Good day, ladies and gentlemen, and welcome to The Clorox Company Fourth Quarter and Fiscal Year 2015 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. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Mr. Steve Austenfeld, Vice President of Investor Relations for The Clorox Company. Mr. Austenfeld, you may begin your conference.

Great. Thanks, Stephanie. Welcome, everyone, and thank you for joining Clorox's fourth quarter conference call. On the call with me today are Benno Dorer, Clorox's CEO, and Steve Robb, our Chief Financial Officer. We're broadcasting this call over the Internet and a replay of the call will be available for seven days at our website, thecloroxcompany.com. Let me remind you that on today's call we will refer to certain non-GAAP financial measures including, but not limited to, free cash flow, EBIT margin, debt-to-EBITDA, and economic profit. Management believes that providing insights on these measures enables investors to better understand and analyze our ongoing results of operations. Reconciliation with the most directly comparable financial measures determined in accordance with GAAP can be found in today's press release, this webcast's prepared remarks or supplemental information available in the Financial Results area of our website, as well as in our filings with the SEC. In particular, it may be helpful to refer to tables located at the end of today's earnings release. Please recognize that today's discussion contains forward-looking statements. Actual results or outcomes could differ materially from management's expectations and plans. Please review our most recent 10-K filing with the SEC and our other SEC filings for a description of important factors that could cause results or outcomes to differ materially from management's expectations and plans. The company undertakes no obligation to publicly update or revise any forward-looking statements. Turning to our commentary, there are three key messages we'd like you to take away from today's call. First, we're very pleased with our Q4 and fiscal year 2015 performance, reflecting our efforts to accelerate growth and to do so profitably. Second, our base is as healthy as it has been in recent memory and we're investing behind our business. At the same…

Thank you, Mr. Dorer. And we go first to Steve Powers with UBS.

Great. Thanks everybody. I guess, Benno and Steve, you've been calling for the elevated trade spending now for a few quarters and we've been a little slow to see it and I think that help explain the gross margin strength this quarter, which is clearly a good thing, but your guidance implies that you still expect to see it eventually. Can you talk about why we maybe haven't seen it as much as you had anticipated so far and why you're not more encouraged looking ahead to 2016? Stephen M. Robb - Chief Financial Officer & Executive Vice President: So, Steve, we actually have seen it. In fiscal 2015, we actually stepped up our total consumer demand-building investment and included in that was a step-up of the trade promotion spending. So, we're certainly leaning in and you've seen that in fiscal 2015. For fiscal 2016, particularly in the first half, we are going to continue to lean into the trade spending really to do two things for us. First to drive trial of our new products because we know if we can get trial we generally do well with repeat on those new products. And then second is just to support retail execution. So we have been stepping up the investment, we're going to do a bit more because it's working for us and the payouts look good. But, it is flowing through the P&L.

Okay. And then competitively, have you seen pretty much what you expected to see or is it's been little bit more benign than you expected? Benno O. Dorer - Chief Executive Officer & Director: I would say competitively, Steve, we're seeing what we said we would see. We're certainly spending into our price increases in bleach and in Glad where we feel like that's justified. But, as far as competition is concerned, what we've said is – before is, that it's somewhat elevated as compared to historical levels, but I would say that it's somewhat elevated certainly not very elevated and that's playing out as we anticipated.

