filings.toolsItem 1. Financial Statements
91K characters. Original on sec.gov · Markdown
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 | ||||||||||||||||||||||
| 3/31/2025 | 3/31/2024 | 3/31/2025 | 3/31/2024 | ||||||||||||||||||||
| Net sales | $ | 1,668 | $ | 1,814 | $ | 5,116 | $ | 5,190 | |||||||||||||||
| Cost of products sold | 924 | 1,048 | 2,827 | 3,026 | |||||||||||||||||||
| Gross profit | 744 | 766 | 2,289 | 2,164 | |||||||||||||||||||
| Selling and administrative expenses | 267 | 301 | 828 | 899 | |||||||||||||||||||
| Advertising costs | 207 | 215 | 599 | 566 | |||||||||||||||||||
| Research and development costs | 27 | 32 | 89 | 93 | |||||||||||||||||||
| Loss on divestiture | — | 240 | 118 | 240 | |||||||||||||||||||
| Pension settlement charge | — | — | — | 171 | |||||||||||||||||||
| Interest expense | 23 | 22 | 66 | 69 | |||||||||||||||||||
| Other (income) expense, net | (34) | (2) | (79) | 3 | |||||||||||||||||||
| Earnings (losses) before income taxes | 254 | (42) | 668 | 123 | |||||||||||||||||||
| Income tax expense | 63 | 8 | 180 | 52 | |||||||||||||||||||
| Net earnings (losses) | 191 | (50) | 488 | 71 | |||||||||||||||||||
| Less: Net earnings attributable to noncontrolling interests | 5 | 1 | 10 | 7 | |||||||||||||||||||
| Net earnings (losses) attributable to Clorox | $ | 186 | $ | (51) | $ | 478 | $ | 64 | |||||||||||||||
| Net earnings per share attributable to Clorox | |||||||||||||||||||||||
| Basic net earnings (losses) per share | $ | 1.51 | $ | (0.41) | $ | 3.87 | $ | 0.52 | |||||||||||||||
| Diluted net earnings (losses) per share | $ | 1.50 | $ | (0.41) | $ | 3.84 | $ | 0.52 | |||||||||||||||
| Weighted average shares outstanding (in thousands) | |||||||||||||||||||||||
| Basic | 123,367 | 124,249 | 123,643 | 124,133 | |||||||||||||||||||
| Diluted | 124,066 | 124,249 | 124,468 | 124,721 | |||||||||||||||||||
| Comprehensive income | $ | 196 | $ | 154 | $ | 467 | $ | 409 | |||||||||||||||
| Less: Total comprehensive income attributable to noncontrolling interests | 5 | 1 | 10 | 7 | |||||||||||||||||||
| Total comprehensive income attributable to Clorox | $ | 191 | $ | 153 | $ | 457 | $ | 402 |
See Notes to Condensed Consolidated Financial Statements (Unaudited)
The Clorox Company
Condensed Consolidated Balance Sheets
(Dollars in millions, except per share data)
| 3/31/2025 | 6/30/2024 | ||||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 226 | $ | 202 | |||||||
| Receivables, net | 597 | 695 | |||||||||
| Inventories, net | 635 | 637 | |||||||||
| Prepaid expenses and other current assets | 132 | 88 | |||||||||
| Total current assets | 1,590 | 1,622 | |||||||||
| Property, plant and equipment, net of accumulated depreciation and amortization of $2,872 and $2,821, respectively | 1,245 | 1,315 | |||||||||
| Operating lease right-of-use assets | 349 | 360 | |||||||||
| Goodwill | 1,222 | 1,228 | |||||||||
| Trademarks, net | 501 | 538 | |||||||||
| Other intangible assets, net | 68 | 143 | |||||||||
| Other assets | 537 | 545 | |||||||||
| Total assets | $ | 5,512 | $ | 5,751 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Notes and loans payable | $ | 54 | $ | 4 | |||||||
| Current operating lease liabilities | 85 | 84 | |||||||||
| Accounts payable and accrued liabilities | 2,016 | 1,486 | |||||||||
| Total current liabilities | 2,155 | 1,574 | |||||||||
| Long-term debt | 2,483 | 2,481 | |||||||||
| Long-term operating lease liabilities | 322 | 334 | |||||||||
| Other liabilities | 341 | 848 | |||||||||
| Deferred income taxes | 21 | 22 | |||||||||
| Total liabilities | 5,322 | 5,259 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ equity | |||||||||||
| Preferred stock: $1.00 par value; 5,000,000 shares authorized; none issued or outstanding | — | — | |||||||||
| Common stock: $1.00 par value; 750,000,000 shares authorized; 130,741,461 shares issued as of March 31, 2025 and June 30, 2024; and 123,251,595 and 124,201,807 shares outstanding as of March 31, 2025 and June 30, 2024, respectively | 131 | 131 | |||||||||
| Additional paid-in capital | 1,304 | 1,288 | |||||||||
| Retained earnings | 99 | 250 | |||||||||
| Treasury stock, at cost: 7,489,866 and 6,539,654 shares as of March 31, 2025 and June 30, 2024, respectively | (1,331) | (1,186) | |||||||||
| Accumulated other comprehensive net (loss) income | (176) | (155) | |||||||||
| Total Clorox stockholders’ equity | 27 | 328 | |||||||||
| Noncontrolling interests | 163 | 164 | |||||||||
| Total stockholders’ equity | 190 | 492 | |||||||||
| Total liabilities and stockholders’ equity | $ | 5,512 | $ | 5,751 |
See Notes to Condensed Consolidated Financial Statements (Unaudited)
The Clorox Company
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in millions)
| Nine months ended | |||||||||||
| 3/31/2025 | 3/31/2024 | ||||||||||
| Operating activities: | |||||||||||
