Clorox Company (the) · NYSE:CLX
Clorox Company (the) — The Clorox Company — Barclays Global Consumer Staples Conference 2018
45 slides from Clorox Company (the)'s conference presentation, Sep 5, 2018
Slide 1: Barclays Global Consumer Staples Conference
Barclays Global Consumer Staples Conference Benno Dorer Kevin Jacobsen Chairman and Chief Executive Officer Chief Financial Officer September 2018
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, including as a result of the Nutranext acquisition, diluted earnings per share, marg
Slide 3: Key Messages
Key Messages • Continued confidence in our 2020 Strategy • Solid progress behind decisive actions to address near-term headwinds • Maintaining focus on long term profitable growth and long term investment case remains solid 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 Selected Countries/Categories: United States Share Position International Share Position Disinfecting Wipes #1 Argentina Bleach #1 Bleach #1 Saudi Arabia Bleach #1 Toilet Bowl Cleaner #1 Malaysia Bleach #1 Peru Bleach #1 Dilutable Cl
Slide 6: Mid-Sized Categories
Mid-Sized Categories International: 17% Cleaning: 34% Latin America 8% Home Care 19% Canada 4% Laundry 9% Australia / NZ 2% FY18 Professional 6% Rest of World 3% Lifestyle: 17% $6.1B Household: 32% in Sales 9% 14% 4% 9% 3% 7% 1%* 2% 6 * Note: Reflects results following April 2018 acquisition. Expect
Slide 7: Evolving our Portfolio with Nutranext Acquisition
Evolving our Portfolio with Nutranext Acquisition #2 in #1 in #1 in Leading Natural Natural All Channels DTC Brand • Fast growing sub-segments within vitamins, minerals and supplement category • Leading brands • Attractive margins • Leverages Clorox capabilities Notes: Share Source: SPINS Natural La
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, 2018, Clorox’s S&A/Sales was ~13.7% vs. peer average of 18% . This number does not include R&D or marketing expenses and
Slide 9: Good Growth: Profitable, Sustainable, Responsible
Good Growth: Profitable, Sustainable, Responsible PERFORMANCE PEOPLE Commitment to Environment, 2020 Good Social, Strategy Growth & Corporate PRODUCTS Governance (ESG) PLANET PURPOSE 9
Slide 10: Strong Shareholder Return behind 2020 Strategy
Strong Shareholder Return behind 2020 Strategy Total Shareholder Return - 5 Years Ending 6/30/2018 100% 88% 87% 80% 18% 24% 60% 47% 40% 19% 70% 63% 20% 28% 0% Clorox Peers S&P 500 Share Price Appreciation Dividend Paid 10 Peers consist of 16 companies: CHD, CL, COTY, CPB, KDP, EL, GIS, HSY, K, KHC,
Slide 11: Leading Through Strategic Change in CPG
Leading Through Strategic Change in CPG Digital Retail Consumer Rising Costs Currency Value Headwinds >50% of Growing with >50% Superior Cost Savings Go Lean Advertising Top Retailers, & Pricing eCom 11
Slide 12: 2020 Strategy
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 portfolio mome
Slide 13: 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 in- BRAND PRICING store and online EQUITY EXECUTION 13
Slide 14: Innovation: Strong Track Record
Innovation: Strong Track Record Incremental Sales Growth from Product Innovation (Last 12 months) Goal: +3% FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19+ 14 Source: Clorox Internal
Slide 15: Solid Pipeline to Continue the Momentum
Solid Pipeline to Continue the Momentum FY18 FY19 FH Clorox Disinfecting Burt’s Bees Glad ForceFlex Plus Burt’s Bees Burt’s Bees Burt’s Bees ScentivaTM: Fresh Wipes: Ultra Strength Cosmetics Advanced Protection Charcoal Liquid Body Wash Brazilian Blossom & Easy to Pull Face Mask Lipstick FY19 BH Mor
Slide 16: Innovation Spotlight: Scentiva Platform
Innovation Spotlight: ScentivaTM Platform Launched March 2017 • Cleans, Disinfects and Deodorizes • Delivers experiential custom scents from fine fragrance houses 16 FY17: Hawaiian Sunshine FY17: Tuscan Lavender & Jasmine
