UNITED
STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant to Section 13 OR
15(d) of the Securities Exchange Act of 1934
Date of Report (Date of
earliest event reported): February 4, 2016
THE CLOROX
COMPANY
(Exact name of registrant
as specified in its charter)
| Delaware |
1-07151 |
31-0595760 |
| (State or other jurisdiction of |
(Commission File Number) |
(I.R.S. Employer |
| incorporation) |
|
Identification No.) |
1221 Broadway, Oakland,
California 94612-1888
(Address of principal executive offices) (Zip
code)
(510)
271-7000
(Registrant's
telephone number, including area code)
Not
applicable
(Former name or
former address, if changed since last report)
Check the appropriate box
below if the Form 8-K filing is intended to simultaneously satisfy the filing
obligation of the registrant under any of the following provisions:
[ ] Written communications
pursuant to Rule 425 Under the Securities Act (17 CFR 230.425)
[ ] Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial
Condition
On February 4, 2016, The
Clorox Company issued a press release announcing its financial results for its
second quarter ended December 31, 2015. The full text of the press release is
attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
Item 7.01 Regulation FD
Disclosure
Attached hereto as Exhibit
99.2 and incorporated herein by reference is supplemental financial information.
Item 9.01 Financial
Statements and Exhibits
(d) Exhibits
| |
Exhibit |
|
Description |
|
99.1 |
|
Press Release dated February 4, 2016 of The
Clorox Company |
|
99.2 |
|
Supplemental information regarding financial
results |
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto duly authorized.
|
THE CLOROX
COMPANY |
| |
| |
| Date: February 4,
2016 |
By: |
/ s/ Laura Stein |
|
|
Executive Vice President
– |
|
|
General
Counsel |
THE CLOROX COMPANY
FORM 8-K
INDEX TO EXHIBITS
| Exhibit |
|
Description |
| 99.1 |
|
Press
Release dated February 4, 2016 of The Clorox Company |
| 99.2 |
|
Supplemental information regarding
financial results |
| PRESS RELEASE |
 |
| |
|
Clorox Reports 18 Percent EPS Growth
in Q2; Raises Fiscal Year 2016 EPS Outlook
OAKLAND, Calif., Feb. 4, 2016
– The Clorox Company (NYSE:CLX) today reported flat sales and 18 percent growth
in diluted net earnings per share (EPS) from continuing operations for its
second quarter, which ended Dec. 31, 2015. On a currency-neutral basis,
second-quarter sales grew 3 percent.
“Our strategy continues to
drive profitable growth,” said Chief Executive Officer Benno Dorer. “We
delivered 18 percent earnings growth supported by strong operational execution
and commodity tailwinds, helping to drive gross margin expansion. Importantly,
we also delivered sales increases in each of our U.S. segments behind continued
strong investments in our brands.”
All results in this press
release are reported on a continuing operations basis, unless otherwise stated.
As previously announced, Corporación Clorox de Venezuela S.A. (Clorox Venezuela)
discontinued operations effective Sept. 22, 2014. For the current and year-ago
quarters, the results from Clorox Venezuela are included in discontinued
operations in the company’s financial statements. Some information in this
release is 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 reconciliations of key second-quarter fiscal year 2016 and fiscal year 2015
results to the most directly comparable financial measures calculated in
accordance with generally accepted accounting principles in the U.S.
(GAAP).
Fiscal Second-Quarter
Results
Following is a summary of key
second-quarter results. All comparisons are with the second quarter of fiscal
year 2015, unless otherwise stated.
* $1.14 diluted EPS (18%
increase)
* 1% volume growth
* Flat sales
In the second quarter, Clorox
delivered earnings from continuing operations of $151 million, or $1.14 diluted
EPS, compared to $128 million, or 97 cents diluted EPS, in the year-ago quarter.
Second-quarter diluted EPS results were driven largely by gross margin
expansion.
In the second quarter, sales
were flat, reflecting volume growth and the benefits of price increases, offset
by 3 percentage points of unfavorable foreign currency exchange rates and higher
trade promotion spending. On a currency-neutral basis, sales grew 3 percent.
Volume for the second quarter increased 1 percent, reflecting gains in Home Care
and Natural Personal Care, partially offset by decreases in Laundry and Water
Filtration.
The company’s second-quarter
gross margin increased 210 basis points to 44.6 percent from 42.5 percent in the
year-ago quarter, driven primarily by the benefits of favorable commodity costs,
cost savings and price increases. These factors were partially offset by higher
manufacturing and logistics costs and the impact of unfavorable foreign currency
exchange rates.
“This was the highest
second-quarter gross margin we’ve delivered in more than five years,” said Chief
Financial Officer Steve Robb. “Strong cost savings programs and operational
efficiencies contributed to margin increases in each of our U.S. segments,
enabling us to continue investing strongly in our business. Importantly, our Go
Lean strategy for our International business is delivering results. We grew
market share in the six months ending November 2015 and maintained margin in
International despite foreign currency and inflation headwinds.”
Year-to-date net cash provided
by continuing operations was $178 million, compared with $267 million in the
year-ago period. The year-over-year change reflects higher working capital,
including higher performance-based employee incentive compensation payments
related to the company’s strong fiscal year 2015 results and higher tax
payments. These factors were partially offset by higher earnings from continuing
operations in the first half of fiscal year
2016 and $25 million in prior-period payments to settle interest-rate hedges
related to the company’s issuance of long-term debt. The company continues to
anticipate free cash flow to be about 10 percent of sales in fiscal year 2016.
