Kimberly-Clark Announces First Quarter 2024 Results and Raises 2024 Outlook
Delivers net sales of
Strong EPS expansion driven by accretive innovation and productivity initiatives
Company increases 2024 outlook to reflect solid start to year
"We delivered an encouraging set of first quarter results as we embark on this next chapter of growth for Kimberly-Clark," said
Hsu continued, "Our powerhouse pipeline of innovation drove sequentially stronger gains from volume-plus-mix. We continued our strong productivity momentum through our efforts to optimize our margin structure, and we are making good progress focusing our enterprise as we advance the implementation of our new operating model. We're excited about our opportunities to capitalize on this momentum on a global level, enabling us to deliver long-term value for our stakeholders."
Quarter Highlights
- Net sales of
$5.1 billion were down 1 percent, with organic sales growth of 6 percent versus the prior year. - Gross margin was 37.1 percent, up 390 basis points versus the prior year, driven by organic net sales growth and gross productivity gains.
- Diluted earnings per share were
$1.91 ; adjusted earnings per share were$2.01 , up 20 percent versus prior year including a$0.21 year-on-year headwind from currency translation.
First Quarter 2024 Results
First quarter sales of
In
In D&E markets, organic sales were up 15 percent reflecting both pricing gains as well as volume and mix gains. Organic sales for Developed Markets decreased 2 percent, driven by lower pricing that primarily reflected comparisons with temporary, energy surcharge-related price increases in
Gross margin improved by 390 bps to 37.1 percent as organic growth, together with gross productivity gains, more than offset cost inflation, primarily in developing markets and supply chain-related investments.
First quarter operating profit was $853 million, including
Net interest expense was
First quarter effective tax rate was 23.6 percent, compared to 24.5 percent prior year. On an adjusted basis, the effective rate in the first quarter was 23.6 percent.
Net income of equity companies was $61 million compared to
Diluted EPS increased 14 percent to
Business Segment Net Sales Results
Q1 change vs year ago (%) |
Volume |
Mix/Other |
Price |
Divestitures |
Currency |
Total(b) |
Organic(c) |
|||||||
Personal Care |
2 |
1 |
7 |
— |
(9) |
— |
10 |
|||||||
|
1 |
1 |
— |
— |
— |
2 |
2 |
|||||||
D& |
4 |
1 |
19 |
— |
(24) |
— |
23 |
|||||||
Developed Markets |
(2) |
— |
— |
— |
(2) |
(4) |
(2) |
|||||||
Consumer Tissue |
— |
— |
— |
(3) |
— |
(2) |
— |
|||||||
|
2 |
1 |
3 |
— |
— |
6 |
6 |
|||||||
D& |
(8) |
— |
(2) |
(13) |
— |
(25) |
(11) |
|||||||
Developed Markets |
3 |
— |
(4) |
— |
— |
(1) |
(2) |
|||||||
KC Professional |
(2) |
1 |
2 |
(2) |
(2) |
(3) |
2 |
|||||||
|
(3) |
1 |
1 |
— |
— |
(1) |
(1) |
|||||||
D& |
(1) |
— |
13 |
(13) |
(11) |
(12) |
12 |
|||||||
Developed Markets |
2 |
1 |
(4) |
— |
— |
(1) |
(1) |
|||||||
Consolidated |
1 |
1 |
4 |
(1) |
(5) |
(1) |
6 |
(a) |
Impact of the sale of |
(b) |
Total may not equal the sum of volume, mix/other, net price, divestitures and business exits and currency due to rounding and excludes inter-geographic sales. |
(c) |
Combined impact of changes in volume, mix/other and net price. |
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
Year-to-date cash provided by operations was
2024 Outlook
Based on its first quarter results, the company has updated its 2024 outlook, with all factors compared to 2023, as follows:
Organic
Adjusted Operating Profit is now expected to grow at a low-teens percentage rate on a constant-currency basis. This is up from previous expectations for high-single-digit to low-double-digit Adjusted Operating Profit growth on a constant currency basis.
Adjusted Earnings Per Share is now expected to grow at a low-teens percentage rate on a constant-currency basis, an increase from previous expectations of high-single-digit growth.
Reported Operating Profit and Reported Earnings Per Share are currently expected to be negatively impacted by approximately 700 basis points from currency translation, compared to the company's previous assumptions for a 400 basis-point headwind.
This outlook reflects assumptions subject to change given the macro environment.
