Q4 2026 The Clorox Co Earnings Call

August 3, 2026

Operator: Good day, ladies and gentlemen, and welcome to The Clorox Company Q4 fiscal year 2026 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. If you would like to ask a question, you may press star one on your touchtone pad at any time. If anyone should require assistance during the conference, please press the star zero on your touchtone pad at any time. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call, Ms. Lisah Burhan, Vice President of Investor Relations for The Clorox Company. Ms. Burhan, you may begin your conference.

Speaker #1: Good day, ladies and gentlemen, and welcome to the CLOROX Company fourth quarter fiscal year 2026 earnings release conference call. At this time, all participants are in a listen-only mode.

Speaker #1: 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 1 on your touchstone pad at any time.

Speaker #1: If anyone should require assistance during the conference, please press the star 0 on your touchstone pad at any time. As a reminder, this call is being recorded.

Speaker #1: I would now like to introduce your host for today's conference call, Ms. Lisah Burhan, Vice President of Investor Relations for the CLOROX Company. Ms. Burhan, you may begin your conference.

Speaker #2: Thank you, Jen. Good afternoon, and thank you for joining us. On the call with me today are Linda Rendle, our Chair and CEO, and Luke Bellay, our CFO.

Lisah Burhan: Thank you, Jen. Good afternoon, and thank you for joining us. On the call with me today are Linda Rendle, our Chair and CEO, and Luc Bellet, our CFO. Please note also that our earnings release and prepared remarks are available on our website at thecloroxcompany.com. Linda will share a few opening comments. Then we'll take your questions. During this call, we may make forward-looking statements, including about our fiscal year 2027 outlook. These statements are based on management's current expectations but may differ from actual results or outcome. 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 has been filed with the SEC.

Speaker #2: Please note also that our earnings release and prepared remarks are available on our website at thecloroxcompany.com. Linda will share a few opening comments, and then we'll take your questions.

Speaker #2: During this call, we may make forward-looking statements, including about our fiscal year 2027 outlook. These statements are based on management's current expectations, but actual results or outcomes may differ.

Speaker #2: 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 and has been filed with the SEC.

Speaker #2: In addition, please refer to the non-GAAP financial information section of our earnings release and the supplemental financial schedule in the Investor Relations section of our website for reconciliations of non-GAAP financial measures to the most comparable GAAP measures.

Lisah Burhan: In addition, please refer to the non-GAAP financial information section of our earnings release and the supplemental financial schedule in the investor relations section of our website for a reconciliation on non-GAAP financial measures to the most comparable GAAP measures. I will turn it over to Linda.

Speaker #2: I will turn it over to Linda.

Speaker #3: Thank you for joining us today. Throughout fiscal year 2026, we operated in a dynamic environment marked by heightened value-seeking behavior, increased competitive activity, inflationary pressures, and ongoing macroeconomic uncertainty.

Linda Rendle: Thank you for joining us today. Throughout fiscal year 2026, we operated in a dynamic environment marked by heightened value-seeking behavior, increased competitive activity, inflationary pressures, and ongoing macroeconomic uncertainty. We moved with urgency on incremental short and medium-term actions to better serve consumers and compete more effectively in this environment. That work is focused on advancing superiority in key categories by sharpening our product experiences, strengthening our price pack architecture, improving our promotion effectiveness, increasing the impact of our brand-building investments, and ensuring we are present where consumers choose to shop. At the same time, we took strong actions to advance our long-term strategy while continuing the always-on transformation work that is strengthening our capabilities, improving productivity, and positioning the business for more consistent profitable growth.

Speaker #3: We moved with urgency on incremental short- and medium-term actions to better serve consumers, and compete more effectively in this environment. That work is focused on advancing superiority in key categories by sharpening our product experiences, strengthening our price-pack architecture, improving our promotion effectiveness, increasing the impact of our brand-building investments, and ensuring we are present where consumers choose to shop.

Speaker #3: At the same time, we took strong actions to advance our long-term strategy while continuing the always-on transformation work that is strengthening our capabilities, improving productivity, and positioning the business for more consistent, profitable growth.

Speaker #3: While the majority of our businesses are performing at or above expectations, we have taken decisive actions to improve in the areas that are not yet delivering what we expect.

Linda Rendle: While the majority of our businesses are performing at or above expectations, we have taken decisive actions to improve in the areas that are not yet delivering what we expect. We are encouraged by the sequential improvement and the progress we are making. As we look at fiscal year 2027, we are confident in our strategy and the stronger foundation we have built. Our focus remains on the priorities that will create long-term value, delivering superiority across our portfolio, accelerating consumer-led innovation, investing behind our brands, shaping a portfolio structurally positioned for faster growth, advancing operational excellence, and generating fuel to reinvest in the business. With that, Jen, we will now open the line for questions.

Speaker #3: We are encouraged by the sequential improvement and the progress we are making. As we look at fiscal year 2027, we're confident in our strategy and the stronger foundation we've built.

Speaker #3: Our focus remains on the priorities that will create long-term value. Delivering superiority across our portfolio, accelerating consumer-led innovation, investing behind our brands, shaping a portfolio structurally positioned for faster growth, advancing operational excellence, and generating fuel to reinvest in the business.

Speaker #3: With that, Jen, we'll now open the line for questions.

Speaker #1: Thank you. Ms. Rendle, ladies and gentlemen, if you have a question, please press star 1 on your touchstone telephone. And our first question comes from Peter Grumm with UBS.

Operator: Thank you, Ms. Rendle. Ladies and gentlemen, if you have a question, please press star one on your touchtone telephone. Our first question comes from Peter Grom with UBS.

Speaker #4: Great, thank you. Good afternoon, everyone. Hope you're doing well. Two questions, just on the top line. So maybe just—you know, a lot of moving pieces here, but you noted weaker category growth.

Peter Grom: Great. Thank you. Good afternoon, everyone. Hope you are doing well. Two questions just on the top line. Maybe just a lot of moving pieces here, but you noted weaker category growth. Can you maybe just unpack what is embedded from a category standpoint relative to market share in the flat to up slightly organic sales outlook?

Speaker #4: Can you maybe just unpack what's embedded from a category standpoint relative to market share in the flat to up slightly organic sales outlook?

Speaker #3: Hi, Peter. I'll start. So, what we reference as weaker category growth is very consistent with actually what we saw in fiscal year 2026. We expect the categories to continue to be muted, given what's going on from a macroeconomic perspective, and consumers continuing to engage in value-seeking behaviors, largely consistent with what we saw in 2026.

Linda Rendle: Hi, Peter. I will start. What we referenced as weaker category growth is very consistent with actually what we saw in fiscal year 2026. We expect the categories to continue to be muted given what is going on from a macroeconomic perspective and consumers continuing to engage in value-seeking behaviors, largely consistent with what we saw in 2026. Of course, we are watching that very carefully because this outlook assumes more of a continuity in category growth, and no significant displacement depending on what happens with inflation and what happens in the Middle East, et cetera. I would say very much in line with the category growth that we saw in 2026. From a market share perspective, we expect to continue to make progress on market share. We had a number of categories that had turnarounds, particularly the exit rates, much stronger.

Speaker #3: Of course, we're watching that very carefully, because this outlook assumes more of a continuity in category growth, and no significant displacement depending on what happens with East, et cetera.

Speaker #3: But I would say very much in line with the category growth that we saw in 2026. And then from a market share perspective, we expect to continue to make progress on market share.

Speaker #3: We had a number of categories that had turnarounds, particularly the exit rates, which were much stronger. Food, GLAD, and Home Care continued to be strong, but we expect to continue to make progress throughout the course of the fiscal year on market share.

Linda Rendle: Food, Glad, Home Care continued to be strong. We expect to continue to make progress throughout the course of the fiscal year on market share. That gets us to the combination of what we expect from an organic growth perspective.

Speaker #3: And that gets us to the combination of what we expect from a organic growth perspective.

Speaker #4: Great, thank you. And I guess just to that point, so you're expecting a slower start to the year. You know, it sounds like a continuation of the current consumption trends, as well as some of the timing-related impacts from grilling and some merchandising.

Peter Grom: Great. Thank you. I guess just to that point, you're expecting a slower start to the year. It sounds like a continuation of the current consumption trends as well as some of the timing related impacts from grilling and some merchandising. Is that improvement simply just the absence of those latter impacts, or are you expecting consumption trends to also show signs of improvement as we move through the year?

Speaker #4: So is that improvement simply just the absence of those latter impacts, or are you expecting consumption trends to also show signs of improvement as we move through the year?

Speaker #3: You know, right now, Q1 is a timing issue for the most part. As you noted, on Kingsford in particular, we can talk about the grilling season that's underway.

Linda Rendle: Right now, Q1 is a timing issue for the most part, as you noted on Kingsford in particular. We can talk about the grilling season that's underway. Really a timing impact to Q1, then we would expect the remainder of the year, particularly the back half, more in line with the trends that we've seen over the course of 2026. If you look at what we've done every quarter, we've made sequential improvements. Consumption sequentially improved with a stronger exit rate, getting back to flat consumption in Q4. Share sequentially improved. Our exit rate in June was nearly flat. If you look at our category share results, distribution continued to improve, merchandising continued to be more effective. Q1 is a blip given some timing issues, but we would expect that pattern to continue, particularly again in the back half of 2027.

Speaker #3: But really a timing impact to Q1, and then we would expect the remainder of the year, particularly the back half, more in line with the trends that we've seen over the course of '26.

Speaker #3: And if you look at what we've done every quarter, we've made sequential improvements. So, consumption sequentially improved with a stronger exit rate, getting back to flat consumption in Q4.

Speaker #3: Shares sequentially improved. Our exit rate in June was nearly flat. If you look at our category share results, distribution continued to improve. Merchandising continued to be more effective.

Speaker #3: And issues, but we would expect that pattern to continue, particularly again in the back half of '27.

Speaker #4: Great. Thank you so much. I'll pass it on.

Peter Grom: Great. Thank you so much. I'll pass it on.

Speaker #3: Thanks, Peter.

Linda Rendle: Thanks, Peter.

Speaker #1: Our next question will come from Filippo Filorni with Citi.

Operator: Our next question will come from Filippo Falorni with Citi.

Speaker #5: Hi, good afternoon, everyone. So, Linda, maybe just picking up on Peter's question—from a market share standpoint, can you give us an update on where you feel you've made the most progress so far at the category level, and where you think there's more room to go in fiscal '27?

Filippo Falorni: Hi, good afternoon, everyone. Linda, maybe just picking up on Peter's question. From a market share standpoint, can you give us an update where you feel you've made the most progress so far from a category, at the category level, where you think there's more room to go in fiscal 2027? Is the expectation to exit the year with some share gains? Help us understand a bit the market share trajectory as we think about fiscal 2027. Thank you.

Speaker #5: And is the expectation to exit the year with some share gains? Help us understand a bit the market share trajectory as you think about fiscal '27.

Speaker #5: Thank you.

Speaker #3: Sure, Filippo. So, starting in aggregate again, we saw sequential improvement if you looked at fiscal year 2026 from Q1 to Q4, with getting to close to flat.

Linda Rendle: Sure, Filippo. Starting in aggregate, again, we saw sequential improvement if you looked at fiscal year 2026 from Q1 to Q4 with getting to close to flat. We're down a 10th of a share point in aggregate. That was due to a number of businesses continuing to perform from a share perspective. We saw our Home Care business continue to deliver share growth. We're at eight consecutive quarters of share growth in Home Care. We continue to see strong share growth in our CloroxPro and International businesses. Really importantly, we saw market share turnarounds in Glad behind our reinvestment in superiority across a number of levers, since we saw trash grow in Q4.

Speaker #3: We're down a tenth of a share point in aggregate, and that was due to a number of businesses continuing to perform from a share perspective.

Speaker #3: We saw our Home Care business continue to deliver share growth. We're at eight consecutive quarters of share growth in Home Care. We continue to see strong share growth in our Pro and International businesses.

Speaker #3: And then, really importantly, we saw market share turnarounds in Glad behind our reinvestment in superiority across a number of levers. And so, we saw trash grow in Q4.

Speaker #3: And then importantly, despite the category still being a bit soft, we saw the turnaround of share for hidden value ranch behind all of the actions we took on innovation, price pack architecture, marketing spend, and our activation against the World Cup.

Linda Rendle: Importantly, despite the category still being a bit soft, we saw the turnaround of share for Hidden Valley Ranch behind all the actions we took on innovation, price pack architecture, marketing spend, and our activation against the World Cup. We want to continue to make that progress in 2027, and all of those businesses have strong innovation plans, have strong brand investments. We continue to expect those businesses to perform from a market share perspective heading into 2027. We want to continue to make progress in other areas.

Speaker #3: And we want to continue to make that progress in '27. All of those businesses have strong innovation plans and strong brand investments, so we continue to expect those businesses to perform well from a market share perspective heading into '27.

Speaker #3: We want to continue to make progress in other areas. Of note would be litter, where if you look at the most recent week, some of the incremental actions we've taken to improve superiority are leading to a better trend on market share. But we're far from where we want to be.

