Clorox Co 10-Q for FY2020 Q3

Clorox Co (CLX)

10-Q 2020-05-01 For: 2020-03-31

Added on April 09, 2026

About this 10-Q

Clorox Co filed this 10-Q on May 1, 2020, covering the quarter ended March 31, 2020 (FY2020 Q3).

Headline figures

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.78B; up 15.0% from $1.55B a year earlier
Net income: $241M; up 28.9% from net income of $187M a year earlier
Diluted EPS: $1.89; up 31.3% from $1.44 a year earlier

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Delaware			31-0595760
(State or other jurisdiction of			(I.R.S. Employer Identification No.)
incorporation or organization)


	Three Months Ended								Nine Months Ended
	3/31/2020			3/31/2019			3/31/2020			3/31/2019
Net sales	$	1,783	$	1,551	$	4,738		$	4,587
Cost of products sold		951		878		2,604			2,593
Gross profit		832		673		2,134			1,994
Selling and administrative expenses		269		216		690			639
Advertising costs		184		161		461			445
Research and development costs		39		34		103			98
Interest expense		24		24		74			72
Other (income) expense, net		19		(2)		16			8
Earnings before income taxes		297		240		790			732
Income taxes		56		53		161			153
Net earnings	$	241	$	187	$	629		$	579
Net earnings per share
Basic net earnings per share	$	1.92	$	1.46	$	5.01		$	4.53
Diluted net earnings per share	$	1.89	$	1.44	$	4.94		$	4.45
Weighted average shares outstanding (in thousands)
Basic		125,661		128,404		125,641			128,092
Diluted		127,328		130,266		127,236			130,218

Comprehensive income	$	186	$	200	$	575		$	562


	3/31/2020			6/30/2019
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	496	$	111
Receivables, net		726		631
Inventories, net		457		512
Prepaid expenses and other current assets		71		51
Total current assets		1,750		1,305
Property, plant and equipment, net of accumulated depreciation and amortization of $2,203 and $2,150, respectively		1,047		1,034
Operating lease right-of-use assets		297		—
Goodwill		1,568		1,591
Trademarks, net		785		791
Other intangible assets, net		111		121
Other assets		292		274
Total assets	$	5,850	$	5,116
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Notes and loans payable	$	638	$	396

Current operating lease liabilities		65		—
Accounts payable and accrued liabilities		1,091		1,035
Income taxes payable		—		9
Total current liabilities		1,794		1,440
Long-term debt		2,288		2,287
Long-term operating lease liabilities		277		—
Other liabilities		730		780
Deferred income taxes		66		50
Total liabilities		5,155		4,557
Commitments and contingencies
Stockholders’ equity
Preferred stock: $1.00 par value; 5,000,000 shares authorized; none issued or outstanding		—		—
Common stock: $1.00 par value; 750,000,000 shares authorized; 158,741,461 shares issued as of March 31, 2020 and June 30, 2019; and 125,923,030 and 125,686,325 shares outstanding as of March 31, 2020 and June 30, 2019, respectively		159		159
Additional paid-in capital		1,111		1,046
Retained earnings		3,398		3,150
Treasury shares, at cost: 32,818,431 and 33,055,136 shares as of March 31, 2020 and June 30, 2019, respectively		(3,317)		(3,194)
Accumulated other comprehensive net (loss) income		(656)		(602)
Stockholders’ equity		695		559
Total liabilities and stockholders’ equity	$	5,850	$	5,116


	Nine Months Ended
	3/31/2020			3/31/2019
Operating activities:
Net earnings	$	629	$	579
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation and amortization		133		133
Stock-based compensation		37		34
Deferred income taxes		5		(7)
Other		26		(29)
Changes in:
Receivables, net		(102)		11
Inventories, net		50		(51)
Prepaid expenses and other current assets		(6)		(10)
Accounts payable and accrued liabilities		53		(55)
Operating lease right-of-use assets and liabilities, net		7		—
Income taxes payable / prepaid		(26)		(2)
Net cash provided by operations		806		603
Investing activities:
Capital expenditures		(158)		(135)
Other		13		9
Net cash used for investing activities		(145)		(126)
Financing activities:
Notes and loans payable, net		234		117
Treasury stock purchased		(225)		(315)
Cash dividends paid		(399)		(368)
Issuance of common stock for employee stock plans and other		129		137
Net cash used for financing activities		(261)		(429)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(8)		(2)
Net increase (decrease) in cash, cash equivalents, and restricted cash		392		46
Cash, cash equivalents, and restricted cash:
Beginning of period		113		134
End of period	$	505	$	180


