OAKLAND,
Calif., Nov. 1, 2023 /PRNewswire/ -- The Clorox
Company (NYSE: CLX) today reported results for the first quarter of
fiscal year 2024, which ended Sept. 30,
2023.
First-Quarter Fiscal Year 2024 Summary
Following is a summary of key results for the first quarter,
which was marked by the impact of the previously announced
cyberattack. All comparisons are with the first quarter of fiscal
year 2023 unless otherwise stated.
- Net sales decreased 20% to $1.4
billion compared to a 4% net sales decrease in the year-ago
quarter. The decrease was driven largely by lower volume resulting
from the cyberattack, partially offset by favorable price mix.
Organic sales1 were down 18%.
- Gross margin increased 240 basis points to 38.4% from
36.0% in the year-ago quarter, due to the benefits of pricing and
cost-savings initiatives, partially offset by the impact of lower
volume.
- Diluted net earnings per share (diluted EPS) decreased
75% to 17 cents from 68 cents in the year-ago quarter. This decrease
includes current-period investments in the company's long-term
strategic digital capabilities and productivity enhancements
(17 cents) and incremental expenses
resulting from the cyberattack (15
cents).
- Adjusted EPS1 decreased 47% to
49 cents from 93 cents in the year-ago quarter, due to lower
volume partially offset by the benefits of pricing and ongoing
cost-savings initiatives.
- Year-to-date net cash provided by operations was
$20 million compared to $178 million in the year-ago period, representing
an 89% decrease.
"After entering the fiscal year with solid momentum, the August
cyberattack caused wide-scale disruptions that are impacting our
short-term financial performance," said CEO Linda Rendle. "Looking forward, our near-term
priorities are clear: We are laser focused on rebuilding customer
inventories, preserving merchandising activities, and ultimately
rebuilding distribution and market share. We are confident that our
portfolio of leading brands in essential categories and our IGNITE
strategy will enable us to deliver consistent, profitable growth
over time."
This press release includes certain non-GAAP financial
measures. See "Non-GAAP Financial Information" at the end of this
press release for more details.
Strategic and Operational Highlights
The following are recent highlights of business and
environmental, social and governance achievements:
- Delivered another quarter of strong cost savings as part of the
company's effort to rebuild margin.
- Improved volume consumption trends enterprisewide prior to the
cyberattack while lapping major pricing actions in the year-ago
period.
- Successfully executed pricing to offset higher costs,
generating organic sales growth in the International segment.
- Named Safer Choice Partner of
the Year by the U.S. Environmental Protection Agency, the sixth
time the company has been recognized with this award acknowledging
efforts to manufacture products with ingredients designated as
safer for families, pets, workplaces, communities and the
environment.
Key Segment Results
The following is a summary of key first-quarter results by
reportable segment. It reflects the impact of the previously
announced cyberattack, which drove lower sales in all segments and
lower segment adjusted earnings before interest and income taxes,
or adjusted EBIT2, in three of four segments. All
comparisons are with the first quarter of fiscal year 2023, unless
otherwise stated. Prior periods presented have been recast to
reflect the reportable segment changes effective in the fourth
quarter of fiscal year 2023.
Health and Wellness (Cleaning; Professional Products)
- Net sales were down 23%, with 29 points of lower volume
partially offset by 6 points from favorable price mix. Results
reflect decreases in both businesses.
- Segment adjusted EBIT was down 22%, driven primarily by the
impact of lower volume partially offset by the benefit of
pricing.
Household (Bags and Wraps; Cat Litter; Grilling)
- Net sales were down 23%, with 30 points of lower volume more
than offsetting 7 points from favorable price mix. Results reflect
decreases in all three businesses.
- Segment adjusted EBIT was down 118%, primarily due to lower
volume. The decrease was partially offset by the benefits of
cost-savings initiatives and pricing.
Lifestyle (Food; Natural Personal Care; Water
Filtration)
- Net sales were down 28%, driven by 37 points of lower volume
partially offset by 9 points of favorable price mix. Results
reflect decreases in all three businesses.