Linda Rendle: Of note would be litter, where if you look at the most recent week, some of the incremental actions we've taken to improve superiority are leading to a better trend on market share, but we're far from where we want to be on that business, and we knew that this transformation would take time, but we'd expect to make progress on that. As well as Kingsford. Maybe I'll just go ahead and talk about the season for Kingsford right now. I think that would be helpful. If you look at the category from a grilling perspective across all fuel types, including pellets for the first time, the category declined, and this was largely and mostly due to weather-related issues on major holidays. Memorial Day was unseasonably chilly and wet across most of the US.

Speaker #3: That business, and we knew that this transformation would take time, but we'd expect to make progress on that. And then, as well as Kingsford—you know, maybe I'll just go ahead and talk about the season for Kingsford right now.

Speaker #3: I think that would be helpful. So if you look at the category from a grilling perspective, across all fuel types, including pellets for the first time, the category declined and this was largely and mostly due to weather-related issues on major holidays.

Speaker #3: So, Memorial Day was unseasonably chilly and wet across most of the U.S. Then, for July 4th, 185 million Americans were under a heat advisory, and almost 150 daily city temperature highs were broken during the July 4th weekend.

Linda Rendle: For July 4th, 185 million Americans were under heat advisory, and almost 150 daily city temperature highs were broken during July 4th weekend. We saw less grilling behavior from consumers, and that significantly impacted the category. In addition, retailers made some choices on merchandising to go after value shopping consumers and put smaller sizes on deal. We'll correct that next year, because it's actually better to load consumers earlier in the season. That was a learning, and we won't repeat that next year. That is what you're seeing in the category and share results for Kingsford, but we would expect that to also improve as we head into season year 2027. That'll start in March of next year.

Speaker #3: So we saw less grilling behavior from consumers, and that's significantly impacted the category. In addition, retailers made some choices on merchandising to go after value shopping consumers and put smaller sizes on deal or correct that next year.

Speaker #3: Because it's actually better to load consumers earlier in the season, and so that was a learning. We won't repeat that next year. So, that is what you're seeing in the category and share results for Kingsford, but we would expect that to also improve as we head into season year '27.

Speaker #3: That'll start, you know, in March of next year.

Speaker #5: Great, thank you. And then one question for Luke. At the gross margin line, can you remind us what your expectation is in terms of commodity costs for the year, and the commodity headwind? And what assumption do you have for oil prices for the year?

Filippo Falorni: Great. Thank you. One question for Luc. At the gross margin line, can you remind us what is your expectation in terms of commodity costs for the year and the commodity headwind, and what assumption you have for oil prices for the year? Thank you.

Speaker #5: Thank you.

Speaker #2: Sure, Filippo. So we expect fiscal year '27 inflation to be above $200 million. For perspective, that's more than double our historical range, which has been in the $75 to $100 million range.

Luc Bellet: Sure, Filippo. We expect fiscal year 2027 inflation to be above $200 million. For perspective, it's about more than double our historical range, which has been in the $75 to 100 million. Now clearly the current geopolitical backdrop continues to create volatility across energy, commodity, and supply chain markets. Our outlook assume an average for Brent crude oil at about $90 per barrel. Importantly, it's not just energy or commodity stories. While commodities remain a significant driver, we are also seeing inflation across broader areas of supply chain, including supplier costs, ocean freight, trucking costs, and other logistic-related expenses. As a result, it's fair to say that inflationary pressures are proving more persistent and should extend well beyond what is just reflected in the headlines for the oil price. The last thing I would mention is there's a dynamic from a timing standpoint.

Speaker #2: Now, clearly, the current geopolitical backdrop continues to create volatility across energy, commodity, and supply chain markets. So our outlook assumes an average for Brent crude oil at about $90 per barrel.

Speaker #2: But importantly, it's not just energy or commodity stories. While commodities remain a significant driver, we are also seeing inflation across broader areas of the supply chain, including supplier costs, ocean freight, trucking costs, and other logistics-related expenses.

Speaker #2: So as a result, you know, it's fair to say that inflationary pressures are proving more persistent and should extend well beyond what is just reflected in the headline for the oil price.

Speaker #2: The last thing I would mention is there's a dynamic from a timing standpoint. We expect the impact of the inflation to be more pronounced in the first half of fiscal year '27.

Luc Bellet: We expect the impact of the inflation to be more pronounced in H1 of fiscal year 2027.

Speaker #5: Got it. Thank you both.

Filippo Falorni: Got it. Thank you, Benoit.

Filippo Falorni: Got it. Thank you, Bellet.

Speaker #1: And we'll move next to Andrea Teixeira with JPMorgan Chase.

Operator: We'll move next to Andrea Teixeira with JPMorgan Chase.

Speaker #6: Thank you, everyone. I wanted to go back to the impact of Gold Jewel, and also get a clarification on the promo environment.

Andrea Teixeira: Thank you, everyone. I wanted to go back to the impact of GOJO and also kind of a clarification on the promo environment. On GOJO, obviously we can calculate how much the impact was on a like-for-like basis over the additional, the M&A. Can you comment on how things have been performing as an organic basis if you were to compare like for like? Any indications of the plans, I think the integration you mentioned on the prepared remarks has been going well, but obviously it is still in the phase of integration. Clarification on the promo is like how we should be thinking if it is about integrations with some of the promo. I wanted to see if there is any truths and takes from Prime Day earlier, anything we should be aware of coming into the fiscal 2027.

Speaker #6: I'm sorry, Gold. We can obviously calculate how much the impact was on a like-for-like basis or from the additional M&A.

Speaker #6: But can you comment on how those have been performing on an organic basis, if you were to compare like-for-like? And then, any indications of the plans—I think the integration you mentioned in the prepared remarks has been going well.

Speaker #6: But obviously, it's during the phase of integration. And then, clarification on the promo—how we should be thinking is about the integrations with some of the promo.

Speaker #6: So, I wanted to see if there are any puts and takes from Prime Day earlier? Anything we should be aware of coming into fiscal '27?

Speaker #3: Sure, Andrea. I'll start with Gold Jewel, and then I'll pass it to Luke to get into some more of the financial details. We're really pleased with the start that Clorox PURELL has had.

Linda Rendle: Sure, Andrea. I will start with GOJO, and I will pass it to Luc to get into some more of the financial details. We are really pleased with the start that Clorox Purell has had. We are seeing the strategic rationale for this acquisition playing through. Of course, I will note it is early, but we continue to feel great about the synergies, about the opportunities to enhance growth. The integration is going as planned and in some places slightly ahead, given the opportunities that we found. If you look at the business performance outside of what we just thought it would add from a company perspective, like for like, that business continues to perform very strong. They were actually ahead of their targets for Q4, and they have strong plans embedded into this outlook for fiscal year 2027.

Speaker #3: We are seeing the strategic rationale for this acquisition playing through. And of course, I'll note it's early, but we continue to feel great about the synergies and the opportunities to enhance growth.

Speaker #3: And the integration is going as planned, and in some places, slightly ahead, given the opportunities that we've found. If you look at the business performance outside of what we just thought it would add from a company perspective—like-for-like—that business continues to perform very strong.

Speaker #3: So, they were actually ahead of their targets for Q4, and they have strong plans embedded into this outlook for fiscal year '27. So, feeling very good about the base health.

Linda Rendle: Feeling very good about the base health, and feeling very good about our CloroxPro business in tandem, which delivered a strong Q4. We have a lot of confidence that business will continue to be accretive and additive to the company's performance.

Speaker #3: And feeling very good about our Pro business in tandem, which delivered a strong Q4. And we have a lot of confidence that business will continue to be accretive and additive to the company's performance.

Speaker #2: Yeah, so I think from the financial standpoint, most of it will be in the adjustment, except the fourth quarter, where, you know, the growth in Gold Jewel will start impacting the organic sales growth.

Luc Bellet: Yeah. I think from a financial standpoint, most of it will be in the adjustment, except the Q4, where the growth in GOJO would start impacting the organic sales growth, and it will be an outsized growth contributor. It is just a quarter, so it is fairly small for the full year. Going forward, though, we fully expect this business to continue growing at mid-single digits, and we expect to start seeing some of the revenue synergies showing up as early as next year. Once we start putting those in place, probably our expectation for the business would be mid-to high single digits for a few years as we realize those synergies. Since we are talking about financials, maybe just two more comments.

Speaker #2: And it will be an outsized growth contributor. That is just a quarter, so it's fairly small for the full year. Going forward, though, we fully expect this business to continue growing at a mid-single-digit rate.

Speaker #2: And we start. We expect to start seeing some of the revenue synergies showing up as early as next year. And so once we start putting those in place, you know, we probably our expectation for the business would be mid to high single digits, you know, for, you know, for a few years as we realize those synergies.

Speaker #2: And since we're talking about financials, maybe just, you know, two more comments. Linda mentioned the business is actually performing well and a little ahead of their plans.

Luc Bellet: Linda mentioned the business is actually performing well and a little ahead of their plans, so they were actually accretive, not dilutive as we anticipated in Q4. We expect them to be accretive to adjusted EPS as well next fiscal year. That's, as you remember, we expected them to be initially neutral. That's a stronger performance. Last thing, we talked about it in our prepared remarks, and we talked about it last time, but it's just helpful to remember that GOJO is a B2B business and has a different P&L profile than The Clorox Company, so legacy. When you look at a pro forma of the business we acquired on a gross margin standpoint, there's about half a point of dilution, and then SG&A would be about the post-acquisition, about less than a point higher than what it was.

Speaker #2: So they were actually accretive, not dilutive, as we anticipated in the fourth quarter. And we expect them to be accretive to adjusted EPS as well next fiscal year.

Speaker #2: So that's, as you remember, we expected them to be initially neutral. So that's, you know, that's a stronger performance. And then last thing, we talked about it in our prepared remarks and we talked about it last time, but it's just, you know, helpful to remember that Gold Jewel is a B2B business.

Speaker #2: And as a different P&L profile than the Clorox Company, so legacy. So when you look at a pro forma of the business we acquired, on the gross margin standpoint, there's about, you know, a half a point of dilution.

Speaker #2: And then there's SG&A, which would be about, you know, make the post-acquisition about less than a point higher than what it was.

Speaker #2: And then advertising is about a point lower than what it was. So just keep that in mind as you look at the different lines on the P&L for our outlook.

Luc Bellet: Advertising is about a point lower than what it was. Just keep that in mind as you look at the different lines on the P&L for our outlook.

Speaker #3: Good, Andrea. And then I'll turn to your question on promotion. So I'll maybe just make a comment on Q4, and then what we expect for '27.

Linda Rendle: Good, Andrea, I'll turn to your question on promotion. I'll maybe just make a comment on Q4 and then what we expect for 2027. For Q4, to your point, there was some noise in the promotional numbers, which meant that promotion was higher than year-ago, given the Prime Day shift into Q4 from a category perspective. We view that as a timing issue versus a significant change in the increase in a promotional environment as a percent of sales. What we expect for fiscal year 2027 is a continued elevated promotional environment, given the fact the focus on value, and that's more in line with what we saw pre-COVID levels, and that varies again by category. For the most part, just returning to those more historic promotional levels.

Speaker #3: So for Q4, to your point, there was some noise in the promotional numbers, which meant that promotion was higher than a year ago, given the Prime Day shift into Q4 from a category perspective.

Speaker #3: But we view that as a timing issue, versus a significant change in the increase or, you know, in a promotional environment as a percent of sales.

Speaker #3: What we expect for fiscal year '27 is a continued elevated promotional environment, given the focus on value. That's more in line with what we saw pre-COVID.

Speaker #3: Levels—and that varies, again, by category. But for the most part, we're just returning to those more historic promotional levels. And then, of course, you'll see a little bit of noise in timing in Q1 given the shift in Prime Day.

Linda Rendle: Of course, you'll see a little bit of noise and timing in Q1 given the shift in Prime Day, nothing structurally different from a promotion perspective.

Speaker #3: But nothing structurally different from a promotion perspective.

Speaker #6: Thank you.

Andrea Teixeira: Thank you.

Speaker #1: And we'll move to our next question. This comes from Anil Azul with Bank of America.

Operator: We'll move to our next question. This comes from Anna Lizzul with Bank of America.

Speaker #7: Hi, good afternoon. Thank you so much for the question. Linda, as you look at the business now and where it stands with some of the portfolio changes you've made in the last few years, especially on innovation and with the Gold Jewel acquisition, do you see an opportunity here for potential portfolio trimming with some of the underperforming categories like Litter?

Anna Lizzul: Hi. Good afternoon. Thank you so much for the question. Linda, as you look at the business now and where it stands with some of the portfolio changes you've made in the last few years, especially on innovation and with the GOJO acquisition, do you see an opportunity here for potential portfolio trimming with some of the underperforming categories like litter? Now that we are near the third anniversary of the cyber attack, I wanted to ask, in light of that, how do you see those impacted businesses performing? If some of the investment is maybe better used on other parts of the business or categories at this point? Secondly, as the challenging economic environment for consumers continues and you're expecting lower category growth, how is this impacting your plans for innovation and different pack sizes across the portfolio? Thanks so much.

Speaker #7: And now that we are near the third anniversary of the cyberattack, I wanted to ask, in light of that, how do you see those impacted businesses performing?

Speaker #7: And if some of the investment is maybe better used on other parts of the business or categories at this point? And secondly, as the challenging economic environment for consumers continues and you’re expecting lower category growth, how is this impacting your plans for innovation and different pack sizes across the portfolio?

