Good afternoon, everyone. Thank you for joining us for our third quarter fiscal year 2021 conference call. Joining me today are Nick Vlahos, Chief Executive Officer; and Kelly Kennedy, Chief Financial Officer. Before we start, I would like to remind you of our legal disclaimer that we will make certain statements today that are forward-looking within the meaning of the federal securities laws, including statements about the outlook of our business and other matters referenced in our earnings release issued today. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings as well as our earnings release issued today for a more detailed description of the risk factors that may affect our results. Please also note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. Also, during this call, we may discuss non-GAAP financial measures, which adjust our GAAP results to eliminate the impact of certain items. You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP to GAAP measures in today's financial results earnings release. A live broadcast of this call is also available on the Investor Relations section of our website at investor.honest.com. With that, I'll turn the call over to Nick.

Thanks, Sung. Good afternoon, everyone. We're excited to speak with you today. Honest is dedicated to providing safe, clean and effective products to consumers around the world. We continue to work tirelessly to drive our mission of inspiring everyone to love living consciously. As noted in our earnings release, we delivered a solid quarter with top line growth versus the third quarter of 2020 and gross margin expansion from the first half of 2021. Revenue growth was primarily driven by volume reflecting increased productivity in existing distribution and new omnichannel expansion. Honest grew market share in the quarter across our core product categories and accelerated household penetration reflective of our brand values and efficacious products that resonate strongly with consumers. Overall, we're proud of our team's contribution to our results. We delivered on our brand mission while navigating headwinds stemming from a dynamic operating environment with significant inflationary pressure and supply chain challenges. We recorded our eighth consecutive quarter of year-over-year revenue and volume growth, delivered 20% year-over-year growth in our Diapers and Wipes and Skin and Personal Care categories, and improved gross margin performance by 40 basis points from the first half of the year. Our financial results demonstrate the ongoing strength of our business. Our priority continues to be executing against our strategic initiatives. We are focused on broadening awareness of our brand, introducing breakthrough innovative products, and expanding our digital and retail presence. Now I'll provide an update on our progress across these initiatives in Q3 2021. Starting with marketing innovation, we continue to expand brand awareness and consumer touch points through the use of marketing campaigns, leveraging our Content Community and Commerce strategy. By inspiring authentic dialogue and creating lasting connections, we increased our household penetration to 3.5% this quarter, up over 10% as compared to Q3 of 2020. We continued to invest in driving household penetration within our Skin and Personal Care business, where we drove 28% year-over-year revenue growth both for this quarter and for the first nine months of 2021. This remains a strategic priority for us as more than 40% of year-to-date new honest.com consumers have been acquired through our Skin and Personal Care products. Second, we continue to support our breakthrough innovative products. In the third quarter of 2021, we saw strong results from our Clean Conscious Diaper that we introduced in the middle of the first quarter. Behind the improvements in performance and sustainability of this product, we witnessed nearly 20% year-over-year revenue growth for the quarter on our diaper business. Our diaper market share continued to increase this quarter as our diaper retail consumption growth outpaced the market. Honest grew 24% compared to the total diaper market, up 14%. In the third quarter of 2021, we also introduced our sustainable packaging initiative for Beauty. The line now features tree-free packaging on all our secondary cartons. As part of this launch, we also introduced our Daily Defense collection, a new line of skin care products designed to defend the skin against environmental aggressors. The beauty restage has already begun to show signs of positive performance and has led to retail distribution gains. We expect this restage to be a growth driver for the business going forward. Third, we were pleased to deliver strong growth in our retail channel, as our integrated omnichannel strategy has led to a more balanced mix of revenue across our channels. Our retail channel accounted for 53% of our total revenue in the third quarter, as opposed to only 44% in the third quarter of 2020 when consumers remained at home and shifted significantly to online shopping. In line with this macro trend, we have seen increased consumer willingness to get back into stores as more people have become vaccinated. As a result, we have seen a channel shift from digital to retail causing an acceleration in revenue growth within our retail channel. Our retail channel grew 28% in the third quarter of 2021 compared to 2020. We believe we're well positioned with our omnichannel strategy to capture growth wherever our consumers choose to shop. Significant white space opportunity exists to expand our on-shelf presence and the depth of our product offering with new and existing retail partners. In the third quarter, the number of stores selling Honest products expanded to over 40,000 retail locations, up double-digits compared to the same period in 2020, led by a significant increase in stores selling our Skin and Personal Care products. Behind our sustainable packaging initiative for Beauty, we're excited to announce that we will continue expanding into an additional 385 Target stores with our beauty products in Q1 of 2022. This will bring our Beauty line into over 1,600 total Target stores and will increase our total points of distribution in Beauty at Target by approximately 30%. In addition, we have exciting new distribution wins on our beauty restage with a key strategic retail partner in the drug channel. In Q4 of 2021, we are adding an incremental seven skin care items in line in roughly 3,000 Walgreens stores. In addition to that distribution in Q4, we are setting 1,500 end caps at Walgreens in Q1 of 2022 that will add 15 new items to our current assortment. Before I turn it over to Kelly, I want to take a moment to reiterate our commitment to ESG, which has been part of our DNA since our founding. From developing products designed to be safe to working hand in hand with our charity partners to serve those in need to embracing diversity and inclusion, we're on a mission to create real and meaningful impact on society. In summary, we believe we have built the foundation for Honest to continue to grow as a leading clean and natural wellness brand. We continue to capitalize on our strong Content Community and Commerce platform to drive good growth across product categories in all consumer touch points. We are pleased with our solid progress this year and believe we are well positioned to advance our strategic growth plan. Now I would like to turn the call over to Kelly Kennedy, our Chief Financial Officer to review our third quarter results.

