Clorox Company (the) · NYSE:CLX
Clorox Company (the) — The Clorox Company — Q1 FY2019 Earnings Presentation
34 slides from Clorox Company (the)'s earnings presentation, Oct 31, 2018
Slide 1: FY19 Q1 Investor Presentation / Safe Harbor
FY19 Q1 Investor Presentation 1 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,
Slide 2: Contents / Who We Are
Contents Key Sections Slide # • Who We Are 4 • Financial Performance 16 • 2020 Strategy 30 • Appendix 62 3 WHO WE ARE 2
Slide 3: Our Story
1913 2018 Our Story 1957 – 1969 1999 2006 – current Purchased by P&G, divested and Sales grew by ~40% through Expanded Health & Wellness portfolio once again independent First Brands acquisition through the acquisitions of Burt’s Bees, Developed world-class brand- Renew Life, and Nutranext bran buil
Slide 4: How We Create Value: Leading Brands
How We Create Value 7 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
Slide 5: Mid-Sized Categories $6.1B / Operational Excellence
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% 9 * Note: Reflects results following April 2018 acquisition. Expect
Slide 6: 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 11 Our Efforts Are Broadly Recognized 100 Most Sustainable Companies 12 6
Slide 7: 2020 Strategy / Long-Term Growth Algorithm
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 8: Strong Shareholder Return
Strong Shareholder Return Total Shareholder Return - 3 Years Ending 9/30/2018 70% 61% 10% 50% 41% 11% 30% 15% 52% 30% 10% 17% -10% -2% Clorox Peers S&P 500 Share Price Appreciation Dividend Paid 15 Peers consist of 16 companies: CHD, CL, COTY, CPB, DPS, EL, GIS, HSY, K, KHC, KMB, KO, RB-GB, NWL, PEP
Slide 9: Q1FY19 Performance & FY19 Outlook
Q1FY19 Performance & FY19 Outlook Q1 FY19 FY19 FY Outlook (3 months) (Oct 31 earnings call) Innovation: ~ +3pts $1.6B ~ 2% to 4% Nutranext Acq. & Sales (+4%) Aplicare Div. ~ +2.5pts (vs Year Ago) F/X: ~ -2pts Gross Margin: about flat $1.62 $6.20 to $6.40 Diluted EPS Selling and Admin: ~14% of Sales
Slide 10: Continued Discipline on SG&A / Top-Tier ROIC
Continued Discipline on SG&A As of Fiscal Year Ending June 30, 2018 30% Goal: % of Sales 20% < 14% Sales 13.7% 10% 0% CPB KHC K KMB CHD GIS CLX PG HSY NWL CL COTY DPS PEP SG&A % of Sales as of Latest Fiscal Year End, CLX as of June 30, 2018 19 Delivering Top-Tier ROIC As of Fiscal Year Ending June 3
Slide 11: Strong Free Cash Flow / Impact of Tax Reform
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 12: Use of Cash Priorities / M&A Focus Unchanged
Use of Cash Priorities Business Growth Support Dividend (includes targeted M&A) Free Cash Flow Debt Leverage1 Share Repurchases (Target: 2.0 – 2.5x) 23 1. Debt Leverage = Gross Debt / EBITDA. EBITDA is a non-GAAP measure. See reconciliation in the supplemental financial schedules located at: https:/
Slide 13: 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 14: Healthy Dividend Growth / Long-Term Investment Case
Healthy Dividend Growth… Dividends Have Increased Each Year Since 1977 Dividend Yield as of September 30, 2018 +14% Dividend increase in Feb 2018 4% 3% 2.5% Peer Average: 3.2% 2% 1% 0% GIS KHC NWL COTY CPB KMB PG KO K PEP HSY CLX CL RB-GB CHD EL 27 Source: FactSet, Trailing Dividend Yield as of Sept
Slide 15: Strong Shareholder Return / 2020 Strategy
Strong Shareholder Return Total Shareholder Return 10 Year ending 9/30/2018 TSR % 250 226 CLOROX 210 S&P500 200 195 Peers 150 100 50 0 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 -50 29 Peer includes 14 companies: CPB, KMB, K, RB-GB, KO, GIS, NWL, EL, PEP, CHD, CL, P
Slide 16: 2020 Strategy: Drive Superior Consumer Value
2020 Strategy: 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 17: Building Brand Equity / Digital Engagement
Building Brand Equity Evolving how we build Brands Brand New Agency Marketing Studios Partners Technology Building Brands with Purpose Human Technology Purpose Centered Enabled Driven 33 We Continue to Lean Into Digital Engagement 55% FY19 Est: Over 50% 49% 45% 41% 34% Clorox expects to invest over
Slide 18: Our Partners Help Build World-Class Digital
Our Partners Help Build World-Class Digital Select Partners: 35 Innovation: Strong Track Record Incremental Sales Growth from Product Innovation (Last 12 months) Goal: +3% FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 36 Source: Clorox Internal 18