Key Segment
Results
Following is a summary of key
second-quarter results from continuing operations by reportable segment. All
comparisons are with the second-quarter of fiscal year 2015, unless otherwise
stated.
Cleaning
(Laundry, Home Care,
Professional Products)
| ● |
2% volume
growth |
| ● |
2% sales growth
|
| ● |
15% pretax earnings
growth |
Segment volume growth was
driven by gains across a number of Home Care brands, including continued
strength of Clorox® disinfecting wipes, which delivered double-digit
growth. These factors were partially offset by decreased shipments in Laundry
largely due to the impact of a February 2015 price increase on
Clorox® bleach as well as volume decreases in Professional Products
driven by a comparison to strong year-ago growth behind Ebola and Enterovirus
concerns. Pretax earnings growth reflected higher sales and the benefits of
favorable commodity costs and cost savings, partially offset by higher
manufacturing and logistics costs.
Household
(Bags and Wraps, Charcoal, Cat
Litter)
| ● |
Flat
volume |
| ● |
1% sales growth
|
| ● |
31% pretax earnings
growth |
Segment volume results
reflected gains in Bags & Wraps and Charcoal, offset by decreases in Cat
Litter. Bags & Wraps volume growth reflected increases across several
Glad® products, including continued strength of premium trash bags
supported by the launch of new Glad® with Clorox® trash
bags and distribution gains, following last year’s launch of Glad®
OdorShield® with Gain®. Higher shipments in Charcoal were
driven by distribution gains and increased merchandising activity. Lower
shipments in Cat Litter were due to continued competitive activity. Segment
sales outpaced volume due to the benefit of a November 2014 price increase in
Bags & Wraps and favorable mix from consumers trading up to premium trash
bags, partially offset by higher trade promotion spending primarily in Bags
& Wraps. Pretax earnings growth reflected the benefits of favorable
commodity costs, higher sales and cost savings, partially offset by higher
manufacturing and logistics costs.
Lifestyle
(Dressings and Sauces, Water
Filtration, Natural Personal Care)
| ● |
2% volume
growth |
| ● |
2% sales growth
|
| ● |
1% pretax earnings
decrease |
Segment volume growth was
driven primarily by double-digit increases in Natural Personal Care, on top of
double-digit growth in the year-ago quarter. Natural Personal Care’s strong
results were driven primarily by the launch of Burt’s Bees® lip color
products, a strong holiday program and ongoing strength in facial towelettes.
These factors were partially offset by lower shipments in Water Filtration,
driven by soft consumption following strong first-quarter shipments in the
fiscal year. Pretax earnings decreased largely due to significant incremental
demand-building investments to drive trial behind innovation, partially offset
by stronger sales growth.
Page 2 of 10
International
(All sales outside of the
U.S.)
| ● |
Flat
volume |
| ● |
7% sales decrease (6%
growth, currency-neutral basis) |
| ● |
8% pretax earnings
decrease |
Segment volume was flat
largely due to the impact of price increases taken to offset inflationary
pressures. Sales decreased primarily driven by the impact of unfavorable foreign
currency exchange rates, partially offset by the benefits of price increases and
favorable mix. On a currency neutral basis, sales grew 6 percent despite slowing
economic growth in international markets. Pretax earnings decreased, reflecting
lower sales and higher manufacturing and logistics costs, primarily driven by
continued inflation. These factors were partially offset by the benefit of cost
savings.
Clorox Updates Fiscal Year
2016 Outlook
| ● |
Flat to 1% sales growth,
or 3% to 4% growth, currency-neutral basis (unchanged) |
| ● |
50-75 basis points of
EBIT margin expansion (raised) |
| ● |
$4.75 to $4.90 diluted
EPS range (raised) |
Clorox continues to anticipate
delivering flat to 1 percent sales growth, which reflects about 3 points of incremental sales growth from product
innovation for the fiscal year. The company’s sales outlook also includes the
impact from slowing international economies as well as 3 percentage points of
impact from unfavorable foreign currency exchange rates, including the recent
significant devaluation of the Argentine peso. The company continues to
anticipate fiscal year sales to reflect an increase in trade promotion
investments to address expected competitive activity in key categories.
Clorox now anticipates EBIT
margin expansion in the range of 50 to 75 basis points, reflecting the benefits
of favorable commodity costs, partially offset by higher inflation
in international markets impacting manufacturing and
logistics costs and selling and administrative expenses. The company’s EBIT
margin also reflects higher advertising and sales promotion investments in the
U.S. to support product innovation, particularly in the second half of the
fiscal year.
Clorox continues to anticipate
its effective fiscal year 2016 tax rate to be between 34 percent and 35 percent.
Net of all these factors, Clorox now anticipates fiscal year 2016 diluted EPS
from continuing operations in the range of $4.75 to $4.90 versus the company’s
previous outlook of $4.68 to $4.83.
For More Detailed Financial
Information
Visit the company’s
Financial Reporting: Financial Results section of the company’s
website at TheCloroxCompany.com for the
following:
| ● |
Supplemental unaudited
volume and sales growth information |
| ● |
Supplemental unaudited
gross margin driver information |
| ● |
Supplemental unaudited
reconciliation of certain non-GAAP financial information, including
earnings from continuing operations before interest and taxes (EBIT) and
earnings from continuing operations before interest, taxes, depreciation
and amortization (EBITDA) |
| ● |
Supplemental unaudited
balance sheet and cash flow information and free cash flow
reconciliation |
| ● |
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 company’s website
at TheCloroxCompany.com.
