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This is an important First Step. The overall assignment is described in two parts: Part A—theStrategic Analysis assignment and Part B—the Financial Ratios and Trend Analysisassignment. Each part is worth 7.5% towards your final WGB 650 grade, or 15% when bothcomponents are combined. After you have completed these assignments, especially theStrategic Analysis, share it with your teammates. It should help you formulate your new productplan.everything in the file, you need to read it in order to complete the assignment.
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2022 INTEGRATED ANNUAL REPORT
EXECUTIVE SUMMARY
Contents
5
Company purpose
and strategy
6 Company snapshot
8 Strategy accomplishments
32
About this report
The strength and resilience of Clorox brands continues to
benefit our business, creating value for our stakeholders.
We’re building on that momentum by investing further in our
brands, people and capabilities — all to ensure we fulfill our
purpose to champion people to be well and thrive.
1
Dear
Linda Rendle, Chief Executive Officer
Stakeholder,
The past year brought ongoing volatility and challenges, yet we maintained
a relentless focus on living our purpose and investing in our people, brands
and capabilities to navigate this tough environment and build a stronger,
more resilient company for the long term. Our IGNITE strategy, which has
served us well over the past three years, remains as relevant as ever in these
conditions — strengthening our advantages, accelerating profitable growth,
and fully integrating environmental, social and governance considerations
into our business to mitigate risks, maximize opportunities and effect
positive change overall.
A year of extraordinary challenges
Against the backdrop of record-high input cost inflation, ongoing demand
normalization and supply chain disruptions, we continued to execute on
what we could control and made progress on our priorities to drive growth
and rebuild margin.
2
Net sales decreased 3% compared to 9% growth in the prior year. While
demand has come down from what we saw at the start of the pandemic,
particularly in our cleaning and disinfecting portfolio, we’re a bigger business
today than prior to the pandemic, and our cleaning and disinfecting portfolio
remains healthy with sales well above pre-pandemic levels. Importantly,
our brands are stronger today than ever before. A record-high 75% of
our portfolio was deemed superior by consumers as measured by our
consumer value metric.
We’re leveraging the strength of our brands to take advantage of demanddriven tailwinds — higher awareness of health and hygiene, spending more
time at home, reinforced by enduring hybrid work and digital adoption
CLOROX | 2022 INTEGRATED REPORT EXECUTIVE SUMMARY
acceleration — which are creating long-term growth opportunities across
our portfolio. Relative to fiscal year 2019, our three-year average net sales
growth was 5% for fiscal year 2022, in line with our long-term goal of 3% to
5%. This demonstrates the strength of our diverse portfolio of well-loved
brands and the resilience of our categories.
We responded to higher manufacturing and logistics costs and commodity
costs by implementing multiple rounds of pricing across the portfolio,
driving our hallmark cost savings program and optimizing our supply
chain to remove COVID-related costs built up during the pandemic. While
our actions helped to partially offset these headwinds, the severity and
persistence of cost pressures significantly impacted our gross margin,
resulting in a 43% decrease in our fiscal year 2022 adjusted EPS. We are
resolutely focused on improvement.
Strengthening our advantages to drive profitable growth
There’s no question that the environment will remain difficult in the year
ahead as many of the challenges we faced in fiscal year 2022 endure
and consumers adapt to unprecedented inflation. That said, we are well
positioned to make further progress on IGNITE, balancing margin recovery
with top-line momentum. With an advantaged portfolio of strong brands
and household essentials poised to benefit from lasting consumer trend
Our brands are stronger
today than ever before.
A record-high 75% of our
portfolio was deemed
superior by consumers
as measured by our
consumer value metric.
CLOROX | 2022 INTEGRATED REPORT EXECUTIVE SUMMARY
tailwinds, I continue to have high conviction in our ability to deliver on our
3% to 5% long-term sales growth because of the broad set of actions
we’re taking and all the investments we’re making to position ourselves for
success over the long run. These include:
• Operating with discipline: We’ll continue to drive operational excellence
and our hallmark cost savings program that, in conjunction with pricing
and the new streamlined operating model we’ll begin implementing in
fiscal year 2023, supports our commitment to rebuild margins.
