AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 22/10/2026
Moat38
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 2/4 · Exclusive retained Glad licenses provide a concrete contractual advantage, while brands and reported market-share gains support differentiation. Portfolio-wide barriers and the licenses’ economic contribution are not established.
durability · 2/4 · Glad retains its licenses after venture termination, supporting continuity. Brand positions require sustained advertising and innovation, and no protection horizon or long record of share gains is supplied.
customer dependency · 1/4 · Private-label alternatives, price-based competition and short customer performance obligations indicate fragile dependency. Brand preference is evidenced indirectly, but material switching friction is not.
erosion resilience · 1/4 · Fiscal 2025 share gains are favorable, but fiscal 2026 competitive pressure, missed expectations and margin contraction show limited recent resilience. Shipment timing prevents interpreting the full volume decline as competitive erosion.
Pricing power44
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Pricing actions supported fiscal 2024 margin recovery. Fiscal 2025 brought higher promotional spending, and fiscal 2026 price/mix/other was flat overall and negative in Household and Lifestyle. Outcomes are mixed; the bridge does not isolate pure pricing.
retention · 2/4 · Assessed indirectly from reported market-share gains and continuing sales. These support continuing consumer demand, while competitive pressure weakens confidence. ERP-related inventory movements obscure fiscal 2026 demand trends; no repeat-purchase rate is supplied.
margin resilience · 1/4 · Earlier pricing and cost-saving benefits did not prevent a 290-basis-point gross-margin decline in fiscal 2026 as manufacturing, logistics and lower sales outweighed savings. This is realized weakness, without establishing that pricing alone caused it.
contractual freedom · 2/4 · Implemented pricing actions and customer performance obligations of one year or less support some ability to reset commercial terms. Trade promotions and concentrated retail sales constrain practical freedom; unilateral repricing rights are not disclosed.
Predictability88
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 50.00
- Revenue growth volatility (pp)
- 3.68
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 2.50
Financial strength14
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 0.00
- netDebtEbitGrade
- 0.00
- interestCoverageGrade
- 55.31
- currentRatioGrade
- 0.00
- Debt / FCF (x)
- 12.51
- Net debt / operating income (x)
- 5.35
- Current ratio (x)
- 0.66
Capital allocation100
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 27.74
- 3-year average dilution (%)
- -0.49
- 3-year average SBC / revenue (%)
- 0.97
- cashConversionGrade
- 98.33
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Transformation spending of approximately $580 million matched the upper end of the prior range, and adjusted free cash flow of $881 million exceeded $856 million of dividends and repurchases. However, adjusted cash flow adds back the $476 million venture payment; unadjusted operating cash flow less capital expenditure was $405 million. Increased acquisition-related indebtedness and an actual downgrade temper the assessment, while acquisition returns remain unproven.
incentive alignment · 3/4 · Actual fiscal 2026 incentives reflected underperformance: the short-term company multiplier was 54%, and the completed performance-share cycle was certified at 69% of target. Net-share retention requirements reinforce alignment. These are actual outcomes and existing requirements, although complete ownership compliance and incentive-adjustment details are unavailable.
execution · 2/4 · Completed ERP implementation and spending within the prior range demonstrate delivery, alongside fiscal 2025 share gains. Operational transition challenges and acknowledged misses in fiscal 2026 offset those achievements. Execution is assessed from operating outcomes; prospective efficiencies are not counted as realized success.
governance · 2/4 · A lead independent director, independent committee chairs and an independent CEO search committee provide disclosed oversight mechanisms. The auditor found effective financial-reporting controls, subject to the GOJO exclusion. Combined chair and CEO roles and limited evidence of oversight effectiveness prevent a stronger assessment.
Evidence
While net sales were
1
Table of Contents
essentially flat in fiscal year 2025, the Company grew overall market share while also expanding gross margin.
Fiscal 2025 business overview: reported market-share growth · Filed 08/08/2025
The Glad business will continue to retain the exclusive core intellectual property licenses contributed by P&G on a royalty-free basis for the licensed products marketed.
Note 9: retained Glad intellectual property licenses · Filed 07/08/2026
The Company’s products generally compete on the basis of product performance, brand reputation and recognition, image and price.