Page 3 of 10
The Clorox
Company
The Clorox Company (NYSE: CLX)
is a leading multinational manufacturer and marketer of consumer and
professional products with about 7,700 employees worldwide and fiscal year 2015
sales of $5.7 billion. Clorox markets some of the most trusted and recognized
consumer brand names, including its namesake bleach and cleaning products;
Pine-Sol® cleaners; Liquid Plumr® clog removers; Poett® home care products;
Fresh Step® cat litter; Glad® bags, wraps and containers; Kingsford® charcoal;
Hidden Valley® dressings and sauces; Brita® water-filtration products and Burt's
Bees® natural personal care products. The company also markets brands for
professional services, including Clorox Healthcare® and Clorox Commercial
Solutions®. More than 80 percent of the company's sales are generated from
brands that hold the No. 1 or No. 2 market share positions in their categories.
Clorox is a signatory of the
United Nations Global Compact, a community of global leaders committed to
sustainability. The company has been broadly recognized for its corporate
responsibility (CR) efforts, including, most recently, two U.S. EPA Climate
Leadership Awards for Excellence and inclusion among the top 40 companies on the
2015 Newsweek Green Rankings and CR magazine's 100 Best Corporate Citizens 2015
list. The Clorox Company and The Clorox Company Foundation contributed
approximately $15 million in combined cash grants, product donations, cause
marketing and employee volunteerism in the past fiscal year. For more
information, visit TheCloroxCompany.com, the
CR Matters Blog and follow the company on Twitter at
@CloroxCo.
Page 4 of 10
Forward-Looking
Statements
This press release contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, and such forward-looking statements involve risks and uncertainties. Except for historical information,
statements about future volumes, sales, foreign currencies, costs, cost savings, margins, earnings, earnings per share,
diluted earnings per share, foreign currency exchange rates, cash flows, plans, objectives, expectations, growth, or
profitability, are forward-looking statements based on management's estimates, assumptions and projections. Words such as
"could," "may," "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "seeks,"
"estimates," and variations on such words, and similar expressions that reflect our current views with respect to future
events and operational and financial performance, 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. Important factors that could affect performance and cause results to differ materially from
management's expectations are described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" in the company's Annual Report on Form 10-K for the fiscal year ended
June 30, 2015, as updated from time to time in the company's SEC filings. These factors include, but are not limited to:
intense competition in the company's markets; worldwide, regional and local economic conditions and financial market
volatility; the ability of the company to drive sales growth, increase price and market share, grow its product categories
and achieve favorable product and geographic mix; risks related to international operations, including political
instability; government-imposed price controls or other regulations; foreign currency exchange rate controls, including
periodic changes in such controls, fluctuations and devaluations; labor claims, labor unrest and inflationary pressures,
particularly in Argentina; and potential harm and liabilities from the use, storage and transportation of chlorine in
certain international markets where chlorine is used in the production of bleach; risks related to the possibility of
nationalization, expropriation of assets or other government action in foreign jurisdictions; risks related to the company's
discontinuation of operations in Venezuela; volatility and increases in commodity costs such as resin, sodium hypochlorite
and agricultural commodities, and increases in energy, transportation or other costs; supply disruptions and other risks
inherent in reliance on a limited base of suppliers; the ability of the company to develop and introduce commercially
successful products; dependence on key customers and risks related to customer
consolidation and ordering patterns; costs resulting from government regulations; the ability of the company to successfully
manage global, political, legal, tax and regulatory risks, including changes in regulatory or administrative activity;
risks related to reliance on information technology systems, including potential security breaches, cyber-attacks or
privacy breaches that result in the unauthorized disclosure of consumer, customer, employee or company information, or
service interruptions; risks relating to acquisitions, new ventures and divestitures, and associated costs, including the
potential for asset impairment charges related to, among others, intangible assets and goodwill; the success of the
company's business strategies; the ability of the company to implement and generate anticipated cost savings and
efficiencies; the impact of product liability claims, labor claims and other legal proceedings, including in foreign
jurisdictions; the company's ability to attract and retain key personnel; the company's ability to maintain its business
reputation and the reputation of its brands; environmental matters, including costs associated with the remediation of past
contamination and the handling and/or transportation of hazardous substances; the impact of natural disasters, terrorism
and other events beyond the company's control; the company's ability to maximize, assert and defend its intellectual
property rights; any infringement or claimed infringement by the company of third-party intellectual property rights; the
effect of the company's indebtedness and credit rating on its operations and financial results; the company's ability to
maintain an effective system of internal controls; uncertainties relating to tax positions, tax disputes and changes in the
company's tax rate; the accuracy of the company's estimates and assumptions on which its financial statement projections
are based; the company's ability to pay and declare dividends or repurchase its stock in the future; and the impacts of
potential stockholder activism.
The company's forward-looking
statements in this press release are based on management's 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.
Page 5 of 10
Non-GAAP Financial
Information
This press release contains
non-GAAP financial information relating to sales growth, diluted EPS, EBIT and
EBIT margin. The company has included reconciliations of these non-GAAP
financial measures to the most directly comparable financial measure calculated
in accordance with GAAP. See the end of this press release for these
reconciliations.