Okay. And then a question on free cash flow, which was obviously very strong this year again, and you finished the year below your target leverage ratio. So two questions on that. First, this year, the rate of CapEx spending relative to sales was quite low versus history. Do you see that as sustainable or do you see a step-up there as you look out whether 2016 or beyond? And then, with respect to the leverage ratio itself, is there any step-up embedded in guidance there and if you were to step it up, how would you prioritize between incremental repurchases bolt-on deal perhaps in the professional space, et cetera? Stephen M. Robb - Chief Financial Officer & Executive Vice President: Okay. So let me start with the first question on capital expenditures. Yeah, historically, we've spent at the level of depreciation and amortization and I think that's still the right level for the company over the long-term. It has been a bit less than that over the last two years, as you pointed out, and that was a conscious decision on our part, after we had made some pretty significant investments to rebuild R&D facilities, put SAP into the Latin American business. But I think for a long-term modeling, certainly, how we think about it is CapEx should run in line with depreciation and amortization. Terms of the priorities for the use of cash, these remain unchanged. The number one goal is to accelerate top line growth profitability. And we think we've got plenty of cash to do that, but we'd like to do that organically. Second is, we're still committed to bolt-on acquisitions through our M&A efforts, it's been more challenging over the last couple of years, but we're cautiously optimistic we'll get some traction on that over the next year or two. The dividend has been very important to many of our investors and so we've been prioritizing returning cash through that dividend over the last couple of years and I think you'll see us continue to do that. And then if we've got excess cash that's pooling up, again as we've done for many years either through the dividend or share repurchases, we look to get it back. So no change to capital allocation for the company, it will continue to be disciplined and consistent with the priorities that we've outlined before.

Okay. Just to clarify, so no step-up embedded in guidance? Stephen M. Robb - Chief Financial Officer & Executive Vice President: I think what we've said for long time is again the long-term debt-to-EBITDA, we think 2 to 2.5 is in our sweet spot, not afraid to let that go down a little below the 2 to 2.5 to build a dry powder for M&A. But we're also not afraid to let it go a little bit above 2.5 for some period of time if we've got good opportunities. So I think you'll see that number moving around over time depending on the opportunities.

Great. Thank you.

We'll go now to Chris Ferrara with Wells Fargo.

Hey, good afternoon, guys. Stephen M. Robb - Chief Financial Officer & Executive Vice President: Good afternoon, Chris.

So I guess back when you introduced the 2020 Strategy, the number you gave on promo spending, I think, it was 100 basis points incremental. And so, I guess following up a little bit. Is 100 basis points still the number that you guys expect based on the returns you've seen? And I guess how far of the way through that are you, if you're willing to quantify that at all? Benno O. Dorer - Chief Executive Officer & Director: Yeah. Chris, good afternoon. So, first of all, what we've said is indeed we would like to spend 1 percentage point of sales over time behind our brands. We've also said that that spending could move around, certainly move around by quarter, but also move around by bucket. So, in some cases, it could be advertising, it could be sales promotion, it could be innovation supports, it could be a trade promotional pricing, really where we see the ROI, as you know we're pretty disciplined in how we measure ROI and how we spend our dollars depending on where we get the greatest return. That is still the right number. Originally, when we started this Strategy 2020 journey, we thought that we would step into that over time, and we certainly saw an opportunity over the last fiscal year to step into it faster, which we have in the back half. So, this 1 percentage point increase is still the right target. It's working, certainly as you've seen in top line growth, as you've seen in share growth, but it's also working given that, as you know, we're interested in profitable growth, so we see it flow through in the bottom line. So we're staying committed to it and it's still the right number.

Okay. Thanks. And I guess just pushing a little bit on the commodity piece or the gross margin piece. So, you're saying flat gross margins. I guess pricing is positive, which I'm guessing is inclusive of higher expected promo spending. Commodities are positive and you're not seeing by very much. I guess cost savings if you continue to do what you've been doing, it will be pretty good. I guess how bad will manufacturing and logistics be into fiscal 2016? And I guess could you talk about that in light of the fact that, it was only an 80 basis point drag and I say only, because it's been obviously much bigger than that. So, I guess, is that a trend as a follow up question to that and will it be a little more manageable going forward? Thanks. Stephen M. Robb - Chief Financial Officer & Executive Vice President: Good question. As we said, we believe that our gross margins will be about flat, but you'll have some variability across the quarters. Couple of things. What's working for us, our cost savings programs continue to perform well. We're very pleased with the in-market execution of the price increases that we've taken, and we'll continue to look to take pricing, particularly in the international markets, which, as you know, has higher rates of inflation. I think – and commodities will likely be a tailwind certainly for the first half of the fiscal year is what we're modeling. The things that will mitigate a lot of this, to some extent, manufacturing and logistics was about 110 basis points for the full year this year and I think it's likely to continue to be a headwind for some time for us. FX is a big issue, because that puts a drag on the margins. And then finally as we indicated a few minutes ago, we are going to step-up our level of trade promotion investment behind these new products in retail execution. So, when you net all of those things together, we think gross margin will be about flat. And here is what's important to remember, we've got a good plan in place to drive EBIT margin expansion in fiscal 2016. So, we are targeting 25 bps to 50 bps of the EBIT margin expansion, and we feel like we're very much on track to deliver that for the full fiscal year.