Thank you, Nick and welcome everyone. This quarter reflects our eighth consecutive quarter of year-over-year top line growth. We also delivered consistent gross margins and EBITDA profitability performance despite a challenging macro environment including significant levels of cost inflation and supply chain disruption. This quarter's performance reflects the positive momentum of the Honest brand as well as our team's strong execution against our strategic priorities. Starting with our financial results and key drivers. Third quarter revenue totaled $83 million, a 6% increase over Q3 2020. This was 47% growth as compared to the third quarter of 2019. Combined year-over-year revenue growth in the third quarter of 2021 on the Diapers and Wipes and Skin and Personal Care businesses, which represented 96% of total revenue, was 20%. Diving into key drivers by product categories. Diapers and Wipes grew 16% as we saw strong double-digit growth across both diapers and wipes. Our Diaper business grew significantly behind the continuous adoption of our Clean Conscious Diaper innovation launched earlier in the year. Our wipes also saw strong growth, especially in the retail channel. Based on third-party data for the third quarter, our diaper consumption was up 24% and our wipes consumption was up 23% with both achieving market share gains. Skin and Personal Care grew 28%, driven by higher sales volumes within the retail channel. Omnichannel demand for our Skin and Personal Care products was driven by additional retail distribution, incremental assortment and consistent investments in our Content Community Commerce strategy. Based on third-party data for the third quarter, our personal care consumption was up 25% year-over-year, driving higher market share penetration during the quarter. Household and Wellness, which represented 4% of total revenue declined 71%. The launch of our new sanitizing and disinfecting products in Q3 of 2020 fueled Household and Wellness category revenue to four times the level in Q1 and Q2 of 2020, as both consumer and retail customers were eager to stock up on products that sanitize and disinfect. Consistent with an industry-wide trend, we've seen consumption and customer demand for these products, significantly decline as consumers have become vaccinated and return to pre-COVID routines. Current demand reflects a return to pre-COVID revenue for the category. Now, turning to results by channel. Consistent with industry trends, we saw a continued rebound in the retail channel in the third quarter of 2021. Outsized retail growth was aided by a strong increase in store traffic, as consumers returned to in-person shopping. Retail channel revenue increased 28% to $43.5 million, up 61% on a two-year stack basis. Corresponding to the consumer-led shift back to retail, digital channel revenue declined 11% to $39.1 million, but was up 32% on a two-year stack basis. For the quarter, retail accounted for 53% of total revenue, up from 44% in the same quarter in 2020. We feel that our omnichannel model is a true competitive advantage, as we were able to be wherever our consumer chooses to shop and can capture consumers' changing shopping behavior. Turning now to gross margin. Gross margin achieved 36% for the quarter. Gross margin headwinds for the third quarter of 2021 versus the third quarter of 2020 included higher input costs, as well as the normalization of trade spend, as retailers pulled back on trade promotions during the COVID-19 pandemic. Q3 gross margin was 40 basis points above first half gross margin, as we benefited from costovation projects, product mix and operating leverage. Key areas of year-over-year cost inflation included transportation, freight, and warehouse labor costs, which have progressively increased throughout the year. We continued our efforts to offset these headwinds in part by our continued focus on costovation, productivity improvements, and improved mix across the business. In Q3, we captured a full quarter of our Clean Conscious Diaper innovation, which has improved our diaper margins by over 100 basis points. We've also had a number of other conservation initiatives launching throughout 2021, headlined by our sustainable packaging initiatives for beauty that launched in Q3, which we anticipate will improve beauty gross margins by approximately 800 basis points. Given record levels of cost inflation, costovation productivity, and pricing will be levers for us to deliver against our long-term margin and profitability targets. Our pricing strategy has been away on taking pricing in order to expand market share. And we've been able to increase share across all of our core categories in the third quarter, as well as year-to-date. Given the continued inflationary pressures, we've seen in the market, we believe now is the right time to take pricing action, and are confident that our products will continue to have the correct price value relationship, to drive share