Colgate-Palmolive Company (NYSE:CL) today reported worldwide Net
sales of $3,866 million in second quarter 2019, a decrease of 0.5%
versus second quarter 2018. Global unit volume increased 1.0%,
pricing increased 3.0% and foreign exchange was negative 4.5%.
Organic sales (Net sales excluding the impact of foreign exchange,
acquisitions and divestments) increased 4.0%.
Net income and Diluted earnings per share in second quarter 2019
were $586 million and $0.68, respectively. Net income in second
quarter 2019 included $31 million ($0.04 per diluted share) of
aftertax charges resulting from the Company’s Global Growth and
Efficiency Program.
Net income and Diluted earnings per share in second quarter 2018
were $637 million and $0.73, respectively. Net income in second
quarter 2018 included $51 million ($0.06 per diluted share) of
aftertax charges resulting from the Global Growth and Efficiency
Program and a $15 million ($0.02 per diluted share) benefit from a
foreign tax matter.
Excluding charges resulting from the Global Growth and
Efficiency Program in both periods and the benefit from a foreign
tax matter in 2018, Net income in second quarter 2019 was $617
million, a decrease of 8% versus second quarter 2018, and Diluted
earnings per share in second quarter 2019 were $0.72, a decrease of
6% versus second quarter 2018.
Gross profit margin was 59.7% in second quarter 2019 versus
59.2% in second quarter 2018. Excluding charges resulting from the
Global Growth and Efficiency Program in both periods, Gross profit
margin was 59.6% in second quarter 2019, an increase of 30 basis
points versus the year ago quarter as cost savings from the
Company’s funding-the-growth initiatives and higher pricing were
partially offset by higher raw and packaging material costs, which
included foreign exchange transaction costs.
Selling, general and administrative expenses were 35.4% of Net
sales in second quarter 2019 versus 33.5% of Net sales in second
quarter 2018. Excluding charges resulting from the Global Growth
and Efficiency Program in both periods, Selling, general and
administrative expenses increased by 200 basis points versus the
year ago quarter to 35.2% of Net sales in second quarter 2019 due
to higher overhead expenses and increased advertising investment,
both as a percentage of Net sales. On an absolute basis, worldwide
advertising investment increased 3% to $416 million versus $403
million in the year ago quarter.
Operating profit decreased to $888 million in second quarter
2019 compared to $946 million in second quarter 2018. Excluding
charges resulting from the Global Growth and Efficiency Program in
both periods, Operating profit was $928 million in second quarter
2019, a decrease of 8% versus second quarter 2018. Operating profit
margin was 23.0% in second quarter 2019 versus 24.3% in second
quarter 2018. Excluding charges resulting from the Global Growth
and Efficiency Program in both periods, Operating profit margin was
24.0% in second quarter 2019, a decrease of 180 basis points versus
the year ago quarter. This decrease in Operating profit margin was
primarily due to an increase in Selling, general and administrative
expenses, partially offset by an increase in Gross profit, both as
a percentage of Net sales.
Net cash provided by operations year to date was $1,249 million
compared to $1,297 million in the comparable 2018 period. Working
capital as a percentage of Net sales was negative 2.9% compared to
negative 2.1% in the year ago period.
Noel Wallace, President and Chief Executive Officer, commented
on the second quarter results, “We have achieved another quarter of
sequential improvement in organic sales growth with the strong 4.0%
increase driven by both positive volume and higher pricing. In
particular, it was terrific to see positive pricing across every
operating division.
“Advertising investment increased in absolute dollars and as a
percent to sales versus second quarter 2018, with increases as a
percent to sales in every division.
“Colgate’s leadership of the global toothpaste market continued
during the quarter with our global market share at 41.4% year to
date. Our global leadership in manual toothbrushes also continued
with Colgate’s global market share in that category at 31.7% year
to date.”
Mr. Wallace continued, “As we look ahead, based on current spot
rates, we continue to expect 2019 net sales to be flat to up
low-single-digits, with organic sales up between 2% and 4%, though
we now expect to be toward the higher end of that range as we
continue to plan for increased investment behind our brands, higher
pricing and strong innovation, particularly behind our core
businesses.
“We are also excited about expanding our premium skin care
portfolio with the recent announcement of our agreement to acquire
the Filorga skin care business, which is not included in our
guidance.
“On a GAAP basis, based on current spot rates, we expect gross
margin expansion and a low-single-digit decline in earnings per
share in 2019.
“Excluding charges resulting from the Global Growth and
Efficiency Program in both 2018 and 2019, the charge related to
U.S. tax reform in 2018 and the benefit from a foreign tax matter
in 2018, based on current spot rates, we continue to plan for a
year of gross margin expansion, increased advertising investment
and a mid-single-digit decline in earnings per share.”
At 11:00 a.m. ET today, Colgate will host a conference call to
elaborate on second quarter results. To access this call as a
webcast, please go to Colgate’s website at http://www.colgatepalmolive.com.
The following are comments about divisional performance for
second quarter 2019 versus the year ago period. See attached
Geographic Sales Analysis Percentage Changes and Segment
Information tables for additional information on divisional net
sales and operating profit.
