Welcome to The Clorox Company's Third Quarter Fiscal Year 2016 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 call, Mr. Steve Austenfeld, Vice President of Investor Relations for The Clorox Company. Mr. Austenfeld, you may begin the conference.

Great. Thank you. And thank you for joining Clorox's third 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, 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 earning 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. Now turning to our prepared remarks, I'll cover highlights of our third quarter performance by segment. I'll then turn it over to Steve Robb, who will address our financial results and our outlook look for fiscal year 2016. Benno will then share his perspective on our strategy, results and the acquisition of Renew Life, which we announced earlier today. And then after that, we'll take…

Thank you, Steve, and hello to everyone on the call. I'd like for you to take three things away from today's call and press releases. First, our 2020 Strategy continues to deliver strong shareholder returns. Second, consistent with the 2020 Strategy, we've been making significant investments in our brand behind the strategy accelerators, and these investments are working. Third, we remain focused on accelerating consistent, profitable growth by positioning our portfolio behind tailwinds as reflected in the acquisition of Renew Life into our family of brands. I'd like to share a little perspective on each of these three areas. The first takeaway, our Strategy 2020 continues to deliver strong shareholder returns. This is certainly evident in our strong Q3 top-line growth, reflected by growing market shares and household penetration on key brands in the U.S. On a currency neutral basis, we're seeing growth in international as well. We have strong gross margin expansion, supporting incremental investments in our brands. And we delivered strong earnings per share growth. These results, the health of our businesses, and our overall strong fundamental execution have enabled us to raise our fiscal year sales and earnings outlook. The second take-away – consistent with a 2020 Strategy, we've been making significant investments in our brands behind the strategy accelerators, and these investments are working. As discussed earlier in the call, in addition to incremental trade promotion spending in the second half of the fiscal year to support new products, we anticipate increasing our advertising investment to about 12% of sales in the fourth quarter to keep our brands healthy and growing. Now, you might ask yourself why the increased investment and why now? Well, we have strong momentum on our brands as evidenced by our recent result, and seek to continue that momentum by investing behind…

Thank you, Mr. Dorer. And our first question comes from Steve Powers with UBS.

Thanks. Hey, guys. So some of this you touched upon in the latter part of your prepared remarks, but just that step-up to 12% in ad spending in Q4, was that always the plan? Or you decided to do that based on the year-to-date strength? And if it's the latter, just talk about how your – what your assurances are that you'll get a good ROI on that investment. And do you wish at all that you'd spent more earlier to kind of even out those investments in the marketplace? Stephen M. Robb - Chief Financial Officer & Executive Vice President: So, Steve, this is Steve Robb. Short answer is, yes, this has always been a part of the plan. You might recall in the third quarter earnings call we talked about significantly stepping up our consumer demand building investment programs, particularly advertising. You saw that in the third quarter where we invested incrementally about $22 million in advertising and we're going to step it up again. Part of the timing this year for the advertising investments, it's a reflection of the new product program. If you're going to step up your level of advertising, you want to have something to talk about and Fresh Step with Febreze, the Burt's Bees lip color launch, these are the things that we're really leaning in heavy to. So the spending increase is back-loaded this year, but it's back-loaded consistent with the programs. And then finally, from a return on investment, we do a lot of extensive measuring and tracking and scorecarding of all of the investments we make and to-date we've seen very good returns. We're going to continue to lean in and, as always, we'll adjust as appropriate as we get new information. But at this point, we feel like it's a very good ROI. But keep in mind, the investments we make in the fourth quarter, most of the benefit will I think be in future years as you get awareness and trial on those new products.

Okay, great. And I know some of it is going to be targeted at the Cat Litter business. And a little bit more perspective there because the consumer takeaway data still looks soft, at least in the tracked channels. I think it was down 5% in April, your business was, and down just over 1 point in the last 12 weeks despite the marketing and the R&D efforts to-date. So I know you said you were pleased. Just any update there? And what's realistic to expect from that business as we progress forward into your fourth quarter and beyond?

Yeah, Steve, we remain pleased with this. We've always said that it's going to take time for us to turn the share around. It's actually great to see that if you look at the last four weeks to five weeks in the quarter, share had stopped eroding and it started to be flat. So we feel good about that and we're investing behind it. The customer takeaway is strong, early consumer acceptance is strong. And we're investing behind this, certainly knowing that competition aren't pushovers in this category. But we know from consumer data that we have a better product on hand and we're investing in awareness and trial and we continue to be optimistic that this innovation is going to make a difference to the business.

