Hello. This is Chris Jakubik, Head of Investor Relations at Kimberly-Clark, and welcome to our Fourth Quarter 2023 Business Update. During our review, we will make some forward-looking statements that are based on how we see things today. Actual results may differ due to risks and uncertainties, and these are discussed in our earnings release and our filings with the SEC. We will discuss some non-GAAP financial measures during these remarks. These non-GAAP financial measures should not be considered a replacement for, and should be read together with GAAP results. And you can find the GAAP to non-GAAP reconciliations within our earnings release and the supplemental materials posted at investor.kimberly-clark.com. Today, our Chairman and CEO, Mike Hsu, will provide an update on our overall business performance, and Nelson Urdaneta, our Chief Financial Officer, will provide an overall financial review and our outlook for the coming year. We have also scheduled a separate live question-and-answer session with analysts. You can access our earnings release, supplemental materials and audio of our Q&A session at investor.kimberly-clark.com. A replay of the Q&A session will be available following the event through the same website. With that, I will turn it over to Mike.

Great. Thank you, Chris, and thanks to everyone for joining us today. Our fourth quarter results reflect a solid finish to a 2023 that was punctuated by better organic growth and a stronger recovery of costs, margins, and earnings than we anticipated at the start of the year. Our results reflect the hard work and commitment of our people to excite and delight our consumers and customers, while navigating macro-economic challenges that have persisted across our industry. Looking back at the past year, and in fact, the five years since I stepped into the role as CEO, I am incredibly proud of our team. We've made significant enhancements to our business and how we're serving our customers and our consumers. At the same time, we successfully addressed an unprecedented inflationary cycle, continuous supply chain disruptions and the need to offset new, higher cost levels. Importantly, we built advantages in key commercial areas that will benefit us for the long term. Through it all, we've learned some valuable lessons that have made us stronger. Our strong performance this year and our solid finish gives us confidence that this phase of cost recovery and supply chain stabilization is largely behind us. This is a pivotal moment for Kimberly-Clark. We're positioned to build on the consumer centricity we've established over the past several years and take another leap forward into our next chapter of growth. We do this from a much stronger financial position. From our cost structure to our cash flow to our balance sheet, we're in a better position to accelerate and enhance the performance of our business. Our growth strategies are working, and our financial performance has improved as we've strengthened our foundation. But I believe we can do even better. We're continuing to sharpen our strategic focus and I'm confident in and excited about the future of Kimberly-Clark. We look forward to hosting an Investor Day in March to share more about the strategic priorities and key initiatives that will drive this step-change in the future. We began 2023 with two main objectives: playing to win by continuing to elevate our categories and expand our markets; and driving profitable growth focused on margin recovery in a quality way, boosting our brand investments while remaining disciplined on costs. Versus our initial expectations last January, we over-delivered on both fronts. In terms of organic growth, the quality of our top-line momentum has continued to improve with a healthier balance across price, volume, and mix. I would like to highlight three key points about our organic growth since 2019. First, in 2023, we built further on the sales gains achieved in the 2020 to 2022 pandemic period. Second, the contribution from pricing to help offset unprecedented inflation is receding and our brands remain healthy and well-positioned to grow. Third, underlying growth, volume plus mix is now turning positive. Volumes have continued to improve and were flat in Q4. We've been driving consistent, positive mix the past four years, reflecting our strategy to elevate our categories. This has shown most prominently in our Personal Care business, where we strategically focused the majority of our organic investments. A key driver has been our focus on launching category-defining innovation. It's our heritage, and a focal point of our strategy to elevate our categories and expand our markets. Our approach to innovation has evolved to be more consumer-centric, driving consumer-preferred solutions, guided by consumer insights and behaviors to create and scale end-to-end advantages. We've focused on propositions that can deliver the trifecta of consumer desirability, technology advantage and margin expansion. In 2023, we prioritized innovation in two of the biggest consumer demand spaces in Personal Care, Skin Health & Wellness and Leak-Free Comfort. In Skin Health & Wellness, we leveraged advantaged technology for superior performance in products such as our Huggies Dual Zone for skin health, Huggies Newborn Zinc Enriched and Kotex Liners with a pH indicator. The team did an incredible job of scaling the Kotex launch globally within its first full year. In Leak-Free Comfort, we applied advantaged product designs to improve performance in Feminine Care with Kotex Overnight, a platform being rolled out globally. In Youth Pants where GoodNites XL drove growth into its second full year of launch, and in Diapers with a new marketing push behind our superior-performing Huggies Blowout Blocker in all of our newborn lines. These innovations were successful because of the consumer-preferred solutions they deliver as well as the strategic investments we made to improve our commercial execution over the past few years. Our commercial execution is much stronger and more integrated than at any point in the company's history. We've enhanced and scaled our innovation and product technologies. We've pivoted toward a digital-first brand paradigm, focused on building ongoing relationships with our consumers. We're enabling superior in-market execution by leveraging world-class process and tools. And we've enhanced net revenue realization through a disciplined analytical approach, helping us to systematically optimize trade decisions in real time. As a result, new product launches in the past three years represented 54% of 2023 net sales in our Consumer businesses and contributed more than 70% of our incremental organic growth in 2023. In Personal Care, we have more than doubled the rate innovation was delivering for us as recently as 2021. In addition, more than 75% of our top 25 projects are now being scaled globally. This level of innovation has helped mitigate the volume and mix impact, and in many cases helped facilitate, the revenue realization we've driven over the past two years. We're moving faster and with greater confidence because we now have leading-edge commercial tools to take more informed actions and capitalize on our innovative products. A testament to our improvement in commercial execution is the fact that for the second year in a row we've topped The Advantage Survey as the best CPG manufacturer in North America. Together, these factors have been key contributors to what has been a price/mix and productivity-driven gross margin recovery through the end of 2023. Over the past five quarters, accretive innovation, improved commercial execution and a strong ongoing stream of cost savings enabled our rapid recovery in gross margins. This is critical because our gross margins and more specifically gross profit dollars serve as our fuel for growth and investments in the future. In the second half of 2023, we recovered 2019 levels faster than originally anticipated and can now pivot our focus from cost recovery to accelerating growth and building longer-term competitive advantages. Importantly, we view our gross margin recovery to-date as a milestone, not an endpoint, and believe there remains ample opportunity for us to expand margins from here. We've made great progress, but we have a lot of opportunity yet to be realized. There's no question that pressures on our consumers and inflationary economies in some of our developing markets will remain challenging in the near term. We will continue our relentless focus on market share and our need to improve upon recent trends. The foundation we've established over the past several years has positioned us to take another leap forward into our next chapter of growth. Elevating our categories and expanding our markets is working and can be accelerated. We're in a better position to fully leverage the investments we've made. We know where we can improve even more in terms of volume, mix and efficiency to drive margins further. And we are in a much stronger financial position to undertake a step-change in the business. Which is a good place to hand off to Nelson to cover our financial results and initial outlook for 2024.

