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Washington, D.C. 20549

(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, 2025.

OR

☐			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

(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)

(Address of principal executive offices) (Zip code)

(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 20, 2025, there were 121,980,379 shares outstanding of the registrant’s common stock ($1.00 par value).

Condensed Consolidated Statements of Earnings (Unaudited)

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(Dollars in millions)

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in millions)

			Three months ended
			9/30/2025						9/30/2024
Operating activities:
Net earnings			$	82					$	103
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation and amortization			56						54
Stock-based compensation			10						13
Deferred income taxes			84						(1)
Loss on divestiture			—						112
Other			(12)						(5)
Changes in:
Receivables, net			118						84
Inventories, net			(55)						(6)
Prepaid expenses and other current assets			(41)						(38)
Accounts payable and accrued liabilities			(40)						(137)
Operating lease right-of-use assets and liabilities, net			(2)						—
Income taxes payable / prepaid			(107)						42
Net cash provided by operations			93						221
Investing activities:
Capital expenditures			(36)						(39)
Proceeds from divestiture, net of cash divested			—						128
Other			2						—
Net cash (used for) provided by investing activities			(34)						89
Financing activities:
Notes and loans payable, net			214						—
Treasury stock purchased			(129)						(107)
Cash dividends paid to Clorox stockholders			(151)						(151)
Issuance of common stock for employee stock plans and other			7						21
Net cash used for financing activities			(59)						(237)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(1)						2
Net increase (decrease) in cash, cash equivalents and restricted cash			(1)						75
Cash, cash equivalents and restricted cash:
Beginning of period			170						207
End of period			$	169					$	282

Notes to Condensed Consolidated Financial Statements (Unaudited)

The unaudited interim condensed consolidated financial statements for the three months ended September 30, 2025 and 2024, 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, 2025, which includes a complete set of footnote disclosures, including the Company’s significant accounting policies.

In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (ASU 2025-06)”, which modernizes the accounting for internal-use software to current development practices, clarifies when to begin capitalizing costs and enhances disclosure requirements. The ASU is effective for annual reporting periods beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” These amendments primarily require enhanced quantitative and qualitative disclosures in the notes to the financial statements for specific expense categories underlying the expenses presented on the income statement. These amendments are to be applied prospectively to financial statements issued after the effective date or retrospectively to any or all periods presented in the financial statements. Early adoption is permitted. The standard will be effective for annual periods beginning after December 15, 2026, and subsequent interim periods. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s disclosures.

In December 2023, the FASB issued 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 on an annual and interim basis. 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 are effective for the annual period beginning July 1, 2024 and interim periods beginning July 1, 2025. The Company adopted the annual requirement for fiscal year 2025 and interim requirements in the first quarter of fiscal year 2026.

The Company has an agreement with The Procter & Gamble Company (P&G) for the Company’s Glad bags and wraps business. In connection with this agreement, P&G provides research and development (R&D) support to the Glad business. As of both September 30, 2025 and June 30, 2025, P&G had a 20% interest in the venture. The Company pays a royalty to P&G for its interest in the profits, losses and cash flows, as contractually defined, of the Glad business, which is included in Cost of products sold.

The term of this agreement was to expire in January 2026, unless the parties agreed, on or prior to January 31, 2025, to further extend the term of the agreement for another seven years or agree to take some other relevant action. Since the parties jointly did not opt to further extend the term of the agreement for another seven years or agree to take some other relevant action on or before January 31, 2025, the agreement will terminate in accordance with its terms in January 2026.

Upon termination of the agreement, the Company is required to purchase P&G’s 20% interest for cash at fair value as established by predetermined valuation procedures. As of September 30, 2025 and June 30, 2025, the estimated fair value of P&G’s interest in the venture was $476, of which $488 and $501, respectively, was recognized and reflected in Accounts payable and accrued liabilities in the Company’s condensed consolidated balance sheet.

The difference between the estimated fair value and the amount recognized, and any future changes in the fair value of P&G’s interest, is charged to Cost of products sold in accordance with the effective interest method over the remaining life of the agreement. Following termination, the Glad business will retain the exclusive core intellectual property licenses contributed by P&G on a royalty-free basis for the licensed products marketed.

