Group 1 - The Clorox Company held its Third Quarter Fiscal Year 2025 Earnings Release Conference Call, indicating a structured approach to financial reporting and investor communication [2][4] - Key participants in the call included Lisah Burhan (VP, IR), Linda Rendle (Chair and CEO), and Luc Bellet (CFO), highlighting the involvement of top management in addressing investor queries [3][4] - The call included a forward-looking statement regarding the fiscal year 2025 outlook, suggesting that management is optimistic about future performance despite potential variances from actual results [5]

As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately. Here is how Clorox performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: View all Key Company Metrics for Clorox here>>> Shares of Clorox have returned -3.3% over the past month versus the Zacks S&P 500 composite's +0.4% change. The stock curren ...

Clorox (CLX) came out with quarterly earnings of $1.45 per share, missing the Zacks Consensus Estimate of $1.57 per share. This compares to earnings of $1.71 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -7.64%. A quarter ago, it was expected that this consumer products maker would post earnings of $1.39 per share when it actually produced earnings of $1.55, delivering a surprise of 11.51%.Over the last four quarters, the co ...

Financial Data and Key Metrics Changes - The company reported a tenth consecutive quarter of gross margin expansion, indicating strong fundamentals despite a challenging consumer environment [7][8] - The updated outlook reflects anticipated pressure on consumers and retailers, impacting sales growth expectations [7][8] Business Line Data and Key Metrics Changes - The household products category experienced a low single-digit decline, attributed to changing consumer spending behaviors and macroeconomic uncertainties [12][19] - The company maintained overall market shares across its portfolio, with specific categories showing resilience despite competitive pressures [7][12] Market Data and Key Metrics Changes - U.S. consumer sentiment weakened significantly in the latter half of the third quarter, leading to changes in shopping behaviors and impacting sales [7][19] - Retailers engaged in inventory destocking, particularly in the household segment, which affected sales figures [36][39] Company Strategy and Development Direction - The company remains focused on its long-term strategy, emphasizing organic sales growth and strong earnings growth despite current market challenges [8][18] - The management is actively working on mitigating tariff impacts through strategic pricing and supply chain adjustments [28][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of its essential product categories, despite current consumer spending pressures [7][21] - The company anticipates continued challenges in the consumer environment but remains committed to navigating these uncertainties effectively [8][21] Other Important Information - The company is preparing for an ERP transition, which is expected to enhance operational efficiency and support future growth [55][59] - The management highlighted the importance of maintaining a strong balance sheet and cash flow to capitalize on potential M&A opportunities in the future [118][119] Q&A Session Summary Question: What is driving the category weakness? - Management noted that while categories typically show resilience, recent macroeconomic factors have led to a low single-digit decline in household essentials [12][19] Question: How should we think about organic sales growth given current conditions? - Management indicated that organic sales growth expectations are muted due to ongoing category softness and retailer inventory adjustments [24][88] Question: What is the expected impact of tariffs on gross margins? - The anticipated gross impact from tariffs is around $100 million annually, with efforts underway to mitigate this through various strategies [27][28] Question: Can you provide insights on promotional activity by category? - Management confirmed that promotional activity has normalized but varies by category, with some experiencing higher promotional pressures [44][46] Question: How is the ERP transition expected to impact organic sales? - The ERP transition is expected to provide a lift in organic sales, with retailers building inventory ahead of the transition to mitigate out-of-stock risks [55][59] Question: What is the company's approach to M&A in the current environment? - The company remains open to M&A opportunities but prioritizes maintaining a healthy core business and strong financial performance [118][119]