Thank you, Mike. The stronger financial position we now enjoy truly resides in the exceptional execution, discipline, and portfolio optimization our team has displayed these past two years. As we look back at 2023, we have many reasons to believe in our potential and our ability to drive that momentum across the enterprise. Fourth quarter organic growth was 3%, reflecting further, gradual progress in getting towards a healthier balance across price, mix and volume, with volumes flat as we begin to lap the strong pricing actions taken over the past several quarters. In fact, pricing in the second half of 2023 was predominantly driven by price increases in inflationary, developing markets, a profile we expect will continue in 2024. Gross margin increased 210 basis points to 34.9%, reflecting improved revenue realization, mix, and cost savings that more than offset other manufacturing costs and currency headwinds. Looking forward, our cost basket in the near term is likely to remain mixed, with favorability in some raw materials, contrasting with higher distribution and labor costs as well as currency headwinds. Below gross profit, adjusted operating income margin was down 80 basis points and adjusted earnings per share was $0.03 below Q4 last year. Currency headwinds, both in the form of translation as well as a negative impact from monetary losses in hyperinflationary economies, were in fact a significant factor that held back operating profit growth, operating margin and EPS in the fourth quarter. The negative impact from monetary losses in hyperinflationary economies, captured in the other income and expense line, was approximately $70 million in Q4, representing more than 100 basis points of negative impact to operating margins. At adjusted EPS, this impact was partially offset by higher interest income, resulting in a roughly $0.09 per share negative impact in the quarter. These impacts were largely driven by a significant devaluation since we last updated our guidance in late October. For the full year, we built further on the strong organic sales gains in 2022 as pricing faded, as expected, and volume plus mix gradually turned positive, adjusted gross margin for the year improved 370 basis points to 34.5%, reflecting our hard-fought return to pre-pandemic gross margin levels in the second half of the year, while adjusted operating margin grew 150 basis points and adjusted earnings per share were up 17%, mainly for the same reasons. There were two other factors driving our full year results worth highlighting. First, at operating profit and EPS, note that the full year negative impact from monetary losses in hyperinflationary economies was about $115 million, representing a roughly 50 basis point negative impact to adjusted operating margin. At EPS, we saw a roughly $0.16 impact net of interest income from our monetary positions in those hyperinflationary economies. Second, and more important, is our investments in our brands, our people, and our capabilities, investments we've continued to make despite the ups and downs in our gross margin. Our 2023 marketing, research and general expense levels, specifically, reflect advertising spending of more than 5% of net sales, up almost $200 million from last year, the successful deployment of revenue growth management capabilities. It also reflects the upgrading of our commercial talent, and technology investments that include a new system to increase procurement efficiency across the enterprise, as well as higher incentive compensation. While this has held back our operating profit margins versus 2019 levels, as we've highlighted today, those investments have been critical in recovering our baseline earnings power and driving organic growth. And as we make further progress towards a volume and mix driven organic growth profile, we're confident that we will begin to see the type of margin leverage we expect from these investments. Before I get to our 2024 outlook, I'll provide some highlights on each of our segments. In Personal Care, the momentum we saw in the second half and the quality of fourth quarter results is both encouraging and something we expect to build upon. Organic sales growth reflected a shift to a more balanced contribution from volume, mix and price in the second half, with volumes positive for the second consecutive quarter. North America Personal Care grew 5% in Q4, driven entirely by volume and mix. Outside of North America, China grew volumes in the high-single digits for the full year, while other markets saw improving volume and mix trends as the year progressed, relative to strong, but necessary, year-on-year price increases throughout the year. At a category level, it's worth noting continued momentum in Feminine Care from share gains leading to double-digit organic growth for the full year. At the operating margin, Q4 levels reflected both a typical seasonal low in the business as well as an unfavorable swing in one-off, discrete costs versus the prior year. That said, the mid-17% margins in the second half and full year represent a solid base from