The Clorox Company (CLX) 30 Apr 242024 Q3 Earnings call transcript

Company Profile

Participants

Lisah Burhan	executive
Linda Rendle	executive
Peter Grom	analyst
Kevin Jacobsen	executive
Andrea Teixeira	analyst
Christopher Carey	analyst
Dara Mohsenian	analyst
Anna Lizzul	analyst
Javier Escalante Manzo	analyst
Filippo Falorni	analyst
Lauren Lieberman	analyst
Olivia Tong Cheang	analyst

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to The Clorox Company Third Quarter Fiscal Year 2024 Earnings Release Conference Call. [Operator Instructions].

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

Lisah Burhan

thank Good joining for afternoon, and us. you

are call Jacobsen, our today the Linda our with Kevin On and me Rendle, CEO; Chair CFO. and

release chance hope take available are your then a website. moment, review I few had a our remarks. a questions. just will has our of everyone on earnings we'll Linda and In these opening prepared Both and to share comments,

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

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

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

over it turn to I'll Now Linda.

Linda Rendle

us joining for you today. Thank

During attack while continued the cyber a Ignite to strategy the our stronger, to recovery build from third progress resilient advancing August company. our quarter, more we

the our most the in quarter in For line expectations. our progress was with third part,

as we in transformation in a experienced came recovery environment. businesses than [indiscernible] program lower Sales benefiting from supply planned. slower came margin margin Gross few higher, our

our ahead lower adjusted sales Despite and earnings strong brands, we expectations on of share. investments the quarter our finished in per

putting back Before results we turn and context these is to stepping think I in important. questions,

be recovery from business not linear. be to the our restore Given would the would attack, plans our a and fundamentals the cyber magnitude of we disruption knew complex, of path

back well of We work strong the expectations and in we the start return second of as the laser-focused We the half more on have are our of progress year the made on to finishing fiscal at ahead to our do year entered it 'XX. had business the trajectory knew we quarter was job. to tremendous tracked and

restoring end levels normalized which rebuilding ability commercial attack merchandising to the inventories, to planned the for our These rebuilding fully each the lost fully to service actions due fourth our and distribution of quarter. plans included normalized return This and by businesses, as the cyber of in third accomplished quarter. restore levels we unlock

the we over regained make lost With confident share nearly we penetration QX, and Through and levels to XX% strong further we're of investment our expect behind now market in time. to levels and we volume normalized, service QX. brands, growth rebuild can return household progress

we original the before on beginning to disruption Despite strong the target at work, our based now cyber or and guidance we've exceed attack. team's we and provided adjusted significant are exceed positioned of the EPS the and experienced our lost our sales gross margin meet year

with exit XXXX our Importantly, position us in strong date to progress recovery to a fundamentals. fiscal good puts

In well our rebuilding throughout addition, returning we margins, continuing priorities against gross execute Ignite to substantial recovery. progress target levels over our strategic pre-pandemic to time. continue We made to

goal and profitable consistent of completed portfolio invested in deliver transformation of our our business, which the and our growth. progressed Argentina divestiture We evolving digital model more launched operating streamlined innovation, and and supports capabilities, brands our to

plans and In enhance the I'm strategic the the shareholder strategy. confident and we taking Ignite to our term continuing investments advance right to objectives financial steps closing, and navigate we're near our and have deliver right long-term to value. against

your take questions. will I and Kevin that, With

Operator

question UBS. Grom And from comes Thank of Rendle. Peter [Operator our you, first Ms. Instructions].

Peter Grom

informs and well. how kind more organic this doing to I you're you sales growth the of on get of hope the path I kind here? on implied hoping forward XQ some was color

expecting gaps overship consumption. some kind going to less the of to seems I versus but know this distribution close these you're implying is it always or you're case, more that of like

to XQ at ton of be guide kind of a does you look the imply -- of low really dynamic. single growth you low implied this year, for need the to it digits kind land the where considering at When to end of

So maybe I first, am thinking right? about that

the rate if how context out growth the looking in And your on this just X% long-term the X%? to view so, next year, does of exit to algorithm inform of

