Clorox(CLX) - 2025 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements 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 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 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 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 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] - 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][23] - 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] 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) 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 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] - 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] Segment Results Analysis 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] - Household: Q3 volume, net sales, and segment adjusted EBIT decreased by 9%, 11%, and 18% respectively, primarily due to lower consumption in Grilling[112] - International: Q3 net sales decreased by 15%, primarily due to the divestiture of the Argentina business[116] Financial Position and Liquidity 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] - The company declared dividends of $1.22 per share in Q3 FY2025, totaling $150 million paid to stockholders[135] Quantitative and Qualitative Disclosures About Market Risk 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] Controls and Procedures 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] - 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] PART II - OTHER INFORMATION Risk Factors 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] Unregistered Sales of Equity Securities and Use of Proceeds 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] Other Information 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] Exhibits 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]