Supplemental Unaudited Condensed Information –Volume Growth
Reportable
Segments | % Change vs. Prior Year | MajorDriversofChange |
| FY17 | FY18 |
| Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | FYTD |
| Cleaning | 13% | 10% | 13% | 4% | 10% | 5% | 2% | 4% | Q2increasedrivenprimarilyby highershipmentsin Home Care, mainly from Clorox®disinfectingwipes behindcontinued strengthin the clubchanneland the launch of newScentiva®branded products, partiallyoffset by lowershipmentsinProfessional Products business, primarilyfrom the sale of theAplicare businessinAugust2017. |
| Household | 6% | 11% | 9% | 5% | 8% | 7% | 0% | 3% | Q2 flat involume reflectedhighershipmentsin theDigestiveHealthbusinessfrom strong growth in the e-commerce channeloffset by lowershipmentsin Bags andWraps,Cat Litter andCharcoal businesses. |
| Lifestyle | 1% | 5% | -1% | -1% | 1% | 2% | 3% | 3% | Q2increasedrivenprimarilyby highershipmentsin WaterFiltrationbehindincreased merchandising supportfor pour-throughfilterproductsin the clubchanneland the launch of new Brita® Long LastTMfilters and Brita®StreamTMpitchers;as well as highershipmentsin theNatural PersonalCarebusinessbehindcontinued strengthof lip careproducts. |
| International | 4% | 2% | -2% | 1% | 1% | -2% | 0% | -1% | Q2 flat involume reflectedhighershipmentsinCanadaoffset by lowershipmentsin certain Asian and LatinAmerican countries. |
| Total Company | 8% | 8% | 7% | 3% | 6% | 4% | 1% | 3% | |
Supplemental Unaudited Condensed Information –Sales Growth
Reportable
Segments | % Change vs. Prior Year | MajorDriversofChange |
| FY17 | FY18 |
| Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | FYTD |
| Cleaning | 7% | 3% | 7% | 2% | 5% | 5% | 1% | 3% | Q2 variance between volume and sales driven primarily by unfavorable mix. |
| Household | 3% | 12% | 4% | 4% | 5% | 5% | -3% | 1% | Q2variance between volumeand sales drivenprimarilyby pricedecreasein aportionof the Glad®trashportfolioandunfavorablemix. |
| Lifestyle | 2% | 4% | -3% | 2% | 1% | 4% | 3% | 4% | Q2volumeand sales were about the same. |
| International | 0% | -2% | 3% | 5% | 1% | 1% | 4% | 3% | Q2variance between volumeand sales drivenprimarilyby the benefit of priceincreases. |
| Total Company | 4% | 5% | 4% | 3% | 4% | 4% | 1% | 2% | |
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| The Clorox Company | |
Supplemental Unaudited Condensed Information–Gross Margin Drivers
The table belowprovidesdetails on the drivers of grossmargin changeversus the prior year.
| Driver | Gross Margin Change vs. Prior Year (basis points) |
| FY17 | FY18 |
| Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 |
| Cost Savings | +140 | +140 | +150 | +150 | +150 | +160 | +170 |
| Price Changes | +70 | +70 | +60 | +50 | +60 | +40 | +30 |
| Market Movement (commodities) | +90 | +10 | -70 | -90 | -20 | -90 | -110 |
| Manufacturing & Logistics | -220 | -210 | -130 | -130 | -170 | -80 | -240 |
| All other(1) | -140 | 0 | -140 | +50 | -60 | +20 | -20 |
| Change vs prior year | -60 | +10 | -130 | +30 | -40 | +50 | -170 |
| Gross Margin (%) | 44.4% | 44.7% | 44.0% | 45.7% | 44.7% | 44.9% | 43.0% |
| (1) | In Q1 of fiscal year 2017, “All other” includes about -60bps of unfavorable mix and -50bps of unfavorable foreign exchange impact. |
| | In Q3 of fiscal year 2017, “All other” includes about -100bps of unfavorable mix (negative mix in charcoal business and strong sales in club channel across multiple businesses) and -60bps of higher trade promotion spending. |
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| The Clorox Company | |
Supplemental Unaudited Condensed Information –Balance Sheet
As of December 31, 2017
Working Capital Update
Dollars in Millions and percentages based on rounded numbers
| Q2 | Change | Q2 | Change |
| FY 2018 | FY 2017 | Days(4)
FY 2018 | Days(4)
FY 2017 |
| Receivables, net | $536 | $514 | $22 | 34 | 32 | 2 |
| Inventories, net | $494 | $501 | ($7) | 53 | 56 | -3 |
| Accounts payable and Accrued Liabilities | $885 | $878 | $7 | | | |
| Total WC(1) | $306 | $257 | $49 | | | |
| Total WC % net sales(2) | 5.4% | 4.6% | | | | |
| Average WC (1) | $198 | $181 | $17 | | | |
| Average WC % net sales(3) | 3.5% | 3.2% | | | | |
| (1) | 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. |
| (2) | Represents working capital at the end of the period divided by (net sales for current quarter x 4). |
| (3) | Represents a two-point average of working capital divided by (net sales for current quarter x 4). |
| (4) | Days calculations based on a two-point average. |
Supplemental Unaudited Condensed Information –Cash Flow
For the quarter ended December 31, 2017
Capital expenditures for the second quarter were $40 million versus $58 million in the year-ago quarter.
