Net Sales +1% vs. YA; Organic Sales +5%;
Diluted Net EPS $1.04, +9% vs. YA; Core EPS
$1.06, +6%; Currency-Neutral Core EPS +15%
Raises Guidance for Sales Growth and Adjusted
Free Cash Flow Productivity
The Procter & Gamble Company (NYSE:PG) reported third
quarter fiscal year 2019 net sales of $16.5 billion, an increase of
one percent versus the prior year. Excluding the impacts of foreign
exchange, acquisitions and divestitures, organic sales increased
five percent. Diluted net earnings per share were $1.04, up nine
percent versus the prior year. Core earnings per share increased
six percent to $1.06. Currency-neutral core EPS increased 15%
versus the prior year.
Operating cash flow was $3.5 billion for the quarter. Free cash
flow productivity was 100%. The Company returned $3.1 billion of
cash to shareholders via $1.9 billion of dividend payments and
approximately $1.3 billion of common stock repurchases. Over the
last 10 years, P&G has returned approximately $67 billion to
shareholders in cash dividends. Earlier this month, P&G
announced a four percent increase in the quarterly dividend,
marking the 63rd consecutive year the Company has increased its
dividend. P&G has been paying a dividend for 129 consecutive
years, since its incorporation in 1890.
“We delivered another quarter of strong organic sales growth,
enabling us to further increase our outlook for the year,” said
David Taylor, Chairman, President and Chief Executive Officer.
“Cash generation also remains strong, supporting an increase in our
cash productivity target and extending our long track record of
dividend increases. Our focus on superiority, productivity and
improving P&G’s organization and culture is delivering improved
results despite a challenging competitive and macroeconomic
environment.”
January - March Quarter Discussion
Net sales in the third quarter of fiscal year 2019 were $16.5
billion, up one percent versus the prior year. Unfavorable foreign
exchange was a five percent hurt to sales for the quarter.
Excluding the impacts of foreign exchange, acquisitions and
divestitures, organic sales increased five percent driven by a two
percent increase in organic shipment volume. Pricing added two
percentage points to organic sales. Positive mix impact was a one
percent help to organic sales due to strong growth in developed
markets and disproportionate growth of premium priced products,
such as SK-II and Tide Pods.
January - March
2019
Volume
ForeignExchange
Price
Mix
Other
(2)
Net
Sales
OrganicVolume
Organic Sales
Net Sales
Drivers (1)
Beauty 3% (5)% 2% 4% —% 4% 3% 9% Grooming (3)% (7)% 2% —% —% (8)%
(3)% (1)% Health Care 7% (4)% 2% 1% 3% 9% 2% 5% Fabric & Home
Care 5% (4)% 1% 1% (1)% 2% 5% 7% Baby, Feminine & Family Care
—% (4)% 3% (1)% —% (2)%
—% 2%
Total P&G
3% (5)% 2% 1%
—% 1% 2%
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, the impact from the July 1, 2018 adoption of new
accounting standards for "Revenue from Contracts with Customers"
and rounding impacts necessary to reconcile volume to net sales.
- Beauty segment organic sales increased
nine percent versus year ago. Skin and Personal Care organic sales
increased mid-teens driven by premium innovation, positive product
mix from the disproportionate growth of super-premium SK-II brand
and increased pricing. Hair Care organic sales increased mid-single
digits with strong growth in developed and developing regions and
increased pricing.
- Grooming segment organic sales
decreased one percent. Shave Care organic sales were in-line with
prior year levels as positive geographic mix help from the growth
of developed regions and the benefit of devaluation-driven price
increases were offset by related unit volume declines. Appliances
organic sales decreased mid-single digits due to negative mix
impacts from the disproportionate growth of mid-tier products.
- Health Care segment organic sales
increased five percent. Oral Care organic sales increased
mid-single digits driven by strong volume growth and positive sales
mix in developed markets driven by premium toothpaste and
toothbrush innovations. Personal Health Care organic sales
increased mid-single digits primarily due to devaluation and
innovation related price increases. Personal Health Care all-in
sales increased double digits due to the addition of the Merck OTC
business.
- Fabric and Home Care segment organic
sales increased seven percent for the quarter. Fabric Care organic
sales increased mid-single digits driven by innovation, increased
pricing and positive mix due to the disproportionate growth of
premium products. Home Care organic sales increased high single
digits driven by innovation, positive mix due to the
disproportionate growth of premium products and increased
pricing.
- Baby, Feminine and Family Care segment
organic sales increased two percent versus year ago. Baby Care
organic sales decreased low single digits due to competitive
activity and market contraction, partially offset by increased
pricing and positive mix from the disproportionate growth of
premium products. Feminine Care organic sales increased high single
digits driven by innovation, positive product mix due to the
disproportionate growth of premium products and devaluation-related
price increases. Family Care organic sales increased mid-single
digits due to innovation and increased pricing, partially offset by
negative mix impact from the disproportionate growth of large sizes
and club and dollar channels.
