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The Clorox Company (CLX - Free Report) reported second-quarter fiscal 2024 results, wherein the top and bottom lines beat their respective Zacks Consensus Estimate and improved year over year. The results mainly benefited from higher volumes and increased sales across each of the segments.
Also, significant gains from pricing actions and ongoing cost-saving initiatives aided the performance. Results also benefited from a solid innovation pipeline and digital transformation. CLX has been on track with its streamlined operating model, which aims to improve efficiency.
The market cheered CLX after the better-than-anticipated results, with its shares gaining 7.1% in the after-market trading session on Feb 1. Shares of this currently Zacks Rank #3 (Hold) company have risen 17.1% in the past three months compared with the industry’s 5.8% growth.
Q2 Update
Adjusted earnings of $2.16 per share soared 120% year over year and beat the Zacks Consensus Estimate of $1.08. Bottom-line results gained from increased sales and the gross margin, somewhat offset by adverse currency as well as increased selling and administrative expenses and advertising investments.
Adjusted earnings excluded one-time costs related to the recent cyberattack incident, and ongoing digital capabilities and productivity enhancements of 16 cents and 19 cents, respectively. CLX’s pricing and ongoing cast-saving initiatives contributed to its better-than-expected performance.
On a GAAP basis, the company reported earnings of 75 cents per share, reflecting a drop of 6% from earnings of 80 cents per share reported a year ago.
The Clorox Company Price, Consensus and EPS Surprise
Net sales of $1,990 million grew 16% from the year-ago quarter's level and surpassed the Zacks Consensus Estimate of $1,777 million. On an organic basis, sales rose 20% year over year. The uptick was mainly due to higher volumes and favorable price mix, partly negated by adverse foreign currency rates.
The gross margin expanded 730 bps year over year to 43.5% in the fiscal second quarter. Gains from pricing and cost-saving initiatives were offset by the impact of adverse currency. The gross margin was significantly ahead of our projection of an 80-bps increase to 37% for the fiscal second quarter.
Segmental Discussion
Sales of the Health and Wellness segment climbed 25% to $720 million, which surpassed our estimate of $600.1 million. This was due to a rise of 22 points in volume and a six-point gain from a favorable price mix.
The Household segment’s sales were up 9% to $502 million and came ahead of our estimate of $471.2 million. The upside resulted from four points in volume and a five-points gain from a favorable price mix. Each of the segment’s businesses, including Bags and Wraps, Cat Litter, and Grilling Bags, reported higher sales.
Sales in the Lifestyle segment increased 21% year over year to $403 million and outpaced our estimate of $342 million. This was mainly driven by a 24-point increase in volumes, offset by three points of adverse price mix. The segment’s three businesses – Food, Natural Personal Care and Water Filtration Food – reported sales increases.
In the International segment, sales of $311 million were up 9% year over year and outshined our estimate of $280.3 million. This was driven by a volume rise of six points and a 25-point gain from a favorable price mix offset by a 22-point impact from unfavorable currency. Organic sales for the segment improved 31%.
Financials
Clorox ended second-quarter fiscal 2024 with cash and cash equivalents of $355 million, and a long-term debt of $2,479 million.
Fiscal 2024 Guidance
For fiscal 2024, management envisions net sales to be down low single digits year over year versus the earlier projection of decline in mid-to-high single digits. This revision reflects the progress made in the reported quarter and higher expectations for the second half. The guidance includes about five points of negative currency impact.
The gross margin is projected to expand 200 bps compared with the previous guidance of being flat year over year. This is backed by the combined gains from pricing, cost savings and supply-chain optimization, partly offset by supply-chain inflation and the impact from the cyberattack.
CLX suggests selling and administrative expenses to be 16-17% of sales, including the impact of 2.5 points from its strategic investments in digital capabilities, implementation of the streamlined operating model and expenses incurred for the cyberattack. It had earlier expected selling and administrative expenses to be 16% of sales.
