Clorox Company (The)

or are in a listen-only mode. At the conclusion of our prepared remarks, we will conduct a question and answer session. If you would like to ask a question, you may press star 1 on your touchtone pad at any time. If anyone should require assistance during the conference, please press star 0 on your touchtone pad at any time. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call, Ms. Lisa Burhan, Vice President of Investor Relations for the Clorox Company. Ms. Berhon, you may begin your conference.

Thank you, Jen. Good afternoon, everyone, and thank you for joining us. On the call with me today are Linda Rendell, our chair and CEO, and Luc Bellet, our CFO. Please note also that our earnings release and prepared remarks are available on our website at theclarkscompany.com. In just a moment, Linda will share a few opening comments, and then we'll take your questions. During this call, we may make forward-looking statements including about our fiscal year 2026 outlook. These statements are based on management's current expectation, but may differ from actual results or outcome. In addition, we may refer to certain non-GAAP financial measures. Please refer to the forward-looking statement section, which identifies various factors that could affect such forward-looking statements, which has been filed with the SEC. In addition, please refer to the non-GAAP financial information section in our earnings release and the supplemental financial schedule in the investor relations section of our website, for reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures. Now I'll turn it over to Linda.

Thank you for joining us today. Our Q4 and fiscal year 2025 performance was mixed, with weaker-than-expected top-line growth balanced by strong margin and earnings performance for the year. In the front half of the year, our fundamentals on consumer, category, and shares played out largely in line with our expectations. In the back half, our category slowed when macroeconomic uncertainties picked up. While this largely stabilized in Q4, it has not yet normalized. To put the quarter in context, we executed many of the elements with excellence as we shipped higher than expected incremental orders to temporarily build retailer inventories in support of our ERP launch in the U.S. And as a reminder, our new ERP is a critical part of a strong digital foundation that enables us to better leverage data and insights to drive revenue and efficiencies. We also delivered strong gross margin in earnings in the quarter. At the same time, when consumers are stressed, the bar goes up and we didn't deliver on all elements of our plans for value superiority on some of our businesses this quarter. We also lapped abnormally high demand creation activities from last Q4 as we continue to rebuild shares following supply restoration from our August 2023 cyber attack. This led to lower than expected sales for the quarter when we exclude the ERP retail inventory build. Looking ahead, we are clear-sighted on what we need to do to win in the marketplace and and deliver clearly superior experiences and value to our consumers in this environment. We see opportunity ahead as consumers continue to seek better experiences, and we will lean into this with our innovation pipeline in the back half of the year. Importantly, we're excited to advance our transformation and begin to fully unlock the new, modernized capabilities we've built. While we have more work to do, I'm confident we have the right plans, capabilities, and investment levels not only to win with consumers, but also to deliver strong financial performance in fiscal year 2026 and beyond. With that, Luke and I will now take your questions.