Net Sales +5%; Organic
Sales +6%; Diluted Net EPS $1.12, +8%; Core EPS $1.17,
+10%
ADJUSTS ALL-IN SALES OUTLOOK FOR FOREIGN
EXCHANGE; MAINTAINS GUIDANCE FOR ORGANIC SALES, EARNINGS, ADJUSTED
FREE CASH FLOW PRODUCTIVITY
The Procter & Gamble Company (NYSE:PG) reported third
quarter fiscal year 2020 net sales of $17.2 billion, an increase of
five percent versus the prior year. Excluding the net impacts of
foreign exchange, acquisitions and divestitures, organic sales
increased six percent. Diluted net earnings per share were $1.12,
an eight percent increase versus the prior year. Core earnings per
share increased 10% to $1.17. Currency-neutral core EPS increased
15% versus the prior year.
Operating cash flow was $4.1 billion for the quarter. Free cash
flow productivity was 113%. The Company returned $2.8 billion of
cash to shareholders through $1.9 billion in dividend payments and
$900 million of common stock repurchases in the third quarter. Over
the last 10 years, P&G has returned over $120 billion to
shareholders in cash dividends and stock repurchase. Earlier this
week, P&G announced a 6% increase in the quarterly dividend,
marking the 64th consecutive year the Company has increased its
dividend. P&G has been paying a dividend for 130 consecutive
years, since its incorporation in 1890.
“The strong results we delivered this quarter are a direct
reflection of the integral role our products play in meeting the
daily health, hygiene and cleaning needs of consumers around the
world,” said David Taylor, Chairman, President and Chief Executive
Officer. “Our organization has been doing a terrific job against
our near-term priorities – protecting the health and safety of each
other, maximizing availability of P&G products to meet
heightened consumer need and helping society meet and overcome the
challenges of this crisis.”
January - March Quarter Discussion
Net sales in the third quarter of fiscal year 2020 were $17.2
billion, up five percent versus the prior year. Unfavorable foreign
exchange negatively impacted sales by two percentage points for the
quarter. Excluding the impacts of foreign exchange, acquisitions
and divestitures, organic sales increased six percent driven
primarily by an increase in organic shipment volume. Organic
shipment volume increased six percent as strong consumer demand in
North America and certain European markets due to the COVID-19
pandemic was partially offset by volume decreases in certain Asian
markets due primarily to temporary disruption of consumer access to
retail markets related to the COVID-19 pandemic. Increased pricing
contributed one percent to net sales. Mix was neutral to net sales
growth.
January - March
2020
Volume
Foreign
Exchange
Price
Mix
Other (2)
Net
Sales
Organic
Volume
Organic
Sales
Net Sales
Drivers (1)
Beauty
1%
(2)%
2%
(2)%
—%
(1)%
1%
1%
Grooming
—%
(3)%
2%
(2)%
—%
(3)%
—%
(1)%
Health Care
7%
(2)%
1%
1%
—%
7%
7%
9%
Fabric & Home Care
8%
(1)%
—%
1%
—%
8%
8%
10%
Baby, Feminine & Family Care
7%
(1)%
—%
—%
—%
6%
7%
7%
Total P&G
6%
(2)%
1%
—%
—%
5%
6%
6%
(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 one percent versus year
ago. Skin and Personal Care organic sales increased low single
digits driven by innovation, increased pricing and increased
marketing spending, partially offset by negative product mix, due
to the double digits decline of the super-premium SK-II brand
caused by the temporary disruption of retail markets across Asia
and a sharp reduction in travel retail sales. Hair Care organic
sales increased low single digits driven by innovation related
price increases, partially offset by double digit volume decreases
in China due primarily to the temporary disruption of retail
markets.
- Grooming segment organic sales decreased one percent versus
year ago. Shave Care organic sales decreased low single digits
driven by negative mix due to the disproportionate decline in North
America which has higher than segment average selling prices,
partially offset by devaluation-driven price increases. Appliances
organic sales increased high single digits primarily due to
positive mix from the disproportionate growth of premium
products.
