Paul J. Alexander - Kimberly-Clark Corp. Thomas J. Falk - Kimberly-Clark Corp. Maria G. Henry - Kimberly-Clark Corp. Michael D. Hsu - Kimberly-Clark Corp.

Lauren Rae Lieberman - Barclays Capital, Inc. Ali Dibadj - Sanford C. Bernstein & Co. LLC Jason English - Goldman Sachs & Co. Olivia Tong - Bank of America Merrill Lynch Bonnie L. Herzog - Wells Fargo Securities LLC Stephen R. Powers - UBS Securities LLC Nik Modi - RBC Capital Markets LLC Kevin Grundy - Jefferies LLC Faiza Alwy - Deutsche Bank Securities, Inc. Iain E. Simpson - Société Générale SA (UK) Andrea F. Teixeira - JPMorgan Securities LLC

Ladies and gentlemen, thank you for your patience and holding. We now have your presenters and conference. Please be aware that each of your lines is in a listen-only mode. At the conclusion of today's presentation, we'll be opening the floor for your questions. At that time, instructions will be given as to the procedures to follow if you would like to ask an audio question. It is now my pleasure to introduce today's first presenter, Mr. Paul Alexander. Paul J. Alexander - Kimberly-Clark Corp.: Thank you, and good morning, everyone. Welcome to Kimberly-Clark's second quarter earnings conference call. With us this morning are Tom Falk, Chairman and CEO; Mike Hsu, President and Chief Operating Officer; and Maria Henry, our CFO. Here's the agenda for the call. Tom will start with some opening comments about the current environment. Maria will then review our second quarter results and after that Tom will provide his perspectives on our results and the outlook for the year. And we'll finish with Q&A. As usual, we have a presentation of today's materials in the Investors section of our website. As a reminder, we'll be making forward-looking statements today. Please see the Risk Factors section of our latest Annual Report on Form 10-K for further information. Lastly, we'll be comparing our 2017 results to 2016 adjusted results, which exclude certain items described in this morning's news release. And now, I'll turn it over to Tom. Thomas J. Falk - Kimberly-Clark Corp.: Thanks, Paul, and good morning, everyone. Before Maria gives you some of the details on the quarter, I thought I would comment on how I see the environment overall and then how we're approaching it. So, while I remain optimistic about our long-term future, the near-term environment has become more challenging than maybe we saw at the beginning of the year. So category growth has slowed broadly in lots of places over the last year or so, and we expect that growth will pick back up over time, but that pickup may not happen quickly. In the meantime, competitive activity has increased, including higher spending in North America over the last 12 months. So in this environment, we continue to focus on what we think are the fundamentals that create long-term shareholder value. That means we're continuing to invest behind our brands by launching innovation, pursuing targeted growth initiatives and then supporting our brands with strong marketing campaigns. At the same time, we fine-tune some of our promotion strategies and we have a heightened focus on delivering more cost savings and tightly controlling our discretionary spending in an environment like this. We're also continuing to manage our company with financial discipline and allocate capital in shareholder-friendly ways. So in short, we continue to execute our strategies for long-term success, and we are adjusting our near-term plans as we operate in a more difficult environment. And with that, I'll turn it over to Maria for a review of our second quarter results. Maria G. Henry - Kimberly-Clark Corp.: Thanks, Tom. Good morning, everyone. Let me start with the headlines for the quarter. Sales and earnings were down slightly, reflecting a challenging environment, as Tom just described, and comparison to strong results last year. We delivered significant cost savings in the quarter, and we've increased our full year cost savings outlook. And finally, we're on track with our overall capital plan. Now let's take a look at the details, starting with sales. Our second quarter net sales were $4.6 billion, that's down 1% year-on-year due to lower organic sales. Tom is going to provide some more color on our top line in just a few minutes. On profitability, second quarter gross margin was 36.1%, that's down 20 basis points year-on-year. Operating margin was 17.5%, down 50 basis points. While margins were down slightly overall, I'm encouraged with the improvements that we achieved in our Personal Care and K-C Professional business segments, and also in the developing and emerging markets overall. Commodities were a $75 million drag in the second quarter, and for the full year, we're now expecting inflation of $200 million to $300 million, that's $50 million higher than our previous estimate driven by higher pulp costs. Our teams continued to deliver significant FORCE cost savings. Second quarter savings were $120 million and we've increased our full year savings target to $425 million to $450 million. Our original target was for savings of at least $400 million. Given the current environment, we are also tightly managing our overhead spending. On the bottom line, second quarter earnings per share were $1.49, down 3% year-on-year. Lower equity income reduced earnings by $0.03 per share, offset by a lower share count and a slightly better effective tax rate. Now let's take a look at cash flow. Cash provided by operations in the second quarter was $825 million, in line with our expectations. Cash flow was down compared to $860 million in the year-ago quarter, including the impact of higher tax payments this year. Second quarter working capital cash conversion cycle was down six days compared to full year 2016, bringing the year-to-date decline to five days. We're making very good progress in this area, and we expect to nicely exceed our original one-day improvement target for the full year. We also continue to manage capital spending in this environment, and we now expect that full year spending will be in the lower half of our $850 million to $950 million target range. On capital allocation, second quarter dividend payments and share repurchases totaled more than $600 million. We continue to expect that full year dividends and share repurchases will total between $2.2 billion and $2.4 billion. Looking at our segments, in Personal Care, organic sales fell 1% due to lower net selling prices. Organic sales were up 2% in developing and emerging markets but were down elsewhere. Personal Care operating margins were 20.6%, up 60 basis points. The improvement was driven by cost savings, partially offset by lower selling prices and higher input costs. In Consumer Tissue, organic sales were down 2%, driven by North America. Overall, Consumer Tissue operating margins were 16.5%, down 190 basis points. The results were impacted by lower sales and higher pulp costs. In K-C Professional, organic sales in the quarter were up 1%, with gains in all major geographies. K-C Professional operating margins were 20.1%, up 150 basis points. The comparison included benefits from cost savings. So in summary, our second quarter results were impacted by difficult environment with weaker economies, category softness and increased competitive activity. Nonetheless, we are achieving strong cost savings, we're generating healthy cash flow, and we're allocating capital in shareholder-friendly ways. I'll now turn the call back over to Tom. Thomas J. Falk - Kimberly-Clark Corp.: Thanks, Maria. I'll provide more detail on our top line sales and market conditions, and then I'll address our full-year outlook. As Maria just mentioned, our organic sales were down 1% in the quarter as we're operating in a challenging growth environment. In our consumer businesses in North America, organic sales fell by 2% that were impacted by category softness, lower promotional shipments and higher competitive activity. Just for perspective, in the categories that we compete in, in North America, the total market declined by about 1% in the quarter. Looking at our businesses in North America, Personal Care volumes were off 1%. In the infant and child care mega category, our volumes were down mid-single digits. Beyond tough comparisons, results were impacted by competitive activity and lower category demand, which is down about 1% year-to-date following last year's 1% decline in the U.S. growth rate. On the other hand, volumes were up mid-single-digits in baby wipes and low single-digits in adult care. In adult care, we're introducing an improved Depend product this quarter, and we're increasing marketing and promotion support to help drive more growth in this category. Our Consumer Tissue volumes were down 4%, and that compares to a 6% growth in the base period. We'd expect some better performance in Consumer Tissue in the back half of the year as we got a stronger promotional calendar planned and we're making some targeted promotion changes on Kleenex facial tissue. Turning to developed markets outside of North America, organic sales were down 3% in the second quarter. Sales were down in Personal Care in South Korea, where the diaper category is being impacted by a pretty significant decline in the birth rate. We expect results to pick up some in the second half of the year as we got some diaper and feminine care product upgrades in the market and we're also relaunching our baby wipes business there. Volumes were also down in the quarter in Consumer Tissue in Western and Central Europe, reflecting a continued challenging environment there. Moving to developing and emerging markets, organic sales were up 2% in the second quarter. For the first half of the year, organic sales have increased by 3%, with volume growth of more than 5%. So, I'm encouraged by our volume performance and, overall, we're largely on track with our plans in these markets. Looking at second quarter performance in some of our key markets. In China, organic sales in diapers were similar year-on-year as higher volumes and improved mix were offset by lower selling prices. And while competitive activity picked up somewhat in the second quarter, we continue to be optimistic that pricing won't be as negative in China this year as it was last year. We launched several innovations in China in the second quarter. And going forward, we plan to continue to focus on driving winning product solutions behind our Huggies brand. Moving to Brazil, organic sales in Personal Care were down high single-digits compared to a 10% increase in the year-ago period. Through six months, organic sales in Brazil are similar year-on-year, which is probably a better indicator of our underlying trends. While category volumes are still down in Brazil, our volumes were up mid single-digits, aided by innovation and changes to our promotional strategies there. In Argentina, organic sales in Personal Care were up mid-teens driven by higher selling prices. Although category volumes are still down pretty significantly, our volumes are up somewhat following the relaunch of Huggies diapers earlier this year. And then lastly in Eastern Europe, our organic sales in diapers rose about 10%, as our teams there delivered another double-digit volume increase this quarter. We've also recently introduced several innovations on Huggies in Russia to help us drive even more growth. Now beyond our sales performance, I'll just briefly build on Maria's comments to say that I am encouraged with the FORCE cost savings, our improvements in working capital, and the cash we've been able to return to shareholders in the first half of the year. Now turning to our outlook. In terms of our full year targets, we expect organic sales will be similar or up slightly year-on-year. Our prior assumption was for growth of 1% to 2%. We still expect growth in the second half of the year to pick up somewhat from the first half, and that's largely due to easier comparisons along with benefits from innovations and other steps we're taking to improve our performance. On the bottom line, we expect that earnings per share will be at the low end of our target range of $6.20 to $6.35. That reflects our new outlook for organic sales and cost inflation, along with additional cost savings, some overhead spending reductions, and a slightly lower effective tax rate. Our priorities for the second half of the year are as follows: first, to execute on our brand fundamentals with excellence to make sure we improve our top line performance; second, to deliver cost savings to help keep our margins healthy; and third and finally, to generate strong cash flow. Our teams are very focused on these priorities and our plan is to deliver sales and earnings growth in the back half of the year. Beyond the near term, over the long term, we're committed to continuing our long track record of making changes to improve our company so that we achieve success for our brands, for our businesses, and for our shareholders. That wraps up our prepared remarks and now we'll begin to take your questions.

