Item 1. Financial Statements

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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				Nine months ended
	3/31/2024		3/31/2023		3/31/2024		3/31/2023
Net sales	$	1,814	$	1,915	$	5,190	$	5,370
Cost of products sold		1,048		1,115		3,026		3,324
Gross profit		766		800		2,164		2,046
Selling and administrative expenses		301		311		899		854
Advertising costs		215		206		566		523
Research and development costs		32		35		93		100
Loss on divestiture		240		—		240		—
Pension settlement charge		—		—		171		—
Goodwill, trademark and other asset impairments		—		445		—		445
Interest expense		22		24		69		69
Other (income) expense, net		(2)		24		3		54
Earnings (losses) before income taxes		(42)		(245)		123		1
Income tax expense (benefit)		8		(36)		52		21
Net earnings (losses)		(50)		(209)		71		(20)
Less: Net earnings attributable to noncontrolling interests		1		2		7		7
Net earnings (losses) attributable to Clorox	$	(51)	$	(211)	$	64	$	(27)
Net earnings (losses) per share attributable to Clorox
Basic net earnings (losses) per share	$	(0.41)	$	(1.71)	$	0.52	$	(0.22)
Diluted net earnings (losses) per share	$	(0.41)	$	(1.71)	$	0.52	$	(0.22)
Weighted average shares outstanding (in thousands)
Basic		124,249		123,649		124,133		123,512
Diluted		124,249		123,649		124,721		123,512

Comprehensive income (loss)	$	154	$	(205)	$	409	$	(39)
Less: Total comprehensive income attributable to noncontrolling interests		1		2		7		7
Total comprehensive income (loss) attributable to Clorox	$	153	$	(207)	$	402	$	(46)

See Notes to Condensed Consolidated Financial Statements (Unaudited)

The Clorox Company

Condensed Consolidated Balance Sheets

(Dollars in millions, except per share data)


	3/31/2024		6/30/2023
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	219	$	367
Receivables, net		673		688
Inventories, net		674		696
Prepaid expenses and other current assets		95		77
Total current assets		1,661		1,828
Property, plant and equipment, net of accumulated depreciation and amortization of $2,800 and $2,705, respectively		1,292		1,345
Operating lease right-of-use assets		379		346
Goodwill		1,229		1,252
Trademarks, net		539		543
Other intangible assets, net		149		169
Other assets		556		462
Total assets	$	5,805	$	5,945
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Notes and loans payable	$	111	$	50

Current operating lease liabilities		82		87
Accounts payable and accrued liabilities		1,653		1,659
Income taxes payable		—		121
Total current liabilities		1,846		1,917
Long-term debt		2,480		2,477
Long-term operating lease liabilities		347		310
Other liabilities		853		825
Deferred income taxes		24		28
Total liabilities		5,550		5,557
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 March 31, 2024 and June 30, 2023; and 124,186,844 and 123,820,022 shares outstanding as of March 31, 2024 and June 30, 2023, respectively		131		131
Additional paid-in capital		1,270		1,245
Retained earnings		34		583
Treasury stock, at cost: 6,554,617 and 6,921,439 shares as of March 31, 2024 and June 30, 2023, respectively		(1,189)		(1,246)
Accumulated other comprehensive net (loss) income		(155)		(493)
Total Clorox stockholders’ equity		91		220
Noncontrolling interests		164		168
Total stockholders’ equity		255		388
Total liabilities and stockholders’ equity	$	5,805	$	5,945

See Notes to Condensed Consolidated Financial Statements (Unaudited)

The Clorox Company

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in millions)


	Nine months ended
	3/31/2024		3/31/2023
Operating activities:
Net earnings (losses)	$	71	$	(20)
Adjustments to reconcile net earnings (losses) to net cash provided by operations:
Depreciation and amortization		176		174
Stock-based compensation		55		60
Deferred income taxes		(126)		(122)
Loss on divestiture		238		—
Pension settlement charge		171		—
Goodwill, trademark and other asset impairments		—		445
Other		18		34
Changes in:
Receivables, net		(16)		(1)
Inventories, net		20		13
Prepaid expenses and other current assets		12		(15)
Accounts payable and accrued liabilities		(120)		78
Operating lease right-of-use assets and liabilities, net		—		2
Income taxes payable / prepaid		(144)		80
Net cash provided by operations		355		728
Investing activities:
Capital expenditures		(131)		(144)

