Clorox Company (the) · NYSE:CLX
Clorox Company (the) — The Clorox Company — CAGNY 2024
70 slides from Clorox Company (the)'s conference presentation, Feb 22, 2024
Slide 1: CAGNY 2024
CAGNY 2024 Linda Rendle Chair & Chief Executive Officer Kevin Jacobsen EVP & Chief Financial Officer 1
Slide 2: Safe Harbor
Safe Harbor Except for historical information, matters discussed in this presentation, including statements about the Company’s future volume, sales, organic sales growth, costs, cost savings, earnings, earnings attributable to the Company, earnings per share, diluted earnings per share, margins, fo
Slide 3: Well Positioned to Rebuild Earnings & Create Long-Term Shareholder Value
Well Positioned to Rebuild Earnings & Create Long-Term Shareholder Value • Advantaged portfolio of superior value brands in essential categories with continued investment • We have made strong progress recovering from the cyberattack and are rebuilding our momentum • We remain committed to maintaini
Slide 4: Who We Are
o The Clorox Company Who We Are
Slide 5: Global Portfolio of Leading Brands Trusted & Loved by Consumers
Global Portfolio of Leading Brands Trusted & Loved by Consumers 35% HEALTH & WELLNESS 28% HOUSEHOLD $7.4 Billion 100+ 9 of 10 60% OF FY23 NET SALES MARKETS U.S. HOMES HAVE PORTFOLIO HAS 18% LIFESTYLE GLOBALLY OUR PRODUCTS SUPERIOR CONSUMER 16% INTERNATIONAL VALUE Results from fiscal year 2023. The b
Slide 6: Choiceful, Disciplined Playbook
Choiceful, Disciplined Playbook Creates Competitive Advantage & Shareholder Value Leading brands loved Purposeful & targeted in by consumers where we play ECONOMIC PROFIT World class capabilities to Purpose-driven growth drive operational excellence with integrated ESG goals 6
Slide 7: Portfolio of Leading Brands with Superior Consumer Value
Portfolio of Leading Brands with Superior Consumer Value 60% #1 or #2 54% Brands in Majority of Categories FY19 FY23 FY19 FY23 Superior Consumer Value Source: IRI MULOP Latest 52 Weeks Ending Feb 4, 2024. 7
Slide 8: Strategic Update
o The Clorox Company Strategic Update
Slide 9: IGNITE Built to Address Disruptors and Megatrends
IGNITE Built to Address Disruptors and Megatrends Disrupters: Megatrends: • Data & technology • Health & wellness • Rising consumer expectations • Personalization • Dramatic change in retail • Responsibility • Cost & competitive landscape shifts • Multi-cultural millennials 9
Slide 10: IGNITE Creates a Resilient, Faster Growing Company
IGNITE Creates a Resilient, Faster Growing Company Accelerate growth to 3-5% IGNITE Expand Adj. EBIT Margin +25 to +50bps Adjusted EBIT (a non-GAAP measure) represents earnings before income taxes (a GAAP measure), excluding interest income, interest expense and other significant items that are nonr
Slide 11: Imperative for Growth is to Reimagine Work
IGNITE Imperative for Growth is to Reimagine Work CONSUMER-OBSESSED LEANER FASTER 11
Slide 12: Transformation Levers
IGNITE Transformation Levers Modernized Digital Streamlined Capabilities Transformation Operating Model 12
Slide 13: Modernized Capabilities
IGNITE Modernized Capabilities Prioritizing capabilities core to our value creation advantages: • Marketing personalization • Innovation • Customer partnership • Holistic margin management • Data & technology 13
Slide 14: Digital Transformation
IGNITE Digital Transformation Multi-year program with strong ROI that supports our financial goals: • $500M spend supplements consistent, annual IT investment • Integrated data fabric • Upgrades core and builds modernized capabilities 14
Slide 15: Streamlined Operating Model
IGNITE Streamlined Operating Model Designed to get us closer to consumers and customers: • Business unit led end-to-end processes • Reduced layers • Scaled capabilities dynamically deployed • On track to deliver $75-100M of ongoing annual savings 15
