Clorox(US:CLX)2025-11-03 21:12Financial Performance - Net sales decreased 19% to $1.43 billion, primarily due to lower shipments related to the ERP transition[5] - Organic sales decreased 17%, driven mainly by lower volume related to its ERP transition[5] - Gross margin decreased 410 basis points to 41.7% from 45.8% in the year-ago quarter[5] - Diluted EPS decreased 19% to $0.65 from $0.80 in the year-ago quarter[5] - Year-to-date net cash provided by operations was $93 million, representing a 58% decrease compared to $221 million in the year-ago period[5] - Adjusted diluted earnings per share (EPS) for the three months ended September 30, 2025, was $0.85, a 54% decrease from the adjusted EPS of $1.86 in the same period last year[33] - Net earnings attributable to Clorox for Q3 2025 were $80 million, compared to $99 million in Q3 2024, representing a 19% decrease[37] - Basic net earnings per share decreased to $0.65 from $0.80, a decline of 18.75% year-over-year[37] Future Outlook - The company expects net sales to be down 6% to 10% for fiscal year 2026, including a negative impact of about 7.5 points related to the ERP transition[16] - Adjusted EPS is expected to be between $5.95 and $6.30, reflecting a decrease between 23% and 18%[16] - The company anticipates diluted EPS for fiscal year 2026 to range from $5.60 to $5.95, with adjusted EPS expected to range from $5.95 to $6.30[34] ERP Transition and Digital Transformation - The company successfully completed the first two phases of its U.S. ERP implementation and is on track to finish the final phase this winter[8] - The company is transitioning to a cloud-based ERP system as part of its digital transformation strategy, which is expected to enhance operational efficiencies[28] - The company expects to incur approximately $60 million ($46 million after tax) in operating expenses related to digital capabilities and productivity enhancements investment in fiscal year 2026[34] - The total incremental transformational investment for digital capabilities is expected to be approximately $580 million over five years, with 75% of this amount representing incremental operating costs[28][29] Sales Performance by Segment - The company faced a 19% decrease in net sales in the Health and Wellness segment and a 23% decrease in the Lifestyle segment for the three months ended September 30, 2025[32] - Net sales for the three months ended September 30, 2025, were $1,429 million, a decrease of 19% compared to $1,762 million for the same period in 2024[37] - The Health and Wellness segment reported net sales of $565 million, down 19% from $698 million year-over-year[38] - The Household segment also saw a 19% decline in net sales, from $447 million to $362 million[38] Innovation and Recognition - New products introduced include Clorox Screen+ Sanitizing Wipes and Glad ForceFlex Apple Cinnamon scented trash bags[8] - The company received Kantar's Outstanding Innovation Award and was recognized among America's Greatest Companies by Newsweek[8] Financial Position - Total current assets increased to $1,695 million from $1,576 million year-over-year, primarily driven by higher receivables[39] - Total liabilities rose to $5,390 million from $5,273 million, indicating an increase in financial obligations[39] Risks and Challenges - The company has identified risks related to supply chain disruptions and geopolitical tensions that could affect future performance[25] - The impact of divestitures on organic sales growth was calculated as a 2% increase for the total company[32]