Good day, ladies and gentlemen, and welcome to The Clorox Company Fourth Quarter and Fiscal Year 2019 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. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call Ms. Lisah Burhan, Vice President of Investor Relations for The Clorox Company. Ms. Burhan, you may begin your conference.

Thanks, Sharon, and welcome, everyone. On the call with me today are Benno Dorer, our Chairman and CEO; and Kevin Jacobsen, our CFO. 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. On today's call, we may refer to certain non-GAAP financial measures, including, but not limited to free cash flow, EBIT margin, debt to EBITDA, organic sales growth, and economic profit. Management believes that providing insights on these measures enable 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 on our website as well as in our SEC filings. In particular it may be helpful to refer to tables located at the end of today's earnings release. Please also recognize that today's discussion contains forward-looking statements. Actual results or outcomes could differ materially from management's expectations and plans. I would also direct you to read the forward-looking disclaimers in our quarterly earnings release. Please review our most recent 10-K filings 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. I'll start by covering our topline commentary discussing highlights in each of our segments, Kevin will then address our financial results as well as outlook for the fiscal year 2020, and finally, Benno will offer his perspective, and we'll close with Q&A. For the total company, full year sales were up 1%, while Q4 sales decreased 4%, reflecting double-digit sales decline in our Household…

Thank you, Lisah, and thank you everyone for joining us today. Overall results were mixed in fiscal year 2019, reflecting a strong start in the first half followed by more mixed results in the third and fourth quarters, primarily behind challenges in select categories. At the same time, I'm pleased with the progress we've made rebuilding gross margin allowing us to invest more in our brands and technology transformation to support long-term profitable growth. Starting with our fourth quarter results, sales decreased 4% reflecting a negative three point impact from lower volume and two points of negative impact from unfavorable foreign currencies, partially offset by the benefit of price increases net of trade spending. It's important to note that the three point volume decline in the quarter was driven by our Charcoal business and to a lesser extent our Glad business. Gross margin for the quarter came in at 45.1%, an increase of 110 basis points compared to 44% in the year ago quarter. Fourth quarter gross margin included 220 basis points of benefit from pricing and 150 basis points from cost savings, partially offset by 150 basis points of increased trade spending and 90 basis points of higher manufacturing and logistics costs. Selling and administrative expenses as a percentage of sales were essentially flat versus the year ago quarter. Advertising and sales promotion investment levels as a percentage of sales came in at about 10% with spending for our U.S. retail business coming in at about 11% for the second straight quarter. Our effective tax rate was about 17% versus about 29% in the year ago quarter, primarily driven by the benefit of U.S. tax reform. Net of all these factors, we delivered diluted net earnings per share from continuing operations of $1.88 versus $1.66 in the year ago…

Hello, everyone, and thank you, Kevin. Here are my three key messages for you today: first, as we discussed fiscal year 2019 was mixed, which was reflected in our back half results. We're currently facing persistent challenges in Charcoal and Glad, that impacted our top line results in the back half and full fiscal year of 2019. We will work to significantly strengthen our Charcoal business plans as well as address the pricing-related issues and drive innovation on Glad. We anticipate these businesses will return to growth in the back half of fiscal year 2020. At the same time, I feel good about the strength in other parts of our portfolio with strong fiscal year sales growth in a number of businesses. We delivered broad-based growth across Home Care, our largest SBU with Clorox Disinfecting Wipes to returning to growth in the fourth quarter. We also delivered sales growth in our Professional Products business, double-digit sales growth in Litter, strong sales growth in Burt's Bees as well as sales increases in Food and Brita. I also feel good about our innovation program. It continues to drive consumer value that is superior through differentiation in our products and brands with the introduction of consumer meaningful innovations in fiscal year 2019, including Hidden Valley Ready-to-Eat Dips, Brita Filtering Water Bottles and several new Burt's Bees lip and face care products. We're also pleased to see continued momentum behind our Clorox Scentiva and Fresh Step Clean Paws platforms. I continue to be pleased with the Nutranext acquisition, which delivered robust growth in the fourth quarter and contributed strongly to total company fiscal year sales behind an integration that remains on track. I'm also pleased with our strong progress in our International business. In the face of significant FX headwinds, our Go Lean strategy…

Thank you, Mr. Dorer. [Operator Instructions] Our first question comes from Steve Powers with Deutsche Bank.

