The Clorox Company (CLX) 2 Aug 232023 Q4 Earnings call transcript

Company Profile

Participants

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

Call transcript

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Operator

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

Lisah Burhan

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

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

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

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

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

it to Linda. Now I'll turn over

Linda Rendle

thank you and we've results, against closed progress us. priorities. the joining XXXX with everyone, Hello, strong out fiscal underscoring strategic our made significant We year for

our commitments. across driving strong the delivered categories been team's year, we of Over set a the course and these of and our relentlessly top-line focused capabilities. comprehensive to execution rebuilding operating while brands, we've the of continuing health in on long-term on environment, growth Thanks challenging in margins a actions, to invest

of margin net and basis expansion our XXXX, X%, target, year adjusted XX%. gross within points generated we of XXX growth fiscal For EPS growth sales of long-term

our the resilience to margin excellence commitment and relevance IGNITE improvements, operational of supported the strength by Our and our of performance strategy. reflects our and portfolio driving

short digital and our to superior operating made we're streamline advance the our model, are innovation, we In on consumer strategy. to IGNITE investments transformation drive deliver brands, over the value growth. term, progress of profitable making The positioning us our delivering inspired results addition to strengthen our long-term

XXXX, priorities. to clear ahead look our are we fiscal on we As year

back While building at in with believe and matters on us in margins difficult remain us term. time deliver positioned we enhance superiority company to consumers. to a most to to top-line long value to financial resilient when on uncertainty to value marketplace, and enable household goals, more pre-pandemic drive operational put committed taking progress appropriate to are to rebuild create have it these actions share build we're the stakeholders. expect penetration win the for persisting, over confident plans grow our our environment a we position stronger, and growth the actions the levels and to I'm to our macroeconomic long-term a will continue We and and

take will I and Kevin questions. that, With your

Operator

[Operator comes Peter Please Instructions] And UBS. from question Grom ahead, go from first our Peter.

Peter Grom

Thanks, operator, and good afternoon, everyone.

to you the questions performance to related and wanted I track data. the by that data? mentioned, the there the timing you that's than was shipment Was top-line. two stronger early back on the elsewhere that in captured I minus ask certainly is So school, being due cleaning we in called first, what strength stronger not out some largely for see can but volume to shipments X% shipments Maybe or know

And sales just to organic then on X%. second X% of guidance the

expect half? provided in the versus point volume some to outlook, some balance starting curious be volume I at digit just do with US of Thanks. color mild growth XQ. on the your growth perspective phasing in year. mid-single a back as mentioned we And that recession back through in pricing specifically, You on in move you half, the get the would you

Linda Rendle

question to Kevin. Hi, first it hand I'll Peter. your then I'll start over with

consumption stronger expected, had QX, did things, aggregate. see on across categories And versus that's our what we two result board So mainly. a over-delivery we of across as the we in noted,

been an they elasticities be than better And historically. to that's first aggregate continue comment. The being have

at You expect. promo we to we'll that it know, pace we normalizing trade see through QX, than slower we differences but that it go by category, see a And year but favorable continue they're to in be. we'd degree normalize for XXXX, been would has aggregate, as the fiscal wasn't and thought

first that's So bucket, -- the that's consumption. stronger

some across better our think would we didn't is, by a supply statement able operational just to performance broad We the second we team, have. make that's and supply were chain. The that

retailers had Our were stronger than we shipments to expected.

growth. adjustments then plan, see and the including consumer better category did performed we having a merchandising to on plans, in the those execution in not retailers and excellence. We and lot with to which and growth with centered and to than expected, the retailers right significant QX. working And very was expectations operationally made Kingsford, had we significantly great in great Just executed of favorably reacted spoke our the came perform together finally supported about we with things that in QX,

those we are expected. big buckets what what the And three main we and really between saw,

Kevin Jacobsen

the for can as to then, fiscal saw, projecting we're for you And ‘XX the as plans And I about -- sales. to X% year. talk our relates year Peter, X% it

the few are in the to digits mid-single then and a If to you half, half, the that and out front digits front in I'd to phasing me, the items. expectations And be think about half. half front back call back half, from excuse single half sales back low our closer

calendar in our is, of recession fiscal year the half we're prepared be remarks, first mild saw as you a year, ‘XX. half which would The projecting our the back in front of

outlook. categories, bit reflected our put will that in our that of pressure think we in we've and on consumers little a So

pricing the item to is going taken lap the four to of be are middle of rounds we've now the we to aware year. The get when we other of

last year. get So we the will we through December, that fourth took that lap price we halfway increase when

the pricing So the have of the we'll year, second half taken. all now lapped we've

half. you'll is move you'll improving the see see in the benefit trends larger really tail to result back as half front the to start mix we expect of price and see as the a of we and off then So year, that, volume what in through

digit we we're that as internationally, recognizing it's growth, be doing low some trends, be think single combination of that so consumers. mix environment improving we a pricing still still of get to volume going And bit a a but because for little price economic it'll difficult

Peter Grom

you, it on. I'll Thank both. pass

Operator

our of next And Bank from Anna. ahead, question Lizzul from Please comes Anna America. go

Anna Lizzul

question. I sales comment a This your as to expect more return X% little growth sales strategy to X% normalized that Good the much you drivers your to to bit from really achieving you what expecting if term? ‘XX afternoon. in guidance, you. X% of net can are on, below And to do wondering growth growth. very that sales you longer the is Thanks IGNITE In of see long-term the net basis? flat X% sales when addition, you algorithm your was for fiscal growth. on X% annual a a Thank

