The Clorox Company |  |
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SupplementalInformation –Volume Growth
| % Change vs. Prior Year | |
| Reportable Segments | FY12 | FY13 | Major Drivers of Change |
| Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |
| Cleaning(1) | -1% | 0% | 7% | 5% | 2% | 4% | 13% | 1% | -4% | 3% | Q4decrease driven by lowershipments of Clorox®disinfecting wipes, and Clorox®2partially offset by highershipments in theProfessionalProductsbusiness and of Clorox®bleach. |
| Household | 5% | 1% | 2% | -2% | 1% | -7% | 1% | -4% | -1% | -3% | Q4decrease driven by lowershipments in theCharcoalbusiness,partially offset by highershipments of cat litterproducts and Glad®premium trash bags. |
| Lifestyle | 5% | 2% | 4% | 2% | 3% | -1% | 7% | 1% | 0% | 2% | Q4 flatvolume driven by highershipments ofHidden Valley®products; offset by lowershipments of Brita®products. |
| International | 4% | -1% | 1% | 3% | 2% | -2% | -3% | 1% | -6% | -2% | Q4decrease driven by the exit of the non-strategic exportbusiness and lowershipments inCanada andArgentina. |
| Total Company | 2% | 0% | 4% | 2% | 2% | -1% | 5% | 0% | -3% | 0% | |
SupplementalInformation –Sales Growth
| % Change vs. Prior Year | |
| Reportable Segments | FY12 | FY13 | Major Drivers of Change |
| Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | |
| Cleaning(1) | -2% | 5% | 10% | 7% | 5% | 8% | 15% | 2% | -1% | 5% | Q4variancebetweenvolume and sales driven by the benefit offavorable product mix and priceincreases. |
| Household | 3% | 4% | 6% | 3% | 4% | -3% | 7% | -1% | 2% | 1% | Q4variancebetweenvolume and sales driven by the benefit of priceincreases. |
| Lifestyle | 6% | 6% | 10% | 3% | 6% | 1% | 8% | 2% | 2% | 3% | Q4 salesoutpacedvolume due to the benefit of priceincreases. |
| International | 10% | 0% | 4% | 3% | 4% | 3% | 3% | 2% | -1% | 2% | Q4variancebetweenvolume and sales driven by the benefit of priceincreases andfavorableproduct mix,partially offset byunfavorableforeign currencyexchange rates. |
| Total Company | 3% | 4% | 7% | 4% | 5% | 3% | 9% | 1% | 0% | 3% | |
| (1) | | The Cleaning reportable segment includes the December 2011 acquisitions of HealthLink and Aplicare, Inc. |
The Clorox Company | |
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SupplementalInformation –Gross Margin Drivers
The table belowprovides details on the drivers of the grossmarginchange versus the prior year.
| Gross Margin Change vs. Prior Year (basis points) |
| Driver | FY12 | FY13 |
| Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY |
| Cost Savings | +160 | +180 | +160 | +150 | +160 | +170 | +190 | +150 | +150 | +160 |
| Price Changes | +170 | +240 | +250 | +230 | +220 | +160 | +120 | +110 | +120 | +120 |
| Market Movement (commodities)(1) | -320 | -240 | -200 | -110 | -220 | -10 | -10 | -20 | -20 | -20 |
| Manufacturing & Logistics(1) | -220 | -170 | -200 | -140 | -180 | -70 | -200 | -250 | -140 | -170 |
| All other | -40 | -30 | -190 | -210 | -120 | -140 | - | -10 | +20 | -10 |
| Change vs prior year | -250 | -20 | -180 | -80 | -140 | +110 | +100 | -20 | +130 | +80 |
| Gross Margin (%) | 41.8% | 41.5% | 42.3% | 42.7% | 42.1% | 42.9% | 42.5% | 42.1% | 44.0% | 42.9% |
| (1) | | Market Movement (commodities) beginning in Q1 FY13 includes the change in the cost of diesel fuel. In FY12, the change in the cost of diesel fuel is included in Manufacturing & Logistics. |
The Clorox Company | |
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Supplemental Information – Balance Sheet
(Unaudited)
As of June 30, 2013
Working Capital Update
| Q4 | | | | | |