Hey, thanks. So, I think, you've been pretty clear about the challenges that you face in wipes and Charcoal. But how should we think about the rest of the business in fiscal 2020, because there is roughly a 300 basis point spread between the midpoint of your stated long-term goal of 3% to 5% growth and this year's flat to 2% outlook? And based on what we've heard from others, just a broader backdrop for CPG demand seems pretty favorable. So I'd like to assume the rest of the portfolio, ex-Glad and ex-Charcoal would be performing in line with at least the low end to mid-range of that long-term outlook. But if you're expecting both Glad and Charcoal to return to growth in the back half, it seems to imply the other 80% of the portfolio might also end up below even at 3% levels. So could you just help me with that and frame for me how you think that portfolio is shaping up health-wise versus the long term?

Hey, Steve. Good morning. This is Kevin and I appreciate the question. And let me give you a perspective on how we're feeling about the portfolio broadly, separating the businesses, as we've talk about, that have been more challenge Glad and coal. As you heard in our prepared remarks, our expectations when we think about fiscal year 2020 is, those two businesses will be a drag on our performance in the front half or we work to get them back on track. But if I set those aside, we feel very good broadly about the balance of our portfolio. If you look at Cleaning, Lifestyle and International, all performing well over fiscal year 2019. And when I look at fiscal year 2020 our expectation, specifically in the U.S. is that, we'll be generating top-line growth consistent with our long-term growth algorithm. As you know it's 2% to 4% in the U.S. And our expectation is we're going to be back in that range in the back half of the year as we get coal and Glad back on track.

Okay. So did -- any drag versus the long-term algorithm ex-Glad, ex-Charcoal is really just International and some of the macro factors. Is that fair?

Yes. That's right. And for International, we've been targeting 5% to 7%. We've continued to be challenged by FX headwinds. That was particularly true in 2019 where we had about a 15-point headwind. I'd tell you as we look at 2020 we think it's going to be a slightly better environment, but we still think it's going to be a material headwind to our International business. On a currency neutral basis they are certainly growing within that 5% to 7% if not higher, but being held back by FX at this point.

Okay. Great. And then Kevin, why don't I get you talking? You gave some helpful phasing information for the -- on the top-line for the year. But could you talk to us through any phasing dynamics on the gross margin line or the advertising lines? And then I'll pass it on. Thanks.

Sure. Maybe on advertising, I would say, typically we will spend the money based on when it's most advantageous for us. It tends to be a bit more loaded in the back half just based on the innovation cycle. I would expect to see something similar to that although I don't expect to see any big changes but maybe a little bit heavier on the back half. And then on gross margin gross margin I think will be fairly consistent across the year. The investments we're making will put a little bit of downward pressure on margin. As we mentioned we're investing in compaction. They will be launching in the spring. We've got another project we're not ready to talk about publicly, but will continue to invest in it and we'll talk about that at a future date.

Okay. Great. Thank you.

Thanks, Steve,

Your next question comes from Steve Strycula with UBS.

Good afternoon. So first a more mechanical question and then more of a strategic question for Benno. So for Kevin on the repurchase activity is any repurchase activity be embedded in the fiscal 2020 outlook? And can you give us some kind of magnitude? And were you back in the market in the fourth quarter?