which we expect to build going forward. In Consumer Tissue, the organic growth trend into Q4 reflected improved volumes sequentially as we begin to lap considerable pricing taken in previous quarters. Full year organic growth was driven by North America and Developed Markets, with North America delivering flat volumes for the full year. And in the UK, momentum of our Andrex brand continued as we recover from supply chain disruptions. Specifically, we saw both sequential and year-over-year share gains in Q4 as well as double-digit consumption growth for the full year. At operating profit, margins for the segment strengthened as the year progressed, reflecting the improving volume trends as well as ongoing productivity initiatives. Finally, our K-C Professional business results reflected the success of our sharpened strategic focus on country category segments that we see as more resilient, as well as investments in innovation to create value-driven propositions and sustainable solutions for our customers. As a result, organic growth has been driven by a strong contribution from necessary pricing that was largely lapped in North America and other Developed Markets in the fourth quarter. Volumes have primarily reflected expected elasticity from pricing, while mix has been a solid contributor throughout because of the choices we've made to emphasize certain segments over others. In Q4, volumes in North America reflected the ongoing rightsizing of the business in terms of both our own focus on profitable volume as well as wholesale inventory levels. We would expect a more subdued volume picture to continue into Q1 for the same reasons, with improved trends as the year progresses. In terms of operating margin for Professional, while Q4 levels reflected typical seasonality versus the rest of the year, full year gross and operating margins in the business improved to levels that enable us to shift our full focus on investing to drive growth going forward. The last area that I want to touch upon, and speaks as much to the strengthening of our financial profile as our P&L, is our cash flow and balance sheet. In 2023, we generated $2.8 billion in free cash flow while investing roughly $770 million in CapEx spending. This reflected both the recovery in our baseline earnings power as well as better working capital discipline that we're beginning to drive throughout the organization. As a result, we've been able to rapidly reduce both net debt and our net leverage to levels consistent with our long-term, single-A credit rating target. Taken together, we now have the strong financial footing to accelerate the type of step-change in the business we know we're capable of. Our confidence in our path forward is also reflected in the dividend increase we announced today. Which brings me to our outlook for 2024. Overall, while significant exogenous headwinds like currency are likely to remain a factor in our reported results, we are cautiously optimistic that both the consumer environment and our own operating momentum will continue to lead to durable, profitable growth. On the top-line, we are expecting low-to-mid single digit organic net sales growth, a range of organic growth that we expect will include approximately 200 basis points from pricing in hyperinflationary economies. At the same time, reported net sales growth is likely to be negatively impacted by roughly 300 basis points from currency translation and another 60 basis points from divestitures. At operating profit, we currently expect high single-digit to low double-digit growth on a constant currency basis. This reflects our expectations for further improvements in revenue realization, business mix and cost savings. It also includes an assumption for costs from monetary losses in hyperinflationary economies, captured within the other income and expenses line, at roughly half the rate we experienced in 2023. Reported operating profit growth is likely to be negatively impacted by approximately 400 basis points from currency translation. We currently expect high single-digit earnings per share growth on a constant currency basis, reflecting both interest expenses and effective tax rate slightly higher versus the prior year. Here again, we expect reported EPS results to be impacted by approximately 400 basis points from currency translation. As far as pacing during the year, we expect 2024 reported net sales to be relatively balanced between the first half and second half of the year, although with a relatively lower rate of organic net sales growth in the first quarter versus the full year as our 2024 programming has a greater impact as the year unfolds. At the same time, we expect operating profit and earnings this year to be more 48% versus 52%, first half versus second half weighted, compared to what turned out to be more of 51:49 split in 2023. This reflects a combination of the balance of sales, greater currency headwinds in the first half and our expectation for greater productivity gains as the year progresses. With that, I will turn it back to Mike for some closing thoughts.

