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8-K - CURRENT REPORT - CLOROX CO /DE/ | clorox_8k.htm |
EX-99.2 - SUPPLEMENTAL INFORMATION - CLOROX CO /DE/ | exhibit99-2.htm |
PRESS RELEASE |
Clorox Reports Solid Sales and Margin Growth in First Quarter; Confirms Fiscal Year 2013 Outlook
OAKLAND, Calif., Oct. 31, 2012 The Clorox Company (NYSE: CLX) today reported 3 percent sales growth and a 110 basis-point increase in gross margin for the quarter, which ended Sept. 30.
Were off to a good start in the fiscal year, said Chairman and CEO Don Knauss. We delivered sales growth in both our U.S. and International businesses. We also saw strong margin improvement in the quarter, which is a particular focus for the company, even as we continue to invest in systems and facilities infrastructure.
Some results in this press release are reported on a non-GAAP basis. See Non-GAAP Financial Information below and the tables toward the end of this press release for more information and a reconciliation of key first-quarter results.
Fiscal First-Quarter Results
Following is a summary of key first-quarter results. All comparisons are with the first quarter of fiscal year 2012, unless otherwise stated.
* | $1.01 diluted earnings per share (3 percent growth) | |
* | 1% volume decrease | |
* | 3% sales growth |
Clorox reported first-quarter earnings of $133 million, or $1.01 diluted earnings per share (EPS). This compares with $130 million, or 98 cents diluted EPS, in the year-ago quarter. Current-quarter results reflect higher sales and gross margin expansion, partially offset by higher selling and administration expenses, including continued investments in the companys information technology (IT) systems.
Volume for the first quarter of fiscal year 2013 decreased 1 percent, as price increases impacted shipments. Sales growth outpaced volume primarily due to the benefit of price increases, partially offset by unfavorable foreign exchange.
Gross margin increased 110 basis points to 42.9 percent from 41.8 percent in the year-ago quarter. The increase in gross margin was driven primarily by strong cost savings and the benefit of price increases, partially offset by inflation impacting manufacturing and logistics costs, as well as other supply chain costs.
We are very pleased that we delivered margin improvement in the quarter, said Senior Vice President and Chief Financial Officer Steve Robb. Weve taken the right steps to rebuild our margin, including well-executed price increases across our portfolio and a strong focus on cost savings, a company hallmark.
The effective tax rate of 31.6 percent for the current quarter was higher versus the year-ago quarter, but lower than anticipated, reflecting the benefit of a recent international tax settlement. Clorox anticipates the tax rate for the full year to be between 33 percent and 34 percent.
Net cash provided by operations increased to $208 million from $131 million in the year-ago quarter. The year-over-year increase was due primarily to favorable changes in working capital. For the full fiscal year, Clorox anticipates free cash flow of about 9 percent to 10 percent of sales. The company defines free cash flow as cash provided by operations less capital expenditures. In September, the company issued $600 million of 10-year senior notes, temporarily increasing its cash balance prior to the mid-October repayment of other maturing long-term debt of $350 million. The companys cash balance is expected to return to a more normalized level by Dec. 31.
(Laundry, Home Care, Professional Products)
- 4% volume increase
- 8% sales increase
- 11% pretax earnings increase
(Bags and Wraps, Charcoal, Cat Litter)
- 7% volume decrease
- 3% sales decrease
- 19% pretax earnings increase
(Dressings and Sauces, Water Filtration, Natural Personal Care)
- 1% volume decrease
- 1% sales increase
- 2% pretax earnings increase
Volume was up in the Food business driven primarily by higher shipments of Hidden Valley® products, offset by lower shipments of KC Masterpiece® products due to strong competitive activity. Volume declined in the Water Filtration business due to lower shipments of faucet mount products, as well as lower Brita Bottle® shipments, compared to strong volume behind the new product launch in the prior-year quarter. Burts Bees shipments declined slightly, following strong growth in the year-ago period, behind a robust pipeline of new products. Burts Bees delivered double-digit retail sales growth. Segment sales grew primarily due to the benefit of price increases. Pretax earnings growth reflected the benefit of cost savings.
(All countries outside of the U.S.)