Yes. Thanks, Steve. I can start with our repurchase program. If I just think broadly about fiscal year 2019, we're quite pleased. We returned about $1.2 billion to shareholders in 2019. That's a combination of both dividend and share repurchases. That's up about 60% versus fiscal year 2018 as you've seen us lean into the dividend over the last couple of increases. That also includes on our share repurchase program, we have now executed about $425 million against my $2 billion authorization so about 20% of the authorization, which also included about $250 million in Q4. As I look forward, as we've talked before this is not an ASR so I do not have a defined number of shares I'm going to buy. We've got an internal program we manage. What I'd tell you is I would have you believe that within the outlook we provide there may be some level of share repurchases. I'm not going to provide a forecast on it. But to extent, it materially changes one way or the another -- I'd certainly update you. But for now you should assume it's embedded within our EPS outlook range.

Okay. And then Benno just wanted to understand strategically how should we think about compaction phasing through the business particularly as it launches in the spring? And then what has been the feedback in your conversations with retailers as to -- that gives you confidence that some of those businesses can accelerate in the back half of next year?

Yes. So Bleach Compaction -- Steve will start in quarter three. And typically if you recall our progress on compaction over the last few times we did it we've got some experience on this the last time we did it was 2013. It takes several quarters so we'd expect to be through all of this in several stages early fiscal year 2021. So feel good about that project. Clearly as we think about our coal and Glad -- so maybe focus your question on coal. Coal the issue is really that we're out of sync with two large customers. And we have to get back in sync strategically with those two large customers. We also need better demand-building plans. Obviously, results are disappointing there as Lisah said. And we owe our customers and consumers better plans with the right innovation. And as Lisah said, we will have product improvements as well as new Kingsford pellets in market for the next grilling season. We'll have continued strong marketing support focused on household penetration and brand value and excitement. And again, we need to have the right merchandising plans with all retailers consistently. And we clearly didn't succeed with that in Q4. So that's the work ahead. That's work that our company has a strong track record of. We feel like we know what the opportunity is on this business as well as on Glad. And we have to get back to doing what we do best.

All right. Thank you.

Your next question comes from Bonnie Herzog with Wells Fargo.

All right. Thank you. I actually have a big-picture question on your strategy. The strategy you guys just discussed and know what you're going to be unveiling further at your October Analyst Day doesn't necessarily sound like a major change from your current strategy. But I guess you have been thinking about and looking back at just subpar results in FY 2019 and a pretty weak outlook for FY 2020, I'm wondering if you guys think you might need to make more radical changes either in your strategy or possibly in the composition of your portfolio. I guess I'm really trying to understand what gives you the confidence that some of the changes you're making will result in the improvements in the second half.

Yes. Thanks Bonnie. So, we don't need that -- we don't think that that's needed, so no major change in strategy. If we think about the issues, again, they're largely contained to two businesses. And again if I think about Charcoal, we're mostly off with two customers. And Glad is really tied to post-pricing issues where we've clearly seen widened price gaps which we're addressing and we also saw some distribution bumpiness probably across the portfolio which we can also trace back to pricing. And again we have reaffirmed that pricing is really necessary and we'll stand by that. So, feeling good about the rest of the portfolio. Frankly, as Kevin said, it's generally solid. We'll cycle through in the post pricing bumpiness. We think we can address the Glad and Charcoal issues. And then we really think we have robust plans for fiscal year 2020 and beyond. Strong advertising sales promotion that's still relevant. We have brands that consumers love. We have our consumer value propositions and measure continued to be positive. We have robust innovation plans. We're leaning to cost savings. And we will continue to deliver strong cash flow and then put that to work for our shareholders. We think all of the fundamentals that have worked so well for our shareholders with our company strategically for a long period of time continue to remain in place and we're excited to update you on where we're going in October in New York. But you should expect us to lean into components that will make a difference to consumers, to customers, and to shareholders. But what you cannot expect is the departure from a strategic path that's worked for the company for a very long time.

Okay. Honestly that's really helpful. And if I may I wanted to circle back to something you touched on and maybe drill down a little bit further on the higher trade promo spending and whether it's working in Household or specifically in bags. And should we assume that you're going to need to pull a little bit further on that lever as you touched on the gap from they're at which is further implied in your guidance? And then trying to think about how much do you have to pull there and whether or not that will impact work. And then as we think about Charcoal and you touched on this, but should we also think about the promo lever being pulled in that category too for your turnaround, or is that just more dependent on some of the merchandising in innovation you mentioned?

