CLX - Earnings call transcript Q1 2020

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Operator

Good day, ladies and gentlemen, and welcome to The Clorox Company First Quarter Fiscal Year 2020 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. At the conclusion of our prepared remarks, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference call. Ms. of for President Clorox Vice Burhan, Investor The Relations Company. Lisah Ms. may begin you your Burhan, conference.

Lisah Burhan

everyone, for and Happy Welcome, Sharon. Thanks, thanks Halloween. joining today. us

Chairman will call thecloroxcompany.com. over On Benno Internet. our And Jacobsen, me website with of the for CFO. and the seven replay our on call our this the Kevin available CEO; broadcasting today We're a and be call Dorer, are days

certain EBIT non-GAAP to, On debt financial enable including on and refer today's ongoing of understand call, sales limited flow, we these analyze better but profit. that results organic free EBITDA, operations. to cash economic Management margin, may to not measures and providing to our measures, growth investors believes insights

earnings end from with webcast's be release, website Reconciliations statements. also or SEC may today's and In contains tables press forward-looking remarks GAAP prepared could today's Actual to as in our filings. with be helpful available most plans. in can that expectations well comparable discussion the found recognize materially differ on this of directly supplemental financial refer particular, or outcome information measures in it our to today's at release. as management's results accordance determined located the Please

revise cause filings I SEC quarterly to for would disclaimers and undertakes statements. a or filing or no XX-K publicly The forward-looking expectations company you of review to results the our and any recent outcomes from other in management's obligation read description earnings factors forward-looking also direct to our most Please differ SEC could plans. that release. with update our materially important the

top as year Kevin then each our for well our address covering our fiscal commentary, line by in segments. results discussing will the of as outlook financial XXXX. our start highlights I'll

Finally, we'll offer with perspective and his Q&A. close Benno will

our period. our segment. X%. X%. sales through decreased Cleaning sales now I'll decreased X% QX the results ago go year quarter. by of In growth on company, top results The sales total the were for the Organic solid sales are in For down segment,

by a Products Our Professional business in particularly campaign delivered e-commerce back-to-school the successful growth, driven sales strong channel.

strength health continue with We Hydrogen in Clorox see disinfectants growth platforms their both even setting, used Clorox launch. years double-digit our Fuzion, delivering to after Peroxide innovation also this care longevity and and such business, four in as initial of

Care, Home margin. offset between volume down bifurcation and non-tracked unfavorable channels tracked performance Shipments quarter were in growth In tracked and of the channels. non-tracked sales Wipes slightly Disinfecting growth with channels, increased Clorox solidly outpacing wide a by for with by grew mix

and were implemented helping working category. Our grow investments the are fully

is consistently focus near-term to results strengthen Our our across channels. all

highlighted in as platforms, late QX. our innovation have Additionally, Cleaning stickier with we launch, Compostable bigger, plan Wipes strong launching Clorox IGNITE based on in a Strategy

launch. Scentiva after three initial with digit continues Our volume growth its high platform years perform single to well

XXXX. were for compacted Lastly, with liquid within select the Clorox with of of line launch business Laundry full this Cleaning sales including on retailers addressing quarter, spring the segment, in bleach driven distribution product a down increased primarily by our promotion. bleach We're fronts, of in competitive multiple innovation coupled losses

aerosol During fast-growing the we're equity a period, segment. trigger, the a including laundry sanitization liquid a platform, launching product, Clorox to the spray spray same also strong bringing innovation sanitizing additive and

building we're down XX%, the trash we same and now seeing trade this as Bags distribution driven declines of bags and QX the by QX share focused factors as on digits, on market portfolio. In the well as Turning momentum. in were We're Glad place. wider portions investments Wraps, previously, sequential price well improvements in gaps select are Household volume in sales and losses to Bags on double Wraps Higher as Charcoal. down discussed segment, were and mainly in driven by sales

shipments. The reduce also and market XXXX weak lower were sales gear our grilling we'll down part level reflected an Charcoal focused to effort this trade upcoming spending, season. on higher As into a expected, sales digits XXXX stronger plan category grilling from of to driven decline consumption a by inventory a double season quarter, going ongoing executing and be up Building the to on around. grilling grilling season, a turn business normalized inventory strong this

In headwinds. declined persisting double category slowdown consumption RenewLife, sales digits and to due

a to support continuing we're to As engaging of part plans, in our supported return growth, relaunch of our calendar category next year. retailers focus on by effort business full to brand growth this

we're to Finally, slightly, non-tracked in our double-digit share much down sales in channels. ago other in tracked stronger Litter businesses, seeing sales lapping strong and than Cat the Similar business growth performance year quarter. was the channels

Our Paws strongly Clean first beyond platform Fresh year. to grow its innovation Step continues

in activities. lean further continued trial-building dedicated we'll advertising and with So,

overall In segment, Care three including sales reflecting position fueled of in that one of its at and number our one lip Lip the a mass businesses. innovation number the growth Care sales Burt's the drove grew and quarter category. four core as delivered lip our flavor Lifestyle retailer the balm watermelon reinforced in key overall the Bees brand's new growth in consecutive categories channel Successful and was Face for by X%, share Care. a in growth, XXth strength double-digit Lip balm

and a as shipments also a well hemp QX. including pipeline record line. care has as In in as as relaunched line Face strong such Care, men's skin cleansers innovation of products as masks launching there pore of sensitive line business The were face well

of growth. successful combination category a formula has driving innovation in and Bees, been strong pricing a Burt's For