Diluted net earnings per share were $1.04, a nine percent
increase versus the prior year. Core earnings per share were $1.06,
a six percent increase versus the prior year, driven primarily by
the increase in net sales and a lower effective tax rate. These
benefits were partially offset by a reduction in operating margin
due primarily to negative currency and commodity cost impacts.
Currency-neutral core earnings per share increased 15% for the
quarter.
Reported gross margin increased 30 basis points, including 30
basis points of lower non-core restructuring charges versus the
prior year. Core gross margin was unchanged versus the prior year,
including 60 basis points of negative foreign exchange impacts. On
a currency-neutral basis, core gross margin increased 60 basis
points driven by 160 basis points of productivity savings and 80
basis points of pricing benefit, partially offset by 70 basis
points of commodity cost increases, 30 basis points of innovation
reinvestments and 80 basis points of unfavorable product mix and
other impacts.
Selling, general and administrative expense (SG&A) as a
percentage of sales increased 40 basis points on a reported basis
versus the prior year, including a 30 basis-point help from a
year-on-year decrease in non-core restructuring charges. Core
SG&A as a percentage of sales increased 70 basis points versus
the prior year, including 40 basis points of negative foreign
exchange impacts. On a currency-neutral basis, core SG&A as a
percentage of sales increased 30 basis points as 110 basis points
of sales leverage benefit and 100 basis points of savings from
overhead and marketing expenses were more than offset by 100 basis
points of marketing reinvestments and 140 basis points of inflation
and other impacts, including integration and overhead costs for the
Merck consumer healthcare acquisition.
Operating profit margin decreased 10 basis points versus the
base period on a reported basis including approximately 60 basis
points help from lower non-core restructuring charges. Core
operating margin decreased 60 basis points including 100 basis
points of negative foreign exchange impacts. On a currency-neutral
basis, core operating margin increased 40 basis points including
total productivity cost savings of 260 basis points for the
quarter.
Fiscal Year 2019 Guidance
The Company now estimates fiscal 2019 all-in sales growth in the
range of in-line to up one percent versus the prior fiscal year,
which includes a negative impact of three to four percentage points
from the combination of negative foreign exchange and a modest
positive impact from acquisitions and divestitures. P&G
increased its guidance for organic sales growth from a range of two
to four percent to a solid four percent for fiscal 2019.
The Company maintained its guidance ranges on the bottom line.
On an all-in GAAP basis, diluted net earnings per share are
expected to increase seventeen to twenty-four percent versus the
prior year. Core earnings per share are expected to increase three
to eight percent versus fiscal 2018 Core EPS of $4.22. This outlook
includes an estimated $1.4 billion after-tax headwind from foreign
exchange and higher commodity and transportation 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. P&G increased its
outlook for adjusted free cash flow productivity from over 90% to
at least 100% for fiscal 2019.
P&G expects to pay over $7 billion in dividends and
repurchase approximately $5 billion of common shares in fiscal
2019.
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.
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 and acts of war or terrorism; (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, 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 decision to leave 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, intellectual property, 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; and (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. 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 2019 2018
% Chg NET SALES $ 16,462 $ 16,281 1% Cost of products
sold 8,427 8,384 1%
GROSS PROFIT 8,035 7,897
2% Selling, general and administrative expense 4,806 4,688
3%
OPERATING INCOME 3,229 3,209 1% Interest expense
131 133 (2)% Interest income 52 69 (25)% Other non-operating
income, net 128 108 19%
EARNINGS BEFORE INCOME
TAXES 3,278 3,253 1% Income taxes 502 713 (30)%
NET EARNINGS 2,776 2,540 9% Less: Net earnings
attributable to noncontrolling interests 31 29 7%
