Colgate-Palmolive Company (NYSE:CL) today reported worldwide Net
sales of $3,762 million in first quarter 2017, even with the first
quarter 2016 level. Global unit volume decreased 2.0%, pricing
increased 2.5% and foreign exchange was negative 0.5%. Organic
sales (Net sales excluding the impact of foreign exchange,
acquisitions and divestments) grew 0.5%.
Net income and Diluted earnings per share in first quarter 2017
were $570 million and $0.64, respectively. Net income in first
quarter 2017 included $31 million ($0.03 per diluted share) of
aftertax charges resulting from the Company’s Global Growth and
Efficiency Program (the “2012 Restructuring Program”).
Net income and Diluted earnings per share in first quarter 2016
were $533 million and $0.59, respectively. Net income in first
quarter 2016 included $38 million ($0.04 per diluted share) of
aftertax charges resulting from the 2012 Restructuring Program.
Excluding charges resulting from the 2012 Restructuring Program
in both periods, Net income in first quarter 2017 was $601 million,
an increase of 5% versus first quarter 2016, and Diluted earnings
per share in first quarter 2017 was $0.67, an increase of 6% versus
first quarter 2016.
Gross profit margin was 60.3% in first quarter 2017 versus 59.8%
in first quarter 2016. Excluding charges resulting from the 2012
Restructuring Program in both periods, Gross profit margin was
60.7% in first quarter 2017, an increase of 70 basis points versus
the year ago quarter. This increase was primarily driven by cost
savings from the Company’s funding-the-growth initiatives and the
2012 Restructuring Program, and higher pricing, partially offset by
higher raw and packaging material costs.
Selling, general and administrative expenses were 36.2% of Net
sales in first quarter 2017 versus 36.0% of Net sales in first
quarter 2016. Excluding charges resulting from the 2012
Restructuring Program in both periods, Selling, general and
administrative expenses increased by 30 basis points to 35.6% of
Net sales in first quarter 2017, as a result of higher overhead
expenses. Worldwide advertising investment increased 1% to $400
million versus $398 million in the year ago quarter.
Operating profit increased to $885 million in first quarter 2017
compared to $867 million in first quarter 2016. Excluding charges
resulting from the 2012 Restructuring Program in both periods,
Operating profit was $931 million in first quarter 2017, an
increase of 1% versus first quarter 2016. Operating profit margin
was 23.5% in first quarter 2017 versus 23.0% in first quarter 2016.
Excluding charges resulting from the 2012 Restructuring Program in
both periods, Operating profit margin was 24.7% in first quarter
2017, an increase of 20 basis points versus the year ago
quarter.
Net cash provided by operations year-to-date was
$691 million compared to $614 million in the comparable
2016 period, reflecting strong operating earnings and a continued
tight focus on working capital. Working capital as a percentage of
Net sales was negative 4.3% compared to negative 2.8% in the year
ago period.
Ian Cook, Chairman, President and Chief Executive Officer,
commented on the first quarter results, “Clearly the first quarter
was challenging and did not meet our organic sales growth
expectations, driven mainly by softer results in North America. Net
sales were even with the year ago quarter, while organic sales grew
0.5%, led by emerging markets where organic sales grew 3.0%.
“Colgate’s leadership of the global toothpaste market continued
during the quarter with its global market share now at 43.8%
year-to-date. Our global leadership in manual toothbrushes also
continued with Colgate’s global market share in that category now
at 32.7% year-to-date.
“Pleasingly, gross profit margin, operating profit margin, net
income as a percent to sales and operating cash flow all increased
versus the year ago period.
“As we look ahead, uncertainty in global markets and slowing
category growth worldwide remain challenging. While based on
current spot rates, we continue to expect a low-single-digit net
sales increase for 2017, based on our slow start to the year, we
now expect organic sales growth for 2017 to be modestly below our
4% - 7% range with sequential improvement throughout the year.
“On a GAAP basis, based on current spot rates, we are planning
for a year of gross margin expansion and expect earnings per share
on a dollar basis to be flat.
“Excluding charges resulting from the 2012 Restructuring Program
and the other 2016 one-time items previously disclosed, based on
current spot rates, we continue to plan for a year of strong
operating cash flow, gross margin expansion, increased advertising
investment and low-single-digit earnings per share growth on a
dollar basis.”
At 11:00 a.m. ET today, Colgate will host a conference call to
elaborate on first quarter results. To access this call as a
webcast, please go to Colgate’s website at
http://www.colgatepalmolive.com.