• Delivering bigger, stickier innovation platforms: We’re taking advantage of
consumer behavior shifts to create platform-based innovations that win in
the market and deliver multiyear value. We introduced innovations across
28 categories in fiscal year 2022, including new products in our Clorox,
Fresh Step and Glad brands. Coupled with our robust innovation pipeline,
this sets us up well to drive growth for years to come.
• Building purpose-driven, personalized brands: Consumers increasingly
expect highly personalized and customized interactions with our
brands, and we’re more than 75% of the way toward our 2025 goal of
knowing 100 million consumers. We’re using this to better personalize
paid media and owned channel activations, which is contributing to
greater efficiencies and higher engagement.
• Accelerating our digital transformation: We’re upgrading our digital
infrastructure and capabilities, including transitioning to a new global ERP,
over the next five years through a $500 million investment. This investment
will better position us for the long term in supply chain, digital commerce,
innovation and brand building, while also driving important efficiency
benefits and ensuring our ability to maintain momentum beyond our
IGNITE strategy period.
• Reimagining how we work: To further support our objectives of driving
both growth and productivity, we’ll begin implementing a streamlined
operating model in the first quarter of fiscal year 2023 to create a
simpler, faster company. The changes, which complement our digital
transformation initiatives, will bring us closer to our consumers and
customers so we can more effectively anticipate what’s coming and
better meet their increasing expectations, all while driving incremental
annual cost savings.
3
Building a more sustainable and inclusive world
Our purpose — to champion people to be well and thrive every single
day — drives everything we do, including how we approach our work and
the impact it has on the world around us, which is why our ESG goals are
integrated into our business strategy and operations. We’re mobilizing our
people and brands to advance our ESG commitments, including proactively
addressing challenges in our industry, in collaboration with other stakeholders,
with an eye toward better risk management and long-term stakeholder value
creation. Importantly, we recognize the connection between significant ESG
issues and our company’s financial performance.
Supporting people’s well-being starts with our own teammates, who are a
critical enabler of Clorox’s success. We strive to be an employer of choice
and are constantly evolving our practices and regularly engaging with our
teammates to understand how we can create a more rewarding work
experience. In fiscal year 2022, we continued to enhance our benefits and
programs to support the physical, mental and financial well-being of our
people, including implementing a new flexible time off policy, announcing
enhanced family-forming benefits and providing a health savings account
option to our U.S. teammates. Importantly, as employee safety is central to
our values, I’m pleased to say that we maintained a recordable incident rate
significantly below our target and the industry average.
In addition, we continue to take steps to advance inclusion, diversity, equity
and allyship, or IDEA. Of note, at the start of the 2023 fiscal year, I was proud
to announce Clorox’s first-ever chief diversity and social impact officer,
Shanique Bonelli-Moore, to lead all our important IDEA initiatives underway
as well as the new ones ahead. This will ensure we further drive systemic
and lasting change to build an even more people-centered, purpose-driven
culture at Clorox.
Recognizing that most of our emissions are generated through our value
chain, or scope 3, we know that collaboration with our stakeholders is crucial to
accelerate our emissions reductions. We recently published a climate action
plan that outlines our approach to achieving net zero emissions by 2050, which
includes collaborating with others and leveraging new technologies and
innovations as they become available to deliver on our goals.
As a signatory to the United Nations Global Compact, we reaffirm our
commitment to its Ten Principles by driving ESG initiatives like these that are
part of a strategy that prioritizes building a more sustainable and inclusive world.
A brighter future ahead
As the world around us continues to rapidly change and macroeconomic
uncertainty continues, I’m confident that we’re taking the necessary actions
to better position Clorox to not only navigate this environment but to also
drive consistent and profitable growth over time; build a stronger, more
resilient company; and create long-term value for stakeholders. Clorox has
succeeded over the last 109 years by evolving and adapting as challenges
and opportunities have presented themselves, and I have no doubt that our
best years lie ahead.
My heartfelt gratitude goes out to all my Clorox teammates for their hard work,
commitment and exceptional resilience in the face of uncertainty and change.
Thank you for your continued support and interest in Clorox.
