Clorox Reports Solid Sales and Margin Growth in First Quarter; Confirms Fiscal Year 2013 Outlook

Wed Oct 31, 2012 8:30am EDT

* Reuters is not responsible for the content in this press release.

  OAKLAND, CA, Oct 31 (Marketwire) -- 
The Clorox Company (NYSE: CLX) today reported 3 percent sales growth and
a 110 basis-point increase in gross margin for the quarter, which ended
Sept. 30. 

    "We're off to a good start in the fiscal year," said Chairman and CEO Don
Knauss. "We delivered sales growth in both our U.S. and International
businesses. We also saw strong margin improvement in the quarter, which
is a particular focus for the company, even as we continue to invest in
systems and facilities infrastructure." 

    Some results in this press release are reported on a non-GAAP basis. See
"Non-GAAP Financial Information" below and the tables toward the end of
this press release for more information and a reconciliation of key
first-quarter results.

    Fiscal First-Quarter Results
 Following is a summary of key first-quarter
results. All comparisons are with the first quarter of fiscal year 2012,
unless otherwise stated.
 * $1.01 diluted earnings per share (3 percent
growth)
 * 1% volume decrease
 * 3% sales growth

    Clorox reported first-quarter earnings of $133 million, or $1.01 diluted
earnings per share (EPS). This compares with $130 million, or 98 cents
diluted EPS, in the year-ago quarter. Current-quarter results reflect
higher sales and gross margin expansion, partially offset by higher
selling and administration expenses, including continued investments in
the company's information technology (IT) systems. 

    Volume for the first quarter of fiscal year 2013 decreased 1 percent, as
price increases impacted shipments. Sales growth outpaced volume
primarily due to the benefit of price increases, partially offset by
unfavorable foreign exchange. 

    Gross margin increased 110 basis points to 42.9 percent from 41.8 percent
in the year-ago quarter. The increase in gross margin was driven
primarily by strong cost savings and the benefit of price increases,
partially offset by inflation impacting manufacturing and logistics
costs, as well as other supply chain costs.

    "We are very pleased that we delivered margin improvement in the
quarter," said Senior Vice President and Chief Financial Officer Steve
Robb. "We've taken the right steps to rebuild our margin, including
well-executed price increases across our portfolio and a strong focus on
cost savings, a company hallmark." 

    The effective tax rate of 31.6 percent for the current quarter was higher
versus the year-ago quarter, but lower than anticipated, reflecting the
benefit of a recent international tax settlement. Clorox anticipates the
tax rate for the full year to be between 33 percent and 34 percent.

    Net cash provided by operations increased to $208 million from $131
million in the year-ago quarter. The year-over-year increase was due
primarily to favorable changes in working capital. For the full fiscal
year, Clorox anticipates free cash flow of about 9 percent to 10 percent
of sales. The company defines free cash flow as cash provided by
operations less capital expenditures. In September, the company issued
$600 million of 10-year senior notes, temporarily increasing its cash
balance prior to the mid-October repayment of other maturing long-term
debt of $350 million. The company's cash balance is expected to return to
a more normalized level by Dec. 31.

    Key Segment Results
 Following is a summary of key first-quarter results
by reportable segment. All comparisons are with the first quarter of
fiscal 2012, unless otherwise stated.

Cleaning
 (Laundry, Home Care,
Professional Products)


--  4% volume increase
--  8% sales increase
--  11% pretax earnings increase

    

Volume growth in the segment was driven primarily by high
double-digit growth in the Professional Products business, due to the
benefit of acquisitions made in fiscal 2012 and a double-digit increase
in the base business. Shipments in the Home Care business were about
equal to the year ago quarter, with all-time record shipments of
Clorox(R) disinfecting wipes, offset by declines on Pine-Sol(R) products
due to a price increase in the fourth quarter of fiscal 2012. Home Care
sales increased due to the benefit of price increases. Laundry volume
decreased due to lower shipments of Clorox 2(R) stain fighter and color
booster, partially offset by the highest volume growth of bleach in more
than two years. Segment sales outpaced volume largely due to the benefit
of price increases. Pretax earnings growth was driven primarily by higher
sales and the benefit of strong cost savings, partially offset by
unfavorable product mix. 

Household
 (Bags and Wraps, Charcoal, Cat
Litter)


--  7% volume decrease
--  3% sales decrease
--  19% pretax earnings increase

    

The segment's volume and sales decreases were driven primarily by
declines in the Charcoal business, reflecting the impact of price
increases earlier in the calendar year and the comparison to very strong
merchandising and volume growth in the year-ago quarter. Cat Litter
volume declined due to price increases implemented in the fourth quarter
of fiscal 2012 and increased competitive activity. Glad(R) volume was up,
with continued strong gains in premium trash bag products such as Glad(R)
OdorShield(R) trash bags with Febreze(R). The variance between the
changes in segment volume and sales was primarily due to the benefit of
price increases. Pretax earnings growth was driven largely by strong cost
savings, partially offset by lower sales.

