Since our last note on Clorox in February, inflation has accelerated and run hotter than expected. Rising costs have further squeezed earnings and driven the firm's trailing payout ratio to over 100%. Despite the operating environment turning even more challenging than anticipated, we believe Clorox's long-term outlook remains intact, and the company's dividend remains safe. However, we do expect inflationary challenges to persist for a while longer. From resin used in plastic containers to non-woven fabrics for wipes products, prices of the cleaning product maker's essential materials have risen by 25% to 50% over the last two years, on top of the overwhelming increased costs to ship goods.