North America (22% of Company
Sales)
North America Net sales increased 2.5% in second quarter 2019.
Unit volume increased 2.0%, pricing increased 1.0% and foreign
exchange was negative 0.5%. Organic sales for North America
increased 3.0%.
Operating profit in North America decreased 4% in second quarter
2019 to $254 million, or 200 basis points to 30.0% of Net sales.
This decrease in Operating profit as a percentage of Net sales was
primarily due to a decrease in Gross profit and an increase in
Selling, general and administrative expenses, both as a percentage
of Net sales. This decrease in Gross profit was primarily due to
higher raw and packaging material costs, partially offset by cost
savings from the Company’s funding-the-growth initiatives. This
increase in Selling, general and administrative expenses was
primarily due to higher overhead expenses, primarily related to
higher logistics costs, and increased advertising investment.
In the U.S., Colgate maintained leadership in the toothpaste
category during the quarter with its market share at 34.6% year to
date. Successful products include Colgate TotalSF, Colgate Optic
White Stain Fighter and Colgate Essentials with Charcoal
toothpastes. In manual toothbrushes, Colgate maintained its brand
market leadership in the U.S. with its market share in that
category at 40.7% year to date, supported by the success of Colgate
Extra Clean and Colgate Gum Health manual toothbrushes.
Products succeeding in other categories include eltaMD foaming
facial cleanser, eltaMD UV Clear facial sunscreen, PCA Skin
Hyaluronic Acid Boosting Serum, Softsoap Gentle Wash body wash,
Irish Spring 5-in-1 body wash, Fabuloso Complete liquid cleaner and
Suavitel Complete fabric conditioner.
Latin America (24% of Company
Sales)
Latin America Net sales decreased 0.5% in second quarter 2019.
Unit volume increased 1.5%, pricing increased 5.5% and foreign
exchange was negative 7.5%. Volume gains in Mexico and Colombia
were partially offset by volume declines in Brazil. Organic sales
for Latin America increased 7.0%.
Operating profit in Latin America decreased 4% in second quarter
2019 to $251 million, or 110 basis points to 27.0% of Net sales.
This decrease in Operating profit as a percentage of Net sales was
primarily due to an increase in Selling, general and administrative
expenses partially offset by an increase in Gross profit, both as a
percentage of Net sales. This increase in Gross profit was
primarily due to cost savings from the Company’s funding-the-growth
initiatives and higher pricing, partially offset by higher raw and
packaging material costs, which included foreign exchange
transaction costs. This increase in Selling, general and
administrative expenses was due to higher overhead expenses and
increased advertising investment.
Colgate maintained its toothpaste leadership in Latin America
during the quarter, with market share gains in Colombia, the
Dominican Republic, Honduras, Paraguay and Panama. Products
succeeding in the region include the Colgate Total 12 relaunch,
Colgate Natural Extracts, elmex and Colgate Periogard toothpastes.
Colgate’s leadership in the manual toothbrush category continued
throughout the region, supported by the success of Colgate Pro
Cuidado, Colgate 360 Advanced and Colgate Ultra Soft Advanced
manual toothbrushes.
Products succeeding in other categories include Colgate Total 12
and Colgate Periogard mouthwashes, Protex Pro-Hidrata and Palmolive
Natureza Secreta bar soaps, Lady Speed Stick Clinical Complete and
Speed Stick Clinical Complete spray deodorants, Suavitel Complete
fabric conditioner, Axion dish liquid and Fabuloso Bleach
Alternative liquid cleaner.
Europe (15% of Company
Sales)
Europe Net sales decreased 5.0% in second quarter 2019. Unit
volume was even with the year ago period, pricing increased 1.0%
and foreign exchange was negative 6.0%. Volume gains in Spain and
Greece were offset by volume declines in Germany and France.
Organic sales for Europe increased 1.0%.
Operating profit in Europe decreased 5% in second quarter 2019
to $148 million, while as a percentage of Net sales it was 25.2%,
even with the year ago period, as an increase in Gross Profit
largely offset an increase in Selling, general and administrative
expenses, all as a percentage of Net Sales. This increase in Gross
Profit was primarily due to cost savings from the Company’s
funding-the-growth initiatives, partially offset by higher raw and
packaging material costs. This increase in Selling, general and
administrative expenses was due to higher overhead expenses and
increased advertising investment.
Colgate maintained its toothpaste leadership in Europe during
the quarter, with market share gains in the United Kingdom, Italy,
Spain, Greece, the Netherlands and Denmark. Products succeeding in
oral care include Colgate Total, Colgate Max White Expert
Anti-Stain, Colgate Natural Extracts Charcoal, elmex and meridol
Pur toothpastes, Colgate 360° Advanced Whole Mouth Health and
Colgate Slim Soft Advanced manual toothbrushes and Colgate Plax
mouthwash.
Products succeeding in other categories include Sanex pump body
lotions, Sanex and Palmolive Clay body washes, Ajax Boost liquid
cleaner and Soupline fabric conditioner.
Asia Pacific (17% of Company
Sales)
Asia Pacific Net sales decreased 4.0% during second quarter
2019. Unit volume decreased 1.5%, pricing increased 0.5% and
foreign exchange was negative 3.0%. Volume declines in the Greater
China region were partially offset by volume gains in Thailand.