Linda Rendle

Thanks, And Peter. can for he the Why setting at fiscal Kevin, it of that talk don't appreciate then started, some fourth expect the talk outlook. just can I about course, I'll dynamics not I'll get Kevin you hand guidance this we're exit. point. us thinking how we year And the about certainly in to and you'll about 'XX we're give quarter. of the But and

dynamics there attack, QX, to first comes and plan we distribution the have are to track as the the to of And and is what we to address. do do result on that of it that. are we mentioned, are number plans things restore the fully temporary cyber a as and intend you So a lost we to important that well right

we on retailers, major the in shelf are all to from and decisions to distribution. track those the losses At that of this restore the order point, resets we built distribution supply on inventory know our

will reported organic quarter. sales we and as that head help certainly, So fourth both into the

our as growth. is The And have pre-pandemic they you returning to levels. support recall our merchandising to conversations, to on that our were fully will the higher plans, supply second of earlier that for restored the ability levels, both we normalized track during is than those are to to fourth and/or we going pandemic, well expect dynamic return basically And from be which we quarter. service back now to if

I and And the times consumers dealing then, our recovery, informing how complex we're it's retailers, thing range. the variable what dealing The different that's where quite of is are that happen mention, and volatile and We're with with as of large. and are and fast resets all a because with. you see resets those for matter, will shelf at the cycle on depth can course, breadth we purchase still would implied range that's rather

in and to help just that Kevin, over that the hand plays about he think you I'll outlook. can But out how

Kevin Jacobsen

to quarter trends. volume it specifically think outlook, sales Peter, see I organic your the in improving relates growth what I QX, is and occurring as expect to question, this

we're look you volume continue half X%, year, QX. down to improve forward. that at the performance, X% down the in as If of front to we I our expect about move

increased spending. I see also we'll trade some expect

back continue more We work still environment. towards normalized promotional that to level. a of normal QX sort was below

think some I you'd So expect to increased spending. trade see

I all away. result I pricing any a as simpler. divestiture pricing it's then now. expect FX business, would international. meaningful Most don't gotten was lot of And go of expect of Argentina the don't headwinds. That any our a in

trade probably flat to trends track bit you about a gets be to growth spending, of see should you year. little keep little and a on to sales down for that X% improving QX, So volume that and us in down in would up the terms uptick bit of in organic

Peter Grom

on the Awesome. clarification. on you mentioned XQ Or building And just or Kevin, building margin Is relative the kind to remarks, XX% maybe exiting X In of prepared of year. comment? talking the specifically just broad-based you gross a follow-up are a exit the more that rate?

Kevin Jacobsen

Yes.

few I a think there's things.

We in we'll You closer QX, saw where when landed, be exit. XX% we to a think little over we Peter, XX%.

tell our Linda you, said, margins year next outlook for 'XX. would prepared not As I in expand but provide to to to fiscal we continue we're fully expect year,

this So year. we'll exit

build Over up next the probably to we're full on I that around year. year, XX%, and expect

Peter Grom

on. I'll it pass

Operator

Teixeira Andrea JPMorgan. of question next comes Our from

Andrea Teixeira

share? . But you what a comments levels. supply that that also below areas that the that you in you're consumers that was in is the And experienced you the experienced that in confidence that recovered can relative consumption prepared still within more you that below your organic the much XX% you which channel planned areas I elaborate same there lost Linda, growth, losses? few third service given gives were back? the than remarks come X% of during impacted mentioned So patterns quarter. portfolio your the mentioned would consumption understand slower you all to consumption report period on still And how

then, what commodities? be prices would see move thinking And to How margins Are on the XXXX. Is XXXX, do that? Ignite, should savings, forward? expect fiscal how as the commodities? you we building And how embedding you said mostly a Kevin, about the you on into inflationary you some that just other and resin we offset clarification

Linda Rendle

get first twofold. that And question. think I question All was the right. with started I'll

start I'll have talk to then where I'll called about right supply QX areas we business consumer place addressing about restore that are a intend fundamentals. have the And on to that we plans consumer the what maybe as we that accomplish we roll and quarter. So and bit the confidence and first out for in more do the we continue the around sales to our impacted the that into we

couple the the to -- a their that and of and portfolio continue originally out we called the about challenged in last So that and be time that on those supply more recovery, we had the a call call glad depth was actually the before we of had were a than anticipated given and -- And as forecast. of we quarter challenge talked businesses bit the at Litter longer well.

