Oct 30, 2026 earnings call — Power brands drive growth and margin expansion
Company beat outlook as organic sales grew 5.1% and adjusted EPS was $0.92.
Revenue $1.6B (est $1.6B) · EPS $0.92 (est $0.90)
Key quotes
"Our power brands drove our third consecutive quarter of industry-leading organic sales growth, supported by innovation, distribution wins and targeted marketing investments."
"Productivity delivered 150 basis points. Our acquisition mix and portfolio actions drove 160 basis points and 40 basis points was a combination of volume, price, mix and FX."
"Revenues grew 20% in the quarter, and global online sales now represent 25.9% of total consumer sales."
Analyst Q&A 14
Value innovation and gross margin outlook
Q (Anna Lizzul · BofA): They asked about innovation in the value tier given higher promotions by peers. They also asked how to think about gross margin expansion into early 2027 with higher inflation.
A: Management said innovation is a core capability across personal care and household, with more household innovation coming in 2027 and 2028. They highlighted productivity gains, RGM tools, positive mix from innovation, and fixed-cost leverage next year after shedding businesses.
"We look at productivity levels of where we are today, we're going to have a record level of productivity in 2026." — Lee McChesney (CFO)
Category trends and Q4 guidance
Q (Peter Grom · UBS): He asked whether there were major category shifts this quarter and how category growth looks over the next 12–18 months. He also asked why 4Q organic sales guide steps down versus year-to-date trends.
A: Management said they are more bullish on category growth and expect category growth closer to 2.5%, including into 2027. On Q4 organic sales, they said 4% is still strong and they may be a bit conservative, noting October trends are very strong.
"So outlook for categories is closer to 2.5%." — Richard Dierker (CEO)
Hedging, pricing and promotions
Q (Bonnie Herzog · Goldman Sachs): She asked how hedged they are on commodities for next year and whether they are below typical levels. She also asked about pricing strategy, promotional intensity, and category differences with stretched consumers.
A: Management said they focus first on productivity, then revenue growth management, and price only if inflation becomes structural. They noted promotional spending is up in Laundry and Litter, manufacturers used tariff refunds to extend promotions, and the company is hedging going into 2027 and is slightly more hedged than last year.
"I'd say at this point right now, we're actually slightly hedged a bit more than we were at this time last year." — Lee McChesney (CFO)
HERO performance internationally
Q (Rupesh Parikh · Oppenheimer): He asked how the HERO business is performing in international markets. He also asked about TOUCHLAND growth expectations and international contribution going forward.
A: Management said HERO is a strong growth driver internationally with consumption and sales up, and they are encouraged by innovation for the brand. For TOUCHLAND, they expect the business to be close to flattish this year, with confirmed U.S. distribution gains and international launches that should drive growth in 2027.
"We feel great about the innovation coming for HERO." — Richard Dierker (CEO)
Tariff refund and THERABREATH outlook
Q (Christopher Carey · Wells Fargo): He asked what the tariff refund benefit was in Q3 and any remaining impact in Q4. He also asked how durable THERABREATH growth is and about toothpaste distribution and repeat demand.
A: They reported about $15 million net benefit in Q3 and about $5 million expected in Q4, and that those amounts are included in the inflation figure. On THERABREATH, management said mouthwash still has a long runway, is growing double digits, is within 6–7 share points of LISTERINE, and the toothpaste repeat rate is closing in on 30% after strong trial.
"On THERABREATH mouthwash, we think there's still a ton of room to run." — Richard Dierker (CEO)
Operating leverage and TOUCHLAND placement
Q (Nik Modi · RBC): He asked whether fixed-cost leverage from lapping lost revenue will meaningfully help next year given prior spending to fix businesses. He also asked for more detail on TOUCHLAND distribution and where it will be placed at retail.
A: Management said fixed-cost leverage is a normal tailwind as revenue grows and prior higher spending was mostly in marketing and gross-to-net, not cost of goods. TOUCHLAND will be broader than today, placed in a couple different classes of trade, including beauty and mass, with beauty exclusives to differentiate.
"It's going to be in a couple of different classes of trade, which is good." — Richard Dierker (CEO)
Pricing approach and margin goals
Q (Andrea Teixeira · JPMorgan): She asked how to position pricing into next year and whether margin accretion from their Evergreen model still holds. She wanted clarity on negotiation approach going into 2027.
A: Management declined to add more detail beyond prior comments and reiterated they prioritize productivity first, expect promotions to come down over time, and will use price if inflation proves structural. They said the Evergreen model aims for gross margin expansion but gave no new quantitative guidance.
