Q3 2026 Church & Dwight Earnings Conference Call - CHURCH & DWIGHT CO INC

Good morning, ladies and gentlemen, and welcome to the Church and Dwight's third quarter 2026 earnings conference call. Before we begin, I have been asked to remind you that on this call, the company's management may make forward-looking statements regarding, among other things, the company'S financial objectives and forecasts. These statements are subject to risks and uncertainties and other factors that are described in detail in the company' SEC filings. I would now like to introduce your host for today's call, Mr. Rick Durker, President and Chief Executive Officer of Church & Dwight. Please go ahead, sir. Good morning, everyone. Thanks for joining the call. We delivered strong third quarter results, and I want to start off by thanking all of our Church & Twight employees around the world for executing so well in a volatile environment. I'll begin with some thoughts on the broader environment and then review our Q3 results, and then I'll turn it over to Lee McChesney, our CFO, and when Lee is done, we'll open it up for questions. Starting with the broader environment, conditions remain challenging, including inflationary pressure related to the Middle East conflict and increasing global transportation rates. That said, our teams continue to execute with excellence. Our portfolio of value and premium brands, they are performing well, and we remain focused on offering consumers high quality, solution-oriented products at the right value. Our power brands drove our third consecutive quarter of industry-leading organic sales growth, supported by innovation, distribution lens, and targeted marketing investment. Turning to the quarter, we exceeded our outlook across key metrics. Net sales increased 1% ahead of our outlook of a 1% decline. Organic sales grew 5.1% well above our 3% outlook with growth across all three divisions. This performance was driven primarily by volume growth of 4.6% and positive price and mix of 0.5%. Gross margin was up 46.8%, up 170 basis points and adjusted EPS was 92 cents, up almost 14% and above our 89 cent outlook. Innovation and distribution gains continue to be key drivers of our organic growth performance. Our 26 innovations across the power brands are performing very well, and we remain confident that our relentless focus on innovation will continue to drive industry-leading growth on shelf and fuel market share expansion. Now I'll turn my comments to each of the three divisions. First up is the U.S. consumer business. organic sales increased 4.4%, driven by 3.6% volume growth and favorable price and product mix of 0.8%. Growth was broad-based across our household and personal care portfolios, led by Arm & Hammer Liquid Laundry Detergent, TheraBreath Mouthwash and Toothpaste, Arm &hammer Cat Litter, and Waterpik Water Flossers. This mouth is also off to a great start. This quarter, we had such broad-base growth. I didn't list them all, but six brands contributed in a meaningful way. The Arm & Hammer brand, which had another quarter of growth, with laundry hitting record shares across total laundry, Arm &hammer laundry detergent consumption grew over 4%, and the category grew about 2% in the quarter. Promotional levels for the category were elevated. However, Arm&Hammer gained share as the value segment in laundry continues to be fit for purpose in this economic environment. Next up is litter. Continued fantastic results as Arm &Hammer cat litter consumption grew 5.4% and share increased 0.6 points to reach 24%. While category promotional levels declined slightly, they do remain at historical high levels. Our Arm & Hammer cat litter dual defense with microband clumping litter launch continues to do very well. Now turning to the personal care side of the business, TheraBreath continues to contribute considerably to our overall performance as the brand gained three and a half share points to reach a record share level of 26.8%, which further solidified our number two position in total mouthwash. Even with that growth, household penetration remains relatively low at only 14%, compared to the mouthwash category of 65%. TheraBreath Complete is now the top-selling new rinse nationally, and we recently launched portable rinse sachets for freshness on the go. TheraBreath Toothpaste is building trial in an everyday regiment through a robust marketing campaign with strong average consumer ratings of 4.5 stars. Hero is expanding its acne expertise into cleansers with a lineup designed to balance efficacy and gentleness. Hero Consumption outpaced the patch category in the quarter, and we're confident that the cleanser's launch will lead to share gains in total acne. In fact, in the last four weeks, that is happening. facial cleansers represent a 650 million dollar category and account for approximately 30 percent of the total acting category lots of runway for hero as again we have relatively low household penetration at 10 compared to the category at 30 which gives us great confidence in the continued growth of the brand turning to waterpik that business had double digit sales growth in the quarter and is gaining share in 2026. As we discussed on the last quarter, touchland sales growth in the U.S. has slowed from our original expectations due to competitive products growing in channels that we did not compete in. The good news is that our plans to expand distribution in the US are on track. And as a reminder, a significant opportunity remains on household penetration in the us where touchland is only 6% compared to the category, which is around 47 percent additionally the international rollout for touchland remains significant we recently launched touchland in the uk and australia and the early results have been excellent we have plans for a much broader distribution in 27 and 28. turning to international organic sales