gains into the future. We've taken pricing action in diapers and selected items in our Wipes and Personal Care business that will go into effect at the beginning of Q1 2022. Key price increases include mid to high single digit increases on the majority of our diapers, to offset inflation in our transportation and warehouse labor costs. We've similarly increased costs on select baby wipes and personal care items. We're monitoring input costs across our portfolio and believe we have the ability to take additional pricing actions in 2022, as needed across the rest of our portfolio. Total operating expenses increased $3.2 million versus Q3 of 2020, primarily driven by increased stock-based compensation expense and cost of operating as a public company. We invested $14 million in marketing this quarter, which reflects 17% of revenue behind our Content Community and Commerce strategy, which funded increased influencer campaigns and investments in paid media for our Skin and Personal Care product categories, to drive higher household penetration. During the quarter, we also made robust investments in research and development, as we build our product innovation pipeline. This includes investments in product development, claims and clinical testing that qualify our products for certification and performance claims that resonate with the consumer and differentiate our products on shelf. Now turning to the bottom line. Top line growth and solid gross margins allowed us to deliver $1.2 million in adjusted EBITDA for the third quarter of 2021. We ended the quarter in a healthy position with $90 million in cash and short-term investments, with no debt on our balance sheet. We believe we are well positioned to execute against our 2023 strategy, and continue to retain financial flexibility to invest in incremental marketing, product innovation, and domestic and international expansion over the coming years. Looking towards the remainder of the year, trends for the balance of the year remain dynamic, as we navigate an evolving environment, with significant input cost pressure and continued uncertainty around the COVID-19 pandemic, and its impact on consumer behavior. With that in mind, I will now share some thoughts on our outlook for the remainder of 2021. As it relates to revenue, our expectation for the year remains consistent with what we shared on our last earnings call. We expect Diapers and Wipes and Skin and Personal Care in total to grow double digits in line with our expectations for the year. We expect to drive continued share expansion and overall household penetration in the fourth quarter. Based on macro household and wellness trends, consumer demand for sanitizing and disinfecting products has remained below 2020 levels. Given the current level of consumer demand and high level of customer inventories, we expect to see increases in price promotions, and merchandising in the Household and Wellness category over the next few quarters. As we look forward to the future of our Household and Wellness product categories, we are developing plans to reinvigorate the category, including product innovation that will allow us to continue to enhance our Household and Wellness portfolio. As it relates to margin, similar to the entire industry, we are seeing continued input cost inflation and in some cases, an acceleration of headwinds in areas such as transportation, freight, labor and packaging. To help mitigate these headwinds, similar to the first nine months of the year, we have costovation and productivity initiatives in place for the remainder of the year. As a result, we expect our annual gross margin for the year to be in the range of 35% to 35.5%. On operating expenses, we expect marketing for the full year 2021 to be roughly 17% of revenue. We expect SG&A for the full year 2021 to be roughly 27% of revenue. As we reflect on 2021 performance to date, we are pleased with the momentum and core strength of the business in Diapers and Wipes and Skin and Personal Care, which collectively represent 96% of our revenue, and have grown double digits year-over-year. We are also pleased with our gross margin and adjusted EBITDA results that we've been able to achieve even in an extremely challenging supply chain and inflation environment. As we continue to execute our Strategy 2023, we have conviction in our long-term growth algorithm. The clean and natural market is outpacing growth versus conventional brands in our product categories. We're growing our market share in our core product categories as we invest in product and marketing innovation. We're expanding our points of distribution and driving our omnichannel strategy in retail and digital partners. We are focused on executing our growth plans and driving higher long-term shareholder value, while solidifying Honest's position as the next-generation modern CPG company. With that, I'll turn the call over to the operator to begin the Q&A portion of the call.

