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Kimberly Clark Corporation (NYSE:KMB)
Q3 2018 Earnings Conference Call
Oct. 22, 2018, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

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 today's presentation, we will open the floor for questions. At that time, instructions will be given as to the procedure to follow if you'd like to ask an audio question. It is now my pleasure to introduce today's first presenter, Mr. Paul Alexander.

Paul Alexander -- Vice President, Investor Relations

Thank you, and good morning, everyone. Welcome to our conference call. Here with us today are Tom Falk, Chairman and Chief Executive Officer; Mike Hsu, President and Chief Operating Officer; and Maria Henry, our CFO.

Today's call will focus on three things -- our third quarter 2018 results, our full-year outlook, and this mornings announcement that Mike Hsu has been elected Kimberly Clark's next Chief Executive Officer, effective January 1, 2019. This morning you'll hear from Tom, Mike, and Maria, and then we'll finish with Q&A. As usual, we have a presentation of today's materials in the investor section of our website.

As a reminder, we will be making forward-looking statements this morning. Please see the Risk Factors section of our latest annual report on Form 10-K for further discussion of forward-looking statements. Finally, we'll be referring to adjusted results and outlook. Both exclude certain items described in this morning's earnings news release. That release has further information about these adjustments and reconciliations to comparable GAAP financial measures. Now, I'll turn it over to Tom.

Thomas J. Falk -- Chairman and Chief Executive Officer

Thanks, Paul, and good morning, everyone. I'd like to be the first to congratulate Mike Hsu on his upcoming move to become Chief Executive Officer of Kimberly Clark. So, congratulations, Mike. The Board of Directors and I have been working on this succession plan for several years. It was my recommendation that Mike it he right choice and now is the right time. This is a carefully planned and natural transition.

I'm confident Mike is the right leader to build on Kimberly Clark's nearly 150-year legacy of caring for the needs of people around the world while delivering top-tier performance. He's passionate about our people, our brands, and our businesses, and he has a deep understanding of what it takes to win in the marketplace. Now let me hand the call over to Mike.

Michael D. Hsu -- President and Chief Operating Officer

Good morning, everyone. First, I'd like to thank you, Tom, for your tremendous leadership of Kimberly Clark over the past 35 years, especially the last 16 years as CEO. During your tenure, you really transformed K-C into one of the world's leading consumer products companies. You've also been a great mentor to me, and I'm honored to lead this great company, and I'm excited about our future.

So now, back to the business at hand. I'm going to turn the call over to Maria to talk about the third quarter results.

Maria Henry -- Chief Financial Officer

Congratulations, both Tom and Mike. Tom, your great leadership and mentorship since I joined in 2015, and Mike, looking forward to the future. As awkward as it is, I'm going to pivot to the headlines for the quarter. So let's get into it.

Organic sales were up 1%, driven by 3% growth in developing and emerging markets. Margins and operating profit were impacted by significant commodity inflation and negative foreign currency effects. Hoping to partially offset those headwinds, we delivered strong cost savings and reduced overhead spending. And with the benefit of lower taxes, our adjusted earnings per share increased 7%. Finally, we continue to return cash to shareholders.

Now let's look at the details of the results, starting with sales. Our third quarter net sales were $4.6 billion. That's down 2% year-on-year, with a 3-point drag from currency rates. Organic sales increased 1% versus a year ago. Net selling prices and product mix each improved 1%, while volumes fell 1 point.

Moving on to profitability. Third quarter adjusted gross margin was 33.2%, down 250 basis points year-on-year. Third quarter adjusted operating margin was 17.4%, down 120 basis points. Commodities were a drag of $210 million in the quarter, primarily due to pulp and other raw materials. We're now expected that full-year commodity inflation will be in the upper half of our previous estimate of $675 to $775 million.

Foreign currencies were also a sizable headwind in the quarter, reducing operating profit by high single-digit rates. On the other hand, we achieved $105 million of forced cost savings, including significant benefits from negotiated short-term raw materials contracts. We also delivered $40 million of cost savings from our restructuring program. In terms of that program, we're making good progress overall, including closing a small consumer tissue converting facility in Latin America this quarter.

In addition to the restructuring, we also continued to reduce our overhead costs. In total, between-the-lines spending declined 150 basis points as a percentage of net sales. All in all, adjusted operating profit was down 8%. On the bottom line, third quarter adjusted earnings per share were $1.71, up 7% year-over-year. That includes significant benefits from a lower tax rate, along with lower interest and share count. We now expect the full-year tax rate will between 21% to 22%, which is better than our estimate of 23% from three months ago, largely because of some planning initiatives.

I'm pleased that our effective tax rate is expected to be below target this year. Looking ahead at this point, I expect our rate in 2019 will move back up somewhere into the 23% to 26% range that we initially targeted for 2018. Therefore, we're expecting that the tax rate will be a pretty significant year-on-year earnings headwind for us in 2019.

Now let's turn to cash flow and capital efficiency. Cash provided by operations in the third quarter was $662 million, compared to $805 million in the year-ago quarter. The decrease increased a $100 million U.S. pension plan contribution, restructuring payments, and the benefit of lower taxes. We continue to allocate capital in shareholder-friendly ways. Dividends and share repurchases totaled approximately $520 million in the third quarter. We expect the full-year amount will total $2.2 billion, in line with our $2.1 to $2.3 billion target.

Looking at our segments. In personal care, organic sales were up 2%. Performance was led by developing and emerging markets, with organic sales up 5%. In terms of the highlights for D&E personal care this quarter, in Brazil, organic sales were up high teens, including inflationary-driven price increases, and solid volume growth on diapers. In Argentina, organic sales were also up high teens, as price realization continues to accelerate, while our volumes, both for us and for the category, were down.

In Eastern Europe, organic sales increased double digits for the fourth consecutive quarter, with strong volume growth on Huggies and Kotex. In China, organic sales were down high teens, due to lower diaper sales and continued challenging market conditions. Elsewhere in Asia, ASEAN, which represents about 3% of Kimberly Clark sales across all of our business segments, ASEAN had strong double-digit organic sales growth in personal care, driven by Huggies in Vietnam.

Personal care organic sales were up 2% in North America. Infant and child care volumes increased high single-digits compared to a mid-single-digit decline last year. Pull-Ups training pants momentum remained strong, and Huggies diapers benefited from growth in e-commerce and the timing of promotional shipments.