On September 10, 2024, the Company completed the divestiture of its Better Health VMS business. As a result of the transaction, the Company recorded an after tax loss of $118 during the first quarter of fiscal year 2025. Net sales of the Better Health VMS business for the three months ended September 30, 2024 was $38. Refer to notes to the condensed consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended June 30, 2025 for further information related to the Better Health VMS business divestiture.

Inventories, net consisted of the following as of:

			9/30/2025						6/30/2025
Finished goods			$	500					$	447
Raw materials and packaging			149						141
Work in process			18						15
LIFO allowances			(90)						(80)
Total inventories, net			$	577					$	523

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, 2025 and June 30, 2025, the amount due to suppliers participating in the SCF program and included in Accounts payable and accrued liabilities was $179 and $236, respectively.

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.

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 $25 and $36 as of September 30, 2025 and June 30, 2025, respectively.

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 $57 and $67 as of September 30, 2025 and June 30, 2025, respectively.

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, 2025 and June 30, 2025.

The Company designates its commodity forward, futures and options contracts for forecasted purchases of raw materials, foreign currency forward contracts for forecasted purchases of inventory and interest rate contracts for forecasted interest payments as cash flow hedges.

The effects of derivative instruments designated as hedging instruments on Other comprehensive (loss) income and Net earnings were as follows:

The estimated amount of the existing net gain (loss) in Accumulated other comprehensive net (loss) income as of September 30, 2025 that is expected to be reclassified into Net earnings within the next twelve months is $14.

The Company utilizes a variety of financial institutions as counterparties for over-the-counter derivative instruments. The Company enters into agreements governing the use of over-the-counter derivative instruments and sets internal limits on the aggregate over-the-counter derivative instrument positions held with each counterparty. Certain terms of these agreements require the Company or the counterparty to post collateral when the fair value of the derivative instruments exceeds contractually defined counterparty liability position limits. Of the over-the-counter derivative instruments in liability positions, $0 and $2 contained such terms as of September 30, 2025 and June 30, 2025, respectively. As of both September 30, 2025 and June 30, 2025, neither the Company nor any counterparty was required to post any collateral as no counterparty liability position limits were exceeded.

Certain terms of the agreements governing the Company’s over-the-counter derivative instruments require the Company’s credit ratings, as assigned by Standard & Poor’s and Moody’s to the Company and its counterparties, to remain at a level equal to or better than the minimum of an investment grade credit rating. If the Company’s credit ratings were to fall below investment grade, the counterparties to the derivative instruments could request full collateralization on derivative instruments in net liability positions. As of both September 30, 2025 and June 30, 2025, the Company and each of its counterparties had been assigned investment grade ratings by both Standard & Poor’s and Moody’s.

Certain of the Company’s exchange traded futures and options contracts used for commodity price risk management include requirements for the Company to post collateral in the form of a cash margin account held by the Company’s broker for trades conducted on that exchange. As of both September 30, 2025 and June 30, 2025, the Company maintained cash margin balances related to exchange traded futures and options contracts of $1 and $2, respectively, which are classified as Prepaid expenses and other current assets on the condensed consolidated balance sheets.

The Company holds interests in mutual funds and cash equivalents as part of trust assets related to its nonqualified deferred compensation plans. The participants in the nonqualified deferred compensation plans, who are the Company’s current and former employees, may select among certain mutual funds in which their compensation deferrals are invested in accordance with the terms of the plans and within the confines of the trusts, which hold the marketable securities.

The trusts represent variable interest entities for which the Company is considered the primary beneficiary, and therefore trust assets are consolidated and included in Other assets in the condensed consolidated balance sheets. The gains and losses on the trust assets are recorded in Other (income) expense, net in the condensed consolidated statements of earnings and comprehensive income. The interests in mutual funds are measured at fair value using quoted market prices. The Company has designated these marketable securities as trading investments.

Financial assets and liabilities measured at fair value on a recurring basis in the condensed consolidated balance sheets are required to be classified and disclosed in one of the following three categories of the fair value hierarchy:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions.

