Net Sales +8%; Organic
Sales +8%; Diluted Net EPS $1.47, +4%
vs. prior year; Core EPS $1.64, +15% vs. prior year
RAISES SALES, EARNINGS, ADJUSTED FREE CASH
FLOW PRODUCTIVITY AND CASH RETURN GUIDANCE
The Procter & Gamble Company (NYSE:PG) reported second
quarter fiscal year 2021 net sales of $19.7 billion, an increase of
eight percent versus the prior year. Excluding the net impacts of
foreign exchange, acquisitions and divestitures, organic sales also
increased eight percent. Diluted net earnings per share were $1.47,
an increase of four percent versus the prior year. Core EPS was
$1.64, an increase of 15% versus the prior year. Currency-neutral
core EPS increased 18% versus the prior year.
Operating cash flow was $5.4 billion for the quarter. Adjusted
free cash flow productivity was 113%. The Company returned $5
billion of cash to shareholders via $2 billion of dividend payments
and $3 billion of common stock repurchases.
“We delivered another strong quarter of results across all key
measures – top line, bottom line and cash,” said David Taylor,
Chairman, President and Chief Executive Officer. “We remain focused
on executing our strategies of superiority, productivity,
constructive disruption and improving P&G’s organization and
culture. These strategies enabled us to build strong business
momentum before the COVID crisis, accelerated our progress in
calendar year 2020 and remain the right strategies to deliver
balanced growth and value creation over the long term.”
October - December Quarter Discussion
Net sales in the second quarter of fiscal year 2021 were $19.7
billion, an eight percent increase versus the prior year. Organic
sales, which excludes the impacts of foreign exchange, acquisitions
and divestitures, also increased eight percent, driven by a five
percent increase in shipment volume, one percentage point of
increased pricing and two percentage points of positive mix impact.
Positive mix was driven by the disproportionate growth of the
higher-priced Home Care and Appliances categories and the North
America region. Foreign exchange had no net impact to net sales for
the quarter.
October -
December 2020
Volume
Foreign
Exchange
Price
Mix
Other (2)
Net
Sales
Organic
Volume
Organic
Sales
Net Sales
Drivers (1)
Beauty
2%
1%
2%
1%
—%
6%
2%
5%
Grooming
4%
(1)%
1%
1%
—%
5%
4%
6%
Health Care
4%
—%
1%
4%
—%
9%
4%
9%
Fabric & Home Care
7%
—%
1%
4%
—%
12%
7%
12%
Baby, Feminine & Family Care
4%
—%
2%
—%
—%
6%
4%
6%
Total P&G
5%
—%
1%
2%
—%
8%
5%
8%
(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 five percent versus year
ago. Skin and Personal Care organic sales increased mid-single
digits primarily driven by innovation, increased pricing and
positive mix impact of premium Olay Skin Care and Safeguard hand
soap and hand sanitizer launches. Hair Care organic sales increased
mid-single digits led by strong demand and retail execution in
Greater China and increased pricing.
- Grooming segment organic sales increased six percent versus
year ago. Appliances organic sales increased more than 20% due to
increased demand for at-home shaving and styling products and
innovation. Shave Care organic sales increased low single digits
driven by innovation and devaluation-related pricing, partially
offset by category contraction due to the pandemic and negative
geographic mix impact.
- Health Care segment organic sales increased nine percent for
the quarter. Oral Care organic sales increased double digits, with
high single digits or higher growth in each region driven by
innovation and positive mix impacts from the disproportionate
growth of premium products. Personal Health Care organic sales
increased mid-single digits primarily due to innovation, increased
consumption, and increased pricing, partially offset by negative
mix due to a decline in the sales of respiratory products driven by
a lower than average incidence of cough, cold and flu this
season.
- Fabric and Home Care segment organic sales increased 12% for
the quarter. Fabric Care organic sales increased high single digits
driven by innovations, incremental marketing spending, the
disproportionate growth of premium forms like laundry unit dose and
fabric enhancer beads and increased pricing. Home Care organic
sales increased around 30% driven by increased consumer demand for
home cleaning products during the pandemic, premium innovation and
incremental marketing spending resulting in mid-single digits or
higher growth in every region. Dish Care, Air Care and Surface Care
each grew high teens or more.
- Baby, Feminine and Family Care segment organic sales increased
six percent versus year ago. Baby Care organic sales increased low
single digits primarily driven by mid-single digit growth in North
America and devaluation-related price increases in certain regions,
partially offset by category contraction in certain regions due to
the pandemic and competitive activity. Feminine Care organic sales
increased mid-single digits driven by positive product mix due to
premium innovation growth in North America and Greater China and
devaluation-related price increases in certain regions. Family Care
organic sales increased double digits driven by consumption
increases as consumers spend more time at home during the
pandemic.