Our first question comes from Lauren Lieberman with Barclays. Lauren Rae Lieberman - Barclays Capital, Inc.: Thanks, good morning. Thomas J. Falk - Kimberly-Clark Corp.: Hey, good morning Lauren. Lauren Rae Lieberman - Barclays Capital, Inc.: I wanted to talk a little bit about the competitive environment in North America you called out across the consumer businesses. Is it, one, primarily from branded players, is it private label, and then also just how retailers are kind of playing into all of that or stimulating the change in the environment? Thomas J. Falk - Kimberly-Clark Corp.: Yeah, I'll give you a couple of comments, and maybe Mike can give a little bit more color. I mean I think the answer is probably all of the above. When you have weaker category growth overall and you have about the same number of people fighting over it, you can see that play out. And there is no question, there is channel shifting going on as e-commerce grows and that's putting pressure on lots of retailers. Maybe Mike has some other comments to add. Michael D. Hsu - Kimberly-Clark Corp.: No, I definitely agree with that, Lauren. I'd say it's probably certainly branded players and then also private labels have an effect, too. I would say North America is always competitive, but we are really focused on the fundamentals that we need to bring, which is innovation, creating longer-term shareholder value. We are really focused on building the categories and so we got a really strong line-up of winning products out there right now. But we got to really fine-tune what's in our current marketing plans and promotions to improve our competitiveness in the market. We're also focused on, as Tom mentioned earlier, improving our in-store execution in the second half. Lauren Rae Lieberman - Barclays Capital, Inc.: And with in-store execution, and you mentioned kind of promotional adjustments, it feels like a lot of your category volume, maybe less so for tissue but more in personal care is sort of naturally shifting more online. So, how effective do you feel like for the focus on in-store, is there things that you're also doing to better position your businesses online right. We know Amazon has – we know they've made their push in diapers and wipes, and it looks like wipes is probably the piece that's had some success. So what are you also doing from an online standpoint, not just in-store? Thomas J. Falk - Kimberly-Clark Corp.: Yeah, I mean, in-store to us, I guess, broadly means whatever mom wants to shop. So that's a traditional bricks-and-mortar retail or an online retail, so it's making sure you got the right items in distribution, the right pricing, the right merchandising support. Michael D. Hsu - Kimberly-Clark Corp.: Yeah, we've got a lot of resources focused on driving online growth and working with our customers on their online strategies. And obviously all of our customers or many of our customers are working towards the same end. I would say we're making pretty good progress in growing online. Still the majority of our business is still sold offline, but we're making good progress, but not satisfied with our online performance. But I'd say, bringing us back to the offline portion, I think if you characterize our first half, we were going up against a very strong comp in the first half last year and some of our promotion plans, kind of, were balanced more, tilted towards the second half this year. So, we are expecting much stronger performance in the back half, particularly of our family care business with promotions. Lauren Rae Lieberman - Barclays Capital, Inc.: Okay. Thank you. Thomas J. Falk - Kimberly-Clark Corp.: Thanks, Lauren.

