Clorox Company Conference Call Summary Company Overview - **Company**: The Clorox Company (CLX) - **Date**: June 04, 2025 - **Speakers**: Linda Rendell (CEO), Luke Belay (CFO) Key Industry Insights - **Consumer Health**: The company anticipated increased pressure on consumers, expecting category growth to slow from the typical 2-2.5% to about 0-1% [4][5] - **Value-Seeking Behavior**: Consumers are increasingly seeking value, opting for larger sizes for better price per use or smaller sizes to reduce spending [6][10] - **Tariff Impact**: Changes in consumer spending patterns were noted due to macroeconomic factors, particularly tariffs affecting grocery purchases [8][9] - **Category Performance**: Categories ended flat, with a significant change in trajectory observed from the beginning to the end of the quarter, indicating volatility in consumer behavior [11][12] Financial Performance - **Earnings Outlook**: Despite top-line slowdowns, the company expects to deliver strong earnings performance due to improved margin capabilities [12][14] - **Long-Term Confidence**: The company remains confident in the essential nature of its categories and the potential for growth once consumer behavior stabilizes [13][14] Retailer Dynamics - **Inventory Management**: Retailers are actively managing inventory levels, leading to some destocking, but this is viewed as a temporary adjustment rather than a structural change [15][18] Strategic Initiatives - **IGNITE Strategy**: The strategy aims to accelerate growth and transform the company for future resilience, with a focus on margin transformation and digital infrastructure [21][22] - **Digital Transformation**: A significant digital transformation is underway, enhancing data infrastructure and operational efficiency [22][23] ERP Transition - **Upcoming ERP Implementation**: A new ERP system is set to go live in July, marking a significant upgrade after over 25 years [34][35] - **Risk Management**: The company has developed a robust plan to manage risks associated with the ERP transition, including building excess inventory to mitigate out-of-stock risks [38][49] Category-Specific Insights - **Litter Category**: Despite competitive pressures and a cyberattack impact, the litter category remains a strong growth area [61][64] - **Trash Bags**: The trash bag category is experiencing elevated promotional activity, but the company is well-equipped to manage through this cycle [66][69] - **Hidden Valley Ranch**: The salad dressing category has seen a decline, but the brand continues to grow share and has a strong innovation pipeline [73][75] - **Cleaning Business**: The cleaning segment, particularly liquid bleach, has shown consistent growth and strong margins, with plans for continued investment [78][80] Margin and Cash Flow Management - **Margin Goals**: The company aims to grow EBIT margin by 25-50 basis points annually, with a strong pipeline for margin expansion [86][88] - **Free Cash Flow**: The goal is to generate free cash flow between 11-13% of sales, with expectations to meet this target despite ERP transition impacts [91][92] Capital Allocation Strategy - **Priorities**: The company focuses on investing in core business, supporting dividends, managing debt leverage, and returning excess cash to shareholders [99][100] Future Outlook - **Growth and Innovation**: The company aims to maximize value creation from its transformation efforts, focusing on faster growth and superior consumer experiences [106][108] - **Long-Term Goals**: By 2030, the company aspires to report stronger growth, improved margins, and consistent returns for shareholders [109][110]

Group 1 - The article promotes Ian's Insider Corner, which offers access to initiation reports for new stocks, an active chat room, and weekly updates [1] - Ian Bezek, a former hedge fund analyst, specializes in high-quality compounders and growth stocks at reasonable prices, with a focus on Latin American markets [2] Group 2 - The article includes a disclosure stating that the author has no positions in any mentioned companies and has no plans to initiate any positions within the next 72 hours [3] - Seeking Alpha emphasizes that past performance does not guarantee future results and that the views expressed may not reflect the opinions of the platform as a whole [4]