Organic sales for Asia Pacific decreased 1.0%.
Operating profit in Asia Pacific decreased 14% in second quarter
2019 to $174 million, or 320 basis points to 26.9% of Net sales.
This decrease in Operating profit as a percentage of Net sales was
primarily due to an increase in Selling, general and administrative
expenses as a percentage of Net sales. This increase in Selling,
general and administrative expenses was due to higher overhead
expenses, reflecting foreign exchange transaction gains in the
second quarter of 2018, and increased advertising investment.
Colgate maintained its toothpaste leadership in the Asia Pacific
region during the quarter with market share gains in the
Philippines, Australia and Pakistan. Products succeeding in oral
care include Colgate Naturals, Colgate Vedshakti and elmex
toothpastes and Colgate Slim Soft Advanced manual toothbrush.
Products succeeding in other categories include Palmolive Skin
Therapy bar soap, Palmolive Luminous Oils shower gel and liquid
hand soap, Ajax Charcoal and Lime spray cleaner and Softlan Divine
Pleasures fabric conditioner.
Africa/Eurasia (6% of Company
Sales)
Africa/Eurasia Net sales increased 0.5% during second quarter
2019. Unit volume increased 3.5%, pricing increased 6.0% and
foreign exchange was negative 9.0%. Volume gains in Russia and the
Gulf States were partially offset by volume declines in South
Africa and Saudi Arabia. Organic sales for Africa/Eurasia increased
9.5%.
Operating profit in Africa/Eurasia increased 12% in second
quarter 2019 to $47 million, or 200 basis points to 19.3% of Net
sales. This increase in Operating profit as a percentage of Net
sales was primarily due to an increase in Gross profit as a
percentage of Net sales. This increase in Gross profit was
primarily due to cost savings from the Company’s funding-the-growth
initiatives and higher pricing, partially offset by higher raw and
packaging material costs, which included foreign exchange
transaction costs.
Colgate maintained its toothpaste leadership in Africa/Eurasia
during the quarter, with market share gains in Turkey, Morocco,
Kazakhstan, Jordan and Bahrain. Successful products contributing to
sales in the region include the Colgate Total 12 relaunch, Colgate
Natural Extracts and Colgate Optic White Expert White toothpastes,
Colgate 360° Advanced Whole Mouth Clean and Colgate Slim Soft
Advanced manual toothbrushes and Palmolive Micellar Care shower gel
and bar soap.
Hill's Pet Nutrition (16% of Company
Sales)
Hill’s Net sales increased 3.5% during second quarter 2019. Unit
volume increased 2.0%, pricing increased 4.0% and foreign exchange
was negative 2.5%. Volume gains in the United States, South Africa
and Western Europe were partially offset by volume declines in
Japan. Hill’s organic sales increased 6.0%.
Hill’s Operating profit in second quarter 2019 increased 1.0% to
$167 million, while as a percentage of Net sales it decreased 60
basis points to 27.3% of Net sales. This decrease in Operating
profit as a percentage of Net sales was primarily due to a decrease
in Gross profit as a percentage of Net sales. This decrease in
Gross profit was primarily due to higher raw and packaging material
costs, partially offset by cost savings from the Company’s
funding-the-growth initiatives and higher pricing.
Successful products contributing to sales in the United States
include the relaunched Hill’s Science Diet (with upgraded recipes,
improved kibble shapes and redesigned package graphics), Hill’s
Prescription Diet Gastrointestinal Biome and Hill’s Bioactive
Recipe.
Successful products contributing to sales internationally
include the relaunched Hill’s Science Diet and Hill’s Prescription
Diet Stews.
***
About Colgate-Palmolive: Colgate-Palmolive is a leading global
consumer products company, tightly focused on Oral Care, Personal
Care, Home Care and Pet Nutrition. Colgate sells its products in
over 200 countries and territories around the world under such
internationally recognized brand names as Colgate, Palmolive,
elmex, Tom’s of Maine, Sorriso, Speed Stick, Lady Speed Stick,
Softsoap, Irish Spring, Protex, Sanex, eltaMD, PCA Skin, Ajax,
Axion, Fabuloso, Soupline and Suavitel, as well as Hill’s Science
Diet and Hill’s Prescription Diet. For more information about
Colgate’s global business, visit the Company’s website at
http://www.colgatepalmolive.com. To
learn more about the Colgate Bright Smiles, Bright Futures oral
health education program, please visit http://www.colgatebsbf.com. CL-E
Market Share Information
Management uses market share information as a key indicator to
monitor business health and performance. References to market share
in this press release are based on a combination of consumption and
market share data provided by third-party vendors, primarily
Nielsen, and internal estimates. All market share references
represent the percentage of the dollar value of sales of our
products, relative to all product sales in the category in the
countries in which the Company competes and purchases data
(excluding Venezuela from all periods).
Market share data is subject to limitations on the availability
of up-to-date information. In particular, market share data is
currently not generally available for certain retail channels, such
as eCommerce or certain discounters. The Company measures
year-to-date market shares from January 1 of the relevant year
through the most recent period for which market share data is
available, which typically reflects a lag time of one or two
months. The Company believes that the third-party vendors it uses
to provide data are reliable, but it has not verified the accuracy
or completeness of the data or any assumptions underlying the data.