Proceeds from divestiture, net of cash divested		17		—
Other		20		2
Net cash used for investing activities		(94)		(142)
Financing activities:
Notes and loans payable, net		61		(99)


Cash dividends paid to Clorox stockholders		(446)		(437)

Issuance of common stock for employee stock plans and other		3		10
Net cash used for financing activities		(382)		(526)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(26)		—
Net increase (decrease) in cash, cash equivalents and restricted cash		(147)		60
Cash, cash equivalents and restricted cash:
Beginning of period		368		186
End of period	$	221	$	246

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 and nine months ended March 31, 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.

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, 2023, 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 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. 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. 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. DIVESTITURE OF ARGENTINA BUSINESS

On March 20, 2024, the Company completed the sale of its Argentina business, which consisted of two production plants in Argentina as well as the rights to the Company’s brands in Argentina, Uruguay and Paraguay, to Apex Capital and an investment group. The transaction is in support of the Company’s IGNITE strategy and the commitment to evolve the Company’s portfolio to increase focus on its core business to drive more consistent, profitable growth.

The transaction was executed pursuant to a stock purchase agreement, which covered all the outstanding stock of the Clorox Argentina S.A. and Clorox Uruguay S.A. As a result of the transaction, the Company recorded a pre-tax loss of $240 during the three and nine months ended March 31, 2024 primarily due to the one-time noncash impact of the release of the cumulative translation adjustment losses of $223 related to these entities that had previously been recorded in Accumulated other comprehensive net (loss) income.

The major classes of assets and liabilities of the Argentina business divested as of March 20, 2024 were as follows:

NOTE 2. DIVESTITURE OF ARGENTINA BUSINESS (Continued)


	Divestiture
Working capital, net	$	31
Property, plant and equipment, net	18
Goodwill (1)	16
Other assets	3
Other liabilities	(3)
Net assets divested	$	65

(1)Goodwill corresponding to the International reportable segment.

The following table presents Net sales of the Argentina business which includes the financial results up to March 20, 2024, the date of sale:


	Three months ended				Nine months ended
	3/31/2024		3/31/2023		3/31/2024		3/31/2023
Net sales	$	43	$	46	$	123	$	127

The divestiture of the Company’s Argentina 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.

NOTE 3. CYBERATTACK

On Monday, August 14, 2023, the Company disclosed it had identified unauthorized activity on some of its Information Technology (IT) systems. That activity began on Friday, August 11, 2023 and after becoming aware of it that evening, the Company immediately began taking steps to stop and remediate the activity. The Company also took certain systems offline and engaged third-party cybersecurity experts to support its investigation and recovery efforts. The Company implemented its business continuity plans, including manual ordering and processing procedures at a reduced rate of operations in order to continue servicing its customers. However, the incident resulted in wide-scale disruptions to the Company’s business operations throughout the remainder of the quarter ended September 30, 2023.

The impacts of these system disruptions included order processing delays and significant product outages, resulting in a negative impact on net sales and earnings. The Company has since transitioned back to automated order processing. The Company experienced lessening operational impacts in the second quarter and has since returned to substantially normalized operations.

The Company also incurred incremental expenses of approximately $8 and $57 as a result of the cyberattack for the three and nine months ended March 31, 2024, respectively. The following table summarizes the recognition of costs in the condensed consolidated statements of earnings and comprehensive income:


	Three months ended		Nine months ended
	3/31/2024			3/31/2024
Costs of products sold	$	1		$	21
Selling and administrative expenses	7			36
Total	$	8		$	57

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 expects to incur lessening costs related to the cyberattack in future periods. The Company has not recognized any insurance proceeds in the three and nine months ended March 31, 2024 related to the cyberattack. The timing of recognizing insurance recoveries, if any, may differ from the timing of recognizing the associated expenses.

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 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, cash flows 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 March 31, 2024 and June 30, 2023, the amount due to suppliers participating in the SCF program and included in Accounts payable and accrued liabilities was $208 and $220, respectively.