Adult care volumes were down mid-single-digits, reflecting strong growth last year, changes in promotional timing, and competitive activity. Overall, personal care segment operating margins continue to be healthy at 20.7%, although down 40 basis points year-on-year.

Switching to the consumer tissue segment. Organic sales fell 2%. North America organic sales declined 5%, primarily due to lower promotional activity. Overall, our initiatives to improve net realized revenue led to a 2% increase in net selling prices, and a 1% improvement in mix. Developed markets outside of North America grew consumer tissue organic sales by 4%, led by Western and Central Europe. Consumer tissue segment operating margins were 14.4%. That's down 310 basis points, driven by commodity inflation and lower volumes, partially offset by higher pricing and cost savings.

Lastly, in our Kimberly Clark professional segment, organic sales grew 1%. In D&E markets, K-C professional organic sales rose 4%, driven by continued volume growth in Asia-Pacific. Organic sales were up slightly in North America, including volume growth in washroom products and wipers. K-C professional segment operating margins were 18.9%. That's down 160 basis points versus record performance last year. Results this year were impacted by commodity and currency headwinds.

In summary, our third quarter results were impacted by a difficult environment, with depreciating currencies adding to continued significant commodity inflation. Nonetheless, we achieved higher net selling prices, delivered significant cost savings, and reduced overhead spending. We continue to allocate capital in shareholder-friendly ways. With that, I'll turn it back over to Mike to comment on our full-year outlook.

Michael D. Hsu -- President and Chief Operating Officer

Thanks, Maria. As most of you know, the overall environment remains challenging, especially with commodity inflation and currency volatility. In the near-term, we're responding by aggressively managing our business up and down the P&L. At the same time, we continue to execute our long-term strategy to deliver sustainable growth. As we mentioned in this morning's new release, we are confirming our previous outlook for our key top and bottom line financial target. On the top line, we continue to target organic sales growth of approximately 1%. That's equal to our actual performance through 9 months.

I'm encouraged that we're making progress improving net selling prices. Pricing went from being down 1% in the first half to up 1% in the third quarter. That's consistent with what we said in July, when we indicated that pricing should be modestly positive in the back half of the year. In mid-August, we announced price increases on the majority of our consumer businesses in North America. Many of those increases will start to go into effect in the first quarter of 2019. Realizing higher selling prices will be important next year, given that recent commodity forecasts and foreign currency rates imply pretty significant headwinds again in 2019.

Now looking at commodities and currencies for 2018, we expect these factors will negatively impact our adjusted operating profit by slightly more than the 20% to 25% range we assumed in July. That's mostly because of the recent weakness in many foreign currencies, especially in Latin America. In addition, our commodity inflation outlook is a bit higher on average. And so as a result, our teams are further reducing costs and raising selling prices. In addition, as Maria mentioned, our outlook for this year's tax rate has improved.

All in all, we continue to target bottom line adjusted earnings per share of $6.60 to $6.80 for the year, up 6% to 9% year-on-year. So let me wrap up with the following. First, I'm extremely proud of the 40,000 K-C employees around the world who are committed to our vision to lead the world in essentials for a better life. We have a strong senior leadership team in place to help lead this company forward.

Second, while the current environment is challenging, I'm optimistic about the long-term opportunities we have to grow our brands around the world. Third, our teams are focused on improving our business, winning in the marketplace, and creating long-term shareholder value. So that concludes our prepared remarks, and now we'll be happy to take your questions.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, at this time, the floor is open for your questions. If you would like to ask a question, you may do so now by pressing *1. If at any time your question has been answered or you need to remove yourself from the question queue, press *2. Again, to ask a question now, please press *1. Our first question comes from Oliva Tong with Bank of America Merrill Lynch.

Olivia Tong -- Bank of America Merrill Lynch -- Analyst

Thanks, good morning. First, congrats Mike, and congrats Tom.

Thomas J. Falk -- Chairman and Chief Executive Officer

Thank you.

Michael D. Hsu -- President and Chief Operating Officer

Thank you.

Olivia Tong -- Bank of America Merrill Lynch -- Analyst

I wanted to ask you about the progress on pricing, particularly in personal care. Obviously, North America was still negative but less so. As we go into Q4, should we expect between positive as some of your price plans take hold, or are there still promotions still planned that could depress that realization?

Then in the developing and emerging markets, it's nice to see also that strong positive, but how much more can you price, even if it is cost-justified, given the macro challenges across several of the key markets?

Michael D. Hsu -- President and Chief Operating Officer

Maria, maybe I'll comment on the first part. I think overall, I think globally I would say our pricing overall is on track, and that we're cautiously optimistic about the progress we're making, and that we will make progress. As you're probably well aware, we've taken pretty significant actions, especially in North America, Europe, and Latin America. North America and Europe, generally mid- to single-digit price increases on the brands we've increased prices on. In Latin America, generally double-digit.

At retail in North America, we've had a wide range of discussions that you would probably expect us to have. But I think we're all in agreement that we're going to try to move forward and minimize the potential disruptive impact on consumers, but we recognize that the market does need to move upward. Right now, we're cautiously optimistic that the market is moving in the right direction.

With regard to the D&E, I think it is a challenge. I mean, one of the headlines is the Argentinian consumer is highly stressed. We are raising prices double digits to offset both a commodity impact and also the currency impacts. Year-on-year in the diaper category, the diaper price will increase almost 100% for this year, while their wages have increased generally about a quarter of that. So it's a challenge, but we are doing what we need to do to manage this business.

Olivia Tong -- Bank of America Merrill Lynch -- Analyst

Got it.

Thomas J. Falk -- Chairman and Chief Executive Officer

Thanks, Olivia. Go ahead, Olivia.

Olivia Tong -- Bank of America Merrill Lynch -- Analyst

Thank you. On China, you didn't touch on that, but with all the talk about the opportunity there, particularly in recent conferences, are you concerned about the decline in China now that the volume is also down in addition to price? Is there any time in launch time? Because I think you mentioned last quarter that you had some innovation coming. I assume you still think this is just part of a cycle, rather than a long-term market change. What are you doing to shift the trajectory and what are the mile markers you're using to indicate where things stand?

Michael D. Hsu -- President and Chief Operating Officer

On China, obviously we're not suffered with our performance right now in China. It remains our biggest long-term opportunity, but it's also a complex market and it's got its challenges. I think the team is pulling on the right levers that you would want them to pull. That starts with improving the product. We are excited about the product enhancements we've made to the line.

