clx-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024.


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-07151

THE CLOROX COMPANY

(Exact name of registrant as specified in its charter)


Delaware			31-0595760
(State or other jurisdiction of			(I.R.S. Employer Identification No.)
incorporation or organization)

1221 Broadway, Oakland, California, 94612-1888

(Address of principal executive offices) (Zip code)

(510) 271-7000

(Registrant’s telephone number, including area code)


(Former name, former address and former fiscal year, if changed since last report)
___________________
Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock - $1.00 par value	CLX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of October 16, 2024, there were 123,781,318 shares outstanding of the registrant’s common stock ($1.00 par value).

TABLE OF CONTENTS


						Page
PART I - FINANCIAL INFORMATION						3
Item 1. Financial Statements						3
Condensed Consolidated Statements of Earnings and Comprehensive Income						3
Condensed Consolidated Balance Sheets						4
Condensed Consolidated Statements of Cash Flows						5
Notes to Condensed Consolidated Financial Statements						6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						18
Item 3. Quantitative and Qualitative Disclosures About Market Risk						30
Item 4. Controls and Procedures						30
PART II - OTHER INFORMATION						31
Item 1.A. Risk Factors						31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						31
Item 5. Other Information						31
Item 6. Exhibits						32

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

The Clorox Company

Condensed Consolidated Statements of Earnings and Comprehensive Income (Unaudited)

(Dollars in millions, except per share data)


	Three months ended
	9/30/2024		9/30/2023
Net sales	$	1,762	$	1,386
Cost of products sold		955		854
Gross profit		807		532
Selling and administrative expenses		281		276
Advertising costs		201		165
Research and development costs		31		29
Loss on divestiture		118		—


Interest expense		21		21
Other (income) expense, net		(22)		12
Earnings before income taxes		177		29
Income tax expense		74		4
Net earnings		103		25
Less: Net earnings attributable to noncontrolling interests		4		3
Net earnings attributable to Clorox	$	99	$	22
Net earnings per share attributable to Clorox
Basic net earnings per share	$	0.80	$	0.17
Diluted net earnings per share	$	0.80	$	0.17
Weighted average shares outstanding (in thousands)
Basic		123,795		123,973
Diluted		124,677		124,650

Comprehensive income	$	111	$	24
Less: Total comprehensive income attributable to noncontrolling interests		4		3
Total comprehensive income attributable to Clorox	$	107	$	21

See Notes to Condensed Consolidated Financial Statements (Unaudited)

The Clorox Company

Condensed Consolidated Balance Sheets

(Dollars in millions, except per share data)


	9/30/2024		6/30/2024
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	278	$	202
Receivables, net		595		695
Inventories, net		594		637
Prepaid expenses and other current assets		109		88
Total current assets		1,576		1,622
Property, plant and equipment, net of accumulated depreciation and amortization of $2,798 and $2,821, respectively		1,242		1,315
Operating lease right-of-use assets		341		360
Goodwill		1,233		1,228
Trademarks, net		503		538
Other intangible assets, net		78		143
Other assets		524		545
Total assets	$	5,497	$	5,751
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Notes and loans payable	$	4	$	4

Current operating lease liabilities		83		84
Accounts payable and accrued liabilities		1,472		1,486
Income taxes payable		20		—
Total current liabilities		1,579		1,574
Long-term debt		2,482		2,481
Long-term operating lease liabilities		315		334
Other liabilities		874		848
Deferred income taxes		23		22
Total liabilities		5,273		5,259
Commitments and contingencies
Stockholders’ equity
Preferred stock: $1.00 par value; 5,000,000 shares authorized; none issued or outstanding		—		—
Common stock: $1.00 par value; 750,000,000 shares authorized; 130,741,461 shares issued as of September 30, 2024 and June 30, 2024; and 123,673,684 and 124,201,807 shares outstanding as of September 30, 2024 and June 30, 2024, respectively		131		131
Additional paid-in capital		1,297		1,288
Retained earnings		31		250
Treasury stock, at cost: 7,067,777 and 6,539,654 shares as of September 30, 2024 and June 30, 2024, respectively		(1,252)		(1,186)
Accumulated other comprehensive net (loss) income		(147)		(155)
Total Clorox stockholders’ equity		60		328
Noncontrolling interests		164		164
Total stockholders’ equity		224		492
Total liabilities and stockholders’ equity	$	5,497	$	5,751