Slide 17: Reinventing Scent Experience in Home Care
Reinventing Scent Experience in Home Care • 2 New Fragrances • 5 new forms (Aerosol Foam Cleaner, Toilet Cleaning Gel, Disinfection Foamer Spray, and Toilet Wand) 17 FY18: Pacific Breeze and Coconut FY19: Fresh Brazilian Blossom
Slide 18: Se [seta]
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Slide 19: Scentiva Results Driving Profitable Growth
Scentiva Results Driving Profitable Growth • Largest Home Care launch in 10 years1 • Wipes double digit volume growth in FY18 • Home Care 4th consecutive year of share growth2 • Executing Pricing: Wipes (FY18), Sprays (FY19) 1: +5pts Household Penetration in 18 months 19 2. Share source IRI MULOP fo
Slide 20: Innovation Spotlight: Fresh Step Clean Paws
Innovation Spotlight: Fresh Step Clean Paws • Tracking is biggest dissatisfier with Litter • Fresh Step Clean Paws introduced in January 2018 • Larger Particles • Low Dust Formula 20
Slide 21: Clean Paws Advertising
Clean Paws Advertising
Slide 22: Clean Paws Results Driving Profitable Growth
Clean Paws Results Driving Profitable Growth • #1 new item in litter category in 2018 • Clean Paws +2.6 dollar share in FY18 • Litter mid-digit volume growth in FY18 • Litter 7th consecutive quarter of share gains • Executing Pricing on Litter in FY19 22 Source: IRI MULOP for 52 weeks ending 6/17/20
Slide 23: Leaning Into Digital Engagement
Leaning Into Digital Engagement 55% >50% 49% 45% 41% Expect to invest 34% over 50% of media in digital FY15 FY16 FY17 FY18 FY19 Est 23
Slide 24: eCommerce Sales Well Ahead of Goals
eCommerce Sales Well Ahead of Goals • Early investment paying off $500M 2020 Aspiration • ~6% of Company Sales in FY18 • +38% Sales CAGR (FY15 to FY18) 2020 Goal Actual Actual Actual Goal Goal Goal FY16 FY17 FY18 FY20 Goals 24 FY18 includes eCommerce sales from Nutranext
Slide 25: A Majority of our Portfolio is Value Advantaged
A Majority of our Portfolio is Value Advantaged % Sales Superior Consumer Value 53% 53% of portfolio has 34% superior consumer value. FY14 FY18 27 Note: Consumer Value Measure for US Brands only
Slide 26: Funding Growth by Reducing Waste
Funding Growth by Reducing Waste • Agile Enterprise transformation: faster, more efficient and more consumer focus • Goal: Deliver consumer value with little or no unnecessary use of resources and time $25 million + 196,000 14 ROI annual Hours saved Avg. months to market admin savings through FY18
Slide 27: Superior Employee Engagement
Superior Employee Engagement World Class Levels Higher than Peers +7* +2* 88% 88% Growing over time 87% 2018 2016 2017 Source: Willis Towers Watson FMCG Norm: Based on responses from more than 160,000 employees globally. Global High Performing Companies: Companies meeting two criteria: (a) superior
Slide 28: Key Messages
Key Messages • Continued confidence in our 2020 Strategy • Solid progress behind decisive actions to address near-term headwinds • Maintaining focus on long term profitable growth and long term investment case remains solid 28
Slide 29: Financial Performance
THE CLOROX COMPANY Financial Performance | > Ze
Slide 30: Long-Term Growth Algorithm
Long-Term Growth Algorithm 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 Free Cash
Slide 31: FY18 Performance & FY19 Outlook
FY18 Performance & FY19 Outlook FY18 _____FY19 Full Year Outlook_____ (12 months) (Aug 2 earnings call) Innovation: ~ +3pts Sales $6.1B Nutranext Acquisition (vs Year Ago) (+3%) ~ 2% to 4% & Aplicare Divestiture: ~+2.5pts FX: ~-2pts Gross Margin: Flat to up modestly Diluted EPS $6.26 $6.32 to $6.52
Slide 32: Addressing Near-term Headwinds with Decisive Actions
