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CAGNY 2025 Linda Rendle Chair & Chief Executive Officer Kevin Jacobsen EVP & Chief Financial Officer Luc Bellet Incoming EVP & Chief Financial Officer
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Safe Harbor Except for historical information, matters discussed in this presentation, including statements about the expected or potential impact of the Company’s operational disruption stemming from a cyberattack and the success of the Company’s future volume, sales, costs, cost savings, earnings, foreign currencies and foreign currency exchange rates, cash flows, plans, objectives, expectations, growth or profitability, are forward-looking statements based on management’s estimates, assumptions and projections. Important factors that could affect performance and cause results to differ materially from management’s expectations are described in the Company’s most recent Form 10-K filed with the SEC, as updated from time to time in the Company’s SEC filings. Those factors include, but are not limited to, unfavorable macroeconomic and geopolitical conditions and uncertainty; labor shortages, wage pressures, rising inflation, the interest rate environment, fuel/energy costs, weather events/natural disasters, disease outbreaks/pandemics, terrorism and unstable geopolitical conditions, as well as macroeconomic and geopolitical volatility and uncertainty; increases in commodity, energy and other costs; supply disruptions; the Company’s ability to drive sales growth and increase prices/market share; impact of the changing retail environment; the Company’s recovery from the August 2023 cyberattack and risks relating to its use/reliance on information and operational technology systems, including security breaches or cyberattacks; dependence on key customers; intense competition in the Company’s markets; volatility and increases in raw materials, transportation, labor and other costs; risks related to supply chain issues, product shortages and disruptions; the success of the Company’s cost savings and transformational initiatives/strategies; the Company’s business reputation and that of its brands/products; dependence on key customers; the Company’s product innovation or ability to expand into adjacent categories/countries; the Company’s ability to attract/retain key personnel; government regulations; political, legal and tax risks; the Company’s ability to drive sales growth and increase market share; risks relating to international operations and trade, including price controls, foreign currency fluctuations, and labor unrest, inflation and potential instability in Argentina; labor claims and labor unrest, potential harm and liabilities from use, and storage and transportation of chlorine in certain markets; environmental, social or governance matters; product liability claims, labor claims and other legal proceedings; government regulations; political, legal and tax risks; information and operational technology security breaches or cyber attacks; risks relating to acquisitions, new ventures and divestitures; the success of the Company’s transformational initiatives, business strategies and products; product liability claims, labor claims and other legal proceedings; the Company’s business reputation; environmental, social or governance matters; financial projections accuracy; risks related to the acquisition of Procter & Gamble’s interest in the Glad business; reliance on third-party service providers; environmental matters including remediation costs; the Company’s ability to assert/ and defend its intellectual property rights; the effect of the Company’s indebtedness/credit ratings on its business operations, financial results and ability to access funding; and the impacts of potential shareholder activism. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise, except to the extent required by law and we make no representation, express or implied, that the information is still current or complete. The Company may also use non-GAAP financial measures, which could differ from reported results using Generally Accepted Accounting Principles (GAAP). The most directly comparable GAAP financial measures and reconciliation to non-GAAP financial measures are set forth in the Supplemental Schedules of the Company’s quarterly financial results and in the Company’s SEC filings, including its Form 10-K and its exhibits furnished to the SEC, which are posted at TheCloroxCompany.com in the Investors/Financial Information/Quarterly Results and SEC Filings sections, respectively. 2
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Well Positioned to Continue to Build Earnings & Create Long-Term Shareholder Value • Advantaged portfolio of superior value brands in essential categories supported with continued investment • We are transforming into a faster-growing, more resilient company by modernizing our capabilities, executing our digital transformation, and streamlining our operating model, all of which we are just starting to scale • Confident in our ability to deliver consistent profitable growth over time and create long-term shareholder value 3
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Who We Are
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Global Portfolio of Leading Brands Trusted & Loved by Consumers Results from fiscal year 2024. The balance for net sales is included in Corporate and Other. *As measured by our consumer value metric. 100+ MARKETS GLOBALLY >60% OF PORTFOLIO HAS SUPERIOR CONSUMER VALUE* 35% 18% 28% 16% HEALTH & WELLNESS HOUSEHOLD LIFESTYLE INTERNATIONAL $7.1 Billion FY24 NET SALES 5 80% OF SALES FROM BRANDS THAT ARE NO. 1 OR NO. 2 IN CATEGORIES
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Choiceful, Disciplined Playbook Creates Competitive Advantage & Shareholder Value Leading brands loved by consumers Purposeful & targeted in where we play Purpose-driven growth World class capabilities to drive operational excellence ECONOMIC PROFIT 6
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Portfolio of Leading Brands with Superior Consumer Value 54% 60% 64% FY19 FY23 Current Superior Consumer Value #1 or #2 Brands in Majority of Categories (1) (1) 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. Source: Circana Latest 52 weeks ending June 30, 2024. (2) As measured by our consumer value metric. Source: Circana Latest 52 weeks ending December 22, 2024. 7 (2)
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Strategic Update
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IGNITE IGNITE Built to Address Megatrends New Wave Wellness Home Life Redefined IGNITE Megatrends Health & Wellness Multicultural Millennials Digitally Transformed Engagement Personalization How They’ve Evolved Responsibility No Significant Change
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IGNITE Mental Health Lifestyle & GLP-1 Impact New Wave Wellness Personalization & Performance
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IGNITE Home Life Redefined Smaller Households Balancing Relaxation & Productivity Embracing Smaller, Imperfect Spaces
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IGNITE Digitally Transformed Engagement Social Commerce Collapsing Purchase Funnel AI Assistants
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IGNITE State of the Consumer More Uncertainty Ahead Value-Seeking Behaviors Willingness to Pay for Better Experiences
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IGNITE Private Label Remains Stable in Our Categories 18% 17% 16% 17% 17% 17% 2019 2020 2021 2022 2023 2024 Private Label Dollar Share Source: Circana Market Advantage - Total U.S. MULO+ and Pet Spec and Pet Ecommerce, February 2025.