Okay. Thanks guys.

We go now to Olivia Tong with Bank of America Merrill Lynch.

Great, thanks. First just on – a little bit on the guidance, because the operating expense comps were a lot tougher in the first half than the second half with the spending and the delta in incentive comps during the second half. So as you think about the cadence of earnings as fiscal 2016 progresses, would you expect to follow a similar pattern to last year or revert to something more in line with historicals? Stephen M. Robb - Chief Financial Officer & Executive Vice President: So you're asking me, what our first half outlook is versus our second half? So I'm going to reference back, we do provide a full year outlook, I think there's a couple of things, though, I will point out about the first half, just as a quick reminder. As you think of the sales growth in the first half, we do need to anniversary some pretty strong Charcoal growth numbers in the first quarter of year ago, so that's an important thing to keep an eye on. Second thing is, you might recall we have the Ebola and other concerns in the second quarter, so we're certainly going to have to lap those numbers and we're watching foreign currency pretty carefully. But beyond that, there's going to be puts and takes across the quarters and I think we're going to hold to the full year outlook at this point. And keep in mind, we're one month into the fiscal year so I think we need a little more time before we start providing more detailed color.

Okay. You had mentioned in your prepared remarks that you're managing price gaps in bags and bleach, can you talk a little bit more about that? Stephen M. Robb - Chief Financial Officer & Executive Vice President: Yeah, certainly, we've taken increases obviously on bleach and Glad, both of which have gone fairly well for us. Although I would say that, historically, particularly on the Glad business, we have spent some of the money back and that's certainly what we're doing. And historically, more than 50% of the resin savings have been spent back in the market and we're doing that, we're spending probably a bit more. So I would say, on balance, both businesses are doing well from a market share standpoint. We're pleased with the execution, but not unexpectedly we're having to spend some of that back to manage the price gaps which are pretty consistent with what we would expect. Benno O. Dorer - Chief Executive Officer & Director: And, Olivia, one thing I'd just add is more broadly that part of the strength that we're seeing on a top line, we certainly think is because we're very focused on delivering value to consumers, so this focus on value is playing out. And while value is more than just pricing, we're certainly always monitoring the price gap and we have good processes in place, making sure the price sensitivity is where it needs to be, and always following a price increase you want to be extra mindful of that and our remarks spoke to that.

Got it. Thanks. And if I could just follow up with one more question on Burt's Bees. I mean, it's been a great growth driver for you behind innovation. Is there opportunity to expand that to even more categories, perhaps even into Household, because it seems like you've branched out in terms of licensing the brand a little bit. So just curious on how you think about the opportunity there? Thanks much. Benno O. Dorer - Chief Executive Officer & Director: Yeah. Thanks, Olivia. On Burt's Bees, like you said, really nice success with double-digit sales growth in fiscal year 2015, which has really been strong also compared to previous years as we stepped up investments. Three growth pillars. First of all, just continued growth opportunities on the base businesses, the categories that we're already in, in the U.S., in Canada, given that we're seeing opportunities that we have, for the first time, taken advantage now in fiscal 2015 through TV advertising to just grow awareness and trial on the base, and we think that there is a lot of space in this first growth pillar. Second growth pillar, getting into new categories. Third growth pillar, in international. As for new categories, yes, there still is a lot of opportunity and one thing that we will be doing in the front half that goes exactly after this opportunity is later on in the first half launch color lipsticks. So this is our first foray into lipsticks. It's a category where there is a sizable consumer need for natural products and we have a wonderful product out there, both in terms of product performance as well as in terms of packaging, that we think is highly differentiated and we have started to engage our customers in this opportunity and are getting real enthusiastic response. So that's the next one up where we feel like we can make a significant dent in the new category. But like I said, over time, there should be additional opportunities to get into new categories beyond this.