Our first question comes from Andrea Teixeira with JPMorgan.

Thank you for taking my question. I appreciate the background information on the guidance. Although it's not formal guidance, I would like to understand how we should approach the components you've mentioned, particularly the double-digit growth in Diapers and Wipes and the strong performance in beauty due to restaging. Should we expect high single to low double-digit top line growth for the year? It seems like we could aim for at least low double-digit growth in the fourth quarter, leading to high single-digit growth for the year. Additionally, considering your comments about inventory levels in the diaper category normalizing and gaining market share, do you anticipate this trend continuing? How do you plan to respond to passing on some of the cost increases we've experienced into the next fiscal year?

Yes. I'll start by saying that we are not providing specific full-year guidance. However, the overall trend we're indicating remains unchanged from what we shared during the last call. Therefore, our full-year outlook has not changed. We are pleased with how the business is performing. Notably, we experienced a 20% growth in Q3 across Diapers, Wipes, and Personal Care. Currently, we are seeing double-digit growth in the business, as reflected in the consumption data for Diapers, Wipes, and Personal Care. In response to your second question, we have observed significant acceleration in Diapers and Wipes, largely driven by the successful launch of the Clean Conscious Diaper, as well as our innovative marketing campaigns and overall brand traction. This has contributed to a positive trend in growth that exceeds the historical single-digit growth rates. We are monitoring birth rates closely, with some early signs that this trend may be shifting slightly. However, the key drivers of our consumption growth in Diapers and Wipes, along with increased market share and household penetration, stem from the overall growth in the category, which is outpacing the total market growth. For the quarter, the Diapers category grew by 14%, while our consumption in the 12 weeks ending October 3 was 24%. Thus, in the Diapers segment, we are significantly outpacing the overall category growth. Your last question was about pricing, or do you have a follow-up?

Yes, that's very helpful. I believe the guidance suggests a gross margin of around 35% to 35.5% for the year. If my calculations are accurate, that indicates an expansion for the fourth quarter. I understand that cost-saving measures will take effect and there will be more beauty products available in the fourth quarter. Does this indicate a substantial improvement compared to last year? Should we consider the mix impact that will aid us despite these cost pressures?

