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, 2015
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, 2015, The Clorox Company issued a press release announcing its financial results for its second quarter ended December 31, 2014. 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, 2015 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, 2015 | By: | /s/ Laura Stein |
Senior Vice President | |||
General Counsel |
THE CLOROX COMPANY
FORM 8-K
INDEX TO EXHIBITS
Exhibit | Description | ||
99.1 | Press Release dated February 4, 2015 of The Clorox Company | ||
99.2 | Supplemental information regarding financial results |
PRESS RELEASE | |
* | 97 cents diluted EPS (8% growth) | |
* | 4% volume growth | |
* | 3% sales growth |
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 2014, unless otherwise
stated.
Cleaning
(Laundry, Home Care,
Professional Products)
Volume growth in the segment was driven by double-digit gains in Professional Products, reflecting increases in its cleaning and health care businesses, which were driven, in part, by Ebola and Enterovirus concerns. Volume for Home Care and Laundry was essentially flat. Home Care volume results reflected the distribution loss of Clorox® disinfecting wipes at a major club customer in calendar year 2014, offset by double-digit Clorox® disinfecting wipes gains at other retailers and volume growth across multiple Home Care brands. Laundry volume results reflected continued bleach category softness. Home Care and Laundry grew market share in total, with gains across multiple brands. Pretax earnings growth reflected higher sales, as well as the benefits of cost savings and price increases, partially offset by incremental demand-building investments and higher commodity costs.
Household
(Bags and Wraps, Charcoal, Cat
Litter)
Segment volume growth was driven primarily by gains in Bags and Wraps behind innovation and increased distribution of Glad® OdorShield® trash bags. Cat Litter also grew volume behind new Fresh Step® extreme light weight cat litter. The variance between volume and sales results was due primarily to the benefit of price increases in Bags and Wraps. Pretax earnings growth reflected higher sales and the benefit of cost savings, partially offset by higher commodity costs and incremental demand-building investments.
Lifestyle
(Dressings and Sauces, Water
Filtration, Natural Personal Care)
Volume results in the segment were driven by strong double-digit gains in Natural Personal Care, largely due to innovation in Burts Bees® lip and face-care products, including continued growth in towelettes. Incremental demand-building programs, including the first-ever television campaign for the Burts Bees® brand, also contributed to Natural Personal Cares strong sales results. Dressings and Sauces also grew volume primarily from increased merchandising of Hidden Valley® dry mixes and salad dressings. These results were partially offset by lower shipments in Water Filtration due to increased merchandising of private-label filter products. Volume growth outpaced sales growth primarily due to unfavorable mix. Pretax earnings growth reflected higher sales, lower commodity costs and the benefit of cost savings. These factors were partially offset by higher manufacturing costs and higher advertising spending.
Page 2 of 9
International
(All countries outside of the
U.S.)
The segments volume growth reflected gains primarily in Mexico, Canada, Europe and Argentina. Segment sales reflected the impact of unfavorable foreign currency exchange rates across most countries, partially offset by the benefit of price increases. On a currency-neutral basis, segment sales grew 11 percent. Pretax earnings declined $9 million primarily due to the impact of unfavorable foreign currency exchange rates and higher selling and administrative expenses, as well as increased manufacturing and logistics costs and higher commodity costs, largely driven by continued high inflation. These factors were partially offset by higher volume and the benefits of price increases and cost savings.
Clorox Updates Outlook for Fiscal Year 2015
The company now anticipates fiscal-year 2015 sales to grow about 1 percent, reflecting first-half sales results, product innovation and the benefit of price increases. The fiscal-year sales outlook also now anticipates a greater impact from unfavorable foreign exchange rates in the range of 2 percent to 3 percent. Other moderating factors include slowing economies in international markets and an increase in full-year trade-promotion spending to drive the companys core business and trial of new products in a highly competitive environment.
