Clorox Reports Q2 Fiscal Year 2024 Results, Updates Outlook
- 16% increase in net sales to $1.99 billion
- Diluted net earnings per share decreased by 6%
- Adjusted EPS increased by 120% to $2.16
- Progress in recovering from the cyberattack
- Strong cost savings and double-digit organic sales growth in International markets
- Net sales and adjusted EBIT increased across all reportable segments
- International net sales grew by 9% and segment adjusted EBIT increased by 33%
- None.
Insights
The Clorox Company's second-quarter fiscal year 2024 report highlights significant recovery and growth post-cyberattack, with a noteworthy 16% increase in net sales to $1.99 billion. This performance is particularly impressive considering the 20% rise in organic sales, which excludes impacts from acquisitions, divestitures and foreign exchange. The substantial 730 basis point increase in gross margin to 43.5% signifies effective cost management and pricing strategies, even in the face of adverse foreign exchange rates.
However, the 6% decrease in diluted EPS to 75 cents, influenced by noncash pension plan settlement charges and investments in digital and productivity enhancements, indicates that while the company is growing, it's also incurring significant expenses that affect profitability. The 55% decrease in net cash provided by operations year-to-date is a concern for liquidity and may impact the company's ability to invest in growth opportunities or return value to shareholders in the short term.
Investors might view the updated fiscal year outlook, which now expects net sales to be down low single digits, as a positive revision from previous expectations. This suggests that management is confident in the company's trajectory despite the ongoing challenges posed by currency devaluation, particularly the Argentine Peso.
Clorox's strong sales performance, particularly in the Health and Wellness segment with a 25% increase, indicates a successful recovery strategy post-cyberattack and an effective response to the Pine-Sol recall. The company's ability to rebuild retailer inventories ahead of schedule is likely to restore consumer confidence and solidify its market position. Furthermore, the 109% increase in segment adjusted EBIT for both Health and Wellness and Household segments illustrates robust operational efficiency and cost control.
The 21% increase in the Lifestyle segment's net sales and the introduction of new products such as the Brita Refillable Water Filtration System reflect Clorox's commitment to innovation and meeting evolving consumer needs. These initiatives could strengthen the company's competitive edge and drive future growth.
Clorox's international performance, with organic sales growth of 31% despite significant foreign exchange headwinds, showcases the company's strong international pricing strategy and adaptability in a challenging global market. The 33% increase in segment adjusted EBIT for International sales also underscores the potential for international markets to contribute significantly to Clorox's profitability.
The Clorox Company's report reflects broader economic trends, such as the impact of unfavorable foreign exchange rates on multinational corporations. The devaluation of currencies like the Argentine Peso poses challenges but also demonstrates Clorox's ability to execute pricing actions to mitigate inflationary pressures. This adaptability is crucial in a volatile global economy.
The report also indicates that Clorox is navigating supply chain constraints effectively, as seen in the net sales increase across various segments. This is a positive signal in the context of global supply chain disruptions that have affected many industries. Clorox's performance could be an indicator of resilience and potential for other consumer goods companies facing similar challenges.
From an economic perspective, the double-digit organic sales growth in International markets and the strategic focus on cost savings and productivity enhancements are indicative of a company leveraging macroeconomic conditions to strengthen its market position and operational efficiency, which could lead to sustainable long-term growth.
Second-Quarter Fiscal Year 2024 Summary
Following is a summary of key results for the second quarter, which reflect operational recovery from the previously announced cyberattack. All comparisons are with the second quarter of fiscal year 2023 unless otherwise stated.