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IGNITE New Opportunities to Champion People to Be Well and Thrive Every Single Day Drive Category Growth Increase Market Share Attracting New Households Driving New Occasions
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IGNITE IGNITE Creates a Resilient, Faster Growing Company Deliver Sales Growth of Expand Adj. EBIT Margin by Generate Free Cash Flow of 3 to 5% Adjusted EBIT (a non-GAAP measure) represents earnings before income taxes (a GAAP measure), excluding interest income, interest expense and other significant items that are nonrecurring or unusual. Adjusted EBIT margin is a measure of Adjusted EBIT as a percentage of net sales. +25 to 50bps 11 to 13%
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IGNITE IGNITE Strategy Choices Fuel Growth Innovate Experiences Reimagine Work Evolve Portfolio
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IGNITE Creating a Resilient, Faster Growing Company Streamlined Operating Model Digital Transformation Modernized Capabilities
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IGNITE What We’ve Achieved To Date Fuel Growth Stabilized and rebuilt margin Innovate Experiences Accelerated growth Increased consumer value Better innovation pipeline Strengthened retailer partnerships Reimagine Work Data transformation Streamlined operating model Scaling modernized capabilities Evolve Portfolio Acquired majority interest in Saudi JV Divested VMS and Argentina businesses
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FUEL GROWTH Scaling Holistic Margin Management Toolbox Strategic Pricing Price Pack Architecture Trade Optimization Network Optimization Procurement Productivity Enhancement Design to Value
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FUEL GROWTH On-Track to Return to Pre-Pandemic Gross Margins (*) Based on Outlook as of Feb 3, 2025 FY22 FY23 FY24 FY25 FY25 Outlook +360 bps +360 bps +125 to 150 bps 36% ~44% (*)
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FUEL GROWTH Net Revenue Management Beginning to Deliver Value 22
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FUEL GROWTH Price Pack Architecture - Cleaning Dilutables Pine-Sol concentrated platform expansion Source: POS Circana Latest 52 weeks ending January 12, 2025 versus same period year ago. +8% Sales Growth Margin Accretive
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FUEL GROWTH What's Next - Price Pack Architecture • Different pack sizes to address different consumer needs • Partnering with retailers to learn in-market
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FUEL GROWTH What's Next - Design to Value • Standardized Product & Packaging • Simplified Formula • Increased Operational Efficiency
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INNOVATE EXPERIENCES 54% 60% 64% FY19 FY23 Current Superior Consumer Value #1 or #2 Brands in Majority of Categories (1) (1) 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. Source: Circana Latest 52 weeks ending June 30, 2024. (2) As measured by our consumer value metric. Source: POS Circana Latest 52 weeks ending December 22, 2024. (2) Consumer Value is of the Highest Importance 26
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INNOVATE EXPERIENCES Delivering Clearly Superior Experiences Through Modernized Capabilities I love it! Proposition “I want it!” Product “It’s amazing!” Packaging “I need it!” Price / Value “It’s worth it!” Place “I see it!”
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INNOVATE EXPERIENCES Scentiva Platform for Scent Seekers Make Up 40-50M U.S. Households Clean More Frequently Growing Population
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INNOVATE EXPERIENCES Proposition – Strong, Differentiated Cleans like Clorox with an amazing, long-lasting freshness Proposition “I want it!”
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INNOVATE EXPERIENCES Product - Expanding to Tougher Job Occasions Product “It’s amazing!”
