Okay. Thanks.

Good morning, everyone. Thanks for joining us today.

I'll begin with a review of the Q3 results, and then I'll turn the call over to Rick Dierker, our CFO. And when Rick is done, we'll open up the call for questions.

But before we begin, I would like to recognize all Church & Dwight employees around the world for their continued dedication to keeping our company going, especially our supply chain and R&D teams as during this quarter, the company faced the complexities of widespread raw material and labor shortages at our suppliers and at our third party manufacturers. Now let's talk about the results.

Q3 was a solid quarter. Reported sales growth was 5.7%, organic sales growth grew 3.7% and exceeded our 1.5% Q3 outlook.

The 3.7% organic growth rate in the quarter is impressive, considering the prior year Q3 2020 organic sales growth was 9.9%. So that's growth on top of growth.

The adjusted EPS was $0.80 and that's $0.10 better than our outlook. We grew consumption in 12 of the 16 categories in which we compete and in some cases on top of big consumption gains last year.

Regarding brand performance, five of our brands saw a double digit consumption growth, and I'll name them for you: vitamins, ARM & HAMMER cat litter, Scent Boosters, BATISTE and ZICAM. And although many of our brands experienced double digit consumption growth, it's not all reflected in our 3.7% organic sales growth as shipments were constrained by supply issues.

In Q3, online sales as a percentage of total sales was 14.3%. Our online sales increased by 2% year-over-year.

Now keep in mind, this is on top of 100% growth in e-commerce that we experienced in Q3 2020 versus 2019. And we continue to expect online sales for the full year to be above 15% as a percentage of total sales.

Now as described in the release, Hurricane Ida's impact was substantial, which resulted in limited availability of raw materials and caused our fill levels to continue to be below normal. Labor shortages at suppliers and third party manufacturers have constrained their ability to produce.

Transportation challenges have further contributed to supply problems. Now the good news is that over the past 18 months, we have made our supply chain more resilient by qualifying dozens of new suppliers and co-packers, which provides, of course, both short term and long term benefits.

And in a few minutes, Rick will tell you about our plans to expand capacity in 2022 with a significant increase in CapEx next year to support our growth plans. Now due to the lower than normal case fill rate, we pulled back on Q3 marketing compared to the prior year, and we expect the supply issues to begin to abate in the first half of 2022.

Our biggest issue is wide widespread inflation. We're dealing with significant inflation of raw and packaging materials, labor, transportation and component costs, which is compressing our gross margin.

These conditions are expected to continue well into 2022, and Rick will cover gross margin in his remarks in a few minutes. On past earnings calls, we described how we expected categories to perform in 2021.

Overall, our full year thinking is generally consistent. Just to name a few categories, demand for vitamins, laundry additives and cat litter has remained elevated in 2021.

The condoms, dry shampoo and water flosser categories have recovered and are experiencing year-over-year growth as society opens up and consumers have greater mobility. Baking soda and oral analgesics have declined from COVID highs as expected.

So now I'm going to talk about each business. First up is Consumer Domestic.

So the Consumer Domestic business grew organic sales 2.8% and this is on top of 10.7% organic growth in Q3 2020. Looking at market shares in Q3, six of our 13 power brands gained share and our share results are clearly impacted by our supply issues.

I will comment on a few of the brands right now. VITAFUSION gummy vitamins saw a huge consumption growth in Q3, up 24%.

Consumers have made health and wellness a priority. It appears that the new consumers that came into the category are staying, because if we look at the last year, VITAFUSION household penetration is up almost 10%.

BATISTE dry shampoo grew consumption 36% in the quarter and grew share to over 40%, first time that's happened. Dry shampoo is recovering as stores have reopened and consumers are becoming more mobile.

Next up is WATERPIK. WATERPIK consumption declined in the quarter due to the year-over-year timing of a major online retailer sales event.

But the good news is that WATERPIK continues to have strong consumption year-to-date and continues to benefit from the heightened consumer focus on health and wellness. In Household Products, ARM & HAMMER liquid laundry held share despite leading with price.

ARM & HAMMER scent boosters continue to gain share, going the other way was unit dose share, which declined due to supply issues. The good news in unit dose is that we are now self-reliant with reliable in-house production.

And also in household products, ARM & HAMMER cat litter grew consumption 11%, while gaining 50 basis points of market share. Next up is International.

Despite disruptions due to COVID, our International business came through with 2.3% organic growth, primarily driven by strong growth in the Global Markets Group. Asia continues to be a strong growth engine for us.

STERIMAR, FEMFRESH, VITAFUSION and L'il Critters led the growth for the International business. Now the next one is Specialty Products.

Our Specialty Products business delivered a very strong quarter with 18.5% organic growth but this was on an easy comp. The prior year quarterly organic growth for Specialty Products was actually down 3.4%.

So 18.5% is a really nice rebound. And this was driven by both higher pricing and volume.

Milk prices remained stable and demand is high for our nutritional supplements. Now let's talk about pricing.

In response to the rising costs, we have already taken pricing actions in 50% of our portfolio, effective July 1 and October 1. The volume elasticities have been slightly better than expected since the July price increases.

We will be announcing pricing actions effective Q1 2022 on an additional 30% of the portfolio. That means that as of Q1 2022, we expect to have raised price on approximately 80% of our global portfolio of brands.