- Net sales increased
16% to$1.99 billion 1% net sales increase in the year-ago quarter. The increase was driven largely by higher volume as the company rebuilt customer inventories following the August cyberattack as well as favorable price mix, partially offset by unfavorable foreign exchange rates. Organic sales1 were up20% . - Gross margin increased 730 basis points to
43.5% from36.2% in the year-ago quarter, due to the benefits of pricing and cost-savings initiatives, more than offsetting unfavorable foreign exchange rates. Gross margin also reflects the benefit of better cost absorption from strong shipment growth. - Diluted net earnings per share (diluted EPS) decreased
6% to75 cents from80 cents in the year-ago quarter. This decrease includes a noncash pension plan settlement charge ($1.04 19 cents ) and incremental expenses resulting from the cyberattack (16 cents ). - Adjusted EPS1 increased
120% to$2.16 98 cents in the year-ago quarter, due to higher net sales and gross margin expansion, partially offset by unfavorable foreign exchange rates, higher selling and administrative expenses and advertising investments. - Year-to-date net cash provided by operations was
$173 million $387 million 55% decrease.
"Our second quarter results reflect strong execution on our recovery plan from the August cyberattack," said Chair and CEO Linda Rendle. "We are rebuilding retailer inventories ahead of schedule, enabling us to return to merchandising and restore distribution. While there is still more work to do, we're focused on executing with excellence in what remains a challenging environment to drive top-line growth and rebuild margin. We're confident we have the right plans in place to win with consumers given the strength and superior value of our brands and our ongoing investments in innovation and brand-building throughout our advantaged portfolio."
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:
- Made strong progress recovering from the August cyberattack-related operational disruptions, including progress recovering market shares and distribution losses by rebuilding the vast majority of retailer inventory ahead of expectations.
- Delivered another strong quarter of cost savings as part of the company's ongoing effort to rebuild margin.
- Delivered double-digit organic sales growth in International, enabled by the company swiftly and successfully executing incremental pricing actions to fully offset inflation as well as impacts from
Argentina's currency devaluation. - Introduced new product innovations to meet the needs of consumers, including Kingsford High Heat and Low and Slow charcoal briquettes, Clorox Toilet Bomb Foaming Toilet Bowl Cleaner and the Brita Refillable Water Filtration System.
- Received the EPA's 2023 Green Chemistry Awards and named to Wall Street Journal's 250 Best Managed Companies, 3BL's 100 Best Corporate Citizens, and Newsweek's America's Most Responsible Companies and America's Greenest Companies lists.
Key Segment Results
The following is a summary of key second-quarter results by reportable segment. All comparisons are with the second 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 increased
25% , driven by 22 points of higher volume and 3 points of favorable price mix.- Cleaning sales increased, driven by shipments to rebuild retailer inventory and lapping the voluntary recall of certain Pine-Sol scented products.
- Professional Products sales increased, driven by shipments to rebuild retailer inventory and lapping the voluntary recall of certain Pine-Sol scented products.
- Segment adjusted EBIT2 increased
109% , primarily behind increased net sales and lower manufacturing and logistics costs.
Household (Bags and Wraps; Cat Litter; Grilling)
- Net sales increased
9% , driven by 4 points of higher volume and 5 points of favorable price mix.- Bags and Wraps sales increased, driven by shipments to rebuild retailer inventory, partially offset by lower merchandising and consumption losses due to supply chain constraints.
- Cat Litter sales increased, driven by shipments to rebuild retailer inventory and continued strong consumer demand, partially offset by consumption losses due to supply chain constraints.
- Grilling sales increased, driven by shipments to rebuild retailer inventory.
- Segment adjusted EBIT increased
109% , primarily due to net sales growth and cost savings.
Lifestyle (Food; Natural Personal Care; Water Filtration)
- Net sales increased
21% , driven by 24 points of higher volume partially offset by 3 points of unfavorable price mix.- Food sales increased, driven by shipments to rebuild retailer inventory.
- Natural Personal Care sales increased, driven by shipments to rebuild retailer inventory.
- Water Filtration sales increased, driven by shipments to rebuild retailer inventory and strong merchandising activities, partially offset by consumption losses from early quarter out-of-stocks.