Linda Rendle

expect X% CAGR at to to expecting period, course, four-year of you range the a But, and midpoint way at X% of X% X% And and tale Yeah. would again, I look what the deliver year. if from front growth we X% slightly now. in we a expectation as strategy that put percent in kind of price just X% we continue to this year the This halves, of reported it. organic a is below what And up did that and is for a two And growth tougher two we're right to our talk And the we that in we our perspective, is a consumers. about half, in is stronger then perspective. increases half long-term lap it from we now, sales want our is back expect mild coming that have. the to get recession.

you when we aggregate, we've the together, in to. things about put those So committed good feel top-line think that I

vitamins, X In headwind of and business. addition, point our includes that supplements minerals, a about from

last about, of and spoke perspective. from top-line calls, we at to a plan re-engineered As have we trade-off that focus a profitability, on couple the that done more we've over

case expect help that, that getting return wouldn't X that time, And, and So include would would that headwind. a in we that us X%. to does be point that X% the over within to

we're course year. the We're this, the be a lapping are normalized Those of are mild march through again, then to would more I The through expecting, are trade half. way elasticities in back we the think price our that in expecting go recession expecting expecting we we the our and that about forming promotion assumptions as increases, year, two normalize as growth. of as well, we to all

If of the there outlook against come us those that we'll plan, be put watching true, very could the and and plan we carefully if through need we to move the those we assumptions this any end And we change, is impact balanced one high from on end adjust of a lower what out both, really perspective. an our but delivering as plan, year. feel

Anna Lizzul

as Thank you. ‘XX. this as on And XX% in in you back that to terms intend you've fiscal a levels. an peers it is advertising in ‘XX does ask promotional a mentioned to back sales, this to also well? advertising percent investment spend fiscal about up Do a levels, just balance of in versus just in on like promotional get of to you're And spend marketing is space? just versus levels about some on promotional Thanks. versus given ramping promotion spend with the wanted level follow-up of you spend XX% fiscal marketing sound versus the the in ramp pre-COVID ’XX, And feel of right intention

Linda Rendle

Sure.

going marketing given XX% as promotion we targeting times we've want is on transition off than from that. investment history. our sales are that. noted, continue significant to on think So the we coming we we've sales pressure that about but a cost spend, pricing, and they four prudent spent justified, we're and the under the year, fact of support perspective, This rounds through advertising consumer price as you more consumer increase, spent the a that's XX% And obviously rightly the over of to of be to macroeconomic there's

XX% that us XX% And have right so number. that And is is think points number. the data you we right give the two confidence

for rounds that took couldn't to gave advertising spending when During us supply. the that the four superiority That fully and confidence even took. ratings our time we at up, we brands, in our the we pandemic, to pricing of advertising take led stronger a increase

stressed, in advertising again, and a where of sense. of additional consumers pressured makes think a are time lot that we investing So point

a nearly was. ever it in We investment was part to of our year. met IGNITE that to data then a that is us give get to you to which and consumers journey to on allows personalize we've in them, a point And and the our reached strategy. been would that has point the highest being that goal, second on return We've led know US, advertising XXX million I high the

really point And we continue extra about perspective know to get to we're we'll the supporting what So again, good putting moving this time. a because what feel our XX% going addition mean to that will from superiority a we our necessarily year returns in be brands. best the in we managers Doesn't this brands after. during forward. of This general think support our up of it is roll need evaluate really

And lower up. then were than to from ramping they be continue pre-pandemic, a perspective, promotion promotions but are

the what it it just return the seeing we this that faster promotions, would hasn't. but fair, we think throughout we fair But had. we're course again, we've similar based and year, assumption. assumed to the wouldn't pre-pandemic. beyond more And on is those that's so expectation data, Our were we levels we a normalized to up to targeting to we'll be year, be And, ramp were returning what pre-pandemic, of in though, going what

the reduction. vast around price our off points, et with price the And means is for of done merchandising, still Most no majority cetera. shelf good the consumer sales quality that our of categories, targeting this key are

given given term. dynamics, grow needed those return over and what So the spend we to a from the level we combination in think what we of think to long is categories right perspective see and are the share consumer grow

Anna Lizzul

Thank much. helpful. Very you Great. very

Operator

from Mohsenian Dara Morgan go Stanley. ahead, Please question And our comes Dara. from next

Dara Mohsenian

Hey, afternoon. guys. Good

guidance. ‘XX wanted just I on to fiscal touch the So

You're the remarks. $XXX of year. half fiscal in the prepared and in margins million in well below back the level come QX assuming gross know you've of level I you costs higher the got mentioned

it's as of First, lack the think b, And year. some us detail can the on conceptually, increases? obviously, back just that it just and versus what's the for the half progress cost more year-over-year specifically you driving then, sequential give you of year, about bucket full up

Thanks. specifically how your relative progress why that eventually half. to those back that again, wondering pre-COVID with fits back Just goal in margin gross levels towards to year, not this move more and