And we'll go now to Ali Dibadj with Bernstein Research. Ali Dibadj - Sanford C. Bernstein & Co. LLC: Hey guys. I want to drill down a couple of things, two things. One is, so given the spending you're describing, it sounds like we should expect next year to be more of a volume-driven year than a pricing-driven year, at least net price, kind of like this quarter, is that fair? Stephen M. Robb - Chief Financial Officer & Executive Vice President: Well, certainly given foreign currency headwinds, yeah, I think you're going to see volume obviously outstripping sales growth, just because of that. Ali Dibadj - Sanford C. Bernstein & Co. LLC: For organic I mean? Benno O. Dorer - Chief Executive Officer & Director: Perhaps, Ali, with the exception of international of course where volumes may be somewhat under pressure and where we'll continue to do the best we can on pricing to offset the FX and cost inflation headwinds. Ali Dibadj - Sanford C. Bernstein & Co. LLC: So I want to bring that your gross margin guidance a little bit, because if it is going to be a little bit more volume-driven at least organically, and it reiterates some of the questions earlier. But if pricing is up, volume leverage you're going to get, commodities are a help, cost savings help, and you mentioned the offsets of that are effectively some trade spend, which is only going to be about half of commodities, you really only have FX as the last bucket. And you can make estimates and slice this either way, but it feels like you're talking about several hundred basis points of gross margin impact from FX. I don't know if that can be right. So within that FX, can you disaggregate that a…

And we'll go now to Joe Altobello with Raymond James. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Hey guys, good morning. Just want to clarify something you said earlier, Steve, regarding the increased promo to address price gaps in both bleach and trash bags. You've mentioned in the past that you did expect some volume impact from that. Has that been going as you expected? Or is this to address something that's gotten worse than your model had predicted? Benno O. Dorer - Chief Executive Officer & Director: Yeah, Joe, this is Benno. Good afternoon. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Hi. Benno O. Dorer - Chief Executive Officer & Director: So, I would say, if we take those in turn, in Laundry, that's gone about as expected, the category has actually done very well. And the category has done and has been at its best since we've started lapping the compaction a few years ago. So, feeling really good about that and I would call that about in line share continues to grow. So, that's as expected. Glad, I would call that's better than expected with strong sales growth, but also strong volume growth. And I would associate that with a really strong starts behind our Glad OdorShield Febreze with Gain scented trash bags that have helped us grow not just the dollar share, but also volume share in the last quarter. And we're certainly continued to invest in that, because we have a lot of momentum in that. And in Q1, we'll double down on innovation and we will launch, for the first time, Glad with Clorox trash bags and what that is, is a new premium trash bag with an antimicrobial agent embedded in the drawstring and we think that that'll continue…

We go now to Bill Schmitz with Deutsche Bank.

Yes. Hi. This is Faiza calling in for Bill. So, I just had a couple of questions. One, it sounds like you're moving some dollars from the A&P line to trade spending. So, one, is that fair? And two, is that because you are reducing spending in international markets or is that across the globe and is that because you're finding that the ROI is better on trade spending than on A&P? Benno O. Dorer - Chief Executive Officer & Director: Yeah. What we said is that we will spend an additional percentage point of sales and we've said that those dollars will move around, so you will always see shifts between quarters. Within advertising and sales promotion, if you look at advertising and sales promotion is actually up. So, we are spending incrementally in trade, but that spending is incremental to advertising and sales promotion and not replacement to advertising and sales promotion. What we are certainly doing within advertising and sales promotion is shift from international, where the returns in some countries right now are clearly lower and we're not interested in investing in not-profitable volume. And those dollars go into the U.S. where we are seeing a nice return and where you see that deliver strong growth in businesses like Burt's Bees, but also Home Care. So, trade is incremental right now to advertising sales promotion, that's probably going to be here to stay for a little while at the somewhat elevated basis, but we're also continuing to be very committed to advertising and sales promotion spend as is evident in the fiscal year results, and we like the return in that area as well.

