Clorox Reports Solid Sales and Margin Growth in First Quarter;

Clorox Reports Solid Sales and Margin Growth in First Quarter;
Confirms Fiscal Year 2013 Outlook 
OAKLAND, CA -- (Marketwire) -- 10/31/12 --  The Clorox Company (NYSE:
CLX) today reported 3 percent sales growth and a 110 basis-point
increase in gross margin for the quarter, which ended Sept. 30.  
"We're off to a good start in the fiscal year," said Chairman and CEO
Don Knauss. "We delivered sales growth in both our U.S. and
International businesses. We also saw strong margin improvement in
the quarter, which is a particular focus for the company, even as we
continue to invest in systems and facilities infrastructure."  
Some results in this press release are reported on a non-GAAP basis.
See "Non-GAAP Financial Information" below and the tables toward the
end of this press release for more information and a reconciliation
of key first-quarter results. 
Fiscal First-Quarter Results
 Following is a summary of key
first-quarter results. All comparisons are with the first quarter of
fiscal year 2012, unless otherwise stated.
 * $1.01 diluted earnings
per share (3 percent growth)
 * 1% volume decrease
 * 3% sales growth 
Clorox reported first-quarter earnings of $133 million, or $1.01
diluted earnings per share (EPS). This compares with $130 million, or
98 cents diluted EPS, in the year-ago quarter. Current-quarter
results reflect higher sales and gross margin expansion, partially
offset by higher selling and administration expenses, including
continued investments in the company's information technology (IT)
systems.  
Volume for the first quarter of fiscal year 2013 decreased 1 percent,
as price increases impacted shipments. Sales growth outpaced volume
primarily due to the benefit of price increases, partially offset by
unfavorable foreign exchange.  
Gross margin increased 110 basis points to 42.9 percent from 41.8
percent in the year-ago quarter. The increase in gross margin was
driven primarily by strong cost savings and the benefit of price
increases, partially offset by inflation impacting manufacturing and
logistics costs, as well as other supply chain costs. 
"We are very pleased that we delivered margin improvement in the
quarter," said Senior Vice President and Chief Financial Officer
Steve Robb. "We've taken the right steps to rebuild our margin,
including well-executed price increases across our portfolio and a
strong focus on cost savings, a company hallmark."  
The effective tax rate of 31.6 percent for the current quarter was
higher versus the year-ago quarter, but lower than anticipated,
reflecting the benefit of a recent international tax settlement.
Clorox anticipates the tax rate for the full year to be between 33
percent and 34 percent. 
Net cash provided by operations increased to $208 million from $131
million in the year-ago quarter. The year-over-year increase was due
primarily to favorable changes in working capital. For the full
fiscal year, Clorox anticipates free cash flow of about 9 percent to
10 percent of sales. The company defines free cash flow as cash
provided by operations less capital expenditures. In September, the
company issued $600 million of 10-year senior notes, temporarily
increasing its cash balance prior to the mid-October repayment of
other maturing long-term debt of $350 million. The company's cash
balance is expected to return to a more normalized level by Dec. 31. 
Key Segment Results
 Following is a summary of key first-quarter
results by reportable segment. All comparisons are with the first
quarter of fiscal 2012, unless otherwise stated. 
Cleaning
 (Laundry,
Home Care, Professional Products) 