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INNOVATE EXPERIENCES 31
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INNOVATE EXPERIENCES Packaging - High-Impact, Sensorial Packaging “I need it!" From To
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INNOVATE EXPERIENCES Superior Experience is Driving Accelerated Scentiva Growth 4% 55% 27% FY23 FY24 FY25e 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% +58% ++ Year over Year Dollar Sales Growth +28% +3% * * Based on estimated FY25 sales
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INNOVATE EXPERIENCES Cats Are Cool More Younger Cat Owners Deeper Connections A New Generation is Rewriting the Rules of Cat Ownership More Younger Cat Owners 34
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INNOVATE EXPERIENCES CLEAN SCENT SCOOPING ODOR CONTROL CAT WELLNESS HARD TO TRANSPORT & STORE Consumers Have Different Litter Dissatisfiers TRACKING 35
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INNOVATE EXPERIENCES Proposition “I want it!” Proposition – Odor Control #1 Category Dissatisfier is Odor Control 36
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INNOVATE EXPERIENCES Product “It’s amazing!” Product – Revolutionary Odor Control World’s Most Premium Clumping Clay Patented Activated Carbon Antimicrobial Technology Paw & Liquid Activated Fragrance
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INNOVATE EXPERIENCES Heavy Duty Spot Heavy Duty work, launching 2/15, won't have a final link for a week or 2 (rough cuts available now) Proposition “I want it!”
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INNOVATE EXPERIENCES Place – Winning the Digital Shelf Place “I see it!" Source: POS Circana MULOP + Pet eCommerce Latest 52 weeks ending January 26, 2025 versus same period year ago. +12% eCommerce Sales Growth 39
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INNOVATE EXPERIENCES Packaging - Harder Hitting to Improve Value Packaging “I need it!" 40
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INNOVATE EXPERIENCES 4 1 What’s Next for Fresh Step Attract New Cat Owners Launch Superior Innovation Win the Digital Shelf 41
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INNOVATE EXPERIENCES Trash is a Problem Everyone Shares Need for Strength & Odor Control Value Top of Mind Willingness to Pay to Make Trash Easier & More Pleasant
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INNOVATE EXPERIENCES Trash Has Many Dissatisfiers LEAKS RIPS & TEARS SMELLS BACTERIA & GERMS CHOREDOM We outsmart waste to leave you Glad
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INNOVATE EXPERIENCES Product - Improving Strength Product “It’s Amazing!” +14% Sales Growth Source: POS Circana MULO+ excluding Club Latest 26 weeks ending December 29, 2024 versus same period year ago.
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INNOVATE EXPERIENCES Kairo Ad 45
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INNOVATE EXPERIENCES Product - Innovating with Retailers to Win Product “It’s amazing!” 46
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INNOVATE EXPERIENCES Packaging “I need it!" Packaging – Improving Shopability & Value 47
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INNOVATE EXPERIENCES What’s Next for Glad Communicate Superiority Win at Shelf Lead Category Innovation 48
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REIMAGINE WORK Creating a Resilient, Faster Growing Company Streamlined Operating Model Digital Transformation Modernized Capabilities
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REIMAGINE WORK Modernized Capabilities Consumer Personalization Innovation Core Operations
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REIMAGINE WORK Modernized Capability - Personalization • Proprietary data of 100M known users • State of the art consumer data platform • High efficiency content hub 60% of all media spending is personalized
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REIMAGINE WORK Personalize to Drive Improved Experience & ROI Right Person Right Time Right Content + +
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REIMAGINE WORK Personalization is Paying Off – Growth & Efficiency Source: ROI measurement results from Clorox marketing mix modeling compared to Nielsen benchmarks, 2024.
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REIMAGINE WORK Personalizing a Glad Platform Cherry Blossom Fashionista & Trendsetter Home Decor & Design Scented Home Wellness & Self Care Scented Trash Buyer +43% Sales Growth and accelerating in its 3rd year Source: POS Circana Total US - Multi Outlet+, Latest 52 weeks ending Jan 26, 2025 versus same period year ago
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REIMAGINE WORK Personalizing for Social Media
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REIMAGINE WORK Personalizing with Retailers Regional Experiences Scaling Digital Content Superior Merchandising
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REIMAGINE WORK Personalizing with Consumers Along Their Lead Journey Moment of Worry Address Uncertainty Drive Friction-Less Shopping Build Lasting Relationships +13% Sales Lift Total Brita Elite Lead Filtering Pour Through Products. Source POS Circana Total US - Multi Outlet+, Latest 13 weeks ending 1/26/25 versus same period year ago.