Speaker #7: Thanks so much.

Speaker #3: Hi, Anna. Great. I'll start with portfolio. I'll probably move to your third question second, and then I'll tackle the cyber attack question to bring it home.

Linda Rendle: Hi, Anna. Great. I'll start with portfolio. I'll probably move to your third question second, and then I'll tackle the cyber attack question to bring it home. From a portfolio perspective, we are very pleased with the results of the disciplined action we've taken on our portfolio over the last number of years. The divestitures we've made aimed at getting a more predictable, steady, and higher growth company, and that certainly has played out in the divestiture of Argentina and vitamins, minerals, and supplements. As well as the large acquisition we made in GOJO, we see very clear line of sight to that improving company performance. What I'll say is we'll continue to be disciplined, just as we've shown up over the last number of years.

Speaker #3: So, from a portfolio perspective, we are very pleased with the results of the disciplined action we've taken on our portfolio over the last number of years.

Speaker #3: The divestitures we've made aimed at getting a more predictable, steady, and higher-growth company. That certainly has played out in the divestiture of Argentina and the vitamins, minerals, and supplements businesses.

Speaker #3: And as well as the large acquisition we made in Gold Jewel, we see a very clear line of sight to that improving company performance. And what I'll say is we'll continue to be disciplined.

Speaker #3: Just as we've shown up over the last number of years, we regularly review our portfolio as a management team and a board, and we're always looking to see: Is there a way to strengthen our core?

Linda Rendle: We regularly review our portfolio as a management team and a board, we're always looking to see is there a way to strengthen our core, whether that be through acquisitions or divestitures. We'll, again, just stay disciplined. It's always focused on shareholder value. It's always focused on ensuring that we have the capabilities that can execute with excellence against each of the businesses that we own, and that's the way that we'll approach it. Hopefully, based on our track record, you can see the exact way that we'll approach this moving forward, although nothing to comment on at the moment. As you look at just the challenging categories, I think there's two things to note, and both of them are challenges in some ways, but both of them are very big opportunities.

Speaker #3: Whether that be through acquisitions or divestitures. And, you know, we'll again just stay disciplined. It's always focused on shareholder value. It's always focused on ensuring that we have the capabilities that can execute with excellence against each of the businesses that we own.

Speaker #3: And that's the way that we'll approach it. So, hopefully, based on our track record, you can see the exact way that we'll approach this moving forward.

Speaker #3: Although nothing to comment on at the moment. And then, you know, as you look at just the challenging categories, I think there are two things to note.

Speaker #3: And both of them are challenges in some ways, but both of them are very big opportunities. And what this is predicated on is, we believe we are the drivers of category growth.

Linda Rendle: What this is predicated on is we believe we are the drivers of category growth. Of course, there's things that impact category growth, macroeconomics, where the consumer is. As the leaders of categories, when you have number one and number two share brands, we take the job very seriously that our job is to grow the category, and of course, we'd like to grow share in those categories as well. We're focused on two major areas to do that. The first is addressing value-seeking across consumers, we see that across all consumers, most potent in low-income consumers right now. We are laser-focused against every aspect of value superiority. For us, we have a superiority model. We've shared this before. It takes into account the product, the package, the proposition, the place, so where consumers can find it, and, of course, the price.

Speaker #3: And of course, there are things that impact category growth—macroeconomics, where the consumer is—but as the leaders of categories, when you have number one and number two share brands, we take the job very seriously that our job is to grow the category.

Speaker #3: And of course, we'd like to grow share in those categories as well. We're focused on two major areas to do that. The first is addressing value-seeking across consumers.

Speaker #3: And we see that across all consumers—most potent in low-income consumers right now. But we are laser-focused, again, on every aspect of value superiority.

Speaker #3: And for us, we have a superiority model—we've shared this before—that takes into account the product, the package, the proposition, and the place—so where consumers can find it.

Speaker #3: And, of course, the price. And we're looking through all five of those levers, by business, by retailer, to ensure that we have value superiority.

Linda Rendle: We're looking through all five of those levers by business, by retailer to ensure that we have value superiority, we're laser-focused on that. What you will see in the plan that we just finished in 2026 is we made some of those investments. Glad trash and Hidden Valley are two great examples, those are playing out in share growth. As we head into fiscal year 2027, we're also going to be making additional investments in superiority to do the same thing, where we're going to be investing in some product superiority on a number of our big businesses, including packaging upgrades. We're investing in some places in a targeted way, like we did with Glad on pricing, because based off the amount of pricing we took since COVID, there's a few places where we need to make adjustments.

Speaker #3: And we're laser-focused on that. And so, what you will see in the plan that we just finished in '26 is, we made some of those investments.

Speaker #3: Glad, Trash, and Hidden Valley are two great examples, and those are playing out in share growth. As we head into fiscal year '27, we're also going to be making additional investments in superiority to do the same thing.

Speaker #3: We're going to be investing in some product superiority on a number of our big businesses, including packaging upgrades. We're investing in some places in a targeted way, like we did with Glad, on pricing.

Speaker #3: Because, based on the amount of pricing we've taken since COVID, there are a few places where we need to make adjustments. That's going to be a key focus for us as we move forward, to continue to support consumers and category growth.

Linda Rendle: That's going to be a key focus for us as we move forward to continue to support consumers and category growth. Very importantly, consumers continue to look for better experiences overall, and of course, value is part of that, but they are looking for us to address trends that are important to them in their lives. We highlighted some of them in the prepared remarks, but consumers continue to focus heavily on their wellness. There's opportunities to provide them solutions like we're doing with Clorox PURE on their allergies, or continuing to address pet health in litter. There's just a number of opportunities that we can address to ensure that we continue to support category growth and support getting back to more normalized category growth over time, we do that through innovation.

Speaker #3: And then, very, very importantly, you know, consumers continue to look for better experiences overall. And, of course, value is part of that. But they are looking for us to address trends that are important to them in their lives.

Speaker #3: And we highlighted some of them in the prepared remarks. But consumers continue to focus heavily on their wellness. And there are opportunities to provide them solutions, like we're doing with Clorox Pure on their allergies.

Speaker #3: Or continuing to address pet health in litter. There are just a number of opportunities that we can address to ensure that we continue to support category growth and work toward getting back to more normalized category growth over time.

Speaker #3: And we do that through innovation. In '26, our innovation as a percent of sales doubled, and we expect continued progress in '27. We have a very strong slate of innovation targeted at those trends and ensuring that we deliver value to consumers.

Linda Rendle: In 2026, our innovation as a percent of sales doubled. We expect continued progress in 2027. We have a very strong slate of innovation targeted at those trends and ensuring that we deliver value to consumers. That's how we're thinking about it. Finally, on the cyber attack, I think it's a good point, Anna. Between COVID, supply chain disruptions, and the cyber attack, we have been very operationally focused as a company, getting back to basics. When you lose distribution after cyber, you have to get that distribution back. Your competition has, in many cases, had a 6-month head start on you on innovation because they haven't been focusing on that. Job one was restoring distribution, which we did, restoring the fundamentals, which we did. Now, most of the businesses have also been able to welcome consumers back fully.

Speaker #3: So that's how we're thinking about it. And then finally, on the cyber attack, I think it's a good point, Anna. You know, between COVID, supply chain disruptions, and the cyber attack, we have been very operationally focused as a company, getting back to the basics.

Speaker #3: You know, when you lose distribution after cyber, you have to get that distribution back. Your competition has, in many cases, had a six-month head start on you on innovation because they haven't been focusing on that.

Speaker #3: And so, job one was restoring distribution, which we did, restoring the fundamentals, which we did. And now, you know, most of the businesses have also been able to welcome consumers back fully.

Speaker #3: So, I'll give a good example—Home Care did that in full, and you can see the share results. I feel great about Trash and Food and some other of our businesses at the same time.

Linda Rendle: I give a good example. Home Care did that in full, and you can see the share results. I feel great about trash, food, and some other of our businesses at the same time. Litter is the one that I would say continues to have a hangover. Given the operational challenges on that business, given the amount that was on e-commerce, et cetera, I feel good that we've gotten distribution points back, but we're still working through our litter reinvention to ensure that consumers know that we are a better value than competition and making sure that that is clear on packaging, the way that we talk to them in our marketing, and improving the product, et cetera. We're making some additional investments in superiority to deal with that.

Speaker #3: Litter is the one that I would say continues to have a hangover. Given the operational challenges on that business, given the amount that was on e-commerce, et cetera, I feel good that we've gotten distribution points back, but we're still working through our litter inventory to ensure that consumers know that we are a better value than competition and making sure that is clear on packaging and in the way that we talk to them in our marketing.

Speaker #3: Improving the product, et cetera. And we're making some additional investments in superiority to deal with that. So I would say, largely, we're through a lot of the cyberattack effects, but you have seen over the last couple of years just that operational intensity at higher levels.

Linda Rendle: I would say largely we're through a lot of the cyber attack effects, but you have seen over the last couple of years just that operational intensity at higher levels. We're getting back to innovation, getting back to full brand building, and leaving most of that behind, which is energizing to us as a management team and as a company.

Speaker #3: And we're getting back to innovation, getting back to full brand building, and leaving most of that behind. Which is energizing to us as a management team and as a company.

Speaker #1: Great. Thanks so much for all the detail, Linda. Very helpful.

Anna Lizzul: Great. Thanks so much for all the details, Linda. Very helpful.

Speaker #3: Thanks, Anna.

Linda Rendle: Thanks, Anna.

Speaker #1: Our next question will come from Bonnie Herzog with Goldman Sachs.

Operator: Our next question will come from Bonnie Herzog with Goldman Sachs.

Speaker #4: All right. Thank you. Hi, everyone. I just had a quick question, first on your EPS guidance. I guess I’m wondering why your range is, I guess, you know, relatively wide versus the tight guidance range on sales and the specific 42% gross margin guide.

Bonnie Herzog: All right. Thank you. Hi, everyone. I just had a quick question first on your EPS guidance. I guess I'm wondering why your range is relatively wide versus the tight guidance range on sales and the specific 42% gross margin guide. Maybe you could help frame for us what's implied at the bottom end versus the top end of your EPS gross guidance range this year.

Speaker #4: You know, maybe you could help frame for us what's implied at the bottom end, versus the top end of your EPS gross guidance range this year.

Speaker #2: Yes, Bonnie, I can take that. I mean, at the end of the day, there are a lot of moving parts, especially with the transitory element on ERP.

Luc Bellet: Yes, Bonnie, I can take that. At the end of the day, there's a lot of moving parts, especially with the transitory element on ERP. The fact that we are comping a lower than usual incentive comp in the base year. If you remove all those, essentially the main impact on EPS is the lower gross margin. When it is about 42, there's a little bit of movement, and the EPS is quite sensitive. As I just mentioned, this is probably where we have the environment around the cost and commodities, and especially the timing more than the total is what's leading to a slightly wider than usual EPS range.

Speaker #2: But if you look at the fact that we are comping a lower-than-usual incentive comp in the base year... But if you remove all those, essentially the main impact on the EPS is the lower gross margin.

Speaker #2: And what it is about 42, it actually is, you know, there's a little bit of movement. And the EPS is quite sensitive. And as I just mentioned, this is probably where we have the environment around the cost and commodities.

Speaker #2: And especially the timing, more than the total, is what, you know, is leading to a slightly wider than usual EPS range.

Speaker #4: Okay, thanks for that. And just maybe a second quick question on A&P spend for the year. How should we think about the phasing of that spend throughout the year?

Bonnie Herzog: Okay, thanks for that. Just maybe a second quick question on A&P spend for the year. How should we think about phasing of that spend throughout the year? I'm asking in the context of the incremental spend related to GOJO and then the steps that you've talked about as you're continuing to overhaul your litter business. Thank you.

Speaker #4: And I'm asking in the context of, you know, the incremental spend related to GOJO. And then, you know, the steps that you've talked about, you know, as you're continuing to overhaul your Litter business.

Speaker #4: Thank you.

Speaker #3: Sure, Bonnie. I would consider ex-Gojo, where we're spending over 11% of sales, as we have in the past over the past number of years, where we increased it from 10% to continue.

Linda Rendle: Sure, Bonnie. I would consider ex-GOJO, where we're spending over 11% of sales as we have in the past number of years, where we increased it from 10%, to continue. The 10% reflects GOJO's lower percent of advertising and sales promotion. I would just consider phasing to be very much like we've thought about in prior years. We tend to heavy up our spending during key pulse periods, whether that be back to school, cold and flu, particularly when we're launching new innovation, which tends to happen in Q3 and Q4. Again, we're not super detailed on when we have that spending. We want it to mirror the business plan. It should look largely like other years have in the past.

Speaker #3: And so the 10 reflects Gojo's lower percent of advertising and sales promotion. And I would just consider phasing to be very much like we've thought about in prior years.

Speaker #3: We tend to increase our spending during key pulse periods, whether that be back-to-school or cold and flu. And particularly when we're launching new innovation, which tends to happen in Q3 and Q4.

Speaker #3: And again, you know, we're not super detailed on when we have that spending. We want it to mirror the business plan, but it should look largely like other years have in the past.

Speaker #4: All right. Thank you.

Bonnie Herzog: All right. Thank you.

