Colgate-Palmolive Company (NYSE:CL) today reported worldwide Net
sales of $3,928 million in third quarter 2019, an increase of 2.0%
versus third quarter 2018. Global unit volume increased 3.0%,
pricing increased 1.5% and foreign exchange was negative 2.5%.
Organic sales (Net sales excluding the impact of foreign exchange,
acquisitions and divestments) increased 4.5%.
Net income and Diluted earnings per share in third quarter 2019
were $578 million and $0.67, respectively. Net income in third
quarter 2019 included $36 million ($0.04 per diluted share) of
aftertax charges resulting from the Company’s Global Growth and
Efficiency Program and acquisition costs primarily related to the
previously disclosed acquisition of the Laboratoires Filorga
Cosmétiques ("Filorga") skin health business, which closed on
September 19, 2019.
Net income and Diluted earnings per share in third quarter 2018
were $523 million and $0.60, respectively. Net income in third
quarter 2018 included $102 million ($0.12 per diluted share) of
aftertax charges resulting from the Global Growth and Efficiency
Program and related to U.S. tax reform.
Excluding charges resulting from the Global Growth and
Efficiency Program in both periods, acquisition costs in 2019 and
the charge related to U.S. tax reform in 2018, Net income in third
quarter 2019 was $614 million, a decrease of 2% versus third
quarter 2018, and Diluted earnings per share in third quarter 2019
were $0.71, a decrease of 1% versus third quarter 2018.
Gross profit margin was 59.0% in third quarter 2019, even with
third quarter 2018. Excluding charges resulting from the Global
Growth and Efficiency Program in both periods, Gross profit margin
was 59.0% in third quarter 2019, a decrease of 20 basis points
versus the year ago quarter as higher raw and packaging material
costs, which included foreign exchange transaction costs, were
partially offset by cost savings from the Company’s
funding-the-growth initiatives and higher pricing.
Selling, general and administrative expenses were 36.4% of Net
sales in third quarter 2019 versus 35.6% of Net sales in third
quarter 2018. Excluding charges resulting from the Global Growth
and Efficiency Program in both periods, Selling, general and
administrative expenses increased by 30 basis points versus the
year ago quarter to 35.7% of Net sales in third quarter 2019 due to
increased advertising investment, partially offset by lower
overhead expenses, both as a percentage of Net sales. On an
absolute basis, worldwide advertising investment increased 7% to
$423 million versus $395 million in the year ago quarter.
Operating profit decreased to $856 million in third quarter 2019
compared to $874 million in third quarter 2018. Excluding charges
resulting from the Global Growth and Efficiency Program in both
periods and acquisition costs in 2019, Operating profit was $900
million in third quarter 2019, even with third quarter 2018.
Operating profit margin was 21.8% in third quarter 2019 versus
22.7% in third quarter 2018. Excluding charges resulting from the
Global Growth and Efficiency Program in both periods and
acquisition costs in 2019, Operating profit margin was 22.9% in
third quarter 2019, a decrease of 50 basis points versus the year
ago quarter. This decrease in Operating profit margin was due to a
decrease in Gross profit and an increase in Selling, general and
administrative expenses, both as a percentage of Net sales.
Net cash provided by operations year to date was $2,163 million
compared to $2,194 million in the comparable 2018 period. Working
capital as a percentage of Net sales was negative 2.8% compared to
negative 3.1% in the year ago period.
Noel Wallace, President and Chief Executive Officer, commented
on the third quarter results, “We are pleased that our growth
continued to accelerate this quarter, having achieved sequential
improvement in organic sales growth for the fourth consecutive
quarter. The strong 4.5% growth was again driven by both positive
volume and higher pricing.
"We are very focused on sustaining this growth momentum by
continuing to innovate in our core businesses, pursue adjacent
categories and expand into new markets and channels. We also
continue to invest behind our brands, with our advertising
investment increasing in absolute dollars and as a percent to sales
versus third quarter 2018.
“Colgate’s leadership of the global toothpaste market continued
during the quarter with our global market share at 41.2% year to
date. Our global leadership in manual toothbrushes also continued
with Colgate’s global market share in that category at 31.6% year
to date.”
Mr. Wallace continued, “As we look ahead, based on current spot
rates, we continue to expect 2019 net sales to be flat to up
low-single-digits, with organic sales now expected to be up between
3% and 4%, roughly in line with year-to-date growth.
“On a GAAP basis, based on current spot rates, we now expect a
slight decline in gross margin and continue to expect a
low-single-digit decline in earnings per share in 2019.
“Excluding charges resulting from the Global Growth and
Efficiency Program in both 2018 and 2019, acquisition costs in
2019, the charge related to U.S. tax reform in 2018 and the benefit
from a foreign tax matter in 2018, based on current spot rates, we
now expect a slight decline in gross margin and continue to plan
for increased advertising investment and a mid-single-digit decline
in earnings per share.”
At 11:00 a.m. ET today, Colgate will host a conference call to
elaborate on third 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
third quarter 2019 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 (22% of Company
Sales)
North America Net sales increased 1.5% in third quarter 2019.
Unit volume increased 0.5%, pricing increased 1.0% and foreign
exchange was even with the year ago period. Organic sales for North
America increased 1.5%.
Operating profit in North America decreased 4% in third quarter
2019 to $248 million, or 170 basis points to 28.5% of Net sales.
This decrease in Operating profit as a percentage of Net sales was
primarily due to a decrease in Gross profit, partially offset by a
decrease in Selling, general and administrative expenses, both as a
percentage of Net sales. This decrease in Gross profit was
primarily due to higher raw and packaging material costs, partially
offset by cost savings from the Company’s funding-the-growth
initiatives. This decrease in Selling, general and administrative
expenses was primarily due to lower overhead expenses.
In the U.S., Colgate's share of the toothpaste market is at
34.3% year to date. Successful products include Colgate Optic White
Stain Fighter, Colgate Essentials with Charcoal and Colgate TotalSF
toothpastes. In manual toothbrushes, Colgate maintained its brand
market leadership in the U.S. with its market share in that
category at 39.9% year to date, supported by the success of Colgate
360° and Colgate Gum Health manual toothbrushes.
Products succeeding in other categories include EltaMD foaming
facial cleanser, EltaMD UV Clear facial sunscreen, PCA Skin Vitamin
B3 Brightening Serum, Irish Spring 5-in-1 body wash, Fabuloso
Complete liquid cleaner and Suavitel Complete fabric
conditioner.
Latin America (23% of Company
Sales)
Latin America Net sales increased 3.0% in third quarter 2019.
Unit volume increased 4.5%, pricing increased 3.5% and foreign
exchange was negative 5.0%. Volume gains were led by Brazil,
Central America, Colombia and Mexico. Organic sales for Latin
America increased 8.0%.
Operating profit in Latin America increased 6% in third quarter
2019 to $235 million, or 80 basis points to 26.7% 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
primarily due to cost savings from the Company’s funding-the-growth
initiatives and higher pricing, partially offset by higher raw and
packaging material costs, which included foreign exchange
transaction costs. This increase in Selling, general and
administrative expenses was due to increased advertising
investment, partially offset by lower overhead expenses.
Colgate maintained its toothpaste leadership in Latin America
during the quarter, with market share gains in Colombia, the
Dominican Republic, Panama, Chile, El Salvador and Honduras.
Products succeeding in the region include the relaunched Colgate
Total 12, Colgate Natural Extracts, Colgate Periogard, Colgate
Orthogard and elmex toothpastes. Colgate’s leadership in the manual
toothbrush category continued in the region, supported by the
success of Colgate Pro Cuidado, Colgate Ultra Soft and Colgate
Bamboo manual toothbrushes.
Products succeeding in other categories include Colgate Total 12
and Colgate Periogard mouthwashes, Protex Pro-Hidrata and Palmolive
Natureza Secreta bar soaps, Lady Speed Stick Clinical Complete and
Speed Stick Clinical Complete deodorants, Suavitel Complete fabric
conditioner, Axion dish liquid and Fabuloso Bleach Alternative
liquid cleaner.
Europe (15% of Company
Sales)
Europe Net sales decreased 5.0% in third quarter 2019. Unit
volume increased 1.5%, pricing decreased 1.5% and foreign exchange
was negative 5.0%. Volume gains in France, Spain and the United
Kingdom were partially offset by volume declines in Germany.
Organic sales for Europe were even with the year ago period. The
results of operations of Filorga for the period from the
acquisition date through September 30, 2019 were not material to
the Company's consolidated results of operations and are not
included in the Company's third quarter results.
Operating profit in Europe decreased 6% in third quarter 2019 to
$153 million, or 10 basis points to 25.2% of Net sales. This
decrease in Operating profit as a percentage of Net sales was due
to a decrease in Gross profit, partially offset by a decrease in
Selling, general and administrative expenses, both as a percentage
of Net sales. This decrease in Gross Profit was primarily due to
higher raw and packaging material costs and lower pricing,
partially offset by cost savings from the Company’s
funding-the-growth initiatives. This decrease in Selling, general
and administrative expenses was primarily due to decreased
advertising investment.
Colgate maintained its toothpaste leadership in Europe during
the quarter, with market share gains in the United Kingdom, Italy,
Spain, Greece, the Netherlands and Denmark. Products succeeding in
oral care include the relaunched Colgate Total, Colgate Max White
Expert Anti-Stain, Colgate Max White Charcoal, Colgate Natural
Extracts Charcoal and elmex toothpastes, Colgate Slim Soft Advanced
manual toothbrush and meridol mouthwash.
Products succeeding in other categories include Sanex pump body
lotions, Palmolive Clay and Sanex body washes, Ajax Boost liquid
cleaner and Soupline fabric conditioner.
Asia Pacific (18% of Company
Sales)
Asia Pacific Net sales increased 2.5% during third quarter 2019.
Unit volume increased 2.0%, pricing increased 1.0% and foreign
exchange was negative 0.5%. Volume gains in the Philippines,
Australia, India, New Zealand and the Greater China region were
partially offset by volume declines in Malaysia. Organic sales for
Asia Pacific increased 3.0%.
Operating profit in Asia Pacific increased 1% in third quarter
2019 to $193 million, while as a percentage of Net sales it
decreased 40 basis points to 28.0% 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 due to cost savings from the Company’s funding-the-growth
initiatives and higher pricing, 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 toothpaste leadership in the Asia Pacific
region during the quarter with market share gains in the
Philippines, New Zealand and Pakistan. Products succeeding in oral
care include Colgate Maximum Cavity Protection with Amino Power,
Colgate Charcoal Clean, Colgate Miracle Repair, Colgate Vedshakti
and elmex toothpastes and Colgate Cushion Clean manual
toothbrush.
Products succeeding in other categories include Palmolive Men
With Natural Charcoal bar soap, Palmolive Luminous Oils shower gel
and liquid hand soap and Ajax Eco Clean multipurpose biodegradable
wipes.
Africa/Eurasia (6% of Company
Sales)
Africa/Eurasia Net sales increased 5.0% during third quarter
2019. Unit volume increased 3.0%, pricing increased 4.0% and
foreign exchange was negative 2.0%. The Company's new joint venture
in Nigeria contributed 1.0% to Net sales and unit volume growth.
Volume gains in Russia, the Gulf States and Kenya were partially
offset by volume declines in South Africa. Organic sales and
organic unit volume for Africa/Eurasia increased 6.0% and 2.0%,
respectively.
Operating profit in Africa/Eurasia increased 17% in third
quarter 2019 to $48 million, or 200 basis points to 19.4% 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 primarily due to cost savings from the Company’s
funding-the-growth initiatives and higher pricing, partially offset
by higher raw and packaging material costs, which included foreign
exchange transaction costs. This increase in Selling, general and
administrative expenses was due to higher overhead expenses and
increased advertising investment.
Colgate maintained its toothpaste leadership in Africa/Eurasia
during the quarter, with market share gains in Turkey, Kazakhstan,
Morocco, Jordan and Bahrain. Successful products contributing to
sales in the region include the relaunched Colgate Total 12,
Colgate Optic White Charcoal, Colgate Safe Whitening and meridol
toothpastes, and Palmolive Micellar Care shower gel and bar
soap.
Hill's Pet Nutrition (16% of Company
Sales)
Hill’s Net sales increased 8.5% during third quarter 2019. Unit
volume increased 6.5%, pricing increased 3.5% and foreign exchange
was negative 1.5%. Volume gains in the United States and Western
Europe were partially offset by volume declines in South Africa.
Hill’s organic sales increased 10.0%.
Hill’s Operating profit in third quarter 2019 increased 4% to
$169 million, while as a percentage of Net sales it decreased 130
basis points to 26.7% of Net sales. This decrease in Operating
profit as a percentage of Net sales was primarily due to a decrease
in Gross profit and an increase in Selling, general and
administrative expenses, both as a percentage of Net sales. This
decrease in Gross profit was primarily due to higher raw and
packaging material costs, partially offset by cost savings from the
Company’s funding-the-growth initiatives and higher pricing. This
increase in Selling, general and administrative expenses was due to
increased advertising investment, partially offset by lower
overhead expenses.
Successful products contributing to sales in the United States
include the relaunched Hill’s Science Diet (with upgraded recipes,
improved kibble shapes and redesigned package graphics) and Hill's
Prescription Diet Gastrointestinal Biome.
Successful products contributing to sales internationally
include Hill’s Prescription Diet Stews and the relaunched Hill’s
Science Diet.
***
About Colgate-Palmolive: Colgate-Palmolive is a leading global
consumer products company, focused on Oral Care, Personal Care,
Home Care and Pet Nutrition. With more than 34,000 people and its
products sold in over 200 countries and territories, Colgate is
known for household names such as Colgate, Palmolive, elmex, Tom’s
of Maine, Sorriso, Speed Stick, Lady Speed Stick, Softsoap, Irish
Spring, Protex, Sanex, Filorga, EltaMD, PCA Skin, Ajax, Axion,
Fabuloso, Soupline and Suavitel, as well as Hill’s Science Diet and
Hill’s Prescription Diet. The Company is also recognized for its
leadership and innovation in promoting environmental sustainability
and community wellbeing, including its achievements in saving
water, reducing waste, promoting recyclability and improving the
oral health of children through its Bright Smiles, Bright Futures
program, which has reached more than one billion children since
1991. For more information about Colgate’s global business and how
the Company is building a future to smile about, visit http://www.colgatepalmolive.com.
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).
Market share data is subject to limitations on the availability
of up-to-date information. In particular, market share data is
currently not generally available for certain retail channels, such
as eCommerce or certain discounters. 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 reported by the Company may
be different from market share information reported 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 current plans and assumptions. Such statements may
relate, for example, to sales or volume growth, net selling price
increases, organic sales growth, profit or profit margin growth,
earnings per share levels, financial goals, the impact of foreign
exchange volatility, cost-reduction plans including the Global
Growth and Efficiency Program, tax rates, U.S. tax reform, new
product introductions, commercial investment levels, acquisitions,
divestitures, share repurchases, or legal or tax proceedings, among
other matters. These statements are made on the basis of the
Company’s views and assumptions as of this time and the Company
undertakes 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. The Company cautions 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, 2018 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 and nine months ended
September 30, 2019 vs. 2018 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, Non-service related
postretirement costs, 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 Global Growth and Efficiency
Program and, as applicable, acquisition costs in 2019, the benefit
from a foreign tax matter in 2018 and the charge related to U.S.
tax reform in 2018 (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 and nine months ended September 30,
2019 and 2018 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 nine months ended September 30, 2019 and 2018 for a
comparison of free cash flow before dividends to Net cash provided
by operations as reported in accordance with GAAP.
(See attached tables for third quarter
results.)
Table 1
Colgate-Palmolive
Company
Condensed Consolidated
Statements of Income
For the Three Months Ended
September 30, 2019 and 2018
(Dollars in Millions Except
Per Share Amounts) (Unaudited)
2019
2018
Net sales
$
3,928
$
3,845
Cost of sales
1,612
1,576
Gross profit
2,316
2,269
Gross profit margin
59.0
%
59.0
%
Selling, general and administrative
expenses
1,429
1,369
Other (income) expense, net
31
26
Operating profit
856
874
Operating profit margin
21.8
%
22.7
%
Non-service related postretirement
costs
27
18
Interest (income) expense, net
35
36
Income before income taxes
794
820
Provision for income taxes
167
258
Effective tax rate
21.0
%
31.5
%
Net income including noncontrolling
interests
627
562
Less: Net income attributable to
noncontrolling interests
49
39
Net income attributable to
Colgate-Palmolive Company
$
578
$
523
Earnings per common share
Basic
$
0.67
$
0.60
Diluted
$
0.67
$
0.60
Average common shares outstanding
Basic
858.7
868.8
Diluted
861.2
871.1
Table 2
Colgate-Palmolive
Company
Condensed Consolidated
Statements of Income
For the Nine Months Ended
September 30, 2019 and 2018
(Dollars in Millions Except
Per Share Amounts) (Unaudited)
2019
2018
Net sales
$
11,678
$
11,733
Cost of sales
4,767
4,755
Gross profit
6,911
6,978
Gross profit margin
59.2
%
59.5
%
Selling, general and administrative
expenses
4,163
4,061
Other (income) expense, net
125
114
Operating profit
2,623
2,803
Operating profit margin
22.5
%
23.9
%
Non-service related postretirement
costs
79
65
Interest (income) expense, net
113
106
Income before income taxes
2,431
2,632
Provision for income taxes
586
717
Effective tax rate
24.1
%
27.2
%
Net income including noncontrolling
interests
1,845
1,915
Less: Net income attributable to
noncontrolling interests
121
121
Net income attributable to
Colgate-Palmolive Company
$
1,724
$
1,794
Earnings per common share
Basic(1)
$
2.00
$
2.06
Diluted(1)
$
2.00
$
2.05
Average common shares outstanding
Basic
860.1
871.9
Diluted
862.4
875.0
Note:
(1) Basic and diluted earnings per share
are computed independently for each quarter and any year-to-date
period presented. As a result of changes in shares outstanding
during the year and rounding, the sum of the quarters’ earnings per
share may not necessarily equal the earnings per share for any
year-to-date period.
Table 3
Colgate-Palmolive
Company
Condensed Consolidated Balance
Sheets
As of September 30, 2019,
December 31, 2018 and September 30, 2018
(Dollars in Millions)
(Unaudited)
September 30,
December 31,
September 30,
2019
2018
2018
Cash and cash equivalents
$
948
$
726
$
841
Receivables, net
1,495
1,400
1,532
Inventories
1,371
1,250
1,245
Other current assets
535
417
523
Property, plant and equipment, net
3,689
3,881
3,871
Other assets, including goodwill and
intangibles
6,988
4,487
4,559
Total assets
$
15,026
$
12,161
$
12,571
Total debt
$
8,151
$
6,366
$
6,604
Other current liabilities
3,726
3,329
3,662
Other non-current liabilities
2,975
2,269
2,373
Total liabilities
14,852
11,964
12,639
Total Colgate-Palmolive Company
shareholders’ equity
(324
)
(102
)
(430
)
Noncontrolling interests
498
299
362
Total liabilities and equity
$
15,026
$
12,161
$
12,571
Supplemental Balance Sheet
Information
Debt less cash, cash equivalents and
marketable securities(1)
$
7,094
$
5,630
$
5,643
Working capital % of sales
(2.8
)%
(1.7
)%
(3.1
)%
Note: (1) Marketable securities of $109, $10 and $120 as of
September 30, 2019, December 31, 2018 and September 30, 2018,
respectively, are included in Other current assets.
Table 4
Colgate-Palmolive
Company
Condensed Consolidated
Statements of Cash Flows
For the Nine Months Ended
September 30, 2019 and 2018
(Dollars in Millions)
(Unaudited)
2019
2018
Operating Activities
Net income including noncontrolling
interests
$
1,845
$
1,915
Adjustments to reconcile Net income
including noncontrolling interests to Net cash provided by
operations:
Depreciation and amortization
386
385
Restructuring and termination benefits,
net of cash
11
(20
)
Stock-based compensation expense
83
97
Charge for U.S. tax reform
—
80
Deferred income taxes
79
78
Voluntary benefit plan contributions
(113
)
(67
)
Cash effects of changes in:
Receivables
(65
)
(196
)
Inventories
(69
)
(36
)
Accounts payable and other accruals
(52
)
13
Other non-current assets and
liabilities
58
(55
)
Net cash provided by operations
2,163
2,194
Investing Activities
Capital expenditures
(226
)
(321
)
Purchases of marketable securities and
investments
(152
)
(159
)
Proceeds from sale of marketable
securities and investments
14
28
Payment for acquisitions, net of cash
acquired
(1,711
)
(728
)
Other
—
6
Net cash used in investing activities
(2,075
)
(1,174
)
Financing Activities
Principal payments on debt
(4,184
)
(5,478
)
Proceeds from issuance of debt
6,008
5,536
Dividends paid
(1,140
)
(1,122
)
Purchases of treasury shares
(1,024
)
(956
)
Proceeds from exercise of stock
options
490
319
Net cash provided by (used in) financing
activities
150
(1,701
)
Effect of exchange rate changes on Cash
and cash equivalents
(16
)
(13
)
Net increase (decrease) in Cash and cash
equivalents
222
(694
)
Cash and cash equivalents at beginning of
the period
726
1,535
Cash and cash equivalents at end of the
period
$
948
$
841
Supplemental Cash Flow
Information
Free cash flow before dividends (Net cash
provided by operations less Capital expenditures)
Net cash provided by operations
$
2,163
$
2,194
Less: Capital expenditures
(226
)
(321
)
Free cash flow before dividends
$
1,937
$
1,873
Income taxes paid
$
669
$
655
Table 5
Colgate-Palmolive
Company
Segment Information
For the Three and Nine Months
Ended September 30, 2019 and 2018
(Dollars in Millions)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Net Sales
Oral, Personal and Home Care
North America
$
869
$
858
$
2,568
$
2,509
Latin America
881
856