	3/31/2020		6/30/2019
Finished goods	$	362	$	411
Raw materials and packaging	123		125
Work in process	7		6
LIFO allowances	(35)		(30)
Total	$	457	$	512


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Balance sheet classification	3/31/2020
Operating leases
Right-of-use assets	Operating lease right-of-use assets	$	297
Current lease liabilities	Current operating lease liabilities	65
Non-current lease liabilities	Long-term operating lease liabilities	277
Total operating lease liabilities		$	342

Finance leases
Right-of-use assets	Other assets	$	14
Current lease liabilities	Accounts payable and accrued liabilities	2
Non-current lease liabilities	Other liabilities	12
Total finance lease liabilities		$	14


	Nine Months Ended
	3/31/2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases, net	$	47
Operating cash flows from finance leases	—
Financing cash flows from finance leases	2
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	28
Finance leases	7


	3/31/2020
Weighted-average remaining lease term:
Operating leases	7 years
Finance leases	7 years
Weighted-average discount rate:
Operating leases	2.6	%
Finance leases	3.2	%


Year	Operating leases		Finance leases
2020	$	12	$	1
2021	68		3
2022	54		2
2023	48		2
2024	41		2
Thereafter	155		6
Total lease payments	$	378	$	16
Less: Imputed interest	(36)		(2)
Total lease liabilities	$	342	$	14


Year	Operating leases		Capital leases
2020	$	71	$	2
2021	65		2
2022	50		1
2023	42		1
2024	37		1
Thereafter	124		2
Total lease payments	$	389	$	9


	Gains (losses) recognized in Other comprehensive (loss) income
	Three Months Ended						Nine Months Ended
	3/31/2020		3/31/2019		3/31/2020		3/31/2019
Commodity purchase derivative contracts	$	(11)	$	2	$	(8)	$	(4)
Foreign exchange derivative contracts	2		—		2		1
Interest rate derivative contracts	—		—		—		—
Total	$	(9)	$	2	$	(6)	$	(3)


	Location of Gains (losses) reclassified from Accumulated other comprehensive net (loss) income into Net earnings	Gains (losses) reclassified from Accumulated other comprehensive net (loss) income and recognized in Net earnings
		Three Months Ended						Nine Months Ended
		3/31/2020		3/31/2019		3/31/2020		3/31/2019
Commodity purchase derivative contracts	Cost of products sold	$	—	$	(1)	$	(1)	$	(1)
Foreign exchange derivative contracts	Cost of products sold	—		1		—		2
Interest rate derivative contracts	Interest expense	(2)		(2)		(5)		(5)
Total		$	(2)	$	(2)	$	(6)	$	(4)


			3/31/2020						6/30/2019
	Balance sheet classification	Fair value hierarchy level	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets
Foreign exchange forward contracts	Prepaid expenses and other current assets	2	$	2	$	2	$	—	$	—



			$	2	$	2	$	—	$	—
Liabilities
Commodity purchase swaps contracts	Accounts payable and accrued liabilities	2	$	5	$	5	$	1	$	1
Commodity purchase futures contracts	Accounts payable and accrued liabilities	1	1		1		1		1
Commodity purchase swaps contracts	Other liabilities	2	1		1		—		—
			$	7	$	7	$	2	$	2


	3/31/2020		6/30/2019
Draw down on revolving credit facility	$	450	$	—
Commercial paper	188		396
Total	$	638	$	396


	Net sales
	Three Months Ended						Nine Months Ended
	3/31/2020		3/31/2019		3/31/2020		3/31/2019
Home Care	23	%	20	%	22	%	19	%
Laundry	9	%	8	%	9	%	9	%
Professional Products	6	%	5	%	6	%	6	%
Cleaning	38	%	33	%	37	%	34	%
Bags and Wraps	11	%	12	%	12	%	13	%
Cat Litter	7	%	8	%	7	%	8	%
Grilling	9	%	10	%	6	%	6	%
Digestive Health	1	%	2	%	1	%	2	%
Household	28	%	32	%	26	%	29	%
Food	8	%	9	%	9	%	9	%
Natural Personal Care	4	%	4	%	5	%	5	%
Water Filtration	4	%	3	%	4	%	3	%
Dietary Supplements	3	%	3	%	3	%	4	%
Lifestyle	19	%	19	%	21	%	21	%
International	15	%	16	%	16	%	16	%
Total	100	%	100	%	100	%	100	%