The following are comments about divisional performance for
first quarter 2017 versus the year ago period. See attached
Geographic Sales Analysis Percentage Changes and Segment
Information tables for additional information on divisional net
sales and operating profit.
North America (20% of Company
Sales)
North America Net sales decreased 5.0% in first quarter 2017.
Unit volume decreased 5.0% with 0.5% lower pricing, while foreign
exchange was positive 0.5%. Organic sales for North America
decreased 5.5%, reflecting the impact of market share losses during
the quarter from a portfolio transition within our home care
business, retailer inventory reductions and a further slowdown in
category growth.
Operating profit in North America decreased 3% in first quarter
2017 to $233 million, while as a percentage of Net sales, it
increased 80 basis points to 30.7% of Net sales. This increase in
Operating profit as a percentage of Net sales was due to a decrease
in Selling, general and administrative expenses, partially offset
by a decrease in Gross profit, both as a percentage of Net sales.
This decrease in Gross profit was primarily driven by higher raw
and packaging material costs, partially offset by cost savings from
the Company’s funding-the-growth initiatives and the 2012
Restructuring Program. This decrease in Selling, general and
administrative expenses was due to lower overhead expenses and
decreased advertising due to the timing of advertising investment
in the prior year.
In the U.S., Colgate maintained its leadership in the toothpaste
category during the quarter with its market share at 35.6%
year-to-date. Successful new products include Colgate Total
Clean-In-Between, Colgate Optic White Beauty Radiant, Colgate
Sensitive Smart White and Tom’s of Maine Rapid Relief Sensitive
toothpastes. In manual toothbrushes, Colgate maintained its brand
market leadership in the U.S. with its market share in that
category at 41.2% year-to-date, driven by strong sales of Colgate
Total 360° 4 Zone manual toothbrush.
New products succeeding in other categories include Colgate
Total Advanced Health and Colgate Kids mouthwashes, Colgate Total
360° Whole Mouth Clean battery toothbrush and Softsoap Luminous
Oils and Irish Spring Signature For Men body washes.
Latin America (25% of Company
Sales)
Latin America Net sales increased 9.0% in first quarter 2017.
Unit volume was even with the year ago quarter, while pricing
increased 7.0% and foreign exchange was positive 2.0%. Excluding
the impact of divested businesses, unit volume increased 0.5%.
Volume gains in Mexico, the Caribbean region and the Southern Cone
region were offset by volume declines in Brazil. Organic sales for
Latin America increased 7.5%.
Operating profit in Latin America increased 9% in first quarter
2017 to $269 million, while as a percentage of Net sales, it
remained even at 29.1%. Operating profit as a percentage of
Net sales was even with the year ago quarter, as an increase in
Gross profit was offset by an increase in Selling, general and
administrative expenses, both as a percentage of Net sales. This
increase in Gross profit was mainly driven by cost savings from the
Company’s funding-the-growth initiatives and higher pricing, which
were partially offset by higher raw and packaging material costs.
This increase in Selling, general and administrative expenses was
due to higher overhead expenses and increased advertising
investment.
Colgate maintained its leadership in toothpaste in Latin America
during the quarter, with market share gains in Mexico, Peru, the
Dominican Republic, Puerto Rico and Paraguay. Strong sales of
Colgate Total Professional Daily Repair, Colgate Triple Action
Extra Whitening, Colgate Sensitive Pro-Alivio and Colgate Max Fresh
toothpastes contributed to volume growth throughout the region.
Colgate’s leadership in the manual toothbrush category continued
throughout the region, driven by strong sales of Colgate Triple
Action manual toothbrush.
Products in other categories contributing to growth throughout
the region include Colgate Plax Ice Glacial mouthwash, Protex
Pro-Hidrata shower gel, bar soap and liquid hand soap, Palmolive
Natural Secrets shower gel and bar soap, Suavitel Sweet Pleasures
fabric conditioner, Axion Active Foam dish liquid and Fabuloso
Perfect Fusion liquid cleaner.
Europe (15% of Company
Sales)
Europe Net sales decreased 5.0% in first quarter 2017. Unit
volume increased 0.5%, pricing decreased 1.0% and foreign exchange
was negative 4.5%. Volume gains led by the United Kingdom, Spain
and the Netherlands were partially offset by volume declines in
France. Organic sales for Europe decreased 0.5%.
