The Clorox Company (CLX) 4 Feb 222022 Q2 Earnings call transcript

Company Profile

Participants

Lisah Burhan	VP, IR
Linda Rendle	CEO
Kevin Jacobsen	CFO
Dara Mohsenian	Morgan Stanley
Andrea Teixeira	JPMorgan
Chris Carey	Wells Fargo Securities
Kaumil Gajrawala	Credit Suisse
Lauren Lieberman	Barclays
Kevin Grundy	Jefferies
Jason English	Goldman Sachs
Peter Grom	UBS
Linda Bolton-Weiser	D.A. Davidson

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to The Clorox Company Second Quarter Fiscal Year 2022 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 call, Ms. Lisah Burhan, Vice President of Investor Relations for The Clorox Company. Ms. your begin may you conference. Burhan,

Lisah Burhan

afternoon, Thanks, us. you joining thank Michelle. Good for and

On Linda our has today and me which release the with call both remarks, are to our our of I and prepared chance available Kevin CFO. Rendle, hope a everyone on had are review earnings website. Jacobsen, CEO; our

opening In your Linda will moment, In posted transcript a a take addition, we'll of a just comments, few we've questions. then the pre-recorded remarks. and share

make forward-looking outlook may may on about our impact During COVID-XX outcomes. XXXX we this expectations our differ based statements fiscal year results or statements and of but call, actual management's current are potential the from business. pandemic on These

to the could measures, release, statements the factors comparable including which the the are identify various tables measures In filed information been most the such SEC. at that of non-GAAP affect which non-GAAP forward-looking non-GAAP with we addition, refer refer reconcile GAAP to of section, both that may statements has to section, certain also financial end and forward-looking today's the Please financial directly financial located which earnings measures.

it Now to over Linda. I'll turn

Linda Rendle

conditions, you helpful. pandemic. brand innovation and executed Demand and superiority strategic our than in actions Thank us. our and taking This everyone. driving savings, joining our consumer-centric our under well. our of we those operating environment the includes height better across I are found volatile We portfolio, remains supply, pipeline. pricing despite a remarks customers Hopefully, the challenging during hope well while cost control. advancing results families our but Hello, robust prepared faced these and for restoring significant serving are headwinds you you your cost QX, factors in on

demand-driven We business. expect portfolio brands growth them, invest to strong, fuel in have to will and our which exposed we of will tailwinds, we long-term continue trusted a for

and term the stronger, appropriate to growth XXXX company. as environment With for actions resilient and the confident I Kevin adjusted a to navigate open outlook persist and are deliver While a questions. will result, the near this challenging period, dynamic highly taking anticipate build we more profitable our and this we line over fiscal we're that, time over that

Operator

Thank Instructions] comes Mohsenian of with Our you, [Operator Ms. the Rendle. line question Stanley. from first Morgan Dara

Dara Mohsenian

margins. So a on couple of questions gross

least a discuss Just given long you're you you do the elasticity Originally, like rate now magnitude to this require on -- at exit would a you assume progress this think just QX. require from gross based recover standpoint? pricing to no make corporate sounds margin year, to demand in can conceptually pressures it compression. if you declines of expected year's recover But increase, the these next arithmetic year, it price and run mid-teens even of lot now try cost takes it a to hoping how the it

not take that in clearly, to realistic X So year. much pricing

commodities of cost an level aggressively be factors? more to try just it lower base terms aggressively So and pressure? and to potential SG&A on how your maybe you relative if more to impact cost ways in fixed margin pricing about take just structurally it the gross different your just think any there's a other ability consider might consider endeavor? long share? thoughts structure second, do And to light cost to now thoughts Is a to in how what recover then of on And around offset multiyear any appears