| FY 2013 | FY 2012 | Change | Days(5) | Days(5) | |
| ($ millions) | ($ millions) | ($ millions) | FY 2013 | FY 2012 | Change |
| Receivables, net | $580 | | $576 | | $4 | | 33 | 33 | -- |
| Inventories, net | $394 | | $384 | | $10 | | 44 | 43 | +1 days |
| Accounts payable(1) | $413 | | $412 | | $1 | | 45 | 43 | +2 days |
| Accrued liabilities | $490 | | $494 | | -$4 | | | | |
| Total WC(2) | $189 | | $198 | | -$9 | | | | |
| Total WC % net sales(3) | 3.1 | % | 3.2 | % | | | | | |
| Average WC(2) | $219 | | $243 | | -$24 | | | | |
| Average WC % net sales(4) | 3.5 | % | 3.9 | % | | | | | |
| (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, assets held for sale, 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. |
Supplemental Information – Cash Flow
(Unaudited)
For the quarter ended June 30, 2013
Capital expenditures for the fourth quarter were $60 million versus $73 million in the year-ago quarter (fiscal year 2013 = $194).
Depreciation and amortization for the fourth quarter was $46 million versus $45 million in the year-ago quarter (fiscal year 2013 = $182).
Net cash provided by continuing operations in the fourth quarter was $291 million, or 19 percent of sales.
The Clorox Company | |
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Supplemental Information – Fiscal Year to Date Free Cash Flow Reconciliation
| | Fiscal | | Fiscal |
| | 2013 | | 2012 |
| Net cash provided by continuing operations – GAAP | | $777 | | $620 |
| Less: Capital expenditures | | 194 | | 192 |
| Free cash flow – non-GAAP(1) | | $583 | | $428 |
| Free cash flow as a percent of sales – non-GAAP(1) | | 10.4% | | 7.8% |
| Net sales | | $5,623 | | $5,468 |
| (1) | In accordance with the 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 uses free cash flow and free cash flow as a percent of sales 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. In addition, free cash flow may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded. |
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| The Clorox Company |
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Reconciliation ofearnings fromcontinuingoperations beforeincome taxes to EBIT(1)andEBITDA(2)(3)Dollars in millions andpercentages based on rounded numbers
| FY 2012 | | | FY 2013 |
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| Q1
9/30/11 | | Q2
12/31/11 | | Q3
3/31/12 | | Q4
6/30/12 | | FY
6/30/12 | | | Q1
9/30/12 | | Q2
12/31/12 | | Q3
3/31/13 | | Q4
6/30/13 | | FY
6/30/13 |
| Earnings from continuing operations | $ | 187 | | | $ | 155 | | | $ | 198 | | $ | 251 | | | $ | 791 | | | | $ | 194 | | $ | 188 | | | $ | 202 | | | $ | 269 | | | $ | 853 | |
| before income taxes | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest income | | (1 | ) | | | (1 | ) | | | - | | | (1 | ) | | | (3 | ) | | | | - | | | (1 | ) | | | (1 | ) | | | (1 | ) | | $ | (3 | ) |
| Interest expense | | 29 | | | | 30 | | | | 33 | | | 33 | | | | 125 | | | | | 33 | | | 33 | | | | 30 | | | | 26 | | | | 122 | |
| EBIT(1) | | 215 | | | | 184 | | | | 231 | | | 283 | | | | 913 | | | | | 227 | | | 220 | | | | 231 | | | | 294 | | | | 972 | |
| EBIT margin(1) | | 16.5% | | | | 15.1% | | | | 16.5% | | | 18.4% | | | | 16.7% | | | | | 17.0% | | | 16.6% | | | | 16.3% | | | | 19.0% | | | | 17.3% | |
| Depreciation and amortization | | 46 | | | | 43 | | | | 44 | | | 45 | | | | 178 | | | | | 44 | | | 46 | | | | 46 | | | | 46 | | | | 182 | |
| EBITDA(2) | $ | 261 | | | $ | 227 | | | $ | 275 | | $ | 328 | | | $ | 1,091 | | | | $ | 271 | | $ | 266 | | | $ | 277 | | | $ | 340 | | | $ | 1,154 | |