NOTE 5. RESTRUCTURING AND RELATED COSTS

In the first quarter of fiscal year 2023, the Company began recognizing costs related to a plan that involves streamlining its operating model to meet its objectives of driving growth and productivity. The streamlined operating model is expected to enhance the Company’s ability to respond more quickly to changing consumer behaviors and innovate faster. The Company anticipates the implementation of this new model will be completed in fiscal year 2024, with different phases occurring throughout the implementation period.

The Company incurred $60 of costs in fiscal year 2023 and anticipates incurring approximately $30 to $40 of costs in fiscal year 2024 related to this initiative, of which approximately $10 to $20 are expected to be employee-related costs to reduce certain staffing levels such as severance payments, with the remainder for consulting and other costs. Costs incurred are expected to be settled primarily in cash.

The total restructuring and related implementation costs, net associated with the Company’s streamlined operating model as reflected in the condensed consolidated statements of earnings and comprehensive income:


	Three months ended				Nine months ended				Inception to date ended
	3/31/2024		3/31/2023		3/31/2024		3/31/2023		3/31/2024
Costs of products sold	$	—	$	—	$	—	$	(1)	$	(3)
Selling and administrative expenses	5		6		8		11		20
Research and development	—		—		—		—		(1)
Other (income) expense, net:
Employee-related costs	5		15		5		34		57


Total, net	$	10	$	21	$	13	$	44	$	73

Employee-related costs primarily include severance and other termination benefits calculated based on salary levels, prior service and statutory requirements. Other costs primarily include consulting fees incurred for the organizational design and implementation of the streamlined operating model, related processes and other professional fees incurred.

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

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:

NOTE 5. RESTRUCTURING AND RELATED COSTS (Continued)


	Employee-Related Costs		Other		Total
Accrual Balance as of June 30, 2023	$	23	$	5	$	28
Charges	5		9		14
Cash payments	(20)		(9)		(29)

Accrual Balance as of March 31, 2024	$	8	$	5	$	13

NOTE 6. INVENTORIES, NET

Inventories, net consisted of the following as of:


	3/31/2024		6/30/2023
Finished goods	$	588	$	595
Raw materials and packaging	179		182
Work in process	12		8
LIFO allowances	(104)		(87)
Total inventories, net	$	675	$	698
Less: Non-current inventories, net (1)	1		2
Total current inventories, net	$	674	$	696

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

NOTE 7. GOODWILL, TRADEMARKS AND OTHER ASSETS IMPAIRMENTS

The Company tests its goodwill and other indefinite-lived intangible assets for impairment annually in the fiscal fourth quarter unless there are indications during a different interim period that these assets may have become impaired. Finite-lived intangible assets are reviewed for possible impairment whenever events or changes in circumstances occur that indicate that the carrying value of an asset (or asset group) may not be recoverable.

There were no impairment charges for goodwill or intangible assets recorded by the Company during the three and nine months ended March 31, 2024.

Fiscal Year 2023 Impairment

During the third quarter of fiscal year 2023, management made a decision to narrow the focus on core brands and streamline investment levels in the Vitamins, Minerals and Supplements (VMS) business. As a result, revisions were made to the internal financial projections and operational plans of the VMS business reflecting the Company’s current estimates regarding the future financial performance of these operations and macroeconomic factors. The revised estimated future cash flows reflect lower sales growth expectations and lower investment levels. These revisions were considered a triggering event requiring interim impairment assessments to be performed as part of the preparation of the quarterly financial statements on the global indefinite-lived trademarks, other long-term assets and the VMS reporting unit.

Based on the outcome of these assessments, the following pre-tax, noncash impairment charges were recorded:


	Impairment Charges
	VMS reporting unit		International reporting unit		Total
Goodwill	$	306	$	—	$	306
Trademarks, net	127		12		139


Total	$	433	$	12	$	445

In connection with recognizing these impairment charges, the Company recognized tax benefits related to the impairments of $83 due to the partial tax deductibility of these charges.

Refer to the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023 for further information related to the VMS reporting unit goodwill and trademark impairments.

NOTE 8. 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 $44 and $41 as of March 31, 2024 and June 30, 2023, 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 $38 and $51 as of March 31, 2024 and June 30, 2023, 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 March 31, 2024 and June 30, 2023.