Yes. We are guiding for a margin that is below our year-to-date performance, which stands at 35.6%. We anticipate a margin of 35.0% to 35.5%. This adjustment is due to additional headwinds that have emerged since our previous discussion a quarter ago, particularly with increased transportation costs, especially ocean freight, which is affecting our Wipes business. We mentioned earlier the promotional pricing strategies aimed at boosting demand for sanitizing and disinfecting products, and we will continue to promote these aggressively to strengthen that segment. Furthermore, we have encountered limited price increases from our contract manufacturers who are passing on some of their increased costs, especially in packaging due to rising resin prices and transportation expenses for their incoming components. Overall, we are experiencing more challenges to our margins than we indicated in the Q2 call, leading us to predict a range of 35% to 35.5%. When modeling for Q4, this indicates a wide range, with the higher end reflecting our year-to-date results. Given the current market volatility and our recent experiences, we hoped to manage the cost increases we faced in transportation, which we thought had stabilized. However, we have seen further increases in Q3 and expect this to continue into Q4.

Yeah, I think I can totally see that in the model. I was just more referring to the level against last year. I think last year you had a 33.6%. So that was probably the beginning of the pressures and some of the mix effects of having more diapers vis-à-vis the beauty restaging. So it was more like on a year-over-year basis but I can take it off-line.

I think that's correct. You're exactly right, Andrea. I mean the key takeaway here is we like how the business is trending. Diapers and Wipes Skin and Personal Care core businesses that we've been talking about growing 20% combined here in this Q3. We see that trend that pacing of double-digit continuing, so we feel really good about that. And then, this past quarter we faced in this kind of supply chain space, input costs. We had about roughly $2 million to $3 million in supply chain disruption this past quarter largely in Wipes and Personal Care. So to be able to drive that top line at the level that we did and mitigate that $2 million to $3 million of pressure in the system based on the supply chain disruption we're pleased with where we stand today. And again, similar to what we talked in Q2, based on kind of the trends we see, and again positive numbers, when it comes to the core business there's still continued volatility in the supply chain. We just want to be conservative and maintain those expectations for the year. That's the takeaway.

Thank you very much. I'll pass it on.

Thank you.

Our next question comes from Laurent Grandet with Guggenheim.

Good afternoon, Nick and Kelly. I would like to follow up on the previous question. Could you share with us the level of inventory you have in Diapers and Wipes at retail? Are you selling as much as consumers are purchasing from retailers? I would like to understand this first.

We don't have anything significant to report. The order levels are in line with our consumption patterns, and we're not experiencing any discrepancies. While we had mentioned this issue in the second quarter, things have been consistent, and there are no concerns to highlight.

Thank you. And then in Personal and Skin Care so it was strong, almost I mean 30% growth on top of 45% last year, but a bit lower than probably what we were expecting. So is there a reason why? And if you can give a bit more color about the growth in that segment that would be good. I mean you mentioned about 4,000 stores additional. That's probably more I mean on Personal Care. So, where what kind of stores if you can give us some more color here? As well as if the growth was coming from volume, mix, or price?

Yes, I'll take the first part and I'll let Kelly add some additional color. We're really pleased with the beauty restage and the progress that we're making with this initiative. And as we had discussed this last quarter there was a lot of transition that took place as it pertains to short stores setting the new product line. Target, which is a key strategic partner of ours was in the process of setting and making those transitions this past quarter. And based on the performance to-date that's why you see them also adding an incremental 385 doors which is roughly around a 30% increase to take us to 1,600 doors. So, that 385 is going to get added in Q1 of this year. So, that's a good example of hey, we're pacing well. We see the retailers taking that product on and expanding it. Walgreens, which has been a strategic partner of ours, as they kind of reinvent themselves through this health and wellness lens based on the new leadership that they have within their organization, they've partnered with us to be able to introduce really the product line. There are seven new items that are going to go into 3,000 stores in Q4. And then we also have solidified 1,500 end caps with 15 of our core items in Q1 that's going to take place. So, when you put that together, we like the progress that we're making against the beauty restage. There's always a timing component of when these stores get set, old inventory comes out, new in. But I think the way the consumption is pacing when you look at kind of the Skin and Personal Care business, consumption being up 25% that doesn't lie. So, we like the progress. And as we look at kind of this next year going beyond Q4, there's a large commitment in this space with our key strategic partners and you're going to continue to see us kind of drive that part of the business. The other interesting point here is we also from an honest.com perspective when you look at Skin and Personal Care, we actually source from a number perspective, 41% of our new folks that are coming into honest.com came in through Skin and Personal Care compared to 34% a year ago. So, again, a testament to the new innovation and the new news within the marketplace. Kelly anything else?