But that said, pricing did come down in the middle of Q2, and we're going to be competitive on price in that marketplace, but we believe -- I don't really believe that market out in China is commoditizing. We are seeing consumers still interested in new products and product quality. That said, a number of manufacturers have pulled pricing down, and so we're going to need to be competitive. But I do view it as a challenge that's going to be ongoing for a while in the near-term, but long-term, it's a big growth market. Volume for the year to date has been up high single digits. The challenge has been the pricing.

Olivia Tong -- Bank of America Merrill Lynch -- Analyst

Got it. Thank you.

Operator

Thank you. Our next question comes from Jason English with Goldman Sachs.

Jason English -- Goldman Sachs -- Analyst

Hey, good morning, folks. Thank you for the question. Michael, you guys have clearly faced a lot of headwinds in the last couple of years, both on competition and cost. You've pulled a lot of levers to minimize the pain at the bottom line, including reductions in a lot of discretionary spend, as is highlighted once again today in your release. Do you believe your reductions in discretionary spend have left you competitively vulnerable? Should we expect you to use any of your productivity and price benefits to be utilized to restore investments going forward?

Michael D. Hsu -- President and Chief Operating Officer

Maybe I'll start. Maybe Maria can comment as well. One, I think the simple answer, Jason, is no. I think the teams are doing a great job getting more efficient at cost. We had a very big global restructuring that we announced at the beginning of this year that is proceeding very, very well. I think we are identifying a lot of good opportunities for us to improve our efficiency.

However, we're still going to spend, and we are spending this year, in the right areas -- product innovation, marketing programs, and sales execution are critical growth drivers for us. We feel like we're investing in the right areas. But we also had, I had identified opportunities for us where we weren't spending efficiently, and we're managing that better. But Maria, any additional?

Maria Henry -- Chief Financial Officer

Yeah, I think that's certainly the headline, Mike. But if you look at where we're taking the biggest amount of cost out, it's in the general administrative types of activities. And on the discretionary activities like travel, consulting, those types of things, really pulling back and working differently in order to get done what we need to get done. We've also had a big focus on reducing non-working advertising cost, and that has really paid off for us this year. We're leveraging the restructuring program to structurally drive down the cost base of the company, and that portion of that will be sustainable.

Michael D. Hsu -- President and Chief Operating Officer

The thing I'll note further, Jason, is I think overall, I think our in-market performance in most geographies is improving, especially in big markets in our big businesses in North America consumer, I think are getting better in diapers and parts of consumer tissue. I think in many of our D&E markets, with one notable exception, China being that one, are having good performance in their markets. So I think we are investing in the right places.

Jason English -- Goldman Sachs -- Analyst

Very helpful. Thank you.

Thomas J. Falk -- Chairman and Chief Executive Officer

Thanks, Jason.

Operator

Our next question comes from Ali Dibadj from Bernstein.

Ali Dibadj -- Sanford C. Bernstein & Co. -- Analyst

Hey, guys. Congrats, Mike and Tom. A few questions for me. First, I guess we were a little surprised by the margin disappointment, even with the start-ups in pricing this looks like, and it looks like we're going to see continued pressure on EBIT, given your guidance has worsened a little bit here. A lot of the pressure looks like it's coming from consumer tissue, so that's pulp. But it looks like FORCE was a little bit behind what we would've expected. Pricing is still on the comm, and you've got to believe it's going to happen. Can you talk a little bit about the trajectory you expect your margins to look like over the next few quarters, given all those moving parts?

Michael D. Hsu -- President and Chief Operating Officer

Yeah, the trajectory will go up in the next few quarters. I think the challenge has been we announced our pricing in mid-August. Obviously, most of that has not taken root yet. We did have net selling prices in consumer tissue up a couple points this quarter in North America, which was good progress. That was related to some of the innovation and the D-sheet that we made more at the beginning of the year. So, we've got more price increases coming through, generally mid- to high single digits in North America, and we'll start to see that generally take place in the first quarter of 2019. That includes personal care, as well.

In developing and emerging markets, we have made significant progress, particularly in Latin America, but we've got huge currency headwinds there, and in Europe.

Maria Henry -- Chief Financial Officer

Yeah, and if I comment on the cost side, Ali, what I say for the quarter was that pulp was relatively stable if you look at the breakdown of what we gave of the $210 million on inflation. In the other raw materials, polymer was worse than we expected in the third quarter. It was up 40% year-on-year, and we weren't expecting that coming in. On FORCE cost savings at $105 million, I describe it as a solid number, but it was somewhat behind our expectation. We had some plant outages in our K-C P business, and so we lost some momentum there on the FORCE cost savings within that segment in the quarter.

Then the other big one is currency. We had a significant drag from transactional currency in the quarter, particularly in Latin America, where we not only have the translational effect, but in those countries they're buying U.S. dollar denominated pulp, and with the lower value currency, that's a double hit for that region of our business. So the transactional currency was a meaningful negative for us in the quarter.

Michael D. Hsu -- President and Chief Operating Officer

Yeah, interesting side note, I think if you add up and look at the quarter results, which the breakdown is pricing and cost savings generally offset commodities, it was the unexpected hit in currency that probably left that a little soft there.

Ali Dibadj -- Sanford C. Bernstein & Co. -- Analyst

But so to follow up on that a little bit in another question. One is the pressure was in consumer tissue, specifically on margins, that's disproportionally a domestic business, No. 1, and it looks like pulp is, to your point, kind of stabilized. So a better understanding there. Then on Latin America pricing, I mean, if we're doing our math right, Argentina, call is 2% to 3% of your sales, 40% to 50% price inflation, so the bulk of your pricing actually came from that, right? Just Argentina. So those are follow-ups there. Then just a broader question, Mike, for you, as you look forward, given all these moving parts and challenges, are there pieces of the business that you think you want to spend more time on as you look forward for your vision for KMB?

Michael D. Hsu -- President and Chief Operating Officer

Let me come back to -- I'll address the Argentina. I think in Latin America, we've taken fairly broad pricing increases in many markets, most notably also Brazil. So it's more than just Argentina. Ali, I wasn't clear about your question about North America consumer tissue?

Ali Dibadj -- Sanford C. Bernstein & Co. -- Analyst

Well, so I'm just saying your consumer tissue operating margins were where you really had some pressure this quarter. That's disproportionally a North American business. You're taking the pricing in North America. It's not going to be resolved going forward by international pricing, so I'm trying to understand the trajectory of the consumer tissue operating margin, in particular, as you go forward here as well.