Yes. Charcoal first. So, right merchandising, right innovation, right demand plans that's really the answer here. On Glad if you think about what we did in Q4, we did up our trade investments to narrow the price gaps. That led to sequential improvements and we're clearly seeing green shoots. If you look at for instance the grocery channel where that was implemented first, shares have improved and now -- are now about flat. But I think we would say that the lien interest trade spend wasn't enough which is why in Q1 we're planning for additional trade spend that will fully close the widened gaps that we experienced post pricing. So, that's working. But perhaps the progress on this has been overshadowed by distribution losses tied to bumpiness that we have explained. And then frankly it has been a little worse than we had anticipated in Q4 and has worsened and overshadowed the progress through the trade investments. So, feel good about the added trade investments that we're putting in place in Q1. And then to make full progress in the back half what's needed is to cycle through those distribution losses and to bring innovation back. And as Lisah said earlier, we have several initiatives planned for the back half. And with all those plans combined, we expect a return to growth and we feel pretty good about the prospects of that.

All right. Thank you.

Next question comes from Andrea Teixeira with JPMorgan.

Hi, good morning. Thank you. So, I just want to go back to distribution just a follow-up. And I appreciate Benno your commentary about Charcoal execution in two other customers. So, I think like you know what's happening there. And I get that obviously you may not you also said that you don't expect the shelf to flag the distribution losses that you've had until the next calendar year -- early calendar year, right? So the second half of fiscal. So, I'm just trying to understand what makes you confident that these two retailers will put you back on shelf and that your value proposition will be more compelling in the second half of fiscal 2020 than what you have in place right now? And are you planning to or price rollbacks then for -- I mean probably -- Charcoal is probably not the case but for Glad? And then a separate question would be on supplements on Lifestyle. I know you feel confident about Nutranext that it checks the boxes on collagen and protein trends. But you mentioned that you may decide in the last quarter conference call to a different question that I post to you that you may decide to increase investments in RenewLife in fiscal 2020. Is that a possibility now or not yet? Thank you.

Yes. So, a lot in there Andrea. Let me try to unpack this a little bit. So on Glad, as I just said, we will add more trade promotion in the first quarter of this fiscal year to fully close the gap. What makes me confident on coal that we are going to be more strategically aligned with the two retailers were clearly -- we need to do better. That's up on -- that's up to us. I feel like the combination of our plans with product improvements with new line extensions and pellets, with stronger marketing support and very collaborates -- collaborative talks with both retailers that are going on right now and better plans we will earn their confidence back. It's something that we have a strong track record of and it's something that we need to get back to. Regarding your question on vitamins, minerals and supplements, clearly, feel good about Nutranext as is evidenced by the progress throughout fiscal year 2019 and the expected double-digit growth in fiscal year 2020. RenewLife is clearly still lagging behind. Fiscal year 2019 was a disappointing fiscal year on that business and Q4 was no exception. For perspective, RenewLife represents a little over 1% of sales. So perhaps in terms of materiality, it's less of a factor here, but we're also working on better plans. We remain excited about the long-term potential in digestive wellness. We have a strong brand. We have strong capabilities in this category. The process will take time, but feel good about the long-term prospect on RenewLife too.

Very helpful. Thank you, Benno.

Next question comes from Olivia Tong with Bank of America.

Great. Thanks. Wanted to talk a little bit about tracked versus the untracked. You talked about some of the shelf space losses that you've seen in the mass and the home retailer. But it's kind of surprising to see that the spread between tracked and untracked widened as dramatically as it did this quarter and also in a different direction than usual. So is it fair to assume that there were disproportionate losses in club and online? If so can you kind of give us a little bit more color into the channels? And then, I mean, you -- is there like stuff that came that you would -- that was up for bid and the margin profile just didn't quite meet your standards.