As of both September 30, 2025 and June 30, 2025, the Company’s financial assets and liabilities that were measured at fair value on a recurring basis during the period included derivative financial instruments, which were classified as either Level 1 or Level 2, and trust assets to fund the Company’s nonqualified deferred compensation plans, which were classified as Level 1.

All of the Company’s derivative instruments qualify for hedge accounting. The following table provides information about the balance sheet classification and the fair values of the Company’s derivative instruments:

The following table provides information about the balance sheet classification and the fair values of the Company’s other assets and liabilities for which disclosure of fair value is required:

															9/30/2025												6/30/2025
			Balance sheet classification						Fair value hierarchy level						Carrying Amount						Estimated Fair Value						Carrying Amount						Estimated Fair Value
Assets
Interest-bearing investments, including money market funds			Cash and cash equivalents (1)						1						$	51					$	51					$	54					$	54
Time deposits			Cash and cash equivalents (1)						2						14						14						10						10
Trust assets for nonqualified deferred compensation plans			Other assets						1						184						184						169						169
															$	249					$	249					$	233					$	233
Liabilities
Notes and loans payable			Notes and loans payable (2)						2						$	218					$	218					$	4					$	4
Long-term debt			Long-term debt (3)						2						2,485						2,452						2,484						2,431
															$	2,703					$	2,670					$	2,488					$	2,435

(1)Cash and cash equivalents are composed of time deposits and other interest-bearing investments, including money market funds with original maturity dates of 90 days or less. Cash and cash equivalents are recorded at cost, which approximates fair value.

(2)Notes and loans payable are composed of outstanding U.S. commercial paper balances and/or amounts drawn on the Company’s credit agreements, all of which are recorded at cost, which approximates fair value. The weighted average effective interest rate on U.S. commercial paper balances as of September 30, 2025 and June 30, 2025 was 4.31% and 4.61%, respectively.

(3)Long-term debt is recorded at cost. The fair value of Long-term debt was determined using secondary market prices quoted by corporate bond dealers, and is classified as Level 2.

In determining its quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter. The effective tax rate on earnings was 23.4% and 41.8% for the three months ended September 30, 2025 and 2024, respectively. The higher tax rate in the prior period as compared to the current period was primarily driven by the nondeductibility of the loss on the divestiture of the Better Health VMS business in the prior period.

The One Big Beautiful Bill Act (OBBBA) was enacted in the United States on July 4, 2025. This legislation includes provisions that allow accelerated tax deductions for acquisitions of qualified property and for research expenses. It also modifies the U.S. taxation of certain earnings associated with international business. The Company assessed the provisions of the OBBBA and determined the corporate tax changes did not have a material impact on the effective tax rate in future periods. The OBBBA’s provisions for accelerated tax deductions will change the timing of cash tax payments in the current fiscal year and future periods.

The following is the reconciliation of the weighted average number of shares outstanding (in thousands) used to calculate basic net EPS to those used to calculate diluted net EPS:

			Three months ended
			9/30/2025						9/30/2024
Basic			122,629						123,795
Dilutive effect of stock options and other			389						882
Diluted			123,018						124,677
Antidilutive stock options and other			3,355						2,937

Basic net earnings per share and Diluted net earnings per share are calculated on Net earnings attributable to Clorox.

The major components of Other (income) expense, net were:

(1)On August 14, 2023, the Company experienced a cyberattack which resulted in wide-scale disruptions to the Company’s business operations. In the three months ended September 30, 2024, the Company recorded insurance recoveries of $(10), of which $(1) was recorded in Costs of products sold and the remainder was recorded in Other (income) expense, net. Business interruption and other insurance recoveries that do not correspond directly to previously incurred expenses are recognized in Other (income) expense, net. Refer to notes to the condensed consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended June 30, 2025 for further information related to the August 2023 Cyberattack.

