Q1 2024 The Clorox Company Earnings Call

November 1, 2023

Operator: Good day ladies and gentlemen, and welcome to The Clorox Company's first quarter fiscal year 2024 earnings release conference call.

Good day, ladies and gentlemen, and welcome to the Clorox Company first quarter fiscal year 2024 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.

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.

If you would like to ask a question, you may press star one on your touchtone pad at anytime. If anyone should require assistance during the conference, please press star zero on your touchtone pad at anytime.

If anyone should require assistance during the conference. Please press star zero on your Touchtone pad at anytime.

As a reminder, this call is being recorded.

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

Lisah Burhan: Thank you Jen. Good afternoon and thank you for joining us. On the call today with me are Linda Rendle, our CEO and Kevin Jacobsen, our CFO. I hope everyone has had a chance to review our earnings release and prepared remarks, both of which are available on our website.

In just a moment, Linda will share a few opening comments and then we'll take your questions.

During this call, we may make forward-looking statements, including about our fiscal 2024 outlook. These statements are based on management's current expectations, but may differ from actual results or outcomes.

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

Please refer to the forward looking statements section, which identified various factors that could affect such forward looking statements, which has been filed with the SEC.

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

Now, I'll turn it over to Linda.

Linda Rendle: Hello everyone and thank you for joining us.

We entered fiscal year 2024 with momentum supported by strong progress on our priorities over the past several quarters to maintain top line growth while rebuilding margin.

Prior to the August cyber attack, our performance was on track with our expectations with solid consumption and market share trends, including improving volume consumption as we lapped year ago pricing actions. This is a testament to the strength and superior value of our brand and the role they play in our consumers' daily lives.

This is a testament to the strength and superior value of our brands and the role they play in our consumers' daily lives.

In addition, we continued to realize benefits from our margin enhancing initiatives, including pricing, cost savings, and supply chain optimization. However, the cyberattack caused wide scale operational disruptions, which adversely impacted our first quarter financial performance. While we're not yet back to normal, we are now on a solid path to operational recovery, but this will take some time.

However, the cyberattack cause wide scale operational disruptions, which adversely impacted our first quarter financial performance, while we're not yet back to normal we are now on a solid path to operational recovery, but this will take some time.

We're laser focused on our immediate priorities and are rebuilding retailer inventories as quickly as possible preserving merchandising activity and improving our distribution to return to the trajectory we were on prior to the cyber attack.

We've proven that we can execute and rebuild inventories, earn back our shelf space and distribution, and regain and ultimately drive share growth over time, just as we did coming out of the pandemic when we restored supply following extraordinary demand for our products.

We're confident our ability to do so again given the strength and superior value of our brand, the relevance of our ignite strategy, and the relentless focus of our teams on executing with excellence to win in the marketplace.

As we navigate the near term, we remain committed to our long term strategies for growing the topline and rebuilding margins, which includes investing in innovation and brand building, driving our hallmark cost savings program, and advancing our digital transformation and streamline operating model.

Looking ahead, the disruption of the last few months does not change the Clorox story. As we execute on our recovery efforts, we're confident that our portfolio of leading brands and essential categories and our ignite strategy will enable us to regain market share and deliver consistent, profitable growth over time.

With that, Kevin and I will take your questions.

Operator: Thank you Ms. Rendle. Ladies and gentlemen, if you have a question, please press star one on your touchtone phone.

And our first question will come from Peter Grom with UBS.

Peter K. Grom: Thanks operator, and good afternoon everyone. Kevin, I was hoping to just get some color on the phasing implied in the guidance in the context of the 1Q performance and some of the 2Q commentary. Maybe just to start, with gross margin up nicely in 19 can you maybe walk us through the drivers that actually would push gross margin to be flat for the year. And then I know from a sales perspective, it's still a wide range, but it does seem to imply a decline in the back half of the year. Is that just you some conservatism or are there key reasons behind that? Thanks.

Kevin I was hoping to just get some color on the phasing implied in the guidance in the context of the <unk> performance and some of the <unk> commentary. Maybe just to start with gross margin up nicely in <unk> can you maybe walk us through the drivers that actually would push. <unk> margin to be flat for the year and then you know I know. From a sales perspective, it's still a wide range, but it does seem to imply a decline in the back half of the year or is that just you. You know some conservatism or are there key reasons behind that thanks.

Maybe just to start with gross margin up nicely in <unk> can you maybe walk us through the drivers that actually would push. <unk> margin to be flat for the year and then you know I know. From a sales perspective, it's still a wide range, but it does seem to imply a decline in the back half of the year or is that just you. You know some conservatism or are there key reasons behind that thanks.

<unk> margin to be flat for the year and then you know I know. From a sales perspective, it's still a wide range, but it does seem to imply a decline in the back half of the year or is that just you. You know some conservatism or are there key reasons behind that thanks.

From a sales perspective, it's still a wide range, but it does seem to imply a decline in the back half of the year or is that just you. You know some conservatism or are there key reasons behind that thanks.

You know some conservatism or are there key reasons behind that thanks.

Kevin B. Jacobsen: Yeah, happy to you Peter and thanks for the questions. Let me start with gross margin phasing in and talk about what we're seeing in Q1 and sort of how we see that playing out as we go forward. The one thing to keep in mind is and these assumptions really have not changed since we talked last quarter in August, which is as it relates to pricing, as you may know, we took four rounds of pricing, we've now lapped three rounds of pricing so you're going to start to see the benefit of pricing continue to moderate as we move throughout the fiscal year and we will lap the fourth round by the end of this quarter. And so as we get into the back half of the year we will no longer have the benefit of pricing. Now we're still taking pricing internationally, so there'll be some benefit, but not to the degree you're seeing.

The one thing to keep in mind is in these assumptions really have not changed since we talked last quarter in August which is as.

As it relates to pricing as you May know, we took four rounds of pricing. We've now lapped three rounds of pricing so you're going to start to see the benefit of pricing continue to moderate as we move throughout the fiscal year and we will lap the fourth round by the end of this quarter and so as we get into the back half of the year will no longer have the benefit of pricing now we're still taking pricing internationally, so there'll be some.

Benefit, but not to the degree you're seeing in <unk>.

As an example, if you look at our most recent quarter, pricing benefit to margin is worth about 470 basis points, so a nice contributor and you'll see that moderate as we go through the year. And then the other item I would highlight is we're going to see our belief is increased merchandising levels and again this is not a change in our assumptions. We continue to operate below pre-pandemic levels. Typically we merchandize about 25-27% of our business and last year we ended up about 20% and so we've continued to expect that to increase as we go forward and so our assumption is in the back half of the year that we'll see increased levels of merchandising support that will put a little pressure on margin.

<unk> and you'll see that moderate as we go through the year and then the other item I would highlight is you know we're going to see our belief is increased merchandising levels and again. This is not a change in our assumptions.

We continue to operate below pre pandemic levels typically re merchandize about 25, 27% of our business and last year. We ended up about 20% and so we've continued to expect that to increase as we go forward and so our assumption is in the back half of the year that we'll see increased levels of merchandising support that will put a little pressure on margin.

And then lastly, we continue to believe that we're going to see a consumer that's under more pressure in the back half of the year and for all the reasons you folks know as we talked about a return to paying student loan payments, increasing interest rates and the pressure that will put on consumers. And typically that puts a little bit of pressure on our categories. Now based on the nature of our categories being everyday essential categories, it's not a significant impact, but usually you can see consumption down one or two points as a result of that and that's an assumption we continue to assume since the beginning of the year and that will pressure margins a little bit as well.

We talked about a return to paying student loan payments, increasing interest rates and the pressure that put on consumers and typically that puts a little bit of pressure on our categories now based on the nature of our categories being everyday essential categories. It's not a significant impact, but usually you can see consumption down one or two points as a result of that. The assumption we continue to assume. Since the beginning of the year and that will pressure margins, a little bit as well.

The assumption we continue to assume. Since the beginning of the year and that will pressure margins, a little bit as well.

Since the beginning of the year and that will pressure margins, a little bit as well.

Now on to sales, talk a little bit about the back half. Obviously, you folks saw we were down 20% in Q1. If we deliver our expectation for Q2, which is sales to grow mid single digits, that would project in the back after year and reported basis sales being flat to down high single digits and that's a fairly wide range. I think it's a function of both the macroeconomic uncertainty about how this plays out with the consumer but then the additional variability we have as we're working to rebuild some of the distribution and share we've lost. We fully expect to rebuild that but we recognize there'll be some variability and the exact pace of that recovery is not totally in our control and so that will have some impact on our sales performance as well. But I think Peter what's most important is Linda and I are quite confident we will rebuild back that distribution share we lost as a result of cyber event, but trying to predict the exact pace of that recovery is a little difficult to do. So we provide a range that we think reflects that variability.

Talk a little bit about the back half obviously, you folks saw we were down 20% in Q1. If we deliver our expectation for Q2, which is sales to grow mid single digits. That would project in the back after year on reported basis sales being flat to down high single digits and that's a fairly wide range I think it's a function of both the macroeconomic uncertainty about how this plays out with the consumer but then the additional variability we have as we're working to rebuild some of the distribution and share. We've lost we fully expect to rebuild. That but we recognize there'll be some variability in the exact pace of that recovery is not totally in our control and so that will have some impact on our sales performance as well, but I think Peter what's most important is lynne and I are quite confident we will rebuild back that distribution share. We lost as a result of cyber event, but trying to predict the exact pace of that recovers a little difficult to do so. We provide a range that we think reflects that variability.

If we deliver our expectation for Q2, which is sales to grow mid single digits. That would project in the back after year on reported basis sales being flat to down high single digits and that's a fairly wide range I think it's a function of both the macroeconomic uncertainty about how this plays out with the consumer but then the additional variability we have as we're working to rebuild some of the distribution and share. We've lost we fully expect to rebuild. That but we recognize there'll be some variability in the exact pace of that recovery is not totally in our control and so that will have some impact on our sales performance as well, but I think Peter what's most important is lynne and I are quite confident we will rebuild back that distribution share. We lost as a result of cyber event, but trying to predict the exact pace of that recovers a little difficult to do so. We provide a range that we think reflects that variability.

