CLOROX CO /DE/

Previous wording

Unfavorable and uncertain general economic andgeopolitical conditions beyond the Company's control could negatively impact its financial results.

Current wording

Unfavorable and uncertain general economic and geopolitical conditions beyond the Company's control could negatively impact its financial results.

Previous wording

Unfavorable general economic factors that are beyond the Company's control have materially adversely affected, and could continue to materially adversely affect, its business, results of operations, financial condition and liquidity. These factors include, but are not limited to, supply chain disruptions, labor shortages, wage pressures, ongoing elevated levels of inflation, recession and economic slowdown, as well as housing markets, consumer credit availability, consumer debt levels, fuel and energy costs (for example, the price of gasoline or alternative energy sources), rising interest rates, tax rates and policy, unemployment trends, the impact of natural disasters, pandemics/epidemics, civil disturbances and terrorist activities, foreign currency exchange rate fluctuations, conditions affecting the retail environment for the Company's products and other matters that influence consumer demand, spending and preferences that could impact the demand for the Company's products and negatively impact its net sales and results of operations.

Current wording

Unfavorable general economic factors that are beyond the Company's control have materially adversely affected, and could continue to materially adversely affect, its business, results of operations, financial condition and liquidity. These factors include, but are not limited to, inflation, tariffs, recession and economic slowdown, labor shortages, wage pressures, and supply chain disruptions, as well as housing markets, consumer credit availability, consumer debt levels, fuel and energy costs, interest rate fluctuations, tax rates and policy, unemployment trends, natural disasters, pandemics/epidemics, civil disturbances and terrorist activities, foreign currency exchange rate fluctuations, conditions affecting the retail environment for the Company's products and other factors that influence consumer demand, spending and preferences that could impact the demand for the Company's products and negatively impact its net sales and results of operations.

Previous wording

In addition, geopolitical instability, including the conflicts in Ukraine and the Middle East and rising tensions between China and Taiwan, actual and potential shifts in U.S. and foreign trade, economic and other policies, including as a result of escalating trade tensions between the U.S. and its trading partners, including China, as well as other global events, have significantly increased global macroeconomic uncertainty and volatility. Sustained macroeconomic uncertainty and volatility and geopolitical instability, including relating to the results of elections, could undermine global consumer confidence and could continue to reduce consumers’ purchasing power, thereby reducing demand for the Company's products, and continue to disrupt global supply chains, impacting the availability and cost of transportation, logistics, raw materials, commodities, labor and packaging. This uncertainty and volatility also make it difficult for the Company, as well as its customers, suppliers, distributors and business partners to anticipate the resulting impacts and to accurately forecast and plan future business activities, which may, in turn, cause customers to limit their purchase orders or affect their ability to pay amounts owed to the Company in a timely manner or at all, or adversely affect its business partners' ability to supply or provide services. These situations are evolving, and there is significant uncertainty as to their full or related impacts on the global economy and geopolitical relations, in general, and on the Company’s business, in particular. These geopolitical conflicts and tensions may also heighten other risks disclosed in this Report, any of which could have an adverse impact on the Company’s business, results of operations, cash flows and/or financial condition.

Current wording

partners, including China, particularly due to the imposition of tariffs by the U.S. and retaliatory tariffs by those partners); and other global events, have significantly increased global macroeconomic uncertainty and volatility. Sustained macroeconomic uncertainty and volatility and geopolitical instability could undermine global consumer confidence and could continue to reduce consumer spending and purchasing power, thereby reducing demand for the Company's products, and continue to disrupt global supply chains, impacting the availability and cost of transportation, logistics, raw materials, commodities, labor and packaging. Furthermore, U.S. government policy or election outcomes may prompt nationalist sentiment abroad, potentially resulting in targeted boycotts of U.S. products and services, which could adversely affect demand for the Company’s products in certain international markets and negatively impact financial results. This uncertainty and volatility also make it difficult for the Company, as well as its customers, suppliers, distributors and business partners to anticipate the resulting impacts and to accurately forecast, make financial projections, and plan future business activities, which may, in turn, cause customers to limit their purchase orders or affect their ability to pay amounts owed to the Company in a timely manner or at all, or adversely affect its business partners' ability to supply or provide services. These situations continue to evolve, and there is significant uncertainty as to their full or related impacts on the global economy and geopolitical relations, in general, and on the Company’s business, in particular. These geopolitical conflicts and tensions may also heighten other risks disclosed in this Report, including relating to cybersecurity, any of which could have an adverse impact on the Company’s business, results of operations, cash flows and/or financial condition.

Previous wording

Increasing unfavorable macroeconomic and geopolitical conditions have caused, and may also lead to, recession risk, increased credit and collectability risks, higher borrowing costs or reduced availability of capital and credit markets, reduced liquidity, asset impairments, declines in the value of the Company's financial instruments, and failures of counterparties including financial institutions and insurers. If any financial institution party to the Company's credit or other financing arrangements were to declare bankruptcy or become insolvent, they may be unable to perform under their agreements with the Company, which could result in reduced borrowing capacity. In addition, if any parties with which the Company conducts business are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such parties’ ability to continue to fund their business and perform their obligations to the Company could be adversely affected. Any of these factors could negatively and materially impact the Company's business, financial condition, and results of operations.

Current wording

The Company has experienced, and expects to continue to experience, the indirect impacts of the conflicts in Ukraine and the Middle East, including increases in the cost of raw and packaging materials and commodities (including the price of oil), supply chain and logistics challenges, and it is not possible to predict the broader or longer-term consequences of these conflicts or the sanctions and export controls imposed in response to each conflict. Increasing unfavorable macroeconomic and geopolitical conditions have caused, and may also lead to, recession risk, increased credit and collectability risks, higher borrowing costs or reduced availability of capital and credit markets, reduced liquidity, asset impairments, declines in the value of the Company's financial instruments, and failures of counterparties including financial institutions and insurers. If any financial institution party to the Company's credit or other financing arrangements were to declare bankruptcy or become insolvent, they may be unable to perform under their agreements with the Company, which could result in reduced borrowing capacity. In addition, if any parties with which the Company conducts business are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such parties’ ability to continue to fund their business and perform their obligations to the Company could be adversely affected. Any of these factors could negatively and materially impact the Company's business, financial condition, and results of operations.

Previous wording

Sales growth objectives may be difficult to achieve, and market and category declines and changes to the Company’s product and geographic mix may adversely impact the Company’s financial condition and results of operations.

Current wording

Market and category declines and the Company’s product and geographic mix may adversely impact the Company’s ability to meet sales growth targets, profitability and financial results.

