Clorox Corporation (CLX) posted outstanding fourth-quarter fiscal 2011 earnings of $1.26 per share compared with $1.05 per share in the year-ago quarter. Reported quarter earnings beat the Zacks Consensus Estimate of $1.19 per share. Higher sales, a lower tax rate and share repurchases by the company led to the earnings rise.
Clorox’s net sales during the quarter gained 4.0% year over year to $1,482 million from $1,429 million in the year-ago quarter. Total revenue beat the Zacks Consensus Estimate of $1,467 million. Total volume in the quarter expanded 2% as the company benefited from volume gains from Cleaning and Household segments.
Revenue by Segment
Clorox’s sales in the Cleaning segment jumped 4% due to a 4% growth in volume. The increase in segment volume was mainly attributable to higher shipments in the Home Care and Away From Home businesses partially offset by lower shipments in the Laundry business.
Household segment sales inched up 1% primarily due to a 2% volume growth. Higher volumes resulted from growth in Cat Litter and Bags & Wraps partially offset by lower shipments of Kingsford charcoal.
Clorox’s Lifestyle segment recorded a 5% sales jump in the quarter compared with the base period, a year ago, on the back of volume growth of 3%. Increase in volume was supported by trade promotion spending. The volume growth was primarily driven by higher shipments of Burt’s Bees coupled with new flavor initiation in Dressings & Sauces.
In the International segment, Clorox’s sales grew 9%, while volumes remained flat. Favorable pricing coupled with a positive currency impact led to the growth in sales.
Margins
Clorox’s gross margin decreased 80 basis points (bps) to 43.5% from 44.3% in the year-ago quarter due to increased commodity costs. This was partially offset by the benefit of price increases and prudent cost savings in the quarter.
Balance Sheet and Cash Flow
At quarter end, Clorox had cash and cash equivalents of $259 million and long-term debt of $2,125 million compared with a cash balance of $87 million and a long-term debt of $2,124 million in the year-ago quarter. During the quarter, the company generated $303 million of cash from operations while free cash flow came in at $234 million.
The company bought back 2.7 million shares of the company's common stock for $183 million.
Guidance
Looking ahead, Clorox anticipates annual earnings of $4.00 to $4.10 per share on 1% to 3% growth in sales for fiscal 2012. Gross margin is expected to remain flat.
Clorox Corporation, which competes with names like Colgate-Palmolive Company (CL) and Procter and Gamble Company (PG), currently has a Zacks #3 Rank, implying a short-term Hold rating on the stock. We have a long-term Neutral recommendation on the stock.
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