Michael D. Hsu -- President and Chief Operating Officer

I think in the quarter, obviously and the North America tissue team has done a nice job trying to offset a lot of it. It's a pretty big hit from a commodity impact. They've offset, I would say about half of it. But obviously that's not good enough and therefore, that's why we did the additional price move in August. We'll start to see that impact starting in January.

Thomas J. Falk -- Chairman and Chief Executive Officer

Ali, I would just add that margins were up sequentially in that business by 30 basis points, and so that's in line with what we were expecting, given that the pricing, as Mike has said a couple of times, hasn't come into the market yet.

Michael D. Hsu -- President and Chief Operating Officer

Then maybe with regard to your third question, strategic direction. I'll give you a couple thoughts. Right now, I'm still focused on the job I'm in, which is we've got to finish '18 strong, so that's kind of where the focus us. We will have plenty of opportunity to talk strategic direction as this transition occurs, so I'll share more then. But I'll give you just a couple thoughts. A few things. Here's what's not going to really change going forward, which is one, we're going to continue to manage the business in a shareholder-friendly way, with a focus on our shareholders; we're going to continue to operate with balance on long-term perspective on what drives shareholder value; and the core tenets.

As you would expect, Ali, it's a CPG business, so we're going to focus on innovation, brand building, in-market execution, and cost savings. Those are the four areas that every company kind of manages. I think it's kind of how you assemble them. So when you talk about maybe where the strategic emphasis is, I will tell you a couple thought starters that we've been working on. One is we've got big businesses in big developed markets. I think they are inherently slower growing, right? But I think we have a big opportunity to elevate those categories and premium-ize those categories and make those categories worth paying more for. The great thing that we have in our categories is we've got actual performance differences, and where performance really matters.

So elevate our core business is the key opportunity for us. The other big opportunity obviously is the developing and emerging market potential. We need to continue to lead the world in driving our personal care business across D&E markets. It's a multi-billion-dollar opportunity overall long time. I think we can do a better job driving the weight of that in our portfolio, and also how we lead market development across the important markets for us.

The third big area is on the digital and e-commerce front. I think it can have a transformative impact on our business. I think our business really matters to our consumers and our retailers because of the ring, the spend they're spending our categories, the frequency they're using it, and the long duration they're in our categories, and so we're really going to look to focus on how we transform our business through digital and e-commerce. So those are a couple thought starters. I don't know if that answers your question.

Ali Dibadj -- Sanford C. Bernstein & Co. -- Analyst

It helps. Look forward to chatting more about it. Congrats, again.

Thomas J. Falk -- Chairman and Chief Executive Officer

Thanks, Ali.

Operator

Thank you. Our next question comes from Bonnie Herzog with Wells Fargo.

Bonnie Herzog -- Wells Fargo Securities -- Analyst

Thank you. Good morning, and congrats to both Tom and Mike. I have a question on your 1% organic sales growth in the quarter. I'm wondering if this performance was better or maybe worse than your expectations internally. I guess I'm thinking about this in the context of your fourth quarter expectations, which imply that your organic sales growth won't accelerate sequentially for you to meet your 1% full-year guidance. So I guess I'm wondering why this is and how you guys are thinking about the impact of some of the pricing actions you've mentioned.

Michael D. Hsu -- President and Chief Operating Officer

I think, Bonnie, overall on-track for us. Year-to-date, we're up about 1%. We're expecting for the full-year to be on that path. The important thing is what I mentioned a little earlier. We are seeing improved performance in many of our key markets, including in North America, and most of our D&E markets. In a lot of D&E markets, we're up a few points on share in our key categories, and we are seeing good organic growth.

Bonnie Herzog -- Wells Fargo Securities -- Analyst

Okay. Then I had a couple questions on private label. First I was curious to hear from you why we're not seeing more trade-up into branded products from private label, especially given the current strength across the U.S. macro environment in the consumer. Second, we're hearing a lot of the private label has stalled on pricing. Could you guys confirm this? Then wondering how you see the relative price gaps narrowing, and if you think this should encourage more trade-up to your brands? Thanks.

Michael D. Hsu -- President and Chief Operating Officer

I would love to see more trade-up, faster. I think the recent private label trends are a little mixed. If you look at our categories, I think in the third quarter, private label was up in 3, down in 3, and flat in 2. Overall kind of mix, it was up a bit more across the consumer tissue categories for us. I think we are seeing though improved performance in parts of our tissue business, particularly bath tissue, both Scott 1000 and Cottonelle. Kleenex premium side, and our towels business is also performing better.

I think the focus there for us is we really are focused on the product experience and bringing innovation. Those were areas, particularly on bath tissue this year, where we brought really good innovation. I think that's why we are seeing improved performance there. Now as Maria mentioned, our overall organic in consumer tissue in North America for the quarter was down 5%. A lot of that was associated with some promotion shifts that we had, or decreases in promotional spending that we're making to try to improve profitability of the business. The underlying base performance of the business and the brands, particularly in bath, I think is improving.

Operator

Our next question comes from Lauren Lieberman with Barclays.

Lauren Lieberman -- Barclays Capital -- Analyst

Great, thank you. Good morning. I was hoping you could talk a little bit about the adult incontinence category in the U.S. Because I think that when Procter reentered the category, the conversation was sort of move activity, more advertising raises awareness, raises the profile of the category, and grows the category, so share wasn't really the right metric to be watching. But recently, and you mentioned it in the release, but also you said in the Nielsen data that actually sales trends have turned negative. Can you just talk a little bit about what's going on in that business? If there was something in the quarter in particular in terms of promotional timing that may have impacted it, or if, in fact, it's now not just a share game, or not just share is the indicator, we should be watching actually the sales growth. Thanks.

Michael D. Hsu -- President and Chief Operating Officer

Lauren, in North American adult care, I think it's also a soft area for us that we want to improve our performance in. I think the team is addressing it. One is that's probably the one category in North America we're competitive and promotional activity remains fairly elevated. We are still seeing some aggressive couponing out there. And so that's kind of the environment we're operating in. Also in that, I think the opportunity for us is we have had some negative distribution changes that the team is working to correct.

We also are working on some product improvements as well. I think it's a competitive category. There's still growth inherent in that business. The focus for us going forward is to make sure that we're focused on driving category growth. I'll note that I think before P&G reentered, we were growing hot, low double digits or even mid-double digits for a number of years. That growth has slowed down with maybe a little more competitive activity.

