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Sep 30, 2020
Clorox Q1 2021 Earnings Report
Clorox's Q1 2021 earnings showcased strong sales growth and increased EPS.
Key Takeaways
Clorox reported a strong start to fiscal year 2021 with a 27% increase in sales and a 103% increase in diluted EPS for the first quarter, driven by broad-based strength across its portfolio and double-digit sales growth in all reportable segments.
Sales increased by 27%, driven by double-digit growth in eight of ten business units due to COVID-19 and people spending more time at home.
Diluted EPS increased by 103% to $3.22, reflecting higher sales, gross margin expansion, and a one-time non-cash gain from the remeasurement of the company’s previously held investment in its Saudi joint venture.
The company's first-quarter gross margin increased 400 basis points to 48% from 44% in the year-ago quarter.
Net cash provided by operations was $383 million, compared to $271 million in the year-ago period, an increase of 41%.
Clorox
Clorox
Forward Guidance
Clorox’s fiscal year sales are now expected to grow between 5% and 9%, reflecting strong first-quarter sales results as well as the expectation of stronger sales results over the balance of the fiscal year, including double-digit sales growth in the second quarter.
Positive Outlook
- Fiscal year sales are now expected to grow between 5% and 9%.
- Fiscal year organic sales are now expected to grow in the 5% to 9% range.
- Gross margin is expected to be about flat, reflecting the benefits of strong cost savings and sales.
- Fiscal year selling and administrative expenses are still expected to be about 14% of sales, as the company continues to invest aggressively in initiatives to take advantage of longer-term growth opportunities.
- The company’s effective tax rate now is expected to be in the range of 21% to 22%.
Challenges Ahead
- A deceleration is still anticipated in the back half of fiscal year 2021 as the company laps double-digit growth from the period when the initial COVID-19 spike occurred.
- Gross margin is expected to be about flat, offset by higher commodity costs, primarily for resin, and transportation costs, in addition to temporary costs related to COVID-19.
- Fiscal year diluted EPS outlook continues to include an estimated contribution of 45 to 53 cents from the company’s increased stake in its Saudi joint venture, primarily driven by a one-time, non-cash gain.
- Back-half sales results are still expected to be significantly stronger relative to pre-pandemic levels.
- Advertising and sales promotion spending is still anticipated to be about 11% of sales, reflecting increased brand investments in support of the company’s robust pipeline of innovation and continued consumer engagement, both in and out of the home, as well as ongoing efforts to deliver superior consumer value.