Net Sales +5%; Organic Sales +4%;
Diluted Net EPS $1.26, +13% vs. prior year
Reported EPS; +8% vs. prior year Core EPS
MAINTAINS SALES AND EARNINGS GUIDANCE
RAISES OUTLOOK FOR ADJUSTED FREE CASH FLOW
PRODUCTIVITY AND CASH RETURN
The Procter & Gamble Company (NYSE:PG) reported third
quarter fiscal year 2021 net sales of $18.1 billion, an increase of
five percent versus the prior year. Excluding the impacts of
foreign exchange, acquisitions and divestitures, organic sales
increased four percent. Diluted net earnings per share were $1.26,
an increase of 13% versus prior year reported EPS and eight percent
versus prior year Core EPS.
Operating cash flow was $4.1 billion for the quarter. Free cash
flow productivity was 106%. The Company returned $5 billion of cash
to shareholders via $2 billion of dividend payments and $3 billion
of common stock repurchases. Earlier this month, P&G announced
a 10% increase in the quarterly dividend, marking the 65th
consecutive year the Company has increased its dividend. P&G
has been paying a dividend for 131 consecutive years since its
incorporation in 1890.
“We delivered another quarter of solid top-line, bottom-line and
cash results in what continues to be a challenging operating
environment,” 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 and
accelerate our progress during the crisis, and they remain the
right strategies to deliver balanced growth and value creation over
the long term.”
January - March Quarter Discussion
Net sales in the third quarter of fiscal year 2021 were $18.1
billion, a five percent increase versus the prior year. Favorable
foreign exchange increased net sales for the quarter by one
percentage point. Excluding the impacts of foreign exchange,
acquisitions and divestitures, organic sales increased four
percent, driven by two percentage points 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, Oral Care and Appliances categories and the North America and
Greater China regions. Shipment volumes were unchanged versus the
prior year.
January - March
2021
Volume
Foreign
Exchange
Price
Mix
Other (2)
Net
Sales
Organic
Volume
Organic
Sales
Net Sales
Drivers (1)
Beauty
2%
2%
2%
3%
—%
9%
2%
7%
Grooming
—%
—%
2%
2%
—%
4%
—%
4%
Health Care
—%
1%
—%
3%
—%
4%
—%
3%
Fabric & Home Care
3%
1%
2%
2%
—%
8%
3%
7%
Baby, Feminine & Family Care
(4)%
1%
2%
1%
—%
—%
(4)%
(1)%
Total P&G
—%
1%
2%
2%
—%
5%
—%
4%
(1)
Net sales percentage changes are
approximations based on quantitative formulas that are consistently
applied.
(2)
Other includes the sales mix
impact from acquisitions and divestitures and rounding impacts
necessary to reconcile volume to net sales.
- Beauty segment organic sales increased seven percent versus
year ago. Skin and Personal Care organic sales increased high
single digits primarily driven by positive mix impact from growth
of super premium SK-II brand, premium innovation in North America
Skin Care and increased pricing. Hair Care organic sales increased
high single digits led by Greater China due to innovation,
distribution growth and a low base period due to pandemic-related
shutdowns. Devaluation-related price increases also contributed to
Hair Care sales growth.
- Grooming segment organic sales increased four percent versus
year ago. Appliances organic sales increased more than 20% due to
increased demand for at-home shaving and styling products,
innovation and increased pricing. Shave Care organic sales were
unchanged as devaluation related price increases and growth in
female blades and razors were offset by consumption declines in
male blades and razors due to decreased shave frequency.
- Health Care segment organic sales increased three percent for
the quarter. Oral Care organic sales increased high single digits
driven by innovation and the positive mix impacts of premium
products growth. Personal Health Care organic sales decreased
mid-single digits primarily due to pandemic-related increases in
consumer and retailer inventories in the base period and a lower
than average cough, cold and flu season in the current period.
- Fabric and Home Care segment organic sales increased seven
percent for the quarter. Fabric Care organic sales increased low
single digits driven by innovation, marketing investments,
devaluation-related price increases and positive mix from the
disproportionate growth of premium forms like fabric enhancer
beads. Home Care organic sales increased high teens driven by
increased consumer demand for home cleaning products during the
pandemic, innovation, increased marketing investments and positive
mix due to the disproportionate growth of the North America
region.
