Good day, ladies and gentlemen and welcome to the Clorox Company’s Third Quarter Fiscal Year 2020 Earnings Release Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today’s conference, Ms. Lisah Burhan, Vice President, Investor Relations for the Clorox Company. Ms. Burhan, you may begin the conference.

Thank you, Christine. Welcome everyone and thank you for joining us today. On the call with me today are Benno Dorer, our Chair and CEO and Kevin Jacobsen, our CFO. Before I go into results, I just want to express how grateful we are to be speaking to all of you today. This is clearly an unprecedented time. Our thoughts are with everyone who has been affected by this pandemic, especially those who have lost friends and loved ones. At the same time, we are also inspired by so many frontline healthcare workers, first responders, delivery and grocery workers, our own production employees and more. We are grateful to them for their selfless dedication to helping others. A few usual reminders before we go into results. We are broadcasting this call over the Internet and a replay of the call will be available for 7 days on 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. Reconciliations 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 maybe 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, including among others, statements related to the expected or potential impact of COVID-19. Actual results or outcomes could differ materially from management’s current views, beliefs, assumptions and expectations and plans. I would also direct you to…

Thank you, Lisah and thank you everyone for joining us today, particularly during this difficult time. We hope you and your loved ones are well. I’m extremely proud of the strong financial results we delivered this quarter as they reflect how our company responded so quickly to address an unprecedented demand for disinfecting products and our other trusted products people count on every day as they shelter in place during this global pandemic. The impact from COVID-19 had a significant impact on our third quarter results. At the same time, I am also encouraged by the continued progress we see in our core business prior to the increased sales as a result of COVID-19. In addition to our strong sales performance, we delivered our sixth consecutive quarter of gross margin expansion and another quarter of strong cash flow. And as you saw in our press release, with this quarter’s strong performance and our expectation for continued strong demand for our products in the fourth quarter, we have raised our fiscal year outlook, which I will discuss in a moment. Turning to our third quarter results, sales increased 15%, reflecting 18 points of volume growth, partially offset by two points of unfavorable foreign currency headwinds and one point of unfavorable price/mix. On an organic sales basis, third quarter sales grew 17%. Additionally, based on the trends we were seeing in the quarter prior to the impact of COVID-19, sales are tracking in line with our original plan to return to organic sales growth in the back half of the fiscal year. Gross margin for the quarter increased 330 basis points to 46.7% compared to 43.4% for the year ago quarter. Third quarter gross margin included the benefits of increased volume as well as 150 basis points from cost savings and 90…

Thanks, Kevin. We appreciate all of you joining the call today. Our hearts go out to everyone who has been impacted by this global health crisis and we hope that you and your families are safe and well. Clorox is a health and wellness company at heart. And during these past few months, our mission has never been clearer. In the uncharted territory presented by COVID-19, we knew it was important to act quickly to help, always grounded in our most important company value, do the right thing. We know that the public is counting on the Clorox Company and our products around the world, and our team of 8,800 strong is stepping up every day to make a difference the right way. With this in mind, here are the three important takeaways from today’s call. First, I am proud of our people’s leadership and passion in serving public health, which has been rewarded by our consumers, customers and the communities we serve and has led to strong Q3 financial results. Back in early January, we activated our company to guide our response to increased supply to protect public health and people and we have pursued three priorities since then front and center: first, protecting the health, safety and well-being of our employees; second, making cash and product contributions to support caregivers and other organizations providing coronavirus relief; and third, maximizing supply to get our products where they are needed most. In the U.S., our employees qualify as critical infrastructure workers, because we make essential household products. Our third quarter results reflect directly on the outstanding job our people are doing in the face of extraordinary circumstances and the health and well-being and that of our families is top of mind. To support those who continue to work in our…

Thank you, Mr. Dorer. [Operator Instructions] Your first question comes from the line of Andrea Teixeira from JPMorgan.