Clorox continues to anticipate moderate gross margin expansion in fiscal year 2015, reflecting the benefits of cost savings and price increases. The company now anticipates commodity costs to be about flat, due to energy cost declines, which are expected to be partially offset by higher logistics costs, as well as the aforementioned increase in full-year trade-promotion spending.
Clorox continues to anticipate EBIT margin to be about flat for fiscal year 2015, reflecting moderate gross margin expansion, offset by higher demand-building investments.
Clorox continues to anticipate its effective fiscal year 2015 tax rate to be about 34 percent.
Net of all these factors, Clorox now anticipates fiscal 2015 diluted EPS from continuing operations in the range of $4.40 to $4.55.
For More Detailed Financial Information
Visit the Investors: Financial Reporting: Financial Results section of the companys website at TheCloroxCompany.com for the following:
* | Combined financial tables that include the schedules below | |
* | Supplemental unaudited condensed volume and sales growth information | |
* | Supplemental unaudited condensed 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 balance sheet and cash flow information and free cash flow reconciliation (unaudited) | |
* | Supplemental price-change information |
Page 3 of 9
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.
The Clorox Company
The Clorox Company is a leading multinational manufacturer and marketer of consumer and professional products with about 7,700 employees worldwide and fiscal year 2014 sales of $5.5 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® and KC Masterpiece® dressings and sauces; Brita® water-filtration products and Burts Bees® natural personal care products. The company also markets brands for professional services, including Clorox Healthcare®, HealthLink®, Aplicare® and Dispatch® infection control products for the healthcare industry. More than 80 percent of the company's brands hold the No. 1 or No. 2 market share positions in their categories. Clorox's commitment to corporate responsibility includes making a positive difference in its communities. In fiscal year 2014, The Clorox Company and The Clorox Company Foundation contributed more than $16 million in combined cash grants, product donations, cause marketing and employee volunteerism. For more information, 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, 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, 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 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, 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 management's expectations are described in the sections entitled "Risk Factors" in the company's Annual Report on Form 10-K for the fiscal year ended June 30, 2014, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Exhibit 99.2 of the Companys Current Report on Form 8-K filed on December 4, 2014, as updated from time to time in the company's SEC filings. These factors include, but are not limited to: 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 unrest and inflationary pressures, particularly in Argentina and other challenging markets; risks related to the possibility of nationalization, expropriation of assets, or other government action in foreign jurisdictions; risks related to the Companys discontinuation of operations in Venezuela; intense competition in the company's markets; changes in the companys leadership; worldwide, regional and local economic conditions and financial market volatility; volatility and increases in commodity costs such as resin, sodium hypochlorite and agricultural commodities and increases in energy, transportation or other costs; 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; 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; supply disruptions and other risks inherent in reliance on a limited base of suppliers; the ability of the company to implement and generate anticipated cost savings and efficiencies; the success of the company's business strategies; the impact of product liability claims, labor claims and other legal proceedings, including in foreign jurisdictions and the company's litigation related to its discontinued operations in Brazil; the ability of the company to develop and introduce commercially successful products; 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; 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; 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.
Page 4 of 9
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.
Non-GAAP Financial Information
This press release contains non-GAAP financial information relating to sales growth, diluted EPS, the debt to EBITDA ratio 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 companys 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 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 be read in connection with the companys 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 companys website.