Yeah. Thanks Olivia. So, clearly as I would unpack this if you think about Q4 volume versus year ago the drag really is entirely at Kingsford and Glad. And within those two businesses, frankly, the majority of the drag is Kingsford. And then if you then think about the Kingsford business as we said, we're -- the issues were with two major customers. And one of them is untracked right in the home hardware channel and that -- this is a big quarter for Kingsford and this is a big customer. So the Q4 impact of that was unusual and significant. And I would point you to that single retailer in a very big business in a very big quarter to account for much of the issue.

And then haven't talked a ton about wipes. But last quarter you sounded pretty down deep and cautious about where you are in the Disinfecting Wipes lifecycle. But then this quarter you reported record quarterly shipments of the wipes. So can you talk a little bit about what's the change there and the dynamics that kind of led to such a snapback in the underlying trends of course excluding the impact of cold and flu last quarter? Thank you.

Yeah. So positive about the progress on wipes, clearly, a competitive category still. But last quarter we talked to you about putting trade spend in place to counter what is an elevated competitive activity on the promotional side. We returned to growth this last quarter on top of a very strong quarter in the previous fiscal year. And we were able to make the trade spend increase begin to work. And now for fiscal year 2020, we continue to feel good about this business. We expect this trade investment to continue to work. And importantly, at the Analyst Day, we'll share with you significant innovation both on the base as well as with the new product that we're very excited about. So this is a stronghold for our company. It's a growth engine for our company and we expect that to continue.

Got it. Thank you very much.

Next question comes from Dara Mohsenian with Morgan Stanley.

Hey, guys. So I wanted to focus on pricing for a minute. If we go back a year ago when price increases were first being implemented in the household products industry, I think at least from my perspective we heard a very confident tone from you guys more so than other companies and basically that you've earned pricing power with the increase in new product superiority at the consumer level. If we fast forward to today, pricing has pretty much gone through almost across the board at most of your competitors and you guys had a couple of categories where you've had price gap issues in terms of both bags and wipes and a better response. So I'd just be curious to get a bit of postmortem on if anything has changed from your perspective in terms of the way you manage pricing what you sort of learned from those issues? And I guess specifically as you look at the price gaps is sort of managing the price gaps versus peers a greater priority given they appeared to be willing to use that pricing lever? Thanks.

Yes Dara. So like we said in our earlier remarks we feel good about pricing. It was cost justified is necessary to protect long-term margin also to protect the strong investments that we're making in our brands. All of them are in market now. And I would say generally in line with expectations excluding Glad and Kingsford, I would say. It's just too early. The key indicators -- consumer indicators are strong. If I think about the consumer value measure and as you know that's a measure that we care about a lot, that's unchanged post pricing and the majority of our brands continue to be perceived by consumers as delivering superior value and that's very positive and important to us. The categories have improved. Two years ago before we started any pricing activity our categories were flattish for the total company. Now if you think about the last 52 weeks they're up north of 2 points, up versus year ago. That's a dramatic difference and is very consistent with past experience and expectations. So I would say excluding Glad inline with expectations, clearly the bumpiness that we had anticipated which leads generally to lower merchandising and distribution losses are there. We're seeing them. We're addressing them. But they're temporary. But generally the good news is that pricing has been accepted, has been accepted as part of the industry where we perhaps somewhat disproportionately affected by distribution losses given that we went out with price increases as you recall Dara early and confidently. That's quite possible, but that doesn't change our conclusion that pricing overall was necessary and good.

Okay. That's helpful. And then looking at a bunch of your peers in the U.S. we've seen top line momentum come back to a number of names with reinvestment behind the business. It sounds like a lot of the European household products peers are also choosing to do some margin resets and reinvestments. I guess just as we think about your business have you considered a larger reinvestment back into ad spend on what you've guided to this year? Why wouldn't that make sense here? I get that a lot of those companies don't directly compete against you. But there seem to be a number of players that are perceiving like higher spending is working to drive their business in the industry. So any thoughts there would be helpful? Thanks.