Operating profit in Europe decreased 1% in first quarter 2017 to
$140 million, while as a percentage of Net sales it increased 110
basis points to 25.1% of Net sales. This increase in Operating
profit as a percentage of Net sales was due to a decrease in
Selling, general and administrative expenses, partially offset by a
decrease in Gross profit, both as a percentage of Net sales. This
decrease in Gross profit was primarily driven by higher raw and
packaging material costs, which included foreign exchange
transaction costs, and lower pricing due to increased in-store
promotional activities. These decreases in Gross profit were
partially offset by cost savings from the Company’s
funding-the-growth initiatives and the 2012 Restructuring Program
and sales mix. This decrease in Selling, general and administrative
expenses was due to decreased advertising, due to the timing of
advertising investment in the prior year, and lower overhead
expenses.
Colgate maintained its oral care leadership in Europe during the
quarter, with toothpaste market share gains in Italy, Ireland,
Czech Republic, Slovenia, Bosnia and Bulgaria. Premium products
succeeding in oral care include Colgate Enamel Strength, Colgate
Natural Extracts and meridol Parodont Expert toothpastes, Colgate
360° Advanced Whole Mouth Health and Colgate 360° Advanced Max
White Expert White manual toothbrushes and Colgate MinionsTM
interactive battery powered brush for kids.
Premium innovations succeeding in other product categories
include Sanex Zero% shower gel and deodorant, Palmolive Naturals
with precious oils and Palmolive Gourmet shower gels, Sanex Men
7in1 deodorant, Paic Extreme dish liquid, the Ajax Optimal7 range
of multi-benefit cleaners available in liquid, spray and wipes and
Soupline Parfum Supreme line of fabric conditioner products.
Asia Pacific (19% of Company
Sales)
Asia Pacific Net sales decreased 3.0% during first quarter 2017.
Unit volume decreased 1.0%, pricing was even with the year ago
quarter and foreign exchange was negative 2.0%. Volume declines in
India, the Greater China region and Thailand were partially offset
by volume gains in the South Pacific region, Vietnam and the
Philippines. Organic sales for Asia Pacific decreased 1.0%.
Operating profit in Asia Pacific was $219 million in first
quarter 2017, even with first quarter 2016, while as a percentage
of Net sales it increased 90 basis points to 30.4% of Net sales.
This increase in Operating profit as a percentage of Net sales was
due to an increase in Gross profit and a decrease in Selling,
general and administrative expenses, both as a percentage of Net
sales. This increase in Gross profit was mainly driven by cost
savings from the Company’s funding-the-growth initiatives,
partially offset by higher raw and packaging material costs, which
included foreign exchange transaction costs. This decrease in
Selling, general and administrative expenses was due to decreased
advertising, in part reflecting a shift from advertising investment
to in-store promotional activities and due to the timing of
advertising investment in the prior year, which was partially
offset by higher overhead expenses.
Colgate continued its toothpaste leadership in the Asia Pacific
region during the quarter with market share gains in the
Philippines and Singapore. New products succeeding in the region
include Colgate Total Pro Breath Health, Colgate Natural, Colgate
Sensitive Pro-Relief Extra Protect and Colgate Sensitive Pro-Relief
Smart White toothpastes.
New products succeeding in other categories in the region
include Colgate Slim Soft Advanced, Colgate 360° Advanced and
Colgate Peppa PigTM manual toothbrushes, Colgate Plax Ice Infinity
and Colgate Plax Spicy Fresh mouthwashes, Protex Thai Therapy bar
soap, Ajax Spray n' Wipe cleaners and Softlan Gentle Care and
Softlan Charcoal Cupboard Fresh fabric conditioners.
Africa/Eurasia (6% of Company
Sales)
Africa/Eurasia Net sales increased 6.5% during first quarter
2017. Unit volume decreased 6.5%, pricing increased 7.0% and
foreign exchange was positive 6.0%. Volume declines in the Sub
Saharan Africa region and Russia were partially offset by volume
gains in the North Africa/Middle East region. Organic sales for
Africa/Eurasia increased 0.5%.
Operating profit in Africa/Eurasia increased 5% in first quarter
2017 to $45 million, while as a percentage of Net sales it
decreased 30 basis points to 18.3% of Net sales. This decrease in
Operating profit as a percentage of Net sales was primarily due to
an increase in Selling, general and administrative expenses,
partially offset by an increase in Gross profit, both as a
percentage of Net sales. This increase in Gross profit was
primarily driven by higher pricing, cost savings from the Company’s
funding-the-growth initiatives and lower raw and packaging material
costs, driven by foreign exchange transaction gains. This increase
in Selling, general and administrative expenses was due to
increased advertising investment and higher overhead expenses.
