Clorox Company (the) · NYSE:CLX
Clorox Company (the) — The Clorox Company — Q2 2018 Earnings Presentation
99 slides from Clorox Company (the)'s earnings presentation, Feb 2, 2018
Slide 1: FY18 Q2 Investor Deck
FY18 Q2 Investor Deck AP. THE CLOROX COMPANY WZ o-
Slide 2: Safe Harbor
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, earnings, earnings per share, diluted earnings per share, margins, foreign currencies, foreign currency exchange r
Slide 3: Contents
Contents Key Sections Slide # • Company Overview 4 • Strategy 2020 and Financial Algorithm 11 • Strategy 2020 – Strategic Elements 14 • Financial Performance 76 • Appendix 89 3
Slide 4: How We Create Value
How We Create Value 4
Slide 5: Leading Brands
Leading Brands Over 80% of Global Sales from #1 or #2 Share Brands United States Share Position International Share Position Disinfecting Wipes #1 Argentina #1 Bleach #1 Saudi Arabia #1 Toilet Bowl Cleaner #1 Mexico #2 Clean Up Spray #1 Peru #1 Colombia #2 Dilutable Cleaners #1 Chile #1 Drain Care #
Slide 6: Competing Well with National & Store Brands
Competing Well with National & Store Brands Categories with National Brands Categories with Store Brands 80% 40% 60% *Glad >50% Share of Premium Trash Bags 40% 20% Hidden Valley Church & Dwight Kingsford 20% Clorox Clorox Clorox Reynolds Glad* Reckitt Brands Nestle Brands Brands Brands Store P&G Kra
Slide 7: Mid-Sized Categories
Mid-Sized Categories International : 17% Cleaning : 34% Latin America 9% Home Care 19% Canada 3% Laundry 9% Australia / NZ 2% Rest of World 3% FY17 Professional 6% Lifestyle : 16% $6B Household : 33% 9% in Sales 14% 4% 10% 7% 3% 2% 7
Slide 8: Operational Excellence
Operational Excellence Leading Brands Focus on Process & World Class Health & Efficiency Capabilities Wellness Top-Tier SG&A ● Top-Tier ROIC ● Healthy Cash Flow *As of June 30th, 2017, Clorox’s S&A/Sales was ~13.6% vs. peer average of 19% . This number does not include R&D or marketing expenses and
Slide 9: Good Growth
Good Growth PERFORMANCE Commitment to PEOPLE Environment, 2020 Good Social, Strategy Growth & Corporate Governance PRODUCTS (ESG) PLANET PURPOSE 9 Profitable, Sustainable, Responsible
Slide 10: Leading Through Strategic Change in CPG
Leading Through Strategic Change in CPG Digital Consumer Challenging International Revolution Focus on Value Retail Macro Environment Headwinds 10
Slide 11: Evolved 2020 Strategy
Evolved 2020 Strategy Mission • We make everyday life better, every day • Maximize economic profit Objectives • Big-share brands in mid-sized categories and countries • Drive superior consumer value behind strong brand investment, Strategy innovation and technology transformation • Accelerate portfo
Slide 12: Long-Term Growth Algorithm Unchanged
Long-Term Growth Algorithm Unchanged U.S. Domestic International Total Company ~80% of Clorox Sales ~20% of Clorox Sales +2-4% annual growth +5-7% annual growth annual growth 1.5 - 3.0 pts 1.0 - 1.5 pts = +3 to 5pts company growth company growth Annual EBIT Margin Improvement: +25 to +50 bps Annual
Slide 13: FY18 Q2 Performance and FY18 Outlook
FY18 Q2 Performance and FY18 Outlook FY18 Q1 FY18 FY Outlook (Feb 2 earnings call) Sales $1.4B Innovation: ~+3pts Aplicare Divestiture: ~-1pt (vs Year Ago) (+1%) +1 to +3% Pricing: less than +1pt F/X: less than -1pt Diluted EPS $1.77 $6.17 to $6.37 Gross Margin: down modestly from cont. ops (+55%) (
Slide 14: Strategy 2020: Drive Superior Consumer Value