Kevin Jacobsen

those Maybe take of and for longer a term given I to about million. questions, dealing step with with year, little million Happy And inflation what just think in million. cost and this year, what and Dara. ’XX, if Maybe year. folks Yeah. been projecting of year we're $XXX a inflation. back you about levels year let $XXX difficult start me this we've we're know inflation, really $XXX fiscal that we cost of Last extreme experienced projecting terms about cost

sequentially expecting to environment. we're So but cost operate still a moderating, better, it's getting in higher

linerboard, down we we As looking year. worth that it'd still will hit relatively as in year, about But I There's items fairly flat ag that we predominantly diesel. are neutral cost then came inflationary. we're And see will rising be looking still It inflation, really say and declines inflating, we're look a in we're cost some chain chemicals, at Resin we're and modestly those costs we're million a products us, there's assuming that substrate, cost. commodities. overall, this bucket seeing would and some at particularly of of think areas last supply we third for a $XXX year-over-year. projecting through. our of corrugate of increases seeing coming number two be

really other operating to we then labor And hits manufacturing to be the inflationary looking continue driven environment. item expect that primarily at warehousing and we're particularly by

primary so the And the where $XXX are expect those to see million. buckets we

margin. the levels committed folks those progress Dara, And pre-pandemic goals year to to on this know gross about and to Now of you back expecting as those quite we're margin. the we've make you getting margin bit, said, phasing rebuilding this talked continue -- we're a gross of

last we points. We’ve made think I good year. progress about improved basis XXX

this year, to on points XXX build basis to another points this basis of expect expecting We XXX improvement.

the basis we recovered this by will XXX assuming points so basis year, have we lost. points deliver that of this little we over XXX And end of a plan,

our Now fourth in seasonality Kingsford fourth -- some in in terms of an our of a do phasing, Clorox margin. amount has say, highest because particularly our terms is our business that's quarter I'd disproportionate quarter. the Dara, And of typically Typically, the margins. we

a I folks It's XX% the fourth know, Kingsford quarter. think we very out in at you as business. sold

lot margin. we So And a well and point. is of very that packing do some, highest to tends to generate trial, comes QX but Burt's at margin. then business, gift activity margin our do it little awareness typically, because on One, as our we great lowest as is a Kingsford a drive lower our which

gotten all QX So you and should the normally think about pricing QXs our business. the point normalization disruptions, historically, high. is low Once past then are the we've a and and

it's quarter look So quarter. basis to versus sequentially on I a better think by year-over-year

we'll Now solid good in make I expect QX, progress.

degree round QX, XXX Now, now. now starting third not same that in basis because to points the pricing of we've lapped

advance And this to year-over-year good basis targeting about continue and to to said, get it pricing, so a as the is I on margins down of expect you should to we have to expect to benefit we're I solid XX% year. step And then what expect QX. do but a

Dara Mohsenian

and the around welcome, at the incremental performance year? all my I'm household Okay. And personalization a in just XXX you Linda, particularly fiscal a return on? the you overstaying the all-time consumers? your and on assuming then maybe you've pricing not. penetration pause comment I'm assuming taken an and nearly ROI any this Is comments you're year, fiscal that are light can being pricing marketing next can later after And million of you if not more Thanks. just reaching on high

Kevin Jacobsen

assumed four have we've similar rounds in to assumptions. any Yeah, outlook, taken. pricing broad-based the pricing first start the In can Dara, the I not US with we our

experiencing continue Now, broad-based of don't continue activities. internationally to this of the the we'll And But rates management in price because focus revenue higher we're inflation we there. net will pricing, also to anything year. assumed have on we US terms in

Linda Rendle

not have the people pricing. brand the this adjust to and to see this level your shock we question the talked rounds see perspective, And knew a were about take were to that. we bit last just then category household seen over we Clorox months. quarters, pricing they And a they tend had to. last volume, the adjust penetration, things we've few we along but And, hit comment, having a over certainly, And household when behavior a certainly of what of comment, is reactions short-term penetration, XX took a with as initial is from they've four seen going we on they've

home, perspective, We've importantly to And their users purchase a leave look then seen in brand typically or trade It's So -- see in behavior. big the a seeking to have again, a behavior. cases, engage a consumers exit cycle, they a those delay They And not which use the what to up typically factors increases. sizes. inventory note, seen surprise. Maybe value is they number category. looking price household during we extreme very And light they in of sizes what a we've from smaller they go behavior, see in. to is we they they this penetration think Clorox play the alternates. I isn't some category larger category,

in want growing And our portfolio. course, that household time nine we're in of what household place think we're over US And important a again. out penetration. focused penetration I in be it's then XX perspective, But is to households returning to of put we're on, we still in where

of then, service long we of advertising focus earlier, to all and and returning all as penetration our about category term innovation promotion, grow share. in the growth, think I are to growth little course, volume spoke what growth that to well returning plans and aim sales our in So household on as the investments over is increase would about a

household would as pricing, and plan. what course through to we year the But is, penetration we we then move would in the of fiscal I have of through course plans say as to to feel begin in household mean we expect I year very with we our improve on make the to through continue beyond. expectation, penetration get place in and our ‘XX good about line the and progress and

Operator

Falorni question ahead, go from next from Filippo comes Please our Filippo. And Citi.

Filippo Falorni

Hey. Good afternoon, guys.

in QX. volume like a ask It again, question. in want much the the question also, better particularly drove margin as you in was Thank it to next think cost guys, of volume how record a saving to ahead cost another should on think came -- for What And, Dara's you expectation, about from gross plan from and seemed algorithm? the was Just year year, then following outperformance we incremental leverage relative to your savings up year you. above, QX? trends? like, better about And -- well how

Kevin Jacobsen

Filippo, the Thanks, Yeah. question. for

at We true margin, As for certainly XX% went it relates our performance our expectation. versus on the the part, you drivers to we for cost and the top-line with on and to under I say XX%. That gross generally various into you're expectation. was look the and our margin. gross XX% QX And as you line as volume. quarter just they're most right, gross biggest commodities. over-delivery margin saw, The in was would within targeting delivered savings, variance particularly pricing,

P&L. had driver And strong so volume leverage, the that was margin, the our the that, It benefited only of very but gross as decline performance it result X% quarter. flowed entire And projected quarter. through declined improved operating primary the volume quarter. earnings certainly had in really for a of We the also for a larger