Financial Data and Key Metrics Changes - The company experienced a decline in overall market categories, with average declines in the low single digits during the third quarter [14][22] - Despite the challenges, the company maintained market shares and achieved its tenth consecutive quarter of gross margin expansion [9][10] - The gross margin for the fourth quarter is expected to be around 44%, consistent with the annual average of approximately 44.5% [40] Business Line Data and Key Metrics Changes - The household products segment faced significant competitive pressure, leading to a decline in sales, particularly in the Glad brand due to increased promotional activity [96][100] - The cleaning category showed resilience, with the company growing market share despite overall category declines [86][111] - The cat litter segment is competitive, but the company has introduced innovations that are performing well in the market [100][101] Market Data and Key Metrics Changes - Consumer sentiment weakened significantly in the second half of the third quarter, impacting shopping behaviors and leading to lower-than-expected sales [8][9] - Retailers are adjusting their inventory levels, which has resulted in some destocking, particularly in the household segment [41][44] - The company noted a shift in consumer spending towards essentials and larger purchases, impacting discretionary categories [17][78] Company Strategy and Development Direction - The company aims to continue delivering organic sales growth and strong earnings growth while navigating a challenging consumer environment [10][120] - There is a focus on innovation and maintaining a balanced portfolio that caters to both premium and value-seeking consumers [55][111] - The company is actively managing its supply chain and pricing strategies to mitigate the impact of tariffs and maintain margins [32][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of their essential product categories despite current economic uncertainties [9][23] - The outlook for fiscal year 2025 anticipates continued challenges, with organic sales growth expected to be muted [27][92] - The company is closely monitoring consumer behavior and market dynamics to adapt its strategies accordingly [23][120] Other Important Information - The company is preparing for an ERP transition, which is expected to enhance operational efficiency and inventory management [61][65] - There is a wide range in the sales outlook due to the volatility in consumer demand and retailer inventory adjustments [62][66] Q&A Session Summary Question: What is driving the category weakness? - Management noted that while categories are traditionally resilient, recent macroeconomic uncertainties have led to a low single-digit decline in sales [14][22] Question: How should we think about organic sales growth in the long term? - The company expects organic sales growth to be suppressed in the near term but anticipates a return to normal category growth over time [27][28] Question: What is the expected impact of tariffs on gross margin? - The anticipated gross impact from tariffs is around $100 million annually, with efforts underway to mitigate this through various strategies [31][32] Question: Can you provide insights on promotional activity by category? - Promotional activity has normalized overall, but some categories, like Glad, are experiencing higher promotional pressures due to competitive actions [50][51] Question: How is the ERP transition expected to impact sales? - The ERP transition is expected to lead to a build-up of inventory, which could translate into growth in the following quarters [65][66] Question: What is the company's approach to M&A in the current environment? - The company remains focused on strengthening its core business while exploring opportunities for portfolio improvement through M&A [120]

