Attached files
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8-K - CURRENT REPORT - CLOROX CO /DE/ | clorox_8k.htm |
EX-99.1 - PRESS RELEASE DATED AUGUST 3, 2015 OF THE CLOROX COMPANY - CLOROX CO /DE/ | exhibit99-1.htm |
The Clorox Company |
Supplemental Unaudited Condensed Information Volume Growth
Reportable Segment |
% Change vs. Prior Year | Major Drivers of Change | |||||||||
FY14(1) | FY15(1) | ||||||||||
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | ||
Cleaning | 0% | 3% | -5% | 0% | -1% | -1% | 3% | 1% | 7% | 2% | Q4 increase driven by higher shipments across a number of brands in Home Care including double-digit growth of Clorox® disinfecting wipes, and in Professional Products business in its cleaning, health care and food products. |
Household | 2% | -1% | 5% | -2% | 1% | 4% | 3% | 0% | 2% | 2% | Q4 increase driven by higher shipments in Bags and Wraps, primarily from premium trash bags including Glad® OdorShield® and ForceFlex® trash bags due to merchandising and innovation, partially offset by the impact of recent price increases. |
Lifestyle | 4% | -1% | -1% | 2% | 1% | 0% | 5% | 2% | 0% | 1% | Q4 volume was flat reflecting higher shipments of Burts Bees® face and lips-care products, offset by lower shipments of Dressings and Sauces as gains in Hidden Valley® bottled and dry products were more than offset by lower shipments of KC Masterpiece® sauces, and lower shipments of Brita® products. |
International | 1% | 3% | 1% | 2% | 2% | 5% | 5% | 1% | 2% | 3% | Q4 increase driven by higher shipments in Latin America and Canada, partially offset by lower shipments in Europe. |
Total Company | 1% | 1% | 0% | 0% | 1% | 1% | 4% | 1% | 3% | 2% | |
Supplemental Unaudited Condensed Information Sales Growth | |||||||||||
Reportable Segment |
% Change vs. Prior Year | Major Drivers of Change | |||||||||
FY14(1) | FY15(1) | ||||||||||
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | ||
Cleaning | 1% | 2% | -4% | -1% | 0% | -2% | 3% | 1% | 9% | 3% | Q4 variance between volume and sales driven by the benefit of price increases on Clorox® liquid bleach, partially offset by the impact of unfavorable mix. |
Household | 5% | -1% | 4% | -2% | 1% | 5% | 5% | 5% | 4% | 5% | Q4 variance between volume and sales driven primarily by the benefit of price increases on Bags and Wraps. |
Lifestyle | 5% | 0% | -3% | 2% | 1% | -1% | 4% | 3% | 0% | 1% | Q4 volume and sales were both flat. |
International | -2% | 1% | -6% | -6% | -3% | 0% | -2% | 0% | 0% | -1% | Q4 variance between volume and sales driven by unfavorable foreign currency exchange rates, partially offset by the benefit of price increases and favorable mix. |
Total Company | 2% | 0% | -2% | -2% | 0% | 1% | 3% | 3% | 4% | 3% |
1) Volume growth and sales growth percentage changes for the International reportable segment and Total Company reflect the reclassification of Clorox Venezuela to discontinued operations effective Q1 fiscal 2015 for all periods presented.