Strategy 2020: Drive Superior Consumer Value Mission • We make everyday life better, every day • Maximize economic profit Objectives • Big-share brands in mid-sized categories and countries • Drive superior consumer value behind strong brand investment, Strategy innovation and technology transformat
Slide 15: Driving Superior Consumer Value
Driving Superior Consumer Value PRODUCT • Value is an outcome of: EXPERIENCE - Great brand equity - Differentiated products - The right pricing CONSUMER VALUE • Executing with excellence by BRAND PRICING delivering seamless consumer EQUITY experience in-store and online 15
Slide 16: Driving Superior Consumer Value
Driving Superior Consumer Value PRODUCT • Value is an outcome of: EXPERIENCE - Great brand equity - Differentiated products - The right pricing CONSUMER VALUE • Executing with excellence by BRAND PRICING delivering seamless consumer EQUITY experience in-store and online 16
Slide 17: Brand Equity: Evolving How We Build Brands
Brand Equity: Evolving How We Build Brands Brand New Agency Marketing Studios Partners Technology 17
Slide 18: Brand Equity: Building Brands with Purpose
Brand Equity: Building Brands with Purpose Human Technology Purpose Centered Enabled Driven 18
Slide 19: A Majority of our Portfolio is Value Advantaged
A Majority of our Portfolio is Value Advantaged % Sales Superior Consumer Value 57% 57% of portfolio has 34% superior consumer value. FY14 FY17 19 Note: Consumer Value Measure for US Brands only
Slide 20: We Continue to Lean Into Digital Engagement
We Continue to Lean Into Digital Engagement 51% 45% 41% 34% Clorox invests over 50% of our media in digital FY15 FY16 FY17 FY18 Estimate 20
Slide 21: Strong Operating Discipline in Digital
Strong Operating Discipline in Digital Right Level Effective Digital Safety & of Targeting Digital Levers Ad Fraud 21
Slide 22: Our Partners Help Build World-Class Digital
Our Partners Help Build World-Class Digital Select Partners: 22
Slide 23: Driving Superior Consumer Value
Driving Superior Consumer Value PRODUCT • Value is an outcome of: EXPERIENCE - Great brand equity - Differentiated products - The right pricing CONSUMER VALUE • Executing with excellence by BRAND PRICING delivering seamless consumer EQUITY experience in-store and online 23
Slide 24: Broad-Based Approach to 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 24 *Cost-o-vation is a term used at Clorox that describes innovation that improves product pe
Slide 25: Strong Track Record of Innovation
Strong Track Record of Innovation Incremental Sales Growth from Product Innovation (Last 12 months) Goal: +3% 3.1% 2.7% 2.2% 2.8% 3.3% 3.4% 3.0% 3.0% 2.7% 2.9% FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 25 Source: Clorox Internal
Slide 26: Strong Track Record of Innovation
Strong Track Record of Innovation Glad Odorshield with Gain Clorox Scentiva Cleaning Platform Fresh Step with Febreze Power Gel Clorox Splash-less Bleach Burt’s Bees Lipsticks Clorox Fuzion Long-Burning Brita Stream Cleaner & Charcoal Hidden Valley Ranch Withs Disinfectant 26
Slide 27: Evolving our Processes
Evolving our Processes BIGGER BETTER FASTER Size of Innovation to Prize Processes Market Redesigned front-end • Consumer Feedback New product development innovation processes: process cuts average time • Insights to market by nearly 40%: • Leverage consumer “Jobs” framework • Technology • Applies Ag
Slide 28: Reinventing Scent Experience in Home Care
Reinventing Scent Experience in Home Care TM Clorox® Scentiva • Kills 99.9% of Bacteria & Viruses • Cleans, Disinfects and Deodorizes • Two experiential custom blended 28 Hawaiian Sunshine scents from fine fragrance houses Tuscan Lavender & Jasmine