Previous wording

The Company faces intense competition from consumer product companies both in the U.S. and in its international markets. Most of the Company’s products compete with other widely advertised, promoted and merchandised brands within each product category. The Company also faces competition from retailers, including club stores, grocery stores, drugstores, dollar stores, mass merchandisers, e-commerce retailers and subscription services, which are increasingly offering “private label” brands that are typically sold at lower prices and compete with the Company’s products in certain categories. Increased purchases of “private label” products or other lower priced brands could negatively impact net sales of the Company’s higher-margin products or there could be a shift in product mix to lower-margin offerings, especially at a time of ongoing inflationary pressure, and this would negatively impact its net earnings and profits. The Company’s products generally compete on the basis of product performance, brand reputation and recognition, image and price, thereby requiring substantial expenditures for advertising, sales promotion and trade merchandising to gain and maintain market position. The Company is also increasingly using digital media marketing and promotional programs to reach consumers. If the Company’s advertising, marketing and promotional programs, including its use of digital and social media, are not effective or adequate, the Company’s net sales may be negatively impacted.

Current wording

The Company faces intense competition from consumer product companies both in the U.S. and in its international markets, and our ability to maintain or gain market share may be impacted by the actions by competitors. The Company’s ability to achieve sales growth depends on its ability to drive growth through innovation, including as part of its IGNITE strategy, expand into new products and categories, channels and countries, invest in its established brands and enhanced merchandising, grow categories with retailers and capture market share from competitors. Most of the Company’s products compete with other widely advertised, promoted and merchandised brands within each product category. The Company also faces competition from retailers, including club stores, grocery stores, drugstores, dollar stores, mass merchandisers, e-commerce retailers and subscription services, which are increasingly offering “private label” brands that are typically sold at lower prices and compete with the Company’s products in certain categories. Increased purchases of “private label” products or other lower priced brands could negatively impact net sales of the Company’s higher-margin products or there could be a shift in product mix to lower-margin offerings, and this would negatively impact its net earnings and profits. The Company’s products generally compete on the basis of product performance, brand reputation and recognition, image and price, thereby requiring substantial expenditures for advertising, sales promotion and trade merchandising to gain and maintain market position. The Company is also increasingly using digital media marketing and promotional programs to reach consumers. If the Company’s advertising, marketing and promotional programs, including its use of digital and social media, are not effective or adequate, the Company’s net sales may be negatively impacted.

Previous wording

Some of the Company’s competitors are larger than the Company and have greater financial resources. These competitors, as well as new market entrants, may be able to spend more aggressively on advertising and promotional activities, introduce competing products more quickly, adopt new technology, such as artificial intelligence and machine learning, more quickly and successfully, and respond more effectively to changing business and economic conditions and consumer preferences than the Company can. Heightened competitive activity from strong local competitors, other large multinational companies, and new entrants into the market may result in more aggressive product claims and marketing challenges, increased promotional spending and geographic expansion, and marketing of new products. Furthermore, the Company’s competitors may attempt to gain market share by offering products at prices at or below those typically offered by the Company. Competitive activity may require the Company to increase its spending on advertising and promotions and/or reduce prices, which could lead to reduced sales, margins and/or net earnings.

Current wording

Some of the Company’s competitors are larger than the Company and have greater financial resources. These competitors, as well as new or smaller market entrants, may be able to spend more aggressively on advertising and promotional activities, introduce competing products more quickly, adopt new technology, such as artificial intelligence and machine learning, more quickly and successfully, and respond more effectively to changing business and macroeconomic conditions and consumer preferences than the Company can. Heightened competitive activity from strong local competitors, other large multinational companies, and new entrants into the market may result in more aggressive product claims and marketing challenges, increased promotional spending and geographic expansion, and marketing of new products. Furthermore, the Company’s competitors may attempt to gain market share by offering products at prices at or below those typically offered by the Company. Competitive activity may require the Company to increase its spending on advertising and promotions and/or reduce prices, which could lead to reduced sales, margins and/or net earnings.

Previous wording

The Company may not successfully introduce new products and line extensions, or expand into adjacent categories and countries, which could adversely impact its financial condition and results of operations.

Current wording

The Company may not successfully introduce new products and line extensions, or expand into adjacent categories and countries, which could adversely impact its ability to meet sales growth targets, financial condition and results of operations.

Previous wording

The Company’s future performance and growth depends on innovation and its ability to successfully develop or license capabilities to introduce new products, brands, line extensions and product innovations or enter or expand into adjacent product categories, sales channels or countries. The Company’s ability to anticipate changes in consumer preferences and quickly innovate in order to adapt its products (including product packaging, environmental impact and sustainability profile) to meet changing consumer demands and/or evolving regulatory requirements is essential, especially in light of the reduction in barriers for even small competitors, and these innovations may result in increased costs. This risk is further heightened by the continued evolution of consumer needs, habits and preferences as a result of shifts in U.S. demographics. The Company cannot be certain that it will successfully achieve its innovation goals. New product and product packaging development and marketing efforts, including efforts to enter markets or product categories in which the Company has limited or no prior experience, not only incur substantial capital expenditures but also contain inherent risks. These risks include product development or launch delays, noncompliance with applicable laws or regulations, or infringement of third-party intellectual property, any of which could result in the Company not being first to market, and the failure of new products, brands and line extensions to achieve anticipated levels of market acceptance. In addition, success in launching new products is also dependent on the Company’s ability to deliver effective and efficient marketing in an evolving media landscape (including digital), which is subject to dynamic and increasingly restrictive privacy requirements. The Company may not be able to fully recoup the cost of unsuccessful product introductions or may experience a decline in sales of existing products as a result of consumer adoption of its new products, both of which could materially adversely affect the Company’s business, net earnings, margins, financial condition and results of operations.

Current wording

The Company’s ability to achieve its sales growth targets depends on innovation and its ability to successfully develop or license capabilities to introduce new products, brands, line extensions and product innovations or enter or expand into adjacent product categories, sales channels, markets or countries. The Company’s ability to anticipate changes in consumer preferences and quickly innovate in order to adapt its products (including product packaging and environmental impact and sustainability profile) to meet changing consumer demands and/or evolving regulatory requirements is essential, especially in light of the reduction in barriers for even small competitors, and these innovations may result in increased costs. This risk is further heightened by the continued evolution of consumer needs, habits and preferences as a result of shifts in U.S. demographics. The Company cannot be certain that it will successfully achieve its innovation goals. New product and product packaging development and marketing efforts, including efforts to enter markets or product categories in which the Company has limited or no prior experience, not only incur substantial capital expenditures but also contain inherent risks. These risks include product development or launch delays, noncompliance with applicable laws or regulations, or infringement of third-party intellectual property, any of which could result in the Company not being first to market, and the failure of new products, brands and line extensions to achieve anticipated levels of market acceptance. In addition, success in launching new products is also dependent on the Company’s ability to deliver effective and efficient marketing in an evolving media landscape (including digital), which is subject to dynamic and increasingly restrictive privacy requirements. The Company may not be able to fully recoup the cost of unsuccessful product introductions or may experience a decline in sales of existing products as a result of consumer adoption of its new products, both of which could materially adversely affect the Company’s business, net earnings, margins, financial condition and results of operations.

