The Clorox Company | Nanjing PCR Plates Co.,Ltd

OAKLAND, Calif., Aug. 2, 2023 /PRNewswire/ -- The Clorox Company (NYSE: CLX) today reported results for the fourth quarter and fiscal year 2023, which ended June 30, 2023.

Fourth-Quarter Fiscal Year 2023 Summary

Following is a summary of key fourth-quarter results. All comparisons are with the fourth quarter of fiscal year 2022 unless otherwise stated.

"We closed out fiscal year 2023 with strong results driven by broad-based consumption across our portfolio," said CEO Linda Rendle. "Over the course of the year, we've been relentlessly focused on driving top-line growth while rebuilding margins in the midst of a challenging operating environment as we continue to advance our long-term strategy to invest in our advantaged portfolio of superior brands, advance our digital transformation, and streamline our operating model. Looking ahead to fiscal year 2024, we are committed to building on our progress and believe these actions, combined with the strength of our portfolio and the relevance of our IGNITE strategy, will enable us to drive long-term profitable growth."

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:

Key Segment Results

As of the fourth quarter of fiscal year 2023, the Health and Wellness reportable segment is composed of the Cleaning and Professional Products businesses. The Vitamins, Minerals and Supplements business, previously within Health and Wellness, is now included in Corporate and Other and reported within Total Company. Additionally, beginning this quarter management has changed its disclosed measure of segment profitability from segment pretax earnings to segment adjusted earnings (losses) before interest and income taxes (adjusted EBIT)2. To reflect those changes, net sales and adjusted EBIT for the past three fiscal years have been recast and are available in the Investors section of The Clorox Company website and in our Form 8-K filing.

The following is a summary of key fourth-quarter results by reportable segment. All comparisons are with the recast fourth quarter of fiscal year 2022, unless otherwise stated.

Health and Wellness (Cleaning; Professional Products)

Household (Bags and Wraps; Cat Litter; Grilling)

Lifestyle (Food; Natural Personal Care; Water Filtration)

International (Sales Outside the U.S.)

Fiscal Year 2023 Summary

The following is a summary of key fiscal year 2023 results. All comparisons are to fiscal year 2022.

Fiscal Year 2024 Outlook

_________________

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 fourth-quarter and fiscal year 2023 results.

At 5 p.m. ET today, the company will host a live Q&A audio webcast with Chief Executive Officer 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:

Note: Percentage and basis-point, or point, changes noted in this press release are calculated based on rounded numbers, except for per-share data and the effective tax rate.

About The Clorox Company

The Clorox Company (NYSE: CLX) champions people to be well and thrive every single day. Its trusted brands, which include Brita®, Burt's Bees®, Clorox®, Fresh Step®, Glad®, Hidden Valley®, Kingsford®, Liquid-Plumr®, Pine-Sol® and Natural Vitality®, can be found in about nine of 10 U.S. homes and internationally with brands such as Ayudin®, Clorinda®, Chux® and Poett®. Headquartered in Oakland, California, since 1913, Clorox was one of the first U.S. companies to integrate ESG into its business reporting, with commitments in three areas: Healthy Lives, Clean World and Thriving Communities. Visit thecloroxcompany.com to learn more.