The company disclosed these
non-GAAP financial measures to supplement its consolidated financial statements
presented in accordance with GAAP. These non-GAAP financial measures exclude
certain items that are included in the company’s results reported in accordance
with GAAP, including income taxes, interest income, interest expense and foreign
exchange impact. The exclusion of foreign exchange impact is also referred to as
currency-neutral. Management believes these non-GAAP financial measures provide
useful additional information to investors about trends in the company’s
operations and are useful for period-over-period comparisons as they show
currency-neutral sales comparisons. The company uses such financial measures in
its budgeting process and as factors in determining compensation. 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 financial 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 be
read in connection with the company’s consolidated financial statements
presented in accordance with GAAP.
Media Relations
Aileen Zerrudo (510) 271-3075,
aileen.zerrudo@clorox.com
Kathryn Caulfield (510)
271-7209, kathryn.caulfield@clorox.com
Investor Relations
Landon Dunn (510) 271-7256,
landon.dunn@clorox.com
Steve Austenfeld (510)
271-2270, steve.austenfeld@clorox.com
For recent presentations made
by company management and other investor materials, visit Investor Events on the company’s website.
Page 6 of 10
Condensed Consolidated
Statements of Earnings
(Unaudited)
Dollars in millions, except per share amounts
|
|
Three Months
Ended |
|
Six Months
Ended |
|
|
12/31/2015 |
|
12/31/2014 |
|
12/31/2015 |
|
12/31/2014 |
| Net
sales |
|
$ |
1,345 |
|
|
$ |
1,345 |
|
|
$ |
2,735 |
|
|
$ |
2,697 |
|
| Cost of products sold |
|
|
745 |
|
|
|
773 |
|
|
|
1,510 |
|
|
|
1,547 |
|
| Gross profit |
|
|
600 |
|
|
|
572 |
|
|
|
1,225 |
|
|
|
1,150 |
|
| |
| Selling and administrative
expenses |
|
|
191 |
|
|
|
191 |
|
|
|
377 |
|
|
|
371 |
|
| Advertising costs |
|
|
126 |
|
|
|
127 |
|
|
|
249 |
|
|
|
248 |
|
| Research and development
costs |
|
|
34 |
|
|
|
33 |
|
|
|
64 |
|
|
|
63 |
|
| Interest expense |
|
|
22 |
|
|
|
26 |
|
|
|
45 |
|
|
|
52 |
|
| Other income, net |
|
|
(3 |
) |
|
|
(2 |
) |
|
|
(4 |
) |
|
|
1 |
|
| Earnings from continuing operations before income
taxes |
|
|
230 |
|
|
|
197 |
|
|
|
494 |
|
|
|
415 |
|
| Income taxes on continuing
operations |
|
|
79 |
|
|
|
69 |
|
|
|
170 |
|
|
|
142 |
|
| Earnings from continuing operations |
|
|
151 |
|
|
|
128 |
|
|
|
324 |
|
|
|
273 |
|
| Earnings (losses) from
discontinued operations, net of tax |
|
|
(2 |
) |
|
|
(3 |
) |
|
|
(3 |
) |
|
|
(58 |
) |
| Net
earnings |
|
$ |
149 |
|
|
$ |
125 |
|
|
$ |
321 |
|
|
$ |
215 |
|
| |
| Net earnings (losses) per
share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Continuing
operations |
|
$ |
1.16 |
|
|
$ |
0.98 |
|
|
$ |
2.50 |
|
|
$ |
2.10 |
|
| Discontinued
operations |
|
|
(0.01 |
) |
|
|
(0.02 |
) |
|
|
(0.02 |
) |
|
|
(0.44 |
) |
| Basic net earnings
per share |
|
$ |
1.15 |
|
|
$ |
0.96 |
|
|
$ |
2.48 |
|
|
$ |
1.66 |
|
| |
| Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Continuing
operations |
|
$ |
1.14 |
|
|
$ |
0.97 |
|
|
$ |
2.46 |
|
|
$ |
2.07 |
|
| Discontinued
operations |
|
|
(0.01 |
) |
|
|
(0.02 |
) |
|
|
(0.02 |
) |
|
|
(0.44 |
) |
| Diluted net
earnings per share |
|
$ |
1.13 |
|
|
$ |
0.95 |
|
|
$ |
2.44 |
|
|
$ |
1.63 |
|
| |
| Weighted average shares outstanding (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
|
129,543 |
|
|
|
130,555 |
|
|
|
129,349 |
|
|
|
129,933 |
|
| Diluted |
|
|
131,546 |
|
|
|
132,819 |
|
|
|
131,477 |
|
|
|
132,203 |
|
Page 7 of 10
Reportable Segment
Information
(Unaudited)
Dollars in millions
|
|
|
|
|
|
|
|
|
|
|
Earnings (losses) from continuing
operations |
|
|
Net sales |
|
before income
taxes |
|
|
Three Months
Ended |
|
Three Months
Ended |
|
|
12/31/2015 |
|