Speaker #3: Thanks, Bonnie.

Linda Rendle: Thanks, Bonnie.

Speaker #2: Thanks, Bonnie.

Luc Bellet: Thanks, Bonnie.

Speaker #1: Our next question comes from Robert Moskow with TD Cowen.

Operator: Our next question comes from Robert Moskow with TD Cowen.

Speaker #5: Hi, thanks for the question. I have a couple. One for you, Luke. You know, it's great to see all these investments in digital capabilities in the rearview mirror.

Robert Moskow: Hi, thanks for the question. I have a couple. One for you, Luc. It's great to see all these investments in digital capabilities in the rearview mirror. Your ERP is set up. Can you give us some examples of how it's helping you move faster, maybe, make decisions with fewer touches, combine data pools? Are we right to think that at some point it can help you shrink your overhead costs, as the organization learns to use the new platform? Thanks.

Speaker #5: Your ERP is set up. Can you give us some examples of how it's helping you move faster, maybe? You know, making decisions with fewer touches.

Speaker #5: You know, combine data pools. And are we right to think that, at some point, it can help you shrink your overhead costs as the organization learns to use the new platform?

Speaker #5: Thanks.

Speaker #2: Yeah, thanks, Robert. Yeah, nice to have the cost, noise, and volatility associated with this large, complex implementation in the rearview mirror. And we, you know, we expect to see the benefit ramping up.

Luc Bellet: Yeah. Thanks, Robert. Yeah. Nice to start seeing the cost noise and volatility associated with large complex implementation in the rearview mirror. We expect to see the benefit ramping up. It will take a little while. We're just very much in stabilization mode right now, and we're going to start seeing optimization across the supply chain and across our admin functions, I would say probably later this fiscal year and then into next fiscal year. This is when we'll see the benefit on efficiencies. As you can imagine, there is obviously some productivity gain to be had on the supply chain through just better planning, lower inventory levels, just more automation opportunities. There's actually a lot of effectiveness. Where we start seeing it is now people are able to see end-to-end data.

Speaker #2: It will take a little while. You know, we're just very much in stabilization mode right now, and we're going to start seeing optimization across the supply chain and across our admin functions.

Speaker #2: I would say probably later this fiscal year, and then into next fiscal year. This is when we'll see the brunt of the benefit on efficiencies.

Speaker #2: There is, as you can imagine, there is obviously some productivity gain to be had on the supply chain. Through just better planning, lower inventory levels, just, you know, more automation opportunities.

Speaker #2: But there's actually a lot of effectiveness. And where we start seeing it is now, people are able to see end-to-end data. So you can, you know, you can have just your supply chain being much more reactive and in some case proactive to some change in demand signal.

Luc Bellet: You can have just your supply chain being much more reactive, and in some cases proactive to some change in demand signal. We start seeing this in our integrated business planning thought, and we also see a lot of efficiency, or we had some initial inefficiencies that we'll be lapping, but some efficiencies in our demand fulfillment and order to cash functions. Later, we also expect to see much more automation and efficiencies in the back office. We went from an environment that was quite manual, working on spreadsheets, with now it's fairly automated. I think I'd mentioned this, one of the benefit also of upgrading our digital infrastructure is we're able to take advantage at a broader scale of global business services.

Speaker #2: So we're starting to see this in our integrated business planning, thought. We also see a lot of efficiency, or, like, we had some initial inefficiencies that we'll be lapping, but some efficiencies in our demand fulfillment and order-to-cash functions.

Speaker #2: And then, later, we, you know, we also expect to see much more automation and efficiencies in the back office. Like, you know, we went from an environment that was quite manual, working on spreadsheets, to now, you know, fairly automated.

Speaker #2: And I think I'd mentioned this. One of the benefits also of upgrading our digital infrastructure is we're able to take advantage, at a broader scale, of global business services.

Speaker #2: And so this is something that we'll accelerate in the next few years, and that's a great source of productivity for us in SG&A.

Luc Bellet: This is something that will accelerate in the next few years, and that's a great source of productivity for us in SG&A.

Speaker #5: Okay, very good. Luke, was there any quantification of what those inefficiencies were in fiscal '26 to maintain customer service? Is it material enough to provide a benefit in comparison to '27?

Robert Moskow: Okay, very good. Luc, was there any quantification of what those inefficiencies were in fiscal 2026 to maintain customer service? Is it material enough to provide a benefit in comparison in 2027?

Speaker #2: Yeah. If you remember, Robert, we experienced most of those in the second quarter and the third quarter. There's a little bit of a range with it.

Luc Bellet: Yeah. If you remember, Robert, we experienced most of those in Q2 and Q3. There's a little bit of a range with it, but I would say it's under Alpha gains. We definitely included that lapping in our gross margin guidance.

Speaker #2: But I would say it's under a point. And then we, you know, definitely included that lapping in our gross margin guidance.

Speaker #5: Okay. Thank you.

Robert Moskow: Okay. Thank you.

Speaker #1: And we'll move next to Kevin Grundy with BMO Capital.

Operator: We'll move next to Kevin Grundy with BNP Paribas.

Speaker #6: Great, thanks. Good afternoon, everyone—it's good for me. First one—hey, Luke. First one for you, if I may: just on visibility on free cash flow and then, sort of relative to the dividend policy.

Kevin Grundy: Great. Thanks. Good afternoon, everyone.

Luc Bellet: Hi, Kevin.

Kevin Grundy: Two for me. Hey, Luc. First one for you, if I may, just on visibility on free cash flow and then sort of relative to the dividend policy, then I have a follow-up on pricing for Linda. Specifically on the dividend, as you are well aware, the board decided to modestly increase the dividend again. It sets the payout ratio for you guys around 85% of net earnings. The Consumer Staples group is around 50% to 60%. It is not quite as onerous from a payout ratio perspective if we look at free cash flow, provided that the company is able to deliver against this 11% to 13% of sales, which has been a bit choppy in recent years given all the volatility. That is all kind of a big windup, Luc.

Speaker #6: Then I have a follow-up on pricing for Linda. So, specifically on the dividend, as you're well aware, the Board decided to modestly increase the dividend again.

Speaker #6: It sets the payout ratio for you guys around 85% of net earnings. The group—the Staples Group—is around 50% to 60%. It's not quite as onerous from a payout ratio perspective.

Speaker #6: If we look at free cash flow, provided that the company is able to deliver against this 11 to 13% of sales—which has been a bit choppy in recent years given all the volatility.

Speaker #6: So that's all kind of a big wind-up, Luke. Maybe just comment on the current dividend policy. Why do you think it's appropriate, I guess, given that the payout ratio has crept up and is well above Staples peers?

Kevin Grundy: Maybe just comment on the current dividend policy, why you think it is appropriate, I guess, given that payout ratio has crept up and is well above Consumer Staples peers, and if there is any consideration by the board to potentially look at a reset to free up capital flexibility for more reinvestment elsewhere. Thanks.

Speaker #6: And if there’s any consideration by the board to potentially look at a reset to free up capital flexibility for more reinvestment elsewhere. Thanks.

Speaker #2: Kevin, thanks for the question. Actually, let me use your framing—I like that. I'm going to start by talking about free cash flow. We have a business model that generates, and continues to generate, strong free cash flows.

Luc Bellet: Kevin, thanks for the question. Actually, let me use your framing. I like that. I am going to start with talking about free cash flow. We have a business model that generates and continues to generate strong free cash flows. In fiscal year 2027, we expect another year of strong cash flow generations. That should be in line with our targeted range of 11% to 13%. That does include the temporary lower margin in the front H1 of the year, driven by the elevated costed wins, but it also includes some continued focus on working capital and balance sheet discipline to drive cash flow improvements. Net, we feel good about cash flow. As a reminder, GOJO also brings not only some strong cash flows in line with 11% to 13%, but very stable cash flow because of their install base.

Speaker #2: In fiscal year '27, we expect another year of strong cash flow generation that should be in line with our targeted range of 11 to 13%.

Speaker #2: That does include the temporary lower margin in the front half of the year, driven by the elevated costed wins, but it also includes some continued focus on working capital.

Speaker #2: And balance sheet discipline to drive cash flow improvement. So, net, we feel good about cash flow. As a reminder, Gojo also brings not only some strong cash flows in line with the 11% to 13%, but very stable cash flow because of their installed base.

Speaker #2: And beyond that, the way we structured the acquisition of GOJO, we also expect to see some tax benefit in the years to come.

Luc Bellet: Beyond that, the way we structure the acquisition of GOJO, we also expect to see some tax benefit in the years to come. All of that is actually just helping strengthen the cash flow. Net, feel good about our cash flow generation. Within that context, I think, answering your question on dividend, I think at this point, our commitment to support the dividend has not changed. As you know, we have a long track record here. Dividend has increased annually for a decade, and for now, you should expect this to continue. We do regular reviews with our boards, and we have a really robust process, and at this time, we are comfortable with our current dividends. As you mentioned, the current payout is a bit elevated, but we see this as something more transitory as we rebuild our gross margin and not something structural.

Speaker #2: So, all of that is actually just helping strengthen the cash flow. So net, we feel good about our cash flow generation. Within that context, I think, answering your question on dividend, I think at this point, our commitment to support the dividend has not changed.

Speaker #2: As you know, we have a long track record here. You know, the dividend has increased annually for decades. And, you know, for now, you should expect this to continue.

Speaker #2: We do regular, you know, reviews with our board, and we have a really robust process. At this time, we're comfortable with our current dividends.

Speaker #2: As you mentioned, the current payout is a bit elevated, but we see this as something more transitory as we rebuild our gross margin, and not something structural.

Speaker #2: So, of course, we'll continue to evaluate this over time.

Luc Bellet: Of course, we continue to evaluate this over time.

Speaker #6: Very good. Thanks, Luke. If I could just squeeze in a quick follow-up—maybe it's not quick—but for you, Linda, on the pricing side: I guess I'm a bit sort of intrigued by the reluctance for more pricing when there seems to be a price justification for it, and more on household products and less in personal care.

Kevin Grundy: Very good. Thanks, Luc. I could just squeeze in a quick follow-up. Maybe it's not quick, but for you, Linda, on the pricing side, I guess I'm a bit sort of intrigued by the reluctance for more pricing when there seems to be a price justification for it and more on household products and less in personal care. This is an industry sort of question. It's a Procter question, it's a Church & Dwight question, et cetera, where it seems like in past cycles, there's been more of a, I guess, a leaning to use that as a lever when it seems like the pricing window would be open and there's a price justification for it. It sort of begs the question, is it just cyclical, or do you think that there's something more secular going on in some of these categories?

Speaker #6: So this is an industry sort of question. It's a Procter question. It's a Church & Dwight question, et cetera, where it seems like in past cycles, there's been more of a, I guess, a leaning to use that as a lever when it seems like the pricing window would be open.

Speaker #6: And there's a price justification for it. And it sort of begs the question, is it just cyclical, or do you think that there's something more secular going on in some of these categories?

Speaker #6: And particularly those where you play, where private label is high—whether this is going to be trash bags, whether this is going to be bleach, whether this is going to be litter, et cetera.

Kevin Grundy: Particularly those where you play where private label is high, whether this is going to be trash bags, whether this is going to be bleach, whether this is going to be litter, et cetera. I'd just be curious to get your thoughts on that and whether you think that has merit, that there may be a loss of pricing power within some of these household product categories. Thank you for all that.

Speaker #6: So I'd just be curious to get your thoughts on that, and whether you think there is merit to the idea that there may be a loss of pricing power within some of these household products categories.

Speaker #6: Thank you for all that.

Speaker #4: Yeah, thanks for the question, Kevin. So I don't view a structural issue on pricing over the long term in our categories. We see consumers continue to accept pricing and better innovation that we price for with better experiences.

Linda Rendle: Yeah. Thanks for the question, Kevin. I don't view a structural issue on pricing over the long term in our categories. We see consumers to continue to accept pricing and better innovation that we price for with better experiences, and that's playing out in many of our categories today. I'll speak for Clorox only. What we view is a unique period of time where we have near back-to-back inflation cycles off of a record-setting inflation cycle back in 2022 and 2023. We experienced costs at a level 10 times higher than what we had normally experienced, and we took four rounds of pretty substantial pricing across our categories. It turned out that the elasticities in that pricing were a bit better than we had expected. Now as consumers come under pressure, you can kind of see little places where we've had to adjust pricing, et cetera.

Speaker #4: On that's playing out in many of our categories today. I think what you know, I'll speak for Clorox only. What we view is a unique period of time where we have near back-to-back inflation cycles.

Speaker #4: Coming off a record-setting inflation cycle back in '22 and '23, we experienced costs at a level ten times higher than what we had normally experienced.

Speaker #4: And we took four rounds of pretty substantial pricing across our categories, and it turned out that the elasticities in that pricing were a bit better than we had expected.

Speaker #4: But now, as consumers apply pressure, you can kind of see little places where we've had to adjust pricing, et cetera. So I think, you know, from our perspective, we just look at our toolbox, because pricing is only one tool in the toolbox.