Slide 16: Fueling Our Growth Aspiration
FUEL GROWTH Fueling Our Growth Aspiration • Strong progress on our commitment to return to pre-pandemic gross margins over time • Investing in our brands and capabilities 16
Slide 17: Our Journey to Create More Fuel for Growth
FUEL GROWTH Our Journey to Create More Fuel for Growth Trade Before: Optimization Consistent incremental cost Strategic Price Pack savings Pricing Architecture Now: Building new capabilities for holistic margin management Design to Value Procurement Next: New ways of working embedded in business uni
Slide 18: Over-delivering Cost Savings Goal
FUEL GROWTH Over-delivering Cost Savings Goal Adjusted EBIT Margin Benefit from Cost Savings >+200bps +175bps IGNITE FY20-23 Strategy Goal Progress (4-yr avg) Adjusted EBIT (a non-GAAP measure) represents earnings before income taxes (a GAAP measure), excluding interest income, interest expense and
Slide 19: Strategic Pricing - Across the Portfolio
FUEL GROWTH Strategic Pricing - Across the Portfolio + Successfully executed Maintaining superior four rounds of pricing to consumer value offset inflation on majority of portfolio 19
Slide 20: Design to Value - Hidden Valley Ranch
FUEL GROWTH Design to Value - Hidden Valley Ranch • Lower-cost ingredients with fewer supply chain challenges • Significantly increased consumer likeability 20
Slide 21: Price Pack Architecture - Cleaning Dilutables
FUEL GROWTH Price Pack Architecture - Cleaning Dilutables • Lower costs • More sustainable • More cleaning power for consumers • Shelf productivity for retailers Old New 21
Slide 22: Fuel Growth is Delivering Value and Rebuilding Margins
FUEL Fuel Growth is Delivering Value and Rebuilding Margins GROWTH FY23 FY24e FY25e+ +360bps ~+200bps(1) Continue to expand (1) Based on Outlook as of February 1, 2024 22
Slide 23: Capabilities that Deliver a Superior Consumer Brand Experience
INNOVATE Capabilities that Deliver a Superior Consumer Brand Experience EXPERIENCES Personalized experiences Frictionless Bigger, stickier shopping innovations 23
Slide 24: Our Journey to Innovate Personalized, Frictionless Experiences
INNOVATE Our Journey to Innovate Personalized, Frictionless Experiences EXPERIENCES Before: Experiences optimized within each point of interaction with consumers Now: Optimize across the entire brand experience for consumers in partnership with retailers Next: Stronger, data-enhanced personalized re
Slide 25: Personalize to Drive Improved Experience & ROI
INNOVATE EXPERIENCES Personalize to Drive Improved Experience & ROI Right Person Right Time Right Content 25
Slide 26: Personalization is Driving Better Investment
INNOVATE EXPERIENCES Personalization is Driving Better Investment • We have known consumer data on almost 100M users in the U.S. 45% 1 • Over 50% of our media is now increase in personalized advertising payout vs • FY24 advertising investment pre-IGNITE increased to about 11% of net sales 1Source: C
Slide 27: Data & Technology Enable Personalization
INNOVATE EXPERIENCES Data & Technology Enable Personalization Consumer Data Platform Digital Asset Manager Data hub: our known consumer data helps us Content hub: right content identify the right person and the right time for that person and time 27
Slide 28: Creating Structure & Capabilities to Drive the Speed Needed for Personalization
INNOVATE Creating Structure & Capabilities to Drive the Speed Needed for Personalization EXPERIENCES Create Scale Test Iterate Learn 28
Slide 29: Personalizing this Year’s Cold & Flu Season
INNOVATE EXPERIENCES Personalizing this Year’s Cold & Flu Season Digital Triggers Interest Content 29
Slide 30: & Beth .