Our next question comes from Ali Dibadj with Bernstein. Ali Dibadj - Sanford C. Bernstein & Co. LLC: Hey, guys. Thomas J. Falk - Kimberly-Clark Corp.: Hey, Ali. Ali Dibadj - Sanford C. Bernstein & Co. LLC: So I have a few questions. One is just on organic sales, obviously, they continue to be challenging, clearly more challenging than we last talked. But you also say that you expect the top line to grow again. I'm trying to understand the underlying reasoning for that, and I guess, more specifically, is that the conclusion from Mike's strategic review that you said he was doing? Or is that yet to come really thinking about the long-term 3% to 5% organic sales growth target? And if that's not the conclusion from that review, when should we get that verdict? And then, also want to talk about margins, almost in a similar vein, I mean, FORCE has done just extraordinarily well for you guys, obviously continuing to do so and now raising it, recently the target for this year. Can you give us a sense of how much of that needs to be reinvested? And where exactly are the savings coming from, in particular because you're seeing Consumer Tissue margins fall so much this quarter? Should we be thinking about cost cutting not coming from there anymore, FORCE not coming from there anymore and kind of Consumer Tissue margins being past peak? Thomas J. Falk - Kimberly-Clark Corp.: Yeah. Well, I think I got a lot of those. So, on the top line, I mean, a lot of it is, if you look at our North American business and, Paul, you can check me on the numbers, I think first half last year we were up 5%, in the back half we were flat. Paul J. Alexander - Kimberly-Clark Corp.: Correct. Thomas J. Falk - Kimberly-Clark Corp.: So, just the comp will lead you more to growth naturally, just as we continue with the rate that we're on. So, I think the things that's probably different than on our top line look overall is the category declines, really some of the birthrate declines, both in North America and in places like Korea. You can still see category weakness in some of the Latin American markets, although some of the more recent data has been a little bit more encouraging on that front. In terms of the strategic review, I mean, I wouldn't say any of what we're talking about today is related to that. I mean, the strategic review is tending to look long-term and we still see the category potential in all of our categories as the developing and emerging markets grow. But how quickly we get to that future and the environment that we're in is still something that we're taking a look at. Coming back to FORCE, I don't know, Maria, if you want to comment on cost savings? Maria G. Henry - Kimberly-Clark Corp.: Yeah, we do continue to deliver significant cost savings through the FORCE program, and we were able to take up the full year target. And what I'd say is that as the program name implies, our teams really are Focused On Reducing Costs Everywhere. When you look at our supply chain savings that includes improving productivity and waste across our manufacturing operations, driving down the cost of our facilities, optimizing the cost of our product specifications and continually negotiating lower input costs or material costs of our products. And year-to-date, we are at 4% of cost of goods, which is really a strong performance, not only internally but benchmarks very well. I continue to see opportunities for us to continue to deliver the FORCE cost savings as we move forward. So good performance there, and I think more opportunity there. Thomas J. Falk - Kimberly-Clark Corp.: Yeah, we come back to the reinvestment rate. If you look at the cost savings we generated relative to the commodity costs and other things that hit us, I mean, you can see that even though we had a great cost savings quarter, we still had gross margins that were down because of lower pricing and higher commodity costs, so and the biggest single factor in the Tissue margins was pulp price change year-over-year. And the FORCE cost savings probably fell a little bit more in the Personal Care segment this quarter, which is where the margin improvement occurred. Ali Dibadj - Sanford C. Bernstein & Co. LLC: If I can go back to sort of the strategic review. Tom, you mentioned in your remarks, we're committed to making the changes to improve our company going forward. Is that something that's also being thought through in the strategic review? And what I mean by that is when do we get confirmation about 3% to 5% organic sales growth top line, not to put too much pressure on you Mike, but when do we get confirmation on that or a different number? And also are you going to tell us about perhaps some other changes, like how you are in Europe PC, maybe a bigger breakup, for example, the company or something. I mean, is there a timeframe for us to be thinking about when you guys would tell us, Mike, the outcome of your strategic review? And whether it touches all those elements? Thomas J. Falk - Kimberly-Clark Corp.: Yeah, Ali, I think your plan for the strategic review might be a little more glorious than what we're looking at. I mean, really what Mike and his team are trying to do and he can kind of add some comment to it as well as to say what are the things we need to do to really unlock the potential of our business in China, or how do we grow our adult care business everywhere when we see the huge opportunity there, and to kind of take us to the next level of performance and how our company operates and realizes the potential that we see in our categories everywhere. So that's under way. It's more about probably how we work together and use the matrix inside the company. It's not a portfolio analysis as you would have described it. Ali Dibadj - Sanford C. Bernstein & Co. LLC: Got it. Okay. Go ahead, Mike. Michael D. Hsu - Kimberly-Clark Corp.: I'd just add that, yeah, we're certainly excited about the long-term development growth of our categories. We do believe we're operating in some of the fastest-growing categories because of our D&E potential longer term. And so, we're really focused on category development and internally, we call it development of the white space for us. But we also recognize that the last couple of years have been a little slower and so we are working to see, hey, when do we get back onto that track. That said probably, and you may not find earth shattering news from us, but it's probably going to result in greater focus and more intentional development of some of our categories and geographies. Ali Dibadj - Sanford C. Bernstein & Co. LLC: Got it. So, we shouldn't expect anything like in Analyst Day or presentation or anything? That was, all right, I also thought that's what is going to come out of this, but it sounds like no. Michael D. Hsu - Kimberly-Clark Corp.: We give you our 2018 guidance; we'll give you an update on where we're at, at that stage so. Ali Dibadj - Sanford C. Bernstein & Co. LLC: Okay. Thanks very much. Thomas J. Falk - Kimberly-Clark Corp.: Thanks Ali.