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) | |||||||||
FY14 | FY15 | |||||||||
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |
Cost Savings | +180 | +150 | +140 | +110 | +140 | +120 | +130 | +170 | +160 | +140 |
Price Changes | +80 | +70 | +80 | +80 | +80 | +90 | +100 | +140 | +110 | +110 |
Market Movement (commodities) | -110 | -140 | -120 | -110 | -120 | -40 | -90 | - | +100 | - |
Manufacturing & Logistics | -140 | -120 | -120 | -240 | -160 | -170 | -90 | -120 | -80 | -110 |
All other | -10 | -20 | -10 | -10 | -10 | -70 | -40 | -80 | -20 | -50 |
Impact of Clorox Venezuela reclassification to discontinued operations(1) |
+30 | +10 | - | +40 | +20 | - | - | - | - | - |
Change vs prior year | +30 | -50 | -30 | -130 | -50 | -70 | +10 | +110 | +270 | +90 |
Gross Margin (%) | 43.5% | 42.4% | 42.1% | 42.9% | 42.7% | 42.8% | 42.5% | 43.2% | 45.6% | 43.6% |
(1) | Other than the impact of the Clorox Venezuela reclassification to discontinued operations, none of the fiscal year 2014 gross margin drivers have changed; all effects of the Clorox Venezuela reclassification to discontinued operations are reflected in this line. | |
The Clorox Company |
Supplemental Information Balance Sheet
(Unaudited)
As of June 30, 2015
(All periods presented have been adjusted to reflect Clorox Venezuela reclassification to discontinued operations)
Working Capital Update
Q4 | Q4 | |||||
FY 2015 | FY 2014 | Change | Days(5) | Days(5) | ||
($ millions) | ($ millions) | ($ millions) | FY 2015 | FY 2014 | Change | |
Receivables, net | $519 | $546 | -$27 | 30 | 33 | -3 |
Inventories | $385 | $386 | -$1 | 44 | 44 | 0 |
Accounts payable (1) | $431 | $440 | -$9 | 47 | 47 | 0 |
Accrued liabilities | $548 | $472 | $76 | |||
Total WC (2) | $37 | $146 | -$109 | |||
Total WC % net sales (3) | 0.6% | 2.4% | ||||
Average WC (2) | $112 | $217 | -$105 | |||
Average WC % net sales (4) | 1.8% | 3.6% |
Receivables, net: Decrease driven primarily by unfavorable foreign exchange rates.
Accrued liabilities: Increase driven primarily by year over year higher performance-based incentive cost.
(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 and year ended June 30, 2015
Capital expenditures for the fourth quarter were $42 million versus $50 million in the year-ago quarter (fiscal year 2015 = $125 million).
Depreciation and amortization for the fourth quarter was $43 million versus $46 million in the year ago quarter (fiscal year 2015 = $169 million).
Net cash provided by continuing operations in the fourth quarter was $377 million, or 24 percent of sales (fiscal year 2015 = $858 million or 15% of sales).
The Clorox Company |
Supplemental Unaudited Condensed Information
Fiscal Year Free Cash Flow Reconciliation
Fiscal Year | Fiscal Year | |||
2015 | 2014 | |||
($ millions) | ($ millions) | |||
Net cash provided by continuing operations GAAP | $858 | $786 | ||
Less: Capital expenditures | 125 | 137 | ||
Free cash flow non-GAAP (1) | $733 | $649 | ||
Free cash flow as a percent of sales non-GAAP (1) | 13.0% | 11.8% | ||
Net sales | $5,655 | $5,514 |
(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)
(All periods presented have been adjusted to reflect Clorox Venezuela reclassification to discontinued operations)
Dollars in millions and percentages based on rounded numbers
FY 2014 | FY 2015 | |||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |||||||||||||||||||||||
9/30/13 | 12/31/13 | 3/31/14 | 6/30/14 | 6/30/14 | 9/30/14 | 12/31/14 | 3/31/15 | 6/30/15 | 6/30/15 | |||||||||||||||||||||||
Earnings from continuing operations | $ | 211 | $ | 184 | $ | 226 | $ | 263 | $ | 884 | $ | 218 | $ | 197 | $ | 217 | $ | 289 | $ | 921 | ||||||||||||
before income taxes | ||||||||||||||||||||||||||||||||
Interest income | (1) | - | (1) | (1) | (3 | ) | (1) | (1) | (1) | (1) | (4) | |||||||||||||||||||||
Interest expense | 26 | 26 | 25 | 26 | 103 | 26 | 26 | 25 | 23 | 100 | ||||||||||||||||||||||
EBIT (1)(3) | 236 | 210 | 250 | 288 | 984 | 243 | 222 | 241 | 311 | 1,017 | ||||||||||||||||||||||
EBIT margin (1)(3) | 17.6% | 16.1% | 18.3% | 19.2% | 17.8% | 18.0% | 16.5% | 17.2% | 20.0% | 18.0% | ||||||||||||||||||||||
Depreciation and amortization | 43 | 45 | 43 | 46 | 177 | 43 | 42 | 41 | 43 | 169 | ||||||||||||||||||||||
EBITDA (2)(3) | $ | 279 | $ | 255 | $ | 293 | $ | 334 | $ | 1,161 | $ | 286 | $ | 264 | $ | 282 | $ | 354 | $ | 1,186 | ||||||||||||
EBITDA margin (2)(3) | 20.8% | 19.5% | 21.4% | 22.3% | 21.1% | 21.2% | 19.6% | 20.1% | 22.7% | 21.0% | ||||||||||||||||||||||