Great. And then just one last one, if I could, which is around the Renew Life acquisition. Should we think about that as accretive to fiscal 2018 versus the current base case? Or is that too ambitious, given the investment plans that you talked through? Stephen M. Robb - Chief Financial Officer & Executive Vice President: I think what I had said in my opening remarks is it's early days and so we need to get farther into it. We've owned this business for about a day now. But based on our internal projections, we anticipate it will be neutral to accretive in fiscal 2018. And, again, part of the reason that you're not seeing more accretion earlier, this is a business that's been growing high-single digits, again, it's got attractive margins. Just like we did with Burt's Bees many years ago, we want to fuel that growth, so we are going to be stepping up the level of consumer demand building investments over the next couple years, particularly as we expand the distribution across the U.S. So that's the number one reason I think as you get into fiscal 2018 we're being a bit cautious on the EPS accretion. But certainly it's a profitable business with good cash flows and we feel very good about it.

Okay, great. Thank you.

We'll now take a question from Bill Schmitz with Deutsche Bank.

Hey, guys. Hey, what happened with gross margin relative to your guidance? Because I think you were saying like 100 basis points for the full year and then it was up like a couple hundred basis points for the first half. It seemed like you were thinking gross margin was going to be flat, and then it came up like another 200 basis points this quarter. So were you guys just being conservative? Or did something sort of change for the better in the quarter? And then maybe just what do you think the gross margin is going to be up for the full year now? Stephen M. Robb - Chief Financial Officer & Executive Vice President: So, Bill, I couldn't hear the second part of the question. Let me try the first part and then if you have a follow-up question, we're happy to answer it. Gross margin certainly came in better than we had anticipated in the third quarter. Two drivers I would call out. The first is just stronger top-line growth for the company. As you know, you get a bit of scale advantage when you have stronger growth. And we also had some positive mix. We had real strength in some of our businesses, like Brita, which is higher margin, our Burt's Bees business which is higher margin. So that certainly helped. I would also say commodity costs came in a bit better than we had expected. Now, I'm going to caution on that as well, because I do think commodity costs are starting to reach a bottom at this point. I think we found the floor. And we're watching it pretty carefully because I think as you go into the fourth quarter and as we look at our gross margin, we think gross margins are likely to be flattish in the fourth quarter. And the reason for that is we're starting to lap some of the commodity goodness we saw in the year-ago period and we're also investing more in consumer demand spend that we talked about earlier. So I feel great about the margin expansion for the company, feel good about delivering about 50 bps of EBIT margin expansion for the year, but I do think, looking forward, gross margin growth is going to start to slow down as the commodity tailwinds dissipate.

Okay, great. And then just on this Renew Life acquisition, are you funding it with cash on hand or are you going to (37:29)? Stephen M. Robb - Chief Financial Officer & Executive Vice President: Yeah, that's a good question. Short term, you'll see us use a mix of cash and commercial paper. I think longer term, we'll have to take a look at our capital structure and upcoming debt maturities and then we'll make a determination on the best way to fund it. I think it's safe to say over the very long term, at some point we'll probably go out with additional debt, but that's a decision we'll take in the future based on the facts and circumstances that we have.

Okay. Because the reason I ask is that assuming it will cost you maybe a couple percent at most in terms of (38:00). It seems like based on your dilution guidance that the thing is going to lose quite a bit of money, like $8 million to $10 million next year. Is that directionally what you guys are thinking? Stephen M. Robb - Chief Financial Officer & Executive Vice President: Yeah, Bill, the $0.05 to $0.07 of EPS dilution for fiscal 2017, it's really being driven by the cost to integrate the business, which is important to us because, remember, if we can integrate this quickly, we can get revenue synergies. We can get it on the same trucks. We can assist in accelerating the top-line growth for the business. So we certainly have money to integrate the business. We also have money for the step-up in inventory, which, as you know, you have to do intangible assets amortization, et cetera. So those are the primary drivers. But in addition to that, we'll also spend more on consumer demand building investment. To be clear, it's a business in fiscal 2017 that we're expecting good growth rates, healthy margins. But what we found is it's important to integrate quickly and to lean in and build on the momentum that the great people at Renew Life have been delivering over the last couple of years.

Got you. And then will this be a platform for you guys? So is this like a broader entry into the CMS space? Or is this kind of an opportunistic (39:12)?