Our next question comes from Jason English with Goldman Sachs. Thomas J. Falk - Kimberly-Clark Corp.: Hey, Jason. Jason English - Goldman Sachs & Co.: Hey. Hey, good morning, folks. Thanks for the question. I guess, I want to pick up on Ali's line of questioning, because I think his line of questioning was very much focused in terms of the long-term trajectory and the intrinsic value of the company. And I think that's important because as I've had lots of conversations from investors, there's really been two sticking points for people. One is the path to return to the type of growth that you used to be able to realize in Personal Care, and the second is the glide path to where margins can go in Tissue and Professional, particularly with the consternation of private label, price aggression. So, I was hoping you could delve in a little bit more deeply there. You mentioned category growth has slowed, can you give us some more context around what you think the drivers are and what levers may be there to get us back to reacceleration? And then a little bit deeper on the Consumer Tissue side. The results today are likely to do nothing other than sort of fuel those concerns with margins sort of rolling in that business, pricing under pressure despite input cost inflation, is there reason to believe that private label competitive dynamics in that market are indeed going to be ratcheted a lot higher on the forward and likely going to be causing some – a minimal cap on margins there, if not some downward pressure? Thomas J. Falk - Kimberly-Clark Corp.: Okay. A lot of questions, Jason, we'll do the best we can on those, so coming back to the growth path and some of the drivers of weaker categories, I mean, in Personal Care and baby and child care in particular, it's been birthrate-related in a lot of the developed markets. So we had kind of projected 2016 was going to be a flat birthrate year. In the second quarter, we got the final fourth quarter numbers that showed it down 2% for the fourth quarter, which brought the full year down 1%. So that obviously has caused category growth to be weaker than we would've anticipated going into 2017. Korea's birthrate, I think, we got the final 2016 numbers, was down 7%, which is a pretty big, big drop. So I think there is potentially lots of reasons, we don't really understand it at a deep enough consumer insight level, I'd say. But a broad trend is that Millennials are having their children a little later, as long as they have the same number, we're in good shape because the category growth will return. You have to go through the adjustment while that age shift happens from a demographic standpoint. So I think in Latin America, we've seen some of the negative category growth, and that's really economically driven because of some of the economic recession, with GDP per capita going backwards in places like Brazil and Argentina. I'd say in the last couple of share periods in Brazil, we've seen a little bit more positive category growth and things seem to be returning more to an equilibrium there. Argentina is still a little bit volatile, we're seeing negative category trends and positive pricing trends, and so that's putting a lot of pressure on the consumer. In other markets where you're seeing some category negatives were places that had big currency swings last year and where we took pricing and some of that pricing has come back out of the market this year, that would be markets like Russia and other key markets in Eastern Europe. So probably a bunch of things happening, some demographic, some economic, that put pressure on our categories in the first half of the year. On tissue margins, I mean, good progress on KCP in the quarter and continue to see opportunity there as that business builds around the world. On consumer tissue, it's probably always going to be a little bit more volatile and affected by pulp prices. We've seen good progress lately over the last couple of years. We were kind of asked where can it go from there, and we thought that high-teens was kind of the right place for consumer tissue to land in the near to medium term. And if I look at our year-to-date margins in consumer tissue, I think, it's 17.7%, so we are in the ballpark, it was a little lower than that in the second quarter, that's usually a light facial tissue quarter and we had a little bit higher pulp prices. So I'd say we're not concerned about the current tissue trends. Private-label shares, as you mentioned, are up a tick in towels, but haven't seen a lot of share movement on private label really anywhere at this stage. So I don't know if that covers most of what you had, Jason; I think so. Jason English - Goldman Sachs & Co.: Yeah, I think, so. And it was a loaded question. So, I will be respectful of other's people time and pass it on. Thomas J. Falk - Kimberly-Clark Corp.: Thanks, Jason.

