CLOROX CO /DE/

The Clorox Company is a leading multinational manufacturer and marketer of consumer and professional products, operating in approximately 25 countries or territories and selling its products in approximately 100 markets primarily through mass retailers, grocery outlets, warehouse clubs, dollar stores, home hardware centers, drug, pet and military stores, third-party and owned e-commerce channels, and distributors. The Company's products compete with other nationally advertised brands and private label brands within each category, and competition comes from similar and alternative products produced by major multinational or national companies, some having greater financial resources, as well as from retailers including club stores, grocery stores, drugstores, dollar stores, mass merchandisers, e-commerce retailers and subscription services.

The Company markets some of the most trusted and recognized consumer brand names, including its namesake bleach, cleaning and disinfecting products; Pine-Sol and Tilex cleaners; Liquid-Plumr clog removers; Poett home care products; Glad bags and wraps; Fresh Step cat litter; Kingsford grilling products; Hidden Valley dressings, dips, seasonings and sauces; Brita water-filtration products; and Burt's Bees natural personal care products. Over 80% of the Company's sales are generated from brands that hold the No. 1 or No. 2 market share positions in their categories. The Company's largest customer, Walmart Stores, Inc. and its affiliates, accounted for 27% ¹ of consolidated net sales in fiscal year 2025, and the Company's five largest customers accounted for nearly half of consolidated net sales for each of fiscal years 2025, 2024 and 2023.

The Company generates revenue through the manufacture and marketing of consumer and professional products across four reportable segments: Health and Wellness, Household, Lifestyle, and International. The Company's products are sold primarily through mass retailers, grocery outlets, warehouse clubs, dollar stores, home hardware centers, drug, pet and military stores, third-party and owned e-commerce channels, and distributors, with some brands sold using a direct-to-consumer model. The Company's business is based primarily upon individual sales orders, and it typically does not enter into long-term contracts with its customers.

The Health and Wellness segment consists of cleaning, disinfecting and professional products marketed and sold in the United States, including home care cleaning and disinfecting products and laundry additives primarily under the Clorox, Clorox2, Pine-Sol, Scentiva, Tilex, Liquid-Plumr and Formula 409 brands; professional cleaning and disinfecting products under the CloroxPro and Clorox Healthcare brands; and professional food service products under the Hidden Valley brand. The Household segment consists of bags and wraps, cat litter and grilling products marketed and sold in the United States, including bags and wraps under the Glad brand; cat litter primarily under the Fresh Step and Scoop Away brands; and grilling products under the Kingsford brand. The Lifestyle segment consists of food, water-filtration and natural personal care products marketed and sold in the United States, including dressings, dips, seasonings and sauces primarily under the Hidden Valley brand; water-filtration products under the Brita brand; and natural personal care products under the Burt's Bees brand. The International segment consists of products sold outside the United States, including laundry additives and home care products primarily under the Clorox, Poett, Pine-Sol and Clorinda brands; bags and wraps under the Glad brand; cat litter primarily under the Ever Clean and Fresh Step brands; and water-filtration products under the Brita brand. Global product lines that accounted for 10% or more of consolidated net sales for fiscal year 2025 were cleaning products at 44% ², bags and wraps at 15% ³, food products at 12% ⁴, and cat litter products at 10% ⁵.

In September 2024, the Company completed the divestiture of its Better Health VMS business, which included the Natural Vitality, NeoCell, Rainbow Light and RenewLife brands, relevant trademarks and licenses, and associated manufacturing and distribution facilities in Sunrise, Florida. In February 2025, the Company announced that the Venture Agreement with The Procter & Gamble Company for the Company's Glad bags and wraps business will wind down by January 31, 2026, and the Company will acquire P&G's 20% ⁶ interest in the venture at its termination. The Company's transformation efforts continued, including the replacement of its enterprise resource planning system and transitioning to a cloud-based platform, with the total incremental transformational investment expected to be $570 to $580 million ⁷. During fiscal year 2025, the Company paid $602 million ⁸ in dividends to shareholders, and in July 2025, Clorox announced an increase of 2% ⁹ to its dividend. The Company repurchased 565,378 ¹⁰ shares during the fourth quarter of fiscal year 2025 under its Evergreen Program at an average price of $132.65 ¹¹ per share.

In fiscal year 2025, the Company delivered organic sales and earnings growth while net sales were essentially flat, and the Company grew overall market share while also expanding gross margin. Diluted net earnings per share increased 190% ¹² compared to the year-ago period, primarily due to the losses on the divestiture of the Argentina business in the prior period, higher volume in the current period, the pension settlement charge in the prior period and cost savings and the benefits of cyberattack insurance recoveries in the current period, partially offset by the loss relating to the divestiture of the Better Health VMS business, unfavorable mix and higher trade promotion spending all in the current period.

The Company's IGNITE strategy accelerates innovation in key areas of the business to drive growth, focusing on four strategic choices aimed at fueling long-term, profitable growth; innovating consumer experiences; reimagining how the company and its people work; and continuously evolving the product portfolio. The Company launched numerous innovations and new products in fiscal year 2025, including seven new Hidden Valley Ranch flavors, new scent options for Scentiva Bleach and Poett Multi-Purpose Cleaner, Burt's Bees Tinted Boosted Lip Balm and Rescue Lip Relief, Ever Clean Senior Cat Litter as well as Fresh Step Heavy Duty Litter, Kingsford Beercoal charcoal briquettes and the Brita Plus System. The Company continues to invest in transformative technologies and processes over a five-year period, including replacement of the Company's ERP system and transitioning to a cloud-based platform, with implementation in the U.S. beginning in fiscal year 2026.

