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 · 18/10/2026
Moat38
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 2/4 · Exclusive royalty-free Glad licenses establish a specific contractual advantage, while branded products and fiscal 2025 share gains support differentiation. Portfolio-wide economic protection and relative cost superiority remain unproven.
durability · 2/4 · Glad’s licenses continued after the ownership transaction, supporting persistence of that asset. License duration and economic importance are missing, and branded competition requires ongoing reinvestment.
customer dependency · 1/4 · Widely promoted alternatives, cheaper private labels and retailer bargaining leverage indicate fragile customer dependence. No meaningful switching friction is demonstrated.
erosion resilience · 1/4 · Fiscal 2025 share gains are favorable, but fiscal 2026 competitive pressure, missed expectations and margin contraction show limited resilience. ERP inventory effects prevent attributing the sales decline entirely to moat erosion.
Pricing power38
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 1/4 · Total-company price/mix/other reduced sales growth by one percentage point in both the March 2026 quarter and nine-month period. This supports weak net price realization, although the combined measure cannot isolate pricing from mix and promotions.
retention · 2/4 · Indirect operating evidence is mixed: fiscal 2025 share gains and essentially flat March-quarter volume suggest continuing demand, while fiscal 2026 sales and volume declined. Inventory drawdown materially confounds the latter; no retention rate is inferred.
margin resilience · 1/4 · Fiscal 2026 gross margin fell 290 basis points as lower sales and higher manufacturing and logistics costs outweighed savings. Prior-year expansion provides context but does not demonstrate sustained cost pass-through.
contractual freedom · 2/4 · Customer performance obligations last one year or less, allowing relatively frequent commercial resets. Trade promotion arrangements and retailer leverage constrain practical freedom; short obligations do not prove unilateral price-setting rights.
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)
- 3.15
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 2.52
Financial strength59
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
- 67.58
- netDebtEbitGrade
- 60.19
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 7.03
- Debt / FCF (x)
- 3.27
- Net debt / operating income (x)
- 1.99
- Current ratio (x)
- 0.84
Capital allocation98
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 (%)
- 23.81
- 3-year average dilution (%)
- 0.11
- 3-year average SBC / revenue (%)
- 1.06
- cashConversionGrade
- 100.00
Management50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · The completed Glad cash purchase preserved exclusive royalty-free licenses, but the VMS disposal realized a loss and financing commitments add obligations. These actual decisions support a mixed assessment; acquisition returns and comprehensive cash generation are missing, and supplier terms affect operating cash flow.
incentive alignment · 3/4 · Actual three-year performance-share awards paid at 69%, and fiscal 2026 grants use economic profit and stock-based incentives. The disclosed measurement holds management accountable for impairments. This demonstrates operating alignment, while ownership exposure and discretionary adjustments limit stronger conclusions.
execution · 1/4 · Reported ERP completion is a concrete milestone, but operational difficulties and management’s explicit admission of missed goals and public expectations outweigh that achievement. Sales and margin results corroborate execution weakness, with inventory timing limiting demand conclusions.
governance · 2/4 · An established independent CEO Search Committee and disclosed compensation committee authority provide concrete oversight structures. Their effectiveness across the business is not established, and the supplied passages do not support exceptional governance.
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.
Business: fiscal 2025 market-share and gross-margin results · 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.
Appendix A: continuing Glad intellectual property licenses · Filed 07/10/2026
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.
Appendix A: products and brands · Filed 07/10/2026
Most of the Company’s products compete with other widely advertised, promoted and merchandised brands within each product category.
Risk Factors: competition from advertised brands · Filed 08/08/2025
The Company also faces competition from retailers, including club stores, grocery stores, drugstores, dollar stores, mass merchandisers, e-commerce retailers and subscription services, which are increasingly offering “private label” brands that are typically sold at lower prices and compete with the Company’s products in certain categories.
Risk Factors: lower-priced retailer private labels · Filed 08/08/2025
This trend has resulted in the increased size and influence of large consolidated retailers, who have in the past changed, and may in the future change, their business strategies; demand lower pricing or higher trade discounts; impose other burdensome requirements on product suppliers; or move away from branded products to "private label."
Risk Factors: consolidated retailers and supplier terms · Filed 08/08/2025
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.
Proxy Summary: ERP challenges, inventory drawdown and competitive activity · 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.
Proxy Summary: fiscal 2026 performance missed goals and public expectations · Filed 07/10/2026
2026 2025 % Change 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%.
Appendix A, A-5: fiscal 2026 gross-profit and gross-margin results · Filed 07/10/2026
The decrease was primarily driven by lower net sales and higher manufacturing and logistics costs, partially offset by cost savings.
Appendix A: causes of fiscal 2026 margin decline · Filed 07/10/2026
The Clorox Company 2026 Proxy Statement > Appendix A A-5 Net salesand 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.