No, the B2B stage is still in the early phase. We believe it's being well received by both consumers and customers. Retailers have a lot of confidence in it. Certainly, we are earning distribution wins, as Nick pointed out, and they see us as leaders in that area. We are quite excited, but it typically takes some time to become established.

Thank you guys. I'll pass it on. Thank you.

Thank you.

Our next question comes from Steph Wissink with Jefferies.

Thank you. Good afternoon everyone. Kelly I wanted to go back to your comments on taking price action now. I think in the last quarter, you talked about deferring, it sounds like you will be taking. Is any of the fourth quarter margin pressure in the guidance just the timing effect of having not taken price yet and still seeing some costing increases real-time?

Yes, the new pricing will take effect in early January, so it won't benefit this quarter. As we assessed our portfolio, we found that the pricing will impact about 35% to 40% of it, primarily focused on diapers, some select baby wipes, and a few other personal care items. One of our key considerations was our ability to manage input cost pressures, not only in Q4 but also as we anticipate these challenges continuing into 2022. We are being very mindful of the price-value relationship. The competition in diapers has already adjusted their pricing. We believe we have achieved our goal for the year, which includes gaining market share by following pricing trends rather than leading them. We feel that now is the right time to implement the new pricing, as the price-value relationship remains favorable for consumers.

The other thing that I would add Steph when it comes to this space as you think of kind of pricing and kind of the choices we made strategically that we've measured, we didn't take price and we wanted to capture incremental share on Diapers and Wipes as well as Skin and Personal Care. And when you look at our household penetration numbers, we've added about 450,000 households over the last year which as you know from a strategic perspective is a key area for us, as we drive new consumers into the Honest brand. We're currently in about 4.5 million households and to add an incremental 450,000 is a testament to kind of the marketing strategy that we have around Content, Community and Commerce. And we think that bodes well for us as we look. And as we go into next year, we will be taking price around 35% to 45% on the portfolio. But again, the price value relationship should maintain based on the suggested retail pricing within the market. And based on those new households that we've also captured selling that second, third item, etcetera and making it an Honest lifestyle household is the opportunity in front of us.

The only other thing I'd add, Steph, is that when we consider 2022 and the overall pressures from input costs, the pricing we are proposing is adequate to cover those costs. The majority of our cost structure is not influenced by cost inflation, but approximately one-third will be affected in 2022. The main areas of concern remain the same as we previously discussed: transportation in small parcels and rising warehouse labor rates, which began to increase throughout 2021.

Okay. That's really helpful. One more Kelly on the margins. I wanted to just understand a little bit about what's short term versus the bigger picture. You also mentioned promotions in the sanitization category. It sounds like there's some excess inventory that needs to be worked down. So also wondering how much of a burden that is on the fourth quarter margin relative to what would be more structural? It sounds like that's quite transitory not something that you expect to carry forward into the full year?

Yes, we are definitely anticipating and preparing for price promotions in Q4 and extending into Q1. We believe that we are following the industry's trend in pricing strategy, as competitiveness is key. Our previous pricing levels were not competitive enough, but since implementing some promotional pricing, we have noticed a solid increase in overall sales velocity. We are confident that we will navigate through this situation, although it is expected to be temporary.