exited a other the the levels and things all our able end QX by of minor we normalized The good of those few we news is service back to that businesses, were quarter, to customers. with fix in getting to fully

retailers production all feel head lost to have the we inventory, with able of those distribution that as plans temporarily and we get I we back plans we so the right right And into QX, good merchandising. our again, to have be that restore and and points

thing impacted QX, will impact don't So anticipate a QX. nature in temporary again, was that that we that but

few things at If the on. consumer, you look a going

regain had pre resets QX. First, when majority as having knew the that fully we beginning at would distribution we versus cyber, of to and year our that the anticipated. points that is outlook. we our are original in distribution happen down still planned, going set expect still anticipated And of That which shelf we the we

there. track on So

starting the And then to we're would say share turnaround. I see

rebuilding And addition, nearly weeks, So our at in trend few of we've improve. if XX% share look you've even you loss. to households. And actually, last that see we're continued the recovered

the in down if for really versus cycle about and X restored consumer it, moving you which pre in inventories categories. So haven't we we purchase expected, think cyber, direction. our the QX we had, at, And basically still fully households and from only improving restored are but when distribution in fully our right again,

increased comes consumer to influence that we've the we why yet. that levels consumer. we've and can cycle where had right spending cycle, is purchase well that the Purchase as have we reduced are recapture next that have fully spending and ensuring we about so is we that sales this to this on shelf, days, not on in the investment that laser-focused advertising What back in and we're do, our as chance revenue, promotion we X QX, as restored XX

and shelf. QX, confident in We hoping the very a intend can done. And we're to consumer do as much confident We're of that back it on as very to the just fully of to stocked now as we're distribution, comes merchandising. get we majority watching in

What in during where we and into that behavior? the we're do their year make need is the very consumer good 'XX, see time. tweaks very but about good beginning And head come as feel fiscal beginning of we we back the that that any lost to fundamentals to are restoring we

Andrea Teixeira

That's helpful.

Kevin Jacobsen

Andrea, 'XX. 'XX on now plant still gross sure we're for in you question process can as of margin, the building in on I'm our appreciate, your right

we're to sitting we're top margins, going line, fully growing expect expanding growing where earnings. today, But I at be

build certainly, about as top question, margin, And think how grow margin. I we you helps specific to think line growth so your

the of margin divestiture was Argentina Additionally, that the our company. to dilutive business,

that margin. our business certainly helps divesting So

efforts, our will cost offsets level inflation, than but margin then be a moderate. we continue And think more of to that believe collectively, transformation we what

now it going right There deflationary a in be inflation, So believe continues be we to we're do year. will but environment moderate. to cost next not some

to actions and mentioned, And exact year. to are just next margin we're working still enough through. think amount that. us more continue to offset the that than But build the I we allow

Andrea Teixeira

Argentina, In helpful. removing is the a as super That's what Argentina tailwind? Yes. impact of

Kevin Jacobsen

tell out, break Andrea, company can below I don't but you, gross significantly terms the margin. in of that We average we're specifically, Yes.

X% was margin. below It average of math. sales gross the and some well in terms do of probably can You company

Andrea Teixeira

good. Very Okay.

Operator

question of Carey comes next Our from Wells Fargo. Chris

Christopher Carey

I wanted quarter in to international. the ask delivery excluding about sales

you -- of key as price So the get activity back on in your was trying shelf, prepared spoke competitive in divisions to the in remarks, you your increased quarter. some about mix negative were

on I that dynamic quite sounded And I'm on getting you marry back good the with to the recently had quarter. logistical trying in think of shelf

had shelf put I expected? than so maybe expectations and And a to sales trying a bit gains you whether share guess competitors firmer coming on altogether why the I'm bit below in are behind perhaps and your

that need promo to this competitive shelf on your in gross obviously, you to may the back next you how not over trade comment is quarter. self to whether and if And you increase out your in to spending, to mix? price prior get expect. exactly margins you question, accelerate think need quarters And spending actually uplift called the that's whether this several some you

trying and that to tell, the that actions try some So I'm came you situation. why in just to the not to wrestle seem can below rectify the you and expectation, be but the sales taking of between

Linda Rendle

have miss degree we Chris, or we've penetration and will that to not QX, what due the we lost. a sales made have see, was consumer -- here a household feel from we not we like all Yes, happen we data progress issue that anticipate to back with dynamic consumer with the we the we the bouncing in the that that do

This make more remainder for It we went we to we on quarter mostly. than merchandising of simply impacted done went mid-quarter. had get supply the did. complex we very supply we That It would our X would thought really it through ability when progress we was businesses, longer. the thought

