The Clorox Company (CLX) 2 May 232023 Q3 Earnings call transcript

Company Profile

Participants

Lisah Burhan	VP, IR
Linda Rendle	CEO
Kevin Jacobsen	CFO
Andrea Teixeira	JPMorgan
Peter Grom	UBS
Anna Lizzul	Bank of America
Dara Mohsenian	Morgan Stanley
Filippo Falorni	Citi
Lauren Lieberman	Barclays
Olivia Tong	Raymond James
Christopher Carey	Wells Fargo
Javier Escalante	Evercore ISI
Stephen Powers	Deutsche Bank
Jason English	Goldman Sachs
Kevin Grundy	Jefferies

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to the Clorox Company Third Quarter Fiscal Year 2023 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. At the conclusion of our prepared remarks, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded.

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

Lisah Burhan

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

take On and Linda In moment, a Rendle, of which our me just earnings release today a and review available then remarks, chance with opening your everyone few Jacobson, both prepared a hope CFO. questions. the Kevin share I on our Linda had to are we'll will and our comments, call CEO; has are our website.

During management's this make may actual forward-looking statements, XXXX outlook. including year call, we that from about These current differ outcomes. fiscal statements may or are results expectations

could may filed refer to statements identify forward-looking the affect addition, non-GAAP financial statements, that SEC. which refer which have such to we with forward-looking been the measures. Please section, In factors certain various

a please addition, the our financial Relations of our refer release information measures directly in comparable section for non-GAAP of to supplemental of GAAP Investor schedule earnings In the measures. to financial reconciliation section non-GAAP most the financial and the website

Now over Linda. to it I'll turn

Linda Rendle

joining segments, Hello, and adjusted operating We with and EPS sales environment, and for all a the us. and expansion you thank in cost delivered strong challenging in growth organic gross third quarter margin everyone, four results made growth. double-digit

reflects performance, strong outlook. brands the our relevance and our solid the strength IGNITE the our of Based and raising our on performance execution Our team, fiscal portfolio, of by value resilience of superior our we're strategy. year our

and our consecutive margin by decade margin sales savings. pricing above line cost Net high gross quarter, During grew delivered improvement while through great second target maintaining long-term justified we the top of supported and building made progress cost quarter our growth. we

company. further digital and resilient investing progress our a We our operating innovation and our in pipeline, also stronger, streamlined model more transformation while create advancing priorities, to brands IGNITE made on

top can balance drive While progress on and controlling we're we focused both to-date, line line growth. our relentlessly and what to encouraged by bottom appropriately we're

Looking pockets the and ongoing to operating necessary. expect strong. to very headwinds remain for moderation recent watching macro in input potential ahead, under and of pressure overall of come and be we're greater the given are we as uncertainty, inflationary volatile reactions we consumer this light to to closely environment them costs, In adapt challenging. prepared Despite continue plans

continue Regardless, trusted behind. I we profitable we time. actions essential confident environment us consistent over deliver which remain this that to have categories, to well growth and brands position navigate our to invest

and Kevin that, With I take questions. your will

Operator

And Andrea Instructions] ahead. will Teixeira. from go your question Thank first come you. Please [Operator

Andrea Teixeira

afternoon, you, operator everyone. Thank good and

So my elasticities question had refers a not and quarter in and better. more kind and team Kevin of that anticipated. continue. going that's assuming not coming in to course, Linda, you than can lapping came the on But of the better you're And highlighted

putting the you can VMS, area Kingsford regarding an one -- a work are talk you potentially asset other bit you'd that be You Any a So out if rightsizing you about being clarification, sale opportunity? to as just price you gaps. little that? the would just it? And can called think or that for out have

Kevin Jacobsen

the sales points Kevin. in is And organic if there delivered Thank anticipated. is you But with this those. we And I'm stronger saw, about we you QX. may than the can I question. growth to expectations delivered about were talk our Andrea, have start points for and you in set those sales for as in is quarter, Andrea, seen organic nature, one-time X happy our X Maybe that aside, remarks, X% which growth. prepared I we about third

year can about X% growth. projecting outlook, QX, to organic outlook our back If into you our X% at We're for full it. you and look

it like of end high look very in did I the would say at range, QX. that would it

expect is strong consumption. business continued well. We performing The

I is think our it business. Kingsford have you one watch the out and mentioned we

competition same That shares Kingsford in seen on business in activity an businesses third level and had result, remarks, the performance our saw was a to the degree price and and we one in we're you one may have in While was seeing of move moved competitive as that priced increased a strong quarter. the third our prepared the we're we we decline seen of widen came very December seeing we've we quarter, not expectations. pricing. in our And gaps below

of the we're increasing the business they've something team happened watching, and that But in mind they've Kingsford impact quarter. their QX, an support certainly do outsized the with for business fourth our gone back and quarter. Now our Andrea, our this we're that adjusted it's in XX% in so in We total about quarter. in fourth you has the may sales on fourth know plans

a we're eye So keeping close on. it's clearly something

at the the QX, And around be fourth we have Memorial particularly end think below we'd holidays, good be watching a consistent the adjusted expectations, that think range it we but which the X end if think early reason tell in pretty in to if We I it's have closely, that a quarter. for I good what the QX. in how successful that plans July that or a out. little plays our learned range, place we is of to delivers and towards would lower season, top key we're of But we'll Day reflect be why we've

Linda Rendle

take I'll VMS. Andrea,

perspective, And from portfolio. aware, a right VMS is a we're face So It's to and out you're in that now highlighted relates role the X% as issues our small about category market has continued sales of performance of coming to business. the we've of what portion all we've challenging our of dynamics it business that on reassessed seeing plays it course, as And portfolio. then, COVID.

