Clorox Company Earnings Call Nuggets: Conservative EPS Guidance and the Household Division
Conservative EPS Guidance
Joe Lachky – Wells Fargo: So, it sounds like you are being fairly conservative with your EPS guidance despite the strong quarter here. Maybe you can through your outlook and point out where your concerns are in the second half kind of preventing you from being more optimistic? I think you’ve kind of touched on these a little bit, I guess, Venezuela, or maybe advertising tax rate, but if could break it down or maybe extend on some of those impacts?
Donald R. Knauss – Chairman and CEO: Yeah. Let me start Joe and then I will turn it over to Steve. I think when you look at the second half and we are still confident with the consensus numbers on the top line, for example, but we are lapping nearly 6% growth in the year ago second half. The other thing is, we will have fully integrated by February, the acquisitions from HealthLink and Aplicare. So, we are not going to get the benefit of the acquisition on the top line, so that will be integrated in. And third as you said, it’s just the questions around the uncertainty in Venezuela and what that potential devaluation could do, but I think when you look at our innovation pipeline, and what’s coming, some of those I just highlighted, I think we feel good about where the consensus numbers are. Steve, I don’t know if you want to add anything to that.
Stephen M. Robb – SVP and CFO: Yeah, let me just build on that. So, just turning to earnings per share, we do think we’ve got a balanced outlook at $4.25 to $4.35 earnings per share. I think just a couple of things I would point out as you think of earnings per share growth in the second half of the fiscal year. Number one, advertising. As I’d mentioned just a few minutes ago, we fully expect that we are going to invest about 9% of net sales in advertising and when you look at the investment in the second half of fiscal 2012 that number was closer to 8.5%. So, it does represent a significant ramp-up in spending to support the innovation that Don talked about. The other is, we believe that we have appropriately set aside contingency for potential risks in Venezuela and that certainly a drag of call it $0.05 to $0.10. Then finally, we’ve got a higher tax rate. So, those are really three factors that are causing the earnings per share in the second half to probably be up modestly, although it could be flat or down a little bit depending on what happens in Venezuela relative to the 10% growth that you saw in the first half.