Kevin Jacobsen

question. the Dara, Kevin. I appreciate is this

give year. our actions time. in if that expectations sure, a recover cost But right margins the the start we And some you And in believe gross can you me margin. I perspective we're of beyond over efforts Let seeing. and as with you can we and what outlook that we're costs specific appreciate, provide to I terms for we continue primarily our this I'm can doing, savings at work the program taking rebuild we're a pricing look be through position won't

to of able I going think do that's inflation inflation. the of with plans we've time some to think with. be do of place we from in a margins. the level And peers. is right to dealing level a take we're given you're and extreme us I an unique But This environment think Now rebuild lot got hearing cost

to that If continue we're I and we is process to our quarter, this margins the for through years. that fourth at we've the look when then think that we inflationary history, us, a in cycle the rebuilding last Now fully going expect continue to of gone start We year. start believe this continue fourth -- that's in by year. position XX next

tell If taken you we've to program that. cost our dealing savings X price it has It take though in previous look case, the would the XX this, to done been extreme we're expect about the inflation longer. months you inflation, cost of of able to times do I margins. rebuild level at XX drive and historically I we've us fully offset because to with, to this

business take at any in how I have committed for how And years while see the out. want important That extend do line or are headwinds to the to is for to to the make we margin. same either what's exactly the momentum. time, margins, or inflationary we think accelerate will to maintain it's influence that inflation. rebuilding us going we rebuild we'll sure to the on invest line top us timing, several to the to get continue certain plays we further what a But So tailwinds extent, could cost market if And out. also time is plays

the We top good momentum line. on have very

And that to momentum. you As expecting know, X% X% maintain continue to going forward. we're to invest to we want

in which then we little to can we So past. One costs committed way value we that regard -- we've company we're margins, bit tell at and we you, think this doing. price the the to thing choices maximize rebuild maintain And then make. the momentum. this appropriate fixed is about invest of I'd we to and And the pace, talked in a

significantly you extended opportunity we to chain increase demand. well through is able supply us. our this be an both to availability this That As pandemic, ability as elevated have supply increase to as know, to for our meet

so we're chain as able that that's And confidence we're reason in out. those demand to continues And supply go take to moderate, rebuild to after to fixed our margins. those us another be be gives that going able to going costs and

Dara Mohsenian

have higher and this offset from Great. of out? here pressure gross you on as cost some in And opportunities levels you leverage terms perhaps pull greater an margin savings SG&A of then you're any the given to looking commodity at standpoint look can

Kevin Jacobsen

savings perspective, to also you'll of forward. and for cost that drive key going But continue to cost have another years, a very and we're that will We've of going Yes, our from we a benefits to see on offset and to admin be to we'll see us rely certainly goods, to been to continue year we both the cost continue as but on help doing good productivity productivity, that do that program. inflation. go. track drive our We're you'll admin work component

Operator

Teixeira Andrea Your line next of question comes JPMorgan. with the from

Andrea Teixeira

on more will third-party I that hope think, as online it's saying XXXX? calendar just improved. there have supply mostly secular like Dara's more could And -- take-or-pay because is still and consideration seeing demand are supply some that consideration a we lot represent logistics normalized? out, Kevin, this to way those a that you that chain you all broad-based more half and the have Or -- more commodities and supply that other peeked of the you're it now, well. I there calling cushion even just hearing pressure? calendar and that But that of and a therefore, contracts year? transportation, already follow-up, to of should you're months anniversary the keep it's even something be with than have alluded is potentially of XX are they peers question. that While in is and of that to you the called we inflation, which that capacity revenues XX now take is in And might the Are to you thinking? Or now? response want you something that that and to now amount

Kevin Jacobsen

for thanks question. Andrea, the Yes,

because And higher we'd meet capacitized we because make not a our demand. end a our thought want overinvest in to and demand smart it out over relates choice as That the we products, then take-or-pay was underutilizing to that tremendous past, came As facilities. as our cost, in but at we use for to more agreements including supplier of product third-party increase get and demand expanding the base, of this our about manufacturers so we've the started to did in moderated, up talked quickly capacity. we

that made we so And decision.

