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OAKLAND, Calif., Nov. 1, 2022 /PRNewswire/ -- The Clorox Company (NYSE: CLX) today reported results for the first quarter of fiscal year 2023, which ended Sept. 30, 2022.
First-Quarter Fiscal Year 2023 SummaryFollowing is a summary of key first-quarter results. All comparisons are with the first quarter of fiscal year 2022 unless otherwise stated.
"We delivered better-than-expected results this quarter in a challenging operating environment, which reflects the strength of our brands and strong execution," said CEO Linda Rendle. "Looking ahead, we expect to face ongoing macro headwinds and will adapt with agility. Given these factors, we are maintaining our outlook for the year. We will continue to focus on rebuilding margin, investing in consumer-inspired innovation and driving our transformation forward to build a stronger, more resilient company."
1 | Organic sales growth/(decrease) and adjusted EPS are non-GAAP measures. See Non-GAAP Financial Information at the end of this press release for reconciliations to the most comparable GAAP measures. |
The following are recent highlights of business and ESG achievements:
The following is a summary of key first-quarter results by reportable segment. All comparisons are with the first quarter of fiscal year 2022, unless otherwise stated.
Health and Wellness (Cleaning; Professional Products; Vitamins, Minerals and Supplements)
Household (Bags and Wraps; Grilling; Cat Litter)
Lifestyle (Food, Natural Personal Care, Water Filtration)
International (Sales Outside the U.S.)
Fiscal Year 2023 Outlook
The company is confirming its fiscal year 2023 outlook with the following elements:
At 5 p.m. ET today, the company will host a live Q&A audio webcast with CEO Linda Rendle and Chief Financial Officer Kevin Jacobsen to discuss the results.
At approximately 4:15 p.m. ET today, Clorox will post prepared management remarks regarding its first-quarter fiscal year 2023 results.
For More Detailed Financial InformationVisit the company's Quarterly Results for the following:
Note: Percentage and basis-point, or point, changes noted in this press release are calculated based on rounded numbers, except for per-share data and the effective tax rate.
About The Clorox CompanyThe Clorox Company (NYSE: CLX) champions people to be well and thrive every single day. Its trusted brands, which include Brita®, Burt's Bees®, Clorox®, Fresh Step®, Glad®, Hidden Valley®, Kingsford®, Liquid-Plumr®, Pine-Sol® and Rainbow Light®, can be found in about nine of 10 U.S. homes and internationally with brands such as Ajudin®, Clorinda®, Chux® and Poett®. Headquartered in Oakland, California, since 1913, Clorox was one of the first U.S. companies to integrate ESG into its business reporting, with commitments in three areas: Healthy Lives, Clean World and Thriving Communities. Visit thecloroxcompany.com to learn more.
CLX-F
Forward-Looking StatementsThis 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, including, among others, statements related to the expected or potential impact of the novel coronavirus (COVID-19) pandemic, and the related responses of governments, consumers, customers, suppliers, employees and the company, on our business, operations, employees, financial condition and results of operations, and any such forward-looking statements, whether concerning the COVID-19 pandemic or otherwise, involve risks, assumptions and uncertainties. Except for historical information, statements about future volumes, sales, organic sales growth, foreign currencies, costs, cost savings, margins, earnings, earnings per share, diluted earnings per share, foreign currency exchange rates, tax rates, cash flows, plans, objectives, expectations, growth or profitability are forward-looking statements based on management's estimates, beliefs, assumptions and projections. Words such as "could," "may," "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," "will," "predicts," and variations on such words, and similar expressions that reflect our current views with respect to future events and operational, economic 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, 2022, as updated from time to time in the company's Securities and Exchange Commission filings. These factors include, but are not limited to: the impact of the changing retail environment, including the growth of alternative retail channels and business models, and changing consumer preferences; volatility and increases in the costs of raw materials, energy, transportation, labor and other necessary supplies or services; the ability of the company to drive sales growth, increase prices and market share, grow its product categories and manage favorable product and geographic mix; risks related to supply chain issues, product shortages and disruptions to the business, as a result of increased supply chain dependencies due to an expanded supplier network and a reliance on certain single-source suppliers; the ongoing COVID-19 pandemic and related impacts, including on the availability of, and efficiency of the supply, manufacturing and distribution systems for, the company's products, including any significant disruption to such systems; on the demand for and sales of the company's products; and on worldwide, regional and local adverse economic conditions; intense competition in the company's markets; unfavorable general economic and political conditions beyond our control, including recent supply chain disruptions, labor shortages, wage pressures, rising inflation, fuel and energy costs, foreign currency exchange rate fluctuations, weather events or natural disasters, disease outbreaks or pandemics, such as COVID-19, terrorism, and unstable geopolitical conditions, including the conflict in Ukraine; risks related to the company's use of and reliance on information technology systems, including potential security breaches, cyber-attacks, privacy breaches or data breaches that result in the unauthorized disclosure of consumer, customer, employee or company information, or service interruptions, especially at a time when a large number of the company's employees are working remotely and accessing its technology