Lifestyle
 (Dressings and
Sauces, Water Filtration, Natural Personal Care)


--  1% volume decrease
--  1% sales increase
--  2% pretax earnings increase

    

Volume was up in the Food business driven primarily by higher
shipments of Hidden Valley(R) products, offset by lower shipments of KC
Masterpiece(R) products due to strong competitive activity. Volume
declined in the Water Filtration business due to lower shipments of
faucet mount products, as well as lower Brita Bottle(R) shipments,
compared to strong volume behind the new product launch in the prior-year
quarter. Burt's Bees shipments declined slightly, following strong growth
in the year-ago period, behind a robust pipeline of new products. Burt's
Bees delivered double-digit retail sales growth. Segment sales grew
primarily due to the benefit of price increases. Pretax earnings growth
reflected the benefit of cost savings. 

International
 (All countries
outside of the U.S.)


--  2% volume decrease
--  3% sales increase
--  30% pretax earnings decrease

    

Volume declined in the segment largely due to the exit of
nonstrategic export businesses. Base business in Latin America grew both
volume and sales, while Canada volume and sales declined slightly.
Segment sales increased primarily due to price increases, partially
offset by unfavorable foreign exchange. The pretax earnings decline of
$12 million was due to the inflationary impact on manufacturing and
logistics costs, unfavorable foreign exchange and expenses associated
with IT systems implementation in Latin America.

    Clorox Confirms Fiscal 2013 Financial Outlook
 Clorox confirmed its
previous financial outlook for fiscal 2013:
 * 2-4 percent sales growth

* EBIT margin up 25-50 basis points
 * Diluted EPS in the range of
$4.20-$4.35

    Clorox continues to anticipate sales growth for fiscal 2013 in the range
of 2 percent to 4 percent. This reflects continued category growth and
product innovation across many of the company's brands. Uncertainty in
some international markets, the negative impact of declining foreign
currencies and a more challenging comparison to strong fiscal 2012 sales
growth continue to be influencing factors in the company's fiscal 2013
outlook.

    The company continues to expect earnings before interest and taxes (EBIT)
margin(1) to increase by 25-50 basis points for the fiscal year,
reflecting strong cost savings, the benefit of price increases and
commodity costs estimated to be about flat versus the prior year. This
range also anticipates the impact of declining foreign currencies.

    Clorox continues to expect spending against its systems and facilities
investments, as well as infrastructure-related investments, to be about
equal to fiscal 2012, or in the range of $50 million to $55 million. 

    Net of all these factors, Clorox continues to anticipate fiscal 2013
diluted EPS in the range of $4.20 to $4.35.

    (1) EBIT as a percent of net sales

    For More Detailed Financial Information
 Visit the Investors: Financial
Reporting: Financial Results section of the company's website at
TheCloroxCompany.com for the following:
 * Supplemental volume and sales
growth information
 * Supplemental gross margin driver information
 *
Reconciliation of certain non-GAAP financial information, including
earnings before interest and taxes (EBIT) and earnings before interest,
taxes, depreciation and amortization (EBITDA)
 * Supplemental balance
sheet and cash flow information
 * Supplemental price-change information

    Note: Percentage and basis-point changes noted in this press release are
calculated based on rounded numbers. Supplemental materials are available
in the Investors: Financial Reporting: Financial Results section of the
company's website at TheCloroxCompany.com.

    Webcast Postponed to Friday, Nov. 2 
 In light of Hurricane Sandy, Clorox
has moved its first-quarter earnings webcast to Friday, Nov. 2, at 10:30
a.m. Pacific time (1:30 p.m. Eastern time). The webcast can be accessed
at http://investors.thecloroxcompany.com. Following a live discussion, a
replay of the webcast will be archived for one week on the company's
website.

