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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%.
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.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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