Distribution, fourth reset retailers in back when we quarter that's always their shelves. because would come the knew

So fully distribution. the still is the able the on to that because of to good recover news supply we're we were quarter, restore track end by

of this weren't and those fully we heightened But to still we to place in able really not a competition where was supply able events supply couple were on merchandising businesses. as

QX. of through that the we're end through at got We that. But

to level. We now investment in have fully ability is QX. level, feel the we supply That right investment the

And be clear, our businesses. I'll have constrained just we not

and should these the they right to, both we on said in have promotion to and households advertising need outlook we provided We spend we they contemplated what have get and sales That back. that spending believe is merchandising. the

are households will. quarter, we And plans, seeing as we purchase the we're year make we we through we went have another the fully we come if right indicators But QX us fundamentals that feel and our the through will adjustments X like here going to Again, as like recovered We're up in be we those we QX, restore go by all right end X now, well set feel And head fiscal we cycle. back. 'XX. but of will through the business. have into

Christopher Carey

the point gross and to quick a One XXX pretty follow-up Logistics quarter. notable would Manufacturing a That's just Okay. step-up. was impact be basis negative margin in

the durable think seeing level. inflation don't specifically that And you logistics contextualize we're forward this whether what Kevin, is just can anomaly? I just And at or maybe happened quarter? going is whether there that in an

Kevin Jacobsen

devaluation that Sure, we that increase we driven about Argentina, primarily You they before is projecting a and XXX% recall referred Chris. inflation, you inflation by might to had divested December. business, The significant in in were

playing was driver. biggest through it's that So and the

turning expect you that Logistics benign once Argentina. To in is year-over-year strip us, on your to go terms would drag. that not we level I question, fairly of of as out see now cost you the forward and divest Manufacturing be Logistics a business, it's

of that benefits across So, given the having business additional P&L. our portfolio one had the longer, this disruptions any not the of broadly in it is

Operator

Instructions] from [Operator our next Mohsenian Stanley. And Dara Morgan question of comes

Dara Mohsenian

to growth I a year. just get on had 'XX line a to point, explicit this be want year top normal follow-up into too for relative don't but move question next we you just I as base at fiscal this

any lose 'XX? of relative you and just to about in what typical can you expect as the And Kevin, just lose maybe talk growth? line Linda, you quantify to issue think about look from in puts you sales Do to year? 'XX or fiscal 'XX we fiscal did out a systems top level fiscal as takes also

Kevin Jacobsen

little it's for talk 'XX. what say I'd too too specifically Dara, about early the to us a

As I developing said, we're still our plan.

divestiture plans. a as still result Maybe probably August the make about still that's be of I have items, sure just the We'll too you'll a Argentina points for going about we're It'd talk other to that would year folks X have until item just through sale. we're but point of that conversation remind the any our with early in that business, sales. next But QX, headwind is, X.X detail. working wait of X see because portion of to to

Dara Mohsenian

Okay. margin and you And CAGNY about gross to on RGM. then on margins, focus a holistic talked management

that Can in is remarks, you the over think of on big a important piece be next gross years? give indicated color over us a how that of couple you you pressure as time might little as more the about recovery? recovering the prepared And margin

And is progress how think from a fiscal about about as timing And in standpoint? conceptually do out Should think effort? this of a a about we that 'XX? think lot we multiyear coming the you recovery,

Linda Rendle

Dara. again, guidance providing on 'XX Sure, any specifics. for Without beyond obviously, or

with track we've gross you we behind look, at can confidence, I consecutive of think records, have. quarter CAGNY on the based that I what expansion really our say sixth is we important. about delivered if talked strong one, toolkit margin And this

traditional tools, place teams price the to that. behind stand to margins we cost to see grow to of pre-pandemic and tools to continue look pack savings. Revenue in return can go that those and progress cost majority savings to gave tools one fact with knew levels But the that end-to-end the where we're use and of is commitment have great dealt make we broader us to And a against we've we've transformation, from within the to a else we architecture as certainly growth digital had, and visibility look gross all them we over that more beyond management plans there. our been those years then and of and a take couple use inflation. we opportunity good we that have last put the implementing have wanted Pricing

that. dependent really to about it's I implement we how very that. feel have and before, good And One, in talked on toolbox fast confident we our Kevin feel X things. do and this ability

the looks But forward, any recovery we this and we very to when continue pace as business at feel in our around our and to to of be do. we be people's second we look will specifics like. we those the accomplish returned continue environment what be in but levels to to reporting. toolbox what But the control And what's see what factors, we have Again, out we're good inflation that about pre-pandemic point. set will able X providing not cost to right