Food results to to streak extended top increase The the year investments demand-building Dips ago track sales were remained XX usage innovation the growth sales quarters. quarter. dressings. The strong quarter occasion. plans expand with well, of reflecting as to in growth shipments Valley Ready-to-Eat also on share of on Hidden for higher of The dry and brand up were seasonings its

and continued dating of back in consistent year. channels. for Brita sales bottles performed streak behind e-commerce mass water volume the of Brita which slightly new growth shipments the Brita business Longlast a and higher quarter systems, solid our were up The Brita filtration strongly the

for our Finally, strategic growth double-digit this our sales were Nutranext a decrease quarter, nonstrategic down and brands. in reflecting brands in

Vitality. strong mainly behind of private with Neocell in shipments by grew of that brands nonstrategic strategic part The portfolio label the the the acquisition. driven exit and business Natural to Our our came is decision this decrease

Nutranext, portfolio. initial Moving we're working optimizing on more phase integration up than focusing strategic the representing of now brands, the few the a XX% portfolio, of on

We business. continue prospects to growth this be excited of about the

and organic and Sales for the Lastly, sales unfavorable about quarter eight headwinds, on we were aims turning to our flat to IGNITE impact. strong of America with Litter. currency on international the increases, Cat of invest with benefit offset grew that growth, Despite like profitability price in volume Bees international. and we and innovation in profitable points sales to Strategy grew X% in by basis. see segment an Burt's the returns businesses selectively foreign Consistent the platforms the Latin improve International continue

over to who turn our QX it 'XX. financial outlook I'll our Now, Kevin, discuss performance and FY will for

Kevin Jacobsen

you Thank us you, Lisah, everyone thank for joining today. and

generally First the as businesses. we and as results challenges Charcoal through came in expected, quarter work to continue in Bags Wraps our and

track release, our Importantly XXXX as we our and outlook. for remain year fiscal noted we confirmed on in press

trade sales an about organic X sales decreased spending offset of primarily quarter foreign and Bags businesses. about headwinds. of X% benefit. factors reflecting basis, of On to points These currency decreased our by results, Wraps about points pricing X and first Turning by and higher sales mix of about points unfavorable were our first quarter X X%, points X partially Charcoal driven

Gross ago margin for the quarter. compared to quarter basis the for XX% points year increased XX to XX.X%

by benefit points from basis First higher of margin benefit basis point XXX XXX basis spending. cost partially included quarter offset XXX pricing gross of and a trade points savings from

note to a related that of like gross the was benefits I'd margin timing. to portion to

while still we're also logistics encouraged favorability early in costs. First these commodity markets. the we're And reflected seeing quarter by it's year, the in gross margin in cost and favorability fiscal

came in administrative reduced expenses due Selling to XX% leverage. at XX.X% of operating as to percent compared a and sales

Importantly year-over-year for about of levels flat of about spending declined. spending the quarter a at promotion in retail percentage business sales as sales. administrative with U.S. and our selling were Advertising investment XX% and sales coming for

earnings XX% to decrease Net was all X%. $X.XX effective in the rate ago tax net a versus the quarter year factors, of ago share $X.XX Our these about diluted per year first of we quarter, delivered equal quarter. of

cash provided at versus year-to-date an first increase X%. of in quarter million came million operations net to $XXX in the by prior quarter, Turning flow, the cash $XXX in

Now I'll fiscal outlook. our to XXXX turn year

about As X, X% X be from we to of October to of points press recently from currencies, year's communicated in our release expect primarily sales impact digits foreign we Argentina. unfavorable down assumption reflecting updated our single this up low

Analyst to our assumed at we peso now XX%. mentioned our Argentine Day, about And I at the of devaluation previously expectations closer are XX%. As

and innovation on Wraps to outlook half in remains sales business Importantly, the organic our driven stronger fiscal the unchanged Charcoal expectation year sales Bags X% growth by year. X% fiscal reflecting of performance for and and back organic our

expect we to reflecting slightly foreign margin margin, currencies. assumption our to on updated gross continue fiscal be to Turning year recently down