In addition, market share information reported by the Company may
be different from market share information reported by other
companies due to differences in category definitions, the use of
data from different countries, internal estimates and other
factors.
Cautionary Statement on Forward-Looking
Statements
This press release and the related webcast may contain
forward-looking statements (as that term is defined in the U.S.
Private Securities Litigation Reform Act of 1995 or by the
Securities and Exchange Commission (SEC) in its rules, regulations
and releases) that set forth anticipated results based on
management’s current plans and assumptions. Such statements may
relate, for example, to sales or volume growth, net selling price
increases, organic sales growth, profit or profit margin growth,
earnings per share levels, financial goals, the impact of foreign
exchange volatility, cost-reduction plans including the Global
Growth and Efficiency Program, tax rates, U.S. tax reform, new
product introductions or commercial investment levels,
acquisitions, including the recently announced agreement to acquire
the Filorga skin care business, divestitures, or legal or tax
proceedings, among other matters. These statements are made on the
basis of the Company’s views and assumptions as of this time and
the Company undertakes no obligation to update these statements
whether as a result of new information, future events or otherwise,
except as required by law or by the rules and regulations of the
SEC. Moreover, the Company does not nor does any other person
assume responsibility for the accuracy and completeness of these
statements. The Company cautions investors that any such
forward-looking statements are not guarantees of future performance
and that actual events or results may differ materially from those
statements. For more information about factors that could impact
the Company’s business and cause actual results to differ
materially from forward-looking statements, investors should refer
to the Company’s filings with the SEC (including, but not limited
to, the information set forth under the captions “Risk Factors” and
“Cautionary Statement on Forward-Looking Statements” in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2018 and subsequent Quarterly Reports on Form 10-Q). Copies of
these filings may be obtained upon request from the Company’s
Investor Relations Department or on the Company’s website at
http://www.colgatepalmolive.com.
Non-GAAP Financial Measures
The following provides information regarding the non-GAAP
financial measures used in this earnings release and/or the related
webcast:
This release discusses Net sales growth (GAAP) and organic sales
growth, which is Net sales growth excluding the impact of foreign
exchange, acquisitions and divestments (non-GAAP). Management
believes the organic sales growth measure provides investors and
analysts with useful supplemental information regarding the
Company’s underlying sales trends by presenting sales growth
excluding the external factor of foreign exchange as well as the
impact from acquisitions and divestments. See “Geographic Sales
Analysis Percentage Changes” for the three and six months ended
June 30, 2019 vs. 2018 included with this release for a comparison
of organic sales growth to Net sales growth in accordance with
GAAP.
To supplement Colgate’s Condensed Consolidated Statements of
Income presented in accordance with GAAP, the Company has disclosed
non-GAAP measures of operating results that exclude certain items.
Worldwide Gross profit, Gross profit margin, Selling, general and
administrative expenses, Selling, general and administrative
expenses as a percentage of Net sales, Other (income) expense, net,
Operating profit, Operating profit margin, Non-service related
postretirement costs, Effective income tax rate, Net income
attributable to Colgate-Palmolive Company and Diluted earnings per
common share are discussed both as reported (on a GAAP basis) and
excluding charges resulting from the Global Growth and Efficiency
Program and, as applicable, the benefit from a foreign tax matter
and the charge related to U.S. tax reform (non-GAAP). These
non-GAAP financial measures exclude items that, either by their
nature or amount, management would not expect to occur as part of
the Company’s normal business on a regular basis, such as
restructuring charges, charges for certain litigation and tax
matters, gains and losses from certain divestitures and certain
unusual, non-recurring items. Investors and analysts use these
financial measures in assessing the Company’s business performance,
and management believes that presenting these financial measures on
a non-GAAP basis provides them with useful supplemental information
to enhance their understanding of the Company’s underlying business
performance and trends. These non-GAAP financial measures also
enhance the ability to compare period-to-period financial results.
See “Non-GAAP Reconciliations” for the three and six months ended
June 30, 2019 and 2018 included with this release for a
reconciliation of these financial measures to the related GAAP
measures.
The Company uses these financial measures internally in its
budgeting process, to evaluate segment and overall operating
performance and as factors in determining compensation. While the
Company believes that these financial measures are useful in
evaluating the Company’s underlying business performance and
trends, this information should be considered as supplemental in
nature and is not meant to be considered in isolation or as a
substitute for the related financial information prepared in
accordance with GAAP. In addition, these non-GAAP financial
measures may not be the same as similar measures presented by other
companies.
The Company defines free cash flow before dividends as Net cash
provided by operations less Capital expenditures. As management
uses this measure to evaluate the Company’s ability to satisfy
current and future obligations, repurchase stock, pay dividends and
fund future business opportunities, the Company believes that it
provides useful information to investors. Free cash flow before
dividends is not a measure of cash available for discretionary
expenditures since the Company has certain non-discretionary
obligations such as debt service that are not deducted from the
measure. Free cash flow before dividends is a non-GAAP measure and
may not be comparable to similarly titled measures reported by
other companies. See “Condensed Consolidated Statements of Cash
Flows” for the six months ended June 30, 2019 and 2018 for a
comparison of free cash flow before dividends to Net cash provided
by operations as reported in accordance with GAAP.