The Company's transformation efforts continued throughout fiscal year 2025, and the Company fully leveraged its new streamlined operating model to deliver ongoing cost savings and further enhance the Company's ability to respond more quickly to changing consumer behaviors and innovate faster. The Company continues to invest in its long-standing cost savings program focused on reducing material and manufacturing costs, improving supply chain operations, and reducing overhead. The total incremental transformational investment is expected to be $570 to $580 million ¹³, and it is expected that these implementations will generate efficiencies and transform the Company's operations in the areas of supply chain, digital commerce, innovation, brand building and more over the long term.

The Company has a complex global network of suppliers and relies on a number of single-source suppliers for certain commodities and raw material inputs. Raw materials were generally available during fiscal year 2025 with minimal constraints, and while the Company does not expect supply constraints in fiscal year 2026, supply risk may result from external factors outside of the Company's control. The Company generally utilizes supply contracts to help ensure availability and a number of forward-purchase contracts to help reduce the volatility of the pricing of raw materials needed in its operations. The Company is in the process of implementing a new ERP system along with a suite of other digital technologies, with implementation in the U.S. beginning in fiscal year 2026.

The Company continues to invest in transformative technologies and processes over a five-year period, with the total incremental transformational investment expected to be $570 to $580 million ¹⁴. During fiscal year 2025, the Company paid $602 million ¹⁵ in dividends to shareholders, and in July 2025, Clorox announced an increase of 2% ¹⁶ to its dividend. As of June 30, 2025, the Company had approximately $2.5 billion ¹⁷ of debt. The Board of Directors authorized the Company to repurchase up to $2,000 million ¹⁸ in shares of common stock on the open market under the Open-Market Program, which has no expiration date, and as of the end of the fourth quarter of fiscal year 2025, approximately $993 million ¹⁹ remained available under this program.

In the back half of fiscal year 2025, heightened macroeconomic uncertainties drove changes in shopping behaviors, resulting in temporary category slowdowns and lower sales. The Company faces risks from unfavorable general economic conditions including inflation, tariffs, recession and economic slowdown, labor shortages, wage pressures, and supply chain disruptions, as well as geopolitical instability including the conflicts in Ukraine and the Middle East, the potential for escalation in hostilities between the U.S. and Iran, and rising tensions between China and Taiwan. The Company is highly exposed to changes in the prices of commodities and transportation used in manufacturing and shipping of its products, including as a result of new or increased tariffs, and supply pressures and market disruptions may continue into fiscal year 2026, including as a result of new or increasing U.S. or retaliatory tariffs.

The Company's ability to achieve its sales growth targets depends on its ability to successfully introduce new products, brands, line extensions, and product innovations, or enter or expand into adjacent product categories, sales channels, markets or countries, and a large percentage of the Company's revenues comes from mature markets that are subject to high levels of competition. During fiscal year 2025, 86% ²⁰ of the Company's net sales were attributable to U.S. markets, including U.S. territories. The Company faces intense competition from consumer product companies both in the U.S. and in its international markets, and some of the Company's competitors are larger than the Company and have greater financial resources.

The Company faces material risks from its dependence on key customers, as net sales to Walmart Stores, Inc. and its affiliates were 27% ²¹ of consolidated net sales in fiscal year 2025, and the Company's five largest customers accounted for nearly half of consolidated net sales. The Company is highly exposed to volatility and increases in the costs of raw materials, energy, transportation, labor and other necessary supplies, including resin, non-woven fabrics, sodium hypochlorite, corrugated cardboard, soybean oil, solvent, derivatives of amines, and other chemicals and agricultural commodities, which have negatively impacted and may continue to negatively impact net earnings and cash flow. The Company's obligation to purchase P&G's 20% interest in the Glad business upon termination of the venture agreement, with an estimated fair value of $476 million ²² as of June 30, 2025, creates financial risk as changes in underlying assumptions could significantly affect the estimated fair value and adversely affect net earnings and cash flow. The Company's August 2023 cyberattack materially affected its business strategy, results of operations, and financial condition, and the Company continues to face risks from cyber-threats, ransomware, and other security breaches. The Company had approximately $2.5 billion ²³ of debt as of June 30, 2025, which could require a substantial portion of cash flow for debt payments and limit financial flexibility.

Management's message emphasizes that the Company remained focused on making significant investments in its strong brands, strategic digital capabilities and streamlined operating model to drive long-term value creation, having fully recovered from the August 2023 cyberattack and delivered strong execution against its IGNITE goals during the prior fiscal year. Management states that in fiscal year 2025 the Company delivered organic sales and earnings growth while advancing its goals to build a stronger, more resilient company, and that diluted net earnings per share increased 190% ²⁴ compared to the year-ago period. The strategic priorities emphasized for the period ahead include continuing to invest in its brands and capabilities to build a stronger, more resilient company that delivers consistent, profitable growth over time, and the Company will continue to invest in transformative technologies and processes, including the replacement of its ERP system and transitioning to a cloud-based platform.