Previous wording

The Company’s sales are largely concentrated in the traditional retail grocery, mass retail outlet, warehouse club and dollar store channels, in addition to e-commerce channels. Alternative retail channels, including hard discounters, subscription services and buying clubs, have become and may continue to be more prevalent and popular than traditional retailers. In addition, a growing number of alternative sales channels and business models, such as niche brands, native online brands, private label and store brands, direct-to-consumer brands and channels and discounter channels, have emerged. In particular, the growing presence of, and increasing sales through, e-commerce retailers have affected, and may continue to affect, consumer behavior or preferences (as consumers increasingly shop online and via mobile and social applications) and market dynamics, including any pricing pressures for consumer goods as retailers face added costs to build their e-commerce capacity. Further, consumer preferences continue to evolve due to a number of factors, including inflation which could cause consumers to purchase a smaller pack or quantity of a product or a lower priced alternative to the Company's products; fragmentation of the consumer market and changes in consumer demographics, which includes the aging of the general population and the emergence of millennial and younger generations who have different spending, consumption and purchasing habits; evolving consumer concerns or perceptions regarding ESG practices of manufacturers, including the environmental impacts of products and the sourcing and sustainability of packaging materials, such as single-use plastics; a growing demand for natural or organic products and ingredients; evolving consumer concerns or perceptions (whether accurate or inaccurate) regarding the effects of ingredients or substances present in certain consumer products; changing consumer sentiment toward non-local products or sources; and changing perceptions of environmental impacts (including packaging, energy and water use and waste management). Any significant changes in consumer preferences or behavior, such as time spent at home or in shared public spaces, could materially and/or negatively impact demand for the Company's products and, in turn, the Company's net sales and results of operations. Consumer preferences are also influenced by perception of the brand image of the Company and its products, the success of advertising and marketing campaigns, the Company’s ability to engage with consumers in the manner they prefer, including through the use of digital media or assets, and the perception of the Company’s advertising, use of social media and engagement in political and social issues, andgeopolitical events. If the Company isnot successful in continuing to adapt to rapidly changing consumer preferences and market dynamics or expanding sales through e-commerce retailers or alternative retail channels, consumers may reduce th…

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Current wording

The Company’s sales are largely concentrated in the traditional retail grocery, mass retail outlet, warehouse club and dollar store channels, in addition to e-commerce channels. Alternative retail channels, including hard discounters, subscription services and buying clubs, have become and may continue to be more prevalent and popular than traditional retailers. In addition, a growing number of alternative sales channels and business models, such as niche brands, native online brands, private label and store brands, direct-to-consumer brands and channels and discounter channels, have emerged. In particular, the growing presence of, and increasing sales through, e-commerce retailers have affected, and may continue to affect, consumer behavior or preferences (as consumers increasingly shop online to compare pricing and product availability) and market dynamics, including any pricing pressures for consumer goods as retailers face added costs to build their e-commerce capacity. Further, consumer preferences continue to evolve due to a number of factors, including macroeconomic volatility and uncertainty, and inflation, which could cause consumers to purchase a smaller pack or quantity of a product or a lower priced alternative to the Company's products; fragmentation of the consumer market and changes in consumer demographics, which includes the aging of the general population and the emergence of millennial and younger generations who have different spending, consumption and purchasing habits; evolving consumer concerns or perceptions regarding the sustainability practices of manufacturers, including the environmental impacts of products (including packaging, energy and water use, and waste management) and the sourcing and sustainability of packaging materials, such as single-use plastics; a growing demand for natural or organic products and ingredients; evolving consumer concerns or perceptions (whether accurate or inaccurate) regarding the effects of ingredients or substances present in certain consumer products; and changing consumer sentiment toward non-local products or sources. Any significant changes in consumer preferences or behavior, such as time spent at home or in shared public spaces, could materially and/or negatively impact demand for the Company's products and, in turn, the Company's net sales and results of operations. Consumer preferences are also influenced by perception of the brand image of the Company and its products, the success of advertising and marketing campaigns, the Company’s ability to engage with consumers in the manner they prefer, including through the use of digital media or assets, and the perception of the Company’s advertising, use of social media and engagement in political and social issues, and geopolitical events. If the Company is not successful in continuing to adapt to rapidly changing consumer preferences and market dynamics or expanding sales through e-commerce retailers or alternative retail channels, …

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Previous wording

Harm to the Company’s reputation or the reputation of one or more of its leading brands or products could have an adverse effect on the business, financial condition and results of operations.

Current wording

Harm to the Company’s reputation or the reputation of one or more of its leading brands or products could have an adverse effect on its business, financial condition and results of operations.

Previous wording

Maintaining a strong reputation with consumers, customers and trade and other third-party partners is critical to the success of the Company’s business. The Company devotes significant time and resources to programs designed to protect and preserve its reputation such as ethics and compliance, brand protection, product safety and quality, and enterprise risk management, and has published ESG goals, including relating to environmental impact and sustainability and inclusion and diversity, as part of its IGNITE Strategy. The Company could be the subject of negative publicity in spite of or as a result of these efforts, including relating to product safety, quality or efficacy, ingredients or substances present or allegedly present in the Company’s products or packaging, or ESG and related issues, including if the Company is not successful in achieving its ESG goals or provides inaccurate information. In addition, the Company’s products have, in the past, and could, in the future, face withdrawal, recall or other quality issues, which could lead to decreased demand for and reputational damage to the related brands. The Company’s products, especially its dietary supplement and related products, are dependent on consumers’ perception of their efficacy, safety and quality. Emerging studies have, in the past, and could, in the future, prove or allege that ingredients or substances that are present or allegedly present in the Company's products, the products themselves, or similar products of other companies, are ineffective or harmful to consumers. The Company also licenses certain of its brands to third parties. Such licenses and partnerships may create additional exposure for those brands to product safety, quality, sustainability and other concerns.

Current wording

Maintaining a strong reputation with consumers, customers and trade and other third-party partners is critical to the success of the Company’s business. The Company devotes significant time and resources to programs designed to protect and preserve its reputation such as ethics and compliance, brand protection and suitability, product safety and quality, and enterprise risk management, and has published goals, including relating to environmental impact and sustainability, as part of its IGNITE Strategy. The Company could be the subject of negative publicity in spite of or as a result of these efforts, including relating to product safety, quality or efficacy; ingredients or substances actually or allegedly present in the Company’s products or packaging; sustainability; or its human capital practices, including if the Company changes its position on or does not achieve its sustainability goals, or provides inaccurate information. In addition, the Company’s products have, in the past, and could, in the future, face withdrawal, recall or other quality issues, which could lead to decreased demand for and reputational damage to the related brands. The Company’s products are dependent on consumers’ perception of their efficacy, safety and quality. Emerging studies have, in the past, and could, in the future, prove or allege that ingredients or substances that are present or allegedly present in the Company's products, the products themselves, or similar products of other companies, are harmful to consumers. The Company also licenses certain of its brands to third parties. Such licenses and partnerships may create additional exposure for those brands to product safety, quality, sustainability and other concerns.

Previous wording

Widespread use of social media and networking sites by consumers has greatly increased the accessibility and speed of dissemination of information and misinformation. Negative publicity, posts or comments about the Company, its brands, its products, its marketing activities, whether accurate or inaccurate, or disclosure of non-public sensitive information about the Company, could be widely disseminated through the use of social media or in other formats. Additionally, marketing initiatives may not have the desired effect on a brand’s or product’s image. Such events, if they were to occur, could harm the Company’s image and adversely affect its business, financial condition and results of operations, as well as require resources to rebuild the Company’s reputation.