Due to our expectation of incremental cost increases, we continue to analyze additional pricing actions that can be put in place next year in 2022. Now let's turn to the outlook.

Significant inflation of material and component costs and co-packer costs impacted our gross margin in Q3. Looking forward, we expect input costs and transportation costs to remain elevated in Q4 and we expect significant incremental cost increases in 2022.

Our EPS expectations are unchanged. We expect adjusted EPS growth of 6% this year.

It's important to remember that we are comping 15% EPS growth in 2020. We expect full year reported sales growth of 5.5% with 4% full year organic sales growth.

It's also important to call out that we are committed to maintaining the long term health of our brands by ensuring a healthy level of marketing investment in Q4 and in 2022. As many of you know, we typically target 11% to 12% marketing spend.

Q3 was 12.3% and we expect Q4 to be approximately 13%. Just to wrap things up, October consumption continues to be strong.

We're navigating through significant supply challenges and cost inflation. We expect our portfolio of brands to do well, both in good and bad times and in uncertain economic times such as now.

We have a strong balance sheet and we continue to hunt for TSR accretive businesses. And next up is Rick to give you more details on Q3.

Thank you, Matt, and good morning, everybody. We'll start with EPS.

Third quarter adjusted EPS, which excludes the positive earnout adjustments, was $0.80, up 14.3% to prior year. We don't expect any further adjustments to the earnout.

The $0.80 was better than our $0.70 outlook, primarily due to continued strong consumer demand and higher than expected sales as well as lower incentive comp and lower marketing spend as supply chain shortages were impacting customer fill rates. We also overcame a higher tax rate year-over-year.

Reported revenue was up 5.7% and organic sales were up 3.7%. Matt covered the details of the top line.

I'll jump right into gross margin. Our third quarter gross margin was 44.2%, a 130 basis point decrease from a year ago.

This was below our previous outlook of expansion as we faced incremental pressure from the effect of Hurricane Ida on material costs and distribution. Gross margin was impacted by 500 basis points of higher manufacturing costs, primarily related to commodities, distribution and labor.

Tariff costs negatively impacted gross margin by an additional 40 basis points. These costs were partially offset by a positive 250 basis point impact from price/volume mix and a positive 120 basis point impact from productivity.

Moving to marketing. Marketing was down $10 million year-over-year as we lowered spend to reduce demand until fill rates could recover.

Marketing expense as a percentage of net sales was healthy at 12.3%. For SG&A, Q3 adjusted SG&A decreased to 180 basis points year-over-year with lower legal costs and lower incentive comp.

Other expense all-in was $12.1 million, a slight decline due to lower interest expense from lower interest rates. And for income tax, our effective rate for the quarter was 20.4% compared to 17.3% in 2020, an increase of 310 basis points, primarily driven by lower stock option exercises.

We continue to expect the full year rate to be 23%. And net of cash, for the first nine months of 2021, cash from operating activities decreased 18% to $653 million due to higher cash earnings being offset by an increase in working capital.

We continue to expect cash from operations to be approximately $950 million for the full year. As of September 30th, cash on hand was $180.

Our full year CapEx plan is now $120 million, down from the original $180 million in the outlook due to purchase timing. This CapEx move out a year and we now expect CapEx in 2022 to exceed $200 million.

Future is bright as we continue to expand manufacturing and distribution capacity primarily focused on laundry, litter and vitamin. On October 28th, the Board of Directors authorized a new stock repurchase program up to $1 billion.

As you read in the release, this is a sign of our confidence in the company’s future performance and the expectations of our robust cash flow generation. Our number one priority for capital allocation remains acquisitions.

And given our low leverage ratios, we have confidence to do both. Through October, we purchased approximately $130 million worth of shares and in Q4, we will likely get ahead of our 2022 planned purchases as well.

And now to the full year outlook. We now expect the full year 2021 reported sales growth to be approximately 5.5% and organic sales growth to be approximately 4%.

Our consumption is strong and outpacing shipments. We expect our customer fill levels to improve throughout Q4.

Turning to gross margin. We now expect full year gross margin to be down 170 basis points, previously down to 75 basis points.

This represents an incremental impact from our last guidance due to broad based inflation on raws and transportation costs. That was exacerbated by Hurricane Ida.

In our prior outlook, we had discussed $125 million of higher cost versus our plan. That number today is $170 million and the majority of that increase in the last 90 days relates to transportation, labor and other increases.

As a reminder, we price to protect gross profit dollars, not necessarily margin. The $45 million movement versus our previous outlook is primarily noncommodity related.

[Commodity] spot pricing today is elevated compared to spot pricing just three months ago. And now for the full year.

We expect adjusted EPS to be 6%. Our brands continue to go from strength to strength as strong consumption and organic sales growth lap almost 10% organic growth a year ago.

And while inflation is broad based, we have taken pricing actions to mitigate, which gives us confidence over the long term. For our Q4 outlook, we expect reported sales growth of approximately 3%.

We expect organic sales growth of approximately 2% due to the supply chain constraints and our SPD business to return to a more normal growth rate. Adjusted EPS is expected to be $0.61 per share, up 15% from last year's adjusted EPS.

And with that, Matt and I would be happy to take any questions.

So I guess the first here, just with the supply chain headwinds. Is there a way to frame like how significant impact it was on your top line in Q3 and Q4, and just any initial thoughts in terms of the magnitude of impacts early next year?