Addressing Near-term Headwinds with Decisive Actions • Rising input costs putting near-term pressure on margins • Committed to keeping our business fundamentally strong and healthy through decisive and principled actions Margin Accretive Pricing Cost Savings Go Lean Innovation 32
Slide 33: Executing Pricing in Support of Profitable Growth
Executing Pricing in Support of Profitable Growth • Pricing 50% of portfolio • In-line with expectations 33
Slide 34: Strong Track Record of Cost Savings
Strong Track Record of Cost Savings EBIT Margin Benefit from Cost Savings 250 bps 200 bps +150bps Annual Goal 150 bps 100 bps 50 bps 0 bps FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19+ EBIT (a non-GAAP measure) represents earnings from continuing operations before income taxes (a GAAP measure), excl
Slide 35: Continued Discipline on SG&A
Continued Discipline on SG&A 40% As of Fiscal Year Ending June 30, 2018 30% Goal: < 14% % of Sales Sales 20% 13.7% 10% 0% CPB KHC K CHD KMB GIS CLX PG HSY RB-GB NWL CL KO COTY KDP PEP EL 35 SG&A % of Sales as of Latest Fiscal Year End, CLX as of June 30, 2018
Slide 36: Delivering Top-Tier ROIC
Delivering Top-Tier ROIC As of Fiscal Year Ending June 30, 2018 40% 30% 29% 20% Peer Average: 18% 10% 0% CL RB-GB CLX HSY KMB CHD KDP NWL K GIS EL KHC PG PEP CPB KO Return on invested capital (ROIC), a non-GAAP measure, is calculated as earnings from continuing operations before income taxes and int
Slide 37: Strong Free Cash Flow
Strong Free Cash Flow Annual Free Cash Flow Goal raised to 11%-13% of Sales Free Cash Flow % of Sales: 11% 12% 13% 10% 11% 13% $974 $858 $871 $780 $786 $768 $590 $649 $733 $596 $640 $780 FY13 FY14 FY15 FY16 FY17 FY18 $ in Millions Operating Cash Flow Free Cash Flow Free Cash Flow (a non-GAAP measure
Slide 38: 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) 1. Debt Leverage = Gross Debt / EBITDA. EBITDA is a non-GAAP measure. See reconciliation in the supplemental financial schedules located at: 38 https:/
Slide 39: M&A Focus Unchanged
M&A Focus Unchanged Strong Fit with Strong, US Strategy & Capabilities Centric Brands Fast Growing Margin Accretive 39 Please note that this slide refers to general goals for Clorox’s M&A focus – each element may not be relevant or applicable to each potential M&A transaction.
Slide 40: Healthy Dividend Growth…
Healthy Dividend Growth… Dividends Have Increased Each Year Since 1977 Dividend Yield as of June 30, 2018 +14% Dividend increase in 4% Feb 2018 3% Peer Average: 3.1% 2.7% 2% 1% 0% GIS KHC KMB NWL PG COTY CPB KO K PEP HSY CLX RB-GB CL CHD EL 40
Slide 41: Over $2B Returned to Shareholders in the Last 4 Years
Over $2B Returned to Shareholders in the Last 4 Years Initiated up to $2B share repurchase $ in Millions program in May 2018 $568 $442 $520 $676 FY15 FY16 FY17 FY18 Cash Returned to Shareholders 41 Cash Returned to Shareholders is defined as Dividends Paid plus Share Repurchased less issuance for em
Slide 42: 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 − Healthy brand building investments, including digital/eCommerce • Margin improvement opportunities continue to exist − Leverage pricing power to mitigate input
Slide 43: Strong Shareholder Return
Strong Shareholder Return TSR % Total Shareholder Return 350 10 Year ending 6/30/2018 300 CLOROX 252 250 Peers 218 200 S&P500 163 150 100 50 0 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 -50 43 Peer includes 14 companies: CPB, KMB, K, RB-GB, KO, GIS, NWL, EL, PEP, CHD, CL,
Slide 44: Key Messages
Key Messages • Continued confidence in our 2020 Strategy • Solid progress behind decisive actions to address near-term headwinds • Maintaining focus on long term profitable growth and long term investment case remains solid 44
Slide 45: Q&A
Q&A Aw THE CLOROX COMPANY > Za
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