Thank you and hope all is well and congrats on your results. So Benno, I was hoping if you can comment on your increasing production capacity into the fourth quarter. And I understand you were using third parties and using some of this capacity that you always had through peak season of cold and flu. So if you can comment on, obviously, in the sanitizing and in all your portfolio, which I understand is about 20% to 25%, and into the International, too, if you can keep that production. And in terms of consumption trends against shipments, if you can update us if you’re still seeing a lot of demand from replenishing inventories at the shelf and also what you’re seeing in terms of the grilling season for the other products you commented on the prepared remarks, but just to see if you can position us on the other portions of the portfolio? And then I have a follow-up on the gross margin, then I will pass it on.

Yes. Thanks, Andrea. That’s a lot of good ground to cover. And product supply, of course, is on everybody’s mind. What we’ve commented on is that demand has been clearly unprecedented, and we’re in uncharted territory for our supply chain, in particular, in disinfecting products. Typically, if you think about supply chains, they’re built to be in the sweet spot of quality, safety, efficiency, cost, effectiveness required to produce the necessary output for the long term. But when you have situations like we faced where, in March, we saw demand spikes for some of our disinfecting products of 500-plus percent, I think it’s evident to everybody that despite heroic efforts, you have out of stocks. And clearly, we are continuing to see out of stocks. We’re really proud of how our organization has responded. As Kevin commented, we haven’t seen any major supply disruptions on our side. We have been able to increase our production of disinfecting products by 40%. We focused on fewer SKUs. We saw great partnership and patience from retailers, and I want to thank all of them for it to help us bring products to market as quickly as possible. We accepted incremental costs like air freighting, speeding up the supply chain to serve stores as quickly as possible. And as you commented, we activated third-party suppliers to help us cope with the surge in demand. We will continue to do that. We continue to find new ways to increase our capacity. We should see meaningful continued improvement this summer. And of course, we are also investing in the right capacity long term as we expect that demand for disinfecting products is going to be elevated for a long time as they will continue to play significantly increased role in people’s lives. As we’ve commented, we’re…

That’s helpful, Benno. But if you if I can also ask on the gross margin point, but before we go into the gross margin, just even if you do the midpoint of your range, it sounds a little conservative to everything you’ve just said. So I was wondering if it’s just a level of being conservative at this point, just for the puts and takes and potentially retailers facing their own issues because it looks like as everything you’ve said in the prepared remarks and now indicates that you can safely be at the top of that range or is it just like you’re trying to be conservative given the uncertainty?

Yes. We think we have a balanced outlook, Andrea. As you think about the range also, 4% to 6% with one quarter to go, and you can do the math, that implies a very wide range. Again, we think it’s balanced. We think that there is a lot of uncertainty as far as the consumer is concerned. We’re assuming that supply is not going to be disrupted, importantly. And as we learn more about asymptomatic cases, and the safety of our employees is very critical. And of course, for us, it’s important to continue to be able to manufacture the way we have, but we can’t take that for granted. So I would say, at this point, this is our best foot forward with a wide range, and it’s a balanced outlook. And perhaps Kevin can comment on gross margin. Do you want to?

Yes. The nature of the question, though. Did you have a question, Andrea, specifically related to gross margin?

Yes. Yes. I appreciate the time. And just quickly on your point about 250 basis points, is that just the separate logistics impact or you are saying that we should be seeing it seems to me just an isolated impact and temporary? But obviously, it’s the trend for gross margin, as we implied in the guidance, is up for the fourth quarter.

Yes. So thank you for the question. On the 250 bps, we do believe that’s temporary. It’s really related to two items. We are investing more with our production team, as I mentioned, both in wages and benefits as well as enhanced cleaning measures. So that’s part of it. As well as I think Benno just mentioned some of the specifics, the increased transportation, warehousing costs we’re incurring. And I’d say that’s going to continue until we can catch up with the demand signal. So I’d expect in the near term, that’s something we’ll see hitting margin. And we’ll have to see how this plays out. That will be very much influenced by the shape of the demand.

Thank you. I appreciate it.

Our next question comes from the line of Steven Strycula from UBS.

