Clorox Reports Q4 and Fiscal Year 2007 Results; Updates Fiscal 2008 Outlook.OAKLAND, Calif. -- The Clorox Clorox commercial name for a sodium hypochlorite preparation marketed as household bleach, but also used for disinfection. Company (NYSE NYSE See: New York Stock Exchange :CLX (library, graphics) CLX - The Common Lisp library providing a low-level interface to the X Window System, equivalent to Xlib. Graphics toolkits can be built on top of CLX, e.g. McCLIM, Garnet, CLUE and CLIO. ) today announced earnings results for the fiscal fourth quarter, which ended June 30, 2007. For the quarter, the company reported mixed top-line results but earnings within its previously communicated outlook range. Clorox also announced that solid sales growth, gross margin expansion and cost savings contributed to favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. operating results for fiscal year 2007. "I'm pleased that we delivered on our earnings outlook for the quarter," said Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Don Knauss. "Although we are disappointed that sales and volume growth were lower than anticipated, we delivered overall strong results when you look at the back half of the fiscal year. As I've said before, results will vary by quarter, and we continue to manage our business for the long term." Commenting on the company's fiscal year 2007 results, Knauss said, "I'm happy with our overall performance for the year. Despite challenging commodity and competitive environments, we expanded gross margin, achieved our sixth consecutive year of strong sales growth and cost savings greater than $100 million, and delivered earnings results in line with our outlook. Importantly, we also introduced our Centennial Strategy to drive long-term growth. I'm extremely proud of the hard work and dedication of Clorox employees worldwide, and excited about the future of our company as we look ahead to our centennial anniversary in 2013." Clorox reported fourth-quarter net earnings of $164 million, or $1.07 diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ). This compares with $142 million in the year-ago quarter, or 92 cents diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS, for an increase of 15 cents per diluted share. These results reflect solid gross margin improvement and a more favorable tax rate versus the year-ago quarter. Earnings results for the year-ago quarter and fiscal year 2006 included after-tax charges of $7 million, or 5 cents diluted EPS, related to the retirement of the former chairman and CEO from his positions, and $16 million, or 11 cents diluted EPS, related to non-cash historical stock option compensation expense. For fiscal year 2007, Clorox reported net earnings from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $496 million, or $3.23 per diluted share. This compares with fiscal year 2006 net earnings from continuing operations of $443 million, or $2.89 diluted EPS, which included the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. $23 million of charges, for an increase of 34 cents per diluted share, or 12 percent. Fourth-quarter highlights Fourth-quarter sales grew 2 percent to $1.34 billion, compared with $1.32 billion in the year-ago quarter. Excluding the impact of the previously announced acquisition of bleach bleach Solid or liquid chemical compound used to whiten or remove the natural colour of fibres, yarns, paper, and textile fabrics. Sunlight was the chief bleaching agent up to the discovery of chlorine in 1774 by Karl Wilhelm Scheele (b. 1742—d. businesses in Canada and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , sales growth was about flat for the quarter. Volume increased 2 percent compared to the year-ago quarter. The increase was primarily driven by higher shipments of laundry Laundry can be:
Before industrialization and cleaning products in Latin America due to category growth and the recently acquired bleach business; all-time record shipments of Fresh Step([R]) scoopable cat litter Cat litter (often called kitty litter) is one of any of a number of materials used in litter boxes to absorb moisture from cat feces and urine, which reduces foul odors such as ammonia and renders them more tolerable within the home. due to a significant product improvement; higher shipments of Glad([R]) products behind successful promotional activities; and shipments in Canada from the new bleach business. Results were negatively impacted by lower consumption following very strong 8 percent volume growth in the third quarter and continued aggressive competitive activity in the fourth quarter, particularly in U.S. laundry and cleaning products, as well as lower shipments of Kingsford([R]) charcoal charcoal, substance obtained by partial burning or carbonization (destructive distillation) of organic material. It is largely pure carbon. The entry of air during the carbonization process is controlled so that the organic material does not turn to ash, as in a and auto-care products due to the impact of poor April weather. The company reported its fourth consecutive quarter