- Health Care segment organic sales increased nine percent. Oral
Care organic sales increased mid-single digits primarily due to
innovation, market growth, increased pricing and positive mix
driven by the disproportionate growth of premium products,
partially offset by reduced volumes in China primarily due to the
temporary disruption of retail markets. Personal Health Care
organic sales increased high teens primarily due to innovation,
increased consumer demand, increased marketing spending, increased
pricing and positive mix due to the disproportionate growth of the
North America region which has higher than segment average selling
prices.
- Fabric and Home Care segment organic sales increased 10% for
the quarter. Fabric Care organic sales increased high single digits
driven by innovation, market growth, increased consumer demand in
North America and Europe and positive mix due to the
disproportionate growth of premium products. Home Care organic
sales increased mid-teens driven by innovation, increased demand in
North America and Europe and positive mix due to the
disproportionate growth of premium products.
- Baby, Feminine and Family Care segment organic sales increased
seven percent versus year ago. Baby Care organic sales increased
low single digits driven by increased demand in certain markets and
positive mix due to the disproportionate growth of premium
products, partially offset by reduced volumes in China primarily
due to the temporary disruption of retail markets. Feminine Care
organic sales increased high single digits driven by innovation,
increased marketing spending, increased pricing and positive
product mix due to the disproportionate growth of premium products.
Family Care organic sales increased double digits driven by a sharp
increase in consumer demand, partially offset by unfavorable mix
due to the disproportionate growth of large sizes and club
channels.
Diluted net earnings per share were $1.12, an eight percent
increase versus the prior year, driven primarily by the increase in
net sales and an increase in operating margin. Core earnings per
share were $1.17, a 10% increase versus the prior year, due to
higher non-core restructuring charges versus the prior year.
Currency-neutral core earnings per share increased 15% for the
quarter.
Reported gross margin increased 60 basis points, including a 60
basis-point hurt from higher non-core restructuring charges versus
the prior year. Core gross margin increased 120 basis points versus
the prior year, including 10 basis points of negative foreign
exchange impacts. On a currency-neutral basis, core gross margin
increased 130 basis points driven by 170 basis points of gross
productivity savings, 100 basis points from commodity cost
decreases and 40 basis points of pricing benefit, partially offset
by 180 basis points of unfavorable product mix and other
impacts.
Selling, general and administrative expense (SG&A) as a
percentage of sales increased 10 basis points on a reported basis
versus the prior year, including a 10 basis-point help from a
year-on-year reduction in non-core restructuring charges. Core
SG&A as a percentage of sales increased 20 basis points versus
the prior year, including approximately 70 basis points of negative
foreign exchange impacts. On a currency-neutral basis, core
SG&A as a percentage of sales decreased 50 basis points as 180
basis points of sales leverage benefit and 70 basis points of
savings from overhead and marketing expenses were partially offset
by 190 basis points of increased marketing investments and 10 basis
points of inflation and other impacts.
Operating profit margin increased 50 basis points versus the
base period on a reported basis, including 50 basis points hurt
from higher non-core restructuring charges. Core operating margin
increased 100 basis points including approximately 80 basis points
of negative foreign exchange impacts. On a currency-neutral basis,
core operating margin increased 180 basis points including total
productivity cost savings of 240 basis points.
Fiscal Year 2020 Guidance
The Company adjusted its outlook for fiscal 2020 all-in sales
growth, from a range of four to five percent growth to a range of
three to four percent growth versus the prior year, to reflect
stronger headwinds from foreign exchange. The revised growth
estimate includes a negative two percentage point impact from
foreign exchange, partially offset by a modest positive impact from
acquisitions and divestitures. The Company maintained its guidance
for organic sales growth in the range of four to five percent.
The Company maintained its guidance range for fiscal 2020 all-in
GAAP diluted net earnings per share growth at 235% to 245%, noting
that the comparison period is significantly depressed by the
Gillette Shave Care impairment charges in fiscal 2019. P&G also
maintained its fiscal 2020 guidance for core earnings per share
growth at the range of eight to eleven percent growth versus fiscal
2019.