Slide 29: Reinventing Scent Experience in Home Care
Reinventing Scent Experience in Home Care TM Clorox® Scentiva New scent: Pacific Breeze and Coconut New product form 29
Slide 30: Solid Pipeline to Continue the Momentum
Solid Pipeline to Continue the Momentum FY18 Burt’s Bees FY18 Front Half Cosmetics Back Half Clorox Performance Scentiva Cleaning Platform 30 Bleach with Cloromax
Slide 31: Strategic Approach to Pricing Guided by Consumer Value
Strategic Approach to Pricing Guided by Consumer Value • Price for value, considering all PRODUCT elements of consumer value EXPERIENCE • Leverage value-added innovation as a pricing opportunity CONSUMER VALUE • Strong track record of price BRAND PRICING EQUITY increases over past 5 years 31
Slide 32: Driving Superior Consumer Value
Driving Superior Consumer Value PRODUCT PRODUCT • Value is an outcome of: EXPERIENCE EXPERIENCE - Great brand equity - Differentiated products - The right pricing CONSUMER CONSUMER VALUE VALUE • Executing with excellence BRAND BRAND PRICING PRICING by delivering seamless EQUITY EQUITY consumer exper
Slide 33: Clorox has a Long History of Retail Success
Clorox has a Long History of Retail Success Mass eCommerce Merch Dollar Club Home Hardware 33
Slide 34: Clorox Capabilities are World Class and Adaptable
Clorox Capabilities are World Class and Adaptable • Insights • Category management • Shopper marketing • Retail operations • Supply chain • Omni-channel retailing 34
Slide 35: Accelerating Growth in eCommerce
Accelerating Growth in eCommerce • Early investment in eCommerce is paying off • Adapting Clorox capabilities to a digital application • Leveraging our strength in category management and shopper marketing 35
Slide 36: Translating Category Management from Physical to Digital
Translating Category Management from Physical to Digital • Winning with assortment and shelving in brick & mortar • ‘Top of the page’ is online equivalent of eye-level shelving 36
Slide 37: Translating Shopper Marketing from Physical to Digital
Translating Shopper Marketing from Physical to Digital • Engaging shoppers in store with bundles and disruptive displays • Engaging shoppers online with relevant and customized content 37
Slide 38: eCommerce Sales Well Ahead of Goals
eCommerce Sales Well Ahead of Goals ~4% of Total Company Sales 37% Sales CAGR (FY15 to FY17) Actual Actual Actual Goal Goal Goal FY15 FY16 FY17 38 FY17 include eCommerce sales from RenewLife acquisition
Slide 39: Strong Progress on our Tech Transformation
Strong Progress on our Tech Transformation eCommerce Digital Marketing Integrate the Physical and Leverage Data, Technology and Digital Retail Worlds to Meet Analytics to Drive Consumer Shopper Needs Engagement Product & Winning the Enhanced More More More Packaging Algorithm Content Targeted Person
Slide 40: Technology Transformation 2.0
Technology Transformation 2.0 Organizes Around Broadens Digital Consumers’ Goals Across the Value Chain TT2.0 Next Generation Digital Goes Deeper into Commerce & What's Working on Engagement Demand 40
Slide 41: Technology Transformation 2.0
Technology Transformation 2.0 Organizes Around Broadens Digital Consumers’ Goals across the Value Chain TT2.0 Next Generation Digital Goes Deeper into Commerce & What's Working on Engagement Demand 41
Slide 42: Evolving in a Digital World
Evolving in a Digital World From: 3Ds To: Seamless Consumer Experience (CX) DESIRE DECIDE DELIGHT Across the enterprise, everyone focuses on critical points of consumer journeys to cultivate and enhance engagement 42
Slide 43: Moments to Engage Consumers on their Journey