Supplemental Materials and Live Webcast
Supplemental materials will be available at approximately
About Kimberly-Clark
Kimberly-Clark (NYSE: KMB) and its trusted brands are an indispensable part of life for people in more than 175 countries and territories. 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, Plenitud, Sweety, Softex, Viva and WypAll, hold No. 1 or No. 2 share positions in approximately 70 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:
- 2024 Transformation Initiative - In 2024, we initiated this transformation initiative to to improve our focus on growth and reduce our structural cost base by reorganizing into three new business segments, making the corporate and regional overhead cost structures more efficient and optimizing our global supply chain. Results in 2024 include charges related to this program.
- Sale of
Brazil tissue and K-C Professional business. In the second quarter of 2023, we recognized a net benefit related to the sale of ourBrazil tissue and K-C Professional business. - Impairment of intangible assets. In the second quarter of 2023, we recognized non-cash charges related to the impairment of certain intangible assets related to Softex Indonesia and Thinx.
- Pension settlements. In 2023, we 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.
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
Certain non-GAAP financial measures referenced in this news release are presented on a forward-looking basis. Kimberly-Clark does not provide a reconciliation of these forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures on a forward-looking basis because it is unable to predict certain adjustment items without unreasonable effort. Please note that these items could be material to Kimberly-Clark's results calculated in accordance with GAAP.
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 and divestitures and business exits also impact the year-over-year change in net sales.
CONSOLIDATED INCOME STATEMENTS (Millions, except per share amounts) |
|||||
Three Months Ended |
|||||
2024 |
2023 |
Change |
|||
|
$ 5,149 |
$ 5,195 |
-1 % |
||
Cost of products sold |
3,238 |
3,469 |
-7 % |
||
Gross Profit |
1,911 |
1,726 |
+11 % |
||
Marketing, research and general expenses |
1,039 |
924 |
+12 % |
||
Other (income) and expense, net |
19 |
15 |
+27 % |
||
Operating Profit |
853 |
787 |
+8 % |
||
Nonoperating expense |
(15) |
(16) |
-6 % |
||
Interest income |
10 |
7 |
+43 % |
||
Interest expense |
(67) |
(73) |
-8 % |
||
Income Before Income Taxes and Equity Interests |
781 |
705 |
+11 % |
||
Provision for income taxes |
(184) |
(173) |
+6 % |
||
Income Before Equity Interests |
597 |
532 |
+12 % |
||
Share of net income of equity companies |
61 |
43 |
+42 % |
||
Net Income |
658 |
575 |
+14 % |
||
Net income attributable to noncontrolling interests |
(11) |
(9) |
+22 % |
||
Net Income Attributable to |
$ 647 |
$ 566 |
+14 % |
||
Per Share Basis |
|||||
Net Income Attributable to |
|||||
Basic |
$ 1.92 |
$ 1.68 |
+14 % |
||
Diluted |
$ 1.91 |
$ 1.67 |
+14 % |
||
Cash Dividends Declared |
$ 1.22 |
$ 1.18 |
+3 % |
||
Common Shares Outstanding |
|
||||
2024 |
2023 |
||||
Outstanding shares as of |
336.8 |
337.4 |
|||
Average diluted shares for three months ended |
338.3 |
338.6 |
|||
Unaudited |
N.M. - Not Meaningful |
NON-GAAP RECONCILIATIONS (Millions, except per share amounts) |
||||||
Three Months Ended |
||||||
As Reported |
2024 |
As Adjusted Non-GAAP |
||||
Marketing, research and general expenses |
$ 1,039 |
$ 45 |
$ 994 |
|||
Operating Profit |
853 |
(45) |
898 |
|||
Provision for income taxes |
(184) |
11 |
(195) |
|||
Effective tax rate |
23.6 % |
— |
23.6 % |
|||
Net Income Attributable to |
647 |
(34) |
681 |
|||
Diluted Earnings per Share(a) |
1.91 |
(0.10) |
2.01 |
(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 measures, and they should be read only in conjunction with the company's consolidated financial statements prepared in accordance with GAAP. There are limitations to these non-GAAP financial measures because they are not prepared in accordance with GAAP and may not be comparable to similarly titled measures of other companies due to potential differences in methods of calculation and items being excluded. The company compensates for these limitations by using these non-GAAP financial measures as a supplement to the GAAP measures and by providing reconciliations of the non-GAAP and comparable GAAP financial measures. |