Linda Rendle
Chief Executive Officer
We also made progress on our long-term environmental sustainability
goals in fiscal year 2022. Building on our accomplishment of reaching
100% renewable electricity in the U.S. and Canada last year, we’re 84%
of the way toward achieving our goal to have 100% recyclable, reusable
or compostable packaging by 2025; we’ve attained zero-waste-to-landfill
status in nearly half of our facilities and more than three-quarters of
our plants; and we met our 2030 science-based target to reduce
our absolute scope 1 and 2 GHG emissions by 50% by 2030 — several
years ahead of schedule.
4
CLOROX | 2022 INTEGRATED REPORT EXECUTIVE SUMMARY
Company purpose and strategy
Throughout the 2022 fiscal year, our purpose and IGNITE strategy served as valued guideposts to help us navigate a tough environment and take important
steps to build a stronger, more resilient company for the long term.
Vision
IGNITE strategy
E E x p er i e
VAT
nc
NO
es
N
I
INNOVATE Experiences
LG
SUPERIOR
CONSUMER
w
O
VALUE
th
EV
ro
Widen the funnel on how we deliver
cost savings, leveraging technology and
sustainability to generate fuel for growth.
FUE
FUEL Growth
Deliver purpose-driven growth.
ESG
Integrated strategic choices
Turn data into insights to build purposedriven, personalized brands and deliver
bigger, stickier innovation platforms while
enhancing consumer shopping experiences
— allowing us to better serve people.
Objective
Exceptional innovators who earn
people’s enduring loyalty.
RE
EVOLVE Portfolio
Po
r tfolio
We champion people to be well
and thrive every single day.
LV
E
Purpose
Broaden our playing field in and around
our core business, emphasizing consumer
megatrends, including sustainability, and
continue to lean into enhanced wellness.
REIMAGINE Work
Galvanize our people with a bolder, more
inclusive workplace in which we simplify
our operations, tap technology and
move more quickly to drive growth.
I MA
RK
GINE WO
Integrated ESG goals
Healthy Lives
Clean World
Thriving Communities
Strong Governance
Improving people’s health and well-being.
Investing in our people and communities to
contribute to a more equitable world.
CLOROX | 2022 INTEGRATED REPORT EXECUTIVE SUMMARY
Taking climate action and reducing plastic and other waste.
Enhancing our leadership in ESG through an unwavering
commitment to strong corporate governance and ESG
performance overseen by the board of directors.
5
Sales by segment
Our business:
FY22 at a glance
net sales
employees
100+
markets
25
country/territory
operations
8%
Cleaning
Clorox
Clorox 2
Scentiva
Pine-Sol
Liquid-Plumr
Tilex
Formula 409
18%
Health and
Wellness
29%
$7.1B
9,000
37%
17%
International
18%
Lifestyle
28%
Household
4%
Professional
Products
Clorox Healthcare
CloroxPro
4%
Vitamins, Minerals
and Supplements
Rainbow Light
Natural Vitality
NeoCell
RenewLife
28%
37%
Health and Wellness
Household
12%
Bags and Wraps
Glad
Cat Litter
Fresh Step
Scoop Away
Ever Clean
Lifestyle
10%
Food Products
Hidden Valley
4%
Natural Personal
Care
Burt’s Bees
4%
Water Filtration
Brita
17%
International
Clorox
Ayudin
Clorinda
Poett
Pine-Sol
Glad
Brita
RenewLife
Ever Clean
Burt’s Bees
8%
Grilling
Kingsford
6
CLOROX | 2022 INTEGRATED REPORT EXECUTIVE SUMMARY
Our global
footprint*
Administrative/
Sales Office
Plants
R&D Facilities
Joint Ventures
Global Headquarters
North America
United States
Canada
Mexico
Puerto Rico
Panama
Costa Rica
South America
Colombia
Ecuador
Peru
Argentina
Chile
Uruguay
Europe
United Kingdom
* Excludes third-party manufacturers and copackers.
CLOROX | 2022 INTEGRATED REPORT EXECUTIVE SUMMARY
Africa
Kenya
South Africa
Australia
Middle East
Egypt
Saudi Arabia
United Arab
Emirates
New Zealand
Asia
China
South Korea
Hong Kong
Philippines
Malaysia
7
Growth &
Transformation
Investing for the long term to build a
stronger, more profitable company
FY22 achievement highlights
As part of a $500 million strategic investment over a five-year period that
began in fiscal year 2022, began transforming digital capabilities and
culture to drive purpose-driven growth, with a focus on personalized,
data-driven consumer messaging, streamlined digital commerce and
strategic management of trade promotions.