- 2% volume decrease
- 3% sales increase
- 30% pretax earnings decrease
Volume declined in the segment largely due to the exit of nonstrategic export businesses. Base business in Latin America grew both volume and sales, while Canada volume and sales declined slightly. Segment sales increased primarily due to price increases, partially offset by unfavorable foreign exchange. The pretax earnings decline of $12 million was due to the inflationary impact on manufacturing and logistics costs, unfavorable foreign exchange and expenses associated with IT systems implementation in Latin America.
Clorox Confirms Fiscal 2013
Financial Outlook
Clorox
confirmed its previous financial outlook for fiscal 2013:
* | 2-4 percent sales growth | |
* | EBIT margin up 25-50 basis points | |
* | Diluted EPS in the range of $4.20-$4.35 |
Clorox continues to anticipate sales growth for fiscal 2013 in the range of 2 percent to 4 percent. This reflects continued category growth and product innovation across many of the companys brands. Uncertainty in some international markets, the negative impact of declining foreign currencies and a more challenging comparison to strong fiscal 2012 sales growth continue to be influencing factors in the companys fiscal 2013 outlook.
The company continues to expect earnings before interest and taxes (EBIT) margin1 to increase by 25-50 basis points for the fiscal year, reflecting strong cost savings, the benefit of price increases and commodity costs estimated to be about flat versus the prior year. This range also anticipates the impact of declining foreign currencies.
Clorox continues to expect spending against its systems and facilities investments, as well as infrastructure-related investments, to be about equal to fiscal 2012, or in the range of $50 million to $55 million.
Net of all these factors, Clorox continues to anticipate fiscal 2013 diluted EPS in the range of $4.20 to $4.35.
For More Detailed Financial
Information
Visit the
Investors: Financial Reporting: Financial Results section of the companys
website at TheCloroxCompany.com for
the following:
* | Supplemental volume and sales growth information | |
* | Supplemental gross margin driver information | |
* | Reconciliation of certain non-GAAP financial information, including earnings before interest and taxes (EBIT) and earnings before interest, taxes, depreciation and amortization (EBITDA) | |
* | Supplemental balance sheet and cash flow information | |
* | Supplemental price-change information |
Note: Percentage and basis-point changes noted in this press release are calculated based on rounded numbers. Supplemental materials are available in the Investors: Financial Reporting: Financial Results section of the companys website at TheCloroxCompany.com.
Webcast Postponed to
Friday, Nov. 2
In light of
Hurricane Sandy, Clorox has moved its first-quarter earnings webcast to Friday,
Nov. 2, at 10:30 a.m. Pacific time (1:30 p.m. Eastern time). The webcast can be
accessed at http://investors.thecloroxcompany.com. Following a live discussion, a
replay of the webcast will be archived for one week on the companys website.
____________________
The Clorox Company
The Clorox Company is a
leading manufacturer and marketer of consumer and professional products with
approximately 8,400 employees and fiscal year 2012 revenues of $5.5 billion.
Clorox markets some of the most trusted and recognized brand names, including
its namesake bleach and cleaning products, Clorox Healthcare,
HealthLink®, Aplicare® and Dispatch® products,
Green Works® naturally derived home care products,
Pine-Sol® cleaners, Poett® home care products, Fresh
Step® cat litter, Glad® bags, wraps and containers,
Kingsford® charcoal, Hidden Valley® and KC
Masterpiece® dressings and sauces, Brita® water-filtration
products, and Burts Bees® and gud® natural personal care
products. Nearly 90 percent of the companys brands hold the No. 1 or No. 2
market share positions in their
categories. The companys products are manufactured in more than two dozen
countries and marketed in more than 100 countries. Clorox is committed to making
a positive difference in the communities where its employees work and live.
Founded in 1980, The Clorox Company Foundation has awarded cash grants totaling
more than $87 million to nonprofit organizations, schools and colleges. In
fiscal year 2012 alone, the foundation awarded $3.5 million in cash grants, and
Clorox made product donations valued at $15 million. For more information about
Clorox, visit TheCloroxCompany.com.