(See attached tables for second quarter
results.)
Table 1
Colgate-Palmolive
Company
Condensed Consolidated
Statements of Income
For the Three Months Ended
June 30, 2019 and 2018
(Dollars in Millions Except
Per Share Amounts) (Unaudited)
2019
2018
Net sales
$
3,866
$
3,886
Cost of sales
1,558
1,585
Gross profit
2,308
2,301
Gross profit margin
59.7
%
59.2
%
Selling, general and administrative
expenses
1,369
1,300
Other (income) expense, net
51
55
Operating profit
888
946
Operating profit margin
23.0
%
24.3
%
Non-service related postretirement
costs
27
23
Interest (income) expense, net
38
35
Income before income taxes
823
888
Provision for income taxes
205
213
Effective tax rate
24.9
%
24.0
%
Net income including noncontrolling
interests
618
675
Less: Net income attributable to
noncontrolling interests
32
38
Net income attributable to
Colgate-Palmolive Company
$
586
$
637
Earnings per common share
Basic
$
0.68
$
0.73
Diluted
$
0.68
$
0.73
Average common shares outstanding
Basic
859.4
871.7
Diluted
861.9
874.0
Table 2
Colgate-Palmolive
Company
Condensed Consolidated
Statements of Income
For the Six Months Ended June
30, 2019 and 2018
(Dollars in Millions Except
Per Share Amounts) (Unaudited)
2019
2018
Net sales
$
7,750
$
7,888
Cost of sales
3,155
3,179
Gross profit
4,595
4,709
Gross profit margin
59.3
%
59.7
%
Selling, general and administrative
expenses
2,734
2,692
Other (income) expense, net
94
88
Operating profit
1,767
1,929
Operating profit margin
22.8
%
24.5
%
Non-service related postretirement
costs
52
47
Interest (income) expense, net
78
70
Income before income taxes
1,637
1,812
Provision for income taxes
419
459
Effective tax rate
25.6
%
25.3
%
Net income including noncontrolling
interests
1,218
1,353
Less: Net income attributable to
noncontrolling interests
72
82
Net income attributable to
Colgate-Palmolive Company
$
1,146
$
1,271
Earnings per common share
Basic(1)
$
1.33
$
1.46
Diluted(1)
$
1.33
$
1.45
Average common shares outstanding
Basic
860.7
873.5
Diluted
862.7
877.0
Note:
(1) Basic and diluted earnings per share are computed
independently for each quarter and any year-to-date period
presented. As a result of changes in shares outstanding during the
year and rounding, the sum of the quarters’ earnings per share may
not necessarily equal the earnings per share for any year-to-date
period.
Table 3
Colgate-Palmolive
Company
Condensed Consolidated Balance
Sheets
As of June 30, 2019, December
31, 2018 and June 30, 2018
(Dollars in Millions)
(Unaudited)
June 30,
December 31,
June 30,
2019
2018
2018
Cash and cash equivalents
$
863
$
726
$
833
Receivables, net
1,590
1,400
1,545
Inventories
1,322
1,250
1,254
Other current assets
480
417
540
Property, plant and equipment,
net
3,793
3,881
3,908
Other assets, including goodwill
and intangibles
5,103
4,487
4,570
Total assets
$
13,151
$
12,161
$
12,650
Total debt
$
6,645
$
6,366
$
6,865
Other current liabilities
3,777
3,329
3,596
Other non-current liabilities
2,739
2,269
2,378
Total liabilities
13,161
11,964
12,839
Total Colgate-Palmolive Company
shareholders’ equity
(347
)
(102
)
(523
)
Noncontrolling interests
337
299
334
Total liabilities and equity
$
13,151
$
12,161
$
12,650
Supplemental Balance Sheet
Information
Debt less cash, cash equivalents
and marketable securities(1)
$
5,716
$
5,630
$
5,949
Working capital % of sales
(2.9
)%
(1.7
)%
(2.1
)%
Note: (1) Marketable securities of $66, $10 and $83 as of
June 30, 2019, December 31, 2018 and June 30, 2018, respectively,
are included in Other current assets.
