Clorox Co 10-Q for FY2021 Q1

Clorox Co (CLX)

10-Q 2020-11-02 For: 2020-09-30

Added on April 09, 2026

About this 10-Q

Clorox Co filed this 10-Q on November 2, 2020, covering the quarter ended September 30, 2020 (FY2021 Q1).

Headline figures

Quarter ended September 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.92B; up 27.2% from $1.51B a year earlier
Net income: $415M; up 104.4% from net income of $203M a year earlier
Diluted EPS: $3.22; up 102.5% from $1.59 a year earlier

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


(Former name, former address and former fiscal year, if changed since last report)
___________________
Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock - $1.00 par value	CLX	New York Stock Exchange


	Three Months Ended
		9/30/2020		9/30/2019
Net sales			$	1,916	$	1,506
Cost of products sold				996		843
Gross profit				920		663
Selling and administrative expenses				238		211
Advertising costs				179		137
Research and development costs				32		30
Interest expense				25		25
Other (income) expense, net				(80)		2
Earnings before income taxes				526		258
Income taxes				109		55
Net earnings				417		203
Less: Net earnings attributable to noncontrolling interests				2		—
Net earnings attributable to Clorox			$	415	$	203
Net earnings per share attributable to Clorox
Basic net earnings per share			$	3.28	$	1.61
Diluted net earnings per share			$	3.22	$	1.59
Weighted average shares outstanding (in thousands)
Basic				126,346		125,823
Diluted				128,729		127,465

Comprehensive income			$	434	$	190
Less: Total comprehensive income attributable to noncontrolling interests				2		—
Total comprehensive income attributable to Clorox			$	432	$	190


	9/30/2020		6/30/2020
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	860	$	871
Receivables, net		685		648
Inventories, net		534		454
Prepaid expenses and other current assets		65		47
Total current assets		2,144		2,020
Property, plant and equipment, net of accumulated depreciation and amortization of $2,270 and $2,224, respectively		1,176		1,103
Operating lease right-of-use assets		281		291
Goodwill		1,793		1,577
Trademarks, net		786		785
Other intangible assets, net		265		109
Other assets		332		328
Total assets	$	6,777	$	6,213
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities


Current operating lease liabilities	$	64	$	64
Accounts payable and accrued liabilities		1,395		1,329
Income taxes payable		57		25
Total current liabilities		1,516		1,418
Long-term debt		2,781		2,780
Long-term operating lease liabilities		268		278
Other liabilities		797		767
Deferred income taxes		104		62
Total liabilities		5,466		5,305
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 September 30, 2020 and June 30, 2020; and 126,037,019 and 126,198,606 shares outstanding as of September 30, 2020 and June 30, 2020, respectively		159		159
Additional paid-in capital		1,146		1,137
Retained earnings		3,840		3,567
Treasury shares, at cost: 32,704,442 and 32,542,855 shares as of September 30, 2020 and June 30, 2020, respectively		(3,407)		(3,315)
Accumulated other comprehensive net (loss) income		(623)		(640)
Total Clorox stockholders’ equity		1,115		908
Noncontrolling interests		196		—
Total stockholders’ equity		1,311		908
Total liabilities and stockholders’ equity	$	6,777	$	6,213


	Three Months Ended
	9/30/2020		9/30/2019
Operating activities:
Net earnings	$	417	$	203
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation and amortization		51		44
Stock-based compensation		13		6
Deferred income taxes		20		7
Other		(71)		19
Changes in:
Receivables, net		(8)		73
Inventories, net		(70)		6
Prepaid expenses and other current assets		(18)		(10)
Accounts payable and accrued liabilities		20		(82)
Operating lease right-of-use assets and liabilities, net		(1)		1
Income taxes payable / prepaid		30		4
Net cash provided by operations		383		271
Investing activities:
Capital expenditures		(69)		(54)
Businesses acquired, net of cash acquired		(85)		—
Other		3		12
Net cash used for investing activities		(151)		(42)
Financing activities:
Notes and loans payable, net		—		51
Treasury stock purchased		(100)		(110)
Cash dividends paid		(140)		(133)
Issuance of common stock for employee stock plans and other		(7)		9
Net cash used for financing activities		(247)		(183)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		3		(2)
Net increase (decrease) in cash, cash equivalents, and restricted cash		(12)		44
Cash, cash equivalents, and restricted cash:
Beginning of period		879		113
End of period	$	867	$	157


