# Clorox (CLX) Financial Model Free Excel 3-statement financial model and company analysis for Clorox. - Canonical: https://finamodel.com/companies/clorox - Industry: Consumer Goods - Downloadable model: Yes - Excel download: https://finamodel.com/company-models/CLX.xlsx ## Model Purpose This model provides a comprehensive equity valuation and scenario planning tool for The Clorox Company, enabling analysts to assess the financial impact of the company's margin recovery programme, the upcoming Glad joint venture buyout, and the normalisation of volume growth following the severe fiscal 2024 cyberattack. ## Company Overview The Clorox Company is a leading multinational manufacturer and marketer of consumer and professional products. The company operates a brand-heavy, asset-light consumer packaged goods business model, leveraging strong brand equity to maintain premium pricing in mature categories. Business segments and approximate revenue contribution: * Health and Wellness (30%): Includes cleaning products and professional products. * Household (25%): Includes bags and wraps (Glad), grilling products (Kingsford), and cat litter (Fresh Step). * Lifestyle (25%): Includes food (Hidden Valley), water filtration (Brita), and natural personal care (Burt's Bees). * International (20%): All product sales outside the United States. Key geographies: The United States accounts for approximately 85% of total net sales, with the remaining 15% generated internationally. Competitive position: Clorox holds the number one or number two market share position in the vast majority of its product categories. Key competitors include Procter & Gamble, Church & Dwight, Kimberly-Clark, and private label brands. Recent major events: In August 2023 (fiscal 2024 Q1), a severe cyberattack caused massive operational disruptions, artificially depressing fiscal 2024 results and creating highly volatile year-over-year comparisons for fiscal 2025. The company recently divested its operations in Argentina and its Better Health Vitamins, Minerals, and Supplements (VMS) business. Furthermore, Clorox announced it will wind down the Glad joint venture with Procter & Gamble in January 2026, intending to acquire P&G's 20% interest for approximately $0.5 billion. ## Revenue Deep Dive ### Health and Wellness * Segment name: Health and Wellness * Revenue driver formula: Prior Year Revenue x (1 + Volume Growth + Price/Mix Impact) * Historical growth rate: Flat to low single-digit decline (heavily distorted by pandemic spikes and the 2023 cyberattack) * Key growth levers and headwinds: Normalisation of cleaning habits post-pandemic acts as a headwind, while product innovation and professional channel expansion drive growth. * Pricing dynamics: Highly competitive, with increasing pressure from private label alternatives in the home care category. * Revenue recognition notes: Recognised at the point of shipment or delivery. * Seasonality: Generally stable, with slight upticks during cold and flu season (fiscal Q2/Q3). ### Household * Segment name: Household * Revenue driver formula: Prior Year Revenue x (1 + Volume Growth + Price/Mix Impact) * Historical growth rate: 1% to 3% CAGR * Key growth levers and headwinds: Resin and commodity costs heavily influence pricing power. Private label penetration is a significant headwind in the trash bag category. * Pricing dynamics: Spot pricing for commodities dictates consumer pricing adjustments. * Revenue recognition notes: Recognised at the point of shipment. * Seasonality: Highly seasonal. The Kingsford charcoal business peaks significantly in fiscal Q3 and Q4 (spring and summer in the US). ### Lifestyle * Segment name: Lifestyle * Revenue driver formula: Prior Year Revenue x (1 + Volume Growth + Price/Mix Impact) * Historical growth rate: 2% to 4% CAGR * Key growth levers and headwinds: Consumer shift towards natural products benefits Burt's Bees, while food inflation impacts Hidden Valley volumes. * Pricing dynamics: Premium pricing model based on strong brand equity. * Revenue recognition notes: Recognised at