XXX strong north ‘XX, EBIT each we look, savings. cost as have question team the just really target year on go well. I and basis as points delivered system. to that's to drive on doing year points. work of this work expect did of In terrific expansion then, XXX year the We they're year. a And margin cost year fully fiscal to your this out we forward through some And well a credit a and savings, of basis team the very cost And our

points. another strong as And expect continue continue would margin, And we'll we supply on absorb progress of the that's to And on important probably to it's inflationary an year, operate environment. cost said, team year really this north savings to I inflation incredibly have both grow that's XXX the rebuilding increased So that for because in basis us driving our our work good doing. on that's based driving chain continue optimization and to we're margin. and doing allowing work is us we

team I the both last and So it and goals really good again work to our this year expect by year. do exceeded

Filippo Falorni

in year. helpful, guidance you Kevin. expect volume That's on top-line, a question, And a Great. the Linda, high-level then improvement your you in just, mentioned super throughout sequential

obviously, that confidence high that to investment other of Thank is incremental what us point point you back other can the give advertising than, the volume the improvement? the a like, you Just some coming specific gives guys comparisons volume to confidence or it any at on level, you.

Linda Rendle

what Yeah. helpful On volume, penetration and and maybe back, a take my time then household just to from little return volume I based a similar talk believe growth. more more would see of we comments growth think driven volume step be bit what over we as we'll to pricing on to impacts more

we the fact we the pricing trade-off think the committed took. picture that So deliver to was that's were of that able and the top-line we to that margin we cost that the justified. And trade-off make with we volume knew pricing were certainly on given going level to. And a I progress big right this,

look lever brand we health. that it, one at only it's category understanding and And

two So again, impacts look right have what increases And adjusting here still we pricing and lap will to that in now. at if are price QX QX. we if we Consumers volume, we it?

And well they're our categories. to is. And beyond the so to adjusting they're adjusting what still pricing pricing

there's came they has they a changed also world wallet and pandemic just cross in also element elasticity note of it's to a think Everything And to experiences. perspective. important from here. want an through I have their

out. settle watching we're that consumer So

what volumes beginning our seeing are we're improve. in to is And data

because volumes were were have for behavior don't standpoint, their return they want down to harder essential consumer weeks, in those what efficient them, a and still for to to this were weeks, work making most routines you have routines we so improvement. the the you'll see if categories, We old that latest two and saw they from is in more to effective stuff. look our those to to increases. consumers example, are do price lap will XX XX But than particularly You

So perhaps run through inventory house, they in they it they've tried alternative those doesn't to to well, maybe work have and see tend people and start the we their as an come back.

their We category also advertising to loss them to come to reintroduce products innovation. saw use tend users our through the of because light the and they talk We product, up pick about us we family child spend them in back again benefits our that, to their back as the send and experiences cold house. school or flu a again if of we remind to run they them

moments, to those tends to bring tend users So we again. those over, grow light and volumes

in consistent time And that's and taken pricing, that we've every we've categories. seen

experienced is is, what's of unique time the for specifically inflation this Clorox industry amount think unprecedented. I our and

certainly taking not pricing. We’re this level of

will investments. it the about that So in made be the the pace so we've think plans far. right we this at. making we're But the place. with We're progress happy right happens really have We

progress we they're still time, volume-based a versus superior are we volumes were again, and more strong. forward. on return so what to moving growth very brands over Our will make And pre-pandemic, they believe value

Filippo Falorni

Great. you, Thank guys.

Operator

Please JP Morgan. from ahead, next Andrea. Andrea our Teixeira And go comes from question

Andrea Teixeira

off. the trade consumption Good and any Hello, there's question is shipments trade-off, if everyone. you. afternoon. Thank My on

were by came or than levels where do feared? be? better you mentioned better by the than Linda, was in given exit rebuilding driven that retailers As volumes should consumption, was it inventory anticipated, -- also think driven they do was you you quarter, are consumption feel and You inventory,

And volumes to in that, second on about, clarification then related better your than assumption comments have mild a slightly anticipated. recession coming the for also half I like, and for the the

of or elasticities you of the back that you're the exit are you has your said to or in? towards category behavior more rate that quarter some but price the want just some historical that end point, -- you So you been kick see on price at top the Is on prudently assuming changing. that, going quarter, saw elasticity to

Kevin Jacobsen

Andrea. Hey,

your start shipment maybe and Linda with question me consumption can address price Let elasticity. then

things I organic expectations As our expectations, relates there's basis. the and I'll a on seeing, few year-over-year both fourth and it to anticipated to sales and growth, in by quarter. as we in you driven think are than had we talk delivered versus growth quarter, was a stronger our the consumption Versus anticipated. know, That much we about X% primarily X% coming stronger we

consumer resilient and that QX drop-off materialize. any and in some the is we as quite we might So and we look to consumption that in we didn't QX haven't expect still see seen drop-off consumption,

digit our third exactly primary the plans. bit drivers that And tell performance. what over grew the of made we execution. would I fourth accomplish to we're driver changes quarter. our a able then in the you, some in we'd And bit you to quarter. on both in our That delivery. cautious last business had other we volume quite a know, strong was a Kingsford. to about quarter. was talked And the disappointed that double very team, had performance as the very We were We with be the sales, And strong credit to But and results

