Clorox Company CLX
Q2 2012 Earnings Call Transcript

Operator: Bill Schmitz, Deutsche Bank.

Bill Schmitz - Deutsche Bank North America: Are there signs that Bleach is turning the corner because the (indiscernible) looked great, a lot of it was pricing driven but are you optimistic about that business?

Lawrence S. Peiros - EVP and COO: So, we have some plans that we are pretty excited about Bleach. You may have seen our new campaign around Bleachable Moments and essentially we're trying to attract the lighter user and new users to the category and we are convinced that some of this new messaging will appeal to that. We also have some interesting innovation in place hitting shelves pretty much as we speak is a gel bleach in a bottle that is easy to use with an (ATM) machine. I think as many people know it is very pretty hard to manipulate even some of our smaller bottles to get it into that little container on an ATM machine, so this is a bottle that has a directive spout with a thicker formula that allows customers to get into ATM machines and we know you have had an issue with dosing over the last several years that has impacted volumes, particularly with the ATM machines. So, this is the way that we are addressing the dosing issue as well as giving a more convenient form to consumers.

Stephen M. Robb - SVP and CFO: Yeah, we are feeling more optimistic than I think we haven in sometime, but the category is still is definitely not one of our healthiest.

Lawrence S. Peiros - EVP and COO: Just to put a point on it Bill. As you noted in the – when you look at the (FDKP), data that track channel data, certainly the data ending in January – we saw a 52-weeks trend of down almost 4.5 points in the last 13-weeks, up 1.3. As you said, a lot of that driven by pricing, but as Larry noted, we certainly feel better about it now then we have in a while.

Bill Schmitz - Deutsche Bank North America: Then can you just tell me how the acquisitions were dilutive only because money is virtually free now so it was just (indiscernible) going out with the amortization or how can we kind of look at that, I know you said about $0.04 for the year?

Stephen M. Robb - SVP and CFO: Yeah, Bill, we're projecting about $0.04 for this year, probably slightly less in fiscal '13 but we fully expect that these acquisitions combined will be EPS neutral to accretive as we get into fiscal '14. Here is how we would have you think about that. There is really three things we're doing with these acquisitions. First is we've got some money set aside to integrate these business. The second thing we're going to do is we're setting money aside to further accelerate the growth and then finally, this shouldn't be a surprise, we think there is some pretty good cost savings opportunities with both of these businesses. So, we put some additional money aside to be able to go after some cost savings so that over time we can expand the margins of the businesses and those are really the three factors that are causing it to be slightly dilutive.

Bill Schmitz - Deutsche Bank North America: One last one and just a little bit broader, I mean, as an organization was there any sort of soul searching after the whole (Icon) episode, I mean, has anything sort of changed broadly, did you learn anything from the process?

Lawrence S. Peiros - EVP and COO: Well, I think Bill what we learned is that we had pretty good creditability with our long-term investors and I think we belief and the investment thesis behind the Company, the fact that our brands are – brand shares are near all time-highs, the margins of the structure or the margin for the business we see continuing to improve as we get into FY '13 as these commodities tend to mitigate some, so I think what we learned is that the investment thesis behind the Company still is a robust one and our investor certainly agreed with that. So, I think that was the primary learning we got out of it and I think the organization did a pretty good job of staying focused on building the business while this is going on.