delivered another strong quarter of growth and grew organically 7.8 percent driven by volume growth of 9.1 percent partially offset by lower price and and product mix of 1.3%. Again, similar to the U.S., growth was broad-based. It was led by TheraBreath, Batiste, Touchland, and OxiClean. In fact, nine brands in international had double-digit growth. Global e-com was once again a strong contributor. Revenues grew 20% in the quarter, and global online sales now represent 25.9% of total consumer sales. Our SPD division also delivered strong results, organic sales growth of 5%, reflecting volume growth at 2.9% and higher price and product mix of 2.1%. These balanced global results contributed to our overall great organic growth performance in the quarter. This was now our 11th straight quarter of organic growth in the SPD business. Regarding 2026, I continue to be very pleased with our performance in first nine months of the year. Our brands remain strong, our portfolio is more focused following the strategic actions we completed in 2025. Our operating fundamentals continue to support volume growth market share gains and gross margin expansion looking ahead to 2027 i'm also very optimistic about the company's performance we have momentum as we enter the year our teams are advancing our 2030 growth initiatives focusing on expanding arm and hammer increasing thorough breath and oral care and scaling our international business i look forward to sharing our first formal update on these initiatives at our analyst day at the end of january and with that i'll turn the call over to lee for more detail on the quarter all right well thank you rick and good day everyone we appreciate you joining the call as rick just shared our teams delivered another strong quarter in 2026. against the backdrop backdrop of ongoing industry headwinds and uncertainty our team has delivered three quarters of five percent plus profitable organic growth a big thank you to our team members and all of our retail and distribution partners for driving growth really well done so let's get into the the details. We'll start with EPS. Third quarter adjusted EPS was 92 cents, an increase of 13.6% versus last year, and it was above our outlook of 89 cents. Stronger than expected sales and continued gross margin expansion fueled the earnings growth, enabled healthy levels of marketing, and supported our SG&A investments. Organic sales in the third quarter grew 5.1%, well above our outlook of approximately 3%. Growth was broad-based and primarily volume-driven, with volume growth of 4.6% and positive price and mix of 0.5%. Our consumer domestic business organic sales increased 4.4%. Our consumer international business increased 7.8%, and our specialty products business increased 5%. This steady and broad- based growth continues to demonstrate the strength of our portfolio categories, our innovation that drives true incremental growth, and the execution mindset of our commercial teams. Let's now turn to gross margin. Our third quarter gross margin increased to 46.8%, an increase of 170 basis points versus last year. Productivity delivered 150 basis points, our acquisition mix and portfolio actions drove 160 basis points and 40 basis points was a combination of volume, price, mix, and FX. These positive contributions were partially offset by the headwinds from inflation and transportation costs of 180 basis points. In this quarter, our marketing investment levels reached 11.9% of sales as we continue to invest behind our brands and new products. Adjusted SG&A was $261 million, or 16.3% of net sales, an increase of 110 basis points versus last year. The increase reflects acquisition-related amortization, in our SG&A investments in international, e-commerce, and AI capability building. Adjusted income from operations increased $27 million, or 10.1%, to $298 million, reflecting our strong, profitable growth results. Let's now turn to cash flow. Cash from operations for the first nine months of 2026 was $841 million, which drove a healthy cash flow conversion of 114%. Capital expenditures totaled $92 million through the third quarter, and we expect full-year capital expenditures to be approximately $125 million, or about 2% of sales. And as for the third quarter total debt was $2.2 billion, and cash on hand was $447 million. Our Board of Directors approved a new share repurchase program authorizing up to $1 billion dollars of common stock repurchases. This program has no expiration date and replaces the prior authorization. This program is consistent with our disciplined approach to capital allocation. It gives us additional flexibility to return capital by continuing to invest in the business and pursue strategic acquisition opportunities. Let's now turn to our 2026 outlook. As detailed this morning in our press release, we are raising our sales expectations and tightening our adjusted EPS outlook. Our outlook reflects the strong year-to-date growth and our confidence in continued fourth quarter momentum. It also includes the latest impact of the Middle East commodity pressures and the latest transportation rates that have both increased further over the past 90 days. Overall, our outlook for 2026 includes approximately $150 million of inflation, which brings us up to $50 million more than we had in our original outlook at the beginning of 2026 and 20 million more than our July outlook and this outlook assumes roughly a crude oil price of a hundred dollars a barrel now our teams have continued to focus on delivering incremental productivity and leveraging an RGM toolkit to mitigate this pressure which has helped us helped our business deliver gross margin improvements every quarter in 2026. so for 26 we now expect organic sales growth of approximately five percent at the high end of our prior range of 4% to 5%. We now expect adjusted gross margin to expand