The Clorox Company is a leading multinational manufacturer and marketer of consumer and professional products, operating in approximately 25 countries and selling in over 100 markets. The company offers a variety of well-known brands, including Clorox® bleach and cleaning products, Pine-Sol® cleaners, Liquid-Plumr® clog removers, Glad® bags and wraps, Fresh Step® cat litter, Kingsford® grilling products, Hidden Valley® dressings, Brita® water-filtration products, and Burt's Bees® natural personal care products, among others **[0000021076-24-000030_clx-20240630.htm:3]** **[0000021076-24-000030_clx-20240630_d2.htm:1]** **[0000021076-24-000040_clx-20240930.htm:17]**. Clorox's business is organized into four reportable segments: Health and Wellness, Household, Lifestyle, and International **[0000021076-24-000030_clx-20240630_d2.htm:1]** **[0000021076-24-000030_clx-20240630.htm:6]** **[0000021076-24-000040_clx-20240930.htm:17]**.

1. **Health and Wellness** - Focuses on cleaning and disinfecting products, including Clorox® bleach and Pine-Sol® cleaners.
2. **Household** - Encompasses bags, wraps, cat litter, and grilling products, featuring brands like Glad® and Fresh Step®.
3. **Lifestyle** - Includes food, water-filtration, and natural personal care products, with offerings such as Hidden Valley® dressings and Brita® water-filtration products.
4. **International** - Comprises products sold outside the United States, extending the reach of Clorox's diverse product portfolio.

58c6c73824ca24e6b15edfa7adcf02f9f3a194373dac57f2874b7232a3ce72a9

Adjustments for Non-Cash Items (USD, millions)

Stock-Based Compensation (USD, millions)

Changes in Working Capital (USD, millions)

Capital Expenditures (CapEx) (USD, millions)

Proceeds from / Repayments of Debt (USD, millions)

Share Repurchases (USD, millions)

Dividend Payments (USD, millions)

Net Change in Cash (USD, millions)

e1420e5812b1d6d074706204043369fea406629bcc824feee69af77f2dcda9a4

09d8ef663866a2c7b7fe574f4fd0658e834a4dff38335db10838ca255d28db1b

c5d3995c55b2279aad521ef072121316d11f239ce2adffee895692e1f2869c39

| Segment/Quarter | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 |
|-----------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Health and Wellness ($ million) | **698**  **[0000021076-24-000040_clx-20240930.htm:15]**  | N/A | **609**  **[0000021076-24-000016_clx-20240331.htm:20]**  | **720**  **[0000021076-24-000008_ex991-pressreleasedatedfeb.htm:1]** **[0000021076-24-000010_clx-20231231.htm:16]**  | N/A | **651**  **[0000021076-23-000030_ex991-pressreleasedatedaug.htm:17]**  | **707**  **[0000021076-23-000015_clx-20230331.htm:20]**  | **635**  **[0000021076-23-000007_clx-20221231.htm:15]**  |
| Household ($ million) | **447**  **[0000021076-24-000040_clx-20240930.htm:15]**  | N/A | **526**  **[0000021076-24-000016_clx-20240331.htm:20]**  | **502**  **[0000021076-24-000008_ex991-pressreleasedatedfeb.htm:1]** **[0000021076-24-000010_clx-20231231.htm:16]**  | N/A | **663**  **[0000021076-23-000030_ex991-pressreleasedatedaug.htm:17]**  | **550**  **[0000021076-23-000015_clx-20230331.htm:20]**  | **462**  **[0000021076-23-000007_clx-20221231.htm:15]**  |
| Lifestyle ($ million) | **320**  **[0000021076-24-000040_clx-20240930.htm:15]**  | N/A | **315**  **[0000021076-24-000016_clx-20240331.htm:20]**  | **403**  **[0000021076-24-000008_ex991-pressreleasedatedfeb.htm:1]** **[0000021076-24-000010_clx-20231231.htm:16]**  | N/A | **333**  **[0000021076-23-000030_ex991-pressreleasedatedaug.htm:17]**  | **353**  **[0000021076-23-000015_clx-20230331.htm:20]**  | **332**  **[0000021076-23-000007_clx-20221231.htm:15]**  |
| International ($ million) | **259**  **[0000021076-24-000040_clx-20240930.htm:15]**  | N/A | **310**  **[0000021076-24-000016_clx-20240331.htm:20]**  | **311**  **[0000021076-24-000008_ex991-pressreleasedatedfeb.htm:1]** **[0000021076-24-000010_clx-20231231.htm:16]**  | N/A | **305**  **[0000021076-23-000030_ex991-pressreleasedatedaug.htm:17]**  | **305**  **[0000021076-23-000015_clx-20230331.htm:20]**  | **286**  **[0000021076-23-000007_clx-20221231.htm:15]**  |
| Corporate and Other ($ million) | N/A | N/A | **54**  **[0000021076-24-000016_clx-20240331.htm:20]**  | **54**  **[0000021076-24-000010_clx-20231231.htm:16]**  | N/A | **67**  **[0000021076-23-000030_ex991-pressreleasedatedaug.htm:17]**  | N/A | N/A |

72505c8dc30f694cacdb5f81bfbdbd925b9c48361cfa0d441c8d306cd79eb332

555721b6432819143b64333f2b4f9c6b530374403fb3b830eb53ce377d06a15a

1. Despite your efforts to restore supply and distribution post-cyber attack, certain brands like Litter and Kingsford are still underperforming; what specific strategies are you implementing to regain lost market share and fully capitalize on growth opportunities in these categories?
2. Given the significant improvement in gross margins, why aren't you investing more aggressively in advertising and promotion to drive market share gains, especially when competitors are increasing their spend and your market share isn't where you'd like it to be?
3. With the recent divestitures of Argentina and the VMS business, how confident are you in maintaining your 3% to 5% long-term organic sales growth target, and what key growth drivers will compensate for the loss of these businesses?
4. Considering the increased promotional intensity in some of your categories and the ongoing pressure on consumer spending, how do you plan to balance pricing, promotions, and innovation to drive volume growth without compromising margins?
5. The Burt's Bees brand has faced significant supply issues and heightened competition, leading to variability in distribution; what measures are you taking to address these challenges, and how do you plan to ensure Burt's Bees remains a growth-accretive asset in your portfolio?

