CLX - Earnings call transcript Q3 2020

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Operator

Good day, ladies and gentlemen and welcome to the Clorox Company’s Third Quarter Fiscal Year 2020 Earnings Release Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today’s conference, Ms. Lisah Burhan, Vice President, Investor Relations for the Clorox Company. Ms. the begin may you conference. Burhan,

Lisah Burhan

Welcome Thank joining thank for and today. you, Christine. us you everyone

On me CFO. call CEO the with and Chair Dorer, Kevin and our Jacobsen, our today are Benno

want Before into are be time. is to I speaking This how of today. an results, just to you go all clearly grateful to I we express unprecedented

also and workers, by inspired delivery time, those who especially thoughts with are pandemic, same frontline many everyone Our so production and the lost by who and loved friends healthcare this we responders, At has more. are our been affected first employees ones. have workers, own grocery

We are to dedication selfless them grateful for their helping others. to

into we A few before usual results. reminders go

as be determined and accordance the most measures Reconciliations supplemental our tables release. located with to refer ongoing including, as with webcast’s financial understand information will comparable end these debt be sales for EBITDA, press on financial GAAP or this In in today’s organic on maybe On results call, but to, website, EBIT that days our operations. flow, broadcasting insights today’s earnings limited available helpful to well directly economic believes thecloroxcompany.com. over margin, measures, our to are release, particular, free better to at may available website today’s our enable Management investors analyze providing it non-GAAP SEC and call and certain call filings. not refer of of found can a to we this growth remarks cash Internet profit. the X measures in We the the on replay in of prepared

results management’s expected also read Actual forward-looking discussion today’s statements, quarterly differ expectations earnings would to in with filings The from statements among forward-looking other current no materially current recent a obligation differ undertakes any outcomes most could update revise important of results filings direct our for COVID-XX. views, of review the outcome plans. that beliefs, XX-K from description views, you and expectations impact SEC cause our I disclaimers and statements. materially SEC Please forward-looking related or potential and assumptions our company including recognize release. or could plans. to also or others, and or contains assumptions, that Please the beliefs, to to management’s factors

year to start covering top as line today’s financial results, well highlights will as will each our fiscal as address Turning commentary Kevin usual of our discussion our of results I XXXX. business in segments. with then for outlook our

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

grew volume sales For company, in in that play spend the our sales supported products total QX every at they reportable growth more XX%, everyday by health in important role support or XX%, an home. up pandemic, public and significant of strong the demand Organic either of segments reflecting as during lives the all especially increases products were segment. time people,

quarter, businesses. In segment, growth QX for XX% three double-digit up in all sales with the Cleaning strong were

QX double sales portfolio, Clorox sales across Clorox For segment by double-digits ToiletWand, with In growth Care, increased in online, record Shipments claims. products where than from all-time perspective, channels such Clorox nearly the products of Clorox non-tracked this channels. disinfecting more club in strong Home of Clorox growth broad-based tracked spray, channels, volume wipes, disinfecting shipments behind bathroom and Clorox come two-thirds with toilet across that was cleaner. disinfecting disinfecting cleaner, all cleanup especially in Scentiva bowl strong but as were and

or existing our to households data encouraged see users. higher from than majority the demand from are early, that higher the of rather incremental is stockpiling coming While we from just usage

usage impact have habits, in we brands, hygiene will invest turn to With a incremental pandemic sustained our consumers’ further loyalty. and expected on positive the disinfecting into

quarter role demand authorities the plays the for public Laundry positive for has its and sales in been Bleach. for It Clorox by capabilities health high strong long it also disinfecting by by double-digits public fueled recommended grew health.

clock As they we are the and IGNITE support to hygiene in a In our bleach public strong are marketing have Strategy get brands recent of mentioned products Clorox to plants is our and on the running shipments supporting Clorox sanitizing top facilities our and the drive expectations, to is needed innovations we frontlines trial health. laundry around when with healthcare to Consistent we at now where shelf. for mind products been compaction higher investment communication, to in with most. Bleach, time we are case our on those rollout our our will disinfection of Putting directing with aside, of with prioritize demand line our have awareness consumers. the

Lastly, usage in cleaning higher channel, professional higher driven commercial everywhere. and are facilities within are step-up growth and products business this shipments protocol saw products. a at sales on capacity operating double-digit demands that the by also institutions from segment, as strong our unprecedented is disinfecting cleaning by our full portfolio driven of In healthcare facilities healthcare Cleaning there rely

the were segment, Household sales to QX Turning up X%.

sales Our cat strongly volume behind up increase double-digit owners in stocked care products their up essential as pets. were Cat for to on Litter

to launch. record after continues Our even build its on all-time initial to Paws this continue Step high shipments We’ll Fresh well Clean quarter, all-time and quarter, affordable sales our high product differentiated with highlight resonate platform Grilling significantly the Scoop solid as record with this performing. year which third also consumers saw value grilling line yet occasions the home. is as for high Away up of stayed growth consumers with seen brand, proposition

Importantly, business was and demand Grilling health higher January in in tracked February COVID-XX. to this consumption channels. even in related we our of and the base There end in surge see the the of at February, was also the total began up of before share improvements to category

season. Early a has helping process retailer grilling strong in the and of response March, plans shipped positive, in drive expanding in to build innovation pellets, will our Our which sales. growing throughout we’re distribution, segment, been the

on and Glad innovation. to continue on focusing includes sales build and slightly the were strategy we’ll this down consumer in quarter. momentum, enhancing implementing that experience, investing our pricing for forward, the right trade Going structure

other businesses, assertion at up the Glad stay home. as Like saw demand on consumers to essentials stocked also

that from benefit gap there COVID-XX, in distribution we’ll overall end tracked innovation by puts many profitable Earlier business wins see takes an coupled distribution the already was growth. loss the than strong in this particular build in through this quarter of with It’s gain any negative are while continue we more improvements for distribution a including offset on increased channels. the quarter begun customers. to significant had this share of to by category to that impact to customer. at progress, and this to net distribution quarter, However, expect retail important And execution, note at return and the other from demand price surge we in and before progress, due in

expect we consumers to by higher forward, long as Going demand higher as at home. usage accompanied continue are staying

by continued In RenewLife, to double-digits declined headwinds. and competitive sales category due