    The Clorox Company
 The Clorox Company is a leading manufacturer and
marketer of consumer and professional products with approximately 8,400
employees and fiscal year 2012 revenues of $5.5 billion. Clorox markets
some of the most trusted and recognized brand names, including its
namesake bleach and cleaning products, Clorox Healthcare(TM),
HealthLink(R), Aplicare(R) and Dispatch(R) products, Green Works(R)
naturally derived home care products, Pine-Sol(R) cleaners, Poett(R) home
care products, Fresh Step(R) cat litter, Glad(R) bags, wraps and
containers, Kingsford(R) charcoal, Hidden Valley(R) and KC Masterpiece(R)
dressings and sauces, Brita(R) water-filtration products, and Burt's
Bees(R) and gud(R) natural personal care products. Nearly 90 percent of
the company's brands hold the No. 1 or No. 2 market share positions in
their categories. The company's products are manufactured in more than
two dozen countries and marketed in more than 100 countries. Clorox is
committed to making a positive difference in the communities where its
employees work and live. Founded in 1980, The Clorox Company Foundation
has awarded cash grants totaling more than $87 million to nonprofit
organizations, schools and colleges. In fiscal year 2012 alone, the
foundation awarded $3.5 million in cash grants, and Clorox made product
donations valued at $15 million. For more information about Clorox, visit
TheCloroxCompany.com.

    Forward-Looking Statements
 This press release contains "forward-looking
statements" within the meaning of Section 27A of the Securities Act of
1933, as amended (the Securities Act), and Section 21E of the Securities
Exchange Act of 1934, as amended (the Exchange Act), and such
forward-looking statements involve risks and uncertainties. Except for
historical information, matters discussed above, including statements
about future volume, sales, costs, cost savings, earnings, cash flows,
plans, objectives, expectations, growth, or profitability, are
forward-looking statements based on management's estimates, assumptions
and projections. Words such as "will," "could," "may," "expects,"
"anticipates," "targets," "goals," "projects," "intends," "plans,"
"believes," "seeks," "estimates," and variations on such words, and
similar expressions, are intended to identify such forward-looking
statements. These forward-looking statements are only predictions,
subject to risks and uncertainties, and actual results could differ
materially from those discussed above. Important factors that could
affect performance and cause results to differ materially from
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 Annual Report on Form 10-K for the
fiscal year ended June 30, 2012, as updated from time to time in the
company's SEC filings. These factors include, but are not limited to: the
company's costs, including volatility and increases in commodity costs
such as resin, diesel, chlor-alkali, sodium hypochlorite, high-strength
bleach, agricultural commodities and other raw materials; increases in
energy costs; the ability of the company to implement and generate
expected savings from its programs to reduce costs, including its supply
chain restructuring and other restructuring plans; supply disruptions or
any future supply constraints that may affect key commodities or product
inputs; risks inherent in relationships with suppliers, including
sole-source or single-source suppliers; risks related to the handling
and/or transportation of hazardous substances, including, but not limited
to, chlorine; the success of the company's strategies; the ability to
manage and realize the benefits of joint ventures and other cooperative
relationships, including the company's joint venture regarding the
company's Glad(R) plastic bags, wraps and containers business, and the
agreements relating to the provision of information technology, procure
to pay and other key services by third parties; risks relating to
acquisitions, mergers and divestitures, and the costs associated
therewith; risks inherent in maintaining an effective system of internal
controls, including the potential impact of acquisitions or the use of
third-party service providers, and the need to refine controls to adjust
for accounting, financial reporting and other organizational changes or
business conditions; the ability of the company to successfully manage
tax, regulatory, product liability, intellectual property, environmental
and other legal matters, including the risk resulting from joint and
several liability for environmental contingencies and risks inherent in
litigation, including class action litigation and International
litigation; risks related to maintaining and updating the company's
information systems, including potential disruptions, costs and the
ability of the company to implement adequate information systems in order
to support the current business and to support the company's potential
growth; the ability of the company to develop commercially successful
products that delight the consumer; consumer and customer reaction to
price changes; actions by competitors; risks related to customer
concentration; customer-specific ordering patterns and trends; risks
arising out of natural disasters; the impact of disease outbreaks,
epidemics or pandemics on the company's, suppliers' or customers'
operations; changes in the company's tax rate; unfavorable worldwide,
regional or local general economic and marketplace conditions and events,
including consumer confidence and consumer spending levels, the rate of
economic growth, the rate of inflation or deflation, and the financial
condition of the company's customers, suppliers and service providers;
foreign currency exchange rate fluctuations and other risks of
international operations, including government-imposed price controls;
unfavorable political conditions in the countries where the company does
business and other operational risks in such countries; the impact of the
volatility of the debt and equity markets on the company's cost of
borrowing, cost of capital and access to funds, including commercial
paper and its credit facility; risks relating to changes in the company's
capital structure, including risks related to the company's ability to
implement share repurchase plans and the impact thereof on the company's
capital structure and earnings per share; the impact of any unanticipated
restructuring or asset-impairment charges and the ability of the company
to successfully implement restructuring plans; risks arising from
declines in cash flow, whether resulting from declining sales, higher
cost levels, tax payments, debt payments, share repurchases, higher
capital spending, interest cost increases greater than management's
expectations, interest rate fluctuations, increases in debt or changes in
credit ratings, or otherwise; the costs and availability of shipping and
transport services; potential costs in the event of stockholder activism;
and the company's ability to maintain its business reputation and the
reputation of its brands.

