Clorox Company — FY2012 Form 10-K Summary
Reporting period: Fiscal year ended June 30, 2012. Although the request metadata says “2011 Q4,” this filing is an annual report for FY2012; the supplied text does not provide standalone fourth-quarter financial results.
Business context and financial performance
Clorox manufactures and markets consumer and professional products, including cleaning, household, lifestyle and international brands. It reported approximately 8,400 employees and operated in more than 100 countries. Management identifies economic profit as its key financial decision metric.
| Metric (USD millions, unless stated) | FY2012 | FY2011 | Change |
|---|---|---|---|
| Net sales | 5,468 | 5,231 | +4.5% |
| Continuing-operations earnings before income taxes | 791 | 563 | +40.5% |
| Total assets at year-end | 4,355 | 4,163 | +4.6% |
| Debt at June 30, 2012 | 2,700 | Not stated in supplied text | — |
FY2012 segment net sales were Cleaning $1,692 million, Household $1,676 million, Lifestyle $901 million and International $1,199 million. Segment continuing-operations earnings before income taxes were $381 million, $298 million, $265 million and $119 million, respectively; Corporate recorded a $272 million loss. FY2011 Lifestyle and International results included $164 million and $94 million, respectively, in noncash Burt’s Bees goodwill impairment charges.
The supplied filing text does not provide clear consolidated net income, operating cash flow, free cash flow, gross or operating margins, or current liquidity ratios. It reports $267 million of cash and cash equivalents within Corporate assets at June 30, 2012.
Material changes and notable developments
- Net sales increased in all four segments versus FY2011; Lifestyle and International pretax segment earnings increased from the prior year, which included the Burt’s Bees impairment charges.
- Clorox acquired HealthLink and Aplicare, expanding its healthcare infection-control business, and acquired Soy Vay, an Asian marinades and dressings business.
- The company introduced new products, prepared a phased launch of concentrated bleach, opened a new Pleasanton facility, and continued implementing an upgraded Latin American ERP system.
- Liquid bleach represented approximately 13% of consolidated sales, trash bags 13%, and charcoal 11% in FY2012. Walmart and affiliates accounted for 26% of sales; the five largest customers represented 44%.
Outlook, risks and contingencies
- For FY2013, management anticipated price increases across parts of its portfolio and continued commodity and other cost increases. It expected cost savings to help offset cost pressures; no numerical earnings or sales guidance is provided in the supplied text.
- Risks include raw-material, energy and transportation inflation; competitive and private-label pressure; possible volume declines following price increases; dependence on major retailers and some single-source suppliers; and foreign-exchange, political and inflation risks, particularly in Venezuela and Argentina.
- Debt totaled $2.7 billion, including $850 million of senior unsecured notes maturing in FY2013. The company disclosed covenant constraints and noted that additional borrowing could increase financial risk.
- Environmental remediation liabilities were $14 million at June 30, 2012; the company stated potential additional exposure could not be estimated. Management said the ultimate disposition of other disclosed lawsuits and claims was not expected to materially adversely affect the consolidated financial statements, while noting litigation outcomes are uncertain.
- The company said it generated significant operating cash and had access to credit facilities, but the supplied text does not state cash-flow amounts or facility availability. It also cited economic uncertainty, acquisition integration, regulatory, product-liability, cyber/IT, and California earthquake risks.
Investor facts to verify
- Review the complete financial statements and MD&A for FY2012 net income, cash flows, margins, working capital, liquidity facilities and detailed debt maturities; those figures are not included in the supplied text.
- Confirm the refinancing or repayment plan for the $850 million of notes due in FY2013 and the company’s covenant headroom.
- Assess the realized volume and profit effects of FY2013 pricing actions and commodity-cost inflation against planned cost savings.
- Evaluate acquisition performance and integration, particularly HealthLink and Aplicare, and monitor exposure to Venezuela, Argentina and major customers.