of number manufacturers We the have we with. third-party work increased

demand we as to really of demand. expect And would go expect these in year. stepping start out the of out some In As this that year, the stepping as we fiscal start moderates, those start agreements. consumer going would, half are be back it of the agreements. we we'll then to pace I driven will by

up Because down. have to increased back As And capacity as think at we we're we've you'll start out you'll suggests we're But we've that higher number moderation. all we is nodes levels year. inventory we to on the of match will have levels holding will come the that our play inventory play will the over I different inventory pull in in these everything out, demand start built see is facilities. that what how this network, manufacturing watch see demand just looking means start our in we performance time

to than fiscal the inputs And you'll And third-party So then very that's with. by benefit heard biggest 'XX, we are of calling manufacturers. transportation amount down. back across the I would seeing within year, from levels because, commodities end rather what these I dealing then peers, inflation, real broadly inflation by seeing the of think of you've the supply our bringing see our out production that in come and in-house, our similar We're start all facilities far, inventory utilizing chain. inflation the start to you'll the year on we're think

we're think commodity is inflation. commodity still the us, component then challenge it inflation, transportation I question areas. broadly For obviously, seeing the us, use X for was, rates our really and carriers. we're is transportation of we're is market. we're the resin, about Where But in the it, seeing not. biggest of X/X across And about or One, on your higher the seeing X/X of transportation, clearly spot structural seeing is it other

XX% to elevated at we're And carriers. historically. a seeing is than continuing, to running to move continue we trucks for higher spot spot us see the premiums we've greater the demand to increase. driver market They're done forcing than XX% it's As and primary market shortage pace of

I significantly primary back think over to and assume over time, you're spot able us time, for to demand you to carriers, reduce going from that our see should move goods away moderates carriers if transportation our costs. be those

And back ability to to see out. for that so these that nice it be market, is as for expect I while will in inflation the be over spot us time. a using settles us would significant And upcharge carriers. savings there move will a And demand

Operator

question the of Securities. Carey comes Your Fargo Chris next from with line Wells

Chris Carey

hear full definitely guess, what remain I be in raw logistics worse, the and productivity this worse to you're that and and comfortable I margins just bit to on this also mix going that said. some cost fixed I'm trying about the that is dealing for significant as bit you kind goes, for as the maybe and I quarter this of story for materially going light, then with to a -- look for the a sure. building, not trying remains if bridge sequentially to that negative deleverage too. guess big far you certain maybe assume make stay I the you to the worse, deleverage year, guess things at coming manufacturing better. nod obviously, of with the pricing -- back XX% is you than moving I pressure, worse I just a as think how I'm But pretty gross operating I And I'm And probably to the I half, is maybe you bad, to but as And that's is question, the the obviously just probably and half. guess you going year. gross sorry be thinking in of that -- factor way really you're have operating that fairly is like fair? get pricing quarter, I'm mix raw But I have I'm suppose part materials just just understand to base, I is I about just how the want gross normalizing negative are portfolio correctly. guess to hear long to assume little but so now? building, pricing muted, getting at weren't a margin understand be thought to in does margins have guess productivity still pretty outlook on pieces and here? sure back materials what

Kevin Jacobsen

Thanks, Sure. question. the Chris, for

Let through a the see me about we little gross bit progressing talk year. how margin

our and terms continue quarter QX of about pressure. that margin to down be is that we you going So now, to in margins challenging we expected expect our last XX%. saw And with quarter, most

where by balance are we'd expect margins, position the We expect year. continue start into sequential to QX, then fiscal improvement continue of And that continue the we 'XX. to expect we year a we to we rebuild to in and move throughout as

what the year will Now to of drivers drive a in that back to your question I'd about are point few. half sequential the improvement. the that

pricing. points. was points fairly is generates This us for Pricing as to we quarter continue It was basis to In basis is value it of terms first XXX the margin. through limited. the build year. about will QX, last it about in move XX of benefit The

by XXX margin. think by south It's starting XXX. still I the of gross XXX. it's will well to be think fourth I over benefit approach to a quarter, probably bit the bps little QX, And

will value half the actions have pricing we building from that of over we additional the to the you're So ones are today taken see take that the announced going back year.