Thank you, Nelson. In closing, we are proud of our 2023 results and the solid finish to the year. We enter 2024 having advanced the company's strategic foundation, consumer-centricity and financial position. Moving forward, we will continue invest in differentiating our global brands and strengthening our capabilities. We will further leverage our cost structure and remain financially disciplined. And we'll make sure we are deploying capital in ways that benefit the enterprise and deliver value to our shareholders. On behalf of my leadership team and the more than 40,000 employees who work tirelessly to fulfill our purpose of Better Care for a Better World, thank you for your time and interest in Kimberly-Clark.

Good morning, and welcome to Kimberly-Clark's fourth quarter 2023 earnings question-and-answer session. I will now hand the call over to Chris Jakubik, Vice President, Investor Relations. Please go ahead.

Thank you, and hello, everyone. This is Chris Jakubik, Head of Investor Relations at Kimberly-Clark. And welcome to our Q&A session for our fourth quarter and full year 2023 results. During our remarks today, we will make some forward-looking statements that are based on how we see things today. Actual results may differ due to risks and uncertainties, and these are discussed in our earnings release and our filings with the SEC. We will also discuss some non-GAAP financial measures today. These non-GAAP financial measures should not be considered a replacement for and should be read together with GAAP results. And you can find the GAAP to non-GAAP reconciliations within our earnings release and the supplemental materials posted at investor.kimberly-clark.com. Before we begin, I'm going to hand it over to our Chairman and CEO, Mike Hsu, for a few quick opening comments.

Okay. Thank you, Chris. And first of all, I'd like to just welcome Chris to Kimberly-Clark. This is his first earnings call with us, but it's probably a triple-digit number in earnings calls that he has done in his career. So, welcome to K-C, Chris. Hey, I'd like to just start by sharing that we're really proud of our performance in 2023, but, of course, we're not yet satisfied. We've built a strong foundation and positioned Kimberly-Clark for our next chapter of growth. These past few years, we've consistently invested to build a consumer-centric organization while navigating unprecedented challenges. Our strategy to elevate our categories and expand our market is working, and we're on an exciting path and positioned to deliver durable growth and returns for shareholders in our next chapter. And as we mentioned in our prepared remarks, we're looking forward to detailing our strategic priorities, our long-term algorithm, and outline the key initiatives behind our plans in March. And so with that, love to open it up for questions.

Certainly. Everyone, at this time, we'll be conducting a question-and-answer session. [Operator Instructions] Your first question is coming from Dara Mohsenian from Morgan Stanley. Your line is live.

Hey, guys. I just wanted to touch on the organic sales growth guidance for next year. Low to mid single digit seems pretty robust relative to the 3% this quarter and just starting out the year lower in Q1. Obviously you mentioned the 200 basis points from the hyperinflationary markets next year in the prepared remarks, so that's part of it. Maybe, A, give us a sense of how much those markets contributed in Q4. And then, just as you look at the base business, ex those markets, maybe some commentary on pricing versus volume and what you're expecting? And if you could also just touch on market share performance in Q4. The U.S. track channels are weaker. So, just any update on how you're feeling about your market share performance and plans on that front as you look out to '24 would be helpful. Thanks.

Okay. Hey, thanks, Dara. Maybe I'll start with -- maybe as you kind of tee up there, the state of the consumer, particularly in Developed Markets, I'd say, our underlying category growth across Personal Care, Consumer Tissue, and Professional remains pretty robust both in absolute terms, and I think if you look across in relative to other broader staples. Our products -- I'll remind you, our daily essentials in -- unlike some categories, substitution of our categories is fairly low. On top of that, we still have a lot of room for penetration and revenue per user gains, and so we're working on that. So, overall, I think the consumer right now still remains despite what, you might argue, is a fairly mixed kind of consumer picture, the consumer remains pretty healthy. We're confident in our ability to elevate our categories and expand the markets further. The consumer picture, I said is somewhat mixed. Employment remains strong. Wage growth is up. But I think it's also probably fair to say, from our side that, the full effects of all the rate hikes and all the economic policy impacts are not fully materialized in the consumers. So that all said, the categories were pretty robust. In North America, just to give you a reference point, North America category value was up six in the fourth quarter and up eight for the year. So that's a pretty solid number. Again, I'll chalk that up to the fact that there's low substitution in our categories. And that makes our categories a lot more resilient than other staples categories that I've worked in the past. We still also, Dara, see pretty good demand for premium products and we're seeing that in a broad array of markets, including in North America. Surprisingly, you might say in a market like Argentina is still, Brazil, China, of course. And so, we're very enthused about our approach with elevating our categories and expanding our markets and we believe that still working and still appropriate, even though we recognize we've got to be able to offer great value at all price tiers. So I'll pause there. I know that I threw a lot at you. So, I know there were multiple parts to your question. I don't know, Dara, if you wanted to go. Nelson, if you want to...

Yeah, there was a question on the decomposition of our top-line growth for the year and how it relates to Q4, let me address that a little bit, Dara. I think to recap, the fourth quarter was a quarter in which we attained flat volumes and pricing was only 2% of the contribution with mix being 1%. That 2% was largely hyperinflationary economies. And as you think about this year, this is going to be a year in which we see volumes beginning to pick up from Q2 on. And we expect pricing to be in that 200 basis point range, right in-line with what we saw in the last quarter of the year and that pricing is really going to be driven based on what we expect today by hyperinflationary economies. So, the profile is really on the pricing side, very similar to what we saw in Q4.

Okay. And the volume pick up as we go through the year, is that more pricing moderates? Is it that you've seen some early signs and whatever the geographies or product categories? Or that you're seeing some volume recovery? Or is it more just sort of a natural assumption over time as pricing recovers? Thanks.