Operator

Our Lizzul of Bank next of comes question America. Anna from

Anna Lizzul

your pressure. I QX? who this You remarks indicated was consumer you're income the remains prepared if is so in as tiers? far Or wondering all related a consumer comment under mentioned companies to lower-income seeing have some other across in primarily this

you of promotion the are advertising then your in and mentioned second And half merchandising along levels spend the with increasing higher here.

weaker So, share consumer to loss how by this is versus need cyber driven from much wondering win to the of trying the rebuild a attack financially over just just

Linda Rendle

seeing future, of evaluate they interest consumer cost of for cost in pressure that basket a we're et housing, changing of We're across everyone, the store. as categories a happening rate outside to And when Sure. cetera, behaviors what's all down what's environment, whether think to about our on. they go come groups. going the of And as groceries the nearly seeing broadly they

larger they're it behavior buying value-seeking. we So they smaller quite broadly, et take, we're about cetera. seeing called trips they're the that thinking sizes, are sizes and People and buying

-- great consumer in afford in income date, them. during on that it at value make -- eyes they the always categories. we've we very tend for focused And and pressured. well. do can't tough have with mistake are and low-income say, because our we deliver really products a consumers particular, work they a to to lower our would times economic And to times stood I more well as I we

that and typically And income we continue we are consumers. see fared doing so low we to well with well,

QX private haven't merchandising was that get we're believe the closely largely lower their a seen watching the to private weren't our isn't is seeing share but cyber the fact of We we and back, our on we're label material as we course, was attack. QX. that it we shelf. to And due in due than trade label growth to distribution And that

the private have our time back indicators We're are households seeing might that that right the off all shelf. coming label during were when tried we

behaviors income but how and consumers all a on certainly are always So comment that focused general spending we're income, are say wallet. very and low watching their all pressure under evaluating to they're tiers that more was their

level comes we stressed we it spending that when always plans, Because levels in introducing innovation then the times our was had just would more pre-pandemic behaviors we capturing that where merchandising ensure that And we're even anticipated we return new before a to sure open to were right spending new consumers saw consumer. to making are we people to thought to of that.

back when kids example, to to they their send kids send when they For school or college. the

that. this And perspective. that though a so our And return support from share we'd anticipated to and return promo does always distribution our growth also

we us. that So it like for works hard doubly

But doing return. we're merchandising We cyber. that wouldn't this of this recovery anticipated say always level from I just because of our

we And that sure year we saw wanted and consumer make to et then we because from pressured did superior cetera. communicating this were our and that level, value, an a advertising promotion sales increase

year. this returning these spending in all to year, revenue of sales within It promotion. spending closer advertising range typically a and level be in for will But us that given past. XX% we're to had normal We the we've in around are reduced spend XX% of a the and

about don't level. we normal go it is need to need to. consumer that. feel see that seeing we this the than We course we that of So, like more But any deeper really further than or business right we're behaviors to react is have

Operator

Escalante Our from Evercore comes Javier ISI. of question next

Javier Escalante Manzo

issues trajectory penetration, household to understand I you share X. relative back also comes pre-pandemic you say, the feels have is was But supply market always when market share of losses are if I the you actually referring the mentioned. to, correctly, cyber that -- because could it there if commentary chain attack. as it to on the and One if

litters share whether to a restore trash contested like levels have these bags? market pet So categories pre-pandemic highly the follow-up. if and then comment I can that, in intent is . to And on you

Linda Rendle

few lots of Javier. and mean, has Sure, a and last puts been I complex it certainly years takes.

intend I or on for hold not. And to to winning so market if ourselves with is long-term goal, to the and we mid- we grow would is is we're say That share. consumer that what bar our the comment

we cyber grown market not the this given the Clearly, but place. have share year, in right trend seeing attack, move we're the

X And perspective, we X.XX the about of from made market there the nearly of we're low perspective. share look down if about We've at a -- for down So since data. X/X share, progress back cyber [ lost points point weekly our during we ended quarter the you ].