Clorox anticipates advertising and sales promotion spending to be 11% of sales. This is likely to be driven by its commitment to investing in its brand portfolio. The effective tax rate is likely to be 22-23%.
The company expects GAAP earnings of $3.06-$3.26 per share for fiscal 2024. The guidance suggests a year-over-year increase of 155-172%. On an adjusted basis, earnings per share are anticipated to be $5.30-$5.50, indicating a decline of 4-8% year over year.
This view excludes the 70 cents impact of long-term strategic investment in digital capabilities and productivity enhancements, 20 cents cost from streamlined operating model initiatives and incremental expense of 30 cents from the cyberattack. Additionally, adjusted earnings per share are expected to exclude a non-cash charge of $1.04 associated with the settlement of the company's domestic qualified pension plan.
Stocks to Consider
Some better-ranked stocks from the broader Consumer Staples space are Church & Dwight Co. (CHD - Free Report) , Colgate-Palmolive (CL - Free Report) and Inter Parfums (IPAR - Free Report) .
Church & Dwight, offering a broad range of household, personal care and specialty products, currently carries a Zacks Rank #2 (Buy). CHD has a trailing four-quarter earnings surprise of 10.1%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Church & Dwight’s current financial year’s sales and earnings indicates growth of 8.7% and 6.4%, respectively, from the year-ago numbers.
Colgate-Palmolive, a leading consumer goods company, currently carries a Zacks Rank of 2. CL has a trailing four-quarter earnings surprise of 4.2%, on average.
The Zacks Consensus Estimate for CL’s current financial-year sales and earnings indicates growth of 3.5% and 7.7%, respectively, from the year-ago reported figures.
Inter Parfums is engaged in the manufacturing, distribution and marketing of a wide range of fragrances and related products. It currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for IPAR’s current financial-year sales and earnings indicates an improvement of 20.9% and 20.2%, respectively, from the prior-year figures. It has a trailing four-quarter earnings surprise of 45.7%, on average.
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Clorox (CLX) Q2 Earnings & Revenues Beat Estimates, Rise Y/Y
The Clorox Company (CLX - Free Report) reported second-quarter fiscal 2024 results, wherein the top and bottom lines beat their respective Zacks Consensus Estimate and improved year over year. The results mainly benefited from higher volumes and increased sales across each of the segments.
Also, significant gains from pricing actions and ongoing cost-saving initiatives aided the performance. Results also benefited from a solid innovation pipeline and digital transformation. CLX has been on track with its streamlined operating model, which aims to improve efficiency.
The market cheered CLX after the better-than-anticipated results, with its shares gaining 7.1% in the after-market trading session on Feb 1. Shares of this currently Zacks Rank #3 (Hold) company have risen 17.1% in the past three months compared with the industry’s 5.8% growth.
Q2 Update
Adjusted earnings of $2.16 per share soared 120% year over year and beat the Zacks Consensus Estimate of $1.08. Bottom-line results gained from increased sales and the gross margin, somewhat offset by adverse currency as well as increased selling and administrative expenses and advertising investments.
Adjusted earnings excluded one-time costs related to the recent cyberattack incident, and ongoing digital capabilities and productivity enhancements of 16 cents and 19 cents, respectively. CLX’s pricing and ongoing cast-saving initiatives contributed to its better-than-expected performance.
On a GAAP basis, the company reported earnings of 75 cents per share, reflecting a drop of 6% from earnings of 80 cents per share reported a year ago.
The Clorox Company Price, Consensus and EPS Surprise
The Clorox Company price-consensus-eps-surprise-chart | The Clorox Company Quote
Net sales of $1,990 million grew 16% from the year-ago quarter's level and surpassed the Zacks Consensus Estimate of $1,777 million. On an organic basis, sales rose 20% year over year. The uptick was mainly due to higher volumes and favorable price mix, partly negated by adverse foreign currency rates.
The gross margin expanded 730 bps year over year to 43.5% in the fiscal second quarter. Gains from pricing and cost-saving initiatives were offset by the impact of adverse currency. The gross margin was significantly ahead of our projection of an 80-bps increase to 37% for the fiscal second quarter.