Moments to Engage Consumers on their Journey Diagnosing: Tracking: “What’s the issue I “How do I track should work on?” progress?” Choosing: Supply on-hand: “Which product “How can I avoid addresses my needs?” running out?” 43
Slide 44: Technology Transformation 2.0
Technology Transformation 2.0 Organizes Around Broadens Digital Consumers’ Goals across the Value Chain TT2.0 NextGeneration Next GenerationDigital Digital Goes Deeper into Commerce&& Commerce What's Working on Engagement Engagement Demand 44
Slide 45: Next-Gen Digital Commerce & Engagement
Next-Gen Digital Commerce & Engagement All in on Enhanced Digital Personalized eCommerce Engagement Experiences 45
Slide 46: Leveraging Game-Changing Technology
Leveraging Game-Changing Technology Today Technology Transformation Focus • Ubiquitous Connectivity/Mobile • Artificial Intelligence (AI) • Big Data & Analytics • Voice Activated Technology • Cloud Computing & Storage • Mixed Reality • Dynamic Promotion Technology 46
Slide 47: Technology Transformation 2.0
Technology Transformation 2.0 Organizes Around Broadens Digital Consumers’ Goals Across the Value Chain TT2.0 Next Generation Digital Goes Deeper into Commerce & What's Working on Engagement Demand 47
Slide 48: Technology-Enabled Innovation
Technology-Enabled Innovation Digital Product Connected Development Innovation for Products & Tools eCommerce Services 48
Slide 49: Technology-Enabled Supply Chain
Technology-Enabled Supply Chain Digital End-to- Technology-Enabled End Supply Chain eCommerce 49
Slide 50: Strategy 2020: Accelerate Portfolio Momentum
Strategy 2020: Accelerate Portfolio Momentum Mission • We make everyday life better, every day • Maximize economic profit Objectives • Big-share brands in mid-sized categories and countries • Drive superior consumer value behind strong brand investment, Strategy innovation and technology transformat
Slide 51: Portfolio Segmentation
Portfolio Segmentation High FUEL GROWTH Profit Margin Potential Low High Sales Growth Potential 51
Slide 52: Fuel Brands Create Investment Dollars
Fuel Brands Create Investment Dollars Investing in A&SP . . . . . . and across all demand spend 10% 9% Sales Advertising Promotion >+2pts since FY15 FY13 FY17 Trade Promotion AS&P as a % of Sales 52
Slide 53: Investments Drive Household Penetration
Investments Drive Household Penetration % Sales with Growing/Stable HH Pen 72% 72% of portfolio has growing or stable 31% household penetration FY13 FY17 53 Source: IRI Panel Data, Total U.S. All Outlets, NBD Weighted
Slide 54: Growing Households in Both Growth and Fuel
Growing Households in Both Growth and Fuel % of sales from brands that have expanding or stable household penetration: Fuel Brands Growth Brands 98% 56% 42% 7% FY13 FY17 Fuel Brands FY13 FY17 Growth Brands 54 Source: IRI Panel Data, Total U.S. All Outlets, NBD Weighted
Slide 55: Focused on Long-Term Gross Margin Expansion
Focused on Long-Term Gross Margin Expansion Strong Cost Savings Pricing, Mix and Margin-Accretive Track Record Demand Optimization Innovation 55
Slide 56: Adjusting Short-Term Incentive Target Metrics
Adjusting Short-Term Incentive Target Metrics • Short-Term Incentive Metrics: From (before FY18): To (starting in FY18): NET 50% NET 50% CUSTOMER CUSTOMER SALES SALES NET GROSS ECONOMIC INCOME** MARGIN PROFIT* 50% 30% 20% • Long-Term Incentive Metric Unchanged: 100% Economic Profit *Economic profit
Slide 57: Strategy 2020: Fuel Growth by Reducing Waste