From a top line perspective, organic for the domestic division was, I think, 2.8%. If we look at what consumption was, remember, our fill levels at retail are pretty good, our in shelf, in stock levels are in the mid-90s.

We want to be in the high 90s, but are in the mid 90s. The consumption was closer to 6%.

And so that just means retailer inventories are depleted to some degree. So you can do the math between the 2.7% and really the 6% consumption.

And then on the cost side, so you guys mentioned that you expect significant or incremental increases next year. Is there any way to quantify, like as you look at your current spot prices and cost pressures, what significant could mean as of today for next year?

Rupesh, I would imagine there will be a lot of questions on 2022 and want us to quantify that. Here's what I would say.

Our goal is to offset cost increases dollar for dollar with our price increases. And the 2022 plan at this time of the year is a work in process.

And we expect to have, like I said, significant incremental cost increases year-over-year, '22 versus '21. If you look at what's happened so far, in April, we priced up 30% and that was primarily laundry and that was high single digits.

And in July, there's another 20%. This is litter, additives, baking soda, flossers and showerheads and that was mid- to high single digits.

And today, we're saying another 30% but that's largely personal care and that will be mid to high single digits as well. But as one of my friends likes to say is everyone is chasing a ball downhill.

And so costs have continued to escalate, even since the April announcements and the July announcements. So we're going to be revisiting our '21 pricing decisions next year.

And Rick could probably give you a little bit of color on maybe a couple of things that are causing the incremental cost increases. But that's probably as far as we would go on '22.

But Rick, do you want to add anything to that?

Just to kind of triangulate what we're seeing. I would tell you that in our July outlook, if we looked at our Q4 forecast, for example, and you look at the gross margin bridge or even the dollars, we were seeing that inflation was largely going to be offset by price.

Fast forward three months and the gap is a couple of hundred basis points. And so that's why we're -- as Matt said, revisiting pricing, that's why we're doing more pricing for other parts of the portfolio.

We are going to -- I think it's a no-brainer at this point in time, we are going to assume spot pricing as we move into 2022 for a large part of it that we're at right now. We're going to assume transportation tightness.

The good thing for us, though, is as our fill levels improve, that tightness, the efficiency improves. There's still macro tightness but the efficiency of our trucks improved and we're going to assume labor is still elevated.

But we're going to do as best we can to mitigate as much as that and we'll give you our outlook in January.

So I wanted to kind of get into, obviously, the supply chain issues are causing fill rates to be pretty weak. Retailers are obviously looking for more efficient assortment.

I wanted to get your thoughts around that, especially as it relates to innovation, because you've got -- obviously, innovation is such a critical part of your algorithm. So as you think about that now and kind of going forward into 2022, maybe you can just provide some context on kind of how you think that's going to play out?

We always have a robust lineup for new products we did in '21. We have them ready to go in '22 and we got great ideas for '23.

So as you know, retailers are interested in innovation and it attracts consumers to the store increases, footfall. So I think we're in good shape for 2022.

The question is, our consumers -- we do think that the balance sheet for consumers is healthy right now. So disposable income is up and savings rates are up.

But going the other way is inflation so one headline is the $4 for a gallon of gasoline. As far as the willingness to buy new products and for demand to stay strong, the stimulus has ended.

I do think household balance sheets are strong at the moment. And likely, we'll sustain strong demand for a couple of quarters, although visibility is poor beyond quarter or two, as we all know.

But we got a good lineup for 2021 and we do think, at least in the near term, the consumer has seemed somewhat flushed and that often influences their buying intent.

And Matt, if I could just follow up when it comes to -- during the pandemic, consumers are obviously migrating to a well-known brand, exploration drops, people want to get in and out of the store quickly for health and safety reasons. Have you seen exploration actually tick back up, consumers looking for some of those newer, niche kind of [Technical Difficulty]?

I wouldn’t say yes to that, Nik. I still think that the larger brands are still winning.

Two questions on pricing, not surprisingly. First, on the new pricing you [Indiscernible] take.

Do you know whether your competition is also taking similar pricing in personal care? And then just a little bit more color on the price increases you already took, you mentioned price elasticity that it was better than you had anticipated.

Just curious if you could give a little bit more color in terms of what you had anticipated and what you're seeing with respect to impact to consumption?

We are aware in a couple of personal care categories where our competitors have already moved, but we wouldn't call those competitors out on this call, nor would we cite the percentage increase that they had. But there are a couple of categories and I expect they're going to be more, Olivia, where people are already moving in personal care.

We moved early on, on laundry and largely household products, our first two rounds. The April announcement and also the July announcement, laundry, litter, additives, baking soda, if you remember.

So next up is going to be personal care, but that's as far as I can go with respect to competition.

And then on elasticities, I'd say we're really happy where it's at for many of the household products. I think we moved first in laundry as an example.

But competition is starting to move. And the elasticities are better than we had expected, which is good.

And then litter, when I originally told you about the litter price increase, we assume competition did not move when we did all of our math in our forecast and it's obvious that competition has moved in litter as well.

And then in terms of the marketing spend kind of getting pulled back a little bit this quarter because of the in-stock levels. Are you expecting to reinstate that as time progresses?

And then also, given pricing plans, fairly decent consumption, obviously, hopefully, by next year, supply chain challenges do get a little bit better. Should we expect fiscal '22 to be a better growth year given all those different factors?

