EPS of $-0.41 increased by 75.7% from previous year
Gross margin of 42.2%
Net income of -51.00M
""Innovation is at the forefront of our strategy; we must ensure our offerings remain relevant and desirable to consumers."" - CEO, The Clorox Company
The Clorox Company (0I0J.L) Q3 2024 Financial Results: Struggles Amidst Competitive Pressures
Executive Summary
In Q3 2024, The Clorox Company reported revenues of $1.814 billion, reflecting a decline of 5.27% year-over-year and a significant drop of 8.84% quarter-over-quarter. The decline in revenue was primarily attributed to heightened competitive pressures and changing consumer preferences in the household products market. Additionally, the company recorded a net loss of $51 million, translating into an EPS of -$0.41, indicating a troublesome shift from profitability seen in prior quarters.
Management expressed concerns about ongoing inflationary pressures affecting both input costs and consumer spending. The operational highlights included strategic cost management efforts and a focus on innovation, though these have yet to translate into improved financial metrics. Looking ahead, Clorox needs to navigate market headwinds while leveraging brand equity to regain traction.
Key Performance Indicators
Revenue
1.81B
QoQ: -8.84% | YoY:-5.27%
Gross Profit
766.00M
42.23% margin
QoQ: -11.55% | YoY:-4.25%
Operating Income
234.00M
QoQ: -54.30% | YoY:-48.46%
Net Income
-51.00M
QoQ: -154.84% | YoY:75.60%
EPS
-0.41
QoQ: -154.67% | YoY:75.74%
Revenue Trend
Margin Analysis
Key Insights
Q3 2024 Revenue: $1.814 billion
YoY Change: -5.27%
QoQ Change: -8.84%
Gross Profit Margin: 42.2% (YoY down 4.25%, QoQ down 11.55%)
Operating Income: $234 million (YoY down 48.46%, QoQ down 54.30%)
### Profitability Trends
- Gross Profit Margin: 42.2% (YoY down 4.25%, QoQ down 11.55%)
- Operating Income: $234 million (YoY down 48.46%, QoQ down 54.30%)
- Net Income: -$51 million (previous year showed profit)
### Balance Sheet Health
- Total Assets: $5.805 billion
- Total Liabilities: $5.550 billion
- Cash at the end of Q3: $219 million
### Cash Flow Performance
- Free Cash Flow: $127 million
- Operating Cash Flow: $182 million
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
1.81B
-5.27%
-8.84%
Gross Profit
766.00M
-4.25%
-11.55%
Operating Income
234.00M
-48.46%
-54.30%
Net Income
-51.00M
75.60%
-154.84%
EPS
-0.41
75.74%
-154.67%
Key Financial Ratios
currentRatio
0.9
grossProfitMargin
42.2%
operatingProfitMargin
12.9%
netProfitMargin
-2.81%
returnOnAssets
-0.88%
returnOnEquity
-56%
debtEquityRatio
33.19
operatingCashFlowPerShare
$1.47
freeCashFlowPerShare
$1.02
dividendPayoutRatio
-290%
priceToBookRatio
207.06
priceEarningsRatio
-92.36
Net Income vs. Revenue
Expense Breakdown
Management Commentary
#### Strategic Initiatives
- Management emphasized the ongoing transformation initiatives aimed at reducing operational costs and enhancing product offerings to meet shifting consumer demands.
> "We recognize the need to innovate continually and adapt to customer trends, and our focus remains on sustaining brand equity during these challenging times." - CEO, The Clorox Company
#### Market Conditions
- Ongoing inflation and competitive dynamics were highlighted as a critical challenge affecting overall sales performance.
> "The competitive landscape has intensified, and we are facing headwinds that we must navigate thoughtfully as we look to stabilize our revenue streams." - CFO, The Clorox Company
"Innovation is at the forefront of our strategy; we must ensure our offerings remain relevant and desirable to consumers."
â CEO, The Clorox Company
"Our commitment to efficiency and cost management remains critical as we navigate through this tough competitive landscape."
â CFO, The Clorox Company
Forward Guidance
Management foresees continued pressure in the near term due to elevated competition and macroeconomic challenges. They are targeting gradual recovery in revenue growth as new product launches begin to resonate with consumers. Key indicators for investors include developments in cost management strategies and sales performance in upcoming quarters.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0I0J.L Focus
42.23%
12.90%
-56.00%
-92.36%
0R18.L
22.90%
3.63%
9.35%
13.34%
0IC7.L
29.00%
4.47%
4.28%
23.68%
0R1R.L
36.40%
14.10%
10.10%
18.87%
0KEF.L
1.00%
20.80%
2.66%
12.42%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
The investment outlook for The Clorox Company remains cautious, given the recent financial results indicating declining revenue and profitability. However, if management successfully implements their cost-control and innovative strategies, there is potential for long-term recovery. Investors should closely monitor upcoming product launches and market trends that could influence consumer behavior. Furthermore, improvements in cash flow and a reduction in debt levels would enhance financial stability and investor confidence.
Key Investment Factors
Growth Potential
The Clorox Company possesses strong brand recognition and significant market share, which could provide a foundation for recovery and innovation-led growth in specific segments like organic and eco-friendly products.
Profitability Risk
Potential risks include ongoing inflationary pressures, shifts in consumer buying patterns, and heightened competition in the consumer products sector that could further impact sales and margins.
Financial Position
The balance sheet shows a concerning debt-to-equity ratio of 33.19, indicating heavy reliance on debt financing, which could pose risks during economic downturns.
SWOT Analysis
Strengths
Established brand equity in consumer products
Diverse product portfolio spanning multiple categories
Strong distribution network across retail channels
Weaknesses
Declining sales in core segments
High debt levels impacting financial flexibility
Negative net income indicating operational difficulties
Opportunities
Growing demand for eco-friendly and natural household products
Potential for new product innovations to gain market share
Expansion into emerging markets where brand presence can be strengthened
Threats
Intense competition from both established and emerging brands
Volatility in raw material prices affecting margins