Forward-Looking Statements
This press release contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the Securities Act), and Section 21E of the Securities
Exchange Act of 1934, as amended (the Exchange Act), and such forward-looking
statements involve risks and uncertainties. Except for historical information,
matters discussed above, including statements about future volume, sales, costs,
cost savings, earnings, cash flows, plans, objectives, expectations, growth, or
profitability, are forward-looking statements based on managements estimates,
assumptions and projections. Words such as will, could, may, expects,
anticipates, targets, goals, projects, intends, plans, believes,
seeks, estimates, and variations on such words, and similar expressions, are
intended to identify such forward-looking statements. These forward-looking
statements are only predictions, subject to risks and uncertainties, and actual
results could differ materially from those discussed above. Important factors
that could affect performance and cause results to differ materially from
managements expectations are described in the sections entitled Risk Factors
and Managements Discussion and Analysis of Financial Condition and Results of
Operations in the Annual Report on Form 10-K for the fiscal year ended June 30,
2012, as updated from time to time in the companys SEC filings. These factors
include, but are not limited to: the companys costs, including volatility and
increases in commodity costs such as resin, diesel, chlor-alkali, sodium
hypochlorite, high-strength bleach, agricultural commodities and other raw
materials; increases in energy costs; the ability of the company to implement
and generate expected savings from its programs to reduce costs, including its
supply chain restructuring and other restructuring plans; supply disruptions or
any future supply constraints that may affect key commodities or product inputs;
risks inherent in relationships with suppliers, including sole-source or
single-source suppliers; risks related to the handling and/or transportation of
hazardous substances, including, but not limited to, chlorine; the success of
the companys strategies; the ability to manage and realize the benefits of
joint ventures and other cooperative relationships, including the companys
joint venture regarding the companys Glad® plastic bags, wraps and
containers business, and the agreements relating to the provision of information
technology, procure to pay and other key services by third parties; risks
relating to acquisitions, mergers and divestitures, and the costs associated
therewith; risks inherent in maintaining an effective system of internal
controls, including the potential impact of acquisitions or the use of
third-party service providers, and the need to refine controls to adjust for
accounting, financial reporting and other organizational changes or business
conditions; the ability of the company to successfully manage tax, regulatory,
product liability, intellectual property, environmental and other legal matters,
including the risk resulting from joint and several liability for environmental
contingencies and risks inherent in litigation, including class action
litigation and International litigation; risks related to maintaining and
updating the companys information systems, including potential disruptions,
costs and the ability of the company to implement adequate information systems
in order to support the current business and to support the companys potential
growth; the ability of the company to develop commercially successful products
that delight the consumer; consumer and customer reaction to price changes;
actions by competitors; risks related to customer concentration;
customer-specific ordering patterns and trends; risks arising out of natural
disasters; the impact of disease outbreaks, epidemics or pandemics on the
companys, suppliers or customers operations; changes in the companys tax
rate; unfavorable worldwide, regional or local general economic and marketplace
conditions and events, including consumer confidence and consumer spending
levels, the rate of economic growth, the rate of inflation or deflation, and the
financial condition of the companys customers, suppliers and service providers;
foreign currency exchange rate fluctuations and other risks of international
operations, including government-imposed price controls; unfavorable political
conditions in the countries where the company does business and other
operational risks in such countries; the impact of the volatility of the debt
and equity markets on the companys cost of borrowing, cost of capital and
access to funds, including commercial paper and its credit facility; risks
relating to changes in the companys capital structure, including risks related
to the companys ability to implement share repurchase plans and the impact
thereof on the companys capital structure and earnings per share; the impact of
any unanticipated restructuring or asset-impairment charges and the ability of
the company to successfully implement restructuring plans; risks arising from
declines in cash flow, whether resulting from declining sales, higher cost
levels, tax payments, debt payments, share repurchases, higher capital spending,
interest cost increases greater than managements expectations, interest rate
fluctuations, increases in debt or changes in credit ratings, or otherwise; the
costs and availability of shipping and transport services; potential costs in
the event of stockholder activism; and the companys ability to maintain its
business reputation and the reputation of its brands.
Page 4 of 9
The companys forward-looking statements in this press release are based on managements current views and assumptions regarding future events and speak only as of their dates. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by the federal securities laws.
Non-GAAP Financial
Information
This press
release contains non-GAAP financial information relating to sales growth, gross
margin and diluted EPS. The company has included reconciliations of this
information to the most directly comparable financial measure calculated in
accordance with generally accepted accounting principles in the U.S. (GAAP). See
the end of this press release for the reconciliations of sales growth, gross
margin and diluted EPS.