Yes Dara. We always consider how much money to spend and the -- about 10% continues to be the right number. Remember that's up already from previous years. Also the spending in absolute this year will be up and comes on the back of higher ROIs as measured by our own analytic insights. So we're confident with the 10% as the right level.

Okay. Thanks.

Next question comes from Kaumil Gajrawala with Credit Suisse.

Thanks, good afternoon everybody. Two questions, I guess, first we've spoken quite a bit about distribution. Can you give us some context on what the impact was from distribution losses on your overall top line? And then when we're thinking -- as we're thinking about next year can you give some context on the impact of what generally seems to be lower commodity cost on your gross margins? Thanks.

Thanks Kaumil. It's Kevin. I'll - let me take the two questions about commodities and distribution. On the commodity question in terms of the impact of the topline, I would tell you -- or excuse me distribution, we don't break that out. So I think we share the key drivers in terms of volume and price mix, but don't break out the impact to distribution loss. What I would tell you on commodities in terms of our expectations, if you recall in fiscal year 2019 there's a pretty significant headwind both commodities and logistics about 150 basis points. As we look forward in fiscal year 2020 and our ingoing assumption to the year is a much milder commodity environment, I expect it to be down in the front half and up slightly in the back half, but pretty benign overall. Having said that I do expect logistics to continue to be a headwind in fiscal year 2020, both transportation rates I anticipate will still be inflationary to a lesser degree than what we experienced in 2019, but still inflationary. And then we continue to see inflation in logistics particularly in warehousing as we can use the warehouses being built to support fast delivery and that's putting pressure on wages. But overall, I would expect that somewhere in the 50 to 100 bp headwind which is much less that we experienced in 2019.

Got it. Thank you.

Next question comes from Jason English with Goldman Sachs.

Excellent. Hey guys, thanks for squeezing me in here and good afternoon to you. I want to drill a little bit deeper into two other businesses both the multipurpose liquid cleaners and bleach if we could. First, on bleach it's -- the data the measured data and tracked channels has softened of late with the private label picking up and your business spotting and share on axillary and distribution losses. Can you give us any context of what you're seeing across all channels and what you think may be driving that? And then still on the topic of bleach, going back to 2013 the last compaction initiative -- and I'm really stretching my memory here. But if my memory does serve me correct, it created a lot of market share volatility for you I believe as private label was slow to follow and there was a perception a value perception. It was private label sitting next to you at much bigger bottles that really weighed on share and was volatile for performance for a while. A, is my memory correct there? And B, any reason it would be different this time?

Yes, in gust in general I'm quite pleased with Laundry. Laundry had a solid year Jason. And actually most recently if you think about our bleach business we gained share right? But typically what does happen is that share gains tend to over time be a little bit of a zero-sum game. And you win some and you lose some. And there's always volatility. But in general shares in the category have been over for long period of time about flat. And the value that we've been driving on this business comes from expansion of the category and from trade-up. And in the future, we don't expect to change from that strategy. Bleach Compaction feeds into that. Most of all what Bleach Compaction has always done is trade consumers up to larger sizes and with that comes a quite significant category increase. So if you think about the benefit on -- of compaction for the company, the last time in 2013 it was actually higher sales mostly driven by category growth. And then second of course there's a margin component as well which at the time was rather significant. So given that there is a transition over for sure two quarters and of course we can't speak to competition following and what their specific timings are that always creates some volatility. But the net effect as a result of category increases and margin improvements has been very positive. And of course it's a good investment also for sustainability reasons and one that retailers are very excited about leads to better shelf holding power, fewer out-of-stocks in the category and this is a category that's always been somewhat affected by out-of-stocks. So it is a very good initiative that will create a lot of value for the company, but also for retailers and certainly for the planet.

Okay. So long term generally good. But historically could be turbulent maybe turbulent this time around for a short duration before it gets better.