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE $ 2,745
$ 2,511 9%
EFFECTIVE TAX RATE 15.3 %
21.9 %
NET EARNINGS PER SHARE (1) Basic $ 1.07
$ 0.97 10% Diluted $ 1.04 $ 0.95 9%
DIVIDENDS PER COMMON
SHARE $ 0.7172 $ 0.6896 DILUTED WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 2,637.7 2,645.6
COMPARISONS AS A % OF NET
SALES Basis Pt Chg Gross profit 48.8% 48.5% 30 Selling,
general and administrative expense 29.2% 28.8% 40 Operating income
19.6% 19.7% (10) Earnings before income taxes 19.9% 20.0% (10) Net
earnings 16.9% 15.6% 130 Net earnings attributable to Procter &
Gamble 16.7% 15.4% 130 (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, 2019 % Change
% Change % Change Versus
Year Earnings/(Loss) Before Versus Year Versus
Year Net Sales Ago Income
Taxes Ago Net Earnings
Ago Beauty $3,061 4% $675 5% $551 13% Grooming 1,424 (8)%
329 (22)% 344 3% Health Care 2,115 9% 462 (1)% 358 17% Fabric &
Home Care 5,382 2% 1,114 11% 847 33% Baby, Feminine & Family
Care 4,357 (2)% 861 1% 653 21% Corporate 123 N/A (163) N/A 23 N/A
Total Company $16,462 1% $3,278
1% $2,776 9% Three Months
Ended March 31, 2019 (Percent Change vs. Year Ago)
(1) Volume with Volume Excluding
Acquisitions &
Acquisitions & Foreign Net Sales
Divestitures Divestitures
Exchange Price Mix
Other (2)
Growth Beauty 3% 3% (5)% 2% 4% —% 4% Grooming (3)%
(3)% (7)% 2% —% —% (8)% Health Care 7% 2% (4)% 2% 1% 3% 9% Fabric
& Home Care 5% 5% (4)% 1% 1% (1)% 2% Baby, Feminine &
Family Care —% —% (4)% 3% (1)%
—%
(2)%
Total Company 3% 2% (5)%
2% 1% —% 1%
(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,
the impact from the July 1, 2018 adoption of new accounting
standards for "Revenue from Contracts with Customers" 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
2019 2018 CASH, CASH EQUIVALENTS AND
RESTRICTED CASH, BEGINNING OF PERIOD $ 2,569 $ 5,569
OPERATING ACTIVITIES Net earnings 9,203 7,971 Depreciation
and amortization 2,004 2,084 Share-based compensation expense 299
249 Deferred income taxes (24 ) (1,826 ) Gain on sale of assets
(370 ) (187 ) Changes in: Accounts receivable (549 ) (450 )
Inventories (601 ) (457 ) Accounts payable, accrued and other
liabilities 1,441 752 Other operating assets and liabilities (537 )
2,331 Other 225 201
TOTAL OPERATING ACTIVITIES
11,091 10,668
INVESTING ACTIVITIES Capital
expenditures (2,533 ) (2,810 ) Proceeds from asset sales 22 246
Acquisitions, net of cash acquired (3,943 ) (108 ) Purchases of
short-term investments (159 ) (3,770 ) Proceeds from sales and
maturities of short-term investments 2,535 2,790 Change in other
investments (59 ) 44
TOTAL INVESTING ACTIVITIES
(4,137 ) (3,608 )
FINANCING ACTIVITIES Dividends to
shareholders (5,561 ) (5,449 ) Change in short-term debt (1,832 )
(1,259 ) Additions to long-term debt 2,368 5,072 Reductions of
long-term debt (1,002 ) (1,402 ) Treasury stock purchases (3,253 )
(5,634 ) Impact of stock options and other 2,590 1,158
TOTAL FINANCING ACTIVITIES (6,690 ) (7,514 )
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND
RESTRICTED CASH (95 ) 211
CHANGE IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH 169 (243 )
CASH, CASH
EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD $ 2,738 $
5,326
THE PROCTER & GAMBLE COMPANY AND
SUBSIDIARIES
(Amounts in Millions Except Per Share
Amounts)
Condensed Consolidated Balance Sheets
March 31, 2019 June 30, 2018 Cash and
cash equivalents $ 2,738 $ 2,569 Available-for-sale investment
securities 7,085 9,281 Accounts receivable 5,198 4,686 Inventories
5,358 4,738 Prepaid expenses and other current assets 1,933 2,046
TOTAL CURRENT ASSETS 22,312 23,320 Property, plant and
equipment, net 20,993 20,600 Goodwill 46,753 45,175 Trademarks and
other intangible assets, net 25,836 23,902 Other noncurrent assets
5,779 5,313
TOTAL ASSETS $ 121,673 $ 118,310 Accounts
payable $ 10,207 $ 10,344 Accrued and other liabilities 9,252 7,470
Debt due within one year 8,911 10,423
TOTAL CURRENT
LIABILITIES 28,370 28,237 Long-term debt 21,359 20,863 Deferred
income taxes 6,951 6,163 Other noncurrent liabilities 9,441 10,164
TOTAL LIABILITIES 66,121 65,427
TOTAL SHAREHOLDERS'
EQUITY 55,552 52,883
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 121,673 $ 118,310
The Procter & Gamble Company
Exhibit 1: Non-GAAP Measures
In accordance with the SEC's Regulation G, the following
provides definitions of the non-GAAP measures used in Procter &
Gamble's April 23, 2019 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 items:
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.