Our next question comes from Olivia Tong with Bank of America Merrill Lynch. Olivia Tong - Bank of America Merrill Lynch: Great. Thanks, good morning. First, in terms of baby and child care promotion, I mean how much of this is being funded by you versus the retailer? Maybe can you talk about North American price by sort of major product segments, it looks like price was flat overall, but I imagine there is a fair bit of difference in your segment? And I know you are not funding the majority of it, but how are you adjusting sort of your long-term plans to help combat against an environment in which the consumer is starting to get more and more used to lower prices, bigger and better deals particularly in that category? Thank you. Thomas J. Falk - Kimberly-Clark Corp.: Yes, I mean, you are right, Olivia, retailers determine the final finished products selling price in North America and that's the way it's always been. And so we go to market with a consistent trade deal. And then our customers decide how they want to apply those funds and whether they want to invest some of their own funds to attract the young family into their retail environment. And that's kind of been the way the game has been played for a long, long time and that's really not any different now. It was the way Wal-Mart played as they grew and certainly some of the e-commerce players are offering hot deals to try to make sure the family gets converted to their shopping. In terms of how do we flex in that environment, we're trying to make sure we've got a winning product proposition, number one, that you've got great product superiority, you got good marketing and innovation coming, and that you're communicating all of that to the consumer and that's changing with digital and social and all the other tools that we have. But I don't know, Mike, if you want to add any more color on that? Michael D. Hsu - Kimberly-Clark Corp.: No. Yeah, certainly, Olivia, I think funding or you could see it in our numbers, I think, our price levels are comparable versus year ago. I would say probably the softness that we are seeing in the category primarily is driven by retail pricing. I think our overall plan though is and we're not happy about the softness, there is some shift into training pants and I think that's healthy for the category overall except in the way that it's occurring, we're not happy about the impact on our Polis business because some of that is being driven by the lower prices. We are focused on innovation and being the category leaders and trying to drive the category to growth. And that means bringing in innovation, we're the consumer-preferred brand, strong consumer preferred brand proposition and so we're really focused on category driving messaging on the training pant category. And then in diapers, again, we continue to bring news, but we are recognizing we probably need to fine-tune our plans to make sure, and we have done that to make sure that we're competitive on promotion. Olivia Tong - Bank of America Merrill Lynch: Great, thanks. And then I guess in terms of North American consumer tissue, why do you think private labels is gaining the momentum that it is and why do you think there's so much of a push in promotion in tissue because, obviously, I understand the desire to winning new mom in diapers, but it's not as obvious in tissue? Thomas J. Falk - Kimberly-Clark Corp.: Yeah, I think that in some ways, I've got kind of the private-label shares here across our business. If you looked at it, it was up a tick versus the previous quarter and probably paper towels is the area where we've seen the most share growth generally. And if you think about it, there's relatively low cost of product failure in the paper towel category. So if the towel doesn't work, you take another one, as opposed to personal care where if the diaper leaks or the fem pad leaks, you've got a major problem. And so, I think, that's probably been part of it. Michael D. Hsu - Kimberly-Clark Corp.: Yeah. And Olivia, I think, the thing that we'll say is, tissue, just like diapers, they tend to be strong traffic drivers for the retailers, and so that's why you're probably seeing some intensified activity there. I think, given what's going on in the economy and the retail environment, there are some external factors that are kind of tailwinds for private-label expansion. However, we do believe that retailers, when they're competing, compete more effectively and successfully with national brands because of that value proposition that's more transparent to brands. And so we really feel like our job is to bring the innovation and the category-driving messaging. And you don't have to look further than what we've done in adult care, I think, if you looked 10 years ago, I think the category had been inverted. We lost our leading share position to private label. The team went back to the brand foundations and really focused on bringing value-added news like Real Fit, and I think that's driven over double-digit share increases in that period and got us back to the right leadership and the right category expansion profile. So we recognize, given the economy, you're going to see some of this fluctuation, but we're focused on bringing innovation and the right messaging for the category. Olivia Tong - Bank of America Merrill Lynch: Got it. And if I can just sneak in one more on feminine care. Can you talk a little bit about the trends post the launch of U by Kotex, because at least from the tracked channel data, it doesn't look like much has changed so far? Thomas J. Falk - Kimberly-Clark Corp.: Are you asking about fitness? Olivia Tong - Bank of America Merrill Lynch: Yes. Thomas J. Falk - Kimberly-Clark Corp.: Yeah, yeah. So I think volumes were down, but we're lapping, Olivia, 10% growth in the year-ago base period. So last year, some of our results benefited by some promotional shipments and then some distribution gains. So our market shares were flat sequentially and down a little bit versus Q2 last year. We did launch UbK fitness. I think we're off to a good start, it's on track. Consumer feedback is strong and we're just rolling out the marketing support behind that launch right now. Olivia Tong - Bank of America Merrill Lynch: All right. Thanks so much. Appreciate it. Thomas J. Falk - Kimberly-Clark Corp.: Thanks, Olivia.

Our next question comes from Bonnie Herzog with Wells Fargo. Bonnie L. Herzog - Wells Fargo Securities LLC: Good morning. Thomas J. Falk - Kimberly-Clark Corp.: Good morning, Bonnie. Bonnie L. Herzog - Wells Fargo Securities LLC: I have a bit of a follow-on question on your consumer tissue business. I was hoping you could touch on some of the executional issues you called out last quarter. Do you guys think you did a better job in Q2, broadly speaking? And then maybe specifically, do you think you did a better job of matching some of the promotions in the quarter with your displays, for instance? And then, where are you at with your price points in your tissue business? I think you guys have mentioned you wanted to sharpen those? And then finally, what other changes have you made to drive better growth in this business? Thomas J. Falk - Kimberly-Clark Corp.: Yeah. Bonnie, couple of changes. Just for a couple of facts, and I'm assuming most of those questions relate to North America. So our North America volume was down 4% in the second quarter, and that's up against a plus-6% comp in the year-ago base period. So that does reflect some lower promotional shipments and stronger competitive activity that happened in the quarter. Q2 was an improvement versus our 7% decline in the first quarter, but we still have a lot of work to do. We're not satisfied with our performance yet. We have better activity coming up in the second half. We strengthened the promotion calendar. I think our field selling organization is better prepared in the second half with their events. And we fine-tuned some of our pricing, most notably on Kleenex, where we did take a price increase early in the year, the beginning of the year, and we've adjusted some of that on-shelf pricing given the market conditions and we're expecting better results. Bonnie L. Herzog - Wells Fargo Securities LLC: Okay. So bottom line, you think second half, obviously, should ramp in this specific business given things that you can control and just maybe broadly, do you think the competitive environment should ease, or do you expect that to still be pretty heightened? Thomas J. Falk - Kimberly-Clark Corp.: Don't know. I don't know how to answer that, but we're going to focus on what we control, which is improving our execution. Bonnie L. Herzog - Wells Fargo Securities LLC: Okay. And then just maybe a quick question on China. You've been lapping some easy price compares in the market now for quite some time. So, I guess, I'm curious what gives you the confidence that this can improve in the second half, especially I guess given that Procter, I think, is about to finally begin rolling out a new diaper product in August, I think? Thomas J. Falk - Kimberly-Clark Corp.: Yeah, I mean, I think a lot of the pricing started in the back half of last year, and so I think, we're just going to start to lap easier price compares in the back half of this year. So I'd say we had some benefit from mix in this quarter as we had a little heavier newborn shipments last year. We still see strong underlying category growth. It's still a tough competitive market. I don't know, Mike, if you want to give any other color on that front? Michael D. Hsu - Kimberly-Clark Corp.: Yeah, I think, the market and the competitive environment certainly remains very active. But we do think the pricing situation has eased compared to this time a year ago. We remain pretty excited and confident in our China business. We're expecting better volume gains in the second half and for the full year behind double-digit category growth. We do have best-in-class innovation. We rolled out a new tier 7 product earlier this year, and I think, that's performing very well. We've got premium tier diaper pants that are out in the marketplace. So, I think we've got the right innovation and the right products out there, and I think the team is doing a great job. And I think the long-term opportunity for growth in China is huge, as you know, and it's about five times as many births per year and the market size is, depending on what numbers you want to look at, comparable. And so over the long-term, this market is going to be much larger than the U.S. And so we've got a lot of opportunity to grow. Bonnie L. Herzog - Wells Fargo Securities LLC: Okay. That's helpful. Thank you. Thomas J. Falk - Kimberly-Clark Corp.: Thanks, Bonnie.

