2017 Integrated Annual Report

GRI
2017 Scorecard
  • Global
    Headquarters
  • Plant
  • Administration/
    Sales Office
  • Joint Venture
  • Research &
    Development
North America
  • United States
  • Canada
  • Mexico
  • Dominican Republic
  • Puerto Rico
  • Panama
  • Costa Rica
South America
  • Colombia
  • Ecuador
  • Peru
  • Uruguay
  • Argentina
  • Chile
Europe
  • United
    Kingdom
Asia
  • Saudi Arabia
  • United Arab Emirates
  • China
  • South Korea
  • Hong Kong
  • Philippines
  • Malaysia
Africa
  • Egypt
  • Kenya
  • South Africa
  • Australia
  • New
    Zealand
$6.0B
Net Sales
8,100+
Employees
25+
Country/Territory Operations
100+
Markets Around the World

Sales by Segment and Category*

34%
Cleaning
  • 19% Home Care
  • Clorox®
  • Pine-Sol®
  • Tilex®
  • 409®
  • Liquid-Plumr®
  • Green Works®
  • 9% Laundry
  • Clorox®
  • Clorox2®
  • 6% Professional Products
  • Clorox Healthcare®
  • Clorox Commercial Solutions®
33%
Household
  • 14% Bags, Wraps & Containers
  • Glad®
  • 10% Charcoal
  • Kingsford®
  • Match Light®
  • 7% Cat Litter
  • Fresh Step®
  • Scoop Away®
  • 2% Digestive Health*
  • Renew Life®
17%
International
  • 9% Latin America
  • 3% Canada
  • 2% Australia/New Zealand
  • 3% Rest of World
16%
Lifestyle
  • 9% Food Products
  • Hidden Valley®
  • Soy Vay®
  • KC Masterpiece®
  • 4% Natural Personal Care
  • Burt's Bees®
  • 3% Water Filtration
  • Brita®

* All percentages represent rounded numbers.

Performance

Achieving financial success while investing for the long term.

Net Sales
($ Millions)

Earnings From Continuing Operations Before Interest and Taxes Margin1
(as a % of Net Sales) (non-GAAP)

Earnings From Continuing Operations
($ Millions)

Economic Profit2
(non-GAAP) ($ Millions)

Diluted Net Earnings Per Share From Continuing Operations
 

Net Cash Provided by Continuing Operations
($ Millions)

Free Cash Flow3
(non-GAAP) ($ Millions)

People

Engaging our people as business owners and promoting diversity and inclusion, opportunity and respectful treatment.

Best-In-Class
Employee Engagement1

88%

Employee Engagement1
(vs. 80% for Peers, 85% for High-Performing Companies)

World-Class Workplace Safety2

.60

Recordable Incident Rate
(vs. World-Class Level <1.0)

Diversity as a Business Strength

In the workforce
41%

Global Female Nonproduction Managers

50%

Global Female Nonproduction Employees

31%

Ethnic Minorities Among U.S. Nonproductive Employees
(vs. 32% U.S. Census Bureau)3

26%

Ethnic Minorities Among U.S. Nonproduction Managers
(vs. 30% U.S. Census Bureau)3

In Corporate Governance4
33%

Minority Board Members
(vs. 14% Fortune 500 Average)5

36%

Female Clorox Executive Committee Members

33%

Female Board Members
(vs. 20% Fortune 500 Average)5

Products

Innovating and making responsible products, responsibly.

3%

Incremental Sales From Product Innovation

Goal

50%

By 2020

34%

Product Portfolio With Sustainability Improvements1

Planet

Shrinking our environmental footprint while growing our business.

Operational Footprint Reduction
(CY 2016 vs CY 2011 per case of product sold)

Goal

20%

By 2020

18%

Greenhouse
Gas Emissions

15%

Energy
Consumption

21%

Water
Consumption

41%

Solid Waste
to Landfill

Community

Safeguarding families with our Be Healthy, Be Smart and Be Safe initiatives.

$2.8M1

Or 115,000 Employee Volunteer Hours in CY 2016

$5.4M

U.S. Corporate
Product Donations

$4.6M

The Clorox Company Foundation and Burt’s Bees® Greater Good Foundation Cash Grants

$1.1M

U.S. Cause-Marketing
Contributions

$11.1M

Total Impact

2017 Scorecard

Our Global
Footprint

Highlighting the scope of our company through sales, workforce, operations and market data.

