Colgate-Palmolive Company (NYSE:CL) Q4 2023 Earnings Call Transcript
Colgate-Palmolive Company (NYSE:CL) Q4 2023 Earnings Call Transcript January 26, 2024
Colgate-Palmolive Company isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning. Welcome to today's Colgate-Palmolive Fourth Quarter and Full Year 2023 Earnings Conference Call. This call is being recorded and is being simulcast live at www.colgatepalmolive.com. Now, for opening remarks, I'd like to turn this call over to Chief Investor Relations Officer and Executive Vice President, M&A, John Faucher.
John Faucher: Thanks, Betsy. Good morning, and welcome to our fourth quarter in full year 2023 earnings release conference call. This is John Faucher. Today's conference call will include forward-looking statements. Actual results could differ materially from these statements. Please refer to the Q4 and full year 2023 earnings press release and related prepared materials and our most recent filings with the SEC, including our 2022 annual report on Form 10-K and subsequent SEC filings, all available on Colgate's website for a discussion of the factors that could cause actual results to differ materially from these statements. This conference call will also include a discussion of non-GAAP financial measures, including those identified in tables 4, 6, 7, 8, and 9 of the earnings press release.
A full reconciliation to the corresponding GAAP financial measures is included in the Q4 2023 earnings press release and is available on Colgate's website. Joining me on the call this morning are Noel Wallace, Chairman, President, and Chief Executive Officer, and Stan Sutula, Chief Financial Officer. Noel will provide you with some thoughts on our Q4 and full year results and our 2024 outlook. We will then open it up for Q&A. Noel?
Noel Wallace: Thanks, John, and good morning, everyone, and thanks for joining us to discuss our strong finish to a very good year in 2023 and our positive outlook for 2024. Over the past two years, we've been particularly focused on sustaining our strong organic sales growth while rebuilding our margins and improving our cash flow performance. We delivered on all three of those goals this year while still investing behind advertising to strengthen our brands and building and scaling capabilities to deliver future growth. 2023 marked our fifth consecutive year of organic sales growth either in line or ahead of our 3% to 5% long-term target range. We delivered balanced organic sales growth, growth in all six divisions, all four of our categories, and with improved balance between pricing and volume as we exited the year.
Volume rounded to flat in the fourth quarter and was up for the quarter, excluding the impact of lower private label volumes at Hill’s. Our market share momentum is improving behind strong innovation, higher levels of brand investment with a focus on improving the effectiveness of each dollar spent. We're also seeing the benefits of our digital transformation as our efforts with data analytics continue to proceed. Our commitment to revenue growth management and the strength of our funding the growth efforts combined with our global productivity initiative drove gross margin expansion, double-digit-based business operating profit growth, and high single-digit based business EPS growth. We delivered these results while increasing the investment in marketing and strategic capabilities and absorbing the headwinds from higher interest expense, pension and tax.
We drove greater than 60% free cash flow growth, allowing us to invest behind our brands, increase capacity and buy back stock. We also increased our dividend for the 61st consecutive year. I am deeply proud of the results Colgate people have delivered in a challenging operating environment. 2024 will offer many of the same challenges as 2023, geopolitical unrest, foreign exchange headwinds and a challenged consumer, continued softness in China, and a large number of political elections around the world. We enter 2024 with strong momentum and the plans in place to deliver in this environment, as well as greater flexibility in both our income statement and our balance sheet. As we have mentioned over the past few quarters, we're focused on returning to consistent, compounded EPS growth, and our 2024 guidance reflects this ambition.
We will continue to invest to drive high-quality, balanced organic sales growth and with both volume and pricing growing. We plan to deliver our productivity to fund this incremental investment while growing earnings per share. This should enable us to deliver strong cashflow growth to invest back in the business and return cash to shareholders. I look forward to discussing our 2024 plans in further detail at CAGNY next month, so you can share the confidence the Colgate-Palmolive team has in our continued growth. And with that, I'll take your questions.
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