Current wording

Widespread use of social media and networking sites by consumers has greatly increased the accessibility and speed of dissemination of information (whether accurate or inaccurate). Negative publicity, posts or comments about the Company, its brands, its products, its marketing activities, whether accurate or inaccurate, or disclosure of non-public sensitive information about the Company, could be widely disseminated through the use of social media or in other formats. Additionally, marketing initiatives may not have the desired effect on a brand’s or product’s image. Such events, if they were to occur, could harm the Company’s image and adversely affect its business, financial condition and results of operations, as well as require resources to rebuild the Company’s reputation.

Previous wording

In addition, the legal, regulatory and ethical landscape around the use of artificial intelligence and machine learning is rapidly evolving. The Company’s ability to adopt this emerging technology in an effective and ethical manner may impact its reputation and ability to compete, and this technology could be, among other things, false, biased, or inconsistent with the Company’s values and strategies. Further, the use of generative artificial intelligence tools may compromise confidential or sensitive information, put the Company’s intellectual property at risk, or subject the Company to claims of intellectual property infringement, all of which could damage the Company's reputation.

Current wording

In addition, the legal, regulatory and ethical landscape around the use of artificial intelligence and machine learning is rapidly evolving. While the Company’s success may increasingly become dependent on its ability to adopt and effectively leverage this emerging technology, it may not be able to do so in an effective manner. This technology could also prove to be, among other things, false, biased, or inconsistent with the Company’s values and strategies, which could lead to operational disruptions, flawed decision-making, increased costs, or reputational harm. Further, the use of generative artificial intelligence tools may compromise confidential or sensitive information, put the Company’s intellectual property at risk, or subject the Company to claims of intellectual property infringement, all of which could damage the Company's reputation.

Previous wording

A limited number of customers account for a large percentage of the Company’s net sales. Net sales to the Company’s largest customer, Walmart Stores, Inc. and its affiliates, were 25%, 26% and 25% of consolidated net sales for the fiscal years ended June 30, 2024, 2023 and 2022, respectively, and occurred across all of the Company’s reportable segments. The Company’s five largest customers accounted for nearly half of the Company’s consolidated net sales for each of the fiscal years 2024, 2023 and 2022, and a significant portion of the Company’s future revenues may continue to be derived from a small number of customers. As a result, changes in the strategies of the Company’s largest customers, including a reduction in the number of brands they carry, a shift of shelf space to “private label” or competitors’ products or a decision to lower pricing of consumer products, including branded products, may harm the Company’s net sales or net earnings, and reduce the ability of the Company to offer new, innovative products to consumers. Any loss of a key customer or a significant reduction in net sales to a key customer of the Company or a business unit could have a material adverse effect on the Company’s business, financial condition and results of operations. In addition, the use of the latest technology by its customers regarding pricing may lead to category pricing pressures. Consistent with the ongoing variability in information technology (IT) systems industry-wide, the Company's IT platforms may not be fully compatible at all times with those used by its customers and may not be able to respond to customer data or technology demands.

Current wording

A limited number of customers account for a large percentage of the Company’s net sales. Net sales to the Company’s largest customer, Walmart Stores, Inc. and its affiliates, were 27%, 25%, and 26% of consolidated net sales for the fiscal years ended June 30, 2025, 2024, and 2023, respectively, and occurred across all of the Company’s reportable segments. The Company’s five largest customers accounted for nearly half of the Company’s consolidated net sales for each of the fiscal years 2025, 2024, and 2023, and a significant portion of the Company’s future revenues may continue to be derived from a small number of customers. As a result, changes in the strategies of the Company’s largest customers, including a reduction in the number of brands they carry, a shift of shelf space to “private label” or competitors’ products or a decision to lower pricing of consumer products, including branded products, may harm the Company’s net sales or net earnings, and reduce the ability of the Company to offer new, innovative products to consumers. Any loss of a key customer or a significant reduction in net sales to a key customer of the Company or a business unit could have a material adverse effect on the Company’s business, financial condition and results of operations. In addition, the use of the latest pricing technology by its customers may lead to category pricing pressures. Consistent with the ongoing variability in information technology (IT) systems industry-wide, the Company's IT platforms, including after the implementation its ERP system, may not be fully compatible at all times with those used by its customers and may not be able to respond to customer data or technology demands.

Previous wording

Acquisitions, new venture investments and divestitures may not be successful, which could have an adverse effect on the Company’s business, financial condition and results of operations.

Current wording

Acquisitions, new venture investments and divestitures may not be successful, which could have an adverse effect on the Company’s business.

Previous wording

• maintain uniform standards, controls, procedures and policies throughout acquired companies, including effective integration of acquired companies into the Company’s internal control over financial reporting;

Current wording

•maintain uniform standards, controls, procedures and policies throughout acquired companies, including effective integration into the Company’s internal control over financial reporting;

Previous wording

• achieve expected synergies and obtain the desired financial or strategic benefits from acquisitions within the anticipated time periods, if at all;

Current wording

•achieve expected synergies and financial or strategic benefits from acquisitions within the anticipated time periods, if at all;

Previous wording

• achieve distribution expansion related to products, categories and markets from acquisition and retain key relationships and or personnel of acquired companies;

Current wording

•achieve distribution expansion related to products, categories and markets from acquisition and retain key relationships and personnel of acquired companies;

Previous wording

• identify and manage any legal or reputational risks that may predate or be associated with a transaction, which could negatively impact the Company following the consummation of such transaction; and

Current wording

•identify and manage any legal or reputational risks that may predate or be associated with a transaction, which could negatively impact the Company following closing; and

Previous wording

Acquired companies or operations, joint ventures or investments may not be profitable or may not achieve sales levels and profitability and cash flow expectations. Furthermore, acquisitions or ventures could also result in dilutive issuances of equity securities, the incurrence of debt, the assumption of contingent liabilities (such as those relating to advertising claims, environmental issues and litigation, negative reputational issues), an increase in expenses related to intangible assets, including trademarks and goodwill, and increased operating expenses, all of which could adversely affect the Company’s financial condition, margins and results of operations. Future acquisitions of foreign companies or new foreign ventures would subject the Company to local regulations and could potentially lead to risks related to, among other things, increased exposure to foreign exchange rate changes, tax or labor laws, government price controls, or repatriation of profits and liabilities relating to the Foreign Corrupt Practices Act (“FCPA”). In addition, to the extent that the economic benefits associated with an acquisition or investment diminish in the future or the performance of an acquired company or business is less robust than expected, the Company may be required to record impairments of intangible assets. Any impairment charges could adversely affect the Company’s financial condition, margins and results of operations.