Strategy 2020: Fuel Growth by Reducing Waste Mission • We make everyday life better, every day • Maximize economic profit Objectives • Big-share brands in mid-sized categories and countries • Drive superior consumer value behind strong brand investment, Strategy innovation and technology transformat
Slide 58: Strong Track Record of Cost Savings
Strong Track Record of Cost Savings EBIT Margin Benefit from Cost Savings 300 bps 250 bps 200 bps +150bps 150 bps Annual Goal 100 bps 50 bps 0 bps FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18+ 58 EBIT (a non-GAAP measure) represents earnings from continuing operations before income taxes (
Slide 59: Strong Pipeline of Cost Savings is in our DNA
Strong Pipeline is Cost Savings of in Cost ourSavings DNA 3-Year Pipeline Bleach concentration +150bps Plant Consolidation World Class Manufacturing Supply chain optimization Resin Reduction Packaging Reduction Agile Enterprise Every Year Discovery Charter Commercialize 59
Slide 60: Fueling Growth in International
Fueling Growth in International International : 17% Cleaning : 34% Latin America 9% Home Care 19% Canada 3% Laundry 9% Australia / NZ 2% Rest of World 3% FY17 Professional 6% Lifestyle : 16% $6B Household : 33% 9% in Sales 14% 4% 10% 7% 3% 2% 60
Slide 61: Leading Brands in International
Leading Brands in International >80% of our brands in International are #1 or #2 in their market Country Share Position Country Share Position Argentina #1 Argentina #1 Saudi Arabia #1 Chile #1 Mexico #2 Peru #1 Canada Trash Bags #1 Canada Food Wraps #1 Colombia #2 New Zealand Food Protection #1 Hon
Slide 62: Applying Strong Capabilities to International
Applying Strong Capabilities to International Innovation Cost Digital eCommerce Savings +3 pts Sales +$20M 45% of Media +79% Sales Growth 62 Note: Reflects International segment’s FY17 change versus FY16
Slide 63: International “Go Lean” Strategy is Working
International “Go Lean” Strategy is Working Pricing Focus on Right-Size Optimize Demand Maximization Cost Savings Infrastructure Creation 63
Slide 64: “Go Lean” Enables Selective Growth Investments
“Go Lean” Enables Selective Growth Investments Category Right to Tailwinds Win High Quick Margin Return 64
Slide 65: Optimistic about International
Optimistic about International • “Go Lean” strategy is working • “Go Lean” enables selective growth investments • Leading brands • Applying strong capabilities to International • Expecting less unfavorable FX 65
Slide 66: Strategy 2020: Engage our People as Business Owners
Strategy 2020: Engage our People as Business Owners Mission • We make everyday life better, every day • Maximize economic profit Objectives • Big-share brands in mid-sized categories and countries • Drive superior consumer value behind strong brand investment, Strategy innovation and technology tran
Slide 67: Clorox Growth Culture Enables our 2020 Strategy
Clorox Growth Culture Enables our 2020 Strategy 80 78 75 75 70 71 • Decisive 65 • Empowered Growth Culture Index • Accountable Fast-Moving Consumer Goods Global High Performing Companies Clorox 67
Slide 68: Strong Engagement Distinguishes Us from Peers
Strong Engagement Distinguishes Us from Peers Strong Absolute Results Strong Relative to Peers 87% 88% Stronger Results Over Time 86% 2017 2015 2016 Source: Willis Towers Watson FMCG Norm: Based on responses from more than 160,000 employees globally. Global High Performing Companies: Companies meeti
Slide 69: We Cultivate Diversity Broadly to Generate Value
We Cultivate Diversity Broadly to Generate Value 36% Female Clorox Executive Committee Members Board Executives 33% Female Board Members Employees Suppliers 33% Minority Board Members Clorox Employee Resource Groups 69