See Notes to Condensed Consolidated Financial Statements (Unaudited)

The Clorox Company

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in millions)


	Three months ended
	9/30/2024		9/30/2023
Operating activities:
Net earnings	$	103	$	25
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation and amortization		54		61
Stock-based compensation		13		13
Deferred income taxes		(1)		(5)
Loss on divestiture		112		—


Other		(5)		1
Changes in:
Receivables, net		84		108
Inventories, net		(6)		(14)
Prepaid expenses and other current assets		(38)		(22)
Accounts payable and accrued liabilities		(137)		(138)
Operating lease right-of-use assets and liabilities, net		—		(1)
Income taxes payable / prepaid		42		(8)
Net cash provided by operations		221		20
Investing activities:
Capital expenditures		(39)		(24)

Proceeds from divestiture, net of cash divested		128		—
Other		—		1
Net cash provided by (used for) investing activities		89		(23)
Financing activities:
Notes and loans payable, net		—		298

Treasury stock purchased		(107)		—
Cash dividends paid to Clorox stockholders		(151)		(149)

Issuance of common stock for employee stock plans and other		21		6
Net cash (used for) provided by financing activities		(237)		155
Effect of exchange rate changes on cash, cash equivalents and restricted cash		2		—
Net increase (decrease) in cash, cash equivalents and restricted cash		75		152
Cash, cash equivalents and restricted cash:
Beginning of period		207		368
End of period	$	282	$	520

See Notes to Condensed Consolidated Financial Statements (Unaudited)

The Clorox Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in millions, except per share data)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited interim condensed consolidated financial statements for the three months ended September 30, 2024 and 2023, in the opinion of management, reflect all normal and recurring adjustments considered necessary for a fair presentation of the consolidated results of operations, financial position and cash flows of The Clorox Company and its controlled subsidiaries (the Company or Clorox) for the periods presented. However, the financial results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period. Percentage and basis point calculations are based on rounded numbers, except for per share data and the effective tax rate.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been omitted or condensed pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). The information in this report should be read in conjunction with the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended June 30, 2024, which includes a complete set of footnote disclosures, including the Company’s significant accounting policies.

Recently Issued Accounting Standards

Recently Issued Accounting Standards Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” These amendments primarily require enhanced disclosures and disaggregation of income tax information by jurisdiction in the annual income tax reconciliation and quantitative and qualitative disclosures regarding income taxes paid. These amendments are to be applied prospectively, with the option to apply the standard retrospectively, for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s disclosures.

In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” These amendments primarily require enhanced disclosures about significant segment expenses regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss. The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods. These amendments are to be applied retrospectively for all periods presented in the financial statements and will be effective for the annual period beginning July 1, 2024, and interim periods beginning July 1, 2025. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s disclosures.

Recently Adopted Accounting Standards

In September 2022, the FASB issued ASU No. 2022-04, "Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” These amendments require disclosure of the key terms of outstanding supplier finance programs and a rollforward of the related obligations. These amendments are effective for fiscal years beginning after December 15, 2022, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. The Company adopted the standard as of July 1, 2023, except for the rollforward information which will be effective for the fiscal year ended June 30, 2025. The adoption relates to disclosures only and does not have an impact on the condensed consolidated financial statements, results of operations or cash flows.

