| The Clorox Company |  |
Three Months Ended June 30, 2020
Percentage change versus the year-ago period |
| Reported
(GAAP)
Net Sales
Growth/
(Decrease) | Reported
Volume | Acquisitions
&
Divestitures | Foreign
Exchange
Impact | Price
Mix and
Other (1) | Organic
Net Sales
Growth/
(Decrease)
(Non-GAAP)
(2) | Organic
Volume
(3)
|
| Health and Wellness (4) | 33% | 32% | —% | —% | 1% | 33% | 32% |
| Household(4) | 17 | 12 | — | — | 5 | 17 | 12 |
| Lifestyle(4) | 16 | 12 | — | — | 4 | 16 | 12 |
| International | 12 | 17 | — | (12) | 7 | 24 | 17 |
| Total | 22% | 21% | —% | (2%) | 3% | 24% | 21% |
| |
Twelve Months Ended June 30, 2020
Percentage change versus the year-ago period |
| Reported
(GAAP)
Net Sales
Growth/
(Decrease) | Reported
Volume | Acquisitions
&
Divestitures | Foreign
Exchange
Impact | Price
Mix and
Other (1) | Organic
Net Sales
Growth/
(Decrease)
(Non-GAAP)
(2) | Organic
Volume
(3)
|
| Health and Wellness (4) | 14% | 15% | —% | —% | (1%) | 14% | 15% |
| Household(4) | 1 | 3 | — | — | (2) | 1 | 3 |
| Lifestyle(4) | 10 | 9 | — | — | 1 | 10 | 9 |
| International | 5 | 9 | — | (10) | 6 | 15 | 9 |
| Total | 8% | 10% | —% | (2%) | —% | 10% | 10% |
| |
Three Months Ended March 31, 2020
Percentage change versus the year-ago period – As Recast (4) |
| Reported
(GAAP)
Net Sales
Growth/
(Decrease) | Reported
Volume | Acquisitions
&
Divestitures | Foreign
Exchange
Impact | Price
Mix and
Other (1) | Organic
Net Sales
Growth/
(Decrease)
(Non-GAAP)
(2) | Organic
Volume
(3)
|
| Health and Wellness (4) | 26% | 27% | —% | —% | (1%) | 26% | 27% |
| Household(4) | 3 | 7 | — | — | (4) | 3 | 7 |
| Lifestyle(4) | 14 | 14 | — | — | — | 14 | 14 |
| International | 11 | 16 | — | (11) | 6 | 22 | 16 |
| Total | 15% | 18% | —% | (2%) | (1%) | 17% | 18% |
| The Clorox Company | |
Three Months Ended December 31, 2019
Percentage change versus the year-ago period – As Recast (4) |
| Reported
(GAAP)
Net Sales
Growth/
(Decrease) | Reported
Volume | Acquisitions
&
Divestitures | Foreign
Exchange
Impact | Price
Mix and
Other (1) | Organic
Net Sales
Growth/
(Decrease)
(Non-GAAP)
(2) | Organic
Volume
(3)
|
| Health and Wellness (4) | (1%) | —% | —% | —% | (1%) | (1%) | —% |
| Household(4) | (7) | (4) | — | — | (3) | (7) | (4) |
| Lifestyle(4) | 5 | 5 | — | — | — | 5 | 5 |
| International | (2) | (1) | — | (8) | 7 | 6 | (1) |
| Total | (2%) | —% | —% | (2%) | —% | —% | —% |
| |
Three Months Ended September 30, 2019
Percentage change versus the year-ago period – As Recast (4) |
| Reported
(GAAP)
Net Sales
Growth/
(Decrease) | Reported
Volume | Acquisitions
&
Divestitures | Foreign
Exchange
Impact | Price
Mix and
Other (1) | Organic
Net Sales
Growth/
(Decrease)
(Non-GAAP)
(2) | Organic
Volume
(3)
|
| Health and Wellness (4) | (2%) | —% | —% | —% | (2%) | (2%) | —% |
| Household(4) | (13) | (7) | — | — | (6) | (13) | (7) |
| Lifestyle(4) | 5 | 5 | — | — | — | 5 | 5 |
| International | — | 2 | — | (8) | 6 | 8 | 2 |
| Total | (4%) | —% | —% | (2%) | (2%) | (2%) | —% |
(1) This represents the net impact on net sales growth/ (decrease) from pricing action, mix and other factors.
(2) Organic sales growth/ (decrease) is defined as net sales growth/ (decrease) excluding the effect of any acquisitions and divestitures and foreign exchange rate changes. See “Non-GAAP Financial Information” below for reconciliation of organic sales growth to net sales growth/ (decrease), the most directly comparable GAAP financial information.
(3) Organic volume represents volume excluding the effect of any acquisitions and divestitures.