    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, gross margin and diluted
EPS. The company has included reconciliations of this information to the
most directly comparable financial measure calculated in accordance with
generally accepted accounting principles in the U.S. (GAAP). See the end
of this press release for the reconciliations of sales growth, gross
margin and diluted EPS.

    The company has disclosed information related to sales growth, gross
margin and diluted EPS on a non-GAAP basis to supplement its condensed
consolidated statements of earnings presented in accordance with GAAP.
These non-GAAP financial measures exclude certain items that are included
in the company's results reported in accordance with GAAP, including
charges associated with simplification of the company's supply chain and
other restructuring-related charges and the impact of foreign exchange
and foreign currency exchange transactions and acquisitions.

    Management believes that these non-GAAP financial measures provide useful
additional information to investors about current trends in the company's
operations and are useful for period-over-period comparisons. These
non-GAAP financial measures should not be considered in isolation or as a
substitute for the comparable GAAP measures. In addition, these non-GAAP
measures may not be the same as similar measures provided by other
companies due to potential differences in methods of calculation and
items being excluded. They should only be read in connection with the
company's condensed consolidated statements of earnings presented in
accordance with GAAP.

    See Below for These Unaudited First-Quarter Results:


--  Condensed Consolidated Statements of Earnings, Reportable Segment
    Information and Condensed Consolidated Balance Sheets
    
    
--  Reconciliation of First-Quarter 2013 Sales Growth, Gross Margin and
    Diluted EPS
    


    


Condensed Consolidated Statements of Earnings (Unaudited)
Dollars in millions, except per share amounts

                                                        Three Months Ended
                                                      --------------------- 
                                                       9/30/2012  9/30/2011 
                                                      ---------- ---------- 

Net sales                                             $    1,338 $    1,305 
Cost of products sold                                        764        759 
                                                      ---------- ---------- 
Gross profit                                                 574        546 

Selling and administrative expenses                          195        190 
Advertising costs                                            122        118 
Research and development costs                                30         28 
Interest expense                                              33         29 
Other income, net                                              -         (6)
                                                      ---------- ---------- 
Earnings before income taxes                                 194        187 
Income taxes                                                  61         57 
                                                      ---------- ---------- 
Net earnings                                          $      133 $      130 
                                                      ========== ========== 

Net earnings per share
  Basic
  Diluted                                             $     1.02 $     0.99 
                                                            1.01       0.98 
Weighted average shares outstanding (in thousands)
  Basic                                                  130,268    131,968 
  Diluted                                                131,702    133,611 

Reportable Segment Information
(Unaudited)
Dollars in millions

First Quarter                                   Earnings (Losses) Before
                         Net Sales                    Income Taxes
-------------- ----------------------------  ------------------------------ 
                Three Months Ended            Three Months Ended
               -------------------           --------------------
                                   % Change                        % Change 
               9/30/2012 9/30/2011    (1)    9/30/2012  9/30/2011     (1)
               --------- --------- --------  ---------  ---------  -------- 

Cleaning
 Segment       $     472 $     439        8% $     120  $     108        11%

Household
 Segment             355       366       -3%        50         42        19%

Lifestyle
 Segment             208       206        1%        56         55         2%

International
 Segment(2)          303       294        3%        28         40       -30%

Corporate              -         -        -        (60)       (58)        3%
               --------- --------- --------  ---------  ---------  -------- 

Total Company  $   1,338 $   1,305        3% $     194  $     187         4%
               ========= ========= ========  =========  =========  ======== 

(1) Percentages based on rounded numbers.
(2) The International segment includes Natural Personal Care results outside
    the U.S. for all periods presented.