That would project in the back after year on reported basis sales being flat to down high single digits and that's a fairly wide range I think it's a function of both the macroeconomic uncertainty about how this plays out with the consumer but then the additional variability we have as we're working to rebuild some of the distribution and share. We've lost we fully expect to rebuild. That but we recognize there'll be some variability in the exact pace of that recovery is not totally in our control and so that will have some impact on our sales performance as well, but I think Peter what's most important is lynne and I are quite confident we will rebuild back that distribution share. We lost as a result of cyber event, but trying to predict the exact pace of that recovers a little difficult to do so. We provide a range that we think reflects that variability.

That but we recognize there'll be some variability in the exact pace of that recovery is not totally in our control and so that will have some impact on our sales performance as well, but I think Peter what's most important is lynne and I are quite confident we will rebuild back that distribution share. We lost as a result of cyber event, but trying to predict the exact pace of that recovers a little difficult to do so. We provide a range that we think reflects that variability.

We provide a range that we think reflects that variability.

Peter K. Grom: Got it. And then maybe just a follow up, I know this may be hard to answer as we're kind of in the first quarter of this year, but do you have any perspective around whether you think the disruption could have some lasting impacts beyond this year, maybe from a top line perspective do you see any risk that there could be shelf space losses or permanent share shift, anything from a margin perspective? I guess what I'm really trying to understand is whether you think you can fully recapture the earnings loss from the incident as you think about fiscal '25. Thanks.

But do you have any perspective around whether you think the disruption could have some lasting impacts beyond this year, maybe from a top line perspective do you see any risk that there could be shelf space losses are permanent cherish is anything from a margin perspective, and I guess, what I'm really trying to understand is whether you think you can fully recapture the earnings loss from the incident as you think about fiscal 'twenty.

Thanks.

Linda Rendle: Thanks Peter. We're really confident there's no structural issues related to this incident. It's short term in nature and as Kevin highlighted, we have full confidence we'll be able to restore distribution and share over time. And what Kevin highlighted is exactly right, it's about pace. And what we're focused on this year is making progress as quickly as we can and that starts in Q2 with rebuilding inventories and we already are shipping well ahead of consumption now as we finished out the end of this month and we intend to continue to do that for the rest of the quarter with the goal of getting back to inventory and retailers as fast as we possibly can. We think we'll get through the bulk of that in Q2. We will have some left to do in in the back half of the year. And then as Kevin said, rebuilding ensuring we have merchandising and distribution back to where it is.

inventories and we already are shipping well ahead of consumption now as we finished out the end of this month and we intend to continue to do that for the rest of the quarter with the goal of getting back to inventory and retailers as fast as we possibly can. We think we'll get through the bulk of that in Q2. We will have some left to do in in the back half of the year.

And then as Kevin said, rebuilding ensuring we have merchandising and distribution back to where it is. We are working as quickly as feasible to get as much of that done in '24 as we possibly can and that's what we're focused on and we have a history of doing that. If you look back when for example, Pinesol due to a product issue we were able to get that distribution back quickly. If you look at post COVID-19, the ramp up on distribution was fast and then we had a couple of quarters after that initial ramp up where we continued to make progress.

And then as Kevin said, rebuilding ensuring we have merchandising and distribution back to where it is.

We are working as quickly as feasible to get as much of that done in '24 as we possibly can and that's what we're focused on and we have a history of doing that. If you look back when for example, Pinesol due to a product issue we were able to get that distribution back quickly. If you look at post COVID-19, the ramp up on distribution was fast and then we had a couple of quarters after that initial ramp up where we continued to make progress. But what I can say is we intend to do as much as we possibly can in fiscal year '24. There is no structural issues related to this in our business and we have strong confidence that given the superior value of our brands, our investments and innovation that we will get it back and again, as Kevin said, it's a matter of timing.

Get as much of that town in 'twenty four as we possibly can.

And that's what we were focused on and we have a history of doing that if you look back when for example, pine saw without due to a product issue and we were able to get that distribution back quickly. If you look at post COVID-19. The ramp up on distribution was fast and then we had a couple of quarters. After that initial ramp up where we continue to make progress.

But what I can say is we intend to do as much as we possibly can in fiscal year '24. There is no structural issues related to this in our business and we have strong confidence that given the superior value of our brands, our investments and innovation that we will get it back and again, as Kevin said, it's a matter of timing.

Peter K. Grom: Got it. Thanks so much.

Okay.

Operator: And our next question comes from Filippo Falorni with Citi. Hey, good afternoon everyone. Linda, maybe can you give us a little more color on the conversations with key retailers as you go and try to rebuild the shell space is that a requirement of increasing merchandising that seemed like part of your gross margin outlook as well, just any color on how those conversations have been going so far.

Operator: And our next question comes from Filippo Falorni with Citi.

Filippo Falorni: Hey, good afternoon everyone. Linda, maybe can you give us a little more color on the conversations with key retailers as you go and try to rebuild the shell space is that a requirement of increasing merchandising that seemed like part of your gross margin outlook as well, just any color on how those conversations have been going so far.

Hey, good afternoon, everyone. Linda maybe just can you give us a little more color on the conversations with key retailers as you go and try to rebuild the cell space. Is that a requirement of increasing merchandising that it seemed like part of your gross margin outlook as well just to just any color on how those conversations have been going so far.

Linda maybe just can you give us a little more color on the conversations with key retailers as you go and try to rebuild the cell space. Is that a requirement of increasing merchandising that it seemed like part of your gross margin outlook as well just to just any color on how those conversations have been going so far.

Is that a requirement of increasing merchandising that it seemed like part of your gross margin outlook as well just to just any color on how those conversations have been going so far.

Linda Rendle: Yeah, thank you for the question and for the opportunity to once again, thank my retailer partners for everything they have done during this time. They have been tremendous. And that is without exception, they have all gone above and beyond to ensure that we're getting as much product as possible to their shoppers. They've partnered with is on manual operations, which is not easy for anyone to do. It wasn't easy for us, and it's certainly not easy for retailers. They've been tremendous and they continue to be tremendous. And now our focus is shifting from manual operations to rebuilding that inventory and they have the same goal of building it as quickly as we do and they are taking every measure on their side to ensure that we have the right appointments et cetera to do that and it's a busy season for them with holidays et cetera, and they are still prioritizing that. And then of course, our joint focus is on ensuring that we get merchandising for things like cold and flu. We have Burke's holiday merchandising. So we're focused and they are focused on ensuring that we meet those deadlines and that we get those in front of consumers and shoppers at that time.

And that is without exception they have all gone above and beyond to ensure that we're getting as much product as possible to their shoppers.

They've partnered with US on manual operations, which is not easy for anyone to do it wasn't easy for us and certainly not easy for retailers they've been tremendous and they continue to be tremendous.

And now our focus is shifting from manual operations to rebuilding that inventory and they have the same goal of building. It as quickly as we do and they are taking every measure on their side to ensure that we have the right appointments.

Et cetera to do that and it's a busy season for them with holidays et cetera, and they are still prioritizing that and then of course, our joint focus is on ensuring that we get merchandising for things like cold and flu.

We have Brooks holiday merchandising. So we're focused and they are focused on ensuring that we meet those deadlines.

and that we get those in front of consumers and shoppers at that time. And then ultimately, what our goal is and this is really important to retailers too, just like coming out of COVID, we had stronger relationships with our retailer partners than we did going in and they were strong to start. We very much intend can makes this a moment to be even stronger with our retailers through transparency, through partnering, through ensuring that we're doing everything feasible to get them what they need. So I feel great about where we are and again, my thank you to them for everything that they're doing and we are well on a path to restore where we need to be from an inventory perspective, and then we'll get the hard work back of ensuring we have the innovation and great plans with their shoppers so we can continue to get focused on growing categories once we get past this initial recovery.

and that we get those in front of consumers and shoppers at that time.

And then ultimately, what our goal is and this is really important to retailers too, just like coming out of COVID, we had stronger relationships with our retailer partners than we did going in and they were strong to start. We very much intend can makes this a moment to be even stronger with our retailers through transparency, through partnering, through ensuring that we're doing everything feasible to get them what they need. So I feel great about where we are and again, my thank you to them for everything that they're doing and we are well on a path to restore where we need to be from an inventory perspective, and then we'll get the hard work back of ensuring we have the innovation and great plans with their shoppers so we can continue to get focused on growing categories once we get past this initial recovery.

Transparency through partnering. Through ensuring that we're doing everything feasible to get them, what they need so I feel great about where we are and again my thank you to them for everything that they're doing and we are well on our path to restore where we need to be from an inventory perspective, and then we'll get the hard work back of ensuring we have the innovation and great plans with their shoppers. So we can continue to get focused on grow. [laughter] categories once we get past this initial recovery.

Through ensuring that we're doing everything feasible to get them, what they need so I feel great about where we are and again my thank you to them for everything that they're doing and we are well on our path to restore where we need to be from an inventory perspective, and then we'll get the hard work back of ensuring we have the innovation and great plans with their shoppers. So we can continue to get focused on grow. [laughter] categories once we get past this initial recovery.

[laughter] categories once we get past this initial recovery.

Filippo Falorni: Got it. That's helpful. And then Kevin, maybe a follow up on the gross margin question. Your commodity impact in the quarter in the gross margin bridge was one of the lowest in a very long time. So like can you give us a sense of what are your expectations on the commodity front for the balance of the year and some help with the phasing? Thank you.