Diluted net earnings per share were $1.47, a four percent
increase versus the prior year driven by the increase in net sales
and an increase in operating margin, partially offset by charges
for early debt extinguishment in the current period. Core earnings
per share were $1.64, a 15% increase versus the prior year driven
primarily by the increase in net sales and operating margin.
Currency-neutral core earnings per share increased 18% for the
quarter.
Reported gross margin increased 170 basis points versus the
prior year reported gross margin. Reported gross margin increased
150 basis points versus the prior year core gross margin due to 20
basis points of non-core restructuring charges in the base period.
Unfavorable foreign exchange negatively impacted gross margin by 50
basis points. On a currency-neutral basis, reported gross margin
increased 200 basis points versus the prior year core gross margin
driven by 180 basis points of productivity savings, 70 basis points
of benefit from increased pricing and 30 basis points help from
lower commodity costs, partially offset by 80 basis points of
unfavorable product mix and other costs. Productivity savings
include approximately 20 basis points of headwind from freight cost
increases.
Selling, general and administrative expense (SG&A) as a
percentage of sales decreased 90 basis points on a reported basis
versus the prior year. SG&A as a percentage of sales decreased
100 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 110 basis points versus the prior year core
SG&A as 210 basis points of sales leverage benefit and 100
basis points of productivity savings from overhead and marketing
expenses were partially offset by approximately 120 basis points of
marketing reinvestments and approximately 80 basis points of
inflation and other impacts.
Operating profit margin increased 260 basis points versus the
base period reported operating margin. Operating profit margin
increased 250 basis points versus the base period core operating
margin due to 10 basis points of non-core restructuring charges in
the base period. Unfavorable foreign exchange negatively impacted
operating margins by approximately 60 basis points. On a
currency-neutral basis, reported operating margin increased 310
basis points versus the prior year core operating margin, including
total productivity cost savings of 280 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 three to four percent to a range of five to six
percent versus the prior fiscal year. The Company raised its
outlook for organic sales growth from a range of four to five
percent to a range of five to six percent. Foreign exchange is now
expected to be roughly neutral to sales growth for the fiscal
year.
The Company said it now expects fiscal 2021 GAAP diluted net
earnings per share growth in the range of eight to ten percent
versus fiscal 2020 GAAP EPS of $4.96. GAAP EPS guidance includes
non-core charges for early debt retirement of $0.16 per share in
fiscal 2021. P&G raised guidance for core earnings per share
growth from a range of five to eight percent to a range of eight to
ten percent versus fiscal 2020 core EPS of $5.12. The Company said
its current outlook includes headwinds of approximately $100
million after-tax from foreign exchange impacts and $100 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. The Company
now expects commodity cost impact to be neutral versus the previous
fiscal year.
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 now estimates
fiscal 2021 adjusted free cash flow productivity to be in the range
of 95% to 100%.
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 $7 billion to $9 billion to up to $10
billion in fiscal 2021. Combined, P&G now plans to return
around $18 billion of cash to shareowners 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. For other P&G news, visit us at
http://www.pg.com/news.
THE PROCTER & GAMBLE
COMPANY AND SUBSIDIARIES
(Amounts in Millions Except
Per Share Amounts)
Consolidated Earnings
Information
Three Months Ended December
31
2020
2019
% Chg
NET SALES
$
19,745
$
18,240
8%
Cost of products sold
9,253
8,869
4%
GROSS PROFIT
10,492
9,371
12%
Selling, general and administrative
expense
5,112
4,889
5%
OPERATING INCOME
5,380
4,482
20%
Interest expense
(143
)
(100
)
43%
Interest income
9
36
(75)%
Other non-operating income/(expense),
net
(369
)
114
(424)%
EARNINGS BEFORE INCOME TAXES
4,877
4,532
8%
Income taxes
990
789
25%
NET EARNINGS