approximately 100 basis points, inclusive of the latest cost headwinds. And our market investments remain at approximately 11% of sales, reflecting our continued commitment to brand investment. SG&A as a percentage of sales is expected to remain above 2025 levels, including acquisitions, our target investments and growth initiatives, AI capabilities, e-commerce, and our international business. The adjusted tax rate is expected to be approximately 21 percent, and we now expect adjusted EPS of approximately 7 percent, tightening on our prior range of 6 percent to 8 percent. Our cash from operations outlook remains approximately 1.175 billion, and if we turn to the fourth quarter, we expect organic sales growth of approximately 4 percent and the adjusted EPS is expected to increase 17 percent to 19 percent versus last year to close out our remarks let me reiterate we are very pleased with the third quarter performance and remain confident in our ability to deliver an improved 2026 outlook our strong portfolio continued share gains and disciplined execution position as well as we look forward to 2027. matt we are now ready for questions we will now begin the question and answer session if you would like to ask a question please press star 1 to raise your hand to withdraw your question press star 1 again we ask that you pick up your handset when asking a question to allow for optimum sound quality if you are muted locally please remember to unmute your device please stand by while we compile the q a roster your first question comes from the line of anna lazul with bank of america anna your line is open please go ahead hi good morning thank you so much for the question um rick your portfolio is clearly performing really well with innovation across categories which has elevated your mix and made it a bit more premium over time so i was wondering if you could talk about innovation on the value tier, especially in light of some higher promotional activity you mentioned from peers? And then on the cost side, I wanted to ask how we should start thinking about gross margin expansion into early 2027, just given the heightened inflationary environment and the pressure that you might be seeing there. Thank you. Yeah. Thanks, Anna. So I think innovation has become a core competency of Church and Dwight. We just had Carlos Linares who was our head of R&D for many years, retire. And what he brought to this company, I think, was just a great multi-factor way to innovate. And so we built this muscle. And it's not a muscle that we've built just in personal care. It's in the household as well. And, you know, we've gone through the arm and hammer strategy, and part of that's good, better, best strategy for laundry and for litter. and there's a lot of work going on with household innovation you'll see some stuff coming in 2027 but in fact I just sat through 2028 probably two weeks ago and I was really encouraged about the entire innovation portfolio but especially household for 2028 so I think it's broad-based we always want to compete on innovation you know value is not just price it's what the consumers getting when you intersect value and price. So that's how you win with innovation over a long period of time. And then, Lee, you want to take the forward-looking? Yeah. So, I mean, to your point, we certainly know what commodities are today. That's certainly what everyone's faced in the business. And we have, you know, some good confidence as we look forward here. You know, we look at productivity levels of where we are today, where we're going to have a record level of productivity in 2026. And as we sit here today, we're actually, at the same time last year, we were actually a little bit favorable to that. So that's a good start for next year. You know, we have our RGM toolkit that's served as well this year. It seems to rally around that for 27 as well. And then certainly we have a nice positive drive towards good mix from innovation and from the portfolio. So, you know, all those things are in play. And, you Know, again, it's all against the backdrop of the inflation we see today. So, you know, as we said, we're optimistic for 27, and, you know, we'll continue to respond to the macro environment. Yeah, I would maybe add one or two comments to that. I think the other thing that's kind of not unique but kind of normal is we actually get fixed cost leverage next year, right? This year, our reported sales growth is essentially flat to up 1%. Organically, we were doing great, but remember, we shed $400 million of businesses. Next year, organic and reported numbers will be a lot closer, and that provides some leverage and as lee said you know we had a record year of productivity looking at what we know right now we expect another record year next year for productivity so those are great tailwinds okay great thank you both very helpful your next question comes from the line of peter graham with ubs peter your line is open please go ahead great thank you good morning everybody happy friday um your two top line related questions rick you know at first maybe just to start we'd love to get some perspective on what you're seeing from a category standpoint you know obviously there's a lot of moving pieces across different categories that curious if you've seen any major shifts as we move through the quarter um and i know a lot can change between now and january but just you know any thoughts on how you see category growth progressing over the next call it to 12 to 18 months and then i guess just related to that you know the four key organic sales uh guidance a bit of a step down versus what we've seen year to date despite it an easier comparison understanding you have a track record of home delivering but curious if that's just simply you know conservatism given the external environment or is there something else driving that view thanks yeah no thanks uh peter you know I think, first of all, categories I'm actually a little bit more bullish on these days. I think we started the year saying category growth of around 2%. Q1, Q2, and Q3 now have all kind of been at or above 2.5%. Like we had a strong Q1 of around 3.5%, Q2 was 2.7%, and then Q3 was 2 1⁄2%. So outlook for categories is closer to 2. 