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CLOROX CO /DE/ (CLX)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 2025 delivered headline beats versus Street: revenue $1.99B (+4% YoY) and adjusted EPS $2.87 (+58% YoY), aided by ~13–14 pts of ERP pre-build shipments that also added ~$0.85–$0.95 to EPS .
  • Gross margin was 46.5% (flat YoY), with ~150 bps lift from ERP shipments; adjusted EBIT margin rose to 23.1% (vs 16.2% in Q4’24) on leverage and cost savings .
  • FY26 outlook embeds a transitory ERP reversal: sales down 6–10%, GM down 50–100 bps, diluted EPS $5.60–$5.95 and adjusted EPS $5.95–$6.30; management framed underlying FY26 ex-ERP as organic -1% to +2%, GM flat to +50 bps, and adjusted EPS +2–4% .
  • Dividend increased to $1.24/sh (from $1.22) on July 30, providing incremental income support amid near-term topline pressure; ERP normalization and back-half innovation pipeline are central stock catalysts .

What Went Well and What Went Wrong

What Went Well

  • Strong margin/earnings execution: Q4 gross margin 46.5% with ~150 bps benefit from ERP shipments; adjusted EPS up 58% YoY to $2.87 on higher volume and cost savings .
  • Segment performance: Health & Wellness net sales +14% and adjusted EBIT +20%; Household adjusted EBIT +59%; Lifestyle adjusted EBIT +54%, reflecting leverage and lower advertising .
  • Strategic transformation: ERP “greenfield” implementation underway to unlock data/efficiency; CEO: “This digital transformation supports our long-term financial goals… accelerate growth and deliver stronger efficiencies” .

What Went Wrong

  • Underlying topline weaker than plan excluding ERP benefit (organic ~-5% vs prior expectation ~-3%) due to lower share/consumption and promotional timing; CFO detailed gap versus consumption and inventory destocking .
  • Price mix headwinds (-4 pts in Q4) from higher trade spend and mix (Club, Litter) depressed net sales growth quality; CFO noted one-time trade accrual adjustment amplified mix headwind .
  • Execution missteps in Kingsford around Memorial Day merchandising/sizing amid weather impacts; management adjusted plans for July 4th and Labor Day to improve share trajectory .

Financial Results

Consolidated Summary (YoY, QoQ, vs prior)

MetricQ4 2024Q3 2025Q4 2025
Revenue ($USD Billions)$1.903 $1.668 $1.988
Diluted EPS (GAAP, $USD)$1.73 $1.50 $2.68
Adjusted EPS (non-GAAP, $USD)$1.82 $1.45 $2.87
Gross Margin (%)46.5% 44.6% 46.5%
Adjusted EBIT Margin (%)16.2% 15.9% 23.1%

Notes:

  • ERP shipments contributed ~13–14 pts to Q4 sales, ~150 bps to GM, and ~$0.85–$0.95 to EPS; expected to reverse in FY26 .
  • Q4 QoQ uplift reflects pre-build shipments and cost leverage, while YoY gains lap prior-year cyberattack-related items and restructuring .

Estimates vs Actuals (S&P Global)

MetricQ2 2025 Estimate*Q2 2025 Actual*Q3 2025 Estimate*Q3 2025 Actual*Q4 2025 Estimate*Q4 2025 Actual*
Revenue ($USD)$1,626,048,980$1,686,000,000$1,717,033,340$1,668,000,000$1,926,079,340$1,988,000,000
Primary EPS ($USD)$1.4005$1.55$1.5575$1.45$2.2120$2.87
EBITDA ($USD)$297,688,650$287,000,000$326,698,640$296,000,000$433,196,780$467,000,000

Values retrieved from S&P Global.*

Implications:

  • Q4: broad beats on revenue, EPS, and EBITDA versus consensus; Q3: misses on revenue and EPS; Q2: beats on revenue and EPS, slight EBITDA miss.*

Segment Breakdown (Q4 2025)

SegmentNet Sales ($MM)YoY %Adjusted EBIT ($MM)YoY %
Health & Wellness$741 +14% $243 +20%
Household$639 +7% $156 +59%
Lifestyle$339 +3% $94 +54%
International$269 -1% $23 +28%
Total Reportable$1,988 —$516 —

Drivers:

  • Volume +8 pts, price mix -4 pts; ERP shipments were primary volume driver across segments, while higher trade spend and Club channel mix weighed on price mix .

