) came up with impressive earnings and sales comparisons for the
second-quarter of fiscal 2013. The company's adjusted earnings of
90 cents per share jumped approximately 13.9% from the year-ago
quarter's earnings of 79 cents.
Quarterly earnings of this Zacks Rank #3 (Hold) company also
exceeded the Zacks Consensus Estimate of 81 cents, reflecting a
surprise of 11.1%.
Including the net proceeds from sale leaseback transaction of
its Oakland office, the company reported earnings of 93 cents per
The company's earnings benefited from improvements in revenues
as well as gross margins, offset by higher selling and
administration expenses as it continues to invest in information
technology (IT) systems.
Net sales elevated 8.5% year over year to $1,325 million from
$1,221 million in the year-ago quarter, mainly due to improved
prices and volumes. Moreover, total revenue came in ahead of the
Zacks Consensus Estimate of $1,270 million. Total volume
increased 5% from the comparable quarter last year.
Revenue by Segment
Sales in the
segment jumped 15% to $425 million, primarily due to a 13% volume
growth and higher prices. During the quarter, the segment
witnessed volume growth in its Professional Products business,
Home Care unit and the Laundry business.
sales increased 7% to $357 million, while volume inched up 1%.
Volumes in the quarter were benefited from increased shipments in
the Charcoal business, partially offset by volume decline in
volume of Cat Litter and Glad products.
Sales at the
segment hiked 8% to $237 million, primarily due to an increase of
7% in volume. Volume growth in the Burt's Bees and Food
businesses was responsible for the growth.
business segment, Clorox's sales improved 3% to $306 million,
benefiting from price increases, partially offset by a 3% volume
decline. The segment's Base business in Latin America and Canada
remained weak, while other regions did well during the
Costs and Margins
Clorox's gross margin expanded 100 basis points (bps) to 42.5%
from 41.5% in the year-ago quarter. Solid costs savings and
improved prices led to increase in margins, while inflation
played the spoilsport impacting manufacturing and logistics costs
as well as other supply chain costs.
Advertising costs remained almost flat year over year at $116
million, while as a percentage of revenue it contracted 60 basis
points to 8.8%. The company's adjusted operating income stood at
$243 million compared with $208 million in the second quarter of
fiscal 2012. Consequently, operating margin improved 130 bps to
Balance Sheet and Cash Flow
Clorox ended the quarter with cash and cash equivalents of
$445 million and long-term debt of $2,169 million. During the
first half of fiscal 2013, the company generated $325 million net
cash from operations, exhibiting an increase of $157 million from
the year-ago period.
Bolstered by better-than-expected quarterly performance,
Clorox raised its sales growth forecast to 3%-5% for fiscal 2013
from 2%-4% forecasted earlier, driven by better category-wise
performances, market share gains and further product innovation
across its brands.
The company expects operating income margin to expand by 25 to
50 basis points in fiscal 2013, on the back of strong cost
savings, the benefit of price increases and flat commodity costs
Further, the company now anticipates annual earnings of
$4.25-$4.35 per share in fiscal 2013, up from previous guidance
range of $4.20-$4.35. Moreover, Clorox guided expenditures toward
systems and facilities development and other restructuring
initiatives to be in the range of $50-$55 million in fiscal
Other Stocks to Consider
Other stocks in the same industry that are worth considering
Church & Dwight Company Inc.
Proctor & Gamble Company
). All these companies carry a Zacks Rank #2 (Buy).
CHURCH & DWIGHT (CHD): Free Stock Analysis
COLGATE PALMOLI (CL): Free Stock Analysis
CLOROX CO (CLX): Free Stock Analysis Report
PROCTER & GAMBL (PG): Free Stock Analysis
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