Kimberly-Clark Announces First Quarter 2023 Results
Net sales growth up 2 percent, organic growth up 5 percent
Revenue Growth Management program drives significant margin improvements
Company raises 2023 outlook for EPS growth
"I'm proud of our teams around the world for a strong start to the year. We grew organic sales by 5 percent, which reflects the health of our categories and the essential nature of our products," said Chairman and CEO
Hsu continued, "While inflationary pressures have yet to subside, we drove continued improvement in our gross margin this quarter. We will continue to lean into our productivity and cost savings programs to mitigate elevated costs, while strategically investing in future growth platforms that will expand our presence in attractive markets for years to come."
Quarter Highlights
- Delivered strong top-line growth, with net sales of
$5.2 billion , up 2 percent with organic sales growth of 5 percent. On a combined two year basis, organic growth increased 8 percent. - Gross margin increased 340 basis points versus the prior year, driven by favorable net revenue realization offsetting inflation.
- Diluted earnings per share were
$1.67 , up 8 percent; up 24 percent versus adjusted earnings per share last year. - Raised 2023 outlook for adjusted earnings per share growth of 6 to 10 percent, with operating profit up low double digits on a percent basis versus adjusted results last year.
Strategic Highlights
- Continuing advances in commercial capabilities, including revenue growth management and in-market execution.
- Personal Care driving occasion-led innovation with Kotex overnights and GoodNites.
- Refreshed Cottonelle Ultra Comfort and Ultra Clean in key
U.S. accounts. - Launched a new innovative washroom solution, Kimberly-Clark Professional ICON, that brings game changing hygiene and design in the
United Kingdom . - Recognized as one of Barron's 100 Most Sustainable Companies in 2023 and one of
Ethisphere's 2023 World's Most Ethical Companies(R) for the fifth year in a row.
First Quarter 2023 Results
First quarter sales of
In
Gross margin improved by 340 basis points to 33.2 percent, with higher net revenue realization and cost savings offsetting higher input costs of
First quarter operating profit was
Net interest expense was
First quarter effective tax rate was 24.5 percent compared to reported rate of 18.2 percent and an adjusted rate of 21.0 percent last year due to benefits of certain tax planning initiatives.
Net income of equity companies was $43 million compared to
EPS increased 8 percent to
Business Segment Net Sales Results
Change vs year ago (%) |
Volume |
Price |
Mix/Other |
Acquisition(a) |
Currency |
Total(b) |
Organic(c) |
|||||||
Personal Care |
(5) |
7 |
1 |
1 |
(4) |
(1) |
3 |
|||||||
|
(2) |
4 |
(1) |
2 |
— |
2 |
1 |
|||||||
D& |
(10) |
11 |
2 |
— |
(8) |
(5) |
3 |
|||||||
Developed Markets |
(4) |
7 |
1 |
— |
(6) |
(1) |
4 |
|||||||
Consumer Tissue |
(5) |
11 |
— |
— |
(3) |
4 |
7 |
|||||||
|
(3) |
7 |
1 |
— |
— |
5 |
5 |
|||||||
D& |
(9) |
13 |
1 |
— |
(5) |
— |
5 |
|||||||
Developed Markets |
(4) |
17 |
— |
— |
(7) |
6 |
13 |
|||||||
KC Professional |
(6) |
17 |
1 |
— |
(3) |
9 |
11 |
|||||||
|
(3) |
16 |
(1) |
— |
(1) |
12 |
12 |
|||||||
D& |
(6) |
11 |
2 |
— |
(6) |
1 |
7 |
|||||||
Developed Markets |
(17) |
26 |
4 |
— |
(6) |
7 |
13 |
|||||||
Consolidated |
(5) |
10 |
1 |
— |
(4) |
2 |
5 |
(a) |
Impact of the acquisition of |
(b) |
Total may not equal the sum of volume, net price, mix/other, acquisition and currency due to rounding and excludes intergeographic sales. |
(c) |
Combined impact of changes in volume, net price and mix/other. |
Personal Care Segment
Personal Care sales of
First quarter operating profit of
Consumer Tissue Segment
Consumer Tissue sales of
First quarter operating profit of
K-C Professional (KCP) Segment
KCP sales of
First quarter operating profit of
Cash Flow and Balance Sheet
Cash provided by operations was
2023 Outlook
The company updated its full year expectations for 2023 as summarized below.