Commodity, Foreign Exchange and Interest Rate Derivatives

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 (losses) were as follows:

NOTE 8. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)


	Gains (losses) recognized in Other comprehensive (loss) income
	Three months ended				Nine months ended
	3/31/2024		3/31/2023		3/31/2024		3/31/2023
Commodity purchase derivative contracts	$	—	$	(4)	$	(5)	$	(6)
Foreign exchange derivative contracts	2		1		1		1

Total	$	2	$	(3)	$	(4)	$	(5)


	Location of gains (losses) reclassified from Accumulated other comprehensive net (loss) income into Net earnings	Gains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings
		Three months ended				Nine months ended
		3/31/2024		3/31/2023		3/31/2024		3/31/2023
Commodity purchase derivative contracts	Cost of products sold	$	(2)	$	—	$	(4)	$	7
Foreign exchange derivative contracts	Cost of products sold	—		—		—		1
Interest rate derivative contracts	Interest expense	4		4		10		10
Total		$	2	$	4	$	6	$	18

The estimated amount of the existing net gain (loss) in Accumulated other comprehensive net (loss) income as of March 31, 2024 that is expected to be reclassified into Net earnings (losses) within the next twelve months is $10.

Counterparty Risk Management and Derivative Contract Requirements

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 $1 contained such terms as of March 31, 2024 and June 30, 2023, respectively. As of both March 31, 2024 and June 30, 2023, 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 March 31, 2024 and June 30, 2023, 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 March 31, 2024 and June 30, 2023, the Company maintained cash margin balances related to exchange traded futures and options contracts of $1 and $0, respectively, which are classified as Prepaid expenses and other current assets on the condensed consolidated balance sheets.

Trust Assets

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

NOTE 8. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)

are recorded in Other (income) expense, net in the condensed consolidated statements of earnings. The interests in mutual funds are measured at fair value using quoted market prices. The Company has designated these marketable securities as trading investments.

Fair Value of Financial Instruments

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 March 31, 2024 and June 30, 2023, 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:


			3/31/2024				6/30/2023
	Balance sheet classification	Fair value hierarchy level	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets
Commodity purchase options contracts	Prepaid expenses and other current assets	1	$	—	$	—	$	2	$	2
Commodity purchase swaps contracts	Prepaid expenses and other current assets	2	1		1		—		—

Foreign exchange forward contracts	Prepaid expenses and other current assets	2	1		1		—		—

			$	2	$	2	$	2	$	2
Liabilities
Commodity purchase futures contracts	Accounts payable and accrued liabilities	1	—		—		—		—
Commodity purchase swaps contracts	Accounts payable and accrued liabilities	2	—		—		1		1

			$	—	$	—	$	1	$	1

NOTE 8. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)

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:


			3/31/2024				6/30/2023
	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	$	76	$	76	$	243	$	243
Time deposits	Cash and cash equivalents (1)	2	13		13		9		9


Trust assets for nonqualified deferred compensation plans	Other assets	1	151		151		129		129
			$	240	$	240	$	381	$	381
Liabilities
Notes and loans payable	Notes and loans payable (2)	2	$	111	$	111	$	50	$	50

Current maturities of long-term debt and Long-term debt	Current maturities of long- term debt and Long-term debt (3)	2	2,480		2,356		2,477		2,327
			$	2,591	$	2,467	$	2,527	$	2,377

(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.

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

NOTE 9. OTHER (INCOME) EXPENSE, NET

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


	Three months ended				Nine months ended
	3/31/2024		3/31/2023		3/31/2024		3/31/2023
Amortization of trademarks and other intangible assets	$	7	$	8	$	22	$	22
Trust investment (gains) losses, net	(8)		(7)		(18)		(8)
Net periodic benefit cost	1		4		11		12
Foreign exchange transaction (gains) losses, net (1)	1		4		24		7
Income from equity investees	(1)		(1)		(3)		(3)
Interest income	(4)		(4)		(21)		(9)
Restructuring costs (2)	5		15		5		34
Gain on sale-leaseback transaction (3)	—		—		(16)		—
Other	(3)		5		(1)		(1)
Total	$	(2)	$	24	$	3	$	54

(1)Foreign exchange losses were primarily related to the Company’s operations in Argentina.

(2)Restructuring costs related to the implementation of the Company's streamlined operating model. See Note 5 for additional details.

(3)On December 14, 2023, the Company completed an asset sale-leaseback transaction on a warehouse in Fairfield, California. The Company received proceeds of $19, net of selling costs, the asset had a carrying value of $3, and the transaction resulted in a $16 gain which was recognized in Other (income) expense, net in the Health and Wellness segment. The leaseback is accounted for as an operating lease. The term of the lease is 8 years, with options to extend the lease for two 5 year periods.

NOTE 10. INCOME TAXES

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 losses was (18.6)% and the effective tax rate on earnings was 41.9% for the three and nine months ended March 31, 2024, respectively, and the effective tax rate on losses was 14.7% and the effective tax rate on earnings was 1813.5% for the three and nine months ended March 31, 2023, respectively. The lower tax rate on losses in the current three month period was primarily driven by the divestiture of the Argentina business and an international legal entity reorganization, partially offset by the non-deductibility of impaired VMS goodwill in the prior period. The substantially higher tax rate on earnings before income taxes in the prior nine month period was driven by lower pre-tax income due to VMS impairment charges and the non-deductibility of a portion of those charges, partially offset by the divestiture of the Argentina business in the current period.

Income taxes paid, net of refunds, were $314 and $61 for the nine months ended March 31, 2024 and March 31, 2023, respectively. The increase in payments in the current period was primarily driven by income tax payments for fiscal years 2023 and 2024 that were previously deferred as a result of tax relief provided by the IRS due to winter storms in California.

NOTE 11. NET EARNINGS (LOSSES) PER SHARE (EPS)

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		Nine months ended
	3/31/2024	3/31/2023	3/31/2024	3/31/2023
Basic	124,249	123,649	124,133	123,512
Dilutive effect of stock options and other	—	—	588	—
Diluted	124,249	123,649	124,721	123,512

Antidilutive stock options and other	4,758	4,953	2,720	4,953

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

Since the Company generated net losses attributable to Clorox for the three months ended March 31, 2024 and the three and nine months ended March 31, 2023, there was no dilutive effect of stock options and other instruments during these periods because their impacts would be antidilutive.

NOTE 12. COMPREHENSIVE INCOME (LOSS)

The following table provides a summary of Comprehensive income (loss) for the periods indicated:


	Three months ended				Nine months ended
	3/31/2024		3/31/2023		3/31/2024		3/31/2023
Net earnings (losses)	$	(50)	$	(209)	$	71	$	(20)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	206		10		212		(1)
Net unrealized gains (losses) on derivatives	(1)		(7)		(10)		(21)
Pension and postretirement benefit adjustments	(1)		1		136		3
Total other comprehensive (loss) income, net of tax	204		4		338		(19)
Comprehensive income (loss)	154		(205)		409		(39)
Less: Total comprehensive income attributable to noncontrolling interests	1		2		7		7
Total comprehensive income (loss) attributable to Clorox	$	153	$	(207)	$	402	$	(46)

NOTE 13. STOCKHOLDERS’ EQUITY

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


	Three months ended March 31
(Dollars in millions except per share data; shares in thousands)	Common stock				Additional paid-in capital			Retained earnings			Treasury stock			Accumulated other comprehensive net (loss) income		Noncontrolling interests		Total stockholders’ equity
Amount			Shares				Amount			Shares
Balance as of December 31, 2022	$	131		130,741	$	1,207		$	782		$	(1,297)	(7,263)	$	(502)	$	170	$	491
Net earnings (losses)	—			—	—			(211)			—		—	—		2		(209)
Other comprehensive (loss) income	—			—	—			—			—		—	4		—		4
Dividends to Clorox stockholders ($1.18 per share declared)	—			—	—			(147)			—		—	—		—		(147)
Dividends to noncontrolling interests	—			—	—			—			—		—	—		(3)		(3)

Stock-based compensation	—			—	29			—			—		—	—		—		29
Other employee stock plan activities	—			—	(4)			(9)			20		133	—		—		7


Balance as of March 31, 2023	$	131		130,741	$	1,232		$	415		$	(1,277)	(7,130)	$	(498)	$	169	$	172

Balance as of December 31, 2023	$	131		130,741	$	1,245		$	241		$	(1,205)	(6,661)	$	(359)	$	165	$	218
Net earnings (losses)	—			—	—			(51)			—		—	—		1		(50)
Other comprehensive (loss) income	—			—	—			—			—		—	204		—		204
Dividends to Clorox stockholders ($1.20 per share declared)	—			—	—			(150)			—		—	—		—		(150)
Dividends to noncontrolling interests	—			—	—			—			—		—	—		(2)		(2)

Stock-based compensation	—			—	26			—			—		—	—		—		26
Other employee stock plan activities	—			—	(1)			(6)			16		106	—		—		9



Balance as of March 31, 2024	$	131		130,741	$	1,270		$	34		$	(1,189)	(6,555)	$	(155)	$	164	$	255

	Nine months ended March 31
(Dollars in millions except per share data; shares in thousands)	Common stock				Additional paid-in capital			Retained earnings			Treasury stock			Accumulated other comprehensive net (loss) income		Noncontrolling interests		Total stockholders’ equity
Amount			Shares				Amount			Shares
Balance as of June 30, 2022	$	131		130,741	$	1,202		$	1,048		$	(1,346)	(7,589)	$	(479)	$	173	$	729

Net earnings (losses)	—			—	—			(27)			—		—	—		7		(20)
Other comprehensive (loss) income	—			—	—			—			—		—	(19)		—		(19)
Dividends to Clorox stockholders ($4.72 per share declared)	—			—	—			(587)			—		—	—		—		(587)
Dividends to noncontrolling interests	—			—	—			—			—		—	—		(11)		(11)

Stock-based compensation	—			—	60			—			—		—	—		—		60
Other employee stock plan activities	—			—	(30)			(19)			69		459	—		—		20


Balance as of March 31, 2023	$	131		130,741	$	1,232		$	415		$	(1,277)	(7,130)	$	(498)	$	169	$	172

Balance as of June 30, 2023	$	131		130,741	$	1,245		$	583		$	(1,246)	(6,921)	$	(493)	$	168	$	388
Net earnings	—			—	—			64			—		—	—		7		71
Other comprehensive (loss) income	—			—	—			—			—		—	338		—		338
Dividends to Clorox stockholders ($4.80 per share declared)	—			—	—			(600)			—		—	—		—		(600)
Dividends to noncontrolling interests	—			—	—			—			—		—	—		(11)		(11)

Stock-based compensation	—			—	55			—			—		—	—		—		55
Other employee stock plan activities	—			—	(30)			(13)			57		366	—		—		14



Balance as of March 31, 2024	$	131		130,741	$	1,270		$	34		$	(1,189)	(6,555)	$	(155)	$	164	$	255

NOTE 13. STOCKHOLDERS’ EQUITY (Continued)

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


	Three months ended March 31
	Foreign currency translation adjustments		Net unrealized gains (losses) on derivatives		Pension and postretirement benefit adjustments		Accumulated other comprehensive net (loss) income
Balance as of December 31, 2022	$	(459)	$	107	$	(150)	$	(502)
Other comprehensive (loss) income before reclassifications	9		(3)		—		6
Amounts reclassified from Accumulated other comprehensive net (loss) income	—		(4)		1		(3)
Income tax benefit (expense)	1		—		—		1
Net current period other comprehensive (loss) income	10		(7)		1		4
Balance as of March 31, 2023	$	(449)	$	100	$	(149)	$	(498)

Balance as of December 31, 2023	$	(439)	$	90	$	(10)	$	(359)
Other comprehensive (loss) income before reclassifications	(16)		2		—		(14)
Amounts reclassified from Accumulated other comprehensive net (loss) income (1)	223		(2)		—		221
Income tax benefit (expense), and other	(1)		(1)		(1)		(3)
Net current period other comprehensive (loss) income	206		(1)		(1)		204
Balance as of March 31, 2024	$	(233)	$	89	$	(11)	$	(155)

	Nine months ended March 31
	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, 2022	$	(448)	$	121	$	(152)	$	(479)
Other comprehensive (loss) income before reclassifications	(2)		(5)		—		(7)
Amounts reclassified from Accumulated other comprehensive net (loss) income	—		(18)		4		(14)
Income tax benefit (expense)	1		2		(1)		2
Net current period other comprehensive (loss) income	(1)		(21)		3		(19)
Balance as of March 31, 2023	$	(449)	$	100	$	(149)	$	(498)