The next question comes from Stephen Powers with UBS. Stephen R. Powers - UBS Securities LLC: Great. Thanks. So, Tom, I think you said in your prepared remarks that you seemed happy with the developing and emerging market progress so far year-to-date relative to your plan. I guess was that a volume comment, or was that a comment reflective of both volume and pricing and overall organic growth? Thomas J. Falk - Kimberly-Clark Corp.: Yeah. I mean, I would say that it's more directed to volume, but if you look at their results overall, and their sales in dollars, their profit in dollars, they're tracking much closer to their plan. Stephen R. Powers - UBS Securities LLC: Okay. So then trying to decompose the roundabout two-point reduction in organic growth outlook from where we started the year, is it really all related to the category volume pressures that you called out related to the U.S. and Korea in birthrates, or just versus the stronger competitive environment that we've also talked about? I'm trying to assess if it's not D&E, and it's not D&E volumes, is it just developed market volumes and birthrate, that really two points? Or there's competition? Thomas J. Falk - Kimberly-Clark Corp.: I'd say, no, there's probably two factors. One is currency-related pricing rollback. So as the dollar has weakened relative to where it was a year ago, there's markets like Russia, where we took pretty aggressive pricing and had to roll some of that back this year. You're seeing some of the same factors in Brazil. And then obviously, there's some continued price competition in markets like China. So price is one factor. Some of it related to a weaker dollar that is part of it, and then category growth in developed markets, as we discussed, is probably the other factor. Stephen R. Powers - UBS Securities LLC: Okay, so pricing coming back in D&E markets, but no volume, no volume, no positive volume actually? Thomas J. Falk - Kimberly-Clark Corp.: Yeah, and if you look at our decompose of this quarter, it was flat volume, minus 1 price. And a lot of that price rollback was some of the markets where there were some currency-driven pricing last year. Stephen R. Powers - UBS Securities LLC: Okay. To Bonnie's question on P&G's upcoming launch, have you factored any – I'm assuming that wasn't in your original outlook. Is there any incremental cushion you baked in for that? Or it sounds like you're kind of assuming kind of business as usual, I'm just trying to assess if that's the case, or if you've baked in some allowances there? Thomas J. Falk - Kimberly-Clark Corp.: I'd say business as usual in China as it's a competitive environment with lots of terrific product launches, primarily from our Japanese and other competitors. And so we had assumed going in that China was going to be a competitive environment with lots of competitive launch activity and that has played out. And so I would say, again our team is focused on beating the best product in the market. And if that is P&G with this launch, then that will be who we're aiming at. But at this point, in recent times, it's been more the Japanese players that have had significant product news that we've been up against. Stephen R. Powers - UBS Securities LLC: Okay, that's fair enough. And just if I could sneak in one more, I asked about this last call too, just want to see if we're still on the same trajectory. I think $800 million to $1 billion in buybacks was the outlook coming into the year, you seem to be running ahead of that, just want to checkpoint there? And then also on interest expense you had assumed that would be down, I know that you've got some August notes you're going to reissue. But it also seems like you issued more debt in the quarter than I expected. So what's the outlook on those two numbers as well, if I could? Thanks. Maria G. Henry - Kimberly-Clark Corp.: Sure. On the buyback, the $800 million to $1 billion is still the right number for the year. We're on track with that. And in terms of the interest expense, we did some pre-funding on the $950 million that comes due in August, which is why you see a higher debt number at the end of the quarter, but that should normalize. And the debt that we'll take out in August is a pretty high coupon, it's 6.125%, and so that will be replaced with lower interest rate debt and that should bring the interest expense down for the year. Stephen R. Powers - UBS Securities LLC: Okay. Perfect. Thank you so much. Maria G. Henry - Kimberly-Clark Corp.: Yep. Thomas J. Falk - Kimberly-Clark Corp.: Thanks, Stephen.

Our next question comes from Nik Modi with RBC Capital Markets. Thomas J. Falk - Kimberly-Clark Corp.: Hi, Nik. Nik Modi - RBC Capital Markets LLC: Yeah. Good morning, everyone. Good morning. Just two quick questions. There's been a lot of commentary recently at least this earnings season from a variety of companies on the U.S. weakening. And I mean we have our own theories, I'm just curious on kind of your assessment from the company's standpoint on what's driving the sequential deterioration? And then the second question is, just wanted to understand did the amount of promotions, particularly in North America, pickup as the quarter went on or has it been more steady? Thanks. Thomas J. Falk - Kimberly-Clark Corp.: Yeah. In terms of the U.S. category growth rate, as we looked at that year-over-year, I mean, the big driver is infant and child care in terms of why we're down. If you kind of look across the categories, adult care is still growing mid-single digits. Baby wipes is still growing low single digits. FemCare is pretty flat. Consumer tissue is pretty flat. And value of infant and child care is down 5%, it's like 1% volume and 4% price. And so net-net, our total categories were down 1% with a good chunk of it being driven by birthrate and then competitive pricing activity in baby and child care. Nik Modi - RBC Capital Markets LLC: Great. And then on the promotion question? Thomas J. Falk - Kimberly-Clark Corp.: Promotion side, I mean, I wouldn't say it's more competitive. Mike, maybe you have a different view of that? Michael D. Hsu - Kimberly-Clark Corp.: Yeah, Nik, no, I would say comparable to the first quarter. And I think, well, birthrate is a driver in the diaper business, and there is multiple reasons for that, including the hypothesis around the way in household formation. There is a decline in some Hispanic household births. So, that's one side. But I think the competitive activity has been, I would say, at a higher level than we've experienced in recent years. And that probably started in the back half of last year and has persisted through Q1 and now Q2. And certainly we recognize the need to adjust and fine tune our promotional plans and strategy and we're doing that. Nik Modi - RBC Capital Markets LLC: Great, thanks a lot. Thomas J. Falk - Kimberly-Clark Corp.: Thanks Nik.