We're pretty pleased, Dara. I think we've made very, very solid progress on volume and consumers responded very favorably on our categories. So, I'd say, first of all, our next chapter, which I think we're turning the page and shifting to a volume mix-driven plan, which is returning to that, which -- that was kind of our approach pre-pandemic and so we're going back to that. So, contribution pricing to help offset the record inflation that we've got, it's going to recede and has already started receding. There might be a need to address some particular higher costs in some markets or locations. But that's going to be pretty surgical, and will likely reflect if there's pricing reflect inflation at local levels. But overall, I think we're feeling very good about driving the volume on our business. We have seen our businesses start to improve, including in North America on a share perspective in the fourth quarter, and believe we have the right mix and growth drivers in our plan to drive the business going forward.

Thanks, guys.

Okay. Thank you, Dara.

Thank you, Dara.

Thank you. Your next question is coming from Lauren Lieberman from Barclays. Your line is live.

Great, thanks. Good morning.

Hi, Lauren.

Hi. I wanted to just shift focus maybe a little bit to talk a bit about the cost picture and FORCE savings. Both of those benefit from deflation, and FORCE savings in the fourth quarter were a bit lighter I think than expected or certainly that we'd modeled. So, it's rare to see that. So, if you could just maybe provide some perspective on why that outlook moving forward and maybe how FX plays into that, if at all?

Sure. So, let me start, Lauren, by saying that this phase of cost recovery and supply chain stabilization, we would think of it as largely behind us. A lot of the disruptions and the super cycle that we saw, our expectation is for that to not happen in the foreseeable future and certainly in 2024 based on what we know today. So, thinking about cost as a whole, first, our aggregate cost basket is easing in inflation, but there is no deflation, because there are several components that I'd like to unpack. We expect the '24 cost environment to be more stable. But we will still remain at higher levels of costs mostly in-line with what we've seen in this super cycle these past three years. As you know, core commodities like pulp, resin, energy in dollar terms are expected to be somewhat favorable following the trends that we saw in the back half of last year. However, if you think of other components of our cost basket like distribution, logistics, and labor inflation, that's actually going to remain a headwind in this year, in '24, and that's pretty much offsetting the tailwinds that we're seeing on the core commodities, which leaves us with currency-related inflation on imported materials, largely impacting our emerging market hyperinflationary markets, which will need to be addressed, and we've been addressing that over the past years and we intend to do that in the course of the year. Just as a perspective, the overall net cost headwind when you include all of the components is projected to be around 100 basis points for the year, which we see as much more manageable than what we've seen in the past. We've got very strong productivity plans and a little need to price outside of local inflation in these hyperinflationary markets. Turning to FORCE and our productivity targets, the outlook we provided shows that we feel very good about our ability to continue generating strong productivity. You saw that we ended last year with FORCE results of around $325 million. And it's important to highlight that over the last 20 years, FORCE has delivered a little north of $6 billion of cumulative identified productivity that has flown to the P&L. More recently, and we've been talking about it even at your conference in September, we're evolving our culture towards an end-to-end integrated cost management perspective, really focused on gross productivity. We're building a proactive multi-year pipeline of initiatives. We see our pipeline of gross productivity out to 36 months pretty strong, and that should flow to the bottom-line, and this is reflected in the outlook we are providing today. I'm excited to talk more about our transition to gross productivity and integrated margin management at our March meeting when we talk about the future a little more.

Okay, great. And then, if I could just also follow up a bit on Argentina? So, I guess, a couple parts to this question. Path forward for Argentina? Whether the devaluation of the monetary assets is one-time in nature or do we need to build this in, or how do we think about that in the next kind of quarter or two of the year? And then, also overall, just kind of risk management around FX? Because this time last year there was also kind of a bit -- it wasn't hyperinflation, but a bit of a surprise to the Street in terms of the expected impact from transactional FX. So -- and that's the case again this year. So, path forward in Argentina, the devaluation on monetary assets piece, and then overall risk management on currency and transaction.

Okay. Hey, Lauren, thanks for the question. Hey, let me start with the overall on the path forward, I will say, hey, we're staying the course, but we're, of course, going to balance potential against the inherent volatility in the business. And so, we're going to remain prudent. I do want to say, I'm really inspired, and we've got people operating in some difficult conditions in Argentina and also other markets. So, as a company, we're really inspired by the impact our employees make in these markets and really proud to shoulder that responsibility of serving our consumers in these difficult conditions. At the same time, I will say we will not just hang around where conditions become untenable. And then, of course, you would double-click and say, what's untenable. I'll let you know when we see it. But certainly, if we can't make product or if we can't convert currency at some point that becomes somewhat untenable. But right now, we're working our way through it in multiple markets like Argentina, like Ukraine. And so, again, that's the high-level answer on path forward is we're staying the course.

Yeah. And, Lauren, to build on what I told Dara on the pricing and hyperinflationary, so a few things. As we think of last year, the full year impact of the mark-to-market of our net monetary position in other income and expense line...

Sorry, keep going.