Linda Rendle: I think from our perspective, we just look at our toolbox, because pricing is only one tool in the toolbox, and say that it is best for our categories right now to take targeted pricing, which we are doing. There are places where we are taking a regular price increase. Glad's a good example, given its commodity exposure to resin. We are taking a regular price increase at that category, and have already announced and implemented that pricing. But in other places, we're being much more targeted, and we're using the other tools we have in the toolbox, which we feel confident about, whether that be revenue growth management, price pack architecture, cost savings, and we'll have another strong year of all of that this year. We have our confidence ability to do it over the mid to long term.

Speaker #4: And say that it is best for our categories right now to take targeted pricing, which we are doing. There are places where we are taking a regular price increase—Glad’s a good example, given its commodity exposure to resin.

Speaker #4: We are taking a regular price increase in that category, and I've already announced and implemented that pricing. But in other places, we're being much more targeted.

Speaker #4: And we're using the other tools we have in the toolbox, which we feel confident about, whether that be revenue growth management, price-pack architecture, or cost savings.

Speaker #4: And we'll have another strong year of all of that this year. And we have confidence in our ability to do it over the mid to long term.

Speaker #4: So, I think, Kevin, the point is, you know, it's a unique period where we typically have a bit longer between inflation cycles. I think, given the uncertainty and volatility consumers are experiencing, we are just being more targeted in the toolbox.

Linda Rendle: I think, Kevin, the point is, it's a unique period where we typically have a bit longer between inflation cycles. I think given the uncertainty and volatility consumers are experiencing, we are just being more targeted in the toolbox, but feel fully confident that these categories can take pricing over time. We'll continue to do that through innovation. Again, we'll take targeted pricing this year where we think it's warranted, and we'll take a straight price increase on Glad trash, as you might expect. I think as we move forward, when we get back to hopefully a more normal set of cycles around inflation, you'll continue to see pricing be a strong lever for our types of business.

Speaker #4: But feel fully confident that these categories can take pricing over time. We'll continue to do that through innovation. Again, we'll take targeted pricing this year where we think it's warranted.

Speaker #4: And we'll take a strike price increase on Glad trash, as you might expect. And I think as we move forward, when we get back to hopefully a more normal set of cycles around inflation, you'll continue to see pricing be a strong lever for our types of business.

Speaker #6: Okay, very good. Thank you both.

Kevin Grundy: Okay. Very good. Thank you, folks.

Speaker #4: Thanks.

Linda Rendle: Thanks.

Speaker #1: And we'll move next to Kumal Gajarawala with Jefferies.

Operator: We'll move next to Kaumil Gajrawala with Jefferies.

Speaker #5: Hey, everybody. Thank you. I guess the big question is: what's the right level of spending? You know, it looks like shares are just, you know, slowly starting to get better.

Kaumil Gajrawala: Hey, everybody. Thank you. I guess the big question is on what's the right level of spending? It looks like shares are just slowly starting to get better. Hidden Valley Ranch may have had a bit of a boost from the World Cup. We don't know if that's sustainable or not. Why not maybe a higher figure for investment, just to assure that you don't end up back in the situation you were in earlier with more broader share losses? It feels like we're sort of just at the edge, and I'm curious what the math is behind what that right level of spending is.

Speaker #5: Hidden Valley Ranch, you know, may have had a bit of a boost from the World Cup. We don't know if that's sustainable or not.

Speaker #5: You know, why not maybe consider a higher figure for investment, just to ensure that you don't end up back in the situation you were in earlier with broader share losses?

Speaker #5: Because it feels like we're sort of just at the edge, and I'm curious what the math is behind what that right level of spending is.

Speaker #7: Hi, Kumal. I'll tackle that. So, first, I wouldn't attribute some of the bumpiness we had in fiscal year '26 to a lack of investment.

Linda Rendle: Hi, Kaumil. I'll tackle that. First, I wouldn't attribute some of the bumpiness we had in fiscal year 2026 to a lack of investment. We had an operationally challenging environment. We were transitioning our ERP in the US, et cetera, which caused more of the issues than a spending issue. What I would say is, we've looked across every line of investments across the P&L and balance sheet to say, "Do we have the right level of spending to support superiority in the categories we compete?" We are being very targeted and disciplined about adding incremental spending, and we have done that. You see that in margin this year as we're investing in some product performance. You see that in advertising, where we're spending over 11% in retail again. You see it in our trade spending, where our trade has been higher.

Speaker #7: You know, we had an operationally challenging environment. We were transitioning our ERP in the U.S., et cetera, which caused more of the issues than spending issues.

Speaker #7: And what I would say is, we've looked across every line of investment, across the P&L and balance sheet, to say: do we have the right level of spending to support superiority in the categories we see?

Speaker #7: And we are being very targeted and disciplined about adding incremental spending. And we have done that. You see that in margin this year as we're investing in some product performance.

Speaker #7: You see that in advertising, where we're spending over 11% in retail again. You see it in our trade spending, where our trade has been higher.

Speaker #7: So we want to do that in a way—now that we have better data—we can do that in a much more targeted and effective way to get to the place we want to.

Linda Rendle: We want to do that in a way, now that we have better data, we can do that in a much more targeted and effective way to get to the place we want to, and it's working. You've seen we have been able to increase consumption, increase share over time. We expect that to continue. That's the way that we approach it. Even in advertising, we expect a very high level of efficiency improvements every year from our team, but we reinvest those efficiencies back into the business where we have the highest return, and we'll do that again this year. We feel good about the spending level. If it turns out that the consumer environment weakens or strengthens in any way, those are things that we will reopen up and ensure that we continue to have the right level of spending.

Speaker #7: And it's working. You know, you've seen we have been able to increase consumption, increase share over time. We expect that to continue. But that's the way that we approach it.

Speaker #7: You know, and even in advertising, we expect a very high level of efficiency improvements every year from our team. But we are reinvesting those efficiencies back into the business where we have the highest return.

Speaker #7: And we'll do that again this year. So we feel good about the spending level. If it turns out that the consumer environment weakens or strengthens in any way, those are things that we will reopen and ensure that we continue to have the right level of spending.

Speaker #7: And our team is prioritizing ensuring we have superiority, ensuring we support the innovations that are growing the categories in the market where we're launching. And, as I mentioned earlier, we have a very strong innovation plan for '27.

Linda Rendle: Our team is prioritizing ensuring we have superiority, ensuring we support the innovations that are growing the categories in the market that we're launching. As I mentioned earlier, we have a very strong innovation plan for 2027. If there's opportunities to put good ROI spending in the system, we will.

Speaker #7: And if there are opportunities to put good ROI spending in the system, we will.

Speaker #5: Got it. And then just following up on that a little bit on value seeking or superiority is, you know, you talked about for 2027 more focus on value seeking, more focus on value superiority.

Kaumil Gajrawala: Got it. Just following up on that a little bit on value-seeking or superiority is, you talked about for 2027, more focus on value-seeking, more focus on value superiority. I think sometimes when going through that exercise, you realize maybe a larger percentage of your portfolio may be offsides there and it may take a while to turn in that it's not just related to price, it's also related to speed of product innovation or whatever it is. How do you feel about the sort of current set of products that you have out or innovations that are coming in the near term that would sort of make sure you're on the right side of the value superiority equation versus where you feel you stand now?

Speaker #5: I think sometimes, when going through that exercise, you realize that maybe a larger percentage of your portfolio may be off-sides there.

Speaker #5: And it may take a while to turn. And it's not just related to price; it's also related to speed of product innovation or whatever it is.

Speaker #5: So how do you feel about the sort of current set of products that you have out or innovations that are coming in the near term that would sort of make sure you're on the right side of the sort of value superiority equation versus where you feel you stand now?

Speaker #7: Yeah, I think for the vast majority of our portfolio, I feel very good. We either continue to see performance—so again, I'd call out our Health and Hygiene business in aggregate, which is over 50% of our business.

Linda Rendle: I think for the vast majority of our portfolio, I feel very good. We either continue to see performance, so again, I'd call out our health and hygiene business in aggregate, which is over 50% of our business, continue to feel very good that we're staying ahead of the consumer on value superiority. There'll be places even in that business we're investing in product improvements this year to continue to advance that superiority and continue to win market share. I feel very good about the changes we've made in Glad. Glad was not just pricing work that we did in large trash. We also improved our innovation plans. We improved the proposition through better marketing campaign behind "Don't get mad! Get Glad!". Feel very good about the comprehensive nature of what we tackled.

Speaker #7: We continue to feel very good that we're staying ahead of the consumer on value superiority. There will be places, even in that business, where we're investing in product improvements this year to continue to advance that superiority and continue to win market share.

Speaker #7: I feel very good about the changes we've made in Glad. And you know, Glad was not just pricing work that we did in large card trash.

Speaker #7: We also improved our innovation plans. We enhanced the proposition through a better marketing campaign behind 'Don't Get Mad, Get Glad.' And so, we feel very good about the comprehensive nature of what we've tackled.

Speaker #7: And then to your point, you know, we did see a category lift from the World Cup, but we grew share significantly. So our team's ability to activate price-pack architecture at that time, strengthen our innovation plans, and of course take advantage of the fact that there were a lot of eyes on Ranch during that time, led us to market share improvements.

Linda Rendle: To your point, we did see a category lift from World Cup, we grew share significantly. Our team's ability to activate price pack architecture at that time, strengthen our innovation plans, and of course, take advantage of the fact that there was a lot of eyes on Ranch during that time, led us to market share improvements. Though we'll watch the category carefully, I feel very good about the plans that the food team has in store for 2027. I would say largely, we're at a place where we are going to continue to improve superiority, et cetera. The one I would call out that is early work in progress is litter. We have made improvements across the full range of superiority. All the things I spoke about, product, packaging, the proposition, place, and really focused on winning in e-commerce.

Speaker #7: And though we'll watch the category carefully, I feel very good about the plans that the Food team has in store for '27. So I would say, largely, we're in a place where we are going to continue to improve superiority, et cetera.

Speaker #7: The one I would call out that is early work in progress is litter. We have made improvements across the full range of superiority—so all the things I spoke about: product, packaging, the proposition, place—and really focused on winning in e-commerce.

Speaker #7: But we've taken some additional actions on pricing recently in a targeted way, and we're seeing improvements from that. We'll continue to take additional actions, including launching a set of innovations in the back half.

Linda Rendle: We've taken some additional actions on pricing recently in a targeted way, we're seeing improvements off of that, we'll continue to take additional actions, including launching a set of innovations in the back half. To your point, Kaumil, those take a while. Innovations don't happen overnight. You'll start to see those things flow through in the back half of the year, and that will lead to further improvements.

Speaker #7: And to your point, Kumal, those take a while. Innovations don't happen overnight, but you'll start to see those things flow through in the back half of the year.

Speaker #7: And that will lead to further improvement.

Speaker #5: Got it. Thank you.

Kaumil Gajrawala: Got it. Thank you.

Speaker #1: Our next question will come from Chris Carey with Wells Fargo.

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

Speaker #2: For the questions. The.

Chris Carey: For the questions.

Linda Rendle: Hi, Chris.

Speaker #7: Hi, Chris.

Speaker #2: The first question I wanted to ask, Linda, is, I suppose, a bit of a personal and professional update. You know, Clorox has announced that it will be looking for a new CEO. You have been very transparent about how you'll be running the business for as long as is needed.

Chris Carey: The first question I wanted to ask just, Linda, is, I suppose a bit of a personal professional update. Clorox has announced that it'll be looking for a new CEO. You have been very transparent about you'll be running the business for as long as is needed. Can you just tell us how is that process going? What are the sorts of skill sets you're looking for? Do you have any updated view on timeline? Would just love to get a little bit more context for the leadership development for the organization, if you'll entertain that.

Speaker #2: And so, can you just tell us, you know, how that process is going? What are the sorts of skill sets you're looking for? Do you have any updated view on the timeline?

Speaker #2: We'd just, you know, love to get a little bit more context, you know, regarding the leadership development within the organization, if you'll entertain that.

Speaker #7: Sure, Chris. Of course. As we announced back in May, as you noted, I informed the Board of my intent to step down from my role.

Linda Rendle: Sure, Chris, of course. As we announced back in May, as you note, I informed the board of my intent to step down from my role, given my personal health challenges. The good news is I continue to do well. I'm cancer-free, and feeling well, and continue to execute my job, just like I did before. The board has made good progress in the search. When we first announced that, we let you know that they were in the process of hiring a leading external search firm. They have done that, and I can say that the search is progressing as expected against the timeline the board has laid out. From a skill set perspective, that independent group of the board is properly evaluating our strategy and where we are in our execution and looking for the next leader to take that next leap.

Speaker #7: Given my personal health challenges, the good news is I continue to do well—I’m cancer-free and feeling well, and I continue to execute my job just like I did before.

Speaker #7: The board has made good progress in the search. When we first announced that, we let you know that they were in the process of hiring a leading external search firm. They have done that.

Speaker #7: And I can say that the search is progressing as expected, against the timeline the Board has laid out. And then, from a skill set perspective, that independent group of the Board is properly evaluating our strategy and where we are in our execution.

Speaker #7: And looking for the next leader to take that next leap. We've made a very large transformation as a company—rebuilding the foundation of our data and technology, our innovation plans, our portfolio.