think potential seeing we how we're businesses at it's And potential Kevin businesses. to team higher laser now resource on on right the as the have allocate as our to well forward. growth our resources I strong therefore, in core think focused bigger majority focus be results As narrow a step said, And will to we across what includes, and focus resources businesses profitability moving the continuing growth moving and of That the brands. that's highlighted, like VMS to look allocation making that on business.

role business that's And right moving the for forward. we the think

that, VMS as to relates driving that's with right doing what it We'll we moving work triggered we're we Given now, plans always the the but our like today. we we're that. own non-cash have it focused impairment, portfolio, Board. business But in the more that And our continue do profitability right as on feel forward. to

Andrea Teixeira

dynamics potentially squeeze I some wipes business. can call Any how time seems as enough And the It if -- on wasn't given can, private shelf That's regaining taking it that very that if helpful. share of that lost doing happened that anything could on, that the was the question If the changes the call seems the anything promotions label I in quarter? in there any space out normalized. at capacity, you did didn't or a in you of one normalize? timing more have has in of out and club

Linda Rendle

then COVID QX, wipes. period with perspective the to was by that. one we gone over COVID. regained that wipes, impacted and we're begin over a for of we've has pleased wipes. more few in significant share the We've been we've on been as get But quarter-after-quarter last But performance Omicron most business variants on We've Certainly, noted, with definitely we bumpy years were And through or to well from the months lapping a where the wipes continually now business it a for Yeah. XX the months as business. last very distribution. grown the XX normalized

season and continue see Our with and a that's we supply in we our merchandising than they perspective. that strong that are times stronger to Even now. supply than and cold lower saw are plans, pre-pandemic able from they of to while we to was been ability consumer turn business up, reaction us And have to and behind flu. flu were cold moved a fully consumers

So the that we feel of about good future business.

support launched to our share shares, and position. fact thought what they as that innovation with certainly tertiary return you to continue continue did pipeline. if And strong share have would a that leadership look the We grow good the to brands all we at happen we

Andrea Teixeira

Very I’ll on. it helpful. pass Thank you.

Operator

UBS. question next Peter come will from with Grom Your

Peter Grom

Thanks, good everyone. afternoon, operator and

one, just two maybe So at longer one and more looking on term. questions term near gross margin. Maybe

you've So quite year is nice sequential some progress But strong. a in step this been implies XX%, almost XQ. making XQ which guidance down in the of

at If go that there's I of look pretty and it's margin down. back you So see rare I progression, gross that sequential pre-pandemic, noise. step a know lot

So just may color driving be on that? any what

Kevin Jacobsen

QX as not delivered there's highlighted. performance, stepping the question on for mentioned, margin. point Thanks you from look at at as I one-time X our the Yeah. QX. Peter. a look of in we If items it down I Hi, benefit and XX.X%, about we would gross

aside, that an set XX%. of I if under it's a we're So little ongoing sort basis,

If at outlook at the full year, to we're our looking you XX.X% now for look raised XX%.

get back to can XX%. You about and we the to now suggest quarter into XX% fourth

very in benefit line had. with So I the I would much the we in delivered onetime fourth aside our if third say quarter we set is just what quarter,

the into on good fourth strong delivered the And we expect we so continue quarter performance to quarter. this

Peter Grom

exit profitability. time I And But to provide XQ then line seem looking broader approaching the That's at hesitant inflation. tunnel helpful. rate, of does term, be anticipated. like might the a being out longer around trends the guess returning around the recognize looking maybe the to just -- XQ there's super than end pre-pandemic at I performance, just goalpost light of the It faster

some in on you're to recovery? love now, margin just is seeing you cards as the year? perspective to right pre-pandemic on out the based whether next And look would I So returning whether what levels

Kevin Jacobsen

I'm gross that's I be intend getting the plans. We're year process to still the to to underway, relates in Lynn that's pre-pandemic in outlook about and well for committed it to to back get levels 'XX. going work our developing as Peter, there. providing fiscal Yeah. and cautious of margin, remain we

say it been you high on should year. the this But you we'll to then margins going So bit focused them. early continue at level, continue growth. will rebuilding to We're We very plans, And be to to fully it's make our expect line top driving priorities. and strategic see to would priorities advance expanding progress, expect when drive for much a gross a that. we've same too I our continue

margin, exactly challenge with know get interest a in lot is. when there's I to pre-pandemic we levels gross the of The

our we've I on elements, and we control, time the inflation. But supply those feel to or would say very those primarily as the that reality accelerate said is we about I plays the next progress we're think recovery, a impact disruptions either or from are expectations. months. about And the months delay on to track don't On good exceeding our inflationary making really control, chain talked there's will a XX over either I in the out real depending or initiatives lot component that the I areas how past, drivers. XX

I think now right And got frankly particularly don't a good predict that. crystal anyone's ball to

We're going 'XX. an control. And expect progress. on we'll fiscal those to think so continue making focus the little 'XX. continue progress for be where can think really make on things to a in good end we're it's year to But exact we call to of we that premature by I us I

Peter Grom

it. it pass so Got Thanks I’ll much. on.

Kevin Jacobsen

Peter. Thanks, Yeah.

Operator

from Lizzul Anna America. next of with will come Your Bank question

Anna Lizzul

are for a you directionally costs want mean margins drag still to in better Hi. but that a the of I direction less on on very continue follow moving up. Understanding much and I Thank. at and you acknowledging gross also, here. do did see keep that theme headwind, then benefit a And question. a just you margins. QX? commodity stabilizing costs To mix the benefit into assortment point fiscal expect bigger this do commodity QX, fiscal benefit that see QX? in on you would largely a was margins a on the bigger fiscal in Thank

Kevin Jacobsen

Yeah. for question. Thanks, Anna the

relates to an commodity it environment. As it is inflationary still inflation,

of moderating had inflation; perspective, points. is XXX XXX it basis level QX, Now But commodity to QX, points of inflation. a at in we that in give you basis

environment. inflationary we've seen so but some an moderation, still And

As rebuy that seeing resin a one product deflation. is we we've said, are

a year the being of products most We've part offset than we other good that's for more purchase. by of that the seen but

other and about called had inflation, And in looks of like We We commodities at half right supply beginning total from from million half areas that expect and $XXX year of chain inflation. the still of so it the inflationary. million continues call. still the that to be about about $XXX