My hypothesis would be a little bit more, too much emphasis competing versus marketing message driving category expansion, which is what we're getting back to, and we're going to focus on bringing consumers back into the category, what we call new category entrants, back into the category.

Lauren Lieberman -- Barclays Capital -- Analyst

Okay. That's really helpful. Then also with that as backdrop, it feels like Procter, your primary competitor, is behaving a bit differently in terms of in-store execution, maybe working with retailers a bit differently to work on their display space and activity in store. Can you just talk about if in your business, as you've already mentioned, maybe some distribution losses on incontinence, but if you feel like you're still getting your fair share of activity in the store, if there needs to be a change in perspective on how you're working with retailers to get support for your innovation in store?

Michael D. Hsu -- President and Chief Operating Officer

I would say that while we feel like we're getting our fair share of performances, as the opportunity for us is we can still enhance and improve our in-store execution globally. It's a big opportunity for us. I spent some years in sales, I mean, I tend to be a little obsessed with our performance there, and still think we have an opportunity to improve. So while we can respect what our competitors are doing, we see our own opportunities. While a lot of our performance we're pretty pleased with, we know we can be a lot better, and we're going to focus there.

Lauren Lieberman -- Barclays Capital -- Analyst

Okay, great. Thanks so much.

Operator

Thank you. Our next question comes from Dara Mohsenian with Morgan Stanley.

Dara Mohsenian -- Morgan Stanley & Co. -- Analyst

Hey, good morning. Congrats, Tom and Mike. I have two main questions. First, I guess this is just more of a forward-looking version of Jason's question, but I'd love to hear about any plans going forward in terms of reinvestment behind the business, in marketing or other areas, under your leadership, Mike. It's typical that a new CEO often chooses the opportunity to reinvest in the business. There's been some market share pressure recently. Theoretically, you need to support the business post-pricing. Just given those factors, should we expect more reinvestment by the business as you look going forward? Could it be significant? Or are you pretty comfortable with the level of investment that you're planning for leaving 2018?

Then also, Mike on 2019, I know you won't provide guidance today, but you did go out of your way to cite the recent commodity forecast and forward currency rates implies some significant headwinds. Maria mentioned the tax rates going back up significantly. It seems like some of those headwinds are worse than you would've expected a few months ago, so I'm just curious, are there additional areas you're coming up with to offset those pressures?

Obviously, you've announced a lot of price increases. Is it possible to get more going forward? Another round of pricing? Is there more room on the cost side where you've been effective the last few years beyond the specific programs you've outlined? It just feels like some of those headwinds could be pretty significant for next year, so I'm wondering about some of the offsets the other way. Thanks.

Michael D. Hsu -- President and Chief Operating Officer

Okay. Maybe I'll start, and maybe Maria, you can talk a little bit too. I think the first part is on the investment. There's probably not a general manager in any company that would say they're happy with their overall investment levels. So while we spend what's average for a CPG, would I like to put more behind good ideas? Yes. That's a big reason why we've done the restructuring, and that's to provide fuel for reinvestment, which we are doing in some cases.

I think also, if you think about what I just talked about with Ali, which is the three planks elevate the core of our business to lead personal care development across D&E markets, and drive our digital and e-commerce growth. I think those are areas that would be good candidates for investment. As we think about how do we build out our market positions in international markets and leading marketing development, there could be investment dollars well spent after that. Or in terms of how we fund innovation. So, we are going to do some of those things. I don't think we're ready to share the details of that yet, and that's still to come. So I think that's Part maybe 1.

I think with regard to what you were asking about, maybe the outlook. One is we're not, our practice is not to give guidance on 2019 right now; we'll do that in January. That's how we do that, and so we're going to stick to that. I will tell you a couple things though, just to kind of get, just to give you a little more context. We're going to continue to focus on building a holistic plan. That means focusing on the proven long-term drivers like innovation, brand building, and cost efficiency. So, we're going to do that.

However, it's fair to say the near-term challenge has become more difficult with commodity inflation. You can probably see that the commodity and currency impact has amplified over the last two or three months. Just for reference, I think in this year the commodity and currency combined has equaled to about $1.00 of EPS negative impact on the P&L. So we expect the commodity and currency to be further headwind next year. Part of that is some of our contracted terms for some of our key commodities like pulp are unlikely to be as favorable as they are this year, given the current environment. With that, we've got that to work through. Our tax rate is going to be a drag.

But the pricing and the cost savings are obviously going to be help for us next year. So we're going to give you more expectation guidance as we get back to January. But those were a few thoughts.

Maria Henry -- Chief Financial Officer

I don't think I have anything to add. Obviously, we'll update you in January, when we're together. The comments that we're making on a couple of those items are just in the spirit of transparency, to make sure you know what we're thinking in a couple of areas, as we all start to think more about 2019.

Dara Mohsenian -- Morgan Stanley & Co. -- Analyst

Okay, thanks.

Thomas J. Falk -- Chairman and Chief Executive Officer

Thanks, Dara.

Operator

Thank you. Our next question comes from Stephen Powers with the Deutsche Bank.

Stephen Powers -- Deutsche Bank -- Analyst

Great, thank you. Mike, Tom, congrats. If we take a step back versus where we were a few quarters ago, it feels to me as though the broader discussion, not just for you, but for the industry as a whole, has toned down a bit in terms of any potential tension between CPG suppliers and retailers. I'm curious if you agree with that. If so, your perspective as to why. Because from the outside, it feels like the dialogue is somewhat more constructive today. I wonder if that's just potentially rooted in the fact that the retailers themselves don't seem to be acting so aggressively toward one another.

Amazon is arguably operating with more of a bottom line focus than a year ago, when it was prioritizing pure customer acquisition. Hard discounters haven't taken over the world; consumers are generally healthy, spending; Walmart is doing well, etc. It feels like that has all helped create a relative truce at retail which, in turn, I'd argue has opened up a window for yourselves and other CPG players to pursue some pricing. I guess I'm just trying to figure out am I making things up? Do you agree with that summary in broad terms? Then to the extent you do agree, I guess what is the more normal state of affairs? What we're living through now, which is arguably less intense, or the more aggressive environment that we saw two, three, four quarters ago? Thanks.