Appendix A, A-5: fiscal 2026 sales, volume and shipment timing · Filed 07/10/2026
23 RESULTS OF OPERATIONS CONSOLIDATED RESULTS Three months ended Nine months ended 3/31/2026 3/31/2025 % Change 3/31/2026 3/31/2025 % Change Net sales $ 1,670 $ 1,668 — % $ 4,772 $ 5,116 (7) % Three months ended March 31, 2026 Percentage change versus the year-ago period Reported (GAAP) Net Sales Growth / (Decrease) Reported Volume Acquisitions & Divestitures Foreign Exchange Impact Price/Mix/ Other (2) Organic Sales Growth / (Decrease) (Non-GAAP)(3) Organic Volume (4) Health and Wellness — % 1 % — % — % (1) % — % 1 % Household 3 3 — — — 3 3 Lifestyle (9) (6) — — (3) (9) (6) International 8 2 — 6 — 2 2 Total Company (5) — % — % — % 1 % (1) % (1) % — % Nine months ended March 31, 2026 Percentage change versus the year-ago period 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 (6) % (5) % — % — % (1) % (6) % (5) % Household (7) (6) — — (1) (7) (6) Lifestyle (13) (11) — — (2) (13) (11) International 5 1 — 3 1 2 1 Total Company (4)(5) (7) % (6) % (1) % — % (1) % (6) % (5) % (1)The divestiture impact is calculated as net sales from the Better Health VMS business after the sale date in the nine month year-ago period.
MD&A, page 23: quarterly and nine-month sales-growth components · Filed 30/04/2026
(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.
MD&A: definition of price/mix/other · Filed 30/04/2026
All performance obligations under the terms of contracts with customers have an original duration of one year or less.
Appendix A: customer-contract performance obligation duration · Filed 07/10/2026
These trade promotion programs include shelf price reductions, in-store merchandising, consumer coupons and other trade-related activities.
Appendix A: trade promotion programs and price reductions · Filed 07/10/2026
On January 31, 2026, the Company and P&G agreed that the Company would purchase P&G’s 20% interest, which was paid in cash for $476 on March 2, 2026 and is reflected in Operating activities within the consolidated statement of cash flows.
Appendix A: completed cash purchase of P&G’s Glad interest · Filed 07/10/2026
As a result of the transaction, the Company recorded an after tax loss of $118 during the first quarter of fiscal year 2025.
Note 3: realized loss on Better Health VMS divestiture · Filed 30/04/2026
Credit Arrangements As of March 31, 2026, the Company maintained $2,200 in revolving credit agreements comprised of a $1,000 364-day revolving credit agreement that matures in March 2027 (the 364-Day Revolving Credit Agreement) and a $1,200 revolving credit agreement that matures in March 2030 (collectively the Revolving Credit Agreements), and a $1,250 term credit agreement that matures in March 2027 (the Delayed Draw Term Credit Agreement).
Financial Position and Liquidity: revolving and term credit arrangements · Filed 30/04/2026
69% Performance share units completing their performance period at the end of fiscal year 2026 paid out at 69%.
Proxy Summary: actual fiscal 2024–2026 performance-share payout · Filed 07/10/2026
The performance-based award covering fiscal years 2024 through 2026 was measured based on economic profit growth during the three-year performance period, including one year exceeding our plan’s maximum performance level and two years slightly above our plan’s performance threshold.
Proxy Summary: three-year economic-profit performance · Filed 07/10/2026
•Economic profit (PSUs) •Variation in underlying stock price due to overall business results Three Years (PSUs) PSUs and RSUs (1) Proportion represents the actual base salary, target annual incentive award, and grant date fair market value of annual LTI awards granted in fiscal year 2026 (with PSUs measured at target).
Compensation Discussion and Analysis: actual fiscal 2026 long-term grants and measures · Filed 07/10/2026
It explicitly holds management accountable for asset impairments, aligning payouts with the impact of balance sheet-related decisions.
Compensation Discussion and Analysis: impairment accountability in incentive measurement · Filed 07/10/2026
Following Linda Rendle’s decision to step down as CEO, the Board established an independent CEO Search Committee, which I chair and which also includes the independent chairs of our three standing committees.
Lead Independent Director letter: independent CEO Search Committee · Filed 07/10/2026
The MDCC oversees our executive compensation program; approves the performance goals and strategic objectives for our CEO and evaluates results against those targets each year; determines and approves the compensation of our CEO (after consulting with the other independent members of the Board), our other NEOs, the non-NEO members of the Clorox Executive Committee (CEC), and any other executive officers covered by Section 16 of the Exchange Act; and approves the structure of our annual cash- and stock-based incentive plans.
Compensation Discussion and Analysis: compensation committee authority · Filed 07/10/2026
and the implementation of our U.S. Enterprise Resource Planning (ERP) system.
CEO letter: reported completion of U.S. ERP implementation · Filed 07/10/2026
The Company’s operating cash flows are directly impacted as a result of the extension of payment terms with suppliers.
Appendix A: supplier payment-term effects on operating cash flows · Filed 07/10/2026