1035029ac2f260248986094a38e21d504ae6ff14299dc56f181a740533682d03

e8c596cfcd5fe323adb833935c28df1c5bd5801f3d893474c9cfc05060469b36

**Annual guidance for FY 2025:**
- **Organic Sales Growth**: 3% to 5%  **[CLX_3395775_10]**  (no change from prior guidance 3% to 5%  **[CLX_3395775_3]** )  
- **Gross Margin**: +100 basis points  **[CLX_3395775_10]**  (no change from prior guidance  **[CLX_3395775_3]** )  
- **EBIT Margin**: 17% to 17.5%  **[CLX_3395775_10]**  (no change from prior guidance  **[CLX_3395775_3]** )  
- **Commodity Inflation**: $75 million  **[CLX_3395775_10]**  (no change from prior guidance  **[CLX_3395775_3]** )  
- **Free Cash Flow**: 12% of sales  **[CLX_3395775_10]**  (no prior guidance)  
- **Trade Spending**: Increased spending  **[CLX_3395775_10]**  (no prior guidance)  

1b0a2fbe3d2d2b77333af1e952111baabcc967695c8aae2b4985129c5e7a1561

### Q1 2025 Earnings Call
- **Issued Period**: Q1 2025
- **Guided Period**: FY 2025
- **Guidance**:
  - **Organic Sales Growth**: Expected to be **3% to 5%**, driven primarily by volume with a modestly negative price mix due to increased trade spending  **[CLX_3395775_10]** .
  - **Gross Margin**: Aiming to fully rebuild to pre-pandemic levels, with an addition of **100 basis points**  **[CLX_3395775_3]** .
  - **Free Cash Flow**: Targeting about **12%** as a percent of sales  **[CLX_3395775_15]** .
  - **EBIT Margin**: Planning to rebuild to about **17% to 17.5%**  **[CLX_3395775_9]** .
  - **Trade Spending**: Increased spending expected  **[CLX_3395775_10]** .
  - **Commodity Inflation**: Anticipating about **$75 million** in total supply chain inflation  **[CLX_3395775_20]** .

### Q4 2024 Earnings Call
- **Issued Period**: Q4 2024
- **Guided Period**: FY 2025
- **Guidance**:
  - **Fiscal Q1 Organic Sales Growth**: Expected **20% to 25%** growth  **[CLX_3395775_6]** .
  - **Fiscal Year 2025 Organic Sales Growth**: Expected **3% to 5%**  **[CLX_3395775_10]** .
  - **Gross Margin**: Aiming for an additional **100 basis points** of expansion  **[CLX_3395775_3]** .
  - **EBIT Margin**: Expected to reach **17% to 17.5%**  **[CLX_3395775_9]** .
  - **Cost Savings**: Targeting **175 basis points** of EBIT margin expansion annually  **[CLX_3395775_3]** .
  - **Commodity Inflation**: About **$75 million** anticipated  **[CLX_3395775_20]** .
  - **Advertising and Promotion (A&P) Spending**: **11% to 11.5%** of sales  **[CLX_3395775_12]** .
  - **Cash Return to Shareholders**: **$250 million to $300 million** planned  **[CLX_3395775_16]** .

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: FY 2024
- **Guidance**:
  - **Adjusted EPS**: Expected to meet or exceed initial guidance  **[CLX_3381563_1]** .
  - **Gross Margin**: Positioned to exceed original target  **[CLX_3381563_1]** .
  - **Advertising and Sales Promotion**: Over **11%** of sales  **[CLX_3381563_18]** .
  - **Organic Sales Growth**: Flat to slightly down for Q4, up about **1%** for the year  **[CLX_3381563_2]** .
  - **Gross Margin Exit Rate**: Closer to **43%**  **[CLX_3381563_3]** .
  - **Market Share Recovery**: Nearly **90%** regained  **[CLX_3381563_1]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: FY 2024
- **Guidance**:
  - **Top Line Growth**: **3% to 5%** long-term target  **[CLX_3371635_19]** **[CLX_3371635_4]** .
  - **EBIT Margin Expansion**: **25 to 50 basis points** annually  **[CLX_3371635_19]** .
  - **Gross Margin**: Expected to exit with about **42%**  **[CLX_3371635_9]** **[CLX_3371635_5]** .
  - **Advertising and Sales Promotion**: About **11%** of sales, closer to **12%** in the back half  **[CLX_3371635_14]** .
  - **FX Headwinds**: About **5 points** on the top line  **[CLX_3371635_18]** .
  - **Inflation**: About **$200 million** in cost inflation  **[CLX_3371635_11]** .
  - **Volume Trends**: Expected improvement  **[CLX_3371635_4]** .
  - **Pricing**: Double-digit increases in Argentina  **[CLX_3371635_4]** **[CLX_3371635_18]** .