Thomas J. Falk -- Chairman and Chief Executive Officer

Steve, I'll start since I haven't answered a question for a while. You'll have to listen to the sound of my voice a little while longer. But I guess I would say, and I'll let Mike build on this, is that I don't think it was ever quite as bad as investors thought it was. I think every retailer that I've called on, and I know Mike would probably echo this, they want to hear from you how you're going to help them grow their category and how you're going to help them execute their strategies.

As long as you're bringing value to that conversation and bringing innovation and putting it behind brands that are important to consumers that shop in their stores, you're going to have a pretty conservative conversation. Where you have challenges with retailers is if you're innovation isn't working, your service is lousy, or those kinds of things. Those are the most difficult discussions. Thankfully, we usually stack up pretty well on that front.

I think most of the retailers, they read the business newspapers and know what's happening to commodity costs and know what's happening to exchange rates, so they aren't shocked when you come in with a pricing conversation. I think where you really start to get their attention though is when you pivot to talking about innovation and what you're going to do to make the category bigger, and how you're going to close the execution with a customer in their store. But Mike, maybe you can build on that.

Michael D. Hsu -- President and Chief Operating Officer

I definitely agree with Tom, which is I think the tone of discussions with retailers has been consistent over the last several years. I don't think last year was any different. I think it probably got bigger play in a few areas. Maybe what you're perceiving as change is the improved growth in the infant/child care category as it relates to us. I think last year in the middle of the year, ICC was down about 5% in value. I think that was kind of a rude awakening and caused quite a concern among us and the retailers. What's changed this year is we were down 5% in July last year. The category now in this latest quarter is up 3%. Huge swing. I think that probably has changed what you might perceive as a tone. But I think in the meeting discussions and the tone of discussions with customers has been consistent last year, this year, the year before.

Stephen Powers -- Deutsche Bank -- Analyst

Okay, that's great. Tom, thanks for weighing in. We did miss you so far this call. Just one quick clean-up, if I could. Maria, on the tax rate, the lower tax rate in 2018, should we interpret that as benefiting free cash flow and cash? Is that a cash tax benefit or is it more just an income statement benefit?

Maria Henry -- Chief Financial Officer

No, it's also on the cash side of the house. We did have a nice benefit on cash taxes in the third quarter, and that helped offset things like cash that we spent on the restructuring, and also helped cover the lower operating profit that we had in the quarter.

Stephen Powers -- Deutsche Bank -- Analyst

Okay, perfect. And so for '19, that step-up back to the more normal tax rate would also be a more normal cash tax step-up as well?

Maria Henry -- Chief Financial Officer

Yes, that's right.

Stephen Powers -- Deutsche Bank -- Analyst

Perfect. Okay, thanks so much.

Operator

Thank you. Our next question comes from Wendy Nicholson with Citi.

Wendy Nicholson -- Citigroup Global Markets -- Analyst

Hi. Just a follow-up on that question on the taxes. I mean, it feels to an outsider that the lower taxes are helping you make your earnings target for this year, which is great. But I'm wondering given how many categories or markets or situations specifically that you referenced where competitive activity has intensified, whether you debated internally, hey let's take some of that benefit from those lower taxes and plow them back into more competitive spending immediately? So forget the earnings guidance range, but just increase our competitive investment or promotion or advertising or whatever it is, or hurry up on the new product activity, to insulate some of your market share, whether it's in China, whether it's in adult incontinence, etc., etc.?

And then sort of bigger picture, Mike, as you look at the business, the advertising spending is down, if you think 3.5% of sales maybe this year, down from almost 4% just a few years ago, and yet your business has shifted, I would argue to categories and markets where advertising spending is arguably more important than it was five years ago. As you look forward over the next five years, do you think 3.5% of sales on advertising is right? Do you think you need to migrate back up to the 4%? Maybe even higher given how intensely competitive these markets are, etc., etc.? Thanks so much.

Thomas J. Falk -- Chairman and Chief Executive Officer

Okay, Wendy, I'll start on the etc., etc. part and then let Mike build. But I guess maybe coming back to the tax rate discussion. Some of that is a discrete activity. Putting the extra hundred million in the pension plan, which we got to deduct at last year's tax rates created a tax benefit that was a one-time deal. Really, as part of the whole new tax bill and figuring out what options you have under that to create shareholder value was a separate discussion.

As you look at the investment behind the business, we're more or less investing on plan behind the right innovation and the right markets. I'd say that's showing up in share. I think we're up in high 50s of category country intersections that we track, and feel like we're generally investing at about the right levels. We're also generating a significant amount of non-working media savings as part of the restructuring. A lot of that's been reinvested in advertising and promotion activities.

And so I think the team has pivoted to driving price increases in the back half, which we need. There are times where you may be focused on that and miss some other opportunities. But I still think that's the right thing to be focused on. But I'll let Mike build on that.

Michael D. Hsu -- President and Chief Operating Officer

Wendy, overall, yes, I would like to get the advertising spending up. That said, at our number, you can't read too much into that number these days because it goes into a lot of lines. For example, there's two things going on. For example, digital online spend sometimes can be plotted in a promotion, even though it may be feel more like an advertising expense. So there's a lot of differences going on there. The other thing is given all the innovation that's occurring in the digital media, our ROIs are improving significantly. So we're really excited about that. I think that has a big impact for businesses like ours, that are more continuity based, or that our consumer is in the category for a long time, every day. So, I'm pretty excited about that.

Overall, if you think about the areas that I had mentioned earlier around elevating the core, D&E markets, and digital, yeah, I would like to get us to spend more.

Thomas J. Falk -- Chairman and Chief Executive Officer

I don't know if this will make you feel any better, Wendy. I don't think they're disclosing this, but in the quarter, our advertising spend was above the full-year average by a small amount. We're spending at the right levels, even in this quarter.

Wendy Nicholson -- Citigroup Global Markets -- Analyst

That does make me feel better. Thank you, Tom. It's been a pleasure knowing you, and congratulations on your retirement.

Thomas J. Falk -- Chairman and Chief Executive Officer

Thanks, Wendy.

Operator

Thank you. Our next question comes from Kevin Grundy with Jefferies.

Kevin Grundy -- Jefferies -- Analyst

Thanks. Good morning, everyone, and congratulations, Mike and Tom as well. Mike, one question for you broadly here. I was hoping to get your updated thoughts, and we've touched on a lot of these issues throughout the call, which is balancing some of these pricing objectives, given some of the margin degradation that you've seen here with market share trends. I'm sure you guys are a little bit disappointed, particularly in the U.S., and just one data point as we look at the Nielsen data, for the most recent 4-week period, we have Kimberly Clark losing market share in every single one of its major categories, which I'm sure can't be satisfying to you. So maybe you can talk a little bit about that.