plans first we do believe is what But and need we grow market do there, then right and to from that. have restore the we share to

rounds you on And of progress then, our had past. aggregate, cleaning course, held though and they at business. even were We of have higher, well. But share the they're the businesses many on in mostly brands versus for had up returned COVID multiple look example, pricing. businesses, our and variable of in our some made If market significant we share, really market we

to. working and on have deliver and to to back, confident ability in we're event, So to we another Cyber would place year into unfortunately I'm beyond share. to my we we 'XX rebuild, our has step took grow we right and then aspire were return from place cyber plans the had that be We fiscal share market a where market share. but evaluation growth market in plans caused in the a heading

Javier Escalante Manzo

rarely in in line could little have question. and same the it's the time you're of quarter. and the that businesses, negative pricing bit it then follow-up, and at consumer be negative volumes accounting you the It And seeing a Chris' seems

and you are that into believe in and that XXXX. the gives take in need bags reset you So gaining what share players much recently prices pricing litter didn't confidence trash you I don't pet to value and too most Glad

Linda Rendle

would component of price through of detail. can first there's and that more a all, a mix QX, I Yes. walk trade say, certainly, in Kevin in

what weren't that fully weren't and clear. particular. you and the in couple fully negatively don't back were QX we say, were like. to available able take that pretty I But It's in the on give dynamics of if those Litter we for and that confidence just impacted a us businesses the us? dynamics step We Glad what which mentioned, consumer, means supply that And

But the feel heading and as by said, recovered I've end QX. the QX, good good we that into ability news is, of to supply we

given And more there that that merchandising we cetera. saw couldn't fully were We competitive competitors, more also, fact dynamics, from supply. et

As it during that we specifically relates look to share any consumer time private private stressed if the loss and label to was nor we private to a label. any material prior and you material any event, share there have cyber didn't to label, have in time, recessionary lost

offer they the superior consumer products. behind love We and us. value that offer we trust brands our innovation, understand We with They our They great value. ensure deliver. love brands, the to we spend those brands

as what to saw to label We beginning restore normalized QX environment. and we come heading down share work in to take and and that see back we direction distribution more we a would right it in hold private QX the inventories. in And be expect versus

we distribution in restore continue as progress to expect We make QX. to

not going all have the I did. your be on say a on understandable would distribution, you don't fully you're to and to it and pretty the they think when shelf, So choose consumer shelf is what's

issues that shelf our plans in our restore us we're we that And out happens. but of And that we've COVID had feel where would brands, share we time we product sell, stock of back. we'll were history spending -- on when out We confident in restored came When our back. distribution. confident tell in in

in I our of QX ability We to remain doing confident beyond. and this, it have do and a long history in

Operator

Falorni Filippo comes of Our question from . next Citigroup.

Filippo Falorni

on you points. distribution that you're recovery standpoint. recover sounded the I In space call, confident first TDP that the haven't of still the full recovered shelf the going prior wanted from very to to earnings ask you a

Glad still ] expectation the that had expectation full for and quarter, the year, Like does the the litter a for in versus year expected, in what the And and bit change and you Is mean? in particularly [ cat business? that I the quarter? the weakness was

Linda Rendle

against recover that Filippo. fully shelf year plan expect They sets. in lost. we converting now 'XX distribution Thanks, view in had seen are retailers. to the And we process we QX, the as the decisions of temporary. fiscal their that have We We our that from

speak will categories the happen our and we some quarter. As of some in throughout

So we that restore confidence will we that distribution. have strong

QX and recovered story into have supply supply that to more QX. will we That's a able that of a And that that, distribution that QX story heading place. service knew QX. most and issue would we're from recover. We're always come distribution not we level the fully really back again, fully really in we was because in great And of in

just note, recent business I shelf want did roadshow And they also our our top pack with X. on of I'd a retailers. all

the are very and their us. categories. invested They're leads growing with that brand We

forward personalize well forward, them. The Our to moving focused XXX our now do looking to million can joint digital their how that we having very as were and that digital grow our we're unlock full our underway well better on our innovation they're distribution so to focused conversations to conversations know on that growth-oriented, transformation, categories. future consumers, we back can plans growing, what we're plans, we now want we