Competition: product performance, brand recognition and price · Filed 08/08/2024
Products within this segment include laundry additives and home care products primarily marketed under the Clorox, Poett, Pine-Sol, Clorinda and Chux 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.
Segment disclosures: marketed brand portfolio · Filed 07/08/2026
The Company’s products compete with other nationally advertised brands and with “private label” brands within each category.
Competition: nationally advertised and private-label brands · Filed 08/08/2024
If a product gains consumer acceptance, it typically requires continued advertising and promotional support and ongoing product innovation to maintain its relative market position.
Competition: continuing advertising and innovation requirements · Filed 08/08/2024
ERP transition, the significant year-over-year impact of the related inventory drawdown, and lower-than-anticipated business performance in the second half amid slower category growth and increased competitive activity.
Compensation discussion: ERP challenges and weaker second-half performance · Filed 07/10/2026
Although we improved our performance on relevant measures in the second half of the year, we did not meet the goals we set for ourselves or the expectations we provided publicly.
Compensation discussion: missed internal goals and public expectations · Filed 07/10/2026
Reported (GAAP) Net Sales Growth / (Decrease)
Reported Volume
Acquisitions & Divestitures (1)
Foreign Exchange Impact
Price/Mix/ Other (2)
Organic Sales Growth / (Decrease) (Non-GAAP) (3)
Organic Volume (4)
Health and Wellness (4)
—
%
(1)
%
8
%
—
%
1
%
(8)
%
(8)
%
Household
(11)
(9)
—
—
(2)
(11)
(9)
Lifestyle
(14)
(12)
—
—
(2)
(14)
(12)
International
5
—
—
3
2
2
—
Total Company (4)(5)
(5)
%
(5)
%
3
%
—
%
—
%
(8)
%
(7)
%
(1)The divestiture impact is calculated as net sales from the Better Health VMS business after the sale date in the twelve month year-ago period.
Fiscal 2026 results: segment sales, volume and price/mix/other bridge · Filed 07/08/2026
% Change
2026
2025
2026 to
2025
Gross profit
$
2,844
$
3,213
(11)
%
Gross margin
42.3
%
45.2
%
Gross margin decreased by 290 basis points in fiscal year 2026 from 45.2% to 42.3%.
Fiscal 2026 results: gross-margin contraction · Filed 07/08/2026
and its affiliates, were 26%, 27% and 25% of consolidated net sales for each of the fiscal years ended June 30, 2026, 2025 and 2024, respectively, and occurred across all of the
68
NOTE 22.
Note 22: largest-customer sales concentration · Filed 07/08/2026
While net sales decreased mainly due to the disruptions caused by the cyberattack, the Company rebuilt gross margin primarily due to the benefit of pricing actions and continued positive returns from its trademark cost savings program.
Fiscal 2024 business overview: realized pricing and cost-saving benefits · Filed 08/08/2024
Diluted net earnings per share (EPS) increased 190% 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 Vitamins, Minerals and Supplements (VMS) business, unfavorable mix and higher trade promotion spending all in the current period.
Fiscal 2025 business overview: unfavorable mix and higher trade promotion spending · Filed 08/08/2025
(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.
Fiscal 2026 sales bridge: definition of price/mix/other · Filed 07/08/2026
Net sales and volume both decreased by 5% in fiscal year 2026, primarily due to lower shipments in the current period following the incremental shipments related to the ERP transition in the fourth quarter of fiscal year 2025, partially offset by the benefit of the GOJO acquisition.
Fiscal 2026 results: shipment timing and acquisition effects · Filed 07/08/2026
The decrease was primarily driven by lower net sales and higher manufacturing and logistics costs, partially offset by cost savings.
Fiscal 2026 results: causes of gross-margin contraction · Filed 07/08/2026
All performance obligations under the terms of contracts with customers have an original duration of one year or less.
Revenue accounting: customer performance-obligation duration · Filed 07/08/2026
The Company has trade promotion programs, which primarily include shelf price reductions, in-store merchandising and consumer coupons.
