Clorox (CLX) Tops Q3 EPS by 14c, Revenue Misses, Guides Below Consensus

April 30, 2021 6:38 AM EDT

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Clorox (NYSE: CLX) reported Q3 EPS of $1.62, $0.14 better than the analyst estimate of $1.48. Revenue for the quarter came in at $1.78 billion versus the consensus estimate of $1.87 billion.

GUIDANCE:

Clorox sees FY2021 EPS of $7.45-$7.65, versus the consensus of $8.35.

  • 10% to 13% sales growth (10% to 13% organic sales growth)
  • $5.94 to $6.14 diluted EPS range (19% to 16% decrease versus year ago)
  • $7.45 to $7.65 adjusted EPS range (1% to 4% increase versus year ago)Excludes the $2.11 loss from the noncash impairment related to the VMS business and the 60-cent one-time noncash gain from the Saudi JV acquisition valuation remeasurement.2
  • Gross margin down

Clorox's fiscal year sales are still expected to grow between 10% and 13%, reflecting strong front-half sales results as well as the expectation of moderating demand over the balance of the fiscal year. Fiscal year sales continue to assume about 1 point of contribution from the Saudi joint venture acquisition, offset by 1 point from unfavorable foreign exchange rates. Fiscal year organic sales continue to assume a 10% to 13% growth range.

Gross margin is now expected to be down, primarily reflecting higher commodity and manufacturing and logistics costs.

Fiscal year selling and administrative expenses are now expected to be below 14% of sales as a result of lower incentive compensation costs due to the third-quarter noncash impairment on the VMS business.

Advertising and sales promotion spending is still anticipated to be about 11% of sales, based on an ongoing assumption to spend 12% in the back half of the fiscal year. This level of spending is going toward brand investments in support of the company's robust pipeline of innovation and continued consumer engagement, both in and out of the home, to continue to drive superior consumer value.

The company's effective tax rate is still expected to be in the range of 21% to 22%, both on a reported and adjusted basis.1

Net of all these factors, Clorox now anticipates fiscal year 2021 diluted EPS to decrease between 19% and 16%, or $5.94 to $6.14, and adjusted EPS to increase between 1% and 4%, or $7.45 to $7.65, compared to the prior year. Diluted EPS includes the impact of the two noncash items, and both diluted EPS and adjusted EPS reflect assumptions for strong fiscal year sales performance, partially offset by an increasingly elevated cost environment.

"Excluding the two noncash items, I'm pleased that our sales and adjusted EPS outlook remain on track, especially given the dynamic operating environment," said Chief Financial Officer Kevin Jacobsen. "Importantly, we expect to deliver another year of strong results for our shareholders. Guided by our IGNITE strategy, we're continuing to invest in new growth opportunities where we have a right to win. And we're keeping our sights set on our broader ambition of accelerating profitable growth to generate long-term value creation for our shareholders."

For earnings history and earnings-related data on Clorox (CLX) click here.



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