Your commodity impact in the quarter into gross margin bridge was one of the lowest you know. A long time. So like can. Could you give us a sense of what are your expectations on the commodity front for the balance of the maybe. Some help with the phasing thank you sure.

A long time. So like can. Could you give us a sense of what are your expectations on the commodity front for the balance of the maybe. Some help with the phasing thank you sure.

So like can. Could you give us a sense of what are your expectations on the commodity front for the balance of the maybe. Some help with the phasing thank you sure.

Could you give us a sense of what are your expectations on the commodity front for the balance of the maybe. Some help with the phasing thank you sure.

Some help with the phasing thank you sure.

Kevin B. Jacobsen: Sure, happy to Filippo. We came into the year with an expectation we have about $200 million of supply chain inflation, now that's broader than just commodities, that's inflation across the entire supply chain and that is still an inflationary environment, but certainly moderating versus what we've seen over the last few years. As you look at that $200 million, about a third of that we anticipate as commodity cost inflation about two thirds and the other is supply chain, primarily driven by wage inflation that shows up in a lot of different areas.

We came into the year with an expectation we have about $200 million of supply chain inflation now that that's broader than just commodities, that's inflation across the entire supply chain and. And that is a still an inflationary environment, but certainly moderating versus what we've seen over the last few years.

And that is a still an inflationary environment, but certainly moderating versus what we've seen over the last few years.

As you look at that $200 million. About a third of that we anticipate as commodity cost inflation about two thirds and the other is supply chain, primarily driven by wage inflation that shows up in a lot of different areas that.

About a third of that we anticipate as commodity cost inflation about two thirds and the other is supply chain, primarily driven by wage inflation that shows up in a lot of different areas that.

As it relates to commodities, we still expect to see commodity cost inflation this year. It has evolved a little bit. We've seen some areas coming in lower than originally anticipated, chemicals being one of those areas, substrate as well, but then there are other items that we are seeing increases in primarily petroleum based products such as diesel, solvents, and even some of the AG products are a little higher but mostly puts and takes and so we still expect about $200 million worth of total supply chain inflation and that includes commodities. And in terms of phasing, it's pretty consistent through the year. I would think a little bit of increase in the back half of the year to your point is fairly modest in Q1 about 20 basis points and so you'll see a little bit of that back loaded, but again, it's it's fairly modest relative to what we've been dealing with for the last several years.

Solvents, and even some of the AG products are a little higher but mostly puts and takes and so we still expect about $200 million worth of total supply chain inflation and that includes commodities. And in terms of phasing, it's pretty consistent through the year I would think a little bit of increase in the back half of the year to your point is fairly modest in Q1 about 20 basis points and so youll see a little bit of that back loaded but again, it's it's fairly modest relative to what we've been dealing with for the last several years.

And in terms of phasing, it's pretty consistent through the year I would think a little bit of increase in the back half of the year to your point is fairly modest in Q1 about 20 basis points and so youll see a little bit of that back loaded but again, it's it's fairly modest relative to what we've been dealing with for the last several years.

Filippo Falorni: Great. Thank you. Thank you guys.

Operator: And we'll hear next from Anna Lizzul with Bank of America.

Anna Jeanne Lizzul: Hi, good afternoon. Thanks very much for the question. I just wanted to ask on regaining distribution how much of the distribution recovery will need to be driven by innovation and you already have this innovation in the pipeline or anything in particular you had in the plans for fiscal '24? Thank you.

Wanted to ask on regaining distribution. How much of the distribution recovery will needs to be driven by innovation and you already have this innovation in the pipeline or anything in particular, you had in the plans for fiscal 'twenty four thank you.

How much of the distribution recovery will needs to be driven by innovation and you already have this innovation in the pipeline or anything in particular, you had in the plans for fiscal 'twenty four thank you.

Linda Rendle: Yeah, thanks for the question. So the first priority of course will be restoring the distribution of the everyday items we have on the shelf that perform really well from a retailer perspective and consumer perspective. So we want to make sure that we get those back on and because we're very choice full in how we work with retailers on the distribution and shelving that we have, the items that we had on the shelf deserve to be on there and we're going to work to get those back on. But your point on innovation is exactly right. How we continue to delight consumers and shoppers and drive growth in the category is on innovation and we had a team of people that we walled off as we were dealing with the initial

So the first priority of course will be restoring the distributions of the everyday items, we have on the shelf that perform really well from a retailer perspective and consumer perspective. So we want to make sure that we get those back on and because we're very choice full and how we.

Work with retailers on the distribution and shelving that we have are the items that we had on the shelf deserve to be on there and we're going to work to get those back on but your point on innovation is exactly right. How we continue to delight consumers and shoppers and drive growth in the category is on innovation and we had a team of people that we walled off as we were dealing with the initial.

Linda Rendle: But your point on innovation is exactly right. How we continue to delight consumers and shoppers and drive growth in the category is on innovation and we had a team of people that we walled off as we were dealing with the initial impacts of this cyber attack to ensure that we were able to ship the innovation that we have in the back half. And we're happy to report that innovation in the back half will go with plans and all of our major brands will continue to have innovation that ships at that time, and we're working with retailers to ensure we get that on shelf as quickly as possible and that we get that in front of their shoppers. So they will feel very confident about the base distribution that we will rebuild back as well as the strong innovation plans we have on all major brands in the back half and getting that on shelf with retailers.

impacts of this cyber attack to ensure that we were able to ship the innovation that we have in the back half. And we're happy to report that innovation in the back half will go with plans and all of our major brands will continue to have innovation that ships at that time, and we're working with retailers to ensure we get that on shelf as quickly as possible and that we get that in front of their shoppers. So they will feel very confident about the base distribution that we will rebuild back as well as the strong innovation plans we have on all major brands in the back half and getting that on shelf with retailers.

And all of our major brands will continue to have innovation that ships at that time, and we're working with retailers to ensure we get that on shelf as quickly as possible and that we get that in front of their shoppers. So they will feel very confident about the base distribution that we will rebuild back as well as the strong innovation plans, we have on all major brands in the back half and getting that on shelf with retailers.

Anna Jeanne Lizzul: Okay, thank you. And I wanted to ask around advertising and sales promotional spend, you mentioned it will be about 11% of sales. is this enough given the disruption and central loss in market share versus a similar percentage of sales at the peers are spending on advertising and promotion?

And it will be about 11% of cells is. Is this enough given the disruption in central loss in market share versus. A similar percentage of sales at the peers are spending on advertising and promotion.

Is this enough given the disruption in central loss in market share versus. A similar percentage of sales at the peers are spending on advertising and promotion.

A similar percentage of sales at the peers are spending on advertising and promotion.

Linda Rendle: Yes, as you know, we will continue to spend about 11% of sales on advertising and sales promotion, which was up versus last year, where we spent about 10% and we continue to believe this is the right level of spending to support the brands as we get through this inventory recovery and growth phase as we head into the back half. And of course, we'll make any adjustments that we see necessary by brand et cetera. And it's also [inaudible] continued very strong performance from an ROI perspective, so we're getting more and more for that spend, so not only are we spending at a higher rate, but we're also getting more for every dollar that we invest. And we'll continue to monitor that closely but between that and the increased promotional environment we expect to see, we think we have the right money in the market to ensure that retailers have the right plans and that the consumers are seeing our brands from a marketing perspective.

And of course, we'll make any adjustments that we see necessary by brand et cetera, and it's also supported I wouldn't don't by continued very strong performance from them from an ROI perspective, we're getting more and more for that spend so not only are we spending at a higher rates. But we're also getting more for every dollar that we invest and we'll continue to monitor that closely but between that and the increased promotional environment. We expect to see we think we have the right money. In the market to ensure that retailers have the right plans and that the consumers are or are seeing our brands from a marketing perspective.

But we're also getting more for every dollar that we invest and we'll continue to monitor that closely but between that and the increased promotional environment. We expect to see we think we have the right money. In the market to ensure that retailers have the right plans and that the consumers are or are seeing our brands from a marketing perspective.

In the market to ensure that retailers have the right plans and that the consumers are or are seeing our brands from a marketing perspective.

Operator: And we'll take our next question from Lauren Lieberman with Barclays.

Lauren R. Lieberman: Great. Thanks. Hi, everyone. I just want to follow up on the gross margin conversation, you had an answer to the first question because one spot where I was a little bit confused is Kevin you talked about pricing and merchandising dynamics, most notably for the second half and discuss them as being the same as prior assumptions and most notably to me on the merchandising side, but I feel like there's a disconnect because the prior gross margin pre-cyber, which was a different time in world, I don't think it would have supported the idea of gross margins kind of flattish or flat to down in the back half so I feel like there's a piece maybe missing outside of I think you mentioned logistics cost for Q2, but definitely something else is pressuring gross margins in the second half, I just wanted to follow up on that point first.

I just wanted to follow up on that the gross margin conversation you had an answer to the first question because one spot was a little bit confused is Kevin you talked about pricing and merchandising dynamics, most notably for the second half and discuss them as being the same as prior assumptions and most notably to me on the merchandising side. But I'm not I feel like that's a disconnect because the prior gross margin. Cyber, which I always like a different time in world. I don't think it would have supported the idea of gross margins. Kind of flattish or flat to down in the back half so I feel like Theres a piece maybe missing outside of I think you mentioned logistics cost for <unk>, but it definitely something else is pressuring gross margins in the second half I just wanted to follow up on that 0.1st.

But I'm not I feel like that's a disconnect because the prior gross margin. Cyber, which I always like a different time in world. I don't think it would have supported the idea of gross margins. Kind of flattish or flat to down in the back half so I feel like Theres a piece maybe missing outside of I think you mentioned logistics cost for <unk>, but it definitely something else is pressuring gross margins in the second half I just wanted to follow up on that 0.1st.

Cyber, which I always like a different time in world. I don't think it would have supported the idea of gross margins. Kind of flattish or flat to down in the back half so I feel like Theres a piece maybe missing outside of I think you mentioned logistics cost for <unk>, but it definitely something else is pressuring gross margins in the second half I just wanted to follow up on that 0.1st.