Leveraged data and analytics to get the right Kingsford product to
the right place at the right time, reducing shipping costs by close to
$3 million in the first year as well as improving customer service and
minimizing environmental impact.
After using data and custom analytics to confirm hypothesis that
new movers are more likely to purchase Brita products, launched
personalized creative that drove incremental sales increases at
two large retailers.
Fast-tracked a partnership that allowed us to go from charter
to production in just six months to be first to market in AustraliaNew Zealand with a Glad trash bag that incorporates plastic waste
at risk of becoming ocean pollution.
Introduced new Clorox Disinfecting Mist innovation platform to
transform the current disinfecting aerosol category with a
nonaerosol format that kills germs on hard surfaces, sanitizes
fabrics and eliminates odors, and that is offered with a reusable
trigger and convenient refills.
8
CLOROX | 2022 INTEGRATED REPORT EXECUTIVE SUMMARY
IGNITE progress snapshot
Despite a very challenging operating environment in fiscal year 2022, including record-high input cost inflation and ongoing pandemic-driven volatility, our
results for three-year net sales growth and free cash flow continued to meet the long-term financial goals laid out in our IGNITE strategy, and we continued
to make sequential improvements to return to gross margin expansion.
LONG-TERM GOAL
PROGRESS*
Financial
Grow net sales 3%-5%
5% (three-year CAGR)
Expand adjusted EBIT margin +25 to +50 basis points
-240 basis points (three-year average)1
Deliver free cash flow as percentage of net sales 11% to 13%
13% (three-year average)4
* As of June 30, 2022, unless stated otherwise.
28
categories where we’ve
launched innovation
CLOROX | 2022 INTEGRATED REPORT EXECUTIVE SUMMARY
50%
higher net impact from innovation
vs. pre-IGNITE strategy
3/4
of the way toward 2025
goal of getting to know
100 million consumers
9
Financial performance
Net Sales
Net Sales Growth
($ millions)
(vs year ago)
$6,721
$7,341
$7,107
FY20
FY21
FY22
Economic Profit2
($ millions)
(non-GAAP)
10
$706
$672
$282
FY20
FY21
FY22
+8%
FY20
+9%
FY21
-3%
FY22
Adjusted EBIT Margin1
(as a % of Net Sales)
(non-GAAP)
19.1%
17.3%
10.8%
FY20
FY21
FY22
Free Cash Flow4
Adjusted EPS3
(% of Net Sales)
(non-GAAP)
(non-GAAP)
$7.36
$7.25
$4.10
19.2%
12.9%
7.5%
FY20
FY21
FY22
FY20
FY21
FY22
CLOROX | 2022 INTEGRATED REPORT EXECUTIVE SUMMARY
Financial footnotes
See footnotes below for descriptions of these not generally accepted accounting
principles, or non-GAAP measures, how management uses them, 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. These non-GAAP financial measures should not be considered in
isolation or as a substitute for the comparable GAAP measures; should be read in
connection with the company’s consolidated financial statements presented in
accordance with GAAP; and may not be the same as similar measures provided
by other companies due to potential differences in methods of calculation or
differences in which items are incorporated into these adjustments. For additional
details regarding the reconciliation of GAAP and non-GAAP financial measures
below, see the company’s Current Reports on Form 8-k filed with the SEC and in the
Investors section of the company’s website www.thecloroxcompany.com.
Reconciliation of EBIT and Adjusted EBITi,ii,iii
1
Dollars in millions and percentages based on rounded numbers
FY22
FY21
FY20
Earnings before income taxes
$ 607 $ 900 $ 1,185
Interest income
(5)
(5)
(2)
Interest expense
106
99
99
EBITi,iii
$ 708 $ 994 $ 1,282
EBIT margini,iii
10.0%
13.5%
19.1%
Saudi JV acquisition gainiv
$
0 $ (82) $
0
VMS impairmentv
0
329
0
Professional Products supplier chargevi
0
28
0
Digital capabilities and productivity enhancements
61
0
0
investmentvii
Adjusted EBIT — non-GAAPii,iii
$ 769 $ 1,269 $ 1,282
Adjusted EBIT marginii,iii
10.8%
17.3%
19.1%
Net sales
$ 7,107 $ 7,341 $ 6,721
On July 9, 2020, the company increased its investment in each of the two
entities comprising its Saudi joint venture. As a result of this transaction, a
noncash, nonrecurring net gain was recognized of $82 ($76 after tax) in Other
(income) expense, net in the quarter ended Sept. 30, 2020, primarily due to the
remeasurement of the carrying value of the company’s previously held equity
investment to fair value.