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 related to the expected or potential impact of the novel coronavirus (COVID-19) pandemic, and the related responses of governments, consumers, customers, suppliers, employees and the company, on our business, operations, employees, financial condition and results of operations, and any such forward-looking statements involve risks, assumptions and uncertainties. Except for historical information, statements about future volumes, sales, organic sales growth, foreign currencies, costs, cost savings, margins, earnings, earnings per share, diluted earnings per share, foreign currency exchange rates, tax rates, cash flows, plans, objectives, expectations, growth or profitability are forward-looking statements based on management's estimates, beliefs, assumptions and projections. Words such as "could," "may," "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," "will," "predicts," and variations on such words, and similar expressions that reflect our current views with respect to future events and operational, economic and financial performance are intended to identify such forward-looking statements. These forward-looking statements are only predictions, subject to risks and uncertainties, and actual results could differ materially from those discussed. Important factors that could affect performance and cause results to differ materially from management's expectations are described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the company's Annual Report on Form 10-K for the fiscal year ended June 30, 2022, as updated from time to time in the company's Securities and Exchange Commission filings. These factors include, but are not limited to: the impact of the changing retail environment, including the growth of alternative retail channels and business models, and changing consumer preferences; volatility and increases in the costs of raw materials, energy, transportation, labor and other necessary supplies or services; the ability of the company to drive sales growth, increase prices and market share, grow its product categories and manage favorable product and geographic mix; risks related to supply chain issues, product shortages and disruptions to the business, as a result of increased supply chain dependencies due to an expanded supplier network and a reliance on certain single-source suppliers; the COVID-19 pandemic and related impacts, including on the availability of, and efficiency of the supply, manufacturing and distribution systems for, the company's products, including any significant disruption to such systems; on the demand for and sales of the company's products; and on worldwide, regional and local adverse economic conditions; intense competition in the company's markets; unfavorable general economic and political conditions beyond our control, including recent supply chain disruptions, labor shortages, wage pressures, rising inflation, 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 the conflict in Ukraine; risks related to the company's use of and reliance on information technology systems, including potential security breaches, cyber-attacks, privacy breaches or data breaches that result in the unauthorized disclosure of consumer, customer, employee or company information, or service interruptions, especially at a time when a large number of the company's employees are working remotely and accessing its technology infrastructure remotely; the ability of the company to implement and generate cost savings and efficiencies, and successfully implement its business strategies, including achieving anticipated results and cost savings from the implementation of the streamlined operating model; dependence on key customers and risks related to customer consolidation and ordering patterns; the company's ability to attract and retain key personnel, which may continue to be impacted by challenges in the labor market, such as wage inflation and sustained labor shortages; the company's ability to maintain its business reputation and the reputation of its brands and products; lower revenue, increased costs or reputational harm resulting from government actions and compliance with regulations, or any material costs imposed by changes in regulation; the ability of the company to successfully manage global political, legal, tax and regulatory risks, including changes in regulatory or administrative activity; risks related to international operations and international trade, including changing macroeconomic conditions as a result of inflation, volatile commodity prices and increases in raw and packaging materials prices, labor, energy and logistics; global economic or political instability; foreign currency fluctuations, such as devaluations, and foreign currency exchange rate controls; changes in governmental policies, including trade, travel or immigration restrictions, new or additional tariffs, and price or other controls; labor claims and civil unrest; continued high levels of inflation in Argentina; potential disruption from wars and military conflicts, including the conflict in Ukraine; impact of the United Kingdom's exit from the European Union; potential negative impact and liabilities from the use, storage and transportation of chlorine in certain international markets where chlorine is used in the production of bleach; widespread health emergencies, such as COVID-19; and the possibility of nationalization, expropriation of assets or other government action; the impact of Environmental, Social, and Governance (ESG) issues, including those related to climate change and sustainability on our sales, operating costs or reputation; the ability of the company to innovate and to develop and introduce commercially successful products, or expand into adjacent categories and countries; the impact of product liability claims, labor claims and other legal, governmental or tax proceedings, including in foreign jurisdictions and in connection with any product recalls; risks relating to acquisitions, new ventures and divestitures, and associated costs, including for asset impairment charges related to, among others, intangible assets, including trademarks and goodwill, in particular the impairment charge related to carrying value of the company's Vitamins, Minerals and Supplements business; and the ability to complete announced transactions and, if completed, integration costs and potential contingent liabilities related to those transactions; the accuracy of the company's estimates and assumptions on which its financial projections, including any sales or earnings guidance or outlook it may provide from time to time, are based; risks related to additional increases in the estimated fair value of The Procter & Gamble Company's interest in the Glad business; environmental matters, including costs associated with the remediation and monitoring of past contamination, and possible increases in costs resulting from actions by relevant regulators, and the handling and/or transportation of hazardous substances; the company's ability to effectively utilize, assert and defend its intellectual property rights, and any infringement or claimed infringement by the company of third-party intellectual property rights; the performance of strategic alliances and other business relationships; the effect of the company's indebtedness and credit rating on its business operations and financial results and the company's ability to access capital markets and other funding sources, as well as the cost of capital to the company; the company's ability to pay and declare dividends or repurchase its stock in the future; the impacts of potential stockholder activism; and risks related to any litigation associated with the exclusive forum provision in the company's bylaws.

The company's forward-looking statements in this press release are based on management's current views, beliefs, assumptions and expectations regarding future events and speak only as of the date of this press release. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by the federal securities laws.

Non-GAAP Financial Information

Vitamins, Minerals and Supplements ("VMS") Impairment

During the third quarter of fiscal year 2023, management made the decision to adjust the operating plans of the Vitamins, Minerals and Supplements (VMS) business, which represents about 3% of total company sales, to improve profitability by narrowing its focus on core brands. Given this decision and the related impacts to the financial projections of this business, which assume more modest sales growth going forward, an impairment assessment was performed. As a result, the company took a noncash impairment charge of $445 million ($362 million after tax) during the third quarter of fiscal year 2023.