Current wording

Acquired companies or operations, joint ventures or investments may not be profitable or may not achieve sales, profitability, and cash flow expectations. Furthermore, acquisitions or ventures could also result in dilutive issuances of equity securities, debt, the assumption of contingent liabilities (such as those relating to advertising claims, environmental issues and litigation, and negative reputational issues), an increase in expenses related to intangible assets, including trademarks and goodwill, and increased operating expenses, all of which could adversely affect the Company’s financial condition, margins and results of operations. Future acquisitions of foreign companies or new foreign ventures would subject the Company to local regulations and could potentially lead to risks related to, among other things, increased exposure to foreign exchange rate changes, tax or labor laws, government price controls, or repatriation of profits and liabilities relating to the Foreign Corrupt Practices Act (“FCPA”). In addition, to the extent that the economic benefits associated with an acquisition or investment diminish in the future or the performance of an acquired company or business is less robust than expected, the Company has recorded, and may, in the future, be required to record, impairments of intangible assets. Any impairment charges could adversely affect the Company’s financial condition, margins and results of operations.

Previous wording

The Company has divested and may, in the future, divest certain assets, businesses or brands. A divestiture could affect the profitability of the Company as a result of the gains or losses on such sale of a business or brand, the loss of the operating income or sales resulting from such sale or the costs or liabilities that are not assumed by the acquirer that may negatively impact profitability and cash flow subsequent to any divestiture. If the Company is unable to complete a divestiture or successfully transition a divested business, including the effective management of the related separation and overhead costs, transition services, and the maintenance of relationships with customers, suppliers, and other business partners, its business and financial results could be negatively impacted. The Company may also be required to recognize impairment charges or other losses as a result of a divestiture. For example, in March 2024, the Company completed the sale of its Argentina business, which consisted of two production plants in Argentina as well as the rights to the Company’s brands in Argentina, Uruguay and Paraguay, and in July 2024, the Company entered into a definitive agreement to sell its Better Health VMS business. The Better Health VMS transaction is expected to close in the first quarter of fiscal year 2025. As a result of these transactions, the Company recorded a loss for the sale of its Argentina business in the third quarter of fiscal year 2024 and expects to record a loss for the sale of its Better Health VMS business during the first quarter of fiscal year 2025.

Current wording

The Company has divested and may, in the future, divest certain assets, businesses or brands. A divestiture could affect the profitability of the Company as a result of the gains or losses on such sale of a business or brand, the loss of the operating income or sales resulting from such sale or the costs or liabilities that are not assumed by the acquirer that may negatively impact profitability and cash flow subsequent to any divestiture. The Company may also encounter difficulty finding potential acquirers or other divestiture options on favorable terms. If the Company is unable to complete a divestiture or successfully transition a divested business, including the effective management of the related separation and overhead costs, transition services, and the maintenance of relationships with customers, suppliers, and other business partners, its business and financial results could be negatively impacted. The Company may also be required to recognize impairment charges or other losses as a result of a divestiture. For example, in March 2024 and September 2024, the Company completed the sale of its Argentina business and its Better Health VMS business, respectively, and recorded a loss for each sale.

Previous wording

The Company’s success depends, in part, on its continuing ability to identify, hire, develop and retain highly qualified and diverse personnel. The Company's ability to attract and retain talent has been and may continue to be impacted by a number of factors, including employee morale, its reputation, competition from other employers and availability of qualified individuals in key geographic areas such as the San Francisco Bay Area, and challenges in the labor market, particularly in the U.S., which has increasing labor costs, sustained labor shortages, and changing worker and talent market expectations around flexible work models and relocation. Increased labor costs as a result of increased competition for employees, higher employee turnover rates, increased employee benefit costs, or labor union organizing efforts could increase the Company’s operating expenses, and its growth and results of operations could be adversely impacted.

Current wording

The Company’s success depends, in part, on its continuing ability to identify, hire, develop and retain highly qualified personnel with diverse perspectives, experiences, and backgrounds that reflect the Company’s varied and diverse consumer base, at all levels of the business, including management and in its manufacturing facilities. The Company's ability to attract and retain talent has been and may continue to be impacted by a number of factors, including employee morale, its reputation, competition from other employers and availability of qualified individuals in key geographic areas such as the San Francisco Bay Area, and challenges in the labor market, particularly in the U.S., which has increasing labor costs, sustained labor shortages, and changing worker and talent market expectations around flexible work models and relocation. Increased labor costs as a result of increased competition for employees, higher employee turnover rates, increased employee benefit costs, or labor union organizing efforts could increase the Company’s operating expenses, and its growth and results of operations could be adversely impacted.

Previous wording

Volatility and increases in the cost of raw materials, including resin, non-woven fabrics for wipes products, sodium hypochlorite, corrugated cardboard and other packaging materials, soybean oil, solvent, derivatives of amines, and other chemicals and agricultural commodities, and rapid increases in the cost of energy, transportation, labor and other necessary supplies or services, have harmed, and are likely to continue to harm, the Company’s results of operations. Significant inflationary pressures have impacted the Company's gross margin in fiscal years 2023 and, to a lesser extent, 2024, and it expects inflationary pressures to continue into fiscal year 2025.

Current wording

Volatility and increases in the cost of raw materials, including resin, non-woven fabrics for wipes products, sodium hypochlorite, corrugated cardboard and other packaging materials, soybean oil, solvent, derivatives of amines, and other chemicals and agricultural commodities, and rapid increases in the cost of energy, transportation, labor and other necessary supplies or services, have harmed, and may continue to harm, the Company’s results of operations.

Previous wording

Many of the raw and packaging materials and supplies used in the production of the Company's products are subject to price volatility and fluctuations in availability caused by many factors, including macroeconomic and geopolitical developments and uncertainty, supplier or transport capacity constraints, changes in supply and demand, weather conditions and natural disasters (including the potential effects of climate change, which could also pose physical risks to the Company's facilities as well as those of its key external manufacturers and suppliers), fire, growing and harvesting conditions, energy costs, health epidemics, pandemics or other contagious outbreaks, labor shortages, currency fluctuations, governmental actions (including import and export requirements such as new or increased tariffs, sanctions, quotas or trade barriers), port congestions or delays, cybersecurity incidents or other disruptions, loss or impairment of key manufacturing sites, acts of terrorism and other factors beyond the Company's control.

Current wording

Many of the raw and packaging materials and supplies used in the production of the Company's products are subject to price volatility and fluctuations in availability caused by many factors, including macroeconomic and geopolitical developments and uncertainty, governmental actions (including new or increased tariffs, sanctions, quotas, or trade barriers), supplier or transport capacity constraints, changes in supply and demand, weather conditions and natural disasters (including the potential effects of climate change, which could also pose physical risks to the Company's facilities as well as those of its key external manufacturers and suppliers), fire, growing and harvesting conditions, energy costs, health epidemics, pandemics or other contagious outbreaks, labor shortages, currency fluctuations, port congestions or delays, cybersecurity incidents or other disruptions, loss or impairment of key manufacturing sites or lines, acts of terrorism and other factors beyond the Company's control.