- Baby, Feminine and Family Care segment organic sales decreased
one percent versus year ago. Baby Care organic sales decreased
mid-single digits primarily driven by reduction in retailer
inventories and competitive activity in the current period and
pandemic-related pantry loading in the base period. Feminine Care
organic sales decreased low single digits driven by category
contraction in certain European markets, partially offset by
positive product mix due to premium innovation growth in North
America and Greater China. Family Care organic sales increased
mid-single digits primarily driven by increased pricing due to
lower promotional activity.
Diluted net earnings per share were $1.26, a 13% increase versus
the prior year primarily driven by the increase in net sales and an
80 basis-point increase in operating margin. Diluted net earnings
per share increased eight percent versus the prior year Core EPS,
which excludes non-core restructuring charges in the base period.
Currency-neutral net EPS also increased eight percent for the
quarter versus the prior year Core EPS.
Reported gross margin increased 130 basis points versus the
prior year reported gross margin. Reported gross margin increased
30 basis points versus the prior year core gross margin due to 100
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 80 basis points versus the prior year core gross margin
driven by 120 basis points of productivity savings and 80 basis
points of benefit from increased pricing, partially offset by 30
basis points negative impact from higher commodity costs and 90
basis points of unfavorable product mix, product reinvestments and
other costs. Productivity savings included approximately 80 basis
points of headwinds from freight cost increases.
Selling, general and administrative expense (SG&A) as a
percentage of sales increased 50 basis points on a reported basis
versus the prior year. SG&A as a percentage of sales increased
30 basis points versus the prior year core SG&A due to
approximately 20 basis points of lower non-core restructuring
charges in the base period. Foreign exchange reduced SG&A by 20
basis points. On a currency-neutral basis, reported SG&A as a
percentage of sales increased 50 basis points versus the prior year
core SG&A driven by 150 basis points of marketing reinvestments
and approximately 110 basis points of inflation and other impacts,
partially offset by 120 basis points of sales leverage benefit and
90 basis points of productivity savings from overhead and marketing
expenses.
Operating profit margin increased 80 basis points versus the
base period reported operating margin. Operating profit margin was
unchanged versus the base period core operating margin due to
approximately 80 basis points of non-core restructuring charges in
the base period. Unfavorable foreign exchange negatively impacted
operating margins by 30 basis points. On a currency-neutral basis,
reported operating margin increased 30 basis points versus the
prior year core operating margin, including total productivity cost
savings of 210 basis points for the quarter.
Fiscal Year 2021 Guidance
P&G maintained its outlook for fiscal 2021 all-in and
organic sales growth in the range of five to six percent versus the
prior fiscal year. Foreign exchange is expected to be roughly
neutral to sales growth for the fiscal year.
The Company said it continues to expect 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 of $0.16 per share in fiscal 2021 for early debt
retirement and of $0.16 per share in fiscal 2020 for incremental
restructuring charges. P&G maintained guidance for core
earnings per share growth in the range of eight to ten percent
versus fiscal 2020 core EPS of $5.12. The Company said its current
outlook includes headwinds of approximately $150 million after-tax
from foreign exchange impacts and more than $200 million after-tax
from higher freight costs. The Company now expects a headwind from
commodity costs of approximately $125 million after-tax 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 over 100%
for the year.
P&G expects to pay more than $8 billion in dividends in
fiscal 2021. The Company increased its outlook for common stock
repurchase from up to $10 billion to approximately $11 billion in
fiscal 2021. Combined, P&G now plans to return about $19
billion of cash to shareowners in this fiscal year.
The Company added that it has started the process of
implementing price increases on its Baby Care, Feminine Care and
Adult Incontinence product categories in the United States to
offset a portion of the impact of rising commodity costs. P&G
said the exact amount of the price increase will vary by brand and
sub-brand in the range of mid-to-high single digit percentages and
will go into effect in mid-September.