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 underlying operating results and is useful for period over period comparisons. It also allows investors to view underlying operating results in the same manner as they are viewed by company management.

Digital Capabilities and Productivity Enhancements Investment

As announced in August 2021, the company plans to invest approximately $500 million over a five-year period in transformative technologies and processes. This investment, which began in the first quarter of fiscal year 2022, includes replacement of the company's enterprise resource planning system and transitioning to a cloud-based platform as well as the implementation of a suite of other digital technologies. Together it is expected that these implementations will generate efficiencies and transform the company's operations in the areas of supply chain, digital commerce, innovation, brand building and more over the long term.

Of the total $500 million investment, approximately 65% is expected to represent incremental operating costs primarily recorded within selling and administrative expenses to be adjusted from reported EPS for purposes of disclosing adjusted EPS through fiscal year 2026. About 70% of these operating costs are expected to be related to the implementation of the ERP, with the remaining costs primarily related to the implementation of complementary technologies.

Due to the nature, scope and magnitude of this investment, these costs are considered by management to represent incremental transformational costs above the historical normal level of spending for information technology to support operations. Since these strategic investments, including incremental operating costs, will cease at the end of the investment period, are not expected to recur in the foreseeable future and are not considered representative of the company's underlying operating performance, the company's management believes presenting these costs as an adjustment in the non-GAAP results provides additional information to investors about trends in the company's operations and is useful for period-over-period comparisons. It also allows investors to view underlying operating results in the same manner as they are viewed by company management.

Streamlined Operating Model

In the first quarter of fiscal year 2023, Clorox began recognizing costs related to a plan that involves streamlining its operating model to meet its objectives of driving growth and productivity. The streamlined operating model is expected to enhance the company's ability to respond more quickly to changing consumer behaviors and innovate faster. The company anticipates the implementation of this new model will be completed in fiscal year 2024, with different phases occurring throughout the implementation period.

Once fully implemented, the company expects annual cost savings of approximately $75 million to $100 million, with benefits of approximately $35 million realized in fiscal year 2023. The benefits of the streamlined operating model are currently expected to increase future cash flows as a result of cost savings that will be generated primarily in the areas of selling and administration, supply chain, marketing and research and development.

The company incurred $60 million of costs in fiscal year 2023 and anticipates incurring approximately $30 million to $40 million in fiscal year 2024 related to this initiative. Related costs are primarily expected to include employee-related costs to reduce certain staffing levels, such as severance payments, as well as for consulting and other costs. Due to the nonrecurring and unusual nature of these costs, the company's management believes presenting these costs as an adjustment in the non-GAAP results provides additional information to investors about trends in the company's operations and is useful for period over period comparisons. It also allows investors to view underlying operating results in the same manner as they are viewed by company management.

The following tables provide reconciliations of organic sales growth/(decrease) (non-GAAP) to net sales growth/(decrease), the most comparable GAAP measure:

Three months ended June 30, 2023

Percentage change versus the year-ago period

Health and Wellness (1)

Household

Lifestyle

International

Total Company (2)

Net sales growth / (decrease) (GAAP)

14 %

4 %

12 %

Add: Foreign Exchange

—

Add/(Subtract): Divestitures/Acquisitions

—

Organic sales growth / (decrease) (non-GAAP)

14 %

Twelve months ended June 30, 2023

Percentage change versus the year-ago period

Health and Wellness (1)

Household

Lifestyle

International

Total Company (2)

Net sales growth / (decrease) (GAAP)

4 %

6 %

7 %

— %

4 %

Add: Foreign Exchange

—

Add/(Subtract): Divestitures/Acquisitions

—

Organic sales growth / (decrease) (non-GAAP)

4 %

6 %

7 %

11 %

6 %

(1)

(2)

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

Effective tax rate

Three months ended June 30

2023

2022

% Change

2023

2022

As reported (GAAP)

$ 1.42

$ 0.81

75 %

23.8 %

19.0 %

Streamlined operating model (2)

0.09

—

0.1 %

— %

Digital capabilities and productivity enhancements investment (3)

0.16

0.12

0.1 %

0.6 %

As adjusted (Non-GAAP)

$ 1.67

$ 0.93

80 %

24.0 %

19.6 %

Diluted earnings per share

Effective tax rate

Twelve months ended June 30

2023

2022

% Change

2023

2022

As reported (GAAP)

$ 1.20

$ 3.73

(68) %

32.4 %

22.4 %

VMS impairment (1)

2.91

—

(8.9) %

— %

Streamlined operating model (2)

0.37

—

— %

Digital capabilities and productivity enhancements investment (3)

0.61

0.37

0.1 %

As adjusted (Non-GAAP)

$ 5.09

$ 4.10

24 %

23.6 %

22.5 %

(1) During the quarter ended March 31, 2023, a noncash impairment charge for goodwill and trademarks was recorded for $445 ($362 after tax) related to the VMS business.