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


	Joint Venture
Goodwill	$	212
Reacquired rights (included in Other intangible assets, net)	138
Property, plant and equipment	46
Customer relationships (included in Other intangible assets, net)	10
Working capital, net (includes cash acquired of $26)	31
Noncurrent liabilities, net	(5)
Deferred income taxes	(20)
Total fair value of net assets	412
Less: Fair value of noncontrolling interests	(198)
Less: Fair value of previously held equity interest	(103)
Total purchase consideration	$	111


	9/30/2020		6/30/2020
Finished goods	$	396	$	340
Raw materials and packaging	161		140
Work in process	9		7
LIFO allowances	(32)		(33)
Total	$	534	$	454


		Gains (losses) recognized in Other comprehensive (loss) income
	Three Months Ended
		9/30/2020		9/30/2019
Commodity purchase derivative contracts		$	1	$	—
Foreign exchange derivative contracts		(1)		1
Interest rate derivative contracts		3		—
Total		$	3	$	1


	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
			9/30/2020		9/30/2019
Commodity purchase derivative contracts	Cost of products sold		$	(1)	$	—
Foreign exchange derivative contracts	Cost of products sold		—		—
Interest rate derivative contracts	Interest expense		(2)		(2)
Total			$	(3)	$	(2)


			9/30/2020				6/30/2020
	Balance Sheet Classification	Fair Value Hierarchy Level	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets
Commodity purchase futures contracts	Other current assets	1	$	1	$	1	$	—	$	—
Interest rate forward contracts	Other assets	2	4		4		1		1
			$	5	$	5	$	1	$	1
Liabilities
Commodity purchase futures contracts	Accounts payable and accrued liabilities	1	$	—	$	—	$	1	$	1
Commodity purchase swaps contracts	Accounts payable and accrued liabilities	2	3		3		3		3
Foreign exchange forward contract	Accounts payable and accrued liabilities	2	1		1		1		1
			$	4	$	4	$	5	$	5























	Three Months Ended September 30
(Dollars in millions except per share data; shares in thousands)	Common Stock			Additional Paid-in Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Net (Loss) Income		Non-controlling interests		Total Stockholders’ Equity
	Amount		Shares					Amount		Shares
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 (1)						22									22
Net earnings						203									203
Other comprehensive (loss) income											(13)				(13)
Dividends to Clorox stockholders ($1.06 per share declared)						(134)									(134)
Stock-based compensation				6											6
Other employee stock plan activities				(9)		—		20		472					11
Treasury stock purchased								(104)		(663)					(104)
Balance as of September 30, 2019	$	159	158,741	$	1,043	$	3,241	$	(3,278)	(33,246)	$	(615)	$	—	$	550

Balance as of June 30, 2020	$	159	158,741	$	1,137	$	3,567	$	(3,315)	(32,543)	$	(640)	$	—	$	908
Net earnings						415							2		417
Other comprehensive (loss) income											17				17
Dividends to Clorox stockholders ($1.11 per share declared)						(141)									(141)
Dividends to noncontrolling interests													(4)		(4)
Business combinations including purchase accounting adjustments													198		198
Stock-based compensation				13											13
Other employee stock plan activities				(4)		(1)		8		283					3
Treasury stock purchased								(100)		(444)					(100)
Balance as of September 30, 2020	$	159	158,741	$	1,146	$	3,840	$	(3,407)	(32,704)	$	(623)	$	196	$	1,311


