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REIMAGINE WORK Gen AI in Action
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REIMAGINE WORK What's Next - One-to-One Communication From To Moms + Afternoon + Snacks Carla + Morning, Afternoon, Evening + Home, Work, Gym
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REIMAGINE WORK What's Next - One-to-One Communication Mom with a Toddler Also has Older Kids Trying to Eat Healthier Herself
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REIMAGINE WORK What's Next - One-to-One Communication Wisconsin Freshman Lives in the Dorms Understand the Moment
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REIMAGINE WORK What's Next - Building on Our Foundation to Accelerate Growth 50% Media Spend is One-to-One (Specific Person in Specific Context)
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REIMAGINE WORK Modernized Capability - Better Ideas, More Quickly Leveraging data and AI to... • Reduce cycle time by 65% • Deliver significantly higher consumer interest in ideas • 3x more ideas in the pipeline f Digital Core
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REIMAGINE WORK Strong Platform Innovation Examples Trash Superior StrengthScentiva Year 1 Year 2 Year 3 Fresh Step Proven Power Coming Soon Coming Soon Coming Soon Coming Soon
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REIMAGINE WORK Strong Platform Innovation Examples Burt’s Bees Year 1 Year 2 Year 3 Hidden Valley Ranch Coming Soon Coming Soon Coming Soon Clorox Professional EcoClean MULTI-PACK Coming Soon
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REIMAGINE WORK Modernized Capability - Core Operations Leveraging data and AI to accelerate efficiency & effectiveness • Increased supply chain responsiveness • Reduced operational costs and lower inventory levels • Improved customer service levels with increased forecast accuracy 66
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REIMAGINE WORK Modernized Capabilities – What's Next Scaling Broadly Leading Starting • Personalization with AI content generation • Holistic margin management tools • Core operation efficiency levers • Digital core for innovation • ERP implementation unlocks new value streams • One-to-One communications
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EVOLVE PORTFOLIO Evolving Portfolio to Reduce Volatility, Accelerate Growth and Enhance Margin Accelerate Growth & Enhance Margin • Drive superior consumer value • Grow share and households • Deliver outsized growth in Clorox Professional & International • Divested VMS & Argentina businesses Reduce Volatility • Acquired majority interest in Saudi JV • Divested Argentina M&A a Strategic Lever • Criteria remain largely unchanged • Strong balance sheet
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IGNITE Integrated Business Approach to Sustainability Maximize Value Creation Manage Risk
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Financial Update Kevin Jacobsen EVP & Chief Financial Officer Luc Bellet Incoming EVP & Chief Financial Officer
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Key Messages • Clorox has a long track record of creating shareholder value • As part of our IGNITE strategy, our intent is to accelerate our financial performance • We remain confident in our ability to drive profitable growth and create long-term shareholder value 71
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Long Track Record of Creating Shareholder Value 384 617 SOURCE: FactSet. Total Shareholder Return as of December 31, 2024. 20Y Capital return as of June 30, 2024. +8% 20Y Annualized TSR >$15B 20Y Capital Return 72
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Healthy Free Cash Flow Generation Fuels Business Reinvestment & Cash Returned to Shareholders Free cash flow as a percentage of net sales. Free cash flow (a non-GAAP measure) represents net cash (GAAP measure) less capital expenditures. See reconciliation on page 86 (*) Based on outlook as of Feb 3, 2025 19% 13% 8% 13% 7% 11-13% FY20 FY21 FY22 FY23 FY24 FY25 Outlook* Goal 11-13% Average 12% 73
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Disciplined Uses of Cash Consistent Reinvestment Support for Dividend Growth Maintain Debt Leverage (1) Strong Cash Return (2) 11-13% Free Cash Flow CapabilitiesBrands Supply Chain 1.9x 1.9x 2.9x 2.5x 2 - 2.5x2.2x FY20 FY21 FY22 FY23 FY24 FY25 Outlook $0.8 B $1.5 B $0.6 B $0.6 B $0.6 B ~$0.9 B FY20 FY21 FY22 FY23 FY24 FY25 Outlook ~8% 20Y Dividend Growth >50Y Dividend Payment (1) Debt leverage (a non-GAAP measure) represents total debt divided by adjusted EBITDA for the trailing four quarters.. See reconciliation on page 87 (2) Cash returned to shareholders is defined as cash dividends paid plus treasury stock purchased as outlined in the statements of cash flows. 74
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Disciplined Uses of Cash Driving Top-Tier ROIC CLX 24% Peer average 16% Return on invested capital (ROIC) 5-yr average as of fiscal year ending June 30, 2024. ROIC (a non-GAAP measure) is calculated as earnings before income taxes and interest expense (GAAP measures), adjusted for other nonrecurring or unusual items, computed on an after-tax basis as a percentage of average invested capital. Average invested capital represents a five-quarter average of total assets less non-interest bearing liabilities. ROIC is a measure of how effectively the company allocates capital. Information on the Peer ROIC is based on latest publicly available fiscal-end data from FactSet . Data as of June 30, 2024. See reconciliation on page 89. Peers consists of 16 companies: CHD, CL, EL, GIS, HSY, K, KHC, KMB, KO, MDLZ, NESN-CH, REYN, RKT-GB, PEP, PG and ULVR-GB. Peer companies with data unavailable to us are excluded. 75