KPIs and Drivers

KPIQ4 2025Commentary
Organic Sales Growth (%)+8% +13–14 pts benefit from ERP shipments; ex-ERP underlying organic ~-5% per CFO
Reported Volume (%)+8% ERP pre-build drove volume uplift
Price Mix Impact (pts)-4 pts Unfavorable mix (Club, Litter) and higher trade promotion spending
Gross Margin (%)46.5% ~150 bps from ERP shipments; leverage/cost savings offset higher M&L and trade
Adjusted EBIT ($MM)$460 Up vs Q4’24 ($308) on leverage, lower advertising, and ERP timing

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales (YoY)FY26NA-6% to -10% New (down)
Organic Sales (YoY)FY26NA-5% to -9% incl. -7 to -8 pts ERP reversal New (down)
Gross Margin (YoY bps)FY26NA-50 to -100 bps (incl. ~100 bps ERP reversal headwind) New (down)
S&A (% of Sales)FY26NA~16% (incl. ~90 bps digital investment) New
Ad & Promo (% of Sales)FY26NA~11% New
Effective Tax RateFY26NA~24% New
Diluted EPS ($)FY26NA$5.60–$5.95 New (down)
Adjusted EPS ($)FY26NA$5.95–$6.30 New (down)
Digital Capabilities Investment (EPS impact)FY26NA~$0.35 expense excluded from adjusted EPS New
ERP Reversal (EPS impact)FY26NA-$0.85 to -$0.95 vs FY25 New (negative)
Glad JV Gross Margin TailwindFY26 partialNA+20–25 bps GM benefit in FY26; ~50 bps annualized thereafter New (up)
DividendQ4 2025$1.22/sh$1.24/sh (payable Aug 29) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 FY25)Current Period (Q4 FY25)Trend
ERP transition & digital transformationFY25 outlook updated to include ERP pre-build benefit; JV/ERP plans progressing Greenfield ERP go-live in July; ~2 weeks of July orders shipped in June; sets up FY26 ERP reversal (sales -7–8 pts, GM -100 bps, EPS -$0.85–$0.95) Intensifying timing noise near term; foundational long-term positive
Consumption & market shareQ3: category slowdowns; organic -2%; maintained overall shares Q4 underlying organic ~-5% (ex-ERP) vs consumption ~-3% on lower share; plan to improve back half FY26 Near-term pressured; improvement targeted
Promotions & private labelPromotional pockets noted (cat litter, trash) Promotional environment rational overall; deep discounting in trash/litter persists; limited private label pressure except wipes/glad assortment Stable aggregate; pockets remain competitive
Tariffs/MacroFY25 outlook incorporated tariff risks FY26 tariff headwinds ~$40M; offset via sourcing, reformulation, productivity, and surgical pricing New cost headwind; mitigated
Innovation pipelineQ2: platform expansions (Hidden Valley, Poett, Brita, Fresh Step) Back-half FY26 ramp with new platforms; value superiority emphasis Back-half positive
Household/Kingsford executionQ3: timing shifts in Kingsford; retailer inventory adjustments in litter Kingsford Memorial Day mis-execution; plan adjusted for July 4/Labor Day; smaller sizes to match consumer behavior Improving execution
Glad JV buyoutAnnounced wind-down; intend to acquire P&G’s 20% CFO quantified GM tailwind post-exit; potential one-time EPS impact depending on purchase price vs carrying value Margin accretive post-Jan 2026