Previous wording

The Company has also experienced and may continue to experience disruption in its manufacturing operations and supply chain, as a result of the factors set forth above. Although the Company is unable to predict the impact on its ability to source raw and packaging materials and services in the future, it expects limited supply pressures and market disruptions to continue into fiscal year 2025. If such cost pressures are incurred or exceed the Company’s estimates and the Company is not able to increase the prices of its products (or sustain such price increases) or achieve cost savings to offset such cost increases, its margins would be harmed. Sustained price increases may also lead to declines in sales volumes and loss of market share, as competitors may not adjust their prices or customers may decide to purchase a lower-priced alternative. The Company’s projections may not accurately predict the volume impact of price increases, which could adversely affect its business, financial condition and results of operations.

Current wording

The Company has also experienced and may continue to experience disruption in its manufacturing operations and supply chain, including facility damage or closures, as a result of the factors set forth above. Although the Company is unable to predict the impact on its ability to source raw and packaging materials and services in the future, the Company does not expect supply constraints in fiscal year 2026. Supply pressures and market disruptions may continue into fiscal year 2026, however, including as a result of new or increasing U.S. or retaliatory tariffs, which could also increase raw material costs. If such cost pressures are incurred or exceed the Company’s estimates and the Company is not able to increase the prices of its products (or sustain such price increases) or achieve cost savings to offset such cost increases, its margins would be harmed. Sustained price increases may also lead to declines in sales volumes and loss of market share, as competitors may not adjust their prices or customers may decide to purchase a lower-priced alternative. The Company’s projections may not accurately predict the volume impact of price increases, which could adversely affect its business, financial condition and results of operations.

Previous wording

The Company has a complex global network of suppliers that may, in the future, expand and further evolve in response to market conditions. The Company also relies on a number of single-source suppliers for certain commodities and raw material inputs, including packaging, product components, finished products and other necessary supplies. The Company has experienced and could continue to experience material disruptions in production and other supply chain issues, including as a result of supply chain dependencies, which could result in out-of-stock conditions. The Company has business continuity and disaster recovery plans to address disruptions to the manufacturing or sourcing of products or raw materials, and these plans may not be sufficient. Significant disruptions have and could, in the future, interrupt product supply and, if not remedied in a timely manner or at all, could have an adverse impact on the Company's business, results of operations, cash flows and financial condition.

Current wording

The Company has a complex global network of suppliers that may, in the future, expand and further evolve in response to market conditions. The Company also relies on a number of single-source suppliers for certain commodities and raw material inputs, including packaging, product components, finished products and other necessary supplies. The Company has experienced and could continue to experience material disruptions in production and other supply chain issues, including as a result of supply chain dependencies, which could result in out-of-stock conditions. The Company’s business continuity and disaster recovery plans to address disruptions to the manufacturing or sourcing of products or raw materials may not be sufficient, comprehensive, or effective. Significant disruptions have and could, in the future, interrupt product supply and, if not remedied in a timely manner or at all, could have an adverse impact on the Company's business, results of operations, cash flows and financial condition.

Previous wording

The Company also requires new and existing suppliers to meet its ethical and business partner standards. If the Company's existing or new suppliers fail to meet such standards or any other relevant governmental, industry, customer or Company standards; if the Company is unable to contract with suppliers on favorable terms or at the quantity, quality and price levels needed for its business; if any of the Company’s key suppliers becomes insolvent, ceases or significantly reduces its operations or experiences financial distress; or if any environmental, economic or other outside factors impact its operations, the Company's business, results of operations, cash flows and financial condition could be adversely affected. In addition, the Company may increase production in-house and reduce its supply and manufacturing arrangements with third parties, which may lead to additional costs connected to such transition and unwinding of certain manufacturing relationships.

Current wording

The Company also requires new and existing suppliers to meet its ethical and business partner standards. If the Company's existing or new suppliers fail to meet such standards or any other relevant governmental, industry, customer or Company standards; if the Company is unable to contract with suppliers on favorable terms or at the quantity, quality and price levels needed for its business; if any of the Company’s key suppliers becomes insolvent, ceases or significantly reduces its operations or experiences financial distress; or if any environmental, economic or other outside factors impact its operations, the Company's business, results of operations, cash flows and financial condition could be adversely affected. In addition, the Company may face challenges in production planning and execution, which could impact its ability to cost-effectively meet product demand, or may be required to increase production in-house and reduce its supply and manufacturing arrangements with third parties, which may lead to additional costs connected to such transition and unwinding of certain manufacturing relationships.

Previous wording

The Company is in the process of a multi-year phased upgrade of its digital capabilities, including enhancing operating efficiencies and transitioning to a cloud-based platform, as well as replacing its enterprise resource planning system. It also uses various other hardware, software and operating systems that may need to be upgraded or replaced in the near future as such systems cease to be supported by third-party service providers, and may be vulnerable to increased risks, including the risk of further security breaches, system failures and disruptions. Any such upgrade could take time, oversight and be costly to the Company, and may include potential challenges, such as the cost of training personnel, migration of data, the potential instability of the new system and cost overruns. If such systems are not successfully upgraded or replaced in a timely manner, system outages, disruptions or delays, or other issues may arise. If a new system does not function properly or is not adequately supported by third-party service providers and processes, it could adversely affect the Company’s business and operations, which, in turn, could adversely impact the Company’s results of operations and cash flows.

Current wording

The Company is in the process of a multi-year phased upgrade of its digital and productivity capabilities and ERP system replacement. It also uses various other hardware, software and operating systems that may need to be upgraded or replaced in the near future as such systems cease to be supported by third-party service providers, and may be vulnerable to increased risks, including the risk of further security breaches, system failures and disruptions. Any such upgrade could take time, oversight and be costly to the Company, and may include potential challenges, such as the cost of training personnel, data migration, the potential instability of the new system and cost overruns. If such systems are not successfully upgraded or replaced in a timely manner, system outages, disruptions or delays, or other issues may arise. If a new system does not function properly or is not adequately supported by third-party service providers and processes, it could adversely affect the Company’s business and operations, which, in turn, could adversely impact the Company’s results of operations and cash flows.

Previous wording

The IT/OT systems of the Company, its customers, business partners, suppliers, and third-party providers have been, and will continue to be, subject to cyber-threats such as computer viruses or other malicious codes, security breaches, ransomware, unauthorized access attempts, business email compromise, cyber extortion, denial of service attacks, phishing, deepfakes, social engineering, unintentional or malicious actions of employees or contractors, hacking and other cyberattacks attempting to exploit vulnerabilities by hackers, criminal groups, nation-states and nation-state-sponsored organizations and social-activist organizations. These activities may result in unauthorized access, disclosure and misuse of customer, employee, vendor, Company, or consumer information, including personal consumer information obtained through online and e-commerce sales, and online activities, including promotions, rebates and customer loyalty programs, as well as increased costs related to the Company’s involvement in investigations or notifications conducted by the Company’s business partners.