I don't think it would have supported the idea of gross margins. Kind of flattish or flat to down in the back half so I feel like Theres a piece maybe missing outside of I think you mentioned logistics cost for <unk>, but it definitely something else is pressuring gross margins in the second half I just wanted to follow up on that 0.1st.

Kind of flattish or flat to down in the back half so I feel like Theres a piece maybe missing outside of I think you mentioned logistics cost for <unk>, but it definitely something else is pressuring gross margins in the second half I just wanted to follow up on that 0.1st.

Kevin B. Jacobsen: Yes, I'd say, there's a few items largely--you're exactly right. We've always assumed increased merchandising support. That was true back in August and that continues to be the case. The one other area though that we should talk about is as we're working to rebuild distribution and we're working to rebuild share, we are expecting lower sales in the back half than we were anticipating back in August, so lower sales will have some level of volume deleveraging that will impact margin and then the other assumptions are generally similar to what we saw three months ago.

One other area, though that we should talk about is as we're working to rebuild distribution and we're working to rebuild share we are expecting lower sales in the back half than we were anticipating back in August so lower sales will have some level of volume deleveraging that will impact margin and then the other assumptions are generally similar to what we saw it back three months ago.

Lauren R. Lieberman: Okay. And then pricing, I guess just to follow on also because if we're assuming that higher merchandising in the second half that means I'm guessing that price promotion should be a headwind to sales in the back half, is that right?

And then pricing I guess just to follow on also because if we're assuming that higher merchandising in the second half that means I'm guessing that pricing should price promotion should be a headwind to sales in the back half is that right.

Kevin B. Jacobsen: Once our merchandising level overall will be as part of price mix you'll see that show up.

Lauren R. Lieberman: Okay. And then in the second quarter, shipping ahead of consumption, but with total net sales being up mid to high single digits, I guess, shipping ahead of consumption is like if we use Nielsen as a gauge for consumption I would hope you're shipping above that because that's sort of sadly informed by the out of stock situations so I'm just trying to get a handle on I guess the rate. It feels like the rate at which you would need to ship to make up for the drawdown in 1Q would be stronger than that. Again, it feels like shipments should actually be higher than what you're talking about to kind of rebuild assuming there isn't significant even a temporary shelf loss. I mean shipments are down 30% this quarter, ish.

Shipping ahead of consumption, but with total net sales being up mid to high single digits.

I guess.

The shipping ahead of consumption is like if we use Nielsen as a gauge for consumption I would hope youre shipping above that right because that's sort of sadly informed by the out of stock situations I'm, just trying to get a handle on.

I guess the rate it feels like the rate at which you would need to ship to make up for.

The drawdown in <unk> would be stronger than that.

Again, it feels like.

Shipments should actually be higher than what you're talking about to kind of rebuild.

Assuming there isn't significant even if temporary.

<unk>.

When shipments are down 30% this quarter, yes.

Hello?

Okay.

Operator: This is the operator and we do have the speaker line still established. Are you able to hear us from this end?

Tahira from this end.

Lauren R. Lieberman: I'm the questioner and I can hear, but we can't hear--

Operator: Ms. Lieberman, I can hear you loud and clear. I just want to check with the host, perhaps you can ummute your lines.

Mr. Burhan, are you able to hear us now?

Yes, we can hear you. Sorry, we got dropped. Okay, your line is now established, please go ahead.

Lisah Burhan: Yes, we can hear you. Sorry, we got dropped.

Operator: Okay, your line is now established, please go ahead.

Hey Laura, this is Kevin, are you still on the line? I am still here, but don't know where we lost you. [laughter]

Kevin B. Jacobsen: Hey Lauren, this is Kevin, are you still on the line?

Lauren R. Lieberman: I am still here, but don't know where we lost you. [laughter] What do we do?

What do we do?

Linda Rendle: Lauren, what did you hear last? Maybe that way we can catch up.

Lauren R. Lieberman: I didn't hear you guys. Okay, as far as I'm concerned and I think everybody [inaudible] that if you guys answered we heard none of the answer.

Alright, we're going to go back to your question again. So Lauren, do you want to re ask your question, I apologize, just to make sure everybody is clear on the question. I feel like you're testing me now.

Alright, we're going to go back to your question again. So Lauren, do you want to re ask your question, I apologize, just to make sure everybody is clear on the question.

Linda Rendle: Alright, we're going to go back to your question again.

Kevin B. Jacobsen: So Lauren, do you want to re ask your question, I apologize, just to make sure everybody is clear on the question.

Lauren R. Lieberman: I feel like you're testing me now. I do remember what I asked. So I was just struggling with the shipments right. So if shipments this quarter roughly are down call it 30% for rounding stake, having your net sales only up in the mid to high single digits in 2Q and saying you're shipping above consumption, it just feels like shipments frankly should be higher than that. Saying we're shipping above consumption is almost like a circular logic cause Nielsen is informed by what's on the shelf, not necessarily consumer demand.

I do remember what I asked. So I was just struggling with the shipments right. So if shipments this quarter roughly are down call it 30% for rounding stake, having your net sales only up in the mid to high single digits in 2Q and saying you're shipping above consumption, it just feels like shipments frankly should be higher than that. Saying we're shipping above consumption is almost like a circular logic cause Nielsen is informed by what's on the shelf, not necessarily consumer demand.

Struggling with the with the shipments right. So if shipments this quarter roughly right or down the high <unk> call it 30% for rounding stake. Having your net sales only up in the mid to high single digits into Q and Sanger shipping above consumption. It just. With shipments frankly should be higher than that Brian. Saying were shipping above consumption is almost like a circular logic is Nielsen is informed by what's on the shelf not necessarily consumer demand.

Having your net sales only up in the mid to high single digits into Q and Sanger shipping above consumption. It just. With shipments frankly should be higher than that Brian. Saying were shipping above consumption is almost like a circular logic is Nielsen is informed by what's on the shelf not necessarily consumer demand.

With shipments frankly should be higher than that Brian. Saying were shipping above consumption is almost like a circular logic is Nielsen is informed by what's on the shelf not necessarily consumer demand.

Saying were shipping above consumption is almost like a circular logic is Nielsen is informed by what's on the shelf not necessarily consumer demand.

Kevin B. Jacobsen: Yes, thank you Lauren. I can certainly talk about Q2 and our expectations as you mentioned, we're projecting mid single digit organic sales growth in Q2, and you're exactly right. We expect as a result of shipping above consumption that's certainly going to help the top line relative to Q1.

I can certainly talk about Q2, and our expectation as you mentioned, we're projecting mid single digit organic sales growth in Q2, and Youre exactly right. We expect as a result of shipping above consumption. That's certainly going to help the top line relative to Q1.

There are two items that will partially offset that. The first is, we're going to continue to lap the benefit of pricing and so you'll see that offering a smaller benefit in Q2 sequentially versus Q1. So as you saw in Q1, we had about eight points of favorable price mix. The quarter before that we had 16 points so you'll continue to see that step down in Q2 and that will be a smaller benefit. And then the other item is we are still in a position, particularly in October we were losing consumption, we were losing sales. While we are shipping above consumption, we have not rebuilt retail inventory levels yet. We still have out of stocks occurring. We are still losing sales, particularly in the month of October probably bleed a bit into November as well and so that's still providing a drag on sales in Q1 as well. So when you look at all of that together, we think we'll have that mid single digit growth as a result.

Smaller benefit and then the other item is we are still in a position, particularly in October we were losing consumption. We were losing sales. While we are shipping above consumption, we have not rebuilt retailer inventory levels, yet we still have out of stocks occurring until we are still losing sales, particularly in the month of October probably bleed a bit into November as well and Joe.

Is that still providing a drag on sales in Q1 as well. So when you look at all of that together, we think we'll have that mid single digit growth as a result.

Linda Rendle: Lauren, I'll add just one thing, which is a nuance. To your point on shipping above consumption, when we say consumption, we mean what average consumption would have been being fully in inventory. So we're shipping well beyond that level and that's how we rebuild inventories over time. So it is a meaningful over shipment versus what we normally would.

To your point on shipping above consumption, when we say consumption. We mean, what average consumption would have been being fully in inventory. So we're shipping well beyond that level and thats, how we rebuilt inventories over time so. It is a meaningful over shipment versus what we normally would.

It is a meaningful over shipment versus what we normally would.

Lauren R. Lieberman: Okay, perfect. That definitely helps a lot. And then just the other thing is it feels like as I'm trying to piece through the model that selling and admin and I'm looking at everything versus my model as of August 3rd that you are actually able to take a good amount of cost out of selling and admin and I was curious and then just looking at straight dollars, not percentage of sales. I'm just curious how much of that you say is related to the operating model changes that were already in flight. Is it some of this is maybe more variable or has there been some belt tightening that goes with this given the unfortunate cyber situation?

Alright, and then just the other thing is it feels like. He's trying to piece through the model of that. Selling and admin and I'm looking at everything versus my model as of August 3rd. That you are actually able to take a good amount of cost out of selling and admin and I was curious and then just looking at straight dollars not percentage of sales. I'm just curious how much of that you say is related to the operating model changes that were already in flight is it. Some of this is maybe more variable or has there been some belt tightening that goes with this given the unfortunate cyber situation.

He's trying to piece through the model of that. Selling and admin and I'm looking at everything versus my model as of August 3rd. That you are actually able to take a good amount of cost out of selling and admin and I was curious and then just looking at straight dollars not percentage of sales. I'm just curious how much of that you say is related to the operating model changes that were already in flight is it. Some of this is maybe more variable or has there been some belt tightening that goes with this given the unfortunate cyber situation.