5229be07cdab23a9640e2342baeb69103f8d34e068603262e3b7b3acbc07323d

| Name                  | Position                                                                 | Start Date          | Short Bio                                                                                                                                                                                                 |
|-----------------------|--------------------------------------------------------------------------|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Linda Rendle          | Chair and Chief Executive Officer                                        | September 2020      | Linda Rendle is the **Chair and Chief Executive Officer** of The Clorox Company. She has been with the company since **2003** and became an executive officer in **2016**. She was appointed as Chair effective **January 1, 2024**  **[0000021076-24-000030_clx-20240630.htm:44]** **[0001552781-24-000563_e24323_clx-def14a.htm:1]** **[0001552781-24-000563_e24323_clx-def14a.htm:13]** . |
| Nina Barton           | Executive Vice President - Group President - Care and Connection         | July 2024           | Nina Barton is the **Executive Vice President and Group President - Care and Connection** at Clorox. Before joining Clorox, she was the CEO of Vytalogy Wellness LLC from **July 2021 to November 2023**  **[0000021076-24-000030_clx-20240630.htm:45]** **[0000021076-24-000030_clx-20240630.htm:44]** .                             |
| Stacey Grier          | Executive Vice President - Executive Chief of Staff                      | January 2024        | Stacey Grier is the **Executive Vice President – Executive Chief of Staff** at Clorox. She joined Clorox in 2016 and has held various leadership roles, including Senior Vice President – Chief Marketing Officer  **[0000021076-24-000030_clx-20240630.htm:45]** **[0000021076-24-000030_clx-20240630.htm:44]** .                     |
| Angela Hilt           | Executive Vice President - Chief Legal Officer                           | October 2022        | Angela Hilt is the **Executive Vice President and Chief Legal Officer** of Clorox. She joined the company in **2005** as Senior Corporate Counsel and has held various legal roles since then  **[0000021076-24-000030_clx-20240630.htm:45]** **[0000021076-23-000037_clx-20230630.htm:47]** .                                           |
| Chris Hyder           | Executive Vice President - Group President - Health and Hygiene          | October 2022        | Chris Hyder is the **Executive Vice President and Group President - Health and Hygiene** at Clorox. He has been with Clorox since **2003**, holding various positions of increasing responsibility  **[0000021076-24-000030_clx-20240630.htm:45]** **[0000021076-23-000037_clx-20230630.htm:48]** .                                      |
| Kevin B. Jacobsen     | Executive Vice President - Chief Financial Officer                       | January 2019        | Kevin B. Jacobsen is the **Executive Vice President - Chief Financial Officer** of Clorox. He has been with the company since **1995**, holding various senior leadership roles in the finance department  **[0000021076-24-000030_clx-20240630.htm:46]** **[0000021076-23-000037_clx-20230630.htm:47]** .                              |
| Kirsten Marriner      | Executive Vice President - Chief People and Corporate Affairs Officer    | December 2020       | Kirsten Marriner is the **Executive Vice President - Chief People and Corporate Affairs Officer** at Clorox. She joined Clorox in 2016 and has held various leadership roles in human resources  **[0000021076-24-000030_clx-20240630.htm:46]** **[0000021076-23-000037_clx-20230630.htm:47]** .                                         |
| Eric Reynolds         | Executive Vice President - Chief Operating and Strategy Officer          | September 2020      | Eric Reynolds is the **Executive Vice President - Chief Operating and Strategy Officer** at Clorox. He joined Clorox in 1998 and has held various leadership roles, including Senior Vice President – Chief Marketing Officer  **[0000021076-24-000030_clx-20240630.htm:46]** **[0000021076-24-000030_clx-20240630.htm:44]** .          |
| Chau Banks            | Senior Vice President - Chief Information and Data Officer               | June 2020           | Chau Banks is the **Senior Vice President – Chief Information and Data Officer** at Clorox. She took on additional responsibility for enterprise analytics in **September 2020**  **[0000021076-24-000030_clx-20240630.htm:46]** **[0000021076-23-000037_clx-20230630.htm:47]** .                                                        |
| Shanique Bonelli-Moore| Vice President - Chief Diversity and Social Impact Officer               | July 2022           | Shanique Bonelli-Moore is the **Vice President and Chief Diversity and Social Impact Officer** at Clorox. Prior to joining Clorox, she served as the Executive Director of Inclusion at United Talent Agency  **[0000021076-24-000030_clx-20240630.htm:46]** **[0000021076-23-000037_clx-20230630.htm:48]** **[0000021076-22-000026_clx-20220630.htm:47]** .                        |
| Gina Kelly            | Senior Vice President - Chief Customer Officer                           | June 2024           | Gina Kelly is the **Senior Vice President - Chief Customer Officer** at Clorox. She joined Clorox in 1988 and has held various positions of increasing responsibility over the years  **[0000021076-24-000030_clx-20240630.htm:47]** **[0000021076-24-000030_clx-20240630.htm:44]** .                                                    |
| Michael Ott           | Senior Vice President - Chief Research and Development Officer           | June 2022           | Michael Ott is the **Senior Vice President – Chief Research and Development Officer** at Clorox. He joined Clorox in **1996** as a scientist and has held positions of increasing responsibility in research and development  **[0000021076-24-000030_clx-20240630.htm:47]** **[0000021076-23-000037_clx-20230630.htm:48]** .           |
| Eric Schwartz         | Senior Vice President - Chief Marketing Officer                          | March 2022          | Eric Schwartz is the **Senior Vice President and Chief Marketing Officer** of Clorox. He initially served as a Brand Manager at Clorox from **2000 to 2004** and rejoined the company in 2019  **[0000021076-24-000030_clx-20240630.htm:47]** **[0000021076-23-000037_clx-20230630.htm:49]** .                                           |

b3e143e11b0c4a1492d6b5e515d493e6d9de30ffb41a6efbec0ad3a36f3e5a85

| Program Details         | Program 1 (2018 Open-Market) | Program 2 (Evergreen) |
|-------------------------|------------------------------|-----------------------|
| Approval Date           | May 2018  **[0000021076-24-000040_clx-20240930.htm:34]** **[0000021076-24-000040_clx-20240930.htm:23]**               | August 1999  **[0000021076-24-000040_clx-20240930.htm:34]** **[0000021076-24-000040_clx-20240930.htm:23]**     |
| End Date/Duration       | No expiration date  **[0000021076-24-000040_clx-20240930.htm:34]** **[0000021076-24-000040_clx-20240930.htm:23]**     | No expiration date  **[0000021076-24-000040_clx-20240930.htm:34]** **[0000021076-24-000040_clx-20240930.htm:23]**  |
| Total additional amount | **$2,000 million**  **[0000021076-24-000040_clx-20240930.htm:34]** **[0000021076-24-000040_clx-20240930.htm:23]**     | No specified limit  **[0000021076-24-000040_clx-20240930.htm:34]** **[0000021076-24-000040_clx-20240930.htm:23]**  |
| Remaining authorization | **$993 million**  **[0000021076-24-000040_clx-20240930.htm:34]** **[0000021076-24-000040_clx-20240930.htm:23]**       | Not applicable  **[0000021076-24-000040_clx-20240930.htm:34]** **[0000021076-24-000040_clx-20240930.htm:23]**  |
| Details                 | N/A                          | Reduce/eliminate dilution from stock compensation plans  **[0000021076-24-000040_clx-20240930.htm:34]**  |

6c1383674de227894b118d6dcee8017caed921a6ff8d641eb3805e21b40679ab

International

United States

Foreign

Total Revenue

a28da30aef27834c64d7039ef54a8949816acfbf8dbcd438c78e2d325cb2cec7

| Name              | Start Date | End Date | Reason for Change |
|-------------------|------------|----------|-------------------|
| Ernst & Young LLP | 2003  **[0000021076-24-000030_clx-20240630_d2.htm:27]**  | Present  | Current auditor   |

a8c7bd187d1b4d4c14f2bb0bf6d6ebf43b0225c989920ea146b47cbdb3116e42

e6c0eb5c312c0e06ab696a3b12507eb1871e5b938f155c55103f6dab04a09db3

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- Total Revenue: $1.762 billion (+27% YoY)  **[0000021076-23-000048_clx-20230930.htm:20]** **[0000021076-24-000040_clx-20240930.htm:15]**   
- Health & Wellness: $698 million (+38% YoY)  **[0000021076-23-000048_clx-20230930.htm:20]** **[0000021076-24-000040_clx-20240930.htm:15]**   
- Household: $447 million (+38% YoY)  **[0000021076-23-000048_clx-20230930.htm:20]** **[0000021076-24-000040_clx-20240930.htm:15]**   
- Lifestyle: $320 million (**+40% YoY**)  **[0000021076-23-000048_clx-20230930.htm:20]** **[0000021076-24-000040_clx-20240930.htm:15]**   
- Corporate and Other: $38 million (-34% YoY)  **[0000021076-23-000048_clx-20230930.htm:20]** **[0000021076-24-000040_clx-20240930.htm:15]**   
- Operating Income: $177 million (**>+500% YoY**)  **[0000021076-23-000048_clx-20230930.htm:1]** **[0000021076-24-000040_clx-20240930.htm:1]**   
- Net Income: $103 million (**+312% YoY**)  **[0000021076-23-000048_clx-20230930.htm:1]** **[0000021076-24-000040_clx-20240930.htm:1]**   
- EPS (Diluted): $0.80 (**+371% YoY**)  **[0000021076-23-000048_clx-20230930.htm:1]** **[0000021076-24-000040_clx-20240930.htm:1]**   