when more addition, weighted. very savings see about have think program, track half good but another you bit you back phasing little In cost our we're will on in year, that to a

year, to And half the bps we of of XX XX so in about the generated benefit. front

that to how is, the timing QX with, item from of you challenging XXX other bps to north inflation dealing see half was projects, the year, the at in we're perspective. And back of should year. You the a the point quarter the of the then happen play this out that's just and year-over-year I'd as cost most they look

year, in year calendar As the see beginning much while get operating change we the back in at to year-over-year because started the an to the storm a still half run is really we're the environment, smaller of ice up commodities inflationary with in Texas. of we 'XX

a move sequential spot a And basis and the as offer to relates had about so hit both QX in those the a reduced then to manufacturing, of increases the we pandemic Chris, We we few in is your it products the for number this mix, QX, comment, transportation, on supply. in on quarters. commodities, during there lower we've we through last finally, quarters. And will margin when be benefit as last to which increase talked significantly to temporary

have a QX, which multipacks, we line X of that are and go that unwinding quarter, quarter benefit, by the to does quarters fourth drag full And mix that end. including the will will be of about lapped not well. as mix we should temporary we've through that, margins see yet. reintroducing products, a As current our There

impacted So we'll And the year, there get some margins. to we half be down front year, is, the if back deleveraging up. in of that the benefit. volumes in mentioned, one deleveraging. was that With of you as flat, the half this not volumes last expect then But

not And that we drag so expect either. should

the year as expect building QX. move we we And see to are of so how elements through and we move those the through why margins

Chris Carey

could in. squeeze I just one And more if

$XXX versus the prior of talked like million commodity You and transportation $XXX million. expense about

down With offset, incremental get going you're is but to the some coming earnings pricing, more. the

guess, that the is what's in track just Just I cost that just quantitatively just things all to, are items these else -- it everything harder I'm called and and deleveraging on to those complete X beyond there out. trying the you grid. just other

Kevin Jacobsen

Yes.

$XXX of a just $XXX So couple on I'd thoughts. the million say maybe million, to

talked, we're seeing So in and increase transportation. that's as we've commodities the

That's that's we're bulk the the broadly increase. we're inflation areas I with, But inflation said, not as we're dealing portfolio. across biggest it. While seeing the of seeing the the that's entire year-over-year

XX% relates be back in to XX%. portfolio also price pricing XX%. And a to planning from it to within it's pricing As several to brands those and moved mind, taking pricing, going XX%, of that. of pricing there not to just we've keep as tends We're lag now multiple of rounds our for but that

to going be those and setting extra more 'XX. we get the cost pricing this half, in into effect benefit that's pricing to up as year, we're move year ourselves actions incur now And The so will back as we're $XXX go that million modest benefit really into projecting. fiscal

Operator

the comes Kaumil Our next Credit Suisse. with question line from of Gajrawala

Kaumil Gajrawala

bit like to better questions, you of a a a maybe I Maybe thought? more couple than rather than might margin. little than that sales rate bit? is it's It isn't expected? you Can in you the bit it guess. Or is coming Shifting it at the demand lower elasticity A Is than is had have coming moderating you planned? looks pricing little unpack through just that that expected. really

Linda Rendle

be they across we're stacks a across in segments, brands, our look to of our QX broad-based essentials. to X-year our seeing strong turn disinfecting We quarter the perspective. get perspective, that Kaumil, see and with from a consumers. strong the line And started that quarter we're strong -- really hi, We to a did one. our you from top categories if and happy brands a see this our household on Kaumil. strength continue our our where digits And double continues did cleaning of all to across

you the of share, So majority up business our units. what in we're at seeing, we're look if

deem of superior, measures value of all-time consumers which our portfolio XX%. an measure, as amount high consumer that the Our

investments sales in distribution against in executing of we paying back we've and got remains demand robust. place as those So advertising made promotion, all are supply and innovation, off,

a to the see tailwinds which move strong to spoken getting portfolio fourth that were gives to note forward, that I after businesses continuing about that in a returning our up we've will that As in long-term ago. X% essentials we're growth in quarter. we And perspective, X% goal QX the to even a household us confidence would of continue some from in year