Linda Rendle: We've made a very large transformation as a company, rebuilding the foundation of our data and technology, our innovation plans, our portfolio. Of course, it will be up to a new leader to take a fresh look at that, continue the progress, but also, depending on where they land, maybe take it in a different direction, too. The board is hard at work in determining the right person to do that for the company. In the meantime, we are laser-focused on continuing to execute. I personally am laser-focused on continuing to execute. Then, of course, ensuring a smooth transition that we will do once that new leader is named.

Speaker #7: And, of course, it will be up to a new leader to take a fresh look at that—continue the progress, but also, you know, depending on where they land, maybe take it in a different direction, too.

Speaker #7: And the board has started work in determining the right person to do that for the company. In the meantime, we are laser-focused on continuing to execute.

Speaker #7: I am personally laser-focused on continuing to execute, and then, of course, ensuring a smooth transition—which we will do once that new leader is named.

Speaker #2: Okay, thank you. And we're certainly sending you many well wishes. Then, just from a fundamental perspective, I just had two clarifications from this earnings call.

Chris Carey: Okay. Thank you, and we're certainly sending you many well wishes. Just from a fundamental perspective, I just had two clarifications from this earnings call. The first would be on why growth accelerates a bit relative to fiscal Q1, which I think you characterized as a blip. Was that a reference specifically to the seasonal impact of the grilling category? Is it if we were to exclude the grilling business, you should be running about in line with your full-year guidance, or are you looking for something else to improve relative to where you'd be in fiscal Q1? The second clarification is just around pricing. You noted in the prepared remarks, prospects for pricing. You said strategic pricing several times, including on Glad. What level of pricing that we should be thinking about when it comes to your full-year expectations for flat to slightly positive organic sales growth?

Speaker #2: The first would be on why growth accelerates a bit relative to fiscal Q1, which I think you characterized as a blip. Was that a reference specifically to the seasonal impact of the grilling category?

Speaker #2: Is it, if we were to exclude the grilling business, you should be running about in line with your full-year guidance? Or are you looking for something else?

Speaker #2: You know, to improve relative to where you'd be in fiscal Q1? The second clarification is just around pricing. You noted in the prepared remarks the prospects for pricing.

Speaker #2: You said strategic pricing several times, including on Glad. How much—what's the level of pricing that we should be thinking about when it comes to your, you know, full-year expectations for flat to, you know, slightly positive organic sales growth?

Speaker #2: Thank you.

Chris Carey: Thank you.

Speaker #7: Sure. For Q1, Chris, you are correct in assuming that the timing impacts due to Kingsford and some other promotional impacts are really the story in Q1.

Linda Rendle: Sure. For Q1, Chris, you have it right in assuming that the timing impacts due to Kingsford and some other promotional impacts are really the story in Q1. If not, that would look much like the trajectory for the remainder of the year. That is the primary impact to Q1, as you note. Then from a pricing perspective, back to Kevin's question, we are taking what we would call targeted or strategic pricing. We've done that across the portfolio, looking at the places where the security warrants it, where we feel we have more exposure, but being very disciplined about that. The one category I called out that is more like it has been in the past is Glad, given its exposure to commodities. That price increase is being implemented right now and largely going as expected.

Speaker #7: And if not, that would look much like the trajectory for the remainder of the year. So, that is the primary impact to Q1, as you note.

Speaker #7: And then, from a pricing perspective, you know, back to Kevin's question, we are taking what we would call targeted or strategic pricing, and we've done that across the portfolio—looking at the places where, you know, the security warrants it, where we feel we have more exposure.

Speaker #7: But being very disciplined about that. And the one category I called out that is more like it has been in the past is Glad, given its exposure to commodities.

Speaker #7: That price increase is being implemented right now and is largely going as expected. But if you compare it to historical inflation cycles—certainly looking back at 2023—you would see a more muted price impact.

Linda Rendle: You would see versus historical inflation cycles, if you look back certainly to 2023, a more muted price impact from that perspective, given the degree of pricing we're taking. Then, of course, we price through innovation, which you see as innovations roll out, and that gets built in. That's the extent. You won't see a very large aspect from straight price increases, given the amount that we're using it for this year to offset inflation.

Speaker #7: From that perspective, given the degree of pricing we’re taking—and then, of course, we price through innovation, which you see as innovations roll out.

Speaker #7: And that gets built in. But that's the extent. You won't see a very, very large aspect from straight price increases, given the amount that we're using it for this year to offset inflation.

Speaker #2: Great. And just, is it fair to assume that pricing should be, you know, positive when we see the net price line for the end of the year, and that the initial outlook for volume is for negative volume?

Chris Carey: Great. Just, is it fair to assume that pricing should be positive when we see the net price line for the end of the year and that the initial outlook for volume is for negative volume? Perhaps you think it'll do better over the course of the year, but is that the construct for the outlook? Thanks, Rona.

Speaker #2: Perhaps you think it will do better over the course of the year, but is that the construct for the outlook?

Luc Bellet: That's correct, Chris. You have a few things going on, but net, this is how it will play out.

Speaker #5: That's correct, Chris. You have a few things going on. The net—this is how it will play out.

Speaker #2: Okay. Thank you.

Chris Carey: Okay. Thank you.

Speaker #7: Thanks, Chris.

Linda Rendle: Thanks, Chris.

Speaker #1: We'll move next to Javier Escalante with Evercore ISI.

Operator: We'll move next to Javier Escalante with Evercore ISI.

Speaker #8: Hello, everyone. I think I’m going to ask the pricing question from a different angle. Perhaps for Luke, it would be helpful if you could frame it in the context of the gross margin in 2027—a sort of bridge.

Javier Escalante: Hello, everyone. I guess I'm gonna ask the pricing question from a different angle. Perhaps for Luc, it would be helpful if you frame it on the context of the gross margin in 2027, sort of a bridge, right? You've mentioned that commodity inflation is about $200 million plus. That put you around 300 basis points of negative. If you can dimension the offsets, basically the mix or savings or pricing, what have you, that would be very helpful. Whether that take, why is it doesn't risk the recovery in market share that you mentioned on Glad? Thank you.

Speaker #8: Right? You mentioned that commodity inflation is about $200 million plus. So that puts you around 300 basis points negative. So if you can dimension the offsets—basically the mix, or savings, or pricing, what have you—that would be very helpful.

Speaker #8: And whether that take—why is it, it doesn't risk the recovery in market share that you mentioned on Glad? Thank you.

Speaker #5: Yeah, sure. Javier, I can take it. So yes, just as you mentioned, inflation of $200 million would be—you know, it's going to be more concentrated in the front half.

Luc Bellet: Yeah, sure. Javier, I can take it. Yes. As you just mentioned, inflation of $200 million, it's going to be more concentrated in the front half. As you look at all levers to offset those, productivity would still be the primary lever, right? We mentioned that we actually feel very good about the strength of our cost savings pipeline. Pricing would be another lever, strategic pricing, but not as much as productivity. There are other levers that we're taking. Linda just mentioned, in some cases, we're making investments to actually improve our superiority and brand position, and it can be adjustment in pricing or trade promotion going the other way. When you net all of that, we expect to start recovering gross margin in the back half.

Speaker #5: As you look at all levers to offset those, productivity would still be the primary lever, right? And we mentioned we actually feel very good about the strength of our cost savings pipeline.

Speaker #5: And pricing would be another lever—strategic pricing—but not as much as productivity. There are other levers that we're taking, as Linda just mentioned.

Speaker #5: In some cases, we're making investments to actually improve our superiority in brand position. And it can be an adjustment in pricing or trade promotion going the other way.

Speaker #5: But when you net all of that, we expect to start, you know, recovering gross margin in the back half. Now, of course, across the full year, we won't be able to fully recover the gross margin.

Luc Bellet: Now, of course, across the full year, we won't be able to fully recover the gross margin that we expect to exit the year with a much stronger gross margin.

Speaker #5: But we, you know, we expect to exit the year with a much stronger gross margin.

Speaker #8: And Linda, if you can comment on the market share?

Javier Escalante: Linda, if you can comment on the market share?

Speaker #7: Sure. Javier, is there a particular angle on market share you want me to cover?

Linda Rendle: Sure. Javier, is there a particular angle on market share you wanted me to cover in addition to what we covered?

Javier Escalante: Yes. You basically, it seems like antagonistic kind of goals because you talk about value-seeking behavior, and the two categories that you flag are bags and cat litter. Those, what you see there is that you have value brands actually gaining share and basically investments that you talk about, at least from this kind of standpoint, shows negative pricing. From going from negative pricing, which is what drove the share stabilization to positive pricing going forward, if you can help us have your confidence in terms of this is not going to come at expense of the share recovery that you mentioned. Thank you.

Speaker #8: Yes. Yes. Because you basically I mean, and it seems kind of like antagonistic kind of goals. Because you talk about value-seeking behavior. And the two categories where you that you flag are bags and cat litter.

Speaker #8: And those what you see there is is that you have value brands actually gaining share. And basically, the investments that you talk about, at least from this account standpoint, shows negative pricing.

Speaker #8: So, from going from negative pricing—which is what drove the share stabilization—to positive pricing going forward, if you can help us, you know, have your confidence in terms of this is not going to come at the expense of the share recovery that you mentioned.

Speaker #8: Thank you.

Speaker #7: Yeah, I think it's really important that we're balancing those two things, Javier. We're balancing ensuring that we recover margins over time with continued performance from a category and share perspective.

Linda Rendle: Yeah. I think it's really important that we're balancing those two things, Javier. We're balancing ensuring that we recover margins over time with continued performance from a category and share perspective. Let's just take Glad Trash. I think it's a great example. Glad Trash is actually growing share, and we feel good about the progress that it has made. We are taking pricing consistent with what we see in the category. We see that the pricing is moving in other parts as well. Typically when we've taken price in the past, that's a place where share is either neutral or positive. We're going to see how this plays out. We don't know the level of pricing other people will take.

Speaker #7: So, let's just take Glad trash. I think it's a great example. Glad trash is actually growing share, and we feel good about the progress that it has made.

Speaker #7: And we are taking pricing consistent with what we see in the category. We see that pricing is moving in other parts as well.

Speaker #7: And typically, when we've taken price in the past, that's a place where share is either neutral or positive. We're going to see how this plays out.

Speaker #7: We don't know the level of pricing other people will take. You know, we've determined our own level of pricing that we think is right.

Linda Rendle: We've determined our own level of pricing that we think is right, to recover the right degree of commodities combined with all those other factors, but we'll watch it very closely. The good news is we have better tools today to evaluate those changes in pricing. If we need to make adjustments after we take that price increase, we'll do exactly like we did in Glad Trash before, and all of our other businesses will follow a similar model. I'd also call out for Hidden Valley, it's the same thing. We've been very targeted in how we think about pricing. We've recovered share through good fundamentals, through good distribution, strong innovation, good price pack architecture. As we layer pricing on top of those things, we will look very carefully to see that that whole package of superiority is coming together. If not, we'll make adjustments.

Speaker #7: To recover the right degree of commodities, combined with all those other factors. But we'll watch it very closely. And the good news is, we have better tools today to evaluate those changes in pricing.

Speaker #7: And if we need to make adjustments after we take that price increase, we'll do exactly like we did in Glad Trash before. And all of our other businesses will follow a similar model.

Speaker #7: I'd also call out Hidden Valley. It's the same thing. We've been very targeted in how we think about pricing, and we've recovered share through good fundamentals.

Speaker #7: Through good distribution, strong innovation, and good price pack architecture. And so, as we layer pricing on top of those things, we will look very carefully to see that the whole package of superiority is coming together.

Speaker #7: And if not, we'll make adjustments. But right now, we're feeling good about the share position we're heading into. Sequential improvement, quarter after quarter. Exit rate in June—the strongest we saw.

Linda Rendle: Right now, feeling good about the share position we head into, sequential improvement quarter after quarter, exit rate in June, the strongest we saw all fiscal year 2026, and we'd expect that we continue to make progress in 2027. We know with pricing, it might be a little bumpy, but we're heading in the right direction.

Speaker #7: All fiscal year ’26. And we'd expect that we continue to make progress in ’27. And we know with pricing, it might be a little bumpy.

Speaker #7: But we're heading in the right direction.

Speaker #8: Thank you. Very helpful.

Javier Escalante: Thank you. Very helpful.

Speaker #1: Our next question will come from Olivia Tong with Raymond James.

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

Speaker #9: Great, thanks. Given the volatility in fiscal ’26, can you talk about your retail relationships and how you’re adapting your business for the level of promotion in the market?

Olivia Tong: Great. Thanks. Given the volatility, in fiscal 2026, can you talk about your retail relationships and how you're adapting your business for the level of promotion in the market, and any other learnings from this year that you think should help you stay better on track towards targets this year? Second, can you talk about inventory levels at the moment beyond the grilling and food-related categories that you talked about for Q1? Is there anywhere else where shipments and sell-in might have diverged? Then lastly, on shelf space, are you still below where you were pre-cyber? What's your view on opportunity for incremental shelf space gains this year? Thank you.

Speaker #9: And any other learnings from this year that you think should help you stay better on track towards targets this year? Second, can you talk about inventory levels at the moment, beyond the grilling and food-related categories that you talked about for Q1?

Speaker #9: Is there anywhere else where shipments and selling have where shipments and selling might have diverged? And then lastly, on shelf space, are you still below where you were pre-cyber?

Speaker #9: And what's your view on the opportunity for incremental shelf space gains this year? Thank you.