of year-over-year gross margin expansion, with an increase of 50 basis points to 44.2 percent from 43.7 percent in the year-ago quarter. The increase was primarily due to the benefit of strong cost savings and price increases. These factors were partially offset by the impact of higher trade-promotion spending in response to competitive activity, higher expenses for logistics, and unfavorable costs for agricultural commodities. Net cash provided by operations was $282 million, compared to $301 million in the year-ago quarter. The year-over-year decrease was primarily due to higher levels of inventories, partially offset by increased earnings. During the quarter, Clorox repurchased 1 million shares of the company's common stock at a cost of about $66 million under its ongoing program to offset stock option dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. . Following is a summary of key fourth-quarter results by business segment. All comparisons are with the fourth quarter of fiscal year 2006, unless otherwise stated. Household Group - North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. The segment reported a 2 percent sales decline, 1 percent volume decline and 4 percent decrease in pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern earnings. Volume of some household products, including Clorox([R]) disinfecting wipes, was negatively impacted by lower consumption following very strong growth in the third quarter and continued aggressive competitive activity. In addition, lower shipments of auto-care products resulted from overall category softness due to poor April weather. These results were partially offset by shipments from the recently acquired bleach business in Canada and the launch of Clorox([R]) disinfecting kitchen cleaner. Pretax earnings reflected the impact of higher trade-promotion spending in response to competitive activity, and increased logistics and transportation costs. These factors were partially offset by the benefit of strong cost savings. Specialty Group The segment reported 1 percent sales growth, 2 percent volume growth and a 4 percent increase in pretax earnings. The segment delivered all-time-record shipments of Fresh Step([R]) scoopable cat litter for the fifth consecutive quarter behind a significant product improvement, as well as higher shipments of Glad([R]) trash bags due to higher trade-promotion spending in response to competitive activity. These factors were partially offset by lower shipments of Kingsford([R]) charcoal products due to the impact of poor April weather. Pretax earnings reflected the benefit of strong cost savings and higher sales. International The segment reported 21 percent sales growth, 12 percent volume growth and a 25 percent increase in pretax earnings. Sales results included 8 percentage points of growth from the newly acquired bleach business and 4 percentage points from favorable foreign exchange rates. Volume growth was driven by increased shipments of laundry and cleaning products in Latin America due to category growth and the recently acquired bleach business. Sales growth outpaced volume growth primarily due to the benefit of favorable foreign exchange rates and price increases in Latin America. Pretax earnings reflected the benefit of higher sales and cost savings. Fiscal year 2007 results Fiscal year 2007 sales grew 4 percent to $4.8 billion. The bleach business acquisition contributed less than 1 percent of the sales growth. Volume grew 2 percent, primarily due to increased shipments of laundry and cleaning products in Latin America and Fresh Step([R]) scoopable cat litter. Sales growth outpaced volume growth, primarily due to the impact of price increases, partially offset by the impact of higher trade-promotion spending. For the fiscal year, gross margin increased 90 basis points to 43.1 percent, primarily due to the benefit of strong cost savings and price increases. These factors were partially offset by unfavorable commodity costs, higher manufacturing and logistics costs and increased trade-promotion spending. Net cash provided by operations for the fiscal year was $709 million, compared with $522 million in fiscal year 2006. The year-over-year increase was primarily due to the payment of an income tax settlement in the prior year and higher earnings in the current year. During the fiscal year, Clorox repurchased 2.4 million shares of the company's common stock at a cost of about $155 million under its ongoing program to offset stock option dilution. Fiscal year 2008 financial outlook For fiscal year 2008, Clorox continues to anticipate sales growth from existing brands in the range of 3-5 percent, including the benefit of the bleach business acquisition, which is expected to add just under 1 percent of sales. Clorox's outlook is for gross margin expansion in fiscal year 2008, as the company anticipates that cost savings will more than offset a negative net commodity cost impact and further inflationary in·fla·tion·ar·y adj. Of, associated with, or tending to cause inflation: inflationary prices; inflationary policies. Adj. 