And year to an exit so operating in still I it this expect environment commodities. inflationary to relates as

that's Now transportation to in prices as manufacturing in expectations we our to then fourth on be And to But to at has logistics, a one we'll stabilized in logistics, the say see basis starting we come keep there's it start see year-over-year, relates and when quarter. lower. third there. talk least are in down It on area I'd mind, year-over-year really the pieces quarter, the expectations three transportation. our

seeing transportation, surcharge trucks which as inflation is diesel and to elements. we're think warehousing for also available. But call we less I that in two more There's to continue what demand see deflationary market goods moving and we our those includes other a and

So logistics at for continue least headwind, logistics, be see to that we're of a the quarter. transportation piece fourth but decline, expectation that's to our starting

Anna Lizzul

are QX to a very of Thanks to on the mix and benefit QX? much. And you from margins, fiscal expecting part Okay. fiscal then just assortment see better

Kevin Jacobsen

is and we're mix large multipacks. you business I our assortment of because and mean bigly lapping to a particularly QX Omicron, cleaning is benefit bit business, wipes wipes don't. down when our get I little the

And to the in quarter of cleaning that to them down more in QX. I that get expect normalized portfolio, our not was that see continue mix a back a I benefit so would

Anna Lizzul

very Thanks Great. much.

Kevin Jacobsen

Anna. Thanks,

Operator

will Mohsenian Your next Stanley. come from with question Morgan Dara

Dara Mohsenian

guys. Hey, afternoon. Good

on things understood seems logistics But full mentioned, underlying some in of pressure QX I re-ask side. the high gross in in I similar less point answer you the in question guidance of relative some a I couple adjusted. of next terms of of wanted end margin of the and an least in improvement fairly costs sequential QX a getting to QX are theory, a to see fiscal versus the guess on Peter's are at better did And lot levels as quarter. terms -- fiscal year things commodity basis, QX. you of there So QX

that wanted fiscal QX, sequential on you to points at a of improvement, did just originally what fiscal in fiscal where look So at Thanks. can also, continue in given just you individual based underlying of we then the just an why saw QX? than better highlight, buckets, see on in versus basis, come as underlying understand And performance the versus the expected we path pressure wouldn't you QX? fiscal QX to you expected looking

Kevin Jacobsen

Dara. Thanks, Yeah. Sure.

to add relates right. I'd As one QX, would you're the list it your say exactly I to and item

We that believe expect from as cost pricing. be The is on will move QX pricing. the We counterbalance some of we in from benefit moderation inputs QX to QX. strongest

lapping As increases, two we two we move the took. into QX, first we're now price rounds

would I benefit we'll so less in offset expect by And environment. pricing from that essentially see QX, more moderating cost

collectively, consistent a to which a fairly get that inflation benefit back less So XX, less we offsetting. seeing about pricing QX, little is from with and XX, little

is would you it then about we mid-teens the probably elasticities into And down was volume what went the relates in deleveraging. quarter down benefit volumes as based we XX%. our expecting that biggest volume to QX, expected see above as And on We range. the saw,

relative it as also to So well to on sales EPS. line a that strong as P&L. entire through expectations, drove our contributed that overdelivered stronger We margin really gross top the performance but

really what mentioned the is versus in about full we cost cost expectations. was for that for I line expected. $XXX true the inflation of year. That generally inflation earlier, our we biggest still million and was change QX Peter, as with So expect And the

Dara Mohsenian

spending? elsewhere? into peak anything can if promotional helpful. as about Thanks. you to heading That's obviously the talked the think seeing portfolio elsewhere on on comfortable gaps, with are particularly are you plans And Are adjust price Kingsford mainly business, you you're that discuss price plans or Great. the other managing Kingsford, across then just you about there here? And gaps season worrisome

Linda Rendle

with deeper on then little portfolio start a get I'll and Sure. Kingsford. the

some pricing generally some ago gap we the we're on And went perspective, plans issues. those, we've price of as months seen And had So few closing expected. a took where adjusted we've price from businesses our and of gaps. pockets a frankly, still of the we've

Kingsford, plan, them follow is as have QX. are we as already For we show And right gaps that to market that to the we in have up and in expected our now out the are be. we beginning biggest competition making not those that's price that adjustments most did part, in price full. where in increase one to line to gap you call our

biggest of course, space the being given Part We're also right support go trade the on we up, would the of things consumer opportunities baskets market right under the basket but on the price overall prices plans that be related. of is focused merchandising to drilling have for pressure ensuring with that rest points, retailers, which the in we're the the protein the and of with grill. one is

merchandising see enhanced we into to So head we're QX. out play on supporting those as and expect plans, focused we'll that

marketplace as that value do ahead we'll on ourselves select get that That continue to we of ensure being the continue have is promotion price see that a that portfolio the But brands maintain and perspective. are cautious will to and we I other consumers laser-focused I'd has so much said, ready gaps. have balance brand do and incredibly And into in our and in that right we we any working, manage as from fluctuate as areas to to though, plans noise price think prices where we're not have say adjust, pockets back to been we value of that gap that QX there's with starts gaps. we what come for and issues on our but and trade beyond superior being we

Dara Mohsenian

Thanks. Great. That's helpful.

Operator

question will Citi. Falorni next Your with come from Filippo

Filippo Falorni

guys. pricing. Hey. Question on Good afternoon,

to in obviously the last going from increases cycle you're year. some mentioned of price QX, You

still December through. flowing the have You price increase

you're from capture. at price or towards the price then magnitude talked the longer sequential in increases more you've about for of give back shifting list So us pricing sense change that And term, past can QX? you thinking a in

give So a initiatives 'XX those can we Thank fiscal the look and as from of potential you us to beyond? contribution sense you.