The inventory, year-over-year right basis that time, at we we retailers with take last was resiliency inventory the saw reasons starting last with of reducing more all were other have element had to on as a is, think to though were down year supply the as generally comfortable inventory. you the getting retailers about we about And of think reducing think stocks. to inventory the strong retailers we very chain, And But everyone levels. one year, relates if levels. growth it the their safety

they And if but you retailers continue means that sell reorder when their that, about manufacturers. happening is what's they do to don't customers, the what think from to really

selling still and they're us. not product reordering So from

so year, not as lagged because adjusting are our our saw levels. closer shipments last inventory year, And we consumption much shipments consumption. to retailers forward, This you fast

in in true case now we can consumption, wipes ago. performance saw, year-over-year which not in much the basis, strong very So was a speak home was strong saw know this reductions which really she we're growth. Linda, on and We ago. drove year And particularly contributed our QX, really particularly where and stronger we a XX% year saw line is that a wipes, year-over-year That that care shipping to elasticities. inventory then, I business performance. with to And very shipments that

Linda Rendle

What is or lower less by categories So was elasticities in saw were and we not more some related are in categories, expected. is lower levels. favorable to QX in but return specifically we consumer categories the elasticity, to this to that is happen aggregate, in aggregate, normalized anything elasticities on our expect favorable, cetera. than pressure pre-pandemic just we than nuanced time it's year broader And over particularly what those ’XX the our elasticities we continued Again, more fiscal under. et But expected. had than

what have we for the the economic will And price on that's seeing will in prudent at We Right the factors combination lot the So the and on, are well. in to pressure last put levels, what's lead mild of that's balance now, if savings what US. a That over savings normalized consumer the going certainly excess based those them we rates particularly look elasticities, assumed to plan. think recession predictions as we most for additional few on where a pre-pandemic more half. the had back you years. sheets consumer plan we're are in returning anticipating think in

Andrea Teixeira

of like the normalized? this -- -- on digit just helpful. but rationalization year clarification, or write-down was a That's disappeared single not last headwind a it that inventory write-down, then year, inventory low And the the impact

Kevin Jacobsen

we anticipated there the Last right. reductions a point was at retailers. exactly a headwind as you're Andrea, year, result inventory couple of Yeah.

that didn't we this so impact have And year.

that's sales benefit the period. organic a that prior So part year-over-year, lapping delivered part and source this of by in of reduction XX% inventory we year, that was driven the of growth

Andrea Teixeira

I'll helpful. pass Super it you. on. Thank

Operator

Please And Fargo. comes from go Carey next ahead, our from question Wells Chris Chris.

Chris Carey

Hey, everyone.

Kevin Jacobsen

Hi, Chris.

Chris Carey

can but I still would that given know margin on a prepared inflationary. the a Kevin, a follow-up. be have on always follow-up that in the said one those side? you're seeing commodities? Just I quick What would that favorability we remarks Then just where lag, this the quick curious just commodities I there's see assumptions. gross are be you bit

Kevin Jacobsen

as Chris, we is $XXX coming said we third commodity about inflation. that to within commodities, that from it and relates see million, of Sure. a

million $XX there's I some roughly, We're corrugate few or be so. year-over-year. inflating some areas. seeing say a would substrate, that'd So chemicals, and linerboard

areas Now soybean are deflation, we that's of being number offset particularly where oil. in products, partially some a ag in expecting

inflationary what resin, projecting. seeing flat so We in inflationary, necessarily we're also from about it's diesel last basket a where basis, what but that's helping. really year-over-year. an not terms our But we've modestly modestly commodity of were certainly down year, it's is expect And still or and contributing we're year-over-year on we improvement got

Chris Carey

Okay. in then under And the comping, charcoal then Anything else… some stronger shipment the just on just non-tracked sure sales base, have over-delivery, to make and organic consumption, I those.

Kevin Jacobsen

Yeah.

Chris Carey

a evening. lot …coming up this

All Thanks. Okay. right.

Kevin Jacobsen

two Those are primary Yeah. drivers.

Chris Carey

Okay. Great.

really evening, take guess this through season spending S&A. investment be far about I Just because, levels? it's this talking spending, why come earning now. investment like has your on step-up interesting like, advertising you're enough? we're almost it'd strategic a spectrum on you really question, What's maybe it's strong that, higher whole we're And Linda, getting helpful are this significant how And seeing in

to the push lot from of maybe drivers together it’s going? volumes key and going. more where your investment peers, just Just, manufacturers is not going, in not just going coming some of volumes cycle been are have It's spending, this long we on levels and just a saying that see from a need the seen And thoughts to to you are from time? Clorox. feeling this get very why it's get SG&A all what your marketing lot Is a of are retailers

question, So I it's but for a just big thanks know -- any thoughts.

Linda Rendle

it headed insights thinking Yeah. a Chris. won't that on I give business. And understanding. clear can we into had their had I of you just Sure, speak about own it's certainly COVID, everyone But pretty behalf. the our impact -- behalf We how volatility I we're speak learned let into the lot industry, on and on it. I’ll a about the think

more consumer we it, perspective volatile can right capabilities as to that to And environment, we to we that the that foundation, get right to ensure we insights the right make suited and quick a the flows so from we decisions. we as so a that a ensure of have the began more investing number organization had ago continue digital data had that can possibly fast lead we that we have years

to We So react consumers consumer to certainly as leaner. could on a and And our to digital pulse college, them them operating have, area look to look for things. more on bucket consumers be spending to as do to products that be. invest on an We that And was great like more the promotional if innovation. benefits, do I our for as and the at that faster, school, to good back model We them year, remind obsessed, fast norm. points back mostly us at you quality is the that could introduce keep return the within we we We where spending, spend want to we transformation et needed cetera. ensure then to of introduce that merchandising. to us, in remind of that new

seeing so supply the to can We that sense now. can makes supply industry I good now. levels, given return pre-pandemic certainly think, fully And more

good giving get back into of we to And the right shoppers. so that information cadence

value case we decided thing and, number is ratings which as that And that this you ensure our from to now to I know, XX% A&SP, on is consumers. have have that superior one then addressed a And from we for up, earlier, right have another can perspective. where do we the think XX%, take we we and

portfolio reached we've we superiority the years, from of highest overall a couple ever last perspective the brand Over had.