5%. And also, I would say as we look forward, in 2027, we think it's around 2.5%. So that's all a good thing. On Q4 organic sales, look, 4% is still super high compared to the rest of the industry. Maybe we're being a little conservative. I would Say our trends are very strong as we Look at October even. Awesome. Thank you so much for that. I'll pass it on. your next question comes from the line of bonnie hersong with goldman sachs bonnie your line is open please go ahead okay thank you good morning everyone i had just a quick follow-up on gross margins and then another question but first how hedged are you on commodities heading into next year are you guys you know below your typical levels and then i did have a question on your pricing and promotions. As we think about the consumer, consumption remains pressured on stretched consumer wallets. So could you talk about how you're thinking about pricing for the rest of this year and into next year? Also, with gas prices still elevated, what are you seeing in terms of promotional intensity in your categories? Are there certain categories that are still more impacted than others? Thank you. Yeah, why don't I take the pricing and promotion question and then Lee can circle back on on gross margin and hedging so what the consumer is still stretched a lot of inflation happening out there you're right gas prices are up disposable income that means the disposable income is down when you have this amount of inflation typically promotional levels kind of retread a bit that hasn't happened largely I think because manufacturers have spent back kind of tariff refunds to help extend promotional spending as I said kind of my prepared remarks in laundry as an example amount sold on deal for the category went from the mid 30s typically to around 40 we also did that we're getting a share in this environment the value part of the segment is growing but but promotional spending is up versus historical levels for laundry and litter and but elasticities are are still strong so when that happens you do see the volumes kind of come in and react I guess my comments on price and inflation in general is we've we've been very clear we are first and foremost going after productivity and you just heard me say we had record productivity this year, we think we're going to have record productivity next year. That's what we do first and foremost. We then do what Lee said. We look at our revenue growth management and promotional spending. And when inflation is elevated, typically promotional levels do come down. That is what I have seen over the last 20 years. And then the last is price. And I will say if inflation maintains at this type of level, historically the perspective is companies have to move. If it's not transitory, if it's structural, then it starts to make its way throughout the entire kind of cost picture. But we hit number one and number two the hardest, and then if we need to, then we look at number three. Lee, you want to talk about hedging and gross margin? Sure. So as Rick and I talked about, we've got lots of things that help drive gross margin improvement. We've always done a healthy amount of hedging in key areas. We talked about earlier this year as some of the inflation came along and then you know with all the volatility we paused a bit but we've we've been back at it and hedging um going in for into 27. i would say at this point right now we're actually slightly hedged a bit more than we were at this time last year but you have to consider that you know we hedge certain key things that we purchased right now you're just seeing inflation everywhere so um the impact's helpful but certainly um you Just the overall inflation bucket is larger as we look for here. But that's all part of the math we talked about earlier that we're looking at and facing into for 27 with all of our tools. All right. Thank you. Your next question comes from the line of Rupesh Parikh with Oppenheimer. Rupesh, your line is open. Please go ahead. Good morning, and thanks for taking my question. And so I'm the hero of business. I was just curious how that continues to perform in international markets. Yeah, sure. You know, international, it's actually a great growth driver. We should have listed it in the release for international. Maybe that was just an oversight. But it's definitely a net sales driver. Consumption's up. Sales are up. in the u.s uh gain share in patches um last four weeks we've gained share in all of acne cleansers are off to a good start 4.85 stars uh consumer reviews sales were slightly down in the u.S. but that was consumption was up but sales were only slightly slightly down because remember a third of that business is online and some of that shifted as prime day had shifted from july of june so we feel great about hero we feel great about the innovation coming for hero um so a lot of positive things okay great and then i guess my follow-up question just just on touchland uh so your team has cited slowing growth slowing growth for that for that business uh what are the updated growth expectations for this year and i guess we'll probably wait for next year but just curious as you as you think about international just i don't know if there's a way to think about the level level of growth going for when you incorporate some of the international opportunity yeah no on touchline i would say the business is going to be close to flattish all in but with the confirmed distribution gains that we've already heard about in the us and with the