- Segment adjusted EBIT was down 68%, mainly due to lower volume
partially offset by lower manufacturing and logistics costs.
International (Sales Outside the U.S.)
- Net sales decreased 5%, with 22 points of favorable price mix
more than offset by 14 points of unfavorable foreign exchange rates
and 13 points of lower volume. Organic sales grew 9%.
- Segment adjusted EBIT increased 48% behind the benefit of
pricing, which more than offset unfavorable foreign exchange rates
and the impact of lower volume.
Fiscal Year 2024 Outlook
The company is updating the following elements of its
fiscal year 2024 outlook:
- Net sales are now expected to be down mid- to high single
digits, updated to reflect the impact from the cyberattack.
This compares to the previous expectation of sales that are flat to
up 2%. This continues to reflect about 2 points of unfavorable
impact from foreign exchange rates.
- Gross margin is now expected to be about flat, reflecting the
combined benefit of pricing actions, cost savings and supply chain
optimization offset by input cost inflation and the impact from the
cyberattack. This compares to the previous expectation of an
increase between 150 and 175 basis points.
- Selling and administrative expenses are now expected to be
about 16% of net sales, including about 2 points of impact related
to investments to enhance the company's digital capabilities,
implementation of the streamlined operating model and expenses
resulting from the cyberattack. This compares to the previous
expectation of between 15% and 16% of net sales.
- Advertising and sales promotion spending is expected to be
about 11% of net sales. This continues to reflect the company's
stepped-up efforts to emphasize the superior value of its brands at
a time when consumers are increasingly becoming more value focused
as well as to support efforts to rebuild market share.
- The company's effective tax rate is now expected to be between
23% and 24%, compared to the previous expectation of about
24%.
- Net of these factors, fiscal year diluted EPS is now expected
to be between $2.10 and $2.60, or an increase of 75% to 117%,
respectively. This compares to previous expectations between
$4.65 and $4.95, or an increase of 290% to 316%,
respectively. Adjusted EPS is now expected to be between
$4.30 and $4.80, or a decrease of 16% to 6%. This compares
to previous expectations of between $5.60 and $5.90, or
an increase of 10% to 16%, respectively. Adjusted EPS excludes the
long-term strategic investments in digital capabilities and
productivity enhancements, which continue to be estimated at about
70 cents; a 25-cent charge related to the streamlined
operating model; and incremental charges resulting from the
cyberattack of about 25 cents. It
also excludes a noncash charge of about $1.00 related to termination of the company's
domestic qualified pension plan.
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1
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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.
|
2
|
Adjusted EBIT is
a non-GAAP measure. See Non-GAAP Financial Information at the end
of this press release for reconciliations to the most comparable
GAAP measures.
|
Clorox Earnings Conference Call Schedule
At approximately 4:15 p.m. ET
today, Clorox will post prepared management remarks regarding its
first-quarter fiscal year 2024 results.
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.
Links to the live (and archived) webcast, press release and
prepared remarks can be found at Clorox Quarterly Results.
For More Detailed Financial Information
Visit the company's Quarterly Results for the
following:
- Supplemental unaudited volume and sales growth information
- Supplemental unaudited gross margin drivers information
- Supplemental unaudited cash flow information and free cash flow
reconciliation
- Supplemental unaudited reconciliation of earnings (losses)
before interest and taxes (EBIT) and adjusted EBIT
- Supplemental unaudited reconciliation of adjusted earnings per
share (EPS)
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 Company
The 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 Natural Vitality®, can be
found in about nine of 10 U.S. homes and internationally with
brands such as Ayudin®, 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. In 2023 the company was
ranked No. 1 on Barron's 100 Most Sustainable Companies list.
Visit thecloroxcompany.com to learn more.