12/31/2014 |
|
%
Change(1) |
|
12/31/2015 |
|
12/31/2014 |
|
%
Change(1) |
| Cleaning |
|
$ |
457 |
|
$ |
447 |
|
2 |
% |
|
$ |
123 |
|
|
$ |
107 |
|
|
15 |
% |
| Household |
|
|
375 |
|
|
371 |
|
1 |
% |
|
|
67 |
|
|
|
51 |
|
|
31 |
% |
| Lifestyle |
|
|
251 |
|
|
246 |
|
2 |
% |
|
|
72 |
|
|
|
73 |
|
|
-1 |
% |
| International |
|
|
262 |
|
|
281 |
|
-7 |
% |
|
|
22 |
|
|
|
24 |
|
|
-8 |
% |
| Corporate |
|
|
- |
|
|
- |
|
- |
|
|
|
(54 |
) |
|
|
(58 |
) |
|
-7 |
% |
| Total |
|
$ |
1,345 |
|
$ |
1,345 |
|
0 |
% |
|
$ |
230 |
|
|
$ |
197 |
|
|
17 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
Earnings (losses) from continuing
operations |
|
|
Net sales |
|
before income
taxes |
|
|
Six Months
Ended |
|
Six Months
Ended |
|
|
12/31/2015 |
|
12/31/2014 |
|
% Change(1) |
|
12/31/2015 |
|
12/31/2014 |
|
% Change(1) |
| Cleaning |
|
$ |
954 |
|
$ |
917 |
|
4 |
% |
|
$ |
272 |
|
|
$ |
231 |
|
|
18 |
% |
| Household |
|
|
786 |
|
|
763 |
|
3 |
% |
|
|
149 |
|
|
|
103 |
|
|
45 |
% |
| Lifestyle |
|
|
482 |
|
|
462 |
|
4 |
% |
|
|
131 |
|
|
|
129 |
|
|
2 |
% |
| International |
|
|
513 |
|
|
555 |
|
-8 |
% |
|
|
54 |
|
|
|
50 |
|
|
8 |
% |
| Corporate |
|
|
- |
|
|
- |
|
- |
|
|
|
(112 |
) |
|
|
(98 |
) |
|
14 |
% |
| Total |
|
$ |
2,735 |
|
$ |
2,697 |
|
1 |
% |
|
$ |
494 |
|
|
$ |
415 |
|
|
19 |
% |
(1) Percentages
based on rounded numbers.
Page 8 of 10
Condensed Consolidated
Balance Sheets
Dollars in
millions
|
|
12/31/2015 |
|
6/30/2015 |
|
12/31/2014 |
|
|
(Unaudited) |
|
|
|
|
|
(Unaudited) |
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
| Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
| Cash
and cash equivalents |
|
$ |
390 |
|
|
$ |
382 |
|
|
$ |
819 |
|
| Receivables,
net |
|
|
474 |
|
|
|
519 |
|
|
|
473 |
|
| Inventories,
net |
|
|
450 |
|
|
|
385 |
|
|
|
446 |
|
| Other
current assets |
|
|
176 |
|
|
|
143 |
|
|
|
167 |
|
| Total
current assets |
|
|
1,490 |
|
|
|
1,429 |
|
|
|
1,905 |
|
| |
| Property, plant and equipment,
net |
|
|
878 |
|
|
|
918 |
|
|
|
933 |
|
| Goodwill |
|
|
1,051 |
|
|
|
1,067 |
|
|
|
1,080 |
|
| Trademarks, net |
|
|
532 |
|
|
|
535 |
|
|
|
537 |
|
| Other intangible assets, net |
|
|
47 |
|
|
|
50 |
|
|
|
55 |
|
| Other assets |
|
|
177 |
|
|
|
165 |
|
|
|
164 |
|
| Total assets |
|
$ |
4,175 |
|
|
$ |
4,164 |
|
|
$ |
4,674 |
|
| |
| LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
| Notes
and loans payable |
|
$ |
500 |
|
|
$ |
95 |
|
|
$ |
2 |
|
| Current
maturities of long-term debt |
|
|
- |
|
|
|
300 |
|
|
|
875 |
|
| Accounts
payable |
|
|
366 |
|
|
|
431 |
|
|
|
375 |
|
| Accrued
liabilities |
|
|
492 |
|
|
|
548 |
|
|
|
492 |
|
| Income
taxes payable |
|
|
- |
|
|
|
31 |
|
|
|
- |
|
| Total
current liabilities |
|
|
1,358 |
|
|
|
1,405 |
|
|
|
1,744 |
|
| Long-term debt |
|
|
1,796 |
|
|
|
1,796 |
|
|
|
1,795 |
|
| Other liabilities |
|
|
740 |
|
|
|
750 |
|
|
|
773 |
|
| Deferred income taxes |
|
|
83 |
|
|
|
95 |
|
|
|
81 |
|
| Total liabilities |
|
|
3,977 |
|
|
|
4,046 |
|
|
|
4,393 |
|
| |
| Stockholders’ equity |
|
|
|
|
|
|
|
|
|
|
|
|
| Common stock |
|
|
159 |
|
|
|
159 |
|
|
|
159 |
|
| Additional paid-in
capital |
|
|
823 |
|
|
|
775 |
|
|
|
726 |
|
| Retained earnings |
|
|
2,042 |
|
|
|
1,923 |
|
|
|
1,757 |
|
| Treasury shares |
|
|
(2,265 |
) |
|
|
(2,237 |
) |
|
|
(1,908 |
) |
| Accumulated other comprehensive net
losses |
|
|
(561 |
) |
|
|
(502 |
) |
|
|
(453 |
) |
| Stockholders’ equity |
|
|
198 |
|
|
|
118 |
|
|
|
281 |
|
| Total liabilities and stockholders’
equity |
|
$ |
4,175 |
|
|
$ |
4,164 |
|
|
$ |
4,674 |
|
Page 9 of 10
The tables below present
the reconciliation of non-GAAP financial measures to the most directly
comparable financial measures calculated in accordance with GAAP and other
supplemental information. See “Non-GAAP Financial Information” above for further
information regarding the company’s use of non-GAAP financial
measures.