international launch plans which are underway now we expect uh growth in 2027 so that's the good news okay great thank you i'll pass it along your next question comes from the line of chris carey with wells fargo chris your line is open please go ahead hey thanks so much uh one clarification question first uh what was the tariff refund uh benefit in in q3 did it did it come through is there any remaining impact in in Q4. Maybe it's within that net inflation number, but I just wanted to confirm that, and I have a follow-up. Yep, sure. So, Chris, it was a net about $15 million in the third quarter, and in the fourth quarter, we expect it to be about $5 million. Great, and that lives in that inflation figure that you gave in the quarter? It does. It does, yep. Okay, understood. Okay. All right. Thanks so much. um the the bigger question you know with your you know one of your key strategies is to expand the oral care business i get the question a lot um you know how uh long can um their breath sustain growth i realize you gave some tidbits about household penetration but maybe you could just expand a bit as we head into next year. Secondly, on the toothpaste side of the business, the growth has been very strong. You obviously got, I think, the distribution you thought you would get, you did get. As of last call, you were still in that assessing whether it was the distribution and you were Still assessing kind of repeat demand. Can you give us a sense of these two items really within the concept of the oral care business and how durable you think above-average growth can be going into 2027, given your multi-year plans that you laid out at the prior investor day? Thank you. Yeah, I'll give you some color. We're going to go through a lot more detail in January on the growth initiatives. But basically, on TheraBreath Mouthwash, we think there's still a ton of room to run. We're within six or seven share points of Listerine these days. We're growing double digits. The category is flat. We're winning with innovation. We're running with on-the-shelf space. We're winning with the marketing and reaching the consumer. Our repeat rate is fantastic. Customer loyalty is growing. So across the board, we believe that TheraBreath Mouthwash has still a long runway. And the one fact that I continue to hit again and again is just household penetration for TheraBreath versus the category. And I think that's a good approximation. And meanwhile, let's just talk about the U.S. You know, TheraBeath is a fantastic brand globally. It is starting to win globally. You know we just introduced that actually in Japan. And remember, we bought Grafico, our distributor, a few years back, and now we're putting a few of our brands through that distributor, like Waterpik, like Hero, like TheraBreath. I think TheraPreath has already reached like 15% or 20% of their sales in a matter of 12 months or less. So that trend, that need, problem-solution brand for mouthwash, is not just a U.S. trend or need. That is a global consumer need. So a lot of optimism about the global expansion of TheraBreath. Meanwhile, TheraDreath Paste, like I said last call, off to a great start. We have a one share already on the paste. Repeat rate is closing in on 30%, which is actually really good for a toothpaste innovation because there's high brand loyalty for toothpaste typically. So, we got trial, and now we're getting a repeat rate up, and we're laser-focused on that. Meanwhile, I think I'll hold any other further comments to January on how each of the initiatives are going, but I would just say I expect those growth initiatives to be tailwinds in 27, 28, and 29. Okay. Thank you both. your next question comes from the line of nick modi with rbc capital markets nick your line is open please go ahead thank you good morning everyone um rick can you just you know i wanted to follow up on that operating leverage question you know you said you'll start seeing it next year because you know going to be lapping the loss of the revenue but i suppose you're also spending a lot of money to try to fix those businesses before you sold them so if you can maybe give us some context on you know if that will be a meaningful you know contributor for for next year or at least over the next six to 12 months um and then if you could just provide any more uh distribution clarity on touchline like are you going mass broad is it going to be more targeted you know any any context would be helpful yeah okay nick uh you know my comment on you The question before, I think, from Bonnie was really, like, help us understand why we think we have some positive tailwinds on gross margin. We have multiple positive tail winds on gross margins, one of which is just being able to leverage our fixed costs. And I think 2026 versus 2025, you're right, we had some higher spending that was happening. A lot of that higher spending was actually happening in the marketing line and the growth-to-net line, not necessarily on the cost-of-goods line. So that comparable is already good and done with, and then as we move forward, we're going to have real revenue growth, and you should expect some leverage, and that's a tailwind. That's really the only point. I'm not really trying to quantify that. It's just a normal tailwind for any business as we have real growth. um the second question on touchland um i would say it's it's a little bit broader based than where we're at now it's going to be in a couple different classes of trade which is which is good um it's one big step in the right direction and we already have confirmed acceptances for that and meanwhile in the beauty class of trade we're working hard on making sure we have innovations and exclusives in order to differentiate that a bit. So I would say I'm really, really happy with the progress we've made, and I'm optimistic. Great. Just one quick follow-up on that. Is