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Mar 31, 2022
Clorox Q3 2022 Earnings Report
Clorox reported a net sales increase of 2% and adjusted EPS decreased by 19% due to lower gross margin.
Key Takeaways
Clorox reported Q3 fiscal year 2022 results with a net sales increase of 2% to $1.8 billion. Diluted EPS increased significantly due to a noncash impairment in the Vitamins, Minerals and Supplements business during the year-ago period, while adjusted EPS decreased due to lower gross margin. The company updated its outlook to reflect higher than previously anticipated commodity and manufacturing and logistics costs.
Net sales increased 2% to $1.8 billion, with organic sales also growing 2%.
Diluted EPS increased 347% to $1.21, while adjusted EPS decreased 19% to $1.31.
Gross margin decreased to 35.9% due to higher manufacturing, logistics, and commodity costs.
The company updated its fiscal year 2022 outlook, expecting net sales to decrease 1% to 4% and adjusted EPS to be between $4.05 and $4.30.
Clorox
Clorox
Clorox Revenue by Segment
Clorox Revenue by Geographic Location
Revenue by Segment
Household Revenue
CapyFin.comLifestyle Revenue
CapyFin.comInternational Revenue
CapyFin.comRevenue by Geographic Location
International Revenue
CapyFin.com Forward Guidance
Clorox updated its outlook for fiscal year 2022, expecting net sales to decrease 1% to 4% and adjusted EPS to be between $4.05 and $4.30, reflecting higher commodity and manufacturing and logistics costs.
Positive Outlook
- Net sales are still expected to decrease 1% to 4% (organic sales decrease of 1% to 4%), reflecting a 7% sales decrease in the first half of fiscal year 2022 as the company lapped 27% growth in that period and sales growth in the back half of this fiscal year.
- Selling and administrative expenses are now expected to be at 14% to 15% of net sales, reflecting about 1 point of impact from the company’s strategic investments in digital capabilities and productivity enhancements.
- Advertising and sales promotion spending remains at about 10% of net sales, reflecting the company’s ongoing commitment to invest behind its brands.
- Effective tax rate continues to be between 22% and 23%, with the year-over-year increase primarily reflecting the lapping of several one-time benefits in the prior fiscal year.
- The company’s adjusted EPS outlook excludes the long-term strategic investment in digital capabilities and productivity enhancements to provide greater visibility into the underlying operating performance of the business.
Challenges Ahead
- Gross margin is now expected to decrease up to 800 basis points, primarily due to higher than previously anticipated commodity and manufacturing and logistics costs.
- Diluted EPS is now expected to be between $3.60 and $3.85, or a decrease between 35% and 31%, respectively.
- Adjusted EPS is now expected to be between $4.05 and $4.30, or a decrease between 44% and 41%, respectively.
- Of the company’s approximately $90 million investment in long-term strategic digital capabilities and productivity enhancements in fiscal year 2022, about $73 million, or 45 cents, is still expected to flow through to the profit and loss statement, mostly in selling and administrative expenses.
- Net sales are still expected to decrease 1% to 4% (organic sales decrease of 1% to 4%), reflecting a 7% sales decrease in the first half of fiscal year 2022 as the company lapped 27% growth in that period and sales growth in the back half of this fiscal year.
Revenue & Expenses
Visualization of income flow from segment revenue to net income