The company has disclosed information related to sales growth, gross margin and diluted EPS on a non-GAAP basis to supplement its condensed consolidated statements of earnings presented in accordance with GAAP. These non-GAAP financial measures exclude certain items that are included in the companys results reported in accordance with GAAP, including charges associated with simplification of the companys supply chain and other restructuring-related charges and the impact of foreign exchange and foreign currency exchange transactions and acquisitions.
Management believes that these non-GAAP financial measures provide useful additional information to investors about current trends in the companys operations and are useful for period-over-period comparisons. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP measures may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded. They should only be read in connection with the companys condensed consolidated statements of earnings presented in accordance with GAAP.
See Below for These Unaudited First-Quarter Results:
- Condensed Consolidated Statements of Earnings, Reportable Segment Information and Condensed Consolidated Balance Sheets
- Reconciliation of First-Quarter 2013 Sales Growth, Gross Margin and Diluted EPS
Media Relations
Aileen Zerrudo (510)
271-3075, aileen.zerrudo@clorox.com
Kathryn Caulfield (510) 271-7209,
kathryn.caulfield@clorox.com
Investor Relations
Lisah Burhan (510) 271-3269,
lisah.burhan@clorox.com
Steve Austenfeld (510) 271-2270, steve.austenfeld@clorox.com
For recent presentations made by company management and other investor materials, visit http://investors.thecloroxcompany.com/events.cfm.
Page 5 of 9
Condensed Consolidated
Statements of Earnings (Unaudited)
Dollars in millions, except per share amounts
Three Months Ended | ||||||
9/30/2012 | 9/30/2011 | |||||
Net sales | $ | 1,338 | $ | 1,305 | ||
Cost of products sold | 764 | 759 | ||||
Gross profit | 574 | 546 | ||||
Selling and administrative expenses | 195 | 190 | ||||
Advertising costs | 122 | 118 | ||||
Research and development costs | 30 | 28 | ||||
Interest expense | 33 | 29 | ||||
Other income, net | - | (6 | ) | |||
Earnings before income taxes | 194 | 187 | ||||
Income taxes | 61 | 57 | ||||
Net earnings | $ | 133 | $ | 130 | ||
Net earnings per share | ||||||
Basic | ||||||
Diluted | $ | 1.02 | $ | 0.99 | ||
1.01 | 0.98 | |||||
Weighted average shares outstanding (in thousands) | ||||||
Basic | 130,268 | 131,968 | ||||
Diluted | 131,702 | 133,611 |
Page 6 of 9
Reportable Segment
Information
(Unaudited)
Dollars in
millions
First Quarter | Net Sales | Earnings (Losses) Before Income Taxes | |||||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||||||
9/30/2012 | 9/30/2011 | % Change (1) | 9/30/2012 | 9/30/2011 | % Change (1) | ||||||||||||||||
Cleaning Segment | $ | 472 | $ | 439 | 8 | % | $ | 120 | $ | 108 | 11 | % | |||||||||
Household Segment | 355 | 366 | -3 | % | 50 | 42 | 19 | % | |||||||||||||
Lifestyle Segment | 208 | 206 | 1 | % | 56 | 55 | 2 | % | |||||||||||||
International Segment(2) | 303 | 294 | 3 | % | 28 | 40 | -30 | % | |||||||||||||
Corporate | - | - | - | (60 | ) | (58 | ) | 3 | % | ||||||||||||
Total Company | $ | 1,338 | $ | 1,305 | 3 | % | $ | 194 | $ | 187 | 4 | % |
(1) | Percentages based on rounded numbers. |
(2) | The International segment includes Natural Personal Care results outside the U.S. for all periods presented. |