the point of shipment. * Seasonality: Brita water filtration sales often spike around the back-to-school season (fiscal Q1). ### International * Segment name: International * Revenue driver formula: Prior Year Revenue x (1 + Volume Growth + Price/Mix Impact + Foreign Exchange Impact) * Historical growth rate: 3% to 5% CAGR (constant currency) * Key growth levers and headwinds: Emerging market middle-class expansion drives volume, while strong US dollar and hyperinflation in certain markets act as severe headwinds. * Pricing dynamics: Frequent pricing actions required to offset currency devaluation. * Revenue recognition notes: Recognised at the point of shipment. * Seasonality: Varies by region, generally smoothing out consolidated results. ## Cost Structure ### Variable Costs / COGS * Line-by-line breakdown: Manufacturing costs, raw materials (resin, agricultural commodities), logistics, and warehousing. * Gross margin range: 39.0% to 46.0% over the last 5 years. Fiscal 2024 saw a recovery to 43.0%, with management targeting a return to pre-pandemic levels of 44% to 46%. * Key input costs: Resin (for Glad bags), agricultural commodities (for Hidden Valley), and corrugated cardboard for packaging. * How COGS scales: Largely linear with volume, though manufacturing absorption creates operating leverage during high-volume quarters. ### Operating Expenses * R&D: Typically 2% of revenue, covering product innovation and packaging sustainability. * SG&A: Selling and administrative expenses run between 15% and 16% of net sales. This includes strategic investments in digital capabilities and the ongoing ERP transition. * Advertising and Sales Promotion: Management strictly targets 11.0% to 11.5% of net sales to support brand equity. * Depreciation & Amortisation: Approximately 3% to 4% of revenue, primarily related to manufacturing facilities and amortisation of acquired intangibles. * Restructuring: The company recently completed a streamlined operating model initiative, incurring significant one-time charges in fiscal 2023 and 2024 to generate $100 million in annual savings. ### Margin Profile * Gross margin: 43.0% to 46.0% (expanding due to holistic margin management and cost savings). * EBITDA margin: 16.0% to 18.0%. * Operating margin: 13.0% to 15.0%. * Net margin: 9.0% to 11.0%. * Margin trend: Expanding. The company is recovering from severe inflationary pressures and cyberattack disruptions, leveraging price increases and cost-saving programmes. ## Balance Sheet Structure * Total assets: Approximately $6.0 billion to $7.0 billion. * Key asset categories: Goodwill and trademarks dominate the asset base, alongside property, plant, and equipment. * Goodwill & intangibles: Represents over 50% of total assets (approximately $3.6 billion), stemming from historical acquisitions like Burt's Bees and Nutranext. * Working capital profile: * Days Sales Outstanding (DSO): 30 to 35 days. * Days Inventory Outstanding (DIO): 55 to 65 days. * Days Payable Outstanding (DPO): 60 to 70 days. * Net working capital as % of revenue: Typically low single digits. * The company operates with relatively tight working capital, though the ongoing ERP transition is causing temporary inventory build-ups and shipment shifts. * PP&E: Consists primarily of manufacturing facilities and equipment, with a useful life of 10 to 30 years for buildings and 3 to 15 years for equipment. * Right-of-use assets: Operating leases are material but not dominant, representing approximately $200 million to $300 million. ## Capital Expenditure & Investment * Capex as % of revenue: 2.5% to 3.5% (historically around 3.0%). * Maintenance vs. growth capex: Approximately 60% maintenance and 40% growth, with recent growth capex heavily skewed towards digital transformation and ERP implementation. * Major capex programmes: The multi-year ERP implementation is the primary driver of elevated capital expenditure. * Capitalised software: Material due to the ERP transition, amortised over 3 to 7 years. * M&A pattern: Historically a bolt-on acquirer, but currently in a