1. pressure in manufacturing and logistics. The company now expects that commodity costs in the first half of the fiscal year will be higher than previously anticipated due to continued pressure on agricultural commodities and less favorable resin resin, any of a class of amorphous solids or semisolids. Resins are found in nature and are chiefly of vegetable origin. They are typically light yellow to dark brown in color; tasteless; odorless or faintly aromatic; translucent or transparent; brittle, fracturing costs. As previously communicated, the company's fiscal year 2008 outlook includes anticipated pretax charges of about $14 million to $18 million, or 6-8 cents diluted EPS, related to the planned consolidation of the home-care manufacturing network. $5 million to $6 million of these pretax charges are expected to be non-cash. In addition, the outlook now includes additional anticipated pretax charges in the range of $35 million to $40 million, or 15-17 cents diluted EPS, of which $30 million to $33 million are expected to be non-cash. These anticipated charges are primarily related to certain new venture investments the company has decided not to pursue in light of its Centennial Strategy, and supply chain simplification, primarily in overseas markets. Net of these anticipated charges, the company now anticipates fiscal year 2008 diluted EPS in the range of $3.27 to $3.46. Clorox anticipates continued strong cash flow in fiscal year 2008. The company anticipates using its expected fiscal year 2008 free cash flow, defined as cash provided by operations less capital expenditures, to return cash to shareholders in the form of dividends and share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. . As announced in May, Clorox's Centennial Strategy is focused on achieving double-digit annual percentage growth in economic profit, generally defined as profit the company generates over and above the cost of paying for assets used by the business to generate that profit. In fiscal year 2007, Clorox generated about $379 million in economic profit versus about $348 million in the prior year, for an increase of 9 percent. For a reconciliation of the economic profit in fiscal years 2007 and 2006 to earnings from continuing operations before income taxes for the same periods, refer to the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the company's Web site at www.TheCloroxCompany.com. For fiscal year 2008, the company anticipates economic profit growth in the mid-single digits, which includes the cash portion of the aforementioned charges in support of the Centennial Strategy. Clorox plans to report economic profit results at the end of each fiscal year. For more detail, refer to the economic profit reconciliation information in the Investor Relations section of www.TheCloroxCompany.com. Consistent with Clorox's focus on achieving its annual financial targets, as previously communicated, the company is no longer providing specific financial outlook for individual quarters within a year. For more information Visit the Investors: Financial Results section of the company's Web site at www.TheCloroxCompany.com for the following: * Definitions of financial terms used in this earnings release and on today's conference call with the investment community (details below) * Supplemental volume growth information * Supplemental sales growth information * Supplemental gross margin driver information * Adjusted operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. and EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). reconciliation information * Economic profit reconciliation information * Supplemental balance sheet and cash flow information * Supplemental price-increase information Note: Percentage and basis-point changes noted in this news release are calculated based on rounded numbers. Today's webcast Today at 10:30 a.m. Pacific time (1:30 p.m. Eastern time), Clorox will host a live audio webcast of a discussion with the investment community regarding the company's fourth-quarter results. The webcast can be accessed at http://investors.TheCloroxCompany.com/. Following a live discussion, a replay of the webcast will be archived for one week on the company's Web site. The Clorox Company The Clorox Company is a leading manufacturer and marketer of consumer products with fiscal year 2007 revenues of $4.8 billion. Clorox markets some of consumers' most trusted and recognized brand names, including its namesake name·sake n. One that is named after another. [From the phrase for the name's sake.] namesake Noun bleach and cleaning products, Armor All([R]) and STP STP or standard temperature and pressure, standard conditions for measurement of the properties of matter. The standard temperature is the freezing point of pure water, 0°C; or 273.15°K;. ([R]) auto-care products, Fresh Step([R]) and Scoop Away([R]) cat litter, Kingsford([R]) charcoal, Hidden Valley([R]) and K C Masterpiece([R]) dressings and sauces, Brita([R]) water-filtration systems, and Glad([R]) bags, wraps and containers. With 7,800 employees worldwide, the company