| Net earnings | $ | 488 | $ | 71 | |||||||
| Adjustments to reconcile net earnings to net cash provided by operations: | |||||||||||
| Depreciation and amortization | 162 | 176 | |||||||||
| Stock-based compensation | 64 | 55 | |||||||||
| Deferred income taxes | (16) | (126) | |||||||||
| Loss on divestiture | 112 | 238 | |||||||||
| Pension settlement charge | — | 171 | |||||||||
| Other | (9) | 18 | |||||||||
| Changes in: | |||||||||||
| Receivables, net | 71 | (16) | |||||||||
| Inventories, net | (54) | 20 | |||||||||
| Prepaid expenses and other current assets | (28) | 12 | |||||||||
| Accounts payable and accrued liabilities | (87) | (120) | |||||||||
| Operating lease right-of-use assets and liabilities, net | 1 | — | |||||||||
| Income taxes payable / prepaid | (17) | (144) | |||||||||
| Net cash provided by operations | 687 | 355 | |||||||||
| Investing activities: | |||||||||||
| Capital expenditures | (145) | (131) | |||||||||
| Proceeds from divestiture, net of cash divested | 128 | 17 | |||||||||
| Other | (1) | 20 | |||||||||
| Net cash used for investing activities | (18) | (94) | |||||||||
| Financing activities: | |||||||||||
| Notes and loans payable, net | 50 | 61 | |||||||||
| Treasury stock purchased | (257) | — | |||||||||
| Cash dividends paid to Clorox stockholders | (452) | (446) | |||||||||
| Cash dividends paid to noncontrolling interests | (16) | — | |||||||||
| Issuance of common stock for employee stock plans and other | 30 | 3 | |||||||||
| Net cash used for financing activities | (645) | (382) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (2) | (26) | |||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 22 | (147) | |||||||||
| Cash, cash equivalents and restricted cash: | |||||||||||
| Beginning of period | 207 | 368 | |||||||||
| End of period | $ | 229 | $ | 221 |
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, 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, 2024, which includes a complete set of footnote disclosures, including the Company’s significant accounting policies.
Recently Issued Accounting Standards
Recently Issued Accounting Standards Not Yet Adopted
In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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. The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods. These amendments are to be applied retrospectively for all periods presented in the financial statements and will be effective for the annual period beginning July 1, 2024, and interim periods beginning July 1, 2025. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s disclosures.
Recently Adopted Accounting Standards
In September 2022, the FASB issued ASU No. 2022-04, "Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” These amendments require disclosure of the key terms of outstanding supplier finance programs and a rollforward of the related obligations. These amendments are effective for fiscal years beginning after December 15, 2022, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. The Company adopted the standard as of July 1, 2023, except for the rollforward information which will be effective for the fiscal year ending June 30, 2025. The adoption relates to disclosures only and does not have an impact on the condensed consolidated financial statements, results of operations or cash flows.
NOTE 2. VENTURE AGREEMENT
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 March 31, 2025 and June 30, 2024, 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 March 31, 2025, the estimated fair value of P&G’s interest was $476, of which $515 was recognized and reflected in Accounts payable and accrued liabilities as it is reasonably expected to be settled within one year. As of June 30, 2024, the estimated fair value of P&G’s interest was $531, of which $510 was recognized and reflected in Other liabilities. 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.
NOTE 3. DIVESTITURES
Divestiture of Better Health Vitamins, Minerals and Supplements (VMS) Business
On September 10, 2024, the Company completed the divestiture of its Better Health VMS business in its entirety to an affiliate of Piping Rock Health Products, LLC. The divested business includes the Natural Vitality, NeoCell, Rainbow Light and RenewLife brands, relevant trademarks and licenses, and associated manufacturing and distribution facilities in Sunrise, Florida. The transaction reflects the Company’s commitment to continue evolving its portfolio to reduce volatility and accelerate sales growth, as well as structurally improve its margin, in service of driving more consistent and profitable growth over time. The transaction was executed pursuant to a purchase agreement. As a result of the transaction, the Company recorded an after tax loss of $118 during the nine months ended March 31, 2025.