there signs pockets we want this of of and progress is be. early are success, it While business to not where

to We has business, proliferation we with offerings tailwinds. has a an Since continue led category overall more, category fragmented long-term is believe to of deflation. a including the acquired that this space this

reinvigorate to actively We retailers category. partnering the with are

volume our with two customers. seeing have We been of three top growth

high our segment, very four of Our year growth digits up reflecting Lifestyle sales in businesses. grew brand three sales XX%, re-launch on results ago in in track. on were top FY Brita the quarter. strong In double XXXX is of

before this shows during access that systems Brita growth consistent pandemic. Our to water business has onset and the Brita global a out volume data they ensure the more people clean, than year. seeking been that pandemic, great-tasting dating momentum back have are of even a filtration filters building to with is

to build made focusing on in share we the on communication growth penetration in value to the recession, drive our further household we’ve good During marketing run. this long profitable and will be progress

quarter grown the Food COVID-XX which surge within to Ranch tracked Hidden seasoning strong sales were on of consecutive Hidden The as in people and for the shipments XX home. already more bottle Hidden higher has dressing demand cook Valley up at momentum driven quarters. builds franchise, share in Valley Ranch by due strongly channels an Valley Dry many for

continue. The ate as invest business this forward, to allowing fast-growing The in channel. this presence to to are quarter expect our last ongoing grew us momentum further recession, home. in building people this Going results online to shift capitalize we the at strong our Food on

renewal well strongly as of negatively stores lower Beauty were shipments were so driven important sales In Sales for up March, strong cleansers, that by higher in by driven impacted are products skin baby to to both the growth in sensitive Also Lip innovation, that the quarter overall open. moisturizers, particular, products, line. continued today. protecting was traffic due segment foot families and store Care. Face shipment strength remain for to by care this quarter Care closures increases growth And including the hygiene double-digit contributing were in volume personal as and

As the also measures patterns prolonged, stay-home shopping changed. are consumer have

bright we Bees believe strong. expect of we we the negatively business near-term future to this While in of softness expect fundamentals the term Burt’s be impacted, very the near our as while category continuing this brand with is remains

of quarter, sales by Finally, a by chain mainly related double-digits were driven our this down COVID-XX. disruption to Nutranext for supply

pandemic. due a our high of in the in third-party reached March, labor shortage orders record distributor a at the challenged of While was fulfillment to face

have our impact the disruption, strategic Excluding would grown of the strongly. brands supply

the in broad-based for benefits driven as which before region. near-term. Growth disinfecting expect products, in impacted essential of to of was just segment mainly cleaning currency in demand cleaning the turning quarter also Lastly, by than half volume pricing, XX% disinfecting accounting very With every was more household headwinds Sales for International and by single offset also we elevated were and up to pandemic. XX%, the remain of our XX% the sales, demand saw increases the growth sales onset International, high our from by household not double-digit the implemented volume consumer foreign products. with products were partially but about unfavorable of

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

Kevin Jacobsen

our joining and the shelter our products people day the other our the COVID-XX. proud responded results how particularly during they they quickly quarter prior our from progress We of and sales delivered At result am loved impact I third we your pandemic. to trusted a difficult COVID-XX also as ones thank significant address core impact this disinfecting reflect The quarter a on Thank time. you demand everyone to products company I’m in had this count hope you, as business as during this same unprecedented in time, so Lisah of you increased extremely by we are place for an and global the financial today, for well. us see encouraged every results. on continued strong

performance, our we of as quarter of sales strong and demand strong in will this we expectation our outlook, flow. expansion our cash quarter, strong in strong margin which delivered our another products to quarter release, saw a sixth our addition in press In and moment. consecutive fourth for our gross the And quarter’s with fiscal you continued performance I year have for raised discuss

results, one On point of to reflecting points volume Turning of increased basis, grew sales two by of currency sales offset points XX unfavorable XX%, quarter price/mix. our organic third and unfavorable partially an foreign third sales quarter XX%. growth, headwinds

for fiscal to impact the in basis on sales return year. we the to with growth XX.X% quarter. of line the quarter compared in margin year XX.X% in back the plan quarter to the organic based the trends to tracking original COVID-XX, points Gross are were sales ago increased our to XXX half for prior Additionally, the of seeing

higher Third higher our increased from XX of as from quarter were points basis and pricing, partially points These basis XXX inflation. savings factors gross volume well logistics in of manufacturing XX of international margin of included points cost the XX trade unfavorable and markets offset benefits assortment well basis costs. as to XX and primarily offset basis points basis as by mix spending, points as

currency Third offset the foreign cost quarter by favorability gross margin also headwinds. ongoing in impact partially of commodities, reflected

expenses This philosophy. administrative as chain incentive Additionally, at quarter begin came the late a these compared primarily in our with higher as third Selling costs to incur rate COVID-XX, in pronounced year-over-year did fourth to result our sales more quarter. our XX.X% expense, XX.X% in reflects costs consistent percentage year of compensation while will be ago a in higher pay-for-performance and supply we quarter. in of the

to In expense, nonprofit addition incentive we in of COVID-XX includes to made support also compensation it higher donations relief. organizations

million absolute investment On sales and about versus an XX% at to promotion levels year sales basis of percentage came quarter. ago a as Advertising or sales the ago year about increased about of $XX spending equal in quarter.

came of in our U.S. at XX% spending in retail Additionally, business nearly sales.

our investment heightened invest not continue demand. during of are we reducing period brands to this levels and Importantly, in

tax the tax effective ago factors, third stock-based to XX% Net due higher versus diluted compared to Our these XX%. earnings increase $X.XX ago about excess all in year of quarter XX% $X.XX quarter rate year share about of net we an on delivered of quarter, was compensation. benefits in the per