the spacing going to be, you know, with beauty and masks or, you Know, because I know that was a big debate point. Like, I'm just curious where I'm sure you all fell out on that in terms of where it actually is being placed at retail. Yeah, that's where we expect it to be. Great. Thanks. I'll pass it on. Your next question comes from the line of Andrea Teixeira with J.P. Morgan. Andrea, your line is open. Please go ahead. thank you operator and good morning everyone i was just hoping if you we can elaborate a little bit more on the pricing um you um you mentioned obviously there could be um like the pressures obviously for 2027 will be higher um i was wondering if you can comment on how to position now um into next year you have had tremendous success with your productivity program uh you just alluded to the pressures being uh higher but you being able it kind of like i want to summarize it if if incorrectly if i'm wrong that you're still looking for margin accretion i don't i don't think you took that back from your evergreen models into next year so just to think as we um as we put in pricing into next how we should be thinking if if not uh it will be only with innovation, just if you can help us think about your negotiations at this point. Yeah, thanks for the question, Andrea. I'm not going to make any more comments on pricing than what I've already made. And just to reemphasize it, I said, first and foremost, we focus on productivity. And we've done that in such a good way this year, hitting record levels. We expect to have record levels for next year. And you can see around the corner at that already. And Number two, we expect promotions to come down over time as inflation is sustained at these levels. And then number three, I just said that if inflation remains at these levels, typically industry is priced in those examples when it becomes more structural, not transitory. That's the extent to which I'll talk about pricing. Our evergreen model is to have gross margin expansion. growth and margin expansion are the two things that are the lifeblood of of any organization and you have to have all the right things in order to do that though you have to have a productivity program you have to have the right innovation you have to have consumer moving innovation that people want to pay for so we have some great tailwinds and our our goal each and every year is to expand margin thank you your next question comes from the line of olivia tong with raymond james olivia your line is open please go ahead great thanks good morning um i wanted to talk about uh the top line given the upside this quarter and and quite frankly uh all all through the year um you mentioned obviously the category doing a little bit better obviously you've gained some share can you talk about which elements of these you think are most repeatable and where you think there is still more work to do to sort of maintain momentum across the key categories obviously touchland you know was was a bit of a a tough one this year you talked about some of the gains next year but just thinking through the drivers of the top line next year and then my my follow-up is just around international if you could talk about sort of the next 12 months your thoughts around international expansion from from where you are right now notice that you know price mix obviously was uh swung the other way um this quarter um if you could talk about that whether there was more investment in in price mix or if there was something else uh that was driving that thanks so much yeah no problem olivia i would say i'm really encouraged with the top line you know number one it matters what categories you're in and our categories i would pick our categories over almost any other company out there they've it's you know the balance of premium value the the lack of private label exposure in general there are a lot of good things to say and why our categories are growing around two and a half percent fantastic then we tend to take share over time all right like I said before innovation muscle is is alive and well our marketing and commercial teams are doing a great job gaining that those TDPs we were the The second highest TDP growth, I let everyone know that last quarter as an example for 2026. So there's a lot going right, and our growth isn't just one brand. It's broad-based, and I said that in my prepared remarks. Laundry, litter, TheraBreath, Waterpik, Batiste, baking soda. I mean, there's an whole host of drivers. Internationally, like I said before, it's not one brand or two brands. It's nine brands that had double-digit growth. They're doing a great job taking our recent acquisitions like TheraBreath and Hero Global, and I gave you the example about Japan. So it's very broad-based. I believe it's Very Sustainable, and then you throw on top of that the growth initiatives that we've been working on. Remember, all the time that we spent maybe a year and a half or two years ago on fixing business that kind of were at structural disadvantages, we're spending all that time on innovation and on the growth initiatives. And the growth initiative are laying the groundwork. And I'm going to announce in January the category that we're going to go into in the U.S. for Arm & Hammer, but we have a lot of optimism about that. And then finally for international, it's all about also M&A. A year or two ago, our M&As portfolio and kind of diligence was all U.s.