- Segment adjusted EBIT increased
47% , due to net sales growth partially offset by higher manufacturing and logistics costs.
International (Sales Outside the
- Net sales increased
9% , with 25 points of favorable price mix and 6 points of higher volume more than offsetting 22 points of unfavorable foreign exchange rates. Organic sales grew31% . - Segment adjusted EBIT increased
33% , due to net sales growth behind pricing partially offset by unfavorable foreign exchange rates.
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 low single digits, updated to reflect the progress the company has made in the second quarter as well as the raise in expectations for the second half of the fiscal year, partially offset by 5 points of unfavorable foreign exchange rates primarily due to the devaluation of the Argentine Peso. This compares to the previous expectation of net sales that are down mid- to high single digits.
- Gross margin is now expected to be up about 200 basis points, reflecting the combined benefit of pricing actions, cost savings and supply chain optimization, partially offset by supply chain inflation and the impact from the cyberattack. This compares to the previous expectation of about flat.
- Selling and administrative expenses are now expected to be between
16% to17% of net sales, including about 2.5 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 about16% of net sales. - The company's effective tax rate is now expected to be between
22% and23% , compared to the previous expectation of about23% to24% . - Net of these factors, fiscal year diluted EPS is now expected to be between
$3.06 $3.26 155% to172% , respectively. This compares to previous expectations between$2.10 $2.60 75% to117% , respectively, and includes the lapping of a noncash impairment charge in our Vitamins, Minerals and Supplements business. Adjusted EPS is now expected to be between$5.30 $5.50 4% to8% . This compares to previous expectations of between$4.30 $4.80 16% to6% , respectively. The adjusted EPS outlook excludes the long-term strategic investments in digital capabilities and productivity enhancements, which continue to be estimated at about70 cents ; a charge related to the streamlined operating model, now estimated to be20 cents ; and incremental charges resulting from the cyberattack of about30 cents . It also excludes a noncash charge of$1.04
The company is confirming the following elements of its fiscal year 2024 outlook:
- 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.
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. | ||||
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 second-quarter fiscal year 2024 results.
At 5 p.m. ET today, the company will host a live Q&A audio webcast with Chair and 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
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: our recovery from the cyberattack, 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
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 second 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 the pension settlement charge, 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 the pension settlement charge, 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 Charge
In the second quarter of fiscal year 2024, the Company settled plan benefits related to its domestic qualified pension plan through a combination of an annuity contract purchase with a third-party insurance provider and lump sum payouts. These payments were made using plan assets. In conjunction with this settlement, a one-time noncash charge of