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 maintained its
estimate for fiscal 2020 adjusted free cash flow productivity at
100%.
The Company expects to pay over $7.5 billion in dividends and
repurchase $7 billion to $8 billion of common shares in fiscal
2020.
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 effect 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 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, 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 March
31
2020
2019
% Chg
NET SALES
$
17,214
$
16,462
5%
Cost of products sold
8,716
8,427
3%
GROSS PROFIT
8,498
8,035
6%
Selling, general and administrative
expense
5,045
4,806
5%
OPERATING INCOME
3,453
3,229
7%
Interest expense
(100
)
(131
)
(24)%
Interest income
39
52
(25)%
Other non-operating income, net
106
128
(17)%
EARNINGS BEFORE INCOME TAXES
3,498
3,278
7%
Income taxes
541
502
8%
NET EARNINGS
2,957
2,776
7%
Less: Net earnings attributable to
noncontrolling interests
40
31
29%
NET EARNINGS ATTRIBUTABLE TO PROCTER
& GAMBLE
$
2,917
$
2,745
6%
EFFECTIVE TAX RATE
15.5
%
15.3
%
NET EARNINGS PER SHARE (1)
Basic
$
1.15
$
1.07
7%
Diluted
$
1.12
$
1.04
8%
DIVIDENDS PER COMMON SHARE
$
0.7459
$
0.7172
DILUTED WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
2,613.3
2,637.7
COMPARISONS AS A % OF NET SALES
Basis Pt Chg
Gross profit
49.4%
48.8%
60
Selling, general and administrative
expense
29.3%
29.2%
10
Operating income
20.1%
19.6%
50
Earnings before income taxes
20.3%
19.9%
40
Net earnings
17.2%
16.9%
30
Net earnings attributable to Procter &
Gamble
16.9%
16.7%
20
(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 March 31,
2020
Net Sales
% Change
Versus Year
Ago
Earnings/(Loss) Before
Income Taxes
% Change
Versus Year
Ago
Net Earnings
% Change
Versus Year
Ago
Beauty
$3,033
(1)%
$553
(18)%
$436
(21)%
Grooming
1,380
(3)%
305
(7)%
254
(26)%
Health Care
2,262
7%
523
13%
408
14%
Fabric & Home Care
5,826
8%
1,271
14%
957
13%
Baby, Feminine & Family Care
4,597
6%
1,130
31%
859
32%
Corporate
116
N/A
(284)
N/A
43
N/A
Total Company
$17,214
5%
$3,498
7%
$2,957
7%
Three Months Ended March 31,
2020
Net Sales Drivers (1)
Volume
Organic
Volume
Foreign
Exchange
Price
Mix
Other (2)
Net Sales
Beauty
1%
1%
(2)%
2%
(2)%
—%
(1)%
Grooming
—%
—%
(3)%
2%
(2)%
—%
(3)%
Health Care
7%
7%
(2)%
1%
1%
—%
7%
Fabric & Home Care
8%
8%
(1)%
—%
1%
—%
8%
Baby, Feminine & Family Care
7%
7%
(1)%
—%
—%
—%
6%
Total Company
6%
6%
(2)%
1%
—%
—%
5%
(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
Nine Months Ended March
31
Amounts in
millions
2020
2019
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, BEGINNING OF PERIOD
$
4,239
$
2,569
OPERATING ACTIVITIES
Net earnings
10,317
9,203
Depreciation and amortization
2,199
2,004
Share-based compensation expense
325
299
Deferred income taxes
(588
)
(24
)
Loss (gain) on sale of assets
11
(370
)
Changes in:
Accounts receivable
135
(549
)
Inventories
(533
)
(601
)
Accounts payable, accrued and other
liabilities
738
1,441
Other operating assets and liabilities
(58
)
(537
)
Other
51
225
TOTAL OPERATING ACTIVITIES
12,597
11,091
INVESTING ACTIVITIES
Capital expenditures
(2,415
)
(2,533
)
Proceeds from asset sales
28
22
Acquisitions, net of cash acquired
(58
)
(3,943
)
Purchases of short-term investments
—
(159
)
Proceeds from sales and maturities of
investment securities
6,151
2,535
Change in other investments
(2
)
(59
)
TOTAL INVESTING ACTIVITIES
3,704
(4,137
)