Hi. Good afternoon and congratulations on a very strong quarter. So Benno, I have a question as retailers have a newfound appreciation for some of the disinfectant strength that you guys have in your portfolio. How are your conversations going as retailers think about planning forward, maybe for fall, winter resets, in terms of the amount of linear display space for some of the disinfection products? And then as you think about your International business, given that COVID is a global pandemic situation, does this extend your portfolio reach and use maybe the wipes business as a foot forward into some markets where maybe you didn’t have a strong presence previously?

Yes, international first, Steve. So we do think that this gives us an opportunity to think about international expansion plans. And without getting into too much detail, we’re certainly expecting that disinfecting, in general and perhaps wipes, in particular, are going to be seeing a lot of consumer demand. And this would give us an opportunity to serve more consumers. So it’s something we certainly look at and something that, as we have no shortage of dry powder to invest in growth, we would be willing to invest in should there be profitable opportunities that we can take advantage of with an eye on sustainable competitive advantage. So we would probably not be interested in opportunistic market entries. But where we see a strategic long-term opportunity, we’re certainly prepared to take advantage of it and we are seeing what you see on this. As far as retailer conversations, I will tell you that most of the conversations right now are about meeting the current demand, which is difficult enough. But what I would expect, of course, is that we’re going to have those discussions with retailers at the right time. And they certainly see the numbers as we see them. It’s a lot of incremental usage coming out of disinfecting products. The wipes household penetration sits a little north of 50%. Bleach is about the same. So and what we’re seeing more recently is that the household penetration on those two categories is climbing. So that would suggest that there is an opportunity to expand shelf space in those two categories. But it’s a conversation that still lies ahead of us, but it could certainly contribute to what we believe to be strong ongoing opportunities to serve more consumers with disinfecting products through the right amount of shelf space in store.

Thank you.

Thank you.

Our next question comes from the line of Steve Powers from Deutsche Bank.

Hey, thanks. Good to hear your voices. Benno, just to build on your capacity planning comments and cleaning, as you think about getting ahead of the structural demand for disinfecting that you mentioned, not just in the U.S. in the near term but perhaps also over time overseas, how are you thinking about capacity builds against that backdrop? And should we begin to think of elevated CapEx associated with that or can this all be handled through third-party supply?

I’ll let Kevin comment on CapEx. But we are prepared to invest and, frankly, have started investing in more capacity in disinfecting with an eye on the long-term because of the anticipated demand. And it will be a mix, but typically, we, on an ongoing basis, always like to manufacture our products in-house because we can deliver the right combination of quality and cost. So I’ll let Kevin give you his detailed perspective on how we should be thinking about CapEx.

Hi, Steve. As it relates to CapEx, typically, we spend about 3% of sales each year on CapEx. We’re doing the work right now. But I suspect, as we look to fiscal year 2021, we’ll be closer to 4%. And it’s really for the reasons Benno just talked about. We see a number of opportunities to increase investments and expanding capacity of our self-manufacturing facilities because as I think you’re hearing from us today, we’re seeing heightened demand certainly in Q3 and our Q4. We expect this to continue over a longer term basis. And so we are leaning in right now to start increasing capacity, and we’re investing right now to do that.

Okay, thank you. And then if I could just follow up real quick on the household business and Glad specifically. Clearly, a step back on the distribution loss in the third quarter. But if I heard you correctly, Lisah, I think you spoke of net wins as of the fourth quarter. So I guess net of all the moving parts, how should we think about your shipments relative to takeaway in the fourth quarter and beyond as everything settles out across the market based on that? Thanks.

Yes. So first of all, I will say that this distribution loss which occurred was contemplated in the previous outlook. So it’s not a change to the previous outlook. We knew this for a while. And as we think about by quarter, it’s simply a timing saying, so we lost this in Q3. But for the total back half of the fiscal year, as Lisah has commented, we expect distribution points to be up because we will get significant wins with other customers, including new distribution with significant customers. So it’s a net positive. And what we expect is, for the midterm, this business should do quite well given that it’s also positively impacted by the pandemic as people stay home more. But we’re also, as you will have seen, growing share market share quite significantly as a result of not just the improved distribution position but also some spillover from the lost distribution. We know that some Glad consumers are willing to change stores to buy their brands. And of course, the core fundamentals, as we think about innovation, as we think about price gaps, which we have continued to invest in, continue to improve. So we’re comfortable with where Glad is and the path forward on the business.

