Clorox Company (the) · NYSE:CLX
Clorox Company (the) — The Clorox Company — 2017 dbAccess Global Consumer Conference
36 slides from Clorox Company (the)'s conference presentation, Jun 14, 2017
Slide 1: 2017 dbAccess Global Consumer Conference
6/6/2017 2017 dbAccess Global Consumer Conference Benno Dorer Chairman and Chief Executive Officer June 14, 2017 Safe Harbor Except for historical information, matters discussed in this presentation, including statements about the success of the Company’s future volume, sales, costs, cost savings, e
Slide 2: Key Messages
6/6/2017 Key Messages • We have confidence in our 2020 Strategy • Focus on profitable growth continues to produce solid results Advantaged Portfolio Over 80% of Sales in U.S. and from #1 or #2 Share Brands International : 17% FY16 Company Sales: $5.8B Cleaning : 33% Latin America 9% Home Care 18% Ca
Slide 3: Advantaged Portfolio: #1 or #2 Market Share
6/6/2017 Advantaged Portfolio: #1 or #2 Market Share Compete Well in Categories with Branded Players Home Care Salad Dressing Cat Litter #1 Clorox 20% #1 Hidden Valley 23% #1 Nestle 36% #2 P&G 15% #2 Kraft 13% #2 Clorox 23% #3 Reckitt 14% #3 Private Label 12% #3 Church & Dwight 20% Sales from select
Slide 4: Advantaged Portfolio: Supported by Consumer Megatrends
6/6/2017 Advantaged Portfolio Supported by Consumer Megatrends Health & Wellness Sustainability MEGA TRENDS Fragmentation Affordability Advantaged Portfolio Driving Significant Synergies COMMON CORE CAPABILITIES Brand Customer Supply Building Chain COMMON MEGA TRENDS Big Share Brands ● Low SG&A* (%
Slide 5: 2020 Strategy
6/6/2017 2020 Strategy Mission • We make everyday life better, every day • Maximize economic profit Objectives • Big-share brands in midsized categories and countries • Engage our people as business owners • Increase brand investment behind superior value and more targeted Strategy 3D plans Strategy
Slide 6: Strong Progress Across Strategy Accelerators
6/6/2017 Leadership and Resilience in Times of Strategic Change in CPG Digital Consumer Changing International Revolution Focus on Value Retail Macro Landscape Headwinds Strong Progress Across Strategy Accelerators New, Digital-Led Agencies Cutting Speed to Market by up to 50% Investing in Growth Br
Slide 7: Focus on 3D Innovation
6/6/2017 Focus on 3D Innovation Broad-Based Approach to Innovation KEEP THE CORE HEALTHY GROW MARKET SHARE Product & Product Marketing Superiority New Product Cost-o- Platforms EXPAND MARGIN vation* & ACCELERATE GROWTH Adjacency Expansion *Cost-o-vation is a term used at Clorox that describes innova
Slide 8: FY16 Innovation: Investing Longer and Building on Momentum
6/6/2017 FY16 Innovation: Investing Longer and Building on Momentum Glad with Clorox Clothes Clorox Antimicrobial (International) Clorox Wipes with Burt’s Bees Lipsticks Micro-Scrubbers Fresh Step with Stephen Curry Brita Infinity Hidden Valley with Febreze Partnership “Connected” Greek Yogurt Cloro
Slide 9: Continuing Cat Litter Innovation in FY17
6/6/2017 Continuing Cat Litter Innovation in FY17 Product Innovation Cost-o-vation *8% Price Premium vs non- scented New Convenient Compact Packs Fresh Step with Febreze Hawaiian Aloha 2017 Innovation: Broad-Based Across the Portfolio Glad Kitchen Pro with Leakguard Lip Balm with Scentiva Cleaning P
Slide 10: Innovating to Improve the Cleaning Experience
6/6/2017 Innovating to Improve the Cleaning Experience Sensorial Efficacious “Cleaning is boring… 73% of consumers unfulfilling… seek new And never ending “ experiences Clorox® Scentiva = Cleaning Power + Scent Experience TM Kills 99.9% of Bacteria & Viruses Cleans, Disinfects and Deodorizes Two exp
Slide 11: Experiential Scent Without the Sacrifice