Selling and admin and I'm looking at everything versus my model as of August 3rd. That you are actually able to take a good amount of cost out of selling and admin and I was curious and then just looking at straight dollars not percentage of sales. I'm just curious how much of that you say is related to the operating model changes that were already in flight is it. Some of this is maybe more variable or has there been some belt tightening that goes with this given the unfortunate cyber situation.

That you are actually able to take a good amount of cost out of selling and admin and I was curious and then just looking at straight dollars not percentage of sales. I'm just curious how much of that you say is related to the operating model changes that were already in flight is it. Some of this is maybe more variable or has there been some belt tightening that goes with this given the unfortunate cyber situation.

I'm just curious how much of that you say is related to the operating model changes that were already in flight is it. Some of this is maybe more variable or has there been some belt tightening that goes with this given the unfortunate cyber situation.

Kevin B. Jacobsen: Yeah, Lauren, this is a part of the nice work we've done on the streamline operating model work we're doing. As you know, we're targeting to eliminate about $100 million in costs. And I'd say keep in mind, while we talked quite a bit about the admin savings, this is really about making us a more competitive company by accelerating decision making and getting decision making closer to the people who know the consumer best but it does generate nice savings for us and we are very much on track by the end of this year to complete that two-year program to generate about $100 million and reduce admin savings. And so we started that last year and you should see us continue to drive admin savings this year as well as we complete the program. But even in absolute dollars you're seeing the dollar start to go down year-over-year in spite of the increased costs we're incurring because of the cyber event.

And I'd say keep in mind, while we talked quite a bit about the admin savings. This is really about making us a more competitive company by accelerating decision, making and getting decision, making closer to the people know the consumer best but it does generate nice savings for us and we are very much on track by the end of this year to complete that two year program to generate about $100 million and reduce admin savings.

And so we started that last year and you should see us continue to drive admin savings this year as well as we complete the program. But even in absolute dollars you're seeing the dollar start to go down year-over-year in spite of the increased costs we're incurring because of the cyber event.

But as you say. Even in absolute dollars Youre seeing the dollar start to go down year over year in spite of the increased costs, we're incurring because of the cyber event.

Even in absolute dollars Youre seeing the dollar start to go down year over year in spite of the increased costs, we're incurring because of the cyber event.

Lauren R. Lieberman: Okay, for sure. And why not raise advertising dollars? I would've thought you would want to spend more. I get the percentage of sales math, but sales are down so much so I just would have thought like trying to stay in front of the consumer and frankly this year's earnings quote, unquote doesn't matter all that much because it's a rebuild, why not flex the advertising higher in the second half once you are back in stock?

And frankly this year's earnings quote unquote doesn't matter all that much because it's a rebuild why not flex the advertising higher in the second half once you are back in stock.

Linda Rendle: Hey Lauren, we had all of those debates to see and prioritize having the right level of spending and that's exactly the exercise that we undertook and we think what we have in combination with innovation, with the merchandising spend is the right level and if there is any change to that based off of what we see in the marketplace, we absolutely will make adjustments prioritizing the health of our brands and ensuring that we're in front of our consumer but we feel good about that 11%. It still is slightly higher than it was last year if you just look at absolute dollars as well. And of course, we're driving our team to try to get as much efficiency impacts as they possibly can on that spend as well, but we think it's the right level and again as we always do, we will prioritize that. And if there's any adjustment needed based off of the path forward as we rebuild we will make that but feel very confident where we are right now.

Brands and ensuring that we're in front of our consumer but we feel good about that 11%. Its still is slightly higher than it was last year. If you just look in absolute dollars as well and of course, we're driving our team to try to get as much efficiency impacts as they possibly can on that spend as well, but we think it's the right level and again as we always do we will prioritize that and if there's any.

Needed based off of the <unk>. Forward as we rebuild we will make that but feel very confident where we are right now.

Forward as we rebuild we will make that but feel very confident where we are right now.

Lauren R. Lieberman: Awesome. Thanks so much.

Linda Rendle: Thanks Lauren.

Operator: And your next question will come from Chris Carey with Wells Fargo.

Christopher M. Carey: Hi, everyone.

Linda Rendle: Hi, Chris.

Christopher M. Carey: So a couple quick questions, number one, are there specific categories where you feel like it will be more challenging to rebuild your shelves than others? Should we be thinking about this on a total portfolio basis or are there nuances between your various businesses?

Linda Rendle: Over the long term Chris, no, we feel confident across all of our categories that we'll be able to rebuild distribution, return to merchandising and of course return to the shares that we were before and grow from there. In the short term though, there are some nuances and you'll see recovery faster in some businesses and others and that has to do with the rate of turn from a consumer perspective, so some of our items turn incredibly quickly and they are heavy and bulky. And so we saw inventories depleted faster in those categories for example, and those will take a bit longer to restore. And then some of our other categories where the turns are slower, we've had better inventory positions up until this point and the rebuild will be faster.

No we feel confident across all of our categories that we'll be able to rebuild distribution returned to merchandising and of course return to the shares that we were before and grow from there in the short term, though there are some nuances and youll see recovery faster in some businesses and others and that has to do with the rate of.

Turn from from a consumer perspective, so some of our items turn incredibly quickly and they are heavy and bulky.

And so we saw inventories depleted faster in those categories for example, and those will take a bit longer to restore. And then some of our other categories where the turns are slower,

And so we saw inventories depleted faster in those categories for example, and those will take a bit longer to restore.

And then some of our other categories where the turns are slower, we've had better inventory positions up until this point and the rebuild will be faster.

we've had better inventory positions up until this point and the rebuild will be faster. And then some of it has to do with the complexity. So for example, Burke Bees was more significantly impacted because those orders are highly complex and in a manual environment that took more touches for us to get Burke shipments out and so that's one we're focused on rebuilding as quickly as we can given that was more impacted than some of our other businesses.

we've had better inventory positions up until this point and the rebuild will be faster.

And then some of it has to do with the complexity. So for example, Burke Bees was more significantly impacted because those orders are highly complex and in a manual environment that took more touches for us to get Burke shipments out and so that's one we're focused on rebuilding as quickly as we can given that was more impacted than some of our other businesses.

As quickly as we can given that was more impacted than some of our other businesses.

And that's exactly the work we're doing right now and prioritizing that with retailers so that we have Burke's holiday merchandising cold and flu and we restore inventories in the most critical items that we have and we're prioritizing that by retailer, by part of the country, by merchandising events, but over the long term, we have full confidence across all of our categories that we'll be able to restore inventory and distribution.

We're prioritizing that by retailer by part of the country by merchandising events, but over the long term, we have full confidence across all of our categories that we'll be able to restore inventory on distribution.

Christopher M. Carey: Okay, one quick follow up. I think there were some questions around trying to understand if there is any incremental costs associated with this maybe over the medium term, whether there's a step up in merchandising in the back half or any other costs on top of that. I guess, what I'm hearing is there are not right, so you don't feel the need to invest more into digital infrastructure to protect against such things. You don't feel like you need to accelerate merchandising spending in the back half of the year to perhaps match the retailers to give you more shelf space. Am I reading that correctly? It's more you're off the shelf now you're going to come back on but there's no kind of incremental costs that are going to take time to pay their way. Thanks so much.

I think there was some questions around trying to understand if there is any incremental costs associated with this maybe over the medium term, whether there's a step up in merchandising in the back half.

Or any other costs on top of that I guess, what I'm hearing is there are not right. So you don't feel the need to invest more into. Digital infrastructure to protect against such things. You don't feel like you need to accelerate merchandising spending in the back half of the year to perhaps about some retailers to give you more shelf space. Im reading that correctly, it's more you asked Michelle now youre going to come back on but Theres no. No kind of incremental costs that are going to take time to pay their way. Thanks. So much.

Digital infrastructure to protect against such things. You don't feel like you need to accelerate merchandising spending in the back half of the year to perhaps about some retailers to give you more shelf space. Im reading that correctly, it's more you asked Michelle now youre going to come back on but Theres no. No kind of incremental costs that are going to take time to pay their way. Thanks. So much.

You don't feel like you need to accelerate merchandising spending in the back half of the year to perhaps about some retailers to give you more shelf space. Im reading that correctly, it's more you asked Michelle now youre going to come back on but Theres no. No kind of incremental costs that are going to take time to pay their way. Thanks. So much.

Im reading that correctly, it's more you asked Michelle now youre going to come back on but Theres no. No kind of incremental costs that are going to take time to pay their way. Thanks. So much.

No kind of incremental costs that are going to take time to pay their way. Thanks. So much.

Linda Rendle: Sure Chris. First and clearly we had incremental costs in Q1 associated with this as we dealt with the cyber attack itself and the systems issues that we needed to overcome and build so there wasn't incremental cost there.

First and clearly we had incremental costs in Q1 associated with us as we dealt with the cyber attack itself. And the systems issues that we needed to overcome and belt. So there wasn't incremental cost there.

And the systems issues that we needed to overcome and belt. So there wasn't incremental cost there.

Second, on the marketplace piece, we felt like we put a plan in place that took into account what we thought was going to be a more challenging environment and that plan worked very well for us in this environment of rebuilding as well. So we think we have the right tools in place. We believe again we have the right level of advertising and sales promotional dollars invested in that on the recovery.

We felt like we put a plan in place that took into account what we thought was going to be a more challenging environment. And that plan works very well for us in this environment of rebuilding as well. So we think we have the right tools in place. We believe again, we have the right level of advertising and sales promotion promotional dollars.

And that plan works very well for us in this environment of rebuilding as well. So we think we have the right tools in place. We believe again, we have the right level of advertising and sales promotion promotional dollars.

<unk> invested in that.

I would note one of the things that we're looking at because we remain deeply committed to our strategic priorities over the long term, including our digital transformation, but we are so laser focused on the inventory rebuild we have work to do to see how we sequence that out over the future and if there are any implications or shifts in timing in that but we're not prepared to talk about that in detail today. Just know that continues to be of the highest importance to our strategy, we are deeply committed to it, and we'll be working out what that means in terms of timing and any implications over the coming quarters.