14557dc1f3eaa523e300bb3977b0361ee6e078a53f5633f5cbc31b6bd33d9ef4

755f0e2cf708851b7f15390d14691c5dfda64a3e5c246a6898947cc756deb1e1

| Year | Amount Due (Millions) | Debt Type              | Interest Rate (%) | % of Total Debt |
|------|------------------------|------------------------|-------------------|-----------------|
| 2024 | 189 **[0000021076-25-000013_clx-20241231.htm:10]**           | Notes and Loans Payable | 4.67 **[0000021076-25-000013_clx-20241231.htm:10]**      | 6.6 = (189 / 2,672) * 100 **[0000021076-25-000013_clx-20241231.htm:10]** **[0000021076-25-000013_clx-20241231.htm:1]** |
| N/A  | 2,483 **[0000021076-25-000013_clx-20241231.htm:1]**         | Long-Term Debt         | N/A               | 93.0 = (2,483 / 2,672) * 100 **[0000021076-25-000013_clx-20241231.htm:10]** **[0000021076-25-000013_clx-20241231.htm:1]** |

abb92a10739624628232a0333a856e97e5cd4530f0859350a33c7e62e9ed0ecb

1a08d994aa9e026d88f1eb653a590a53a28e8c6a2811197c827839e51d602bbe

25a23c41a89cf9a1a7e8e5e069c1e7315a10d7f2aaf36e40a6d0271d7fcc270a

- **Clorox is facing significant cost inflation across the supply chain, including commodities and logistics, exacerbated by severe inflation and currency devaluation in Argentina, forecasting almost 300% inflation in that economy**, which may pressure gross margins.  **[CLX_3371635_11]** **[CLX_3371635_2]** **[CLX_3371635_18]**
- **The company expects a modest slowdown in category growth rates due to increased consumer pressure and value-seeking behaviors**, which could negatively impact volumes and top-line growth.  **[CLX_3371635_6]** **[CLX_3371635_23]**
- **Clorox faces challenges in fully restoring distribution and market share in certain categories, particularly in trash bags and cat litter, where aggressive competition and increased promotional activity may affect margins and delay recovery.**  **[CLX_3371635_18]** **[CLX_3371635_3]**

016b9e288435643cd38b87d4132706df2079f97c81f9882d6d8fc1dfa9bc7159

- The company has **fully restored its supply chain and normalized service levels** by the end of Q3, positioning it to recover lost distribution and return to normalized merchandising levels in Q4. Retailers are supportive and eager to have the company's full distribution back on shelves.  **[CLX_3381563_15]** **[CLX_3381563_4]** **[CLX_3381563_12]** **[CLX_3381563_2]**
- Significant progress in **gross margin recovery**, with expectations to return to **pre-pandemic levels over time**. The company has **recovered about 650 basis points** of the **800 basis points lost due to inflation**, and with **moderating input costs** and the divestiture of the **margin-dilutive Argentina business**, it expects to **continue expanding margins into fiscal year 2025**.  **[CLX_3381563_16]** **[CLX_3381563_17]** **[CLX_3381563_6]** **[CLX_3381563_8]** **[CLX_3381563_3]** **[CLX_3381563_14]**
- The company is **increasing investment in advertising and sales promotion to over 11% of sales**, aiming to rebuild household penetration and **regain market share**. Early signs indicate that **nearly 90% of lost share has been recovered**, and consumer households are improving.  **[CLX_3381563_11]** **[CLX_3381563_16]** **[CLX_3381563_4]** **[CLX_3381563_2]**

d3517b4b67d902be249364740b08bc0c4e025cdd4fe9f116654cbf4f7bfa6674

1. **Top Line Growth Outlook**  
   **Q:** How do you expect top line growth, volume, and pricing to evolve?  
   **A:** Linda Rendle stated that they expect consumers to remain under pressure, leading to **low single-digit category growth**.  **[CLX_3395775_2]**  They anticipate volume growth driven by superior value and innovation, aiming for **3% to 5% organic sales growth**.  **[CLX_3395775_9]**  While pricing is holding in the marketplace, they expect **modestly negative pricing** due to increased trade spending.  **[CLX_3395775_9]** 

2. **Gross Margin Improvement**  
   **Q:** What are your expectations for gross margin improvement next year?  
   **A:** Kevin Jacobsen explained that they expect gross margins to fully recover, adding another **100 basis points** to reach pre-pandemic levels.  **[CLX_3395775_3]**  This will be supported by over **200 basis points** of cost savings and benefits from portfolio reshaping, including the divestiture of Argentina and the anticipated sale of the VMS business.  **[CLX_3395775_3]** **[CLX_3395775_22]** 

3. **Household Segment Challenges**  
   **Q:** What are the issues in the Household segment, especially with Glad and Litter?  
   **A:** Linda Rendle described that the Household segment underperformed due to weather impacting the grilling business and delayed distribution recovery in Glad and Litter.  **[CLX_3395775_4]**  While Glad's distribution was fully recovered by the end of the quarter, Litter recovery will take longer due to consumer behavior and increased competitive activity.  **[CLX_3395775_4]** 

4. **Advertising and Marketing Spend**  
   **Q:** Are you increasing advertising and marketing spend to regain market share?  
   **A:** Linda Rendle stated they plan to maintain advertising and sales promotion spending at **11% to 11.5%** of sales, similar to last year.  **[CLX_3395775_8]** **[CLX_3395775_11]**  They believe this strikes the right balance to support growth but are prepared to invest more if needed to win back consumers.  **[CLX_3395775_8]** **[CLX_3395775_13]** 

5. **EBIT Margin Recovery**  
   **Q:** When do you expect EBIT margins to return to historical levels?  
   **A:** Kevin Jacobsen mentioned that they have been rebuilding EBIT margins from **12%** in fiscal year '22 to about **15%** last year, and are targeting **17% to 17.5%** this year.  **[CLX_3395775_8]**  They expect to fully rebuild EBIT margins to historical levels of around **18%** by the end of the year.  **[CLX_3395775_8]** 