Okay. So, the impact above the operating profit line was $115 million for the year and about $70 million for the quarter. That netted off some of the interest income that we perceive on cash balances in Argentina, led to a net impact of about $0.16 on EPS in the year and about $0.09 of EPS in the quarter. As we fast-forward to this year, we are projecting about half of that impact, both in the other income and expense line, and then on EPS. We will see a little bit of more of that impact in the first half of the year, it's reflected in part of our outlook. But that's what's projected at this stage based on what know.

Okay, great. Thanks so much.

Okay. Thanks, Lauren.

Thank you. Your next question is coming from Jason English from Goldman Sachs. Your line is live.

Hey, good morning, folks. Thanks for slotting me in.

Hey, Jason.

Hey, Mike. Couple of questions. I want to bring it back to volume, and specifically I want to double-click on your Professional segment where volume was little bit weaker than we expected this quarter. If I zoom out and just look since 2019, so pre-COVID, volume is down like 23%, 24%. And I know you mentioned rightsizing in prepared remarks today. So, my question is, what's going on there? Where has all the volume gone? And how -- your margin suggest you're not getting meaningful deleverage here. How have you been able to offset the associated deleverage effects of that lost volume?

As always, Jason, you're right on the issue. So, a good one. But I think if you look at the margin profile of the business, I think the team has done a great job addressing, I would say the volume softness or volume change in the environment. And a couple different things. One, we had to adjust rapidly to this work-from-home demand environment that kind of came on with the advent of COVID as you might recall. And you may recall our washroom business, which is the majority of our business in K-C Professional tends to be higher development in offices. And so, that's really where the volume has gone up. I would say right now, that volume on a category basis is running about 80% to 85% of what it was pre-pandemic. And it's not going to bounce back that quickly, the reality is. And I'm not sure you're in your office at Goldman in New York every day. And so that's the same thing. As we look around our offices, we're not fully back in, right? And so, it's partial at best. So that's, I would say, an ongoing challenge in that business. But I think our team has adjusted to that and treated as a reality. We have rightsized some of the business and some of it was from a cost perspective. The reality is we were doing a lot of volume and co-packing a lot of volume on the external market. And so I'd say, we haven't had to address fixed costs as much as you might have thought of. And so -- and I think that's reflected. So, I think the team has done a good job of recapturing margins from a -- both from a price perspective, mix perspective, and also while growing volumes at the same time behind great innovations like our ICON dispenser, which I believe is really the best dispenser in that side of the business. So, anyway, so I think the team has done a great job and I think you can see that in the margin and definitely have recovered from pre-'19 margins on that business and actually exceeding at this point.

That's helpful. I appreciate that. And I think another headwind to volume this year, that you were talking about earlier in the year, but not talking about so much of late, were supply constraints. So, can you remind us where they were? How sizable they were? I assume the lack of conversation around them suggests they're alleviated now. But can you confirm that? And I would imagine that cycling those supply constraints should prove to be a tailwind, particularly in the first half of next year. Is that right? And how large of a tailwind?

One could only hope, Jason. We could only hope that. But actually, I think, first of all, a couple of things. Yeah, we did have some pretty significant supply constraints in our North American Consumer business for the majority of last year, definitely through Q3. And that had to do with some supply conditions with external suppliers, for example, on packaging that made availability difficult across Personal Care. Also some in our Kleenex business, I think we've talked about a key ingredient that we weren't able to get access to, that we developed a secondary source to during the course of the year. So, those were kind of the big factors, I would say. I think we mentioned that on the last quarter call, we didn't make the biggest deal about it. We were working through this challenge with our suppliers, with our customers, and they were fully aware of it. But it's not something that we communicated publicly that often. But I would say for the better part of the year, that did suppress our share performance. I'm not saying that was the only driver, but I think it was a fairly significant driver. We have addressed those issues. I'd say our commercial execution is going to be stronger than ever. We're really past all these constraints that I talked about. And our consumption is moving in the right direction. Our share has moved in the right direction in the fourth quarter as well in North America.

Got it. Good stuff. Thanks a lot. I'll pass it on and look forward to see you in March.

Okay. Thanks, Jason. Thank you.

Thank you. Your next question is coming from Anna Lizzul from Bank of America. Your line is live.

Hi, good morning, and thank you for the question. I wanted to follow up on market share in light of your exposure to private label, since in your track channels, private label share has been creeping up in some of your categories. Just wondering, how are you thinking about brand investment with marketing versus promotions in order to maintain and grow market share? Thank you.