Colgate continued its toothpaste leadership in Africa/Eurasia
during the quarter, with market share gains in Saudi Arabia, the
United Arab Emirates, Kazakhstan, Morocco, Lebanon, Qatar and
Jordan. Successful products contributing to sales in the region
include Colgate Total Pro Breath Health, Colgate Optic White
Lasting White and Colgate Maximum Cavity Protection toothpastes,
and Colgate Zig Zag Charcoal and Colgate Double Action manual
toothbrushes.
Hill’s Pet Nutrition (15% of Company
Sales)
Hill’s Net sales increased 0.5% in first quarter 2017. Unit
volume decreased 4.0% with 4.0% higher pricing and foreign exchange
was positive 0.5%. Volume declines in the United States, Western
Europe and Turkey were partially offset by volume gains in South
Africa, Russia and Thailand. Hill’s organic sales were even with
the year ago quarter.
Hill’s Operating profit increased 1% in first quarter 2017 to
$157 million, or 20 basis points to 28.3% of Net sales. This
increase in Operating profit as a percentage of Net sales was
primarily due to an increase in Gross profit, partially offset by
an increase in Selling, general and administrative expenses, both
as a percentage of Net sales. This increase in Gross profit was
mainly driven by cost savings from the Company’s funding-the-growth
initiatives and higher pricing, partially offset by higher costs,
driven by higher raw and packaging material costs. This increase in
Selling, general and administrative expenses was due to increased
advertising investment and higher overhead expenses.
Successful products contributing to sales in the U.S. include
Hill’s Prescription Diet Dental Care Chews, Hill’s Prescription
Diet z/d for skin and food sensitivities, Hill’s Prescription Diet
i/d and i/d Low Fat Natural for digestive care and Metabolic
Natural for weight management, Hill’s Prescription Diet Derm
Defense for environmental sensitivities, Hill’s Science Diet
Urinary and Hairball Control, Hill’s Science Diet Perfect Weight
and Hill’s Science Diet Youthful Vitality.
Successful products contributing to sales internationally
include Hill’s Prescription Diet Metabolic + Mobility and Metabolic
+ Urinary, Hill’s Prescription Diet Derm Defense, Hill’s
Prescription Diet z/d, Hill’s Prescription Diet i/d, Hill’s Science
Diet Perfect Weight, Hill’s Science Diet Youthful Vitality and
Hill’s Science Diet Healthy Cuisine Stews.
***
About Colgate-Palmolive: Colgate-Palmolive is a leading global
consumer products company, tightly focused on Oral Care, Personal
Care, Home Care and Pet Nutrition. Colgate sells its products in
over 200 countries and territories around the world under such
internationally recognized brand names as Colgate, Palmolive, Speed
Stick, Lady Speed Stick, Softsoap, Irish Spring, Protex, Sorriso,
Kolynos, elmex, Tom’s of Maine, Sanex, Ajax, Axion, Fabuloso,
Soupline and Suavitel, as well as Hill’s Science Diet, Hill’s
Prescription Diet and Hill’s Ideal Balance. For more information
about Colgate’s global business, visit the Company’s website at
http://www.colgatepalmolive.com. To learn more about Colgate Bright
Smiles, Bright Futures® oral health education program, please visit
http://www.colgatebsbf.com. CL-E
Market Share Information
Management uses market share information as a key indicator to
monitor business health and performance. References to market share
in this press release are based on a combination of consumption and
market share data provided by third-party vendors, primarily
Nielsen, and internal estimates. All market share references
represent the percentage of the dollar value of sales of our
products, relative to all product sales in the category in the
countries in which the Company competes and purchases data
(excluding Venezuela from all periods). The Company measures
year-to-date market shares from January 1 of the relevant year
through the most recent period for which market share data is
available, which typically reflects a lag time of one or two
months. The Company believes that the third-party vendors it uses
to provide data are reliable, but it has not verified the accuracy
or completeness of the data or any assumptions underlying the data.
In addition, market share information calculated by the Company may
be different from market share information calculated by other
companies due to differences in category definitions, the use of
data from different countries, internal estimates and other
factors.
Cautionary Statement on Forward-Looking
Statements
This press release and the related webcast may contain
forward-looking statements (as that term is defined in the U.S.