Kevin Jacobsen

Hi, Sure. Filippo.

to give for buy saw watermark forecast really a the high now is that QX the start more that the we fourth somewhere expect generally say you'll quarter, in as see lapping QX, but benefit in I'd to And price should then to area. it year. range, As that price second that relates in QX pull we range, in back. line margin this I increase, a start won't that you to QX

And we that to in round next out over quarters we'll we to it down. last for lap the fully So down time. see until of play to pricing value start that should in continue that three the continue step will December, way took step

then question not this read do list in of on in our scale our I may your fiscal And have price large prepared for we think changes, the additional any year. remarks, balance you have pricing plans

will we'll And evaluate continue architecture to for back our changes. we're on work developing We (ph) then plans 'XX. place

details So much our in about a too and you we'll would to conversation. that that we'll about come back and have be more how we would little to plans share pricing August execute is how early pricing

maybe still volume in pricing. that see you'll mix than the evolve quarters back dependent think is time. another get price this say to very and driven term normalized this mode we all focus more to volume What price an to expect we driven But level it's until and top though, grow continue us I much continue much three we I how architecture and innovation, be I inflationary cycle of to of more I so driven trade-up where we'll back more would get and being through as to the mix lap more and we by longer would margins, which on for I get is, that line, consumer price appropriate think back we're some level expect a over

Filippo Falorni

you. Great. That’s helpful. Thank

Operator

Lieberman Barclays Our from Capital. next question Lauren will come with

Lauren Lieberman

to please you readily prepared basis. been Great. how Thanks. you to dollar and answer. after Hi, that that's have about In a curious follow-up share I important much the Linda’s, of remarks, was something then, talked related think just But a it's you, that's volume with share and a And on everybody. on? market Linda, performance focus about, was you’ve or the guys I kind whether -- hear not I apparent you metric I

Linda Rendle

Lauren. Sure,

our growth overall, taken share we're That nine share goal that on been in being share pleased and said, So to share we we in have markets that, businesses grow given shares satisfied but five grew level that aggregate, are our in into grow happy we and up. were held the I've to share to and really continue the we've our pricing of around that of about transparent world. zone, is of see maintain not the to course, that

in were And share of we share, dollar are something looking course, pricing taken hold pretty and were that about as and was volume if recall, fully had we too. talking that growing you steadily categories, at, earlier, we our

of Lauren, So we're both balancing them.

and share as focus is primary on. value we superior overall is category are as unit we consumers We decisions, dollar how see to et volume cetera. think are on and in the dollar our focus well again, the to want making convey about that Our share But consumers that. think how a share metric representative usually thinking watching better about that we and value of

good are just that being in in larger, adjustments with but to The have that in share seeing volume have mainly gaps. some price the some and do with in time exceptions, line with moved places line notably, most Kingsford is categories you're normalizing the because us of news

it, five dollar but to not yet. is to to nine So happy in and done work is growing see Happy are we metric share. the be watch primary we where businesses, certainly

Lauren Lieberman

to margin. then And the gross thinking and about briefly deleverage margin operating a this it but Kevin it's better expected, was mentioned and still quarter Great. Okay. it was than had I about headwind so gross when

you be stable We Because that is such how versus what newer we business about of performance albeit volumes pre-pandemic volumes, mindful at terms of period? growth? relative the stand geared that is in thinking be really volume levels. volume where the to about pricing margins Difficulty] think often it lower level, if we [Technical should about talking absolute basis should (ph), all to As pre-pandemic forward, think restoring where we're gross on an give

Kevin Jacobsen

volume. few a say on I'd Lauren, things

chose I and moderated continues know, allowed those as down as we our overbuild to be agreements left that lot thing so did us to, we unused that to contract not mean we you capacity with that use internally. manufacturers one think facilities is significant to spike, is, a set were benefit of able not volume

And so I think that's us. benefited

think given I mix to think this we we fiscal declines depending to to mentioned, pricing forward goes the I well but on moderate continue as we've taken, year as -- Filippo, pricing through volume 'XX, I move as in now, where I cycle the price and to would moderate as pricing. expect

further think think quarters so of so, steady as will we and probably we greater of volume. balance get I state year more out and a short pricing I And a fiscal price/mix said, that out extent I top driving think into taken, to a more any future 'XX But the look that's volume. level our as seeing we've got so I when three line we're of being or to

what these And is building not ahead do capacity manufacturing be line with to our try we we're getting about ensuring plans ourselves. and to of in be thoughtful

so got capacity try end don't we up to And a supply make the with once facilities. the we've to state, much team too position work doing sure get we've chain we our steady in our in where to that's been

plans. certainly, something But keeping I in we adjust but a it's that's think to on. pretty something we're close evaluate continue eye shape, we're and our good to continue

Lauren Lieberman

digital program. set from this the the was excluded no more question. the that overall higher. quarter earnings then then higher Great. are year, are Okay. the change on expenses so the just they operating final to in this in expenses quickly, in And But moving but and model changes things outlook just expenses, I

you're now like that. or something so think excluding, I it's an $X.XX additional And

an So estimated I'd about there could program just we it be little change? gone what's explain bit of incremental? cost the savings, incremental Is has that just curious curious up? the just the if a Is

Kevin Jacobsen

question. Yea. Sure. Thanks for the

on transformation much track. As program it our is to relates very that digital

program, a we expectation. five no year and As spend you change it's plan to in know, million, $XXX our

is between equates million, We about program. of the $XXX are bit $X.XX. out, year seeing a five-year $XX about $XX CapEx we expecting to of a that We of $XX year million shifting the little the This million and started of million years. spend OpEx, about second

shift of We bit expected have million, of so years. spend of and that's as we've total little million in timing overall $XXX changing our now $XX just $X.XX raised And year a to million little mentioned, a from forward We're to raised expectation that's a into not about the result spending fiscal million. pulling $XXX between that about $XXX you our bit Lauren. 'XX, that

Lauren Lieberman

so Okay. much. Thank you

Sorry for all the questions.

