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Mar 31, 2020
Clorox Q3 2020 Earnings Report
Reported sales growth and an increase in diluted net earnings per share for its third quarter of fiscal year 2020.
Key Takeaways
Clorox reported a 15% increase in sales and a 31% increase in diluted earnings per share for Q3 2020. The company experienced sales and earnings growth across all reportable segments, driven by strong demand for disinfecting products and broad-based growth across its portfolio.
Sales increased by 15%, driven by an 18-point volume growth.
Organic sales increased by 17%.
Gross margin increased by 330 basis points to 46.7%.
Diluted EPS increased by 31% to $1.89.
Forward Guidance
Clorox's fiscal year sales outlook is now expected to be in the 4% to 6% growth range, driven by the impact of COVID-19.
Positive Outlook
- Sales were tracking in line with the company’s original plan to return to organic sales growth in the back half of the fiscal year.
- Increased product demand driven by strong customer plans.
- Meaningful back-half innovation programs.
- Higher consumer investments, leading to expanded distribution across the portfolio.
- Gross margin is now expected to be up strongly, reflecting the continued benefit of operating leverage driven by sales momentum and cost savings initiatives.
Challenges Ahead
- About 2 points of foreign exchange headwinds.
- Temporary investments to support employees who are on the front lines involved in product manufacturing and shipping, including increased wages and benefits as well as enhanced operational safety measures.
- Higher transportation and warehousing costs to support greater product demand, such as expedited shipping to customers.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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