The reconciliations below
are on a continuing operations basis
Second-Quarter and Fiscal
Year-to-Date Sales Growth Reconciliation
|
Q2
Fiscal
2016 |
|
Q2
Fiscal
2015 |
|
Q2
FYTD
Fiscal
2016 |
|
Q2
FYTD
Fiscal
2015 |
| Total Sales Growth –
GAAP |
0.0% |
|
2.9% |
|
1.4% |
|
1.7% |
| |
|
|
|
|
|
|
|
| Less: Foreign exchange |
-2.7% |
|
-2.8% |
|
-2.8% |
|
-2.4% |
| |
|
|
|
|
|
|
|
| Currency-Neutral Sales Growth -
Non-GAAP |
2.7% |
|
5.7% |
|
4.2% |
|
4.1% |
The reconciliations below
for fiscal year 2015 are provided as a reference point for the fiscal year 2016
outlook.
Fiscal Year EBIT Margin(1)
Reconciliation
Dollar in millions
|
FY |
|
Fiscal |
|
2015 |
| Earnings from continuing
operations |
$921 |
| before income taxes – GAAP |
|
| |
|
| Interest Income |
-$4 |
| Interest Expense |
$100 |
| |
|
| EBIT (1) – non-GAAP |
$1,017 |
| |
|
| Net
Sales |
$5,655 |
| EBIT margin(1)
–
non-GAAP |
18.0% |
(1) EBIT represents earnings from continuing
operations before interest and taxes. EBIT margin is the ratio of EBIT to net
sales.
For Gross Margin
Drivers, please refer to the Supplemental Information: Gross Margin
Driver page in the
Financial Results section of the company’s website TheCloroxCompany.com.
Page 10 of 10
Supplemental Unaudited
Condensed Information –
Volume Growth
Reportable
Segments |
% Change vs. Prior Year |
Major Drivers of Change |
| FY15 |
FY16 |
| Q1 |
Q2 |
Q3 |
Q4 |
FY |
Q1 |
Q2 |
FYTD |
| Cleaning |
-1% |
3% |
1% |
7% |
2% |
5% |
2% |
4% |
Q2 increase driven by higher shipments
across a number of Home Care brands, including double-digit growth of
Clorox® disinfecting wipes, partially offset by lower shipments in Laundry
largely due to the February 2015 price increase on Clorox® bleach, and
Professional Products driven by comparing to strong year-ago growth behind
Ebola and Enterovirus concerns. |
| Household |
4% |
3% |
0% |
2% |
2% |
1% |
0% |
0% |
Q2 was flat driven by higher shipments in
Bags and Wraps behind the continued strength of premium trash bags, and
the Charcoal business behind increased merchandising support and
distribution gains, offset by lower shipments of Cat Litter due to
competitive activity. |
| Lifestyle |
0% |
5% |
2% |
0% |
1% |
8% |
2% |
5% |
Q2 increase driven by higher shipments of
Natural Personal Care behind the launch of Burt’s Bees® lip color
products, strong holiday sales, and continued strength in facial
towelettes, partially offset by lower shipments in Water Filtration due to
soft consumption following strong first-quarter shipments. |
| International |
5% |
5% |
1% |
2% |
3% |
0% |
0% |
0% |
Q2 was flat driven primarily by higher
shipments in Mexico, offset by lower shipments in other Latin American
countries. |
| Total Company |
1% |
4% |
1% |
3% |
2% |
3% |
1% |
2% |
|
|
|
|
|
|
|
|
|
|
|
Supplemental Unaudited
Condensed Information – Sales Growth
Reportable
Segments |
% Change vs. Prior
Year |
Major Drivers of Change |
| FY15 |
FY16 |
| Q1 |
Q2 |
Q3 |
Q4 |
FY |
Q1 |
Q2 |
FYTD |
| Cleaning |
-2% |
3% |
1% |
9% |
3% |
6% |
2% |
4% |
Q2 variance between volume and sales was flat. |
| Household |
5% |
5% |
5% |
4% |
5% |
5% |
1% |
3% |
Q2 variance between
volume and sales driven by the benefit of the November 2014 price increase
in Bags and Wraps and favorable mix from consumers trading up to premium
trash bags, partially offset by higher trade promotion spending, primarily
in Bags and Wraps. |
| Lifestyle |
-1% |
4% |
3% |
0% |
1% |
7% |
2% |
4% |
Q2 variance between volume and sales was flat. |
| International |
0% |
-2% |
0% |
0% |
-1% |
-8% |
-7% |
-8% |
Q2 variance between
volume and sales driven by unfavorable foreign currency exchange rates,
partially offset by the benefit of price increases. |
| Total Company |
1% |
3% |
3% |
4% |
3% |
3% |
0% |
1% |
|
|
|
|
|
|
|
|
|
|
|
 |
| The Clorox
Company |
Supplemental Unaudited
Condensed Information – Gross Margin Drivers
The table below provides details on the drivers of gross margin change
versus the prior year.