3,887
3,743
4%
Less: Net earnings attributable to
noncontrolling interests
33
26
27%
NET EARNINGS ATTRIBUTABLE TO PROCTER
& GAMBLE
$
3,854
$
3,717
4%
EFFECTIVE TAX RATE
20.3
%
17.4
%
NET EARNINGS PER SHARE (1)
Basic
$
1.53
$
1.47
4%
Diluted
$
1.47
$
1.41
4%
DIVIDENDS PER COMMON SHARE
$
0.7907
$
0.7459
DILUTED WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
2,615.4
2,630.1
COMPARISONS AS A % OF NET SALES
Basis Pt Chg
Gross profit
53.1
%
51.4
%
170
Selling, general and administrative
expense
25.9
%
26.8
%
(90)
Operating income
27.2
%
24.6
%
260
Earnings before income taxes
24.7
%
24.8
%
(10)
Net earnings
19.7
%
20.5
%
(80)
Net earnings attributable to Procter &
Gamble
19.5
%
20.4
%
(90)
(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 December
31, 2020
Net Sales
% Change
Versus Year
Ago
Earnings/(Loss) Before
Income Taxes
% Change
Versus Year
Ago
Net Earnings
% Change
Versus Year
Ago
Beauty
$3,806
6%
$1,196
12%
$955
11%
Grooming
1,735
5%
537
9%
452
10%
Health Care
2,746
9%
830
13%
655
15%
Fabric & Home Care
6,498
12%
1,599
25%
1,250
28%
Baby, Feminine & Family Care
4,858
6%
1,352
26%
1,044
27%
Corporate
102
N/A
(637)
N/A
(469)
N/A
Total Company
$19,745
8%
$4,877
8%
$3,887
4%
Three Months Ended December
31, 2020
Net Sales
Drivers (1)
Volume
Organic
Volume
Foreign
Exchange
Price
Mix
Other (2)
Net Sales
Beauty
2%
2%
1%
2%
1%
—%
6%
Grooming
4%
4%
(1)%
1%
1%
—%
5%
Health Care
4%
4%
—%
1%
4%
—%
9%
Fabric & Home Care
7%
7%
—%
1%
4%
—%
12%
Baby, Feminine & Family Care
4%
4%
—%
2%
—%
—%
6%
Total Company
5%
5%
—%
1%
2%
—%
8%
(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
Six Months Ended December
31
Amounts in
millions
2020
2019
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, BEGINNING OF PERIOD
$
16,181
$
4,239
OPERATING ACTIVITIES
Net earnings
8,195
7,360
Depreciation and amortization
1,342
1,400
Loss on early extinguishment of debt
512
—
Share-based compensation expense
254
202
Deferred income taxes
145
(549
)
Gain on sale of assets
(14
)
(13
)
Changes in:
Accounts receivable
(462
)
(257
)
Inventories
(217
)
(533
)
Accounts payable, accrued and other
liabilities
312
958
Other operating assets and liabilities
(14
)
(55
)
Other
110
20
TOTAL OPERATING ACTIVITIES
10,163
8,533
INVESTING ACTIVITIES
Capital expenditures
(1,417
)
(1,684
)
Proceeds from asset sales
39
15
Acquisitions, net of cash acquired
—
(54
)
Proceeds from sales and maturities of
investment securities
—
6,151
Change in other investments
—
1
TOTAL INVESTING ACTIVITIES
(1,378
)
4,429
FINANCING ACTIVITIES
Dividends to shareholders
(4,055
)
(3,855
)
Reductions in short-term debt
(3,418
)
(68
)
Additions to long-term debt
2,429
—
Reductions to long-term debt (1)
(4,220
)
(1,546
)
Treasury stock purchases
(5,008
)
(6,504
)
Impact of stock options and other
1,101
1,060
TOTAL FINANCING ACTIVITIES
(13,171
)
(10,913
)
EFFECT OF EXCHANGE RATE CHANGES ON
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
146
(9
)
CHANGE IN CASH, CASH EQUIVALENTS AND
RESTRICTED CASH
(4,240
)
2,040
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, END OF PERIOD
$
11,941
$
6,279
(1)
Includes early extinguishment of
debt costs of $512 during the six months ended December 31,
2020.
THE PROCTER & GAMBLE
COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per
Share Amounts)
Condensed Consolidated Balance
Sheets
December 31, 2020
June 30, 2020
Cash and cash equivalents
$
11,941
$
16,181
Accounts receivable
4,819
4,178
Inventories
5,957
5,498
Prepaid expenses and other current
assets
1,938
2,130
TOTAL CURRENT ASSETS
24,655
27,987
Property, plant and equipment, net
21,416
20,692
Goodwill
41,381
39,901
Trademarks and other intangible assets,
net
23,864
23,792
Other noncurrent assets
8,796
8,328
TOTAL ASSETS
$
120,112
$
120,700
Accounts payable
$
12,027
$
12,071
Accrued and other liabilities
11,131
9,722
Debt due within one year
8,586
11,183
TOTAL CURRENT LIABILITIES
31,744
32,976
Long-term debt
22,514
23,537
Deferred income taxes
6,073
6,199
Other noncurrent liabilities
11,241
11,110
TOTAL LIABILITIES
71,572
73,822
TOTAL SHAREHOLDERS' EQUITY
48,540
46,878
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
$
120,112
$
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 January 20, 2021 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 measures, 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 items:
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. Beginning in 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.