Yes. So turbulent is a strong word Jason. I don't know that I would go all the way there. Certainly there will be quarter-on-quarter volatility. But I do not recall any turbulence on the business and would not expect that.

Okay. And on the liquid cleaners side which is a pretty chunky-sized business for you guys. Year two the Nielsen datas looked soft and I know it varies by cohort or which subsegment we look into it. But in general, there's been a fair amount of -- fairly sizable share losses that we can see on the tracked channel and also here too fairly sizable distribution declines. It looks problematic in the data but you're not talking about it. So is it indeed sort of problematic, or is it just the lens we're looking through?

It's always temporary back and forth. In Home Care generally we feel good about Home Care. There's many segments that are growing and there's always some that aren't growing. Home Care has a lot of different segments and you're picking one. We feel -- obviously it feels good about our Home Care business. It's our largest SBU, had a strong fiscal year 2019 had a strong quarter. Certainly, as a result of pricing you'll see some bumpiness there too which is temporary. But as I think about Home Care including multipurpose liquid cleaners, I feel good about that business and our plans forward.

Very good. Thank you.

Next question comes from Kevin Grundy with Jefferies.

Hey, good afternoon everyone. A couple for me. One on Kingsford and then I have a follow-up on bleach. So Benno, on Kingsford, you talked about getting into pellets and lump charcoal for some time. And naturally it would seem to make sense to extend the Kingsford brand in the category. But a few questions here. With the benefit of hindsight what do you think the company did not react earlier to the trend away from traditional Charcoal? As you plan to extend the brand into these new forms what's your level of confidence in these new product forms that you'll indeed have success and be able to pick up some share? You talked Benno about the necessity to regain retailer confidence. How should we be thinking about that level of uncertainty here that's embedded in the outlook? And then at a higher level here how are you thinking about the growth rate for Kingsford longer term?

Yes. So, thanks Kevin. First of all, let me maybe start with the last question. So grilling fuels is an attractive category. It's very much on trend. And if you think about the category growth rates including those alternative grilling fuels like lump and pellets actually very strong strongly growing category, we're not benefiting from it. But historically we have and we have to get back to that. Would I have liked for us to be in pellets and lump by now? Absolutely. But what we're focused on now is to get into these markets with propositions that are truly differentiated and that make a difference to the category and adds to the category and to the existing offerings. And admittedly that takes time and sometimes taking time leads to better outcomes. And while like I said I would like to be in there by now we're now focused on looking forward and putting better plans in place for calendar year 2020. Like I said earlier, the problem is largely contained to two large customers. If we drill into say the top 10 customers, there are several customers where we're actually doing quite well. And we have plans that we put in place have been well-received and are working. We got to do better with those two large customers. They are important customers for us. We have a strong track record of success with them and we have to get back to that.

Okay. All right, thanks, Benno. I'll leave the Kingsford topic there. A quick follow-up, maybe this is for Kevin on bleach and the benefit of compaction. I don't know if you specified exactly the degree of compaction. But you guys did disclose in the past that was 500 basis points of margin improvement. Do you care to put a number on, what the benefit will be to the Clorox Bleach business for this round of compaction? And then, I can pass it on. Thank you.

Thanks, Kevin. Yeah, I would tell you. We're not disclosing the impact of bleach. What I would tell you, we feel very good about it in terms of creating long-term value to the company. This is another great program for us. But in terms of the specifics of the value, we won't disclose that.

Okay. Thank you, guys. Good luck.

Thanks, Kevin.

We'll take one last question.

We have a question from Ali Dibadj with Bernstein.