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.
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.
In the three and six months ended Dec. 31, 2023, the company has not recognized any insurance proceeds 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 incur lessening costs related to 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
Digital Capabilities and Productivity Enhancements Investment
As announced in August 2021, the company plans to invest approximately
Of the total
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 Dec. 31, 2023 | |||||||||
Percentage change versus the year-ago period | |||||||||
Health and | Household | Lifestyle | International | Total | |||||
Net sales growth / (decrease) (GAAP) | 25 % | 9 % | 21 % | 9 % | 16 % | ||||
Add: Foreign exchange | — | — | — | 22 | 4 | ||||
Add/(Subtract): Divestitures/acquisitions | — | — | — | — | — | ||||
Organic sales growth / (decrease) (non-GAAP) | 25 % | 9 % | 21 % | 31 % | 20 % | ||||
Six months ended Dec. 31, 2023 | |||||||||
Percentage change versus the year-ago period | |||||||||
Health and | Household | Lifestyle | International | Total | |||||
Net sales growth / (decrease) (GAAP) | (1) % | (7) % | (3) % | 2 % | (2) % | ||||
Add: Foreign Exchange | — | — | — | 18 | 3 | ||||
Add/(Subtract): Divestitures/Acquisitions | — | — | — | — | — | ||||
Organic sales growth / (decrease) (non-GAAP) | (1) % | (7) % | (3) % | 20 % | 1 % | ||||
(1) Total Company includes Corporate and Other. |
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 | |||||||||||||
12/31/2023 | 12/31/2022 | % Change | |||||||||||
As reported (GAAP) | $ 0.75 | $ 0.80 | (6) % | ||||||||||
Pension settlement charge (1) | 1.04 | — | |||||||||||
Cyberattack costs (2) | 0.16 | — | |||||||||||
Streamlined operating model (3) | 0.02 | 0.02 | |||||||||||
Digital capabilities and productivity | 0.19 | 0.16 | |||||||||||
As adjusted (Non-GAAP) | $ 2.16 | $ 0.98 | 120 % | ||||||||||
Diluted earnings per share | |||||||||||||
Six months ended | |||||||||||||
12/31/2023 | 12/31/2022 | % Change | |||||||||||
As reported (GAAP) | $ 0.92 | $ 1.49 | (38) % | ||||||||||
Pension settlement charge (1) | 1.04 | — | |||||||||||
Cyberattack costs (2) | 0.30 | — | |||||||||||
Streamlined operating model (3) | 0.02 | 0.14 | |||||||||||
Digital capabilities and productivity | 0.36 | 0.28 | |||||||||||
As adjusted (Non-GAAP) | $ 2.64 | $ 1.91 | 38 % | ||||||||||
(1) During the three and six months ended Dec. 31, 2023, the company incurred approximately | |||||||||||||
(2) During the three and six months ended Dec. 31, 2023, the company incurred approximately | |||||||||||||
(3) During both the three and six months ended Dec. 31, 2023, the company incurred | |||||||||||||
(4) During the three and six months ended Dec. 31, 2023, the company incurred approximately | |||||||||||||
Three months ended | Six months ended | ||||||||||||
12/31/2023 | 12/31/2022 | 12/31/2023 | 12/31/2022 | ||||||||||
External consulting fees (a) | $ 25 | $ 20 | $ 46 | $ 36 | |||||||||
IT project personnel costs (b) | 2 | 1 | 4 | 2 | |||||||||
Other (c) | 5 | 4 | 9 | 7 | |||||||||
Total | $ 32 | $ 25 | $ 59 | $ 45 | |||||||||
(a) Comprised of third-party consulting fees incurred to assist in the project management and the preliminary project stage of this transformative investment. | |||||||||||||
(b) Comprised of labor costs associated with internal IT project management teams that are utilized to oversee the new system implementations. Given the | |||||||||||||
(c) Comprised of various other expenses associated with the company's new system implementations, including company personnel dedicated to the project | |||||||||||||