This also touches on an issue which was brought up earlier. Are you willing to sacrifice near-term profitability to restore lost market share? How important is some of this lost market share? Particularly some of these losses to private label in tissue and towels? And then just broadly, market around discussion share, how worrisome this is, and your level of confidence that we'll see this improve here in the near-term. Thanks for all that.

Michael D. Hsu -- President and Chief Operating Officer

Yeah. Kevin, let me start with the foundational principle, which is we exist to deliver a strong value proposition to our consumers. That's what we're focused on. That's the only way you can win over the long term. I fundamentally believe in that. That does go along with market share over the long term. I think in the quarter in North America, I think our data given [inaudible], is probably slightly different. I have us up or even in 5 out of 8 categories. There's a lot of activity going on in the club channel, and also in online. I think that's one.

What I was saying earlier, I think our performance is broadly improving across many markets. In D&E, in Russia I think we were up 3 points in diapers and up a point or so in feminine care. In Latin America, including both Brazil and Argentina, we're up 2 or 3 share points in diapers, and up a point or 2 in feminine care. So we are seeing improved performance, and we are very focused on market share. We have to recognize that we need to drive and continue to focus on driving up the right value proposition, which guides a lot of the pricing activity.

Kevin Grundy -- Jefferies -- Analyst

Thank you.

Thomas J. Falk -- Chairman and Chief Executive Officer

Thanks, Kevin.

Operator

Thank you. Our next question comes from Nik Modi with RBC Capital Markets.

Steven Shemesh -- RBC Capital Markets -- Analyst

Good morning. This is actually Steve Shemesh on for Nik. We'd also like to echo congratulations to Tom and Mike. Then we were hoping, just building off that last question, if you could talk about e-commerce and your market share positioning online versus offline, then what plans you have in place to further increase your share online? Thank you.

Michael D. Hsu -- President and Chief Operating Officer

Again, e-commerce proceeding very well for us. Our online share is generally ahead of our offline shares or even. The three big markets for us are China, Korea, and the U.S., although we are seeing some growth in some other markets as well. Overall, our business this year is up double digits, as it was strong double digits last year. And so we feel good about that. I think maybe the looking-forward part, Steve, is we think we can leverage it even more effectively going forward. The teams are innovating in terms of how they deal with their e-commerce channel partners.

Most recently, I think we were ranked No. 1 in Advantage in dealing with e-commerce in China, which is hot off the press. I don't even think a lot of us, some of our team internally have seen that data yet. But pretty exciting news, and I know the teams are doing a great job around the world. And also driving great efficiencies in terms of how they're spending and how they're driving their results.

Thomas J. Falk -- Chairman and Chief Executive Officer

Steve, I'd just add that we want to be present with the right offer and the right product mix wherever mom wants to shop. So, we're doing a lot with e-comm. We're also doing a ton with a lot of our brick-and-mortar retailers who are doing click-and-collect. That's not really captured in any of our data, but every retailer we serve is working on that. We really want to make sure we've got the right product, the right offer wherever mom is looking to do her shopping, and that's really our overall strategy.

Steven Shemesh -- RBC Capital Markets -- Analyst

That's great. Thank you.

Operator

Thank you. Our next question comes from Andrew Teixeira with J.P. Morgan.

Andrea Teixeira -- J.P. Morgan Securities -- Analyst

Thanks. Hi, good morning. Tom, Mike, congrats on the news. Maria, on the upper hand of commodities headwinds, what are your embedded assumptions for pulp and oil prices? On a separate question to all of you on the competitive environment, particularly in North America and China, and I appreciate all the comments, but you had volumes down 8% in North America consumer tissue, and also declines in China too. So what are you going to do in terms of containing volume share losses, or you're just timing as your key competitors put in more money behind innovation, or are you cutting? And given the commodity and tax headwinds into 2019, should we assume that you continue to be cautious on reinvestment and marketing or just broadly, as you said before, not commenting on 2019, but you would expect reinvestment in innovation to pick up as you progress in 2019? Thank you.

Maria Henry -- Chief Financial Officer

Sure, I'll go ahead and start with some of the commodity questions that you have. Running through our assumptions on the key commodities, we're expecting that eucalyptus will be up about 20% for the full year. The same with polymer. That we're expecting will be up more than 20% for the full year, and then on SAM super absorbent, we are expecting that for the full year it'll be up low double digits. So, those are our commodity expectations. I think something worth noting is if you look at commodities and currencies combined, for the full year we are expecting that to be about just over a 25% drag on our operating profit. So it is significant for the year.

Michael D. Hsu -- President and Chief Operating Officer

On the competitive front end, Andrea, I think what I would say is in North America, I think it's mix performance, but overall improving. If you take North America infant and child care, obviously I mentioned that the category trends are improving, but the category trends are improving I think because of our performance more recently. Our share is up about a point in the quarter. Huggies volume was up mid-single digits. Pull-Ups volume or child care volumes were up low double digits. So we feel good after where that is. I think the category is responding well to the innovation that we've put out there.

I think in consumer tissue, one of the big things is that we have been dialing back on our promotion activity. That does come with some volume and share impacts. The big challenge, given all the commodity inflation this year, it's a significant headwind and I think the team has done a good job chopping that back, but one of the levers they have pulled is pricing, both in terms of sheet count reductions, but also including promotion deductions. So that's what we're seeing some of the effects there.

Then the other area that I mentioned, adult care has been a challenge. I think we're down about 3 points in share. That's kind of the big focus area for us where we need to improve.

Andrea Teixeira -- J.P. Morgan Securities -- Analyst

Okay. That's helpful. Thank you.

Operator

Thank you. Our next question comes from Steve Strycula with UBS.

Steven Strycula -- UBS Securities -- Analyst

Hi. Good morning. So I had a question on China diapers. I want to know, if you didn't say it already, how did this business trend on a year-over-year basis? Competitive speaking where are we in the shakeout of the industry? Are we seeing new and local competitors and regional entrants? Has that reached an asymptote? Or are we now seeing a point where there's a little bit of a fallout in the industry? Then I have a follow-up.