Net sales | $ | 1,343 | $ | 1,308 | $ | 1,366 | $ | 1,497 | $ | 5,514 | $ | 1,352 | $ | 1,345 | $ | 1,401 | $ | 1,557 | $ | 5,655 | ||||||||||||
Total debt (4) | $2,313 | $2,224 | $2,672 | $2,166 | $2,191 | $2,191 | ||||||||||||||||||||||||||
Debt to EBITDA (3)(5) | 2.0 | 1.9 | 2.3 | 1.9 | 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: 8-3-15 |
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 | |||
GladWare® disposable containers | -7% | April 2009 | |
Glad® trash bags | -7% | May 2009 | |
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 | +7 to +16% | January 2009 | |
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 | |||
Burts Bees® lip balm | +10 | July 2013 |
● | 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. |
The Clorox Company |
Reconciliation of Economic Profit (1) (Unaudited)
(All periods presented have been adjusted to reflect Clorox Venezuela reclassification to discontinued operations)
Dollars in millions and all calculations based on rounded numbers
FY15 | FY14 | FY13 | |||||||
Earnings from continuing operations before income taxes | $ | 921 | $ | 884 | $ | 852 | |||
Noncash U.S. GAAP restructuring and intangible asset impairment costs | 1 | 3 | - | ||||||
Interest expense | 100 | 103 | 122 | ||||||
Earnings from continuing operations before income taxes, noncash U.S. GAAP | |||||||||
restructuring, intangible asset impairment costs and interest expense | $ | 1,022 | $ | 990 | $ | 974 | |||
Income taxes on earnings from continuing operations before income taxes, noncash | |||||||||
U.S. GAAP restructuring, intangible asset impairment costs and interest expense (2) | 350 | 342 | 318 | ||||||
Adjusted after-tax profit | $ | 672 | $ | 648 | $ | 656 | |||
Average capital employed (3) | $ | 2,393 | $ | 2,494 | $ | 2,552 | |||
Capital charge (4) | 214 | 225 | 230 | ||||||
Economic profit (1) (Adjusted after-tax profit less capital charge) | $ | 458 | $ | 423 | $ | 426 |
(1) | In accordance with the SECs Item 10(e) of Regulations S-K, this schedule provides the definition of a non-GAAP measure and the reconciliation to the most closely related GAAP measure. Economic profit (EP) is defined by the Company as earnings from continuing operations before income taxes, excluding noncash U.S. GAAP restructuring and intangible asset impairment costs, and interest expense; less an amount of tax based on the effective tax rate, and less a charge equal to average capital employed multiplied by the weighted-average cost of capital. EP is a key financial metric the Companys management uses to evaluate business performance and allocate resources, and is a component in determining managements incentive compensation. The Companys management believes EP provides additional perspective to investors about financial returns generated by the business and represents profit generated over and above the cost of capital used by the business to generate that profit. |
(2) | The tax rate applied is the effective tax rate on continuing operations, which was 34.2%, 34.6% and 32.7% in fiscal years 2015, 2014 and 2013, respectively. |
(3) | Total capital employed represents total assets less non-interest bearing liabilities. Adjusted capital employed represents total capital employed adjusted to add back current year noncash U.S. GAAP restructuring and intangible asset impairment costs. Average capital employed represents a two-point average of adjusted capital employed for the current year and total capital employed for the prior year, based on year-end balances. See below for details of the average capital employed calculation: |
FY15 | FY14 | FY13 | |||||||
Total assets | $ | 4,164 | $ | 4,258 | $ | 4,311 | |||
Less: | |||||||||
Accounts payable | 431 | 440 | 413 | ||||||
Accrued liabilities | 545 | 472 | 490 | ||||||
Income taxes payable | 31 | 8 | 29 | ||||||
Other liabilities | 745 | 768 | 742 | ||||||
Deferred income taxes | 95 | 103 | 119 | ||||||
Non-interest bearing liabilities | 1,847 | 1,791 | 1,793 | ||||||
Total capital employed | 2,317 | 2,467 | 2,518 | ||||||
After tax noncash U.S. GAAP restructuring and intangible asset | |||||||||
impairment costs | 1 | 2 | - | ||||||
Adjusted capital employed | $ | 2,318 | $ | 2,469 | $ | 2,518 | |||
Average capital employed | $ | 2,393 | $ | 2,494 | $ | 2,552 |
(4) | Capital charge represents average capital employed multiplied by the weighted-average cost of capital. The weighted-average cost of capital used to calculate capital charge was 9% for all fiscal years presented. The calculation of capital charge includes the impact of rounding numbers. |