6/6/2017 Experiential Scent Without the Sacrifice “I absolutely loved the “The fact that it has scent…a lot better than good fragrance but is that cleaning-type scent the Clorox product is a of other products.” plus.” Scentiva resonates TM “After cleaning, the with both “I trust the Clorox scent lin
Slide 12: Focus on 3D Technology Transformation
6/6/2017 Focus on 3D Technology Transformation Leading the Industry in Digital Consumer Engagement Clorox now 45% invests 45% of our media in digital FY14 FY15 FY16 FY17 Proj Source: Clorox Internal 12
Slide 13: Winning with e-Commerce Across Portfolio
6/6/2017 Winning with e-Commerce Across Portfolio 2020 Strategy +30% Sales • Increase brand investment behind vs YA superior value and more targeted 3D plans • Keep the core healthy and grow into new categories and channels FY16 FY17 Proj Source: Clorox Internal e-Commerce Enabled Innovation 13
Slide 14: RenewLife: Strong Strategic Fit
6/6/2017 Focus on Portfolio Momentum RenewLife®: Strong Strategic Fit Health & US Centric Clear Plan for Wellness Value Creation 14
Slide 15: RenewLife: Strong First Year
6/6/2017 RenewLife®: Strong First Year • Integration is on track, ahead of valuation in year 1 • Distribution wins in Food, Drug and Mass • New marketing campaign Portfolio Segmentation High Fuel Growth Sales Growth Potential Low High 15
Slide 16: Focus on Increasing Household Penetration
6/6/2017 Focus on Increasing Household Penetration New Faces New Spaces New Places New Demographic or Consumes Product in a New Channel or Behavioral Group New Way Location in Store Strategic Choices are Working % Sales Growing/Stable HHPen 80% 80% of portfolio has growing or stable household 31% pe
Slide 17: Growing Household Penetration
6/6/2017 Growing Household Penetration Q3 FY16 Q3 FY17 98% 91% 61% 54% Growth Brands Fuel Brands Above represents the sales contribution from brands that have expanding or stable household penetration Source: IRI Panel Data, Total U.S. All Outlets, NBD Weighted. Clorox® Brand is Leading the Way Hous
Slide 18: Focus on Growth Culture
6/6/2017 Focus on Growth Culture Strong Organizational Culture is a Solid Foundation Strong Values People Centric Operational Excellence 18
Slide 19: Winning the Right Way
6/6/2017 Winning the Right Way #12 #12 Corporate Responsibility at Clorox <A> Reviewed by Ernst & Young LLP Footnotes: http://annualreport.thecloroxcompany.com/_pdf/CLX-012_2016_Integrated_Report.pdf page 27 19
Slide 20: Clorox Engagement Exceeds Global Benchmarks
6/6/2017 Clorox Engagement Exceeds Global Benchmarks 88% in FY17 <A> Reviewed by Ernst & Young LLP Footnotes: http://annualreport.thecloroxcompany.com/_pdf/CLX-012_2016_Integrated_Report.pdf page 26 Key Messages • We have confidence in our 2020 Strategy • Focus on profitable growth continues to prod
Slide 21: Steve Robb, Chief Financial Officer
6/6/2017 Strong Shareholder Return Peer includes 13 companies: CPB, KMB, K, RB-GB, KO, GIS, NWL, EL, PEP, CHD, CL, PG and HSY Steve Robb Chief Financial Officer 21
Slide 22: Solid FY17 Sales Growth (through Q3)
6/6/2017 Key Messages • We have confidence in our 2020 Strategy • Focus on profitable growth continues to produce solid results Solid FY17 Sales Growth (through Q3) 5% 5% 5% 4% 3% 2% 2% 0% FY 2014 FY 2015 FY 2016 FYTD 2017 As Reported Currency Neutral Note: As Reported is GAAP Sales Growth vs YA. Cu
Slide 23: FY17 Outlook and Long-Term Growth Aspirations
6/6/2017 FY17 Outlook Based on May 3rd Earnings Call • Categories: ~ +1% • Mix/Other: ~ -1pt Sales • Innovation: ~ +3pts • FX: ~ -1pt +3% to +4% • Renew Life: ~ +2pts • Gross Margin: Down modestly EBIT Margin • Selling & Admin: <14% of Sales about +25 bps • Advertising & Sales Promotion: about 10% o
Slide 24: Focused on Long-Term Gross Margin Expansion