Table 4
Colgate-Palmolive
Company
Condensed Consolidated
Statements of Cash Flows
For the Six Months Ended June
30, 2019 and 2018
(Dollars in Millions)
(Unaudited)
2019
2018
Operating Activities
Net income including noncontrolling
interests
$
1,218
$
1,353
Adjustments to reconcile Net income
including noncontrolling interests to Net cash provided by
operations:
Depreciation and amortization
256
258
Restructuring and termination benefits,
net of cash
21
(14
)
Stock-based compensation expense
34
47
Deferred income taxes
53
2
Voluntary benefit plan contributions
(102
)
—
Cash effects of changes in:
Receivables
(178
)
(200
)
Inventories
(63
)
(30
)
Accounts payable and other accruals
(14
)
(96
)
Other non-current assets and
liabilities
24
(23
)
Net cash provided by operations
1,249
1,297
Investing Activities
Capital expenditures
(146
)
(216
)
Purchases of marketable securities and
investments
(80
)
(96
)
Proceeds from sale of marketable
securities and investments
14
19
Payment for acquisitions, net of cash
acquired
—
(727
)
Other
—
7
Net cash used in investing activities
(212
)
(1,013
)
Financing Activities
Principal payments on debt
(3,105
)
(3,953
)
Proceeds from issuance of debt
3,368
4,266
Dividends paid
(770
)
(756
)
Purchases of treasury shares
(664
)
(696
)
Proceeds from exercise of stock
options
267
160
Net cash used in financing activities
(904
)
(979
)
Effect of exchange rate changes on Cash
and cash equivalents
4
(7
)
Net increase (decrease) in Cash and cash
equivalents
137
(702
)
Cash and cash equivalents at beginning of
the period
726
1,535
Cash and cash equivalents at end of the
period
$
863
$
833
Supplemental Cash Flow
Information
Free cash flow before dividends (Net cash
provided by operations less Capital expenditures)
Net cash provided by operations
$
1,249
$
1,297
Less: Capital expenditures
(146
)
(216
)
Free cash flow before dividends
$
1,103
$
1,081
Income taxes paid
$
463
$
468
Table 5
Colgate-Palmolive
Company
Segment Information
For the Three and Six Months
Ended June 30, 2019 and 2018
(Dollars in Millions)
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Net Sales
Oral, Personal and Home Care
North America
$
846
$
824
$
1,699
$
1,651
Latin America
929
933
1,818
1,862
Europe
588
620
1,190
1,268
Asia Pacific
646
674
1,346
1,433
Africa/Eurasia
244
243
484
498
Total Oral, Personal and Home Care
3,253
3,294
6,537
6,712
Pet Nutrition
613
592
1,213
1,176
Total Net Sales
$
3,866
$
3,886
$
7,750
$
7,888
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Operating Profit
Oral, Personal and Home Care
North America
$
254
$
264
$
503
$
521
Latin America
251
262
483
535
Europe
148
156
299
318
Asia Pacific
174
203
363
429
Africa/Eurasia
47
42
93
92
Total Oral, Personal and Home Care
874
927
1,741
1,895
Pet Nutrition
167
165
331
329
Corporate(1)
(153
)
(146
)
(305
)
(295
)
Total Operating Profit
$
888
$
946
$
1,767
$
1,929
Note: (1) Corporate operations include costs related to
stock options and restricted stock units, research and development
costs, Corporate overhead costs, restructuring and related
implementation costs and gains and losses on sales of non-core
product lines and assets. Corporate Operating profit (loss)
for the three months ended June 30, 2019 includes charges of $40
related to the Global Growth and Efficiency Program. Corporate
Operating profit (loss) for the three months ended June 30, 2018
included charges of $58 related to the Global Growth and Efficiency
Program. Corporate Operating profit (loss) for the six
months ended June 30, 2019 includes charges of $68 related to the
Global Growth and Efficiency Program. Corporate Operating profit
(loss) for the six months ended June 30, 2018 included charges of
$82 related to the Global Growth and Efficiency Program.
Table 6
Colgate-Palmolive
Company
Geographic Sales Analysis
Percentage Changes
For the Three Months Ended
June 30, 2019 vs. 2018
(Unaudited)
COMPONENTS OF SALES
CHANGE
Pricing
Coupons
Sales
Consumer &
Change
Organic
As Reported
Organic
Ex-Divested
Trade
Foreign
Region
As
Reported
Sales
Change
Volume
Volume
Volume
Incentives
Exchange
Total Company
(0.5)%
4.0%
1.0%
1.0%
1.0%
3.0%
(4.5)%
Europe
(5.0)%
1.0%
—%
—%
—%
1.0%
(6.0)%
Latin America
(0.5)%
7.0%
1.5%
1.5%
1.5%
5.5%
(7.5)%
Asia Pacific
(4.0)%
(1.0)%
(1.5)%
(1.5)%
(1.5)%
0.5%
(3.0)%
Africa/Eurasia
0.5%
9.5%
3.5%
3.5%
3.5%
6.0%
(9.0)%
Total International
(2.5)%
3.5%
0.5%
0.5%
0.5%
3.0%
(6.0)%
North America
2.5%
3.0%
2.0%
2.0%
2.0%
1.0%
(0.5)%
Total CP Products
(1.5)%
3.5%
1.0%
1.0%
1.0%
2.5%
(5.0)%
Hill’s
3.5%
6.0%
2.0%
2.0%
2.0%
4.0%
(2.5)%
Emerging Markets(1)
(1.0)%
5.5%
1.5%
1.5%
1.5%
4.0%
(6.5)%
Developed Markets
(0.5)%
2.0%
0.5%
0.5%
0.5%
1.5%
(2.5)%
Note: (1) Emerging Markets include Latin America, Asia
(excluding Japan), Africa/Eurasia and Central Europe.