Private Securities Litigation Reform Act of 1995 or by the
Securities and Exchange Commission (SEC) in its rules, regulations
and releases) that set forth anticipated results based on
management’s plans and assumptions. Such statements may relate, for
example, to sales or volume growth, organic sales growth, profit or
profit margin growth, earnings per share growth (including on a
currency-neutral basis), financial goals, the impact of foreign
exchange volatility, cost-reduction plans including the 2012
Restructuring Program, tax rates, the need to repatriate
undistributed earnings of foreign subsidiaries, new product
introductions or commercial investment levels, acquisitions,
divestitures, or legal or tax proceedings, among other matters.
These statements are made on the basis of our views and assumptions
as of this time and we undertake no obligation to update these
statements whether as a result of new information, future events or
otherwise, except as required by law or by the rules and
regulations of the SEC. Moreover, the Company does not, nor does
any other person, assume responsibility for the accuracy and
completeness of these statements. We caution investors that any
such forward-looking statements are not guarantees of future
performance and that actual events or results may differ materially
from those statements. For more information about factors that
could impact the Company’s business and cause actual results to
differ materially from forward-looking statements, investors should
refer to the Company’s filings with the SEC (including, but not
limited to, the information set forth under the captions “Risk
Factors” and “Cautionary Statement on Forward-Looking Statements”
in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2016 and subsequent Quarterly Reports on Form 10-Q).
Copies of these filings may be obtained upon request from the
Company’s Investor Relations Department or on the Company’s website
at http://www.colgatepalmolive.com.
Non-GAAP Financial Measures
The following provides information regarding the non-GAAP
financial measures used in this earnings release and/or the related
webcast:
This release discusses Net sales growth (GAAP) and organic sales
growth, which is Net sales growth excluding the impact of foreign
exchange, acquisitions and divestments (non-GAAP). Management
believes the organic sales growth measure provides investors and
analysts with useful supplemental information regarding the
Company’s underlying sales trends by presenting sales growth
excluding the external factor of foreign exchange as well as the
impact from acquisitions and divestments. See “Geographic Sales
Analysis Percentage Changes” for the three months ended March 31,
2017 vs 2016 included with this release for a comparison of organic
sales growth to Net sales growth in accordance with GAAP.
To supplement Colgate’s Condensed Consolidated Statements of
Income presented in accordance with GAAP, the Company has disclosed
non-GAAP measures of operating results that exclude certain items.
Worldwide Gross profit, Gross profit margin, Selling, general and
administrative expenses, Selling, general and administrative
expenses as a percentage of Net sales, Other (income) expense, net,
Operating profit, Operating profit margin, Effective income tax
rate, Net income attributable to Colgate-Palmolive Company and
Diluted earnings per common share are discussed both as reported
(on a GAAP basis) and excluding charges resulting from the 2012
Restructuring Program (non-GAAP). These non-GAAP financial measures
exclude items that, either by their nature or amount, management
would not expect to occur as part of the Company’s normal business
on a regular basis, such as restructuring charges, charges for
certain litigation and tax matters, gains and losses from certain
divestitures and certain unusual, non-recurring items. Investors
and analysts use these financial measures in assessing the
Company’s business performance, and management believes that
presenting these financial measures on a non-GAAP basis provides
them with useful supplemental information to enhance their
understanding of the Company’s underlying business performance and
trends. These non-GAAP financial measures also enhance the ability
to compare period-to-period financial results. See “Non-GAAP
Reconciliations” for the three months ended March 31, 2017 and 2016
included with this release for a reconciliation of these financial
measures to the related GAAP measures.
The Company uses these financial measures internally in its
budgeting process, to evaluate segment and overall operating
performance and as factors in determining compensation. While the
Company believes that these financial measures are useful in
evaluating the Company’s underlying business performance and
trends, this information should be considered as supplemental in
nature and is not meant to be considered in isolation or as a
substitute for the related financial information prepared in
accordance with GAAP. In addition, these non-GAAP financial
measures may not be the same as similar measures presented by other
companies.
The Company defines free cash flow before dividends as Net cash
provided by operations less Capital expenditures. As management
uses this measure to evaluate the Company’s ability to satisfy
current and future obligations, repurchase stock, pay dividends and
fund future business opportunities, the Company believes that it
provides useful information to investors. Free cash flow before
dividends is not a measure of cash available for discretionary
expenditures since the Company has certain non-discretionary
obligations, such as debt service, that are not deducted from the
measure. Free cash flow before dividends is a non-GAAP measure and
may not be comparable to similarly titled measures reported by
other companies. See “Condensed Consolidated Statements of Cash
Flows” for the three months ended March 31, 2017 and 2016 for a
comparison of free cash flow before dividends to Net cash provided
by operations, as reported in accordance with GAAP.