Yes, okay. I just want to make sure I hear I mean my impression based on all that is that we should think about shipments coming in ahead of wherever consumption lands in the fourth quarter. But before I walk away with that, I just want to test that hypothesis with you.

Yes. So we always try to stay away from being that specific on any business forward-looking, so bear with us at this point. You will continue to see the negative impact of the loss distribution for a while, right? But that will be partially offset by or it will be offset by the distribution gains that we’re adding. So it’s going to be a little bit noisy for a quarter or two, but it will normalize after that period of time.

Okay, fair enough. Thanks so much.

Your next question comes from the line of Nik Modi from RBC.

Yes. Good afternoon, everyone. I hope everyone is doing well. Benno, I’m curious how you would think about answering this question because I’ve been thinking about it a lot. There’s just so much trial. I mean how much marketing do you think sorry. How many marketing dollars do you think Clorox would have had to spend in order to get the kind of top line that you have right now? And the reason why I ask that question is this seems, I hope, like a once-in-a-lifetime opportunity where so many consumers are trying these brands and some for the first time across a wide ring of demographics. And how you can spend or lean into that to really engage them to create the stickiness. Now I know everyone is more focused on disinfecting, but I’m talking also about charcoal and your other products, salad dressing, etcetera. So I don’t know how you want to approach that question, but I’m just curious, like how much do you think how much value was created by this situation across your portfolio?

So we are not going to be a company that’s going to cut advertising. For us, advertising is a long-term investment. And as you say, we have a unique opportunity now to turn trial into loyal users. One of our IGNITE Strategies, as you probably recall, is to increase the number of people we have a close personal relationship with in the United States from 20 million to 100 million people over the next five years. Now we’re getting a lot of incremental people in, and it’s our opportunity to hold on to that volume. So in the back half of this fiscal year, we will spend $50 million, 5-0, more than in the previous year. And that tells you the stance that we are taking. We will play offense. We think that advertising investment is a very good investment. Clearly, the ROIs, in theory, they’re a little lower right now than they would be if we didn’t have out of stocks. But the ROIs are still very good. And we’re not spending to make quarter commitments, but we’re spending to build the long-term equity of our brands. How we spend is different. For instance, as you think about our disinfecting products, we’re trying to be useful in people’s lives. We’re trying to live the purpose that we have created for the Clorox brand. And in this particular case, we are spending a lot of money on consumer education, in making sure that people use our brands the right way and in helping them be safe. That is a great investment because at this time, brands need to show up. And at this time, people make up their minds as to whether they trust the brands or not. And for Clorox, we believe that it’s a unique opportunity to continue to build trust in our brands, to hold on to the increased trial that we are seeing. And as a result, we will be very bullish with our advertising spend and not cut any single dollars. Like I said, we’re spending $50 million more in the back half. And I would expect us to continue to spend quite strongly in the next fiscal year as well.

Very helpful. And then if I could, just a quick question on the Glad distribution loss. I know you’ve already budgeted for it, but can you just talk a little bit what was driving the distribution loss? Like what happened?

We typically don’t do that. It’s a discussion that happens between a retailer and the manufacturer. So I’d prefer not to comment as in all cases, just to protect the integrity of the conversations that we have with retailers. But it’s a good retailer. It’s a good partner of ours. We’re growing very strongly with them in other parts of the portfolio. And we’re also optimistic perhaps that at some point, we can have a different kind of conversation in this category with the same customer as we might have had in previous categories. So respect their decision, don’t agree with the decision, we’ll have to see how it works for them. And in the meantime, we’re very comfortable with where we are on Glad and our plans on the business going forward.