CLX-F
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, including, among others, statements regarding the expected
or potential impact of the company's operational disruption
stemming from a cyberattack, and any such forward-looking
statements 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,
2023, and in the company's Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30,
2023, and as updated from time to time in the company's
Securities and Exchange Commission filings. These factors include,
but are not limited to: unfavorable general economic and
geopolitical conditions beyond our control, including supply chain
disruptions, labor shortages, wage pressures, rising inflation, the
interest rate environment, 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 ongoing conflicts in
the Middle East and Ukraine and rising tensions between
China and Taiwan, as well as macroeconomic and
geopolitical volatility and uncertainty as a result of a number of
these and other factors, including actual and potential shifts
between the U.S. and its trading partners, especially China; volatility and increases in the costs
of raw materials, energy, transportation, labor and other necessary
supplies or services; the impact of the changing retail
environment, including the growth of alternative retail channels
and business models, and changing consumer preferences; 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; intense competition in
the company's markets; risks related to the company's use of and
reliance on information technology systems, including potential and
actual security breaches, cyberattacks, privacy breaches or data
breaches that result in the unauthorized disclosure of consumer,
customer, employee or company information, business, service or
operational disruptions, or that impact the company's financial
results or financial reporting, or any resulting unfavorable
outcomes, increased costs or legal proceedings; the ability
of the company to implement and generate cost savings and
efficiencies, and successfully implement its transformational
initiatives or strategies, including achieving anticipated benefits
and cost savings from the implementation of the streamlined
operating model and digital capabilities and productivity
enhancements; 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; changes to
our processes and procedures as a result of our digital
capabilities and productivity enhancements investment that may
result in changes to the company's internal controls over financial
reporting; 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
operational or supply chain disruptions 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; the 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; risks relating to
acquisitions, new ventures and divestitures, and associated costs,
including for asset impairment charges related to, among others,
intangible assets, including trademarks and goodwill, in particular
the impairment charges related to the carrying value of the
company's Vitamins, Minerals and Supplements business; 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 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, as well as the cost of capital
to the company; 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 Information
- This press release contains non-GAAP financial information
related to organic sales growth / (decrease), adjusted EPS and
segment adjusted EBIT for the first quarter of fiscal year 2024, as
well as adjusted EPS outlook for fiscal year 2024.
- Clorox defines organic sales growth / (decrease) as GAAP net
sales growth / (decrease) excluding the effect of foreign exchange
rate changes and any acquisitions or divestitures.
- Management believes that the presentation of organic sales
growth / (decrease) is useful to investors because it excludes
sales from any acquisitions and divestitures, which results in a
comparison of sales only from the businesses that the company was
operating and expects to continue to operate throughout the
relevant periods, and the company's estimate of the impact of
foreign exchange rate changes, which are difficult to predict and
out of the control of the company and management. However, organic
sales growth / (decrease) may not be the same as similar measures
provided by other companies due to potential differences in methods
of calculation or differences in which items are incorporated into
these adjustments.
- Adjusted EPS is defined as diluted earnings per share that
excludes or has otherwise been adjusted for significant items that
are nonrecurring or unusual. The income tax effect on non-GAAP
items is calculated based upon the tax laws and statutory income
tax rates applicable in the tax jurisdiction(s) of the underlying
non-GAAP adjustment.
- Adjusted EPS is supplemental information that management uses
to help evaluate the company's historical and prospective financial
performance on a consistent basis over time. Management believes
that by adjusting for certain items affecting comparability of
performance over time, such as incremental costs related to the
cyberattack, asset impairments, charges related to the streamlined
operating model, charges related to the digital capabilities and
productivity enhancements investment, significant losses/(gains)
related to acquisitions, and other nonrecurring or unusual items,
investors and management are able to gain additional insight into
the company's underlying operating performance on a consistent
basis over time. However, adjusted EPS may not be the same as
similar measures provided by other companies due to potential
differences in methods of calculation or differences in which items
are incorporated into these adjustments.
- Adjusted EBIT represents earnings (losses) before income taxes
excluding interest income, interest expense and other significant
items that are nonrecurring or unusual (such as incremental costs
related to the cyberattack, asset impairments, charges related to
the streamlined operating model, charges related to the digital
capabilities and productivity enhancements investment, significant
losses/(gains) related to acquisitions and other nonrecurring or
unusual items impacting comparability during the period. The
company uses this measure to assess the operating results and
performance of its segments, perform analytical comparisons,
identify strategies to improve performance, and allocate resources
to each segment. Management believes that the presentation of
adjusted EBIT excluding these items is useful to investors to
assess operating performance on a consistent basis by removing the
impact of the items that management believes do not directly
reflect the performance of each segment's underlying operations.