(4) In the fourth quarter of fiscal year 2020, the Digestive Health and Dietary Supplements business units were combined into a new Vitamins, Minerals and Supplements business unit, and the Laundry and Home Care business units were combined to create the Cleaning business unit. These newly established business units, along with the Professional Products business unit, now make up the new Health and Wellness reportable segment. Historical segment financial information presented has been recast to reflect this change.
Non-GAAP Financial Information
Management believes that the presentation of organic sales growth / (decrease) is useful to investors because it excludes sales from any acquisitions and divestitures, which results in a comparison of sales only from the businesses that the company was operating throughout the relevant periods, and the impact of foreign exchange rate changes, which are out of the control of the company and management. However, organic sales growth / (decrease) may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded.
| The Clorox Company | |
The following table provides a reconciliation of organic sales growth / (decrease) (non-GAAP) to net sales growth / (decrease) (GAAP), the most comparable GAAP measure:
| | Three Months Ended June 30, 2020
Percentage change versus the year-ago period |
| | Health and
Wellness (1) | | Household(1) | | Lifestyle(1) | | International | | Total |
| Net sales growth / (decrease) (GAAP) | | 33% | | 17% | | 16% | | 12% | | 22% |
| Add: Foreign Exchange | | — | | — | | — | | 12 | | 2 |
| Add/(Subtract): Divestitures/Acquisitions | | — | | — | | — | | — | | — |
| Organic sales growth / (decrease) (non-GAAP) | | 33% | | 17% | | 16% | | 24% | | 24% |
| |
| | Twelve Months Ended June 30, 2020
Percentage change versus the year-ago period |
| | Health and
Wellness (1) | | Household(1) | | Lifestyle(1) | | International | | Total |
| Net sales growth / (decrease) (GAAP) | | 14% | | 1% | | 10% | | 5% | | 8% |
| Add: Foreign Exchange | | — | | — | | — | | 10 | | 2 |
| Add/(Subtract): Divestitures/Acquisitions | | — | | — | | — | | — | | — |
| Organic sales growth / (decrease) (non-GAAP) | | 14% | | 1% | | 10% | | 15% | | 10% |
| |
| | Three Months Ended March 31, 2020
Percentage change versus the year-ago period – As Recast (1) |
| | Health and
Wellness (1) | | Household(1) | | Lifestyle(1) | | International | | Total |
| Net sales growth / (decrease) (GAAP) | | 26% | | 3% | | 14% | | 11% | | 15% |
| Add: Foreign Exchange | | — | | — | | — | | 11 | | 2 |
| Add/(Subtract): Divestitures/Acquisitions | | — | | — | | — | | — | | — |
| Organic sales growth / (decrease) (non-GAAP) | | 26% | | 3% | | 14% | | 22% | | 17% |
| The Clorox Company | |
| | Three Months Ended December 31, 2019
Percentage change versus the year-ago period – As Recast (1) |
| | Health and
Wellness (1) | | Household(1) | | Lifestyle(1) | | International | | Total |
| Net sales growth / (decrease) (GAAP) | | (1%) | | (7%) | | 5% | | (2%) | | (2%) |
| Add: Foreign Exchange | | — | | — | | — | | 8 | | 2 |
| Add/(Subtract): Divestitures/Acquisitions | | — | | — | | — | | — | | — |
| Organic sales growth / (decrease) (non-GAAP) | | (1%) | | (7%) | | 5% | | 6% | | —% |
| | | | | | | | | | | |
| | Three Months Ended September 30, 2019
Percentage change versus the year-ago period – As Recast (1) |
| | Health and
Wellness (1) | | Household(1) | | Lifestyle(1) | | International | | Total |
| Net sales growth / (decrease) (GAAP) | | (2%) | | (13%) | | 5% | | —% | | (4%) |
| Add: Foreign Exchange | | — | | — | | — | | 8 | | 2 |
| Add/(Subtract): Divestitures/Acquisitions | | — | | — | | — | | — | | — |
| Organic sales growth / (decrease) (non-GAAP) | | (2%) | | (13%) | | 5% | | 8% | | (2%) |
(1) In the fourth quarter of fiscal year 2020, the Digestive Health and Dietary Supplements business units were combined into a new Vitamins, Minerals and Supplements business unit, and the Laundry and Home Care business units were combined to create the Cleaning business unit. These newly established business units, along with the Professional Products business unit, now make up the new Health and Wellness reportable segment. Historical segment financial information presented has been recast to reflect this change.
| The Clorox Company | |
Supplemental Unaudited Condensed Information – Gross Margin Drivers
The table below provides details on the drivers of gross margin change versus the prior year.