Kevin Jacobsen

Thanks, Lauren.

Operator

next our And question James from Financial. Raymond will come Olivia with Tong

Olivia Tong

Thanks. Great. substantially advertising on question with pretty and especially is reinvestment on first My morning. levels, Good up in QX. view A&P your

we nice So certainly some gross saw acceleration following the margin improvement.

do that. few then This you margin follow-up in a continues of ahead where goes? And basis that So just think on your just years. the year-over-year increase biggest wondering in if quite is advertising to on your a forward on margin expectations, gross recover views going advertising a

of the you're the ROI your where were? what incremental on versus to going spend view level So can you talk was about same on expectations generate ability that the and spend and

Linda Rendle

year, continue to for about a that spending this right maintain XX% which doing we level and on continues how why done to Olivia. track brands. think We it's important to Sure, over Advertising sales of support is we've part what to be superior incredibly the in be our of we'll believe everything it. an year. continue value about we fundamentally the is And of

other given was higher we QX than launch merchandising. and noted, innovation you that's As significantly that quarters and timing of

increase having was to spend with this right money And good coincides manage the our but And which time quarter-to-quarter, is our again, to brands. market, the we in timing. this don't fourth support price

afraid the We forward. year. about what that do that the or track and right not we're XX% we XX%, at moving require. continue depending to about to right but to move adjust we're spending, that on that look businesses on for the again, is that adjust believe And But now,

why reason our improving marketing, continue has been fact at if strongly ROI creation given our we ROI value we our the feel you get And that on on from contributes look brands. that been that, terrific our And it the as investment that can know, another has is personalization. driving you are and to to we focus,

And allows wanted them consumers getting to XXX know them. allows in million know to the personalize to it consumers we to know does to XXX better it U.S. and you to So get what is you million

the that. and effectiveness driving benefit by doing we've added had And of efficiency

you more the in and across had of spending message So U.S. right was all you we're people, was across our organic our the getting heavily where the that with advertising at and we that, pretty right time the the across strength money saw we remarks four. said And And look across prepared the lots opportunities. effectively. if widespread in right all growth businesses. sales our good concentrated more segments

year head hear the create can we think to steadfast. what And into we again, you value as as we remains fiscal right advertising level know we'll that be, but 'XX, of commitment way the spending let will you that our

Olivia Tong

a on then helpful. That's And just I it. Kingsford. specific questions few have Got

you you How pricing? where lot If QX obviously, then pricing other was to Kingsford driven (ph) Kingsford margins in the much relative just saw of you pricing first where could this stand a quarter. competition by remind And acceleration of that brands that us versus company follow in saw average.

Kevin Jacobsen

sorry, a Olivia, And question? to company. I'll but gross provide you was don't that second it's at individual brand level, can tracking. contributor I'm sure we margin profitable answer margin not I'm repeat on nice your the and gross

Olivia Tong

where did acceleration relative mind in how a see company pricing? other versus giving by sense QX saw you of follow driven that much Sure. Kingsford average brands Kingsford us in then your Would then? that just And the of you competition pricing was to also, you terms

Kevin Jacobsen

Yeah.

message, I'll On don't business share we the other us quite than it’s happy margin, direct give you nice just and so in sales we get for we're increased Kingsford. a when

how would your QX, As I in pricing. I is But as fully would usually it to I not contributed Kingsford not say pricing, relates overall, sure about to your say I'm large Kingsford question. understand question

company. the has sales really But As Kingsford. earlier, on that's a our in about early in so of our impact very outsized the fourth we mentioned I on QX, business, XX% do Kingsford it season for quarter

our of meaningful And impact on terms less so the it it's has performance. in

Olivia Tong

so Got it. Thanks much.

Operator

will come with Your Fargo. Carey Chris next Wells question from

Chris Carey

everyone. Hi,

Linda Rendle

Chris. Hi,

Chris Carey

'XX, is then investment I on this know investment, the sequential into And XX% just very, the to if underlying So I'm in this are great. model. well sounds in will you question right? this you're questions margin ask 'XX, guess And is It QX. earnings spend. on up growth spending, questions gross is around momentum but margins which think on year gross these But don't an enormous lot I fiscal at of I it continues going you a to step certainly, you're the flow the and these taken amount momentum and earnings of comment imply the right, on gross of the not digesting very going I sales where be margin, S&A? to continue just right looking significant was like call fiscal be that want going you're want number, on you to would a when reality to philosophy through spending because to materially of trajectory

over years? percentage If medium that, connected term? And as underinvested look still that next to over areas four if the of I want to Thanks, And the you there's felt P&L an of that Are guess, target relevant the been there. normalization maybe over clearly types of just like six the to Rendle. XX% you're in that as opportunity the where not of now might there just in, Is a lean gross out near you margin the understand over line? this you quarters have help to of at areas have delivering you us on advertising? of SG&A couple a sales target estimate the next been if where

Linda Rendle

if Sure, Chris. and ask wants Kevin anything add I finish. I'll start then after to

those taking on and the things. we to rebuilding the both we're of volatile Just balance margins incredibly maintaining of a we growth talked and actions environment given ensuring back between pleased do with step And that accomplish. are to uncertain taking maybe strike the And can progress we've top what we we're to we and trying about them. that both line that all the in control want made

it if progress at making end our and any at top us at nice et kind you average look puts look over of then quarters, growth on three-year cetera., we're margin. algorithm our you If the growth, of

improvement. QX still how what to going I balance a give environment there. expected, QX. we really happy providing maintain growth we not to QX, to about think continue that 'XX and let the between than fiscal you We but is thinking the onetime the uncertainty perspective out 'XX Kevin top margins. in outlook, me just with highlighted to consumer why in multiyear outsized deleveraging to a line on we're margin nothing a and expect continue less that it's we remain it's high. margin We rebuild what's Obviously expect performance in we think year that going as want think from journey on And should