However, adjusted EBIT may not be the same as similar measures
provided by other companies due to potential differences in methods
of calculation or differences in which items are incorporated into
these adjustments.
- The reconciliation tables below refer to the equivalent GAAP
measures adjusted as applicable for the following items:
Pension Settlement
In the second quarter of fiscal year 2024, a one-time, noncash
settlement charge is expected to be recognized related to the
previously disclosed termination of the domestic qualified pension
plan, as plan obligations are settled through both lump sum payouts
and annuity purchases. The actual amount of the settlement charge
could vary based on the final valuation of assets and
liabilities.
Cyberattack Costs
As previously disclosed, incremental costs were incurred by the
company as the result of a cyberattack. These costs relate
primarily to third-party consulting services, including IT recovery
and forensic experts and other professional services incurred to
investigate and remediate the attack, as well as incremental
operating costs from the resulting disruption to the company's
business operations.
The company has not recognized any insurance proceeds in the
three months ended Sept. 30, 2023,
related to the cyberattack. The timing of recognizing insurance
recoveries may differ from the timing of recognizing the associated
expenses. Costs associated with ongoing cybersecurity monitoring
and prevention as well as enhancement to the company's
cybersecurity program are not included within this adjustment. The
company expects to continue to incur costs associated with the
cyberattack in future periods.
Due to the nature, scope and magnitude 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.
Streamlined Operating Model
In the first quarter of fiscal year 2023, Clorox began
recognizing costs related to a plan that involves streamlining its
operating 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. The company anticipates the
implementation of this new model will be completed in fiscal year
2024, with different phases occurring throughout the implementation
period.
Once fully implemented, the company expects annual cost savings
of approximately $75 million to
$100 million, with benefits of
approximately $35 million realized in
fiscal year 2023. The benefits of the streamlined operating model
are currently expected to increase future cash flows as a result of
cost savings that will be generated primarily in the areas of
selling and administration, supply chain, marketing and research
and development. The company incurred $60
million of costs in fiscal year 2023 and anticipates
incurring approximately $30 million
to $40 million in fiscal year 2024
related to this initiative. 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. 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.
Digital Capabilities and Productivity Enhancements
Investment
As 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 65% 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 through fiscal year 2026. About
70% of these 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.
The following table provides reconciliation of organic
sales growth / (decrease) (non-GAAP) to net sales growth /
(decrease), the most comparable GAAP measure:
|
Three months ended
Sept. 30, 2023
|
|
Percentage change
versus the year-ago period
|
|
Health and
Wellness
|
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Household
|
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Lifestyle
|
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International
|
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Total Company
(1)
|
Net sales growth /
(decrease) (GAAP)
|
(23) %
|
|
(23) %
|
|
(28) %
|
|
(5) %
|
|
(20) %
|
Add: Foreign
exchange
|
—
|
|
—
|
|
—
|
|
14
|
|
2
|
Add/(Subtract):
Divestitures/acquisitions
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Organic sales growth /
(decrease) (non-GAAP)
|
(23) %
|
|
(23) %
|
|
(28) %
|
|
9 %
|
|
(18) %
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
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Total Company includes
Corporate and Other.
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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)
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(Dollars in millions
except per share data)
|
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Diluted earnings per
share
|
|
|
|
|
|
Three months
ended
|
|
|
|
|
|
9/30/2023
|
|
9/30/2022
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%
Change
|
|
|
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|
|
|
|
|
|
|
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As reported
(GAAP)
|
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$
0.17
|
|
$
0.68
|
|
(75) %
|
|
|
Cyberattack costs
(1)
|
|
0.15
|
|
—
|
|
|
|
|
Streamlined operating
model (2)
|
|
—
|
|
0.12
|
|
|
|
|
Digital capabilities
and productivity enhancements investment (3)
|
|
0.17
|
|
0.13
|
|
|
|
|
As adjusted
(Non-GAAP)
|
|
$
0.49
|
|
$
0.93
|
|
(47) %
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|
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(1) During
the three months ended Sept. 30, 2023, the company incurred
approximately $24 ($18 after tax) of costs related to the
cyberattack. These costs relate primarily to third-party consulting
services, including IT recovery and forensic experts and other
professional services incurred to investigate and remediate the
attack, as well as incremental operating costs from the resulting
disruption to the company's business
operations.