Let me take marketing first. So marketing year-over-year is down but it's up sequentially, Olivia.

So you may remember, in the first half of the year, we were like high single digits, marketing as a percentage of sales. So we dialed it up in Q3.

Yes, it is down less than Q3 2020 but we went from 9% to 12.3% sequentially from Q2 to Q3, and we expect Q4 to be 13%. So as the in stock levels in stores have improved we've dialed up the marketing.

And what your second question was?

Just around the fiscal '22, just because if you're taking pricing, the consumption is relatively solid and it's supply chain challenges that are constricting you and hopefully, those do get a little bit better as time progresses. Just wondering if you think fiscal '22 should be a better growth year given some alleviation of challenges but also pricing coming through?

We're not going to comment really on our outlook for 2022 yet. We'll go through it in detail next quarter.

I'd say, yes, there's tailwinds. Matt talked about that shipments have been lagging consumption.

We do well in any economic environment, value and premium, macroeconomy also matters. And when we have a lot of stimulus in 2021 that cannot repeat that level in 2022.

So those are the brief comments on the outlook.

But Olivia, I would say, just to echo what Matt said. We were at almost 14% market in Q3 a year ago and almost 15.5% marketing in Q4 a year ago.

Those are well in excess of what we would normally spend in marketing. So those aren't really the right comparable.

The right comparable is our Evergreen model between 11% and 12%.

So a couple of things. Just one, you mentioned capacity expansion in the release in 2022 and 2023, and I think you used the word significant.

So can you just help give us a sense for the level of spending you're expecting there or what percent of volume you're hoping to unlock? Is that more something that's typical where you're building more capacity each year?

Is it really an outsized level of spend versus history? And is that just capacity or are there potential other areas of increased investment also as you look out over the next couple of years?

Maybe I'll start and then Matt has something to add. This isn't new news.

At CAGNY this year, we kind of alluded to that we had significant capacity investments for laundry, litter and vitamins. We also said it, I think, at our Analyst Day.

Typically, we are 2% or lower on CapEx spend as a percent of revenue and I think we had signaled that it would be closer to 4% for 2022 and 2023. Today, some of those 2021 projects are slipping just because of time line and same supply chain challenges we have in providing finished goods also is happening in the CapEx installation market.

So I would say that we're in excess of $200 million. In excess of $200 million is our outlook for 2022 and it will be even higher than that in 2023, and that would flow back down to our normal 2% of sales.

And Dara, these are our largest businesses, vitamins, litter and laundry. So we've got a lot of faith in the brands.

We've got tremendous consumption. So we're real excited about adding this capacity, because it's going to stand us well for years to come.

And then second, just on shelf space in the US, you guys have done a great job gaining share in shelf space over time. But you're taking significant pricing granted at a time when competitors are also, you're going through supply chain issues here, so there's some product limitations.

You're cutting marketing versus original guidance, understanding it's still at a robust level. So just curious for any perspective on if that creates any risk from a shelf safe standpoint, how you think about that?

Those are typically not things that retailers like to see. So just how you think about sort of the level of risk given some of the dynamics that are going on in the business here.

I don't see the risk, frankly. We're not alone, Dara, as you know, with respect to raising prices, et cetera.

So I think it's a level playing field out there right now. And you keep in mind that our growth rate in Q3 was almost 4% on top of 10% growth last year and our brands, our consumption is super strong.

And the retailers are aware of that they see the demand for our products. So we're not worried about shelf space losses as a result of our actions.

First, and I make a quick one on new buyback plan. Is the intention to continue to buy back about what you've been doing in recent years or does it maybe signal a bit of an acceleration from where you were before?

If you look at our track record, we've done a few hundred million dollars each and every year. And a few years back when cash was built, we did closer to $500 million.

So somewhere in that range between $300 million and $500 million is what I would tell you.

And then as it relates to [Technical Difficulty] in terms of raw material costs or other costs. Obviously, we know there's a lot of installation.

But to what degree are those numbers maybe increasing at a higher level than they otherwise would, because hedging probably now have started to roll off or are you still hedged and then maybe those roll offs happen at some point later -- some point in '22?

I'm going to do my best to answer that. Your phone is breaking up significantly.

I believe you're asking about the hedging. We are about 90% hedged for 2021.

And as we entered the year, we were significantly hedged, which was a good thing. And as we enter 2022, about now we're about 45% hedged.

And of course, there's probably, I don't know, between $10 million and $20 million worth of a benefit from 2021 hedging. And so just as we layer on our new hedges versus that, that's a headwind but that's something that we've known about for a long time and are managing to do.

As of right now, hedges are very expensive. So we actually lean towards a lot of the spot market as of right now.

The volatility in the market in 2021 has, I think, made the banks less likely to offer up any reasonable hedges for 2022. So that's a quick overview of the hedging.

So I think just going back to the point about pricing and price gaps. In some of like, obviously, you've done well rolling the pricing and rolling it.

And I think that too much point, obviously, you're not alone. But for the most price sensitive categories you compete in and for the areas that you've seen these price increases roll out, any color around the volume elasticity, given the widening price gaps most likely?

And related to that, as your main competitor in this segment is increasing couponing, I believe, like coming back from a depressed level from last year. How do you feel about closing the gap in pricing and as well as the fact that at some point, the private labels, I think, have been taking the time to take action there?