portfolio rationalisation phase (divesting VMS and Argentina). * Typical acquisition multiple: Not applicable currently, though the upcoming Glad JV buyout will cost approximately $0.5 billion for a 20% stake. ## Debt & Capital Structure * Total debt: Approximately $2.5 billion to $2.8 billion. * Net debt: Approximately $2.3 billion. * Debt/EBITDA ratio: Currently around 1.8x to 2.0x, well within target ranges. * Credit rating: Investment grade (typically BBB+ / Baa1). * Key debt instruments: Senior notes and a revolving credit facility. * Maturity profile: Well-laddered, with average maturities exceeding 5 years. * Interest rate profile: Predominantly fixed-rate bonds, with a weighted average cost of debt around 3.5% to 4.0%. * Covenants: Standard interest coverage and leverage covenants, none of which are currently restrictive. * Share repurchase programme: Active but moderate, primarily used to offset stock-based compensation dilution. * Dividend policy: Strong dividend payer with 48 years of consistent growth. The yield is typically around 3.5% to 4.5%, with a payout ratio of 60% to 70%. ## Cash Flow Characteristics * Operating cash flow conversion: OCF / Net Income typically exceeds 1.2x due to high depreciation and amortisation. * Free cash flow margin: 11.0% to 12.0% of net sales. * Major non-cash items: Depreciation, amortisation, and stock-based compensation. * Working capital cash flow impact: Generally neutral over a full fiscal year, but highly volatile quarter-to-quarter due to seasonality (Kingsford) and the current ERP transition. * Capex intensity: Low (around 3% of sales), allowing for strong free cash flow generation. * Cash tax rate: Typically mirrors the GAAP effective tax rate of 22% to 24%. ## Sheet Structure 1. **Assumptions**: Contains all hardcoded drivers, macroeconomic inputs, and scenario toggles. 2. **Income Statement**: Consolidated P&L mirroring the 10-K, with revenue and EBIT broken out by the four reportable segments. 3. **Revenue Build**: Detailed volume and price/mix drivers for Health and Wellness, Household, Lifestyle, and International. 4. **Balance Sheet**: Standard US GAAP balance sheet, explicitly breaking out Goodwill and Trademarks. 5. **Cash Flow Statement**: Indirect method, linking Net Income to OCF, CFI, and CFF. 6. **Working Capital**: Schedules for Accounts Receivable, Inventory, and Accounts Payable based on DSO, DIO, and DPO. 7. **Debt Schedule**: Tranches of senior notes, revolving credit facility, and interest expense calculations. 8. **PP&E and Intangibles**: Capex, depreciation waterfall, and amortisation of acquired intangibles. 9. **Valuation**: DCF model, WACC calculation, and implied share price. ## Key Financial Relationships 1. Health and Wellness Revenue = Prior Year Health and Wellness Revenue * (1 + H&W Volume Growth + H&W Price/Mix Growth) 2. Household Revenue = Prior Year Household Revenue * (1 + Household Volume Growth + Household Price/Mix Growth) 3. Lifestyle Revenue = Prior Year Lifestyle Revenue * (1 + Lifestyle Volume Growth + Lifestyle Price/Mix Growth) 4. International Revenue = Prior Year International Revenue * (1 + International Volume Growth + International Price/Mix Growth + FX Impact) 5. Total Net Sales = Health and Wellness Revenue + Household Revenue + Lifestyle Revenue + International Revenue 6. Cost of Products Sold = Total Net Sales * (1 - Gross Margin %) 7. Advertising and Sales Promotion = Total Net Sales * Advertising % (Targeted at 11.0% to 11.5%) 8. Selling and Administrative Expenses = Total Net Sales * SG&A % 9. Segment Adjusted EBIT = Segment Revenue * Segment EBIT Margin % 10. Free Cash Flow = Net Cash Provided by Operations - Capital Expenditures 11. Interest Expense = Average Total Debt * Weighted Average Interest Rate 12. Dividends Paid = Prior Year Dividends Paid * (1 + Dividend Growth Rate) ## Cross-Sheet Dependencies * The **Revenue Build** sheet feeds segment revenues directly into the **Income Statement**. * The **Income Statement** calculates Net Income, which is the starting line for the **Cash Flow Statement**. * The **Working Capital** sheet calculates changes in operating assets and liabilities, feeding the operating section of the **Cash Flow Statement**. * The **PP&E and Intangibles** sheet calculates Depreciation and Amortisation, which feeds both the **Income Statement** (operating expenses) and the **Cash Flow Statement** (non-cash add-back). * The **Debt Schedule** calculates interest expense for the **Income Statement** and ending debt balances for the **Balance Sheet**. * The **Cash Flow Statement** calculates the net change in cash, which feeds the Cash line on the **Balance Sheet**, ensuring the model balances. Circularity risk exists between the Debt Schedule (interest expense) and the Cash Flow Statement (cash available for debt paydown); this should be managed with a circularity toggle. ## Sign Convention * Revenue, assets, and equity are represented as positive numbers. * Expenses and liabilities are represented as positive numbers in their respective schedules but subtracted in aggregation formulas (e.g., Gross Profit = Revenue - COGS). * On the Cash Flow Statement, cash inflows are positive and cash outflows (including capex, dividends, and debt repayment) are negative. ## Things Most Likely to Go Wrong * Failing to normalise fiscal 2024 base effects. The August 2023 cyberattack artificially depressed fiscal 2024 Q1 and Q2 results. Applying standard growth rates to these depressed figures will result in wildly inaccurate fiscal 2025 projections. * Ignoring the ERP transition shipment shifts. Management has explicitly guided that the ERP transition will cause inventory loading and shipment shifts between quarters in fiscal 2025 and 2026, distorting organic growth metrics. * Forgetting the Glad JV buyout. The model must include a one-time cash outflow of approximately $500 million in January 2026 (fiscal 2026 Q3) to acquire P&G's 20% stake. * Including divested revenues in organic growth calculations. The VMS and Argentina businesses were divested in fiscal 2024 and 2025. Historical revenues must be adjusted to calculate accurate organic volume growth. * Mismodelling advertising spend. Clorox treats advertising as a strict percentage of sales (11.0% to 11.5%). Modelling it as a fixed growth rate will break the margin profile. * Overestimating gross margin expansion. While margins are recovering, they are capped by structural commodity inflation. Do not model gross margins exceeding the historical ceiling of 46.0%. * Misunderstanding seasonality. Kingsford charcoal drives massive volume in the fiscal third and fourth quarters. Annualising Q1 or Q2 results will severely understate revenue. * Ignoring private label pressure. The model must account for volume degradation in the Household segment due to consumers trading down to private label trash bags and basic cleaning supplies. ## Validation Checks * Gross margin must remain between 43.0% and 46.0%. Flag if the model projects margins outside this band. * Advertising and Sales Promotion must equal 11.0% to 11.5% of Total Net Sales. * Capex as a percentage of revenue should remain between 2.5% and 3.5%. * Net Debt to EBITDA should not exceed 2.5x. Flag if leverage breaches this threshold. * The Balance Sheet must balance in every period (Total Assets = Total Liabilities + Shareholders' Equity). * Free Cash Flow margin should stabilise between 11.0% and 12.0%. * The effective tax rate should remain between 22.0% and 24.0%. * Dividend payout ratio should remain between 60.0% and 75.0% of Net Income. ## Key Assumptions (Default Values) | Assumption | Default Value | Unit | Rationale | |---|---|---|---| | Health & Wellness Volume Growth | 1.0 | % | Normalised growth post-pandemic and cyberattack recovery. | | Household Volume Growth | 1.5 | % | Steady growth offset by private label pressure in bags and wraps. | | Lifestyle Volume Growth | 2.0 | % | Driven by Burt's Bees and Hidden Valley brand strength. | | International Volume Growth | 3.0 | % | Emerging market expansion, adjusted for Argentina divestiture. | | Total Price/Mix Impact | 1.5 | % | Moderating