	Three Months Ended March 31, 2020
	Percentage change versus the year-ago period
	Reported (GAAP) Net Sales Growth / (Decrease)		Reported Volume		Acquisitions & Divestitures		Foreign Exchange Impact		Price/Mix/Other ⁽¹⁾		Organic Sales Growth / (Decrease) (Non-GAAP) ⁽²⁾		Organic Volume ⁽³⁾
Cleaning	32	%	34	%	—	%	—	%	(2)	%	32	%	34	%
Household	2		5		—		—		(3)		2		5
Lifestyle	10		7		—		—		3		10		7
International	11		16		—		(11)		6		22		16
Total	15	%	18	%	—	%	(2)	%	(1)	%	17	%	18	%

	Nine Months Ended March 31, 2020
	Percentage change versus the year-ago period
	Reported (GAAP) Net Sales Growth / (Decrease)		Reported Volume		Acquisitions & Divestitures		Foreign Exchange Impact		Price/Mix/Other ⁽¹⁾		Organic Sales Growth / (Decrease) (Non-GAAP) ⁽²⁾		Organic Volume ⁽³⁾
Cleaning	10	%	12	%	—	%	—	%	(2)	%	10	%	12	%
Household	(6)		(2)		—		—		(4)		(6)		(2)
Lifestyle	6		5		—		—		1		6		5
International	3		6		—		(9)		6		12		6
Total	3	%	6	%	—	%	(2)	%	(1)	%	5	%	6	%


	Three Months Ended March 31
	Common Stock					Additional Paid-in Capital		Retained Earnings		Treasury Stock					Accumulated Other Comprehensive Net (Loss) Income	Total Stockholders’ Equity
	Amount		Shares (in thousands)							Amount	Shares (in thousands)
Balance as of December 31, 2018	$	159	158,741	$	1,014	$	2,940	$	(2,794)	(30,651)	$	(577)	$	742
Net earnings						187							187
Other comprehensive (loss) income											13		13
Dividends ($0.96 per share declared)						(123)							(123)
Stock-based compensation				16									16
Other employee stock plan activities				3		—		16		264			19
Treasury stock purchased								(73)		(466)			(73)
Balance as of March 31, 2019	$	159	158,741	$	1,033	$	3,004	$	(2,851)	(30,853)	$	(564)	$	781

Balance as of December 31, 2019	$	159	158,741	$	1,062	$	3,292	$	(3,357)	(33,717)	$	(601)	$	555
Net earnings						241							241
Other comprehensive (loss) income											(55)		(55)
Dividends ($1.06 per share declared)						(135)							(135)
Stock-based compensation				18									18
Other employee stock plan activities				31		—		70		1,083			101
Treasury stock purchased								(30)		(184)			(30)
Balance as of March 31, 2020	$	159	158,741	$	1,111	$	3,398	$	(3,317)	(32,818)	$	(656)	$	695

	Nine Months Ended March 31
	Common Stock					Additional Paid-in Capital		Retained Earnings		Treasury Stock					Accumulated Other Comprehensive Net (Loss) Income	Total Stockholders’ Equity
	Amount		Shares (in thousands)							Amount	Shares (in thousands)
Balance as of June 30, 2018	$	159	158,741	$	975	$	2,797	$	(2,658)	(30,759)	$	(547)	$	726
Cumulative effect of accounting changes, net of tax ⁽¹⁾						(3)							(3)
Net earnings						579							579
Other comprehensive (loss) income											(17)		(17)
Dividends ($2.88 per share declared)						(369)							(369)
Stock-based compensation				34									34
Other employee stock plan activities				24		—		116		2,048			140
Treasury stock purchased								(309)		(2,142)			(309)
Balance as of March 31, 2019	$	159	158,741	$	1,033	$	3,004	$	(2,851)	(30,853)	$	(564)	$	781

Balance as of June 30, 2019	$	159	158,741	$	1,046	$	3,150	$	(3,194)	(33,055)	$	(602)	$	559
Cumulative effect of accounting changes, net of tax ⁽²⁾						22							22
Net earnings						629							629
Other comprehensive (loss) income											(54)		(54)
Dividends ($3.18 per share declared)						(402)							(402)
Stock-based compensation				37									37
Other employee stock plan activities				28		(1)		96		1,661			123
Treasury stock purchased								(219)		(1,424)			(219)
Balance as of March 31, 2020	$	159	158,741	$	1,111	$	3,398	$	(3,317)	(32,818)	$	(656)	$	695