And fact quarter So if turn business, Glad, all you fundamentals, a brands. to look consumers continue that innovation strong of the the to ago. at trusted and Brita business, our it's Food year behind a off again,

Kaumil Gajrawala

profound, Okay. maybe much -- I Great. Kevin. kind And get gross Is run It of mid-XXs that Or months of XX takes to to to take rate likely to you several it's then -- on to suggesting comment, this margins? years. takes so XX more it clarify instance it's you is because the else? back XX said, were to a inflation that years several your offset in something cost think maybe

Kevin Jacobsen

to inflationary to take of previous historically to do to at as the going cycle. XX do we been with. committed terms any sort the and of about It's little of of magnitude an timing to able we I be just were that mid-XXs Yes. as longer X rebuilding are And past, to back Kaumil, I'll range getting have and a dealing months, we're this we've beyond it's before sheer said, because said providing inflation recover XX times X outlook I pandemic margins the in to think what cautious Linda in year. margins began. But I the than

control going be we how recover will So how the number that see We're just again, expect of there's mind, line to impact quickly out. in timing have would to But that plays time to keep a don't of I margins. items we that extended.

better to for plays more that. I'd in perspective a year a But position prepare I 'XX, and better estimate the few provide I that. think out. we of be going environment on to in to position think quarters to get we're timing the be belt we'll see how our a in like inflationary a as fiscal

Operator

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

Lauren Lieberman

quarter, flow and to estimating came was about talk think grew realization and finished was through particular, to happen a we weak had in because and again supply up, going we about and around I inventory consumer demand. of inventory terms little talked that's last external kind I in the all the how goods sequentially. cash wanted what in Inventories Great. the us, this, of was just working the of to bit

talked So volumes. about you

you growing which of being to about that end there in easy year-over-year the less You're supply amount up certain severe if is to the of inventory about want And it's of point, to hoping are categories time? working by I businesses just the get for some versus for because, year. through a talk amounts there's volume. to overcapacity exit or Linda's particular these to are where thinking contracted volumes external degree the But you're more contracts, given of supply how

Kevin Jacobsen

thanks for Lauren, the Yes. question.

hand inventory the me and pandemic, a Let were days. of enterprise. about about talk ended several the XX XX in we're at Typically, and where next little that going quarters. inventory about We carrying bit we before see I our the second over quarter then where across days with

We And have built for reasons. we built inventories primary X so inventories.

This have ability portfolio disruptions us or we inventories going number the in reasons ship of we we system we transportation broadly up inventory down, we supply if demand. First, on suppliers taken chain help disruption. our to the for our ensure secure have manage continue to through any try that helps to down where across have ongoing levels meet and go to have they're

be at to we work have out, working that the to able do think, down. so point, invest across higher the supply start take additional to it's as near And inventories to going we're network. some smart the in some think themselves to term disruptions capital We

that manufacturers. it through inventory as extending chain up supply area relates third-party built our to other we The additional

add nodes we you of holding locations. those network, mentioned, to in inventory just many I more are our As as

the this storing just stepping of we're start have as How will we so some mentioned, we right back additional is it And agreements number we felt play step for I this demand supply up these will half world and a these and of of do out we inventory. year these out the think set to that. out, moderating accounting that we time I as throughout where could and of was locations the

this to levels of as stepping start I down We year, we inventory you'll out start consolidating this said, see And our will year. manufacturing come by end those expect as the start I of base.

