The Clorox Company |  |
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Supplemental Information – Volume Growth
| | % Change vs. Prior Year | |
| Reportable Segment | FY09 | FY10 | Major Drivers of Change |
| | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | YTD | |
| Cleaning | -3% | -7% | -6% | -4% | -5% | 4% | 8% | 1% | 4% | Q3 increase primarily due to increased merchandising of Clorox® disinfecting wipes and Pine-Sol cleaner®. |
| Household | 3% | -10% | -7% | -3% | -4% | -7% | 0% | 4% | -1% | Q3 increase primarily driven by increased merchandising of Fresh Step® cat litter and Kingsford® charcoal. |
| Lifestyle (1) | 35% | 31% | 4% | 3% | 16% | 4% | 12% | 8% | 8% | Q3 increase primarily due to increased consumption of Hidden Valley® bottled salad dressings and Burt’s Bees® natural personal care products. |
| International (2) | 4% | 3% | 2% | 0% | 2% | 3% | 1% | 3% | 2% | Q3 increase primarily driven by increased consumption of disinfecting and fragrance cleaning products in Latin America. |
| Total Company | 4% | -1% | -3% | -2% | -1% | 1% | 5% | 3% | 3% | |
Supplemental Information – Sales Growth
| | % Change vs. Prior Year | |
| Reportable Segment | FY09 | FY10 | Major Drivers of Change |
| | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | YTD | |
| Cleaning | 4% | -1% | 1% | 0% | 1% | 3% | 3% | -4% | 1% | Variance between changes in volume and sales was due to unfavorable product mix and increased trade-promotion spending. |
| Household | 11% | -2% | -1% | 0% | 2% | -11% | -6% | 0% | -5% | Variance between changes in volume and sales was due to price declines on Glad® trash bags and higher trade-promotion spending. |
| Lifestyle (1) | 45% | 37% | 5% | 7% | 20% | 3% | 10% | 5% | 6% | Variance between changes in volume and sales was due to higher trade-promotion spending to support new products. |
| International (1) | 10% | -4% | -4% | -3% | -1% | 4% | 21% | 9% | 11% | Variance between changes in volume and sales was due to the benefit of price increases. The impact of the Venezuelan currency devaluation was mostly offset by stronger currencies in other countries. |
| Total Company | 12% | 3% | 0% | 0% | 3% | -1% | 5% | 1% | 2% | |
| (1) | | Lifestyle includes results of the worldwide Burt’s Bees business. International includes Canadian results. |
The Clorox Company | |
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Earnings Before Interest and Taxes (EBIT), Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) (1)
Reconciliation schedule of earnings before income taxes to EBIT and EBITDA
Dollars in millions and percentages based on rounded numbers
| | FY 2008 | | | FY 2009 | | | FY 2010 | |
| | Twelve | | | | | Twelve | | | | | | |
| | Months | | | Three Months Ended | | Months | | | Three Months Ended | | Year-To- | |
| | Ended | | | | | Ended | | | | | | | | | Date | |
| | 6/30/08 | | | 9/30/08 | | 12/31/08 | | 3/31/09 | | 6/30/09 | | 6/30/09 | | | 9/30/09 | | 12/31/09 | | 3/31/10 | | 3/31/10 | |
| Earnings before income taxes | | $ | 693 | | | | $ | 186 | | | $ | 131 | | | $ | 233 | | | $ | 261 | | | $ | 811 | | | | $ | 244 | | | $ | 163 | | | $ | 243 | | | $ | 650 | | |
| Interest income | | | (12 | ) | | | | (1 | ) | | | (1 | ) | | | (1 | ) | | | (1 | ) | | | (4 | ) | | | | (1 | ) | | | (1 | ) | | | - | | | | (2 | ) | |
| Interest expense | | | 168 | | | | | 42 | | | | 44 | | | | 39 | | | | 36 | | | | 161 | | | | | 36 | | | | 37 | | | | 34 | | | | 107 | | |