And did of to sense secure with the invest continue bit it made to absolute more on of would consumer than pre-pandemic. to portfolio We consumers. stress we we advertising be superior more sales that a is in given we've improvement make think that have to promotion and under, going our the margin given

about how it. And we're that's thinking

when in categories great value their them total time focused remind have at products, them what household we one on. that's we're this delivers And essential in exactly our innovation, great want better and a of great no Clorox. than We brands, they're spending making to those basket choices

do. is that. So on building I doing right to the what me, in it's on line brands. We focus with focus exactly long And term. is spending we it We the think

Chris Carey

both. you, Thank

Linda Rendle

Thanks, Chris.

Operator

And our Evercore Please next Javier ISI. comes from Escalante from go question ahead, Javier.

Javier Escalante

Hi. tracked in different Good afternoon, but everyone. in hopefully retail have angle. I the same, observed it's permutation channels a the I versus the quarter, am of another -- from sales over-deliver

you I fiscal with all can your sense what give a growth, that, follow-up. guidance Home about sales like if so So a talk better into we going ’XX? retail were and Clorox's QX us Depot can start channel things So that you we including have of if and sales, if retail online and understand can

Kevin Jacobsen

Javier, let this see if me let helps. me

at If look QX I different sales your and is channels. across many our you performance think question

As tracked you I'd is look strong that saw, strong the areas had channels, also that's some not performance. tracked very true. in you growth, But very we at of what showing if tell you channels, are up

even and international, then track. quarter. sales Our volumes our in we PPD both volume the grew than XX% sales In organically. and stronger were And held business grew non-track sales

performance but just we're performance. tracked So, on even channels, where it seeing in you're probably that's broad we're see we're all contributed why areas results to of at And business. you'll performance, tracked in seeing what looking stronger the overall that product. selling channel seeing the not the only And you're if

Javier Escalante

that this We is the difference growth sales, quarter, and in channels. in see Well, X%, on June particularly big the retail both over-deliver because, was but and the stronger, is this reason consumption side. at the quarter track organic in March sales volume then and there is very the the that I right, don't that see part we in I'm Linda asking of think mentioned

-- is non-tracked channels, sales quarter, could would your That the what of percentage is me this -- tackle least So differently. Kingsford? seasonality of let in in wondering you at helpful. be if specifically What given

Linda Rendle

drove good would broke of Kevin versus up we the through again and sure just covered maybe just Javier, and go organic of it to it. It's it is all be non-track what way why go Kevin sales, back through amount part consumption drivers to make our because non-track do track out not did. little a include have sales in the which channels. But international PPD, a we fair of he does complicated

break down, organic just of of we and X%. saw sales XX% growth So, to track consumption we about had it sales QX

and So of a held Remember that's portion international of Kevin the portion what PPD we're highlighted. lapping inventory about, Kevin and volume. be delta wipes PPD that it. that are International that. would grew volume, spoke

mortar, number of that, a And And non-tracked et to on retailers haven't addition then strong our spoken a ship lot did, we saw we track channel a And then that of stronger, QX, businesses. e-commerce that's in QX always well. and about number we this do of and non-channel yet, across cetera. brick in performance some and contributed presence. have we as that delta But in but to we events do a

fact really and we quarter XX% at those the those for of do, -- buckets, tracked move And that in But disconnected you And X%. you those have so, of is look yes, us that are four channel merchandising the four we some have normal and normally a QX strong absolutely to bit QX. typically that ship pretty that in the difference buckets the can is that the a addition in this from we number. between sales, very the as the if are have

Javier Escalante

it fiscal in fiscal Well, for year, for thank carryover how you. when -- And squeeze comes is pricing next in the to if something I much impact ‘XX?

Kevin Jacobsen

pretty is is, left one round this Javier, that of fourth have we half pricing the to took What year. a minimal. for lap we

you So if look --

Javier Escalante

Okay.

Kevin Jacobsen

we're in half actions. year because as the for one XXX of a at third round. looking expect you points fiscal as just large benefit of on This total our year, the year, ‘XX basis a And round the total, year should about not benefit now much smaller we pricing had was in fourth

Javier Escalante

Okay. Thank you helpful. so much. Very

Operator

Olivia from Olivia. from James. And Raymond Please question Tong go our comes ahead, next

Olivia Tong

is pace of top-line Great. little cost Why expansion below margin is so love Thanks. less Because well, of versus and meaningfully the ‘XX? pressure The large versus maybe pace a a a by fiscal a just But Pricing of is levels, recovery I ‘XX the growing would was pre-COVID more ‘XX I to inflation, mean, in is I'm trying margin just color in expectations. your not ahead is because gross the of much so year. so still bit of want gross understand, reported, to fair that. gross fiscal margin slowing in deceleration. and margin bit fiscal obviously, expansion last revisit bit gross certainly down, quite on working. Thanks. year

Kevin Jacobsen

Olivia. Sure,

make this progress As year. you to gross margin, said, it as to expect to continue relates we

looking at driven progress. So rebuild year, is that's what back to XXX slowing primarily commitment and And a levels. about This last pre-pandemic by gross delivered of to we we're basis our is from pricing. XXX year margin a points to

months, So pricing bps that year. we had a last the XXX It XX benefit and over of rounds last gross over significant four took to contributed margin.

