Financial Trends -- 4/10
CLX financial trends score a below-average 4/10. The multi-year margin recovery from the FY2022
trough is genuinely impressive (gross margin +940bps over 3 years to 45.2%), and FY2025 delivered
record Adj EBIT of $1,316M. However, revenue has gone nowhere in 5 years ($7,341M in FY2021 vs
$7,104M in FY2025), and the most recent two quarters (FY2026 H1) show sharp deterioration: organic
sales of -17% and -1%, gross margins contracting YoY, EBIT margins collapsing to 11.2%, and EPS
declining double digits. The ERP transition accounts for ~7.5pts of headwind, but even adjusting
for it, underlying organic growth is barely flat -- not acceptable for a staples company.
Weight: 25%
FY2025 Revenue
$7,104M
+0.2% YoY | flat for 5 years
FY2025 Adj EPS
~$7.50
Recovery trajectory from $4.10 trough
FY2025 Gross Margin
45.2%
+940bps vs FY22 trough of 35.8%
FY2025 FCF
$761M
10.7% of sales | volatile history
Revenue Trajectory (Annual, USD M) -- FYE June 30
Revenue is lower today than 5 years ago -- a zero-growth top line.
FY2021 revenue was $7,341M vs FY2025 at $7,104M, a net decline over the full period. Organic
growth has been volatile: +9% (FY21), -2% (FY22), +6% (FY23), N/A (FY24 cyber distortion),
+5% (FY25). FY2026 guidance calls for organic sales of -5% to -9%, inclusive of ~7.5pts ERP
headwind. Even the high end implies underlying organic growth is barely flat. Consensus expects
revenue around $6,650M in FY2026E and a recovery to ~$7,050M in FY2027E as the ERP headwind
reverses, but this is mechanical normalization -- not organic acceleration.
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $7,341M | $7,107M | $7,389M | $7,093M | $7,104M |
| YoY Growth | — | -3.2% | 4.0% | -4.0% | 0.2% |
| Organic Growth | 9% | -2% | 6% | — | 5% |
FY2026E guided organic -5% to -9% (incl ~7.5pts ERP headwind). FY2024 organic N/A due to cyberattack. Data sourced from Daloopa.
Gross Margin Trajectory (Annual)
Gross margin recovery from 35.8% to 45.2% is genuinely impressive -- +940bps over 3 years.
The FY2022 trough of 35.8% was caused by severe input cost inflation (resin, transportation,
logistics). Clorox executed a disciplined recovery through pricing, IGNITE productivity savings,
and mix improvement. FY2025 gross margin of 45.2% now exceeds the pre-inflation FY2021 level
of 43.6%. However, the most recent quarters show this recovery reversing: FQ1 FY2026 gross
margin dropped to 41.7% (-410bps YoY) due to ERP transition costs and trade spending.
Management expects back-half improvement as ERP costs fade.
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Gross Margin | 43.6% | 35.8% | 39.4% | 43.0% | 45.2% |
| YoY Change (bps) | — | -780 | 360 | 360 | 220 |
FY2022 trough from resin/logistics inflation. Recovery driven by pricing + IGNITE savings. Data sourced from Daloopa.
Adj EBIT and Adj EPS Trajectory (Annual)
FY2025 Adj EBIT of $1,316M was a 5-year high, but FY2026 faces sharp reversal.
Adj EBIT recovered from $769M (FY2022) to $1,316M (FY2025), with margins expanding from 10.8%
to 18.5% -- surpassing the pre-inflation FY2021 peak of 17.3%. Adj EPS followed a similar
recovery arc from $4.10 to ~$7.50. However, FY2026 consensus calls for Adj EBIT around $1,150M
(-13% YoY) as ERP transition costs, tariffs (~$40M headwind), and volume declines compress
margins. FY2027E of ~$1,300M represents a mechanical recovery as ERP headwinds reverse, not
genuine operating leverage.
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Adj EBIT ($M) | $1,269M | $769M | $917M | $1,045M | $1,316M |
| EBIT Margin | 17.3% | 10.8% | 12.4% | 14.7% | 18.5% |
| Adj EPS | $7.2 | $4.1 | $5.8 | $6.7 | $7.5 |
| GAAP EPS | $5.6 | $3.7 | $1.2 | $2.2 | $6.5 |
Adj EPS for FY23-FY25 approximated from guidance/fiscal year summaries. GAAP EPS volatile due to impairments. Data sourced from Daloopa.
Free Cash Flow Trajectory (Annual, USD M)
FCF is volatile -- swinging from $930M (FY23) to $483M (FY24) to $761M (FY25).