infrastructure remotely; the ability of the company to implement and generate cost savings and efficiencies, and successfully implement its business strategies, including achieving anticipated results and cost savings from the implementation of the streamlined operating model; dependence on key customers and risks related to customer consolidation and ordering patterns; the company's ability to attract and retain key personnel, which may continue to be impacted by challenges in the labor market, such as wage inflation and sustained labor shortages; the company's ability to maintain its business reputation and the reputation of its brands and products; lower revenue, increased costs or reputational harm resulting from government actions and compliance with regulations, or any material costs imposed by changes in regulation; 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 international operations and international trade, including changing macroeconomic conditions as a result of inflation, volatile commodity prices and increases in raw and packaging materials prices, labor, energy and logistics; global economic or political instability; foreign currency fluctuations, such as devaluations, and foreign currency exchange rate controls; changes in governmental policies, including trade, travel or immigration restrictions, new or additional tariffs, and price or other controls; labor claims and civil unrest; continued high levels of inflation in Argentina; potential disruption from wars and military conflicts, including the conflict in Ukraine; impact of the United Kingdom's exit from the European Union; potential negative impact and liabilities from the use, storage and transportation of chlorine in certain international markets where chlorine is used in the production of bleach; widespread health emergencies, such as COVID-19; and the possibility of nationalization, expropriation of assets or other government action; the impact of Environmental, Social, and Governance (ESG) issues, including those related to climate change and sustainability on our sales, operating costs or reputation; the ability of the company to innovate and to develop and introduce commercially successful products, or expand into adjacent categories and countries; the impact of product liability claims, labor claims and other legal, governmental or tax proceedings, including in foreign jurisdictions and in connection with any product recalls; risks relating to acquisitions, new ventures and divestitures, and associated costs; and the ability to complete announced transactions and, if completed, integration costs and potential contingent liabilities related to those transactions; the accuracy of the company's estimates and assumptions on which its financial projections, including any sales or earnings guidance or outlook it may provide from time to time, are based; risks related to additional increases in the estimated fair value of The Procter & Gamble Company's interest in the Glad business; environmental matters, including costs associated with the remediation and monitoring of past contamination, and possible increases in costs resulting from actions by relevant regulators, and the handling and/or transportation of hazardous substances; the company's ability to effectively utilize, assert and defend its intellectual property rights, and any infringement or claimed infringement by the company of third-party intellectual property rights; the performance of strategic alliances and other business relationships; the effect of the company's indebtedness and credit rating on its business operations and financial results and the company's ability to access capital markets and other funding sources; the company's ability to pay and declare dividends or repurchase its stock in the future; the impacts of potential stockholder activism; and risks related to any litigation associated with the exclusive forum provision in the company's bylaws.
The company's forward-looking statements in this press release are based on management's current views, beliefs, assumptions and expectations regarding future events and speak only as of the date of this press release. 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 InformationAs announced in August 2021, the company plans to invest approximately $500 million over a five-year period in transformative technologies and processes. This investment, which began in the first quarter of fiscal year 2022, includes replacement of the company's enterprise resource planning system and transitioning to a cloud-based platform as well as the implementation of a suite of other digital technologies. Together it is expected that these implementations will generate efficiencies and transform the company's operations in the areas of supply chain, digital commerce, innovation, brand building and more over the long term.
Of the total $500 million investment, approximately 55% is expected to represent incremental operating costs primarily recorded within selling and administrative expenses to be adjusted from reported EPS for purposes of disclosing adjusted EPS over the course of the next five years. About 70% of these incremental operating costs are expected to be related to the implementation of the ERP, with the remaining costs primarily related to the implementation of complementary technologies.
Due to the nature, scope and magnitude of this investment, these costs are considered by management to represent incremental transformational costs above the historical normal level of spending for information technology to support operations. Since these strategic investments, including incremental operating costs, will cease at the end of the investment period, are not expected to recur in the foreseeable future and are not considered representative of the company's underlying operating performance, the company's management believes presenting these costs as an adjustment in the non-GAAP results provides additional information to investors about trends in the company's operations and is useful for period-over-period comparisons. It also allows investors to view underlying operating results in the same manner as they are viewed by company management.
