Clorox(US:CLX)2026-02-03 21:45Financial Performance - For the fiscal quarter ended December 31, 2025, net sales decreased by 1% to $1,673 million compared to $1,686 million in the same period last year[83]. - For the six months ended December 31, 2025, net sales decreased by 10% to $3,102 million compared to $3,448 million in the prior year[83]. - Gross profit for the three months ended December 31, 2025, was $722 million, a decrease of 2% from $738 million in the prior year[88]. - Gross margin decreased by 60 basis points to 43.2% for the three months ended December 31, 2025, primarily due to higher manufacturing and logistics costs[88]. - Selling and administrative expenses for the three months ended December 31, 2025, decreased by 6% to $262 million, representing 15.7% of net sales[90]. - Diluted net earnings per share decreased by $0.25, or 16%, in the current three-month period, primarily due to lapping insurance recoveries and lower gross profit[96]. - Adjusted EBIT for the three months ended December 31, 2025, was $256 million, compared to $258 million for the same period in 2024[129]. Segment Performance - Net sales for the Health and Wellness segment increased by 2% to $643 million in the current three-month period, while segment adjusted EBIT decreased by 2% to $190 million[99]. - Net sales for the Household segment decreased by 6% to $419 million in the current three-month period, with segment adjusted EBIT declining by 54% to $22 million[101]. - Net sales for the Lifestyle segment decreased by 5% to $321 million in the current three-month period, while segment adjusted EBIT increased by 3% to $72 million[103]. - International segment net sales increased by 7% to $294 million in the current three-month period, with segment adjusted EBIT rising by 48% to $31 million[105]. - Organic sales growth for the total company was reported at (1)% for the three months ended December 31, 2025[85]. - Organic sales growth for the total Company was a decrease of 1% for the three months ended December 31, 2025, with Health and Wellness segment showing a growth of 2%[134]. Investments and Acquisitions - The total incremental investment for the ongoing ERP transformation is expected to be approximately $580 million, aimed at enhancing operational efficiency[78]. - The Company plans to acquire GOJO Industries and purchase Procter & Gamble's interest in the Glad business, reflecting a strategy to evolve its portfolio[79]. - The pending acquisition of GOJO Industries announced on January 22, 2026, is planned to be funded primarily through debt financing[116]. - The Company will purchase P&G's 20% interest in the Glad bags and wraps business for $476 million, expected to be paid in cash during Q3 of fiscal year 2026[119]. - The planned acquisition of GOJO is expected to impact the company's net sales, earnings performance, and profitability, although specific financial metrics were not disclosed[135]. Cash Flow and Liquidity - Net cash provided by operations was $404 million in the current six-month period, compared to $401 million in the prior period[112]. - Net cash used for investing activities was $77 million in the current six-month period, compared to net cash proceeds of $35 million in the prior period[114]. - The Company expects to have sufficient funds to support its short- and long-term liquidity and operating needs, anticipating positive cash flows from operations in the future[117]. - As of December 31, 2025, the Company maintained a $1.2 billion revolving credit agreement with no borrowings under it, ensuring availability for general corporate purposes[120]. - The Company repurchased 1,109 thousand shares of common stock for $125 million and 2,157 thousand shares for $254 million during the three and six months ended December 31, 2025, respectively[122]. - Dividends per share declared were $1.24 for the three months ended December 31, 2025, compared to $1.22 for the same period in 2024, with total dividends paid of $151 million[123]. Taxation - The effective tax rate on earnings for the six months ended December 31, 2025, was 24.5%, compared to 28.2% in the prior year[93]. - The effective tax rate on earnings was 25.1% for the current three-month period, compared to 18.1% in the prior three-month period[95]. Operational Challenges and Risks - The Company anticipates continued volatility in the operating environment, impacting consumer spending and overall business performance[80]. - The company faces risks related to the integration of the GOJO business and the realization of anticipated benefits and synergies from the acquisition[135]. - The company is navigating unfavorable economic conditions, including inflation and supply chain disruptions, which could affect sales growth targets[136]. - The company is managing risks associated with reliance on third-party service providers, which could impact cost savings and operational efficiency[136]. - The company is addressing challenges in the labor market, including increasing labor costs and sustained labor shortages, which may impact operations[136]. - The company acknowledges the potential impact of climate change and sustainability issues on sales and operating costs[136]. - The company is focused on maintaining its business reputation and the reputation of its brands amid regulatory and compliance challenges[136]. - The company has not reported any material changes to its market risk since June 30, 2025, indicating stability in this area[140]. - The company's ability to pay dividends or repurchase stock in the future may be influenced by its indebtedness and credit rating[139].