If you can help us kind of reconcile that.

Well, as Matt said, and I mentioned too on elasticities, elasticities are better than we expected because competition has moved. And so we're really happy with that.

I think some competitors, as they do more couponing or whatnot or higher trade and laundry, we have added a little bit of trade back in Q4, but we're well below normal levels as an example. So I think overall, Andrea, I would say it's gone better than expected from a price cap perspective.

But from that roll off of the hedging, the 45% and now you're going to enter 2022 doing mostly spot. So the headwind will be massive and you quoted the $170 million cost pressure.

That is, I think, net of hedges. So should we think about that number, obviously, extrapolate that number into 2022.

Obviously, that's going to be a much bigger impact. I'm assuming.

Is that the way to think?

Well, let's just take a big step back. $170 million is versus our outlook, our plan, if you add in -- let's talk year-over-year.

The year-over-year number is about $250 million or about 9% of COGS. So that's the year-over-year inflation in 2021.

What we're talking about in my comment on the hedging was between $10 million to $20 million, which in the grand scheme of things is a peanut compared to the $250 million that I'm talking about. And so yes, that will be a rollover.

Some of these latest price movements will be a rollover. But that's what pricing actions that we've talked about in different categories that we feel pretty good about because competition is moving.

And it's not just one category or even within CPG, it's broad based within many different categories across many different aisles.

So just to fine point that, so $250 million would be $270 million, all things equal. But is that based on spot prices or is that based on forward curve?

That's 2021 versus 2020, actual. So it's actual and then spot pricing for the last two months of the year.

And then the last month of the year would add you around $20 million only on that $270 million or that's more…

No, Andrea. It's $250 million for the full year forecast 2021 versus 2020.

If we didn't have any hedges, you would add another $10 million to $20 million.

And then for 2022, it has to be higher than that because, obviously, the beginning of the year, the pressures were much lower than we're seeing now. So that's what I wanted to make sure I understood.

We called incremental inflation in 2022. I would not expect to have another year of 9% inflation on top of 9% inflation.

Just following up on Nik's question about innovation. I guess my question is, you're seeing supply shortages and pulling back on marketing.

So we're about to flip as we go to the first of the year, I mean typically, you roll out a lot of new products in 1Q and step up marketing in 2Q. And at the same point, you've said you're not sure or you don't believe that things will be back to normal in terms of supply chain until sometime in the first half.

So I guess, does it change? One, what gives you confidence that things improve in the first half?

And two, does it change your cadence of kind of rolling out new products and marketing behind those and stuff like that or is everything normal at this point?

Bill, what we're saying is that we expect the supply issues to abate, because some of that is in our control. So we do expect -- even though our fill rates today are in the low 80s and they're normally 99%, we think that, that is going to improve over the next few months.

So that's a good thing because we're leaving money on the table, because we haven't been able to meet customer orders right now. So as far as marketing goes, typically, Q1 is our lowest quarter for marketing.

So you wouldn't expect a pickup in marketing spend in Q1 and it's oftentimes around 9%, 10%. But you're right, new products do start hitting shelves in March, April.

So Q2 is off the month of the quarter, when we start amping up the marketing. So that would be our plans right now.

So what you're saying in terms of fill rates are improving kind of month-to-month where you get -- I mean just trying to get what gives you confidence that things are better by April?

Well, because we're in touch with all of our suppliers and co-packers.

And we're also optimistic by nature in that. If Hurricane Ida hadn't happened, we would have been on the road to recovery and further along than where we ended up.

We kind of ended up at the same spot but that was largely due to additional hurricane pressures and disruption.

Yes, you probably know, Bill. We had seven force majeures.

And those chemicals that are coming from that part of the US, it's not just household, all those chemicals affect personal care products as well. So as all of those things get sorted out, and they are improving, just talking to those suppliers down in Louisiana, for example, things are getting better.

And as that supply improves, our fill rates are going to go up and we're going to take advantage of the demand.

And then one last as you look back at vitamins in particular. Is there work you've done to kind of understand how many of the incremental consumers over the past 18 months are going to kind of stay in the category versus as we come out of this, they kind of go back to their more normal patterns in terms of vitamin consumption?

Our work tells us that household penetration is up almost 10% year-over-year. So what we're seeing is repeats of new people coming into the category, repeat purchases.

With a high loyalty rate of around like 80% plus, which is great.

So if you just look at the quarters, Bill, like Q1, Q2, Q3, consumption of VITAFUSION year-over-year, it’s up 25%, up 10%, up 24%, just big numbers, consistent all three quarters. And of course the tailwind is -- two tailwinds, I guess, one, the wellness trend; two, the transition from pills and capsules to gummies, that continues.

And we have good new product lineup in '21, we've got another good one in '22. And I guess the other thing that is noteworthy is if you look at private label share gummies, that has declined in three consecutive quarters.

So that's kind of a fun fact, too. So we're really optimistic about vitamins and that's one of the reasons why we're going to be spending a lot of money on CapEx.

It's one of the three businesses, we're going to be putting some iron in the ground in '22 in anticipation of growth in '23 and beyond.

So Matt, if I could just pick up on the last one, a point of clarification around the iron you're going to put in the ground or CapEx, as you referred to it. So I’m going to have to step up.