4 : & Beth . @ SanDiego, CA
Slide 31: Personalization with Walmart to Create Frictionless Shopping Experiences
INNOVATE Personalization with Walmart to Create Frictionless Shopping Experiences EXPERIENCES • Off-site media near stores with endcaps • Multiple audiences based on purchase data • Walmart search targeting 31
Slide 32: Personalization for Frictionless Shopping Drives Growth
INNOVATE Personalization for Frictionless Shopping Drives Growth EXPERIENCES • Household penetration grew 12.5%1 • More than doubled our return with retailer media targeted messaging2 • Dollar sales +42% and volume +32% vs YAGO3 1IRI Circana, Walmart POS, L13 weeks ending 08-27-23, 2Walmart Media Co
Slide 33: Our Innovation Journey
INNOVATE EXPERIENCES Our Innovation Journey Before: Strong cadence of singular innovations Now: Bigger, stickier innovation through platforms to Next: Digital core creates a stronger pipeline with greater speed 33
Slide 34: Strong Platform Innovation Examples
INNOVATE EXPERIENCES Strong Platform Innovation Examples Experiential Cleaning Re-launch Convenience Toilet Concentration Year 1 Year 2 Coming Soon Year 3 Coming Coming Soon Soon 34
Slide 35: Strong Platform Innovation Examples
INNOVATE EXPERIENCES Strong Platform Innovation Examples Trash Superior Strength Pro Grilling Cat Wellness Year 1 Coming Year 2 Soon Year 3 Coming Soon Coming Soon 35
Slide 36: Operating Model Change Gets Us Closer to Consumers for Bigger, Stickier Innovation
INNOVATE Operating Model Change Gets Us Closer to Consumers for Bigger, Stickier EXPERIENCES Innovation Hidden Valley 36
Slide 37: Scentiva Relaunch Opportunity
INNOVATE EXPERIENCES Scentiva Relaunch Opportunity Consumer Who Are Scent Seekers: Make Up 40-50M Clean More Frequently Over-Index in Being U.S. Households 45% are daily cleaners vs 34% Millennials & Multicultural category buyers Do not want to trade off between a powerful clean and great fragrance
Slide 38: Scentiva Relaunch Activation
INNOVATE EXPERIENCES Scentiva Relaunch Activation Deeper Innovation New High-Impact New Pipeline Graphics Campaign Personalized for new users and loyalists 38
Slide 39: Going Live in 2024
INNOVATE EXPERIENCES Going Live in 2024 39
Slide 40: Hidden Valley New Space
INNOVATE EXPERIENCES Hidden Valley New Space Dipping Set is Growing As Snacking Increases • Over $60M in Sales in last 12 months • 4 of the top 10 SKUs in the dipping set are Hidden Valley 40
Slide 41: Glad is Helping People Get More Out of Each Bag
Glad is Helping People Get More Out of Each Bag INNOVATE EXPERIENCES • Strength #1 category driver • 25% more durable • Uses less plastic than competitors • Over $200M in Sales with over 40% repeat purchase 41
Slide 42: Innovate Experiences
INNOVATE EXPERIENCES 42
Slide 43: Next is an AI-Enabled Digital Core to Build a Stronger Pipeline More Quickly
INNOVATE Next is an AI-Enabled Digital Core to Build a Stronger Pipeline More Quickly EXPERIENCES Results to date: • Reduce cycle time of ideas 50% f • Consumer interest equal or better Digital Core 43
Slide 44: Our First Digital Core Innovation - Clorox Toilet Bomb
INNOVATE EXPERIENCES Our First Digital Core Innovation -Clorox Toilet Bomb • Cleaning the toilet is the ickiest job in the house • Bath bombs are the hottest new form in bathroom • Created in 4 months – launching in February 44
Slide 45: Innovating Experiences is Delivering Value
INNOVATE EXPERIENCES Innovating Experiences is Delivering Value Getting More From Advertising & Sales Building Capabilities Innovation Promotion More Effective to be Faster and More Responsive to Consumers 45