Core Insights - Burt's Bees and Mike's Hot Honey have launched a limited-edition moisturizing lip balm that combines Burt's Bees' beeswax formula with Mike's Hot Honey's signature sweet and spicy flavor, available starting May 29, 2025 [1][2][4] Company Overview - Burt's Bees is recognized as the 1 dermatologist-recommended natural skin care brand, known for its original Beeswax Lip Balm and commitment to using natural ingredients without harmful additives [6] - Mike's Hot Honey is the original and leading brand of hot honey in the U.S., known for its unique sweet-then-heat flavor that enhances various dishes and has gained popularity since its inception in 2010 [7] Product Details - The Burt's Bees x Mike's Hot Honey lip balm will be sold exclusively on Burtsbees.com and Burt's Bees TikTok Shop for $3.99, while supplies last [4] - This collaboration aims to provide a playful and flavor-forward experience for consumers, aligning with the summer season [3][4]

Core Insights - Clorox Company (CLX) is enhancing its portfolio structure to improve sales and profitability through brand investment and innovation [1] - The introduction of Kingsford x Miller Lite Beercoal aims to drive additional sales and align with Clorox's IGNITE strategy [4] Product Innovation - Kingsford x Miller Lite Beercoal is a new product that combines charcoal briquets with real Miller Lite beer, designed to enhance grilling flavor [2][3] - The product is easy to use, grill-ready in approximately fifteen minutes, and available for a limited time at retailers [3] Strategic Initiatives - Clorox's IGNITE strategy focuses on operational efficiency and innovation, building on the foundation of the 2020 Strategy [5][6] - The long-term financial targets under the IGNITE strategy include net sales growth of 2-4%, EBIT margin expansion of 25-50 basis points, and free cash flow generation of 11-13% of sales [6] Financial Performance - Clorox's recent fiscal results indicate challenges due to economic uncertainty, shifts in consumer behavior, and cost inflation, leading to lower sales and missed earnings estimates [7] - The company's shares have declined by 10.2%, contrasting with a 1.4% rise in the industry [8]

Core Viewpoint - The Clorox Company has elected Gina Boswell to its board of directors, effective May 19, 2025, enhancing its leadership with her extensive experience in the consumer goods sector [1][2][3]. Group 1: Board Appointment - Gina Boswell, 62, is the CEO of Bath & Body Works and has held senior roles at Unilever, Avon, Ford, and Estée Lauder, bringing a wealth of operational and leadership experience [2]. - Boswell's background in retail, marketing, brand building, business development, operations, and innovation will provide valuable insights into Clorox's business strategy and growth [2][3]. - With Boswell's appointment, the total number of Clorox board members will increase to 12 [3]. Group 2: Company Overview - The Clorox Company, headquartered in Oakland, California, has been a leader in integrating ESG into its business reporting since 1913 [4]. - Clorox was ranked No. 1 on Barron's 100 Most Sustainable Companies list for the third consecutive year in 2025 [4].

Core Viewpoint - The article discusses the lack of positions held by Parkev Tatevosian, CFA, and The Motley Fool in the mentioned stocks, emphasizing their disclosure policy and potential compensation for promoting services [1] Group 1 - Parkev Tatevosian has no position in any of the stocks mentioned [1] - The Motley Fool also has no position in any of the stocks mentioned [1] - The disclosure policy of The Motley Fool is highlighted, indicating transparency in their operations [1]

Core Insights - Clorox Professional has entered into a new contract with Vizient, enhancing its product solutions for healthcare and commercial cleaning sectors [1][2] - The contract, effective from May 1, 2025, aims to provide a wide range of cleaning and disinfecting solutions, including products from well-known brands like Clorox Healthcare and Pine-Sol [2] Company Overview - Clorox Professional, a unit of The Clorox Company, has a 110-year legacy in supporting healthcare professionals with cleaning and disinfecting solutions [2] - The company offers recognized brands for commercial cleaning, catering to various facilities such as offices, schools, and hospitals [3] - The Clorox Company, headquartered in Oakland, California, has been a pioneer in integrating ESG into its business reporting and was ranked No. 1 on Barron's 100 Most Sustainable Companies list in 2025 [4]