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents Clorox's unaudited condensed consolidated financial statements, including earnings, balance sheets, cash flows, and notes on divestitures and cyberattack impact [Condensed Consolidated Statements of Earnings and Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings%20and%20Comprehensive%20Income) Consolidated Earnings Summary (Unaudited) | Metric | Three Months Ended 3/31/2025 | Three Months Ended 3/31/2024 | Nine Months Ended 3/31/2025 | Nine Months Ended 3/31/2024 | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $1,668 M | $1,814 M | $5,116 M | $5,190 M | | **Gross Profit** | $744 M | $766 M | $2,289 M | $2,164 M | | **Net Earnings (Losses) Attributable to Clorox** | $186 M | $(51) M | $478 M | $64 M | | **Diluted Net Earnings (Losses) Per Share** | $1.50 | $(0.41) | $3.84 | $0.52 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Summary (Unaudited) | Metric | As of 3/31/2025 | As of 6/30/2024 | | :--- | :--- | :--- | | **Total Current Assets** | $1,590 M | $1,622 M | | **Total Assets** | $5,512 M | $5,751 M | | **Total Current Liabilities** | $2,155 M | $1,574 M | | **Total Liabilities** | $5,322 M | $5,259 M | | **Total Stockholders' Equity** | $190 M | $492 M | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Cash Flow Summary (Unaudited) | Metric | Nine Months Ended 3/31/2025 | Nine Months Ended 3/31/2024 | | :--- | :--- | :--- | | **Net Cash Provided by Operations** | $687 M | $355 M | | **Net Cash Used for Investing Activities** | $(18) M | $(94) M | | **Net Cash Used for Financing Activities** | $(645) M | $(382) M | | **Net Increase (Decrease) in Cash** | $22 M | $(147) M | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Details accounting policies, significant events like the Better Health VMS divestiture, cyberattack recoveries, the Glad venture agreement, and segment performance - The company completed the divestiture of its Better Health VMS business on September 10, 2024, recording an after-tax loss of **$118 million** for the nine months ended March 31, 2025[25](index=25&type=chunk) - The agreement with P&G for the Glad business will terminate in January 2026, requiring Clorox to purchase P&G's 20% interest for cash at fair value, estimated at **$476 million** as of March 31, 2025[22](index=22&type=chunk)[23](index=23&type=chunk) - In relation to the August 2023 cyberattack, the company recorded insurance recoveries of **$35 million** and **$70 million** in the three and nine months ended March 31, 2025, respectively, with no significant future costs expected[29](index=29&type=chunk) Segment Net Sales and Adjusted EBIT (Nine Months Ended March 31) | Segment | Net Sales 2025 | Net Sales 2024 | Segment Adjusted EBIT 2025 | Segment Adjusted EBIT 2024 | | :--- | :--- | :--- | :--- | :--- | | **Health and Wellness** | $1,956 M | $1,833 M | $597 M | $517 M | | **Household** | $1,362 M | $1,353 M | $169 M | $162 M | | **Lifestyle** | $964 M | $947 M | $196 M | $192 M | | **International** | $796 M | $891 M | $87 M | $104 M | | **Corporate and Other** | $38 M | $166 M | $(193) M | $(238) M | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 financial performance, noting an 8% net sales decrease, improved gross margin, significant diluted EPS recovery, and strong liquidity [Consolidated Results of Operations](index=26&type=section&id=CONSOLIDATED%20RESULTS) Q3 FY2025 net sales decreased 8% due to divestitures, while gross margin expanded to 44.6%, leading to a diluted EPS of $1.50 Net Sales and Organic Sales Growth (Q3 FY2025 vs Q3 FY2024) | Metric | Total Company | Health and Wellness | Household | Lifestyle | International | | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Sales Growth (GAAP)** | (8)% | 3% | (11)% | (3)% | (15)% | | **Organic Sales Growth (Non-GAAP)** | (2)% | 3% | (11)% | (3)% | 2% | - Gross margin for Q3 FY2025 increased by **240 basis points to 44.6%**, primarily driven by cost savings and benefits from divestitures[96](index=96&type=chunk) - Q3 FY2025 diluted EPS was **$1.50**, a **466% increase** from a loss of ($0.41) in the prior-year quarter, primarily due to the absence of the Argentina divestiture loss and higher gross margin[106](index=106&type=chunk) [Segment Results Analysis](index=29&type=section&id=SEGMENT%20RESULTS) Analyzes Q3 segment performance, noting growth in Health and Wellness, declines in Household and International due to divestitures and lower consumption - **Health and Wellness:** Q3 volume, net sales, and segment adjusted EBIT increased by **7%**, **3%**, and **10%** respectively, driven by strong consumption in Cleaning[110](index=110&type=chunk) - **Household:** Q3 volume, net sales, and segment adjusted EBIT decreased by **9%**, **11%**, and **18%** respectively, primarily due to lower consumption in Grilling[112](index=112&type=chunk) - **International:** Q3 net sales decreased by **15%**, primarily due to the divestiture of the Argentina business[116](index=116&type=chunk) [Financial Position and Liquidity](index=31&type=section&id=FINANCIAL%20POSITION%20AND%20LIQUIDITY) The company maintained strong financial position and liquidity, with net cash from operations significantly increasing and a new $1.2 billion credit agreement Cash Flow Summary (Nine Months Ended) | Activity | 3/31/2025 | 3/31/2024 | | :--- | :--- | :--- | | **Net Cash Provided by Operations** | $687 M | $355 M | | **Net Cash Used for Investing** | $(18) M | $(94) M | | **Net Cash Used for Financing** | $(645) M | $(382) M | - On March 25, 2025, the company entered into a new **$1.2 billion** revolving credit agreement that matures in March 2030[132](index=132&type=chunk) - The company declared dividends of **$1.22 per share** in Q3 FY2025, totaling **$150 million** paid to stockholders[135](index=135&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports that there have been no material changes to its market risk exposures since the end of the previous fiscal year on June 30, 2024 - There have been no material changes to the Company's market risk since June 30, 2024[157](index=157&type=chunk) [Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were effective as of March 31, 2025, with a new ERP system implementation potentially affecting future internal controls - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[158](index=158&type=chunk) - The company is implementing a new enterprise resource planning (ERP) system during fiscal years 2025 and 2026, which could result in changes to its internal control over financial reporting[160](index=160&type=chunk) [PART II - OTHER INFORMATION](index=41&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Risk Factors](index=41&type=section&id=Item%201.A.%20Risk%20Factors) This section directs readers to the risk factors detailed in the company's Annual Report on Form 10-K for the fiscal year ended June 30, 2024 - The report refers to the risk factors disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2024, and the 'Cautionary Statement' in the current report[163](index=163&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any common stock during Q3 FY2025, with approximately $993 million remaining available for repurchase under its 2018 program Share Repurchases (Q3 FY2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2025 | — | $ — | | February 2025 | — | $ — | | March 2025 | — | $ — | | **Total** | **—** | **$ —** | - As of March 31, 2025, **$993 million** remained available for share repurchases under the publicly announced 2018 Open-Market Program[167](index=167&type=chunk) [Other Information](index=41&type=section&id=Item%205.%20Other%20Information) The company reports that none of its directors or officers adopted or terminated a Rule 10b5-1 trading plan or any non-Rule 10b5-1 trading arrangement during Q3 FY2025 - No directors or officers adopted or terminated any Rule 10b5-1 trading plans during the three months ended March 31, 2025[168](index=168&type=chunk) [Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section provides an index of the exhibits filed with the Form 10-Q, including the new Credit Agreement and CEO/CFO certifications - Key exhibits filed with this report include the Credit Agreement dated March 25, 2025, and certifications by the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[171](index=171&type=chunk)