Liquid year of our fiscal the including our investment value of continues in support chain reflect gross in outlook Our compaction for additional spring long-term creation expectation to the Bleach margin investments to rollout XXXX. supply Clorox

about We continue sales. to expect promotion XX% investment and to be of levels sales fiscal at year advertising

selling expect of sales. continue at XX% administrative also about come We and to expenses to in

be we EBIT fiscal assumptions, Consistent to slightly. with year our year down fiscal margin margin gross expect

effective tax of in continues XX%. XX% year be fiscal fiscal outlook Our to range our XXXX year to anticipate rate the to

expect to year XXXX generally range Net EPS results $X.XX. of first of in we came these anticipated. continue be quarter diluted the fiscal to in closing, In all factors, to $X.XX as

and overall We back results continue the the fiscal in work facing improvement of we're continue in Bags and challenges, short-term to year. expect and to Wraps the our in half through Charcoal

to gross contributing savings that quarter expansion. We're program fourth cost start certainly our significantly of a good to consecutive year-over-year our off is margin pleased

continue challenges made while executing our choices we'll have under Strategy. ahead, against the Looking strategic we address to IGNITE short-term

investing with drive create said to the focus value. consumer fuel IGNITE to Day, virtuous our As is we generating continue at of to superior cycle Analyst a

doing and that position deliver we're in of more in our We Wraps and that have results successfully. once record to long-term facing challenges be Bags Charcoal, track the goals. in with through a believe work are line Clorox I And this we long continue a to financial will

I'll with over Benno. it to turn And that,

Benno Dorer

Hello everyone, and thank you Kevin.

Here key are three my messages.

QX First, expected. in came as results generally

in continue Bags we challenges to the sales XXXX lower we anticipate second through discussed last the first half and fiscal year quarter, we be and As Charcoal. half, Wraps persistent as working than

international delivered progress, growth growth. in foreign of a quarter, we pleased sales quarter strong consecutive in currency our the delivering am drove continues expansion And profit make segments. organic sales to our volume seventh which three X% flat and the environment, gross team four growth out I of and for notwithstanding international business tougher margin

do are is I clearly, Bags a to line reinforce and Now priority Wraps results. want that Charcoal our we top improving for not top satisfied with and us.

to significantly with a customers with sustainable on working eye strengthen our long-term actively improvement. business are We plans keen

that innovation believe will we categories. meaningful to deliver includes This and value our consumers

these and about I'm the anticipate we're to continue I the on fiscal green Charcoal half and Importantly, pleased Wraps in see shoots the businesses. of to on second year. improvement And Bags starting

year we're Compostable fiscal Clorox deliver another year and My by second our outlook Natural innovation, track innovations XXXX. Care. well Bags Compaction Pellets that Sanitizer, pipeline the the message Liquid This Clorox for Personal of as and led fiscal and is several Bleach of Wraps in Fabric the of Kingsford Cleaning to Wipes, on Clorox as robust launch brings

Hidden Filtering to awareness and such Brita trial upside Fresh Scentiva, opportunity as Water Ready-to-Eat ongoing while Bottles Clorox continuing invest products, drive platforms, Clean these significant Step in innovation and will Dips. Paws, new We Valley behind of

results I retailer back by business contribute excellent year. and half the strength plans execution the along believe fiscal will for to innovation and of in stronger program commitment Wraps with in consumer Bags supported our our and overall to Charcoal, of the improved that engagement

previously, Charcoal commitment and I and at As on addressing XXXX with plans profitable Bags mentioned the reflect our also to our challenges outlook shorter-term aimed strategic continues to balancing driving year long-term on fiscal focus our growth. Wraps

Strategy shareholder this. Finally, ongoing long-term new confident guide value. my of will third message is us our pursuit delivering I'm our IGNITE in

integrated in create our circle earlier extend behind IGNITE competitive Day a is to innovation Strategy. to front strengthen The we've and superior value. As virtuous we fueling established for deliver innovation choices IGNITE growth this Analyst center advantage and at of discussed and month, investing our

we expect all By activating the in to significant purpose marketing future. brand groundwork brands, drive ROI the laying on the fiscal year XXXX, begun end have to major of

drive category ways We shopping have leading meaningful in-store new experiences and customers to in all major to create to expect to online frictionless opportunities engaged growth.

that We platforms innovation made stickier towards multi-year have points. basis to target annual also to with in expect significant improvements, surpassed And savings, annual the we by half meaningful productivity drive XXX robust basis XXX cost fiscal to our have supported our moving XXXX. back products of differentiate a expect of about innovation brands of finally, investments points cost new steadily savings and pipeline

it's And of we creating our business, is we'll key on value, right also service the Everything with of society. winning in we're do know continue into course, our growing to so integrated we superior way for because focus value the with consumers. ESG that

A recent Commitment to an join New the Foundation's is announcement Plastics MacArthur this. of Global Economy Ellen example

at sustainable good and growth we innovates Day, profitable, for Analyst IGNITE reinforced As responsible. growth, that's

Operator, you may questions. open for up line now the

Operator

Thank you, Dorer. [Operator Bank with Mr. Olivia comes question Instructions] America. from First Tong of

Olivia Tong

afternoon. Good morning -- good

or bit just green all of businesses, quite half about several about those those but little what half across have initiatives You a shoots. second you trajectory, weighted? know like terms any Do help sort for a of already, near-term I In of are talked QX? few second

Kevin Jacobsen

Olivia, Hey, morning. Kevin. it's Good

I that I sales can one. What you'll see in see Let organic expect me take improved is growth. if QX,

said our environment, on having look sales and similar expect I Glad QX, and that, really both to worsening results to growth improving Charcoal. going but a QX with organic Now see improvements because to we're FX

you we're to that I working businesses As the improvements expect next two quarter. and see challenged around to are those know, turn

Benno Dorer

then back of in that course, will the the Olivia, means growth And come half.