Fair enough. Thank you, Benno.

Thanks, Nik.

Our next question comes from the line of Kevin Grundy from Jefferies.

Hey, good afternoon, everyone. And I hope that you’re doing well. I wanted to pick up, Benno, if we could, on the topic of disinfectants and hygiene products but bring it to the company’s long-term guidance. So as you are well aware, there’s a lot of pushback on these calls, I think, for a number of years on your prior guidance, the 3% to 5% organic sales growth and the achievability of it. And so it was just this past October, as you guys are well aware, that you trimmed it down to 2% to 4%. And now just building on the discussion in terms of increased consumer demand in some of your big product categories like disinfectants, it seems like this is certainly going to be more lasting. You’re seeing an increase in household penetration, you’re increasing capacity. So clearly, that’s a view that you guys share as well. But I was just hoping that you could comment, maybe you could quantify this a bit in terms of what you see as the appropriate long-term algorithm now for the company getting beyond this period of pantry load and so forth. But over the next three to five years, is 3% to 5%, again, more relevant? If so, where do you think is sort of appropriate as you guys are planning within that range? So thanks for that.

So I think you will understand how we’re not going to give any numbers or any updated view on our long-term sales guidance. Like we said, we think that there’s going to be continued heightened consumer engagement, and that gives us an opportunity to serve more consumers in the U.S. and international. At the same time, I’d also expect that it’s going to be a more competitive space. As you know, we always worry about competition, and this is going to be an attractive category. And we will have to see what happens to the competitive landscape in the future. And then, of course, there’s other puts and takes, right? So if I think about Burt’s Bees right now, which, as you all know, has been an incredible success story for the company for a very long time, and we expect that to pick up at some point. But personal care businesses, in particular, are challenged. So I think there’s going to be puts and takes. We’re certainly thinking about what the right algorithm might be. We are having the right conversations internally. And at the right time, if we believe there’s a change, we’ll communicate it. Now is not that time. We’re comfortable with the 2% to 4%. Near term, like we said in our fiscal year outlook, we expect elevated demand, but it’s way too early to say how this will translate into long-term value creation. The important thing to take away, though, beyond the numbers is that we will aggressively invest into it. We will play offense, and we will put ourselves in the best possible position in the retail and the professional business to serve as many consumers and institutional customers as we possibly can. And then we’ll see what comes out of that.

Okay, thanks Ben. I will pass it on. Good luck guys.

Your next question comes from the line of Jonathan Feeney from Consumer Edge.

Good morning and thanks very much. And appreciate your leadership in all of this. Kevin, you gave us a couple of figures, and just a simplistic question. Can you tell us what either global takeaway was or U.S. takeaway was as far as you can? I’m just trying to understand what that will mean when we come to model next year and try to compare and see how this big surge of volume sort of smooths out over a few quarters. And secondly, on the cost front, it strikes me that your cost structure looking over the next year, so 12 months from now, not the rest of the fiscal year, which is probably pretty fixed, is pretty petro heavy. And can you give me a sense how much that is that right? And how much your sort of prospective look at those sorts of input costs has come down since, say, the past say, maybe January 1 when some changes in the price of energy and some of these upstream components? Thanks very much.

Yes. Thanks, Jonathan. On the second question related to our cost inputs, you see the same data we see, which, clearly, there’s a significant pullback in the price of oil. But we’re also seeing that in the resin market. But I’d tell you to a much lesser degree because I think there’s some structural issues going on in oil, it’s going to get to pull back much further. I would say this. I think a lot of that is going to be driven by global demand more so than input costs. With GDP globally continue to decline, I think that will continue to put downward pressure on cost inputs, particularly in the energy complex. And for us, that really plays out in a couple of areas. So obviously, for us, resin is a big component of our buy, and that’s most pronounced on our Glad business. Keep in mind, though, in Glad, as we see cost inputs coming down on resin, typically, that means heightened trade spending within the category. And that’s really how the category is managed, that, that flows through to consumers through the form of increased trade. So as resin prices come down, I would expect to see increased trade spending on the Bags and Wraps business across the categories. And then as it relates to oil, oil usually takes six months or so to work through our supply chain. So if oil stays down at these levels, this $20 a barrel level it looks like it’s projecting over the next few months, that certainly would be a tailwind for us going out for the foreseeable future. Now I think it’s probably too early to know that for sure. But certainly, if you look at the environment today, it certainly suggests that’s possible. And then, Jonathan, say more on your global takeaway. Tell me more what you’re looking for in that question.

