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The call was mixed: management highlighted important strategic and operational progress (ERP completion, strong innovation, distribution gains, Glad and Hidden Valley improvements, and the accretive GOJO acquisition with targeted synergies) but also disclosed significant near-term margin headwinds (higher logistics/input costs, one-time acquisition and cost-acceleration charges), category weakness in Food, and a bumpy conversion in Litter. The tone was cautiously optimistic — confident in long-term plans and tools to mitigate inflation and drive value superiority, while acknowledging material short-term pressure and uncertainty.
Management reiterated that fiscal 2026 remains uncertain but gave several quantified assumptions: they’re modeling roughly $100/barrel oil in Q4, which they estimate will be a $20–25M Q4 headwind (~130 bps of gross margin); Q4 gross margin is running about 5 percentage points below last year (~150 bps from lapping ERP-related operating leverage, ~200 bps tied to the GOJO acquisition — including a non‑recurring ~150‑bps inventory step‑up — and another ~100–150 bps from elevated input costs); GOJO adds an ~$800M business (≈$200M in Q4, ~+10% to the quarter and ~+3% to the year), is expected to be EBITDA‑neutral in year 1 with at least $50M of run‑rate synergies targeted, ~50 bps of gross‑margin dilution in year 1, <1 point SG&A dilution and an initial ~1‑point reduction in A&P as a percent of sales (≈‑25 bps full year); interest expense rises ~+$30M in Q4 and ~+$110M in the following year above a ~$100M pre‑acquisition run rate; operationally Q3 total distribution points were +5%, company categories are expected roughly 0–1% for the remainder of the year (litter mid‑single digits, food down mid‑single digits), ERP implementation is complete with ERP‑related logistics/fulfillment costs largely abating in Q4, and there is a one‑time ~50‑bps gross‑margin headwind to accelerate structural cost savings into FY27.
The multi-phase ERP implementation was completed in Q3; service levels have stabilized and related incremental costs have come down. Management stated minimal incremental ERP-related costs by the end of Q3 and expects little to no incremental ERP cost in Q4, improving the foundation for execution and margin recovery.
Innovation execution was highlighted as a strength: Clorox PURE (allergen platform) achieved early distribution wins and velocity above expectations; Scentiva expansion (new Cherry Blossom scent) and other Cleaning innovations are performing well and gaining retail support.
Total distribution points (TDPs) increased by over 5% in Q3, with management expecting continued shelf resets and incremental distribution gains through Q4.
Glad showed sequential share improvement and distribution pickup after the JV buyout and reinvestment; Food (Hidden Valley) returned to share growth in Q3 following price-pack architecture and packaging changes and new product launches (protein-forward, avocado oil).
Closed GOJO acquisition April 1 ($800M business growing mid-single digits). Adds ~ $200M in Q4 (≈10% of the quarter; ≈3% of the fiscal year), expected to be EBITDA-neutral year 1, with ~ $50M run-rate cost synergies targeted over time. Management retained GOJO leadership and has integration resources in place.
Management reiterated ability to mitigate input cost inflation over time using integrated margin management: targeted RGM (example: Glad price reduction test that regained share), productivity, reformulation, accelerated structural cost savings, and trade optimization.
Overall categories through Q3 were roughly in management's expected range (0% to +1% for the year). Management noted consumer resilience: brands continue to be preferred over private label (private label shares largely stabilized this quarter).
Good day, ladies and gentlemen, and welcome to The Clorox Company Q3 FY '26 Earnings Release Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call, Ms. Lisah Burhan, Vice President of Investor Relations for The Clorox Company. Ms. Burhan, you may begin your conference.
Thank you, Jen. Good afternoon, and thank you for joining us. On the call with me today are Linda Rendle, our Chair and CEO; and Luc Bellet, our CFO. Please note that our earnings release and prepared remarks are available on our website at thecloroxcompany.com. Linda will share a few opening comments, and then we'll take your questions. During this call, we may make forward-looking statements, including about our fiscal 2026 outlook. These statements are based on management's current expectations but may differ from actual results or outcomes. In addition, we may refer to certain non-GAAP financial measures.
Please refer to the forward-looking statements section, which identifies various factors that could affect such forward-looking statements, which has been filed with the SEC. In addition, please refer to the non-GAAP financial information section of our earnings release and the supplemental financial schedule in the Investor Relations section of our website for reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures. I'll now turn it over to Linda.
Thank you for joining us today. As we approached fiscal year 2026, we knew it would take a disciplined, phased approach. In th...