Delivers lower-than-expected sales amid a challenging and volatile consumer and geopolitical environment while maintaining overall market shares and delivering its 10th consecutive quarter of gross margin expansion OAKLAND, Calif., May 5, 2025 — The Clorox Company (NYSE: CLX) today reported results for the third quarter of fiscal year 2025, which ended Mar. 31, 2025. PRESS RELEASE Clorox Reports Q3 Fiscal Year 2025 Results, Updates Outlook Key Segment Results Third-Quarter Fiscal Year 2025 Summary Following ...

Core Insights - The Clorox Company reported lower-than-expected sales for the third quarter of fiscal year 2025, with net sales decreasing by 8% to $1.67 billion, primarily due to divestitures and a challenging consumer environment [1][5][3] - Despite the sales decline, the company maintained overall market shares and achieved its tenth consecutive quarter of gross margin expansion, increasing gross margin by 240 basis points to 44.6% [1][5][6] - The company expects continued organic sales growth and strong earnings growth for the fiscal year, despite macroeconomic uncertainties impacting shopping behaviors [3][8] Financial Performance - Net sales decreased 8% to $1.67 billion, with organic sales down 2% due to unfavorable price mix and flat organic volume [5][6] - Diluted EPS increased 466% to $1.50 from a loss of $0.41 in the prior year, influenced by the lapping of losses from divestitures and cyberattack insurance recoveries [5][6] - Adjusted EPS decreased 15% to $1.45 from $1.71, primarily due to lower net sales, partially offset by higher gross margin [5][6] Strategic and Operational Highlights - The company maintained market shares despite complex geopolitical and macroeconomic conditions and continued to invest in product innovations [6][3] - Clorox achieved zero-waste-to-landfill status across all global manufacturing plants where infrastructure allows [6] - The company introduced several new products, including Burt's Bees Boosted Tinted Balm and Clorox Scentiva ToiletWand Refills, to meet consumer needs [6] Fiscal Year 2025 Outlook - The company updated its fiscal year 2025 outlook, expecting net sales to be down 1% to flat, with organic sales growth projected at 4% to 5% [9][13] - Diluted EPS is expected to range between $5.73 and $6.13, reflecting a year-over-year increase of 155% to 172% [10][13] - The outlook includes anticipated benefits from incremental shipments related to the company's ERP transition, expected to contribute 2% to 3% to organic sales growth [9][13]

Core Insights - The article emphasizes the investment philosophy focused on small cap companies, highlighting the importance of identifying mispriced securities through understanding financial drivers and utilizing DCF model valuation [1]. Group 1 - The investment strategy is not confined to traditional categories such as value, dividend, or growth investing, but rather considers all prospects of a stock to assess risk-to-reward [1].

Core Insights - Clorox Company (CLX) is expected to report a decline in both revenue and earnings for the third quarter of fiscal 2025, with revenues estimated at $1.71 billion, a decrease of 5.5% year-over-year, and earnings per share projected at $1.57, down 8.2% from the previous year [1][2]. Financial Performance - The Zacks Consensus Estimate indicates a trailing four-quarter earnings surprise of 23.8% on average, with an 11.5% surprise in the most recent quarter [2]. - Adjusted operating profit is predicted to increase by 8.3% year-over-year to $281.7 million, with an expected operating margin expansion of 180 basis points to 16.1% [6]. Strategic Initiatives - Clorox is leveraging its IGNITE strategy to enhance innovation and profitability across its business segments, particularly in the International segment, which is expected to see organic sales growth of 9% year-over-year [3][4]. - The company is streamlining its operating model to improve efficiency and productivity, which has positively impacted cash flow and adaptability to changing consumer behaviors [5]. Market Conditions - Clorox faces a challenging macroeconomic environment, with consumers experiencing financial pressures and increased advertising expenses impacting profitability [7]. - The company is also contending with stiff competition in the consumer goods sector, which is affecting its market share and operational performance [7]. Valuation and Stock Performance - CLX stock is currently trading at a forward 12-month price-to-earnings ratio of 19.45x, below the industry average of 21.08x, and has underperformed with a 14.8% decline year-to-date compared to the industry's 1.2% decline [9][10].