Segmental Discussion
Sales of the Health and Wellness segment climbed 25% to $720 million, which surpassed our estimate of $600.1 million. This was due to a rise of 22 points in volume and a six-point gain from a favorable price mix.
The Household segment’s sales were up 9% to $502 million and came ahead of our estimate of $471.2 million. The upside resulted from four points in volume and a five-points gain from a favorable price mix. Each of the segment’s businesses, including Bags and Wraps, Cat Litter, and Grilling Bags, reported higher sales.
Sales in the Lifestyle segment increased 21% year over year to $403 million and outpaced our estimate of $342 million. This was mainly driven by a 24-point increase in volumes, offset by three points of adverse price mix. The segment’s three businesses – Food, Natural Personal Care and Water Filtration Food – reported sales increases.
In the International segment, sales of $311 million were up 9% year over year and outshined our estimate of $280.3 million. This was driven by a volume rise of six points and a 25-point gain from a favorable price mix offset by a 22-point impact from unfavorable currency. Organic sales for the segment improved 31%.
Financials
Clorox ended second-quarter fiscal 2024 with cash and cash equivalents of $355 million, and a long-term debt of $2,479 million.
Fiscal 2024 Guidance
For fiscal 2024, management envisions net sales to be down low single digits year over year versus the earlier projection of decline in mid-to-high single digits. This revision reflects the progress made in the reported quarter and higher expectations for the second half. The guidance includes about five points of negative currency impact.
The gross margin is projected to expand 200 bps compared with the previous guidance of being flat year over year. This is backed by the combined gains from pricing, cost savings and supply-chain optimization, partly offset by supply-chain inflation and the impact from the cyberattack.
CLX suggests selling and administrative expenses to be 16-17% of sales, including the impact of 2.5 points from its strategic investments in digital capabilities, implementation of the streamlined operating model and expenses incurred for the cyberattack. It had earlier expected selling and administrative expenses to be 16% of sales.
Clorox anticipates advertising and sales promotion spending to be 11% of sales. This is likely to be driven by its commitment to investing in its brand portfolio. The effective tax rate is likely to be 22-23%.
The company expects GAAP earnings of $3.06-$3.26 per share for fiscal 2024. The guidance suggests a year-over-year increase of 155-172%. On an adjusted basis, earnings per share are anticipated to be $5.30-$5.50, indicating a decline of 4-8% year over year.
This view excludes the 70 cents impact of long-term strategic investment in digital capabilities and productivity enhancements, 20 cents cost from streamlined operating model initiatives and incremental expense of 30 cents from the cyberattack. Additionally, adjusted earnings per share are expected to exclude a non-cash charge of $1.04 associated with the settlement of the company's domestic qualified pension plan.
Stocks to Consider
Some better-ranked stocks from the broader Consumer Staples space are Church & Dwight Co. (CHD - Free Report) , Colgate-Palmolive (CL - Free Report) and Inter Parfums (IPAR - Free Report) .
Church & Dwight, offering a broad range of household, personal care and specialty products, currently carries a Zacks Rank #2 (Buy). CHD has a trailing four-quarter earnings surprise of 10.1%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Church & Dwight’s current financial year’s sales and earnings indicates growth of 8.7% and 6.4%, respectively, from the year-ago numbers.
Colgate-Palmolive, a leading consumer goods company, currently carries a Zacks Rank of 2. CL has a trailing four-quarter earnings surprise of 4.2%, on average.
The Zacks Consensus Estimate for CL’s current financial-year sales and earnings indicates growth of 3.5% and 7.7%, respectively, from the year-ago reported figures.
Inter Parfums is engaged in the manufacturing, distribution and marketing of a wide range of fragrances and related products. It currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for IPAR’s current financial-year sales and earnings indicates an improvement of 20.9% and 20.2%, respectively, from the prior-year figures. It has a trailing four-quarter earnings surprise of 45.7%, on average.