First of easier comps. all, have they'll

And mid-single I improvement also we're QX. losses And distribution Two green need we're and improve seeing most lately. distribution both. aware Kingsford everybody Glad mentioned beginning on are important. anniversary to is that. things we expect We to growing that. digits shoots we're in as But know, very Kingsford strengthening is you I've on and focused now. in consumption think of

is where starting And Glad our end implemented to plans grow by share are quarter.

robust of in course, So Then, the we have innovation we that. a feel good half about back as program stated.

this, to improvements expected. do we there So give We there's enough to is have confidence. are half the back work realize where but us

Olivia Tong

increasing. faster are versus could to whether or growing I it online retailers? efforts accelerating, a a or big continues to question there driver. that If two a be helpful. ask about had Obviously broad it opportunity non-tracked of than That's the I spectrum seems it. Is the more be channels just Got between mean tracked it's other non-tracked? spread is But more even across club been? or online

Benno Dorer

reasons. I commented What Yes. between right? that non-tracked for that's the tracked on we've widening, think is spread And and is two indeed

down where was in channels. most -- non-tracked First seen double slightly digits and we've growing probably but evident in it Care Home the business

our where think is. First bumpiness towards is at that of I channels. our category perhaps would that lot confidence consumer where as untracked perform, channels. non-tracked they all, track talked know us performance And are which brands this gap we because is tracked losses the post-pricing that we do. of that is do in and know half turnaround in merchandising growth why the gives And to channels part in about say, find our has to widening of in categories also been we between more migrating non-tracked share-wise better non-tracked about late. expected of than relates a distribution and We channels. back what in the perhaps that's point, you'll less that in That's the And market the able

Olivia Tong

Got it. Thank you.

Operator

comes Credit question Kaumil Suisse. Next from with Gajrawala

Kaumil Gajrawala

Hi, couple of questions. everybody. A

-- there's well in we're first should between kind and focus. in be I what's categories aware litter. but issues about of think that like on recent something there the some and been going bleach wipes if that the you the period bags beyond Can in in on were the you various now But and such of connected some area I comps losses has it distribution expanding are trash on suppose over issues looks as we the mentioned of? of initially of the some categories talk tough

Benno Dorer

No, Glad and Thanks remains the Kaumil. Kingsford. issue

high the you terms Food, are well. in single share business a growing fastest-growing is has Toilets, strength. which share. portfolio, grew Home all-time If segment, in our of an actually business high performing double-digits. now strategic digits. bit of shipments. Parts is Brita of think quarters strength. a seeing about rest International growth. the of Professional Care Burt's quite The XX there's of

So it's really and Kingsford. Glad

we If quarter. the Kingsford Glad actually you sales out organic grew take and for

which of Now the I'd just right? always it share, look But look three I in are will I years businesses at you you tell think ups higher. longer And tracked is you tell perhaps term, eight that over helpful, of against six or course, you line downs, we those last quarter is, in out share. if you of terms the what if compare if at ago and there's eight

three is growth. in and coming is Brita Litter line in It's of ago. line. than is years three is share higher. XX Bleach quarters is Valley years than off well. really trash. ago. is Care Burt's higher Home coal Hidden doing higher of about

portfolio news as So, the front. performing issues be short-term believe Clearly, distribution will as the lower such to as losses we to, is well on not merchandising well-illustrated post but no everything of attributed want temporary. and they that we And around the pricing. noise can be much

Kaumil Gajrawala

back be And It a point distribution Understood. on from -- gains the now of what there's do the the year. seems know will have be to as going going period Or in? just where going distribution be At the good if losses? back to then expectations for last to half. you you're what finally to at into if sense opposed some distribution you put a we're rooted point return losses Okay. of from in on

Benno Dorer

innovation healthy. strong anniversarying which and to that QX there some comps start and program. are Categories progress along mitigated will Yeah. with Back of clearly does that half be make will losses, assume easier a in generally distribution the we're

progress been pricing. last months be And those happening not are Discussions that to on work long is we've retailers. organizational at this we where now. XXXX make very that's On we're in side, strong a our XX obviously that improvements want the -- point. Reasons all post these this so starting we're in focus It's achieving to as right in have is us distribution we do quarter, area record of track haven't optimism commented that a give focus with partnering temporary. focused the we

particular for us be and course including need for Strategy And the gives our they growth Kingsford. IGNITE of creating and drive at for will better around partnership be new better plans on robust categories innovation. to our in looking future profitable XXXX to They retailers. then plenty business I'm of Glad opportunities

them in we but a work So, progress. focus big Many of now. as happening are of speak, area organizational

Kaumil Gajrawala

Okay. Thank you. it. Got

Operator

Next question with comes Jason English from Goldman Sachs.

