Clorox (NYSE: CLX) reported Q3 EPS of $1.71, $0.35 better than the analyst estimate of $1.36. Revenue for the quarter came in at $181 billion versus the consensus estimate of $1.87 billion.

GUIDANCE:

Clorox sees FY2024 EPS of $5.80-$5.95, versus the consensus of $5.58.

• The company continues to expect net sales to be down low single digits. However, it is now expected to be at the low end of the range, reflecting the impact of the divestiture of the business in Argentina as well as third quarter results. The sales outlook now assumes 3 points of unfavorable foreign exchange rates, versus the previous assumption of 5 points, driven primarily by the divestiture of the Argentina business. Organic sales are still expected to be up low single digits, but also at the low end of the range.
• Gross margin is now expected to be up about 275 basis points, reflecting the benefit of lower input cost headwinds and the modest benefit from exiting Argentina. It continues to reflect the combined benefit of pricing actions, cost savings and supply chain optimization, partially offset by supply chain inflation and the impact from the cyberattack. This compares to the previous expectation of about up 200 basis points.
• Selling and administrative expenses continue to be expected to be between 16% to 17% of net sales, including about 2.5 points of impact related to investments to enhance the company's digital capabilities, implementation of the streamlined operating model and expenses resulting from the cyberattack.
• Advertising and sales promotion spending is now expected to be higher than 11% of net sales, mainly reflecting the impact of lower sales in the third quarter as well as the exit from Argentina. This compares to the previous expectation of about 11%.
• The company's effective tax rate is now expected to be about 31%, compared to the previous expectation of about 22% to 23%. This increase is primarily driven by the divestiture of the Argentina business.
• Net of these factors, fiscal year diluted EPS is now expected to be between $1.66 and $1.81, or an increase of 38% to 51%, respectively. This compares to previous expectations between $3.06 and $3.26, or an increase of 155% to 172%, respectively, and includes the lapping of a noncash impairment charge in the Vitamins, Minerals and Supplements business. Adjusted EPS is now expected to be between $5.80 and $5.95, or an increase of 14% to 17%. This compares to previous expectations of between $5.30 and $5.50, or an increase of 4% to 8%, respectively. The adjusted EPS outlook excludes the long-term strategic investments in digital capabilities and productivity enhancements, which continue to be estimated at about 70 cents; charges related to the streamlined operating model of about 20 cents; and incremental charges resulting from the cyberattack of about 35 cents. It also excludes a noncash charge of $1.04 related to settlement of the company's domestic qualified pension plan and a $1.85 primarily noncash charge related to the divestiture of the Argentina business.

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