Current wording

The IT/OT systems of the Company, its customers, business partners, suppliers, and third-party providers have been, and will continue to be, subject to cyber-threats such as computer viruses or other malicious codes, security breaches, ransomware, unauthorized access attempts, business email compromise, data encryption or exfiltration, cyber extortion, denial of service attacks, phishing, deepfakes, social engineering, unintentional or malicious actions of employees or contractors, hacking and other cyberattacks attempting to exploit vulnerabilities by hackers, criminal groups, nation-states and nation-state-sponsored organizations and social-activist organizations. The Company experienced a cyberattack in August 2023 and may continue to experience an increase in the number of such attacks, which may result in unauthorized access, disclosure and misuse of customer, employee, vendor, Company, or consumer information, including personal consumer information obtained through online and e-commerce sales, and online activities, including promotions, rebates and customer loyalty programs, as well as increased costs related to the Company’s involvement in investigations or notifications conducted by the Company’s business partners. The rapid evolution and increased adoption of emerging technologies, such as artificial intelligence, may also increase the frequency and magnitude of cyberattacks on the Company and amplify its cybersecurity risks. In addition, while the Company has purchased cybersecurity insurance, costs related to a cyberattack may exceed the amount of insurance coverage or be excluded under the terms of its cybersecurity insurance policy. The Company may be unable to obtain cybersecurity insurance in amounts and on terms the Company views as appropriate for its operations.

Previous wording

The security efforts of the Company and its third-party providers may not prevent or timely detect future attacks and resulting breaches or breakdowns of its databases or systems. The Company has in place disaster recovery and business continuity plans to address these incidents, but if these plans or those of its third-party providers do not effectively resolve such breaches or breakdowns on a timely basis or at all, the Company may experience interruptions in its ability to manage or conduct business, as well as reputational harm, governmental fines, penalties, regulatory proceedings, and litigation and remediation expenses. The need to coordinate with various third-party service providers, including with respect to timely notification andaccess to personnel and information concerning an incident, may complicate the Company’s efforts to address issues that arise. As a result, the Company is subject to the risk that the activities associated with its third-party service providers can adversely affect its business, financial condition and results of operations, even if the attack or breach does not directly impact its systems orinformation.

Current wording

The security efforts of the Company and its third-party providers may not prevent or timely detect future attacks and resulting breaches or breakdowns of its databases or systems. These attacks may also be difficult to detect for periods of time and, even if detected, the nature and extent of the incident may not be immediately clear and an investigation into an incident could take a significant amount of time to complete. These factors may inhibit the Company’s ability to provide rapid, complete, and reliable information about the cybersecurity incident to customers, counterparties, and regulators, as well as the public. The Company has in place disaster recovery and business continuity plans to address Company and third-party incidents, but if these plans or those of its third-party providers are not sufficient or comprehensive, or do not effectively resolve such breaches or breakdowns on a timely basis or at all, the Company may experience interruptions in its ability to manage or conduct business, as well as reputational harm, governmental fines, penalties, regulatory proceedings, litigation and remediation expenses, adverse impacts on employee morale, loss of customers or consumers, as well as heightened regulatory and legal scrutiny. The need to coordinate with various third-party service providers, including with respect to timely notification and access to personnel and information concerning an incident, may complicate the Company’s efforts to address issues that arise. As a result, the Company is subject to the risk that the activities associated with its third-party service providers can adversely affect its business, financial condition and results of operations, even if the attack or breach does not directly impact its systems or information.

Previous wording

Cyber-threats and techniques are becoming more sophisticated and are constantly evolving, including through the use of emerging technologies such as artificial intelligence, and are being made by groups and individuals with a wide range of expertise and motives, and this increases the difficulty of detecting and successfully defending against them. Continued geopolitical instability has also heightened the risk of cyberattacks. The Company has incurred, and will continue to incur, expenses to comply with privacy and data protection standards and protocols imposed by law, regulation, industry standards and contractual obligations. Increased regulation of data collection, use, and retention practices, including self-regulation and industry standards, changes in existing laws and regulations, including reporting requirements, enactment of new laws and regulations, increased enforcement activity, and changes in interpretation of laws, could increase the Company's cost of compliance and operation, limit its ability to grow its business or otherwise harm its business.

Current wording

Cyber-threats and techniques are becoming more sophisticated and are constantly evolving and are being made by groups and individuals with a wide range of expertise and motives, and this increases the difficulty of detecting and successfully defending against them. Continued geopolitical instability has also heightened the risk of cyberattacks. The Company has incurred, and will continue to incur, expenses to comply with privacy and data protection standards and protocols imposed by law, regulation, industry standards and contractual obligations. Increased regulation of data collection, use, and retention practices, including self-regulation and industry standards, changes in existing laws and regulations, including reporting requirements, enactment of new laws and regulations, increased enforcement activity, and changes in interpretation of laws, could increase the Company's cost of compliance and operation, limit its ability to grow its business or otherwise harm its business.

Previous wording

In addition, data breaches or theft of personal information collected by the Company and its third-party service providers as well as data breaches or theft of Company information and assets have occurred in the past and may occur in the future. The Company is subject to the laws and regulations of various countries where it operates or does business related to solicitation, collection, processing, transferring, storing or use of consumer, customer, business partner or employee information or related data. These laws and regulations change frequently, and new legislation continues to be introduced and may include different standards and requirements, be interpreted and applied differently from jurisdiction to jurisdiction and create inconsistent or conflicting requirements. The changes introduced by data privacy and protection regulations increase the complexity of regulations enacted to protect business and personal data and they subject the Company to additional costs and have required, and may in the future require, costly changes to the Company’s security systems, policies, procedures and practices. These laws and regulations also may result in the Company incurring additional expenses and liabilities in the event of unauthorized access to or disclosure of personal data.

Current wording

In addition, data breaches or theft of personal information collected by the Company and its third-party service providers as well as data breaches or theft of Company information and assets have occurred in the past and may occur in the future. The Company is subject to the laws and regulations of various countries where it operates or does business related to solicitation, collection, processing, transferring, storing or use of consumer, customer, business partner or employee information or related data. These laws and regulations change frequently, and new legislation continues to be introduced and may include different standards and requirements, be interpreted and applied differently from jurisdiction to jurisdiction and create inconsistent or conflicting requirements. The changes introduced by data privacy and protection regulations increase the complexity of regulations enacted to protect business and personal data and subject the Company to additional costs and have required, and may in the future require, costly changes to the Company’s security systems, policies, procedures and practices. These laws and regulations also may result in the Company incurring additional expenses and liabilities in the event of unauthorized access to or disclosure of personal data.