| Gross Margin Change vs. Prior Year (basis points) |
| Driver | FY19 | FY20 |
| Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY |
| Cost Savings | +130 | +140 | +170 | +150 | +150 | +180 | +150 | +150 | +170 | +160 |
| Price Changes | +90 | +220 | +240 | +220 | +190 | +120 | +100 | +90 | +50 | +90 |
| Market Movement (commodities) | -130 | -120 | -50 | +20 | -60 | +30 | +60 | +60 | +40 | +50 |
| Manufacturing & Logistics | -280 | -190 | -190 | -90 | -190 | -50 | -80 | -50 | -350 | -140 |
| All other (1,2,3,4,5) | +40 | +20 | -110 | -190 | -70 | -220 | -190 | +80 | +260 | +10 |
| Change vs prior year | -150 | +70 | +60 | +110 | +20 | +60 | +40 | +330 | +170 | +170 |
| |
| Gross Margin (%) | 43.4% | 43.7% | 43.4% | 45.1% | 43.9% | 44.0% | 44.1% | 46.7% | 46.8% | 45.6% |
| (1) | In Q3 of fiscal year 2019, “All other” includes about -70bps of negative impact from foreign exchange. |
| (2) | In Q4 of fiscal year 2019, “All other” includes about -150bps of negative impact from higher trade promotion spending. |
| (3) | In Q1 of fiscal year 2020, “All other” includes about -180bps of negative impact from higher trade promotion spending. |
| (4) | In Q2 of fiscal year 2020, “All other” includes about -90bps of negative impact from higher trade promotion spending. |
| (5) | In Q4 of fiscal year 2020, ‘All other” includes the positive impact from volume growth and mix and assortment. |
| The Clorox Company | |
Supplemental Unaudited Condensed Information – Cash Flow
For the quarter ended June 30, 2020
Capital expenditures for the fourth quarter were $96 million versus $71 million in the year-ago quarter. (Fiscal year 2020 = $254 million)
Depreciation and amortization expense for the fourth quarter was $47 million versus $47 million in the year-ago quarter. (Fiscal year 2020 = $180 million)
Net cash provided by operations in the fourth quarter was $740 million, or 37.3% of net sales. (Fiscal year 2020 = $1,546 million, or 23.0% of net sales)
Supplemental Unaudited Condensed Information – Free Cash Flow
Fiscal Year Free Cash Flow Reconciliation
Dollars in Millions and percentages based on rounded numbers
| | Fiscal
Year
2020 | | Fiscal
Year
2019 |
| Net cash provided by operations – GAAP | | $1,546 | | $992 |
| Less: Capital expenditures | | $254 | | $206 |
| Free cash flow – non-GAAP (1) | | $1,292 | | $786 |
| Free cash flow as a percentage of net sales – non-GAAP (1) | | 19.2% | | 12.6% |
| Net sales | | $6,721 | | $6,214 |
| (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 stock 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. |
| |
| These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures and should be read in connection with the company’s consolidated financial statements presented in accordance with GAAP. |
| The Clorox Company | |
Supplemental Unaudited Reconciliation of Earnings Before Income Taxes to EBIT(1)(2)
Dollars in Millions and percentages based on rounded numbers
| | FY 2019 | | FY 2020 |
| | | | | |
| | Q1
9/30/18 | | Q2
12/31/18 | | Q3
3/31/19 | | Q4
6/30/19 | | FY
6/30/19 | | Q1
9/30/19 | | Q2
12/31/19 | | Q3
3/31/20 | | Q4
6/30/20 | | FY
6/30/20 |
| Earnings before income taxes | | $268 | | $224 | | $240 | | $292 | | $1,024 | | $258 | | $235 | | $297 | | $395 | | $1,185 |
| Interest income | | -$1 | | $0 | | -$1 | | -$1 | | -$3 | | $0 | | -$1 | | $0 | | -$1 | | -$2 |
| Interest expense | | $24 | | $24 | | $24 | | $25 | | $97 | | $25 | | $25 | | $24 | | $25 | | $99 |
| EBIT (1)(2) | | $291 | | $248 | | $263 | | $316 | | $1,118 | | $283 | | $259 | | $321 | | $419 | | $1,282 |
| EBIT margin (1)(2) | | 18.6% | | 16.8% | | 17.0% | | 19.4% | | 18.0% | | 18.8% | | 17.9% | | 18.0% | | 21.1% | | 19.1% |
| |
| Net sales | | $1,563 | | $1,473 | | $1,551 | | $1,627 | | $6,214 | | $1,506 | | $1,449 | | $1,783 | | $1,983 | | $6,721 |
| (1) | 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 the ratio of EBIT to net sales. |
| | |
| (2) | 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 and EBIT margin provides useful additional information to investors about trends in the company's operations and is useful for period-over-period comparisons. 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 financial 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 be read in connection with the company’s consolidated financial statements presented in accordance with GAAP. |
