The Clorox Company (CLX) Cash Flow Statement

The gap between net income and operating cash flow is the most important signal here, and it swings sharply in both directions, with a negative operating cash flow quarter in 2026Q3 offsetting a 2.02x conversion in 2026Q4. This pattern suggests that working capital timing and non-operating items, rather than steady operating performance, are driving the quarterly cash profile. Investors should monitor whether the trailing-year average conversion settles near 1.0x, which would support the earnings base, or remains structurally below it.

Free cash flow has been positive in most quarters, but the 2026Q3 outflow of $165M shows how fragile the trajectory is when operating cash swings negative. The recovery toward a double-digit margin in 2026Q4 is encouraging, yet the most recent quarter of $105M in free cash flow reflects a low margin of 5.5%, suggesting the rebound has not yet been sustained. Investors should treat trailing averages with caution and watch whether the 2025Q3 to 2025Q4 margin levels of 11% to 14% can be reestablished.

The swing from a $194M working capital inflow in 2026Q4 to a $138M outflow in 2027Q1 is large relative to quarterly operating cash flow, suggesting receivables, inventory, or payables timing is a primary driver of reported cash. Such swings may indicate that the reported operating cash figures are more sensitive to quarter-end positioning than to the underlying demand trend. Investors should examine whether these reversals reflect seasonal inventory build or trade spend timing, and whether they fully reverse over the year.

Dividends have been held at a near-constant run rate while free cash flow has fluctuated widely, meaning coverage was negative in 2026Q3 and thin in 2027Q1. Buybacks appear largely absent in recent quarters aside from a few periods, and acquisition outflows in 2025Q1 and 2026Q4 are notable against that backdrop. This pattern may suggest the dividend is being funded in part by balance sheet capacity, which warrants monitoring given the elevated leverage reported in the prior analysis.