Slide 46: Evolving Portfolio to Create a More Valuable Core of Businesses
EVOLVE Evolving Portfolio to Create a More Valuable Core of Businesses PORTFOLIO Strengthen the Core International M&A remains a • Drive superior consumer • Grow faster and more Strategic Lever value profitably • Grow market share and • Continue to reduce volatility households from LATAM 46
Slide 47: ESG is Integrated into Our Businesses
EVOLVE PORTFOLIO ESG is Integrated into Our Businesses Maximize Value Creation Manage Risk 47
Slide 48: Progress on Our ESG Commitments
IGNITE Progress on Our ESG Commitments Reduction in Virgin plastic Recyclable, reusable or Zero waste to landfill and fiber packaging compostable packaging 80% Plants vs. 100% goal 9% vs. our 50% goal by 2030 vs. 88% vs. 100% goal by 2025 by 2025 2018 baseline 52% Other facilities vs. 100% goal by 2
Slide 49: Progress Has Enabled Strong Recovery
IGNITE Progress Has Enabled Strong Recovery > 90 80 86 % key customer % of households % total distribution in-stock have been point loss replenishment recovered recovered 49
Slide 50: Financial Performance
o The Clorox Company Financial Performance
Slide 51: Key Messages
Key Messages • Clorox has a long track record of creating shareholder value • As part of our IGNITE strategy, our intent is to accelerate our financial performance • As we exit a significant inflationary period and recover from our cyberattack, we remain confident we will accelerate our financial pe
Slide 52: Long Track Record of Creating Shareholder Value
Long Track Record of Creating Shareholder Value 20-Year TSR (as of 6/30/2023) 578 S&P 500 544 Clorox Jun-03 Jan -03 Jun-08 Jan -08 Jun-13 Jan -13 Jun-18 Jan -18 Jun-23 Jan -23 SOURCE: FactSet, 20 Year Total Share Return as of June 30, 2023 52
Slide 53: Healthy Cash Flow Generation Fueling Business Reinvestment & Cash Return to Shareholders
Healthy Cash Flow Generation Fueling Business Reinvestment & Cash Return to Shareholders Over $4.5 Billion Returned Over the Last 5 Years $1.5 B $1.2 B $0.8 B $0.6 B $0.6 B FY19 FY20 FY21 FY22 FY23 53
Slide 54: Disciplined Uses of Cash
Disciplined Uses of Cash Strong Reinvestment Strong Dividend Growth (1) Long Standing Member of the Dividend Aristocrats CLX 6% Peer average 5% Supply Brands Chain Capabilities Cash Returned to Shareholders(2) Debt Leverage(3) Over $4.5 Billion Returned Over the Last 5 Years Target: 2.0 – 2.5x $1.5
Slide 55: Disciplined Uses of Cash Driving Top-Tier ROIC
Disciplined Uses of Cash Driving Top-Tier ROIC CLX 24% Peer average 16% Return on invested capital (ROIC) 5-yr average as of fiscal year ending June 30, 2023. ROIC (a non-GAAP measure) is calculated as earnings before income taxes and interest expense, adjusted for other nonrecurring or unusual item
Slide 56: Financial Outlook
Financial Outlook FY23 FY24 Outlook(3) Organic Sales Growth(1) +6% +LSD Gross Margin Expansion +360bps About +200bps Adjusted EPS Growth(2) +24% +4% to +8% (1) Organic sales growth (a non-GAAP measure) is defined as net sales growth / (decrease) excluding the effect of any acquisitions and divestitu
Slide 57: Remain Focused on Delivering Accelerated Financial Performance
Remain Focused on Delivering Accelerated Financial Performance Annual Goals IGNITE Progress* Sales Growth +3 to 5% +4% (4Y CAGR) Adj. EBIT Margin Improvement +25 to 50bps -140bps (4Y Average)(1) Free Cash Flow % of Sales 11 to 13% 13% (4Y Average)(2) * As of June 30, 2023. (1) Adjusted EBIT (a non-G
Slide 58: Accelerating Growth Through IGNITE Strategy…