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 March
31
2021
2020
% Chg
NET SALES
$
18,109
$
17,214
5%
Cost of products sold
8,922
8,716
2%
GROSS PROFIT
9,187
8,498
8%
Selling, general and administrative
expense
5,402
5,045
7%
OPERATING INCOME
3,785
3,453
10%
Interest expense
(106
)
(100
)
6%
Interest income
11
39
(72)%
Other non-operating income, net
187
106
76%
EARNINGS BEFORE INCOME TAXES
3,877
3,498
11%
Income taxes
628
541
16%
NET EARNINGS
3,249
2,957
10%
Less: Net earnings/(loss) attributable to
noncontrolling interests
(20
)
40
(150)%
NET EARNINGS ATTRIBUTABLE TO PROCTER
& GAMBLE
$
3,269
$
2,917
12%
EFFECTIVE TAX RATE
16.2
%
15.5
%
NET EARNINGS PER SHARE (1)
Basic
$
1.30
$
1.15
13%
Diluted
$
1.26
$
1.12
13%
DIVIDENDS PER COMMON SHARE
$
0.7907
$
0.7459
DILUTED WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
2,590.3
2,613.3
COMPARISONS AS A % OF NET SALES
Basis Pt Chg
Gross profit
50.7
%
49.4
%
130
Selling, general and administrative
expense
29.8
%
29.3
%
50
Operating income
20.9
%
20.1
%
80
Earnings before income taxes
21.4
%
20.3
%
110
Net earnings
17.9
%
17.2
%
70
Net earnings attributable to Procter &
Gamble
18.1
%
16.9
%
120
(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,
2021
Net Sales
% Change
Versus Year
Ago
Earnings/(Loss) Before
Income Taxes
% Change
Versus Year
Ago
Net Earnings
% Change
Versus Year
Ago
Beauty
$3,316
9%
$721
30%
$577
32%
Grooming
1,438
4%
314
3%
256
1%
Health Care
2,356
4%
484
(7)%
377
(8)%
Fabric & Home Care
6,275
8%
1,348
6%
1,027
7%
Baby, Feminine & Family
Care
4,604
—%
1,133
—%
871
1%
Corporate
120
N/A
(123)
N/A
141
N/A
Total Company
$18,109
5%
$3,877
11%
$3,249
10%
Three Months Ended March 31,
2021
Net Sales
Drivers (1)
Volume
Organic
Volume
Foreign
Exchange
Price
Mix
Other (2)
Net Sales
Beauty
2%
2%
2%
2%
3%
—%
9%
Grooming
—%
—%
—%
2%
2%
—%
4%
Health Care
—%
—%
1%
—%
3%
—%
4%
Fabric & Home Care
3%
3%
1%
2%
2%
—%
8%
Baby, Feminine & Family Care
(4)%
(4)%
1%
2%
1%
—%
—%
Total Company
—%
—%
1%
2%
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 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
2021
2020
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, BEGINNING OF PERIOD
$
16,181
$
4,239
OPERATING ACTIVITIES
Net earnings
11,444
10,317
Depreciation and amortization
2,025
2,199
Loss on early extinguishment of debt
512
—
Share-based compensation expense
398
325
Deferred income taxes
(167
)
(588
)
Loss/(gain) on sale of assets
(15
)
11
Changes in:
Accounts receivable
(604
)
135
Inventories
(399
)
(533
)
Accounts payable, accrued and other
liabilities
1,049
738
Other operating assets and liabilities
(92
)
(58
)
Other
99
51
TOTAL OPERATING ACTIVITIES
14,250
12,597
INVESTING ACTIVITIES
Capital expenditures
(2,073
)
(2,415
)
Proceeds from asset sales
40
28
Acquisitions, net of cash acquired
—
(58
)
Purchases of investments securities
(10
)
—
Proceeds from sales and maturities of
investment securities
—
6,151
Change in other investments
—
(2
)
TOTAL INVESTING ACTIVITIES
(2,043
)
3,704
FINANCING ACTIVITIES
Dividends to shareholders
(6,066
)
(5,761
)
Increases/(reductions) in short-term
debt
(3,381
)
3,020
Additions to long-term debt
2,429
4,951
Reductions to long-term debt (1)
(4,889
)
(1,534
)
Treasury stock purchases
(8,009
)
(7,405
)
Impact of stock options and other
1,470
1,761
TOTAL FINANCING ACTIVITIES
(18,446
)
(4,968
)
EFFECT OF EXCHANGE RATE CHANGES ON
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
65
(179
)
CHANGE IN CASH, CASH EQUIVALENTS AND
RESTRICTED CASH
(6,174
)
11,154
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, END OF PERIOD
$
10,007
$
15,393
(1)
Includes early extinguishment of
debt costs of $512 during the nine months ended March 31, 2021.