Turning net inventory ago provided million the growth. positions cash to to profitable due by increased and capital of the period. lower cash million driven at demand $XXX $XXX QX, support increased The was primarily increase to by reduced to year year-over-year from flow, XX% year-to-date end in operations working sales

in XXXX we our to release. fiscal Now outlook, and noted our press turn year I updated will which have

for of X% COVID-XX. as demand our X% Our fiscal is now result of driven outlook increased to expected products range year the a by to growth in sales be

outlook portfolio, of customer fueled sales half accelerate distribution. strong to our also and back leading ongoing sales reflects consumer plans, our efforts innovation higher to Our increased by meaningful programs investments, momentum the

outlook sales two to updated foreign headwinds. exchange Our continues assume points of about

now Our of organic X% fiscal assumes sales year range to a growth. X% outlook

well measures. accelerated benefits fiscal segment reflecting the our category be This our safety about the rate. at of now our basis cost an savings team leverage enhanced increased strongly expect by are benefit and as continued investments making partially gross wages of grows to up in we XXX or offset operating favorable and Cleaning Turning margin, margin form temporary year production by strong to gross points, driven momentum, we within mix as sales increased be as will

margin in our negatively heightened fourth products. investing our team, the temporary to warehousing to to our estimate points. and addition are increased cost transportation demand basis impact XXX our We In as gross about expedite we to we incurring increases shipments these quarter costs support for by customers

expect to be higher and by commitment now about promotion levels our to and at margin strong incentive administrative compensation, sales, fiscal with administrative advertising reflecting We gross selling consistent of XX% investment continue year to come modestly, XX% partially expansion, year We margin up expect expect and offset sales sales. be expenses EBIT now higher expenses. fiscal of to about our philosophy. We anticipated selling reflecting pay-for-performance to in

due We to these factors, expect fiscal on be to range year be of now in XXXX excess range rate tax benefits expect to effective year to higher compensation. the to stock-based of in tax now our fiscal XX% EPS Net the all $X.XX. of XX% diluted we $X.XX

appropriate of While this range of be is we by range number wider don’t this predict to than what we are would our normally challenging volatility provide accurately which control time. think and at year, is more this they results at directly a quarter managing, influenced we difficult as the estimating fourth we heightened will time given factors are the makes

assumes Importantly, remainder fiscal outlook disruptions chain the this minimal year. for supply of the

our of temporarily Additionally, share both repurchase suspended we have programs.

is take allocation while we a capital further to believe plans. this assess maintains the our the balance While action capital, prudent we company sheet very access and and environment a strong additional to

over base am the continue would make progress to turn I I on to we pleased like business. Benno, I with that our Before reinforce to

rebuild impact have I distribution this the quarter to the in We of COVID-XX that to third quarter. expect begun and prior to continue

focused Additionally, value. on we we support program of to innovation to track another and improving brand continue increase year our on strong of cost strong remain investment in deliver savings consumer

increase pleased to manufacturing to operate Additionally, production effort global crisis. provide capacity essential products our I this am health during help to safely continuing with team’s needed significantly while

have no running majority to and our We of chain. expand the balance supported and calendar expect had the To-date, through flow, with crisis. disruptions, year continuing disinfection And the consumer well plenty vast we to over of finally, investment-grade financial the health suppliers a by to behaviors of to cash company accelerating while recession the capacity to Clorox beyond, manage economic all date major this an balance and our plants have and changing positioned made supply operate. contract resiliency as currently maintains good production continue I of strong of sheet, progress is with manufacturers capitalizing and result revenue on of giving flexibility. a our Clorox believe

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

Benno Dorer

Thanks, Kevin. all call you joining the of appreciate We today.

important everyone is uncharted by and Our crisis has right to well. few health hope know and around our territory impacted team by of quickly the that who the difference was never And and Company wellness mission we counting hearts on families and this and is way. our X,XXX act grounded up that most you your go a a out the the important day do it help, are past heart. in COVID-XX, stepping at We Clorox world, clearer. right safe the the global been we value, knew public make and company always to In thing. every to these presented health Clorox to months, our strong company been during has products is our

in three this mind, are today’s With important call. takeaways from here the

health, proud consumers, I have serving our to results. QX rewarded serve we customers to people’s led financial our pursued we supply has which our support protect has January, caregivers activated First, front needed are center: and critical as get we then qualify relief; infrastructure maximizing coronavirus the products. essential providing make organizations products contributions they our workers, since protecting employees priorities In making of household other and to product our to and company communities and employees; our our third, response people most. health, cash the and passion of to public and leadership first, where because public three and safety supply we the and strong in been health Back and am by guide increased in early and second, well-being U.S., to

circumstances of that of to and in infection job mind. the workers are those results enhanced directly well-being the who health reflect and have outstanding doing face of the frontline facilities, our our making people the To work and Our is pay extraordinary third benefits families added support top and prevention in measures quarter our continue for our increased with products. we our on

fund employee broader established For we initial million global support them relief to have to team, $X families. our their COVID-XX an and provide

than Clorox natural times years, more Company has of health communities XXX crisis helped For and global the in disasters.

with we help this in work million $XX communities battling in to product we crisis, our about and donations. support cash have committed now them As

get partnering in additional XX/X. Americares product To on increase third-party our of have we’ve and quickly, and organizations the to America our most cleaning to United been to manufacturing helping suppliers caregivers we local those as well as and United sources XX% as most. support initial and supplied ago an in support product users addition the disinfecting accessed In Feeding lines, and than million and needed such disinfecting organizations $X extends to populations QX, for focused front to more internationally, and end increase of the can meet faced million States States and of consumers more our the products, year where we the Clearly, quarter. especially have In it on the meet with units demand To products greatest products. XX the vulnerable plants disinfecting demand have been be retailers needs our that supply to extraordinary is extent output, possible, for we communities. try our versus in we running our supplied for disinfecting

who this very made to associates our production grateful heroic possible. are We

wipes facilities. to find germicidal new produce such more products other ways healthcare and Additionally, bleach for to disinfecting we continue as

price and prices all tolerance our zero access and And to sanitizing standard especially at have now. that everyone ensure has times products gouging. at for want we we disinfecting Importantly, to

the remove online partnering have aggressive gouging, sellers we including third-party marketplace. combat identify such, platforms and taken action offers to price As or such in retail with to

market the rising in U.S. performance they regarding with collaborating needed, count than agencies penetration Clorox environment, see connection categories in reflected with increase are has on. gouging And and in ever, can As of share on our brands. enforcement brands many disinfecting the third-party And most we More products. household to of an in uncertain trusted in. brands many turn that people compete strong in law price we trusted we

