Oakland, Calif., Oct. 4, 2005 – The Clorox Company (NYSE:
CLX) (PCX: CLX) today confirmed its financial outlook for the fiscal
first quarter ending Sept. 30, 2005. In addition, as a result of
rapidly rising energy-related costs driven by the impacts of the
recent hurricanes, the company lowered its outlook for the second
quarter ending Dec. 31, 2005, and for the full fiscal year ending
June 30, 2006.
"In an already high-cost environment, the recent storms have
further intensified costs for raw materials, transportation and
utilities in our manufacturing operations," said Chairman and
CEO Jerry Johnston. "We will continue to evaluate the impact
of this changing commodities environment and its impact on our cost
structure and margins. At the same time, we're taking a number of
actions to help offset these cost increases."
Among the actions Clorox is taking are price increases, which go
into effect Jan. 2, 2006, on about 40 percent of the company's product
portfolio. The company is in the process of communicating details
of these price increases to its retail customers, and expects to
share more specific information with the investment community during
its first-quarter conference call on Nov. 3. Because Clorox does
not expect these pricing actions to fully offset commodity cost
increases, the company is taking actions to control other discretionary
costs and expenditures, while continuing its investments to market
its brands and deliver innovation. "Importantly, our core brands
are healthy and the overall business remains strong," Johnston
said.
For the first quarter, Clorox has raised its sales outlook due
to continued momentum across all business segments and lower-than-expected
consumption declines following price increases on selected Clorox®
products during the first quarter. The company now anticipates higher
first-quarter sales growth of 5-6 percent and diluted earnings per
share from continuing operations in the range of 68-72 cents. For
the first quarter, the company expects its effective tax rate to
be in the range of 30-31 percent. The company's full-year effective
tax rate is expected to be approximately 34 percent. As a reminder,
Clorox also began expensing stock options effective the first quarter.
The company continues to estimate that this accounting change will
reduce full-year diluted earnings per share from continuing operations
by about 14-16 cents, which is included in the outlook.
For the second quarter, Clorox continues to anticipate sales growth
of 1-3 percent. The company now expects diluted earnings per share
from continuing operations for the quarter in the range of 41-47
cents due to the impact of anticipated commodity cost increases
during the quarter. The earnings benefit of many of the actions
the company is taking to help offset the impact of the recently
rising raw-material and energy-related costs will not begin to be
realized until the third quarter. As previously announced, the company
also expects second-quarter sales growth and pretax profit to reflect
the impact of pretax launch costs and a reduction in shipments in
anticipation of a Kingsford® charcoal product improvement being
launched in January.
For the full fiscal year, Clorox now anticipates sales growth in
the range of 3-5 percent, but likely at the upper end of the range
due to the net benefit of price increases and innovative new products,
and it anticipates gross margin to be flat or down versus the prior
year. The company now expects diluted EPS for the year in the range
of $2.91-$3.06. The updated range for diluted earnings per share
from continuing operations reflects the incremental cost impacts
resulting from the hurricanes net of the benefit from incremental
price increases and other spending reductions. The wider EPS range
reflects the greater earnings uncertainty this fiscal year due to
the current cost environment. Clorox continues to include contingencies
in its outlook to help offset most unforeseen volatility. The company
will continue to evaluate the impact of commodity-cost increases
as well as the impact of price increases on consumer purchases.
"Although we expect this recent and highly challenging cost
environment to negatively impact our original fiscal 2006 plans,
I feel very good about the fundamental strength of our business,"
Johnston said. "While we're taking prudent actions to help
mitigate cost pressures, we're continuing our demand-building investments
in advertising, supporting our robust R&D platforms and introducing
new products in the second half of the year. We also remain committed
to our key strategy and capability-building choices."
Clorox to Webcast Presentation at Merrill Lynch Conference
Clorox will broadcast its presentation at the Merrill Lynch conference
in London live via the Internet at approximately 9:30 a.m. local
time (4:30 a.m. EDT) on Thursday, Oct. 6, 2005.