Filippo Falorni

to a maybe, it. helpful. X% just business. X%, that remember Got to was from Linda, outlook of longer-term a I you higher question. outlook That's X% long-term updated international when your And the component to then X%

the made Argentina. decision you to divest Obviously,

how and in can your international you target? review that business maybe contributes to left long-term So the what's

Linda Rendle

Sure.

role And about saw faster. has you of less that absolutely we And years, if play portion look of at impact having of you what You we performance you being business. consistent it's played a and our growth. international source the forward. was last volatile out, a we talked couple are talk moving about a International certainly where a of Argentina growing it volatility . But the over variability. the about Kevin certainly, that And heard FX more high and talked expect also right

purchased variability So we recall stable Middle to that in well. might was we able very grow a the example was East our definitely on JV that that volatility a be partnership played and a faster grow the to of from could of solid years good predictable, reduce few at you ownership that had And the base. very minds more were ago, we in then have a looking and majority out has from had markets we and that and

really there. well have that Innovation to We working a consumer continue is marketplace. healthy in

said I And is very say what we've what so consistent with it's would before.

expect We and which a be have like international business, it of the be we in Europe, America our is continued stable continue cetera, to and Asia, international on business growth continue pockets is strong to business grow we'll that in majority good it Latin And versus cleaning about, we will to to East. businesses more continue Litter, we much profitable Middle was but feel the business have contributor, et and our what before.

Operator

Our Barclays. of next Lieberman Lauren comes from question

Lauren Lieberman

Great.

things. couple Just a of

just more input. called was the of you out first for raw a was outlook cost the in So specifically in release outlook that for increase favorable gross or the part material margin

thinking not was is like about gross secondly there. this quarter. going such of do bit color example, So then a for to business on huge a for just . And we're Argentina just I guidance Argentina, FX about quarter, know 'XX. lap on you last even when Argentina, thinking But planning margins curious little impact,

is it Again, reverse think I'm about kind like the the to forward margin, Or because of impact that? of totality moving gross thinking we about of business on disappear how impact business. gone. but absence the the margin the just is just Argentina and not just ahead. Do the

Kevin Jacobsen

to Yes, Lauren, happy take those.

and start going to are I saw at gross some become we And what in particularly As commodities we a you you costs we're look to it moderate. of commodities, continue if as a impact, margins seeing seeing is deflationary. QX, perspective, cost from think fairly to small kind seeing are relates there

a that we food soybean bit see something our You in oil, business. is which in use

You're chemicals. seeing other some it categories, in substrates,

still seeing on some diesel. are increases, We products, solvents, petroleum-based particularly cost

more Resins supply-demand a more little input costs. up just than driven, bit. That's

and so a going And fairly improvement. ongoing I'd that's it definitely in for certainly modest QX, the been say an in us is direction. right hit It's

out then is commodity I'd by Argentina, show step benign say a source on easing But it as on ongoing inflation and on certainly it the driven, will generally I the deal of in commodity fairly of wage inflation. which inflation, with playing continue piece is we be we'll front, We're is tends the it's warehousing. to That still there. which we expected. and more of other up inflation, manufacturing side, the get seeing the wage out we as to expect time to QX and

not the then have -- And you move you said exactly [indiscernible] forward, that forward. impact will areas right, a year, going as you thing about number we Argentina about, talked think next of is I

let So an give example. you me

to Argentina. it almost XXX That You about hit point, highlighted quarter, to FX entirely basis your this was point margin. was

hit As in almost FX QX, we to starting no have I look margin. gross even forward, should

that So you get benefit.

keep areas, but be primary will in by was see in QX that mind, other also things Argentina, But pricing, away. pricing offset go like you that will

So margin-dilutive strip the is Ultimately, business out. of for that all us. was all that a impact you'll net Argentina

a lines, out stepping totality, when you'll look in at up our Argentina. all But the go each those strip that, by result So of X margins it different of that as will elements out Argentina you of drove. exiting

Lauren Lieberman

in Okay. And exit going quarter actually year-over-year impact year, it's just business. all when impact margin back pretty on like back net and these a together put the It's Argentina example? next this you small from small to for from that a pieces the

Kevin Jacobsen

to you do owned sales, when dilutive of look very Yes, the our X% It's that's probably right. I sales. it we business, pretty can you math at quickly. of mean business represents us X% that a and it's and the

benefit do to modest the see can is you of gross math, our margin you the going So forward some there's out portfolio. now

Lauren Lieberman

clarify. I thing X then to And Great. wanted Okay.