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

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


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

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


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

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


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

  
Volume declined in the segment largely due to the exit of nonstrategic
export businesses. Base business in Latin America grew both volume
and sales, while Canada volume and sales declined slightly. Segment
sales increased primarily due to price increases, partially offset by
unfavorable foreign exchange. The pretax earnings decline of $12
million was due to the inflationary impact on manufacturing and
logistics costs, unfavorable foreign exchange and expenses associated
with IT systems implementation in Latin America. 
Clorox Confirms Fiscal 2013 Financial Outlook
 Clorox confirmed its
previous financial outlook for fiscal 2013:
 * 2-4 percent sales
growth
 * EBIT margin up 25-50 basis points
 * Diluted EPS in the
range of $4.20-$4.35 
Clorox continues to anticipate sales growth for fiscal 2013 in the
range of 2 percent to 4 percent. This reflects continued category
growth and product innovation across many of the company's brands.
Uncertainty in some international markets, the negative impact of
declining foreign currencies and a more challenging comparison to
strong fiscal 2012 sales growth continue to be influencing factors in
the company's fiscal 2013 outlook. 
The company continues to expect earnings before interest and taxes
(EBIT) margin(1) to increase by 25-50 basis points for the fiscal
year, reflecting strong cost savings, the benefit of price increases
and commodity costs estimated to be about flat versus the prior year.
This range also anticipates the impact of declining foreign
currencies. 
Clorox continues to expect spending against its systems and
facilities investments, as well as infrastructure-related
investments, to be about equal to fiscal 2012, or in the range of $50
million to $55 million.  
Net of all these factors, Clorox continues to anticipate fiscal 2013
diluted EPS in the range of $4.20 to $4.35. 
(1) EBIT as a percent of net sales 
For More Detailed Financial Information
 Visit the Investors:
Financial Reporting: Financial Results section of the company's
website at TheCloroxCompany.com for the following:
 * Supplemental
volume and sales growth information
 * Supplemental gross margin
driver information
 * Reconciliation of certain non-GAAP financial
information, including earnings before interest and taxes (EBIT) and
earnings before interest, taxes, depreciation and amortization
(EBITDA)
 * Supplemental balance sheet and cash flow information
 *
Supplemental price-change information 
Note: Percentage and basis-point changes noted in this press release
are calculated based on rounded numbers. Supplemental materials are
available in the Investors: Financial Reporting: Financial Results
section of the company's website at TheCloroxCompany.com. 
Webcast Postponed to Friday, Nov. 2 
 In light of Hurricane Sandy,
Clorox has moved its first-quarter earnings webcast to Friday, Nov.
2, at 10:30 a.m. Pacific time (1:30 p.m. Eastern time). The webcast
can be accessed at http://investors.thecloroxcompany.com. Following a
live discussion, a replay of the webcast will be archived for one
week on the company's website. 
The Clorox Company
 The Clorox Company is a leading manufacturer and
marketer of consumer and professional products with approximately
8,400 employees and fiscal year 2012 revenues of $5.5 billion. Clorox
markets some of the most trusted and recognized brand names,
including its namesake bleach and cleaning products, Clorox
Healthcare(TM), HealthLink(R), Aplicare(R) and Dispatch(R) products,
Green Works(R) naturally derived home care products, Pine-Sol(R)
cleaners, Poett(R) home care products, Fresh Step(R) cat litter,
Glad(R) bags, wraps and containers, Kingsford(R) charcoal, Hidden
Valley(R) and KC Masterpiece(R) dressings and sauces, Brita(R)
water-filtration products, and Burt's Bees(R) and gud(R) natural
personal care products. Nearly 90 percent of the company's brands
hold the No. 1 or No. 2 market share positions in their categories.
The company's products are manufactured in more than two dozen
countries and marketed in more than 100 countries. Clorox is
committed to making a positive difference in the communities where
its employees work and live. Founded in 1980, The Clorox Company
Foundation has awarded cash grants totaling more than $87 million to
nonprofit organizations, schools and colleges. In fiscal year 2012
alone, the foundation awarded $3.5 million in cash grants, and Clorox
made product donations valued at $15 million. For more information
about Clorox, visit TheCloroxCompany.com. 
Forward-Looking Statements
 This press release contains
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended (the Securities Act), and Section
21E of the Securities Exchange Act of 1934, as amended (the Exchange
Act), and such forward-looking statements involve risks and
uncertainties. Except for historical information, matters discussed
above, including statements about future volume, sales, costs, cost
savings, earnings, cash flows, plans, objectives, expectations,
growth, or profitability, are forward-looking statements based on
management's estimates, assumptions and projections. Words such as
"will," "could," "may," "expects," "anticipates," "targets," "goals,"
"projects," "intends," "plans," "believes," "seeks," "estimates," and
variations on such words, and similar expressions, are intended to
identify such forward-looking statements. These forward-looking
statements are only predictions, subject to risks and uncertainties,
and actual results could differ materially from those discussed
above. Important factors that could affect performance and cause
results to differ materially from management's expectations are
described in the sections entitled "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the Annual Report on Form 10-K for the fiscal year
ended June 30, 2012, as updated from time to time in the company's
SEC filings. These factors include, but are not limited to: the