If I'm not mistaken, about 25% of the business currently goes through co-packers. And you guys have obviously done a tremendous amount of work building out the supplier and co-packer, co-packers that you use over the past 18 months.

The point of clarity, is there a rethink on the 25%? Is that still the right number?

How much is that going to change on the other side of the stepped up CapEx? And then I have an unrelated follow-up.

I wouldn't expect that number to go the other way, Kevin, for the simple reason that, that is our operating model and that we are an asset-light company. So we do rely on co-packers.

Yes, COVID illuminated the fact that in some cases, we were a little bit too exposed with sole suppliers or sole co-packers or just not enough options but we've remedied that. So we think we're going to be in great shape coming out of COVID.

And keep in mind with respect to our acquisition strategy as well is the same -- that's unchanged too. We still prefer to buy brands and businesses that are co-packed so that we're not wind up with additional plants and additional needs for CapEx.

So no change.

Rick, a quick follow-up for you and then I'll pass it on. Just on the fourth quarter guidance, and I guess what I'm trying to better understand the consumption trends are strong.

We see that in the Nielsen data. The fill rates sound like they're getting better, which is encouraging.

But the organic sales growth guidance of 2% implies a modest deceleration on two year stack or two year average basis. I think you made the comment, SPD maybe will lighten up a little bit.

I'm trying to reconcile the improving fill rates, what we see in the Nielsen data and then the guide for the quarter. And I also understand you guys are typically conservative, but just maybe help me better understand that.

I'm just trying to triangulate the data points.

It's really two things. One is SPD comes back to normal growth rates.

It had a fantastic 18% organic growth quarter in Q3. And part of that was because of the comp a year ago, but Q4 comes down to normal.

So I'd say maybe half the deceleration in the company organic growth rate is SPD. And the other half is we’re being conservative on the the fill rates.

As they continue to improve but we're still assuming they're in the low 80s. And then we said in the first half of 2022, it gets back to normal.

So I would just say it's probably conservatism. If great unbelievable consumption demand continues like we just saw in Q3 or earlier then when you have a bigger number times 80% fill rate then that's when you kind of over-deliver on the quarter, and that's what happened for us in Q3, we out-delivered because of consumer domestic.

So yes, short story is we still think the fill rates are what impacts us.

I'm sorry if I missed it. But have you guys specified which categories or products are suffering most supply chain-wise, where you're leaving the money on the table?

We haven't, Lauren. We said, in general, our fill rate is around 80%.

And because of having seven force majeures after Hurricane Ida, and as Matt alluded to, it's household and personal care. So it's pretty broad-based across the spectrum.

Because one thing I was curious about and it's a little bit tough to ask a question admittedly without knowing which categories are more or less impacted, and recognizing force majeure may well be an industry factor. But what's going on with your competitive set in those categories?

Are others on the shelf is private label producers that's kind of stepping in? But just thinking about not denying the strength of your brands, but if we go forward and supply continues to be constrained for a couple of months.

Are consumers still shopping the categories or going to other brands and thoughts around risk as you come back into the stock if you've lost some of those households?

Let me just make one comment, and I'm sure Matt has some color, too. But we need to distinguish between fill rates and in stock levels.

Fill rates are in the low 80s. In stock levels are in the mid-90s.

So very rarely is a consumer going to shelf and not being able to buy our product. What's happened is mostly retail inventories have been depleted, like in their warehouses or our inventories are lower.

Hopefully, that clears some of it up.

And Lauren, the in-stock levels weren't as good earlier in the year. So we've really seen them improve quite a bit, particularly as we got towards the end of the third quarter.

So looking ahead, going into Q4, we have a lot of our brands back in the low to mid-90s, whereas earlier in the year, they were not. So I think the question might probably be more relevant for an earlier quarter.

And I might also say, we haven't spent as much on trade spending or couponing because we don't want to exacerbate at shelf fill levels as well.

And if you look at what we did with marketing, marketing was 9% in Q2, it's 12% in Q3. So obviously, as in-stock levels started to improve, we started to dial up the marketing.

The pullback also in terms of spend to the degree there is one is more on the trade spend piece in couponing. And as you said, marketing is already rebuilding.

So when we talk about them leaving money on the table, or even the rebuilding shipments to get closer to consumption into next year, it's not like there's a major hole that needs to be filled. Because if stock levels are okay and retailers would like to have more inventory, it's not like there's some major catch-up that has to happen when we think about sales growth for the full '22?

The thing we go to think about is -- and when we talk about in-stock levels, we're talking about on shelf. Now the hole is in the DCs, the distribution centers.

So that's where I think it's hand to mouth and that's where the opportunity is to close the gap between consumption and shipments.

And that was my comment to Rupesh earlier. It was really the 3% or so organic in Q3 compared to the 6% consumption in Q3.

And Lauren, the only class of trade that's not true in it is Club, because Club has their inventory at their stores as opposed to DCs.

And then just my second question was the SG&A was down a lot this quarter. You cited there was litigation but also the incentive comp.

But that was a big piece of kind of holding the P&L together this quarter, and I apologize for being so short term, but that's kind of -- that's what happened now. So as we look into '22, knowing pricing continues to build.

But in the interim, I'm guessing there's less ability to control the SG&A line, if that's fair, given what you have lots of flexibility in marketing, you put so much money to work during 2020, there's a lot of flexibility. But that SG&A line, you run that pretty tightly to begin with.