pricing power as inflation cools. | | Gross Margin | 44.5 | % | Midpoint of management's target return to pre-pandemic levels. | | Advertising & Sales Promotion | 11.2 | % of Sales | Management's stated target range (11.0% to 11.5%). | | Selling & Administrative | 15.5 | % of Sales | Reflects ongoing digital and ERP investments. | | Capex | 3.0 | % of Sales | Historical average and management guidance. | | Days Sales Outstanding (DSO) | 32 | Days | Based on historical balance sheet averages. | | Days Inventory Outstanding (DIO) | 60 | Days | Based on historical balance sheet averages. | | Days Payable Outstanding (DPO) | 65 | Days | Based on historical balance sheet averages. | | Effective Tax Rate | 23.0 | % | Historical GAAP average. | | Cost of Debt | 3.8 | % | Weighted average interest rate on existing senior notes. | | WACC | 6.6 | % | Based on low beta (0.6) and current risk-free rates. | | Terminal Growth Rate | 2.0 | % | Long-term GDP and population growth proxy. | | Glad JV Buyout Cost (FY26) | 500 | $ Millions | Estimated cost to acquire P&G's 20% stake in January 2026. | ## Data Sources & Benchmarks * SEC EDGAR: The Clorox Company (CLX) 10-K, 10-Q, and 8-K filings. * Investor Relations: TheCloroxCompany.com for earnings presentations and historical segment recast data. * Key Peers: Procter & Gamble (PG), Church & Dwight (CHD), Kimberly-Clark (KMB), Colgate-Palmolive (CL). * Industry Data: NielsenIQ or Circana (formerly IRI) for scanner data on US retail market share and private label penetration. * Consensus Estimates: FactSet or Bloomberg for forward-looking analyst estimates to validate model outputs. ## Sources * The Clorox Company Fiscal 2024 Annual Report on Form 10-K. * The Clorox Company Q4 and FY24 Earnings Release (August 2024). * The Clorox Company Q1 FY25 Earnings Release (October 2024). * The Clorox Company Q2 FY25 Earnings Release (February 2025). * Seeking Alpha: Clorox DCF and WACC Estimates. --- ## Frequently asked questions ### What is Clorox's business model and product portfolio? Clorox operates a brand-heavy, asset-light consumer packaged goods business, leveraging strong brand equity across various categories. Its portfolio includes Health and Wellness, Household, Lifestyle, and International segments, offering products from cleaning supplies to food and personal care. ### How does Clorox generate revenue across its segments? Clorox generates revenue through its Health and Wellness (30%), Household (25%), Lifestyle (25%), and International (20%) segments. These segments encompass a wide range of consumer and professional products, with the United States accounting for approximately 85% of total net sales. ### What are the key revenue growth assumptions in the Clorox financial model? The financial model for Clorox assumes a Revenue Growth rate of approximately 4.42%. This forecast considers the normalisation of volume growth following the fiscal 2024 cyberattack and the impact of the Glad joint venture buyout. ### What is Clorox's capital expenditure strategy and its impact on the financial model? Clorox's financial model assumes Capex as a percentage of revenue at approximately 3.64%. This reflects the company's historical capex levels, with recent growth capex heavily focused on digital transformation and a multi-year ERP implementation program. ### What are the primary drivers for equity valuation in the Clorox financial model? The Clorox financial model is designed for comprehensive equity valuation and scenario planning. Key drivers include the assessment of the company's margin recovery program, the upcoming Glad joint venture buyout, and the normalisation of volume growth after the fiscal 2024 cyberattack. ### Can I download an Excel financial model for Clorox (CLX)? Yes, a comprehensive Excel financial model for The Clorox Company is available for download. This model provides a detailed framework for equity valuation and scenario planning, covering a forecast horizon from FY2026 to FY2030. [Interactive forecast calculator](https://finamodel.com/companies/clorox/forecast)