manufactures products in more than two dozen countries and markets them in more than 100 countries. Clorox is committed to making a positive difference in the communities where its employees work and live. Founded in 1980, The Clorox Company Foundation has awarded cash grants totaling more than $69.7 million to nonprofit organizations Nonprofit Organization An association that is given tax-free status. Donations to a non-profit organization are often tax deductible as well. Notes: Examples of non-profit organizations are charities, hospitals and schools. , schools and colleges. In fiscal 2007 alone, the foundation awarded $3.4 million in cash grants, and Clorox made product donations valued at $5.9 million. For more information about Clorox, visit www.TheCloroxCompany.com. Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Except for historical information, matters discussed above, including statements about future volume, sales, costs, cost savings, earnings, cash outflows, plans, objectives, expectations, growth, or profitability, are forward-looking statements based on management's estimates, assumptions and projections. Words such as "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," and variations on such words, and similar expressions, 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 above. Important factors that could affect performance and cause results to differ materially from management's expectations are described in the sections entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Risk Factors" and "Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations" in the company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended June 30, 2006, as updated from time to time in the company's SEC filings. These factors include, but are not limited to, the success of the company's Centennial Strategy; general economic and marketplace conditions and events; competitors' actions; the company's costs, including changes in exposure to commodity costs such as resin, diesel, chlor alkali alkali (ăl`kəlī) [Arab., al-gili=ashes of saltwort], hydroxide of an alkali metal. Alkalies are readily soluble in water and form strongly basic solutions with a characteristic acrid taste. and agricultural commodities; increases in energy costs; consumer and customer reaction to price increases; customer-specific ordering patterns and trends; the company's actual cost performance; changes in the company's tax rate; any future supply constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. which may affect key commodities; risks inherent in sole-supplier relationships; risks related to customer concentration; risks arising out of natural disasters; risks related to the handling and/or transportation of hazardous substances, including but not limited to chlorine chlorine (klōr`ēn, klôr`–) [Gr.,=green], gaseous chemical element; symbol Cl; at. no. 17; at. wt. 35.453; m.p. −100.98°C;; b.p. −34.6°C;; density 3.2 grams per liter at STP; valence −1, +1, +3, +5, +7. ; risks inherent in litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; risks relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. ; risks inherent in maintaining an effective system of internal controls, including the potential impact of acquisitions or the use of third-party service providers; the ability to manage and realize the benefit of joint ventures and other cooperative relationships, including the company's joint venture regarding the company's Glad([R]) plastic bags, wraps and containers business, and the agreement relating to the provision of information technology and related services by a third party; the success of new products; risks relating to acquisitions, mergers and divestitures; risks relating to changes in the company's capital structure; and the ability of the company to successfully manage tax, regulatory, product liability, intellectual property, environmental and other legal matters, including the risk resulting from joint and several liability for environmental contingencies environmental contingencies (en·vīˑ·r  n·menˈ·t . In addition, the company's future performance is
subject to risks particular to the share exchange transaction with
Henkel KGaA, the tax indemnification IndemnificationUsed in insurance policy agreements as to compensation for damage or loss. In the context of corporate governance, Director Indemnification uses the bylaws and/or charter to indemnify officers and directors from certain legal expenses and judgements resulting from obligations and the actual level of debt costs. Declines in cash flow, whether resulting from tax payments, debt payments, share repurchases, interest cost increases greater than management expects, or otherwise, could adversely affect the company's earnings. The company's forward-looking statements in this document are based on management's current views and assumptions regarding future events and speak only as of their dates. 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. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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