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Focused On Delivering Accelerated Financial Performance FY14-FY19 IGNITE Strategy Sales Growth Adj. EBIT Margin Improvement(1) Free Cash Flow (2) +2% Flat +12% +3 to 5% +25 to 50bps 11 to 13% (1) Adjusted EBIT (a non-GAAP measure) represents earnings before income taxes (a GAAP measure), excluding interest income, interest expense and other significant items that are nonrecurring or unusual. Adjusted EBIT margin is the ratio of adjusted EBIT to net sales. The five-year average adjusted EBIT margin growth/(decrease) is calculated as the sum of the growth/(decrease) in adjusted EBIT margin between each of fiscal years 2014 and 2015, 2015 and 2016, 2016 and 2017, 2017 and 2018, and 2018 and 2019 divided by five. (2) Free cash flow (a non-GAAP measure) represents net cash (GAAP measure) less capital expenditures. The five-year average free cash flow is calculated as the average free cash flow as a percentage of net sales for fiscal years 2019, 2018, 2017, 2016 and 2015. 76
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Accelerating Top-Line Growth … • Focusing on bigger, stickier innovation platforms • Leveraging new growth runways, supported by lasting shifts in consumer behavior • Building new net revenue management capabilities • Evolving our portfolio to accelerate profitable growth • FY19-24: Delivered 5Y CAGR of ~3% IGNITE Strategy goal aims to deliver +3 to 5% annual sales growth 3 to 5% 77
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… And Expanding Margins 36% ~44% FY22 FY25 Outlook* +800bps • Long track record of cost savings • Proven ability to price to recover inflation • Building new net revenue management capabilities • Divestitures supporting margin expansion • On track to rebuild Gross Margin (*) Based on Outlook as of Feb 3, 2025 78
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FY25 Financial Outlook - Our Work Continues Organic Sales Growth(1) +360bps +21% Gross Margin Expansion Adjusted EPS Growth(2) +4% to 7% +3% to 5% (3) +125bps to 150bps +13% to 19% +9% to 12% (3) FY25 Outlook(3) (1) Organic sales growth (a non-GAAP measure) is defined as net sales growth / (decrease) excluding the effect of any acquisitions and divestitures and foreign exchange rate changes. See reconciliation on page 91. (2) Adjusted EPS (a non-GAAP measure) is defined as diluted earnings per share that excludes or has otherwise been adjusted for significant items that are nonrecurring or unusual. FY25 outlook for adjusted EPS of between $6.95 and $7.35 represents a year-over-year increase of 13% to 19%, respectively. FY25 adjusted EPS outlook includes $0.25 to $0.45 of impact from the expected incremental shipments related to our ERP transition. See reconciliation on page 92. (3) Organic sales growth and adjusted EPS growth based on Outlook as of February 3, 2025 excluding the impact from ERP implementation.. . FY24 Flat 79
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Ecosystem to Deliver Consistent Profitable Growth 80
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Confidence in Our Ability to Continue Driving Top-Line Growth … Building on Strong Foundation: Bigger, stickier innovation platforms, robust demand creation model and benefits from portfolio evolution Leveraging Transformation and scaling capabilities to: • Build multi-year pipeline of net revenue management opportunities • Accelerate innovation, increase speed to market and personalization Deliver 3-5% sales growth and grow market shares, more consistently 81
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… And Expanding EBIT Margin 25 to 50bps Building on Strong Foundation: Cost savings track record, pricing capability, benefits from divestitures Leveraging Transformation and scaling capabilities to: • Strengthen our cost savings pipeline • Reduce S&A to 13% of sales over time • Improve visibility and consistency Deliver 25 to 50bps of EBIT margin expansion, more consistently 82
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Long-Term Investment Case Remains Attractive • Continue to invest to strengthen our competitive advantage • Attractive business model that delivers strong cash flow • Continue to be disciplined in how we invest our cash 83
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Well Positioned to Continue to Build Earnings & Create Long-Term Shareholder Value • Advantaged portfolio of superior value brands in essential categories supported with continued investment • We are transforming into a faster-growing, more resilient company by modernizing our capabilities, executing our digital transformation, and streamlining our operating model, all of which we are just starting to scale • Confident in our ability to deliver consistent profitable growth over time and create long-term shareholder value 84
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CAGNY 2025 APPENDIX 85