Table 7
Colgate-Palmolive
Company
Geographic Sales Analysis
Percentage Changes
For the Six Months Ended June
30, 2019 vs. 2018
(Unaudited)
COMPONENTS OF SALES
CHANGE
Pricing
Coupons
Sales
Consumer &
Change
Organic
As Reported
Organic
Ex-Divested
Trade
Foreign
Region
As
Reported
Sales
Change
Volume
Volume
Volume
Incentives
Exchange
Total Company
(2.0)%
3.5%
1.0%
1.0%
1.0%
2.5%
(5.5)%
Europe
(6.0)%
0.5%
0.5%
0.5%
0.5%
—%
(6.5)%
Latin America
(2.5)%
6.5%
2.0%
2.0%
2.0%
4.5%
(9.0)%
Asia Pacific
(6.0)%
(2.0)%
(2.0)%
(2.0)%
(2.0)%
—%
(4.0)%
Africa/Eurasia
(3.0)%
8.0%
1.5%
1.5%
1.5%
6.5%
(11.0)%
Total International
(4.5)%
3.0%
0.5%
0.5%
0.5%
2.5%
(7.5)%
North America
3.0%
3.5%
2.0%
2.0%
2.0%
1.5%
(0.5)%
Total CP Products
(2.5)%
3.0%
1.0%
1.0%
1.0%
2.0%
(5.5)%
Hill’s
3.0%
6.0%
2.0%
2.0%
2.0%
4.0%
(3.0)%
Emerging Markets(1)
(3.5)%
4.0%
0.5%
0.5%
0.5%
3.5%
(7.5)%
Developed Markets
(0.5)%
2.5%
1.5%
1.5%
1.5%
1.0%
(3.0)%
Note: (1) Emerging Markets include Latin America, Asia
(excluding Japan), Africa/Eurasia and Central Europe.
Table 8
Colgate-Palmolive
Company
Non-GAAP
Reconciliations
For the Three Months Ended
June 30, 2019 and 2018
(Dollars in Millions Except
Per Share Amounts) (Unaudited)
Gross Profit
2019
2018
Gross profit, GAAP
$
2,308
$
2,301
Global Growth and Efficiency Program
(3
)
5
Gross profit, non-GAAP
$
2,305
$
2,306
Basis Point
Gross Profit Margin
2019
2018
Change
Gross profit margin, GAAP
59.7
%
59.2
%
50
Global Growth and Efficiency Program
(0.1
)%
0.1
%
Gross profit margin, non-GAAP
59.6
%
59.3
%
30
Selling, General and Administrative
Expenses
2019
2018
Selling, general and administrative
expenses, GAAP
$
1,369
$
1,300
Global Growth and Efficiency Program
(10
)
(10
)
Selling, general and administrative
expenses, non-GAAP
$
1,359
$
1,290
Basis Point
Selling, General and Administrative
Expenses as a Percentage of Net Sales
2019
2018
Change
Selling, general and administrative
expenses as a percentage of Net sales, GAAP
35.4
%
33.5
%
190
Global Growth and Efficiency Program
(0.2
)%
(0.3
)%
Selling, general and administrative
expenses as a percentage of Net sales, non-GAAP
35.2
%
33.2
%
200
Other (Income) Expense, Net
2019
2018
Other (income) expense, net, GAAP
$
51
$
55
Global Growth and Efficiency Program
(33
)
(43
)
Other (income) expense, net, non-GAAP
$
18
$
12
Operating Profit
2019
2018
% Change
Operating profit, GAAP
$
888
$
946
(6
)%
Global Growth and Efficiency Program
40
58
Operating profit, non-GAAP
$
928
$
1,004
(8
)%
Basis Point
Operating Profit Margin
2019
2018
Change
Operating profit margin, GAAP
23.0
%
24.3
%
(130
)
Global Growth and Efficiency Program
1.0
%
1.5
%
Operating profit margin, non-GAAP
24.0
%
25.8
%
(180
)
Non-Service Related Postretirement
Costs
2019
2018
Non-service related postretirement costs,
GAAP
$
27
$
23
Global Growth and Efficiency Program
(2
)
(3
)
Non-service related postretirement costs,
non-GAAP
$
25
$
20
Table 8
Continued
Colgate-Palmolive
Company
Non-GAAP
Reconciliations
For the Three Months Ended
June 30, 2019 and 2018
(Dollars in Millions Except
Per Share Amounts) (Unaudited)
2019
Income Before Income
Taxes
Provision For Income
Taxes(1)
Net Income Including
Noncontrolling Interests
Net Income Attributable To
Colgate- Palmolive Company
Effective Income Tax
Rate(2)
Diluted Earnings Per
Share
As Reported GAAP
$
823
$
205
$
618
$
586
24.9
%
$
0.68
Global Growth and Efficiency Program
42
11
31
31
0.1
%
0.04
Non-GAAP
$
865
$
216
$
649
$
617
25.0
%
$
0.72
2018
Income Before Income
Taxes
Provision For Income
Taxes(1)
Net Income Including
Noncontrolling Interests
Less: Income Attributable To
Noncontrolling Interests
Net Income Attributable To
Colgate- Palmolive Company
Effective Income Tax
Rate(2)
Diluted Earnings Per
Share
As Reported GAAP
$
888
$
213
$
675
$
38
$
637
24.0
%
$
0.73
Global Growth and Efficiency Program
61
13
48
(3
)
51
(0.2
)%
0.06
Benefit from a foreign tax matter
—
15
(15
)
—
(15
)
1.6
%
(0.02
)
Non-GAAP
$
949
$
241
$
708
$
35
$
673
25.4
%
$
0.77
The impact of non-GAAP adjustments may not necessarily equal
the difference between “GAAP” and “non-GAAP” as a result of
rounding. Notes: (1) The income tax effect on non-GAAP items
is calculated based upon the tax laws and statutory income tax
rates applicable in the tax jurisdiction(s) of the underlying
non-GAAP adjustment. (2) The impact of non-GAAP items on the
Company’s effective tax rate represents the difference in the
effective tax rate calculated with and without the non-GAAP
adjustment on Income before income taxes and Provision for income
taxes.