The major classes of assets and liabilities of the Better Health VMS business divested as of September 10, 2024 were as follows:
| Divestiture | |||||
| Working capital, net | $ | 41 | |||
| Property, plant and equipment, net | 59 | ||||
| Trademarks, net | 37 | ||||
| Other intangible assets, net | 58 | ||||
| Other assets (1) | 45 | ||||
| Other liabilities | (1) | ||||
| Net assets divested | $ | 239 |
(1) Includes net deferred tax assets of $45
The following table presents Net sales of the Better Health VMS business, which includes the financial results up to September 10, 2024, the date of sale:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| 3/31/2025 | 3/31/2024 | 3/31/2025 | 3/31/2024 | ||||||||||||||||||||
| Net sales | $ | — | $ | 54 | $ | 38 | $ | 166 |
The divestiture of the Company’s Better Health VMS business does not meet the criteria to be reported as discontinued operations in the condensed consolidated financial statements as the Company’s decision to divest this business did not represent a strategic shift that will have a major effect on the Company’s operations and financial results.
Divestiture of Argentina Business
On March 20, 2024, the Company completed the divestiture of its Argentina business. As a result of the transaction, the Company recorded a pre-tax loss of $240 during the third quarter of fiscal year 2024. Net sales of the Argentina business for the three and nine months ended March 31, 2024 were $43 and $123, respectively. Refer to Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024 for further information related to the Argentina business divestiture.
NOTE 4. AUGUST 2023 CYBERATTACK
On Monday, August 14, 2023, the Company identified unauthorized activity on some of its Information Technology (IT) systems and immediately began taking steps to stop and remediate the activity. The Company took certain systems offline, engaged third-party cybersecurity experts and implemented its business continuity plans. However, the incident resulted in wide-scale disruptions to the Company’s business operations. The impacts of these system disruptions resulted in a negative impact on net sales and earnings. The Company experienced lessening operational impacts in the second quarter of fiscal year 2024 and has since returned to normalized operations.
The Company recorded insurance recoveries of $35 and $70 in the three and nine months ended March 31, 2025, respectively, and incurred incremental expenses of approximately $8 and $57 in the three and nine months ended March 31, 2024, respectively, as a result of the cyberattack. The following table summarizes the recognition of (insurance recoveries) and costs in the condensed consolidated statements of earnings and comprehensive income:
| Three months ended | Nine months ended | |||||||||||||||||||||||||||||||||||||
| 3/31/2025 | 3/31/2024 | 3/31/2025 | 3/31/2024 | |||||||||||||||||||||||||||||||||||
| Costs of products sold | $ | (2) | $ | 1 | $ | (5) | $ | 21 | ||||||||||||||||||||||||||||||
| Selling and administrative expenses | — | 7 | — | 36 | ||||||||||||||||||||||||||||||||||
| Other (income) expense, net | (33) | — | (65) | — | ||||||||||||||||||||||||||||||||||
| Total | $ | (35) | $ | 8 | $ | (70) | $ | 57 |
The costs incurred related primarily to third-party consulting services, including IT recovery and forensic experts and other professional services incurred to investigate and remediate the attack, as well as incremental operating costs incurred from the resulting disruption to the Company’s business operations. The Company does not expect to incur significant costs related to the cyberattack in future periods. No additional insurance recoveries related to the cyberattack are anticipated. Insurance recoveries are classified consistent with the expenses to which they relate. Business interruption and other insurance recoveries that do not correspond directly to previously incurred expenses are recognized in Other (income) expense, net.
NOTE 5. SUPPLY CHAIN FINANCING PROGRAM
The Company has arranged for a global financial institution to offer a voluntary supply chain finance (SCF) program for the benefit of the Company’s suppliers. The Company’s current payment terms do not exceed 120 days in keeping with industry standards. The Company’s operating cash flows are directly impacted as a result of the extension of payment terms with suppliers. The SCF program enables suppliers to directly contract with the financial institution to receive payment from the financial institution prior to the payment terms between the Company and the supplier by selling the Company’s payables to the financial institution. Participation in the program is at the sole discretion of the supplier and the Company has no economic interest in a supplier's decision to enter into the agreement and has no direct financial relationship with the financial institution, as it relates to the SCF program. Once a supplier elects to participate in the SCF program and reaches an agreement with the financial institution, the supplier elects which individual Company invoices to sell to the financial institution. The terms of the Company’s payment obligations are not impacted by a supplier’s participation in the program and as such, the SCF program has no direct impact on the Company’s balance sheets or liquidity. The Company has not pledged any assets as security or provided guarantees under the SCF program.
All outstanding amounts related to suppliers participating in the SCF program are recorded within Accounts payable and accrued liabilities in the condensed consolidated balance sheets and the associated payments are included in operating activities within the condensed consolidated statements of cash flows. As of March 31, 2025 and June 30, 2024, the amount due to suppliers participating in the SCF program and included in Accounts payable and accrued liabilities was $227 and $205, respectively.
NOTE 6. RESTRUCTURING AND RELATED COSTS
Beginning in the first quarter of fiscal year 2023, the Company recognized costs related to a plan that involves streamlining its operating model to meet its objectives of driving growth and productivity. The implementation of this new model was completed in fiscal year 2024 and is expected to enhance the Company’s ability to respond more quickly to changing consumer behaviors and innovate faster.