|
(2) During
the three months ended Sept. 30, 2023, and 2022, the company
incurred $0 and $19 ($14 after tax), respectively, of restructuring
and related costs, net related to implementation of the streamlined
operating model.
|
(3) During
the three months ended Sept. 30, 2023, and 2022, the company
incurred approximately $27 ($21 after tax) and $20 ($15 after tax),
respectively, of operating expenses related to its digital
capabilities and productivity enhancements investment. The expenses
relate to the following:
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|
|
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|
|
Three months
ended
|
|
|
|
|
|
|
|
9/30/2023
|
|
9/30/2022
|
|
|
|
|
|
External consulting
fees (a)
|
|
$
21
|
|
$
16
|
|
|
|
|
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IT project personnel
costs (b)
|
|
2
|
|
1
|
|
|
|
|
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Other
(c)
|
|
4
|
|
3
|
|
|
|
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Total
|
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$
27
|
|
$
20
|
|
|
|
|
|
|
|
|
|
|
|
|
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(a) Comprised of third-party
consulting fees incurred to assist in the project management and
the preliminary project stage of this transformative investment.
The company relies on consultants for certain capabilities required
for these programs that the company does not maintain internally.
These costs support the implementation of these programs
incremental to the company's normal IT costs and will not be
incurred following implementation.
|
(b)
Comprised of labor costs associated with internal IT project
management teams that are utilized to oversee the new system
implementations. Given the magnitude and transformative nature of
the implementations planned, the necessary project management costs
are incremental to the historical levels of spend and will no
longer be incurred subsequent to implementation. As a result of
this long-term strategic investment, the company considers these
costs not reflective of the ongoing costs to operate its
business.
|
(c)
Comprised of various other expenses associated with the company's
new system implementations, including company personnel dedicated
to the project that have been backfilled with either permanent or
temporary resources in positions that are considered part of normal
operating expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full year 2024
outlook
(estimated range)
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
|
|
|
|
|
Low
|
|
High
|
|
|
|
As estimated
(GAAP)
|
|
$
2.10
|
|
$
2.60
|
|
|
|
Pension settlement
(4)
|
|
1.00
|
|
1.00
|
|
|
|
|
Cyberattack costs
(5)
|
|
0.25
|
|
0.25
|
|
|
|
Streamlined operating
model (6)
|
|
0.25
|
|
0.25
|
|
|
|
Digital capabilities
and productivity enhancements investment (7)
|
|
0.70
|
|
0.70
|
|
|
|
As adjusted
(Non-GAAP)
|
|
$
4.30
|
|
$
4.80
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) In FY24,
the company expects to incur approximately $155-$175 ($118-134
after tax) of costs related to termination of the domestic
qualified pension plan.
|
(5) In FY24,
the company expects to incur approximately $40-$50 ($30-$38 after
tax) of costs related to the cyberattack. These costs relate
primarily to third-party consulting services, including IT recovery
and forensic experts and other professional services incurred to
investigate and remediate the attack, as well as incremental
operating costs from the resulting disruption to the company's
business operations.
|
(6) In FY24,
the company expects to incur approximately $30-$40 ($23-$30 after
tax) of restructuring and related costs, net related to
implementation of the streamlined operating model.
|
(7) In FY24,
the company expects to incur approximately $100-$120 ($76-$91 after
tax) of operating expenses related to its digital capabilities and
productivity enhancements investment.