6/6/2017 Focused on Long-Term Gross Margin Expansion Strong Focus on Margin Accretive Cost Savings International Innovation Track Record Profitability & Pricing Cost Savings Continue to Deliver EBIT Margin Benefit from Cost Savings 250 bps 200 bps +150bps Annual 150 bps Goal 100 bps 50 bps 0 bps FY1
Slide 25: Opportunities Exist Within SG&A; Top-Tier ROIC
6/6/2017 Opportunities Exist Within SG&A 45% 35% % of Sales 25% Goal: < 14% Sales 15% 14.0% 5% KHC CHD KMB GIS CLX PG K HSY RB-GB NWL COTY CL KO DPS PEP EL SG&A % of Sales as of Latest Fiscal Year End CLX as of June 30, 2016 Top-Tier ROIC 30% 29% 20% Peer Average: 15% 10% 0% CLX KMB CL HSY EL RB-GB
Slide 26: Healthy Free Cash Flow; Use of Cash Priorities
6/6/2017 Healthy Free Cash Flow % of Sales 11% 12% 13% 10% $858 $780 $786 $768 10% - 12% $M of Sales $733 $649 $590 $596 FY13 FY14 FY15 FY16 Goal Operating Cash Flow Free Cash Flow Free Cash Flow (a non-GAAP measure) represents Operating Cash Flow from Continuing Operations less Capital Expenditures
Slide 27: M&A Focus; Cash Returned to Shareholders
6/6/2017 M&A Focus • Areas with Tailwinds in Categories, Countries, and Channels • Strong Fit with Clorox Strategy and Capabilities • Brands with Good Market Positions • Attractive Margins • Balance Sheet Flexibility Gross Debt/EBITA as of 3/31/17 is 2.1x (low end of targeted range of 2.0x to 2.5x)
Slide 28: Strong Shareholder Return: Healthy Dividend Growth
6/6/2017 Healthy Dividend Growth… Dividends Have Increased Each Year Since 1977 +5% Dividend Yield as of Mar 31, 2017 Dividend Increase in 4% 2017 3% Peer Average: 2.5% 2.4% 2% 1% 0% COTY KO GIS PG K KMB PEP KHC CLX CPB DPS HSY CL RB-GB NWL EL CHD Strong Shareholder Return Peer includes 13 companies
Slide 29: Areas We Are Watching; Long Term Investment Case
6/6/2017 Areas We Are Watching • Changing retail landscape • Slowing international economies • Commodity costs expected to continue to firm up Long Term Investment Case Remains Solid • Investing behind leading brands to grow categories and share • Margin improvement opportunities continue to exist •
Slide 30: Appendix
6/6/2017 Key Messages • We have confidence in our 2020 Strategy • Focus on profitable growth continues to produce solid results Appendix 30
Slide 31: Key Credit Metrics; Currency Neutral Net Sales Reconciliation
6/6/2017 Key Credit Metrics $ in B FY13 FY14 FY15 FY16 EBITDA $1.2 $1.1 $1.2 $1.2 Total Debt / EBITDA 2.1x 2.0x 1.8x 1.9x EBITDA Interest Coverage 9.5x 11.3x 11.9x 14.0x EBIT / Interest 8.0x 9.6x 10.2x 12.1x Free Cash Flow / Debt 25% 28% 33% 26% FCF after Dividends / Debt 10% 12% 16% 9% FCF as % of
Slide 32: Gross Margin Reconciliation
6/6/2017 Gross Margin Reconciliation Reportable Segments (unaudited) Dollars in Millions (1) Percentages based on rounded numbers. 32
Slide 33: EBIT and EBITDA (unaudited)
6/6/2017 EBIT and EBITDA (unaudited) Dollars in Millions Footnotes on Slide 67 EBIT and EBITDA (unaudited) Dollars in Millions Footnotes on Slide 67 33
Slide 34: EBIT and EBITDA; Free Cash Flow Reconciliation
6/6/2017 EBIT and EBITDA (unaudited) Free Cash Flow (FCF) Reconciliation Dollars in Millions (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 fl
Slide 35: Free Cash Flow and ROIC Reconciliation
6/6/2017 Free Cash Flow (FCF) Reconciliation Dollars in Millions Note: 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
Slide 36: Return on Invested Capital (ROIC) Reconciliation
6/6/2017 Return on Invested Capital (ROIC) Reconciliation Dollars in millions and all calculations based on rounded numbers (Amounts shown below are five quarter averages) FY16 Total assets $ 4,247 Less: non-interest bearing liabilities (1,790) Average invested capital $ 2,457 36
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