NOTE 2. DIVESTITURES

Divestiture of Better Health Vitamins, Minerals and Supplements (VMS) Business

On September 10, 2024, the Company completed the divestiture of its Better Health VMS business in its entirety to an affiliate of Piping Rock Health Products, LLC. The divested business includes the Natural Vitality, NeoCell, Rainbow Light and RenewLife brands, relevant trademarks and licenses, and associated manufacturing and distribution facilities in Sunrise, Florida. The transaction reflects the Company’s commitment to continue evolving its portfolio to reduce volatility and accelerate sales growth, as well as structurally improve its margin, in service of driving more consistent and profitable growth over time. The transaction was executed pursuant to a purchase agreement. As a result of the transaction, the Company recorded an after tax loss of $118 during the three months ended September 30, 2024.

NOTE 2. DIVESTITURES (Continued)

The major classes of assets and liabilities of the Better Health VMS business divested as of September 10, 2024 were as follows:


	Divestiture
Working capital, net	$	41
Property, plant and equipment, net	59
Trademarks, net	37
Other intangible assets, net	58
Other assets (1)	45
Other liabilities	(1)
Net assets divested	$	239

(1) Includes net deferred tax assets of $45

The following table presents Net sales of the Better Health VMS business, which includes the financial results up to September 10, 2024, the date of sale:


	Three months ended
	9/30/2024		9/30/2023
Net sales	$	38	$	58

The divestiture of the Company’s Better Health VMS business does not meet the criteria to be reported as discontinued operations in the condensed consolidated financial statements as the Company’s decision to divest this business did not represent a strategic shift that will have a major effect on the Company’s operations and financial results.

Divestiture of Argentina Business

On March 20, 2024, the Company completed the divestiture of its Argentina business. Net sales of the Argentina business for the three months ended September 30, 2023 were $33. Refer to Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024 for further information related to the Argentina business divestiture.

NOTE 3. AUGUST 2023 CYBERATTACK

On Monday, August 14, 2023, the Company identified unauthorized activity on some of its Information Technology (IT) systems and immediately began taking steps to stop and remediate the activity. The Company took certain systems offline, engaged third-party cybersecurity experts and implemented its business continuity plans. However, the incident resulted in wide-scale disruptions to the Company’s business operations. The impacts of these system disruptions resulted in a negative impact on net sales and earnings. The Company experienced lessening operational impacts in the second quarter of fiscal year 2024 and has since returned to normalized operations.

The Company recorded insurance recoveries of $10 in the three months ended September 30, 2024 and incurred incremental expenses of approximately $24 in the three months ended September 30, 2023, as a result of the cyberattack. The following table summarizes the recognition of (insurance recoveries) and costs in the condensed consolidated statements of earnings and comprehensive income:


	Three months ended
	9/30/2024		9/30/2023
Costs of products sold	$	(1)	$	11
Selling and administrative expenses	—		13
Other (income) expense, net	(9)		—
Total	$	(10)	$	24

NOTE 3. AUGUST 2023 CYBERATTACK (Continued)

The costs incurred relate primarily to third-party consulting services, including IT recovery and forensic experts and other professional services incurred to investigate and remediate the attack, as well as incremental operating costs incurred from the resulting disruption to the Company’s business operations. The Company does not expect to incur significant costs related to the cyberattack in future periods. Insurance recoveries are classified consistent with the expenses to which they relate. Business interruption and other insurance recoveries that do not correspond directly to previously incurred expenses are recognized in Other (income) expense, net.

NOTE 4. SUPPLY CHAIN FINANCING PROGRAM

The Company has arranged for a global financial institution to offer a voluntary supply chain finance (SCF) program for the benefit of the Company’s suppliers. The Company’s current payment terms do not exceed 120 days in keeping with industry standards. The Company’s operating cash flows are directly impacted as a result of the extension of payment terms with suppliers. The SCF program enables suppliers to directly contract with the financial institution to receive payment from the financial institution prior to the payment terms between the Company and the supplier by selling the Company’s payables to the financial institution. Participation in the program is at the sole discretion of the supplier and the Company has no economic interest in a supplier's decision to enter into the agreement and has no direct financial relationship with the financial institution, as it relates to the SCF program. Once a supplier elects to participate in the SCF program and reaches an agreement with the financial institution, the supplier elects which individual Company invoices to sell to the financial institution. The terms of the Company’s payment obligations are not impacted by a supplier’s participation in the program and as such, the SCF program has no direct impact on the Company’s balance sheets or liquidity. The Company has not pledged any assets as security or provided guarantees under the SCF program.