| Driver |
Gross Margin Change vs. Prior
Year (basis points) |
| FY15 |
FY16 |
| Q1 |
Q2 |
Q3 |
Q4 |
FY |
Q1 |
Q2 |
| Cost Savings |
+120 |
+130 |
+170 |
+160 |
+140 |
+140 |
+130 |
| Price Changes |
+90 |
+100 |
+140 |
+110 |
+110 |
+110 |
+110 |
| Market Movement (commodities) |
-40 |
-90 |
- |
+100 |
- |
+100 |
+180 |
| Manufacturing & Logistics |
-170 |
-90 |
-120 |
-80 |
-110 |
-120 |
-150 |
| All other |
-70 |
-40 |
-80 |
-20 |
-50 |
-10 |
-60 |
| Change vs prior year |
-70 |
+10 |
+110 |
+270 |
+90 |
+220 |
+210 |
| Gross Margin (%) |
42.8% |
42.5% |
43.2% |
45.6% |
43.6% |
45.0% |
44.6% |
 |
| The Clorox
Company |
Supplemental Information – Balance
Sheet
(Unaudited)
As of December 31,
2015
Working Capital Update
Dollars in Millions and
percentages based on rounded numbers
|
Q2 |
|
Q2 |
|
|
FY
2016 |
FY
2015 |
Change |
Days
(5) |
Days
(5) |
Change |
|
($ millions) |
($ millions) |
($ millions) |
FY 2016 |
FY 2015 |
| Receivables, net |
$474 |
$473 |
$1 |
32 |
31 |
1 |
| Inventories |
$450 |
$446 |
$4 |
52 |
49 |
3 |
| Accounts payable (1) |
$366 |
$375 |
($9) |
45 |
42 |
3 |
| Accrued liabilities |
$492 |
$492 |
$0 |
|
|
|
| Total WC (2) |
$242 |
$219 |
$23 |
|
|
|
| Total WC % net sales (3) |
4.5% |
4.1% |
|
|
|
|
| Average WC (2) |
$175 |
$155 |
$20 |
|
|
|
| Average WC % net sales (4) |
3.2% |
2.9% |
|
|
|
|
| (1) |
Days of accounts
payable is calculated as follows: average accounts payable / [(cost of
products sold + change in inventory) / 90]. |
| (2) |
Working capital (WC)
is defined in this context as current assets minus current liabilities
excluding cash and short-term debt, based on end of period balances.
Average working capital represents a two-point average of working
capital. |
| (3) |
Represents working
capital at the end of the period divided by annualized net sales
(current quarter net sales x
4). |
| (4) |
Represents a
two-point average of working capital divided by annualized net sales
(current quarter net sales x
4). |
| (5) |
Days calculations
based on a two-point average. |
Supplemental Information – Cash
Flow
(Unaudited)
For the
quarter ended December 31, 2015
Capital expenditures for the
second quarter were $40 million versus $31 million in the year-ago
quarter.
Depreciation and amortization
for the second quarter was $41 million versus $42 million in the year ago
quarter.
Net cash provided by
continuing operations in the second quarter was $43 million, or 3 percent of
sales.
|
| The Clorox
Company |
Supplemental Unaudited Condensed
Information
Q2 Fiscal Year-To-Date 2016 Free
Cash Flow Reconciliation
Dollars in Millions and
percentages based on rounded numbers
|
|
Q2 |
|
Q2 |
|
|
Fiscal |
|
Fiscal |
|
|
YTD |
|
YTD |
|
|
2016 |
|
2015 |
| Net cash provided by
continuing operations – GAAP |
|
|
$178 |
|
|
|
$267 |
|
| Less: Capital expenditures |
|
|
$68 |
|
|
|
$60 |
|
| Free cash flow –
non-GAAP (1) |
|
|
$110 |
|
|
|
$207 |
|
| Free cash flow as
a percent of sales – non-GAAP (1) |
|
|
4.0% |
|
|
|
7.7% |
|
| Net
sales |
|
|
$2,735 |
|
|
|
$2,697 |
|
| (1) |
In accordance with
the SEC's Regulation G, this schedule provides the definition of certain
non-GAAP measures and the reconciliation to the most closely related GAAP
measure. Management uses free cash flow and free cash flow as a percent of
sales to help assess the cash generation ability of the business and funds
available for investing activities, such as acquisitions, investing in the
business to drive growth, and financing activities, including debt
payments, dividend payments and share repurchases. Free cash flow does not
represent cash available only for discretionary expenditures, since the
Company has mandatory debt service requirements and other contractual and
non-discretionary expenditures. In addition, free cash flow may not be the
same as similar measures provided by other companies due to potential
differences in methods of calculation and items being
excluded. |
|
| The Clorox
Company |
Supplemental unaudited reconciliation
of earnings from continuing operations before income taxes to EBIT(1)(3)
and EBITDA (2)(3)
Dollars in millions and
percentages based on rounded numbers
|
|
FY 2015 |
|
|
FY 2016 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
FY |
|
|
Q1 |
|
Q2 |
|
|
9/30/14 |
|
12/31/14 |
|
3/31/15 |
|
6/30/15 |
|
6/30/15 |
|
|
9/30/15 |
|
12/31/15 |