Previous wording

In fiscal year 2024, 16% of the Company’s net sales were attributable to international markets. The Company has faced and will continue to face substantial risks associated with its foreign operations, including, but not limited to:

Current wording

In fiscal year 2025, 14% of the Company’s net sales were attributable to international markets. The Company has faced and will continue to face substantial risks associated with its foreign operations, including, but not limited to:

Previous wording

• unfavorable and uncertain macroeconomic and geopolitical conditionsand potential operational or supply chain disruptions as a result of these developments;

Current wording

•unfavorable and uncertain macroeconomic and geopolitical conditions as set forth elsewhere in this section and potential operational or supply chain disruptions as a result of these developments;

Previous wording

• the imposition of tariffs, trade restrictions or sanctions, price, profit, capital or other government controls, labor laws, immigration restrictions, travel restrictions, including as a result of pandemics or epidemics, import and export laws or other government actions generating a negative impact on the Company’s business, including changes in trade policies that may be implemented and the impact of geopolitical events generally;

Current wording

•the imposition of or increase in tariffs, trade restrictions or sanctions, changes in trade policies, price, profit, capital or other government controls, labor laws, immigration restrictions, travel restrictions, including as a result of pandemics/epidemics, import and export laws, or other government actions generating a negative impact on the Company’s business;

Previous wording

• environmental events, civil unrest, work stoppages, labor disputes, widespread health emergencies, pandemics or epidemics, terrorism, kidnapping, and drug‐related or other types of violence;

Current wording

•environmental events, civil unrest, work stoppages, labor disputes, widespread health emergencies, pandemics/epidemics, terrorism, kidnapping, and drug‐related or other types of violence;

Previous wording

The Company relies on third-party service providers for certain areas of its business operations, including aspects of the implementation of the Company’s transformational initiatives (such as its digital capabilities upgrade including enhancing operating efficiencies, transitioning to a cloud-based platform and replacing its enterprise resource planning system), IT, procurement, supply chain, manufacturing, certain finance and accounting functions, including financial reporting, and legal, regulatory and tax compliance. Failure by these third parties to meet their contractual, regulatory and other obligations to the Company, or failure to adequately monitor their performance, has in the past and could continue to result in the Company's inability to achieve expected cost savings or efficiencies and result in additional costs to correct errors made by such service providers. Depending on the function involved and despite the availability of contractual remedies against these providers, such errors can also lead to business disruption, systems performance degradation, processing inefficiencies or other systems disruptions, the loss of or damage to intellectual property or sensitive data through security breaches or otherwise, incorrect or adverse effects on financial reporting, litigation, claims, legal or regulatory proceedings, inquiries or investigations, fines or penalties, remediation costs, damage to the Company’s reputation or have a negative impact on employee morale, all of which can adversely affect the Company’s business.

Current wording

The Company relies on third-party service providers for certain areas of its business operations, including aspects of the implementation of the Company’s transformational initiatives (such as its digital and productivity enhancements and replacement of its ERP system), IT, procurement, supply chain, manufacturing, certain finance and accounting functions, including financial reporting, and legal, regulatory and tax compliance. Failure by these third parties to meet their contractual, regulatory and other obligations to the Company, or failure to adequately monitor their performance, has in the past and could continue to result in the Company's inability to achieve expected cost savings or efficiencies and result in additional costs to correct errors made by such service providers. Depending on the function involved and despite the possible availability of contractual remedies against these providers, such errors can also lead to business disruption, systems performance degradation, processing inefficiencies or other systems disruptions, the loss of or damage to intellectual property or sensitive data through security breaches or otherwise, incorrect or adverse effects on financial reporting, litigation, claims, legal or regulatory proceedings, inquiries or investigations, fines or penalties, remediation costs, damage to the Company’s reputation or have a negative impact on employee morale, all of which can adversely affect the Company’s business.

Previous wording

Generally, the manufacture, processing, formulation, packaging, labeling, storage, distribution, advertising and sale of the Company’s products and its business operations must comply with extensive federal, state and foreign laws and regulations, including, in the U.S., the Environmental Protection Agency, the Food and Drug Administration (including applicable current good manufacturing practice regulations), the Consumer Product Safety Commission, the Federal Trade Commission, and the Occupational Safety and Health Administration. There is also an increased risk of fraud or corruption in certain foreign jurisdictions and related difficulties in maintaining effective internal controls. Additionally, the Company could be subject to future inquiries or investigations by governmental and other regulatory bodies. Any determination that the Company’s operations or activities are not in compliance with applicable law could expose the Company to future impairment charges or significant fines, penalties or other sanctions that may result in a reduction in net income or otherwise adversely impact the business and reputation of the Company.

Current wording

The Company’s manufacturing, processing, formulation, packaging, labeling, storage, distribution, advertising, and sale of its products and business operations must comply with extensive, increasingly varied, and complex federal, state, and foreign laws and regulations. In the U.S., this includes oversight from agencies such as the Environmental Protection Agency, the Food and Drug Administration (including applicable current good manufacturing practice regulations), the Consumer Product Safety Commission, the Federal Trade Commission, and the Occupational Safety and Health Administration. Additionally, significant and wide-ranging reforms, regulatory changes, policies, and executive orders, changing enforcement priorities, and staffing reductions at governmental agencies at the federal level in 2025 have introduced uncertainty regarding future regulatory impacts, including around product safety standards, labeling requirements, or approval processes, which may delay product launches, increase compliance risk, or impact the Company’s ability to bring new products to market expeditiously or efficiently. The Company could also be subject to future inquiries or investigations by governmental or other regulatory bodies, and any determination of non-compliance with applicable laws could result in impairment charges, significant fines, penalties, or other sanctions that may adversely affect its business, reputation, and financial performance.

Previous wording

Federal, state and foreign governments may introduce new or expand existing legislation and regulations, or courts or governmental authorities could impose more stringent interpretations of existing legislation and regulations, affecting the Company’s operations, which may require the Company to increase its resources, capabilities and expertise in certain areas. For example, the Company is subject to regulations regarding the transportation, storage or use of certain chemicals to protect the environment, including as a result of evolving climate change standards, and is and may become subject to increased costs or mandatory funding or financial support requirements for recycling and waste management programs under extended producer responsibility regulation or laws, through plastic or packaging taxes, or restrictions on certain products and materials or on the use of certain types of packaging. Such regulations could negatively impact the Company’s ability to obtain raw materials or could increase its acquisition and compliance costs or cause the Company to contribute funds to recycling and other waste management infrastructure, thus making its products more costly, less competitive than other competitive products or reduce consumer demand. Furthermore, additional or amended legislation in the areas of ESG disclosure, healthcare reform, sustainability of packaging, including plastic packaging, executive compensation and corporate governance, could also increase the Company’s costs. The Company is also required to comply with increasingly complex and changing laws and regulations enacted to protect business and personal data in the U.S. and other jurisdictions, which have and could continue to subject the Company to additional compliance costs.

Current wording

Moreover, federal, state, and foreign governments may introduce new or expand existing legislation and regulations, or impose more stringent interpretations of current laws, requiring the Company to enhance its resources, capabilities, and expertise. For instance, the Company is subject to environmental regulations related to the transportation, storage, and use of certain chemicals. It may also face increased costs or mandatory funding obligations under extended producer responsibility regulations (such as plastic or packaging taxes, recycling, and waste management programs) or restrictions on materials and packaging types. These requirements could raise raw material acquisition and compliance costs, limit material availability, or make the Company’s products more expensive and less competitive, thereby reducing consumer demand. Furthermore, the Company is subject to rapidly evolving and increasingly complex legal and regulatory requirements in areas such as sustainability disclosure, sustainable packaging (including plastic packaging), data privacy, executive compensation, and corporate governance. The lack of regulatory convergence across jurisdictions, especially at the state level, may further increase compliance costs.