Page 5 of 9
Condensed Consolidated
Statements of Earnings (Unaudited)
Dollars in millions, except
per share amounts
Three Months Ended | Six Months Ended | |||||||||||||||
12/31/2014 | 12/31/2013 | 12/31/2014 | 12/31/2013 | |||||||||||||
Net sales | $ | 1,345 | $ | 1,308 | $ | 2,697 | $ | 2,651 | ||||||||
Cost of products sold | 773 | 753 | 1,547 | 1,512 | ||||||||||||
Gross profit | 572 | 555 | 1,150 | 1,139 | ||||||||||||
Selling and administrative expenses | 191 | 196 | 371 | 390 | ||||||||||||
Advertising costs | 127 | 122 | 248 | 242 | ||||||||||||
Research and development costs | 33 | 31 | 63 | 62 | ||||||||||||
Interest expense | 26 | 26 | 52 | 52 | ||||||||||||
Other (income) expense, net | (2 | ) | (4 | ) | 1 | (2 | ) | |||||||||
Earnings from continuing operations before income taxes | 197 | 184 | 415 | 395 | ||||||||||||
Income taxes on continuing operations | 69 | 66 | 142 | 138 | ||||||||||||
Earnings from continuing operations | 128 | 118 | 273 | 257 | ||||||||||||
Losses from discontinued operations, net of tax | (3 | ) | (3 | ) | (58 | ) | (6 | ) | ||||||||
Net earnings | $ | 125 | $ | 115 | $ | 215 | $ | 251 | ||||||||
Net earnings (losses) per share | ||||||||||||||||
Basic | ||||||||||||||||
Continuing operations | $ | 0.98 | $ | 0.91 | $ | 2.10 | $ | 1.99 | ||||||||
Discontinued operations | (0.02 | ) | (0.02 | ) | (0.44 | ) | (0.06 | ) | ||||||||
Basic net earnings per share | $ | 0.96 | $ | 0.89 | $ | 1.66 | $ | 1.93 | ||||||||
Diluted | ||||||||||||||||
Continuing operations | $ | 0.97 | $ | 0.90 | $ | 2.07 | $ | 1.95 | ||||||||
Discontinued operations | (0.02 | ) | (0.03 | ) | (0.44 | ) | (0.05 | ) | ||||||||
Diluted net earnings per share | $ | 0.95 | $ | 0.87 | $ | 1.63 | $ | 1.90 | ||||||||
Weighted average shares outstanding (in thousands) | ||||||||||||||||
Basic | 130,555 | 129,836 | 129,933 | 129,955 | ||||||||||||
Diluted | 132,819 | 132,278 | 132,203 | 132,276 |
Page 6 of 9
Reportable Segment
Information
(Unaudited)
Dollars in millions
Second Quarter | Net Sales | Earnings (Losses) from Continuing
Operations Before Income Taxes | |||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||||
12/31/14 | 12/31/13 (1) | % Change (2) | 12/31/14 | 12/31/13 (1) | % Change (2) | ||||||||||||||
Cleaning Segment | $ | 447 | $ | 432 | 3 | % | $ | 107 | $ | 101 | 6% | ||||||||
Household Segment | 371 | 352 | 5 | % | 51 | 41 | 24% | ||||||||||||
Lifestyle Segment | 246 | 237 | 4 | % | 73 | 69 | 6% | ||||||||||||
International Segment | 281 | 287 | -2 | % | 24 | 33 | -27% | ||||||||||||
Corporate | - | - | - | (58 | ) | (60 | ) | -3% | |||||||||||
Total Company | $ | 1,345 | $ | 1,308 | 3 | % | $ | 197 | $ | 184 | 7% | ||||||||
Year-to-Date | Net Sales | Earnings (Losses) from Continuing
Operations Before Income Taxes | |||||||||||||||||
Six Months Ended | Six Months Ended | ||||||||||||||||||
12/31/14 | 12/31/13 (1) | % Change (2) | 12/31/14 | 12/31/13 (1) | % Change (2) | ||||||||||||||
Cleaning Segment | $ | 917 | $ | 911 | 1 | % | $ | 231 | $ | 232 | 0% | ||||||||
Household Segment | 763 | 724 | 5 | % | 103 | 93 | 11% | ||||||||||||
Lifestyle Segment | 462 | 455 | 2 | % | 129 | 122 | 6% | ||||||||||||
International Segment | 555 | 561 | -1 | % | 50 | 64 | -22% | ||||||||||||
Corporate | - | - | - | (98 | ) | (116 | ) | -16% | |||||||||||
Total Company | $ | 2,697 | $ | 2,651 | 2 | % | $ | 415 | $ | 395 | 5% |
(1) As a result of
Clorox Venezuela results being included in discontinued operations beginning in
the first fiscal quarter of the current fiscal year, the prior comparative
period has been reclassified to conform with current quarter
presentation.