So I was just curious on your perspective on other ways to mitigate some of the cost headwinds as pricing is still ramping?

SG&A is down largely because of incentive comp. Why is incentive comp down?

It's because gross margin we have in our targets, and very few companies do that, but we do do that. We're actually -- we're very proud that we do that and it's hard in times like this.

But gross margin will likely be a donut and so that's impactful on the accrual for incentive comp. So rightfully conclusion that you had, Lauren, SG&A will be higher next year as we get back and hopefully hit a plan with all the levers that we typically do.

But we have things that can offset inflation and we have things that can offset SG&A. And the number one far and away next year is going to be pricing and then number two behind that's going to be productivity discussions.

And it sounds like if incentive comp, we hope goes up next year, gross margin is in a donut on that for card next year, meaning gross margin could be up?

Yes, we have 5,000 employees that would like to see that happen.

I think we've covered most of what I wanted to talk about. But just I guess a final cleanup on some of the near term supply constraint dynamics.

The cadence of relief that you've talked about, it seems sort of multifaceted and sort of complex. And therefore, I'm assuming that it's more of like a gradual -- a continued, ongoing gradual rebuild into next year as opposed to some kind of cliff or binary point of recovery.

So can you just validate that, that it's kind of a more even a bumpy glide path as opposed to some kind of discrete set of milestones that we should be thinking about?

I think you asked and answered it Steve, it's not a light switch. So there's not going to be a spike at any point in time.

So what we hope to be able to tell you when we get together in January, is to give you a sense for how October, November, December started to build our improvement in fill rates, for example, is what we hope to be able to be telling you the end of January, and then our expectations for the rest of the first half.

And so I guess from that shipment recovery versus hopefully, sustained strong consumption base cases that that happens, that happen progressively. It’s not like a slight switch as you say and all of a sudden -- sorry, go ahead.

Yes, exactly right. It would be gradual over time as different brands recover faster and is a stair step back up to normalcy.

I guess I'd echo Steve's comment that so many of the questions have been covered already. And maybe in that regard, I'll keep it a bit more medium, longer term.

I guess there's this dynamic with the Church & Dwight portfolio where there's a piece that's valued as a piece that's premium. This offers the flexibility to respond to different economic environments, but we're clearly in this period where demand elasticities are basically nonexistent.

So I mean, in theory, maybe that means the value end of your portfolio offers relative less value than typically it would. I mean, does that give you more credence to close price gaps to get more aggressive on price gaps?

I guess I'm thinking about this 80% of your portfolio is going be pricing in Q1, but you may have to look at more pricing, maybe expand pricing. Maybe you raised pricing.

I'm not sure. But I guess it's a bit theoretical, because it's almost like how long this demand elasticity environment lasts, I don’t know, I don’t think anyone does.

Maybe just how you see your relatively positioning on shelf but in the context of this value versus mix portfolio?

We look at that closely and we continue to look at when you’re pricing up 80% of your portfolio, we're doing a lot of work on what the price gaps are in all the categories where we have raised price and intend to raise price. But part of our operating model long term has always been this round number is 60-40 split between premium and value.

And we do think that -- we do want to preserve that and we do want to preserve the price gaps. So consequently, we will always have that ability to perform well in good and bad times.

So now to answer your question directly, we'd not be looking to drive these value brands up into, say, mid-tier.

And then maybe if I could just sneak in one clarification. I think you said that shortages are everywhere, but I think in the past, had said that household specifically laundry had seen some shortages around surfactants.

Is that happening? Certainly, share is improving in laundry and on pricing is a part of that mix, is a part of that, I suppose, couponing less couponing as part of that.

But are you seeing disproportionate shortages there versus the rest of the portfolio or is it -- as you said, that it's good broad based?

As you see share recover in most cases, 80% of the cases, I would say, it's largely supply chain disruption that had happened. So as you see -- so share recovery in certain areas, it's largely because supply chain is improving.

So I know it's kind of early, but I was just kind of hoping to get your early read on the cold and flu season and the impact this may have on ZICAM, kind of going forward? And then I guess, just as it moves into organic, like how should we think about the potential lift to your total company organic revenue growth from just like a normal cold and flu season?

Well, as you know, we bought ZICAM at the end of 2020. It's number one brand in cold shortening events, to us today, super high shares like 70%.

And the recent consumer trends are really encouraging. You probably saw some of [Rickett's] comments earlier this week.

But if you look at our Q3 all channel consumption for ZICAM, we're up about 40% versus 2020. And Q4, that 40% increase in all channel consumption in Q3, that's not the key quarter.

Q4 is often 40% to 50% of full year sales. So that's ahead of us.

And we did buy the brand back last year, because we thought it had a long term growth opportunity and we do expect it to be a big contributor to sales and profits in 2022, because it's been so depressed in '21. But we wouldn't quantify what we think that might be.

We would just say it's going to be a good tailwind if it gets back to normal levels of cold and flu season.

We'll give you more color on -- we could probably comment a little bit more on that in January when we give our full year outlook for 2022.

I wanted to go back to an earlier statement you made about not lapping or about lapping the stimulus and that not recurring next year. So I'm curious how you think about that in the context of the percentage of products sold on promotion as you head into next year?

