The Clorox Company (CLX) recorded 7.8% growth in fiscal third-quarter earnings, to $165 million from $153 million in the year-ago quarter. Earnings per share came in at $1.16, which topped the Zacks Consensus Estimate by 8 cents.
Net sales for the quarter rose by 1.2% to $1.37 billion from $1.35 billion in the year-ago period. The growth was primarily driven by price increases and favorable foreign currency translations, which was partially offset by Venezuela currency devaluation. Total volume increased 3%, primarily due to several major brands including Clorox disinfecting wipes, Hidden Valley salad dressings, Fresh Step cat litter, Kingsford charcoal and disinfecting and fragranced cleaning products in Latin America.
Segment-wise
In the Cleaning segment, sales declined 4% while volumes grew 1%. The volume increase was driven by increased shipments of disinfecting wipes and Pine-Sol cleaner.
However, sales declined due to unfavorable product mix and increased trade-promotion spending.
In the Household segment, sales were flat year-over-year, although volumes increased 4%. Volume growth was primarily driven by robust shipments of Fresh Step cat litter and increased shipments of Kingsford charcoal and Glad trash bags.
The Lifestyle segment recorded 5% sales growth and 8% volume growth. The volume growth was driven by Hidden Valley salad dressings, increased shipments of Brita pour-through water-filtration products and Burt’s Bees natural personal care products.
In the International segment, sales expanded 9% and volumes grew by 3% year-over-year. Volume growth was driven by higher shipments of disinfecting and fragranced cleaning products in Latin America.
Balance Sheet
Clorox’s gross margin for the quarter was almost flat year-over-year declining marginally by 6 basis points (bps) to 45.1% versus 45.2% in the year-ago quarter. The benefits of cost savings were fully offset by higher commodity costs and trade spending. Operating margin rose by 43 bps to 13.3% from 12.9% in the prior-year period.
At quarter-end, Clorox had cash and cash equivalents of $241 million, compared to $206 million in the year-ago quarter.
Outlook
Clorox has updated its guidance for fiscal 2010. Annual earnings are now expected in the range of $4.20 to $4.25 per share, compared to the previous guidance of $4.10 to $4.25.
Net sales growth for the year is reiterated in the 1% to 2% range, while gross margins are now expected to improve in the 150 to 160 bps range, compared to the earlier prediction of a 150 to 175 bps improvement.
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