Early debt extinguishment charges:
In the three months ended December 31, 2020, the Company recorded
after tax charges of $427 million ($512 million before tax), due to
early extinguishment of certain long-term debt. These charges
represent the difference between the reacquisition price and the
par value of the debt extinguished.
We do not view the above items to be part of our sustainable
results and their exclusion from Core earnings measures provides a
more comparable measure of year-on-year results. These items are
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 Core EPS growth:
Currency-neutral Core EPS growth is a measure of the Company's Core
EPS growth versus the prior period excluding the incremental
current year impact of foreign exchange. Management views this
non-GAAP measure as a useful supplemental measure of Company
performance over time.
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.
Adjusted free cash flow
productivity: Adjusted free cash flow productivity is
defined as the ratio of free cash flow to net earnings excluding
the charges for early debt extinguishment (which are not considered
part of our ongoing operations). 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 December
31, 2020
Three Months Ended December
31, 2019
AS
REPORTED
(GAAP)
EARLY DEBT
EXTINGUISHMENT
ROUNDING
NON-GAAP
(CORE)
AS
REPORTED
(GAAP)
INCREMENTAL
RESTRUCTURING (2)
ROUNDING
NON-GAAP
(CORE)
COST OF PRODUCTS SOLD
$
9,253
$
8,869
$
(42)
$
—
$
8,827
GROSS PROFIT
10,492
9,371
42
—
9,413
GROSS MARGIN
53.1
%
51.4
%
0.2
%
—
%
51.6
%
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSE
5,112
4,889
25
—
4,914
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSE AS A % OF NET SALES
25.9
%
26.8
%
0.1
%
—
%
26.9
%
OPERATING INCOME
5,380
4,482
17
—
4,499
OPERATING PROFIT MARGIN
27.2
%
24.6
%
0.1
%
—
%
24.7
%
NET EARNINGS ATTRIBUTABLE TO
P&G
3,854
427
—
4,281
3,717
17
1
3,735
CORE EPS
CORE EPS
DILUTED NET EARNINGS PER COMMON SHARE
(1)
$
1.47
$
0.16
$
0.01
$
1.64
$
1.41
$
0.01
$
—
$
1.42
CURRENCY IMPACT TO CORE
EARNINGS
$
0.03
CURRENCY-NEUTRAL CORE EPS
$
1.67
DILUTED WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
2,615.4
COMMON SHARES OUTSTANDING - DECEMBER
31, 2020
2,462.5
(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
GROSS MARGIN (1)
150
BPS
SELLING GENERAL & ADMINISTRATIVE
EXPENSE AS A % OF NET SALES (1)
(100
)
BPS
OPERATING PROFIT MARGIN (1)
250
BPS
CORE EPS
15
%
CURRENCY-NEUTRAL CORE EPS
18
%
(1)
Change versus year ago is
calculated based on As Reported (GAAP) values for the three months
ended December 31, 2020 versus the Non-GAAP (Core) values for the
three months ended December 31, 2019.
Organic sales growth:
October -
December 2020
Net
Sales Growth
Foreign
Exchange
Impact
Acquisition &
Divestiture
Impact/Other (1)
Organic
Sales
Growth
Beauty
6%
(1)%
—%
5%
Grooming
5%
1%
—%
6%
Health Care
9%
—%
—%
9%
Fabric & Home Care
12%
—%
—%
12%
Baby, Feminine & Family Care
6%
—%
—%
6%
Total P&G
8%
—%
—%
8%
(1)
Acquisitions/Divestiture
impact/Other includes the volume and mix impact of acquisitions and
divestitures and 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)
+5% to +6%
-
+5% to +6%
(1)
Acquisitions/Divestiture
impact/Other includes the volume and mix impact of acquisitions and
divestitures and 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)
+8% to +10%
-
+8% to +10%
(1)
Includes net impact of prior year
incremental non-core restructuring charges and early debt
extinguishment charges in FY2021.
Free cash flow (dollar amounts in
millions):
Three Months Ended December
31, 2020
Operating Cash Flow
Capital
Spending
Free
Cash Flow
$5,424
$(567)
$4,857
Adjusted free cash flow productivity
(dollar amounts in millions):
Three Months Ended December
31, 2020
Free
Cash Flow
Net
Earnings
Early
Debt
Extinguishment
Charges
Net
Earnings
Excluding Adjustments
Adjusted
Free Cash
Flow
Productivity
$4,857
$3,887
$427
$4,314
113%
Category: PG-IR
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210120005340/en/
P&G Media Contacts:
Erica Noble, 513.271.1793 Jennifer Corso, 513.983.2570
P&G Investor Relations
Contact: John Chevalier, 513.983.9974
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