Any sort of high level thoughts, comments, discussions with retailers in terms of what they may be asking for or kind of how that plays out as we go through '22? Obviously, we're all sitting here with a lot of moving parts, but any sort of color you can give at this point would be helpful on that.

Well, look, we did pull back on promotions this period -- promotions and couponing. And we did it pretty early on because it didn't make a lot of sense to be promoting to shelves that were completely stocked.

As I said earlier, the in stock levels, particularly towards the end of Q3 and looking ahead into Q4 are now approaching the 90s. So consequently, there is an opportunity to start introducing trade promotion back in 2022.

And that is our intent as well. But of course, competitive actions are something that we have to watch as well to decide how much or how little of that we introduced back in, some of that is starting to happen in Q4.

There's not much meat left on the bone, but I will go with this. So kind of a follow-up to Lauren's last comment on gross margin maybe being up next year.

And I guess I'm thinking about your pricing, your pricing to offset the dollar inflation, not recover gross margin rate. And it also sounds like you're bringing on or plan to bring on new capacity that could add incremental manufacturing overhead at least before that capacity is fully utilized.

So as we think about kind of the gross margin outlook for the next 12, 24 months, could it be different than what we've seen from Church over a longer historical period of time, where you've had very good secular gross margin expansion?

We're going to defer that question to January when we give our outlook of all the details and all the moving pieces. We're still firming up all of our pricing plans that we're talking about for the balance of the 30%, all those other moving pieces.

But you are right, we said we're going to price to protect dollars and not margin and that's we think the right approach, but we'll give you more detail on what we think gross margin will do in January.

Looks like I'm going to close this out here. Real quick.

You mentioned in-stock levels are better but service levels are worse. How can those coexist?

For in-stock to improve shouldn't you been overshipping as you kind of restore those levels?

As orders increase, that drives up your shipments but you could still have a low fill rate. Do you know what I mean?

If demand is exceptionally high and you fill it 80%, you can still have -- in theory, you could still have 99% in-stock levels at shelf.

The hole is in -- so we may be shipping more, but it's not staying in the DCs. It's going directly to the stores to maintain the improved in stock levels, but you still are stuck with the hole in the DCs and that's the opportunity that's the potential tailwind.

So if you just graph the dollars and shipments, as an example, Jason, you would see that we have dollars in shipments that are similar to past practice and historical levels, it’s just the demand is so strong.

That's a high-quality problem, I suppose. Looking at the margin lines, lots of questions around gross margin trajectory, but you are coming in with marketing well below your initial budget plan.

I think it's somewhere between 70 to 100 basis points or so below. And I imagine, [lendings] are going to look and say, well, gosh, they're going to have to restore that next year, plus your incentive comp because the gross margins, you’re going to have to restore that to next year.

And it’s not hard to step back and look and say, gosh, they got like a 150 basis point margin hold fulfilled next year, just on respiration of the SG&A lines. What's the flaw in that thought process?

I think the marketing line, we've said many times that it's a range of 11% to 12%. I think in 2020, if you're jumping off from that baseline, that was an extreme -- if we're talking about swimming and diving boards, that's the high dive.

And that's pretty elevated, 15.5%, 15.6% in Q4 of 2020, I think, was our all-time high in the history of the company for marketing spend as a percentage. So we were very flushed in the end of 2020.

And so we spent incremental marketing more so than we ever had in the past. And I would say our evergreen model is between 11% and 12%.

And we think that our 2022 plan will be back within that range, probably the lower end of that range. So that's partly, I would say, is some of the flow is we're not going to get back up to the high 11s in 2022 as an example.

I was just asking relative to guidance. I wasn't going to be referring to the tailing last year, but I think you did guide 11.5% to 12% just last quarter.

So we're looking at a pretty substantial cut relative to what you had expected last quarter…

Yes, you double check the transcript, I think our number was approximately 11.5% for the full year last time.

And the SG&A level, we can debate percentage of sales all day long, but at the end of the day, SG&A is kind of a bucket of hard spend. And you spent like 6.20, 6.19 to be precise in fiscal '19, well, obviously, heavy up this year.

And relative to '20, it's down but you're still up big versus '21. Why the incremental spend versus '19 to '21?

And is there a reason to believe that that's going to grow again in '22 or can we actually get back to something closer to '19?

So is your question, why even excluding incident comp is '21 higher than '19?

Substantially higher. Yes.

And I know you've always kind of put a rate out there, but in terms of percentage of spend. But in absolute dollars, it's grown meaningfully.

So I'm really looking for opportunity to offset the marketing reload next year. And I'm questioning whether or not SG&A actually needs to grow or could it actually be lower next year?

Well, from '19 to '21, probably the biggest movement is actually probably amortization. We typically are very conservative in some of the deals that we do, do and we don't we typically amortize those trade names over 10, 15 years.

And so adding ZICAM into the mix, as an example, would have had amortization between '19 to '21.

We acquired that one in December of '20.

And look, we're a lean company. SG&A is always lean.

We're investing heavily for different things like RPA for our back office and we're looking at centralizing back offices as we go into Asia in a bigger way. But all those things are our nickels and dimes.

But for us, that's how we tend to find a way forward. So again, I don't want to get to 2020 too much today, we're happy to go through it in spades in January.

Okay. Well, thanks, everybody, for joining, and thanks for your interest, and lots of great questions today.

And we look forward to updating everybody again at the end of January with our Q4 results and full year '22.