Jason English

Is good Hey, of blended now all that margin by question. and moderated say, a now line line this to first the some Good for a housekeeping reasonably But time. gross persistent the quick I morning in together it's point, is sort it's for consecutive drag continue? trend can folks. your to expect been quarter. now. we two quite afternoon day logistics marginal quarters The A should be in manufacturing bridge,

Kevin Jacobsen

separate I would manufacturing. I'd from transportation say, Jason. Yeah,

mentioned, pleased transportation On for and the probably the years. first better rates the to you transportation side, favorable time see as of we're part two

We of the in XX have bps spot seeing as decline we're carrier market. about a favorability,

we continue. future renegotiate to just our that reminder. the as in talked rates will XXXX our as this reduction before, fiscal benefit those contracted ongoing transportation But with market rates we about beyond. a that XX% look also are the believe generate carriers in bodes that About eight seeing set. out We as spot year and are is It and well that of I we but may a

so be transportation right there. will I be low thinking started single-digits. would I seeing And I'm the what to up So a nice now, flat down improvement single-digits, low it suspect year

of our in favorable this We time. then for delays some little a And litter had new our manufacturing, investments plant. some

You'll see that year. in on later the out play

bps As spend bps but year. light the I XX was to mentioned, money investment we're supply going QX, expect that I It to to in chain. in in of have about XX still the pretty

pick that later we'll So, the year. up in

Jason English

I one I be Cleaning that range. guess to which lot it's And question. is right. the is side time. seem quarters of very expecting. don't segment, that now All But whole Charcoal to of if really wipes, want was That's back the X% growing a very, weakest a it Professional excluding I implies the business your in Everything and X% come to consumer-facing helpful. than worse in long high the contracting somewhere And singles, to

platform on declining love business Scentiva And in Swiffer high that of derailed. with all Thank opinion And color what's benefit innovation has a years of now it if to Scentiva. in Nielsen, just of issue I'd is data, those context of your some and a think your causing begs is the lack at as I or innovation the the question kind get even we refills I'd love been whether look recent effectiveness. from XX-point sort not coming the fronts. you. singles there on biggest

Benno Dorer

Yes.

disagree is all, take business of strongly maybe business And First Jason I'm with the point. actually okay derailed. the let statement me the I'll that two is turn. this at in the with where

post-pricing of distribution was down behind The all sales First additives. losses. laundry

We have anticipated those.

commented them have about and those several on talked We consistently. times

look for versus share forest but look you bleach because shares at look years If quoted ago helps it three the not at I sometimes trees. at instance, to the

we're significant years fitting an new innovation bleach provides there. X.X fast-growing in us, in perspective. gearing the And segment and that three equity behind well is laundry a that Bleach up the compaction I hope now share for sanitizer is which platform points includes up ago. particularly versus a spring,

shares, same documented. especially years some of pricing. Again in at off up At growth. Care, post to coming it's have distribution you the well look time grew Home share It's just if in down, of volume QX. normal X.X loss and

wide margin. a absolute. channels – non-tracked double-digits is channels outgrew Sales Out due down grew They tracked to in channels. non-tracked by

you non-tracked negative the So for growing the perhaps channels. in mid-single-digits. understand record strength Wipes helps growing, which Scentiva mix effect. is a that's is

than is the look lower it's And higher channel weeks tracked but if XX at share you past XX a than ago past weeks. year

category. progress. making I'll this focus we're So on

category profitable growth. important an is on for Obviously, us

have brand so aware Clorox working Compostable course, our purpose, well which I innovation of know available we the and launch, then you're has well. in is activate including lot a go of And up which starting to back to been that Wipes in the QX. out QX lined in of continue widely half will We Cleaning

is coming downs, and solid innovation about where but feel back and all in. about I the optimistic ups the with So, half Cleaning

Jason English

lot. thanks on. pass it I’ll a Okay,

Operator

comes question Nicholson with from Next Wendy Citi.

Wendy Nicholson

good I question to is said just housekeeping. like private afternoon. do Hi, to My we to when first healthy know just longer headwind? the that exit label and the think business business headwind we you be is But How in go Nutranext should a going expect much continue XX% away? of the good.

is second XX%, initiatives undertaking what Glad my step for then XX% of revenues. huge the are are And important. obviously and And and question think on those two them a of just Charcoal, I your fixed taking between back the you're

guidance And P&L so both normal. on the for that I'm just isn't S&A your higher surprised the line and advertising than

on important you of objectives. and why But XX% those those questioning a year back make wouldn't sure get sort this your two and righted." year just to long-term we're and businesses spend of are it's of targets businesses for advertising really track "This long-term we so kind get your know I'm Thanks. S&A say I holiday from absolutely kind take in XX% more to where for going big

Kevin Jacobsen

would to this expect drag on had first the businesses that of the label a take see of manufacturing. RenewLife long that I year. exit we how I'll you and question and as balance maybe Wendy, both contract some for Hey, private

pretty business step we over our the out next that several continue out capacity transition needs. that's as to sort of of use own that for quarters. natural will We a And

quarters. so for you should drag And the expect several see next to that

Benno Dorer

people the And here is the side. then money option on Wendy, the on the more part advertising not second certainly and

If we trade they share towards about end widened price the about plans advertising seeing going there making. are where also fix the think a the more, the implemented, but that we're good quarter Glad, about we're what October But we're And is the feel increased spending of and trying certainly where the progress now return and into we growth. to are in fully we feel is spending which people. are to And do you good gaps.