Yeah, Bill, we certainly look at this as strategic and I think it's very consistent with what we've said over the last two years, three years since we've begun the journey on the 2020 Strategy. What we said is that Health & Wellness, as defined as in me, on me and around me is a space that we're very interested in, and this certainly is bull's eye. We believe that certainly this acquisition will be attractive for our shareholders as a standalone, but we'll certainly also continue to look at this as a potentially broader platform just like we've done with Burt's Bees. I look at Burt's Bees as a very solid role model for this where the first tranche of value creation came from distribution expansion followed by strong investments in the base business to continue to drive what clearly here is a fast-growing category based on a growing consumer need. About two-thirds of U.S. consumers have experienced digestive health issues, and that trend is expected to continue behind the dietary habits that we're seeing from consumers. So investing in awareness and trial and on the base product certainly is the second opportunity here. And then the third opportunity is to look at adjacent spaces around whether that's organically or perhaps through additional business development activity, and perhaps that it will yield an opportunity to add additional growth down the road. But for the time being, we're focused on driving awareness and trial and distribution on the base product by applying our strong 3D capabilities which I think are a wonderful fit to add to the great work that the current team has already done on the business.

Okay, great. Thanks so much.

We'll now take a question from Joe Altobello with Raymond James. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Morning, guys. First question on the wipes business at Costco. Was there any impact from this quarter? It sounds like it happened in March, wasn't sure if there was a pipeline fill for that.

No, Joe. This started shipping again at the very end of Q3, so no impact. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Okay. And then going forward, what's the volume impact you think that will have?

Well, I don't know that we disclosed the specific volume impact. But obviously Costco is a significant customer of ours and certainly what these Costco customers as well as club customers in general are is pretty loyal to the channel. So the volume incrementality certainly is expected to be pretty significant to the wipes business, which will continue to help us increase household penetration on disinfecting wipes. As you know, disinfecting wipes is a business that has been growing share very strongly for us over the last two years frankly. The category also is up 6% over the past 52 weeks, and we're clearly leaning into a tailwind on wipes, and now we're happy to have this business back. What I will say in addition to your question, Joe, is importantly we stayed principled as we regained this distribution. What we've commented on two years ago was that it is always our aim to stay fair and equitable to all trade customers and ensure that all customers qualify for the same conditions, and it's important to close the loop on this and emphasize that that statement has remained true as we've been able to regain the distribution at Costco at this point. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Got it. That's helpful. And then switching gears to Burt's Bees, it looks like another double-digit quarter. How much further is there for that brand to extend into other categories? And where do you think the brand has a right to enter from a product perspective going forward?

Well, without getting into specifics, Joe, which I know you'll understand that we can't. We certainly believe that this brand has a lot of potential in three ways. And all of that is consistent with what we said in the past. First of all, just continue to drive awareness and trial on the base business: lip, face, body, we have a lot of products out there that enjoy a very strong consumer loyalty but have an opportunity in increasing awareness and trials, so more consumers can use these products, and that is job number one. And we're driving that through tactics like TV advertising which we, for the first time, did last year and which we'll do again this year and believe we'll deliver solid additional growth just on the base. The second opportunity certainly is an expansion into new categories and we're very pleased with how lipsticks is going. It's now the number five lipstick in a very cluttered market, and it's overtaken some very established and prominent brands. Most recently lipsticks did receive a very prestigious award by Cosmopolitan magazine, who called it their favorite lipstick ever, which certainly is something that we were very pleased to see. And then third, the opportunity continues to be in international, and Steve Austenfeld has talked about that earlier in this call where we believe that both in markets that we're already in as well as in markets that we have a very small presence, there's a lot of opportunity to repeat the success that we've had in the U.S. And we're investigating in that. So category expansion will continue to be name of the game, but it's really part of a three-pronged growth strategy that also includes growth on the base and growth in new countries. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Understood. Okay. Thanks, Benno.

And we'll now take a question from John Faucher with JPMorgan.

Thank you. Wanted to chat a little bit about Cat Litter, this is obviously a category where you probably had the greatest competitive headwinds over the past couple of years and probably the toughest for you guys to crack from that standpoint. So I guess as you look at it, how comfortable are you now that this is – you sort of figured out the two or three pieces that you need to push on in order to get the shares moving in the right direction longer-term, given the fact, again, that you've had so much tough competition over the past couple of years?

Yeah, certainly a business that we want to perform better, and as we said earlier, John, we're encouraged by what we're seeing, but we're not done yet. So this will take more time. What we've said is that it requires an increase in investment and we're certainly putting that in place. What we've also said is that will require innovation, and with Fresh Step with Febreze, we're off to a good start. But what we've also said is that it will require sustained innovation over time, and we're certainly working on that and we have respective plans in place to follow up with more innovation later in the year – later in this calendar year and then next calendar year as well. So this is a journey. We're off to a good start. We have more work to do, but we're certainly encouraged by what we're seeing.