Full year 2024 outlook | |||||||||||||
Diluted earnings per share | |||||||||||||
Low | High | ||||||||||||
As estimated (GAAP) | $ 3.06 | $ 3.26 | |||||||||||
Pension settlement charge | 1.04 | 1.04 | |||||||||||
Cyberattack costs (5) | 0.30 | 0.30 | |||||||||||
Streamlined operating model (6) | 0.20 | 0.20 | |||||||||||
Digital capabilities and productivity | 0.70 | 0.70 | |||||||||||
As adjusted (Non-GAAP) | $ 5.30 | $ 5.50 | |||||||||||
(5) In FY24, the company expects to incur approximately | |||||||||||||
(6) In FY24, the company expects to incur approximately | |||||||||||||
(7) In FY24, the company expects to incur approximately | |||||||||||||
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 | |||||||
Three months ended | Six months ended | ||||||
12/31/2023 | 12/31/2022 | 12/31/2023 | 12/31/2022 | ||||
Earnings (losses) before income taxes | $ 136 | $ 130 | $ 165 | $ 246 | |||
Interest income | (7) | (3) | (17) | (5) | |||
Interest expense | 26 | 23 | 47 | 45 | |||
Pension settlement charge | 171 | — | 171 | — | |||
Cyberattack costs | 25 | — | 49 | — | |||
Streamlined operating model | 3 | 4 | 3 | 23 | |||
Digital capabilities and productivity enhancements investment | 32 | 25 | 59 | 45 | |||
Adjusted EBIT | $ 386 | $ 179 | $ 477 | $ 354 | |||
Condensed Consolidated Statements of Earnings (Unaudited) | ||||||||||
Dollars in millions, except per share data | ||||||||||
Three months ended | Six months ended | |||||||||
12/31/2023 | 12/31/2022 | 12/31/2023 | 12/31/2022 | |||||||
Net sales | $ 1,990 | $ 1,715 | $ 3,376 | $ 3,455 | ||||||
Cost of products sold | 1,124 | 1,095 | 1,978 | 2,209 | ||||||
Gross profit | 866 | 620 | 1,398 | 1,246 | ||||||
Selling and administrative expenses | 322 | 282 | 598 | 543 | ||||||
Advertising costs | 186 | 156 | 351 | 317 | ||||||
Research and development costs | 32 | 33 | 61 | 65 | ||||||
Pension settlement charge | 171 | — | 171 | — | ||||||
Interest expense | 26 | 23 | 47 | 45 | ||||||
Other (income) expense, net | (7) | (4) | 5 | 30 | ||||||
Earnings before income taxes | 136 | 130 | 165 | 246 | ||||||
Income tax expense | 40 | 28 | 44 | 57 | ||||||
Net earnings | 96 | 102 | 121 | 189 | ||||||
Less: Net earnings attributable to noncontrolling interests | 3 | 3 | 6 | 5 | ||||||
Net earnings attributable to Clorox | $ 93 | $ 99 | $ 115 | $ 184 | ||||||
Net earnings per share attributable to Clorox | ||||||||||
Basic net earnings per share | $ 0.75 | $ 0.81 | $ 0.93 | $ 1.49 | ||||||
Diluted net earnings per share | $ 0.75 | $ 0.80 | $ 0.92 | $ 1.49 | ||||||
Weighted average shares outstanding (in thousands) | ||||||||||
Basic | 124,176 | 123,546 | 124,075 | 123,443 | ||||||
Diluted | 124,620 | 123,988 | 124,635 | 123,951 | ||||||
Reportable Segment Information | |||||||||||
(Unaudited) | |||||||||||
Dollars in millions | |||||||||||
Net sales | Net sales | ||||||||||
Three months ended | Six months ended | ||||||||||
12/31/2023 | 12/31/2022 | % Change(1) | 12/31/2023 | 12/31/2022 | % Change(1) | ||||||
Health and Wellness | $ 720 | $ 577 | 25 % | $ 1,224 | $ 1,234 | (1) % | |||||
Household | 502 | 462 | 9 | 827 | 885 | (7) | |||||
Lifestyle | 403 | 332 | 21 | 632 | 652 | (3) | |||||
International | 311 | 286 | 9 | 581 | 571 | 2 | |||||
Corporate and Other (2) | 54 | 58 | (7) | 112 | 113 | (1) | |||||
Total | $ 1,990 | $ 1,715 | 16 % | 3,376 | $ 3,455 | (2) % | |||||
Segment adjusted EBIT | Segment adjusted EBIT | ||||||||||
Three months ended | Six months ended | ||||||||||
12/31/2023 | 12/31/2022 | % Change(1) | 12/31/2023 | 12/31/2022 | % Change(1) | ||||||