Our next question comes from Kevin Grundy with Jefferies. Kevin Grundy - Jefferies LLC: Thanks. Good morning. Thomas J. Falk - Kimberly-Clark Corp.: Good morning, Kevin. Kevin Grundy - Jefferies LLC: So first question, this is picking up on Steve's question, can you quantify for us and bridge the 2% organic sales growth that you were targeting at the start of the year and now sort of flattish, and specifically how much of it is a slowdown in the category, is that a point versus how much is maybe market share losses that were not anticipated? And then related to that, so your guidance now suggests something like up modestly, maybe up 1% in the back half of the year, what's implied in that from an industry growth perspective? And then I have a follow-up. Thanks. Thomas J. Falk - Kimberly-Clark Corp.: Yeah, I mean, I think we've probably given you about as much detail on this as I can give you. I'm just kind of looking in January, I think if you recall, organic volume was up 2% and price was going to be similar to up slightly. And now we're going to tell you our volume is up slightly and price is probably going to be down slightly. And so, if that's helpful. Kevin Grundy - Jefferies LLC: It's helpful, but what's the expectation for the industry? So in other words, I mean, is there an expectation that you're going to see market share in the back half of the year? Thomas J. Falk - Kimberly-Clark Corp.: I'd say our expectation is that our share should improve relative to where we are in the first half of the year. I'd expect the birthrate change isn't going to shift quickly. So, given that we had the 2% decline in births in the U.S. in the fourth quarter, that's going to roll over into this year. And I don't think the Korean birthrate that we talked about is going to turn around quickly either. So I think you are going to see some of the continued drag on category, and then we'll see where share falls out. Kevin Grundy - Jefferies LLC: Okay. And then one follow-up, just sticking with the share question. So we're kind of limited here for now, it's a bit of a blackbox in terms of what's going on online across categories, not specifically the ones that you are participating in. Would we draw any wrong conclusions by looking at the share trends in the Nielsen data? Are you seeing drastically different share trends for your business online? Because I guess, the way we look at it now, it's a challenging environment, but the market share performance for your portfolio has certainly been difficult. I mean as I look at it over the most recent 12 weeks, you've lost market share to varying degrees across your portfolio. Are you seeing something similar in the online channel? Or is there very different dynamics going on? So any commentary there would be helpful? And I guess if the answer is, it looks similar, are investment levels appropriate now, both with respect to trade investment, and with respect to advertising and marketing? Does that need to move higher? Is the cost of business moving higher, even while category growths are slowing? So any commentary there would be helpful. And that's it for me. Thank you. Thomas J. Falk - Kimberly-Clark Corp.: Yeah, I think, Kevin, certainly the offline and non-measured share performance is better than the measured at this point. Our online growth is accelerating and our shares continue to grow. That said, I think we're not happy with our share performance in North America, and we are fine-tuning our plans to make sure that our share performance improves in the back half. Kevin Grundy - Jefferies LLC: Thank you.

Our next question comes from Faiza Alwy with Deutsche Bank. Faiza Alwy - Deutsche Bank Securities, Inc.: Yes. Hi. Good morning. So I just had a couple of follow-up questions. One on Consumer Tissue. So first, can you just clarify for us, it looks like pulp costs have increased versus April. But then, it also seems like you're not really able to transfer those cost increases to retailers. Can you just confirm that that's just because of the retail transformation that we're seeing especially in your categories? And is there any expectation that that is going to change as input costs potentially continue to increase? Thomas J. Falk - Kimberly-Clark Corp.: Yeah. There's no question, pulp prices are up sequentially, and our outlook is for them to moderate a bit in the back half of the year because our full year outlook for pulp price is slightly below what the current market price is. And up until this point, it hasn't resulted in any major finished product selling price increases, and I think the question is going to be more on the expected outlook for pulp. And if people are expecting that to moderate, which at the moment they are, that makes it a little tougher to pass finished product selling prices along. And so, at this point, it hasn't resulted in finished product pricing. We have gotten some pricing in our Professional business. And they've had some similar trends on secondary fiber as you've seen on virgin fiber, but again, it is tough broadly getting selling price increases in developed markets at this point. Faiza Alwy - Deutsche Bank Securities, Inc.: Okay. And then just on the competitive environment where you've talked about market share losses, I think this question was asked earlier, but could you just clarify for us how much of this is coming from, like, your primary competitor, like Procter? And how much of it is coming from smaller players? So asked another way, are you seeing, especially, as consumers are shopping more and more online, are you seeing a higher growth in potentially niche brands or private label, specifically online? Thomas J. Falk - Kimberly-Clark Corp.: Are you talking about any particular market, Faiza? Faiza Alwy - Deutsche Bank Securities, Inc.: I would say North America specifically, and maybe more so on the diaper side, or just infant child care? Thomas J. Falk - Kimberly-Clark Corp.: Yeah, I mean, so I'd say, in North America broadly, our shares have been fairly similar sequentially, and I think we're down about 1 point year-on-year. In infant care, Procter has picked up most of that behind their Easy Ups launch last year. I think in another category, I think Mike commented on FemCare, I think it's down two-tenths sequentially and there is not much to talk about there. Adult care, I think we're up four-tenths sequentially. And if you look at some of the tissue brands, kind of a similar story. Facial tissue, we're down a couple of points year-over-year and up a tenth sequentially. Dry bath, we're down 1 point year-on-year and up 1 point sequentially. Paper towels, we're down a little under 1 point year-on-year and up a tenth sequentially. And so, yeah, a little bit better, kind of a mixed performance sequentially and a little bit down year-on-year and most of it with the exception of paper towels has been other branded competitors. Faiza Alwy - Deutsche Bank Securities, Inc.: Okay. Thank you.