| EBIT (2) | | | 849 | | | | | 227 | | | | 174 | | | | 271 | | | | 296 | | | | 968 | | | | | 279 | | | | 199 | | | | 277 | | | | 755 | | |
| EBIT margin (2) | | | 16.1 | % | | | | 16.4 | % | | | 14.3 | % | | | 20.1 | % | | | 19.7 | % | | | 17.8 | % | | | | 20.3 | % | | | 15.6 | % | | | 20.3 | % | | | 18.8 | % | |
| Depreciation and amortization | | | 205 | | | | | 47 | | | | 46 | | | | 49 | | | | 48 | | | | 190 | | | | | 48 | | | | 47 | | | | 44 | | | | 139 | | |
| EBITDA (3) | | $ | 1,054 | | | | $ | 274 | | | $ | 220 | | | $ | 320 | | | $ | 344 | | | $ | 1,158 | | | | $ | 327 | | | $ | 246 | | | $ | 321 | | | $ | 894 | | |
| EBITDA margin (3) | | | 20.0 | % | | | | 19.8 | % | | | 18.1 | % | | | 23.7 | % | | | 22.9 | % | | | 21.2 | % | | | | 23.8 | % | | | 19.2 | % | | | 23.5 | % | | | 22.3 | % | |
| Net sales | | $ | 5,273 | | | | $ | 1,384 | | | $ | 1,216 | | | $ | 1,350 | | | $ | 1,500 | | | $ | 5,450 | | | | $ | 1,372 | | | $ | 1,279 | | | $ | 1,366 | | | $ | 4,017 | | |
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| (1) | | In accordance with SEC's Regulation G, this schedule provides the definition of certain non-GAAP measures and the reconciliation to the most closely related GAAP measure. Management believes the presentation of EBIT, EBIT margin, EBITDA and EBITDA margin provides additional useful information to investors about current trends in the business. |
| (2) | | EBIT (a non-GAAP measure) represents earnings before income taxes (a GAAP measure), excluding interest income and interest expense, as reported above. EBIT margin is a measure of EBIT as a percentage of net sales. |
| (3) | | EBITDA (a non-GAAP measure) represents earnings before income taxes (a GAAP measure), excluding interest income, interest expense, depreciation and amortization, as reported above. EBITDA margin is a measure of EBITDA as a percentage of net sales. |
The Clorox Company | |
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Supplemental Information – Balance Sheet
(Unaudited)
As of March 31, 2010
Working Capital Update
| Q3 | | | | |
| FY 2010 | FY 2009 | Change | Days(5) | Days(5) | |
| ($ millions) | ($ millions) | ($ millions) | FY 2010 | FY 2009 | Change |
| Receivables, net | $556 | $457 | $99 | 32 | 29 | +3 days |
| Inventories, net | $423 | $406 | $17 | 50 | 49 | +1 day |
| Accounts payable (1) | $342 | $333 | $ 9 | 38 | 40 | -2 days |
| Accrued liabilities | $478 | $460 | $18 | | | |
| Total WC (2) | $211 | $137 | $74 | | | |
| Total WC % net sales (3) | 3.9% | 2.5% | | | | |
| Average WC (2) | $194 | $145 | $49 | | | |
| Average WC % net sales (4) | 3.6% | 2.7% | | | | |
- Accounts Receivable increased primarily due to the timing of merchandising events in the quarter and the change in Auto product sales terms
- Inventory increased primarily due to pipeline build to support new product launches
Supplemental Information – Cash Flow
(Unaudited)
For the quarter ended March 31, 2010
Capital expenditures for the third quarter were $35 million versus $51 million in the year-ago quarter
Depreciation and amortization for the third quarter was $44 million versus $49 million in the year-ago quarter
Cash provided by operations
Net cash provided by operations in the third quarter was $197 million, compared with $232 million in the year-ago quarter. Lower cash provided by operations in the current quarter was primarily due to changes in working capital, mainly from an increase in accounts receivable.