Okay. Yeah, great question, Anna. Core to our business, I'd say a couple of things. First of all, on market share, I'm confident that our market share performance this year is going to improve from last year. Definitely, I was not happy with our performance on share last year. For perspective, on a weighted basis, which we use as an internal metric, we don't talk about as much publicly, but on a weighted basis, we are down globally about 40 bps, okay? So, not falling off a cliff, but not what we want. So, we want to be growing weighted share as well. On a cohort basis, which is the one we usually talk to you all about, we are up or even and just under 40%. And so that's below our goal of 50% or more, of which I'd say we were kind of jumping over that bar back in 2021. So, I think we are where we are today, what we're going to build from here. I'd say a couple of things. All that said, probably the biggest challenge has been for us in North America related to the supply constraints that I just talked about. I did want to note. We've had strong gains and really, really strong market positions in most of our largest markets. Just for reference, in South Korea, which is our second largest business, we're up probably about 20 share points over the last five years. And in Australia and New Zealand, we're up somewhere between 10 and 15 share points over the last five years. Andrex, in the quarter, which is our number fifth largest business, was up over 300 bps on share just in the quarter. So, we feel very good -- and one more on China. I think we're approaching almost 300 bps again on the Huggies in the quarter. So, I think we feel very good about our gains in our largest markets. The exception has been North America, where we have underperformed, but that is improving. A lot of that, I think, was just what I discussed with Jason. We had some severe supply constraints where we weren't able to run our brand plans in the way that we wanted to run last year. We saw solid improvement in Q4. We were up or even in six of eight categories and sequentially improved in five of eight. And so, we feel pretty good about our trajectory. As I said just a while ago, our commercial execution capability has never been better, and we're going to gain share by bringing the right innovations, which our customers are excited about, executing well, and bringing sustainable cost advantage to our business. You mentioned private label. On the note, I would recognize that, yeah, we have seen an uptick in private label in the past quarter or two. I think, if you look at the scanner data, I think it was up or even in seven of eight categories. I'd say, on private label, we are very, very committed to having a superior value proposition in every price tier that we're in. So, versus 2019, if you look on a longer perspective, private label is down a bit and the premium segment is up significantly. And even today, the premium segment continues to grow. So, it is clear that the value tier has picked up a bit, and our shares were impacted in the second and third quarter, although I would say, more from our supply constraints than private label trading. I mean, we compete with private label. We're cognizant of that. Our approach, Anna, is to bring the right set of innovations, which we are accelerating and have been accelerating, and our customers are very supportive of it. There are a couple of categories where we have a little more value offering. Scott 1000 is a great value brand, but I think it competes very, very well in its tier and is really, really accepted by consumers. And so, again, we're cognizant that private label is kind of out there, and that in uncertain or tough economic conditions, value becomes much more important to the consumer. And we're committed to having a great value proposition at every tier.

Great. Very helpful. Thank you.

Okay. Thanks, Anna.

Thank you. Your next question is coming from Steve Powers from Deutsche Bank. Your line is live.

Hey, thanks, guys. Good morning.

Hi, Steve.

Hey. So, maybe to start, you talked about a lower rate of organic growth in the first quarter and also a slightly back-half weighted earnings profile for the year in the prepared remarks, and some of the comments this morning echo that. I guess maybe could you provide just a little bit more color on the drivers there and maybe a little bit more specificity on how to think about first quarter trends relative to the balance of the year? Thanks.

Sure, Steve. So, I'll start by reiterating that we're very encouraged by how we finished 2023, a strong foundation for us to build from and a position in which volumes have stabilized. And we had a quarter in which we're flattened volume and mix was another 100 basis points of growth. As we think about the cadence of the year, our first half, second half, balance of sales and earnings, and our quarterly pacing is reflecting a combination of three things. One, our go-to-market plans; two, our productivity initiatives; and thirdly, the current shape of currency headwinds that I talked about a little while ago. On organic sales growth, we see a relatively balanced across the year, but Q1 somewhat muted due to softer volumes on a sequential basis. We have more programming coming into play as the year progresses, especially as Q2 kicks in. And this includes incremental innovation that will be going into market at that stage. So, we should see progressively improvement in volumes and a mix-led organic growth and margins following Q1. The other bit that, again, as we think about Q1 in terms of volumes, we've built into the plan a gradual improvement across the year. And in Q1 specifically, we're expecting another relatively flat volume quarter, also because of the possibility that retail inventory softness pushes us slightly even below that level. But that's reflected in our outlook for the full year, and we expect again, volumes to pick up as the year progresses.

Okay. Thank you for that. I guess kind of just stepping back a little bit, there's been a lot of investment that you've highlighted over the course of time in Personal Care, not just the past year, but the past few years, product quality, marketing, commercialization, et cetera. And I think you see the results in relatively strong market share trends and organic growth. I guess on the other side, Consumer Tissue and KCP continue to lag and struggle from a volume perspective. So, I guess, as you think about '24 and both the relative balance of investment and the relative balance of contribution to growth, can you give us a little insight into how you're thinking about that, and how we should think about how those businesses are likely to trend relative to one another in the year?