Streamlined Operating ModelAs announced in August 2022, Clorox began to implement a streamlined operating model in the first quarter of fiscal year 2023. This quarter, the company began recognizing costs related to implementation of this model to meet its objectives of driving growth and productivity. The streamlined operating model is expected to enhance the company's ability to respond more quickly to changing consumer behaviors and innovate faster. Related costs are primarily expected to include employee-related costs to reduce certain staffing levels, such as severance payments, as well as for consulting and other costs. The company anticipates that the implementation of this new model will be completed in fiscal year 2024, with different phases occurring throughout the implementation period. As a result, the company expects to incur costs of approximately $75 million to $100 million over fiscal years 2023 and 2024, with approximately $35 million, or about 20 cents, to be recognized in fiscal year 2023, primarily within other income and expense. Due to the nonrecurring and unusual nature of these costs, the company's management believes presenting these costs as an adjustment in the non-GAAP results provides additional information to investors about trends in the company's operations and is useful for period over period comparisons. It also allows investors to view underlying operating results in the same manner as they are viewed by company management.
The following tables provide reconciliations of organic sales growth/(decrease) (non-GAAP) to net sales growth/(decrease), the most comparable GAAP measure:
Three Months Ended September 30, 2022 | |||||||||
Percentage change versus the year-ago period | |||||||||
Health and | Household | Lifestyle | International | Total | |||||
Net sales growth / (decrease) (GAAP) | (4) % | (4) % | (3) % | (1) % | (4) % | ||||
Add: Foreign Exchange | — | — | — | 9 | 2 | ||||
Add/(Subtract): Divestitures/Acquisitions | — | — | — | — | — | ||||
Organic sales growth / (decrease) (non-GAAP) | (4) % | (4) % | (3) % | 8 % | (2) % | ||||
The following tables provide reconciliations of adjusted diluted earnings per share (non-GAAP) to diluted earnings per share, the most comparable GAAP measure:
Adjusted Diluted Earnings Per Share (EPS) | ||||||||
(Dollars in millions except per share data) | ||||||||
Diluted Earnings Per Share | ||||||||
Three Months Ended September 30 | ||||||||
2022 | 2021 | % Change | ||||||
As reported (GAAP) | $ 0.68 | $ 1.14 | (40) % | |||||
Streamlined operating model (1) | 0.12 | — | ||||||
Digital capabilities and productivity enhancements | 0.13 | 0.07 | ||||||
As adjusted (Non-GAAP) | $ 0.93 | $ 1.21 | (23) % | |||||
(1) During the three months ended September 30, 2022, the company incurred approximately $19 ($14 after tax) of restructuring and | ||||||||
(2) During the three months ended September 30, 2022 and 2021, the company incurred approximately $20 ($15 after tax) and $12 ($9 | ||||||||
Three Months Ended September 30 | ||||||||
2022 | 2021 | |||||||
External consulting fees (a) | $ 16 | $ 9 | ||||||
IT project personnel costs (b) | 1 | 3 | ||||||
Other (c) | 3 | — | ||||||
Total | $ 20 | $ 12 | ||||||
(a) Comprised of third-party consulting fees incurred to assist in the project management and the preliminary project stage of this | ||||||||
(b) Comprised of labor costs associated with internal IT project management teams that are utilized to oversee the new system | ||||||||
(c) Comprised of various other expenses associated with the company's new system implementations, including company | ||||||||
Full Year 2023 Outlook (Estimated Range) | ||||||||
Diluted Earnings Per Share | ||||||||
Low | High | |||||||
As estimated (GAAP) | $ 3.10 | $ 3.47 | ||||||
Streamlined operating model (3) | 0.20 | 0.20 | ||||||
Digital capabilities and productivity enhancements | 0.55 | 0.55 | ||||||
As adjusted (Non-GAAP) | $ 3.85 | $ 4.22 | ||||||
(3) In FY23, the company expects to incur approximately $25-$45 ($19-$34 after tax) of restructuring and related implementation costs, net | ||||||||