Balance as of June 30, 2023	$	(445)	$	99	$	(147)	$	(493)
Other comprehensive (loss) income before reclassifications	(10)		(4)		4		(10)
Amounts reclassified from Accumulated other comprehensive net (loss) income (1) (2)	223		(6)		175		392
Income tax benefit (expense), and other	(1)		—		(43)		(44)
Net current period other comprehensive (loss) income	212		(10)		136		338
Balance as of March 31, 2024	$	(233)	$	89	$	(11)	$	(155)

(1)Includes the release of currency translation adjustment from the Argentina business divestiture. See Note 2 for additional details.

(2)Includes recognition of pension settlement charge reclassified into Net earnings (losses). See Note 14 for additional details.

NOTE 14. EMPLOYEE BENEFIT PLANS

In the second quarter of fiscal year 2024, the Company settled plan benefits of its domestic qualified pension plan (the Plan), through a combination of an annuity contract purchase with a third-party insurance provider and lump sum payouts. These payments were made using Plan assets. The third-party insurance provider assumed the obligation to pay future pension benefits and provide administrative services and started making direct payments to participants in January 2024. In conjunction with this settlement, a one-time noncash charge, net of curtailment gain, of $171 before taxes ($130 after tax) was recorded in the Company’s condensed consolidated statement of earnings and comprehensive income primarily as a result of accelerating the recognition of actuarial losses previously included in Accumulated other comprehensive net (loss) income that would have been recognized in future periods. In the third quarter of fiscal year 2024, following settlement, remaining excess Plan assets of $19 have been contributed to the Company’s domestic defined contribution plans.

The Company continues to maintain various other retirement income plans for eligible domestic and international employees.

The following table summarizes the components of net periodic benefit cost for the Company’s retirement income plans:


	Three months ended				Nine months ended
	3/31/2024		3/31/2023		3/31/2024		3/31/2023

Interest cost	$	2	$	4	$	10	$	13
Expected return on plan assets (1)	—		(3)		(2)		(8)
Amortization of unrecognized items	—		3		3		7
Curtailment gain	—		—		(6)		—
Settlement loss	—		—		178		—
Total	$	2	$	4	$	183	$	12

(1)The weighted average long-term expected rate of return on plan assets used in computing the fiscal year 2024 net periodic benefit cost is 3.3%.

The net periodic benefit cost (credit) for the Company’s retirement health care plans was ($1) for both the three and nine months ended March 31, 2024 and March 31, 2023.

During both the three months ended March 31, 2024 and 2023, the Company made $8 in contributions to its domestic retirement income plans. During both the nine months ended March 2024 and 2023, the Company made $12 in contributions to its domestic retirement income plans.

Service cost component of the net periodic benefit cost, if any, is reflected in employee benefit costs. All other components are reflected in Other (income) expense, net.

NOTE 15. OTHER CONTINGENCIES AND GUARANTEES

Contingencies

The Company is involved in certain environmental matters, including response actions at various locations. The Company recorded liabilities totaling $28 as of both March 31, 2024 and June 30, 2023 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 March 31, 2024 and June 30, 2023, 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, soil vapor and indoor air. While the Company believes its latest estimates of remediation costs (including any related to soil, 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.

NOTE 15. OTHER CONTINGENCIES AND GUARANTEES (continued)

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 March 31, 2024 and June 30, 2023. 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.

Guarantees

In conjunction with divestitures and other transactions, the Company may provide typical 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 March 31, 2024 and June 30, 2023.

The Company was a party to letters of credit of $18 as of March 31, 2024, primarily related to its insurance carriers, of which $0 had been drawn upon.

NOTE 16. SEGMENT RESULTS

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 costs and various other non-operating income and expenses, as well as the results of the Vitamins, Minerals and Supplements (VMS) business. 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, as well as the assets related to the VMS business.

The principle measure of segment profitability used by management 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 relating to the cyberattack, asset impairments, charges related to the streamlined operating model, 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).

NOTE 16. SEGMENT RESULTS (Continued)

The tables below present reportable segment information and a reconciliation of the segment information to the Company’s consolidated net sales and earnings (losses) before income taxes, with amounts that are not allocated to the reportable segments reflected in Corporate and Other.