	Three Months Ended March 31
	Foreign currency translation adjustments		Net unrealized gains (losses) on derivatives		Pension and postretirement benefit adjustments		Accumulated other comprehensive net (loss) income
Balance as of December 31, 2018	$	(415)	$	(26)	$	(136)	$	(577)
Other comprehensive (loss) income before reclassifications	8		2		—		10
Amounts reclassified from Accumulated other comprehensive net (loss) income	—		2		2		4
Income tax benefit (expense)	—		(1)		—		(1)
Net current period other comprehensive (loss) income	8		3		2		13
Balance as of March 31, 2019	$	(407)	$	(23)	$	(134)	$	(564)

Balance as of December 31, 2019	$	(421)	$	(17)	$	(163)	$	(601)
Other comprehensive (loss) income before reclassifications	(49)		(9)		—		(58)
Amounts reclassified from Accumulated other comprehensive net (loss) income	—		2		2		4
Income tax benefit (expense), and other	(2)		2		(1)		(1)
Net current period other comprehensive (loss) income	(51)		(5)		1		(55)
Balance as of March 31, 2020	$	(472)	$	(22)	$	(162)	$	(656)

	Nine Months Ended March 31
	Foreign currency translation adjustments		Net unrealized gains (losses) on derivatives		Pension and postretirement benefit adjustments		Accumulated other comprehensive net (loss) income
Balance as of June 30, 2018	$	(384)	$	(25)	$	(138)	$	(547)
Other comprehensive (loss) income before reclassifications	(22)		(3)		—		(25)
Amounts reclassified from Accumulated other comprehensive net (loss) income	—		4		5		9
Income tax benefit (expense)	(1)		1		(1)		(1)
Net current period other comprehensive (loss) income	(23)		2		4		(17)
Balance as of March 31, 2019	$	(407)	$	(23)	$	(134)	$	(564)

Balance as of June 30, 2019	$	(414)	$	(23)	$	(165)	$	(602)
Other comprehensive (loss) income before reclassifications	(55)		(6)		—		(61)
Amounts reclassified from Accumulated other comprehensive net (loss) income	—		6		5		11
Income tax benefit (expense), and other	(3)		1		(2)		(4)
Net current period other comprehensive (loss) income	(58)		1		3		(54)
Balance as of March 31, 2020	$	(472)	$	(22)	$	(162)	$	(656)


	Three Months Ended
							% of Net Sales
	3/31/2020		3/31/2019		% Change		3/31/2020		3/31/2019
Selling and administrative expenses	$	269	$	216	25	%	15.1	%	13.9	%
Advertising costs	184		161		14		10.3		10.4
Research and development costs	39		34		15		2.2		2.2

	Nine Months Ended
							% of Net Sales
	3/31/2020		3/31/2019		% Change		3/31/2020		3/31/2019
Selling and administrative expenses	$	690	$	639	8	%	14.6	%	13.9	%
Advertising costs	461		445		4		9.7		9.7
Research and development costs	103		98		5		2.2		2.1


	Twelve Months Ended
	3/31/2020
Earnings from operations	$	870
Add back:
Interest expense	99
Income tax expense	212
Depreciation and amortization	180
Non-cash asset impairment charges	1
Deduct:
Interest income	(2)
Consolidated EBITDA	$	1,360
Interest expense	$	99
Interest Coverage ratio	13.7


	[a]	[b]		[c]	[d]
Period	Total Number of Shares Purchased (1)	Average Price Paid per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 to 31, 2020	—	$	—	—	$1,493 million
February 1 to 29, 2020	102,905	162.27		102,905	$1,493 million
March 1 to 31, 2020	80,897	162.48		80,897	$1,493 million
Total	183,802	$	162.37	183,802


10.1						Second Amended and Restated Executive Change in Control Severance Plan, effective February 11, 2020 (filed as Exhibit 10.1 to the Current Report on Form 8-K, filed February 14, 2020, incorporated herein by reference).
10.2						Severance Plan for Clorox Executive Committee Members, second amended and restated effective as of February 11, 2020 (filed as Exhibit 10.2 to the Current Report on Form 8-K, filed February 14, 2020, incorporated herein by reference).
31.1						Certification by the Chief Executive Officer of the Company Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2						Certification by the Chief Financial Officer of the Company Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32						Certification by the Chief Executive Officer and Chief Financial Officer of the Company Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.SCH						XBRL Taxonomy Extension Schema Document.
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB						XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.
104						Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101).