v
During the quarter ended March 31, 2021, noncash impairment charges of goodwill,
trademarks and other assets were recorded of $329 ($267 after tax) related to the
VMS business.
vi
During the quarter ended June 30, 2021, noncash charges of $28 ($21 after tax)
were recorded on investments and related arrangements made with a Professional
Products business supplier.
vii
Fiscal year 2022 includes $61 ($47 after tax) of incremental operating expenses
primarily recorded within selling and administrative expenses related to
implementation of the company’s digital capabilities and productivity
enhancements investment, which are recorded within the Corporate
segment. The expenses relate to the following:
iv
External consulting feesa
IT project personnel costsb
Otherc
Total
a
b
i
ii
iii
EBIT (a non-GAAP measure) represents earnings before income taxes (a GAAP
measure), excluding interest income and interest expense, as reported above. EBIT
margin is the ratio of EBIT to net sales.
Adjusted EBIT (a non-GAAP measure) represents earnings before income taxes
(a GAAP measure), excluding interest income, interest expense and other significant
items that are nonrecurring or unusual, such as asset impairments, charges related
to digital capabilities and productivity enhancements investment, significant losses/
(gains) related to acquisitions, and other nonrecurring or unusual items, as reported
above. Adjusted EBIT margin is the ratio of adjusted EBIT to net sales. The three-year
average adjusted EBIT margin growth/(decrease) is calculated as the sum of the
growth/(decrease) in adjusted EBIT margin between each of fiscal years 2019 and
2020, 2020 and 2021, and 2021 and 2022, divided by three.
Management believes the presentation of EBIT, EBIT margin, adjusted EBIT and
adjusted EBIT margin provides useful additional information to investors about trends
in the company’s operations and is useful for comparability of performance over time.
CLOROX | 2022 INTEGRATED REPORT EXECUTIVE SUMMARY
c
12 Months Ended June 30, 2022
$ 43
11
7
$ 61
Comprised of third-party consulting fees incurred to assist in the project
management and the preliminary project stage of this transformative
investment. The company relies on consultants for certain capabilities required
for these programs that it does not maintain internally. These costs support the
implementation of these programs incremental to the company’s normal IT costs
and will not be incurred following implementation.
Comprised of labor costs associated with internal IT project management
teams that are utilized to oversee the new system implementations. Given the
magnitude and transformative nature of the implementations planned, the
necessary project management costs are incremental to the historical levels of
spend and will no longer be incurred subsequent to implementation. As a result of
this long-term strategic investment, the company does not consider these costs
to be reflective of the ongoing costs to operate its business.
Comprised of various other expenses associated with the company’s new system
implementations, including company personnel dedicated to the project that have
been backfilled with either permanent or temporary resources in positions that are
considered part of normal operating expenses.
11
Dollars in millions
Earnings before income taxes
Add back:
Certain U.S. GAAP chargesii,iii
Interest expense
Less:
Saudi JV acquisition gainiv
Earnings before income taxes, certain U.S.
GAAP items and interest expense
Less:
Income taxes on earnings before income taxes,
certain U.S. GAAP items and interest expensev
Adjusted after-tax profit
Less:
After-tax profit attributable to
noncontrolling interest
Adjusted after-tax profit attributable to Clorox
Average capital employedvi
Less:
Capital chargevii
Economic profit (Adjusted after-tax profit
attributable to Clorox less capital charge)
i
i
ii
iii
12
On July 9, 2020, the company increased its investment in each of the two
entities comprising its Saudi joint venture. As a result of this transaction, a
noncash, nonrecurring net gain was recognized of $82 ($76 after tax) in Other
(income) expense, net in the quarter ended Sept. 30, 2020, primarily due to the
remeasurement of the carrying value of the company’s previously held equity
investment to fair value.