company's costs, including volatility and increases in commodity
costs such as resin, diesel, chlor-alkali, sodium hypochlorite,
high-strength bleach, agricultural commodities and other raw
materials; increases in energy costs; the ability of the company to
implement and generate expected savings from its programs to reduce
costs, including its supply chain restructuring and other
restructuring plans; supply disruptions or any future supply
constraints that may affect key commodities or product inputs; risks
inherent in relationships with suppliers, including sole-source or
single-source suppliers; risks related to the handling and/or
transportation of hazardous substances, including, but not limited
to, chlorine; the success of the company's strategies; the ability to
manage and realize the benefits of joint ventures and other
cooperative relationships, including the company's joint venture
regarding the company's Glad(R) plastic bags, wraps and containers
business, and the agreements relating to the provision of information
technology, procure to pay and other key services by third parties;
risks relating to acquisitions, mergers and divestitures, and the
costs associated therewith; risks inherent in maintaining an
effective system of internal controls, including the potential impact
of acquisitions or the use of third-party service providers, and the
need to refine controls to adjust for accounting, financial reporting
and other organizational changes or business conditions; the ability
of the company to successfully manage tax, regulatory, product
liability, intellectual property, environmental and other legal
matters, including the risk resulting from joint and several
liability for environmental contingencies and risks inherent in
litigation, including class action litigation and International
litigation; risks related to maintaining and updating the company's
information systems, including potential disruptions, costs and the
ability of the company to implement adequate information systems in
order to support the current business and to support the company's
potential growth; the ability of the company to develop commercially
successful products that delight the consumer; consumer and customer
reaction to price changes; actions by competitors; risks related to
customer concentration; customer-specific ordering patterns and
trends; risks arising out of natural disasters; the impact of disease
outbreaks, epidemics or pandemics on the company's, suppliers' or
customers' operations; changes in the company's tax rate; unfavorable
worldwide, regional or local general economic and marketplace
conditions and events, including consumer confidence and consumer
spending levels, the rate of economic growth, the rate of inflation
or deflation, and the financial condition of the company's customers,
suppliers and service providers; foreign currency exchange rate
fluctuations and other risks of international operations, including
government-imposed price controls; unfavorable political conditions
in the countries where the company does business and other
operational risks in such countries; the impact of the volatility of
the debt and equity markets on the company's cost of borrowing, cost
of capital and access to funds, including commercial paper and its
credit facility; risks relating to changes in the company's capital
structure, including risks related to the company's ability to
implement share repurchase plans and the impact thereof on the
company's capital structure and earnings per share; the impact of any
unanticipated restructuring or asset-impairment charges and the
ability of the company to successfully implement restructuring plans;
risks arising from declines in cash flow, whether resulting from
declining sales, higher cost levels, tax payments, debt payments,
share repurchases, higher capital spending, interest cost increases
greater than management's expectations, interest rate fluctuations,
increases in debt or changes in credit ratings, or otherwise; the
costs and availability of shipping and transport services; potential
costs in the event of stockholder activism; and the company's ability
to maintain its business reputation and the reputation of its brands. 
The company's forward-looking statements in this press release are
based on management's current views and assumptions regarding future
events and speak only as of their dates. The company undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise, except as required by the federal securities laws.  
Non-GAAP Financial Information
 This press release contains non-GAAP
financial information relating to sales growth, gross margin and
diluted EPS. The company has included reconciliations of this
information to the most directly comparable financial measure
calculated in accordance with generally accepted accounting
principles in the U.S. (GAAP). See the end of this press release for
the reconciliations of sales growth, gross margin and diluted EPS. 
The company has disclosed information related to sales growth, gross
margin and diluted EPS on a non-GAAP basis to supplement its
condensed consolidated statements of earnings presented in accordance
with GAAP. These non-GAAP financial measures exclude certain items
that are included in the company's results reported in accordance
with GAAP, including charges associated with simplification of the
company's supply chain and other restructuring-related charges and
the impact of foreign exchange and foreign currency exchange
transactions and acquisitions. 
Management believes that these non-GAAP financial measures provide
useful additional information to investors about current trends in
the company's operations and are useful for period-over-period
comparisons. These non-GAAP financial measures should not be
considered in isolation or as a substitute for the comparable GAAP
measures. In addition, these non-GAAP measures may not be the same as
similar measures provided by other companies due to potential
differences in methods of calculation and items being excluded. They
should only be read in connection with the company's condensed
consolidated statements of earnings presented in accordance with
GAAP. 
See Below for These Unaudited First-Quarter Results: 