On Kingsford, it's all about better plans.

we've of businesses. that a money less issue. to bit two trade commented of And with pleased quarter we've excess we're amount rid of money last certainly spent this quite Day, the spending inventory. at of behind it's money Analyst But a we're get As those again,

commented in look we into here. where that's or past, the people the we more starts important more half. also spending. always that solution progress necessary. the at be and to We're we've to spending don't the spending back willing We're more we're had advertising to evident willing indicated But, trade. think certainly As and in is be lean progress expect But to

Wendy Nicholson

the I in hope isn't, And Grubhub And ordering growing them surprised the with the Clorox, get I'm I'm home. stop hey, know of conversation? part just to of there's surprised. the most more the that Is from spend that well-known -- Charcoal. and cook a I their the biggest category I I regain share. guess money of at conversation is the got people mean hope, from the not on advertising feedback and part Please to assume, you've brand. particularly retailers. retailers always to some ribs lost But also there's

Benno Dorer

softer So part the with of counts consumer. conversation like engaging we're retailers against we making a consumer. the money said, shares the it's the while But about little growing up still double-digits. the digits. And is category, our certainly Charcoal a is spent the I quite if well. in you Charcoal as that category is sure And I mid-single And believe, past business bit weeks, XX think Wendy,

bear have the fruit. are starting So to that conversations we

as well, health categories strong are in the well, the category in not like generally wipes, very part and to seeing discussions If this other key doing categories the performing a of is better. we're that Glad of health the our And certainly, And as perform our of doing component and brands are worse. between our brands tend retailers. If our are well with in certainly our categories brands. categories the correlation

Wendy Nicholson

Got it. Thank you.

Kevin Jacobsen

broaden bit just a and I little Glad. from If that Kingsford just

think you that if about our back is And good. fuel I want in Strategy, create business. reinvest and offer to I'd want we perspective, the other The to feel really we IGNITE

you each quarters. of expanded If look at last now, margin we've gross the four gross performance margins our for

at we've And quarters. increased for three of time, same the the advertising each levels last

think drive with is out, going the we're strategic several quarters. superior to we're And value. that very in you're reinvest long-term consumer really last brands drive So, going that our and consistent over to the seeing I to waste intent

Wendy Nicholson

Thanks Got much. so it.

Operator

question Lieberman from Next Lauren comes Barclays. with

Lauren Lieberman

Thanks. Great.

questions. two First clarifying I had

had responded talking Kevin that think is just Wendy, a to about First believe asked Nutranext. RenewLife. you I follow-up. about But I

go of even of you're So, be have seems when what I they're because I that core some the up, And Nutranext, cut brands deemphasizing. and were as business, so just portfolio the you want to held of you of there'd to I back. described think kind the decision did that what degree to to understanding an this much acquired mean be

the So just follow-up. of almost Nutranext first post-mortem like a be Thanks. sort That's would great. on

Kevin Jacobsen

Yeah. It was was a Nutranext. I apologize, Lauren. answer. That Nutranext

a and along don't case, of typical. So it number done many business when any interest we with we of comes acquire strategically. acquired we In the cases, this this have portfolio When is in businesses pieces the acquisitions. they -- had that in

don't had they number some we picked They private of having DTC that don't And have a They up -- it value. brands contract minor so label. in manufacturing. see long-term

our focused typical value we're think long-term we the for pretty And clean what two up portfolio that year shareholders. or doing. we will and what so, for that's get And on certainly has the first

believe as manufacturing out out private and portfolio contract the label. to core We're stepping of certain the value. really aspects So, of this DTC has the getting of long-term we that well we're stepping

Lauren Lieberman

about back improve. just But growth the talked great. things will also said in the then you quarter. was thing the half. second Okay, We've And the will second come then about

be sales if down, better So, clear to bit want I albeit, QX. to what in just be quarter saw second a expected we than

Kevin Jacobsen

is Yes environment Lauren, of correct. fairly will first that's quarter to the drivers terms worse. FX to but be in expect The getting the different. sales, look I second similar quarter

the a of is happened XX%. in bulk in impact Keep probably in Argentina exposure so you FX have mind August in big The QX. XX% step-down partial the our and peso in late

be offset will organic that then by and forward sales. going improving impact bigger a get You'll

Lauren Lieberman

Okay. curious. thing And All I right, great. was the then other

was the Day, it then maybe I years introduced years prior of Analyst sort Sort -- of where to concept of to to kind about to Day challenged a few which you'd four you look guess now of the I back that prior thinking I'm grow and approach back of got are post-Analyst thinking was sort on more some you versus brands. fuel where businesses. of big degree these

the portfolio. of challenges, improve that So, the of fair want feels in to thought I like to also steps a sort it there's address maybe change talk businesses short-term process? also some they Because are sort maybe structural it Is these good maybe businesses these a you stubborn to how as about across of but start -- led what And here. sort to as got like five the that's proved being decisions sort to and I'll call four, be? we for how years just pricing of of