for QX with sales quarter see diluted a sales of growth core been impact In XX% QX, and Shared half. also the it is were on this growth, COVID-XX, track on the trends we anticipated in to progress consecutive COVID-XX My making feel progress of business. last have we’re with strong making contributed since and gross and our in rents Grilling message the about double-digit second our the gains. accelerated and business, before to prior expansion on a good which improving were growth of expectations, we and margin against our strong seeing distribution also We our quarter. is were We back volume line impact sixth pleased EPS the have were the I then. significant growth expectations particularly

six I that in we businesses share am pleased grew tracked channels. of out nine in

to the In strong traction build back our starts, keep and launched stretch a Clorox it bleach very date. are program our tremendous we throughout highly and around we food helped Clorox plans which shipping played we to fresh, for the One we new new Grilling, Other storage a a initiatives season. that grilling Seal cleaning were innovation new innovation. will the off strong which for part bags innovation Laundry, including our on and product, performance in QX compacted meaningful food presence exception promising are off to with Our a gain wipes, XXXX half distribution innovations plans sanitizers pellets, a started to improvements. pleased Glad successful which was odor-eliminating In fabric hardwood these new retailer Flex’n our Kingsford season platform to of builds start. and compostable

this at we However, their a deliberate to prioritize order suspend disinfecting made to choice time. in production wipes temporarily

was were of pleased continuing very impact of distribution, were this were is performing margin pick we our the the sales pandemic, about the is majority What’s gross at the Prior remain seeing to its prospects. the and very future to as trends excited business. business and rebuilding as important understand soon with in up strong its we will possible core. expand. were We initiative on well We to

IGNITE to challenges experience organization through to to is from well to shareholder last value. our manage trends and expected our my capabilities We perform core the Strategy, in emerging position our that impact pursue expect fourth and confident the And even quarter, those as long-term remain core portfolio, further COVID-XX. we continue will our we strong point and us opportunities near-term generate today

and of categories, households the to heightened turn we are that loyal chain, predict number unemployment of economy will consumers. supply provide the As we difficult about we’re public now by many disinfecting lasting facing pandemic that volatility a may and we same Most and for future. economic several our decline At essentials. meaningful role will impact in seeing following invest entering continue behavior, past of With recession the and health there will our of with time, external it’s in a period the more monitoring. income to to will be are early them consumers into global contract new consumer recession, crisis personal are health COVID-XX the of awareness indications anticipate than brought global we will company. strongly factors actions our predictions trend prominently, near-term future this spending a are products during rises, global as play as the growth long-term prioritize discretionary government

to invest strongly brand care trusted this most in business. program fueled in our States home commitment United differentiated innovation products by category is a with the Clorox and strong the

will Clorox generally less the filtered to role portfolio delivering superior lives superior the Brita since comparing foreseeable bottled an when was our value our relatively products positioning in about as percentage at water. filtration well Moreover, enter the by as water high U.S. given portfolio of of categories as be using well for we the in consumers seen our future. as recession as consumers we benefit The from as consumers like brands measure, resilient has disinfecting all-time began future major past consumers’ level recession. optimistic to trash, out is We’re eating grilling have this prospects this recognize proven and food water our elevated value that

margins backed through keenly given by adequate focused and flow, Clorox strong leaning by expanding meaningful long-term a of investments is core value investments, our strategy offense cash play innovation positioned and price We will strong health remain into on consumer uniquely gaps. our strong And brand capabilities, in to the business. and portfolio,

manage to long-term remain stakeholders, to through be to of since an environment business, important it term, As This and committed value and thing. and served company well core for now. been shareholders has near a our us and doing all we’ll right XXXX, to unprecedented business creation we the value we has our continue committed than ESG more purpose-driven never

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

Operator

you, Mr. from comes first the JPMorgan. Dorer. Teixeira question Andrea Instructions] Thank Your from [Operator of line

Andrea Teixeira

congrats and well and on you Thank your all hope results. is

parties this quarter. Benno, if had So were of cold season I hoping you understand of some capacity fourth the and through into on was third peak using you using you can and comment And I your flu. increasing always production that capacity

to a you still And inventories seeing of which pass margin, have in update us understand keep you from against production. trends you’re in can all if consumption too, that International, you your terms XX%, the I on, XX% shipments, if can if is lot obviously, and of comment I if products can the on just will portfolio? So you but in a portfolio, at on. the the the on gross sanitizing to shelf can into position then the I follow-up and of then terms and what you’re for demand us portions replenishing remarks, season the the also it prepared of grilling if see on the And in other commented you seeing other about

Benno Dorer

faced supply, some everybody’s we of on think when everybody output the in territory cover. in Thanks, you effectiveness of spot clearly, of saw evident that see particular, term. demand supply long we’re stocks. product to good to of uncharted supply And unprecedented, Yes. for products. clearly for But a despite like you in Typically, spikes produce out our to to cost, required if chains, percent, That’s products has And mind. quality, we efforts, been where, Andrea. heroic is is situations the commented to about our disinfecting demand in are it’s chain, What efficiency, safety, you out for built in lot XXX-plus ground March, I stocks. think sweet of have and of of we’ve on we necessary the have disinfecting course, that be they’re continuing

We’re our really responded. of organization proud how has

commented, side. supply disruptions any As our on haven’t we Kevin seen major

as partnership from We patience focused of to bring We help production us for have increase to on quickly air been speeding our accepted suppliers demand. quickly them the as possible. retailers, disinfecting to cope of incremental serve by us XX%. supply products with fewer we up to and it in as all products I And saw and thank possible. able you We great want to surge third-party chain the commented, help to as freighting, as market costs SKUs. stores We activated like

that. We will to continue do

to to is long role increased also right new going people’s We improvement that meaningful are to long investing And demand be to ways the continue find as this a course, in capacity. We time elevated as for for increase summer. continued they play disinfecting our significantly will expect continue term in of capacity lives. should see we we products

we’ve commented, stockpiling. seeing we’re very little As

of particular. lot in a incremental seeing disinfecting, and We’re from households use come in

to point, As will out. with up they you At people they safe lot wipes. home, a well, get some want to protect themselves. to-go stay as of open And have think as countries stay about we particular, want products when the when they again, in will future,