READ MORE

Performance
 

Achieving financial success while investing for the long term.

READ MORE

People
 

Engaging our people as business owners and promoting diversity and inclusion, opportunity and respectful treatment.

READ MORE

Products
 

Innovating and making responsible products, responsibly.

READ MORE

Planet
 

Shrinking our environmental footprint while growing our business.

READ MORE

Community
 

Safeguarding families with our Be Healthy, Be Smart and Be Safe initiatives.

READ MORE

See footnotes below for descriptions of these non-generally accepted accounting principles, or non-GAAP, measures, the reasons management believes they are useful to investors, and reconciliations to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP.

  1. Reconciliation of EBIT
Dollars in millions   FY15     FY16     FY17  
Earnings from continuing operations before                  
income taxes $ 921   $ 983   $ 1,033  
Interest income   -4     -5     -4  
Interest expense   100     88     88  
EBIT(i) – non-GAAP $ 1,017   $ 1,066   $ 1,117  
EBIT margin(i) – non-GAAP   18.0 %   18.5 %   18.7 %
Net sales $ 5,655   $ 5,761   $ 5,973  

(i) EBIT represents earnings from continuing operations before income taxes, interest income and interest expense. EBIT margin is the ratio of EBIT to net sales. The company’s management believes these measures provide useful additional information to investors about trends in the company’s operations and are useful for period-over-period comparisons.

2. Reconciliation of Economic Profit(i)

Dollars in millions and all calculations                  
based on rounded numbers   FY15     FY16     FY17  
Earnings from continuing operations before                  
income taxes $ 921   $ 983   $ 1,033  
Add back:                  
Noncash U.S. GAAP restructuring and                  
intangible asset impairment charges   1     9     4  
Interest expense   100     88     88  
Earnings from continuing operations before                  
income taxes, noncash U.S. GAAP                  
restructuring, intangible asset impairment                  
charges and interest expense $ 1,022   $ 1,080   $ 1,125  
Less: Income taxes on earnings from continuing                  
operations before income taxes, noncash                  
U.S. GAAP restructuring, intangible asset                  
impairment charges and interest expense (ii)   350     368     359  
Adjusted after-tax profit $ 672   $ 712   $ 766  
Average capital employed (iii) $ 2,385   $ 2,463   $ 2,680  
Less: Capital charge (iv) $ 214   $ 222   $ 241  
Economic profit (i) (adjusted after-tax profit                  
less capital charge) $ 458   $ 490   $ 525  

(i)Economic profit (EP) is defined by the Company as earnings from continuing operations before income taxes, excluding noncash U.S. GAAP restructuring and intangible asset impairment charges, and interest expense; less income taxes (calculated utilizing the Company’s effective tax rate), and less a capital charge (calculated as average capital employed multiplied by a cost of capital rate). EP is a key financial metric that the Company’s management uses to evaluate business performance and allocate resources, and is a component in determining employee incentive compensation. The Company’s management believes EP provides additional perspective to investors about financial returns generated by the business and represents profit generated over and above the cost of capital used by the business to generate that profit.

(ii)The tax rate applied is the effective tax rate on earnings from continuing operations, which was 34.2%, 34.1% and 31.9% in fiscal years 2015, 2016 and 2017, respectively.

(iii)Total capital employed represents total assets less noninterest-bearing liabilities. Adjusted capital employed represents total capital employed adjusted to add back current year after tax noncash U.S. GAAP restructuring and intangible asset impairment charges. Average capital employed is the average of adjusted capital employed for the current year and total capital employed for the prior year, based on year-end balances. See below for details of the average capital employed calculation:

Dollars in millions   FY15     FY16     FY17  
Total assets(v) $ 4,154   $ 4,510   $ 4,573  
Less:                  
Accounts payable and accrued liabilities(vi)   976     1,032     1,002  
Income taxes payable   31          
Other liabilities(vi)   745     784     770  
Deferred income taxes   61     82     95  
Noninterest bearing liabilities   1,847     1,898     1,833  
Total capital employed   2,307     2,612     2,740  
After tax noncash U.S. GAAP restructuring                  
and intangible asset impairment costs   1     6     2  
Adjusted capital employed $ 2,308   $ 2,618   $ 2,742  
Average capital employed $ 2,385   $ 2,463   $ 2,680  

(iv)Capital charge represents average capital employed multiplied by a cost of capital rate, which was 9 percent for all fiscal years presented. The calculation of capital charge includes the impact of rounding numbers.