Management Commentary

  • CEO: “While we delivered strong margin expansion and adjusted EPS growth for the year, we did not meet our topline expectations in the back half… we advanced our long-term strategy and began the implementation of our new ERP system in the U.S.” .
  • CFO on Q4 sales math: “Organic sales growth… about 8%, and if you back out the 13% to 14% related to the retailer inventory build, you get… about negative 5%… lower than consumption (~-3%) due to lower share” .
  • CEO on consumer dynamics: “Consumers are definitely still under stress… seeking value… we see significant move to convenience; our wipes business… Sentiva grew 40%” .
  • CFO on FY26 phasing: “Two quarters impacted… Q1 missing two weeks of sales (~-14–15%), and Q4 lapping the extra weeks; underlying outlook ex-ERP is organic -1% to +2%, GM flat to +50 bps, adjusted EPS +2–4%” .

Q&A Highlights

  • Underlying topline and share: Analysts probed gaps vs consumption; management attributed to lower share and execution/promo timing, with plans to correct in FY26 back half .
  • ERP mechanics: Retailers ordered ~two weeks of July demand in June, lifting Q4 and compressing FY26; margin impact higher than expected due to leverage and avoided warehousing costs .
  • Promotional landscape: Generally rational; competitive depth persists in trash/litter; CLX to use strategic promotion to introduce innovation and match sizing/value .
  • Tariffs: ~$40M FY26 cost headwind with mitigating actions including targeted pricing .
  • Medium-term targets: Path back to 3–5% topline contingent on category normalization and share gains; targeting ~18% operating margin post-ERP stabilization; continued gross margin expansion and SG&A productivity .
  • Kingsford execution: Memorial Day merchandising/sizing missteps corrected for July 4 and Labor Day; weather amplified holiday impact .
  • Digital spend: Unique, one-time ERP/digital reset through FY26; normal run-rate tech/AI investments thereafter .

Estimates Context

  • Q4 2025 beats: Adjusted EPS $2.87 vs $2.21*; revenue $1.99B vs $1.93B*; EBITDA $467M vs $433M* — ERP pre-build and cost savings drove upside .
  • Q3 2025 misses: Adjusted EPS $1.45 vs $1.56*; revenue $1.67B vs $1.72B* amid category softness and promo timing .
  • Q2 2025 beats: Adjusted EPS $1.55 vs $1.40*; revenue $1.69B vs $1.63B* on demand creation and share gains .

Values retrieved from S&P Global.*

Where estimates may need to adjust:

  • FY26 consensus should incorporate ERP reversal phasing (Q1/Q4) and tariff headwinds; underlying ex-ERP trajectory implies modest organic growth and margin stability .
  • Segment expectations: Continued competitive intensity in trash/litter near term, offset by innovation; Health & Wellness momentum likely sustained .

Key Takeaways for Investors

  • Q4 headline beats were materially aided by ERP pre-build; expect a mechanical unwind in FY26 with two quarters (Q1, Q4) most impacted — trade the phasing, not the fundamentals .
  • Underlying demand ex-ERP was softer (-5% organic) versus consumption (-3%); watch share recovery and promo/sizing execution, particularly in Kingsford and Fresh Step .
  • Margin story intact: GM rebuilt to 46.5%; adjusted EBIT margin 23.1% in Q4; management targets sustained margin progress post-ERP with SG&A productivity and digital benefits .
  • Tariffs (~$40M) and competitive pockets (trash/litter) are near-term cost/price mix headwinds; mitigations include sourcing/reformulation/productivity and surgical pricing .
  • Back-half FY26 innovation pipeline and net revenue management should support share regain and category growth; promotional spend remains strategic at ~11% of sales .
  • Glad JV buyout provides structural GM tailwind (20–25 bps in FY26, ~50 bps annualized) and simplifies P&L; monitor any one-time EPS impact at closing .
  • Dividend uptick to $1.24 underscores capital return resilience despite ERP timing noise; underlying ex-ERP earnings growth targeted at +2–4% in FY26 .