NOTE 10. STOCKHOLDERS’ EQUITY

Changes in the components of Stockholders’ equity were as follows for the periods indicated:

Changes in Accumulated other comprehensive net (loss) income attributable to Clorox by component were as follows for the periods indicated:

			Three months ended September 30
			Foreign currency translation adjustments						Net unrealized gains (losses) on derivatives						Pension and postretirement benefit adjustments						Accumulated other comprehensive net (loss) income
Balance as of June 30, 2024			$	(239)					$	85					$	(1)					$	(155)
Other comprehensive (loss) income before reclassifications			14						(4)						—						10
Amounts reclassified from Accumulated other comprehensive net (loss) income			—						(2)						—						(2)
Income tax benefit (expense)			—						—						—						—
Net current period other comprehensive (loss) income			14						(6)						—						8
Balance as of September 30, 2024			$	(225)					$	79					$	(1)					$	(147)
Balance as of June 30, 2025			$	(233)					$	77					$	(1)					$	(157)
Other comprehensive (loss) income before reclassifications			(4)						—						—						(4)
Amounts reclassified from Accumulated other comprehensive net (loss) income			—						(4)						—						(4)
Income tax benefit (expense)			—						—						—						—
Net current period other comprehensive (loss) income			(4)						(4)						—						(8)
Balance as of September 30, 2025			$	(237)					$	73					$	(1)					$	(165)

The Company is involved in certain environmental matters, including response actions at various locations. The Company recorded liabilities totaling $27 as of both September 30, 2025 and June 30, 2025 for its share of aggregate future remediation costs related to these matters.

One matter, which accounted for $12 of the recorded liability as of both September 30, 2025 and June 30, 2025, relates to environmental costs associated with one of the Company’s former operations at a site located in Alameda County, California. In November 2016, at the request of regulators and with the assistance of environmental consultants, the Company submitted a Feasibility Study that evaluated various options for managing groundwater at the site and included estimates of the related costs. Following further discussions with the regulators in 2017, the Company recorded an undiscounted liability for costs estimated to be incurred over a 30-year period, based on one of the options in the Feasibility Study related to groundwater. In September 2021, as a result of an additional study and further discussions with regulators, the Company submitted a Soil Vapor Intrusion Report to the regulators. In January 2023, the regulators issued a new order directing the Company and the current property owner to conduct a Remedial Investigation and then prepare a Feasibility Study to evaluate and remediate impacts to soil, groundwater, soil vapor and indoor air. While the Company believes its latest estimates of remediation costs (including any related to soil, groundwater, soil vapor and indoor air impacts) are reasonable, the ultimate remediation requirements are not yet finalized and the regulators could require the Company to implement remediation actions for a longer period or take additional actions, which could include estimated undiscounted costs in the aggregate of up to approximately $28 over an estimated 30-year period, or require the Company to take different actions and incur additional costs.

Another matter in Dickinson County, Michigan, at the site of one of the Company’s former operations for which the Company is jointly and severally liable, accounted for $10 of the recorded liability as of both September 30, 2025 and June 30, 2025. This amount reflects the Company’s agreement to be liable for 24.3% of the aggregate remediation and associated costs for this matter pursuant to a cost-sharing agreement with a third party. If the third party is unable to pay its share of the response and remediation obligations, the Company may be responsible for such obligations. With the assistance of environmental consultants, the Company maintains an undiscounted liability representing its current best estimate of its share of the capital expenditures, maintenance and other costs that may be incurred over an estimated 30-year remediation period. Although it is reasonably possible that the Company’s exposure may exceed the amount recorded for the Dickinson County matter, any amount of such additional exposures, or range of exposures, is not estimable at this time.

The Company’s estimated losses related to these matters are sensitive to a variety of uncertain factors, including the efficacy of any remediation efforts, changes in any remediation requirements and the future availability of alternative clean-up technologies. From time to time, the Company is subject to various legal proceedings, claims and other loss contingencies, including, without limitation, loss contingencies relating to contractual arrangements (including costs connected to the transition and unwinding of certain supply and manufacturing relationships), product liability, patents and trademarks, advertising, labor and employment, environmental, health and safety and other matters. With respect to these proceedings, claims and other loss contingencies, while considerable uncertainty exists, in the opinion of management at this time, the ultimate disposition of these matters, to the extent not previously provided for, will not have a material adverse effect, either individually or in the aggregate, on the Company’s condensed consolidated financial statements taken as a whole.