Slide 70: Employees Share in Rewards for Delivering Results
Employees Share in Rewards for Delivering Results Short-term Incentives Long-term Incentives NET 50% CUSTOMER SALES ECONOMIC PROFIT* NET GROSS 100% MARGIN INCOME* 30% 20% *Continuing operations *Metric for Performance Share Units 70
Slide 71: Good Growth and Achieving Results the Right Way
Good Growth and Achieving Results the Right Way PERFORMANCE Commitment to PEOPLE Environment, 2020 Good Social, Strategy Growth & Corporate Governance PRODUCTS (ESG) PLANET PURPOSE 71 Profitable, Sustainable, Responsible
Slide 72: Making Our Products More Sustainable
Making Our Products More Sustainable Sustainability improvements to 34% of the portfolio* On track to meet our goal of 50% product portfolio by 2020 72 *Cumulative progress since 2011 base year
Slide 73: Reducing Our Environmental Footprint
Reducing Our Environmental Footprint 2020 GOAL 20% WASTE TO LANDFILL 41% WATER CONSUMPTION 21% GREENHOUSE GAS EMISSIONS 18% ENERGY CONSUMPTION 15% On track to meet or beat our goal of 20% reduction by 2020 73 Cumulative progress to date since 2011 base year
Slide 74: Safeguarding Families and Communities
Safeguarding Families and Communities $83 MILLION! TOTAL VALUE OF CONTRIBUTIONS AND VOLUNTEER HOURS 2014 - 2017 74
Slide 75: Our Efforts are Being Recognized
Our Efforts are Being Recognized 75
Slide 76: Long-Term Investment Case Remains Solid
Long-Term Investment Case Remains Solid • Investing behind leading brands to grow categories and share − 3%+ annual growth from innovation − Maintain healthy brand building investments • Margin improvement opportunities continue to exist − Leverage our brands pricing power to mitigate input cost − S
Slide 77: Long-Term Margin Expansion
Long-Term Margin Expansion Strong Cost Savings Focus on International Margin Accretive Track Record Profitability Innovation & Pricing 77
Slide 78: Strong Track Record of Cost Savings
Strong Track Record of Cost Savings EBIT Margin Benefit from Cost Savings 300 bps 250 bps 200 bps +150bps 150 bps Annual Goal 100 bps 50 bps 0 bps FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18+ 78 EBIT (a non-GAAP measure) represents earnings from continuing operations before income taxes (
Slide 79: Continued Discipline on SG&A
Continued Discipline on SG&A SG&A as a Percentage of Sales 14.3% 13.6% FY13 FY17 79
Slide 80: Delivering Top-Tier ROIC
Delivering Top-Tier ROIC As of Fiscal Year Ending June 30, 2017 40% 30% 28% 20% Peer Average: 16% 10% 0% CL KMB CLX EL RB-GB HSY PEP CHD DPS GIS PG CPB K NWL KO KHC Return on invested capital (ROIC), a non-GAAP measure, is calculated as earnings from continuing operations before income taxes and int
Slide 81: Strong Free Cash Flow
Strong Free Cash Flow $ in Millions Annual Free Cash Flow Goal: 10%-12% of Sales Free Cash Flow % of Sales 11% 12% 13% 10% 11% $858 $871 $780 $786 $768 $590 $649 $733 $596 $640 FY13 FY14 FY15 FY16 FY17 Operating Cash Flow Free Cash Flow 81 Free Cash Flow (a non-GAAP measure) represents Operating Cas
Slide 82: Use of Cash Priorities
Use of Cash Priorities Business Growth Support Dividend (includes targeted M&A) Free Cash Flow Debt Leverage1 Share Repurchases (Target: 2.0 – 2.5x) 82 1. Debt Leverage = Gross Debt / EBITDA. EBITDA is a non-GAAP measure. See reconciliation in Appendix
Slide 83: M&A Focus Unchanged
M&A Focus Unchanged • Areas with tailwinds in categories, countries, and channels • Strong fit with Clorox strategy and capabilities • Brands with good market positions • Attractive margins Please note that this slide refers to general goals for Clorox’s M&A focus – each element may not be relevant