Okay. But it sounds like for next year to make the guidance work with the flat gross margin and S&A is slightly below 14 points, it sounds like the ratio is going to go down next year for fiscal 2016? Stephen M. Robb - Chief Financial Officer & Executive Vice President: Faiza, again what we would really focus on is the fact that we do have a plan to get to the 25 bps to 50 bps of EBIT margin expansion. A good chunk of that is going to come from lower S&A costs in part because of the productivity efforts that we put in place in the company and in part because we expect to normalize our incentive compensation cost, so I think that'll be the biggest single contributor. As a company, as Benno indicated, we're going to invest and invest a bit more heavily in consumer demand-building investment, but the mix across the quarters can move between advertising as well as trade.

Okay, great. And then just wanted to ask again about wipes. So I know the sell-through data has been really good. Can you just talk a little bit more about – I know there has been a lot of innovation there also, but how sustainable, how should we think about the wipes category going forward? Benno O. Dorer - Chief Executive Officer & Director: So the wipes business has been a growth driver for us for a while and I'm confident that it can and will be going forward. And the way we're going to drive growth is, one, a focus on delivering superior value to the consumer, we have a consumer-preferred product and we're making clear to the consumer that they are aware of this value superiority and we're certainly investing very strongly in advertising sales promotion and also in trade promotion like I said. And then, two, innovation and one innovation that's done particularly well for us over the last six months is the wipes with the micro scrubbers for particularly tough tasks and we're certainly driving that innovation through spending that creates awareness and trial. At the end of the day, while wipes is on trend, we've talked to many of you in the past about consumers moving towards cleaning in the flow occasions that don't disrupt the flow of the day and wipes are the preferred product form to meet this consumer need, so there is a tremendous consumer tailwind. And with the market share of back at about 50%, we're really poised to capitalize on that trend. So, we see tremendous opportunities for continued growth in this segment.

Great. Thank you very much.

And we'll go now to Jason English with Goldman Sachs. Jason M. English - Goldman Sachs & Co.: Hey, good afternoon, folks. Thank you for the question. I want to follow up on the line of questioning around gross margins first, and I apologize if you answered this, I'm trying to multi-task a little bit. But to Ali's question, we get to similar math. You tried to bridge the assumptions and there is a hole of around 200 basis points or so in your gross margin guidance. Is that really the magnitude of FX pressure you're expecting? Or is it maybe the commodity assumption, commodities clearly inflected into a tailwind this quarter. What are you assuming on a go-forward and why shouldn't we expect that tailwind to continue to build? Stephen M. Robb - Chief Financial Officer & Executive Vice President: So – I don't know if I can bridge all the way, although I will say two points of gross margin drag associated with FX seems a bit large, so let me try to clarify on that. Second, there may be a difference in commodity assumptions again, I don't know exactly how you're modeling the math, but I can tell you that we do expect a modest commodity tailwind certainly in the first half of the fiscal year, but we are expecting energy prices to begin strengthening in the second half of our fiscal year and that we'll start to mitigate some of that tailwind. So, again, we're expecting a very modest tailwind from commodities at this point and maybe that's one of the differences. Jason M. English - Goldman Sachs & Co.: And that assumption on energy is that just because it seems like a prudent assumption or are you seeing anything that would lead you to believe…

And we go now to Erin Lash with Morningstar.

Thank you for taking the question. I just wanted to talk about the Cat Litter category for a second. I think you said that the new product innovation that you had brought to market last August obviously continues to struggle or maybe hasn't turned the category from your perspective around as much as you had hoped. And I guess, where do you see or what is your strategic intent to, I guess, drive improving sales and market share? I know you said volumes were up slightly I think in the quarter, but how do you turn around the sales and market share? Is it more just the competitive landscape or are there factors within your control that you feel you can adjust to drive improving performance in that category? Benno O. Dorer - Chief Executive Officer & Director: Yeah, Erin, thanks for that. So that's a business that we like, it's on trend and category growth is strong. It's a business where historically we've done very well. But, clearly, at this point, it's one of the two businesses that's not growing share. Frankly, if you look at the last four weeks to five weeks share period, it's the only business that's not growing share, so not happy where it is. And my message on the business really is unchanged compared to what we said last quarter. We're not after buying share back, we want to earn share back and what that requires is strong innovation. The competitive landscape in this category has changed, it is a very competitive category and it does require more and more frequent innovation in the category. We're feeling good about Lightweight litter which, as you noted, was launched last year, and that's growing nicely, and we're investing behind it. But it does require more significant innovation and what we've said before is that that innovation will come in the back half of this fiscal year, and that's exactly what will happen. So, I do think that it will take until the back half until we will see shares materially improve but I'm confident that that's going to happen based on what I know about this innovation, and we'll certainly let you know more once we can talk about it in one of the next quarter earnings releases.