|
The following table provides reconciliation of adjusted
EBIT (non-GAAP) to earnings (losses) before income taxes, the most
comparable GAAP measure:
|
Reconciliation of
earnings
(losses) before income
taxes to adjusted EBIT
|
|
Three months
ended
|
|
9/30/2023
|
|
9/30/2022
|
Earnings (losses)
before income taxes
|
$
29
|
|
$
116
|
Interest
income
|
(10)
|
|
(2)
|
Interest
expense
|
21
|
|
22
|
Cyberattack
costs
|
24
|
|
—
|
Streamlined operating
model
|
—
|
|
19
|
Digital capabilities
and productivity enhancements investment
|
27
|
|
20
|
Adjusted
EBIT
|
$
91
|
|
$
175
|
|
|
|
|
Condensed
Consolidated Statements of Earnings (Unaudited)
|
|
|
Dollars in millions,
except per share data
|
|
|
|
|
|
|
Three months
ended
|
|
|
|
09/30/2023
|
|
09/30/2022
|
Net sales
|
|
|
$
1,386
|
|
$
1,740
|
Cost of products
sold
|
|
|
854
|
|
1,114
|
Gross profit
|
|
|
532
|
|
626
|
Selling and
administrative expenses
|
|
276
|
|
261
|
Advertising
costs
|
|
|
165
|
|
161
|
Research and
development costs
|
|
29
|
|
32
|
Interest
expense
|
|
|
21
|
|
22
|
Other (income) expense,
net
|
|
12
|
|
34
|
Earnings before income
taxes
|
|
29
|
|
116
|
Income tax
expense
|
|
4
|
|
29
|
Net earnings
|
25
|
|
87
|
Less: Net earnings
attributable to noncontrolling interests
|
3
|
|
2
|
Net earnings
attributable to Clorox
|
|
$
22
|
|
$
85
|
|
|
|
|
|
|
Net earnings per share
attributable to Clorox
|
|
|
|
Basic net earnings per
share
|
|
$
0.17
|
|
$
0.69
|
Diluted net earnings
per share
|
|
$
0.17
|
|
$
0.68
|
|
|
|
|
|
|
Weighted average shares
outstanding (in thousands)
|
|
|
|
Basic
|
|
123,973
|
|
123,339
|
Diluted
|
|
124,650
|
|
123,914
|
Reportable Segment
Information
|
|
|
(Unaudited)
|
|
|
|
|
|
Dollars in
millions
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
Three months
ended
|
|
9/30/2023
|
|
9/30/2022
|
|
%
Change(1)
|
Health and
Wellness
|
$
504
|
|
$
657
|
|
(23) %
|
Household
|
325
|
|
423
|
|
(23)
|
Lifestyle
|
229
|
|
320
|
|
(28)
|
International
|
270
|
|
285
|
|
(5)
|
Corporate and Other
(2)
|
58
|
|
55
|
|
5
|
Total
|
$
1,386
|
|
$
1,740
|
|
(20) %
|
|
|
|
|
|
|
|
Segment adjusted
EBIT
|
|
Three months
ended
|
|
9/30/2023
|
|
9/30/2022
|
|
%
Change(1)
|
Health and
Wellness
|
$
104
|
|
133
|
|
(22) %
|
Household
|
(4)
|
|
22
|
|
(118)
|
Lifestyle
|
19
|
|
60
|
|
(68)
|
International
|
34
|
|
23
|
|
48
|
Corporate and
Other
|
(62)
|
|
(63)
|
|
(2)
|
Total
|
$
91
|
|
$
175
|
|
(48) %
|
Interest
income
|
10
|
|
2
|
|
|
Interest
expense
|
(21)
|
|
(22)
|
|
|
Cyberattack costs
(3)
|
(24)
|
|
—
|
|
|
Streamlined operating
model (4)
|
—
|
|
(19)
|
|
|
Digital capabilities
and productivity enhancements investment (5)
|
(27)
|
|
(20)
|
|
|
Earnings before income
taxes
|
$
29
|
|
$
116
|
|
(75) %
|
|
|
|
|
|
|
(1) Percentages
based on rounded numbers.
|
(2) Corporate and Other
includes the Vitamin, Minerals and Supplements business.