-- will the will to course, right become predict very what is environment that more impact hit And could corresponding that's like exactly will under very and to now we then, the pressure. if it likely be inflationary when what difficult of And they the look recession, consumer. a

fiscal And so need We We to continue what another to to want out taking 'XX. is that control controlling. good year quarter. or continue into we're this

we to to point capital 'XX innovation, make we we right line And need that at we And feel margins. that do. we're not growth then plans sure right to both the ensuring business. top the those hard our the have of to we against investments invest all if we'll want choices. to about support look we to, advertising, good continue to very support and which strongly in And to rebuilding making feel we your we're afraid And in believe make right business, supporting that which

we to adjustments We'll just specifics, that all and talk top to 'XX. to margin the the is making then know at posture and into right August that course, have necessary of maintaining in But going pace. the we're means committed more what that line we're you growth, about committed again for to do that

Chris Carey

contribute quick Okay. get that And understood QX. QX. had. I'm fair on was, a what in I the to way very I pricing follow-up exactly The the for question. atypically in just question sure back just that's That's such, not Thanks the but as Kingsford on -- was Olivia's did you it that. meant, one

so I it as So Thanks figured you much. ask well.

Kevin Jacobsen

pricing, Yes. I Chris, our across in pretty took portfolio broadly on as think you we may recall, December. pricing

one of Kingsford of repriced. brands a So was number

I is small fairly And it have it had an Kingsford not and impact because impact. low so outsized as said, season, did

see and December. any pricing and I again, a it took change QX So brand of in pricing relates to portion the contributed Kingsford expect as just to priced meaningful we portfolio in don't overall specifically one that because what we is good our to pricing

Chris Carey

Thanks so Okay. much.

Kevin Jacobsen

Yeah. Thanks, Chris.

Operator

Evercore come will next question Escalante Javier Your with from ISI.

Javier Escalante

Hi. tell you have Good SG&A making investment fiscal as and to question what us consensus going on cost excluded $X.XX. this are that accomplished 'XX? has reasonable been is My with to what you everyone. first, do afternoon, digital if It's of into could, operationally, financially you recurring think is

Linda Rendle

specifics want the we're how program if Kevin our for year it reminder forward. Hi, how there's the spend of entails Javier. moving just of with what thinking provide, it. specifics digital about And a to about thinking this we're talk we can then and and I'll start any about

but as simpler. investing, the of to is really the we're be Clorox work putting and and technologies, around course, million you right $XXX faster transform everyone processes in digitally. including does a And changing this, know, that the is So at company our it to new ERP,

well make our is costs. have innovation place we on as insights the put decisions track. This of both better and line efficiencies to access top as as our this data ability chain supply And capabilities, consumer investment speed and we look as reduce in momentum to to decision-making across supporting we see drive that

year-to-year. highlighted continues second begin differences track year I to be but think against the the in see with. implementing on to We're program, that We'll the team of that. Kevin

this, over that. track high-return on for track very project to this project that strategy to and said upfront, we that our you're XXXX. us. I the the benefit to looked the works continue but you Kevin the getting putting all is we've a long and track on how most and term. we by return, of place And because at be and operates. get company And return those changing continue and to is, majority start What deliver the capabilities IGNITE as that's investment then technologies you we're project good of to be When on for we ensure in exit in is and This the evaluated we of entire or value

and to bit As as of implement up also of talked it some course, we our -- release made. region track and calendar another can way, our are we macroeconomic coming in from being year about an to environment changes that first with in -- ERP or way. that we whatever That that really we geopolitical fast, this But well resiliency we've comes we a have faster. our track. weather else want comes fact, ahead strength operating of some the implement about to be improvements year. that about company savings And the and able technology our model specifics, we to a develop we in are combination or to cost were things type that that pandemic of of and to two the paired other those is as those as perspective this change cost whatever simple more on effective is little throws the on

Javier Escalante

recurring clarify, there $X.XX just cost in are to So is that spending in associated the fiscal digital you with making no 'XX?

Kevin Jacobsen

Javier. Hi, Sure.

systems place. it the will is the to spending, the to As cost, the new these investment relates in million happen put is what $XXX

spend. less the through end year, through be think little halfway that we'll of I than a this

with million, $XXX program will over somewhere complete continue it the then this investment And $XXX in place. as So we that years. million. one-time will the the next be around That's three

legacy system in $XXX our get place. are that technology be costs maintenance pay. all is when systems But investment there put which have costs, now to ongoing will Now we'll there in we that those ongoing in the cloud-based continue get it a maintenance of for this to the million the cost off, shut

Javier Escalante

volume a versus it growth Clorox decline on to of if products when give changing can helpful. basis we And your can category Omicron if topics, comment can you so household Thank comes volume now much. you you That's behind category assessment XX% versus very penetration, us? underlying that is And XXXX? your that it compare very if you growth

Linda Rendle

As spoke about is that with we we've pricing, category of that category absolutely to and case. the our in generally you the fact and would expected expect, down, what elasticities line were the given pricing be volumes

to sales, show at categories. our so which at in if strength dollar you the consumer look digits consumption, If the and categories, continues you our of in look high-single resilience

Given react closely consumer continues they as we we to that really to the and pricing react We're Essentials, something to this macroeconomic continue to watching as the environment. in is compete expected.