Tell today, just know that continues to be of the highest importance to our strategy. We are deeply committed to it.

And we'll be working out what that means in terms of timing and any implications over the coming quarters.

Christopher M. Carey: Okay. Thanks a lot. I appreciate it.

Linda Rendle: Thanks Chris.

Operator: And as a reminder, if you'd like to ask a question, you may signal by pressing star one at this time. And our next question will come from Andrea Teixeira with JP Morgan.

Operator: And our next question will come from Andrea Teixeira with JP Morgan.

Andrea F. Teixeira: Hi, good afternoon. Thank you for taking my questions. So I wanted to go back to the shipment consumption but tackle it in a different way. So you think that like if you think about units, the categories that you compete in, would you say are positive volume like in the low single digits if my math is correct, and if that's the case, what you're saying is that yes, the mid to high single digits, given pricing is facing off a bit and rolling off you're saying it might take not one quarter, it might take one or two quarters and somewhat unfortunate like losses that you had in market share or the volume that the consumer went and couldn't find two of your products, it's not that they're going to buy two of them when they got into the store, those lost sales are the lost sales. So is that the way we should be thinking?

So you you think that like if you think about units right. The categories that you compete in. Would you say are positive volume seemed like in the low single digits. If you. If you if my math is correct. And if thats the case, what youre, saying is that yes, the mid to high single digits, given pricing is facing off a bit and rolling off. Youre, saying at Mitek. Not one quarter it might take one or two quarters and somewhat unfortunate like losses that you had in market share or the volume. The consumer wins, including final product. They're going to buy two of them and when they got into the.

Would you say are positive volume seemed like in the low single digits. If you. If you if my math is correct. And if thats the case, what youre, saying is that yes, the mid to high single digits, given pricing is facing off a bit and rolling off. Youre, saying at Mitek. Not one quarter it might take one or two quarters and somewhat unfortunate like losses that you had in market share or the volume. The consumer wins, including final product. They're going to buy two of them and when they got into the.

And if thats the case, what youre, saying is that yes, the mid to high single digits, given pricing is facing off a bit and rolling off. Youre, saying at Mitek. Not one quarter it might take one or two quarters and somewhat unfortunate like losses that you had in market share or the volume. The consumer wins, including final product. They're going to buy two of them and when they got into the.

Youre, saying at Mitek. Not one quarter it might take one or two quarters and somewhat unfortunate like losses that you had in market share or the volume. The consumer wins, including final product. They're going to buy two of them and when they got into the.

Not one quarter it might take one or two quarters and somewhat unfortunate like losses that you had in market share or the volume. The consumer wins, including final product. They're going to buy two of them and when they got into the.

The consumer wins, including final product. They're going to buy two of them and when they got into the.

They're going to buy two of them and when they got into the.

store, those lost sales are the lost sales. So is that the way we should be thinking? And then related to that in a way, a second part of the question is that is there any way you can quantify, like if there is any as you get back to shelf, are you getting back that consumer that may have experimented because they couldn't find your product and regaining that consumer back and what are the tactics are you using to to regain that consumer? Thank you.

store, those lost sales are the lost sales. So is that the way we should be thinking?

And then related to that in a way, a second part of the question is that is there any way you can quantify, like if there is any as you get back to shelf, are you getting back that consumer that may have experimented because they couldn't find your product and regaining that consumer back and what are the tactics are you using to to regain that consumer? Thank you.

Like if there is any how you as you get back to the shelf are you getting back that consumer then may have experimented because they couldn't find your product. And regaining that consumer back and what are the tactics are you using to to regain that consumer. Thank you.

And regaining that consumer back and what are the tactics are you using to to regain that consumer. Thank you.

Linda Rendle: Sure. I'll start with the first part of your question. So maybe if we step back and look at what happened over Q1, and what we anticipate is happening over Q2 and beyond, the big picture is that when this first happened and we moved to manual operations, which meant there was a period of time we weren't shipping anything for a very short period of time and then we began manual operations and we were shipping at a lower rate. We still had inventory in the system for a number of weeks that allowed consumers to have no visibility to this whatsoever. They went to the shelf and they had for the most part a normal experience and they were buying Clorox products.

I'll start with the first part of your question so. If we step back and look at what happened over Q1, and what we anticipate is happening over Q2 and beyond. The Big picture is that when this first happened and we move to manual operations, which meant there was a period of time, we weren't shipping anything for a very short period of time and then we began manual operations and we are shipping at a lower rate, we still had inventory in the system for a number of weeks that.

If we step back and look at what happened over Q1, and what we anticipate is happening over Q2 and beyond. The Big picture is that when this first happened and we move to manual operations, which meant there was a period of time, we weren't shipping anything for a very short period of time and then we began manual operations and we are shipping at a lower rate, we still had inventory in the system for a number of weeks that.

The Big picture is that when this first happened and we move to manual operations, which meant there was a period of time, we weren't shipping anything for a very short period of time and then we began manual operations and we are shipping at a lower rate, we still had inventory in the system for a number of weeks that.

allowed consumers to have no visibility to this whatsoever. They went to the shelf and they had for the most part a normal experience and they were buying Clorox products.

And then over time, depending on the item and category and depending on the inventory that a retailer had and how much we could get to a particular category or retailer and the manual operations consumers, began to see out of stocks and there's a number of behaviors that happen when they experience that. One can be they delay their purchase, they don't find their Clorox product and they delay. The second thing is they really need the item in that category and so they purchased a competitive product and that varies across again different categories, and depending on where consumer inventories were.

Find their clerks product and and they delay.

The second thing is they really need the item in that category and so they purchased a competitive product and that varies across again different categories, and depending on where consumer inventories were. What that led to though is if you look at kind of what we had in Q1, about half of that downside, more than half was the bleed down of customer inventories and then the rest of that we look at as lost sales. And then as we're

And that varies across again different categories, and depending on where consumer inventories, where what that led to though is if you look at kind of what we had in Q1 about half of that downside was more than half was the bleed down of customer inventories and then the rest of that we look at is lost sales and then as well.

What that led to though is if you look at kind of what we had in Q1, about half of that downside, more than half was the bleed down of customer inventories and then the rest of that we look at as lost sales. And then as we're rebuilding that inventory back up you still have lost sales in Q2 at the beginning because we are not fully back and so that same dynamic happens with the consumer when they go to the shelf.

rebuilding that inventory back up you still have lost sales in Q2 at the beginning because we are not fully back and so that same dynamic happens with the consumer when they go to the shelf.

And as we rebuild inventories, we would expect as people who have delayed that purchase cycle or frankly haven't even had a purchase cycle yet come back that they'll see our items and continue to buy. And those that have switched to a competitive product we have strong confidence given the superior value and the trust people have in our brands that once we bring those items back they will return to that. And of course, we will support that with all of the things that we know how to do really well, merchandising, that reminds them of the benefits of our products that key pulse periods, it is why we are absolutely laser focused on things like getting cold and flu merchandising, which we begin to ship later this month and ensuring that we have that and people that are looking for Clorox disinfecting products at that time, we want to make sure that we're not disappointing them. We will do that through innovation and giving them new and increased benefits.

with all of the things that we know how to do really well, merchandising, that reminds them of the benefits of our products that key pulse periods, it is why we are absolutely laser focused on things like getting cold and flu merchandising, which we begin to ship later this month

and ensuring that we have that and people that are looking for Clorox disinfecting products at that time, we want to make sure that we're not disappointing them. We will do that through innovation and giving them new and increased benefits.

We will do that through innovation, and giving them new and increased benefits.

And of course speaking to them and our strong marketing communications where we talk about the benefits of our product and the value they offer to consumers. And we have strong confidence based off a number of things in the past, COVID-19 being one, where there was unprecedented demand and we couldn't fully meet it and we were able to as we restored supply consumers came back to our items, even though they didn't find us on shelf in previous shopping trips that they had. So we're going to play all the regular tactics that we have under our pullback, we're laser focused on doing that.

and we were able to as we restored supply consumers came back to our items, even though they didn't find us on shelf in previous shopping trips that they had. So we're going to play all the regular tactics that we have under our pullback, we're laser focused on doing that.

And previous shopping trips that they had so we're going to play all the regular tactics that we have under our pullback we're laser focused on doing that.

And then as you think about that consumer coming back, if you look at past history, just like I said with COVID or for example, when we were out of the market in Pinesol for a while, as we came back, those tactics worked very well to restore share. Maybe wipes is maybe the best example, we lost 20 share points during the time of the height of the pandemic due to an inability to meet that extraordinary demand. And once we got our distributions back, which we did, we were able to regain that and then even more. People trusted our brand and that's what they wanted and so we have full confidence we'll be able to do that given the strength of our portfolio the superior value of our brands and our continued focus on investments.

Maybe wipes is. Maybe the Best example, we lost 20 share points during the time of the height of the pandemic due to an inability to meet that extraordinary demand and once we got our distributions back which we did we were able to regain that and then even more people trusted our brand and thats, what they want it and so we have full confidence we'll be able to do that given the <unk>.

Maybe the Best example, we lost 20 share points during the time of the height of the pandemic due to an inability to meet that extraordinary demand and once we got our distributions back which we did we were able to regain that and then even more people trusted our brand and thats, what they want it and so we have full confidence we'll be able to do that given the <unk>.

strength of our portfolio, the superior value of our brands and our continued focus on investments.

What I would say is it's all about the pace. We can't completely control the pace of getting back in full distribution, but that's what we are absolutely laser focused on. Our retailers have the same goal to get us fully back in, and that's how we're really thinking about it. It is ensuring we get product back on the shelf, we get back to in-market fundamentals and then of course doing everything we can to support consumers in what we think is going to be a tougher back half for them, just as Kevin talked about from an economic perspective.