| (1) | | Days of accounts payable is calculated as follows: average accounts payable / [(cost of products sold + change in inventory) / 90]. |
| (2) | | Working capital (WC) is defined in this context as current assets minus current liabilities excluding cash and short-term debt, based on end of period balances. Average working capital represents a two-point average of working capital. |
| (3) | | Represents working capital at the end of the period divided by annualized net sales (current quarter net sales x 4). |
| (4) | | Represents a two-point average of working capital divided by annualized net sales (current quarter net sales x 4). |
| (5) | | Days calculations based on a two-point average. |
The Clorox Company | |
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Supplemental Information – Gross Margin Drivers
The table below provides details on the drivers of gross margin change versus the prior year.
| Driver | Gross Margin Change vs. Prior Year (basis points) |
| FY08 | FY09 | FY10 |
| FY | Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 |
| Cost Savings | +170 bp | +200 bp | +210 bp | +240 bp | +230 bp | +220 bp | +170 bp | +160 bp | +170 bp |
| Price Changes | +80 bp | +230 bp | +350 bp | +310 bp | +250 bp | +280 bp | +170 bp | +80 bp | +60 bp |
| Market Movement (commodities) | -270 bp | -460 bp | -450 bp | 0 bp | +160 bp | -170 bp | +240 bp | +300 bp | -120 bp |
| Manufacturing & Logistics (1) | -110 bp | -250 bp | -120 bp | -90 bp | -150 bp | -160 bp | -40 bp | -80 bp | 0 bp |
| All other (2) | -60 bp | +80 bp | -30 bp | +90 bp | -120 bp | +10 bp | -90 bp | -70 bp | -120 bp |
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| Change vs prior year | -190 bp | -200 bp | -40 bp | +550 bp | +370 bp | +180 bp | +450 bp | +390 bp | -10 bp |
| (1) | | “Manufacturing & logistics” includes the change in the cost of diesel fuel. |
| (2) | | “All other” includes all other drivers of gross margin change, which are usually of an immaterial nature. Examples of drivers included: volume change, trade and consumer spending, restructuring and acquisition-related costs, foreign currency, etc. If a driver included in all other is deemed to be material in a given period, it will be disclosed as part of the company’s earnings release. |
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The Clorox Company Updated: 5-3-10 | |
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U.S. Pricing Actions from CY2008 - CY2009
| Brand / Product | Average Price Change | | Effective Date |
| Home Care | | | | |
| Pine-Sol® cleaners | +13% | | | May 2008 |
| Clorox Clean-Up® cleaners | +8% | | | August 2008 |
| Formula 409®, Tilex®, and Clorox® Disinfecting Bathroom cleaners | +12% | | | August 2008 |
| Liquid-Plumr® products | +9% | | | August 2008 |
| Clorox® Toilet Bowl Cleaner and Clorox® ToiletWandTM products | +8 to +13% | | | August 2008 |
| Green Works® cleaners | -7 to -21% | | | May 2010 |
| Laundry | | | | |
| Clorox® liquid bleach | +10% | | | August 2008 |
| Green Works® liquid detergent | approx. -30% | | | May 2010 |
| Glad | | | | |
| Glad® trash bags (rescinded May 2009) | +7% | | | February 2008 |
| GladWare® disposable containers (rescinded April 2009) | +7% | | | February 2008 |
| Glad® trash bags (rescinded December 2008) | +10% | | | October 2008 |
| Glad® trash bags | -7% | | | April 2009 |
| Litter | | | | |
| Cat litter | +7 to +8% | | | August 2008 |
| Cat litter | -8 to -9% | | | March 2010 |
| Food | | | | |
| Hidden Valley Ranch® salad dressing | +7% | | | August 2008 |
| Charcoal | | | | |
| Charcoal | +6% | | | January 2008 |
| Charcoal and lighter fluid | +7 to +16% | | | January 2009 |
| Auto | | | | |
| Armor All® and STP® auto-care products | +5 to +7% | | | January 2008 |
| Armor All® and STP® auto-care products | +5 to +10% | | | January 2009 |
| Armor All® and STP® auto-care products (rollback) | -3 to -15% | | | December 2009 |
Notes:
- Individual SKUs vary within the range.
- This communication reflects pricing actions on primary items.