| EBITDA margin(2) | | 20.0% | | | | 18.6% | | | | 19.6% | | | 21.3% | | | | 20.0% | | | | | 20.3% | | | 20.1% | | | | 19.6% | | | | 22.0% | | | | 20.5% | |
| Net sales | $ | 1,305 | | | $ | 1,221 | | | $ | 1,401 | | $ | 1,541 | | | $ | 5,468 | | | | $ | 1,338 | | $ | 1,325 | | | $ | 1,413 | | | $ | 1,547 | | | $ | 5,623 | |
| Debt to EBITDA(4) | | | | | | | | | | | | | | | | | 2.5 | | | | | | | | | | | | | | | | | | | | 2.1 | |
| Total debt(5) | | | | | | | | | | | | | | | | $ | 2,721 | | | | | | | | | | | | | | | | | | | $ | 2,372 | |
| (1) | | EBIT (a non-GAAP measure) represents earnings from continuing operations 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. |
| (2) | | EBITDA (a non-GAAP measure) represents earnings from continuing operations 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. |
| (3) | | In accordance with the 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. |
| | | Note: The Company calculates EBITDA for compliance with its debt covenants using earnings from continuing operations for the trailing four quarters, as contractually defined. |
| (4) | | Debt to EBITDA (a non-GAAP measure) represents total debt divided by EBITDA. |
| (5) | | Total debt represents the sum of notes and loans payable, current maturities of long-term debt, and long-term debt. |
The Clorox Company
Updated: 8-1-13 |
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U.S. Retail Pricing Actions from CY2009 - CY2013
| Brand / Product | Average Price Change | | Effective Date | |
| Home Care | | | | | | |
| Green Works®cleaners | | -7 to -21% | | | May 2010 | |
| Formula 409® | | +6% | | | August 2011 | |
| Clorox Clean-Up®cleaners | | +8% | | | August 2011 | |
| Clorox®Toilet Bowl Cleaner | | +5% | | | August 2011 | |
| Liquid-Plumr®products | | +5% | | | August 2011 | |
| Pine-Sol®cleaners | | +17% | | | April 2012 | |
| Clorox Clean-Up®, Formula 409®, and Clorox® Disinfecting | | | | | | |
| Bathroom spray cleaners | | +5% | | | March 2013 | |
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| Laundry | | | | | | |
| Green Works®liquid detergent | | approx. -30% | | | May 2010 | |
| Clorox®liquid bleach | | +12% | | | August 2011 | |
| Clorox 2®stain fighter and color booster | | +5% | | | August 2011 | |
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| Glad | | | | | | |
| GladWare®disposable containers | | -7% | | | April 2009 | |
| Glad®trash bags | | -7% | | | May 2009 | |
| Glad®trash bags | | +5% | | | August 2010 | |
| Glad®trash bags | | +10% | | | May 2011 | |
| Glad®wraps | | +7% | | | August 2011 | |
| Glad®food bags | | +10% | | | November 2011 | |
| GladWare®disposable containers | | +8% | | | July 2012 | |
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| Litter | | | | | | |
| Cat litter | | -8 to -9% | | | March 2010 | |
| Cat litter | | +5% | | | May 2012 | |
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| Food | | | | | | |
| Hidden Valley Ranch®salad dressing | | +7% | | | August 2011 | |
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| Charcoal | | | | | | |
| Charcoal and lighter fluid | | +7 to +16% | | | January 2009 | |
| Charcoal and lighter fluid | | +8 to 10% | | | January 2012 | |
| Charcoal | | +6% | | | December 2012 | |
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| Brita | | | | | | |
| Brita®pitchers | | +3% | | | August 2011 | |
| Brita®pitchers and filters | | +5% | | | July 2012 | |
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| Natural Personal Care | | | | | | |
| Burt’s Bees®lip balm | | +10% | | | July 2013 | |
Notes:
- Individual SKUs vary within the range.