Metric |
Previous |
Current |
||
Organic sales |
2% - 4% |
2% - 4% |
||
FX impact(a) on net sales |
(2) % |
(2) % |
||
Net sales |
0% - 2% |
0% - 2% |
||
Operating profit |
up mid to high single digits |
up low double digits |
||
Input cost impact on operating profit ($ million) |
|
|
||
FX impact(b) on operating profit ($ million) |
|
|
||
Effective tax rate |
23% - 25% |
23% - 25% |
||
Income from equity companies |
similar to prior year |
up vs. prior year |
||
EPS (vs. adjusted EPS last year) |
2% - 6% |
6% - 10% |
||
Share repurchases ($ million) |
|
|
(a) Currency translation only |
(b) Currency transaction and translation impacts |
This outlook reflects assumptions subject to change given the high level of volatility in the macro environment and does not reflect the impact of the sale of our tissue business in
Supplemental Materials and Live Webcast
Supplemental materials will be available at
About Kimberly-Clark
Kimberly-Clark (NYSE: KMB) and its trusted brands are an indispensable part of life for people in more than 175 countries. Fueled by ingenuity, creativity, and an understanding of people's most essential needs, we create products that help individuals experience more of what's important to them. Our portfolio of brands, including Huggies, Kleenex, Scott, Kotex, Cottonelle, Poise, Depend, Andrex, Pull-Ups, GoodNites, Intimus, Neve, Plenitud, Sweety, Softex, Viva and WypAll, hold No. 1 or No. 2 share positions in approximately 80 countries. We use sustainable practices that support a healthy planet, build strong communities, and ensure our business thrives for decades to come. We are proud to be recognized as one of the World's Most Ethical Companies(R) by
Copies of Kimberly-Clark's Annual Report to Stockholders and its proxy statements and other
Forward Looking Statements
Certain matters contained in this news release concerning the outlook, anticipated financial and operating results, raw material, energy and other input costs, anticipated currency rates and exchange risks, including in
There can be no assurance that these future events will occur as anticipated or that the company's results will be as estimated. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to publicly update them. For a description of certain factors that could cause the company's future results to differ from those expressed in any such forward-looking statements, see Item 1A entitled "Risk Factors" in the company's Annual Report on Form 10-K for the year ended
Non-GAAP Financial Measures
This news release and the accompanying tables include the following financial measures that have not been calculated in accordance with accounting principles generally accepted in the
- Adjusted earnings and earnings per share
- Adjusted gross and operating profit
- Adjusted effective tax rate
These non-GAAP financial measures exclude the following items for the relevant time periods as indicated in the accompanying non-GAAP reconciliation tables: [divestitures, impairment, restructuring etc]
- Pension settlements. In 2022, the company recognized pension settlement charges related to lump-sum distributions from pension plan assets exceeding the total of annual service and interest costs resulting in a recognition of deferred actuarial losses.
- Acquisition of controlling interest in Thinx. In the first quarter of 2022, the company completed the acquisition of a majority and controlling share of Thinx. As a result of this transaction, a net benefit was recognized primarily due to the nonrecurring, non-cash gain recognized related to the remeasurement of the carrying value of previously held equity investment to fair value partially offset by transaction and integration costs.