(2)
Percentages based on rounded numbers.
Page 7 of 9
Condensed Consolidated
Balance Sheets
Dollars in
millions
12/31/2014 | 6/30/2014 | 12/31/2013 | ||||||||||
(Unaudited) | (Unaudited) | |||||||||||
ASSETS | ||||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | $ | 819 | $ | 329 | $ | 341 | ||||||
Receivables, net | 473 | 546 | 499 | |||||||||
Inventories, net | 446 | 386 | 466 | |||||||||
Other current assets | 167 | 134 | 194 | |||||||||
Total current assets | 1,905 | 1,395 | 1,500 | |||||||||
Property, plant and equipment, net | 933 | 977 | 992 | |||||||||
Goodwill | 1,080 | 1,101 | 1,100 | |||||||||
Trademarks, net | 537 | 547 | 552 | |||||||||
Other intangible assets, net | 55 | 64 | 67 | |||||||||
Other assets | 164 | 174 | 177 | |||||||||
Total assets | $ | 4,674 | $ | 4,258 | $ | 4,388 | ||||||
LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||||||
Current liabilities | ||||||||||||
Notes and loans payable | $ | 2 | $ | 143 | $ | 342 | ||||||
Current maturities of long-term debt | 875 | 575 | - | |||||||||
Accounts payable | 375 | 440 | 359 | |||||||||
Accrued liabilities | 492 | 472 | 480 | |||||||||
Income taxes payable | - | 8 | - | |||||||||
Total current liabilities | 1,744 | 1,638 | 1,181 | |||||||||
Long-term debt | 1,795 | 1,595 | 2,170 | |||||||||
Other liabilities | 773 | 768 | 765 | |||||||||
Deferred income taxes | 81 | 103 | 116 | |||||||||
Total liabilities | 4,393 | 4,104 | 4,232 | |||||||||
Stockholders equity | ||||||||||||
Common stock | 159 | 159 | 159 | |||||||||
Additional paid-in capital | 726 | 709 | 693 | |||||||||
Retained earnings | 1,757 | 1,739 | 1,623 | |||||||||
Treasury shares | (1,908 | ) | (2,036 | ) | (1,932 | ) | ||||||
Accumulated other comprehensive net losses | (453 | ) | (417 | ) | (387 | ) | ||||||
Stockholders equity | 281 | 154 | 156 | |||||||||
Total liabilities and stockholders equity | $ | 4,674 | $ | 4,258 | $ | 4,388 |
Page 8 of 9
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 companys 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 | Q2 | Q2 YTD | Q2 YTD | |||||
Fiscal | Fiscal | Fiscal | Fiscal | |||||
2015 | 2014 | 2015 | 2014 | |||||
Total Sales Growth GAAP | 2.9% | 0.5% | 1.7% | 1.4% | ||||
Less: Foreign exchange | -2.8 | -1.7 | -2.4 | -1.6 | ||||
Currency Neutral Sales Growth - Non-GAAP | 5.7% | 2.2% | 4.1% | 3.0% |
The reconciliations below for fiscal year 2014 are provided as a reference point for the fiscal year 2015 outlook, and reflect the reclassification of Clorox Venezuela to discontinued operations in Q1FY15.
Fiscal Year EBIT Margin(1) Reconciliation
FY | |||
Fiscal | |||
2014 | |||
Earnings from continuing operations | $ | 884 | |
before income taxes GAAP | |||
Interest Income | -3 | ||
Interest Expense | 103 | ||
EBIT (1) non-GAAP | $ | 984 | |
Net Sales | $ | 5,514 | |
EBIT margin(1) non-GAAP | 17.80% |
(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 companys website TheCloroxCompany.com.
