Clorox Reports Strong Q2 Sales and Profit Growth; Provides Improved Fiscal Year 2013 Outlook

Clorox Reports Strong Q2 Sales and Profit Growth; Provides Improved Fiscal Year 
2013 Outlook 
OAKLAND, CA -- (Marketwire) -- 02/04/13 --  The Clorox Company (NYSE:
CLX) today announced strong results for its second quarter, which
ended Dec. 31, 2012. The company reported a 9 percent increase in
sales and 18 percent growth in diluted earnings per share (EPS).
Clorox also delivered one percentage point of gross margin
"I'm extremely pleased with our second-quarter results," said
Chairman and CEO Don Knauss. "We had strong year-over-year sales
growth, as well as another quarter of gross margin expansion, which
is a testament to our focus on delivering profitable growth. Based on
our 5 percent sales growth and 10 percent EPS growth in the first
half of the fiscal year, we feel more optimistic about our full-year
Some information in this press release is 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 second-quarter results. 
Fiscal Second-Quarter Results
 Following is a summary of key
second-quarter results. All comparisons are with the second quarter
of fiscal year 2012, unless otherwise stated. 
* 93 cents dilute
d earnings per share (18 percent growth)
 * 5%
volume growth
 * 9% sales growth 
Clorox reported second-quarter earnings of $123 million, or 93 cents
diluted EPS. This compares with $105 million, or 79 cents diluted
EPS, in the year-ago quarter. Current-quarter results reflect higher
sales and volume, as well as gross margin expansion, partially offset
by higher selling and administration expenses, including continued
investments in the company's information technology (IT) systems;
higher manufacturing and logistics costs, which include the impact of
inflationary pressures; and a higher tax rate versus the year-ago
quarter. In December, Clorox completed a sale and leaseback
transaction of its Oakland, Calif. general office. The company
realized net cash proceeds of $108 million and recognized a gain of
$6 million, or 3 cents diluted EPS, in the second quarter related to
the sale and leaseback transaction.  
Volume for the second quarter of fiscal 2013 increased 5 percent.
Sales grew 9 percent, with increases in all four of the company's
reportable segments. The difference between sales and volume growth
was mostly due to the benefit of price increases. Sales benefited
from an extra shipping day in the quarter and acquisitions made in
the last fiscal year, each contributing about 1.5 percentage points
of growth. Excluding these items, sales grew about 5 percent. Sales
also benefited from shipments to reset retail shelves with the new
concentrated bleach product, as well as shipments of disinfecting
products due to cold- and flu-related early third-quarter
merchandising events. 
Gross margin increased 100 basis points to 42.5 percent from 41.5
percent in the year-ago quarter, driven primarily by strong cost
savings and the benefit of price increases, partially offset by
higher manufacturing and logistics costs, which include the impact of
inflationary pressures. 
Year-to-date net cash provided by operations increased to $325
million from $168 million in the prior-year period. The
year-over-year increase was due primarily to favorable changes in
working capital and higher earnings. For the full fiscal year, Clorox
anticipates free cash flow of 9 percent to 10 percent of sales. The
company defines free cash flow as cash provided by operations less
capital expenditures. Capital expenditures are expected to be in the
range of $200 million to $210 million for the current fiscal year.
Following the December sale and leaseback transaction related to the
company's general office in Oakland, Clorox ended the quarter with an
elevated cash balance. Cash and the issuance of commercial paper will
be used to refinance $500 million in long-term debt maturing in March
Key Segment Results
 Following is a summary of key second-quarter
results by reportable segment. All comparisons are with the second
quarter of fiscal 2012, unless otherwise stated. 
Home Care, Professional Products)  

--  13% volume increase
--  15% sales increase
--  28% pretax earnings increase

Volume growth in the segment was up double-digits, with strong results
in all three business units. Home Care delivered gains on almost
every brand, with the biggest contribution from Clorox(R)
disinfecting wipes. Due to the severity of this year's flu season,
the Home Care business saw strong retailer buy-in and significant
consumption of disinfecting wipes, as well as other Clorox-branded
cleaning products. Laundry volume increased driven by retailer shelf
resets and strong consumer acceptance of new concentrated Clorox(R)
regular bleach. Gains on bleach were partially offset by lower
shipments of Clorox 2(R) stain fighter and color booster due to
continued weak category trends. Also contributing to the segment's
results were strong double-digit volume increases in the Professional
Division behind the benefit of acquisitions made in fiscal
2012, as well as double-digit base business growth. Sales outpaced
volume due to the benefit of price increases. Pretax earnings growth
was driven by higher sales and margin expansion primarily from strong
cost savings and favorable commodity costs, partially offset by
higher manufacturing and logistics costs. 
 (Bags and
Wraps, Charcoal, Cat Litter) 