Pretty simple. Whenever you told about we know what U.S. takeaway is or at least your measured channels. You told us that club and e-com was something like double that rate. I assume that’s just a U.S. number. I’m wondering if you could give us if you think about global takeaway through retail, like how as it compares to your total global sales number or the U.S. version of that, just an actual number as opposed to double the rate, etc.

Yes. I mean I’d say a few things. As we’ve talked, our volume growth is about 18% as a company. And International, we had very strong volume growth as well, very close to that. So our International business is growing at a fairly comparable rate to what we’re seeing in the U.S. And again, because of what we talked about, this is a global health crisis, and we have an international portfolio that’s very lined up to address this and help consumers. And so we’re seeing strong growth broadly. As I think about tracked versus non-tracked, we are seeing elevated growth in non-tracked channels. It’s probably growing 10-plus points higher than tracked right now. But I think that’s also not surprising. We’re seeing very strong growth in e-com, and we’re seeing very strong growth in club as consumers are even ordering from home or they’re trying to order in larger quantities. So we’re seeing those channels grow at an accelerated rate right now.

Okay. That helps a lot. Thank you very much.

Thanks, Jonathan.

Your next question comes from the line of Lauren Lieberman from Barclays.

Thanks, and good afternoon. I just wanted to ask a little about the commercial environment because I would expect and hope that there’s some pullback on promotional activity with demand trending so high. Promotion was still mentioned in the release, and the Nielsen data is sort of a bit of a mixed bag, and I know that’s always the best picture. So wondering if we can hit off on that promotional environment, I guess, within the cleaning categories and then your other businesses would be great.

Hey Lauren as you might expect, given the supply shortages, there aren’t a lot of promotions, and we expect that there won’t be for the rest of the fiscal year. Said that, the way we accrue promotions is less of invoice, but most of our promotional dollars are reflected in everyday low pricing with most of our customers. And we also have a performance-based annual program where a lot of the promotional dollars are being spent. So the fact that there isn’t a lot of promotions given that EDLP is where it’s always been and given that retailers are more than meeting our performance requirements, the trade dollars are continuing to be spent. And we don’t expect that, nor frankly do we necessarily want it to be a source of savings. We have continued to spend against the right price gaps on Glad. And as you can see from market share gains and also pricing developments, we’re continuing to make progress, and we feel good about that. So promotional environments, pretty benign. Expect that to continue, but it will not translate to cost savings.

Okay. So the investments in the trade dollars and adjusting price points that’s something that is still ongoing. We just don’t see it manifest as like promotion in store. But ultimately, it will show up as like a permanent list price change, for example, for Glad.

I’m not saying that. All I’m saying is that we’re continuing to spend the dollars. We’re not pulling back on any dollars in any area. And in Glad, we are spending against a very specific objective, and that is to temporarily keep up pricing in line. What happens with that spend and whether it’s going to, at some point, be converted to a different list price will very much depend on what competition is doing, and that’s out of our control. Right now, we are comfortable spending the dollars in trade, and it’s working.

Okay. Great. And then I was curious with the Professional Products business because that’s obviously been an area of interest for you guys for some time. And I feel like there were some fits and starts in really getting that business to grow as it was sort of hoped maybe at least not now, but five or seven years ago. So where that clearly is an opportunity in terms of usage, but just in terms of, call it, account wins or sales force investments, things like that, that you can do, it maybe early to talk about, but I was just curious about longer-range investments to continue supporting the growth of that business in a more contractual level rather than just right now meeting the surge in absolute need.