(4) In FY23, the company expects to incur approximately $75-$105 ($57-$80 after tax) of operating expenses related to its digital |
Condensed Consolidated Statements of Earnings (Unaudited) | |||||
Dollars in millions, except per share data | |||||
Three Months Ended | |||||
09/30/2022 | 09/30/2021 | ||||
Net sales | $ 1,740 | $ 1,806 | |||
Cost of products sold | 1,114 | 1,136 | |||
Gross profit | 626 | 670 | |||
Selling and administrative expenses | 261 | 236 | |||
Advertising costs | 161 | 182 | |||
Research and development costs | 32 | 33 | |||
Interest expense | 22 | 25 | |||
Other (income) expense, net | 34 | 9 | |||
Earnings before income taxes | 116 | 185 | |||
Income taxes | 29 | 42 | |||
Net earnings | 87 | 143 | |||
Less: Net earnings attributable to noncontrolling interests | 2 | 1 | |||
Net earnings attributable to Clorox | $ 85 | $ 142 | |||
Net earnings per share attributable to Clorox | |||||
Basic net earnings per share | $ 0.69 | $ 1.15 | |||
Diluted net earnings per share | $ 0.68 | $ 1.14 | |||
Weighted average shares outstanding (in thousands) | |||||
Basic | 123,339 | 122,980 | |||
Diluted | 123,914 | 124,042 |
Reportable Segment Information | |||||||||||||
(Unaudited) | |||||||||||||
Dollars in millions | |||||||||||||
Net sales | Earnings (losses) before income taxes | ||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||
9/30/2022 | 9/30/2021 | % Change(1) | 9/30/2022 | 9/30/2021 | % Change(1) | ||||||||
Health and Wellness | $ | 712 | $ | 745 | (4) % | $ | 115 | $ | 105 | 10 % | |||
Household | 423 | 442 | (4) % | 22 | 36 | (39) % | |||||||
Lifestyle | 320 | 331 | (3) % | 60 | 93 | (35) % | |||||||
International | 285 | 288 | (1) % | 23 | 30 | (23) % | |||||||
Corporate | — | — | — | (104) | (79) | 32 % | |||||||
Total | $ | 1,740 | $ | 1,806 | (4) % | $ | 116 | $ | 185 | (37) % | |||
(1) Percentages based on rounded numbers. | |||||||||||||
Condensed Consolidated Balance Sheets | |||||||||||
Dollars in millions | |||||||||||
9/30/2022 | 6/30/2022 | 9/30/2021 | |||||||||
(Unaudited) | (Unaudited) | ||||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | 278 | $ | 183 | $ | 210 | |||||
Receivables, net | 612 | 681 | 654 | ||||||||
Inventories, net | 755 | 755 | 785 | ||||||||
Prepaid expenses and other current assets | 118 | 106 | 171 | ||||||||
Total current assets | 1,763 | 1,725 | 1,820 | ||||||||
Property, plant and equipment, net | 1,322 | 1,334 | 1,301 | ||||||||
Operating lease right-of-use assets | 336 | 342 | 310 | ||||||||
Goodwill | 1,546 | 1,558 | 1,566 | ||||||||
Trademarks, net | 685 | 687 | 691 | ||||||||
Other intangible assets, net | 190 | 197 | 218 | ||||||||
Other assets | 311 | 315 | 368 | ||||||||
Total assets | $ | 6,153 | $ | 6,158 | $ | 6,274 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Current liabilities | |||||||||||
Notes and loans payable | $ | 348 | $ | 237 | $ | 86 | |||||
Current maturities of long-term debt | — | — | 899 | ||||||||
Current operating lease liabilities | 78 | 78 | 72 | ||||||||
Accounts payable and accrued liabilities | 1,584 | 1,469 | 1,582 | ||||||||
Total current liabilities | 2,010 | 1,784 | 2,639 | ||||||||
Long-term debt | 2,475 | 2,474 | 1,885 | ||||||||
Long-term operating lease liabilities | 308 | 314 | 288 | ||||||||
Other liabilities | 805 | 791 | 846 | ||||||||
Deferred income taxes | 59 | 66 | 69 | ||||||||
Total liabilities | 5,657 | 5,429 | 5,727 | ||||||||
Stockholders' equity | |||||||||||
Preferred stock | — | — | — | ||||||||
Common stock | 131 | 131 | 131 | ||||||||
Additional paid-in capital | 1,193 | 1,202 | 1,166 | ||||||||
Retained earnings | 832 | 1,048 | 1,027 | ||||||||
Treasury stock | (1,315) | (1,346) | (1,389) | ||||||||
Accumulated other comprehensive net (loss) income | (515) | (479) | (567) | ||||||||
Total Clorox stockholders' equity | 326 | 556 | 368 | ||||||||
Noncontrolling interests | 170 | 173 | 179 | ||||||||
Total stockholders' equity | 496 | 729 | 547 | ||||||||
Total liabilities and stockholders' equity | $ | 6,153 | $ | 6,158 | $ | 6,274 |
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SOURCE The Clorox Company