time. categories good see very from about the expect low-single and and category feeling consumer time category category in we get Generally, that to we're over now right see to as a we to digit and return But in where volume response position over lap begin perspective pricing you our would that volumes pricing. growth place

required now. the nine out that in We impact also future months that are commodity certainly that. lap a happens perspective and see as plays have what of right we pricing then, not more would point at from that pricing. And any we'll course, to

as The thing down consumers it private say either as et cetera. not I pretty That's that would type about and to relates to making that pricing think only for label, choices it trade you volumes. other been steady. We're seeing relates of

of are earlier, As highlighted five We grew categories. aggregate, shares our in flat. in nine we

secure the that. continued categories, XX% We it's consumers. consumers us. from it's of of share a offer from is have to looks invest in we the portfolio there still deem it to We've that bit like by our is all seen coming simplifying private a that some not value brands other our and relates of and category, label increase coming in but It

over is we innovation to with And expect our invest expect continue retailers. bounce what we advertising category as and again, in growth plans volume time So the and we that back in categories. to in

Javier Escalante

the And do household have penetration you them? statistics,

Linda Rendle

something They're those about On still last as We're still clock spoke the see what a penetration they're stretch, a we is cleanings things people But for would that's in category decline in a that stretching are their portfolio. wallet to trash as to longer. we pricing. I and time phenomenon. about penetration category bag, extraordinary say, Clorox we doing results between fill quarter, is and And usually difference to homes, price and nine is time you high in no out XX expect when expect Yeah. their you time in we Sure. They're is see letting household more very in phenomenon. the is though, penetration we those make that. over declining seeing versus we rebuild volumes. What our Household of category would category, behaviors. penetration and brands sensitive It rebuild a not using take

Javier Escalante

That’s all Thank for me. you much. very Very helpful.

Linda Rendle

Thanks, Javier.

Operator

Bank. hear from Powers Deutsche Steve We'll with next

Stephen Robert

And looking household good longer just Last the it. about we discussion. pick Very obviously. lead over that to and rebuild were I in. you the to household it's talking that then penetration framing looking course XXXX think were a on thanks. wanted of quarter, was up term, I Actually, penetration

response, Kevin, volume you Just I to, stabilization in I it earlier volumes. of correctly, your growth, response question Lauren's emphasized heard on think, to if

course it? of impression. kind a -- don't over wanted just about the of but progression things emphasized the walk kind takeaway just you Maybe in make hairs, understand and course you're two marry splitting of the of you just think -- that to penetration 'XX, you. maybe just over the I implies it's know household I of but whereas wrong rebuilding together volume. I'm of Thank we're grounded want to it's tie thinking 'XX, sure so I those volume, how So away right if because I stabilization positive think

Kevin Jacobsen

Steve. Yeah, Thanks the for question.

that line versus assume volume And to X% X% pricing view As volumes the then given in our target get large-scale switching. have through other volumes, December, we in price on next would it top based with you're pricing I quarters, any don't the start three that growth, plan, we we for and that [indiscernible] past think balances expect more pricing the driving I as that to and just think we line we to mix relates top as price mix. took decline grow

we’re and I a more more then consumers to before starts volume over I think price but traditional to term. of we of driven the it model driven X% a then with to reverses and long to that get and . number of quarters up, environment. line line, probably our we supplemented So primary by stable mix. innovation X% be away being still as But our more We’ll top target trading the think volume return volume driver top more

Stephen Robert

very you Thank much. Okay.

Kevin Jacobsen

Steve. Thanks, Yeah.

Operator

Goldman Your next come Sachs. will from Jason English with question

Jason English

Hey. for couple in. questions. Thanks Good me of afternoon, A folks. sorting

down. share number To clearly losing Let's maybe categories. start you're question with trade some earlier, Lauren's a the of in volume

lost usage usage products, their it to if of seeing Like, through they're a occasions cheaper occasions going are like out your it's Where down. going, where going not you is You're brand? seeing it's those trade down? not trade

Linda Rendle

behavior. of best Yeah, sizes, the they're cost per what consumer larger would see we Jason. say First, It's trading to But very for dependent for following: use, on category the and big I noticed is example. consumers we looking buckets the

that grease they expensive certain somebody or trade seeing they're We people using to also lowest more of use lower only out-of-pocket of their for get bleach cleaner that portfolio, in where convenience. clean off might example, period amount cleaner they cycle willing elbow per to a because cleaner, of our willing a that a and pay within trade put see money certain higher consumers amount have We're to a pricing dilutable they're to so and same looking to are point, more trading and through use a also sizes time. get for price on basis for down them because shopping the

the then And more. consistent people category where are this to we're trying across really stretch something just is behaviors and seeing

are ones different every see to X levels for people So example, of trash behavior. are consumer because they're news a we we less is, trade offer business. into a course, spray different Xst of good cases, we're cleaning convenience, the bag, as sizes category. out buckets bottle. of our those their in using stuffing many really, But able a the the they're really adjust and across that's longer, and in wipe They consistent getting pretty us that then, capture And for important

Jason English

And And do related, think, XX% the gross transitory are, mentioned profit, -- adjusted versus billion level. this them? And this. like mentioned year lot, this? when up of right? then to blow can next quarter. of was you're going $X.X XQ to what were up $X.X three, profit why me profit, maybe How through cumulative Okay. suggesting you couple sort we're you all a quantify Kevin, I you Can volume and pre-COVID, too, almost your versus margins, is a XX.X% unit onetime billion, recovery of to benefits on -- as you remind you you 'XX. adjusted Gross math like you Like pre-COVID. And Chris' hold they that at like, economics question, gross a growth are that benchmarking

this? we and run rate can unusual better So like it, that's -- economics or what your is are that anything much that is unit

Kevin Jacobsen

Yeah, I think benefits onetime Jason. the had The was question two in questions, first two. had We the quarter. you

was spending. first on trade The one

We quarter. the expected. accrual. the rate second at at In have spending we're process a seeing of our not trade the promotional environment increased we normal the end this case, evaluate We

benefit our reduced . we accrual. a in quarter. So was spending trade onetime That the