As we levels count to disruptions, material we down now can need going count supply of taking supply manage when it available arriving based comfortable on the when that relates have inventory the driven on them, we we to feel much be to right that's need it. when then can and on that chain, we trucks being we

to see plays expect we're I how that expect, making continue start going I to to progress. 'XX, progress make in this And we'll So then But time, to year. over out. have

Lauren Lieberman

I see share I categories Okay. true apologize great. versus you about but where certainly your availability XXXX. I there are Linda, far we commented least -- was remarks, where Nielsen, shares, as were has And that's are on-shelf can can And it in more. in market improved. if as don't categories in if in you also it was Linda, on down where at sneak improvement, in XXXX, year-over-year, certainly one That's -- know market your

the right gauge the more think further if to So success want bogey? curious, in bit look multiyear important. you little share? of still What's just kind in I'm out, look kind kind you further, about How year-over-year constructive where you what's to because be do in terms reclaiming be basis? a on positions and a back share But progress of of soft you is categories shares of certain certainly, are of

Linda Rendle

on thank build that. I'll Lauren, yes, you.

we perspective, look pre-pandemic from the in feeling the growth share are make majority market in would progress. So win good we're stronger growing and share levels overall, a if last aggregates to at then I to to X Even and is about continue We X continuing our half said, to share need businesses been even want year. returning progress. our you that. where we to goal weeks, say, and But about share, experienced the and that, be to absolutely make than continue to focused I've the want And we to win. We that in grow super on we first of clear be to to of being launches mean every as in our win great with market we're we'll against is point to great progress, categories. our working, to make time our categories, a But after being of although focused continue a We're ups And on we've all made flat growing innovation competitive in portfolio, share. brands. we is Glad at and I'd That slightly and Glad in downs our growing et as going to in timing. There will market pricing times. but example, cetera. share and grow working, share the there's spending, long winning always intend Trash's category doesn't down, aggregate, progress innovation to

Operator

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

Kevin Grundy

wrestling as with I'm from crystal here, a margin I'm an to beat others our this, little horse of bit I'm coming I ball sorry, But back the to around And sort we chatted a clear XX- in good as with but structural. call, XX-month a commentary bit I'm November, more about I'm recovery little me. to attack but going today. be I it recovery. on some pretty gross may questions differently. as of where you Two the when the come dead sounded going bit guess for to of little guess, like Kevin, a kind

that certainly And on So cautious make of kind looking guess, the a what I'm to of not past has dire, months cadence more the recovery? the more over I at this you quarter, had as I logistics but piece changed think maybe X lot was and dramatically The modeled. commodity manufacturing drastically an dire mean, earlier than I the certainly comment. we worse.

you just So makes just has changed mind? productivity? pace of those for more has company recovery, changed your price the what What to the offset in pieces ability taking internally significantly with that on the -- together, and cautious the I'm it

Kevin Jacobsen

our Kevin. portfolio to to ability the still ability have very those price. over to price. thoughts second on of We've pricing I retailers to through work But some quarter. already to confident in quite XX% XX%. the conversations that balance with Thanks, feel have We Yes. couple executed of the of year of do many A our the on successfully occurred. get

another So pricing. savings. I the mentioned we we're work feel our the the good take cost doing the earlier, on as ability Kevin, feel of very was good there's ago, good think very I thought about we getting and today, we worth difficult. And million. of inflation team broadly, to necessary work $XXX cost We'll here about now $XXX year. that though, are have just million Sitting months seeing, more inflation. What we is X

deal So of think that cost work that we're we'll do continuing and level takes. to just that see on to long more pricing, got that means we've how with, to have seeing inflation I savings,

I what think that, think be I time it to longer and do than it's about to historically. we've expect the prudent to done