Yes, absolutely. That’s part of the broader disinfecting opportunity, Lauren. The Professional business, or PPD, as we call it, has done very well for us for a prolonged period of time. And the core of the business, which is to serve hospitals and other healthcare facilities with disinfecting products, has always done well. What we have done in the past was to look at whether we can enter additional categories. Some of it was successful and still is. Some of it was not mostly because the regulatory environment has changed quite significantly. But the core of the professional business is serving healthcare facilities with disinfecting products, and we have a number of proprietary and unique technologies. We have germicidal wipes, of course, which can help a great deal at this point. But also our total 360 electrostatic sprayer system is seeing an incredible uptick in demand that this fiscal year will be up 500% from last year, and we continue to see an opportunity to drive distribution. So what you can expect is that we will continue to invest very aggressively in strategic opportunities that are centered around areas where the Clorox brand matters, which it does; where we have unique technology, which is predominantly in the healthcare space; and where our know-how in cleaning and disinfecting protocols can come into play. Importantly, we look at these options increasingly, not just as options that are limited to the Professional business but where we can bring the full power of the total company into play. And that will increasingly involve ways to reassure consumers that certain places are cleaned with the Clorox brand as a way to make them feel safe as, at some point, hopefully, we will be all back to normal and enjoying the things outside our homes that we used to enjoy and look forward to.

Thank you, Benno.

Your next question comes from the line of Olivia Tong from Bank of America.

Thanks. Good afternoon. And hope everyone is well. We’ve covered a lot of ground, cleaning, disinfecting already. So maybe I can ask one about just private label and how to think about what potentially happens in some of your more private label exposed categories outside of cleaning, of course, as we think about the recession taking hold. What are you doing to stay focused in this in these categories as we emerge out of the pandemic? Thanks.

Yes. So right now, I would say market share is driven by two things. First of all, just sheer availability, right? And as you think about our disinfecting products, for instance, one of the strategic choices, as hard as it may be, but whether you’re doing the right thing isn’t necessarily just determined by your words, but it’s determined by actions. And one thing we are doing is we’re prioritizing the healthcare section. That leads to more out-of-stocks at retail and it leads could lead to lower shares. And that is okay because that is the right thing to do. That could mean that private label in disinfecting could grow share. Said that, what we’re seeing also is that at the time of crisis, people turn to brands that they trust. And we have many of those brands that people trust. And if you look at tracked channels to date, what’s been happening is that we grow share very strongly, six out of nine categories in tracked channels. We’re seeing one category also growing non-tracked channels, so it’s 7 out of 9 in non-tracked channels. And we’re seeing private label and what we might casually call secondary brands or all other brands decline, all other brands declined very heavily. That is the fact, and that’s what we’re seeing right now. And for us, as we have entered the recession, there are a number of things that we’re bullish about. First of all, the fact that brands do matter, and we have many of the brands that people care about. Second, as I said earlier, the percentage of our brands that is seen by consumers in the U.S. as superior in value is at an all-time high. And if you think about this recession and compare it to the 2008, 2009 recession, that recession was prior to our focus on consumer value. Our focus on consumer value started with our Strategy 2020, which was put in place in 2013. And since then, the percentage of our volume, of our NCS that’s seen as better in value is up significantly. If you add to that our commitment to play offense, if you add to that our ability to invest in the consumer, if you add to that a portfolio that’s relatively recession resistant, several categories typically do quite well during a time of recession. If you then finally add to that our commitment to keep innovating and our expected continued strong innovation plan, we feel like we’re entering the recession with momentum, and we expect that we will do quite well with consumers. And we’re always taking private label seriously, but we like where we stand at this point.

Great. Thanks. Appreciate it.

This concludes the question-and-answer session. Benno, I would now turn the program back over to you.

Yes, thank you all of you. I look forward to speaking with you again in August when we will share our Q4 and fiscal year 2020 results. And in the meantime, please stay safe and well. Thanks.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.