--  1% volume increase
--  7% sales increase
--  65% pretax earnings increase

The segment's volume growth was driven primarily by an increase in
early shipments in the Charcoal business ahead of the upcoming
grilling season. Cat Litter volume was flat primarily due to the
negative volume impact of last May's price increases. Glad(R) sales
were up, but volume was down primarily driven by decreased shipments
in base trash bags and food bags. Volume declines were partially
offset by continued strong growth in premium trash bag products such
as Glad(R) OdorShield(R) trash bags with Febreze(R). Segment sales
growth outpaced volume growth primarily due to the benefit of
previous price increases across all three businesses, as well as
favorable product mix. Pretax earnings growth was driven largely by
higher sales and margin expansion primarily from strong cost savings
of more than $9 million and favorable product mix.  
(Dressings and Sauces, Water Filtration, Natural Personal Care) 

--  7% volume increase
--  8% sales increase
--  1% pretax earnings increase

Volume growth in the segment was driven by double-digit shipment gains
in the Burt's Bees business, reflecting base business growth, new
product innovation in lip care and increased shipments of face
products during the holiday season. The Food business also saw strong
volume growth primarily from higher shipments of Hidden Valley(R)
products due to strong base business growth and the launch of new
non-ranch dressings. Volume declined in the Water Filtration business
due to category softness. Segment sales outpaced volume due to
previous price increases. Pretax earnings growth reflected higher
sales and strong cost savings, offset by higher selling and
administrative expenses, unfavorable product mix and higher
advertising investments. 
 (All countries outside of the U.S.) 

--  3% volume decrease
--  3% sales increase
--  24% pretax earnings decrease

Volume declined in the segment largely due to decreased shipments in
Latin America and Canada. Latin America volume was down mid-single
digits, but sales were up due to the benefit of price increases.
Outside of Latin America and Canada, volume results were generally
positive. Overall segment sales increased primarily due to the
benefit of price increases. The 24 percent pre-tax earnings decline
of $8 million was due to margin compression, driven in part by
significant inflation impacting manufacturing and logistics costs,
expenses associated with IT systems implementation in Latin America
and the impact of price controls in Venezuela and Argentina.  
Clorox Provides Improved 2013 Financial Outlook
 Clorox provided an
improved financial outlook for fiscal 2013: 
* 3-5 percent sales growth (previously 2-4 percent)
 * EBIT margin up
25-50 basis points (unchanged)
 * Diluted EPS in the range of
$4.25-$4.35 (previously $4.20-$4.35) 
Clorox now anticipates sales growth for fiscal 2013 in the range of 3
percent to 5 percent, versus the company's previous outlook of 2
percent to 4 percent. This reflects strong results in the first half
of the fiscal year, continued category growth, product innovation
across many of the company's brands and the benefit of previously
implemented prices increases. Uncertainty in some international
markets, particularly in Venezuela and Argentina, as well as a more
challenging comparison to strong sales growth of nearly 6 percent in
the second half of fiscal 2012, continue to be factors in the
company's fiscal 2013 outlook. 
The company continues to expect earnings before interest and taxes
(EBIT) margin to increase by 25-50 basis points for the fiscal year,
reflecting strong cost savings and the benefit of price increases.
Commodity costs are estimated to be about flat versus the prior year.
The company's outlook reflects a range of 5 to 10 cents of diluted
EPS impact related to a possible currency devaluation in Venezuela
and continued difficulty in implementing price increases in the
country. The updated outlook also reflects higher advertising
spending and a higher tax rate in the second half of the fiscal year
versus the same period in fiscal 2012.  
Clorox continues to expect spending against its systems and
facilities investments, as well as other 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 now anticipates fiscal 2013 diluted
EPS in the range of $4.25 to $4.35 versus the company's previous
outlook of $4.20 to $4.35. 
"We're pleased to be raising our outlook for sales and earnings,
recognizing the company's strong first-half results, including
significant margin growth," said Senior Vice President - Chief
Financial Officer Steve Robb. "I'm confident about the plans for the
remainder of the year, including increased investments in
demand-building programs to support product launches and the health
of our brands. In addition, our outlook includes an increased
contingency given the ongoing challenges in Venezuela, including a
possible currency devaluation." 
For More Detailed Financial Information 
Visit the Investors: Financial Reporting: Financial Results section
of the company's website at 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, cash flow
information and fiscal year-to-date free cash flow reconciliation
Supplemental price-change information 
ote: 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 
The Clorox Company
 The Clorox Company is a leading multinational
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 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. Clorox's commitment
to corporate responsibility includes making a positive difference in
its communities. In fiscal year 2012, The Clorox Company Foundation
awarded $3.5 million in cash grants, and Clorox made product
donations valued at $15 million. For more information, visit 
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 pat
terns and
trends; risks arising out of natural disasters; the impact of disease
outbreaks, 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,
declining product categories, 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 free cash flow, EBIT margin and
sales growth. The company has included reconciliations of non-GAAP
financial information related to sales growth and EBIT margin 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 these reconciliations. 
The company has disclosed information related to free cash flow, EBIT
margin and sales growth 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 interest income, interest expense, the impact of
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. Management uses free cash flow to help assess the cash
generation ability of the business and funds available for investing
activities, such as acquisitions, investing in the business to drive
growth, and financing activities, including debt payments, dividend
payments and share repurchases. Free cash flow does not represent
cash available only for discretionary expenditures, since the Company
has mandatory debt service requirements and other contractual and
non-discretionary expenditures. 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 Second-Quarter Results: 