In conjunction with divestitures and other transactions, the Company has provided certain indemnifications (e.g., indemnifications for representations and warranties and retention of previously existing environmental, tax and employee liabilities) that have terms that vary in duration and in the potential amount of the total obligation and, in many circumstances, are not explicitly defined. The Company has not made, nor does it believe that it is probable that it will make, any material payments relating to its indemnifications and believes that any reasonably possible payments would not have a material adverse effect, either individually or in the aggregate, on the Company’s condensed consolidated financial statements taken as a whole.

The Company had not recorded any material liabilities on the aforementioned guarantees as of both September 30, 2025 and June 30, 2025.

The Company was a party to letters of credit of $20 as of September 30, 2025, primarily related to its insurance carriers, of which $0 had been drawn upon.

The Company operates through strategic business units (SBUs) which are organized into operating segments. Operating segments are then aggregated into four reportable segments: Health and Wellness, Household, Lifestyle and International. Operating segments not aggregated into a reportable segment are reflected in Corporate and Other.

Corporate and Other includes certain non-allocated administrative and other costs and various other non-operating income and expenses, as well as the results of the Better Health VMS business through the date of divestiture. Assets in Corporate and Other include cash and cash equivalents, prepaid expenses and other current assets, property and equipment, operating lease right-of-use assets, other long-term assets and deferred taxes. Corporate and Other includes the results and the Better Health VMS business, through the date of divestiture.

The principal measure of segment profitability used by the Chief Operating Decision Maker (CODM), identified as the Company's Chair and Chief Executive Officer, is segment adjusted earnings (losses) before interest and income taxes (segment adjusted EBIT). Segment adjusted EBIT is defined as earnings (losses) before income taxes excluding interest income, interest expense and other significant items that are nonrecurring or unusual (such as the pension settlement charge, incremental charges and insurance recoveries related to the August 2023 cyberattack, asset impairments, charges related to the digital capabilities and productivity enhancements investment, significant losses/(gains) related to acquisitions / divestitures and other nonrecurring or unusual items impacting comparability).

The CODM uses this measure to assess the operating results and performance of its segments, monitor actual results as compared to plan, perform analytical comparisons, identify strategies to improve performance and allocate resources to each segment as it removes the impact of the items that management believes do not directly reflect the performance of each segment’s underlying operations.

Net sales by segment and a reconciliation to the Company’s consolidated net sales for the three months ended September 30:

All intersegment sales are eliminated and are not included in the Company’s reportable segments’ net sales.

Segment adjusted EBIT, including the significant segment expense provided to the CODM, and a reconciliation to earnings before income taxes for the three months ended September 30:

(1)Other segment items includes selling, general and administrative expenses, advertising costs, research and development costs and other income and expenses. The charges defined in segment adjusted EBIT above are excluded from other segment items and Corporate and Other.

(2)Represents expenses related to the Company’s digital capabilities and productivity enhancements investment corresponding to Corporate and Other.

(1)Other segment items includes selling, general and administrative expenses, advertising costs, research and development costs and other income and expenses. The charges defined in segment adjusted EBIT above are excluded from other segment items and Corporate and Other.

(2)Represents the loss on divestiture of the Better Health VMS business corresponding to Corporate and Other. See Note 3 for additional details related to the divestiture.

(3)Represents insurance recoveries related to the cyberattack corresponding to Corporate and Other. See Note 9 for further discussion.

(4)Represents expenses related to the Company’s digital capabilities and productivity enhancements investment corresponding to Corporate and Other.

Certain other segment disclosures were as follows:

Net sales to the Company’s largest customer, Walmart Inc. and its affiliates, as a percentage of consolidated net sales, was 26% for both the three months ended September 30, 2025 and 2024, respectively.