And that's how we're really thinking about it is it is ensuring we get product back on the shelf, we get back to in market fundamentals. And then of course doing everything we can to support consumers in what we think is going to be a tougher back half for them.

And then of course doing everything we can to support consumers in what we think is going to be a tougher back half for them.

Just as you look as Kevin talked about from a.

Economic perspective.

Andrea F. Teixeira: Thank you.

Okay.

Operator: Your next question will come from Olivia Tong with Raymond James.

Olivia Tong: Great. Thanks. Good afternoon. As you think about sort of rebuilding inventory and market share, how do you ensure that this doesn't impact your ability to stay on pace on innovation and then eventually your ability to get back to the gross margin recovery path because obviously you're not quite back there yet, you are still working on that, how is it that you can stay on pace of innovation with all the disruption that's happening in the business and potentially some need to rejigger the marketing and promotional dollars et cetera in the second half of the year? Thank you.

Great. Thanks, good afternoon. As you think about sort of rebuilding inventory and market share. How do you ensure that this doesn't impact your ability to stay on pace on innovation and then eventually your ability to get back to the gross margin recovery path. Theres obviously. Youre not quite back there yet you are still working on that how is it that you can stay on pace of innovation with all the disruption that's happening in the business and potentially some some need to rejigger the. Marketing and promotional dollars et cetera. In the second half of the year. Thank you.

As you think about sort of rebuilding inventory and market share. How do you ensure that this doesn't impact your ability to stay on pace on innovation and then eventually your ability to get back to the gross margin recovery path. Theres obviously. Youre not quite back there yet you are still working on that how is it that you can stay on pace of innovation with all the disruption that's happening in the business and potentially some some need to rejigger the. Marketing and promotional dollars et cetera. In the second half of the year. Thank you.

Theres obviously. Youre not quite back there yet you are still working on that how is it that you can stay on pace of innovation with all the disruption that's happening in the business and potentially some some need to rejigger the. Marketing and promotional dollars et cetera. In the second half of the year. Thank you.

Youre not quite back there yet you are still working on that how is it that you can stay on pace of innovation with all the disruption that's happening in the business and potentially some some need to rejigger the. Marketing and promotional dollars et cetera. In the second half of the year. Thank you.

Marketing and promotional dollars et cetera. In the second half of the year. Thank you.

In the second half of the year. Thank you.

Linda Rendle: Yes Olivia, it comes back to what we've spoken about before and continues to be of critical importance to us. We are deeply committed to our strategy and that includes continuing to drive our topline momentum while rebuilding margin and balancing the pace of those two things and that continues to be the center of the focus as we make decisions recovering from the cyber attack and all the choices that we'll have over the coming quarters to ensure that we're balancing that for consumers.

Comes back to what we've spoken about before and continues to be of critical importance to us. We are deeply committed to our strategy and that includes continuing to drive our topline momentum while rebuilding margin and balancing the pace of those two things and that continues to be the center of the focus as we make decisions recovering. From the cyber attack.

From the cyber attack.

all the choices that we'll have over the coming quarters to ensure that we're balancing that for consumers. So when this first happened of course job number one was to ensure that we had contained the incident. We believe we have. Job number two was to ensure that we could return operationally, which we did and of course, we transitioned back to automated and now laser focused on restoring supply. But at the same time, we knew it was critically important that we could not let go of the long term. And so I mentioned just a little bit earlier that we had taken a group of resources that did not need to be focused on the immediate issue at hand and we asked them to do everything in their power to preserve innovation in the back half

all the choices that we'll have over the coming quarters to ensure that we're balancing that for consumers.

So when this first happened of course job number one was to ensure that we had contained the incident. We believe we have. Job number two was to ensure that we could return operationally, which we did and of course, we transitioned back to automated and now laser focused on restoring supply. But at the same time, we knew it was critically important that we could not let go of the long term. And so I mentioned just a little bit earlier that we had taken a group of resources that did not need to be focused on the immediate issue at hand and we asked them to do everything in their power to preserve innovation in the back half and that was while systems were down and so they put together a set of plans to do that and the good news is we do have the ability to continue with our innovation plans in the back half because we did that.

Job number two was to ensure that we could return operationally, which we did and of course, we transitioned back to automate it and now laser focused on restoring supply but at the same time. We knew it was critically important that we could not let go of the long term and so I mentioned, just a little bit earlier that we had taken a group of resources that did not need to be focused on the immediate issue at hand, and we asked them to do everything in their power to preserve innovation in the back half.

We knew it was critically important that we could not let go of the long term and so I mentioned, just a little bit earlier that we had taken a group of resources that did not need to be focused on the immediate issue at hand, and we asked them to do everything in their power to preserve innovation in the back half.

and that was while systems were down and so they put together a set of plans to do that and the good news is we do have the ability to continue with our innovation plans in the back half because we did that.

And what we believe is we just have to continue to balance those two things. We have to balance the short term and laser focus on restoring but we have to make sure that we have that innovation and that's how we're approaching this internally. We are trying very hard to ensure that the resource is focused on the short term are not distracted and the same with the resources on the long term. And if you recall Olivia, we did this during COVID-19 when the same issue occurred, demand was so high, we had to ramp up supply, we were dealing with shortages on all our raw materials, but we also did the same thing when we put resources aside for innovation to ensure that we preserve that long term. So that's what we're going to continue to do as we make choices moving forward is we want to balance short and long term, we want to balance top line momentum with rebuilding margin and we have every confidence that we can do both of those based off of the plans that we've outlined for fiscal year '24 and beyond.

Hard to ensure that the resources focused on the short term are not distracted and the same with the resources on the long term and if you recall Olivia we did this during COVID-19. When the same issue occurred demand was so high we had to ramp up supply we were dealing with shortages on all raw materials, but we also did the same thing when we put resources aside for <unk>.

<unk> to ensure that we preserve that long term. So that's what we're going to continue to do as we make choices moving forward is we want to balance short and long term, we want a balanced top line momentum with rebuilding margin and we have every confidence that we can do both of those based off of the plans that we've outlined for fiscal year 'twenty four and beyond.

Olivia Tong: Alright, thanks. And then just secondly, given the cyber attacks and I imagine you took another look at your capabilities and IT infrastructure, obviously in the middle of a program right now, have you revisited the plan? Do you think more needs to be done? And if so, could that potentially extend the project further out?

You took another look at your capabilities in it infrastructure, obviously in the middle of a program right now. Have you revisited the plan. Do you think. More needs to be done. And if so could that potentially extend the project further out.

Have you revisited the plan. Do you think. More needs to be done. And if so could that potentially extend the project further out.

Do you think. More needs to be done. And if so could that potentially extend the project further out.

More needs to be done. And if so could that potentially extend the project further out.

And if so could that potentially extend the project further out.

Linda Rendle: Yes, so two things. Prior to the cyber attack, we had a number of particular cyber security measures in place, including endpoint detection and response tools across our enterprise and as we experienced as we continue as we bring our systems online to enhance those and taking a series of steps to further strengthen our security controls, so that's one bucket. Second of course is we are in the middle of our digital transformation as you note. And we continue to be deeply committed to that digital transformation. We think we've taken into account the broad set of tools and capabilities that we need to put in place to be more effective and efficient as part of that digital transformation. And we think more strongly than ever that is important to our business and a critical priority to do that.

Including endpoint detection. And response towards across our enterprise and as we experienced as we continue as we bring our systems online to enhance those. And taking a series of steps to further strengthen our security controls. So thats one bucket second of course is we are in the middle of our digital transformation as you note.

And response towards across our enterprise and as we experienced as we continue as we bring our systems online to enhance those. And taking a series of steps to further strengthen our security controls. So thats one bucket second of course is we are in the middle of our digital transformation as you note.

And taking a series of steps to further strengthen our security controls. So thats one bucket second of course is we are in the middle of our digital transformation as you note.

And we continue to be deeply committed to that digital transformation. We think we've taken into account the broad set of tools and capabilities that we need to put in place to be more effective and efficient as part of that digital transformation. And we think more strongly than ever that is important to our business and a critical priority to do that. What we are doing now is going through that program and ensuring any learnings we have over the last couple of months, we're integrating into it and that we're taking that into account as we bring the ERP online in the future and as we bring the rest of the tools in place. But what I would say at this point is it is too early to say if there will be any tactical changes that we'll make and how will sequence and time that but what I can reaffirm is our deep commitment to it, how critical we think it is to the company, and it is just more reaffirmed given what we've experienced over the last few months as we've restarted our systems.

We continue to be deeply committed to that digital transformation. We think we've taken into account the broad set of tools and capabilities that we need to put in place to be more effective and efficient as part of that digital transformation. And we think more strongly than ever that as an important to our business and a critical priority to do that what we are doing now is going through that program and ensuring any learnings we have over the last couple of months, we're integrating into it and that we're taking that into account as we bring the ERP online in the future and as we bring the rest of the tools in place, but what I would say at this point as it is.

And we think more strongly than ever that as an important to our business and a critical priority to do that what we are doing now is going through that program and ensuring any learnings we have over the last couple of months, we're integrating into it and that we're taking that into account as we bring the ERP online in the future and as we bring the rest of the tools in place, but what I would say at this point as it is.

What we are doing now is going through that program and ensuring any learnings we have over the last couple of months, we're integrating into it and that we're taking that into account as we bring the ERP online in the future and as we bring the rest of the tools in place. But what I would say at this point is it is too early to say if there will be any tactical changes that we'll make and how will sequence and time that but what I can reaffirm is our deep commitment to it, how critical we think it is to the company, and it is just more reaffirmed given what we've experienced over the last few months as we've restarted our systems.

Too early to say, if there will be any tactical changes that we'll make and how will sequence in time, not but what I can reaffirm is our deep commitment to it how critical we think it is to the company. And it is just more reaffirmed given what we've experienced over the last few months as we restart our systems.

