OAKLAND, CA -- (Marketwire) -- 02/04/13 -- The Clorox Company (NYSE: CLX) today announced strong results for its second quarter, which ended Dec. 31, 2012. The company reported a 9 percent increase in sales and 18 percent growth in diluted earnings per share (EPS). Clorox also delivered one percentage point of gross margin improvement.
"I'm extremely pleased with our second-quarter results," said Chairman and CEO Don Knauss. "We had strong year-over-year sales growth, as well as another quarter of gross margin expansion, which is a testament to our focus on delivering profitable growth. Based on our 5 percent sales growth and 10 percent EPS growth in the first half of the fiscal year, we feel more optimistic about our full-year outlook."
Some information in this press release is reported on a non-GAAP basis. See "Non-GAAP Financial Information" below and the tables toward the end of this press release for more information and a reconciliation of key second-quarter results.
Fiscal Second-Quarter Results
Following is a summary of key second-quarter results. All comparisons are with the second quarter of fiscal year 2012, unless otherwise stated.
* 93 cents diluted earnings per share (18 percent growth)
* 5% volume growth
* 9% sales growth
Clorox reported second-quarter earnings of $123 million, or 93 cents diluted EPS. This compares with $105 million, or 79 cents diluted EPS, in the year-ago quarter. Current-quarter results reflect higher sales and volume, as well as gross margin expansion, partially offset by higher selling and administration expenses, including continued investments in the company's information technology (IT) systems; higher manufacturing and logistics costs, which include the impact of inflationary pressures; and a higher tax rate versus the year-ago quarter. In December, Clorox completed a sale and leaseback transaction of its Oakland, Calif. general office. The company realized net cash proceeds of $108 million and recognized a gain of $6 million, or 3 cents diluted EPS, in the second quarter related to the sale and leaseback transaction.
Volume for the second quarter of fiscal 2013 increased 5 percent. Sales grew 9 percent, with increases in all four of the company's reportable segments. The difference between sales and volume growth was mostly due to the benefit of price increases. Sales benefited from an extra shipping day in the quarter and acquisitions made in the last fiscal year, each contributing about 1.5 percentage points of growth. Excluding these items, sales grew about 5 percent. Sales also benefited from shipments to reset retail shelves with the new concentrated bleach product, as well as shipments of disinfecting products due to cold- and flu-related early third-quarter merchandising events.
Gross margin increased 100 basis points to 42.5 percent from 41.5 percent in the year-ago quarter, driven primarily by strong cost savings and the benefit of price increases, partially offset by higher manufacturing and logistics costs, which include the impact of inflationary pressures.
Year-to-date net cash provided by operations increased to $325 million from $168 million in the prior-year period. The year-over-year increase was due primarily to favorable changes in working capital and higher earnings. For the full fiscal year, Clorox anticipates free cash flow of 9 percent to 10 percent of sales. The company defines free cash flow as cash provided by operations less capital expenditures. Capital expenditures are expected to be in the range of $200 million to $210 million for the current fiscal year. Following the December sale and leaseback transaction related to the company's general office in Oakland, Clorox ended the quarter with an elevated cash balance. Cash and the issuance of commercial paper will be used to refinance $500 million in long-term debt maturing in March 2013.
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