The total restructuring and related implementation costs, net associated with the Company’s streamlined operating model as reflected in the condensed consolidated statements of earnings and comprehensive income:
| Three months ended | Nine months ended | ||||||||||||||||||||||||||||
| 3/31/2024 | 3/31/2024 | ||||||||||||||||||||||||||||
| Selling and administrative expenses | $ | 5 | $ | 8 | |||||||||||||||||||||||||
| Other (income) expense, net: | |||||||||||||||||||||||||||||
| Employee-related costs | $ | 5 | $ | 5 | |||||||||||||||||||||||||
| Total costs | $ | 10 | $ | 13 |
The following table reconciles the accrual for the streamlined operating model’s restructuring and related implementation costs discussed above, which are recorded within Accounts payable and accrued liabilities in the condensed consolidated balance sheets:
| Employee-Related Costs | Other | Total | |||||||||||||||
| Accrual Balance as of June 30, 2024 | $ | 8 | $ | 11 | $ | 19 | |||||||||||
| Cash payments | (8) | (11) | (19) | ||||||||||||||
| Accrual Balance as of March 31, 2025 | $ | — | $ | — | $ | — | |||||||||||
The Company may, from time to time, decide to pursue additional restructuring-related initiatives that involve costs in future periods.
Refer to Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024 for further information related to the streamlined operating model.
NOTE 7. INVENTORIES, NET
Inventories, net consisted of the following as of:
| 3/31/2025 | 6/30/2024 | ||||||||||
| Finished goods | $ | 553 | $ | 556 | |||||||
| Raw materials and packaging | 145 | 172 | |||||||||
| Work in process | 21 | 9 | |||||||||
| LIFO allowances | (84) | (98) | |||||||||
| Total inventories, net | $ | 635 | $ | 639 | |||||||
| Less: Non-current inventories, net (1) | — | 2 | |||||||||
| Total current inventories, net | $ | 635 | $ | 637 |
(1)Non-current inventories, net are recorded in Other assets.
NOTE 8. DEBT
Short-term borrowings
The weighted average effective interest rate of notes and loans payable as of March 31, 2025 and June 30, 2024 was 4.59% and 5.60%, respectively.
Credit arrangements
On March 25, 2025, the Company entered into a new $1,200 revolving credit agreement (the Credit Agreement) that matures in March 2030. The Credit Agreement replaced a prior $1,200 revolving credit agreement (the Prior Credit Agreement) in place since March 2022. The Company did not incur any termination fees or penalties in connection with entering the new agreement, which was considered a debt modification. There were no borrowings under either the Credit Agreement or the Prior Credit Agreement as of March 31, 2025 and June 30, 2024, respectively, and the Company believes that borrowings under the new Credit Agreement will continue to be available for general corporate purposes. The Credit Agreement includes certain restrictive covenants and limitations consistent with the previous agreement, with which the Company was in compliance as of March 31, 2025.
NOTE 9. 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 $27 and $38 as of March 31, 2025 and June 30, 2024, respectively.
Foreign Currency Risk Management
The Company may also enter into certain over-the-counter derivative contracts to manage a portion of the Company’s forecasted foreign currency exposure associated with the purchase of inventory. These foreign currency contracts generally have original contractual maturities of less than 2 years. The foreign exchange contracts are measured at fair value using information quoted by foreign exchange dealers.
The notional amounts of outstanding foreign currency forward contracts used by the Company’s subsidiaries to hedge forecasted purchases of inventory were $37 and $29 as of March 31, 2025 and June 30, 2024, respectively.
Interest Rate Risk Management
The Company may enter into over-the-counter interest rate contracts to fix a portion of the benchmark interest rate prior to the anticipated issuance of fixed rate debt. These interest rate contracts generally have original contractual maturities of less than 3 years. The interest rate contracts are measured at fair value using information quoted by bond dealers.
The Company held no interest rate contracts as of both March 31, 2025 and June 30, 2024.
NOTE 9. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
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:
| Gains (losses) recognized in Other comprehensive (loss) income | |||||||||||||||||||||||
| Three months ended | Nine months ended | ||||||||||||||||||||||
| 3/31/2025 | 3/31/2024 | 3/31/2025 | 3/31/2024 | ||||||||||||||||||||
| Commodity purchase derivative contracts | $ | 1 | $ | — | $ | (2) | $ | (5) | |||||||||||||||
| Foreign exchange derivative contracts | (1) | 2 | 1 | 1 | |||||||||||||||||||
| Total | $ | — | $ | 2 | $ | (1) | $ | (4) |
| 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 | |||||||||||||||||||||||||
| 3/31/2025 | 3/31/2024 | 3/31/2025 | 3/31/2024 | |||||||||||||||||||||||
| Commodity purchase derivative contracts | Cost of products sold | $ | (2) | $ | (2) | $ | (5) | $ | (4) | |||||||||||||||||
| Interest rate derivative contracts | Interest expense | 4 | 4 | 10 | 10 | |||||||||||||||||||||
| Total | $ | 2 | $ | 2 | $ | 5 | $ | 6 |
The estimated amount of the existing net gain (loss) in Accumulated other comprehensive net (loss) income as of March 31, 2025 that is expected to be reclassified into Net earnings within the next twelve months is $12.