--  Condensed Consolidated Statements of Earnings, Reportable Segment
    Information and Condensed Consolidated Balance Sheets
--  Reconciliation of Second-Quarter 2013 Sales Growth and Fiscal Year
    2012 EBIT margin

For recent presentations made by company management and other investor
materials, visit 

Condensed Consolidated Statements of Earnings (Unaudited)                   
Dollars in millions, except share and per share amounts                     
                               Three Months Ended       Six Months Ended    
                            ----------------------- ----------------------- 
                             12/31/2012  12/31/2011  12/31/2012  12/31/2011 
                            ----------- ----------- ----------- ----------- 
Net sales                   $     1,325 $     1,221 $     2,663 $     2,526 
Cost of products sold               762         714       1,526       1,473 
                            ----------- ----------- ----------- ----------- 
Gross profit                        563         507       1,137       1,053 
Selling and administrative                                                  
 expenses                           204         184         399         374 
Advertising costs                   116         115         238         233 
Research and de
 costs                               31          29          61          57 
Interest expense                     33          30          66          59 
Other income, net                    (9)         (6)         (9)        (12)
                            ----------- ----------- ----------- ----------- 
Earnings before income taxes        188         155         382         342 
Income taxes                         65          50         126         107 
                            ----------- ----------- ----------- ----------- 
Net earnings                $       123 $       105 $       256 $       235 
                            =========== =========== =========== =========== 
Earnings per share                                                          
  Basic                     $      0.94 $      0.79 $      1.96 $      1.78 
  Diluted                          0.93        0.79        1.94        1.76 
Weighted average shares                                                     
 outstanding (in thousands)                                                 
  Basic                         130,991     131,112     130,630     131,540 
  Diluted                       132,444     132,358     132,120     133,022 
Reportable Segment Information                                              
Dollars in millions                                                         
                                                 Earnings (Losses) Before   
Second Quarter             Net Sales                   Income Taxes         
                 ----------------------------  ---------------------------- 
                   Three Months Ended            Three Months Ended         
                 ---------------------         ---------------------        
                                          %                             %   
                                       Change                        Change 
                  12/31/12   12/31/11    (1)    12/31/12   12/31/11    (1)  
                 ---------- ---------- ------  ---------- ---------- ------ 
Cleaning Segment $      425 $      370     15% $      100 $       78     28%
Household Segment       357        334      7%         56         34     65%
Lifestyle Segment       237        219      8%         70         69      1%
 Segment                306        298      3%         25         33    -24%
Corporate                 -          -      -         (63)       (59)     7%
                 ---------- ---------- ------  ---------- ---------- ------ 
Total Company    $    1,325 $    1,221      9% $      188 $      155     21%
                 ========== ========== ======  ========== ========== ====== 
Year-to-Date                                      Earnings (Losses) Before  
                           Net Sales                    Income Taxes        
                 ----------------------------  ---------------------------- 
                    Six Months Ended              Six Months Ended          
                 ---------------------         ---------------------        
                                          %                             %   
                                       Change                        Change 
                   12/31/12   12/31/11   (1)     12/31/12   12/31/11   (1)  
                 ---------- ---------- ------  ---------- ---------- ------ 
Cleaning Segment $      897 $      809     11% $      220 $      186     18%
Household Segment       712        700      2%        106         76     39%
Lifestyle Segment       445        425      5%        126        124      2%
 Segment                609        592      3%         53         73    -27%
Corporate                 -          -      -        (123)      (117)     5%
                 ---------- ---------- ------  ---------- ---------- ------ 
Total Company    $    2,663 $    2,526      5% $      382 $      342     12%
                 ========== ========== ======  ========== ========== ====== 
(1) Percentages based on rounded numbers.
Condensed Consolidated Balance Sheets                                       
Dollars in millions                                                         
                                         12/31/2012  6/30/2012   12/31/2011 
                                        ----------- ----------- ----------- 
                                        (Unaudited)             (Unaudited) 
Current assets                                                              
  Cash and cash equivalents             $       445 $       267 $       297 
  Receivables, net                              511         576         489 
  Inventories, net                              444         384         451 
  Other current assets                          152         149         111 
                                        ----------- ----------- ----------- 
    Total current assets                      1,552       1,376       1,348 
Property, plant and equipment, net            1,051       1,081       1,041 
Goodwill                                      1,119       1,112       1,093 
Trademarks, net                                 556         556         566 
Other intangible assets, net                     79          86         103 
Other assets                                    145         144         139 
                                        ----------- ----------- ----------- 
Total assets                            $     4,502 $     4,355 $     4,290 
                                        =========== =========== =========== 
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
Current liabilities                                                         
  Notes and loans payable               $         5 $       300 $       476 
  Current maturities of long-term debt          500         850         350 
  Accounts payable                              365         412         345 
  Accrued liabilities                           493         494         438 
  Income taxes payable                           10           5          28 
                                        ----------- ----------- ----------- 
    Total current liabilities                 1,373       2,061       1,637 
Long-term debt                                2,169       1,571       2,070 
Other liabilities                               788         739         641 
Deferred income taxes                           116         119         141 
                                        ----------- ----------- ----------- 
    Total liabilities                         4,446       4,490       4,489 
                                        ----------- ----------- ----------- 
Stockholders' equity (deficit)                                              
Preferred stock                                   -           -           - 
Common stock                                    159         159         159 
Additional paid-in capital                      644         633         616 
Retained earnings                             1,430       1,350       1,210 
Treasury shares                              (1,801)     (1,881)     (1,861)
Accumulated other comprehensive net                                         
 losses                                        (376)       (396)       (323)
                                        ----------- ----------- ----------- 
Stockholders' equity (deficit)                   56        (135)       (199)
                                        ----------- ----------- ----------- 
Total liabilities and stockholders'                                         
 equity (deficit)                       $     4,502 $     4,355 $     4,290 
                                        =========== =========== =========== 

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.  
Second-Quarter Sales Growth Reconciliation  

                                                          Fiscal    Fiscal  
                                                           2013      2012   
                                                         --------  -------- 
Base sales growth - non-GAAP                                  7.1%      4.0%
Foreign exchange                                             -0.1      -0.5 
Acquisitions                                                  1.5        -- 
                                                         --------  -------- 
Total sales growth - GAAP                                     8.5%      3.5%
                                                         ========  ======== 

Fiscal Year 2012 EBIT(1) Margin Reconciliation 

Earnings from continuing operations before income taxes - GAAP     $    791 
Less: Interest income                                                    -3 
Add: Interest expense                                                   125 
EBIT (1) - non-GAAP                                                $    913 
EBIT margin(2) - non-GAAP                                              16.7%
Net Sales                                                          $  5,468 
(1) EBIT represents Earnings from Continuing Operations Before Interest and 
(2) EBIT margin is a measure of EBIT as a percentage of net sales.          

For Gross Margin Drivers, please refer to the Supplemental
Information: Gross Margin Driver page in the Financial Results
section of the company's website   
Media Relations 
Aileen Zerrudo 
(510) 271-3075  
Kathryn Caulfield
(510) 271-7209 
Investor Relations
Lisah Burhan 
(510) 271-3269 
Steve Austenfeld 
(510) 271-2270 
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