(v)Prior year amounts have been retrospectively adjusted to conform to the current year presentation of debt issuance costs required by ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs."

(vi)Accounts payable and accrued liabilities were combined into one financial statement line as of June 30, 2016. The change has been retrospectively applied to all periods presented. Accounts payable and accrued liabilities and Other Liabilities are adjusted to exclude interest-bearing liabilities.

3.Free cash flow is calculated as net cash provided by continuing operations less capital expenditures related to continuing operations and was $733 million, $596 million and $640 million for fiscal years 2015, 2016 and 2017, respectively. For fiscal years 2015, 2016 and 2017, net cash provided by continuing operations was $858 million, $768 million and $871 million, respectively, and capital expenditures were $125 million, $172 million and $231 million, respectively. The company’s management uses free cash flow and free cash flow as a percent of sales to help assess the cash generation ability of the business and funds available for investing activities, such as acquisitions, investing in the business to drive growth, and financing activities, including debt payments, dividend payments and share repurchases. Free cash flow does not represent cash available only for discretionary expenditures, since the Company has mandatory debt service requirements and other contractual and non-discretionary expenditures. In addition, free cash flow may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded.

1.The Willis Towers Watson global high-performance companies norm is based on responses from 142,506 employees at 26 companies. Companies qualify for the norm by meeting two criteria: 1) superior financial performance, defined by a net profit margin and/or return on invested capital that exceeds industry averages; and 2) superior human resources practices, defined by employee opinion scores near the top among the most financially successful companies surveyed by Willis Towers Watson.

2.Based on corporate benchmarking by Clorox, we consider a recordable incident rate of 1.0 or less to be world-class. Our FY17 RIR of .60 means that for every 100 Clorox employees, we averaged less than one reportable incident during the past year. According to the latest available data from the U.S. Bureau of Labor Statistics, the average RIR for goods-producing manufacturing companies is 3.7. The criteria used to determine RIR follows the U.S. Department of Labor’s Occupational Safety and Health Administration guidelines and is applied globally.

3.Benchmarking of Clorox performance on U.S. minority managers and employees is calculated using data from the 2010 Census.

4.Past data on Clorox minority and female board members only counted independent board members. To facilitate comparisons to peer companies, Clorox now counts all board members when calculating its diversity data.

5.“Missing Pieces Report: The 2016 Board Diversity Census of Women and Minorities on Fortune 500 Boards,” Deloitte and the Alliance for Board Diversity, 2017.

Reviewed by Ernst & Young LLP. Please refer to the Review ReportReview Report.

1.For the calendar year ended Dec. 31, 2016. All sustainability metrics represent cumulative progress against CY 2011 baseline, with percentage based on net fiscal year customer sales. There are four types of sustainability improvement criteria that can be met either by fully meeting one or partially meeting two or more: 1) a 5 percent or more reduction in product or packaging materials on a per-consumer-use basis; 2) an environmentally beneficial change to 10 percent or more of packaging or active ingredients on a per-consumer-use basis; 3) a 10 percent reduction in required usage of water or energy by consumer; or 4) an environmentally beneficial sourcing change to 20 percent or more of active ingredients or packaging on a per-consumer-use basis.

Reviewed by Ernst & Young LLP. Please refer to the Review ReportReview Report.

Reviewed by Ernst & Young LLP. Please refer to the Review ReportReview Report.

1.Financial equivalent of 115,000 volunteer hours, calculated at $24.14 per hour, based on the 2016 U.S. value of volunteer time from IndependentSector.org. Less than 5 percent of these hours are by employees outside the U.S., but all are calculated using the U.S. average rate.

Reviewed by Ernst & Young LLP. Please refer to the Review ReportReview Report.