Yes. And you see it within the market Stephanie when you look at hand sanitization for example. Consumption within the market you look at IRI the latest 13 weeks down about 64%. So, you're seeing the market right now and then the market react around more price promotion as retailers are looking to move through inventories in this space because they've been again pretty backed up in this area. And you're going to see again kind of this element that Kelly highlights since it's a point in time. But long term, we've got a commitment to Household and Wellness as we look at the innovation cadence as I think you saw in September when we did our Innovation Day around new news within a variety of segments as we get into this next year.

Very helpful. Thank you, both.

Thank you.

Our next question comes from John Keephold of Bank of America.

Hi, thanks for taking the question. Hey guys. I think you've answered this already. I just want to be pretty explicit. The benefit we saw in Diapers and Wipes in 3Q there was no timing or quarterly impacts that are worth calling out that may or may not reverse in 4Q right? That was just consumption all the way?

Yes, you're seeing consumption all the way. When you look at the diapers like we said 24% increase in consumption this last quarter that you're seeing. The other piece is from a diaper perspective, this Conscious Diaper we're also gaining share within the marketplace right now. So, the consumption's solid market share growth overall. And as we've highlighted going into Q4 we continue to see kind of the trends that we've seen in Diapers and Wipes Skin and Personal Care continue from a double-digit growth perspective.

Okay. Thank you. And then if you guys could shed some light on quarter-to-date trends you're seeing, is that a worth calling out specifically. I mean I guess you just covered the Diapers and Wipes still up double digits. And if you guys have anything else that might have been glossed over?

No. I would just say all we can say quarter-to-date based on the data that's out there in the market and we're feeling good about where things are trending and not just Diapers and Wipes, I want to also highlight Skin and Personal Care from a trend perspective. There's really been a positive reaction around our conscious diaper. There's also, again, early but a good feedback especially when you look at some of our ratings and reviews as it pertains to our new beauty restage in Skin and Personal Care. And at this point, we're executing exactly against the plan that we've discussed around Diapers and Wipes, Skin and Personal Care. So we feel good where we stand today.

Yeah, the sanitizing and disinfecting, we did call that out on the Q2 call pretty much in line with our, kind of, in terms of what we called. I think some of the promotion will mean more volume, but doesn't really change that overall perspective on where that's trending for the quarter.

I understand. Lastly, regarding marketing as a percentage of sales, I appreciate the guidance for the year. It appears that you're adopting a more optimistic stance and are willing to increase spending. Are you considering a figure around 15%, 16%, or 17%? Just a general idea of where you anticipate that number to trend as a percentage of sales in the longer term?

We previously indicated that we expected the steady state to be around 15% of sales. As you have seen, we made a concerted effort to support our strong innovation efforts, particularly with the launch of our Clean Conscious Diaper in Q1 and the beauty restage. This year, we anticipate landing at approximately 17% of revenue. Moving forward, we will continue to invest in certain areas as necessary, especially to support category extensions or significant innovation projects. We had two major initiatives launched in 2021, which contributed to being at the higher end of our range. You can expect our spending to be between 15% and 17% going forward, with our exact position within that range depending on the level of innovation we introduce each year.

The only thing I would add to it is when we look at the ROI and the investment profile in this space, because we have a lot of work that we did through our Honest Omni-Analytics, seeing the household penetration number go up and adding 450,000 households and obviously seeing 20% combined growth on Diapers, Wipes and Skin and Personal Care off of some pretty aggressive comps a year ago is a testament to that marketing strategy and that investment profile working for us right now. So that is something that we're going to continue as Kelly highlights. Not only are we micro managing it from the ROI perspective, we're seeing the results on top of some pretty aggressive comps on the top-line, as well as when you look at the household penetration component of 450,000 adding to the 4.5 that we currently have, it's working.

Right. Thank you.

And I'm not showing any further questions at this time. I'd like to turn the call to management for any closing remarks.

Yes. Thanks everybody, for taking the time to listen to our story. We obviously, are happy to be able to deliver against the commitments that we've made against this quarter. We wish everybody, a happy safe holiday season. And we look forward to visiting with you next quarter. Thank you.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.