Yeah. I'll just -- I'll make a couple of comments and then Nelson maybe can give some additional detail. But look, see, I would say we are running our Consumer Tissue business, some might say externally, a little differently. I look at our Consumer Tissue business and see it as a premier consumer franchise and I'm proud of the strong margin recovery that we've made over a short period of time in this business. To note, I would say, on a volume basis, if you look at North America for the quarter, our organic and tissue was up 3% and the volume was up 2%. I'm very excited about the volume kind of resiliency in that business. I think it reflects the essential nature of the category. As you know, you're not moving away from the bath category, no matter what the condition is. And so, we recognize we have an important kind of responsibility for consumers. But I think the thing that changed in the past few years, first of all, the amount of inflation that's occurred on our overall business, but especially tissue, has been, not to be dramatic, but fundamentally historic, right? Two years in a row of 2x what the all-time high ever was, right? And so, our teams have done a phenomenal job, I would say, recovering the margins on the business that were necessary to keep that franchise healthy going forward. A couple other things that we've done to improve our ability to manage the business better is, better risk management tools to get us more stability from costs. And hopefully, you guys are seeing that. We're not talking a lot about that, but with Nelson coming in, we've changed some of our practices. With Tamera, our Chief Supply Officer, coming in, we've changed some of our supply chain practices. And so we're trying to reduce the volatility of the input costs. I would say if you looked at the margin recovery, the biggest driver is really, really disciplined application of, we call internally, revenue growth management tools. But if we had not made those investments over the past five years, we would not have been able to move at the pace we moved over the last two years on revenue management. And then, probably the most important thing going forward is the fact that we're driving value-added innovation. And we recognize as a consumer franchise, we have to have a great offering, a superior offering. I mentioned in the UK Andrex, I think we hit about a 33 or 34 share in the quarter. Our price gap has widened over the past three years, but our quality has improved significantly. And we've invested in new technologies in our European tissue business that's allowing us to differentiate that product. And so, we feel good about our position on tissue. There are some pockets of challenge, some markets can be very tough and we're able to operate in those. But we're really pleased with the kind of rapid recovery of margins and how our teams are managing that business right now.

And just to build on what Mike was saying and address the investments, over the last few years, as you would have seen, we've stepped it up both on advertising support for our brands and the capabilities that are allowing us to emerge much stronger from this super cycle of inflation that we've seen. Specifically, for 2023, our advertising budget overall increased to more than 5% in net sales, which represented roughly about 100 basis points of increase versus the prior year. And that's about $200 million in absolute terms. As you think about this year, Steve, we will still keep expanding that, but it'll be at about half the pace of what we saw in 2023. And the other bit is in terms of overheads, which would include some of the capabilities we invested in, we are projecting overheads for the year to be largely flat in dollar terms year-over-year. So that can give you a perspective of what we're seeing in terms of investments and overall spend in 2024, building on what we did in the past few years.

Okay. Great. Thanks a lot, and I'll pass it on.

Okay. Thanks.

If we could take maybe one more question, that'd be great.

Certainly. Your next question is coming from Andrea Teixeira from JPMorgan. Your line is live.

Thank you. Good morning. And welcome, Chris. So, can you -- I have one question and a clarification on your comments, Nelson, towards the end of the last question. First, can you break down a bit the 2024 guide by division? I'm assuming you're still looking at like between to get to your number, mid-single digits for Personal Care, some growth in volume there, because that's where you get most of the growth, and then, Tissue to be flattish -- Consumer Tissue to be flattish or to grow low single, and then Professionals to be negative, especially in the first quarter as you lap those contracts. The reason why I ask is that historically, for a good reason, it's a better ROI, but you're more dependent on Personal Care than the others. And you've been, to your point and to your benefit, getting market share, in particular in U.S. and China in diapers and Fem Care. So, I was wondering how you feel about the comps and how you feel about being able to meet this number in between low-single and mid-single. I mean, at least at the high end of the guide, it does imply that you have a strong volume growth in Personal Care. So, I was wondering how you feel and how you could decompose by division. And then, a clarification on the reinvestment. You said -- Nelson, you mentioned $200 million was the actual number, roughly, of the investment, and then this year would be about half of it. And I was wondering, what is the incrementality? It's more displays and shelf space, promo? What is going to be the main source? Because to be fair, you've been, to your point, investing for a while now since Mike took over five years ago? Thank you.

Hey, Andrea, great set of questions. Maybe I'll start with the bottom half first, and then Nelson could kind of decomp some of the organic drivers. On the investment, again, my priority would be focused on advertising. I think we get great returns on advertising, both from -- certainly from traditional TV and stuff, but more importantly, the digital, and the returns are very, very high. And so, our focus is there. I mean, we are going to be, I would say, competitive on the promotion front -- on a trade promotion front, but that said, that's not how we're going to drive our business. We do feel like we get great value and we have great creative both on things like Huggies, on U by Kotex, across our business, on Scott 1000 lasts long, and so we got great copy and we're going to invest there.

Yeah. So, in terms of kind of the breakdown by segment, I mean, we expect Personal Care to be growing in the mid to high single digits. So think of mid-single digits overall at the high end. And in the other two segments, we will be growing in the low-single digits. And that kind of gets you to the algorithm that we've provided. As I stated at the beginning, our plan is a vol mix, largely lead plan. And keep in mind that pricing will be around 200 basis points of that. And that's largely related to currency-related movements in hyperinflationary economies. So that's kind of the breakdown on how you should be thinking of our segment growth next year.

Thank you.

Thank you. That concludes our Q&A session. I'll now hand the conference back to Chris Jakubik for closing remarks. Please go ahead.

Thanks, everybody, for joining us today. For the analysts that have follow-up questions, we'll be around all day. And beyond that, we're looking-forward to seeing everybody in March.

Thank you, everyone. This concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.