-based. That's not true anymore. We're looking at acquisitions all the time outside the U.S. and moving down the field fairly quickly through the filters, and that process is getting more repeatable and more sustainable, and I'm optimistic. Thanks, Rick. Appreciate it. Your next question comes from the line of Kumail Garjarlath with Jefferies. Kumail, your line is open. Please go ahead. Thank you. Hey, guys. Good morning. I guess you answered a little bit of this in your M&A commentary just now, but maybe if you could put that in the context of the buyback as well. Was this just housekeeping and sort of reauthorizing a plan, or is there maybe a bigger, broader indication on speed of buyback or how you're sort of envisioning what may or may not be around for M&A in the future? Yeah, I would call it more housekeeping than anything. We're getting to the end of our previous authorizations, so you always want to make sure you have flexibility as you look forward into the future. That's probably how I'd characterize it. Yeah, it was a program for 21, So it was time to renew. Okay, got it. And then as it relates to margins, you know, this is gross margins specifically, you're doing mid-single-digit growth. You'll have some leverage next year, a bit of pricing it sounds like. But I think you guys, unlike some other companies, do incentivize specifically on gross margins. How are you sort of thinking about what is the appropriate target to shoot for for 2027 in the context of what we're seeing in various input costs, the consumer environment, all those types of things? It's a great question. I don't think we'll get into that level of detail yet. If you want to ask it again in January, feel free. But, you know, we're going to have inflation that's quite large next year. But offsetting that, we are going to proactivity, we have mix of the tail end typically, especially as you think about TheraBreath or Mistmouth, even Touchland globally, and then like I said before about fixed cost leverage. So there's a lot of things going in our direction. We always believe that we can expand margin, just not ready to put that out there yet. about two or three months too soon okay got it thank you your next question comes from the line of lauren lieberman with barclays lauren your line is open please go ahead great thanks good morning um i just wanted to ask about the revised net sales guidance because the implication for 4q um suggested the structural the puts and takes of acquisitions and divestitures is a net negative. I think, you know, this tree, we were all expecting that to be positive. And given we kind of knew how to think about VMS and the divestiture, it makes me wonder if Miss Mouse is a bit slower. So just curious if you could talk about Miss Mouse trends and just sort of conversations on incremental distribution and plans for 27 and just also specifically that 4Q dynamic. Thanks. Yeah, sure. um i don't remember who asked it uh previously maybe maybe it was peter um i think if you take all the noise away we are saying that hey we've grown five percent for the last three quarters um and our outlook for the year is five percent that makes the math four percent that was the high end of our range previously i just don't think we we have a lot to gain by by going above our normal range. So maybe we're a little conservative on the quarter call, but it is what it is at 4%. We think 4% is head and shoulders above almost anybody else out there. Lee, anything you want to add to that? Yeah, I would just say Miss Mouth is off to a great start. And the outlook for the year is still very strong. Great, great consumption numbers did really well during the prime day season so as we've said before super optimistic no less optimistic probably even more optimistic as we look forward okay thanks a lot your next question comes from the line of steve powers with deutsch bank steve your line is open please go ahead okay thank you very much um One quick housekeeping, you know, Lee, you mentioned the $100 oil. Can you remind me if you guys benchmarked the WTI or Brents? Yeah, it would be WTI is the math. Okay, perfect. And I would just add, just keep in mind, like, we buy products that, you now, aren't always going to be proportional to oil. That's a good rough reference for you, okay? Yeah, yeah, perfect, and then I guess another kind of follow-up, Ricky. You mentioned Hutchland finishing in a roundabout flattish on the year. I guess, how does that compare with year-to-date performance? My sense is there's been growth, so that implies maybe some 4Q declines. So if that's the case, then I understand the overall optimism looking into next year with distribution international, but maybe just how quickly you can turn those declines into positives as we think about the progress into next year? Thanks. Yeah, I would say we do expect, I think, growth in Q4. I think in Q3, it was slightly negative, but it's a sales and shipment timing when you got to get out of the different seasons and programs. So, for the full year, Flattish is the call. I guess I just have a better lens into what retailers have accepted, what programs are in place for displays, how they're going to be set up. As Nick was kind of alluding to, in at least one major retailer, this is in the beauty set, and the set is absolutely beautiful. It's right where we would want it to be. The displays look great. The packaging is right where we want it to be. And we believe that a lot of times consumers are going to the store and they're looking for this because Teslin's kind of created a category that didn't really exist, and then they don't have the choice to buy the Teslin brand. There's only one alternative. And so we believe once they are in more of an accessible retail distribution, then consumers will pick the Tushman product. I think what we're seeing internationally is also off to a great start. You know, in one retailer just a couple weeks ago, they sold out in a matter of hours what they thought they were going to do for one week. So we're trying to make sure we go broad quickly and get through all the regulatory barriers that are in place around the world. and we've made a lot of progress in doing that and we think we're going to have some great success next year so that's kind of why why i have optimism yeah that makes