FINANCING ACTIVITIES
Dividends to shareholders
(5,761
)
(5,561
)
Increases/(reductions) in short-term
debt
3,020
(1,832
)
Additions to long-term debt
4,951
2,368
Reductions of long-term debt
(1,534
)
(1,002
)
Treasury stock purchases
(7,405
)
(3,253
)
Impact of stock options and other
1,761
2,590
TOTAL FINANCING ACTIVITIES
(4,968
)
(6,690
)
EFFECT OF EXCHANGE RATE CHANGES ON
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
(179
)
(95
)
CHANGE IN CASH, CASH EQUIVALENTS AND
RESTRICTED CASH
11,154
169
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, END OF PERIOD
$
15,393
$
2,738
THE PROCTER & GAMBLE
COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per
Share Amounts)
Condensed Consolidated Balance
Sheets
March 31, 2020
June 30, 2019
Cash and cash equivalents
$
15,393
$
4,239
Available-for-sale investment
securities
—
6,048
Accounts receivable
4,640
4,951
Inventories
5,330
5,017
Prepaid expenses and other current
assets
1,777
2,218
TOTAL CURRENT ASSETS
27,140
22,473
Property, plant and equipment, net
20,459
21,271
Goodwill
39,617
40,273
Trademarks and other intangible assets,
net
23,834
24,215
Other noncurrent assets
7,510
6,863
TOTAL ASSETS
$
118,560
$
115,095
Accounts payable
$
10,464
$
11,260
Accrued and other liabilities
9,731
9,054
Debt due within one year
12,701
9,697
TOTAL CURRENT LIABILITIES
32,896
30,011
Long-term debt
23,310
20,395
Deferred income taxes
6,309
6,899
Other noncurrent liabilities
10,104
10,211
TOTAL LIABILITIES
72,619
67,516
TOTAL SHAREHOLDERS' EQUITY
45,941
47,579
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
$
118,560
$
115,095
The Procter & Gamble Company
Exhibit 1: Non-GAAP Measures
The following provides definitions of the non-GAAP measures used
in Procter & Gamble's April 17, 2020 earnings release and the
reconciliation to the most closely related GAAP measure. 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 had and continues to have an ongoing level of
restructuring activities. Such activities have resulted in ongoing
annual restructuring related charges of approximately $250 - $500
million before tax. In 2012, the Company began a $10 billion
strategic productivity and cost savings initiative that included
incremental restructuring activities. In 2017, we communicated
details of an additional multi-year productivity and cost savings
plan. This results in incremental restructuring charges to
accelerate productivity efforts and cost savings. The adjustment to
Core earnings includes only the restructuring costs above what we
believe are the normal recurring level of restructuring costs.
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 and currency-neutral Core
EPS: Core earnings per share, or Core EPS, is a measure of
the Company's diluted net earnings per share adjusted as indicated.
Currency-neutral Core EPS is a measure of the Company's Core EPS
excluding the incremental current year impact of foreign exchange.
Management views these non-GAAP measures as useful supplemental
measures of Company performance over time. These measures are also
used when evaluating senior management in determining their at-risk
compensation.
Free cash flow: Free cash flow is
defined as operating cash flow less capital spending. Free cash
flow represents the cash that the Company is able to generate after
taking into account planned maintenance and asset expansion.
Management views 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.