6. **Impact of Divestitures on Growth**  
   **Q:** Does the 3%–5% organic sales growth outlook still hold after divestitures?  
   **A:** Linda Rendle confirmed that despite divesting Argentina and the VMS business, the **3% to 5%** long-term organic sales growth target remains intact.  **[CLX_3395775_10]**  These moves reduce volatility and support more consistent and profitable growth.  **[CLX_3395775_10]** **[CLX_3395775_22]** 

7. **Cash Flow and Shareholder Returns**  
   **Q:** How did cash flow perform, and will you increase shareholder returns?  
   **A:** Kevin Jacobsen reported they are targeting about **12%** free cash flow as a percent of sales in fiscal year '25.  **[CLX_3395775_15]**  With strong cash flow and a low debt-to-EBITDA ratio, they have restarted their share repurchase program, aiming to return **$250 million to $300 million** to shareholders.  **[CLX_3395775_15]** 

8. **Promotional Activity Impact**  
   **Q:** How is increased trade spending affecting margins?  
   **A:** Kevin Jacobsen noted that trade spending will modestly offset growth, especially in the front half of the year as they return to normalized levels of promotion.  **[CLX_3395775_6]** **[CLX_3395775_12]**  They expect a bit of increased trade spending, which will be a modest drag on gross margins.  **[CLX_3395775_12]** 

9. **Digital Transformation Progress**  
   **Q:** How is the digital transformation progressing, and when do you expect benefits?  
   **A:** Linda Rendle shared that they successfully completed the first wave of their ERP and global finance rollout in Canada.  **[CLX_3395775_20]**  The bulk of the value and benefits from the digital transformation are expected in fiscal year '26 and beyond, once the ERP implementation is complete.  **[CLX_3395775_20]** **[CLX_3395775_21]** 

0cbf60d2d02beb366ac3ee3b1c8174613d3924e97fdefde9cc93581212ef3e2a

- *Bear Case for Clorox ($CLX) Based on the Q&A Section of the Earnings Call Transcript:**
- **Operational Disruptions from Cyber Attack Leading to Sales and Inventory Challenges:** The cyber attack caused wide-scale operational disruptions, resulting in significant shipment declines (down approximately **30%**) and loss of sales due to out-of-stock situations. Rebuilding retailer inventories will take time, and the pace of recovery is uncertain, potentially affecting sales and market share in the near term.  **[CLX_3363329_20]** ,  **[CLX_3363329_3]**
- **Pressure on Gross Margins Due to Increased Merchandising and Lapping of Pricing Actions:** Clorox expects increased merchandising levels, which will pressure gross margins in the second half of the fiscal year. Additionally, the company is lapping prior pricing actions, and as the benefit from pricing moderates, gross margins are projected to be flat despite initial improvements.  **[CLX_3363329_8]** ,  **[CLX_3363329_2]**

9b367ae0534aa5de919a86fe234649831492b2470f6ee73682e845f3353449f2

1. **Gross Margin Outlook**  
   **Q:** What's the outlook for gross margin in the back half?  
   **A:** We expect gross margin to be around **44%-44.5%** in the back half, consistent with our full-year projection.  **[CLX_3404746_7]** **[CLX_3404746_8]**  Q2 margins will be down due to volume deleveraging, but overall margins should remain fairly consistent throughout the year.  **[CLX_3404746_7]** 

2. **Sales Guidance and Growth**  
   **Q:** Have back half growth expectations changed?  
   **A:** Back half growth is expected to be **3%-5%**, aligning with our long-term algorithm.  **[CLX_3404746_4]**  Despite category growth slowing to **0%-1%**, we're confident due to strong demand plans, contributions from international and professional businesses, and benefits from divestitures.  **[CLX_3404746_4]** **[CLX_3404746_8]** 

3. **Commodities and Input Costs**  
   **Q:** Has the commodities outlook changed?  
   **A:** Commodity inflation is slightly better than anticipated but still inflationary; this won't significantly impact our full-year expectations.  **[CLX_3404746_8]**  We forecast **$75 million** in supply chain inflation, split between commodities and other costs.  **[CLX_3404746_8]** 

4. **Divestitures and Margins**  
   **Q:** How are divestitures impacting margins?  
   **A:** Recent divestitures of margin-dilutive businesses will structurally improve margins by **50-70 basis points** on average.  **[CLX_3404746_13]**  We're already seeing benefits in Q1, which will continue into Q2 and beyond.  **[CLX_3404746_13]** 

5. **Market Share Recovery**  
   **Q:** Can you expand market share from here?  
   **A:** We've returned overall market share to pre-cyber levels and grew in almost every category in Q1.  **[CLX_3404746_2]**  We expect to continue growing share, though at a smaller rate, and anticipate solid market share gains by fiscal year-end.  **[CLX_3404746_2]** 

6. **Promotions and Consumer Behavior**  
   **Q:** How is increased promotional spending affecting pricing?  
   **A:** We're seeing volume-based growth as we lap price increases, with trade promotions returning to pre-COVID levels.  **[CLX_3404746_9]**  Advertising and sales promotion are around **11%-11.5%** of sales, higher in the U.S..  **[CLX_3404746_9]** 

7. **Litter and Glad Recovery**  
   **Q:** Update on Litter and Glad business recovery?  
   **A:** Glad returned to share growth, increasing **0.7 share points** in Q1.  **[CLX_3404746_6]**  Litter also grew **0.7 share points**, but recovery will take longer.  **[CLX_3404746_6]**  We're investing in advertising and promotions to regain consumer loyalty.  **[CLX_3404746_6]** 

8. **ERP Implementation Timing**  
   **Q:** What's the timeline for U.S. ERP implementation?  
   **A:** After a successful launch in Canada, we plan to begin U.S. ERP implementation at the end of this fiscal year.  **[CLX_3404746_15]**  We'll provide more details in our Q2 earnings release.  **[CLX_3404746_15]** 

9. **International and PPD Performance**  
   **Q:** What's driving growth in international and PPD?  
   **A:** Both are growing at **mid-single-digit rates**.  **[CLX_3404746_4]** **[CLX_3404746_14]**  International benefits from reduced volatility and the Argentina divestiture.  **[CLX_3404746_14]**  PPD growth is driven by innovation and favorable industry trends, not just return-to-office dynamics.  **[CLX_3404746_14]** 

10. **Impact of Potential Tariffs**  
    **Q:** Could tariffs affect the business?  
    **A:** We've reduced supply chain risks by nearshoring production.  **[CLX_3404746_24]**  While we're monitoring the situation, we don't foresee major disruptions and haven't built any impacts into our outlook.  **[CLX_3404746_24]** 