Benno Dorer

really. not Lauren

fuel So, and business. if Glad a is trash, I think growth Kingsford about a business that's

at those look correlation no as there I two there's businesses. So,

that us faster-growing I think And businesses that feel to I disproportionately invest for sense good in are it perfect about that. makes more profitable. and are

did strong fuel Bees a grow. performing they growth. those to are than run. a better is returning versus Burt's had The Food business of had the concept started run. of businesses many has has before strong we Brita And

I issues two would pricing. point feel those about to We post-pricing businesses. on good

value. to a that to drive pricing us versus trade-off. It's long-term absolutely offset to said able necessary We is shareholder have that this short-term for ensure through to be increases cost we're long-term always able

manage with on to the continue an eye business We our long-term.

Glad And certainly is our the as profitable on power are, of growth. as long-term them through we -- reality focus on as Kingsford part must challenges of that and these distribution these some and difficult losses

aggressively. managing about good we're the feel years we that that offsetting pricing fact ago. portfolio the I feel whole choice a we're to how see about good four is this the none made I of So, as related and

Lauren Lieberman

so Okay, much. great. Thank you

Operator

Next from Kevin with Jefferies. question Grundy comes

Kevin Grundy

afternoon good Hey, guys.

Benno Dorer

Hey Kevin.

Kevin Grundy

for First Kevin. a housekeeping question

in to So, your like guidance first some degree. although as contemplated second a obviously, quarter quarter, It bit soft. sounds well challenged

lower which year of apologize the to a sales the X% feels I the towards guidance you like it's imply do to for see X% I kind organic growth year? if would your the Or little X% balance expectations organic which still of sales to for Kevin it ambitious? preference end this. level the Is set end bit the missed of something higher possible

Kevin Jacobsen

I with I I would insight sales. to in say is Thanks for Kevin. don't terms question. any am provide X% comfortable the X% high-low. Yes, our more to What organic plan of

think a where range solid point. good I that's at we're for feel us and with comfortable this

Kevin Grundy

of you business levels business a that trash advertising Do of, in the woods of more, do segment there. higher Or too challenging of, going year marketing price going the X.X% litter to trade follow-up it we margin quarter And see impairment? Household All on. a back long higher call businesses; permanent on the for kind with going the very investment a the year? had this permanent marketing, much a question This is, in you then the cetera? But et margin Thank low forward? the lowest about significant structure of, that understanding that your business, impairment, time. as it that, charcoal, of pass XX% business and Okay. big I'll now in How How the bags, after this margin advertising think structure see promotion cost on margin I sort you operating in a far. important was Then of for sort not out operating of margin been and you. some see one in right. this a

Kevin Jacobsen

our and Household, thing most it about Yeah. keep think in challenged to The When margin Kevin. one Charcoal, Thanks they're in businesses of terms capital intensive businesses. I mind. are Glad that in two

those over fixed volume two and so outsized spread impact get lot when you've margin. that of of a in lose businesses, lot got have on you costs fewer units And an a

get those in businesses margin my more expectation the we and as is So positively line. that back track see you'll growing, on reflected

Kevin Grundy

Thank it you pass guys. on. I’ll Okay.

Kevin Jacobsen

Kevin. Thanks,

Operator

Next Ali question with from Bernstein. Dibadj comes

Ali Dibadj

guys. Hi,

a Benno, strategy. to around few the one pricing a questions. take back want step have I So I But just

they're badly we've going the the I you're more bumpiness I is too guess, has retailers a ask bumpiness get And get I look increases. elasticity’s, certainly price the many guess, would why the I the case commentary. think apologize do kicking been to from if to I want But are and naïve. of increases? -- the reacting just I consumer I thought to the which now retailers question instances have shelf taking So just are when be very the it's there But you seen price many simple historically. perhaps honestly, you this off before that commentary. But

Benno Dorer

Yes.

consumer price really superior, right? are that before the XX% also fact We've they're to commented is portfolio we which the so versus XX% our good, So -- you as measure on with before So positive seen as that elasticity have actually price increases. unchanged largely value of compares being commented increases. consumer

generally is performing expected. pricing as So

-- experiencing out confidently. distribution do we are why these We Why went early and issues? certainly

we would an perhaps some to that we're And competitors Other you'd outside categories some to expected reaction. to have seeing get result in follow as have I might So point what that follow. them that. retailers. But where ask a clearly is than didn't we

distribution that's We're hard In back. between our as what progress the to distribution are we're this. under distribution And I getting And where cases But understand correlation softer performance. many we've Losing now. was in as we're look really I it with and now is water bridge. categories right the XXXX. performance make on category focused retailers on focused on working too. commented lost

Ali Dibadj

I'm I it's don’t guess because guess sorry. I I But -- I I don't So still just just helpful. -- understand.

good, poorly elasticity’s I mean if their brands this all great. respond and are are good. doesn't that's the to consumer So

What's So that or…? the making like sounds why are retailers it mistake. a disagree Is on? they it -- going

Benno Dorer

I'm sorry?