So drive continue that be continues to exorbitantly will high. Demand demand. to

very wipes lot sold there’s much in them pretty out-of-stocks, As of they that high. doesn’t customers And grab as in away. customer the tracked the fact course, they right inventories. people you look data are far in a consumption and at given very, And see from weeks four latent that we’re keep demand which store, factor refilling about it’s channels, inventory. of out Typically, of

in give to be refill selling us which So future. lot some wipes inventories, point, an opportunity sometime also a at we’ll also hopefully, able of keep the to will

more of now, We’ve in right of about there. for will elevation that wipes a sales. but in of As And we seeing or International, for the XX% commented products. number the said, our see being demand we’re definitely same we course, that disinfecting our also about in an in U.S., products while. disinfecting is dynamics It’s about is sales account one-fourth

pandemic, we we’ll which On expect that is continues be on them. is lot like high. to one come ongoing given many core We as number I before progress Grilling, feel So see of serve. to us. well this demand. commented. of lines be quarter, home. business, on like of even that And as But we made of will as that are higher other of our product of the help able we’ve the demand to consumers there But our were this course, categories product a demand spikes a demand in stay feel out the allocation

plans. Clearly, rewarded the a pleased point much with Grilling, and Grilling as at is seeing. a now, that expect retailers really progress around base Memorial usually grilling really it’s not we’re with We’re Day of Memorial grilling happening Day, a partially merchandising big we see business. by engage so we that progress doubt I we right of strong lot to growth were a season, merchandising this said that on offset made before about occasion, we better that our there’s as offset we the and lot even to strong will pandemic think the in XXXX

a So in supply nutshell, been has difficult.

extraordinary as done as We work meet we the have best demand to can.

perhaps in as not as we’re both business. slowdown. this demand disinfecting We summer, earlier, on expect core substantial well And improvements our seeing

the about we’ve sales growth in sales QX. fiscal of If double-digit outlook, still it to think X% assumes which to year you increased X%, a midpoint our

be we that is So consumption going to elevated for a while. that around you believe that tells

Andrea Teixeira

you helpful, on gross just conservative said. That’s but if your can But point, the do the I into margin, little the you’ve if Benno. you before go range, to it we midpoint sounds of even also ask if just margin gross a everything

the safely you’ve conservative the of now it this be prepared being of conservative at for takes you’re issues just as potentially So a and indicates at I if be retailers uncertainty? given was is everything you point, it just trying the wondering or in facing that like looks range to and the level their said own that just it’s like because and top remarks can puts

Benno Dorer

Yes. We Andrea. think we balanced have outlook, a

and do one is As you that that think consumer you there we X% quarter math, go, a think about lot to as concerned. We the balanced. Again, range. can the to uncertainty range also, as implies think very of X% with it’s wide is the a far

more that of for we critical. employees and to but can’t have, that manufacture be the it’s to learn be not to to very is the And going safety able supply asymptomatic take And us, important cases, about our granted. disrupted, we of course, assuming we is We’re continue way for as importantly.

And would forward So range, Kevin gross best a is you this want at comment balanced foot with I wide point, and perhaps on our a can outlook. to? Do it’s margin. say, this

Kevin Jacobsen

question, the specifically though. Yes. The have a to gross nature of Andrea, question, you Did margin? related

Andrea Teixeira

just And to seeing appreciate the points, for or fourth But your should temporary? just it’s margin, guidance, is point impact trend Yes. up the the Yes. quickly logistics implied I saying gross basis be just seems XXX that about it as and quarter. obviously, me the is time. on we impact are in the an separate we that isolated for you

Kevin Jacobsen

Yes.

the So for thank question. you

do temporary. related we believe XXX the On bps, to items. two It’s really that’s

production enhanced and wages team, We I are in investing as more with mentioned, well as measures. as benefits our both cleaning

it. So part that’s of

until costs incurring. signal. the the well transportation, to mentioned with warehousing Benno going of we the catch that’s specifics, just as we’re increased demand can think I’d up As continue I And say some

influenced this have So I’d very near shape of much And expect we’ll margin. hitting demand. to in will out. That term, plays we’ll be something see by how the the see that’s the

Andrea Teixeira

Thank you. it. I appreciate

Operator

line UBS. the Steven from of comes question Strycula next from Our

Steven Strycula

on strong Hi. a and Good afternoon congratulations quarter. very

maybe some retailers portfolio into some amount portfolio. of terms maybe use the your previously? So a a about disinfection the extend products? are space global of How for linear question of conversations And business then have strong foot the some as a forward reach you maybe for planning I think resets, retailers think a didn’t have you a display your about fall, wipes your situation, as International appreciation business, and have Benno, where is as markets forward, newfound presence guys strength given in of does winter going your this have as you that pandemic for that disinfectant COVID in the

Benno Dorer

Steve. first, international Yes,

would think in of we’re think to consumer much we this to disinfecting, opportunity going us seeing an do expansion to So and particular, us international about that wipes, demand. detail, be general And getting expecting are into perhaps an in certainly gives a opportunity consumers. serve plans. too lot give And this without that more

to with would we that something that, competitive and have in no we it’s advantage. opportunities something profitable willing powder So on sustainable shortage take dry look certainly invest of eye invest there at we growth, of in should can be be advantage as we an to

probably market are we But we’re take see So we see a long-term strategic advantage and we to certainly this. would entries. it of you what not seeing interested where be opportunity, opportunistic in prepared on

As It’s household wipes of sits see see they which what a to is course, current as right difficult discussions as we’re disinfecting retailers incremental penetration will is XX%. those the the expect, now about with The coming going that little conversations meeting But of of far demand, is lot I retailer at we I Bleach numbers you of enough. about most the time. certainly same. them. the products. out north that conversations, usage of have tell And the a would are right

is household on So that and what those is we’re seeing penetration climbing. the two categories more recently

the contribute amount an suggest disinfecting in with to consumers to more shelf categories. right of strong But would it it’s a we shelf those two be that certainly opportunities space store. conversation is of that opportunity but space what ongoing in us, could to that still lies believe expand to So there ahead serve products through

Steven Strycula

Thank you.