Free cash flow productivity: Free
cash flow productivity is defined as the ratio of free cash flow to
net earnings. Management views free cash flow productivity as a
useful measure to help investors understand P&G’s ability to
generate cash. 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 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 March 31,
2020
AS REPORTED
(GAAP)
INCREMENTAL
RESTRUCTURING (2)
ROUNDING
NON-GAAP (CORE)
COST OF PRODUCTS SOLD
$
8,716
$
(179)
—
8,537
GROSS PROFIT
8,498
179
—
8,677
GROSS MARGIN
49.4
%
1.0
%
—
%
50.4
%
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSE
5,045
26
—
5,071
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSE AS A % OF NET SALES
29.3
%
0.2
%
—
%
29.5
%
OPERATING INCOME
3,453
153
—
3,606
OPERATING PROFIT MARGIN
20.1
%
0.9
%
(0.1)
%
20.9
%
NET EARNINGS ATTRIBUTABLE TO
P&G
2,917
141
—
3,058
Core EPS
DILUTED NET EARNINGS PER COMMON SHARE
(1)
$
1.12
$
0.05
$
—
$
1.17
CURRENCY IMPACT TO CORE
EARNINGS
0.05
CURRENCY-NEUTRAL CORE EPS
$
1.22
DILUTED WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
2,613.3
COMMON SHARES OUTSTANDING - MARCH 31,
2020
2,475.6
(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 VERSUS YEAR AGO
CORE GROSS MARGIN
120
BPS
CORE SELLING GENERAL & ADMINISTRATIVE
EXPENSE AS A % OF NET SALES
20
BPS
CORE OPERATING PROFIT MARGIN
100
BPS
CORE EPS
10
%
CURRENCY-NEUTRAL CORE EPS
15
%
THE PROCTER & GAMBLE COMPANY
AND SUBSIDIARIES (Amounts in Millions Except Per Share Amounts)
Reconciliation of Non-GAAP Measures
Three Months Ended March 31,
2019
AS REPORTED
(GAAP)
INCREMENTAL
RESTRUCTURING (2)
ROUNDING
NON-GAAP (CORE)
COST OF PRODUCTS SOLD
$
8,427
(65
)
—
8,362
GROSS PROFIT
8,035
65
—
8,100
GROSS MARGIN
48.8
%
0.4
%
—
%
49.2
%
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSE
4,806
18
(1)
4,823
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSE AS A % OF NET SALES
29.2
%
0.1
%
—
%
29.3
%
OPERATING INCOME
3,229
47
1
3,277
OPERATING PROFIT MARGIN
19.6
%
0.3
%
—
%
19.9
%
NET EARNINGS ATTRIBUTABLE TO
P&G
2,745
44
—
2,789
Core EPS:
DILUTED NET EARNINGS PER COMMON SHARE
(1)
$
1.04
$
0.02
$
—
$
1.06
DILUTED WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
2,637.7
(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.
Organic sales growth:
January - March
2020
Net
Sales Growth
Foreign
Exchange
Impact
Acquisition &
Divestiture
Impact/Other (1)
Organic
Sales
Growth
Beauty
(1)%
2%
—%
1%
Grooming
(3)%
3%
(1)%
(1)%
Health Care
7%
2%
—%
9%
Fabric & Home Care
8%
1%
1%
10%
Baby, Feminine & Family Care
6%
1%
—%
7%
Total P&G
5%
2%
(1)%
6%
Total
P&G
Net
Sales Growth
Combined
Foreign Exchange &
Acquisition/Divestiture Impact/Other (1)
Organic
Sales
Growth
FY 2020
(Estimate)
+3% to +4%
+1%
+4% to +5%
(1)
Includes rounding impacts necessary to reconcile net sales to
organic sales.
Core EPS:
Total
P&G
Diluted
EPS
Growth
Impact
of Incremental Non-Core Items (1)
Core EPS
Growth
FY 2020
(Estimate)
+235% to +245%
(227)% to (234)%
+8% to +11%
(1)
Includes the gain on the dissolution of the PGT Healthcare
partnership and Shave Care impairment in fiscal 2019 and
year-over-year changes in incremental non-core restructuring
charges.
Free cash flow (dollar amounts in
millions):
Three Months Ended March 31,
2020
Operating Cash Flow
Capital
Spending
Free
Cash Flow
$4,064
$(731)
$3,333
Free cash flow productivity (dollar
amounts in millions):
Three Months Ended March 31,
2020
Free
Cash Flow
Net
Earnings
Free
Cash Flow Productivity
$3,333
$2,957
113%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200417005199/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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