was we mentioning as bit price We're to limited plan. have a increase. As Javier, get we year just going I fourth the pricing fiscal look on ‘XX, in little at that to of fairly carryover

it'll So have smaller impact on gross margin. a

team based is margin the savings on work all on grow very and to able really optimization. we're our supply cost then chain And good doing

work supply offset So and the grow to chain in than doing spite gross we of within through dealing million believe the more about still we're can of continue we inflation, good margins. worth that $XXX cost with

And as continue. expect progress, good expect that move that continue to 'XX, I'd we're we so into to fiscal making year while I progress

to very have to dealing feel pre-pandemic they'll cyclical. At occur. have hard those look are to predict take with. ongoing get we at that's not make this our the But turn inflation But just some recovery. tell in these pace to going decades. to to back to when that of spite time and certainly, about to we'll thing environment going that'll That's progress this certainly we bought year. continue of for commodities year margins They ability some expectation deflationary. when But going I over to good one is, we're exactly know occurs, I very you, The to there. in we're It's we accelerate that's time feel this good rebuild our about levels, point,

Linda Rendle

we year before had three this Kevin But got the underscore significantly million of in $XXX fiscal than average to just what on year had which the I point underscored add that. inflation. better of I'll we still one that's times is Olivia, an 'XX. we into at want to inflationary million, level cycle $XXX average just

think still experienced point than environment understand. with Kevin is significant very last a that over we the is I challenging really is important better although two to This inflation, cost So the certainly making years.

Olivia Tong

and versus you then look top-line, what on progresses, last? it. the innovation bit year innovation of rebuilding talk this towards volume as and in on And the impact have you as about view, plays, Got a little that role year what can does your kind

Linda Rendle

the focus our set to Sure. have our strategy Innovation than accelerating grow we're our from to continue IGNITE innovation we period And be platforms period. time. over year. continues as in the that brands out this to we net innovation lifeblood deliver contribution the part we've And secure going more of been of in to how And talked bigger, on able we fact strategy. we've did to about strategy that prior

We have just year. we did our as innovation this across portfolio

in something superiority would all that We're our in fiscal and focused We major year So value value on 'XX. expect brands 'XX. of innovation. innovation really fiscal in year launched similar

as looking combination innovations, a So of improvements and new we're good at as product support. well claims

innovation help et certainly for to it cetera. as are grow a categories under been. from sales we'll looking innovation ensure pressure, we that And these that will increases, important the them and getting course, promotion their with more our lap of that shoppers be But And support an we're sales perspective. XX% aisles, advertising retailers comes innovation of to think as down price ever we has consumer as as

would is continuation a it's So of I we've what say what done.

we ‘XX. progress ensure additional that right we continues as want think we have course, year to in the and can Of investments that fiscal have to

Olivia Tong

Thank you.

Operator

Lieberman Lauren from And Barclays. ahead, our next question Lauren. comes from go Please

Lauren Lieberman

much. Thanks so Great.

things inverse the your we having we're be was there's price for keen reduced probably, won't health on is and example, periods, any sense two a kind more knowing for looking were for particular, in that inventory on where that as frankly be the just this forward, mix more wipes versus you in and the stacks to the track always particularly on charcoal, volume wellness. stacks, tracked we So make should so on retailers guess, year messy, look, curious price called comments a quarter looking that and seeing prior for we think [playing but at see. and shipments should I the in like, look that (ph) channels, in mix stacks dynamic other all on of of dreaded contribution, I the lapping and you the what because -- multi-year at model] there year our differences out and taking loan are

Kevin Jacobsen

at the has see buildup it are pretty good as been, don't everyone we now definition not of something lots of normalization a period I would Lauren, say anything, we significant of lap we very say of or look -- have to that -- have, is we notable. this we I lots where bumpy, was that bumpy. and now understands, ahead Yeah, This that's think, that et said, inventory and I cetera. certainly there is

You gone lapping. know, waves the through we've COVID

out we bit But course, the I one we environment, big the we're on think I I pricing. And have think, any in wood would have ahead little to that that. shocks is see changes there's And us want that. that I off clear there. other one of a I be of I thing a anything looking comment we to material call exception. that still lap saying ahead would other Kevin, we on pricing be saying, put consider, predict Any don't of the barring that been But can lapping based see. that and what of and you being knock Pricing

Lauren Lieberman

times kind past now the Okay. space. I guess, you really distribution terms curious comment was of in release, some, kind there talked you've follow-up, shelf and and of shelf I pre-COVID, innovation space had in out could was about we've knowing pointed agenda. And you Great. And several -- if of lost where the as strong just stand, you in then that in on or

on space How so growing space? -- in to not opportunities shelf are of be stand much? or think of you do where there's shelf guess, I outlook do you you with ‘XX? So thinking that Is innovation kind part the

Linda Rendle

as made We to returned up. distributions getting our supply progress and point Yeah. we good full total

over of in you the across remember months XX distribution businesses. fiscal our in seeking. the that the -- sure consumer, is progress for on that about, make the call where, good said. fully cases aggregate. brands exactly couldn't entered you supply gain to and current innovation. we're think that on pack a able as given to We we result have right the what the want We as ‘XX to points for shelf, gain year to SKUs their want distribution focused on to a a What value cleaned we right us tier And made had our last, that our the in, competitors and number we up, we've part, XX third been of all it, So that of lot many for is most

And what of shelf most get on but continue and we digital done work, we've want the physical our both think be shelf, make We contribute progress, that can and focused as that's fast possibly that and innovations on. we will to that to as the team particularly ‘XX. to will we ensure on

about category the both to we good what expect feel and walking what the and retailers and execution have the with of we half. those We growth into back our we're front and the plans have plans we half contribute. plans for But

Lauren Lieberman

much. so Thanks Okay.

