You probably don't need me to tell you that Brooke Shields has immaculate molars. But for Colgate-Palmolive (NYSE:CL), keeping Brooke's teeth in tip-top shape is job one, given that a new advertising campaign for Colgate Total toothpaste featuring her bewitching bicuspids helped boost U.S. market share 0.6%.

Last week, the consumer-products giant reported first-quarter results that sparkled. Worldwide unit volume grew 8%, with pricing and foreign exchange lifting total sales growth to 12%. This represents an acceleration of sales growth for the company, which notched sales increases between 7%-8% for the past two years. Colgate credits the volume surge to a 20% increase in advertising spending.

Margin checkup
So how can Colgate afford to increase ad spending 20%? The answer is shown in the chart below. Gross profit was up 110 basis points as a percent to sales, a combination of pricing power and sales mix. That type of margin expansion can pay for a lot of commercials; the additional ad spending only increased expenses by 70 basis points as a percent to sales. The end result was first-quarter earnings-per-share growth of 14% -- pretty handy.

1st Quarter

Dollars

% to Sales

Excl. Unusual Items

2007

2006

% Growth

2007

2006

Net Sales

3,216.0

2,870.6

12%

100%

100%

Gross Profit

1,844.9

1,615.6

14.2%

57.4%

56.3%

SG&A Expense

1,159.1

1,012.6

14.5%

36%

35.3%

Operating Profit

662.0

583.3

13.5%

20.6%

20.3%

Net Income

421.1

371.3

13.4%

13.1%

12.9%

EPS (Diluted)

$0.77

$0.68

14%

    
Source: Company Earnings Release

For those of you who don't follow consumer-products companies, take a moment to glance at the operating profit margin -- a whopping 20.6% in the first quarter. For fiscal 2006, Colgate-Palmolive delivered 18.2% operating profit, while Procter & Gamble (NYSE:PG) notched 19.4% and Johnson & Johnson (NYSE:JNJ) chimed in with 24.6%. Compare that to Wal-Mart (NYSE:WMT), which sells a lot of their products and generated 5.9% operating profit in 2006.

Now you know who makes the real money on the toothpaste, laundry detergent, and pet food you buy every week. While retailers are slugging it out for price leadership, the branded consumer product companies are investing in higher marketing to protect their brands, increasing prices wherever possible, and raking it in. Which brings me back full circle to Brooke Shields, her molars, and Colgate Total market share.

Do you care about cash?
Colgate-Palmolive delivered $395 million free cash flow during the first quarter, up 20% from $330 million the prior year. That's $0.73 per share of cash flow after spending on capital improvements and research and development. Essentially, all this cash is going to dividends ($0.30 per share) and buying back shares ($0.47 per share).

I wouldn't be surprised if you like this story. Consumer-products companies fly under the radar for a lot of Foolish investors, but they are cash flow machines. Big mutual funds love them as core holdings. The trick is to keep the new product pipeline full, and get Brooke to convince consumers the brand is worth the extra price compared to retailers' private-label brands. Colgate-Palmolive isn't cheap at 27 times trailing-12-month EPS, but now you know why.

To learn more about making money in boring products, check out:

Colgate-Palmolive and Wal-Mart are both Motley Fool Inside Value recommendations, while Johnson & Johnson is an Income Investor recommendation. To learn about either of these services, consider a free, no-obligation trial today.

Fool contributor Timothy M. Otte surveys the retail scene from Dallas. He welcomes comments on his articles, and owns shares of Wal-Mart, but none of the other companies mentioned in this article. The Fool has a disclosure policy.