Page 9 of 9
The Clorox Company |
Supplemental Unaudited Condensed Information Volume Growth
% Change vs. Prior Year | |||||||||
Reportable Segments | FY14(1) | FY15(1) | Major Drivers of Change | ||||||
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | YTD | ||
Cleaning | 0% | 3% | -5% | 0% | -1% | -1% | 3% | 1% | Q2 volume increase driven by higher shipments in the Professional Products business for Health Care and Cleaning, including benefit related to Ebola and Enterovirus concerns. |
Household | 2% | -1% | 5% | -2% | 1% | 4% | 3% | 3% | Q2 volume increase driven by higher shipments of Glad® Odorshield Trash behind scent innovation and distribution, and Fresh Step® Lightweight litter products. |
Lifestyle | 4% | -1% | -1% | 2% | 1% | 0% | 5% | 2% | Q2 volume increase driven by higher shipments of Burts Bees® lip and face care products, partially offset by lower shipments of Brita® products. |
International | 1% | 3% | 1% | 2% | 2% | 5% | 5% | 5% | Q2 volume increase driven by higher shipments in Latin America, Canada and Europe. |
Total Company | 1% | 1% | 0% | 0% | 1% | 1% | 4% | 2% |
Supplemental Unaudited Condensed Information Sales Growth
% Change vs. Prior Year | |||||||||
Reportable Segments | FY14(1) | FY15(1) | Major Drivers of Change | ||||||
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | YTD | ||
Cleaning | 1% | 2% | -4% | -1% | 0% | -2% | 3% | 1% | Q2 variance between volume and sales was flat. |
Household |
5% |
-1% | 4% | -2% | 1% | 5% | 5% | 5% | Q2 variance between volume and sales driven by the benefit of price increases. |
Lifestyle | 5% | 0% | -3% | 2% | 1% | -1% | 4% | 2% | Q2 variance between volume and sales was driven primarily by unfavorable mix. |
International | -2% | 1% | -6% | -6% | -3% | 0% | -2% | -1% | Q2 variance between volume and sales driven by unfavorable foreign currency exchange rates, partially offset by the benefit of price increases. |
Total Company | 2% | 0% | -2% | -2% | 0% | 1% | 3% | 2% |
(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.
Gross Margin Change vs. Prior Year (basis points) | |||||||
Driver | FY14 | FY15 | |||||
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | |
Cost Savings | +180 | +150 | +140 | +110 | +140 | +120 | +130 |
Price Changes | +80 | +70 | +80 | +80 | +80 | +90 | +100 |
Market Movement (commodities) | -110 | -140 | -120 | -110 | -120 | -40 | -90 |
Manufacturing & Logistics | -140 | -120 | -120 | -240 | -160 | -170 | -90 |
All other(1) | -10 | -20 | -10 | -10 | -10 | -70 | -40 |
Impact of Clorox
Venezuela reclassification to discontinued operations(2) |
+30 | +10 | - | +40 | +20 | - | - |
Change vs prior year | +30 | -50 | -30 | -130 | -50 | -70 | +10 |
Gross Margin (%) | 43.5% | 42.4% | 42.1% | 42.9% | 42.7% | 42.8% | 42.5% |
(1) | In Q2 of fiscal year 2015, All other includes -40 bps of unfavorable foreign currency impact. |
(2) | Other than the impact of the Clorox Venezuela reclassification, none of the fiscal year 2013 and 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 December 31,
2014
Working Capital Update
Q2 | ||||||
FY 2015 | FY 2014 | Change | Days (5) | Days (5) | ||
($ millions) | ($ millions) | ($ millions) | FY 2015 | FY 2014 | Change | |
Receivables, net | $473 | $499 | -$26 | 31 | 35 | -4 |
Inventories | $446 | $466 | -$20 | 49 | 54 | -5 |
Accounts payable (1) | $375 | $359 | $16 | 42 | 42 | 0 |
Accrued liabilities | $492 | $480 | $12 | |||
Total WC (2) | $219 | $320 | -$101 | |||
Total WC % net sales (3) | 4.1% | 6.1% | ||||
Average WC (2) | $155 | $267 | -$112 | |||
Average WC % net sales (4) | 2.9% | 5.1% |
Receivables, net: Decrease driven primarily by unfavorable foreign exchange rates.