Linda Rendle

Lauren. Thanks,

Operator

is Powers ahead, next Bank. Steven question from line go from our Deutsche muted? Please And your Steven, comes Steven.

Steven Powers

hear you Can Sorry. me?

Operator

Yep. Can hear you now. Go ahead.

Steven Powers

Okay. Great.

that. Sorry about

conversation with Lauren, you up sounds things So from on just standpoint. like, inventory relatively and that having were so are it following supply a normalized actually,

share as from embedding to growth or also, margins? category or you've relative your sacrifice growth I'm any to how consumption. to think you're a expectations? guess value the guide expect be, continue to volume the rates perspective, So what you you share category rebuild curious, shipping bias if Just some gain about of still even to implies, guidance guided if both I and it a I perspective

Linda Rendle

fiscal, sales a And our fact we We of head looking long our predict comparing we into then back We've So progress if over into pricing the expect rates as of taken we've with We've headwinds by outlook of category, both commensurate what see good at have the in want or at provided. of recession plans. that to much and we that. plans. categories the the what grounded We share. and us in we off what spending look based category they're built assume year that our lap innovation the it we expect. But that these we to is half mild that that and the total account of additional that we and, plans, And very in we've we in foundation advertising the as any on we're contribute, the that promotion, plan. certainly lands adjusting categories tailwinds. to term at make built we're realities and assumptions

Steven Powers

Okay.

you're doesn't growth. just basis, in net it well, you're with end zone. you're top-line all sound category will not, essentially of that the it go Is fair? like in making kind gain, things summarize maybe like If that, the top So -- line a to sounds on market share if is

Linda Rendle

fair. That's

Steven Powers

you. Thank Okay.

Linda Rendle

Steve. Thanks,

Operator

question from Please Jason. from next Goldman Sachs. ahead, comes Jason go English our And

Jason English

there was XXXX used Hey, had your you of I you Glad, folks. recently to commodities. going us guys in time you was, back by time it log congratulations increases [indiscernible] all finish think the in me Good totally substantial that to had more I'm where to of the in, give I by back you in on accompanied in, back on there evening. rolled point myself, a the a think, decreases decreases. price prices year. was a XXXX, and Litter, Obviously, XXXX, do decreases Thank strong all on downdraft you and some pretty Glad. to and for And going

four or year my expect or commodities, and give you into commodities, roll you last point, through get question price making, other back the downdraft of the put to point, these marketing? should that the the two? differently? back it of to in your of the one the in you in Or, your you we the business A&P that light because would So relief to investment of ability expect spend back cyclical, your are is, P&L are you're trying through like form these increases some of So to we in pricing, we if of instead Kevin, lines manage

Linda Rendle

Hi, same own one a category in we've back Jason. question Thank you on be the for clear, price we're rollback, price rolled your page, no to comment. then completely just so we all other And And longer Glad, from your on increase on is to always trade think, increase. perspective used volatile commodity. way that on we've you're a truckload after as given an evaluate taking resin such rightfully is I ones referring the to, a

with pricing, up we've in make difference a used seen the pricing or we that marketplace. so But category. And taken we've to as has if in that trade order change resin past saw we in something favorability in the we've in stuck the deal the to needed we've taken

action work we to margins, fact And pricing great about progress but also that fully three given obviously, still have year, through big than now, certainly times facing better but continue we the year, see we we've average environment, a made not additional talked inflationary given taken, have what the recovered the an last we're headwind. right to we do

We and are planning penetration through will and that household advertising to -- anticipate and and sales volume and increases promotion. bring pricing in the investment stick, back innovation will through

increases way other stick example. good structural is past. wouldn't on did an right need have why not adjustment, categories the back pricing. levers. we ensuring And focused to we roll think if And Kingsford in again, reason the a we're don't I these we really through they grow make see But price We any like those

We follow. incremental merchant not place. an plan putting did by Competition made to pricing. rollback. took we So our did We not adjustment

that, taken. we pricing, hold we're Our we've is how react a to, try the to truckload truckload and in do it, that example if we good of need a pricing approaching we a continue to to that category we see maintain short-term a in will dynamic manner,

Jason English

Okay.

not even is that hearing you given overall to we list clients log come intend that's That's intent. came super just I through in, published totally that's So you I'm cycle you scenario. Last XXXX, so. calling that differently with and you're And us environment? where trade, end see we you it. a say the do to you ago if scenario, sounds time commodity appreciate inflation if decade increases, didn't did find of don't back those for price announced a pricing increases, you differently adjust manage than the now for you The that what it the price the or actually that gave actually not that like do the intent commodity a in you ourselves manage trade trade, price by in those decreases on flexing

Linda Rendle

you're we've same And focused noted which stick top-line category believe had continue that. other we on see to little I do reason these continuation spending it to like think place in strong stick. of of we increases on landing on to and innovation. tools the we same right good what which I yes, I the is done will on conclusion, seems But a getting levers in different But, a the past, that. to do from we have think data. performance conclusion, all we're intend we've a to a and -- we're perspective the increases pull We Yeah. have price is Jason, bit price these the have can the we as as for we're and structural

Jason English

Understood. Thank you.

Linda Rendle

Thanks, Jason.

Operator

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

Linda Rendle

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

Operator

This conference Thank for attending. concludes you today's call.

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