Table 9
Colgate-Palmolive
Company
Non-GAAP
Reconciliations
For the Six Months Ended June
30, 2019 and 2018
(Dollars in Millions Except
Per Share Amounts) (Unaudited)
Gross Profit
2019
2018
Gross profit, GAAP
$
4,595
$
4,709
Global Growth and Efficiency Program
8
11
Gross profit, non-GAAP
$
4,603
$
4,720
Basis Point
Gross Profit Margin
2019
2018
Change
Gross profit margin, GAAP
59.3
%
59.7
%
(40
)
Global Growth and Efficiency Program
0.1
%
0.1
%
Gross profit margin, non-GAAP
59.4
%
59.8
%
(40
)
Selling, General and Administrative
Expenses
2019
2018
Selling, general and administrative
expenses, GAAP
$
2,734
$
2,692
Global Growth and Efficiency Program
(14
)
(15
)
Selling, general and administrative
expenses, non-GAAP
$
2,720
$
2,677
Basis Point
Selling, General and Administrative
Expenses as a Percentage of Net Sales
2019
2018
Change
Selling, general and administrative
expenses as a percentage of Net sales, GAAP
35.3
%
34.1
%
120
Global Growth and Efficiency Program
(0.2
)%
(0.2
)%
Selling, general and administrative
expenses as a percentage of Net sales, non-GAAP
35.1
%
33.9
%
120
Other (Income) Expense, Net
2019
2018
Other (income) expense, net, GAAP
$
94
$
88
Global Growth and Efficiency Program
(46
)
(56
)
Other (income) expense, net, non-GAAP
$
48
$
32
Operating Profit
2019
2018
% Change
Operating profit, GAAP
$
1,767
$
1,929
(8
)%
Global Growth and Efficiency Program
68
82
Operating profit, non-GAAP
$
1,835
$
2,011
(9
)%
Basis Point
Operating Profit Margin
2019
2018
Change
Operating profit margin, GAAP
22.8
%
24.5
%
(170
)
Global Growth and Efficiency Program
0.9
%
1.0
%
Operating profit margin, non-GAAP
23.7
%
25.5
%
(180
)
Non-Service Related Postretirement
Costs
2019
2018
Non-service related postretirement costs,
GAAP
$
52
$
47
Global Growth and Efficiency Program
(3
)
(7
)
Non-service related postretirement costs,
non-GAAP
$
49
$
40
Table 9
Continued
Colgate-Palmolive
Company
Non-GAAP
Reconciliations
For the Six Months Ended June
30, 2019 and 2018
(Dollars in Millions Except
Per Share Amounts) (Unaudited)
2019
Income Before Income
Taxes
Provision For Income
Taxes(1)
Net Income Including
Noncontrolling Interests
Net Income Attributable To
Colgate- Palmolive Company
Effective Income Tax
Rate(2)
Diluted Earnings Per
Share
As Reported GAAP
$
1,637
$
419
$
1,218
$
1,146
25.6
%
$
1.33
Global Growth and Efficiency Program
71
18
53
53
—
%
0.06
Non-GAAP
$
1,708
$
437
$
1,271
$
1,199
25.6
%
$
1.39
2018
Income Before Income
Taxes
Provision For Income
Taxes(1)
Net Income Including
Noncontrolling Interests
Less: Income Attributable To
Noncontrolling Interests
Net Income Attributable To
Colgate- Palmolive Company
Effective Income Tax
Rate(2)
Diluted Earnings Per
Share
As Reported GAAP
$
1,812
$
459
$
1,353
$
82
$
1,271
25.3
%
$
1.45
Global Growth and Efficiency Program
89
21
68
(3
)
71
(0.1
)%
0.08
Benefit from a foreign tax matter
—
15
(15
)
—
(15
)
0.8
%
(0.02
)
Non-GAAP
$
1,901
$
495
$
1,406
$
79
$
1,327
26.0
%
$
1.51
The impact of non-GAAP adjustments may not necessarily equal
the difference between “GAAP” and “non-GAAP” as a result of
rounding. Notes: (1) The income tax effect on non-GAAP items
is calculated based upon the tax laws and statutory income tax
rates applicable in the tax jurisdiction(s) of the underlying
non-GAAP adjustment. (2) The impact of non-GAAP items on the
Company’s effective tax rate represents the difference in the
effective tax rate calculated with and without the non-GAAP
adjustment on Income before income taxes and Provision for income
taxes.
View source
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