Explanatory Note Regarding
Currency-Neutral Calculations
Diluted earnings per share growth for first quarter 2017, on a
currency-neutral basis, eliminates from Diluted earnings per share
growth (GAAP) charges resulting from the 2012 Restructuring Program
and period-over-period changes in foreign exchange rates in the
translation of local currency results into U.S. dollars.
Accordingly, for purposes of calculating Diluted earnings per share
growth for first quarter 2017, on a currency-neutral basis, first
quarter 2017 local currency results, which include the impact of
foreign currency transaction gains and losses, are translated into
U.S. dollars using average foreign exchange rates for first quarter
2016.
Management’s estimate of Diluted earnings per share growth on a
currency-neutral basis for full year 2017 eliminates from Diluted
earnings per share growth (GAAP) the impact of the 2016 items
previously disclosed, the 2012 Restructuring Program and
period-over-period changes in foreign exchange rates in the
translation of local currency results into U.S. dollars.
Accordingly, for purposes of estimating Diluted earnings per share
growth for full year 2017, on a currency-neutral basis, estimated
full year 2017 local currency results, which include the impact of
foreign currency transaction gains and losses, are translated into
U.S. dollars using 2016 average foreign exchange rates by
quarter.
(See attached tables for first quarter
results.)
Table 1 Colgate-Palmolive
Company Condensed Consolidated Statements of
Income For the Three Months Ended March 31, 2017 and
2016 (Dollars in Millions Except Per Share Amounts)
(Unaudited) 2017 2016 Net sales $ 3,762 $ 3,762
Cost of sales 1,493 1,514 Gross profit 2,269 2,248
Gross profit margin 60.3 % 59.8 % Selling, general
and administrative expenses 1,362 1,354 Other (income)
expense, net 22 27 Operating profit 885 867 Operating
profit margin 23.5 % 23.0 % Interest (income) expense, net
23 28 Income before income taxes 862 839 Provision
for income taxes 251 265 Effective tax rate 29.1 % 31.6 %
Net income including noncontrolling interests 611 574
Less: Net income attributable to noncontrolling interests 41 41
Net income attributable to Colgate-Palmolive Company $ 570 $
533 Earnings per common share Basic $ 0.64 $ 0.60 Diluted $
0.64 $ 0.59 Average common shares outstanding Basic 884.7
893.7 Diluted 891.0 900.2
Table 2 Colgate-Palmolive Company
Condensed Consolidated Balance Sheets As of March
31, 2017, December 31, 2016 and March 31, 2016
(Dollars in Millions) (Unaudited) March 31, December
31, March 31, 2017 2016 2016 Cash and cash equivalents $ 1,347 $
1,315 $ 1,014 Receivables, net 1,496 1,411 1,546 Inventories 1,189
1,171 1,234 Other current assets 564 441 696 Property, plant and
equipment, net 3,883 3,840 3,820 Other assets, including goodwill
and intangibles 3,969 3,945 4,138 Total assets
$ 12,448 $ 12,123 $ 12,448 Total debt $
6,473 $ 6,533 $ 6,580 Other current liabilities 3,802 3,292 3,760
Other non-current liabilities 2,178 2,281 2,181
Total liabilities 12,453 12,106 12,521 Total
Colgate-Palmolive Company shareholders’ equity (313 ) (243 ) (370 )
Noncontrolling interests 308 260 297 Total
liabilities and shareholders’ equity $ 12,448 $ 12,123
$ 12,448
Supplemental Balance Sheet
Information Debt less cash, cash equivalents and marketable
securities* $ 5,014 $ 5,147 $ 5,429 Working capital % of sales (4.3
)%
(2.2
)%
(2.8 )%
*Marketable securities of $112, $71 and $137 as of
March 31, 2017, December 31, 2016 and March 31,
2016, respectively, are included in Other current assets.
Table 3 Colgate-Palmolive
Company Condensed Consolidated Statements of Cash
Flows For the Three Months Ended March 31, 2017 and
2016 (Dollars in Millions) (Unaudited)
2017 2016
Operating Activities Net income including
noncontrolling interests $ 611 $ 574 Adjustments to reconcile net
income including noncontrolling interests to net cash provided by
operations: Depreciation and amortization 109 106 Restructuring and
termination benefits, net of cash (9 ) 6 Stock-based compensation
expense 35 31 Deferred income taxes (51 ) (36 ) Voluntary benefit
plan contribution (57 ) (50 ) Cash effects of changes in:
Receivables (52 ) (95 ) Inventories 9 (32 ) Accounts payable and
other accruals 98 80 Other non-current assets and liabilities (2 )
30 Net cash provided by operations 691 614
Investing Activities Capital expenditures (121 ) (114 )
Purchases of marketable securities and investments (85 ) (80 )
Proceeds from sale of marketable securities and investments 48 50
Other — — Net cash used in investing activities (158
) (144 )
Financing Activities Principal payments on
debt (805 ) (2,388 ) Proceeds from issuance of debt 738 2,370
Dividends paid (345 ) (340 ) Purchases of treasury shares (333 )
(229 ) Proceeds from exercise of stock options 225 146
Net cash used in financing activities (520 ) (441 )
Effect of exchange rate changes on Cash and cash equivalents 19
15 Net increase in Cash and cash equivalents 32 44
Cash and cash equivalents at beginning of the period 1,315
970 Cash and cash equivalents at end of the period $ 1,347
$ 1,014
Supplemental Cash Flow
Information Free cash flow before dividends (Net cash provided
by operations less Capital expenditures) Net cash provided by
operations $ 691 $ 614 Less: Capital expenditures (121 ) (114 )
Free cash flow before dividends $ 570 $ 500
Income taxes paid $ 186 $ 217
Table 4 Colgate-Palmolive Company
Segment Information For the Three Months Ended
March 31, 2017 and 2016 (Dollars in Millions)
(Unaudited) Three Months Ended March 31, 2017 2016
Net Sales Oral, Personal and Home Care North America
$ 760 $ 800 Latin America 924 848 Europe 558 588 Asia Pacific 720
743 Africa/Eurasia 246 231 Total Oral,
Personal and Home Care 3,208 3,210 Pet Nutrition 554
552
Total Net Sales $ 3,762 $ 3,762
Three Months Ended March 31, 2017 2016
Operating Profit Oral, Personal and Home Care North
America $ 233 $ 239 Latin America 269 247 Europe 140 141 Asia
Pacific 219 219 Africa/Eurasia 45 43 Total
Oral, Personal and Home Care 906 889 Pet Nutrition 157 155
Corporate(1) (178 ) (177 )
Total Operating Profit $
885 $ 867
Note:(1) Corporate operations include costs related to stock
options and restricted stock units, research and development costs,
Corporate overhead costs, restructuring and related implementation
costs and gains and losses on sales of non-core product lines and
assets.
Corporate Operating profit (loss) for the three months ended
March 31, 2017 includes charges of $46 related to the 2012
Restructuring Program. Corporate Operating profit (loss) for the
three months ended March 31, 2016 included charges of $55 related
to the 2012 Restructuring Program.
Table 5 Colgate-Palmolive Company
Geographic Sales Analysis Percentage Changes
For the Three Months Ended March 31, 2017 vs 2016
(Unaudited)
COMPONENTS OF SALES CHANGE
Pricing Coupons
Sales Consumer & Change Organic
As Reported Organic Ex-Divested Trade
Foreign
Region
As Reported Sales Change
Volume(1)
Volume
Volume(2)
Incentives Exchange
Total Company — % 0.5 % (2.0 )% (2.0 )% (2.0
)%
2.5 % (0.5 )%
Europe (5.0 )% (0.5 )% 0.5 % 0.5 % 0.5
% (1.0 )% (4.5 )%
Latin America 9.0 % 7.5 % — % 0.5 %
0.5 % 7.0 % 2.0 %
Asia Pacific (3.0 )% (1.0 )% (1.0
)% (1.0 )% (1.0 )% — % (2.0 )%
Africa/Eurasia 6.5 %
0.5 % (6.5 )% (6.5 )% (6.5 )% 7.0 % 6.0 %
Total
International 1.5 % 2.0 % (1.0 )% (1.0 )% (1.0 )% 3.0 % (0.5 )%
North America (5.0 )% (5.5 )% (5.0 )% (5.0 )% (5.0 )%
(0.5 )% 0.5 %
Total CP Products — % 0.5 % (1.5 )%
(1.5 )% (1.5 )% 2.0 % (0.5 )%
Hill’s 0.5 % — % (4.0
)% (4.0 )% (4.0 )% 4.0 % 0.5 %
Emerging
Markets (3) 4.0 % 3.0 % (1.5 )% (1.5 )% (1.5 )% 4.5 %
1.0 %
Developed Markets (4.0 )% (2.5 )% (3.0 )% (3.0
)% (3.0 )% 0.5 % (1.5 )%
Notes:(1) As Reported Volume includes the impact of acquisitions
and divestments, as applicable.