Great. And then if I can just ask a follow-up for Steve on the FX guidance. I mean we're not seeing the type of guidance for the type of currency impact that you're talking about for next year. So, are you using forecasts as opposed to spot rates? Or are you potentially looking at another deval that you've built into your numbers from that standpoint? Thanks. Stephen M. Robb - Chief Financial Officer & Executive Vice President: Yeah, we use a bank consensus rate, so basically they're forward-looking rates. And it's hard to call the FX markets, as you know. But if you just look at the devaluation that Steve Austenfeld talked briefly about in Argentina and look at the carryover effect of that and then just put on the softening currencies, particularly in Latin America, preliminary estimates would seem to indicate about a two-point drag on sales next year. Probably a little bit stronger in the first part of the year than the second half the year, but we'll have to see. But what's important to note, I think for each country, it's different. So our market participation is probably different than many other companies and that may be driving some differences.

Okay, great. Thank you.

We'll now go to Olivia Tong with Bank of America.

Great. Thanks. On the wipes business, a lot of the one-off concerns that drove wipes are well in the past, the virus concerns and things like that. And this was a fairly benign cold and flu season. So I was surprised to see wipes and cleaners up double digits. So can you talk through what drove that? Do you think this is a sustainable level going forward? And how do you feel about inventory levels at retail, particularly given a fairly temperate start to the year in terms of weather, which obviously helped Charcoal? And then obviously, now the greater availability now that you're back in Costco.

Yeah, Olivia, first of all, congratulations again on the birth of your son.

Thank you. Appreciate it.

You're right in saying that the cold and flu season has been relatively benign, but we feel like the wipes business has reached a threshold where cold and flu certainly helps, but where the business is no longer dependent upon cold and flu. So the success is really based on several things. First of all, just basic consumer trends. We've talked to all of you before about the fact that this is a very preferred product form as consumers increasingly clean in the flow versus on their hands and knees. So we're just having a lot of consumer tailwinds. Second, we're fueling those tailwinds with innovation, mostly innovation that increases the versatility of use and allows consumers to use wipes in new places, whether that's on glass, whether that's on wood, whether that's in bathroom or, more recently, for the tougher jobs in the kitchen. Clorox disinfecting wipes with Micro Scrubbers has been incredibly successful and is growing market share and we're fueling that success with additional investments. And then certainly the distribution expansion like the one that was talked about will help. So we have high hopes that we'll continue to see strong growth on wipes in the future. Certainly near-term, we'll see very significant growth as we continue to benefit from the Costco distribution expansion, but we think that based on the investment in those few pillars that I mentioned, we'll continue to see sustained growth on disinfecting wipes down the road.

We'll now take a question from Ali Dibadj with Bernstein. Ali Dibadj - Sanford C. Bernstein & Co. LLC: Hey, guys. Just a couple of questions. One is, as you think about gross and operating margins going forward, what should we think about as we start to lap commodity benefits? Steve, you mentioned flat coming up here, but thinking more about fiscal 2017, because you are lapping commodity benefits. I don't see new pricing on your sheet here necessarily that that's meaningful, A&P up, et cetera. It feels like you're kind of signaling a deceleration of EPS growth for 2017 and I want to get at that through the margin lens first, please. Stephen M. Robb - Chief Financial Officer & Executive Vice President: So let me address the margins. So, first of all, we'll provide the outlook, Ali, in August that we typically do every year. What I do think is important is a trend to call out is commodity prices, which are notoriously difficult to forecast. But again, as I said earlier, energy prices have really started to come up pretty sharply. It looks like the commodity market has stabilized. What does that mean? It means as we go into fiscal 2017, particularly as we move through fiscal 2017, I think some of the benefits we've been enjoying from lower commodity costs are going to start to dissipate. What we can do as a company is focus on the things we can control, keeping the cost savings pipeline healthy, and we're doing that. We're focusing on rebuilding our margins in international with our Go Lean efforts. That's something we're also going to continue. And we're also focused on taking pricing and high inflationary economies. So, I think the actions that we're taking should, over the very long-term, help…