Page 7 of 9
Condensed Consolidated Balance
Sheets
Dollars in millions
9/30/2012 | 6/30/2012 | 9/30/2011 | ||||||||||
(Unaudited) | (Unaudited) | |||||||||||
ASSETS | ||||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | $ | 667 | $ | 267 | $ | 270 | ||||||
Receivables, net | 503 | 576 | 439 | |||||||||
Inventories, net | 421 | 384 | 407 | |||||||||
Other current assets | 154 | 149 | 122 | |||||||||
Total current assets | 1,745 | 1,376 | 1,238 | |||||||||
Property, plant and equipment, net | 1,098 | 1,081 | 1,028 | |||||||||
Goodwill | 1,123 | 1,112 | 1,053 | |||||||||
Trademarks, net | 556 | 556 | 547 | |||||||||
Other intangible assets, net | 83 | 86 | 79 | |||||||||
Other assets | 142 | 144 | 132 | |||||||||
Total assets | $ | 4,747 | $ | 4,355 | $ | 4,077 | ||||||
LIABILITIES AND STOCKHOLDERS DEFICIT | ||||||||||||
Current liabilities | ||||||||||||
Notes and loans payable | $ | 2 | $ | 300 | $ | 440 | ||||||
Current maturities of long-term debt | 850 | 850 | - | |||||||||
Accounts payable | 388 | 412 | 357 | |||||||||
Accrued liabilities | 458 | 494 | 434 | |||||||||
Income taxes payable | 27 | 5 | 37 | |||||||||
Total current liabilities | 1,725 | 2,061 | 1,268 | |||||||||
Long-term debt | 2,169 | 1,571 | 2,122 | |||||||||
Other liabilities | 738 | 739 | 626 | |||||||||
Deferred income taxes | 135 | 119 | 137 | |||||||||
Total liabilities | 4,767 | 4,490 | 4,153 | |||||||||
Contingencies | ||||||||||||
Stockholders deficit | ||||||||||||
Preferred stock | - | - | - | |||||||||
Common stock | 159 | 159 | 159 | |||||||||
Additional paid-in capital | 631 | 633 | 611 | |||||||||
Retained earnings | 1,395 | 1,350 | 1,185 | |||||||||
Treasury shares | (1,836 | ) | (1,881 | ) | (1,717 | ) | ||||||
Accumulated other comprehensive net losses | (369 | ) | (396 | ) | (314 | ) | ||||||
Stockholders deficit | (20 | ) | (135 | ) | (76 | ) | ||||||
Total liabilities and stockholders deficit | $ | 4,747 | $ | 4,355 | $ | 4,077 |
Page 8 of 9
The Clorox Company |
Q1 Fiscal | Q1 Fiscal | ||||
2013 | 2012 | ||||
Base sales growth non-GAAP | 1.8 | % | 2.4 | % | |
Foreign exchange | -0.8 | 0.7 | |||
Acquisitions | 1.5 | -- | |||
Total sales growth - GAAP | 2.5 | % | 3.1 | % |
Q1 fiscal year 2012 gross margin - GAAP | 41.8 | % | Q1 fiscal 2011 year gross margin - GAAP | 44.3 | % | |
Commodities(1) | -0.1 | Commodities(1) | -3.2 | |||
Cost savings | 1.7 | Cost savings | 1.6 | |||
Pricing | 1.6 | Pricing | 1.7 | |||
Logistics and manufacturing(1) | -0.7 | Logistics and manufacturing(1) | -2.2 | |||
Other(2) | -1.4 | Other | -0.2 | |||
Q1 fiscal year 2013 gross margin | Q1 fiscal year 2012 gross margin | |||||
before impact of charges non-GAAP | 42.9 | before impact of charges non-GAAP | 42.0 | |||
Restructuring-related charges | 0.0 | Restructuring-related charges | -0.2 | |||
Q1 fiscal year 2013 gross margin - GAAP | 42.9 | % | Q1 fiscal year 2012 gross margin - GAAP | 41.8 | % |
(1) | Commodities in FY13 include the change in the cost of diesel fuel. In FY12, the change in the cost of diesel fuel is included in logistics and manufacturing. | |
(2) | Other in Q1 FY13 includes -60 bps each for both other supply chain costs and product mix. |
Q1 Fiscal | Q1 Fiscal | ||||
2013 | 2012 | ||||
Diluted EPS non-GAAP | $ | 1.04 | $ | 1.01 | |
Foreign exchange impact | -0.03 | 0.01 | |||
Restructuring and restructuring-related charges | 0.00 | -0.04 | |||
Diluted EPS GAAP | $ | 1.01 | $ | 0.98 |
Page 9 of 9