|
(3) Represents costs related
to the cyberattack of $24 ($18 after tax) for the three months
ended Sept. 30, 2023.
|
(4) Represents
restructuring and related costs, net for implementation of the
streamlined operating model of $0 and $19 ($14 after tax) for the
three months ended Sept. 30, 2023, and 2022,
respectively.
|
(5) Represents expenses
related to the company's digital capabilities and productivity
enhancements investment of $27 ($21 after tax) and $20 ($15 after
tax) for the three months ended Sept. 30, 2023, and 2022,
respectively.
|
Condensed
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
Dollars in
millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/30/2023
|
|
6/30/2023
|
|
9/30/2022
|
|
|
|
|
(Unaudited)
|
|
|
|
|
(Unaudited)
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
518
|
|
$
|
367
|
|
$
|
278
|
|
Receivables,
net
|
|
|
581
|
|
|
688
|
|
|
612
|
|
Inventories,
net
|
|
|
710
|
|
|
696
|
|
|
755
|
|
Prepaid expenses and
other current assets
|
|
|
102
|
|
|
77
|
|
|
118
|
|
|
Total current
assets
|
|
|
1,911
|
|
|
1,828
|
|
|
1,763
|
Property, plant and
equipment, net
|
|
|
1,317
|
|
|
1,345
|
|
|
1,322
|
Operating lease
right-of-use assets
|
|
|
328
|
|
|
346
|
|
|
336
|
Goodwill
|
|
|
1,246
|
|
|
1,252
|
|
|
1,546
|
Trademarks,
net
|
|
|
541
|
|
|
543
|
|
|
685
|
Other intangible
assets, net
|
|
|
162
|
|
|
169
|
|
|
190
|
Other assets
|
|
|
486
|
|
|
462
|
|
|
311
|
Total assets
|
|
$
|
5,991
|
|
$
|
5,945
|
|
$
|
6,153
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
|
Notes and loans
payable
|
|
$
|
347
|
|
$
|
50
|
|
$
|
348
|
|
Current operating lease
liabilities
|
|
|
88
|
|
|
87
|
|
|
78
|
|
Accounts payable and
accrued liabilities
|
|
|
1,678
|
|
|
1,659
|
|
|
1,584
|
|
Income Taxes
Payable
|
|
|
115
|
|
|
121
|
|
|
—
|
|
|
Total current
liabilities
|
|
|
2,228
|
|
|
1,917
|
|
|
2,010
|
Long-term
debt
|
|
|
2,478
|
|
|
2,477
|
|
|
2,475
|
Long-term operating
lease liabilities
|
|
|
290
|
|
|
310
|
|
|
308
|
Other
liabilities
|
|
|
837
|
|
|
825
|
|
|
805
|
Deferred income
taxes
|
|
|
27
|
|
|
28
|
|
|
59
|
|
|
Total
liabilities
|
|
|
5,860
|
|
|
5,557
|
|
|
5,657
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
|
|
|
Preferred
stock
|
|
|
—
|
|
|
—
|
|
|
—
|
Common stock
|
|
|
131
|
|
|
131
|
|
|
131
|
Additional paid-in
capital
|
|
|
1,246
|
|
|
1,245
|
|
|
1,193
|
Retained
earnings
|
|
|
299
|
|
|
583
|
|
|
832
|
Treasury
stock
|
|
|
(1,219)
|
|
|
(1,246)
|
|
|
(1,315)
|
Accumulated other
comprehensive net (loss) income
|
|
|
(494)
|
|
|
(493)
|
|
|
(515)
|
|
|
Total Clorox
stockholders' (deficit) equity
|
|
|
(37)
|
|
|
220
|
|
|
326
|
Noncontrolling
interests
|
|
|
168
|
|
|
168
|
|
|
170
|
Total stockholders'
equity
|
|
|
131
|
|
|
388
|
|
|
496
|
Total liabilities and
stockholders' equity
|
|
$
|
5,991
|
|
$
|
5,945
|
|
$
|
6,153
|
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SOURCE The Clorox Company