2c516091c206b4c777b5483cbeb89c2cf839eb362c0074c84fb8bad261a8c7d1

- **Clorox management is confident in fully recovering from the cyberattack, viewing it as a short-term issue with no structural impact on the business.** They have a history of successfully restoring distribution and market share after disruptions, such as post-COVID.  **[CLX_3363329_3]**
- **The company maintains strong relationships with retailers, who are partnering closely to rebuild inventory and prioritizing Clorox products, even during busy seasons.** This collaboration is assisting in rapidly restoring supply and distribution.  **[CLX_3363329_4]**
- **Despite the disruption, Clorox remains committed to innovation, with major brands set to launch new products in the back half of fiscal 2024, supporting future growth.** They have preserved their innovation plans and are focused on bringing these to market.  **[CLX_3363329_17]** **[CLX_3363329_6]**

72994ec504f394295d5b237d1c42ec6e6f980c3353d2e17c137e5f2175e68ac6

- **Clorox expects to return to pre-pandemic gross margins in fiscal year '25**, driven by strong progress in margin transformation programs, cost savings initiatives, and digital transformation efforts, which are leading to sustained margin expansion and providing flexibility to invest in growth opportunities.  **[CLX_3395775_18]**
- **The company is focused on innovation and delivering superior value to consumers**, with successful product launches like **Clorox Scentiva achieving its largest quarter in Q4**, and strong innovation plans in key categories like Litter for fiscal year '25, which are expected to drive market share growth and share gains in fiscal year '25.  **[CLX_3395775_18]** **[CLX_3395775_8]**
- **Strategic portfolio optimization through the divestiture of Argentina and the sale of the VMS business** reduces volatility, allows focus on growth opportunities in core businesses, supports margin expansion, and confirms their long-term **3% to 5% organic sales growth outlook**.  **[CLX_3395775_11]**

620eca8c3e3ede9e05dc9c5e982ff19cfed1821deacfdc4693289425600dbba3

- **Clorox has made strong progress in rebuilding inventories and distribution after the cyber incident, restoring inventories faster than expected and is confident in fully restoring distribution and market share.**  **[CLX_3371635_3]** **[CLX_3371635_20]**
- **The company is increasing its advertising and promotional spending to 11% of sales this year, with the back half closer to 12%, aiming to drive value superiority and top-line growth.**  **[CLX_3371635_14]** **[CLX_3371635_9]**
- **Clorox expects to improve gross margins by about 200 basis points this fiscal year and is committed to rebuilding gross margins back to pre-inflation levels over time while continuing to invest in strategic initiatives.**  **[CLX_3371635_2]** **[CLX_3371635_9]** **[CLX_3371635_5]**

e7c748535601c529f61498d3f28b688c0c60161b6db7b57920cd83b5b505d656

- **Clorox has experienced significant market share losses due to supply disruptions, including a cyber attack that caused distribution to be down by one-third and resulted in a loss of five full share points.** The company ended June down 0.3 percentage points in share and acknowledges that market share is "not exactly where we want it to be right now."  **[CLX_3395775_14]**
- **The company's Burt's Bees brand has been weak for a long period of time, facing supply issues due to a supplier fire and compounded by the cyber attack.** Additionally, Burt's Bees competes with companies that spend significantly more on marketing (over 30%) compared to Clorox's 14% spend, raising concerns about competitiveness in that segment.  **[CLX_3395775_25]**
- **Clorox is not increasing advertising and marketing spending as aggressively as some competitors, despite acknowledging increased promotional intensity and market share losses.** Competitors are increasing advertising and trade promotions across the board, but Clorox plans to maintain its advertising spend at 11% to 11.5%, which may hinder its ability to regain lost market share.  **[CLX_3395775_14]**

b5a9f3190786d9eede0d6a12d61d935d9a223df0dc0d37911a27095cdda6ffb9

1. **Gross Margin Outlook**  
   **Q:** Will gross margins continue to expand in fiscal 2025?  
   **A:** Management expects to continue expanding gross margins in fiscal '25, building on an anticipated **43% gross margin** by the end of this year.  **[CLX_3381563_3]**  They anticipate that ongoing margin transformation efforts, including cost savings and revenue growth management, will more than offset moderate cost inflation.  **[CLX_3381563_4]**  The divestiture of the Argentina business, which was margin-dilutive, will also contribute to margin expansion.  **[CLX_3381563_4]** 

2. **Fiscal 2025 Top-Line Growth**  
   **Q:** What are the expectations for sales growth in fiscal 2025?  
   **A:** While specific guidance for fiscal '25 isn't provided yet, management expects to grow the top line and expand earnings.  **[CLX_3381563_4]**  They noted that the divestiture of the Argentina business will create about a **1.5-point headwind** to sales next year  **[CLX_3381563_7]** , but they remain optimistic about growth prospects excluding this impact.

3. **Supply Recovery and Sales Impact**  
   **Q:** How did supply issues impact sales, and what's the confidence in recovery?  
   **A:** Sales were impacted by extended supply constraints in the Glad and Litter businesses during Q3.  **[CLX_3381563_4]**  These issues have been fully resolved by the end of the quarter, restoring normalized service levels heading into Q4.  **[CLX_3381563_4]** **[CLX_3381563_16]**  Management is confident in recapturing lost distribution points and believes they have the right plans to rebuild consumer households and restore fundamentals.  **[CLX_3381563_4]** 

4. **Q4 Organic Sales Growth**  
   **Q:** What is the outlook for Q4 organic sales growth?  
   **A:** Management expects improving volume trends in Q4 but anticipates increased trade spending as they return to normalized promotional levels.  **[CLX_3381563_2]**  After considering the divestiture of the Argentina business, they project organic sales growth to be **flat to down slightly** in Q4, keeping them on track for about **1% growth** for the year.  **[CLX_3381563_2]** 

5. **Pricing and Competitive Dynamics**  
   **Q:** Do you need to reset prices heading into 2025?  
   **A:** Management believes they do not need to reset prices into fiscal '25.  **[CLX_3381563_10]**  The negative pricing and volumes in the quarter were due to supply issues, not consumer resistance to pricing.  **[CLX_3381563_10]**  They are confident that as they restore supply and distribution, along with effective spending plans, they will regain market share without lowering prices.  **[CLX_3381563_10]** 

6. **Impact of Argentina Divestiture**  
   **Q:** How will the Argentina divestiture affect margins and sales?  
   **A:** The divestiture of the Argentina business, which was about **2% of sales**, will result in a modest benefit to gross margins as the business was margin-dilutive.  **[CLX_3381563_14]**  It will also create about a **1.5-point headwind** to sales next year.  **[CLX_3381563_7]** **[CLX_3381563_14]**  Exiting Argentina reduces volatility and FX impacts, contributing to a more stable and profitable international business.  **[CLX_3381563_13]** **[CLX_3381563_14]** 