The following table provides Net sales as a percentage of the Company’s consolidated net sales, disaggregated by operating segment, for the periods indicated:

			Net sales
			Three months ended
			9/30/2025						9/30/2024
Cleaning			35		%				34		%
Professional Products			5						6
Health and Wellness			40		%				40		%
Bags and Wraps			11						11
Cat Litter			9						9
Grilling			5						5
Household			25		%				25		%
Food			9						10
Water Filtration			5						5
Natural Personal Care			3						3
Lifestyle			17		%				18		%
International			18		%				15		%
Corporate and Other			—		%				2		%
Total Company			100		%				100		%

The Clorox Company
(Dollars in millions, except per share data)

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide a reader of The Clorox Company’s (the Company or Clorox) financial statements with a narrative from the perspective of management on the Company’s financial condition, results of operations, liquidity and certain other factors that may affect future results. The following discussion of the Company’s financial condition and results of operations should be read in conjunction with MD&A and the condensed consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025, which was filed with the SEC on August 8, 2025, and the unaudited condensed consolidated financial statements and related notes contained in this Quarterly Report on Form 10-Q (this Report). Unless otherwise noted, MD&A compares the three month period ended September 30, 2025 (the current period) to the three month period ended September 30, 2024 (the prior period), with percentage and basis point calculations based on rounded numbers, except for per share data and the effective tax rate.

The Clorox Company is a leading multinational manufacturer and marketer of consumer and professional products with approximately 7,600 employees worldwide. The Company has operations in approximately 25 countries or territories and sells 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. Clorox 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. The Company also markets industry-leading products and technologies for professional customers, including those sold under the CloroxPro™ and Clorox Healthcare® brand names.

The Company primarily markets its leading brands in midsized categories considered to be financially attractive. Most of the Company’s products compete with other nationally advertised brands within each category and with “private label” brands. About 80% of the Company’s sales are generated from brands that hold the No. 1 or No. 2 market share position in their categories.

The Company operates through strategic business units (SBUs) which are organized into operating segments. Operating segments are then aggregated into four reportable segments: Health and Wellness, Household, Lifestyle and International. Operating segments not aggregated into a reportable segment are reflected in Corporate and Other. The four reportable segments consist of the following:

•Health and Wellness consists of cleaning, disinfecting and professional products marketed and sold in the United States. Products within this segment include 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.

•Household consists of bags and wraps, cat litter and grilling products marketed and sold in the United States. Products within this segment include 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.

•Lifestyle consists of food, water filtration and natural personal care products marketed and sold in the United States. Products within this segment include 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.

•International consists of products sold outside the United States. Products within this segment include laundry additives and home care products, primarily marketed under the Clorox, Poett, Pine-Sol and Clorinda brands; bags and wraps under the Glad brand; cat litter, primarily marketed under the Ever Clean® and Fresh Step brands and water-filtration products marketed under the Brita brand.

For the fiscal quarter ended September 30, 2025, the Company continues to monitor macroeconomic conditions as a result of volatility in capital markets and developments in international trade policy. These evolving challenges contributed to a highly dynamic operating environment as the Company continued its efforts to drive growth, rebuild margins and drive its transformation.

While inflationary headwinds have moderated, consumers continue to feel pressure as continued macroeconomic uncertainty impacts spending and prices remain elevated. United States trade policies continue to evolve, including new or increased tariffs on product imports from certain countries. These, and any future new or additional tariffs, as well as any associated retaliatory measures taken by other countries, may impact the macroeconomic environment, consumers, suppliers and the Company’s business. Though the Company has and will continue to take action to mitigate such impacts, the Company anticipates that the operating environment will remain volatile and challenging.

The impact of continued volatility in macroeconomic conditions and geopolitical instability, including ongoing conflicts in the Middle East and Ukraine, the potential for escalation in hostilities between the U.S. and Iran, and rising tensions between China and Taiwan, actual and potential shifts in U.S. and foreign trade, economic and other policies, have increased global macroeconomic and political uncertainty regarding the duration and resolution of the conflicts, the potential escalation of tensions and potential economic and global trade and supply chain disruptions. These factors are difficult to predict considering the rapidly evolving landscape as the Company continues to expect a variable operating environment going forward.

The Company has not experienced significant disruptions in its operations during the first quarter of fiscal year 2026. However, the risks of future negative impacts due to transportation, logistical or supply constraints and higher commodity costs for certain raw materials remain present, and the Company continues to experience corresponding incremental costs and gross margin pressures.