Free cash flow has been highly inconsistent, with no clear growth trajectory. FY2024 was
particularly weak at $483M (6.8% of sales), likely impacted by cyberattack-related disruptions.
FY2025 recovered to $761M (10.7% of sales) but remains below the FY2021 ($945M) and FY2023
($930M) peaks. FY2026 H1 is tracking very weak: FQ1 delivered just $57M in FCF vs $182M prior
year. Full-year FY2026 FCF expected around $650M, well below FY2025.
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| FCF ($M) | $945M | $535M | $930M | $483M | $761M |
| FCF % of Sales | — | — | 12.6% | 6.8% | 10.7% |
| Diluted Shares (K) | 127,299 | 123,906 | 124,181 | 124,804 | 124,287 |
FCF swings widely. FY2026 H1 tracking very weak ($57M in FQ1 alone). Shares ~124K, modest buyback activity. Data sourced from Daloopa.
Quarterly Revenue and Organic Growth
Quarterly organic growth is wildly volatile -- ranging from -18% to +31% -- making the trend nearly impossible to read.
CQ23Q3 (FQ1 FY2024) was the cyberattack quarter at -18%. CQ24Q3 (FQ1 FY2025) was the easy-comp
lap at +31%. CQ25Q3 (FQ1 FY2026) reflects -17% from ERP transition inventory prebuild reversal.
Even stripping out these distortions, the underlying trend in the most recent two quarters is
roughly -3% and flat -- not what you want from a staples company. Revenue has declined YoY in
7 of the last 8 quarters on a reported basis.
| Metric | CQ23Q1 | CQ23Q2 | CQ23Q3 | CQ23Q4 | CQ24Q1 | CQ24Q2 | CQ24Q3 | CQ24Q4 | CQ25Q1 | CQ25Q2 | CQ25Q3 | CQ25Q4 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue ($M) | $1,915M | $2,019M | $1,386M | $1,990M | $1,814M | $1,903M | $1,762M | $1,686M | $1,668M | $1,988M | $1,429M | $1,673M |
| YoY Growth | — | — | — | — | -5.3% | -5.7% | 27.1% | -15.3% | -8.1% | 4.5% | -18.9% | -0.8% |
| Organic Growth | 8% | 14% | -18% | 20% | 2% | -3% | 31% | -9% | -2% | 8% | -17% | -1% |
CQ = Calendar Quarter. FQ = Fiscal Quarter. CQ23Q3 = cyberattack quarter. CQ24Q3 = easy-comp lap. CQ25Q3 = ERP reversal. Data sourced from Daloopa.
Quarterly Gross Margin Trend
FQ1 FY2026 gross margin collapsed to 41.7% -- down -410bps YoY from 45.8%.
The quarterly trend had been encouraging through FY2025, with margins consistently in the
43-47% range. But CQ25Q3 (FQ1 FY2026) saw a dramatic drop to 41.7%, driven by ERP transition
costs (logistics disruptions, incremental trade spending) and tariff headwinds. CQ25Q4 (FQ2)
partially recovered to 43.2% but was still -60bps YoY. Management expects improvement in the
back half as ERP costs fade, but the magnitude of the FQ1 compression is concerning.
CQ25Q3 = FQ1 FY2026. -410bps YoY is a material deterioration from a strong FY2025 base. Data sourced from Daloopa.
Quarterly Adj EBIT Margin and GAAP EPS
EBIT margin collapsed to 11.2% in FQ1 FY2026 -- a -760bps YoY compression.
CQ25Q3 (FQ1 FY2026) EBIT margin of 11.2% vs 18.8% prior year is a stark deterioration. GAAP
EPS fell to $0.65 vs $0.80 (-19% YoY) in FQ1 and $1.29 vs $1.54 (-16% YoY) in FQ2. While
management attributes much of this to the ERP transition, the magnitude of margin compression
exceeds what pure ERP disruption would explain. Elevated promotional spending and tariff costs
are also contributing factors.
| Metric | CQ24Q3 | CQ24Q4 | CQ25Q1 | CQ25Q2 | CQ25Q3 | CQ25Q4 |
|---|---|---|---|---|---|---|
| Adj EBIT Margin | 18.8% | 15.3% | 15.9% | 23.1% | 11.2% | 15.3% |
| GAAP EPS | $0.8 | $1.5 | $1.5 | $2.7 | $0.7 | $1.3 |
CQ25Q3 EBIT margin of 11.2% is the weakest in the available window. EPS declining double-digits YoY. Data sourced from Daloopa.
Quarterly Free Cash Flow and Share Count
FQ1 FY2026 FCF of just $57M is very weak; share count modestly declining.