sense and as does your your comments on the exit rate that helps a lot okay thank you your next question comes from the line of filipo falorny with city filipa your line is open please go ahead hi good morning everyone uh i have to Quick clarification. One on the cost inflation, the $150 million that you mentioned, Lee, can you give us a sense of how much is the raw material piece versus the transportation? And just more broadly, I'd love to hear your thoughts on just the transport piece. We're hearing a lot of companies thinking this is a bit more structural of a headwind given shortages in drivers. So how are you thinking about that potential headwind continuing from here? I'll start. I mean, I would just say they moved from $30 million to $50 million of incremental inflation. It was a mix of commodities and a mix to transportation. Now, to your point, the transportation, we're viewing that as the situation. That is mostly linked to the driver rules in the U.S. and just creating a shortage of drivers. So that's the mindset, and accordingly we're responding around that, you know, trying to make sure we do the most efficient things in transportation. You know, that's all part of what we're looking into as we put together our plans for 27. Yeah. And we're not transportation experts, but I would say that when spot rates go up 40%, that's typically transitory. Like supply and demand forces balance out over time. And we've seen in years past where we've had large spikes, but over, you know 20 years or so, on average, usually have 3% to 5% inflation in transportation rates. And so, this might be a little bit more structural for a period of time, but over time, it will also balance out. Got it. Makes sense. Thanks. Thanks for the clarification. And one other one for you, Rick. You mentioned M&A International. Obviously, this has come up more in recent quarters. Can you just remind us your criteria for M&A and international? Is it the same as your U.S. M&As? Could you potentially think about larger size to get more exposure in some international markets? Any thoughts on your criteria that would be helpful? Thank you. Yep, fair question. I think the criteria is very similar, but there's just a couple of asterisks. Like, of course, you want it to be a number one, number two brand. That doesn't go away. Of course, we want it to be gross margin or creative, asset light, you know, what's the real competitive advantage. I think we're more willing to accept a plant or a factory, you Know, in these examples, because then you can bring in some of our other products, potentially. We're more Willing to buy an entire business there that you need the entire back office, for example, especially if you're going into a different country. So, I think there's a little bit more latitude, but it all makes sense. Great. Thank you very much. Your next question comes from the line of Edward Lewis with Rothschild & Co. Edward, your line is open. Please go ahead. Thanks very much, yes. Rick, I was looking at the e-commerce performance, and it's up at 25.9% of consumer sales in Q3 in this quarter and you've had quite a significant move in that percentage, I guess, over the past few years. The divestments presumably helped. But how much of an advantage is that giving you at the moment and is that why you think you're growing ahead of the categories as you talked about and enjoying the share gains, having this level of e-commerce exposure that, frankly, your peers don't really have? Yeah, I think that's insightful. I think partially, yes. I think we went from a laggard to leader on e-commerce growth. And so we've been ahead of the curve for a while now on typically gaining share with these brands online. And when you look at retail, if you take a big step back, a lot of the growth at retail is what? It's coming from e-com. So that's one. I kind of acknowledge that. But number two is mix matters. and some of the businesses that we sold had low exposure to online businesses and sales and some of the business that we've bought like touchline like miss mouth are over indexed to online businesses or online sales and so that's helped as well so your portfolio mix also matters thanks your last question comes from the line of sergio matsumoto with td cohen sergio your line is open please go ahead hi good morning i'm calling on behalf of rob masco thanks for the question um back at the investor day uh you discussed some uh retail sales through licensee partners and that you have through an incubator model and potentially reacquiring those brands. Are there any specific licensing categories that are showing good traction that perhaps, you know, make sense to bring those brands back in-house over the next 20 to, sorry, 12 to 24 months? Yeah, Sergio, that is an excellent question. I'm not going to give you as much as you want. I'll give you an update in January on our Analyst Day about that. I would say there's one that we've already taken back, and there's two or three that we're looking at if they can hit some key thresholds. And there's also a couple that we'll ask. Sometimes you go through an innovation process internally, and then we think it has legs, but maybe another company's better set to get it off the ground so we're having those conversations as well so it's pretty broad-based and comprehensive and i'll give you more of an update at our analyst day great thanks looking forward to it there are no further questions at this time i will now turn the call back to mr Rick Durker for closing remarks all right thank you very much we had some fantastic results in q3 wasn't possible without a whole group of people at church and Dwight to make that happen so just thanks to the entire team we'll speak to everyone soon late January for analyst day really looking forward to that too take care this concludes today's call thank you for attending you may now disc