- This communication reflects pricing actions on primary items, and does not reflect pricing actions on our Professional Products business.
The Clorox Company | |
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Reconciliation of Economic Profit (EP)(1) (Unaudited)
Dollars in millions and all calculations on a rounded basis
| FY13 | | FY12 | | FY11 |
| Earnings from continuing operations before income taxes | $ | 853 | | $ | 791 | | $ | 563 |
| Noncash restructuring-related and asset impairment costs | | - | | | 4 | | | 6 |
| Noncash goodwill impairment | | - | | | - | | | 258 |
| Interest expense | | 122 | | | 125 | | | 123 |
| Earnings from continuing operations before income taxes, noncash | | | | | | | | |
| restructuring-related and asset impairment costs, noncash goodwill | | | | | | | | |
| impairment and interest expense | $ | 975 | | $ | 920 | | $ | 950 |
| Income taxes on earnings from continuing operations before income taxes, | | | | | | | | |
| noncash restructuring-related and asset impairment costs, noncash | | | | | | | | |
| goodwill impairment and interest expense(2) | | 319 | | | 289 | | | 321 |
| Adjusted after tax profit | $ | 656 | | $ | 631 | | $ | 629 |
| Average capital employed(3) | $ | 2,552 | | $ | 2,544 | | $ | 2,618 |
| Capital charge(4) | | 230 | | | 229 | | | 236 |
| Economic profit(1)(Adjusted after tax profit less capital charge) | $ | 426 | | $ | 402 | | $ | 393 |
| (1) | | In accordance with SEC's Regulation G, this schedule provides the definition of a non-GAAP measure and the reconciliation to the most closely related GAAP measure. Economic profit (EP), a non-GAAP measure, is defined by the company as earnings from continuing operations before income taxes, noncash restructuring-related and asset impairment costs, noncash goodwill impairment (for fiscal year 2011) and interest expense; less an amount of tax based on the effective tax rate (before the fiscal year 2011 noncash goodwill impairment charge) and less a capital charge. Management uses EP to evaluate business performance and allocate resources, and is a component in determining management’s incentive compensation. EP provides additional perspective to investors about financial returns generated by the business and represents profit generated over and above the cost of capital used by the business to generate that profit. |
| (2) | | The tax rate applied is the effective tax rate on continuing operations before the noncash goodwill impairment charge (for fiscal year 2011), which was 32.7%, 31.4% and 33.8% in fiscal years 2013, 2012 and 2011, respectively. The difference between the fiscal year 2011 effective tax rate on continuing operations before the noncash goodwill impairment charge and the effective tax rate on continuing operations of 49.0% is (16.0)% related to the non-deductible noncash goodwill impairment charge and 0.8% for other tax effects related to excluding this charge. |
| (3) | | Total capital employed represents total assets less non-interest bearing liabilities. Adjusted capital employed represents total capital employed adjusted to add back current year noncash restructuring-related and asset impairment costs and noncash goodwill impairment. Average capital employed represents a two-point average of adjusted capital employed for the current year and total capital employed for the prior year, based on year-end balances. See below for details of the average capital employed calculation: |
| FY13 | | FY12 | | FY11 |
| Total assets | $ | 4,311 | | $ | 4,355 | | $ | 4,163 |
| Less: | | | | | | | | |
| Accounts payable | | 413 | | | 412 | | | 423 |
| Accrued liabilities | | 490 | | | 494 | | | 442 |
| Income taxes payable | | 29 | | | 5 | | | 41 |
| Other liabilities | | 742 | | | 739 | | | 619 |
| Deferred income taxes | | 119 | | | 119 | | | 140 |
| Non-interest bearing liabilities | | 1,793 | | | 1,769 | | | 1,665 |
| Total capital employed | | 2,518 | | | 2,586 | | | 2,498 |