THE PROCTER & GAMBLE
COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per
Share Amounts)
Condensed Consolidated Balance
Sheets
March 31, 2021
June 30, 2020
Cash and cash equivalents
$
10,007
$
16,181
Accounts receivable
4,861
4,178
Inventories
6,002
5,498
Prepaid expenses and other current
assets
1,738
2,130
TOTAL CURRENT ASSETS
22,608
27,987
Property, plant and equipment, net
21,103
20,692
Goodwill
40,612
39,901
Trademarks and other intangible assets,
net
23,658
23,792
Other noncurrent assets
8,797
8,328
TOTAL ASSETS
$
116,778
$
120,700
Accounts payable
$
12,134
$
12,071
Accrued and other liabilities
11,109
9,722
Debt due within one year
8,773
11,183
TOTAL CURRENT LIABILITIES
32,016
32,976
Long-term debt
21,053
23,537
Deferred income taxes
5,977
6,199
Other noncurrent liabilities
10,813
11,110
TOTAL LIABILITIES
69,859
73,822
TOTAL SHAREHOLDERS' EQUITY
46,919
46,878
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
$
116,778
$
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 April 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 Company is not able to reconcile its forward-looking non-GAAP
cash flow measure because the Company cannot predict the timing and
amounts of discrete items such as acquisition and divestitures,
which could significantly impact GAAP results.
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.
Free cash flow productivity and Adjusted
free cash flow productivity: Free cash flow productivity is
defined as the ratio of free cash flow to net earnings. 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 free cash flow productivity and
adjusted free cash flow productivity as useful measures to help
investors understand P&G’s ability to generate cash. These
measures are used by management in making operating decisions,
allocating financial resources and for budget planning purposes.
They are 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
March 31, 2021
Three Months Ended March 31,
2020
AS REPORTED
(GAAP)
AS REPORTED
(GAAP)
INCREMENTAL
RESTRUCTURING (2)
ROUNDING
NON-GAAP (CORE)
COST OF PRODUCTS SOLD
$
8,922
$
8,716
$
(179
)
$
—
$
8,537
GROSS PROFIT
9,187
8,498
179
—
8,677
GROSS MARGIN
50.7
%
49.4
%
1.0
%
—
%
50.4
%
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSE
5,402
5,045
26
—
5,071
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSE AS A % OF NET SALES
29.8
%
29.3
%
0.2
%
—
%
29.5
%
OPERATING INCOME
3,785
3,453
153
—
3,606
OPERATING PROFIT MARGIN
20.9
%
20.1
%
0.9
%
(0.1
)%
20.9
%
NET EARNINGS ATTRIBUTABLE TO
P&G
3,269
2,917
141
—
3,058
DILUTED NET EARNINGS PER COMMON SHARE
(1)
$
1.26
$
1.12
$
0.05
$
—
$
1.17
CURRENCY-IMPACT TO CORE
EARNINGS
$
—
CURRENCY-NEUTRAL CORE EPS
$
1.26
DILUTED WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
2,590.3
2,613.3
COMMON SHARES OUTSTANDING - MARCH 31,
2021
2,448.2
(1)
Diluted net earnings per share
are calculated on Net earnings attributable to Procter &
Gamble.
(2)
While total restructuring costs
exceeded the historical ongoing level, total restructuring costs
included within SG&A for this period were below the historical
ongoing level. Accordingly, the non-GAAP adjustment for the
SG&A line item adds costs to the comparable GAAP number.
CHANGE IN CURRENT YEAR REPORTED (GAAP)
MEASURES VERSUS PRIOR YEAR NON-GAAP (CORE) MEASURES (1)
GROSS MARGIN (1)
30
BPS
SELLING GENERAL & ADMINISTRATIVE
EXPENSE AS A % OF NET SALES (1)
30
BPS
OPERATING PROFIT MARGIN (1)
—
BPS
EPS
8
%
CURRENCY-NEUTRAL EPS
8
%
(1)
Change versus year ago is
calculated based on As Reported (GAAP) values for the three months
ended March 31, 2021 versus the Non-GAAP (Core) values for the
three months ended March 31, 2020.
Organic sales growth:
January - March
2021
Net
Sales Growth
Foreign
Exchange
Impact
Acquisition &
Divestiture
Impact/Other (1)
Organic
Sales
Growth
Beauty
9%
(2)%
—%
7%
Grooming
4%
—%
—%
4%
Health Care
4%
(1)%
—%
3%
Fabric & Home Care
8%
(1)%
—%
7%
Baby, Feminine & Family Care
—%
(1)%
—%
(1)%
Total P&G
5%
(1)%
—%
4%
(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 March 31,
2021
Operating Cash Flow
Capital
Spending
Free
Cash Flow
$4,087
$(656)
$3,431
Free cash flow productivity (dollar
amounts in millions):
Three Months Ended March 31,
2021
Free
Cash Flow
Net
Earnings
Free
Cash Flow
Productivity
$3,431
$3,249
106%
Category: PG-IR
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210420005629/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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