Benno Dorer

you. Thank

Operator

comes Powers question the from Steve next Bank. line Deutsche from of Our

Steve Powers

elevated to Hey, near the planning can to supply? against cleaning, capacity demand and Good term your capacity structural thanks. think all are to overseas, build how but disinfecting that perhaps CapEx with time handled begin ahead be this the third-party of associated your that as And you should backdrop? mentioned, that U.S. in for about we Benno, also think you or builds comments through thinking in just just getting not you voices. hear over the about on of

Benno Dorer

can I’ll an frankly, And and we, right will with combination products demand. to CapEx. let basis, the typically, more manufacture it of on Kevin we long-term started the on but always capacity be a in anticipated an because deliver prepared But our of we ongoing to in the comment mix, like cost. invest because in-house investing have on quality eye and, disinfecting are

thinking give how be about Kevin detailed perspective should let I’ll So you on his we CapEx.

Kevin Jacobsen

Steve. Hi,

As typically, on we CapEx. spend to it sales each CapEx, relates X% of about year

see we’re heightened a for number our work be increase think the as suspect, I hearing and right QX fiscal doing just of we’ll expanding year in today, the talked our capacity we closer self-manufacturing certainly look of as QX. reasons I Benno to demand from opportunities us to investments seeing and facilities it’s because We’re about. to now. X%. But XXXX, We And really you’re

expect We continue this basis. to over a term longer

to And do we’re now now to that. leaning and increasing investing in right start so capacity, right we are

Steve Powers

if fourth I heard a if third could back of the real and distribution loss the then I business on Lisah, in quick spoke household up And just But step Clearly, net quarter. you. Glad thank think of as I on you Okay, the follow correctly, quarter. wins you the specifically.

of out parts, net all to and as guess think we I on moving the Thanks. how relative the should the quarter market your in settles across takeaway shipments So that? everything beyond based fourth about

Benno Dorer

Yes.

So say outlook. the previous first of occurred distribution was in all, this loss that which I will contemplated

year, lost with this simply a saying, the for quarter, distribution wins knew customers. previous be significant while. And get with of it’s for a total in this So a will timing half We But commented, by so think significant it’s because the we up we as new we has outlook. we to as back including customers, distribution QX. Lisah to change fiscal about the expect other not points

that share share business So home have will market core we quite it’s as of we is, quite as should you a seen, pandemic And as some of the about to given to stores result continued change midterm, improved spillover course, which also, for lost distribution. as by to But think positive. just to from significantly buy the growing price brands. it’s continue invest distribution net not Glad have positively And that we this but gaps, we position do also consumers innovation, the fundamentals, some are what impacted their people also more. a in, we’re improve. as the stay willing about expect the well know think We

So Glad business. the path comfortable on the forward is where we’re with and

Steve Powers

sure is to of the that fourth I based with shipments consumption want Yes, walk think I I in wherever just that, I want on impression hypothesis make lands hear about in to with away But before test quarter. should ahead that okay. just I we coming all mean my that you.

Benno Dorer

Yes.

any we forward-looking, try this So being always business point. so us on to away specific stay bear with at that from

by the the negative distribution offset by of we’re You it right? loss or for while, be a adding. impact gains partially to see distribution will continue But will the offset that will be that

a but a be will to going after quarter two, time. for or of it’s it noisy So bit little that period normalize

Steve Powers

Okay, fair much. so enough. Thanks

Operator

Modi question RBC. of the line Nik from comes next from Your

Nik Modi

and you you the right create a question that think would can wide first this doing reason how I’m these engage why you just how lean marketing because you I question lot. you that about it sorry. to I’ve in do thinking kind line get demographics. dollars really so the for that much to about a well. stickiness. been Clorox Benno, would Yes. spend this of opportunity consumers answering so order the top to curious much ring the or some I think hope think of a trying many to into everyone. have seems, across them afternoon, like have now? are is had brands how do And There’s time Good How I And trial. is many everyone spend I marketing hope, where ask mean once-in-a-lifetime

talking know on charcoal I’m I about etcetera. your Now but is everyone salad focused disinfecting, other products, more also dressing, and

across how curious, portfolio? question, much like this by just situation So think that to know was you value I’m approach how you I want do how your much but don’t created

Benno Dorer

we So going that’s advertising. are cut to company not going a be to

have into opportunity advertising unique turn us, a is as loyal you say, users. For to trial long-term investment. now we a And

United One is years. the next as increase of million IGNITE million from have we our to five a XXX number you with recall, XX personal people the the States in to of people relationship close over probably Strategies,

we’re opportunity to Now incremental a hold that our in, on getting of to lot people and volume. it’s

you fiscal the spend the in previous back the this half tells of stance So more year, year. will in we than are X-X, And million, that that $XX taking. we

good But long-term not we’re if play ROIs, will quarter spend theory, ROIs are How in we we be of our very And the now to advertising they build stocks. didn’t We very spending of Clearly, equity different. offense. brands. is still but a spending the good. to make commitments, we’re they’re investment We think would the investment. out is right a than that little have lower

people’s For about products, instance, to lives. think trying as our be you in useful disinfecting we’re

that sure And single and on will to cut quite because Clorox trying brands, us the to half. with for brand. in spending making use our lot any great hold a are in be in in the to a trial to at back live their year And trust I or right I the as dollars. purpose strongly in this and for brands our consumer continue our to very money people We’re are we is that to education, to That result, the And $XX increased build we’re have up. investment Clorox, the time, million this helping well. as need And Like bullish said, not would continue we seeing. to way more spend we at people trust advertising they a that the this brands spending in unique opportunity believe case, not. fiscal brands be next whether expect it’s them time, up the show particular created that as safe. minds we make we of a And to on spend

Nik Modi

talk question could, it, Like distribution I happened? the you’ve for And already the was helpful. you bit a then budgeted on a what loss? if Very driving but just know quick what just I can Glad loss. distribution little

Benno Dorer

happens We typically that a the and don’t It’s a between manufacturer. do retailer that. discussion

not in to have a comment the conversations all So good that with I’d partner of retailer. prefer It’s as retailers. we ours. integrity to it’s good the But of just cases, a protect

growing We’re can them same this of optimistic with with in in kind have categories. perhaps strongly as had might parts And other we portfolio. category in customer we’re different we point, previous have very the at that also a of some the conversation

how don’t the in Glad where it very decision, plans their agree with are we’re decision, meantime, comfortable see the respect them. we with we’ll going forward. and on the have on for business So our works And to

Nik Modi

Benno. Fair enough. you, Thank

Benno Dorer

Thanks, Nik.