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 contained such terms as of both March 31, 2025 and June 30, 2024. As of both March 31, 2025 and June 30, 2024, 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, 2025 and June 30, 2024, 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 March 31, 2025 and June 30, 2024, the Company maintained cash margin balances related to exchange traded futures and options contracts of $1 and $3, respectively, which are classified as Prepaid expenses and other current assets on the condensed consolidated balance sheets.
NOTE 9. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
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 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.
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, 2025 and June 30, 2024, 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:
| 3/31/2025 | 6/30/2024 | ||||||||||||||||||||||||||||||||||
| Balance sheet classification | Fair value hierarchy level | Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | ||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||
| Commodity purchase futures contracts | Prepaid expenses and other current assets | 1 | $ | 1 | $ | 1 | $ | — | $ | — | |||||||||||||||||||||||||
| 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 | $ | 1 | $ | 1 | ||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||
| Commodity purchase futures contracts | Accounts payable and accrued liabilities | 1 | $ | — | $ | — | $ | 2 | $ | 2 | |||||||||||||||||||||||||
| Commodity purchase swaps contracts | Accounts payable and accrued liabilities | 2 | 1 | 1 | — | — | |||||||||||||||||||||||||||||
| $ | 1 | $ | 1 | $ | 2 | $ | 2 |
NOTE 9. 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:
| 3/31/2025 | 6/30/2024 | ||||||||||||||||||||||||||||||||||
| 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 | $ | 99 | $ | 99 | $ | 95 | $ | 95 | |||||||||||||||||||||||||
| Time deposits | Cash and cash equivalents (1) | 2 | 14 | 14 | 9 | 9 | |||||||||||||||||||||||||||||
| Trust assets for nonqualified deferred compensation plans | Other assets | 1 | 157 | 157 | 154 | 154 | |||||||||||||||||||||||||||||
| $ | 270 | $ | 270 | $ | 258 | $ | 258 | ||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||
| Notes and loans payable | Notes and loans payable (2) | 2 | $ | 54 | $ | 54 | $ | 4 | $ | 4 | |||||||||||||||||||||||||
| Long-term debt | Long-term debt (3) | 2 | 2,483 | 2,407 | 2,481 | 2,341 | |||||||||||||||||||||||||||||
| $ | 2,537 | $ | 2,461 | $ | 2,485 | $ | 2,345 |
(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)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.
NOTE 10. OTHER (INCOME) EXPENSE, NET
The major components of Other (income) expense, net were:
| Three months ended | Nine months ended | |||||||||||||||||||||||||
| 3/31/2025 | 3/31/2024 | 3/31/2025 | 3/31/2024 | |||||||||||||||||||||||
| Amortization of trademarks and other intangible assets | $ | 5 | $ | 7 | $ | 16 | $ | 22 | ||||||||||||||||||
| Trust investment (gains) losses, net | 2 | (8) | (6) | (18) | ||||||||||||||||||||||
| Net periodic benefit cost | 3 | 1 | — | 11 | ||||||||||||||||||||||
| Foreign exchange transaction (gains) losses, net (1) | (1) | 1 | 2 | 24 | ||||||||||||||||||||||
| Income from equity investees | — | (1) | (3) | (3) | ||||||||||||||||||||||
| Interest income | (2) | (4) | (7) | (21) | ||||||||||||||||||||||
| Restructuring costs (2) | — | 5 | — | 5 | ||||||||||||||||||||||
| Gain on sale-leaseback transaction (3) | — | — | — | (16) | ||||||||||||||||||||||
| Cyberattack insurance recoveries (4) | (33) | — | (65) | — | ||||||||||||||||||||||
| Other | (8) | (3) | (16) | (1) | ||||||||||||||||||||||
| Total | $ | (34) | $ | (2) | $ | (79) | $ | 3 |
(1)Foreign exchange losses were primarily related to the Company’s operations in Argentina in the three and nine months ended March 31, 2024.
(2)Restructuring costs related to the implementation of the Company’s streamlined operating model. See Note 6 for additional details.
(3)On December 14, 2023, the Company completed an asset sale-leaseback transaction on a warehouse in Fairfield, California. The transaction resulted in a $16 gain which was recognized in Other (income) expense, net in the Health and Wellness segment. Refer to Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024 for further information related to the sale-leaseback transaction.
(4)Insurance recoveries related to the August 2023 cyberattack. See Note 4 for additional details.
NOTE 11. 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 earnings was 24.8% and 26.9% for the three and nine months ended March 31, 2025, respectively, and the effective tax rate on (losses) earnings was (18.6)% and 41.9% for the three and nine months ended March 31, 2024, respectively. The change in tax rate on earnings in the current three month period as compared to the prior period was primarily driven by the divestiture of the Argentina business and a legal entity reorganization both in the prior period. The change in tax rate on earnings in the current nine month period as compared to the prior period was primarily driven by the divestiture of the Argentina business and a legal entity reorganization both in the prior period, and the nondeductibility of the loss on the divestiture of the Better Health VMS business in the current period.