And increasing so an time I by And is we're with to and knowing some earlier, important continue dealing as driven take what inflationary stay that's sure think, most we said is balanced. I just make Kevin, think think environment through. to going I it's to work I

do pace going maintain to have momentum. that We're that line top invest we're allows We at to then both. going continue rebuild margins momentum. us the to appropriate to And to

doing we're the going be both and so value very And the both doing to company. on to and how we that's of maximize continue we're focused well, to think going

reasonable. a years to But we be we'll time able out couple of learn I the obviously, over to visibility quarters, recovery seems looking next more get think update that period think as of I more. few expecting and over you so And

Kevin Grundy

down potential I'll Can Okay. a on. categories your handful And label you this for or have And given quick just just comment of the on pricing then of risk private pass trade you where categories, and it higher level follow-up Linda. in around exposure? expectations

Linda Rendle

facts Generally, and our if Kevin. strong Sure, at we really a a And for private It's you high don't brands. concentrated our have those to just share look categories, have categories, very exposure. categories. turn of years. position I And the in many have the on in few strength we very label

been. fact our by is rating So it's about the at that I earlier highest superiority spoke the ever consumers

deemed superior portfolio of consumers. is XX% So our by

private label pandemic, to the are on a not trusted through continues label private on make to trends the brand. progress at look turning share. you Consumers If

advertising been terrific to program investing -- the brands see we're are During the and launched innovations to this quarter with this and innovations promotion continuing more and time, strong that's we've benefits the in all really in new a we half. a start, launched those of sales we've back entire through off coming of innovation

brands So height really a than in pandemic. the the when our at think are, of about they are been were and I position we pre-pandemic even where better

ability pricing. so in we take And confident to feel our

that watching are the have inflation We consumers. closely on very will impacts

unknowns of if pretty look at lot consumers, But times stress in a there's that. economic our fare essentials that to categories you we've to performed that household expect would tend back for we in think the categories, during well, fare we and how continue. of we're I fact well, given

I The note in category. would in other thing taken with the are is seeing we've generally we pricing that what line

and they that So pre-pandemic as were is we forward. we well, and moving be help pre-pricing, as gaps us to private about will move also label price and our what expect

feel position these going to Again, But through in and line. good watch as go our these increases. as price execute through price brands increases we this I can and of momentum strength we're So a continue we're consumers we our carefully on period. given to our think ability pass the I top to as confident

Operator

Jason the Our English next question Goldman line of with Sachs. comes from

Jason English

The Is Are have quick you sort like couple as fiscal going to bps 'XX? in Or price come get margin a to out from questions. fourth XXX are there that full the going price? we price, to in contribution gross increases north quarter? fourth all the more to of of reflect the little quarter. of A

Kevin Jacobsen

comment pricing and in on on fiscal won't 'XX. pricing, year I Jason,

about talk year. this plans our just me Let

work said, I We've implemented do. as some to XX%. As got more we we've --

Some of in place QX, that will quarter, have go in some into effect QX. this we that go pricing actions additional but

going as And XXX would get into year said, 'XX, And not those be the remain see north full bps you quarter so to we so as have pricing we're from the going because suggest, fiscal in impact full you'll I evaluate the QX open some would then of fourth to won't build. value to that which actions, we're of continue continue to the want see based to we think certainly year. if too get to we'll pricing. that, what's then to on I'd make 'XX to out We cost more We it's that's pricing, call. make say how recover necessary, if inflation environment. this that to fiscal required we'll margin. But prepared play early something take going through decisions is And as that's we consider. stand on

Jason English

on words, seen But than private coming that it of Understood. label. other growth experiencing. suffering your from And more now business price from recovery some number losses, gaps It's to categories. you're obviously other the or see be that subdued your we've encouraging of coming and In were a the price a competitors Linda, most of much pre-COVID, market in down. on some branded going rate there were whether lines share it's it's

your your share is value is proposition improving, getting market So and better.

it's mentioned a trash great You bag, example.

a You in And your here can and of is from permanent share structure? happened margin market coming bit How you think see in your part therefore, rebase of what's architecture permanent much that? it. of do rebasing is a pricing