The live webcast, which can be accessed at www.TheCloroxCompany.com/investors/index.html,
will feature Chairman and CEO Jerry Johnston and Chief Financial
Officer Dan Heinrich. Following the live webcast, a replay will
be archived on this Web site.
First-Quarter Conference Call and Webcast
On Thursday, Nov. 3, Clorox will host a live audio webcast of a
discussion with the investment community regarding the company's
first-quarter results. The webcast will begin at 10:30 a.m. PST
(1:30 p.m. EST), and can be accessed at www.TheCloroxCompany.com/investors/index.html.
A replay of the webcast will be available for one week on this Web
site.
Clorox Supports Hurricane Relief Effort
In response to Hurricane Katrina, The Clorox Company Foundation
has paid $250,000 to the American Red Cross for immediate and longer-term
relief efforts.
Clorox has also donated more than 75,000 gallons of Clorox®
liquid bleach, 1.1 million Glad® trash bags, 75,000 canisters
of Clorox® disinfecting wipes, 17,000 bottles of Formula 409®
spray cleaner, about 29,000 bottles of Pine-Sol® cleaner and
40,000 pounds of Scoop Away® cat litter.
In addition, the company has posted educational information about
the public health uses of liquid bleach on the Clorox® brand
Web site at www.Clorox.com. Clorox remains in touch with the American
Red Cross to determine what additional help may be needed.
The Clorox Company
The Clorox Company is a leading manufacturer and marketer of consumer
products with fiscal-year 2005 revenues of $4.4 billion. Clorox
markets some of consumers' most trusted and recognized brand names,
including its namesake bleach and cleaning products, Armor All®
and STP® auto care products, Fresh Step® and Scoop Away®
cat litters, Kingsford® charcoal briquets, Hidden Valley®
and K C Masterpiece® dressings and sauces, Brita® water-filtration
systems, and Glad® bags, wraps and containers. With 7,600 employees
worldwide, the company manufactures products in 25 countries and
markets them in more than 100 countries. Clorox is committed to
making a positive difference in the communities where its employees
work and live. Founded in 1980, The Clorox Company Foundation has
awarded cash grants totaling more than $62.2 million to nonprofit
organizations, schools and colleges; and in fiscal-year 2005 alone
made product donations valued at $4.9 million. For more information
about Clorox, visit www.TheCloroxCompany.com.
Forward-Looking Statements
Except for historical information, matters discussed above, including
statements about future volume, sales and earnings growth, profitability,
costs, cost savings or expectations, are forward-looking statements
based on management's estimates, assumptions and projections. Important
factors that could cause results to differ materially from management's
expectations are described in "Forward-Looking Statements and
Risk Factors" and "Management's Discussion & Analysis"
in the company's SEC Form 10-K for the year ended June 30, 2005,
as updated from time to time in the company's SEC filings. Those
factors include, but are not limited to, general economic and marketplace
conditions and events; competitors' actions; the company's costs,
including changes in exposure to commodity costs such as resin,
diesel and chlor-alkali; the company's actual cost performance;
price changes; risks arising out of natural disasters; risks inherent
in litigation and international operations; the ability to manage
and realize the benefits of joint ventures and other cooperative
relationships, including the company's joint venture with Procter
& Gamble regarding the company's Glad® plastic bags, wraps
and containers business; the success of new products; the integration
of acquisitions and mergers; the divestiture of non-strategic businesses;
and environmental, regulatory and intellectual property matters.
In addition, the company's future performance is subject to risks
following the share exchange transaction with Henkel, including
the sustainability of cash flows and the actual level of debt costs.
Declines in cash flow, whether resulting from tax payments, debt
payments, share repurchases or otherwise, or interest cost increases
greater than management expects, could adversely affect the company's
earnings.
The company's forward-looking statements are and will be based
on management's then current views and assumptions regarding future
events and speak only as of their dates. The company undertakes
no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by the federal securities laws.