Why did GAAP EPS fall while Base Business EPS rose?

GAAP diluted EPS fell 5% to $0.86 because of $129 million in pre-tax charges under the Strategic Growth and Productivity Program, which were excluded from Base Business results. Excluding these charges, Base Business EPS increased 8% to $0.99, with operating profit up 5% on a non-GAAP basis.

Is the company changing its full-year outlook?

Only partially. Net sales and organic sales guidance were reaffirmed, and GAAP EPS growth expectations (double-digit) were maintained. Gross margin guidance was improved to roughly flat from a previously expected decline, and Base Business EPS growth was narrowed upward to mid-single digits from low-to-mid single digits.

Which regions and businesses drove growth, and where was there weakness?

Latin America was the clear leader, with net sales up 13.7% and operating profit up 14%, helped by 8.4 points of favorable FX. Europe, Middle East & Africa and Asia Pacific also grew organically. North America was the weak spot, with net sales down 3.0% and organic volume down 3.9%. Hill's Pet Nutrition grew sales 3.4% but saw organic volume decline 1.8%, with growth driven by pricing and mix.

How is the company balancing margins with continued investment?

Management is prioritizing brand investment, with advertising up 15% in the quarter and expected to rise further in the second half. Despite this spending, Base Business operating margin expanded 10 basis points to 21.4%, and gross margin improved 140 basis points, indicating that pricing and productivity are offsetting reinvestment. Investors should monitor whether these investments translate into sustained volume growth, particularly in North America and Hill's.

What is the state of the company's cash flow and leverage?

Cash generation was healthy, with six-month operating cash flow of $1,742 million (up from $1,484 million) and free cash flow before dividends of $1,476 million. Total debt fell to $7,857 million, and net debt (debt less cash and marketable securities) was $6,404 million, down from $6,593 million at year-end 2025. Dividends paid were $879 million for the six months, with share repurchases of $597 million.

CL 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed July 31, 2026. Cited figures are marked; the original filing is the authoritative source.

Colgate-Palmolive reported second-quarter 2026 results that were mixed on the headline line but solid on the underlying business.

Reported net sales rose 4.9% to $5,361 million^a, with organic sales up 2.4% and volume roughly flat-to-positive on a total-company basis. GAAP diluted EPS fell 5% to $0.86, but this was driven by $129 million of Strategic Growth and Productivity Program charges. On a Base Business (non-GAAP) basis, EPS rose 8% to $0.99, and Base Business gross margin and operating margin both expanded, with Base Business operating profit up 5%.

Divisional performance was uneven. Latin America was the standout, with net sales up 13.7%^b (5.3% organic) and operating profit up 14%, while North America declined 3.0% in sales and its operating profit rose only 3%. Hill's Pet Nutrition grew 3.4% (2.1% organic) but organic volume fell, and Hill's operating profit rose 2%.

Management also highlighted a 15% increase in advertising ($777 million^c in the quarter) as it continues to invest behind its 2030 strategy. Cash generation remained healthy, with six-month operating cash flow of $1,742 million and free cash flow before dividends of $1,476 million, while total debt declined to $7,857 million. Full-year 2026 guidance was largely maintained: net sales growth of 2% to 6% and organic sales growth of 1% to 4%, both unchanged.

Gross profit margin guidance improved to roughly flat from a previously expected decline, and Base Business EPS growth guidance was narrowed upward to mid-single digits from low-to-mid single digits. Management cautioned that volatile market conditions are expected to persist for the balance of 2026. Investors should note that GAAP EPS growth guidance (double-digit growth) and Base Business EPS growth guidance differ materially because of restructuring charges, so the headline GAAP and non-GAAP figures should be weighed together.

02—Key points

Key Highlights

Reported net sales rose 4.9% to $5,361 million; organic sales grew 2.4%, with a 0.4 point drag from lower private label pet food sales.
GAAP diluted EPS declined 5% to $0.86, while Base Business EPS rose 8% to $0.99, reflecting $129 million in Strategic Growth and Productivity Program charges.
Gross profit margin expanded 140 basis points to 61.5% on both GAAP and Base Business bases, supported by pricing (+1.6%) and mix.
Latin America was the strongest division, with net sales up 13.7% (organic +5.3%) and operating profit up 14%; North America sales fell 3.0%.
Full-year 2026 guidance: net sales growth of 2% to 6% and organic sales growth of 1% to 4% were maintained; gross margin now expected roughly flat (previously down); Base Business EPS growth raised to mid-single digits.
Advertising spending increased 15% to $777 million in the quarter, and management signaled continued strong investment in the second half of 2026.
Balance sheet and cash flow remained solid: six-month operating cash flow of $1,742 million, free cash flow before dividends of $1,476 million, and total debt reduced to $7,857 million from $7,988 million at year-end 2025.

03—Questions

Frequently Asked Questions

Why did GAAP EPS fall while Base Business EPS rose?
GAAP diluted EPS fell 5% to $0.86 because of $129 million in pre-tax charges under the Strategic Growth and Productivity Program, which were excluded from Base Business results. Excluding these charges, Base Business EPS increased 8% to $0.99, with operating profit up 5% on a non-GAAP basis.
Is the company changing its full-year outlook?
Only partially. Net sales and organic sales guidance were reaffirmed, and GAAP EPS growth expectations (double-digit) were maintained. Gross margin guidance was improved to roughly flat from a previously expected decline, and Base Business EPS growth was narrowed upward to mid-single digits from low-to-mid single digits.
Which regions and businesses drove growth, and where was there weakness?
Latin America was the clear leader, with net sales up 13.7% and operating profit up 14%, helped by 8.4 points of favorable FX. Europe, Middle East & Africa and Asia Pacific also grew organically. North America was the weak spot, with net sales down 3.0% and organic volume down 3.9%. Hill's Pet Nutrition grew sales 3.4% but saw organic volume decline 1.8%, with growth driven by pricing and mix.
How is the company balancing margins with continued investment?
Management is prioritizing brand investment, with advertising up 15% in the quarter and expected to rise further in the second half. Despite this spending, Base Business operating margin expanded 10 basis points to 21.4%, and gross margin improved 140 basis points, indicating that pricing and productivity are offsetting reinvestment. Investors should monitor whether these investments translate into sustained volume growth, particularly in North America and Hill's.
What is the state of the company's cash flow and leverage?
Cash generation was healthy, with six-month operating cash flow of $1,742 million (up from $1,484 million) and free cash flow before dividends of $1,476 million. Total debt fell to $7,857 million, and net debt (debt less cash and marketable securities) was $6,404 million, down from $6,593 million at year-end 2025. Dividends paid were $879 million for the six months, with share repurchases of $597 million.

04—Continue

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