X problem constraints statements in but the release supply chain were quarter, figured out I a . resumed there about but service call prepared normal being in levels. the in think the in having conflicting on, remarks I the

know it how sure quarter, statements didn't constrained together. those to difference, exit but wanted fit supply if on I clear So I was just normal the during chain by quarter. the it's as make X a service levels timing like you

Linda Rendle

Lauren. right, That's

not our to service able were end. fully we So retailers throughout QX until the

end QX, . some with supply had the constraints, we to levels, of normal with service back impacted those comment normalized service being entered restored the which the at that quarter. that we So chain throughout QX and marries and we levels them

Operator

comes Tong Olivia of Raymond from question James. next Our

Olivia Tong Cheang

I wanted margins. questions to X ask around you

this year you is XXX cyber that year. the margin. gross on pre margin of higher attack to much basis than you beginning going of were First, of the of is you about where points where and the Obviously, were thought be now due outlook ahead EPS for at to the expansion gross

margin downs basis talked all points annually, the $X.XX. a now the gross recover you cyber the lot that, ups attack. and obviously, with So you've in decline from XXX improvement year, past, more of post-COVID as about this year, the Last despite than

to these Argentina, So, you continue year, ability learned hurting can capabilities ex what on of all sort to the versus relative Or gross gross year things, from one-offs the about ongoing what the the post-COVID just recovery outperforming and margin, ex helping you talk year? are cyber, last some just margin keep that this of on this the timing?

Kevin Jacobsen

one. that I'll happy take Sure, to be

we're record where last that what working you it's margin, almost terms about have recover to for you separate years inflation to we've still from think As several term. gross level we've absorb. the of had I of longer in going and doing think to the been

quite that. know in quite points well, margin remain I Linda XXX you cycle. a gross think we bit, committed due we I fully this and Olivia, And as basis inflationary And recovering to lost talked about both

point, we'll the points we're more last your to about and work We've work XXX To doing we'll did with work recover. there. quite get basis year, feel confident this do we'll got get year, the we

inflation. we took of is The process which industry get recover very with pricing. pricing, saw there, to in our consistent We what to rounds leaning X were into you broadly from this

believe back described cost now the more I of invest get levels we enough we extra move what we allows cost that take EBIT in is to forward can to though, our and environment, expand line normal back to bottom cover a more efforts normalized further a as bit margin. typically, business, and either inflation into savings As than little the

year. that which $XX normal million a that's points XX inflation, which us of of level tends long-term was generated, about is where goal to be XX And to basis for cost

more we savings and use cost that than extra margins Our modestly each the year. to cover improve

We're yet. working going. we're the it's still recovering certainly through but cycle, where on not moving not there That's direction. right pricing, was the from in inflationary We're

should offsetting margins of term recovering commodity continue more our that levels get level, assuming see we'll to to to And time. us back the as over you the long these over than margins environment then gets fully transformation how expect to margin gross So expect more inflation. efforts normalized a regular I grow that's

Olivia Tong Cheang

you're of And how in have the just the is you higher of point the on . Are a as half the second for that than then a desire percentage talking sales due it was greater clear clarification just your And had to half pullback call support of versus first is when greater opportunity of higher stocks in half. some in programs, it. half? innovation? -- in or first much Got second of the to that year-over-year to out about you spend advertising in sequentially change higher

Linda Rendle

fiscal in back XX%. to and actually we about in we guidance, wind we the spend beginning clock to our the if advertising year, intended had the Olivia, original money sales Sure. promotion said of more

the to intend cyber the of still the do But you're we that -- has right And given over absolutely shape changed. that the year of that. attack, course

in we're of the we less in So half, half XX% is with spent front over the of more we're sales. the back What seeing the now spending year, still spending. of intention

when outlook given and gave first we've talked above a on there, same want put would money the I dynamics XX%, about intended to us It amount Argentina, but we that is about as about the to it still we But intended. had be guidance. clear what of from though. we same perspective spending sales spending we're about money the we're --

year brands more supporting are about felt wanted we plans our our of changed behind challenged. just the But cyber the given them. again, was and event. innovation shape We as consumers has this about spend again, And to more the good

Lauren Lieberman

Great.

Operator

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

Linda Rendle

then, Until next everyone. call. you continued to . stay progress our our on well. much, Thanks forward on look so updating We

Operator

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

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