Linda Rendle

in to and will is and in to implementation return our categories pre-COVID attributed is change we're But plans true the than taking hold. have definitely pluses in levels, majority settles as going what's the although over brand. the merch, on price the depending There's some isn't pricing pricing be driving cetera. The think aggregate what in distribution really true coming I timing. the execution. innovation as gaps gaps, Jason, increases, what categories. But we of well as minuses not terms in our is seeing seeing lower strong seen We're that good strengths months a data what there's our variability material in out in price et to be

price price of look seeing out we the but going over the within to by forward. play as that versus our driver Again, our months, control gaps majority driven moving of few gaps, performance at is do that we drivers, a next we're share are the not factors be this So et expect cetera. to

were is. be them they for expect about to what We pre-COVID. intent That's not what our

to is intent Our through innovation. win

spending sales and is in intent building our brand continued and win and on to investing promotion Our categories. through advertising

Operator

question Peter from next Grom line the Our UBS. of of is

Peter Grom

question it bigger back purchase investors you you flex in by guidance that half negative in in I this you've should or on is that in I it on guess how revisions? we margin embedded -- on a us gives of exited feel gross my of XXs comfort And the QX And the up do terms I comfort improvement following of then just enough just you because XQ can give in like phasing terms low So really return year. up a the I quite this year, much to is of guess margin. commentary improvement was terms basis as you maybe in But then sequential the and mentioned Kevin, QX. previously, X,XXX help is directionally bit. know points few down a think in the

So of the just expecting like that the any we now around exit should as we rate thought improvement year. be

Kevin Jacobsen

Yes. Thanks, Peter.

operating whether that we the our good control, me we're your doing the also the areas this recognize about cost volatile. about outlook -- an have for balanced work feel a I But think talk on very efforts we that's pricing plan. Let or directly environment year. much question innovation. I was Overall, is in are in actions, we more savings our I

exactly the knowing we outlook provided play inflation appropriate. how is demand, not so think will I And consumer out,

our normally of time year. also this are You'll a that bit wider outlook ranges provide see might than we

areas of that's control. volatility in given we think appropriate don't also level of We the directly some those

I anticipated at on previously, expect like in in So a as we Right provide outlook overall, level then year that progression on QX through building the look different variability inflation, had looking year, we number mid-XXs, across we QX. high in balanced would year as the into starting drivers. increased phasing, of relates the to allows said, And the fiscal land I I good some to And low finish we'll that 'XX. for then we'd likely for be the in probably XXs, we're expect, we then as XXs. we it a now, would move I the build in where QX. with the feel of and year margins

Operator

D.A. Our next the line Bolton-Weiser from Davidson. question with of is Linda

Linda Bolton-Weiser

I your that? per that's not you question business, EPA actually EPA experiencing they experienced experience issues expect business? wondering have a have redo of on some do you gross was you the Brita margin. your Helen Troy to any labeling had regulation Or So in changes. as in could your competitor, shipments halt I just so with labeling to Brita that Are

Linda Rendle

to and their about needs. And filtered meet turned impact Brita I sustainability. it's important. spending really opportunity more the have an twofold. people pandemic going worried terrific And are thinking to success have a think through in do their I story. planet people just point a more And Brita and now think take on we that has water to One, no, Linda, drinking second, issue. to I'll because their it's health water not this been right great they're as wellness, maybe about time over is what's on

the it's We've years. growth. our So that quarter. grown strong Brita it's very at X the double-digit household if you penetration, And business been highest has in a has look last X very, been share in points

this about really So future good of business. feel the

those moving we of to innovation But one plan Our pipeline any don't issues and back EPA an that we to have from it's us perspective. is forward. strong, accelerate continue holding

Operator

concludes back I session. Ms. program now like This you. the to Rendle, question-and-answer to will turn the

Linda Rendle

look Great. speaking Thank And next then, We you to call please well. Thanks, on May. in you. to stay our everyone. until forward again

Operator

conference And this call. conclude does today's

may You now disconnect.

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