	Net sales
	Three months ended				Nine months ended
	3/31/2024		3/31/2023		3/31/2024		3/31/2023
Health and Wellness	$	609	$	647	$	1,833	$	1,881
Household	526		550		1,353		1,435
Lifestyle	315		353		947		1,005
International	310		305		891		876
Corporate and Other	54		60		166		173
Total	$	1,814	$	1,915	$	5,190	$	5,370

	Segment adjusted EBIT
	Three months ended				Nine months ended
	3/31/2024		3/31/2023		3/31/2024		3/31/2023
Health and Wellness	$	154	$	161	$	517	$	418
Household	74		99		162		165
Lifestyle	64		83		192		217
International	38		27		104		74
Corporate and Other	(70)		(101)		(238)		(251)
Total	$	260	$	269	$	737	$	623
Interest income	4		4		21		9
Interest expense	(22)		(24)		(69)		(69)
Loss on divestiture (1)	(240)		—		(240)		—
Pension settlement charge (2)	—		—		(171)		—
Cyberattack costs (3)	(8)		—		(57)		—
VMS impairment (4)	—		(445)		—		(445)
Streamlined operating model (5)	(10)		(21)		(13)		(44)
Digital capabilities and productivity enhancements investment (6)	(26)		(28)		(85)		(73)
Earnings (losses) before income taxes	$	(42)	$	(245)	$	123	$	1

(1)Represents loss on divestiture of the Argentina business corresponding to International. See Note 2 for additional details related to the divestiture.

(2)Represents costs related to the settlement of the domestic qualified pension plan corresponding to Corporate and Other. See Note 14 for additional details relating to the pension settlement.

(3)Represents incremental costs related to the cyberattack of $8 and $57 for the three and nine months ended March 31, 2024, respectively. See Note 3 for additional details relating to the cyberattack. For informational purposes, the following table provides the approximate cyberattack costs corresponding to the Company’s reportable segments as a percentage of total costs:


	Three months ended		Nine months ended
	3/31/2024			3/31/2024
Health and Wellness	18	%		15	%
Household	12			11
Lifestyle	—			11
International	—			4
Corporate and Other	70			59
Total	100	%		100	%

NOTE 16. SEGMENT RESULTS (Continued)

(4)Represents noncash impairment charge of $445 related to the VMS business recorded in both the three and nine months ended March 31, 2023. See Note 7 for additional details relating to the impairment.

(5)Represents restructuring and related implementation costs, net for the streamlined operating model of $10 and $13 for the three and nine months ended March 31, 2024, respectively and $21 and $44 for the three and nine months ended March 31, 2023, respectively. For informational purposes, the following table provides the approximate restructuring and related implementation costs, net corresponding to the Company’s reportable segments as a percentage of the total costs:


	Three months ended				Nine months ended				Inception to date ended
	3/31/2024		3/31/2023		3/31/2024		3/31/2023		3/31/2024
Health and Wellness	4	%	7	%	4	%	6	%	5	%
Household	—		4		—		2		1
Lifestyle	—		2		—		3		3
International	—		21		—		19		13
Corporate and Other	96		66		96		70		78
Total	100	%	100	%	100	%	100	%	100	%

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

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

Net sales to the Company’s largest customer, Walmart Inc. and its affiliates, as a percentage of consolidated net sales, were 25% for both the three and nine months ended March 31, 2024 and 26% for both the three and nine months ended March 31, 2023.

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				Nine months ended
	3/31/2024		3/31/2023		3/31/2024		3/31/2023
Cleaning	29	%	30	%	30	%	30	%
Professional Products	5		4		5		5

Health and Wellness	34	%	34	%	35	%	35	%
Bags and Wraps	12		12		12		12
Cat Litter	8		9		9		9
Grilling	9		8		6		6
Household	29	%	29	%	27	%	27	%
Food	10		10		10		11
Natural Personal Care	3		4		4		4
Water Filtration	4		4		4		4
Lifestyle	17	%	18	%	18	%	19	%
International	17	%	16	%	17	%	16	%
Corporate and Other	3	%	3	%	3	%	3	%
Total	100	%	100	%	100	%	100	%

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