The Company's transformation efforts continued into fiscal year 2026. The Company has begun transitioning core U.S. operations to the new enterprise resource planning system (ERP) as part of the continuing phased implementation of its technology transformation. As expected, the Company is in the stabilization phase and has experienced some sales timing impacts in the current and previous quarter. The Company remains on track to complete implementation this fiscal year. The total incremental transformational investment is expected to be approximately $580 million. The digital foundation provided by the Company’s new ERP supports its long-term financial goals through modernized capabilities that accelerate growth and deliver stronger efficiencies.

For the remainder of fiscal year 2026, the Company anticipates that the operating environment will remain volatile and challenging as consumers may face greater pressure as continued macroeconomic uncertainty impacts spending. The Company will continue to invest in its brands, capabilities and people to deliver consistent, profitable growth over time.

For further discussion, refer to Item 1.A, “Risk Factors” of this report and “Risk Factors” included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

(1)The divestiture impact is calculated as net sales from the Better Health VMS business after the sale date in the three month year-ago period.

(2)This represents the net impact on net sales growth / (decrease) from pricing actions, mix, trade promotion spending, mix from acquisitions and divestitures and other factors. In the three months ended September 30, 2025, the impact from divestiture mix was 1% for Total Company.

(3)Organic sales growth / (decrease) is defined as net sales growth / (decrease) excluding the effect of any acquisitions and divestitures and foreign exchange rate changes. See “Non-GAAP Financial Measures” below for reconciliation of organic sales growth / (decrease) to net sales growth / (decrease), the most directly comparable GAAP financial measure.

(4)Organic volume represents volume excluding the effect of any acquisitions and divestitures. In the three months ended September 30, 2025, the volume impact of divestitures was (3)% for Total Company.

(5)Total Company includes Corporate and Other. Corporate and Other includes the results of the Better Health VMS business through the date of divestiture.

Net sales and volume in the current period decreased by 19% and 18%, respectively, driven by lower shipments in the current period following the incremental shipments related to the ERP transition in the fourth quarter of fiscal year 2025.

Gross margin decreased by 410 basis points in the current period from 45.8% to 41.7%. The decrease was primarily driven by lower volume and higher manufacturing and logistics costs, partially offset by cost savings.

Selling and administrative expenses, as a percentage of net sales, increased by 350 basis points, while dollars were essentially flat in the current period versus the prior period. The increase in selling and administrative expenses as a percentage of net sales was primarily due to lower net sales in the current period related to the ERP transition.

Advertising costs, as a percentage of net sales, increased by 20 basis points in the current period versus the prior period, while dollars decreased. The increase in advertising costs as a percentage of net sales was primarily due to lower net sales in the current period related to the ERP transition. The Company continues to support its brands. The Company’s U.S. retail advertising investments as a percentage of net sales increased from 12% to 13% versus the prior period.

Research and development costs, as a percentage of net sales, increased by 20 basis points in the current period as compared to the prior period, while dollars were essentially flat. The increase in research and development costs as a percentage of net sales was primarily due to lower net sales in the current period related to the ERP transition. The Company continues to invest in product innovation and cost savings.

Loss on divestiture of $118 in the prior period reflected the loss on the divestiture of the Better Health VMS business. See notes to condensed consolidated financial statements for further information.

Other (income) expense, net was ($5) and ($22) in the current and prior periods, respectively. The variance between the current and prior periods was primarily due to lapping the benefit of insurance recoveries mainly related to the cyberattack in fiscal year 2024.

The effective tax rate on earnings was 23.4% and 41.8% for the current and prior periods, respectively.The higher tax rate in the prior period as compared to the current period was primarily driven by the nondeductibility of the loss on the divestiture of the Better Health VMS business in the prior period.

Diluted net earnings per share (EPS) decreased by $0.15, or 19%, in the current period, primarily due to lower net sales in the current period, partially offset by the loss relating to the divestiture of the Better Health VMS business in the prior period.

The following presents the results of the Company’s reportable segments and Corporate and Other. See notes to condensed consolidated financial statements for further discussion of the principal measure of segment profitability used by management, segment adjusted earnings (losses) before interest and income taxes (segment adjusted EBIT):

(1)See “Non-GAAP Financial Measures” below for reconciliation of segment adjusted EBIT to earnings before income taxes, the most directly comparable GAAP financial measure.