Income taxes paid, net of refunds, were $208 and $314 for the nine months ended March 31, 2025 and 2024, respectively. The lower tax payments in the current nine-month period were primarily driven by payments of fiscal year 2023 income taxes in fiscal year 2024, that were previously deferred as a result of the relief provided by the IRS announced in January 2023 due to winter storms in California.
NOTE 12. 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 | ||||||||||||||||||||||
| 3/31/2025 | 3/31/2024 | 3/31/2025 | 3/31/2024 | ||||||||||||||||||||
| Basic | 123,367 | 124,249 | 123,643 | 124,133 | |||||||||||||||||||
| Dilutive effect of stock options and other | 699 | — | 825 | 588 | |||||||||||||||||||
| Diluted | 124,066 | 124,249 | 124,468 | 124,721 | |||||||||||||||||||
| Antidilutive stock options and other | 1,575 | 4,758 | 1,575 | 2,720 |
Basic net earnings per share and Diluted net earnings (losses) per share are calculated on Net earnings attributable to Clorox.
Since the Company generated net losses attributable to Clorox for the three months ended March 31, 2024, there was no dilutive effect of stock options and other instruments during this period because their impacts would be antidilutive.
NOTE 13. COMPREHENSIVE INCOME
The following table provides a summary of Comprehensive income for the periods indicated:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| 3/31/2025 | 3/31/2024 | 3/31/2025 | 3/31/2024 | ||||||||||||||||||||
| Net earnings (losses) | $ | 191 | $ | (50) | $ | 488 | $ | 71 | |||||||||||||||
| Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||
| Foreign currency translation adjustments | 7 | 206 | (13) | 212 | |||||||||||||||||||
| Net unrealized gains (losses) on derivatives | (2) | (1) | (7) | (10) | |||||||||||||||||||
| Pension and postretirement benefit adjustments | — | (1) | (1) | 136 | |||||||||||||||||||
| Total other comprehensive (loss) income, net of tax | 5 | 204 | (21) | 338 | |||||||||||||||||||
| Comprehensive income | 196 | 154 | 467 | 409 | |||||||||||||||||||
| Less: Total comprehensive income attributable to noncontrolling interests | 5 | 1 | 10 | 7 | |||||||||||||||||||
| Total comprehensive income attributable to Clorox | $ | 191 | $ | 153 | $ | 457 | $ | 402 |
NOTE 14. 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, 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 | |||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | 131 | 130,741 | $ | 1,287 | $ | 68 | $ | (1,346) | (7,591) | $ | (181) | $ | 162 | $ | 121 | |||||||||||||||||||||||||||||||||||||
| Net earnings | — | — | — | 186 | — | — | — | 5 | 191 | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive (loss) income | — | — | — | — | — | — | 5 | — | 5 | ||||||||||||||||||||||||||||||||||||||||||||
| Dividends to Clorox stockholders ($1.22 per share declared) | — | — | — | (152) | — | — | — | — | (152) | ||||||||||||||||||||||||||||||||||||||||||||
| Dividends to noncontrolling interests | — | — | — | — | — | — | — | (4) | (4) | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 24 | — | — | — | — | — | 24 | ||||||||||||||||||||||||||||||||||||||||||||
| Other employee stock plan activities | — | — | (7) | (3) | 15 | 101 | — | — | 5 | ||||||||||||||||||||||||||||||||||||||||||||
| Treasury stock purchased | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | 131 | 130,741 | $ | 1,304 | $ | 99 | $ | (1,331) | (7,490) | $ | (176) | $ | 163 | $ | 190 | |||||||||||||||||||||||||||||||||||||
| 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, 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 | |||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | $ | 131 | 130,741 | $ | 1,288 | $ | 250 | $ | (1,186) | (6,540) | $ | (155) | $ | 164 | $ | 492 | |||||||||||||||||||||||||||||||||||||
| Net earnings | — | — | — | 478 | — | — | — | 10 | 488 | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive (loss) income | — | — | — | — | — | — | (21) | — | (21) | ||||||||||||||||||||||||||||||||||||||||||||
| Dividends to Clorox stockholders ($4.88 per share declared) | — | — | — | (609) | — | — | — | — | (609) | ||||||||||||||||||||||||||||||||||||||||||||
| Dividends to noncontrolling interests | — | — | — | — | — | — | — | (11) | (11) | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 64 | — | — | — | — | — | 64 | ||||||||||||||||||||||||||||||||||||||||||||
| Other employee stock plan activities | — | — | (48) | (20) | 112 | 745 | — | — | 44 | ||||||||||||||||||||||||||||||||||||||||||||
| Treasury stock purchased | — | — | — | — | (257) | (1,695) | — | — | (257) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | 131 | 130,741 | $ | 1,304 | $ | 99 | $ | (1,331) | (7,490) | $ | (176) | $ | 163 | $ | 190 |