Our next question comes from Iain Simpson with Société Générale. Iain E. Simpson - Société Générale SA (UK): Thank you very much. Morning all. A couple of questions, please. Firstly, could you just talk us through where both pulp and reclaimed paper costs are at year-on-year and how you expect that to progress in the second half? And how we should think about its impact on pricing in both Consumer Tissue and Professional? And secondly, I guess, a much wider question. I think the U.S. is almost unique amongst developed markets in having a branded Consumer Tissue category where companies can actually earn a return meaningfully in excess of their cost of capital. What sort of gives you comfort that this is sustainable and that what we're seeing now isn't the start of a slide where the U.S. Consumer Tissue ends up looking like Europe or Australia where it's almost completely commoditized? Thanks very much. Thomas J. Falk - Kimberly-Clark Corp.: Okay, on the pulp question. We typically quote eucalyptus pricing, because that's our biggest virgin fiber category. So our outlook is for $950 to $975 a ton on average for the year. I think the current market price is a little bit above that. And that compares to about $850 last year. So it's about $100 to $125 a ton would be our call up year-on-year. Secondary fiber, our call, again, there's a wide variety of grades that you can buy there. We're looking at a double-digit increase versus 2016 and it's in the low $200 a ton for the typical grade that we look at. And the broader margin question, I mean, we do have Consumer Tissue businesses all over the world and with some wide ranging market structures. So U.S. has consistently been a pretty high margin market, but we have other markets like Peru, for example, or Mexico that are similarly very, very profitable high margin markets for us. And even, yeah, markets like Korea and Australia are still reasonably good performing markets. And so we think the strength of brand and innovation in North America is justifying the value that we're delivering. And we've got scale and efficiency here and that seems to be playing out and supporting the margin levels for most of the players in the category. Iain E. Simpson - Société Générale SA (UK): Thanks very much.

Our next question comes from Andrea Teixeira with JPMorgan. Andrea F. Teixeira - JPMorgan Securities LLC: Hi. Good morning, everyone. So Tom, just back on your comments on, and I think Mike as well alluded for emerging market. And I understand, of course, China, you are probably lapping what you mentioned in terms of price declines. But I was curious about Brazil, you mentioned that you're probably growing mid single-digits. You also commented about Russia, which similar to Brazil, you have some kind of like return of the FX kind of like now becoming a tailwind. How can we layer that with, for example, in Brazil, one of your competitors consolidating, the same competitor that consolidated in Mexico, is the competitive environment getting marginally worse there so you have to kind of pull back some of the pricing, some of the promotions into pricing which we're seeing by other multinationals there doing the same thing? Or how should we think, which goes against of course the economy has been improving from its bottom, but if you think about like competitive environment getting worse as we marginally think about Brazil pricing? Thomas J. Falk - Kimberly-Clark Corp.: Yeah, I mean, I would have said, at least the economic environment in Brazil is getting marginally better, and we've seen that in a little bit healthier category trends in the last couple of share periods. And it's been a competitive environment throughout. So I wouldn't say that we've seen a big step-up in Brazil competitive activity. Mike, I don't know, you were just down there not long ago, so you may have a different comment to add? Michael D. Hsu - Kimberly-Clark Corp.: Yeah, I think we're cautiously optimistic about both maybe Brazil and Argentina about the economy showing signs of improvement, although that hasn't fully translated into our categories yet. However, yeah, I think you're right, the competitive environment remains active and probably throughout our second quarter, maybe what we're getting is more volume than price. And I think the team has adjusted their plans to be able to plan that environment little more effectively. What they've done is improved their lower-tiers or their Tier 2 product to make that more competitive and then adjusted some price packs to make the on-shelf affordability better. So I, I think we're cautiously optimistic about Latin America. I think the team is largely on track with what they set out for the year. And then, with CEE, which you mentioned in Russia, we're pretty excited about that business. Even though they still have tough economic conditions, I think the consumer still demonstrates that they're willing to spend in our categories. We're up double-digits organically up there in Russia. We've got winning products. The team is executing great in store, we look great on-shelf and you can see it in their share, we're up about 1 point in the quarter in share, as you can see in that performance. Andrea F. Teixeira - JPMorgan Securities LLC: This is very helpful. Is it fair to say that on those countries specifically and including I'd say layer in your Kimberly-Clark Mexico partners seeing the same thing, is that the fragmentation of the brands not happening that much yet, right, as far as, I mean, we're in different problems, I should say, in emerging markets vis-à-vis what you see here in the U.S. You don't see yet like the same folks, I think, Walmex definitely does their part on Mexico but from the retail standpoint, you don't see them pushing for pricing the same way or promotions the same way as we're seeing in developed markets. Is that a fair assumption? Thomas J. Falk - Kimberly-Clark Corp.: I mean, I think it's a little different in each market. In Brazil, there's probably 30 or 40 diaper brands if you looked across every state in Brazil, and some are just tiny and you might have called them a private label, but they're just in one region or one state. And they wouldn't typically pop up on even the Nielsen data. So you have seen the trends, the consolidation around the bigger brands over time and that's not really changing. And Mexico, we continue to have very strong shares. Pablo and the team down there have done a great job. And I'd say it's about the same number of other players, they occasionally change owners, Mabesa was acquired by Ontex, et cetera, but it hasn't really fundamentally changed the competitive position from that standpoint. And Russia is mostly the international players, it's us and P&G and the Japanese players are present there for the most part. Andrea F. Teixeira - JPMorgan Securities LLC: Okay, thank you. Very helpful. Thomas J. Falk - Kimberly-Clark Corp.: Thanks, Andrea.

Our next question comes from Lauren Lieberman with Barclays. Lauren Rae Lieberman - Barclays Capital, Inc.: Thanks. I just have one quick follow-up. So one thing we know that Procter is changing in China, it's not just an upcoming launch but also their sales force coverage. They talked about adding 600 people to cover the mom and baby channel in China. So could you just share with us a little bit about your sales model in China, if you've dedicated coverage for channels, et cetera? Thanks. Michael D. Hsu - Kimberly-Clark Corp.: Yeah. We do have dedicated channel coverage. We do concentrate more in the larger cities. So we probably won't have those head count numbers that our competitor is talking about. The other thing that I would point out Lauren is that almost the majority of our business now is sold online, and so that's where a lot of our resourcing and our strategy is focused on. But the baby channel is very important to us, we've got great coverage there, we've got a great team there and we've been performing very well in that channel. Lauren Rae Lieberman - Barclays Capital, Inc.: Okay, thank you.

At this time, we have no other questioners in the queue. Paul J. Alexander - Kimberly-Clark Corp.: All right. Well, we thank everyone for your questions and we'll wrap up with a comment from Tom. Thomas J. Falk - Kimberly-Clark Corp.: Yeah, once again it's a challenging environment and we're looking forward to showing you we can deliver growth in the second half of the year. And thank you, again, for your support of Kimberly-Clark. Paul J. Alexander - Kimberly-Clark Corp.: Thank you very much.

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