And then of competitors one had of an in benefit category. was the our our stock dilutable out onetime other

business growth of saw stock. a result a of nice saw as And Pine performance, double-digit pretty that so out our

the combination on Now is shelves. back

to competition. normalized of that more back So continue a to don't we level expect

ones for the line about QX. continue So generated highlighted for into those are items X that basis of unique we and to two quarter we top the of XXX points fairly margin benefit That is benefit about quarter. the points don't expect

are in unit margins going yes, And then gross be. to mean on and rebuilding we're economics, we

sales. we We a much expect company billion into the were $X larger a before than pandemic with went little the to be pandemic. over in We

a we're now. know, As right over you billion seeing $X little

you will are expect bigger we as gross generate So gross that to higher margins, gross more be we a rebuild because profit. and company profit would

as of we we rebuild that certainly multiyear to time. in to a that's right developing We'll relates now. we're intent plans there. company. as to margin 'XX, have to profit rebuild as and much journey how see progress Linda we to So results is think the get impact gross our But said, a But or make the ultimately, is that margins over we expect those larger occur gross it have

Jason English

It's like Okay. this it on. a benchmark. Yeah. sounds you. Thank a pass run is rate It good then. I'll

Kevin Jacobsen

Jason. Thanks,

Operator

will with Grundy question from next your And come Kevin Jefferies.

Kevin Grundy

digital apologize Great. Thanks,. if SG&A, about a What's me, the I moved couple an afternoon, points on your XX underlying this. your A driving looks the SG&A Good basis, on It cleanup I basis for from up like Kevin, prior missed that? ex guidance.

Kevin Jacobsen

Yeah. Kevin, if you year. and just full talk talk QX I'll --

in QX, digital items. which little a So over a We had XXX XX%. the we transformation, We basis points. of couple highlighted is about had

a of We sits from restructuring model operating our those SG&A, changes. points about set had A also XX link. in basis portion in portion

seeing so of in flow through you're And that some SG&A.

expected have we one the other And was compensation. incentive then higher

We have year. goals up a taken the as pay-for-performance our very we've And strong philosophy. for

compensation as be well. our expect higher will incentive We

So we in. that baked

closer XX% XX% our now we expecting result, was XX% for So the to as expectation a quarter went and from year. to last we're

Kevin Grundy

me Got couple real quick. it. for A more

of XX.X% to XX.X% the year this to from amount ambition time? it's this to time reasonable like gets going over XX% sort strokes, understanding longer-term from year walk XX.X% But to broad there. brush get to a you Just some what of take

Kevin Jacobsen

get just you of is But pick XX if this level above million talked look one of just say it's a beyond. our go you at year. bps about you this expectation, million payout, compensation, as you generate We're is, you $XX to expectation back if about, then but million. $XX up And target $XXX I to normalized XX nice year, that's a start so target 'XX to to our expectation Yeah. contributor to incentive at looking would going to there. going and a be we model operating the our

to we're the start bring more you transformation. we early a over getting in that We're our very But online, process. benefits as digital technology And from still new going see then opportunities. time, productivity

XX% at And when believe next path the forward all look you over to how the we as several years. that's collectively, we together, that so look we for get

Kevin Grundy

of particularly lower, with it. of think I decision Got promotion and levels But response. I ask promotion take guess, your of order you, the higher to came quick the perspective, on Kevin. Again, going not magnitude like if trade hard to I follow-up, and everyone your accrual. end think down was can. it sort call categories. of gauge kind One in from like to our moving and up I the on would collectively Thank

see So promotion was down about likelihood around just then Linda what's pass months? that? the what's I retailers to I in those Thank was you with starting already? And sort trade how margin you the happening of to next inflation going can a for already? accrual take with conversations starting and thinking start starting you. jump risk over see Are on to Are and to of move going to for resin freight inflect. more you question ask to going -- a pressure push to both the They Are the promotion broadly. you're going to more I get gross with this have could comment that. there? Kevin, decision higher maybe And is trade on it you XX on. They just

Linda Rendle

increase promotional a Sure, this can as the is the dynamic normalize. dynamic about to Kevin. promotional the to Kevin quarter And as much it but that. that's relates We're we as expected. And did then continuing and not expect accrual environment to the see environment happened talk increase that we

of consumers our with no promotion more in that past just cold back we for to and and XX% or our key looking, role the We about pricing a than look to very that pulse to As talked plays is stays around shelf to specific ensure environment categories. broader, where off we about on that innovation. in them the example, done back-to-school for discount and around promotion, business though, are the a talked We or talk flu. role holidays consumers points college

we're we values be that the That gaps the offer we adjust will that they to on are products, to promotional speaking our dollars need retailers. that discussions We're continue those new we with we promotional consumers use price we we that. to innovation. ensure have have and to and to environment, on to continues And the the and do not focus have if use that afraid a basis, temporary about

and We are point need for that perspective. have the doing from to continues that a out spoke pulse line earlier. when investment right of now, innovation we in strategic are an to But consumer period. to as matters generally, of lever a couple be we we're of Primo that front price and gaps it be we to ensure when us that

Kevin Jacobsen

expected. down. look if I is year just add goes to We product at which XX%. not I the XX%. -- in accrual it then a most specifically XX% is growing that of tradesmen QX It's sold well, recent to was at expect at before Linda the at about it's not would our just some And our quarter of rate we pandemic, and go form And promotion. In the relates as it said trade we it

increasing. is it So

We more of to level expect that get that we faster. back pre-pandemic

but fast expect as so in is growing to accrual continue we And as as do increase. reduction had recognizing to not the it's we anticipated, just

Kevin Grundy

Thank Understood. luck. Good both. I it. appreciate you.,

Kevin Jacobsen

Keving. Thanks,

Operator

Ms. I'd back the question-and-answer concludes turn like to now session. program Rendle, That you. to the

Linda Rendle

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

Operator

call. attending. today's Thank And concludes conference this you for

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