	Three Months Ended September 30
	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, 2019	$	(414)	$	(23)	$	(165)	$	(602)
Other comprehensive (loss) income before reclassifications	(15)		1		—		(14)
Amounts reclassified from Accumulated other comprehensive net (loss) income	—		2		2		4
Income tax benefit (expense)	(1)		(1)		(1)		(3)
Net current period other comprehensive (loss) income	(16)		2		1		(13)
Balance as of September 30, 2019	$	(430)	$	(21)	$	(164)	$	(615)

Balance as of June 30, 2020	$	(450)	$	(18)	$	(172)	$	(640)
Other comprehensive (loss) income before reclassifications	9		3		—		12
Amounts reclassified from Accumulated other comprehensive net (loss) income	—		3		2		5
Income tax benefit (expense), and other	1		(1)		—		—
Net current period other comprehensive (loss) income	10		5		2		17
Balance as of September 30, 2020	$	(440)	$	(13)	$	(170)	$	(623)


	Three Months Ended September 30, 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)
Health and Wellness	28	%	26	%	—	%	—	%	2	%	28	%	26	%
Household	39		25		—		—		14		39		25
Lifestyle	17		17		—		—		—		17		17
International	18		17		9		(8)		8		17		9
Total	27	%	23	%	1	%	(1)	%	5	%	27	%	22	%









	Three Months Ended
							% of Net Sales
	9/30/2020		9/30/2019		% Change		9/30/2020		9/30/2019
Selling and administrative expenses	$	238	$	211	13	%	12.4	%	14.0	%
Advertising costs	179		137		31		9.3		9.1
Research and development costs	32		30		7		1.7		2.0


		Net sales
	Three Months Ended
		9/30/2020		9/30/2019
Cleaning		29	%	32	%
Professional Products		9	%	6	%
Vitamins, Minerals and Supplements		4	%	4	%
Health and Wellness		42	%	42	%
Bags and Wraps		11	%	12	%
Cat Litter		6	%	8	%
Grilling		9	%	4	%
Household		26	%	24	%
Food Products		9	%	9	%
Natural Personal Care		4	%	5	%
Water Filtration		4	%	4	%
Lifestyle		17	%	18	%
International		15	%	16	%
Total		100	%	100	%


	Twelve Months Ended
	9/30/2020
Net earnings	$	1,153
Add back:
Interest expense	99
Income tax expense	300
Depreciation and amortization	187
Non-cash asset impairment charges	2
Deduct:
Interest income	(3)
Non-recurring, non-cash gain(1)	(85)
Consolidated EBITDA	$	1,653
Interest expense	$	99
Interest Coverage ratio	16.7


	[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
July 1 to 31, 2020	—	$	—	—	$1,493 million
August 1 to 31, 2020	443,848	225.30		443,848	$1,493 million
September 1 to 30, 2020	—	—		—	$1,493 million
Total	443,848	$	225.30	443,848


10.1						The Clorox Company 2005 Stock Incentive Plan, First Amendment and Restatement as of November 14, 2012; Second Amendment and Restatement as of September 22, 2020.
10.2						Form of Restricted Stock Unit Award Agreement under the Company's 2005 Stock Incentive Plan (Annual Grant).
10.3						Form of Restricted Stock Unit Award Agreement under the Company's 2005 Stock Incentive Plan (Off-Cycle Grant).
10.4						Form of Performance Share Award Agreement under the Company’s 2005 Stock Incentive Plan for awards made in 2020.
10.5						Form of Nonqualified Stock Option Award Agreement under the Company’s 2005 Stock Incentive Plan.
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).


		THE CLOROX COMPANY
		(Registrant)


DATE: November 2, 2020	BY	/s/ Jeffrey R. Baker
		Jeffrey R. Baker Vice President – Chief Accounting Officer and Corporate Controller