7. **Gross Margin Recovery Strategies**  
   **Q:** How important is Revenue Growth Management in margin recovery?  
   **A:** Revenue Growth Management is a key tool in their margin recovery strategy.  **[CLX_3381563_8]**  With the digital transformation providing greater visibility, they're leveraging initiatives like price pack architecture to drive margins.  **[CLX_3381563_8]**  These efforts aim to return gross margins to pre-pandemic levels and grow from there, depending on implementation pace and cost environment.  **[CLX_3381563_8]** 

8. **Consumer Behavior and Promotional Spend**  
   **Q:** Are increased promotions aimed at financially weaker consumers?  
   **A:** The increased levels of merchandising and promotion were always intended as they return to pre-pandemic spending levels.  **[CLX_3381563_9]**  While acknowledging that consumers across all income tiers are under pressure, the promotions are part of normal business plans and also support the recovery of share lost during the cyberattack.  **[CLX_3381563_9]** 

9. **Market Share Recovery**  
   **Q:** Is the intent to restore market share to pre-pandemic levels?  
   **A:** Management intends not only to restore market share but also to grow beyond pre-pandemic levels.  **[CLX_3381563_10]**  They have recovered nearly **90%** of the share lost due to the cyberattack and are confident in their ability to fully regain and then expand market share with the right plans in place.  **[CLX_3381563_4]** **[CLX_3381563_10]** 

10. **Advertising and Promotion Spend Timing**  
    **Q:** How is the timing of advertising spend changing this year?  
    **A:** Due to the cyberattack, they spent less on advertising in the first half and are spending more in the second half of the year.  **[CLX_3381563_17]**  They still intend to spend about **11% of sales** on advertising and sales promotion, as originally planned  **[CLX_3381563_17]** , ensuring support for their brands as consumers face more challenges.

e76d0247d0d051cc07642586504ccc98f35fe31e586af02d4bb9e9fc128c0e0e

1. **Gross Margin Outlook**  
   **Q:** What's the outlook for gross margins and recovery to prior levels?  
   **A:** Clorox expects gross margins to be around **41.5%** in the back half, similar to the front half, leading to about a **200 basis point** improvement for the full year.  **[CLX_3371635_2]** **[CLX_3371635_4]** **[CLX_3371635_5]**  They remain committed to rebuilding gross margins back to the prior level of **44%**, with further progress anticipated in fiscal **2025**, driven by cost savings and a more normalized cost environment.  **[CLX_3371635_5]** **[CLX_3371635_9]** 

2. **Argentina FX Impact**  
   **Q:** How will Argentina's FX headwinds and inflation affect results?  
   **A:** Clorox anticipates increased FX headwinds due to Argentina, now expecting about **5 points** of FX headwinds on the top line versus the initial **2 points**.  **[CLX_3371635_18]**  They project the Argentine peso to devalue by about **75%**.  **[CLX_3371635_18]**  However, through incremental pricing actions, they aim to fully offset the negative impacts on both sales and gross margin, excluding an expected **$0.20** P&L charge from remeasurement losses.  **[CLX_3371635_2]** **[CLX_3371635_11]** **[CLX_3371635_12]** **[CLX_3371635_18]** 

3. **Volume vs. Price Mix**  
   **Q:** How is volume versus price mix expected to impact sales?  
   **A:** Clorox expects improving volume trends in the back half, transitioning from high single-digit volume declines in the front half.  **[CLX_3371635_4]** **[CLX_3371635_5]**  Price/mix will contribute less, as U.S. pricing has been lapped, but incremental pricing in Argentina will help.  **[CLX_3371635_4]**  Overall, they anticipate stronger organic sales growth in the back half compared to the front half.  **[CLX_3371635_4]** **[CLX_3371635_5]** **[CLX_3371635_7]** 

4. **Recovery from Cyber Incident**  
   **Q:** Has Clorox fully recovered shelf space and distribution post-cyber incident?  
   **A:** Clorox has restored the majority of inventories, reducing distribution point losses from over **30%** at the low point to mid-single digits.  **[CLX_3371635_3]** **[CLX_3371635_10]**  However, categories like trash bags and cat litter are still behind due to supply challenges.  **[CLX_3371635_10]** **[CLX_3371635_16]**  They expect to make significant progress in the back half, but full recovery may extend into fiscal **2025**.  **[CLX_3371635_16]** **[CLX_3371635_20]** 

5. **Promotional Environment**  
   **Q:** How is the competitive and promotional environment changing?  
   **A:** Clorox expects increased trade spending and a return to more normalized promotional levels in the back half, but not exceeding pre-pandemic levels.  **[CLX_3371635_5]** **[CLX_3371635_9]** **[CLX_3371635_24]**  They are not seeing abnormal competitive pressures, though some aggressive promotion is noted in categories like cat litter.  **[CLX_3371635_9]**  They continue to invest in advertising, targeting about **11%** of sales for the year, and closer to **12%** in the back half.  **[CLX_3371635_14]** **[CLX_3371635_24]** 

6. **Consumer Behavior**  
   **Q:** What is the outlook on consumer demand and category growth?  
   **A:** Clorox anticipates a modest slowdown in category growth rates due to increased consumer pressure but expects resilience in household essentials.  **[CLX_3371635_6]** **[CLX_3371635_23]**  They observe value-seeking behaviors, with consumers trading up to larger sizes or premium products.  **[CLX_3371635_8]** **[CLX_3371635_15]**  The impact on categories is expected to be moderate, consistent with previous times of consumer stress.  **[CLX_3371635_6]** **[CLX_3371635_8]** **[CLX_3371635_23]** 

7. **Strategic Initiatives**  
   **Q:** Has the cyber incident affected long-term strategic initiatives?  
   **A:** Clorox remains committed to its strategic priorities, including digital transformation and operating model changes.  **[CLX_3371635_17]** **[CLX_3371635_19]**  While there were some delays in technology implementations like ERP during the cyber event, they are proceeding with their plans and remain on track to achieve long-term top-line growth targets of **3% to 5%** and EBIT margin expansion of **25 to 50 basis points** annually.  **[CLX_3371635_17]** **[CLX_3371635_19]** 

8. **Cold and Flu Season Impact**  
   **Q:** How will the cold and flu season affect results?  
   **A:** The current cold and flu season aligns with pre-pandemic patterns, starting later than last year. Clorox expects a more normalized impact, primarily in the third quarter, which is factored into their outlook.  **[CLX_3371635_12]** 