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Free Cash Flow Reconciliation Dollars in millions & percentages based on rounded numbers 86 (1) In accordance with the SEC's Regulation G, this schedule provides the definition of certain non-GAAP measures and the reconciliation to the most closely related GAAP measure. Management uses free cash flow and free cash flow as a percentage of net sales to help assess the cash generation ability of the business and funds available for investing activities, such as acquisitions, investing in the business to drive growth, and financing activities, including debt payments, dividend payments and stock repurchases. Free cash flow does not represent cash available only for discretionary expenditures since the Company has mandatory debt service requirements and other contractual and non-discretionary expenditures. In addition, free cash flow may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures and should be read in connection with the company’s consolidated financial statements presented in accordance with GAAP. Fiscal Fiscal Fiscal Fiscal Fiscal Year Year Year Year Year 2020 2021 2022 2023 2024 Net cash provided by operations – GAAP $1,546 $1,276 $786 $1,158 $695 Less: Capital expenditures $254 $331 $251 $228 $212 Free cash flow – non-GAAP (1) $1,292 $945 $535 $930 $483 Free cash flow as a percentage of net sales – non-GAAP (1) 19% 13% 8% 13% 7% Net sales $6,721 $7,341 $7,107 $7,389 $7,093
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Debt to Adjusted EBITDA Reconciliation (Debt Leverage) Dollars in millions & percentages based on rounded numbers 87(*) Refer to the next slide for footnotes. FY20 FY21 FY22 FY23 FY24 6/30/2020 6/30/2021 6/30/2022 6/30/2023 6/30/2024 Earnings before income taxes $1,185 $900 $607 $238 $398 Interest income ($2) ($5) ($5) ($16) ($23) Interest expense $99 $99 $106 $90 $90 EBIT (1)(4) $1,282 $994 $708 $312 $465 EBIT margin (1)(4) 19.1% 13.5% 10.0% 4.2% 6.6% Digital capabilities and productivity enhancements investment (cash) (5) $0 $0 $61 $100 $108 Saudi JV acquisition gain (6) $0 ($82) $0 $0 $0 VMS impairment (7) $0 $329 $0 $445 $0 Professional Products supplier charge (8) $0 $28 $0 $0 $0 Streamlined operating model (cash) (9) $0 $0 $0 $60 $32 Loss on divestiture (10) $0 $0 $0 $0 $240 Pension settlement charge (11) $0 $0 $0 $0 $171 Cyberattack costs, net of insurance recoveries (cash) (12) $0 $0 $0 $0 $29 Adjusted EBIT (2)(4) $1,282 $1,269 $769 $917 $1,045 Adjusted EBIT margin (2)(4) 19.1% 17.3% 10.8% 12.4% 14.7% Depreciation and amortization $180 $211 $224 $236 $235 Net sales $6,721 $7,341 $7,107 $7,389 $7,093 Total Debt (13) $2,780 $2,784 $2,711 $2,527 $2,485 2.5Debt to Adjusted EBITDA (14) 1.9 1.9 2.2 20.2% 13.1% 2.9 13.4% $932 $993 $1,111 15.7%Adjusted EBITDA margin (3)(4) 21.8% $1,480 Adjusted EBITDA (3)(4) $1,462
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Debt to Adjusted EBITDA Reconciliation (Debt Leverage) (1) EBIT (a non-GAAP measure) represents earnings before income taxes (a GAAP measure), excluding interest income and interest expen se, as reported above. EBIT margin is the ratio of EBIT to net sales. (2) Adjusted earnings (losses) before interest and income taxes (adjusted EBIT) represents earnings (losses) excluding interest i ncome, interest expense, income taxes and other significant items that are nonrecurring or unusual (such as the pension settlement charge, incremental costs, net of insurance recoveries, related t o the cyberattack, asset impairments, charges related to the streamlined operating model, charges related to the digital capabilities and productivity enhancements investment, significant losses/(gains ) related to acquisitions / divestitures and other nonrecurring or unusual items impacting comparability). Adjusted EBIT margin is the ratio of adjusted EBIT to net sales. (3) Adjusted EBITDA (a non-GAAP measure) represents earnings from income taxes (a GAAP measure), excluding interest income, interest expense and other significant items that are nonrecurring or unusual (such as the pension settlement charge, incremental costs, net of insurance recoveries, related to the cyberattack, asse t impairments, charges related to the streamlined operating model, charges related to digital capabilities and productivity enhancements investment, significant losses/(gains) related to acqui sitions / divestitures and other nonrecurring or unusual items impacting comparability), depreciation and amortization, as reported above. For purposes of calculating a liquidity measure, the impact s of charges or liabilities that require cash settlement were included in the calculation of Adjusted EBITDA. Adjusted EBITDA margin is the ratio of Adjusted EBITDA to net sales. (4) In accordance with the SEC's Regulation G, this schedule provides the definition of certain non-GAAP measures and the reconciliation to the most closely related GAAP measure. Management believes the presentation of EBIT, EBIT margin, Adjusted EBIT, Adjusted EBIT Margin, EBITDA, EBITDA margin, Adjusted EBITDA, Adjusted EBITDA Margin and debt to Adjusted EBITDA provides useful additional information to investors about trends in the company's operations and is useful for period -over-period comparisons. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP financial measures may not be the same as similar measu res provided by other companies due to potential differences in methods of calculation and items being excluded. They should be read in connection with the company’s consolidated financial sta tements presented in accordance with GAAP. (5) Reflects the operating expenses incurred by the company related to its digital capabilities and productivity enhancements inv estment. The majority of these expenses relate to external consulting fees. The remaining expenses relate to internal IT project management and supporting personnel costs and other costs. (6) On July 9, 2020, the company increased its investment in each of the two entities comprising its joint venture in the Kingdom of Saudi Arabia (Saudi joint venture). As a result of this transaction, a noncash nonrecurring net gain was recognized of $82 ($76 after tax) in Other (income) expense, net in the quarter ended September 30, 2020, primarily due to the remeasurement of the carrying value of the company’s previously held equity investment to fair value. (7) During the quarter ended March 31, 2021 and March 31, 2023 noncash impairment charges of goodwill, trademarks and other asset s were recorded of $329 ($267 after tax) and $445 ($362 after tax) respectively, related to the VMS business. (8) During the quarter ended June 30, 2021, noncash charges of $28 ($21 after tax) were recorded on investments and related arran gements made with a Professional Products SBU supplier. (9) Reflects the restructuring and related implementation costs, net incurred by the company as part of the streamlined operating model. These expenses were primarily attributable to employee- related costs, as well as implementation and other associated costs. (10) Represents losses related to the divestiture of the Argentina business. (11) Represents costs related to the settlement of the domestic qualified pension plan. (12) Reflects costs related to the cyberattack, net of insurance recoveries. (13) Total debt represents the sum of notes and loans payable, current maturities of long- term debt and long-term debt. Current maturities of long-term debt and long-term debt are carried at face value net of unamortized discounts, premiums and debt issuance costs. (14) Debt to Adjusted EBITDA (a non-GAAP measure) represents total debt divided by Adjusted EBITDA for the trailing four quarters. 88
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Return on Invested Capital Reconciliation 89 Dollars in Millions and percentages based on rounded numbers (*) Refer to the next slide for footnotes. FY20 FY21 FY22 FY23 FY24 $ 1,185 $ 900 $ 607 $ 238 $ 398 Add back: $ 357 $ 61 $ 605 $ 580 $ 99 $ 99 $ 106 $ 90 $ 90 Less: $ (82) $ 1,284 $ 1,274 $ 774 $ 933 $ 1,068 $ (267) $ (264) $ (174) $ (220) $ (215) $ 1,017 $ 1,010 $ 600 $ 713 $ 853 $ 9 $ 9 $ 12 $ 12 $ 1,017 $ 1,001 $ 591 $ 701 $ 841 $ 3,437 $ 3,858 $ 3,462 $ 3,408 $ 3,236 30% 26% 17% 21% 26% (Amounts shown below are five quarter averages) FY20 FY21 FY22 FY23 FY24 Total assets 5,607$ 6,524$ 6,256$ 6,024$ 5,880$ Less: non-interest bearing liabilities (2,170) (2,716) (2,822) (2,837) (2,921) Average invested capital 3,437$ 3,808$ 3,434$ 3,187$ 2,959$ After tax certain U.S. GAAP items(2) 50$ 28 221 277 Adjusted average invested capital(4) 3,437$ 3,858$ 3,462$ 3,408$ 3,236$ Adjusted Average invested capital (4) Certain U.S. GAAP charges(2) Less: after tax profit attributable to noncontrolling Adjusted after-tax profit attributable to Clorox Income taxes before income taxes and interest expense adjusted for certain U.S. GAAP items (3) Earnings before income taxes (GAAP measure) Earnings before income taxes, certain U.S. GAAP items and interest expense Saudi JV acquisition gain(5) Interest expense Adjusted after-tax profit Return on invested capital (1)
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Return on Invested Capital Reconciliation 90 (1) In accordance with SEC's Regulation G, this schedule provides the definition of a non -GAAP measure and the reconciliation to the most closely related GAAP measure. Return on invested capital (ROIC), a non-GAAP measure is calculated as earnings before income taxes and interest expense, adjust ed for other nonrecurring or unusual items, computed on an after-tax basis as a percentage of average invested capital. Management believes ROIC provides additional inform ation to investors about current trends in the business. ROIC is a measure of how effectively the company allocates capital. ROIC should not be considered in isolation or as a substitute for the comparable GAAP measures and should be read in connection with the company's consolidated financial statements presented in accordance with G AAP. (2) Certain U.S. GAAP charges for fiscal year 2024 include $240 ($231 after tax) of costs related to the divestiture of the Argen tina business, $171( $130 after tax) of costs related to the settlement of the domestic qualified pension plan, $108 ($82 after tax) of expenses related to the company’s digital capabilities and productivity enhancements investments, $32 ($25 after tax) of restructuring and related costs, net for implementation of the streamlined operating mode l and $29 ($22 after tax) of costs related to the cyberattack net of insurance recoveries. Fiscal year 2023 include $445 ($362 after tax) for a noncash impairment charge relat ed to the VMS business, $100 ($76 after tax) of expenses related to the company’s digital capabilities