Hi, guys. Thanks. I think I have a couple questions. One is, do you want to get a better sense of where the confidence is coming from, on the non-Kingsford, non-Glad businesses. And that the issues you've seen there won't spread? And look I get that we always a tracked channels as less important. Tracked channel isn't that big as a business. We have also some other channels. But it's been even just recently a pretty good leading indicator of some of your issues, perhaps a little bit of a longer lag, but clearly its odd show -- the issue show up in Kingsford in the tracked channel data and Glad as well. And so if you permit me to continue with that, lens, the tracked channels actually matter. One of the biggest indicator has been market share losses and I'm just looking at the data. Again, it's a couple of months now. But cleaning broadly, to spray cleaners, to losing share, dressing looks like it's losing share its clearly white as you said, Cat Litter, digestive supplement. You know, I could go on. And those look like they're losing market share. So I guess, I'm trying to get a sense of where your confidence comes, that you're not going to see a spread given the tracked channels remains -- some what a leading indicator at least that has been for the two businesses you had issues in so far Kingsford and Glad.

Yeah, thanks, Ali. So clearly tracked channels matter, because they account for the majority of the business, as it does market share, so that up front. With exception of this quarter, which again was overshadowed by Charcoal, I think we have commented in the past that, performance in non-tracked channels were stronger. We expect that to continue. It's also fair to say, that our market share have been somewhat under pressure and not as strong as they used to be. I think that is evident. And while that's, not something that we like. I'd also say that, what we expect about sales is to drive market share but also categories. So, we'd perhaps again go to a much stronger category, growth as a way to partially offset that. And doing a time of pricing and the bumpiness that we talked about, distributional losses and then in some cases lack of sufficient merchandising, I would put market share softness, firmly in the camp of temporary bumpiness post pricing. What makes me confident is that again if I think about the timing of trade spend on Brita aside that the three segments outside household are performing at minimum solidly with many, actually performing very strongly. And then I think about our plans for fiscal year 2020 based on strong advertising sales promotion, aggressive plans to defend our businesses through trade were needed in selective areas, robust innovation plans, solid categories, a healthy U.S. consumer, an improving business in International, all those things point to a pretty stable and positive outlook that we expect to shine through in the back half.

That's very helpful context. And just to push a little bit on that context. As we think about the first half versus back half, I don't like being so short-term oriented. But it does seem like if everything else is going okay and the confidence is still there and I get there's a little bit more Brita investments and you still got to do Kingsford and Glad, I get that. But I guess I'm still confused about why, number one, it's so extremely, it sounds like back half loaded, i.e., I'm reading into Glad, Kingsford might get worse before they get better in the next -- in the first half. And then two is, whether you're especially with the compaction that should help in the back half whether there's anything else that you're seeing that might actually be under pressure around the corner because with the confidence it would suggest maybe it should be better from a guidance perspective for 2020 than you've given us so far at least on the top line.

Yeah Ali. This is Kevin. Maybe a couple of thoughts to think about front half, back half. As we've talked about the two businesses have been challenged. I would expect to see a sequential improvement from Glad. As we mentioned, we increased trade spending in Q4 and we start to see some improvements. We are increasing further to fully narrow that price gap back when it took pricing and I expect that to drive continuous improvement. Coal I think is going to have a challenged finish to what we call season year 2019 as we've talked about the work we have to do looking forward to season year 2020. So I expect that to be challenged in Q1 and then be stronger in the back half. And then maybe just a couple other things to think about is as we think about why we have confidence in the back half. Keep in mind, we're lapping a very weak cold and flu season from this year. We'll be lapping pricing at the back half of the year. The bulk of our pricing started early in 2019, so we'll be lapping most of that by the back half. The distribution losses as well will now won't be lapping. We're starting to build some of those back. And then finally, our plans on innovation tend to be more back half-loaded. And so when we look at all those drivers, it gives us quite a bit of confidence on our ability to accelerate the performance of the company in the back half of the year.

Okay, okay. I get the compares point certainly. Okay. Thanks very much.

Thanks Ali.

This concludes the question-and-answer session. Mr. Dorer, I would now like to turn the program over to you.

Yeah. Thank you all for joining us today and I look forward to seeing all of you hopefully at our Analyst Day in October. Thank you. Have a good day.

This concludes today's conference call. You may now disconnect.