9. **Logistics Costs**  
   **Q:** Did logistics costs impact gross margins as anticipated?  
   **A:** Despite expectations of elevated logistics costs due to increased shipping to restock retailers, Clorox managed to execute efficiently without incurring significant upcharges.  **[CLX_3371635_11]** **[CLX_3371635_22]**  They utilized their carriers and full truckloads, avoiding the higher costs they had anticipated.  **[CLX_3371635_22]** 

c2538bc541bd80811012fbb159392f948194ea6a6524e9b7cc87e2855266a322

- **Clorox has delivered strong compounded annual sales growth within their target over the last five years**, despite significant disruptions such as a pandemic, inflation, and a cyber attack. They have **stabilized and rebuilt their gross margin and delivered strong earnings growth**, enabling further investment in the business.  **[CLX_3414135_28]**
- The company is experiencing **strong growth in both its International and Professional segments**, driven by leading shares in the Cleaning business, successful **entry into new markets** with products like **Cat Litter**, and the ability to **take pricing**. Additionally, the Professional segment is seeing opportunities in new verticals, contributing to **mid-single-digit growth**.  **[CLX_3414135_16]**
- **Investments in a new ERP system** are expected to enhance Clorox's competitiveness and drive future productivity and cost savings. The ERP implementation will **modernize the backbone of operations**, enabling the company to **deliver consistent, profitable growth** and **strengthen long-term shareholder value**. Cost reductions from shutting down the legacy system are anticipated to **start in the back half of next year**, aiding in margin expansion and productivity improvements.  **[CLX_3414135_28]** **[CLX_3414135_20]** **[CLX_3414135_24]**

7f599742801f6d589dd9496bdf1bc4bab2e19e703be28a747aa3ae08ac5ec956

- **Clorox is experiencing significant volume declines in key segments**, including an **11% decrease in Household volumes**, which may indicate weakening consumer demand.  **[CLX_3414135_27]**
- The company anticipates that **gross margins will decline in the fourth quarter**, due to lapping an unusually high gross margin in the prior year and increased costs, suggesting potential margin pressures.  **[CLX_3414135_27]**
- **Increased competitive pressures in the bags and wraps category (Glad)** are leading to **higher trade and promotional spending**, which could negatively impact profitability.  **[CLX_3414135_13]** **[CLX_3414135_5]**

ca74d5be74e76c765c417e3e5b310019c51cfeccf639c0d352bb9913c836c979

1. **Margin Expansion Beyond Fiscal '25**  
   **Q:** Can you sustain gross margin expansion after fiscal '25?  
   **A:** Clorox aims to rebuild gross margins back to **44%** this year and plans to expand EBIT margins by **25 to 50 basis points per year** starting in fiscal **2026**. Management is confident, driven by productivity initiatives, the upcoming ERP conversion, and enhanced cost-saving measures like design to value and net revenue management.  **[CLX_3414135_2]** 

2. **Assuming Full Control of Glad**  
   **Q:** Why is Clorox taking full control of Glad now?  
   **A:** Clorox will assume full control of the Glad business in a year as the current JV agreement with P&G expires, and both parties mutually agreed not to renew. With strengthened capabilities and important retained IP, Clorox is confident in driving innovation and value in the Glad business moving forward. There's no change in the company's M&A strategy; they continue to evaluate accretive opportunities but will remain disciplined.  **[CLX_3414135_3]** 

3. **Organic Sales Outlook and ERP Impact**  
   **Q:** How will the ERP transition affect sales outlook?  
   **A:** Clorox expects **low single-digit organic sales growth** in Q3 after adjusting for a one-time pull-forward in Kingsford shipments. In Q4, organic sales growth is projected to be **mid- to high single digits**, primarily due to the ERP transition, which will add **1–2 points** of growth by shipping ahead of consumption to build retailer inventories. This impact will reverse in the first half of next fiscal year.  **[CLX_3414135_4]** **[CLX_3414135_9]** 

4. **Increased Competition in Glad**  
   **Q:** Is increased competition requiring more promotional spending?  
   **A:** Clorox is experiencing higher-than-expected competitive activity in the Glad trash category, with deeper discounting from competitors. The company has reacted by increasing trade spending, which is included in their outlook. They feel well-equipped to address this challenge and continue to grow share, as evidenced by Glad trash share growth in Q2.  **[CLX_3414135_7]** 

5. **Returning to 3–5% Growth Rate**  
   **Q:** How will you get back to 3–5% growth amid a fatigued consumer?  
   **A:** Clorox remains confident in its long-term **3–5%** sales growth algorithm, expecting category growth to return to **2–2.5%** when the macro environment improves. In the meantime, they're focusing on driving share gains, investing in innovation, and leveraging opportunities in professional and international businesses. The company acknowledges that in a steady-state macro environment, achieving the low end of the **3–5%** range is realistic.  **[CLX_3414135_11]** **[CLX_3414135_17]** **[CLX_3414135_18]** 

6. **Tariff Exposure**  
   **Q:** What is your exposure to potential tariffs?  
   **A:** Clorox's exposure to potential tariffs is limited, with raw materials sourced from Mexico and Canada accounting for a **single-digit percentage**. The company manufactures products close to where they are consumed and has taken steps to onshore and nearshore production, reducing supply chain risks and tariff exposure. Tariffs are not specifically included in their outlook due to the dynamic environment.  **[CLX_3414135_10]** **[CLX_3414135_16]** 

7. **ERP Investment and SG&A**  
   **Q:** Why are ERP costs so high, and how will SG&A evolve?  
   **A:** Clorox is undertaking a comprehensive digital transformation, including a full ERP implementation to S/4HANA, global finance upgrades, and investments in AI and data infrastructure. This multi-year investment totals **$560–580 million** and is now in year four. Admin expenses are elevated at **15–16%** of sales due to this investment but are expected to decrease to **13%** post-implementation, delivering strong returns through cost efficiencies and value creation.  **[CLX_3414135_22]** 

8. **Growth in International and Professional Segments**  
   **Q:** What's driving growth in international and professional businesses?  
   **A:** Clorox's international growth is propelled by strong performance in cleaning products with leading market shares, successful expansion of the cat litter business into new markets, and effective pricing strategies. In the professional segment, growth comes from penetrating new verticals like government and healthcare and increased share in the base business. They've also started to see a slight return in office occupancy.  **[CLX_3414135_15]** 

9. **Financial Leadership Transition**  
   **Q:** What priorities does the new CFO have?  
   **A:** Incoming CFO Luc Bellet emphasizes continuity in financial discipline and capital allocation, having been deeply involved in the IGNITE strategy and transformation efforts. The focus will be on executing the ERP implementation to modernize operations and unlock future growth opportunities while maintaining the company's commitment to driving shareholder value.  **[CLX_3414135_19]** 

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CLX Q2 2025: Despite an 11% Household volume dip, strong Int’l & Professional segments offset pressure. Management eyes a 44% gross margin this year, 25–50 bps EBIT margin expansion from FY26, and 3–5% long-term sales growth, boosted by ERP-driven cost cuts.

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Clorox Co (CLX)

Financials