Accelerating Growth Through IGNITE Strategy… • Focusing on bigger, stickier innovation 3 – 5% platforms • New growth runways, supported by 2 – 4% lasting shifts in consumer behavior 2% • Creating a more stable and profitable international portfolio FY14-FY19 IGNITE IGNITE Actuals Original Revised FY
Slide 59: … While Rebuilding Margins
… While Rebuilding Margins FY23 FY24e FY25e+ +360bps ~+200bps(1) Continue to expand Pricing, Cost Savings, Supply Chain Optimization, Net Revenue Management, Admin Productivity (1) Based on Outlook as of February 1, 2024 59
Slide 60: Long-Term Investment Case Remains Attractive
Long-Term Investment Case Remains Attractive • We manage a portfolio of leading Brands • Continue to invest to strengthen our competitive advantage • Attractive business model that delivers strong cash flow • Continue to be disciplined in how we invest our cash 60
Slide 61: CAGNY 2024 Q&A
CAGNY 2024 Q&A February 22, 2024 61
Slide 62: CAGNY 2024 Appendix
o The Clorox Company CAGNY 2024 APPENDIX
Slide 63: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation Dollars in millions & percentages based on rounded numbers Fiscal Fiscal Fiscal Fiscal Fiscal Year Year Year Year Year 2019 2020 2021 2022 2023 Net cash provided by operations – GAAP $992 $1,546 $1,276 $786 $1,158 Less: Capital expenditures $206 $254 $331 $251 $228 Free
Slide 64: Debt to Adjusted EBITDA Reconciliation (Debt Leverage)
Debt to Adjusted EBITDA Reconciliation (Debt Leverage) Dollars in millions & percentages based on rounded numbers FY19 FY20 FY21 FY22 FY23 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 Earnings before income taxes $1,024 $1,185 $900 $607 $238 Interest income ($3) ($2) ($5) ($5) ($16) Interest ex
Slide 65: Debt to Adjusted EBITDA Reconciliation
Debt to Adjusted EBITDA Reconciliation (Debt Leverage) (1) EBIT (a non-GAAP measure) represents earnings 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) Adjusted EBIT (a non-GAAP measure) repr
Slide 66: Return on Invested Capital Reconciliation
Return on Invested Capital Reconciliation Dollars in Millions and percentages based on rounded numbers FY19 FY20 FY21 FY22 FY23 Earnings before income taxes (GAAP measure) $ 1,024 $ 1,185 $ 900 $ 607 $ 238 Add back: Certain U.S. GAAP charges(2) $ 357 $ 61 $ 605 Interest expense $ 97 $ 99 $ 99 $ 106
Slide 67: Return on Invested Capital Reconciliation
Return on Invested Capital Reconciliation (1) In accordance with SEC's Regulation G, this schedule provides the definition of a non-GAAP measure and the reconciliation to the most closely related GAAP measure. Return on invested capital (ROIC), a non-GAAP measure is calculated as earnings before inc
Slide 68: Organic Sales Growth / (Decrease) Reconciliation
Organic Sales Growth / (Decrease) Reconciliation The following table provides a reconciliation of organic sales growth / (decrease) (non-GAAP) to net sales growth / (decrease) (GAAP), the most comparable GAAP measure: (1) Clorox defines organic sales growth / (decrease) as GAAP net sales growth / (d
Slide 69: Adjusted Diluted Earnings Per Share Reconciliation
Adjusted Diluted Earnings Per Share Reconciliation Dollars in Millions except per share data The following table provides reconciliation of adjusted diluted earnings per share (non-GAAP) to diluted earnings per share, the most comparable GAAP measure: (1) During the year ended June 30, 2023, noncash
Slide 70: Adjusted Diluted Earnings Per Share Reconciliation
Adjusted Diluted Earnings Per Share Reconciliation The following table provides reconciliation of adjusted diluted earnings per share (non-GAAP) to diluted earnings per share, the most comparable GAAP measure: Based on Outlook as of February 1, 2024 (1) In FY24, the company expects to incur approxim