and productivity enhancements investments and $60 ($45 after tax) of r estructuring and related costs, net for implementation of the streamlined operating model. Fiscal year 2022 includes $61 ($47 after tax) of expenses related to the Comp any's digital capabilities and productivity enhancements investment. Fiscal Year 2021 includes noncash impairment charges of $329 ($267 after tax) and noncash charges of $28 ($21 after tax) on investments and related arrangements made with a Professional Products business supplier. (3) The tax rate applied is the effective tax rate before the identified U.S. GAAP items was 20.1%, 23.6%, 22.5%, 20.7% and 20.8% in fiscal years 2024, 2023, 2022, 2021 and 2020 respectively. (4) Adjusted average invested capital represents a five-quarter average of total assets less non-interest bearing liabilities adjusted for other nonrecurring or unusual items. (5) On July 9, 2020, the company increased its investment in each of the two entities comprising its joint venture in the Kingdom of Saudi Arabia (Saudi joint venture). As a result of this transaction, a non-cash nonrecurring net gain was recognized of $82 ($76 after tax) in Other (income) expense, net in th e quarter ended September 30, 2020, primarily due to the remeasurement of the carrying value of the company’s previously held equity investment to fair value.
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Organic Sales Growth / (Decrease) Reconciliation 91 The following table provides a reconciliation of organic sales growth / (decrease) (non-GAAP) to net sales growth / (decrease) (GAAP), the most comparable GAAP measure: (1) Organic sales growth (a non-GAAP measure) is defined as net sales growth / (decrease) excluding the effect of any acquisitions and divestitures and foreign exchange rate changes. (2) Organic sales growth and organic sales growth excluding the impact from ERP incremental shipments based on Outlook as of Febr uary 3, 2025. ERP is expected to add +1 to 2% incremental net sales.
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Adjusted Diluted Earnings Per Share Reconciliation 92 Dollars in Millions except per share data (1) In the twelve months ended Jun. 30, 2024, the company incurred approximately $29 ($22 after tax) of costs related to the cyberat tack, net of insurance recoveries. These costs relate primarily to third-party consulting services, including IT recovery and forensic experts and other professional services incurred to investigate and remediate the attack, as well as incremental operating costs from the resulting disruption to the company's business operations. (2) During the twelve months ended Jun. 30, 2024, the company incurred approximately $32 ($25 after tax), and during the twelve mont hs ended Jun. 30, 2023, the company incurred approximately $60 ($45 after tax), of restructuring and related costs, net for implementation of the streamlined operating model. Refer to the Non-GAAP Financial Information within the earnings release for further discussion. (3) During the twelve months ended Jun. 30, 2024, the company incurred approximately $108 ($82 after tax),,and during the twelve months ended Jun. 30, 2023, the company incurred approximately $100 ($76 after tax), respectively, of operating expenses related to its digital capabilities and productivity enhancements i nvestment. (4) During the twelve months ended Jun. 30, 2024, the company incurred approximately $240 ($231 after tax) of costs related to th e divestiture of the Argentina business. (5) During the twelve months ended Jun. 30, 2024, the company incurred approximately $171 ($130 after tax) of costs related to th e settlement of the domestic qualified pension plan. (6) During the twelve months ended Jun. 30, 2023, noncash impairment charges of goodwill and trademarks were recorded of $445 ($3 62 after tax) related to the VMS business. (7) Adjusted EPS is defined as diluted earnings per share that excludes or has otherwise been adjusted for significant items that are nonrecurring or unusual. The income tax effect on non-GAAP items is calculated based upon the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the under lying non-GAAP adjustment. (8) Adjusted EPS is supplemental information that management uses to help evaluate the company's historical and prospective finan cial performance on a consistent basis over time. Management believes that by adjusting for certain items affecting comparability of performance over time, such as the pension settlement charge, incremental costs, net of insurance recoveries, related to the cyberattack, asset impairments, charges related to the streamlined operating model, charges related to the digital capabiliti es and productivity enhancements investment, significant losses/(gains) related to acquisitions / divestitures and other nonrecurring or unusual items, investors and management are able to gain additional insight into the company's underlying operating performance on a consistent basis over time. However, adjusted EPS may not be the same as similar measures provided by other companies due to potential differences in methods of calculation or differences in which items are incorporated into these adjustments. The following table provides reconciliation of adjusted diluted earnings per share (non-GAAP) to diluted earnings per share, the most comparable GAAP measure: