CLOROX CO /DE/ (CLX)

EXECUTIVE OVERVIEW

The Clorox Company is a leading multinational manufacturer and marketer of consumer and professional products with approximately 7,600 employees worldwide. The Company has operations in approximately 25 countries or territories and sells its products in approximately 100 markets, primarily through mass retailers; grocery outlets; warehouse clubs; dollar stores; home hardware centers; drug, pet and military stores; third-party and owned e-commerce channels; and distributors. Clorox markets some of the most trusted and recognized consumer brand names, including its namesake bleach, cleaning and disinfecting products, Pine-Sol® and Tilex® cleaners; Liquid-Plumr® clog removers; Poett® home care products; Glad® bags and wraps; Fresh Step® cat litter; Kingsford® grilling products; Hidden Valley® dressings, dips, seasonings and sauces; Brita® water-filtration products; and Burt’s Bees® natural personal care products. The Company also markets industry-leading products and technologies for professional customers, including those sold under the CloroxPro™ and Clorox Healthcare® brand names.

The Company primarily markets its leading brands in midsized categories considered to be financially attractive. Most of the Company’s products compete with other nationally advertised brands within each category and with “private label” brands. About 80% of the Company’s sales are generated from brands that hold the No. 1 or No. 2 market share position in their categories.

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. The four reportable segments consist of the following:

•Health and Wellness consists of cleaning, disinfecting and professional products marketed and sold in the United States. Products within this segment include home care, cleaning and disinfecting products and laundry additives, primarily under the Clorox®, Clorox2®, Pine-Sol, Scentiva®, Tilex, Liquid-Plumr, and Formula 409® brands; professional cleaning and disinfecting products under the CloroxPro and Clorox Healthcare brands; and professional food service products under the Hidden Valley brand.

•Household consists of bags and wraps, cat litter and grilling products marketed and sold in the United States. Products within this segment include bags and wraps under the Glad brand; cat litter, primarily under the Fresh Step and Scoop Away® brands; and grilling products under the Kingsford brand.

•Lifestyle consists of food, water filtration and natural personal care products marketed and sold in the United States. Products within this segment include dressings, dips, seasonings and sauces, primarily under the Hidden Valley brand; water-filtration products under the Brita brand; and natural personal care products under the Burt’s Bees brand.

•International consists of products sold outside the United States. Products within this segment include laundry additives and home care products, primarily marketed under the Clorox, Poett, Pine-Sol and Clorinda brands; bags and wraps under the Glad brand; cat litter, primarily marketed under the Ever Clean® and Fresh Step brands and water-filtration products marketed under the Brita brand.

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RECENT EVENTS AFFECTING THE COMPANY

For the fiscal quarter ended March 31, 2026, the Company continues to monitor macroeconomic conditions as a result of volatility in capital markets and developments in international trade policy. These evolving challenges contributed to a highly dynamic operating environment as the Company continued its efforts to drive growth, rebuild margins and drive its transformation.

Consumers continue to feel pressure as continued macroeconomic uncertainty impacts spending and prices remain elevated. United States trade policies continue to evolve, including new or increased tariffs on product imports from certain countries. These, and any future new or additional tariffs, as well as any associated retaliatory measures taken by other countries, may impact the macroeconomic environment, consumers, suppliers and the Company’s business. Though the Company has and will continue to take action to mitigate such impacts, the Company anticipates that the operating environment will remain volatile and challenging.

Global macroeconomic conditions remain volatile and geopolitical instability persists. This includes active military hostilities in the Middle East, specifically the ongoing conflict involving Iran, rising tensions in other regions, as well as actual and potential shifts in U.S. and foreign trade, economic and other policies, including the imposition of sanctions. These developments have increased uncertainty regarding the duration and potential escalation of conflicts, as well as the risk of economic disruptions that could impact global trade and supply chains. Given the dynamic nature of these conditions, the Company expects continued variability in the operating environment.

The Company has not experienced significant disruptions to its regional operations and global supply chain or significant cost increases during fiscal year 2026 to date due to the ongoing conflict involving Iran. However, the risks of future negative impacts from regional conflicts due to transportation, logistical or supply constraints and higher commodity costs for certain raw materials remain present, and the Company expects to experience corresponding incremental costs and gross margin pressures in future periods.

The Company's transformation efforts continued into fiscal year 2026. The Company has continued transitioning core U.S. operations to the new enterprise resource planning system (ERP) as part of the phased implementation of its technology transformation. The Company remains in the stabilization phase and completed its implementation in the third quarter of fiscal year 2026. The total incremental transformational investment was approximately $580 million. The digital foundation provided by the Company’s new ERP supports its long-term financial goals through modernized capabilities that accelerate growth and deliver stronger efficiencies.

The Company will continue to invest in its brands, capabilities and people to deliver consistent, profitable growth over time. The acquisition of GOJO Industries, Inc. (GOJO), which closed on April 1, 2026, and the completed purchase of The Procter & Gamble Company’s (P&G) interest in the venture agreement for the Company’s Glad bags and wraps business (the Venture Agreement) on March 2, 2026 reflect the Company’s intent to continue evolving its portfolio to deliver long‑term value for shareholders.

For the remainder of fiscal year 2026, the Company anticipates that the operating environment will remain volatile and challenging as consumers may face greater pressure as continued macroeconomic uncertainty impacts spending. The Company will continue to invest in its brands, capabilities and people to deliver consistent, profitable growth over time.

For further discussion, refer to Item 1.A, “Risk Factors” of this report and “Risk Factors” included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

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RESULTS OF OPERATIONS

CONSOLIDATED RESULTS

(1)The divestiture impact is calculated as net sales from the Better Health VMS business after the sale date in the nine month year-ago period.

(2)This represents the net impact on net sales growth / (decrease) from pricing actions, mix, trade promotion spending, mix from acquisitions and divestitures and other factors. In the nine months ended March 31, 2026, the impact from divestiture mix was 0% for Total Company.

(3)Organic sales growth / (decrease) is defined as net sales growth / (decrease) excluding the effect of any acquisitions and divestitures and foreign exchange rate changes. See “Non-GAAP Financial Measures” below for reconciliation of organic sales growth / (decrease) to net sales growth / (decrease), the most directly comparable GAAP financial measure.

(4)Organic volume represents volume excluding the effect of any acquisitions and divestitures. In the nine months ended March 31, 2026, the volume impact of divestitures was (1)% for Total Company.

(5)Total Company includes Corporate and Other. Corporate and Other includes the results of the Better Health VMS business through the date of divestiture.

Net sales and volume in the current three month period were both essentially flat.

Net sales and volume in the current nine month period decreased by 7% and 6%, respectively, primarily due to lower shipments in the current period following the incremental shipments related to the ERP transition in the fourth quarter of fiscal year 2025.

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RESULTS OF OPERATIONS (Continued)

Gross margin decreased by 140 basis points in the current three month period from 44.6% to 43.2%. The decrease was primarily driven by higher manufacturing and logistics costs and unfavorable mix, partially offset by cost savings.

Gross margin decreased by 200 basis points in the current nine month period from 44.7% to 42.7%. The decrease was primarily driven by higher manufacturing and logistics costs and lower volume, partially offset by cost savings.

Expenses

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The Clorox Company

(Dollars in millions, except per share data)

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide a reader of The Clorox Company’s (the Company or Clorox) financial statements with a narrative from the perspective of management on the Company’s financial condition, results of operations, liquidity and certain other factors that may affect future results. In certain instances, parenthetical references are made to relevant sections of the Notes to Consolidated Financial Statements to direct the reader to a further detailed discussion. This section should be read in conjunction with the consolidated financial statements and supplementary data included in this Annual Report on Form 10-K.

The following sections are included herein:

•Executive Overview

•Results of Operations

•Financial Position and Liquidity

•Contingencies

•Quantitative and Qualitative Disclosures about Market Risk

•Recently Issued Accounting Standards

•Critical Accounting Estimates

•Summary of Non-GAAP Financial Measures

EXECUTIVE OVERVIEW

The Clorox Company is a leading multinational manufacturer and marketer of consumer and professional products with fiscal year 2026 Net sales of $6,720 and about 9,200 employees worldwide as of June 30, 2026. The Company has operations in approximately 25 countries or territories and sells its products in approximately 95 markets, primarily through mass retailers; grocery outlets; warehouse clubs; dollar stores; home hardware centers; drug, pet and military stores; third-party and owned e-commerce channels; and distributors. Clorox markets some of the most trusted and recognized consumer brand names, including Clorox® cleaning and disinfecting products; Pine-Sol® cleaner; Liquid-Plumr® clog removers; Poett® home care products; Glad® bags and wraps; Fresh Step® cat litter; Kingsford® grilling products; Hidden Valley® dressings, dips, seasonings and sauces; Brita® water-filtration products; and Burt’s Bees® natural personal care products. The Company also markets industry-leading products and technologies for professional customers, including those sold under the Purell ® CloroxPro™ and Clorox Healthcare® brand names.

The Company primarily markets its leading brands in midsized categories considered to be financially attractive. Most of the Company’s products compete with other nationally advertised brands within each category and with “private label” brands. Over 80% of the Company's sales are generated from brands that hold the No. 1 or No. 2 market share position in their categories.

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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. The four reportable segments consist of the following:

•Health and Wellness consists of cleaning, disinfecting, sanitizing and professional products marketed and sold in the United States. Products within this segment include home care cleaning and disinfecting products and laundry additives, primarily under the Clorox, Clorox2, Pine-Sol, Scentiva, Tilex, Liquid-Plumr and Formula 409 brands; skin sanitization and cleaning products under the Purell and GOJO brands; professional cleaning and disinfecting products under the CloroxPro and Clorox Healthcare brands; and professional food service products under the Hidden Valley brand.

•Household consists of bags and wraps, cat litter and grilling products marketed and sold in the United States. Products within this segment include bags and wraps under the Glad brand; cat litter primarily under the Fresh Step and Scoop Away brands; and grilling products under the Kingsford brand.

•Lifestyle consists of food, water-filtration and natural personal care products marketed and sold in the United States. Products within this segment include dressings, dips, seasonings and sauces, primarily under the Hidden Valley brand; water-filtration products under the Brita brand; and natural personal care products under the Burt’s Bees brand.

•International consists of products sold outside the United States. Products within this segment include laundry additives and home care products primarily marketed under the Clorox, Poett, Pine-Sol, Clorinda and Chux brands; bags and wraps under the Glad brand; cat litter primarily marketed under the Ever Clean and Fresh Step brands and water-filtration products marketed under the Brita brand.

Non-GAAP Financial Measures

This Executive Overview, the succeeding sections of MD&A and Exhibit 99.2 may include certain financial measures that are not defined by accounting principles generally accepted in the United States of America (U.S. GAAP). These measures, which are referred to as non-GAAP measures, are listed below:

•Adjusted free cash flow and Adjusted free cash flow as a percentage of net sales. Adjusted free cash flow is calculated as net cash provided by operations less capital expenditures and adjusted for significant one-time items in operating cash flows, such as the venture agreement payment.

•Earnings before interest and income taxes (EBIT) margin (the ratio of EBIT to net sales).

•Adjusted earnings (losses) before interest and income taxes (adjusted EBIT) represents earnings (losses) excluding interest income, interest expense, income taxes and other significant items that are nonrecurring or unusual (such as the pension settlement charge, incremental costs 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, transaction and integration costs related to acquisitions, significant losses related to divestitures and other nonrecurring or unusual items impacting comparability).

•Adjusted EBIT margin (the ratio of adjusted EBIT to net sales).

•Economic profit (EP) is defined by the Company as earnings before income taxes, excluding certain U.S. GAAP items (such as the pension settlement charge, incremental costs and insurance recoveries related to the August 2023 cyberattack, asset impairments, charges related to implementation of the streamlined operating model, charges related to digital capabilities and productivity enhancements investment, transaction and integration costs related to acquisitions, significant losses related to divestitures and other nonrecurring or unusual items impacting comparability) and interest expense; less income taxes (calculated based on the Company’s effective tax rate excluding the identified U.S. GAAP items), and less after tax profit attributable to noncontrolling interests, and less a capital charge (calculated as average capital employed multiplied by a cost of capital rate).

•Organic sales growth / (decrease) is defined as net sales growth / (decrease) excluding the effect of foreign exchange rate changes and any acquisitions or divestitures.

For a discussion of these measures and the reasons management believes they are useful to investors, refer to “Summary of Non-GAAP Financial Measures” below. To the extent applicable, this MD&A and Exhibit 99.2 include reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP.

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Fiscal Year 2026 Financial Highlights

A detailed discussion of strategic goals, key initiatives and results of operations is included below. Key fiscal year 2026 financial results are summarized as follows:

•The Company’s fiscal year 2026 net sales decreased by 5% to $6,720 from $7,104 in fiscal year 2025, primarily due to lower shipments in the current period following the incremental shipments related to the ERP transition in the fourth quarter of fiscal year 2025, partially offset by the benefit of the GOJO acquisition.

•Gross margin decreased by 290 basis points to 42.3% in fiscal year 2026 from 45.2% in fiscal year 2025. The decrease was primarily driven by lower net sales and higher manufacturing and logistics costs, partially offset by cost savings.

•The Company reported earnings before income taxes of $791 in fiscal year 2026, compared to $1,078 in fiscal year 2025. The Company reported Net earnings attributable to Clorox of $587 in fiscal year 2026, compared to $810 in fiscal year 2025.

•The Company delivered diluted net earnings per share (EPS) of $4.81 in fiscal year 2026, a decrease of 26%, or $1.71 from fiscal year 2025 diluted net EPS of $6.52. The decrease was primarily due to lower net sales and higher manufacturing and logistics costs, partially offset by lapping losses on the divestiture of the Better Health VMS business in the prior period and cost savings in the current period.

•EP decreased by $359 to $397 in fiscal year 2026, compared to $756 in fiscal year 2025 (refer to the reconciliation of EP to earnings before income taxes in Exhibit 99.2).

•The Company’s net cash provided by operations was $612 in fiscal year 2026, compared to $981 in fiscal year 2025. Adjusted free cash flow was $881 or 13.1% of net sales in fiscal year 2026, compared to $761 or 10.7% of net sales in fiscal year 2025 (refer to the reconciliation of net cash provided by operations to adjusted free cash flow in “Financial Position and Liquidity - Investing - Adjusted Free Cash Flow”).

•The Company paid $602 in cash dividends to stockholders in both fiscal years 2026 and 2025. In July 2026, the Company announced an increase of 1% in its dividend from the prior year.

Strategic Goals and Initiatives

The Company's IGNITE strategy — underpinned by its purpose and enduring values — accelerates innovation in key areas of the business to drive growth and deliver value for all Clorox stakeholders. IGNITE focuses on four strategic choices aimed at fueling long-term growth; innovating consumer experiences; reimagining how the company and its people work; and continuously evolving the product portfolio. The Company’s long-term financial goals reflected in IGNITE include annual net sales growth of 3% to 5% — increased from 2% to 4% in 2021 — annual adjusted EBIT margin expansion of 25 to 50 basis points and annual adjusted free cash flow as a percentage of net sales of 11% to 13%.

In April 2026, the Company completed the acquisition of GOJO Industries, Inc. (GOJO), expanding its product portfolio to include the Purell brand and GOJO's health and hygiene solutions. The Company acquired all of the issued and outstanding membership interests of GOJO, which now operates as Clorox Purell and is based in northeast Ohio. The acquisition reflects the Company's strategy to expand its position in health and hygiene and accelerate profitable growth.

In March 2026, the Company acquired The Procter & Gamble Company (P&G)’s 20% interest in the Company’s Glad bags and wraps business (the Venture Agreement) in cash. Following expiration of the Venture Agreement, the Glad business retains the exclusive core intellectual property licenses contributed by P&G on a royalty-free basis for the licensed products marketed.

In fiscal year 2026, the Company continued and completed its investment in transformative technologies and processes. This investment began in fiscal year 2022, and includes replacement of the Company's ERP system and transitioning to a cloud-based platform as well as the implementation of a suite of other digital technologies. The Company began implementation of its core U.S. operations in fiscal year 2026. The Company completed its implementation in the third quarter of fiscal year 2026. The total incremental transformational investment was approximately $580 million. It is expected that these implement

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