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

 
                                                                            
                                                                            
Condensed Consolidated Statements of Earnings (Unaudited)                   
Dollars in millions, except per share amounts                               
                                                                            
                                                                            
                                                        Three Months Ended  
                                                      --------------------- 
                                                       9/30/2012  9/30/2011 
                                                      ---------- ---------- 
                                                                            
Net sales                                             $    1,338 $    1,305 
Cost of products sold                                        764        759 
                                                      ---------- ---------- 
Gross profit                                                 574        546 
                                                                            
Selling and administrative expenses                          195        190 
Advertising costs                                            122        118 
Research and development costs                                30         28 
Interest expense                                              33         29 
Other income, net                                              -         (6)
                                                      ---------- ---------- 
Earnings before income taxes                                 194        187 
Income taxes                                                  61         57 
                                                      ---------- ---------- 
Net earnings                                          $      133 $      130 
                                                      ========== ========== 
                                                                            
Net earnings per share                                                      
  Basic                                                                     
  Diluted                                             $     1.02 $     0.99 
                                                            1.01       0.98 
Weighted average shares outstanding (in thousands)                          
  Basic                                                  130,268    131,968 
  Diluted                                                131,702    133,611 
                                                                            
                                                                            
Reportable Segment Information                                              
(Unaudited)                                                                 
Dollars in millions                                                         
                                                                            
                                                                            
                                                                            
                                                                            
First Quarter                                   Earnings (Losses) Before    
                         Net Sales                    Income Taxes          
-------------- ----------------------------  ------------------------------ 
                Three Months Ended            Three Months Ended            
               -------------------           --------------------           
                                   % Change                        % Change 
               9/30/2012 9/30/2011    (1)    9/30/2012  9/30/2011     (1)   
               --------- --------- --------  ---------  ---------  -------- 
                                                                            
Cleaning                                                                    
 Segment       $     472 $     439        8% $     120  $     108        11%
                                                                            
Household                                                                   
 Segment             355       366       -3%        50         42        19%
                                                                            
Lifestyle                                                                   
 Segment             208       206        1%        56         55         2%
                                                                            
International                                                               
 Segment(2)          303       294        3%        28         40       -30%
                                                                            
Corporate              -         -        -        (60)       (58)        3%
               --------- --------- --------  ---------  ---------  -------- 
                                                                            
Total Company  $   1,338 $   1,305        3% $     194  $     187         4%
               ========= ========= ========  =========  =========  ======== 
                                                                            
                                                                            
                                                                            
(1) Percentages based on rounded numbers.                                   
(2) The International segment includes Natural Personal Care results outside
    the U.S. for all periods presented.                                     
                                                                            
                                                                            
Condensed Consolidated Balance Sheets                                       
Dollars in millions                                                         
                                                                            
                                                                            
                                     9/30/2012     6/30/2012     9/30/2011  
                                   ------------  ------------  ------------ 
                                    (Unaudited)                 (Unaudited) 
                                                                            
ASSETS                                                                      
Current assets                                                              
  Cash and cash equivalents        $        667  $        267  $        270 
  Receivables, net                          503           576           439 
  Inventories, net                          421           384           407 
  Other current assets                      154           149           122 
                                   ------------  ------------  ------------ 
    Total current assets                  1,745         1,376         1,238 
                                                                            
Property, plant and equipment, net        1,098         1,081         1,028 
Goodwill                                  1,123         1,112         1,053 
Trademarks, net                             556           556           547 
Other intangible assets, net                 83            86            79 
Other assets                                142           144           132 
                                   ------------  ------------  ------------ 
Total assets                       $      4,747  $      4,355  $      4,077 
                                   ============  ============  ============ 
                                                                            