Core Viewpoint - Clorox's recent quarterly report revealed disappointing sales and earnings, leading to a decline in stock price and a revised outlook for the fiscal year [2][4][6]. Financial Performance - Clorox reported non-GAAP adjusted earnings per share of $1.45 and sales of $1.67 billion for fiscal Q3, missing analyst estimates by $0.11 per share and falling short of sales expectations by $50 million [4]. - Year-over-year sales decreased by 7.7%, while earnings per share dropped by 15%. Despite an increase in gross margin from 42.2% to 44.6%, it was insufficient to counterbalance the sales decline [5]. Future Guidance - The company now anticipates sales for the fiscal year to be down 1% to flat, a revision from previous guidance of down 1% to up 2%. Organic sales growth is projected to be between 4% and 5%, down from earlier expectations of 4% to 7% [6]. - Clorox maintained its adjusted earnings per share guidance for the year at $6.95 to $7.35, with a likelihood of performance aligning closer to the lower end of this range [7].

Core Insights - Clorox Company reported third-quarter fiscal 2025 results with both revenue and earnings missing Zacks Consensus Estimates and declining year-over-year [1][4] - The results reflect ongoing economic uncertainty affecting consumer shopping habits and overall sales, yet the company maintained strong fundamentals by holding market share and expanding profit margins [2][3] Financial Performance - Adjusted earnings were $1.45 per share, missing the estimate of $1.57 and down 15% from $1.71 in the same quarter last year [4] - Net sales were $1.67 billion, an 8% decline from the previous year, missing the consensus of $1.71 billion; organic sales decreased by 2% due to an unfavorable price mix [4][5] Segment Analysis - Health and Wellness segment sales increased by 3% year-over-year to $630 million, driven by a 7-point increase in volume, despite a 4-point unfavorable price mix [6] - Household segment sales fell 11% to $469 million, primarily due to a 9-point decrease in volume and a 2-point unfavorable price mix [7] - Lifestyle segment sales decreased by 3% to $306 million, attributed to a 2-point decrease in volume and a 1% unfavorable price mix [8] - International segment sales declined 15% to $263 million; however, organic sales grew by 2% when excluding the impact of Argentina and foreign exchange rates [9] Margin and Cost Management - Gross margin expanded by 240 basis points year-over-year to 44.6%, marking the 10th consecutive quarter of margin expansion, driven by cost-saving initiatives and divestitures [5][3] - The company is investing $560-$580 million over five years to upgrade technology and operations, with 70% of this amount expected to be recorded as incremental operating costs [12] Guidance and Outlook - Clorox updated its FY25 outlook, expecting net sales to decline 1% to flat, reflecting weaker consumer demand and impacts from divestitures [14] - Organic sales are anticipated to increase by 4-5%, down from a previous estimate of 4-7%, with a negative impact from the ERP system transition [14][17] - The gross margin is expected to expand by 150 basis points, driven by margin management efforts, despite cost inflation and higher promotional expenses [15] Earnings Projections - The company projects a GAAP EPS of $5.73-$6.13, indicating a year-over-year increase of 155-172% [16] - Adjusted EPS is expected to be $6.95-$7.35, reflecting a 13-19% year-over-year increase [17]

Core Viewpoint - Clorox Co's fiscal third-quarter earnings and revenue missed estimates, leading to a 2.5% decline in share price to $134.96, with profits of $1.45 per share falling below the $1.71 per share from the same quarter last year [1] Group 1: Earnings and Revenue Performance - Clorox reported fiscal third-quarter earnings of $1.45 per share, which is a decrease from $1.71 per share in the same quarter a year ago [1] - The company's revenue also missed market expectations, contributing to the decline in share price [1] Group 2: Analyst Reactions - Following the earnings report, several analysts reduced their price targets for Clorox, with Morgan Stanley lowering its target from $165 to $150 [1] - Despite the price target reductions, there have been no downgrades, as 16 out of 17 brokerages maintain a "hold" or worse rating on the stock [1] Group 3: Stock Performance and Options Activity - Clorox shares traded as low as $129.74 earlier in the day, with the $130 level providing some support against further losses, similar to trends observed in June and July [2] - Since the beginning of the year, Clorox's stock has decreased by 17% [2] - The options market has seen a significant increase in activity, with Clorox stock experiencing quadruple the typical options volume, particularly with the May 125 put being the most popular [2]