(2) During the three and twelve months ended June 30, 2023, the company incurred approximately $16 ($11 after tax) and $60 ($45 after tax), respectively, of restructuring and related costs, net for implementation of the streamlined operating model.

(3) During the three and twelve months ended June 30, 2023, the company incurred approximately $27 ($21 after tax) and $100 ($76 after tax), respectively and during the three and twelve months ended June 30, 2022, the company incurred approximately $19 ($15 after tax) and $61 ($47 after tax), respectively, of operating expenses related

to its digital capabilities and productivity enhancements investment. The expenses relate to the following:

Three months ended June 30

Twelve months ended June 30

2023

2022

2023

2022

External consulting fees (a)

$ 21

$ 14

$ 79

$ 43

IT project personnel costs (b)

Other (c)

Total

$ 27

$ 19

$ 100

$ 61

(a) Comprised of third-party consulting fees incurred to assist in the project management and the preliminary project stage of this transformative investment. The company relies on consultants for certain capabilities required for these programs that the company does not maintain internally. These costs support theimplementation of these programs incremental to the company'snormal IT costs and will not be incurred following implementation.

(b) Comprised of labor costs associated with internal IT project management teams that are utilized to oversee the new system implementations. Given the magnitude and transformative nature of the implementations planned, the necessary project management costs are incremental to the historical levels of spend and will no longer be incurred subsequent to implementation. As a result of this long-term strategic investment, the company considers these costs not reflective ofthe ongoing costs to operate its business.

(c) Comprised of various other expenses associated with the company's new system implementations, including company personnel dedicated to the project that have been backfilled with either permanent or temporary resources in positions that are considered part of normal operating expenses.

Full Year 2024 Outlook (Estimated Range)

Diluted earnings per share

Low

High

As estimated (GAAP)

$ 4.65

$ 4.95

Streamlined operating model (4)

0.25

Digital capabilities and productivity enhancements investment (5)

0.70

As adjusted (Non-GAAP)

$ 5.60

$ 5.90

(4) In FY24, the company expects to incur approximately $30-$40 ($23-$30 after tax) of restructuring and related costs, net related to implementation of the streamlined operating model.

(5) In FY24, the company expects to incur approximately $100-$120 ($76-$91 after tax) of operating expenses related to its digital capabilities and productivityenhancements investment.

The following tables provide reconciliations of adjusted EBIT (non-GAAP) to earnings (losses) before income taxes, the most comparable GAAP measure:

Reconciliation of earnings (losses) before income taxes to adjusted EBIT

Three months ended

Twelve months ended

6/30/2023

6/30/2022

6/30/2023

6/30/2022

Earnings (losses) before income taxes

$ 237

$ 129

$ 238

$ 607

Interest income

(7)

(2)

(16)

(5)

Interest expense

106

VMS impairment (1)

—

445

—

Streamlined operating model (2)

—

Digital capabilities and productivity enhancements investment (3)

100

Adjusted EBIT

$ 294

$ 183

$ 917

$ 769

(1)

Represents a noncash impairment charge related to the VMS business recorded in fiscal year 2023.

(2)

Represents restructuring and related costs, net for implementation of the streamlined operating model.

(3)

Represents expenses related to the company's digital capabilities and productivity enhancements investment.