Slide 19: 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 20: Driving Superior Consumer Value / Retail Capabilities
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 21: 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 41 FY18 includes eCommerce sales from Nutranext Tech Transformation 1.0 to 2
Slide 22: 2020 Strategy: Accelerate Portfolio Momentum
2020 Strategy: 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 23: Fuel Brands Create Investment Dollars
Fuel Brands Create Investment Dollars Increasing demand spend Sales Advertising Promotion >+2pts since FY13 Trade Promotion 45 Investments Drive Household Penetration % Sales with Growing/Stable HH Pen 65% 65% of portfolio has growing or stable 31% household penetration FY13 FY18 46 Source: IRI Pane
Slide 24: 2020 Strategy: Fuel Growth by Reducing Waste
2020 Strategy: 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 25: Fueling Growth in International
Fueling Growth in International International : 17% Cleaning : 34% Latin America 8% Home Care 19% Canada 4% Laundry 9% Australia / NZ 2% Rest of World 3% FY18 Professional 6% Lifestyle : 17% $6.1B Household : 32% 9% in Sales 14% 4% 9% 7% 3% 2% 1%* 49 * Note: Reflects results following April 2018 acq
Slide 26: International Go Lean Strategy / Engage People as Owners
International “Go Lean” Strategy is Working Pricing Focus on Right-Size Optimize Demand Maximization Cost Savings Infrastructure Creation 51 2020 Strategy: Engage our People as Business Owners Mission • We make everyday life better, every day • Maximize economic profit Objectives • Big-share brands
Slide 27: Clorox Growth Culture Enables our 2020 Strategy
Clorox Growth Culture Enables our 2020 Strategy 2018 Growth Culture index: 79 • Decisive • Consistent with Global High Performance Companies • Empowered • Well above Global Fast Moving Consumer • Accountable Goods Companies Source: Willis Towers Watson Global High Performing Companies (Growth Cultur
Slide 28: People Strategy Building a Competitive Advantage
People Strategy Building a Competitive Advantage Strong sustainable engagement results are generally associated with: • 3x higher operating margin1 • 6.5 fewer days lost1 • 41% lower retention risk1 Inclusion and diversity lead to better outcomes: • +6% greater revenue, +15% more customer wins, sign
Slide 29: We Cultivate Diversity Broadly to Generate Value
We Cultivate Diversity Broadly to Generate Value 33% Female Clorox Executive Committee Members Board Executives 33% Female Board Members Employees Suppliers 33% Minority Board Members Clorox Employee Resource Groups 57 Good Growth: Profitable, Sustainable, Responsible PERFORMANCE PEOPLE Commitment t
Slide 30: Making Our Products More Sustainable
Making Our Products More Sustainable Sustainability improvements to 49% of the portfolio* On track to meet our goal of 50% product portfolio by 2020 Source: 2018 Clorox Integrated Annual Report Cumulative progress to date since 2011 base year to 2018 Reducing Our Environmental Footprint 2020 GOAL 20
Slide 31: Safeguarding Families and Communities / Appendix
Safeguarding Families and Communities $69 MILLION Total Cash Grants and Donations FY13 to FY18 $16 MILLION Cash Equivalent Volunteer Hours CY12 to CY17 Source: 2018 Clorox Integrated Annual Report Appendix 31
Slide 32: Key Credit Metrics / Gross Margin Reconciliation
Key Credit Metrics $ in B FY13 FY14 FY15 FY16 FY17 FY18 EBITDA $1.2 $1.1 $1.2 $1.2 $1.3 $1.3 Total Debt / EBITDA 2.1x 2.0x 1.8x 1.9x 1.7x 1.9x EBITDA Interest Coverage 9.5x 11.3x 11.9x 14.0x 14.5x 15.3x EBIT / Interest 8.0x 9.6x 10.2x 12.1x 12.7x 13.3x Free Cash Flow / Debt 25% 28% 33% 26% 29% 31% F
Slide 33: Reportable Segments / ROIC Reconciliation
Reportable Segments (unaudited) Dollars in Millions Earnings (losses) from continuing operations Net sales before incom e taxes Three Months Ended Three Months Ended 9/30/2018 9/30/2017 % Change (1) 9/30/2018 9/30/2017 % Change (1) Cleaning $ 571 $ 559 2% $ 180 $ 172 5% Household 442 441 0% 59 73 -1
Slide 34: 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) FY18 Total assets $ 4,887 Less: non-interest bearing liabilities (1,792) Average invested capital $ 3,095 67 34