Yeah, Ali, we certainly believe that we can add to this. So first of all, if I look at just the basic category, fundamentally we're a health and wellness company. So our company was founded 103 years ago today. And it was founded based on disinfecting product and bleach. And over time, whether that's through our Professional Products, through Brita, through Green Works, through Burt's Bees, we have continued to go deeper into health and wellness. And this is just another example. So for us, we look at this as a health and wellness business where our capabilities can make a real difference. First of all, this is the number one brand in the Natural channel, but there's a very significant potential to grow through distribution in food, drug, mass, certainly here in the U.S., but also in Canada and then in international over time. And that's really bull's eye as it relates to applying Clorox world-class capabilities. I would hold up our capabilities when it comes to driving distribution against any company in our space. And we've certainly proven that time and time again. We've also proven that in the health and wellness space through brand building and through innovation we can make great differences to businesses that we acquire over time, whether that's Burt's Bees or, if you reach further back, Hidden Valley or Brita, we pretty much followed the same model. They were pretty small when we bought them, they were new categories for us when we bought them. But we've made an incredible difference and turned them into brand powerhouses. And as we evaluated this space, which we're very familiar with through extensive diligence and as we evaluated the fit with our own capabilities, we got to a space where we felt that we're very comfortable that we're not just buying a business that is profitable and in a fast-growing category, but one that we can make a significant difference to. Ali Dibadj - Sanford C. Bernstein & Co. LLC: I appreciate it. Thank you.

Why don't we take two more questions and then we can follow up offline with any others.

We'll go next to Jason English with Goldman Sachs. Jason English - Goldman Sachs & Co.: Hey, folks. Thank you for the question. I guess I want to come back on the guidance question, or trying to work back into the guidance as we think about next year with the investment. Very simple question. Your long-term algorithm at 25 basis points to 50 basis points of EBIT margin expansion per year, is there any reason to believe that that may be in jeopardy next year as you accelerate the spend? Stephen M. Robb - Chief Financial Officer & Executive Vice President: So, Jason, again, as I've said, we will provide the outlook in our August call. I think what we did want to foreshadow is major trends and I'll just tick through them. 2 points of FX headwinds, I think that's important. Commodity cost tailwinds, which will likely continue through the fourth quarter, maybe into early part of fiscal 2017. We've got to see. But that's something we're watching closely. We do intend for the advertising investment, which has really stepped up from about 9% of sales to 10% as a company, we think that's permanent. And I think you'll see us continue to invest at that level of consumer demand-building investment, at least for advertising over time. And I would say that when we look out over the next few years, we feel very good about our EBIT margin expansions, but we need to get more information before we provide an outlook on fiscal 2017 on EBIT margin. Jason English - Goldman Sachs & Co.: Yeah, fair enough, fair enough. You mentioned International and some of the macro headwinds, the currency headwinds, that you're facing there. You came out of the gates this year with some nice progression in…

We'll now take our final question from Lauren Lieberman with Barclays.

Thanks. Just a quick question about your comment earlier on kind of remaining true to your longstanding policies of kind of fair and equitable pricing and deals and relationships with all customers. We all know Walmart is kind of looking to invest in price and looking to its suppliers to help in that. So how do you deal with that in that situation when you have a major customer kind of asking for help to contribute to their business, but you've been so steadfast in how you manage relationships across customers? Anything you can help share there would be great.

Yeah, Lauren, as always, we don't comment on specific discussions that we have on any negotiations with customers, but what I can tell you is that our Walmart business continues to be very strong and that we certainly live up to the fair and equitable principle with Walmart in all our discussions that we have. I'd also remind everybody of what we have consistently said in the past, and that is that the vast majority of our discussions that we have with Walmart are around growth because that's what they're looking for and that's what we can bring. So we talk about how we're investing in their categories. We talk about our innovation, their early adopters on many of our innovations and we talk about how we can grow their categories with both investments and innovation. And we're doing that well. Right now, again, our business with Walmart remains very healthy and strong. And we're certainly working our hardest to keep it that way, given that they're a major customer. So what I feel most positive about is that the premise that we've always talked about that the two companies, Walmart and Clorox, are so strongly strategically aligned continues to be true. Where they're investing benefits our company, whether that's in the improvement of store operations, which certainly helps us, for instance, by eliminating out of stocks; whether that's by investing in e-commerce, which, as you know, is a growth platform for us as well, and remains our fastest growing channel, or whether that's their investments in smaller formats like Neighborhood Markets where they really rely on number one and number two brands of which we have so many to drive growth and assortment. So I continue to feel good about our business with Walmart and I continue to feel good about the progress that we're making based on the focus on how we can grow their categories with our innovation and with our demand spend.

Great. Thank you.

And this concludes the question-and-answer session. Mr. Dorer, I would now like to turn the program back to you.

Thank you. So to sum up, I'm very pleased with our performance for the third quarter and fiscal year-to-date because we're making the right investments for the long-term health of the company. Our strategies continue to work, and we're delivering strong results for our shareholders and consumers. So thanks for joining us, everyone, and I hope that all of you will have a great rest of your day.