Michael D. Hsu -- President and Chief Operating Officer

Steven, I would say the competitive intensity in China for the last few quarters or maybe the last couple years has escalated. Just to give you some reference, our personal care organic sales in the quarter were down in the high teens. We had strong growth in fem care, but that was not enough to offset some of the declines in diapers for us. So diaper pricing dropped in the market by about 15% to 20% back in Q2. So we're working our way through that. That's flown through our business and impacting our business right now. Overall, volumes, as I mentioned earlier, I think volumes in the category are up high single digits so far this year, but with pricing, the category is about flat or even slightly down in terms of value terms.

Despite all these price moves, personally, I don't think the category is commoditizing. Some of the effects you're seeing are consumers that are trying new products, local products that they perceive to be interesting or of higher quality or have attributes that they're interesting in. We have responded by upgrading our products. We're really excited about the offering that we have out there. However, some of that impact is muted because of all the price activity.

China is critical for us. It's the largest market in the world right now in diapers. It's going to continue to be and will continue to grow. So we're going to compete in China for the long term. We're going to focus on the right value drivers, which includes a great product offering, the right marketing, and obviously a competitive price.

Steven Strycula -- UBS Securities -- Analyst

Okay, great. Then I had a quick follow-up across your Top 3 diaper markets online -- China, Korea, and the United States. Could you just comment for context what the penetration is roughly across those markets? On the last call, you mentioned the private label is currently under-indexing online. What structurally is driving that in your view relative to brick-and-mortar? Thank you.

Michael D. Hsu -- President and Chief Operating Officer

Maybe the first part. Overall, in Korea, very highly developed in terms of our overall diaper sales online. Paul, can I share? It's almost a 90% online development. And China tends to be, the overall category is about 50% or slightly over 50%. The U.S. is a little more behind. I'd say right now it's in the mid-teens overall. Part of the, when we talk to retail partners across the country, they all say the same thing. The U.S. is still a car culture. As long as they have cars, people are still going to want to shop in the store. But we are seeing very good growth in North America as well. Sorry, Steve, I missed the second part of your question.

Steven Strycula -- UBS Securities -- Analyst

On the last call, you mentioned private label under-indexing online relative to the share at brick-and-mortar. So just curious, what do you see as structurally driving that? And I imagine that fosters very good repeat rates, purchase rates because this is almost a subscription-like business.

Michael D. Hsu -- President and Chief Operating Officer

I don't have a good hypothesis right now as to why that private label is under-indexing. I would say that the reason some of our businesses are performing well online is there's a lot of online marketing activity and digital marketing activity that we put in place to drive that. The tools are becoming increasingly sophisticated, and our teams are getting better at managing and marketing through those tools. So that might be a reason why you see lower development levels at private label.

Thomas J. Falk -- Chairman and Chief Executive Officer

Steve, I'll just chime in on that one. Two things. One is physical store environment you get to interact with the product. So you can see the packaging. You may not be able to necessarily touch and feel the product, but you know what you're getting, whereas online you know what you're getting if you're buying a brand, but you may not know what you're going to get on private label. So it is a little bit of a hurdle on that front. Then secondly, a large super center may have 50 to 100,000 items in distribution in e-tail, or may have a couple million items on their distribution. So just the complexity of managing private label across a number of different categories is not trivial, and that could be another factor.

Maria Henry -- Chief Financial Officer

Yeah, and also the failure rate issue or concern that consumers have on our product, if you think about what they are and what they do for the consumer, that having a trusted brand is important. When you're shopping online and you don't have that ability to interact with the brands at shelf as Tom described, consumers tend to migrate in our categories to brands.

Steven Strycula -- UBS Securities -- Analyst

Great. Thank you. Congrats to both.

Thomas J. Falk -- Chairman and Chief Executive Officer

Thank you.

Operator

Our next question comes from Jonathan Feeney with Consumer Edge.

Jonathan Feeney -- Consumer Edge -- Analyst

Good morning. Tom, thanks, and congrats on a great run. Mike, congrats, and best of luck. A question on mix. Three questions in that really. What are the bigger -- I noticed positive mix not only broadly, but in each of the segments. What are the biggest one or two sources of that positive mix would you say? Is this something that's intentional and maybe tactical this year as another way of coping with higher commodity prices? And about how much of a positive factor in adjusted gross margin, if any, is mix? I know you think in terms of a business in terms of total dollars. Thank you very much.

Thomas J. Falk -- Chairman and Chief Executive Officer

I'll start. Is it intentional? Absolutely. So typically, we would like all of our innovation to be mix accretive. To your further point about pricing challenges, often if you can't get price easily, you try to get mix. So the teams will try to upsell the better value performing item. Our sales teams are absolutely motivated by that. Sometimes you can see mix drag as the business grows in some of the larger format pacts, which can be a countervailing of force on that. But by and large, we would hope that day in and day out we're doing some things that will give us some improvement on mix and offset some of the headwinds that we face from growth in other channels.

Maria Henry -- Chief Financial Officer

On the profit question, the positive mix was definitely a contributor, both in the third quarter and year-to-date.

Jonathan Feeney -- Consumer Edge -- Analyst

Thank you very much.

Thomas J. Falk -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. At this time, we have no further questions in the queue.

Paul Alexander -- Vice President, Investor Relations

We appreciate everyone's questions this morning. We'll conclude the call, and we look forward to speaking with you in January. Everybody have a good day.

Operator

Ladies and gentlemen, that concludes this morning's presentation. You may disconnect your phone lines, and thank you for joining us this morning.

Duration: 65 minutes

Call participants:

Thomas J. Falk -- Chairman and Chief Executive Officer

Maria Henry -- Senior Vice President and Chief Financial Officer

Michael D. Hsu -- President and Chief Operating Officer

Paul Alexander -- Vice President, Investor Relations

Olivia Tong -- Bank of America Merrill Lynch -- Analyst

Jason English -- Goldman Sachs -- Analyst

Ali Dibadj -- Sanford C. Bernstein & Co. -- Analyst

Bonnie Herzog -- Wells Fargo Securities -- Analyst

Lauren Lieberman -- Barclays Capital -- Analyst

Dara Mohsenian -- Morgan Stanley & Co. -- Analyst

Stephen Powers -- Deutsche Bank -- Analyst

Wendy Nicholson -- Citigroup Global Markets -- Analyst

Kevin Grundy -- Jefferies -- Analyst

Steven Shemesh -- RBC Capital Markets -- Analyst

Andrea Teixeira -- J.P. Morgan Securities -- Analyst

Steven Strycula -- UBS Securities -- Analyst

Jonathan Feeney -- Consumer Edge -- Analyst

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