Slide 84: Evolving our Portfolio
Evolving our Portfolio RenewLife® - Strong First Year • Transaction closed in May 2016 • About 2% of total company sales • Purchase Price: $290M (2.5x Sales) • Integration is on track • Distribution wins in Food, Drug, Mass and Club Aplicare - Sale Completed • Transaction closed in August 2017 • No
Slide 85: Balance Sheet Remains Strong
Balance Sheet Remains Strong • Anticipate continued healthy cash flows • Gross Debt/EBITDA as of 12/31/17 is 1.8x (targeted range of 2.0x to 2.5x) • Will continue to look at ways to return excess cash to shareholders 85 EBITDA is a non-GAAP measure. See reconciliation in Appendix
Slide 86: Over $2B Returned to Shareholders in the Last 4 Years
Over $2B Returned to Shareholders in the Last 4 Years $ in Millions FY17 Dividend Payout Ratio = 59% $532 $568 $442 $520 FY14 FY15 FY16 FY17 Cash Returned to Shareholders 86
Slide 87: Healthy Dividend Growth…
Healthy Dividend Growth… Dividends Have Increased Each Year Since 1977 Dividend Yield as of December 31, 2017 4% 3% Peer Average: 2.6% 2.2% 2% 1% 0% GIS KHC KMB KO K PG CPB NWL PEP COTY DPS CLX HSY RB-GB CL CHD EL 87
Slide 88: Strong Shareholder Return
Strong Shareholder Return Total Shareholder Return - 20 Year ending 12/31/2017 599 Peers 522 CLOROX 301 S&P 500 - Dec-97 Dec-99 Dec-01 Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13 Dec-15 Dec-17 88 Peer includes 13 companies: CPB, KMB, K, RB-GB, KO, GIS, NWL, EL, PEP, CHD, CL, PG and HSY
Slide 89: Appendix
Appendix ed ra) «&) S ><! Q
Slide 90: Key Credit Metrics
Key Credit Metrics $ in B FY13 FY14 FY15 FY16 FY17FY1 EBITDA $1.2 $1.1 $1.2 $1.2 $1.3 Total Debt / EBITDA 2.1x 2.0x 1.8x 1.9x 1.7x EBITDA Interest Coverage 9.5x 11.3x 11.9x 14.0x 14.5x EBIT / Interest 8.0x 9.6x 10.2x 12.1x 12.7x Free Cash Flow / Debt 25% 28% 33% 26% 29% FCF after Dividends / Debt 10
Slide 91: Gross Margin Reconciliation
Gross Margin Reconciliation Gross Margin Change vs. Prior Year (basis points) Driver FY17 FY18 Q1 Q2 Q3 Q4 FY Q1 Q2 Cost Savings +140 +140 +150 +150 +150 +160 +170 Price Changes +70 +70 +60 +50 +60 +40 +30 Market Movement (commodities) +90 +10 -70 -90 -20 -90 -110 Manufacturing & Logistics -220 -210
Slide 92: Reportable Segments (unaudited)
Reportable Segments (unaudited) Dollars in Millions (1) Percentages based on rounded numbers. 92
Slide 93: EBIT and EBITDA (unaudited)
EBIT and EBITDA (unaudited) Dollars in Millions Footnotes on Slide 95 93
Slide 94: EBIT and EBITDA (unaudited)
EBIT and EBITDA (unaudited) Dollars in Millions Footnotes on Slide 95 94
Slide 95: EBIT and EBITDA (unaudited)
EBIT and EBITDA (unaudited) (1) EBIT (a non-GAAP measure) represents earnings from continuing operations 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) EBITDA (a non-GAAP measure) represents
Slide 96: Free Cash Flow (FCF) Reconciliation
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 flow and free cash flow as a percent of
Slide 97: Free Cash Flow (FCF) Reconciliation
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 flow and free cash flow as a percent of
Slide 98: Return on Invested Capital (ROIC) Reconciliation
Return on Invested Capital (ROIC) Reconciliation 98
Slide 99: Return on Invested Capital (ROIC) Reconciliation
Return on Invested Capital (ROIC) Reconciliation Dollars in millions and all calculations based on rounded numbers (Amounts shown below are five quarter averages) FY17 Total assets $ 4,549 Less: non-interest bearing liabilities (1,805) Average invested capital $ 2,744 99