Operator

comes the next Grundy from Our question from of line Jefferies. Kevin

Kevin Grundy

that company’s up, hope we I and to Hey, on products pick disinfectants you’re Benno, good afternoon, hygiene if the I well. long-term the topic doing everyone. could, wanted of guidance. to but bring And it

you organic as think, X% sales growth the are these So well aware, years lot I prior guidance, for to a and of on your there’s the it. of on a pushback number achievability X% calls, of

of to it October, X%. it just discussion past going it like increased the be this consumer certainly now down aware, lasting. so you your some And of more this in trimmed that categories guys as terms in And is just are disinfectants, X% seems big to was demand like building to well on you product

you’re increasing penetration, in You’re household capacity. seeing increase an

share forth. could years, sort that’s for where now company for guys are the you that. relevant? to this a you I as comment, quantify you thanks bit do of the appropriate maybe you within algorithm period range? what five long-term getting But so again, so, clearly, guys appropriate So more as is terms could see pantry over to and that If planning you is X% well. load So hoping that a But as you of next three the X%, this think just of beyond in view that was

Benno Dorer

numbers a we be going So I any think long-term to that you on our think to more will give serve going or understand how and an guidance. to consumers also any heightened we expect there’s view space. At in that U.S. more and continued international. the we’re that it’s the gives be not Like time, going opportunity same updated to us engagement, sales said, I’d consumer competitive

right will worry the always So particular, of been course, to I the are pick and and you see very now, for think this know, right? about Burt’s have businesses, as point. competition, competitive company we future. has we incredible the know, takes, challenged. what some you going As a an attractive story success happens all is which, long puts other for to And that Bees But be we And up if landscape personal and in to care then, an in category. about time, expect to there’s at

there’s to puts takes. I So going think and be

certainly We’re the algorithm right what about thinking be. might

having right a the time, the believe if conversations we’ll it. change, there’s communicate are at internally. And We right we

Now is not that time.

long-term will this fiscal to but it’s how Near translate elevated comfortable we term, like the too early year say into creation. in outlook, X%. demand, We’re said to with X% expect we value our way

to though, into The important thing take it. away, that is numbers the invest aggressively we beyond will

we’ll possibly institutional will and that. to And best customers the in and We serve put will business as we comes consumers see the play ourselves in the professional position then offense, out we as can. many of and what possible retail

Kevin Grundy

Okay, thanks Ben. luck Good pass I will it guys. on.

Operator

Feeney Your the line comes from Consumer of question from next Jonathan Edge.

Jonathan Feeney

year, volume your in much and leadership the And cost was of just that either next say, petro couple Kevin, as sorts far not X much you out when we changes secondly, in now, energy that the fixed, can? how what how next to us And me sense Good is a those price input gave few takeaway quarters. just very can your global rest XX mean to give on question. when of Thanks your down months strikes since, some this. of and you of look how is I’m try past some from morning year, is And that year will trying front, that of say, it the sort heavy. has takeaway prospective the model fiscal over us to or compare big much. come of so which you as you of costs me probably Can pretty tell a appreciate structure surge the a understand cost smooths looking much. And see the right? these all January and of maybe what and very this of over and sort upstream components? U.S. at a thanks figures, simplistic was pretty come

Kevin Jacobsen

Yes. Thanks, Jonathan.

the market. we related to in also question same cost you But that tell to structural I’d much our which, issues you say the see, On a think clearly, price oil. second seeing this. to it’s some data further. there’s degree significant pull But in get the we’re I see there’s on inputs, of because resin a back would going oil, lesser the pullback going I in to much

And of really that is that continue cost GDP particularly With the downward global complex. be globally put to decline, energy to in continue inputs, so a input pressure of think lot us, couple areas. a demand driven think plays than on I to more in by out I that costs. will for going

means though, pronounced is form buy, as Glad So our that obviously, typically, increased most consumers on cost trade. that, how spending heightened that Keep And coming to really that’s see through of big a component business. resin, category that’s the is managed, our we inputs us, the mind, and on in through flows trade for category. within down resin of in Glad, the

trade through come So to Bags takes work oil, as then as on to Wraps expect relates so across supply increased usually our spending categories. oil would And to down, months business I it resin the six and see prices chain. the or

be at a a oil levels, this it tailwind these if over $XX that So it’s out like going certainly next foreseeable projecting for for months, barrel level stays down us would the the few future. looks

in today, sure. to too Jonathan, that suggests certainly global possible. for think looking more certainly, your at on say that then, you’re I know look question. if me Tell it that’s you the probably Now But it’s what takeaway. more for environment early And

Jonathan Feeney

Pretty simple. your Whenever you takeaway is at told or about channels. we least know measured U.S. what

it was assume I just You version retail, a of you total takeaway you told number actual compares something give rate. global if as as how wondering e-com us to just if that, number. double us your that’s an about that through club and number U.S. think I’m rate, U.S. that sales or double the opposed the global could etc. to like like

Kevin Jacobsen

few I things. I’d say Yes. mean a

strong And International, growth our about a we’ve talked, volume well, as close to very XX% had we as very volume company. is As growth that.

International growing address our business talked is is about, global of up fairly help to we an a we what U.S. have and this lined that’s seeing international at consumers. portfolio So very a this health the comparable because and what rate in And we’re to crisis, again,

And so we’re broadly. strong seeing growth

right non-tracked, now. elevated about channels. growth probably in It’s non-tracked seeing are I growing But XX-plus surprising. As we think I than think points tracked versus that’s higher also tracked not

seeing very quantities. even order larger strong and from growth they’re consumers we’re trying We’re very in are ordering in seeing e-com, club home to strong growth in or as

an rate right those seeing grow we’re accelerated now. So at channels

Jonathan Feeney

very lot. Thank a Okay. That much. helps you

Kevin Jacobsen

Jonathan. Thanks,

Operator

line the from Lieberman comes question next Your Barclays. from of Lauren

Lauren Lieberman

the on I still a was afternoon. demand some mixed because would is bag, good of sort that environment ask that’s data picture. about just mentioned and always there’s of and promotional Thanks, in Promotion wanted activity hope with the the a so a the pullback high. know I bit best and to trending little expect release, commercial and Nielsen I

promotional your hit within be on other environment, and businesses great. we would I So the can that categories wondering cleaning if off guess, then

