement would kind of taper off in the back half of the year, and just given what you're seeing in terms of cost pressures and productivity, that would seem somewhat conservative. Just if you could help us understand, you know, the outlook for gross margin today and any phasing in the back half of the year, that would be helpful. Yeah, sure. Let me walk a little bit through the outlook and some of the components that we have. As a reminder, Peter, what I stated at the last call was that our expectation was at least 230 basis points because it was a straight math. Obviously, we've reached, you know, 34% gross margins in the Q2. We're very pleased with the progress that has been made as we seek to recover back to, you know, the pre-COVID levels of 35% and then expand from there. We've had 2 quarters of very strong gains in gross margin. Obviously, as we go into the back half of the year, I'd state two things: one, we do expect to have year-over-year gains in gross margins. We do expect that gross margins, you know, margins as a whole, gross operating profit, should, you know, expand, you know, as, in the, in the second half, but not at the pace that we saw in the first half. As you're thinking about your numbers, that's the way I would think about it. We would, you know, exit the year definitely stronger. The implied number, yes, as you say, would be 250 on the gross margin, but that again, that's at least. That's the way I would characterize that, because obviously, we've been expanding ahead of that year to date. As you think about the, you know, the balance of the year, I'd also like to highlight a few things. On the outlook on costs, we have not changed the currency impact that we foresee. We only took down cost by about $50 million. We still expect the full year to be around the $300 million-$400 million of inflation and currency. In the other costs, we still expect around $200 million. It's been playing out in the first half, right around the level we expected. Net, net, you know, good progress on margins. We're pleased with how that's coming along. We expect to continue to make gains, but not at the same pace as what we did in the first half. Yeah, maybe, Peter, I'll just add, you know, just the outlook as Nelson just teed up, you know, really does reflect the strength of our first half and our confidence in our underlying plan. You know, as I mentioned earlier, our categories thus far remain healthy, and demand has been robust. We have strong innovation and commercial lineup, and we feel great to be investing more in that. The cost environment has been stable, and so while it's still a headwind, you know, I'd say we're seeing glimpses of reversion, and so that's a good thing. The other part of it, in our outlook embedded in it is, you know, we do expect ongoing volatility. Certainly, you know, as you're well aware, there's a lot of economic uncertainty in our major markets, soft versus a hard landing and the implications for consumer spending, you know, first and foremost. We're still dealing with a lot of political uncertainty, including the effects of the war. Then, as I mentioned earlier, you know, we still have, you know, some sporadic supply challenges. While, you know, it's much improved versus where it was two years ago, you know, we still have some outages. So there's some inherent volatility, but overall, we feel very good about where the business is and where we're going and feel very good about our outlook. Thanks. That's really helpful. I guess maybe one follow-up on that. You know, I guess just given that the. You mentioned some, you know, reversion in the cost, you know, on the horizon. I mean, I guess based on where things stand today, you know, how should we be thinking about, you know, cost pressures looking out to 2024? I mean, you know, should we expect that, you know, this could remain a tailwind looking ahead? I guess the bigger question is, how does this really inform your view on when you expect to return to that 35% gross margin target you've outlined? Well, you know, certainly, I'll start with, I don't think I'm going to give you guidance on 2024 yet, but, you know, I think. You know, I'm definitely very pleased with our progress on margin recovery. You know, certainly as you saw, our gross and operating margins expand, you know, I think we've done a great job with the revenue realization, you know, managing the cost environment, and so, you know, we feel very good about that. You know, our goal is to, you know, restore our margins to where they were back in 2019, our gross margins. You know, I think we are making that progress, but we aren't going to stop there either. You know, so, when I got into this role back in 2019, you know, I said at that time, you know, one of our goals is to expand our margins over time. You know, what we're trying to do, Peter, is, you know, one, restore, and then when we get there, you know, then we need to expand. There's not two parts of the plan, there's one plan. We're going to continue to work that, all the levers that we've talked about, both from a revenue management perspective and a cost management perspective, to drive, you know, ongoing margin expansion. Thanks so much for that, Mike. I'll pass it on. Okay. Thank you, Peter. Thank you. That concludes our Q&A session. I will now hand the conference back to our host for closing remarks. Please go ahead. Okay. Thank you all for joining us for the call today. We look forward to seeing you in Q3, at the end of Q3. Thank you. Thank you, everyone. This concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.