The company provides these non-GAAP financial measures as supplemental information to our GAAP financial measures. Management and the company's Board of Directors use adjusted earnings, adjusted earnings per share and adjusted gross and operating profit to (a) evaluate the company's historical and prospective financial performance and its performance relative to its competitors, (b) allocate resources and (c) measure the operational performance of the company's business units and their managers. Management also believes that the use of an adjusted effective tax rate provides improved insight into the tax effects of our ongoing business operations. Additionally, the
This news release includes information regarding organic sales growth, which describes the impact of changes in volume, net selling prices and product mix on net sales. Changes in foreign currency exchange rates, acquisitions and exited businesses also impact the year-over-year change in net sales.
|
|||||
CONSOLIDATED INCOME STATEMENTS |
|||||
(Millions, except per share amounts) |
|||||
Three Months Ended |
|||||
2023 |
2022 |
Change |
|||
|
$ 5,195 |
$ 5,095 |
+2 % |
||
Cost of products sold |
3,469 |
3,575 |
-3 % |
||
Gross Profit |
1,726 |
1,520 |
+14 % |
||
Marketing, research and general expenses |
924 |
886 |
+4 % |
||
Other (income) and expense, net |
15 |
(59) |
N.M. |
||
Operating Profit |
787 |
693 |
+14 % |
||
Nonoperating expense |
(16) |
(4) |
+300 % |
||
Interest income |
7 |
2 |
+250 % |
||
Interest expense |
(73) |
(65) |
+12 % |
||
Income Before Income Taxes and Equity Interests |
705 |
626 |
+13 % |
||
Provision for income taxes |
(173) |
(114) |
+52 % |
||
Income Before Equity Interests |
532 |
512 |
+4 % |
||
Share of net income of equity companies |
43 |
23 |
+87 % |
||
Net Income |
575 |
535 |
+7 % |
||
Net income attributable to noncontrolling interests |
(9) |
(12) |
-25 % |
||
Net Income Attributable to |
$ 566 |
$ 523 |
+8 % |
||
Per Share Basis |
|||||
Net Income Attributable to |
|||||
Basic |
$ 1.68 |
$ 1.55 |
+8 % |
||
Diluted |
$ 1.67 |
$ 1.55 |
+8 % |
||
Cash Dividends Declared |
$ 1.18 |
$ 1.16 |
+2 % |
||
Common Shares Outstanding |
|
||||
2023 |
2022 |
||||
Outstanding shares as of |
337.4 |
337.0 |
|||
Average diluted shares for three months ended |
338.6 |
338.2 |
|||
Unaudited |
|||||
N.M. - Not Meaningful |
|
||||||
NON-GAAP RECONCILIATIONS |
||||||
(Millions, except per share amounts) |
||||||
Three Months Ended |
||||||
As Reported |
Acquisition of |
As Adjusted Non-GAAP |
||||
Marketing, research and general expenses |
$ 886 |
$ 21 |
$ 865 |
|||
Other (income) and expense, net |
(59) |
(85) |
26 |
|||
Operating Profit |
693 |
64 |
629 |
|||
Provision for income taxes |
(114) |
4 |
(118) |
|||
Effective tax rate |
18.2 % |
— |
21.0 % |
|||
Net Income Attributable to |
523 |
68 |
455 |
|||
Diluted Earnings per Share(a) |
1.55 |
0.20 |
1.35 |
(a) "As Adjusted Non-GAAP" may not equal "As Reported" plus "Adjustments" as a result of rounding. |
Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for the comparable GAAP |
Unaudited |
|
|||
CONSOLIDATED BALANCE SHEETS |
|||
(Millions) |
|||
|
|
||
ASSETS |
|||
Current Assets |
|||
Cash and cash equivalents |
$ 524 |
$ 427 |
|
Accounts receivable, net |
2,430 |
2,280 |
|
Inventories |
2,224 |
2,269 |
|
Other current assets |
673 |
753 |
|
Total Current Assets |
5,851 |
5,729 |
|
Property, Plant and Equipment, Net |
7,866 |
7,885 |
|
Investments in Equity Companies |