Health and Wellness | $ 259 | $ 124 | 109 % | $ 363 | $ 257 | 41 % | |||||
Household | 92 | 44 | 109 | 88 | 66 | 33 | |||||
Lifestyle | 109 | 74 | 47 | 128 | 134 | (4) | |||||
International | 32 | 24 | 33 | 66 | 47 | 40 | |||||
Corporate and Other | (106) | (87) | 22 | (168) | (150) | 12 | |||||
Total | $ 386 | $ 179 | 116 % | 477 | $ 354 | 35 % | |||||
Interest income | 7 | 3 | 17 | 5 | |||||||
Interest expense | (26) | (23) | (47) | (45) | |||||||
Pension settlement (3) | (171) | — | (171) | — | |||||||
Cyberattack costs (4) | (25) | — | (49) | — | |||||||
Streamlined operating model (5) | (3) | (4) | (3) | (23) | |||||||
Digital capabilities and productivity enhancements | (32) | (25) | (59) | (45) | |||||||
Earnings before income taxes | $ 136 | $ 130 | 5 % | $ 165 | $ 246 | (33) % | |||||
(1) Percentages based on rounded numbers. | |||||||||||
(2) Corporate and Other includes the Vitamin, Minerals and Supplements business. | |||||||||||
(3) Represents the pension settlement charge of | |||||||||||
(4) Represents costs related to the cyberattack of | |||||||||||
(5) Represents restructuring and related costs, net for implementation of the streamlined operating model of | |||||||||||
(6) Represents expenses related to the company's digital capabilities and productivity enhancements investment of | |||||||||||
Condensed Consolidated Balance Sheets | |||||||||||
Dollars in millions | |||||||||||
12/31/2023 | 6/30/2023 | 12/31/2022 | |||||||||
(Unaudited) | (Unaudited) | ||||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | 355 | $ | 367 | $ | 168 | |||||
Receivables, net | 679 | 688 | 600 | ||||||||
Inventories, net | 655 | 696 | 741 | ||||||||
Prepaid expenses and other current assets | 115 | 77 | 113 | ||||||||
Total current assets | 1,804 | 1,828 | 1,622 | ||||||||
Property, plant and equipment, net | 1,314 | 1,345 | 1,322 | ||||||||
Operating lease right-of-use assets | 354 | 346 | 349 | ||||||||
Goodwill | 1,252 | 1,252 | 1,553 | ||||||||
Trademarks, net | 542 | 543 | 685 | ||||||||
Other intangible assets, net | 156 | 169 | 183 | ||||||||
Other assets | 486 | 462 | 331 | ||||||||
Total assets | $ | 5,908 | $ | 5,945 | $ | 6,045 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Current liabilities | |||||||||||
Notes and loans payable | $ | 247 | $ | 50 | $ | 209 | |||||
Current operating lease liabilities | 92 | 87 | 80 | ||||||||
Accounts payable and accrued liabilities | 1,649 | 1,659 | 1,589 | ||||||||
Income Taxes Payable | 34 | 121 | — | ||||||||
Total current liabilities | 2,022 | 1,917 | 1,878 | ||||||||
Long-term debt | 2,479 | 2,477 | 2,476 | ||||||||
Long-term operating lease liabilities | 311 | 310 | 318 | ||||||||
Other liabilities | 852 | 825 | 826 | ||||||||
Deferred income taxes | 26 | 28 | 56 | ||||||||
Total liabilities | 5,690 | 5,557 | 5,554 | ||||||||
Commitments and contingencies | |||||||||||
Stockholders' equity | |||||||||||
Preferred stock | — | — | — | ||||||||
Common stock | 131 | 131 | 131 | ||||||||
Additional paid-in capital | 1,245 | 1,245 | 1,207 | ||||||||
Retained earnings | 241 | 583 | 782 | ||||||||
Treasury stock | (1,205) | (1,246) | (1,297) | ||||||||
Accumulated other comprehensive net (loss) income | (359) | (493) | (502) | ||||||||
Total Clorox stockholders' equity | 53 | 220 | 321 | ||||||||
Noncontrolling interests | 165 | 168 | 170 | ||||||||
Total stockholders' equity | 218 | 388 | 491 | ||||||||
Total liabilities and stockholders' equity | $ | 5,908 | $ | 5,945 | $ | 6,045 | |||||
CLX-F
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SOURCE The Clorox Company
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