v
The tax rate applied is the effective tax rate before the identified U.S. GAAP items
was 22.5%, 20.7% and 20.8% in fiscal years 2022, 2021 and 2020, respectively. The
difference between the fiscal year 2022 effective tax rate on earnings of 22.4%
is due to the tax rate impact of the incremental operating expenses recorded
related to the implementation of the company’s digital capabilities and productivity
enhancements investment of 0.1%. The difference between the fiscal year
2021 effective tax rate on earnings of 20.1% is due to the tax rate impact of the
Professional Products supplier charge, VMS impairment and Saudi JV acquisition
gain of 0.1%, (0.4)% and 0.9%, respectively.
vi
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 U.S. GAAP items, as applicable, and deduct the current-year,
after-tax, noncash, nonrecurring gain. 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.
vii
Capital charge represents Average capital employed multiplied by a cost of capital,
which was 9% for all fiscal years presented. The calculation of capital charge
includes the impact of rounding numbers.
iv
Reconciliation of Economic Profiti
2
FY22
607 $
FY21
FY20
900 $ 1,185
61
106
357
99
2
99
—
82
—
$
774
$ 1,274
$ 1,286
$
174
600
264
$ 1,010
267
$ 1,019
9
9
—
591
$ 3,428
1,001
$ 3,655
1,019
$ 3,478
$
309
$
329
$
$
282
$
672
$ 706
$
313
Economic profit, or EP, is defined by the company as earnings before income taxes,
excluding certain U.S. GAAP items (such as asset impairments, charges related to
digital capabilities and productivity enhancements investment, significant losses/
(gains) related to acquisitions and other nonrecurring or unusual items) and interest
expense; less income taxes (calculated based on the company’s effective tax
rate excluding the identified U.S. GAAP items); and less after-tax profit attributable
to noncontrolling interests; 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.
Fiscal year 2022 includes $61 ($47 after tax) of incremental operating expenses
primarily recorded within Selling and administrative expenses related to
implementation of the company’s digital capabilities and productivity
enhancements investment. Refer to the above Reconciliation of EBIT and
Adjusted EBIT, footnote vii, for more information.
Fiscal year 2021 includes impairment charges of $329 (after tax $267) of which $228,
$93 and $8 related to the goodwill of the VMS reporting unit, certain indefinite-lived
trademarks and other assets, respectively, and noncash charges of $28 ($21 after
tax) on investments and related arrangements made with a Professional Products
business supplier.
FY22
Dollars in millions
Total assets
Less:
Accounts payable and accrued liabilities viii
Current operating lease liabilities
Income taxes payable
Long-term operating lease liabilities
Other liabilities viii
Deferred income taxes
Noninterest-bearing liabilities
Total capital employed vi
After tax certain U.S. GAAP items iii,iv
Adjusted capital employed vi
Average capital employed
viii
FY21
FY20
$ 6,158 $ 6,334 $ 6,213
1,670
1,327
1,463
78
81
64
—
—
25
314
301
278
778
819
755
66
67
62
2,699
2,938
2,511
3,459
3,396
3,702
0
212
2
$ 3,459 $ 3,608 $ 3,704
$ 3,428 $ 3,655 $ 3,478
Accounts payable and accrued liabilities and Other liabilities are adjusted to
exclude interest-bearing liabilities.
CLOROX | 2022 INTEGRATED REPORT EXECUTIVE SUMMARY
3
Reconciliation of Adjusted EPSi,ii
4
Dollars in millions except per share data
FY22
As reported (GAAP)
$
Digital capabilities and productivity enhancements
investmentiii
Professional Products supplier chargeiv
VMS impairmentv
Saudi JV acquisition gainvi
As adjusted (Non-GAAP)i,ii
$
3.73
0.37
—
—
—
4.10
FY21
FY20
$
5.58
$
7.36
$
—
0.17
2.10
(0.60)
7.25 $
—
—
—
—
7.36
Adjusted EPS is defined as diluted earnings per share that excludes or has
otherwise been adjusted for significant items that are nonrecurring or unusual.