All outstanding amounts related to suppliers participating in the SCF program are recorded within Accounts payable and accrued liabilities in the condensed consolidated balance sheets and the associated payments are included in operating activities within the condensed consolidated statements of cash flows. As of September 30, 2024 and June 30, 2024, the amount due to suppliers participating in the SCF program and included in Accounts payable and accrued liabilities was $219 and $205, respectively.

NOTE 5. RESTRUCTURING AND RELATED COSTS

Beginning in the first quarter of fiscal year 2023, the Company recognized costs related to a plan that involves streamlining its operating model to meet its objectives of driving growth and productivity. The implementation of this new model was completed in fiscal year 2024 and is expected to enhance the Company’s ability to respond more quickly to changing consumer behaviors and innovate faster.

The total restructuring and related implementation costs, net associated with the Company’s streamlined operating model plan are reflected in the condensed consolidated statements of earnings and comprehensive income. Restructuring and related implementation costs for the three months ended September 30, 2023 were $0.

The following table reconciles the accrual for the streamlined operating model’s restructuring and related implementation costs discussed above, which are recorded within Accounts payable and accrued liabilities in the condensed consolidated balance sheets:


	Employee-Related Costs		Other		Total
Accrual Balance as of June 30, 2024	$	8	$	11	$	19


Cash payments	(6)		(11)		(17)

Accrual Balance as of September 30, 2024	$	2	$	—	$	2

The Company may, from time to time, decide to pursue additional restructuring-related initiatives that involve costs in future periods.

NOTE 6. INVENTORIES, NET

Inventories, net consisted of the following as of:


	9/30/2024		6/30/2024
Finished goods	$	518	$	556
Raw materials and packaging	148		172
Work in process	12		9
LIFO allowances	(84)		(98)
Total inventories, net	$	594	$	639
Less: Non-current inventories, net (1)	—		2
Total current inventories, net	$	594	$	637

(1)Non-current inventories, net are recorded in Other assets.

NOTE 7. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Financial Risk Management and Derivative Instruments

The Company is exposed to certain commodity, foreign currency and interest rate risks related to its ongoing business operations and uses derivative instruments to mitigate its exposure to these risks.

Commodity Price Risk Management

The Company may use commodity futures, options and swap contracts to limit the impact of price volatility on a portion of its forecasted raw material requirements. These commodity derivatives may be exchange traded or over-the-counter contracts and generally have original contractual maturities of less than 2 years. Commodity purchase and options contracts are measured at fair value using market quotations obtained from the Chicago Board of Trade commodity futures exchange and commodity derivative dealers.

The notional amounts of outstanding commodity derivatives, which related primarily to exposures in soybean oil used for the food business and jet fuel used for the grilling business, were $33 and $38 as of September 30, 2024 and June 30, 2024, respectively.

Foreign Currency Risk Management

The Company may also enter into certain over-the-counter derivative contracts to manage a portion of the Company’s forecasted foreign currency exposure associated with the purchase of inventory. These foreign currency contracts generally have original contractual maturities of less than 2 years. The foreign exchange contracts are measured at fair value using information quoted by foreign exchange dealers.

The notional amounts of outstanding foreign currency forward contracts used by the Company’s subsidiaries to hedge forecasted purchases of inventory were $48 and $29 as of September 30, 2024 and June 30, 2024, respectively.

Interest Rate Risk Management

The Company may enter into over-the-counter interest rate contracts to fix a portion of the benchmark interest rate prior to the anticipated issuance of fixed rate debt. These interest rate contracts generally have original contractual maturities of less than 3 years. The interest rate contracts are measured at fair value using information quoted by bond dealers.

The Company held no interest rate contracts as of both September 30, 2024 a

SEC Form 10-Q filed by Clorox Company