Ali Dibadj

good they disagree Is now guys they when and off it? costs, you in it. brands view don't okay instances prices with up, you're get shelf it good elasticity’s worse? and your are taking if don't they do are enough? they helps kick that so as just think elasticity’s are that many It Or our Or consumers why I

Benno Dorer

that there take mean about pricing. the And Let's perhaps. before, example To it. be cost to resin took pricing retailers pricing best Glad then continues like as We flipped. but be questions doesn't that clear the justified justification were of

pretty consistent the So that isn't something also that what up past we've the one exception it it's category, flied the part resin seen with in that after in while is with pricing. in and took is we this some it peers confidently, took that not. did perhaps It's But our uncommon pricing whereas, worse but of is part we very Ali. early not

Ali Dibadj

in guidance the second of distribution gains Is second new on -- kind half actual going And your confidence your Or in is Okay, in is then confidence forward, okay. the Kevin? losses so distribution guidance? which half. lapping it

Kevin Jacobsen

some actually of when is out. of both. as of half comps, we'll then Yes. that distribution in particularly you on play I'd Certainly at our And losses certain we're a combination commented the say to element, QX. year distribution big lapping and a back terms lapping how extent, rebuilding it's Benno a look have be in expectation working the will

quarter over right so. But as decisions or made earlier, we are being said the now those next

there have goes. there's make we that as that expectation how an we'll still to early fairly So progress It's see but well. certainly

Ali Dibadj

thank Okay. in that the it losses product? laundry And Or just space for of just issues that. my shelf Are Benno -- isolated last anything incident? through detail, of you question different the or around anticipation and an in Cleaning, you is doing it laundry went was compaction

Benno Dorer

to distribution related that compaction It's as commented, pricing call nothing to of post a but wouldn't compaction. related I No. loss we Ali. No.

Ali Dibadj

very for help. Thanks Okay, your all right. much

Operator

Instructions] we [Operator question a Steve from have with Strycula And UBS.

Steve Strycula

Hi good afternoon.

first and on the walk and That quick be talked of you a for Kevin timing was year you puts down quarters year? us saying little expect some takes we through bit the question a question. gross So better. Should the several for it would for little gross the first margin? bit the of margin, quarter Can the about cadence you my next balance of for the the

Kevin Jacobsen

Steve. Sure

was it QX easiest last As we is in the our you for phasing, had. the full down think year will outlook We points year. basis about gross XXX you were This margin know comp as slightly. down be

easy we had comp. pretty a So

have ahead But a very we've with pleased we a other to about We savings, of The am quarter. the was benefit number a That we trying strong years. cost the margin. in of is this big bit think performance. points item hit on though and of delivered to to strongest work XXX had we're five quite I quarter basis us. year had

I So be while at this expect QX, point. number don't pleased the with to up I'm taking

savings kind cost phase our As be XXX to so basis expectation of that better. close a year to the maybe you points, year. I last said previously little bit through on That's

Also if the of the year about took bulk was think pricing last you front-loaded. pricing we

impact a that as partial this decline And Same with the we quarter. QX of basis FX, year points expect see we to move I'd XXX have in excuse this or with through me so benefit, -- year.

get events negative expect to be finally, then full impact I we're Argentina, I'd earlier, impact And forward. mentioned plus light as So going you in supply as making more devaluation, FX the chain ongoing from the the fairly QX.

will those We of make investments the year. over the balance

pick in manufacturing the that the year. you'll So line the of see over up course

that out, still So down it's balanced about view I play all a when I slightly the think, for year.

to XX negative year. that margins begin see you'll with our And the gross suggest plus forward, would going

Steve Strycula

Okay. And then, question. Benno a quick

easy weaker an build year's, retailers up they to about season you the last Have wipes compare? flu seen the think As back we as arguably start flu lap season. business, Cleaning and for

remind few you had a cycle. since it's can years us compaction we've a -- been And then,

Just should Thank period you. about, whether various implications the about in margin volume through to or it's think investors -- as spring. we that move think that the

Benno Dorer

Steve. Thanks,

working with flu for always season, good no flu we're season, is flu whether matter or the to season retailers On prepare bad.

prepared be looking to they products. disinfecting for are more as serve consumers, will we So,

see, on And is if in few times typically we we did one you the margin what expansion. happened gross what compaction compaction, can repeat the last way the

would we expect So that.

costs I logistics as predominantly. think that's material packaging and lower obvious pretty are

a is with And which two also top And of then, consumption positive usually sizes. larger to see in had previous what and effect. line comes times you the expansion migrate consumers often that

post margin. months gross on that is XX line effect benefit primary the for the top But persistent have to it be XX launch. does a So can first

Steve Strycula

you. Thank

Operator

the session. now would you. I question-and-answer Dorer, This to Mr. concludes like over back to the turn program,

Benno Dorer

And thank we look you, when for our Halloween. again in of And you. on joining to a you we report talking all happy forward wish QX. Thank Yeah. with you everyone. February, I

Operator

participating. gentlemen, and Thank you this Ladies for conference call. concludes today's

may disconnect. You now

The Clorox Company (CLX) 31 Oct 192020 Q1 Earnings call transcript