(2) Ex-Divested Volume excludes the impact of divestments, as
applicable.
(3) Emerging Markets include Latin America, Asia (excluding
Japan), Africa/Eurasia and Central Europe.
Table 6 Colgate-Palmolive
Company Non-GAAP Reconciliations For
the Three Months Ended March 31, 2017 and 2016
(Dollars in Millions Except Per Share Amounts) (Unaudited)
Gross Profit 2017 2016
Gross profit, GAAP $ 2,269 $ 2,248 2012 Restructuring Program 14
8 Gross profit, non-GAAP $ 2,283 $ 2,256
Basis Point Gross Profit Margin
2017 2016 Change Gross profit margin, GAAP
60.3 % 59.8 % 50 2012 Restructuring Program 0.4 % 0.2 %
Gross profit margin, non-GAAP 60.7 % 60.0 % 70
Selling, General and Administrative Expenses
2017 2016 Selling, general and administrative
expenses, GAAP $ 1,362 $ 1,354 2012 Restructuring Program (21 ) (26
) Selling, general and administrative expenses, non-GAAP $ 1,341
$ 1,328
Basis Point Selling,
General and Administrative Expenses as a Percentage of Net
Sales 2017 2016 Change Selling, general
and administrative expenses as a percentage of Net sales, GAAP 36.2
% 36.0 % 20 2012 Restructuring Program (0.6 )% (0.7 )%
Selling, general and administrative expenses as a percentage of Net
sales, non-GAAP 35.6 % 35.3 % 30
Other (Income) Expense, Net 2017 2016 Other
(income) expense, net, GAAP $ 22 $ 27 2012 Restructuring Program
(11 ) (21 ) Other (income) expense, net, non-GAAP $ 11 $ 6
Operating Profit 2017
2016 % Change Operating profit, GAAP $ 885 $ 867 2 %
2012 Restructuring Program 46 55 Operating
profit, non-GAAP $ 931 $ 922 1 %
Basis Point Operating Profit Margin 2017
2016 Change Operating profit margin, GAAP 23.5 % 23.0
% 50 2012 Restructuring Program 1.2 % 1.5 % Operating profit
margin, non-GAAP 24.7 % 24.5 % 20
Table 6 Continued Colgate-Palmolive Company
Non-GAAP Reconciliations For the Three
Months Ended March 31, 2017 and 2016 (Dollars in
Millions Except Per Share Amounts) (Unaudited)
2017 Net Income Attributable Net Income
To Including Colgate- Effective
Diluted Income Before Provision For
Noncontrolling Palmolive Income
Earnings Income Taxes
Income Taxes(1)
Interests Company
Tax Rate(2)
Per Share(3)
As Reported GAAP $ 862 $ 251 $ 611 $ 570 29.1 % $ 0.64 2012
Restructuring Program 46 15 31 31 0.2 %
0.03 Non-GAAP $ 908 $ 266 $ 642 $ 601
29.3 % $ 0.67
2016 Net
Income Attributable Net Income To
Including Colgate- Effective Diluted
Income Before Provision For Noncontrolling
Palmolive Income Earnings Income Taxes
Income Taxes(1)
Interests Company
Tax Rate(2)
Per Share(3)
As Reported GAAP $ 839 $ 265 $ 574 $ 533 31.6 % $ 0.59 2012
Restructuring Program 55 17 38 38 (0.1
)% 0.04 Non-GAAP $ 894 $ 282 $ 612 $
571 31.5 % $ 0.63
Notes:(1) 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.
(2) The impact of non-GAAP items on the Company’s effective tax
rate represents the difference in the effective tax rate calculated
with and without the non-GAAP adjustment on Income before income
taxes and Provision for income taxes.
(3) The impact of non-GAAP adjustments on Diluted earnings per
share may not necessarily equal the difference between “GAAP” and
“non-GAAP” as a result of rounding.
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version on businesswire.com: http://www.businesswire.com/news/home/20170428005107/en/
Colgate-Palmolive CompanyJohn Faucher, 212-310-3653Hope Spiller,
212-310-2291
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