Unaudited |
CONSOLIDATED BALANCE SHEETS (Millions) |
|||
|
|
||
ASSETS |
|||
Current Assets |
|||
Cash and cash equivalents |
$ 853 |
$ 1,093 |
|
Accounts receivable, net |
2,383 |
2,135 |
|
Inventories |
1,877 |
1,955 |
|
Other current assets |
487 |
520 |
|
Total Current Assets |
5,600 |
5,703 |
|
Property, Plant and Equipment, Net |
7,772 |
7,913 |
|
Investments in Equity Companies |
364 |
306 |
|
|
2,043 |
2,085 |
|
Other Intangible Assets, Net |
190 |
197 |
|
Other Assets |
1,123 |
1,140 |
|
TOTAL ASSETS |
$ 17,092 |
$ 17,344 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
Current Liabilities |
|||
Debt payable within one year |
$ 809 |
$ 567 |
|
Trade accounts payable |
3,531 |
3,653 |
|
Accrued expenses and other current liabilities |
2,131 |
2,316 |
|
Dividends payable |
407 |
394 |
|
Total Current Liabilities |
6,878 |
6,930 |
|
Long-Term Debt |
7,161 |
7,417 |
|
Noncurrent Employee Benefits |
652 |
669 |
|
Deferred Income Taxes |
395 |
374 |
|
Other Liabilities |
796 |
860 |
|
|
26 |
26 |
|
Stockholders' Equity |
|||
|
1,044 |
915 |
|
Noncontrolling Interests |
140 |
153 |
|
Total Stockholders' Equity |
1,184 |
1,068 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 17,092 |
$ 17,344 |
2024 Data is Unaudited |
CONSOLIDATED CASH FLOW STATEMENTS (Millions) |
||||
Three Months Ended |
||||
2024 |
2023 |
|||
Operating Activities |
||||
Net income |
$ 658 |
$ 575 |
||
Depreciation and amortization |
185 |
188 |
||
Asset impairments |
— |
11 |
||
Stock-based compensation |
32 |
24 |
||
Deferred income taxes |
(11) |
(50) |
||
Net (gains) losses on asset dispositions |
5 |
2 |
||
Equity companies' earnings (in excess of) less than dividends paid |
(61) |
(43) |
||
Operating working capital |
(367) |
(85) |
||
Postretirement benefits |
2 |
(6) |
||
Other |
(5) |
(3) |
||
Cash Provided by Operations |
438 |
613 |
||
Investing Activities |
||||
Capital spending |
(194) |
(201) |
||
Investments in time deposits |
(97) |
(177) |
||
Maturities of time deposits |
119 |
259 |
||
Other |
(9) |
4 |
||
Cash Used for Investing |
(181) |
(115) |
||
Financing Activities |
||||
Cash dividends paid |
(398) |
(391) |
||
Change in short-term debt |
4 |
(308) |
||
Debt proceeds |
— |
348 |
||
Proceeds from exercise of stock options |
3 |
11 |
||
Acquisitions of common stock for the treasury |
(54) |
(30) |
||
Cash dividends paid to noncontrolling interests |
(19) |
(16) |
||
Other |
(21) |
(11) |
||
Cash Used for Financing |
(485) |
(397) |
||
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
(12) |
(4) |
||
Change in Cash and Cash Equivalents |
(240) |
97 |
||
Cash and Cash Equivalents - Beginning of Period |
1,093 |
427 |
||
Cash and Cash Equivalents - End of Period |
$ 853 |
$ 524 |
Unaudited |
SELECTED BUSINESS SEGMENT DATA (Millions) |
||||||
Three Months Ended |
||||||
2024 |
2023 |
Change |
||||
|
||||||
Personal Care |
$ 2,713 |
$ 2,704 |
— % |
|||
Consumer Tissue |
1,599 |
1,634 |
-2 % |
|||
K-C Professional |
823 |
847 |
-3 % |
|||
Corporate & Other |
14 |
10 |
N.M. |
|||
TOTAL |
$ 5,149 |
$ 5,195 |
-1 % |
|||
OPERATING PROFIT |
||||||
Personal Care |
$ 545 |
$ 487 |
+12 % |
|||
Consumer Tissue |
290 |
240 |
+21 % |
|||
K-C Professional |
188 |
159 |
+18 % |
|||
Corporate & Other(a) |
(151) |
(84) |
N.M. |
|||
Other (income) and expense, net(a) |
19 |
15 |
+27 % |
|||
TOTAL OPERATING PROFIT |
$ 853 |
$ 787 |
+8 % |
(a) |
Corporate & Other and Other (income) and expense, net include income and expense not associated with the business segments, including adjustments as indicated in the Non-GAAP Reconciliations. |
Unaudited |
N.M. - Not Meaningful |
[KMB-F]
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SOURCE
Investor Relations contact: Christopher Jakubik, CFA, KC.InvestorRelations@kcc.com; Media Relations contact: David Kellis, media.relations@kcc.com