Benno Dorer

that program promotions, won’t expect Lauren the have aren’t supply year. is the of reflected Hey rest in given promotional lot of our expect, there way fiscal pricing also Said shortages, and a lot we dollars accrue of annual as the dollars most the low there but being are And a we promotions promotional might customers. that, you for be we of invoice, are our the of with spent. a less most where performance-based of everyday

more dollars So expect lot frankly necessarily than do spent. given are requirements, retailers that source is want we isn’t meeting promotions and a that trade there a don’t to of And that, where of we given always the it the been performance nor to that are our be fact savings. EDLP continuing it’s be

also market the and that. can share gains We from have pricing as on and continued make spend against Glad. to feel about progress, developments, you see we And right gaps to price good we’re continuing

it Expect pretty savings. continue, environments, to translate promotional that So not but benign. to cost will

Lauren Lieberman

Okay.

and up see the price example, So like will investments dollars it in it show in for ultimately, the price But adjusting promotion still for like trade ongoing. is points just manifest that store. We list as permanent change, that’s something a Glad. as don’t

Benno Dorer

I’m All I’m to spend not that saying that. we’re dollars. is saying continuing the

trade, some a will price at converted the list in in are of is that’s And very we a to What spending with specific Glad, be up comfortable temporarily Right depend line. back it’s dollars different our against that and any in working. it’s area. and to, are We’re happens in and very is out objective, that on not spending what going whether much any dollars point, to pulling pricing doing, on spend control. keep and competition we now,

Lauren Lieberman

there like because curious and least seven not Okay. years hoped as was area that you now, the feel in business sort I for or that’s but was starts Professional of some then Great. guys an it interest And some were getting really grow maybe obviously I of fits time. five to And been business at Products ago. for with

talk investments about, I to in in that absolute but need. wins to the clearly surge longer-range sales of, of account the like right in but growth force that, terms an it investments, things that call was contractual curious terms that meeting usage, where than just business of level continue or in So now just supporting about is you rather it, more just early opportunity maybe can do, a

Benno Dorer

And the done other hospitals always enter to the in products, healthcare very serve additional the of disinfecting call The disinfecting Yes, done look That’s business, has part has time. What absolutely. Lauren. we we of which period for well. it, Professional at or we with can opportunity, broader well business, facilities and as core was categories. have PPD, is to done a the for us prolonged of whether past

Some was is. successful and still of it

mostly the healthcare technologies. regulatory and changed products, environment business core of serving has because facilities of quite But the is have a number of proprietary the unique Some not it significantly. professional with and we was disinfecting

uptick a which electrostatic have We incredible be XXX will this total course, an great from and we in demand point. sprayer is opportunity this drive germicidal last up an system also But to deal distribution. wipes, seeing year, to our can fiscal see XXX% year help continue at that of

So is what unique does; strategic which technology, matters, invest continue to which you know-how brand opportunities into we disinfecting that will Clorox have healthcare we in can where expect it and where space; centered are can predominantly and the come protocols in very is areas that where cleaning around in the play. aggressively our

some we to consumers way with ways to to. options places to normal that at are back our as and options to homes forward the a hopefully, point, enjoying the cleaned full used not will can limited where but at certain play. that business brand make the that into as as, increasingly we these bring Clorox and be are reassure all look safe them we total Importantly, feel enjoy the involve we the things to increasingly, outside that power Professional will And look just of company

Lauren Lieberman

Benno. you, Thank

Operator

Your of the Bank America. next question line from comes of Olivia Tong from

Olivia Tong

Thanks. Good lot cleaning, is a already. covered We’ve disinfecting well. hope ground, afternoon. And everyone of

of how maybe So Thanks. potentially outside as of one exposed ask private private just you emerge about can taking this of pandemic? in in to What stay label are about to some and as recession the in think categories we course, more what we think hold. of happens out I focused the these doing cleaning, about your label categories

Benno Dorer

Yes.

So market two by driven share right now, I things. is say would

section. that And six that thing you products, about to hard doing is prioritizing choices, could of strongly, as could is you that, are channels grow one more we leads tracked by words, could to we time right? right been to the we’re necessarily have healthcare just the And many they actions. of think That isn’t lead to the our That And in at thing label but that may of determined out just categories of all, mean people disinfecting of out-of-stocks very turn as people And that And those to private also right we’re thing nine crisis, it seeing share. that lower tracked date, grow what’s you’re doing as we leads if whether shares. retail that and happening do. look in share the Said it’s what trust. that First but determined is sheer availability, is disinfecting brands by it at because okay brands instance, your for is at the channels. trust. be, one strategic

that’s brands what channels, declined casually We’re And of other fact, seeing seeing there decline, so now. as that out other we’re very the brands a recession, bullish X heavily. we’re us, we’re non-tracked call about. of seeing one for And entered number is brands the might it’s label things right and what category in private channels. or are growing secondary also all we non-tracked That X all and have we

of brands we brands matter, and that about. all, First people have many the of care fact that do the

I our is consumers an that compare if in about recession seen focus high. by in you is that said our and it the XXXX, at the earlier, consumer percentage as prior on think this value. to all-time And value U.S. as recession, brands to the superior was of recession Second, XXXX

of consumer as Our was better that’s focus in value since in with the up place our And seen put percentage is our volume, XXXX. our NCS then, of on Strategy started value significantly. in which XXXX,

the If you a well portfolio relatively to you our in categories invest consumer, quite play to during add time to that typically a recession offense, add that that our several ability resistant, if of commitment recession. to add you that’s if to do

innovating always then our innovation strong recession do this finally we add and but the to taking keep with expected momentum, private like stand where like commitment seriously, at And will to quite that well we with label If we’re you point. and we our continued we that expect feel we plan, entering consumers. we’re

Olivia Tong

Thanks. Great. it. Appreciate

Operator

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

Benno Dorer

Yes, Thanks. and And thank results. year forward fiscal XXXX you. will you well. I meantime, our of look QX and August in again you safe the share with we when all in speaking stay to please

Operator

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

You may now disconnect.

The Clorox Company (CLX) 1 May 202020 Q3 Earnings call transcript