| Earnings from continuing
operations |
|
$218 |
|
$197 |
|
$217 |
|
$289 |
|
$921 |
|
|
$264 |
|
$230 |
| before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest income |
|
-$1 |
|
-$1 |
|
-$1 |
|
-$1 |
|
-$4 |
|
|
-$1 |
|
-$2 |
| Interest expense |
|
$26 |
|
$26 |
|
$25 |
|
$23 |
|
$100 |
|
|
$23 |
|
$22 |
| EBIT (1)(3) |
|
$243 |
|
$222 |
|
$241 |
|
$311 |
|
$1,017 |
|
|
$286 |
|
$250 |
| EBIT margin (1)(3) |
|
18.0% |
|
16.5% |
|
17.2% |
|
20.0% |
|
18.0% |
|
|
20.6% |
|
18.6% |
| Depreciation and amortization |
|
$43 |
|
$42 |
|
$41 |
|
$43 |
|
$169 |
|
|
$41 |
|
$41 |
| EBITDA (2)(3) |
|
$286 |
|
$264 |
|
$282 |
|
$354 |
|
$1,186 |
|
|
$327 |
|
$291 |
| EBITDA margin (2)(3) |
|
21.2% |
|
19.6% |
|
20.1% |
|
22.7% |
|
21.0% |
|
|
23.5% |
|
21.6% |
| Net sales |
|
$1,352 |
|
$1,345 |
|
$1,401 |
|
$1,557 |
|
$5,655 |
|
|
$1,390 |
|
$1,345 |
|
| Total debt (4) |
|
$2,224 |
|
$2,672 |
|
$2,166 |
|
$2,191 |
|
$2,191 |
|
|
$2,227 |
|
$2,296 |
| Debt to EBITDA (3)(5) |
|
1.9 |
|
2.3 |
|
1.9 |
|
1.8 |
|
1.8 |
|
|
1.8 |
|
1.8 |
| (1) |
EBIT (a non-GAAP
measure) represents earnings from continuing operations before income
taxes (a GAAP measure), excluding interest income and interest expense, as
reported above. EBIT margin is the ratio of EBIT to net
sales. |
| |
| (2) |
EBITDA (a non-GAAP
measure) represents earnings from continuing operations before income
taxes (a GAAP measure), excluding interest income, interest expense,
depreciation and amortization, as reported above. EBITDA margin is the
ratio of EBITDA to net sales. |
| |
| (3) |
In accordance with
the SEC's Regulation G, this schedule provides the definition of certain
non-GAAP measures and the reconciliation to the most closely related GAAP
measure. Management believes the presentation of EBIT, EBIT margin,
EBITDA, EBITDA margin and debt to EBITDA provides additional useful
information to investors about current trends in the
business. |
| |
| (4) |
Total debt represents
the sum of notes and loans payable, current maturities of long-term debt,
and long-term debt. |
| |
| (5) |
Debt to EBITDA (a
non-GAAP measure) represents total debt divided by EBITDA for the trailing
four quarters. |
 |
The Clorox Company
Updated:
02-04-16 |
U.S. Retail Pricing Actions from
CY2010 - CY2016
| Brand /
Product |
|
Average Price
Change |
|
Effective
Date |
| Home Care |
|
|
|
|
| Green Works® cleaners |
|
-7 to -21% |
|
May 2010 |
| Formula 409® |
|
+6% |
|
August 2011 |
| Clorox Clean-Up®
cleaners |
|
+8% |
|
August 2011 |
| Clorox® Toilet Bowl
Cleaner |
|
+5% |
|
August 2011 |
| Liquid-Plumr® products |
|
+5% |
|
August 2011 |
| Pine-Sol® cleaners |
|
+17% |
|
April
2012 |
| Clorox Clean-Up®, Formula
409®, and Clorox® Disinfecting Bathroom spray
cleaners |
|
+5% |
|
March
2013 |
| Green Works® cleaners |
|
+21% |
|
July 2014 |
| |
|
|
|
|
| Laundry |
|
|
|
|
| Green Works® liquid
detergent |
|
approx. -30% |
|
May 2010 |
| Clorox® liquid bleach |
|
+12% |
|
August 2011 |
| Clorox 2® stain fighter and color
booster |
|
+5% |
|
August 2011 |
| Clorox® liquid bleach |
|
+7% |
|
February 2015 |
| |
|
|
|
|
| Glad |
|
|
|
|
| Glad® trash bags |
|
+5% |
|
August 2010 |
| Glad® trash bags |
|
+10% |
|
May 2011 |
| Glad® wraps |
|
+7% |
|
August 2011 |
| Glad® food bags |
|
+10% |
|
November 2011 |
| GladWare® disposable
containers |
|
+8% |
|
July 2012 |
| Glad® trash bags |
|
+6% |
|
March 2014 |
| Glad® ClingWrap |
|
+5% |
|
March 2014 |
| Glad® trash bags |
|
+6% |
|
November 2014 |
| Glad® wraps |
|
+5% |
|
January 2015 |
| |
|
|
|
|
| Litter |
|
|
|
|
| Cat litter |
|
-8 to -9% |
|
March 2010 |
| Cat litter |
|
+5% |
|
May 2012 |
| |
|
|
|
|
| Food |
|
|
|
|
| Hidden Valley Ranch® salad
dressing |
|
+7% |
|
August
2011 |
| |
|
|
|
|
| Charcoal |
|
|
|
|
| Charcoal and lighter fluid |
|
+8 to 10% |
|
January 2012 |
| Charcoal |
|
+6% |
|
December 2012 |
| |
|
|
|
|
| Brita |
|
|
|
|
| Brita® pitchers |
|
+3% |
|
August 2011 |
| Brita® pitchers and
filters |
|
+5% |
|
July 2012 |
| |
|
|
|
|
| Natural Personal Care |
|
|
|
|
| Burt’s
Bees® lip balm |
|
+10% |
|
July
2013 |
Notes:
| ● |
Individual SKUs vary within the
range. |
| ● |
This
communication reflects pricing actions on primary items, and does not
reflect pricing actions on our Professional Products
business. |
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