Quarterly FCF has been volatile, ranging from $57M (CQ25Q3) to $269M (CQ25Q4). The FQ1 weakness
vs $182M prior year reflects ERP-driven working capital disruptions. On the positive side,
diluted shares declined ~2% over 6 quarters (from 124.7K to 121.9K), indicating modest but
consistent buyback activity. This is a minor positive in an otherwise challenging picture.
FCF quarterly data shows high volatility. Shares down ~2% over 6 quarters. Data sourced from Daloopa.
Segment Organic Growth (Quarterly, FY2026 H1)
Three of four segments are declining organically -- breadth of weakness is concerning.
In FQ1 FY2026 (CQ25Q3), all four segments posted negative organic growth: Health and Wellness
-19%, Household -19%, Lifestyle -23%, International -2%. FQ2 (CQ25Q4) showed only partial
recovery: Health and Wellness +2%, Household -6%, Lifestyle -5%, International +5%. Household
and Lifestyle are structurally weak, facing private label competition in cat litter, trash bags,
and cleaning. Only International shows relative resilience. The Gojo/Purell acquisition may
help Health and Wellness but adds integration risk.
| Segment | CQ25Q1 (FQ3) | CQ25Q2 (FQ4) | CQ25Q3 (FQ1) | CQ25Q4 (FQ2) |
|---|---|---|---|---|
| Health & Wellness | 3% | 14% | -19% | 2% |
| Household | -11% | 7% | -19% | -6% |
| Lifestyle | -3% | 3% | -23% | -5% |
| International | 2% | 1% | -2% | 5% |
FQ1 FY2026 organic heavily distorted by ERP inventory prebuild reversal (~7.5pts headwind). Household and Lifestyle structurally weak. Data sourced from Daloopa.
Key Financial Signals
Positive Signals
1. Multi-year margin recovery is real -- GM from 35.8% to 45.2% (+940bps over 3 years)
2. FY2025 was a strong profit year -- Adj EBIT of $1,316M was a 5-year high
3. Share count modestly declining -- ~2% reduction over recent quarters
4. Innovation pipeline -- Clorox allergen platform, Glad Leakguard, Litter relaunch, Gojo acquisition
2. FY2025 was a strong profit year -- Adj EBIT of $1,316M was a 5-year high
3. Share count modestly declining -- ~2% reduction over recent quarters
4. Innovation pipeline -- Clorox allergen platform, Glad Leakguard, Litter relaunch, Gojo acquisition
Negative / Decelerating Signals
1. Revenue has gone nowhere in 5 years -- FY2021 $7,341M vs FY2025 $7,104M
2. FY2026 is sharply deteriorating -- organic -17%/-1%, margins collapsing, EPS declining
3. ERP transition masking weakness -- underlying organic ~-3% to flat even adjusting for ERP
4. 3 of 4 segments declining -- Household, Lifestyle structurally weak
5. FCF remains volatile -- $57M in FQ1 FY26 vs $182M prior year
6. Tariff/competitive headwinds -- ~$40M tariff hit, private label gaining in key categories
2. FY2026 is sharply deteriorating -- organic -17%/-1%, margins collapsing, EPS declining
3. ERP transition masking weakness -- underlying organic ~-3% to flat even adjusting for ERP
4. 3 of 4 segments declining -- Household, Lifestyle structurally weak
5. FCF remains volatile -- $57M in FQ1 FY26 vs $182M prior year
6. Tariff/competitive headwinds -- ~$40M tariff hit, private label gaining in key categories
Score Penalty Modifiers
| Modifier | Impact | Notes |
|---|---|---|
| Revenue stagnation (5yr) | -1.0 | Revenue lower than 5 years ago; no secular growth |
| ERP transition disruption | -0.5 | Material ongoing operational disruption in FY2026 H1 |
| Margin reversal in recent Qs | -0.5 | GM and EBIT margins sharply lower YoY in FQ1-FQ2 FY26 |
| Segment breadth of weakness | -0.5 | 3 of 4 segments declining organically |
| Volatile FCF | -0.5 | FCF swings widely; FY2026 tracking weak |
| Tariff/macro headwinds | -0.5 | ~$40M tariff headwind in FY2026; consumer under pressure |
| Multi-year margin recovery | +0.5 | Gross margin recovery from 35.8% to 45.2% is genuinely impressive |
| Innovation pipeline | +0.5 | Strong back-half innovation; Gojo/Purell acquisition adds optionality |
Base score: 5 (median for consumer staples with flat revenue). Net adjustments: -2.0 penalties + 1.0 bonus = 4/10. Data sourced from Daloopa and CLX earnings transcripts.