NOTE 14. 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, 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) | (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) | |||||||||||||||
| Balance as of December 31, 2024 | $ | (259) | $ | 80 | $ | (2) | $ | (181) | |||||||||||||||
| Other comprehensive (loss) income before reclassifications | 6 | — | — | 6 | |||||||||||||||||||
| Amounts reclassified from Accumulated other comprehensive net (loss) income | — | (2) | — | (2) | |||||||||||||||||||
| Income tax benefit (expense) | 1 | — | — | 1 | |||||||||||||||||||
| Net current period other comprehensive (loss) income | 7 | (2) | — | 5 | |||||||||||||||||||
| Balance as of March 31, 2025 | $ | (252) | $ | 78 | $ | (2) | $ | (176) | |||||||||||||||
| 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, 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) | (1) | — | (43) | (44) | |||||||||||||||||||
| Net current period other comprehensive (loss) income | 212 | (10) | 136 | 338 | |||||||||||||||||||
| Balance as of March 31, 2024 | $ | (233) | $ | 89 | $ | (11) | $ | (155) | |||||||||||||||
| Balance as of June 30, 2024 | $ | (239) | $ | 85 | $ | (1) | $ | (155) | |||||||||||||||
| Other comprehensive (loss) income before reclassifications | (14) | (1) | — | (15) | |||||||||||||||||||
| Amounts reclassified from Accumulated other comprehensive net (loss) income | — | (5) | (1) | (6) | |||||||||||||||||||
| Income tax benefit (expense) | 1 | (1) | — | — | |||||||||||||||||||
| Net current period other comprehensive (loss) income | (13) | (7) | (1) | (21) | |||||||||||||||||||
| Balance as of March 31, 2025 | $ | (252) | $ | 78 | $ | (2) | $ | (176) |
(1)Includes the release of currency translation adjustment from the Argentina business divestiture. See Note 3 for additional details.
(2)Includes recognition of pension settlement charge reclassified into Net earnings. See Note 15 for additional details.
NOTE 15. EMPLOYEE BENEFIT PLANS
In the second quarter of fiscal year 2024, the Company settled plan benefits of its domestic qualified pension plan (the Plan) and recorded a one-time noncash charge, net of curtailment gain, of $171 before taxes ($130 after tax) in the Company’s condensed consolidated statement of earnings and comprehensive income.
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 (credit) cost for the Company’s remaining retirement income plans:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| 3/31/2025 | 3/31/2024 | 3/31/2025 | 3/31/2024 | ||||||||||||||||||||
| Interest cost | $ | 1 | $ | 2 | $ | 4 | $ | 10 | |||||||||||||||
| Expected return on plan assets (1) | — | — | (1) | (2) | |||||||||||||||||||
| Amortization of unrecognized items | — | — | — | 3 | |||||||||||||||||||
| Curtailment gain | — | — | — | (6) | |||||||||||||||||||
| Settlement (gain) loss | 2 | — | (2) | 178 | |||||||||||||||||||
| Total | $ | 3 | $ | 2 | $ | 1 | $ | 183 |
(1)The weighted average long-term expected rate of return on plan assets used in computing the fiscal year 2025 net periodic benefit cost is 5.8%.
The net periodic benefit (credit) cost for the Company’s retirement health care plans was $0 and ($1) for the three and nine months ended March 31, 2025, respectively and ($1) for both the three and nine months ended March 31, 2024.
During both the three months ended March 31, 2025 and 2024, the Company made $8 in contributions to its domestic retirement income plans. During both the nine months ended March 31, 2025 and 2024, 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 16. OTHER CONTINGENCIES AND GUARANTEES
Contingencies
The Company is involved in certain environmental matters, including response actions at various locations. The Company recorded liabilities totaling $27 and $28 as of March 31, 2025 and June 30, 2024, respectively 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, 2025 and June 30, 2024, 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 March 31, 2025 and June 30, 2024. 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
NOTE 16. OTHER CONTINGENCIES AND GUARANTEES (continued)
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 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 March 31, 2025 and June 30, 2024.
The Company was a party to letters of credit of $18 as of March 31, 2025, primarily related to its insurance carriers, of which $0 had been drawn upon.
NOTE 17. 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. 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 of September 10, 2024.
The principal 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 and insurance recoveries related to the August 2023 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).
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.