Revenue accounting: price reductions and promotional programs · Filed 07/08/2026
Adjusted free cash flow
2026
2025
Net cash provided by operations
$
612
$
981
Less: Capital expenditures
(207)
(220)
Add: Venture agreement termination payment
476
—
Adjusted free cash flow
$
881
$
761
Adjusted free cash flow as a percentage of net sales
13.1
%
10.7
%
Financing Activities
Net cash provided by financing activities was $1,668 in fiscal year 2026, compared with net cash used of $924 in fiscal year 2025.
Liquidity: operating cash flow, capital expenditure and adjusted free cash flow reconciliation · Filed 07/08/2026
During the fiscal year ended June 30, 2026, the Company repurchased 2,157 thousand shares of common stock at a cost of $254.
Financing: fiscal 2026 completed share repurchases · Filed 07/08/2026
Dividends per share and total dividends paid to Clorox stockholders were as follows during the fiscal years ended June 30:
2026
2025
Dividends per share declared
$
4.96
$
4.88
Dividends per share paid
4.96
4.88
Total dividends paid
602
602
On July 31, 2026, the Company declared a 1% increase in the quarterly dividend, from $1.24 to $1.25 per share, payable on August 28, 2026 to common stockholders of record as of the close of business on August 12, 2026.
Financing: dividends paid and subsequent dividend declaration · Filed 07/08/2026
•the effect of the Company’s indebtedness and credit ratings, including increased indebtedness resulting from the GOJO acquisition and Glad joint venture buyout and the recent downgrade of the Company's long-term credit rating by S&P Global Ratings, on its business operations and financial results and the Company’s ability to access capital markets and other funding sources, as well as the cost of capital to the Company;
Cautionary statement: increased acquisition-related debt and actual credit downgrade · Filed 07/08/2026
The total incremental transformational investment was approximately $580 million.
Strategic initiatives: completed transformation investment · Filed 07/08/2026
operations in fiscal year 2026. The Company completed its implementation in the third quarter of fiscal year 2026.
Strategic initiatives: fiscal 2026 implementation completion · Filed 07/08/2026
in fiscal year 2026. The total incremental transformational investment is expected to be $570 to $580 million.
Fiscal 2025 overview: expected transformation investment range · Filed 08/08/2025
The Company multiplier for our short-term incentive for fiscal year 2026 was 54%.The result reflected operational challenges early in the year associated with our U.S.
Compensation discussion: actual fiscal 2026 short-term incentive multiplier · Filed 07/10/2026
for the second and third years. In July 2026, the MDCC certified a final payout for the 2023 PSUs at 69% of target.
Compensation discussion: certified July 2026 performance-share payout · Filed 07/10/2026
of net shares acquired after tax withholding until the minimum ownership level is met.
Compensation discussion: executive net-share retention requirement · Filed 07/10/2026
Board leadership structure is comprised of a combined Board chair and CEO, a strong lead independent director, and
Board leadership: combined chair and CEO with lead independent director · Filed 07/10/2026
independent Board committee chairs.
Board leadership: independent committee chairs · Filed 07/10/2026
Following Linda Rendle’s decision to step down as CEO, the Board established an independent CEO Search Committee, which
Lead independent director letter: independent CEO search committee · Filed 07/10/2026
In our opinion, The Clorox Company (the Company) maintained, in all material respects, effective internal control over financial reporting as of June 30, 2026, based on the COSO criteria.
Independent auditor opinion: effective internal control over financial reporting · Filed 07/08/2026
As indicated in the accompanying management’s report on internal control over financial reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of GOJO Industries, Inc., which is included in the 2026 consolidated financial statements of the Company and constituted 30% of total assets as of June 30, 2026 and 3% and 1% of net sales and net earnings attributable to Clorox, respectively, for the year then ended.
Internal-control audit: acquired GOJO business excluded from management assessment · Filed 07/08/2026
Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of GOJO Industries, Inc.
Internal-control audit: acquired GOJO business excluded from auditor evaluation · Filed 07/08/2026
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.
Strategic initiatives: prospective transformation efficiencies · Filed 07/08/2026
The goodwill represents expected synergies from complementary expertise and business-to-business capabilities as well as both near-term and long-term strategic value to the Company.
Acquisition accounting: expected GOJO synergies · Filed 07/08/2026