| Noncash restructuring-related and asset impairment costs | | - | | | 4 | | | 6 |
| Noncash goodwill impairment | | - | | | - | | | 258 |
| Adjusted capital employed | $ | 2,518 | | $ | 2,590 | | $ | 2,762 |
| Average capital employed | $ | 2,552 | | $ | 2,544 | | $ | 2,618 |
| (4) | | Capital charge represents average capital employed multiplied by the weighted-average cost of capital. The weighted-average cost of capital used to calculate capital charge was 9% for all fiscal years presented. |
The Clorox Company | |
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Calculation of Return on Invested Capital (ROIC)(1) (Unaudited)
Dollars in millions and all calculations on a rounded basis
| FY13 | | FY12 | | FY11 |
| Earnings from continuing operations before income taxes | $ | 853 | | $ | 791 | | $ | 563 |
| Restructuring and asset impairment costs | | 1 | | | 4 | | | 4 |
| Noncash goodwill impairment | | - | | | - | | | 258 |
| Interest expense | | 122 | | | 125 | | | 123 |
| Earnings from continuing operations before income taxes, | | | | | | | | |
| restructuring and asset impairment costs, noncash goodwill | | | | | | | | |
| impairment, and interest expense | $ | 976 | | $ | 920 | | $ | 948 |
| Income taxes on earnings from continuing operations before | | | | | | | | |
| income taxes, noncash restructuring-related and asset | | | | | | | | |
| impairment costs, noncash goodwill impairment and interest | | | | | | | | |
| expense(2) | | 319 | | | 289 | | | 320 |
| Adjusted after tax profit | $ | 657 | | $ | 631 | | $ | 628 |
| Adjusted average invested capital(3) | $ | 2,711 | | $ | 2,606 | | $ | 2,632 |
| Return on invested capital(1) | | 24.2% | | | 24.2% | | | 23.9% |
| (1) | | In accordance with SEC's Regulation G, this schedule provides the definition of a non-GAAP measure and the reconciliation to the most closely related GAAP measure. Return on invested capital (ROIC), a non-GAAP measure, is calculated as earnings from continuing operations before income taxes, excluding restructuring and asset impairment costs, noncash goodwill impairment and interest expense, computed on an after-tax basis as a percentage of adjusted average invested capital. Management believes ROIC provides additional information to investors about current trends in the business. ROIC is a measure of how effectively the company allocates capital. |
| (2) | | The tax rate applied is the effective tax rate on continuing operations, before the noncash goodwill impairment charge for fiscal year 2011, which was 32.7%, 31.4% and 33.8% in fiscal years 2013, 2012 and 2011 respectively. The difference between the fiscal year 2011 effective tax rate on continuing operations before the noncash goodwill impairment charge and the effective tax rate on continuing operations of 49.0% is (16.0)% related to the non-deductible noncash goodwill impairment charge and 0.8% for other tax effects related to excluding this charge. |
| (3) | | Average invested capital represents a five quarter average of total assets less non-interest bearing liabilities and assets held for sale. Adjusted average invested capital represents average invested capital adjusted to add back a five quarter average of cumulative, current-year after-tax restructuring and asset impairment costs. See below for details of the adjusted average invested capital calculation: |
| | (Amounts shown below are five quarter averages) | FY13 | | FY12 | | FY11 |
| Total Assets | $ | 4,488 | | | $ | 4,254 | | | $ | 4,343 | |
| | Less: non-interest bearing liabilities | | (1,778 | ) | | | (1,652 | ) | | | (1,638 | ) |
| Less: assets held for sale | | - | | | | - | | | | (175 | ) |
| Average invested capital | | 2,710 | | | | 2,602 | | | | 2,530 | |
| Cumulative after-tax restructuring and asset impairment costs | | 1 | | | | 4 | | | | 102 | |
| Adjusted average invested capital | $ | 2,711 | | | $ | 2,606 | | | $ | 2,632 | |