NOTE 17. SEGMENT RESULTS (Continued)
| Net sales | ||||||||||||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||||||||||
| 3/31/2025 | 3/31/2024 | 3/31/2025 | 3/31/2024 | |||||||||||||||||||||||
| Health and Wellness | $ | 630 | $ | 609 | $ | 1,956 | $ | 1,833 | ||||||||||||||||||
| Household | 469 | 526 | 1,362 | 1,353 | ||||||||||||||||||||||
| Lifestyle | 306 | 315 | 964 | 947 | ||||||||||||||||||||||
| International | 263 | 310 | 796 | 891 | ||||||||||||||||||||||
| Reportable segment total | $ | 1,668 | $ | 1,760 | $ | 5,078 | $ | 5,024 | ||||||||||||||||||
| Corporate and Other | — | 54 | 38 | 166 | ||||||||||||||||||||||
| Total | $ | 1,668 | $ | 1,814 | $ | 5,116 | $ | 5,190 | ||||||||||||||||||
| Segment adjusted EBIT | ||||||||||||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||||||||||
| 3/31/2025 | 3/31/2024 | 3/31/2025 | 3/31/2024 | |||||||||||||||||||||||
| Health and Wellness | $ | 169 | $ | 154 | $ | 597 | $ | 517 | ||||||||||||||||||
| Household | 61 | 74 | 169 | 162 | ||||||||||||||||||||||
| Lifestyle | 60 | 64 | 196 | 192 | ||||||||||||||||||||||
| International | 31 | 38 | 87 | 104 | ||||||||||||||||||||||
| Reportable segment total | $ | 321 | $ | 330 | $ | 1,049 | $ | 975 | ||||||||||||||||||
| Corporate and Other | (55) | (70) | (193) | (238) | ||||||||||||||||||||||
| Total | $ | 266 | $ | 260 | $ | 856 | $ | 737 | ||||||||||||||||||
| Interest income | 2 | 4 | 7 | 21 | ||||||||||||||||||||||
| Interest expense | (23) | (22) | (66) | (69) | ||||||||||||||||||||||
| Loss on divestiture (1) | — | (240) | (118) | (240) | ||||||||||||||||||||||
| Pension settlement charge (2) | — | — | — | (171) | ||||||||||||||||||||||
| Cyberattack costs, net of insurance recoveries (3) | 35 | (8) | 70 | (57) | ||||||||||||||||||||||
| Streamlined operating model (4) | — | (10) | — | (13) | ||||||||||||||||||||||
| Digital capabilities and productivity enhancements investment (5) | (26) | (26) | (81) | (85) | ||||||||||||||||||||||
| Earnings before income taxes | $ | 254 | $ | (42) | $ | 668 | $ | 123 |
(1)Represents losses on divestiture of the Better Health VMS and Argentina businesses corresponding to Corporate and Other and International, respectively. See Note 3 for additional details related to the divestitures.
(2)Represents costs related to the settlement of the domestic qualified pension plan corresponding to Corporate and Other. See Note 15 for additional details related to the pension settlement.
(3)Represents insurance recoveries of $35 and $70 in the three and nine months ended March 31, 2025, respectively, and incremental expenses of approximately $8 and $57 in the three and nine months ended March 31, 2024, respectively, as a result of the cyberattack. See Note 4 for additional details related to the August 2023 cyberattack. For informational purposes, the following table provides the approximate cyberattack costs and insurance recoveries corresponding to the Company’s reportable segments as a percentage of the total:
| Three months ended | Nine months ended | ||||||||||||||||||||||||||||||||||
| 3/31/2025 | 3/31/2024 | 3/31/2025 | 3/31/2024 | ||||||||||||||||||||||||||||||||
| Health and Wellness | — | % | 18 | % | — | % | 15 | % | |||||||||||||||||||||||||||
| Household | — | 12 | — | 11 | |||||||||||||||||||||||||||||||
| Lifestyle | — | — | — | 11 | |||||||||||||||||||||||||||||||
| International | — | — | — | 4 | |||||||||||||||||||||||||||||||
| Corporate and Other | 100 | 70 | 100 | 59 | |||||||||||||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % |
(4)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, primarily corresponding to Corporate and Other.
(5)Represents expenses related to the Company’s digital capabilities and productivity enhancements investment corresponding to Corporate and Other.
NOTE 17. SEGMENT RESULTS (Continued)
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 27% and 26% for the three and nine months ended March 31, 2025, respectively, and 25% for both the three and nine months ended March 31, 2024.
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 | ||||||||||||||||||||||
| 3/31/2025 | 3/31/2024 | 3/31/2025 | 3/31/2024 | ||||||||||||||||||||
| Cleaning | 33 | % | 29 | % | 33 | % | 30 | % | |||||||||||||||
| Professional Products | 5 | 5 | 5 | 5 | |||||||||||||||||||
| Health and Wellness | 38 | % | 34 | % | 38 | % | 35 | % | |||||||||||||||
| Bags and Wraps | 12 | 12 | 12 | 12 | |||||||||||||||||||
| Cat Litter | 8 | 8 | 9 | 9 | |||||||||||||||||||
| Grilling | 8 | 9 | 6 | 6 | |||||||||||||||||||
| Household | 28 | % | 29 | % | 27 | % | 27 | % | |||||||||||||||
| Food | 11 | 10 | 11 | 10 | |||||||||||||||||||
| Water Filtration | 4 | 4 | 4 | 4 | |||||||||||||||||||
| Natural Personal Care | 3 | 3 | 4 | 4 | |||||||||||||||||||
| Lifestyle | 18 | % | 17 | % | 19 | % | 18 | % | |||||||||||||||
| International | 16 | % | 17 | % | 15 | % | 17 | % | |||||||||||||||
| Corporate and Other | — | % | 3 | % | 1 | % | 3 | % | |||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % |
Previous: Cover and table of contents · Next: Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations