Net Sales +9%; Organic Sales +9%; Diluted Net
EPS $1.63, +20% vs. prior year Reported EPS; +19% vs. prior year
Core EPS UPDATES GAAP EPS GUIDANCE TO REFLECT DEBT RESTRUCTURING;
RAISES SALES, CORE EPS, ADJUSTED FREE CASH FLOW PRODUCTIVITY AND
CASH RETURN GUIDANCE
The Procter & Gamble Company (NYSE:PG) reported first
quarter fiscal year 2021 net sales of $19.3 billion, an increase of
nine percent versus the prior year. Excluding the net impacts of
foreign exchange, acquisitions and divestitures, organic sales also
increased nine percent. Diluted net earnings per share were $1.63,
an increase of 20% versus the prior year reported EPS and an
increase of 19% versus the prior year Core EPS. On a
currency-neutral basis, EPS increased 22% versus the prior year
core results.
Operating cash flow was $4.7 billion for the quarter. Adjusted
free cash flow productivity was 95%. The Company returned $4
billion of cash to shareholders via $2 billion of dividend payments
and $2 billion of common stock repurchases.
“We delivered another strong quarter of organic sales growth,
core earnings per share and cash returned to shareowners, enabling
us to increase our outlook for fiscal year results,” said David
Taylor, Chairman, President and Chief Executive Officer. “Our
near-term priorities continue to be employee health and safety,
maximizing availability of P&G products for consumers around
the world, and helping society meet the challenges of the COVID
crisis. We remain firmly focused on executing our strategies of
superiority, productivity, constructive disruption and improving
P&G’s organization and culture to deliver balanced top-line and
bottom-line growth along with strong cash generation.”
July - September Quarter Discussion
Net sales in the first quarter of fiscal year 2021 were $19.3
billion, a nine percent increase versus the prior year. Unfavorable
foreign exchange negatively impacted sales by one percentage point
for the quarter. Excluding the impacts of foreign exchange,
acquisitions and divestitures, organic sales also increased nine
percent, driven by a seven percent increase in organic shipment
volume, one percentage point of increased pricing and one
percentage point of positive mix impact. Positive mix was driven by
the disproportionate growth of premium home, health and hygiene
products and the North American business, driven in part by
pandemic-related consumption and inventory increases.
July - September
2020
Volume
Foreign
Exchange
Price
Mix
Other (2)
Net
Sales
Organic
Volume
Organic
Sales
Net Sales
Drivers (1)
Beauty
7%
(1)%
1%
—%
—%
7%
7%
7%
Grooming
5%
(2)%
2%
—%
—%
5%
5%
6%
Health Care
9%
(1)%
1%
2%
—%
11%
9%
12%
Fabric & Home Care
10%
—%
—%
4%
—%
14%
10%
14%
Baby, Feminine & Family Care
3%
(1)%
1%
—%
—%
3%
3%
4%
Total P&G
7%
(1)%
1%
1%
1%
9%
7%
9%
(1)
Net sales percentage changes are
approximations based on quantitative formulas that are consistently
applied.
(2)
Other includes the sales mix
impact from acquisitions and divestitures and rounding impacts
necessary to reconcile volume to net sales.
- Beauty segment organic sales increased seven percent versus
year ago. Skin and Personal Care organic sales increased high
single digits driven by innovation-led growth in North America and
Greater China. North America Skin and Personal Care grew mid-teens
behind the launch of Safeguard hand soap and hand sanitizer and
premium innovations on Olay. Globally, Personal Cleansing grew over
30%, with double digit growth in every region. Greater China SK-II
grew over 20% with strong domestic consumption trends. Hair Care
organic sales increased high single digits led by strong demand in
North America, Greater China and Latin America, with mid-single
digit growth or better across each of P&G’s top hair care
brands.
- Grooming segment organic sales increased six percent versus
year ago. Appliances organic sales increased more than 30% due to
innovation, increased demand for dry shaving and styling products,
and increased pricing. Shave Care organic sales were unchanged as
high single digit growth in female blades & razors was offset
by market softness in male blades & razors due to
pandemic-related consumption decline.
- Health Care segment organic sales increased 12% for the
quarter. Oral Care organic sales increased mid-teens globally, with
mid-single digit or better growth in each region driven by
innovation, currency devaluation-related price increases and
positive mix impacts. Personal Health Care organic sales increased
high single digits primarily due to innovation and increased
consumption, primarily in digestive and wellness.
- Fabric and Home Care segment organic sales increased 14% for
the quarter. Fabric Care organic sales increased high single digits
driven by high teens growth in the North America region through new
innovations, incremental brand communication, and disproportionate
growth of premium forms like laundry unit dose and fabric enhancer
beads. Home Care organic sales increased more than 30% driven by
increases in consumer demand for home cleaning products during the
pandemic, resulting in double digit growth in every region. Dish
Care, Air Care, and Surface Care each grew 20% or more.
- Baby, Feminine and Family Care segment organic sales increased
four percent versus year ago. Family Care organic sales increased
double digits primarily due to consumption increases driven by
consumers spending more time at home during the pandemic. Feminine
Care organic sales increased high single digits with innovation led
growth in North America and Greater China and more than 20% growth
in Adult Incontinence products. Baby Care organic sales decreased
low single digits as low single digit growth in the North American
region was more than offset by category contraction and increased
competitive activity in other regions.
Diluted net earnings per share were $1.63, a 20% increase versus
the prior year driven by the increase in net sales and an increase
in operating margin. Diluted net earnings per share grew 19% versus
the base period Core EPS due to non-core restructuring charges in
the base period. Currency-neutral net EPS increased 22% versus the
prior year core EPS.
Reported gross margin increased 170 basis points versus the
prior year reported gross margin. Reported gross margin increased
140 basis points versus the prior year core gross margin due to 30
basis points of non-core restructuring charges in the base period.
Unfavorable foreign exchange negatively impacted gross margin by 30
basis points. On a currency-neutral basis, reported gross margin
increased 170 basis points versus the prior year core gross margin
driven by 120 basis points of productivity savings, 70 basis points
help from lower commodity cost, 40 basis points of pricing benefit
and 20 basis points of fixed cost leverage, partially offset by 80
basis points of unfavorable product mix and other costs.
Selling, general and administrative expense (SG&A) as a
percentage of sales decreased 160 basis points on a reported basis
versus the prior year. SG&A as a percentage of sales decreased
170 basis points versus the prior year core SG&A due to lower
non-core restructuring charges in the base period. Unfavorable
foreign exchange negatively impacted SG&A by 10 basis points.
On a currency-neutral basis, reported SG&A as a percentage of
sales decreased 180 basis points versus the prior year core
SG&A as 230 basis points of sales leverage benefit and 110
basis points of savings from overhead and marketing expenses were
partially offset by 110 basis points of marketing reinvestments and
50 basis points of inflation and other impacts.
Operating profit margin increased approximately 320 basis points
versus the base period reported operating margin and increased 300
basis points versus the base period core operating margin.
Unfavorable foreign exchange negatively impacted operating margins
by 50 basis points. On a currency-neutral basis, reported operating
margin increased 350 basis points versus the prior year core
operating margin, including total productivity cost savings of 230
basis points for the quarter.
Fiscal Year 2021 Guidance
P&G raised its outlook for fiscal 2021 all-in sales growth
from a range of one to three percent to a range of three to four
percent versus the prior fiscal year. The revised range includes an
estimated one percent negative impact from foreign exchange. The
Company raised its outlook for organic sales growth from a range of
two to four percent to a range of four to five percent.
The Company said it now expects fiscal 2021 GAAP diluted net
earnings per share growth in a range of four to nine percent versus
fiscal 2020 GAAP EPS of $4.96. GAAP EPS guidance now includes
non-core charges in the range of $0.15 to $0.20 per share from the
early debt retirement project that was initiated earlier this
month. P&G raised guidance for core earnings per share growth
from a range of three to seven percent to a range of five to eight
percent versus fiscal 2020 core EPS of $5.12. The Company said its
current outlook includes headwinds of approximately $325 million
after-tax from foreign exchange impacts and $50 million after-tax
from higher freight costs. The outlook also includes an estimated
$150 million after tax headwind for the combined impacts of higher
interest expense and lower interest income. These headwinds should
be partially offset by approximately $175 million after-tax benefit
from lower commodity costs.
The Company is not able to reconcile its forward-looking
non-GAAP cash flow measure without unreasonable efforts because the
Company cannot predict the timing and amounts of discrete cash
items, such as acquisitions, divestitures, or impairments, which
could significantly impact GAAP results. The Company estimates
fiscal 2021 adjusted free cash flow productivity to be around
95%.
P&G expects to pay approximately $8 billion in dividends in
fiscal 2021. The Company increased its outlook for common stock
repurchase from a range of $6 billion to $8 billion to a range of
$7 billion to $9 billion in fiscal 2021. Combined, P&G now
plans to return $15 billion to $17 billion of cash to shareholders
in this fiscal year.
Forward-Looking Statements
Certain statements in this release or presentation, other than
purely historical information, including estimates, projections,
statements relating to our business plans, objectives, and expected
operating results, and the assumptions upon which those statements
are based, are “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995, Section 27A
of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements generally
are identified by the words “believe,” “project,” “expect,”
“anticipate,” “estimate,” “intend,” “strategy,” “future,”
“opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,”
“will continue,” “will likely result,” and similar expressions.
Forward-looking statements are based on current expectations and
assumptions, which are subject to risks and uncertainties that may
cause results to differ materially from those expressed or implied
in the forward-looking statements. We undertake no obligation to
update or revise publicly any forward-looking statements, whether
because of new information, future events or otherwise, except to
the extent required by law.
Risks and uncertainties to which our forward-looking statements
are subject include, without limitation: (1) the ability to
successfully manage global financial risks, including foreign
currency fluctuations, currency exchange or pricing controls and
localized volatility; (2) the ability to successfully manage local,
regional or global economic volatility, including reduced market
growth rates, and to generate sufficient income and cash flow to
allow the Company to affect the expected share repurchases and
dividend payments; (3) the ability to manage disruptions in credit
markets or changes to our credit rating; (4) the ability to
maintain key manufacturing and supply arrangements (including
execution of supply chain optimizations and sole supplier and sole
manufacturing plant arrangements) and to manage disruption of
business due to factors outside of our control, such as natural
disasters, acts of war or terrorism, or disease outbreaks; (5) the
ability to successfully manage cost fluctuations and pressures,
including prices of commodities and raw materials, and costs of
labor, transportation, energy, pension and healthcare; (6) the
ability to stay on the leading edge of innovation, obtain necessary
intellectual property protections and successfully respond to
changing consumer habits and technological advances attained by,
and patents granted to, competitors; (7) the ability to compete
with our local and global competitors in new and existing sales
channels, including by successfully responding to competitive
factors such as prices, promotional incentives and trade terms for
products; (8) the ability to manage and maintain key customer
relationships; (9) the ability to protect our reputation and brand
equity by successfully managing real or perceived issues, including
concerns about safety, quality, ingredients, efficacy or similar
matters that may arise; (10) the ability to successfully manage the
financial, legal, reputational and operational risk associated with
third-party relationships, such as our suppliers, contract
manufacturers, distributors, contractors and external business
partners; (11) the ability to rely on and maintain key company and
third party information and operational technology systems,
networks and services, and maintain the security and functionality
of such systems, networks and services and the data contained
therein; (12) the ability to successfully manage uncertainties
related to changing political conditions (including the United
Kingdom’s exit from the European Union) and potential implications
such as exchange rate fluctuations and market contraction; (13) the
ability to successfully manage regulatory and legal requirements
and matters (including, without limitation, those laws and
regulations involving product liability, product and packaging
composition, intellectual property, labor and employment,
antitrust, data protection, tax, environmental, and accounting and
financial reporting) and to resolve pending matters within current
estimates; (14) the ability to manage changes in applicable tax
laws and regulations including maintaining our intended tax
treatment of divestiture transactions; (15) the ability to
successfully manage our ongoing acquisition, divestiture and joint
venture activities, in each case to achieve the Company’s overall
business strategy and financial objectives, without impacting the
delivery of base business objectives; (16) the ability to
successfully achieve productivity improvements and cost savings and
manage ongoing organizational changes, while successfully
identifying, developing and retaining key employees, including in
key growth markets where the availability of skilled or experienced
employees may be limited; and (17) the ability to successfully
manage the demand, supply, and operational challenges associated
with a disease outbreak, including epidemics, pandemics, or similar
widespread public health concerns (including the novel coronavirus,
COVID-19, outbreak). For additional information concerning factors
that could cause actual results and events to differ materially
from those projected herein, please refer to our most recent
10-K/A, 10-Q and 8-K reports.
About Procter & Gamble
P&G serves consumers around the world with one of the
strongest portfolios of trusted, quality, leadership brands,
including Always®, Ambi Pur®, Ariel®, Bounty®, Charmin®, Crest®,
Dawn®, Downy®, Fairy®, Febreze®, Gain®, Gillette®, Head &
Shoulders®, Lenor®, Olay®, Oral-B®, Pampers®, Pantene®, SK-II®,
Tide®, Vicks®, and Whisper®. The P&G community includes
operations in approximately 70 countries worldwide. Please visit
http://www.pg.com for the latest news and information about P&G
and its brands.
THE PROCTER & GAMBLE
COMPANY AND SUBSIDIARIES
(Amounts in Millions Except
Per Share Amounts)
Consolidated Earnings
Information
Three Months Ended September
30
2020
2019
% Chg
NET SALES
$
19,318
$
17,798
9%
Cost of products sold
9,142
8,723
5%
GROSS PROFIT
10,176
9,075
12%
Selling, general and administrative
expense
4,895
4,785
2%
OPERATING INCOME
5,281
4,290
23%
Interest expense
(136
)
(108
)
26%
Interest income
10
58
(83)%
Other non-operating income, net
142
103
38%
EARNINGS BEFORE INCOME TAXES
5,297
4,343
22%
Income taxes
989
726
36%
NET EARNINGS
4,308
3,617
19%
Less: Net earnings attributable to
noncontrolling interests
31
24
29%
NET EARNINGS ATTRIBUTABLE TO PROCTER
& GAMBLE
$
4,277
$
3,593
19%
EFFECTIVE TAX RATE
18.7
%
16.7
%
NET EARNINGS PER SHARE (1)
Basic
$
1.69
$
1.41
20%
Diluted
$
1.63
$
1.36
20%
DIVIDENDS PER COMMON SHARE
$
0.7907
$
0.7459
DILUTED WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
2,625.3
2,647.5
COMPARISONS AS A % OF NET SALES
Basis Pt Chg
Gross profit
52.7
%
51.0
%
170
Selling, general and administrative
expense
25.3
%
26.9
%
(160)
Operating income
27.3
%
24.1
%
320
Earnings before income taxes
27.4
%
24.4
%
300
Net earnings
22.3
%
20.3
%
200
Net earnings attributable to Procter &
Gamble
22.1
%
20.2
%
190
(1)
Basic net earnings per share and
Diluted net earnings per share are calculated on Net earnings
attributable to Procter & Gamble.
THE PROCTER & GAMBLE
COMPANY AND SUBSIDIARIES
(Amounts in Millions)
Consolidated Earnings
Information
Three Months Ended September
30, 2020
Net Sales
% Change
Versus Year
Ago
Earnings/(Loss) Before
Income Taxes
% Change
Versus Year
Ago
Net Earnings
% Change
Versus Year
Ago
Beauty
$3,786
7%
$1,228
12%
$976
12%
Grooming
1,601
5%
426
—%
355
1%
Health Care
2,471
11%
679
26%
525
31%
Fabric & Home Care
6,644
14%
1,743
30%
1,349
31%
Baby, Feminine & Family Care
4,723
3%
1,318
16%
1,010
16%
Corporate
93
N/A
(97)
N/A
93
N/A
Total Company
$19,318
9%
$5,297
22%
$4,308
19%
Three Months Ended September
30, 2020
Net Sales
Drivers (1)
Volume
Organic
Volume
Foreign
Exchange
Price
Mix
Other (2)
Net Sales
Beauty
7%
7%
(1)%
1%
—%
—%
7%
Grooming
5%
5%
(2)%
2%
—%
—%
5%
Health Care
9%
9%
(1)%
1%
2%
—%
11%
Fabric & Home Care
10%
10%
—%
—%
4%
—%
14%
Baby, Feminine & Family Care
3%
3%
(1)%
1%
—%
—%
3%
Total Company
7%
7%
(1)%
1%
1%
1%
9%
(1)
Net sales percentage changes are
approximations based on quantitative formulas that are consistently
applied.
(2)
Other includes the sales mix
impact from acquisitions and divestitures and rounding impacts
necessary to reconcile volume to net sales.
THE PROCTER & GAMBLE
COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per
Share Amounts)
Consolidated Statements of
Cash Flows
Three Months Ended September
30
Amounts in
millions
2020
2019
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, BEGINNING OF PERIOD
$
16,181
$
4,239
OPERATING ACTIVITIES
Net earnings
4,308
3,617
Depreciation and amortization
671
723
Share-based compensation expense
89
110
Deferred income taxes
193
(586
)
Gain on sale of assets
(12
)
(2
)
Changes in:
Accounts receivable
(825
)
(261
)
Inventories
(137
)
(549
)
Accounts payable, accrued and other
liabilities
442
1,151
Other operating assets and liabilities
(30
)
(35
)
Other
40
1
TOTAL OPERATING ACTIVITIES
4,739
4,169
INVESTING ACTIVITIES
Capital expenditures
(850
)
(1,079
)
Proceeds from asset sales
21
6
Proceeds from sales and maturities of
investment securities
—
6,151
Change in other investments
—
1
TOTAL INVESTING ACTIVITIES
(829
)
5,079
FINANCING ACTIVITIES
Dividends to shareholders
(2,030
)
(1,932
)
Reductions in short-term debt
(3,568
)
(61
)
Reductions to long-term debt
(25
)
—
Treasury stock purchases
(2,000
)
(3,000
)
Impact of stock options and other
893
875
TOTAL FINANCING ACTIVITIES
(6,730
)
(4,118
)
EFFECT OF EXCHANGE RATE CHANGES ON
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
31
(65
)
CHANGE IN CASH, CASH EQUIVALENTS AND
RESTRICTED CASH
(2,789
)
5,065
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, END OF PERIOD
$
13,392
$
9,304
THE PROCTER & GAMBLE
COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per
Share Amounts)
Condensed Consolidated Balance
Sheets
September 30, 2020
June 30, 2020
Cash and cash equivalents
$
13,392
$
16,181
Accounts receivable
5,043
4,178
Inventories
5,707
5,498
Prepaid expenses and other current
assets
1,884
2,130
TOTAL CURRENT ASSETS
26,026
27,987
Property, plant and equipment, net
20,876
20,692
Goodwill
40,569
39,901
Trademarks and other intangible assets,
net
23,814
23,792
Other noncurrent assets
8,614
8,328
TOTAL ASSETS
$
119,899
$
120,700
Accounts payable
$
11,935
$
12,071
Accrued and other liabilities
10,366
9,722
Debt due within one year
7,707
11,183
TOTAL CURRENT LIABILITIES
30,008
32,976
Long-term debt
23,948
23,537
Deferred income taxes
6,294
6,199
Other noncurrent liabilities
11,073
11,110
TOTAL LIABILITIES
71,323
73,822
TOTAL SHAREHOLDERS' EQUITY
48,576
46,878
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
$
119,899
$
120,700
The Procter & Gamble Company
Exhibit 1: Non-GAAP Measures
The following provides definitions of the non-GAAP measures used
in Procter & Gamble's October 20, 2020 earnings release and the
reconciliation to the most closely related GAAP measures. We
believe that these measures provide useful perspective on
underlying business results and trends (i.e., trends excluding
non-recurring or unusual items) and provide a supplemental measure
of year-on-year results. The non-GAAP measures described below are
used by management in making operating decisions, allocating
financial resources and for business strategy purposes. These
measures may be useful to investors as they provide supplemental
information about business performance and provide investors a view
of our business results through the eyes of management. These
measures are also used to evaluate senior management and are a
factor in determining their at-risk compensation. These non-GAAP
measures are not intended to be considered by the user in place of
the related GAAP measure, but rather as supplemental information to
our business results. These non-GAAP measures may not be the same
as similar measures used by other companies due to possible
differences in method and in the items or events being
adjusted.
The Core earnings measures included in the following
reconciliation tables refer to the equivalent GAAP measures
adjusted as applicable for the following item:
Incremental Restructuring: The
Company has historically had an ongoing level of restructuring
activities. Such activities have resulted in ongoing annual
restructuring related charges of approximately $250 - $500 million
before tax. Since 2012, the Company has had a strategic
productivity and cost savings initiative that resulted in
incremental restructuring charges. The adjustment to Core earnings
includes only the restructuring costs above what we believe are the
normal recurring level of restructuring costs. In fiscal 2021 and
onwards, the Company expects to incur restructuring costs within
our historical ongoing level.
We do not view the above item to be part of our sustainable
results and its exclusion from Core earnings measures provides a
more comparable measure of year-on-year results. This item is also
excluded when evaluating senior management in determining their
at-risk compensation.
Organic sales growth: Organic sales
growth is a non-GAAP measure of sales growth excluding the impacts
of acquisitions and divestitures and foreign exchange from
year-over-year comparisons. We believe this measure provides
investors with a supplemental understanding of underlying sales
trends by providing sales growth on a consistent basis. This
measure is used in assessing achievement of management goals for
at-risk compensation.
Core operating profit margin: Core
operating profit margin is a measure of the Company's operating
margin adjusted for items as indicated. Management believes this
non-GAAP measure provides a supplemental perspective to the
Company’s operating efficiency over time.
Core gross margin: Core gross
margin is a measure of the Company's gross margin adjusted for
items as indicated. Management believes this non-GAAP measure
provides a supplemental perspective to the Company’s operating
efficiency over time.
Core selling, general and administrative
(SG&A) expense as a percentage of net sales: Core
SG&A expense as a percentage of net sales is a measure of the
Company's selling, general and administrative expenses adjusted for
items as indicated. Management believes this non-GAAP measure
provides a supplemental perspective to the Company’s operating
efficiency over time.
Core EPS: Core earnings per share,
or Core EPS, is a measure of the Company's diluted net earnings per
share adjusted as indicated. Management views this non-GAAP measure
as a useful supplemental measure of Company performance over time.
This measure is also used when evaluating senior management in
determining their at-risk compensation.
Currency-neutral net EPS growth:
Currency-neutral net EPS growth is a measure of the Company's EPS
growth versus the prior period Core EPS excluding the incremental
current year impact of foreign exchange. Management views this
non-GAAP measure as useful supplemental measures of Company
performance over time.
Adjusted free cash flow: Adjusted
free cash flow is defined as operating cash flow less capital
spending and adjustment for the transitional tax resulting from the
U.S. Tax Act (the Company incurred a transitional tax liability of
approximately $3.8 billion from the U.S. Tax Act, which is payable
over a period of 8 years). Adjusted free cash flow represents the
cash that the Company is able to generate after taking into account
planned maintenance and asset expansion. Management views adjusted
free cash flow as an important measure because it is one factor
used in determining the amount of cash available for dividends,
share repurchases, acquisitions and other discretionary
investments.
Adjusted free cash flow
productivity: Adjusted free cash flow productivity is
defined as the ratio of adjusted free cash flow to net earnings.
Management views adjusted free cash flow productivity as a useful
measure to help investors understand P&G’s ability to generate
cash. Adjusted free cash flow productivity is used by management in
making operating decisions, allocating financial resources and for
budget planning purposes. This measure is also used in assessing
the achievement of management goals for at-risk compensation. The
Company's long-term target is to generate annual adjusted free cash
flow productivity at or above 90 percent.
THE PROCTER & GAMBLE COMPANY
AND SUBSIDIARIES (Amounts in Millions Except Per Share Amounts)
Reconciliation of Non-GAAP Measures
Three Months Ended
September 30, 2020
Three Months Ended September
30, 2019
AS REPORTED
(GAAP)
AS REPORTED
(GAAP)
INCREMENTAL
RESTRUCTURING (2)
ROUNDING
NON-GAAP (CORE)
COST OF PRODUCTS SOLD
$
9,142
$
8,723
$
(52
)
$
—
$
8,671
GROSS PROFIT
10,176
9,075
52
—
9,127
GROSS MARGIN
52.7
%
51.0
%
0.3
%
—
%
51.3
%
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSE
4,895
4,785
22
—
4,807
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSE AS A % OF NET SALES
25.3
%
26.9
%
0.1
%
—
%
27.0
%
OPERATING INCOME
5,281
4,290
30
—
4,320
OPERATING PROFIT MARGIN
27.3
%
24.1
%
0.2
%
—
%
24.3
%
NET EARNINGS ATTRIBUTABLE TO
P&G
4,277
3,593
31
(1
)
3,623
DILUTED NET EARNINGS PER COMMON SHARE
(1)
$
1.63
$
1.36
$
0.01
$
—
$
1.37
CURRENCY IMPACT TO EARNINGS
$
0.04
CURRENCY-NEUTRAL EPS
$
1.67
DILUTED WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
2,625.3
2,647.5
COMMON SHARES OUTSTANDING - SEPTEMBER
30, 2020
2,479.6
(1)
Diluted net earnings per share
are calculated on Net earnings attributable to Procter &
Gamble.
(2)
While total restructuring costs
exceeded the historical ongoing level, total restructuring costs
included within SG&A for this period were below the historical
ongoing level. Accordingly, the non-GAAP adjustment for the
SG&A line item adds costs to the comparable GAAP number.
CHANGE IN CURRENT YEAR REPORTED (GAAP)
MEASURES VERSUS PRIOR YEAR NON-GAAP (CORE) MEASURES (1)
GROSS MARGIN
140
BPS
SELLING GENERAL & ADMINISTRATIVE
EXPENSE AS A % OF NET SALES
(170
)
BPS
OPERATING PROFIT MARGIN
300
BPS
EPS
19
%
CURRENCY-NEUTRAL EPS
22
%
(1)
Change versus year ago is
calculated based on As Reported (GAAP) values for the three months
ended September 30, 2020 versus the Non-GAAP (Core) values for the
three months ended September 30, 2019.
Organic sales growth:
July - September
2020
Net
Sales Growth
Foreign
Exchange
Impact
Acquisition &
Divestiture
Impact/Other (1)
Organic
Sales
Growth
Beauty
7%
1%
(1)%
7%
Grooming
5%
2%
(1)%
6%
Health Care
11%
1%
—%
12%
Fabric & Home Care
14%
—%
—%
14%
Baby, Feminine & Family Care
3%
1%
—%
4%
Total P&G
9%
1%
(1)%
9%
(1)
Includes rounding impacts
necessary to reconcile net sales to organic sales.
Total
P&G
Net
Sales Growth
Combined
Foreign Exchange &
Acquisition/Divestiture Impact/Other (1)
Organic
Sales
Growth
FY 2021
(Estimate)
+3% to +4%
+1%
+4% to +5%
(1)
Includes rounding impacts
necessary to reconcile net sales to organic sales.
Core EPS growth:
Total
P&G
Diluted
EPS
Growth
Impact
of Incremental Non-Core Items (1)
Core EPS
Growth
FY 2021
(Estimate)
+4% to +9%
(1)% to +1%
+5% to +8%
(1)
Includes impact of prior year
incremental non-core restructuring charges and early debt
extinguishment charges expected in FY2021.
Adjusted free cash flow (dollar amounts in
millions):
Three Months Ended September
30, 2020
Operating Cash Flow
Capital
Spending
U.S. Tax
Act Payments
Adjusted
Free Cash Flow
$4,739
$(850)
$225
$4,114
Adjusted free cash flow productivity
(dollar amounts in millions):
Three Months Ended September
30, 2020
Adjusted
Free Cash Flow
Net
Earnings
Adjusted
Free Cash Flow Productivity
$4,114
$4,308
95%
Cat: PG-IR
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201020005617/en/
P&G Media Contacts:
Damon Jones, 513.983.0190 Jennifer Corso, 513.983.2570
P&G Investor Relations
Contact: John Chevalier, 513.983.9974
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