Inventories: Decrease driven primarily by the write-off of inventory resulting from the discontinuation of Clorox Venezuelas operations.
(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, 2014
Capital expenditures for the second quarter were $31 million versus $36 million in the year-ago quarter.
Depreciation and amortization for the second quarter was $42 million versus $45 million in the year ago quarter.
Net cash provided by continuing operations in the second quarter was $33 million, or 2 percent of sales.
The Clorox Company |
Supplemental Unaudited Condensed Information
Fiscal Year to Date Free Cash Flow Reconciliation
Q2 | Q2 | |||
Fiscal | Fiscal | |||
YTD | YTD | |||
2015 | 2014 | |||
Net cash provided by continuing operations GAAP | $267 | $222 | ||
Less: Capital expenditures | 60 | 63 | ||
Free cash flow non-GAAP (1) | $207 | $159 | ||
Free cash flow as a percent of sales non-GAAP (1) | 7.7% | 6.0% | ||
Net sales | $2,697 | $2,651 |
(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)
(Adjusted to reflect Clorox Venezuela reclassified to discontinued operations)
Dollars in millions and percentages based on rounded numbers
FY 2014 | FY 2015 | |||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | ||||||||||||||||||||||
9/30/13 | 12/31/13 | 3/31/14 | 6/30/14 | 6/30/14 | 9/30/14 | 12/31/14 | ||||||||||||||||||||||
Earnings from continuing operations | $ | 211 | $ | 184 | $ | 226 | $ | 263 | $ | 884 | $ | 218 | $ | 197 | ||||||||||||||
before income taxes | ||||||||||||||||||||||||||||
Interest income | (1 | ) | - | (1 | ) | (1 | ) | (3 | ) | (1 | ) | (1 | ) | |||||||||||||||
Interest expense | 26 | 26 | 25 | 26 | 103 | 26 | 26 | |||||||||||||||||||||
EBIT (1)(3) | 236 | 210 | 250 | 288 | 984 | 243 | 222 | |||||||||||||||||||||
EBIT margin (1)(3) | 17.6% | 16.1% | 18.3% | 19.2% | 17.8% | 18.0% | 16.5% | |||||||||||||||||||||
Depreciation and amortization | 43 | 45 | 43 | 46 | 177 | 43 | 42 | |||||||||||||||||||||
EBITDA (2)(3) | $ | 279 | $ | 255 | $ | 293 | $ | 334 | $ | 1,161 | $ | 286 | $ | 264 | ||||||||||||||
EBITDA margin (2)(3) | 20.8% | 19.5% | 21.4% | 22.3% | 21.1% | 21.2% | 19.6% | |||||||||||||||||||||
Net sales | $ | 1,343 | $ | 1,308 | $ | 1,366 | $ | 1,497 | $ | 5,514 | $ | 1,352 | $ | 1,345 | ||||||||||||||
Total debt (4) | $ | 2,313 | $ | 2,224 | $ | 2,672 | ||||||||||||||||||||||
Debt to EBITDA (3)(5) | 2.0 | 1.9 | 2.3 |
(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 Company calculates debt to Consolidated EBITDA for compliance with its debt covenants using Consolidated EBITDA for the trailing four quarters, as contractually defined. |
|
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 |
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. |