Speaker #7: Sure. If you don't mind, I'm going to go a little bit out of order. I'll just start with the simple one up front, which is inventory levels.

Linda Rendle: Sure. If you don't mind, I'm gonna go a little bit out of order. I'll just start with the simple one up front, which is inventory levels. Largely, we see inventory levels in line with what we would expect, and have not seen in our categories any material inventory changes or pressures from retailers. We would expect that to be fluid throughout the year as retailers make choices, but we have no visibility to that. Again, it's short-term noise. It doesn't tend to change the way that consumers consume or how retailers approach our brands in store. For now, we don't have any aspects outside of the ones that you mentioned with promotional timing in Kingsford. Shelf space from cyber, we fully recovered all the distribution we lost from cyber. We did detailed planning at a by retailer level, by business level.

Speaker #7: So, largely, we see inventory levels in line with what we would expect and have not seen, in our categories, any material inventory changes or pressures from retailers.

Speaker #7: We would expect that to be fluid throughout the year as retailers make choices, but we have no visibility to that. And again, that's short-term noise.

Speaker #7: You know, it doesn’t tend to change—the way that consumers consume or how retailers approach our brands in store. But for now, we don’t have any aspects outside of the ones that you mentioned with promotional timing in Kingsford.

Speaker #7: Shelf space from cyber — we fully recovered all the distribution we lost from cyber. And we did detailed planning at a by-retailer level, by-business level.

Speaker #7: Distribution is actually higher today than it was post-cyber. And we gained share of distribution this year as well. Based on our innovation plans, we expect to continue to have another strong year and gain, you know, physical and virtual shelf space, as well as TDPs.

Linda Rendle: Distribution is actually higher today than it was post-cyber, we gained share of distribution this year as well. Based off of our innovation plans, we expect to continue to have another strong year in gaining physical, virtual shelf space, as well as TDPs. I think that moves nicely into your question on retailer relationships, Olivia, because the reality is that the sales environment, the retail environment is changing really rapidly and in exciting ways for consumers.

Speaker #7: And I think that that moves nicely into your question on retailer relationships, Olivia, because the reality is that the sales environment—the retail environment—is changing really rapidly.

Speaker #7: And in exciting ways for consumers. Given the technology, given the data that we all have in the ecosystem, we have an opportunity to give consumers better shopping experiences.

Linda Rendle: Given the technology, given the data that we all have in the ecosystem, we have an opportunity to give consumer better shopping experiences, whether that be through e-commerce, through the way that we talk to them about our brands, all the way to visions of having agentified commerce, where consumers are really out of a lot of the decision-making patterns, we can ensure that they are spending time doing things they really love doing rather than shopping. With that, we've invested with our retail partners to ensure that we're ready and leading in many of those aspects. I call out, in particular, with some of our larger retailers, our focus on e-commerce.

Speaker #7: Whether that be through e-commerce, through the way that we talk to them about our brands, all the way to visions of having agentified commerce, where consumers are really out of a lot of the decision-making patterns.

Speaker #7: And we can ensure that they are spending time doing things they really love doing, rather than shopping. And with that, we've invested with our retail partners to ensure that we're ready and leading in many of those aspects.

Speaker #7: I'd call out, in particular with some of our larger retailers, our focus on e-commerce. We're getting much more sophisticated with those retailer partners in how we talk to consumers in e-commerce.

Linda Rendle: We're getting much more sophisticated with those retailer partners on how we talk to consumers in e-commerce, how we translate that into sales, how we tie that into brick-and-mortar stores and our plans there, we're seeing the impact. We've had a number of categories significantly improve their growth rates in e-commerce, that will continue to be a focus for the company in 2027. We have relatively strong share positions in e-commerce, there are places where we're under-shared, we will make progress this year in ensuring that each category by retailer, we have specific plans for and are laser-focused on e-commerce. Then I think from a future perspective, because we've invested so much in those retailer relationships, we're ready for whatever comes, want to be building in our categories the plans of the future for retailers. We've seen that with them.

Speaker #7: How we translate that into sales, how we tie that into brick-and-mortar stores and our plans there—and we're seeing the impact. We've had a number of categories significantly improve their growth rates in e-commerce.

Speaker #7: And that will continue to be a focus for the company in '27. We have relatively strong share positions in e-commerce, but there are places where we're under-shared.

Speaker #7: And we will make progress this year in ensuring that, for each category by retailer, we have specific plans. And we are laser-focused on e-commerce.

Speaker #7: And then I think from a future perspective, because we've invested so much in those retailer relationships, you know, we're ready for whatever comes. And we want to be building, in our categories, the plans of the future for retailers.

Speaker #7: And we've seen that with them. You know, we are category advisors given our leading share position in most of the categories we compete in, and we continue to invest in that capability through category growth ideas that we work with retailers on.

Linda Rendle: We are category advisors, given our leading share positions in most of the categories we compete, and we continue to invest in that capability through category growth ideas that we work with retailers on, and then, of course, the future of capabilities. It feels very, very good that our retailer relationships are stronger than they've been. That's an area where you have to continue to improve year after year, and that's what we're focused on for 2027, particularly on the e-commerce side.

Speaker #7: And then, of course, the future of capabilities. So, we feel very, very good that our retailer relationships are stronger than they've been. But that's an area where, you know, you have to continue to improve year after year.

Speaker #7: And that's what we're focused on for '27, particularly on the e-commerce side.

Speaker #1: And we'll move to our next question from Stephen Powers with Deutsche Bank.

Operator: We'll move to our next question from Stephen Powers with Deutsche Bank.

Speaker #2: Great, thanks so much. Maybe, just as you mentioned in the prepared remarks, there's been a lot of work done on Fresh Step over the last several months.

Stephen Powers: Great. Thanks so much. Linda, as you mentioned in the prepared remarks, there's been a lot of work done on Fresh Step over the last several months, and I know it's still relatively early, but maybe a little bit more perspective on what you've seen since you made those changes and what your expectations are in terms of the progress, the progression from here.

Speaker #2: And I know it's still relatively early, but maybe a little bit more perspective on what you've seen since you made those changes, and what your expectations are in terms of the progress and the progression from here.

Speaker #7: Yeah, thanks, Steve. You know, maybe just taking a step back on Fresh Step. I think this ties really well to how we talk about growing categories and making sure that we win share in our categories.

Linda Rendle: Yeah. Thanks, Steve. Maybe just taking a step back on Fresh Step, I think this ties really well to how we talk about growing categories and making sure that we win share in our categories. That all ties to do we have an overall superior proposition that we're giving the consumer through all aspects? Is the product better? Is the packaging better? Are we communicating that difference to consumers in a way that's compelling? Can they find us wherever they're shopping, and is it easy to procure? Then, of course, is it the right price? When we evaluated our plan on Fresh Step, we could see that we were not in a place where we had superiority. We overhauled the entire Fresh Step brand to address every single one of those elements of superiority, and we knew that that would just be a first phase.

Speaker #7: And that all ties to: do we have an overall superior proposition that we're giving the consumer through all aspects? Is the product better? Is the packaging better?

Speaker #7: Are we communicating that difference to consumers in a way that's compelling? Can they find us wherever they're shopping? And is it easy to procure?

Speaker #7: And then, of course, is it the right price? When we evaluated our plan on Fresh Step, we could see that we were not in a place where we had superiority.

Speaker #7: And so we overhauled the entire Fresh Step brand to address every single one of those elements of superiority. And we knew that that would just be the first phase.

Speaker #7: So we improved the product. We had some product that had too much dust, so we reduced the dusting in our product. We changed our focus on some of the categories where we hadn't been competing a lot. Lightweight is a very important part of the segment.

Linda Rendle: We improved the product. We had some product that had too much dust, we reduced the dusting in our product. We changed our focus on some of the categories where we hadn't been competing a lot. Lightweight is a very important part of the segment, and we had a very small business there, we've invested in innovation in lightweight. We've invested in packaging changes to consumer-preferred packaging in that lightweight. We changed our marketing and all of our e-commerce sites. In addition, more recently, we've invested more in price. That's all in an effort to improve that superiority. Because we changed all of those elements, that takes a while to ensure the consumer understands the value you're getting with that better product, translating that into sales, and translating that into repeats.

Speaker #7: And we had a very small business there. So we've invested in innovation in lightweighting. We've invested in packaging changes to consumer-preferred packaging in that lightweighting.

Speaker #7: We've changed our marketing and all of our e-commerce sites. In addition, more recently, we've invested more in price. That's all in an effort to improve that superiority.

Speaker #7: But because we changed all of those elements, it takes a while to ensure that the consumer understands the value you're getting with that better product.

Speaker #7: Translating that into sales and then translating that into repeat. And that's what we're in right now—getting through the hump of that, making executional changes where things weren't shelved exactly right.

Linda Rendle: That's what we're in right now is getting through the hump of that, making executional changes where things weren't shelved exactly right, making claim changes where we're not communicating exactly right the product changes. We're in early innings. Of course, most importantly is getting back to a strong slate of innovation that drives the category. We knew that would take some time, and that really starts in earnest in fiscal year 2027, which we're excited to get out in the market in the back half. I would characterize it as something where, given cyber, given the impacts, and given the very strong competitive set we have here who continue to make strides, we fell behind in superiority, we're taking all the right steps to address that.

Speaker #7: Making claim changes where we're not communicating exactly right the product changes. We're in early innings. And then, of course, most importantly, is getting back to a strong slate of innovation that drives the category.

Speaker #7: And we knew that would take some time. That really starts in earnest in fiscal year '27, which we're excited to get out in the market in the back half.

Speaker #7: So I would characterize it as something where, given cyber, given the impacts, and given the very strong competitors that we have here who continue to make strides, you know, we fell behind in superiority.

Speaker #7: But we're taking all the right steps to address that. You can see, through examples—whether that be Glad Trash or Hidden Valley—that when we put our mind to it and get that superiority right, we can make the right changes to get back to a leadership position in this category.

Linda Rendle: You can see through examples and whether that be Glad trash or Hidden Valley, that when we put our mind and get that superiority right, we can make the right changes to get back to a leadership position in this category. I feel confident over time we will, it's early innings, Steve, and we'll continue to keep you updated as we make progress.

Speaker #7: So, I feel confident that over time we will. But it's early innings, Steve, and we'll continue to keep you updated as we make progress.

Speaker #2: Yep. Okay, very good. And if I could, I guess, a question on guidance, but more from a philosophical perspective. I mean, just given, you know, the CEO search, as you mentioned, is still underway.

Stephen Powers: Yep. Okay. Very good. If I could, I guess a question on guidance, more from a philosophical perspective. Just given the CEO search, as you mentioned, being still underway and a transition anticipated, was there anything that was done differently in approaching the fiscal 2027 guidance formulation in terms of embedding just enough conservatism to make sure that you're setting up incoming leadership for success and avoiding a need to make additional changes and reinvestments from this new level, this new fiscal 2027 base, if you will? Thank you.

Speaker #2: And a transition anticipated. I guess, was there anything that was done differently in approaching the fiscal '27 guidance formulation, in terms of embedding just, you know, enough conservatism to make sure that you're setting up incoming leadership for success?

Speaker #2: And avoiding a need to make, you know, additional changes and reinvestments from this new level, this new fiscal '27 base, if you will. Thank you.

Speaker #7: Yeah. Yeah, Steve. You know, as we set this budget with our board, we took the exact same principled approach we've taken every year, which is looking at the external factors.

Linda Rendle: Yeah. Stephen, as we set this budget with our board, we took the exact same principled approach we've taken every year, which is looking at the external factors, making the assumptions around what we expect from the consumer category and cost, looking at the plans that we have and doing everything we can to strengthen them, and then setting an appropriate and balanced outlook based off of those factors. Nothing else was taken into consideration. It was the same set of factors that we always consider. From a management team and board perspective, we are laser-focused on executing that because that's the best way that we can set that up for a new CEO to come in, is to execute these plans we have, and we feel these plans are the right plans to continue to advance our categories and our share position within them.

Speaker #7: Making the assumptions around what we expect from the consumer category and cost, looking at the plans that we have, and doing everything we can to strengthen them.

Speaker #7: And then setting an appropriate and balanced outlook based off of those factors. So nothing else was taken into consideration. It was the same set of factors that we always consider.

Speaker #7: And from a management team and board perspective, we are laser-focused on executing that, because that's the best way that we can set that up for a new CEO to come in.

Speaker #7: The goal is to execute these plans we have, and we feel these plans are the right plans to continue to advance, you know, our categories and our share position within them.

Speaker #2: Okay. Very good. Thank you for that. I appreciate it.

Stephen Powers: Okay. Very good. Thank you for that. I appreciate it.

Speaker #7: Thanks, Steve.

Linda Rendle: Thanks, Stephen.

Speaker #1: We'll move next to Lauren Lieberman with Barclays.

Operator: We'll move next to Lauren Lieberman with Barclays.

Speaker #8: Great, thanks so much. Just a quick one, because I know we've covered a lot of ground. SG&A drivers—you mentioned the incentive comp reset, and then sort of a structural increase from Gojo.

Lauren Lieberman: Great. Thanks so much. Just a quick one, because I know we've covered a lot of ground. SG&A drivers, I know you mentioned the incentive comp reset and then, the structural increase from GOJO, Luc, how should we think about comparable level of SG&A going forward? Also, I apologize if I missed it, if there's been any conversation on beginnings of ERP-enabled savings. I know you've talked about productivity as kind of the first line of defense versus inflation, ERP-driven savings that may be starting to manifest in SG&A this year or also in logistics savings. That was another area we talked about as being subject to help with the new ERP. Thanks.

Speaker #8: But just, Luke, how should we think about, you know, like, comparable levels of SG&A going forward? And then also, I don’t—I apologize if I missed it.

Speaker #8: But if there's been any conversation on the beginnings of ERP-enabled savings, I know you've talked about productivity as kind of the first line of defense versus inflation.

Speaker #8: But ERP-driven savings that may be starting to manifest in SG&A this year, or also in logistics savings. That's another area we talked about as, you know, being subject to help from the new ERP.

Speaker #8: Thanks.

Speaker #9: Yeah. Thanks, Lauren and Luke. There's a lot going on in the SG&A line. So let me let me unpack it a little bit. The you know, first and foremost, the you know, the 16% of sales includes about 40 basis points of negative impact from Gojo transaction related cost.

Luc Bellet: Yeah. Thanks, Lauren. Look, there's a lot going on in the SG&A line, let me unpack it a little bit. First and foremost, the 16% of sales includes about 40 basis points of negative impact from GOJO transaction-related costs. Right? It's a one-time. Excluding that, you're about 15.5%. Now, as I mentioned, GOJO has a higher level of SG&A, that adds about a point also. Excluding this, you get pretty close to where we finish the year. Keep in mind this year, actually the incentive comp was quite significant. Without going through the math, what I'll tell you is that the level of productivity next year will more than offset the level of inflation. We are making progress. Now, we're not making step progress. There's two things.

Speaker #9: Right? So it's a one-time item. So excluding that, you're at about 15.5%. Now, as I mentioned, Gojo has a higher level of SG&A.

Speaker #9: And so that adds about, you know, a point also. And so, excluding this, you get pretty close to, you know, where we finish the year.

Speaker #9: But keep in mind, this year the incentive comp was quite significant. And so, without going through the math, what I'll tell you is that the level of productivity next year more than offsets the level of inflation.

Speaker #9: So, we are making progress. Now, we're not making step progress, and there are two things. One, you know, because the top line is fairly flat.

Luc Bellet: One, because the top line is fairly flat, you don't get the benefit of operating leverage. Most importantly, most of the initiatives that we talk about that are enabled by the ERP and further expansion in global business services will start taking place, maybe starting late this year, most likely next fiscal year.

Speaker #9: You don't get the benefit of offering leverage. But most importantly, most of the initiatives that we talk about, that are enabled by the ERP and further expansion in global business services, will start taking place maybe starting late this year.

Speaker #9: But most likely, next fiscal year.

Speaker #8: Okay, just so I can clarify that, did you say that total productivity will be greater than inflation?

Lauren Lieberman: Okay. Just so I can clarify that, did you say that total productivity will be greater than inflation?

Speaker #9: That is correct. So, we are actually on a, you know, on a comparable basis, we are making progress in SG&A next year.

Luc Bellet: That is correct. We are actually, on a comparable basis, we are actually making progress in SG&A next year.

Speaker #8: Okay, that productivity statement—sorry, that was specific to SG&A, not including gross margin. That's a separate conversation.

Lauren Lieberman: Okay. That productivity statement, sorry, that was specific to SG&A. Gross margin's a separate conversation.

Speaker #9: That is correct.

Luc Bellet: That is correct.

Speaker #8: Okay. And then, since we're doing this—on the $200 million of inflation you mentioned, I just want to clarify what that covers. Is that just inputs?

Lauren Lieberman: Okay. Since we're doing this, the $200 million of inflation you mentioned, I just want to clarify what that covers. Is that just inputs? Does that include logistics and transportation inflation as well or not?

Speaker #8: Does that include logistics and transportation inflation as well, or not?

Speaker #9: Yeah, that's total inflation across the supply chain, right? So, commodities are going to be the majority of it. But as you mentioned, we are actually seeing pretty material inflation across different elements of logistics, as an example.

Luc Bellet: Yeah, that's total inflation across supply chain. Right? Commodities is going to be the majority of it. As you mentioned, we are actually seeing pretty material inflation across different elements of logistics, as an example. Labor is actually not as much of a driver next year.

Speaker #9: Labor is actually not, you know, not as much of a driver next year.

Speaker #8: Okay, great. And then actually, just one last modeling thing. Interest expense for 2027—I'm guessing that's north of $200 million. Is that right?

Lauren Lieberman: Okay, great. Actually just one last modeling thing. Interest expense for 2027, I'm guessing that's north of $200 million. Is that right?

Speaker #9: Yeah, that's right. Right now, you know, it's about $210 million.

Luc Bellet: Yeah, that's right. Right now it's about $210 million.

Speaker #8: Okay. All right. Great. Thank you so much.

Lauren Lieberman: Okay. All right, great. Thank you so much.

Speaker #7: Thanks, Lauren.

Linda Rendle: Thanks, Lauren.

Speaker #9: Thank you, Lauren.

Luc Bellet: Thank you, Lauren.

Speaker #1: Your next question comes from Nick Modi with RBC Capital Markets.

Operator: Your next question comes from Nik Modi with RBC Capital Markets.

Speaker #2: Thank you. This is CLOROX for Nick Modi. Ranches on uplift in demand and consumer engagement during the World Cup—as you noted in your prepared remarks, what type of capabilities do you have in place to monitor these trends?

[Analyst] (RBC Capital Markets): Thank you. This is Clark for Nik Modi. Ranch saw an uplift in demand and consumer engagement during the World Cup, as you noted in your prepared remarks. What type of capabilities do you have in place to monitor these trends, and how do you plan on leveraging this momentum to drive further growth for Hidden Valley Ranch? Thank you.

Speaker #2: And how do you plan on leveraging this momentum to drive further growth for Hidden Valley Ranch? Thank you.

Speaker #7: Sure. Hi, Clorox. You know, it was an exciting moment, I think, for everyone around the world with the World Cup. And, of course, an exciting moment for our company was the love that international visitors experienced when they tried Ranch for the first time.

Linda Rendle: Sure. Hi, Clark. It was an exciting moment, I think, for everyone around the world with the World Cup. Of course, an exciting moment for our company was the love that international visitors experienced when they tried Ranch for the first time. That is an American staple, not available in many other countries. The team was prepared that this could be a moment, and took full advantage of it. We worked with our retail partners to ensure that they were putting Ranch out in front, given visitors were wanting to try it and giving it incented consumers in the United States to remind them to use it. We did the largest sampling program that we've ever done.

Speaker #7: That is an American staple and not available in many other countries. The team was prepared that this could be a moment and took full advantage of it.

Speaker #7: So we worked with our retail partners to ensure that they were putting Ranch out in front, given visitors were wanting to try it and given it incented, you know, consumers in the United States to, you know, remind them to use it.

Speaker #7: We did the largest sampling program that we've ever done. Once we started to see the impact, we got to many of the quarterfinals, semis, and finals games, and did the largest sampling program with our dry product, which allowed those consumers to take it back home with them.

Linda Rendle: Once we started to see the impact, we got to many of the quarterfinal, semis, and finals games and did the largest sampling program with our dry product, which allowed those consumers to take it back home with them if they wanted to. Of course, we captured a lot of attention on social media as we talked about the love that Ranch was getting, turning that again into sales. I think the important part here is, one, we have a superior product that consumers love, and we continue to invest in that product. We will continue to invest in it in fiscal year 2027. We have a very strong slate of innovation that is targeted at consumers who are thinking about wellness. There's a number of innovations we have, whether that be avocado oil, et cetera, that are focused on that trend.

Speaker #7: If they wanted to. And then, of course, we captured a lot of attention on social media as we talked about the love that Ranch was getting.

Speaker #7: And turning that again into sales, I think the important part here is, you know, one, we have a superior product that consumers love, and we continue to invest in that product.

Speaker #7: We will continue to invest in it in fiscal year '27. We have a very strong slate of innovation that is targeted at consumers who are thinking about wellness.

Speaker #7: And there's a number of innovations we have, whether that be avocado oil, et cetera, that are focused on that trend. We ensured that we got price-pack architecture right for those consumers that are value-stretched.

Linda Rendle: We ensured that we got price pack architecture right for those consumers that are value stretched. We have focused on some smaller sizes and larger sizes and getting that distribution right, and we will see that play into 2027. Given the love and attention, we continue our social campaigns to remind consumers of all the great ways to use Ranch to make their at-home meals even better. We're seeing strong consumer reaction to that as well. Feel good about the progress. Feel good about the moment that we took advantage of, but this was much broader than a moment. It was taking our full capabilities to bear and building a stronger plan for 2027.

Speaker #7: And so we have focused on some smaller sizes and larger sizes and getting that distribution right. And we will see that play into '27.

Speaker #7: And then, given the elevated attention, we continue our social campaigns to remind consumers of all the great ways to use Ranch to make their at-home meals even better.

Speaker #7: And we're seeing strong consumer reaction to that as well. So, feel good about the progress. Feel good about the, you know, moment that we took advantage of.

Speaker #7: But this was much broader than a moment. It was about bringing our full capabilities to bear and building a stronger plan for '27.

Speaker #2: Thank you very much.

[Analyst] (RBC Capital Markets): Thank you very much.

Speaker #7: Thank you.

Linda Rendle: Thank you.

Speaker #1: We'll move next to Priya Aurigupta with Barclays Capital.

Operator: We'll move next to Priya Ohri-Gupta with Barclays Capital.

Speaker #3: Great, thank you so much for the question. I was just wondering if you could address how you plan to think.

Priya Ohri-Gupta: Great. Thank you so much for the question. I was just wondering if you could address how you plan to

Speaker #7: Priya?

Linda Rendle: Priya?

Speaker #3: Yeah. Nope. Is that what you have outstanding? Should we expect those to get for you, the dance? Thank you.

Priya Ohri-Gupta: Yeah, notes that you have outstanding, should we expect those to get refinanced? Thank you.

Speaker #7: I think we lost you for a moment. Could you please repeat your question?

Linda Rendle: I think we lost you a little bit. Do you mind repeating your question?

Speaker #3: Sorry about that. I just wanted to see if we should expect you to refinance the short-term and CP balance that you have outstanding.

Priya Ohri-Gupta: Sorry about that. I just wanted to see if we should expect you to refinance the short-term and CP balance that you have outstanding.

Speaker #9: Hi, Priya. We don't have any plans at the moment. Actually, just so you know, the way we structured the debt is to ensure that we would actually repay those with the free cash flows that we'll generate over the next 12 to 18 months.

Luc Bellet: Hi, Priya. We don't have any plan for the moment, actually. Just the way we structure the debt is to ensure that we would actually repay those with the free cash flows that we'll generate over the next 12 to 18 months. Now, we do have some maturity coming up, so that'll give us an opportunity to just reassess the debt structure going forward in next calendar year.

Speaker #9: Now, we do have some maturity coming up. And so that'll be you know, that'll give you us an opportunity to just reassess the debt structure going forward in next calendar year.

Speaker #3: Great. Thank you so much.

Priya Ohri-Gupta: Great. Thank you so much.

Speaker #1: And this concludes the question and answer session. Ms. Rendle, I'd like to turn the program back to you.

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

Speaker #7: Thanks, Jen. I will close by saying we're entering fiscal year 2027 from a stronger position than we started fiscal year 2026, and we expect that momentum to continue building as we move through the year.

Linda Rendle: Thanks, Jen. I will close by saying we're entering fiscal year 2027 from a stronger position than we started fiscal year 2026, and we expect that momentum to continue building as we move through the year. With our ERP implementation complete, we're focused on optimizing the platform, unlocking productivity, and realizing the benefits of that investment. At the same time, we're continuing to advance our long-term strategy, sustain our always-on transformation agenda, and take the necessary targeted short- and medium-term actions to strengthen superiority. The acquisition of GOJO further strengthens our foundation by expanding our health and hygiene platform, bringing the Purell brand into our portfolio, and creating new opportunities to serve consumers and professional customers with a more complete set of trusted hygiene solutions.

Speaker #7: With our ERP implementation complete, we're focused on optimizing the platform, unlocking productivity, and realizing the benefits of that investment. At the same time, we're continuing to advance our long-term strategy, sustain our always-on transformation agenda, and take the necessary targeted short- and medium-term actions to strengthen superiority.

Speaker #7: The acquisition of GOJO further strengthens our foundation by expanding our health and hygiene platform, bringing the PURELL brand into our portfolio, and creating new opportunities to serve consumers and professional customers with a more complete set of trusted hygiene solutions.

Speaker #7: Combined with the investments we've made in our business over the last several years, these actions give us confidence in our ability to accelerate category and market share growth, expand profitability, and create long-term shareholder value.

Linda Rendle: Combined with the investments we've made in our business over the last several years, these actions give us confidence in our ability to accelerate category and market share growth, expand profitability, and create long-term shareholder value. Thank you for your time and questions today. We look forward to updating you on our progress next quarter.

Speaker #7: Thank you for your time and questions today. We look forward to updating you on our progress next quarter.

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

Q4 2026 The Clorox Co Earnings Call

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