Transitional Impact of U.S. Tax
Reform: As discussed in Note 2 to the Consolidated Financial
Statements, the U.S. government enacted comprehensive tax
legislation commonly referred to as the Tax Cuts and Jobs Act (the
“U.S. Tax Act”) in December 2017. This resulted in a net charge of
$22 million for the three months ended March 31, 2018 related to an
adjustment to the estimated repatriation tax charge. The adjustment
to core earnings only includes this transitional impact. It does
not include the ongoing impacts of the lower U.S. statutory rate on
current year earnings.
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, the impact from the July 1, 2018
adoption of new accounting standards for "Revenue from Contracts
with Customers" and foreign exchange from year-over-year
comparisons. The impact of the adoption of the new accounting
standard for Revenue from Contracts with Customers is driven by the
prospective reclassification of certain customer spending from
marketing (SG&A) expense to a reduction of Net sales. 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 free cash flow
productivity at or above 90%.
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 INCREMENTAL
NON-GAAP (GAAP) RESTRUCTURING
ROUNDING (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
CURRENCY IMPACT TO CORE EARNINGS 0.09 CURRENCY-NEUTRAL CORE EPS
$ 1.15
DILUTED WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 2,637.7
COMMON SHARES OUTSTANDING - MARCH 31,
2019 2,508.3 (1) Diluted net earnings per share are
calculated on Net earnings attributable to Procter & Gamble.
CHANGE VERSUS YEAR AGO
CORE GROSS MARGIN — BPS CORE
SELLING GENERAL & ADMINISTRATIVE EXPENSE AS A % OF NET SALES 70
BPS CORE OPERATING PROFIT MARGIN (60 ) BPS CORE EFFECTIVE TAX RATE
(570 ) BPS CORE EPS 6 % 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, 2018
TRANSITIONAL IMPACTS OF
AS REPORTED INCREMENTAL U.S. TAX
NON-GAAP (GAAP) RESTRUCTURING
REFORM ROUNDING (CORE) COST OF
PRODUCTS SOLD $ 8,384 $ (110 ) — $ (1 ) $ 8,273
GROSS
PROFIT 7,897 110 — 1 8,008
GROSS MARGIN 48.5 % 0.7 % — %
— % 49.2 %
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE 4,688
(24 ) — — 4,664
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE AS A
% OF NET SALES 28.8 % (0.1 )% — % (0.1 )% 28.6 %
OPERATING
INCOME 3,209 134 — 1 3,344
OPERATING PROFIT MARGIN 19.7
% 0.8 % — % — % 20.5 %
NET EARNINGS ATTRIBUTABLE TO P&G
2,511 116 22 — 2,649
Core
EPS:
DILUTED NET EARNINGS PER COMMON SHARE (1) $ 0.95
$ 0.04 0.01 $ —
$ 1.00
DILUTED WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 2,645.6 (1) Diluted net earnings per
share are calculated on Net earnings attributable to Procter &
Gamble.
Organic sales growth:
Acquisition
&
Foreign
Exchange
Divestiture
Organic
Sales
January - March
2019
Net Sales
Growth
Impact
Impact/Other(1)
Growth
Beauty 4% 5% —% 9% Grooming (8)% 7% —% (1)% Health Care 9% 4% (8)%
5% Fabric & Home Care 2% 4% 1% 7% Baby, Feminine & Family
Care (2)% 4% —% 2%
Total P&G
1% 5% (1)%
5%
Combined Foreign
Exchange &
Organic
Sales
Total
P&G
Net Sales
Growth
Acquisition/Divestiture Impact/Other
(1)
Growth
FY 2019(Estimate)
-% to +1% +3% to +4% +4% (1)
Acquisition & Divestiture Impact/Other includes the volume and
mix impact of acquisitions and divestitures, the impact from the
July 1, 2018 adoption of new accounting standards for "Revenue from
Contracts with Customers" and rounding impacts necessary to
reconcile net sales to organic sales.
Core EPS:
Diluted
EPS
Total
P&G
Growth
Impact of
Incremental Non-Core Items (1)
Core EPS
Growth
FY 2019(Estimate)
+17% to +24% (14)% to (16)% +3% to +8% (1)
Includes the gain on the dissolution of the PGT Healthcare
partnership in 2019 and the impact of U.S. Tax Act and loss on
early extinguishment of debt in 2018 and year-over-year changes in
incremental non-core restructuring charges.
Free cash flow (dollar amounts in
millions):
Three Months Ended March 31, 2019
Operating Cash
Flow
Capital
Spending
Free Cash
Flow
$3,517 $(752) $2,765
Free cash flow productivity (dollar
amounts in millions):
Three Months Ended March 31, 2019
Free Cash
Flow
Net
Earnings
Free Cash Flow
Productivity
$2,765 $2,776 100%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190423005488/en/
P&G Media
Contacts:Damon Jones, 513.983.0190Jennifer Corso,
513.983.2570
P&G Investor Relations
Contact:John Chevalier, 513.983.9974
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