"And just to reemphasize it, I said, first and foremost, we focus on productivity, and we've done that in such a good way this year, hitting record levels." — Richard Dierker (CEO)
Top-line drivers and international plans
Q (Olivia Tong Cheang · Raymond James): She asked which elements of the top-line strength are most repeatable and where more work is needed to maintain momentum. She also asked about international expansion over the next 12 months and why price/mix swung the other way this quarter.
A: Management said they are encouraged and that their categories are attractive because of the premium/value balance and low private-label exposure, which supports about 2.5% category growth. Growth is broad-based across many brands and markets, international expansion includes double-digit growth for nine brands, and M&A is increasingly focused outside the U.S.
"The balance of premium and value, the lack of private label exposure in general, there are a lot of good things to say and why our categories are growing around 2.5%." — Richard Dierker (CEO)
Buyback housekeeping and margin target
Q (Kaumil Gajrawala · Jefferies): He asked if the buyback authorization was just housekeeping or a signal on buyback speed versus M&A. He also asked what gross margin target to shoot for in 2027 given input costs and the consumer environment.
A: Management said the buyback renewal was mostly housekeeping to renew the program and keep flexibility. On margins they would not provide a target now, noting large inflation next year but offsetting tailwinds of productivity, mix, and fixed-cost leverage; they believe margin can expand but will not quantify yet.
"We always believe that we can expand margin." — Richard Dierker (CEO)
MISS MOUTH'S trends and Q4 net sales
Q (Lauren Lieberman · Barclays): She asked about the revised net sales guidance and whether divestitures/acquisitions netted negative. She asked if MISS MOUTH'S is slower and about incremental distribution for 2027 and the 4Q dynamic.
A: Management said their three-quarter trend is 5% growth and the year's outlook is 5%, which mathematically makes Q4 about 4%, and they may be conservative on the quarter. They said MISS MOUTH'S is off to a great start with strong consumption and they remain optimistic for next year.
"If you take all the noise away, we are saying that, hey, we've grown 5% for the last 3 quarters and our outlook for the year is 5%." — Richard Dierker (CEO)
Oil benchmark and TOUCHLAND status
Q (Stephen Robert Powers · Deutsche Bank): He asked whether they benchmark oil to WTI or Brent. He also asked about TOUCHLAND year-to-date performance and how fast declines can turn to positives into next year.
A: Lee said they benchmark to WTI. Management said TOUCHLAND was slightly negative in Q3 due to sales and shipment timing, expects Q4 growth, and calls the full year flattish while noting strong retail displays and international sell-outs.
"Yes, it would be WTI, is the math." — Lee McChesney (CFO)
Cost inflation mix and international M&A criteria
Q (Filippo Falorni · Citi): He asked how much of the $150 million cost inflation is raw materials versus transportation and whether transportation is a structural headwind. He also asked about international M&A criteria and whether larger deals are possible.
A: Lee said the move from $30 million to $50 million of incremental inflation included both commodities and transportation and they view transportation pressures as linked to driver shortages, so they are optimizing transport efficiency. Richard said international M&A criteria are similar to U.S. (scale, margin accretive, competitive advantage) but they are more willing to accept a plant or full business for strategic reasons.
"I think we're more willing to accept a plant or a factory in these examples because then you can bring in some of our other products potentially." — Richard Dierker (CEO)
E-commerce advantage on share gains
Q (Edward Lewis · Rothschild): He asked whether the higher e-commerce share (25.9% of consumer sales) is giving them an advantage and helping them grow ahead of categories and gain share versus peers.
A: Management said they have moved from a laggard to a leader in e-commerce growth, which helps gain share because a lot of retail growth is coming from e-commerce. They also noted portfolio mix matters: divested businesses had low online exposure while recent buys like TOUCHLAND and MISS MOUTH over-index online.
"I think we went from a laggard to leader on e-commerce growth." — Richard Dierker (CEO)
Licensing incubator and bringing brands back
Q (TD Cowen): He asked which licensing or incubator categories are showing traction and might be worth reacquiring into the house over the next 12–24 months.
A: Management would not give full details now and said they will update at Analyst Day in January. They said one brand has already been taken back, 2 or 3 are being evaluated against thresholds, and other cases involve conversations where a partner may be better to launch initially.
"I would say there's one that we've already taken back, and there's 2 or 3 that we're looking at if they can hit some key thresholds." — Richard Dierker (CEO)