Condensed Consolidated Statements of Earnings

Dollars in millions, except per share data

Three months ended

Twelve months ended

06/30/2023

06/30/2022

06/30/2023

06/30/2022

(Unaudited)

Net sales

$ 2,019

$ 1,801

$ 7,389

$ 7,107

Cost of products sold

1,157

1,133

4,481

4,562

Gross profit

862

668

2,908

2,545

Selling and administrative expenses

329

244

1,183

954

Advertising costs

211

207

734

709

Research and development costs

138

132

Goodwill, trademark and other intangible asset impairments

—

445

—

Interest expense

106

Other (income) expense, net

Earnings before income taxes

237

129

238

607

Income taxes

136

Net earnings

181

104

161

471

Less: Net earnings attributable to noncontrolling interests

Net earnings attributable to Clorox

$ 176

$ 101

$ 149

$ 462

Net earnings per share attributable to Clorox

Basic net earnings per share

$ 1.43

$ 0.81

$ 1.21

$ 3.75

Diluted net earnings per share

$ 1.42

$ 0.81

$ 1.20

$ 3.73

Weighted average shares outstanding (in thousands)

Basic

123,823

123,230

123,589

123,113

Diluted

124,641

123,795

124,181

123,906

Reportable Segment Information

(Unaudited)

Dollars in millions

Net sales

Three months ended

Twelve months ended

6/30/2023

6/30/2022

% Change(1)

6/30/2023

6/30/2022

% Change(1)

Health and Wellness (2)

$ 651

$ 571

14 %

$ 2,532

$ 2,427

4 %

Household

663

580

14 %

2,098

1,984

6 %

Lifestyle

333

292

14 %

1,338

1,253

7 %

International

305

294

4 %

1,181

1,180

— %

Corporate and Other (2)

5 %

240

263

(9) %

Total

$ 2,019

$ 1,801

12 %

$ 7,389

$ 7,107

4 %

Segment adjusted EBIT

Three months ended

Twelve months ended

6/30/2023

6/30/2022

% Change(1)

6/30/2023

6/30/2022

% Change(1)

Health and Wellness (2)

$ 176

$ 78

126 %

$ 594

$ 381

56 %

Household

143

49 %

308

234

32 %

Lifestyle

63 %

284

280

1 %

International

(12) %

(8) %

Corporate and Other (2)

(107)

(49)

118 %

(358)

(223)

61 %

Total

$ 294

$ 183

61 %

$ 917

$ 769

19 %

Interest income

Interest expense

(21)

(37)

(90)

(106)

VMS impairment (3)

—

(445)

—

Streamlined operating model (4)

(16)

—

(60)

—

Digital capabilities and productivity enhancements investment (5)

(27)

(19)

(100)

(61)

Earnings (losses) before income taxes

$ 237

$ 129

84 %

$ 238

$ 607

(61) %

(1)

Percentages based on rounded numbers.

(2)

(3)

Represents a noncash impairment charge of $445 related to the VMS business recorded in fiscal year 2023. As a result of the segment changes noted above, $433 and $12 was recast from the third quarter fiscal year 2023 interim reporting period for the Health and Wellness and International reportable segments, respectively.

(4)

Represents restructuring and related costs, net for implementation of the streamlined operating model of $16 and $60 for the three and twelve months ended June 30, 2023, respectively. As a result of the segment changes noted above, these amounts were recast from the fiscal year 2023 reporting period for Corporate and Other.

(5)

Represents expenses related to the company's digital capabilities and productivity enhancements investment of $27 and $100 for the three and twelve months ended June 30, 2023, respectively and $19 and $61 for the three and twelve months ended June 30, 2022, respectively. As a result of the segment changes noted above, these amounts were recast from the fiscal year 2023 reporting period for Corporate and Other.

Condensed Consolidated Balance Sheets

Dollars in millions

6/30/2023

6/30/2022

(Unaudited)

ASSETS

Current assets

Cash and cash equivalents

367

183

Receivables, net

688

681

Inventories, net

696

755

Prepaid expenses and other current assets

106

Total current assets

1,828

1,725

Property, plant and equipment, net

1,345

1,334

Operating lease right-of-use assets

346

342

Goodwill

1,252

1,558

Trademarks, net

543

687

Other intangible assets, net

169

197

Other assets

462

315

Total assets

5,945

6,158

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Notes and loans payable

237

Current operating lease liabilities

Accounts payable and accrued liabilities

1,659

1,469

Income taxes payable

121

—

Total current liabilities

1,917

1,784

Long-term debt

2,477

2,474

Long-term operating lease liabilities

310

314

Other liabilities

825

791

Deferred income taxes

Total liabilities

5,557

5,429

Stockholders' equity

Preferred stock

—

Common stock

131

Additional paid-in capital

1,245

1,202

Retained earnings

583

1,048

Treasury stock

(1,246)

(1,346)

Accumulated other comprehensive net (loss) income

(493)

(479)

Total Clorox stockholders' equity

220

556

Noncontrolling interests

168

173

Total stockholders' equity

388

729

Total liabilities and stockholders' equity

5,945

6,158

CLX-F

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SOURCE The Clorox Company