Thank you. That's helpful. And then I just had one follow up on the International business. Obviously, growth has slowed around the world, and you've highlighted that. Clorox has also been very outspoken that they're only going to play in markets where they feel they have a competitive edge. And so, I guess as you look across your international landscape, do you feel that there are opportunities to maybe rationalize where you're playing or is it more just a factor of macro growth coming back and then you're positioned to benefit? Thank you. Benno O. Dorer - Chief Executive Officer & Director: Yeah, Erin, it's the latter. We're overall happy with our portfolio in the U.S. and beyond. To International, sales grew 11% on a currency neutral basis in the last quarter. And in fact, we're gaining market share in International, so that should tell you that we have strength, we have strong brands that people like, but because of the macroeconomics that strength is not translating into top line that we can count on and bottom line. Fiscal year 2016 is going to be another tough year in international, again driven by macros, in particular of course FX as we expect three points of headwinds, but in the long run you'd have to expect that the fundamentals, the macros improve. And then, I'm confident that we're poised to benefit from that.

Thank you. That's very helpful.

And we go now to Lauren Lieberman with Barclays.

Thanks. Just two quick things. One was the follow up on the Professional Products comments. Are those contract wins, so the increased volume in this quarter should be sustainable going forward or is it sell-in for a new relationship? Stephen M. Robb - Chief Financial Officer & Executive Vice President: I think it's broad-based. We're seeing our foodservice business has actually done quite well. The Jan/San business continues to perform well. And we're continuing to expand in the healthcare, just bringing on new items into distribution, but just picking up new contracts as well. Benno O. Dorer - Chief Executive Officer & Director: Yeah, Lauren, one thing that is sometimes overlooked is that, in our Professional business, e-commerce actually is a significant growth driver as people buy in particular through office supplies customers. So there's nothing unusual in the Professional segments, we're seeing good strength across all segments as Steve noted. Certainly also as we've said earlier in the call, Ebola is something that we're anniversarying later this fall and that's a watch-out as we think about the Professional business for this fiscal year, certainly in the front half. But in general, what we've said is that the Professional business is a growth driver for us as a company and we feel good about the progress and the prospects.

Okay. Great. And then the second thing was just the other income in the quarter really for the year, just I know it's hard, but what do you think is a best way to think about that for next year? Stephen M. Robb - Chief Financial Officer & Executive Vice President: Yeah. Well, keep in mind, there's some one-time items that flow through fiscal 2015, things like the sale of the low-income housing partnership assets in the quarter. So to the extent that you're seeing some one-time benefits come through, we would not project those forward.

Okay. So, best to – I mean, traditionally I model that line kind of flat, but it can – that can yield some pretty significant differences because that's not the way it goes, so. Stephen M. Robb - Chief Financial Officer & Executive Vice President: Yeah, I think flat is probably not a bad estimate, again, because the items that occurred in the first quarter of fiscal 2015 where we made some changes, but also in the fourth quarter, those things are going to anniversary out.

Okay. Thank you so much.

This concludes the question-and-answer session. Mr. Dorer, I would now turn the conference back to you. Benno O. Dorer - Chief Executive Officer & Director: Yeah. Thank you. Let me sum this up. We're pleased to have delivered a strong fourth quarter and fiscal year 2015 financial performance, reflecting our efforts to accelerate growth profitably. Our business is fundamentally healthy and our outlook presents a balanced view of our strengths and the challenges and opportunities we see in the year ahead for our business. So, thank you.

This concludes our conference. Thank you for your participation.