Condensed Consolidated Balance Sheets
Dollars in millions

                                     9/30/2012     6/30/2012     9/30/2011
                                   ------------  ------------  ------------ 
                                    (Unaudited)                 (Unaudited) 

ASSETS
Current assets
  Cash and cash equivalents        $        667  $        267  $        270 
  Receivables, net                          503           576           439 
  Inventories, net                          421           384           407 
  Other current assets                      154           149           122 
                                   ------------  ------------  ------------ 
    Total current assets                  1,745         1,376         1,238 

Property, plant and equipment, net        1,098         1,081         1,028 
Goodwill                                  1,123         1,112         1,053 
Trademarks, net                             556           556           547 
Other intangible assets, net                 83            86            79 
Other assets                                142           144           132 
                                   ------------  ------------  ------------ 
Total assets                       $      4,747  $      4,355  $      4,077 
                                   ============  ============  ============ 

LIABILITIES AND STOCKHOLDERS'
 DEFICIT
Current liabilities
  Notes and loans payable          $          2  $        300  $        440 
  Current maturities of long-term
   debt                                     850           850             - 
  Accounts payable                          388           412           357 
  Accrued liabilities                       458           494           434 
  Income taxes payable                       27             5            37 
                                   ------------  ------------  ------------ 
  Total current liabilities               1,725         2,061         1,268 
  Long-term debt                          2,169         1,571         2,122 
  Other liabilities                         738           739           626 
  Deferred income taxes                     135           119           137 
                                   ------------  ------------  ------------ 
    Total liabilities                     4,767         4,490         4,153 
                                   ------------  ------------  ------------ 

Contingencies

Stockholders' deficit
Preferred stock                               -             -             - 
Common stock                                159           159           159 
Additional paid-in capital                  631           633           611 
Retained earnings                         1,395         1,350         1,185 
Treasury shares                          (1,836)       (1,881)       (1,717)
Accumulated other comprehensive
 net losses                                (369)         (396)         (314)
                                   ------------  ------------  ------------ 
Stockholders' deficit                       (20)         (135)          (76)
                                   ------------  ------------  ------------ 
Total liabilities and
 stockholders' deficit             $      4,747  $      4,355  $      4,077 
                                   ============  ============  ============ 


    
The tables below present the reconciliation of non-GAAP financial
measures to the most directly comparable GAAP financial measures and
other supplemental information. See "Non-GAAP Financial Information"
above for further information regarding the company's use of non-GAAP
financial measures. 



Sales Growth Reconciliation

                                                       Q1 Fiscal  Q1 Fiscal 
                                                          2013       2012
                                                       ---------  --------- 

Base sales growth - non-GAAP                                 1.8%       2.4%

Foreign exchange                                            -0.8        0.7 
Acquisitions                                                 1.5         -- 
                                                       ---------  --------- 

Total sales growth - GAAP                                    2.5%       3.1%
                                                       =========  ========= 

Gross Margin Reconciliation

Q1 fiscal year 2012 gross              Q1 fiscal 2011 year gross
 margin - GAAP                  41.8%  margin - GAAP                   44.3%

Commodities(1)                  -0.1   Commodities(1)                  -3.2 
Cost savings                     1.7   Cost savings                     1.6 
Pricing                          1.6   Pricing                          1.7 
Logistics and manufacturing(1)  -0.7   Logistics and manufacturing(1)  -2.2 
Other(2)                        -1.4   Other                           -0.2 
                                ----                                   ---- 

Q1 fiscal year 2013 gross              Q1 fiscal year 2012 gross
 margin before impact of               margin before impact of
 charges - non-GAAP             42.9   charges - non-GAAP              42.0 
                                ----                                   ---- 

Restructuring-related charges    0.0   Restructuring-related charges   -0.2 
                                ----                                   ---- 

Q1 fiscal year 2013 gross              Q1 fiscal year 2012 gross
 margin - GAAP                  42.9%  margin -GAAP                    41.8%
                                ====                                   ==== 

(1) Commodities in FY13 include the change in the cost of diesel fuel. In
    FY12, the change in the cost of diesel fuel is included in logistics and
    manufacturing.
(2) Other in Q1 FY13 includes -60 bps each for both other supply chain costs
    and product mix.

Diluted EPS Reconciliation

                                                        Q1 Fiscal  Q1 Fiscal
                                                          2013       2012
                                                       ---------- ----------

Diluted EPS - non-GAAP                                 $     1.04 $     1.01

Foreign exchange impact                                     -0.03       0.01
Restructuring and restructuring-related charges              0.00      -0.04
                                                       ---------- ----------

Diluted EPS - GAAP                                     $     1.01 $     0.98
                                                       ========== ==========


    


Media Relations
Aileen Zerrudo
(510) 271-3075
aileen.zerrudo@clorox.com

Kathryn Caulfield
(510) 271-7209
kathryn.caulfield@clorox.com

Investor Relations
Lisah Burhan
(510) 271-3269
lisah.burhan@clorox.com

Steve Austenfeld
(510) 271-2270
steve.austenfeld@clorox.com

For recent presentations made by company management and other investor
materials, visit http://investors.thecloroxcompany.com/events.cfm. 

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