The income tax effect on non-GAAP items is calculated based upon the tax
laws and statutory income tax rates applicable in the tax jurisdiction(s) of the
underlying non-GAAP adjustment.
ii
Adjusted EPS is supplemental information that management uses to help evaluate
the company’s historical and prospective financial performance on a consistent
basis over time. Management believes that by adjusting for certain items affecting
comparability of performance over time, such as asset impairments, charges
related to the streamlined operating model, charges related to Digital capabilities
and productivity enhancements investment, significant losses/(gains) related to
acquisitions, and other nonrecurring or unusual items, investors and management
are able to gain additional insight into the company’s underlying operating
performance on a consistent basis over time.
iii
Fiscal year 2022 includes $61 ($47 after tax) of incremental operating expenses
primarily recorded within Selling and administrative expenses related to
implementation of the company’s Digital capabilities and productivity
enhancements investment. Refer to the above Reconciliation of EBIT and
Adjusted EBIT, footnote vii, for more information.
iv
During the quarter ended June 30, 2021, noncash charges of $28 ($21 after tax)
were recorded on investments and related arrangements made with a Professional
Products business supplier.
v
During the year ended June 30, 2021, noncash impairment charges of goodwill,
trademarks and other assets were recorded of $329 ($267 after tax) related to the
VMS business.
vi
On July 9, 2020, the company increased its investment in each of the two
entities comprising its Saudi joint venture. As a result of this transaction, a
noncash, nonrecurring net gain was recognized of $82 ($76 after tax) in Other
(income) expense, net in the quarter ended Sept. 30, 2020, primarily due to the
remeasurement of the carrying value of the company’s previously held equity
investment to fair value.
i
CLOROX | 2022 INTEGRATED REPORT EXECUTIVE SUMMARY
Reconciliation of Free Cash Flow
Dollars in millions and percentages based on rounded numbers
Net cash provided by operations — GAAP
Less:
Capital expenditures
Free cash flow — non-GAAP
Free cash flow as a percentage of net sales — non-GAAP
Net sales
$
FY22
FY21
FY20
786
$ 1,276
$ 1,546
251
331
254
535 $ 945 $ 1,292
7.5%
12.9%
19.2%
$ 7,107 $ 7,341 $ 6,721
$
Management uses Free cash flow and Free cash flow as a percentage of net 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 stock
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 nondiscretionary expenditures. The three-year average free
cash flow is calculated as the average free cash flow as a percentage of net sales
for fiscal years 2022, 2021 and 2020.
13
Innovation across our brands
From our leading, trusted brands that consumers have loved for decades
to emerging brands that are still growing in awareness, innovation is critical
in every part of our business. Innovation helps us address unmet consumer
needs, keeps our brands top of mind and brings joy to life’s everyday moments
in new ways.
Innovation takes many forms. We’re further leveraging “scaled agile,” an
approach that involves being in a constant beta mode, tweaking concepts
Clorox Disinfecting Mist
Testing trial and travel sizes at hotel locations.
while continuing to move forward with bigger ideas. In fiscal year 2022,
for example, we began testing the use of Clorox Disinfecting Mist in
convenient travel size at hotel locations in Florida and Hawaii, making
weekly adjustments based on feedback. Learnings from this test will
inform whether alternative channels provide additional ways to reach
consumers with a new business model. Pivoting quickly to the latest trends
is especially critical in our Natural Personal Care and Vitamins, Minerals and
Supplements, or Better Health VMS, businesses. Our Better Health VMS
Burt’s Bees Throwback Lip Balm Tins
Throwback packaging brought to life the nostalgia of Burt’s Bees loved by
consumers through rad graphics and an old-school recyclable tin package.
Brita Water Filtration Products
CloroxPro HealthyClean
E-learning platform for
cleaning professionals.
14
Credit: Denver Water
Partnerships with municipalities
replacing lead service lines.
CLOROX | 2022 INTEGRATED REPORT EXECUTIVE SUMMARY
business applies trend sensing to understand the landscape of macro-benefits spaces, category-growth forms
and trending ingredients that are shaping consumer demand. The business then develops quick-to-scale products
based on these trends, including online test and learns, and collaborations with leading-edge retailers to scale
rapidly based on results.
For more transformational innovation, our Seed to Scale team partners with our business units to create seeds of
ideas and build on them using consumer insight, marketplace trends, external partnerships and feedback from
experiments in the real world. The team’s goal is to generate and screen ideas quickly by putting out prototypes as
fast as possible, weeding out unsuccessful ideas and building upon the ideas that work. A concept that arose from
the work of the Seed to Scale team was