2,700
2,718
Europe
607
640
1,798
1,908
Asia Pacific
690
673
2,035
2,106
Africa/Eurasia
248
236
732
734
Total Oral, Personal and Home Care
3,295
3,263
9,833
9,975
Pet Nutrition
633
582
1,845
1,758
Total Net Sales
$
3,928
$
3,845
$
11,678
$
11,733
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Operating Profit
Oral, Personal and Home Care
North America
$
248
$
259
$
750
$
780
Latin America
235
222
718
757
Europe
153
162
452
480
Asia Pacific
193
191
557
620
Africa/Eurasia
48
41
141
133
Total Oral, Personal and Home Care
877
875
2,618
2,770
Pet Nutrition
169
163
501
492
Corporate(1)
(190
)
(164
)
(496
)
(459
)
Total Operating Profit
$
856
$
874
$
2,623
$
2,803
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 September 30, 2019 and 2018 includes charges of $26
and $25, respectively, related to the Global Growth and Efficiency
Program. Corporate Operating profit (loss) for the three months
ended September 30, 2019 includes costs of $18 related to
acquisitions. Corporate Operating profit (loss) for the nine
months ended September 30, 2019 and 2018 includes charges of $94
and $107, respectively, related to the Global Growth and Efficiency
Program. Corporate Operating profit (loss) for the nine months
ended September 30, 2019 includes costs of $18 related to
acquisitions.
Table 6
Colgate-Palmolive
Company
Geographic Sales Analysis
Percentage Changes
For the Three Months Ended
September 30, 2019 vs. 2018
(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
Incentives
Exchange
Total Company(1)
2.0
%
4.5
%
3.0
%
3.0
%
3.0
%
1.5
%
(2.5
)%
Europe
(5.0
)%
—
%
1.5
%
1.5
%
1.5
%
(1.5
)%
(5.0
)%
Latin America
3.0
%
8.0
%
4.5
%
4.5
%
4.5
%
3.5
%
(5.0
)%
Asia Pacific
2.5
%
3.0
%
2.0
%
2.0
%
2.0
%
1.0
%
(0.5
)%
Africa/Eurasia(1)
5.0
%
6.0
%
3.0
%
2.0
%
3.0
%
4.0
%
(2.0
)%
Total International
1.0
%
4.5
%
3.0
%
3.0
%
3.0
%
1.5
%
(3.5
)%
North America
1.5
%
1.5
%
0.5
%
0.5
%
0.5
%
1.0
%
—
%
Total CP Products
1.0
%
3.5
%
2.0
%
2.0
%
2.0
%
1.5
%
(2.5
)%
Hill’s
8.5
%
10.0
%
6.5
%
6.5
%
6.5
%
3.5
%
(1.5
)%
Emerging Markets(2)
3.0
%
6.0
%
3.0
%
3.0
%
3.0
%
3.0
%
(3.0
)%
Developed Markets
1.5
%
3.5
%
3.0
%
3.0
%
3.0
%
0.5
%
(2.0
)%
Notes: (1) The impact of the Nigeria joint venture on as reported
volume was 0% for Total Company and 1.0% for the Africa/Eurasia
region. (2) Emerging Markets include Latin America, Asia (excluding
Japan), Africa/Eurasia and Central Europe.
Table 7
Colgate-Palmolive
Company
Geographic Sales Analysis
Percentage Changes
For the Nine Months Ended
September 30, 2019 vs. 2018
(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
Incentives
Exchange
Total Company(1)
(0.5
)%
3.5
%
1.5
%
1.5
%
1.5
%
2.0
%
(4.0
)%
Europe
(6.0
)%
0.5
%
1.0
%
1.0
%
1.0
%
(0.5
)%
(6.5
)%
Latin America
(0.5
)%
7.0
%
3.0
%
3.0
%
3.0
%
4.0
%
(7.5
)%
Asia Pacific
(3.5
)%
—
%
(0.5
)%
(0.5
)%
(0.5
)%
0.5
%
(3.5
)%
Africa/Eurasia(1)
(0.5
)%
7.5
%
2.0
%
1.5
%
2.0
%
6.0
%
(8.5
)%
Total International
(2.5
)%
3.5
%
1.5
%
1.5
%
1.5
%
2.0
%
(6.0
)%
North America
2.5
%
2.5
%
1.5
%
1.5
%
1.5
%
1.0
%
—
%
Total CP Products
(1.5
)%
3.0
%
1.5
%
1.5
%
1.5
%
1.5
%
(4.5
)%
Hill’s
5.0
%
7.0
%
3.5
%
3.5
%
3.5
%
3.5
%
(2.0
)%
Emerging Markets(2)
(1.5
)%
4.5
%
1.5
%
1.5
%
1.5
%
3.0
%
(6.0
)%
Developed Markets
0.5
%
3.0
%
2.0
%
2.0
%
2.0
%
1.0
%
(2.5
)%
Notes: (1) The impact of the Nigeria joint venture on as reported
volume was 0% for Total Company and 0.5% for the Africa/Eurasia
region. (2) Emerging Markets include Latin America, Asia (excluding
Japan), Africa/Eurasia and Central Europe.
Table 8
Colgate-Palmolive
Company
Non-GAAP
Reconciliations
For the Three Months Ended
September 30, 2019 and 2018
(Dollars in Millions Except
Per Share Amounts) (Unaudited)
Gross Profit
2019
2018
Gross profit, GAAP
$
2,316
$
2,269
Global Growth and Efficiency Program
1
8
Gross profit, non-GAAP
$
2,317
$
2,277
Basis Point
Gross Profit Margin
2019
2018
Change
Gross profit margin, GAAP
59.0
%
59.0
%
—
Global Growth and Efficiency Program
—
%
0.2
%
Gross profit margin, non-GAAP
59.0
%
59.2
%
(20
)
Selling, General and Administrative
Expenses
2019
2018
Selling, general and administrative
expenses, GAAP
$
1,429
$
1,369
Global Growth and Efficiency Program
(28
)
(9
)
Selling, general and administrative
expenses, non-GAAP
$
1,401
$
1,360
Basis Point
Selling, General and Administrative
Expenses as a Percentage of Net Sales
2019
2018
Change
Selling, general and administrative
expenses as a percentage of Net sales, GAAP
36.4
%
35.6
%
80
Global Growth and Efficiency Program
(0.7
)%
(0.2
)%
Selling, general and administrative
expenses as a percentage of Net sales, non-GAAP
35.7
%
35.4
%
30
Other (Income) Expense, Net
2019
2018
Other (income) expense, net, GAAP
$
31
$
26
Global Growth and Efficiency Program
3
(8
)
Acquisition costs
(18
)
—
Other (income) expense, net, non-GAAP
$
16
$
18
Operating Profit
2019
2018
% Change
Operating profit, GAAP
$
856
$
874
(2
)%
Global Growth and Efficiency Program
26
25
Acquisition costs
18
—
Operating profit, non-GAAP
$
900
$
899
—
%
Basis Point
Operating Profit Margin
2019
2018
Change
Operating profit margin, GAAP
21.8
%
22.7
%
(90
)
Global Growth and Efficiency Program
0.7
%
0.7
%
Acquisition costs
0.4
%
—
%
Operating profit margin, non-GAAP
22.9
%
23.4
%
(50
)
Non-Service Related Postretirement
Costs
2019
2018
Non-service related postretirement costs,
GAAP
$
27
$
18
Global Growth and Efficiency Program
(1
)
(1
)
Non-service related postretirement costs,
non-GAAP
$
26
$
17
Table 8
Continued
Colgate-Palmolive
Company
Non-GAAP
Reconciliations
For the Three Months Ended
September 30, 2019 and 2018
(Dollars in Millions Except
Per Share Amounts) (Unaudited)
2019
Income Before Income
Taxes
Provision For Income
Taxes(1)
Net Income Including
Noncontrolling Interests
Net Income Attributable To
Colgate-Palmolive Company
Effective Income Tax
Rate(2)
Diluted Earnings Per
Share
As Reported GAAP
$
794
$
167
$
627
$
578
21.0
%
$
0.67
Global Growth and Efficiency Program
27
5
22
22
(0.1
)%
0.03
Acquisition costs
18
4
14
14
0.1
%
0.01
Non-GAAP
$
839
$
176
$
663
$
614
21.0
%
$
0.71
2018
Income Before Income
Taxes
Provision For Income
Taxes(1)
Net Income Including
Noncontrolling Interests
Net Income Attributable To
Colgate-Palmolive Company
Effective Income Tax
Rate(2)
Diluted Earnings Per
Share
As Reported GAAP
$
820
$
258
$
562
$
523
31.5
%
$
0.60
Global Growth and Efficiency Program
26
4
22
22
(0.5
)%
0.02
U.S. tax reform
—
(80
)
80
80
(9.5
)%
0.10
Non-GAAP
$
846
$
182
$
664
$
625
21.5
%
$
0.72
The impact of non-GAAP adjustments may not necessarily equal the
difference between “GAAP” and “non-GAAP” as a result of rounding.
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.
Table 9
Colgate-Palmolive
Company
Non-GAAP
Reconciliations
For the Nine Months Ended
September 30, 2019 and 2018
(Dollars in Millions Except
Per Share Amounts) (Unaudited)
Gross Profit
2019
2018
Gross profit, GAAP
$
6,911
$
6,978
Global Growth and Efficiency Program
9
19
Gross profit, non-GAAP
$
6,920
$
6,997
Basis Point
Gross Profit Margin
2019
2018
Change
Gross profit margin, GAAP
59.2
%
59.5
%
(30
)
Global Growth and Efficiency Program
0.1
%
0.1
%
Gross profit margin, non-GAAP
59.3
%
59.6
%
(30
)
Selling, General and Administrative
Expenses
2019
2018
Selling, general and administrative
expenses, GAAP
$
4,163
$
4,061
Global Growth and Efficiency Program
(42
)
(24
)
Selling, general and administrative
expenses, non-GAAP
$
4,121
$
4,037
Basis Point
Selling, General and Administrative
Expenses as a Percentage of Net Sales
2019
2018
Change
Selling, general and administrative
expenses as a percentage of Net sales, GAAP
35.6
%
34.6
%
100
Global Growth and Efficiency Program
(0.3
)%
(0.2
)%
Selling, general and administrative
expenses as a percentage of Net sales, non-GAAP
35.3
%
34.4
%
90
Other (Income) Expense, Net
2019
2018
Other (income) expense, net, GAAP
$
125
$
114
Global Growth and Efficiency Program
(43
)
(64
)
Acquisition costs
(18
)
—
Other (income) expense, net, non-GAAP
$
64
$
50
Operating Profit
2019
2018
% Change
Operating profit, GAAP
$
2,623
$
2,803
(6
)%
Global Growth and Efficiency Program
94
107
Acquisition costs
18
—
Operating profit, non-GAAP
$
2,735
$
2,910
(6
)%
Basis Point
Operating Profit Margin
2019
2018
Change
Operating profit margin, GAAP
22.5
%
23.9
%
(140
)
Global Growth and Efficiency Program
0.8
%
0.9
%
Acquisition costs
0.1
%
—
%
Operating profit margin, non-GAAP
23.4
%
24.8
%
(140
)
Non-Service Related Postretirement
Costs
2019
2018
Non-service related postretirement costs,
GAAP
$
79
$
65
Global Growth and Efficiency Program
(4
)
(8
)
Non-service related postretirement costs,
non-GAAP
$
75
$
57
Table 9
Continued
Colgate-Palmolive
Company
Non-GAAP
Reconciliations
For the Nine Months Ended
September 30, 2019 and 2018
(Dollars in Millions Except
Per Share Amounts) (Unaudited)
2019
Income Before Income
Taxes
Provision For Income
Taxes(1)
Net Income Including
Noncontrolling Interests
Net Income Attributable To
Colgate- Palmolive Company
Effective Income Tax
Rate(2)
Diluted Earnings Per
Share
As Reported GAAP
$
2,431
$
586
$
1,845
$
1,724
24.1
%
$
2.00
Global Growth and Efficiency Program
98
23
75
75
—
%
0.09
Acquisition costs
18
4
14
14
—
%
0.01
Non-GAAP
$
2,547
$
613
$
1,934
$
1,813
24.1
%
$
2.10
2018
Income Before Income
Taxes
Provision For Income
Taxes(1)
Net Income Including
Noncontrolling Interests
Less: Income Attributable To
Noncontrolling Interests
Net Income Attributable To
Colgate- Palmolive Company
Effective Income Tax
Rate(2)
Diluted Earnings Per
Share
As Reported GAAP
$
2,632
$
717
$
1,915
$
121
$
1,794
27.2
%
$
2.05
Global Growth and Efficiency Program
115
25
90
(3
)
93
(0.2
)%
0.11
Benefit from a foreign tax matter
—
15
(15
)
—
(15
)
0.5
%
(0.02
)
U.S. tax reform
—
(80
)
80
—
80
(2.9
)%
0.09
Non-GAAP
$
2,747
$
677
$
2,070
$
118
$
1,952
24.6
%
$
2.23
The impact of non-GAAP adjustments may not necessarily equal the
difference between “GAAP” and “non-GAAP” as a result of
rounding.
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.
View source
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