LIABILITIES AND STOCKHOLDERS'                                               
 DEFICIT                                                                    
Current liabilities                                                         
  Notes and loans payable          $          2  $        300  $        440 
  Current maturities of long-term                                           
   debt                                     850           850             - 
  Accounts payable                          388           412           357 
  Accrued liabilities                       458           494           434 
  Income taxes payable                       27             5            37 
                                   ------------  ------------  ------------ 
  Total current liabilities               1,725         2,061         1,268 
  Long-term debt                          2,169         1,571         2,122 
  Other liabilities                         738           739           626 
  Deferred income taxes                     135           119           137 
                                   ------------  ------------  ------------ 
    Total liabilities                     4,767         4,490         4,153 
                                   ------------  ------------  ------------ 
                                                                            
Contingencies                                                               
                                                                            
Stockholders' deficit                                                       
Preferred stock                               -             -             - 
Common stock                                159           159           159 
Additional paid-in capital                  631           633           611 
Retained earnings                         1,395         1,350         1,185 
Treasury shares                          (1,836)       (1,881)       (1,717)
Accumulated other comprehensive                                             
 net losses                                (369)         (396)         (314)
                                   ------------  ------------  ------------ 
Stockholders' deficit                       (20)         (135)          (76)
                                   ------------  ------------  ------------ 
Total liabilities and                                                       
 stockholders' deficit             $      4,747  $      4,355  $      4,077 
                                   ============  ============  ============ 

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


 
                                                                            
                                                                            
Sales Growth Reconciliation                                                 
                                                                            
                                                       Q1 Fiscal  Q1 Fiscal 
                                                          2013       2012   
                                                       ---------  --------- 
                                                                            
Base sales growth - non-GAAP                                 1.8%       2.4%
                                                                            
Foreign exchange                                            -0.8        0.7 
Acquisitions                                                 1.5         -- 
                                                       ---------  --------- 
                                                                            
Total sales growth - GAAP                                    2.5%       3.1%
                                                       =========  ========= 
                                                                            
                                                                            
                                                                            
Gross Margin Reconciliation                                                 
                                                                            
Q1 fiscal year 2012 gross              Q1 fiscal 2011 year gross            
 margin - GAAP                  41.8%  margin - GAAP                   44.3%
                                                                            
Commodities(1)                  -0.1   Commodities(1)                  -3.2 
Cost savings                     1.7   Cost savings                     1.6 
Pricing                          1.6   Pricing                          1.7 
Logistics and manufacturing(1)  -0.7   Logistics and manufacturing(1)  -2.2 
Other(2)                        -1.4   Other                           -0.2 
                                ----                                   ---- 
                                                                            
Q1 fiscal year 2013 gross              Q1 fiscal year 2012 gross            
 margin before impact of               margin before impact of              
 charges - non-GAAP             42.9   charges - non-GAAP              42.0 
                                ----                                   ---- 
                                                                            
Restructuring-related charges    0.0   Restructuring-related charges   -0.2 
                                ----                                   ---- 
                                                                            
Q1 fiscal year 2013 gross              Q1 fiscal year 2012 gross            
 margin - GAAP                  42.9%  margin -GAAP                    41.8%
                                ====                                   ==== 
                                                                            
                                                                            
                                                                            
(1) Commodities in FY13 include the change in the cost of diesel fuel. In   
    FY12, the change in the cost of diesel fuel is included in logistics and
    manufacturing.                                                          
(2) Other in Q1 FY13 includes -60 bps each for both other supply chain costs
    and product mix.                                                        
                                                                            
                                                                            
                                                                            
Diluted EPS Reconciliation                                                  
                                                                            
                                                        Q1 Fiscal  Q1 Fiscal
                                                          2013       2012   
                                                       ---------- ----------
                                                                            
Diluted EPS - non-GAAP                                 $     1.04 $     1.01
                                                                            
Foreign exchange impact                                     -0.03       0.01
Restructuring and restructuring-related charges              0.00      -0.04
                                                       ---------- ----------
                                                                            
Diluted EPS - GAAP                                     $     1.01 $     0.98
                                                       ========== ==========

  
Media Relations
Aileen Zerrudo
(510) 271-3075
aileen.zerrudo@clorox.com 
Kathryn Caulfield
(510) 271-7209
kathryn.caulfield@clorox.com 
Investor Relations
Lisah Burhan
(510) 271-3269
lisah.burhan@clorox.com 
Steve Austenfeld
(510) 271-2270
steve.austenfeld@clorox.com 
For recent presentations made by company management and other investor 
materials, visit http://investors.thecloroxcompany.com/events.cfm.