Depreciation and amortization expense for the second quarter was $41 million same as in the year-ago quarter.
Net cash provided by continuing operations in the second quarter was $65 million, or 4.6% of net sales.
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| The Clorox Company | |
Supplemental Unaudited Condensed Information –Free Cash Flow
Fiscal Year-To-Date Free Cash Flow Reconciliation
Dollars in Millions and percentages based on rounded numbers
| | Q2
Fiscal
YTD
2018 | | | | Q2
Fiscal
YTD
2017 | |
| Net cash provided by continuing operations – GAAP | | $322 | | | | $271 | |
| Less: Capital expenditures | | $89 | | | | $117 | |
| Free cash flow – non-GAAP(1) | | $233 | | | | $154 | |
| Free cash flow as a percentage of net sales – non-GAAP(1) | | 8.0% | | | | 5.4% | |
| Net sales | | $2,916 | | | | $2,849 | |
| (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 percentage of net 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 | |
Supplemental Unaudited Reconciliation of Earnings From Continuing Operations Before Income Taxes to EBIT(1)(3)and EBITDA(2)(3)
Dollars in millions and percentages based on rounded numbers
| | FY 2017 | | FY 2018 |
| | | | |
| | Q1 | | Q2 | | Q3 | | Q4 | | FY | | Q1 | | Q2 |
| | 9/30/16 | | 12/31/16 | | 3/31/17 | | 6/30/17 | | 6/30/17 | | 9/30/17 | | 12/31/17 |
| Earnings from continuing operations | | $264 | | $227 | | $247 | | $295 | | $1,033 | | $279 | | $227 |
| before income taxes | | | | | | | | | | | | | | |
| Interest income | | -$1 | | -$1 | | -$1 | | -$1 | | -$4 | | -$1 | | -$2 |
| Interest expense | | $22 | | $22 | | $22 | | $22 | | $88 | | $21 | | $20 |
| EBIT(1)(3) | | $285 | | $248 | | $268 | | $316 | | $1,117 | | $299 | | $245 |
| EBIT margin(1)(3) | | 19.8% | | 17.6% | | 18.1% | | 19.2% | | 18.7% | | 19.9% | | 17.3% |
| Depreciation and amortization | | $41 | | $41 | | $39 | | $42 | | $163 | | $40 | | $41 |
| EBITDA(2)(3) | | $326 | | $289 | | $307 | | $358 | | $1,280 | | $339 | | $286 |
| EBITDA margin(2)(3) | | 22.6% | | 20.6% | | 20.8% | | 21.7% | | 21.4% | | 22.6% | | 20.2% |
| Net sales | | $1,443 | | $1,406 | | $1,477 | | $1,647 | | $5,973 | | $1,500 | | $1,416 |
| |
| Total debt(4) | | $2,407 | | $2,549 | | $2,440 | | $2,195 | | $2,195 | | $2,200 | | $2,283 |
| Debt to EBITDA(3)(5) | | 2.0 | | 2.1 | | 2.0 | | 1.7 | | 1.7 | | 1.7 | | 1.8 |
| (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 the ratio of EBIT to 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 the ratio of EBITDA to 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, EBITDA margin and debt to EBITDA provides useful additional information to investors about trends in the company's operations and are useful for period-over-period comparisons.
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| (4) | Total debt represents the sum of notes and loans payable, current maturities of long-term debt and long-term debt. Current maturities of long-term debt and long-term debt are carried at face value net of unamortized discounts, premiums and debt issuance costs.
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| (5) | Debt to EBITDA (a non-GAAP measure) represents total debt divided by EBITDA for the trailing four quarters. |