And it is just more reaffirmed given what we've experienced over the last few months as we restart our systems.

Olivia Tong: Great. Thank you.

Linda Rendle: Thanks Olivia.

Operator: And our next question will come from Javier Escalante with Evercore ISI.

Javier T. Escalante Manzo: Hi, good evening everyone. I have a question I guess it's a CFO question. It has to do with the business planning, forecasting, and reporting that you've had. How often do you communicate with the segment reporting to you because this seems to be kind of like a very simple business, mostly US driven and I was surprised by the fact that it took over 10 months to know that the incident was material.

Question I guess is it CFO question. On has to do with the business planning forecasting and reporting. That said, how often do you communicate with. With the segment reporting. To you. Because this seems to be kind of like a very simple business, mostly U S driven and I was surprised by the fact that. Took over 10 months to know that the E&C them less material. Took over 10 months to know that the E&C them less material.

On has to do with the business planning forecasting and reporting. That said, how often do you communicate with. With the segment reporting. To you. Because this seems to be kind of like a very simple business, mostly U S driven and I was surprised by the fact that. Took over 10 months to know that the E&C them less material. Took over 10 months to know that the E&C them less material.

That said, how often do you communicate with. With the segment reporting. To you. Because this seems to be kind of like a very simple business, mostly U S driven and I was surprised by the fact that. Took over 10 months to know that the E&C them less material. Took over 10 months to know that the E&C them less material.

With the segment reporting. To you. Because this seems to be kind of like a very simple business, mostly U S driven and I was surprised by the fact that. Took over 10 months to know that the E&C them less material. Took over 10 months to know that the E&C them less material.

To you. Because this seems to be kind of like a very simple business, mostly U S driven and I was surprised by the fact that. Took over 10 months to know that the E&C them less material. Took over 10 months to know that the E&C them less material.

Because this seems to be kind of like a very simple business, mostly U S driven and I was surprised by the fact that. Took over 10 months to know that the E&C them less material.

Took over 10 months to know that the E&C them less material.

Kevin B. Jacobsen: Yeah Javier, what I would say is I think you saw we communicated in one of our previous 8-K that we thought this was going to have a material impact on our results and so we tried to communicate that fairly quickly but then the next step for us was to determine the actual financial impact and so that's what we communicated in our pre-announcement because we thought it is important given the last outlook we had that was put out there in August prior to the event, we did not want to wait till our earnings call today to report results. So as soon as we had a fairly good handle on the financial impact we communicated that publicly. Now you have to keep in mind the reality is we are working in an environment that had limited systems capabilities so it's more manual effort so that takes a little bit longer but importantly, we thought we wanted to get out there and provide that information as soon as we could.

And then the next step for US was to determine the actual financial impacted and so that's why we communicated in our pre announcement because we thought it is important given the last outlook we had it was. Put out there in August prior to the event, we did not want to wait till our earnings call today to report results.

Put out there in August prior to the event, we did not want to wait till our earnings call today to report results.

So as soon as we had a fairly good handle on the financial impact we communicated that publicly. Now you have to keep in mind the reality is we are working in an environment that had limited systems capabilities so it's more manual effort so that takes a little bit longer but importantly, we thought we wanted to get out there and provide that information as soon as we could.

But you have to really work through this Javier because what you're really trying to figure out is when you can restructure systems, when you can start rebuilding inventory and depending on that timeline that will impact our financial performance. So you have to let this play out a bit as we're going through the evaluation of the cyber event itself, developing recovery plan and then determining the financial implications of that recovery plan. So that was all the work that went on and then as a result of that we came out with our pre-announcement about a month ago.

And so that was all the work that went on and then as a result of that we came out with our pre announcement about a month ago.

Linda Rendle: [inaudible]

Javier T. Escalante Manzo: Linda, go ahead, sorry for that.

Yeah go ahead, sorry for that.

Linda Rendle: Oh, sorry, Javier, I was just going to build on Kevin's response to your question. The other thing I would just note is this is actually a fairly complex business and we compete in 13 categories in over 100 countries around the world. And we're aggregating all of that information in a manual environment to understand the impacts. In addition to that, we are working with all of our retailers and supplier partners who then have to transition to a manual process with us and getting our arms around exactly the implications on timing. So I just wanted to note, it is actually a rather complex business and one where when we we're in a manual environment you could understand how difficult it would be to have full visibility to all parts of that. And as Kevin said, our commitment was to transparency and giving information as we had it, which you saw in those series of 8-Ks.

The other thing I would just note is this is actually a fairly complex business and we compete in 13 categories in over 100 countries around the world. And we're aggregating all of that information in a manual environment to understand the impacts. In addition to that we are working with all of our retailers and supplier partners, who then have to transition to a manual process with us and getting our arms around exactly the implications on timing. So I just wanted to note. It is actually a rather complex business. And one where when when we were in a manual environment you could understand how difficult it would be to have full visibility to all parts of that. And we're aggregating all of that information in a manual environment to understand the impacts. In addition to that we are working with all of our retailers and supplier partners, who then have to transition to a manual process with us and getting our arms around exactly the implications on timing. So I just wanted to note. It is actually a rather complex business. And one where when when we were in a manual environment you could understand how difficult it would be to have full visibility to all parts of that.

And we're aggregating all of that information in a manual environment to understand the impacts. In addition to that we are working with all of our retailers and supplier partners, who then have to transition to a manual process with us and getting our arms around exactly the implications on timing. So I just wanted to note. It is actually a rather complex business. And one where when when we were in a manual environment you could understand how difficult it would be to have full visibility to all parts of that.

And one where when when we were in a manual environment you could understand how difficult it would be to have full visibility to all parts of that.

And as Kevin said, our commitment was to transparency and giving information as we had it, which you saw in those series of 8-Ks.

You saw in those series of eight Ks.

Javier T. Escalante Manzo: I appreciate that. Now my question was, I used to work for one corporation, a large one, global. And I remember that they used to close the books every month and we re forecast every month. So basically that was the question I was asking, so how frequent does the CFO office re forecast the business plan on a regular basis, understanding that there was a cyber event, which was very unfortunate.

Used to work for one corporation. The largest one global. And I remember that. They used to close the books every month and we re forecast every month.

The largest one global. And I remember that. They used to close the books every month and we re forecast every month.

And I remember that. They used to close the books every month and we re forecast every month.

They used to close the books every month and we re forecast every month.

So basically that was the question I was asking so how frequent does the CFO office. We forecast the business plan on a regular basis understanding that there is the west. As cyber event, which is very unfortunate.

We forecast the business plan on a regular basis understanding that there is the west. As cyber event, which is very unfortunate.

As cyber event, which is very unfortunate.

Yeah Javier, let me separate a normal environment versus the cyber environment because it's much different. So similar to [inaudible] we close our books every month, release results every month and we forecast on a regular basis. That's a cadence of anywhere from five to eight forecasts per year. So we have very frequent updates in a normal environment, but as Linda mentioned, in his last year because of the limitations for automated systems, a very manual environment so it was less visibility to our financial performance while the systems were down and then as we brought those systems back up we actually communicated as soon as we had a handle on what we thought the financial impact was to us. And right now you have full visibility over your P&L, all the legal entities, all that? We do. We have startup our systems. We're back to an automated environment that includes our ERP system. So yes, we have full visibility as we move forward now.

Kevin B. Jacobsen: Yeah Javier, let me separate a normal environment versus the cyber environment because it's much different. So similar to [inaudible] we close our books every month, release results every month and we forecast on a regular basis. That's a cadence of anywhere from five to eight forecasts per year. So we have very frequent updates in a normal environment, but as Linda mentioned, in his last year because of the limitations for automated systems, a very manual environment so it was less visibility to our financial performance while the systems were down and then as we brought those systems back up we actually communicated as soon as we had a handle on what we thought the financial impact was to us.

Similar to it sounds like the experience yet we close our books every month reserve results every month and we forecast on a regular basis thats a cadence of anywhere from five to a forecast of the year. So we have very frequent updates in a normal environment, but as Linda mentioned in his last period because of the limitations for automated systems a very manual. So it was less visibility to our financial performance water systems were down and then as we brought those systems back up we actually communicate as soon as we have a handle on what we thought the financial impact to us. And right now you have full visibility over. Your your P&L all the legal entities. We do we have startup are our systems were back to an automated environment that includes our ERP system. So yes, we have full visibility as we move forward now.

So it was less visibility to our financial performance water systems were down and then as we brought those systems back up we actually communicate as soon as we have a handle on what we thought the financial impact to us. And right now you have full visibility over. Your your P&L all the legal entities. We do we have startup are our systems were back to an automated environment that includes our ERP system. So yes, we have full visibility as we move forward now.

And right now you have full visibility over. Your your P&L all the legal entities. We do we have startup are our systems were back to an automated environment that includes our ERP system. So yes, we have full visibility as we move forward now.

Javier T. Escalante Manzo: And right now you have full visibility over your P&L, all the legal entities, all that?

Your your P&L all the legal entities. We do we have startup are our systems were back to an automated environment that includes our ERP system. So yes, we have full visibility as we move forward now.

Kevin B. Jacobsen: We do. We have startup our systems. We're back to an automated environment that includes our ERP system. So yes, we have full visibility as we move forward now.

We do we have startup are our systems were back to an automated environment that includes our ERP system. So yes, we have full visibility as we move forward now.

Javier T. Escalante Manzo: Okay, thank you very much.

Kevin B. Jacobsen: Thanks Javier.

Operator: This concludes our question and answer session. Ms. Rendle, I'd now like to turn the program back to you.

Linda Rendle: Thank you everyone. We look forward to speaking with you again on our next call and until then, please stay well.

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

The host has ended this call goodbye. The host has ended this call goodbye.

The host has ended this call goodbye.

Q1 2024 The Clorox Company Earnings Call

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