281 |
238 |
|
|
2,090 |
2,074 |
|
Other Intangible Assets, Net |
868 |
851 |
|
Other Assets |
1,221 |
1,193 |
|
TOTAL ASSETS |
$ 18,177 |
$ 17,970 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
Current Liabilities |
|||
Debt payable within one year |
$ 536 |
$ 844 |
|
Trade accounts payable |
3,788 |
3,813 |
|
Accrued expenses and other current liabilities |
2,376 |
2,289 |
|
Dividends payable |
394 |
388 |
|
Total Current Liabilities |
7,094 |
7,334 |
|
Long-Term Debt |
7,945 |
7,578 |
|
Noncurrent Employee Benefits |
645 |
654 |
|
Deferred Income Taxes |
612 |
647 |
|
Other Liabilities |
810 |
799 |
|
|
210 |
258 |
|
Stockholders' Equity |
|||
|
719 |
547 |
|
Noncontrolling Interests |
142 |
153 |
|
Total Stockholders' Equity |
861 |
700 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 18,177 |
$ 17,970 |
|
2023 Data is Unaudited |
|
|||
CONSOLIDATED CASH FLOW STATEMENTS |
|||
(Millions) |
|||
Three Months Ended |
|||
2023 |
2022 |
||
Operating Activities |
|||
Net income |
$ 575 |
$ 535 |
|
Depreciation and amortization |
188 |
188 |
|
Asset impairments |
11 |
— |
|
Gain on previously held equity investment in Thinx |
— |
(85) |
|
Stock-based compensation |
24 |
16 |
|
Deferred income taxes |
(50) |
(52) |
|
Net (gains) losses on asset dispositions |
2 |
6 |
|
Equity companies' earnings (in excess of) less than dividends paid |
(43) |
(23) |
|
Operating working capital |
(85) |
(369) |
|
Postretirement benefits |
(6) |
(14) |
|
Other |
(3) |
2 |
|
Cash Provided by Operations |
613 |
204 |
|
Investing Activities |
|||
Capital spending |
(201) |
(253) |
|
Acquisition of business, net of cash acquired |
— |
(34) |
|
Investments in time deposits |
(177) |
(83) |
|
Maturities of time deposits |
259 |
255 |
|
Other |
4 |
(1) |
|
Cash Used for Investing |
(115) |
(116) |
|
Financing Activities |
|||
Cash dividends paid |
(391) |
(384) |
|
Change in short-term debt |
(308) |
834 |
|
Debt proceeds |
348 |
— |
|
Debt repayments |
— |
(300) |
|
Proceeds from exercise of stock options |
11 |
23 |
|
Acquisitions of common stock for the treasury |
(30) |
(25) |
|
Cash dividends paid to noncontrolling interests |
(16) |
— |
|
Other |
(11) |
(15) |
|
Cash Used for Financing |
(397) |
133 |
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
(4) |
2 |
|
Change in Cash and Cash Equivalents |
97 |
223 |
|
Cash and Cash Equivalents - Beginning of Period |
427 |
270 |
|
Cash and Cash Equivalents - End of Period |
$ 524 |
$ 493 |
|
Unaudited |
|
||||||
SELECTED BUSINESS SEGMENT DATA |
||||||
(Millions) |
||||||
Three Months Ended |
||||||
2023 |
2022 |
Change |
||||
|
||||||
Personal Care |
$ 2,704 |
$ 2,729 |
-1 % |
|||
Consumer Tissue |
1,634 |
1,568 |
+4 % |
|||
K-C Professional |
847 |
780 |
+9 % |
|||
Corporate & Other |
10 |
18 |
N.M. |
|||
TOTAL |
$ 5,195 |
$ 5,095 |
+2 % |
|||
OPERATING PROFIT |
||||||
Personal Care |
$ 487 |
$ 475 |
+3 % |
|||
Consumer Tissue |
240 |
171 |
+40 % |
|||
K-C Professional |
159 |
90 |
+77 % |
|||
Corporate & Other(a) |
(84) |
(102) |
N.M. |
|||
Other (income) and expense, net(a) |
15 |
(59) |
N.M. |
|||
TOTAL OPERATING PROFIT |
$ 787 |
$ 693 |
+14 % |
(a) |
Corporate & Other and Other (income) and expense, net include income and expense not associated |
Unaudited |
|
N.M. - Not Meaningful |
[KMB-F]
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SOURCE
Relations contact: Christina Cheng, KC.InvestorRelations@kcc.com; Media Relations contact: David Kellis, media.relations@kcc.com